Dixon v. Huntington Nat'l Bank, 100572
| Decision Date | 18 September 2014 |
| Docket Number | No. 100572,100572 |
| Citation | 2014 Ohio 4079 |
| Parties | JAMES DIXON, ET AL. PLAINTIFFS-APPELLANTS v. HUNTINGTON NATIONAL BANK, ET AL. DEFENDANTS-APPELLEES |
| Court | Ohio Court of Appeals |
ATTORNEY FOR APPELLANTS
Brent L. English
Law Offices of Brent L. English
The 820 Building, Suite 900
Cleveland, Ohio 44113
Alexander E. Goetsch
Komlavi Atsou
Cavitch, Familo & Durkin Co., L.P.A.
1300 East Ninth Street
20th Floor
Cleveland, Ohio 44114
Janeane R. Cappara
Kirk W. Roessler
Ziegler & Metzger, L.L.P.
2020 Huntington Building
925 Euclid Avenue
Cleveland, Ohio 44115
{¶1} Plaintiffs-appellants, James and Penny Dixon ("the Dixons"), appeal from the trial court's order granting defendant-appellee's, Third Federal Savings and Loan Association ("Third Federal"), motion to dismiss. The Dixons also appeal from the court's denial of their motion to reconsider the court's judgment granting defendant-appellee's, Huntington National Bank ("HNB"), motion to dismiss. Finding no merit to the appeal, we affirm.
{¶2} In May 2013, the Dixons filed a complaint against Third Federal, HNB, and a group of six attorneys from the law firm of Weltman, Weinberg and Reis, Co., L.P.A. ("Weltman"),1 pursuant to the Ohio Corrupt Practices Act, R.C. 2923.31, et seq. ("OCPA"), and the federal Racketeer Influenced Corrupt Organizations Act, 18 U.S.C. 1961, et seq. ("RICO").
{¶3} The Dixons alleged in their original complaint that the defendants participated in a pattern of corrupt activity, in violation of both the OCPA and RICO during foreclosure proceedings that HNB had initiated against the Dixons' adult daughter, on a parcel of residential property. The Dixons had a mortgage interest on the property, and HNB subsequently named them as defendants. In the instant case, the Dixonsalleged they were unlawfully deprived of their interest in the property when defendants obtained a default judgment against them and their daughter, because the Dixons allege that the defendants failed to properly serve them with the complaint.
{¶4} The Dixons subsequently filed an amended complaint, removing the RICO claims alleged in Counts 3 and 4. On July 25, 2013, defendant HNB filed a motion to dismiss the Dixons' amended complaint, pursuant to Civ.R. 13(A). The motion was ripe for ruling on August 5, 2013, and the trial court granted the motion on August 8, 2013. As of August 8, 2013, the Dixons had not filed a brief in opposition.
{¶5} On August 2, 2013, the Dixons filed a motion for enlargement of time to respond to all pending motions. The Dixons' motion was not granted until August 9, 2013, one day after HNB's motion was granted.
{¶6} On July 26, 2013, defendant Third Federal also filed a motion to dismiss, which the Dixons opposed. On August 23, 2013, the Dixons filed a motion for reconsideration of the court's judgment granting HNB's motion to dismiss, which HNB opposed. On September 17, 2013, the court held a hearing to address all outstanding motions. The transcript of that hearing was not filed in the instant case.
{¶7} On September 26, 2013, the trial court denied the Dixons' motion to reconsider its order granting HNB's motion to dismiss and also granted Third Federal's motion to dismiss. The Dixons now appeal from the trial court's judgments granting Third Federal's motion to dismiss and denying their motion for reconsideration. They raise seven assignments of error.
{¶8} In their first assignment of error, the Dixons argue the trial court erred in granting Third Federal's motion to dismiss. In their third assignment of error, they argue the trial court erred in dismissing the OCPA claim against Third Federal. These two assignments of error are interrelated and shall be addressed together.
{¶9} We review an order dismissing a complaint for failure to state a claim for relief de novo. Perrysburg Twp. v. Rossford, 103 Ohio St.3d 79, 2004-Ohio-4362, 814 N.E.2d 44. In O'Brien v. Univ. Community Tenants Union, Inc., 42 Ohio St.2d 242, 327 N.E.2d 753 (1975), the Ohio Supreme Court established the standard of review that is to be applied to a motion to dismiss pursuant to Civ.R. 12(B)(6), holding that:
[i]n order for a court to dismiss a complaint for failure to state a claim upon which relief can be granted (Civ.R. 12(B)(6)), it must appear beyond doubt from the complaint that the plaintiff can prove no set of facts entitling him to recovery. (Conley v. Gibson, 355 U.S. 41 [78 S.Ct. 99, 2 L.Ed.2d 80], followed.)
Id. at the syllabus. When reviewing a Civ.R. 12(B)(6) motion to dismiss, we must accept the material allegations of the complaint as true and make all reasonable inferences in favor of the plaintiff. Johnson v. Microsoft Corp., 106 Ohio St.3d 278, 2005-Ohio-4985, 834 N.E.2d 791.
{¶10} However, "unsupported conclusions of a complaint are not considered admitted * * * and are not sufficient to withstand a motion to dismiss." State ex rel. Hickman v. Capots, 45 Ohio St.3d 324, 324, 544 N.E.2d 639 (1989). To prevail on themotion, it must appear from the face of the complaint that the plaintiff can prove no set of facts that would justify a court granting relief. O'Brien at paragraph one of the syllabus.
{¶11} The Dixons argue the trial court erred in relying on Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), in dismissing their claims. They contend that based on these cases, the trial court erroneously held their amended complaint to stricter standards and requirements than necessary. We disagree.
{¶12} In Tuleta v. Med. Mut. Of Ohio, 8th Dist. Cuyahoga No. 100050, 2014-Ohio-396, ¶ 30, this court reversed the trial court's judgment in which the trial court relied upon Bell Atlantic and Iqbal, finding that neither the Ohio Supreme Court nor this court had adopted the heightened federal pleading standards set forth in these two cases.
{¶13} Whereas this court has not adopted the stricter federal pleading standards for all cases, case law clearly establishes that this court has adopted stricter standards for cases in which RICO and/or OCPA claims are alleged. The complaint in Tuleta did not contain RICO or OCPA claims, and therefore was not subject to the more stringent requirements under which the pleading in the instant case is reviewed.
{¶14} In Universal Coach, Inc. v. New York City Transit Auth., Inc., 90 Ohio App.3d 284, 629 N.E.2d 28 (8th Dist.1993), this court discussed the degree of specificity required in pleadings alleging OCPA violations, and set forth a stricter standard of pleading for RICO and OCPA claims. This court pointed out that OCPA is directly adopted from RICO, and despite some minor differences, this court is in no wayprohibited from applying federal requirements of pleading specificity when addressing OCPA claims before the court. Id. at 292.
{¶15} To survive a motion to dismiss, the court in Universal held that the complaint must allege the following specific elements:
The United States Supreme Court and numerous other federal courts have examined the elements required to establish a RICO violation: (1) conduct of the defendant which involves the commission of two or more of specifically prohibited state or federal criminal offenses; (2) the prohibited criminal conduct of the defendant constitutes a pattern of corrupt activity; and (3) the defendant has participated in the affairs of an enterprise or has acquired and maintained an interest in or control of an enterprise. Sedima S.P.R.L. v. Imrex Co. (1985), 473 U.S. 479, 105 S.Ct. 3275, 87 L.Ed.2d 346. We hold that the failure of a plaintiff to plead any of the elements necessary to establish a RICO violation results in a defective complaint which cannot withstand a motion to dismiss as based upon a failure to state a claim upon which relief can be granted. Compare Van Dorn Co. Cent. States Can. Co. v. Howington, 623 F.Supp. 1548 (N.D.Ohio 1985).
Id. at 291 (Emphasis added.).
{¶16} In the instant case, the Dixons failed to allege that Third Federal's conduct involved the commission of two or more of the specifically prohibited state criminal offenses and that such conduct constituted a pattern of corrupt activity, as required by R.C. 2923.31(E). In fact, the Dixons failed to set forth a single criminal offense on the part of Third Federal. Rather, the Dixons' amended complaint listed the foreclosure default, which was taken by HNB, as an example of criminal activity.
{¶17} Moreover, the Dixons failed to properly allege an enterprise as defined by R.C. 2923.31(C):
[I]n order to establish the existence of an "enterprise" under Ohio's RICO Act, there must be some evidence of: (1) an ongoing organization, formal orinformal; (2) with associates that function as a continuing unit; and (3) with a structure separate and apart, or distinct, from the pattern of corrupt activity.
State v. Warren, 10th Dist. Franklin No. 92AP-603, 1992 Ohio App. LEXIS 6755 (Dec. 31, 1992); United States v. Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981).
{¶18} In Patton v. Wilson, 8th Dist. Cuyahoga No. 82079, 2003-Ohio-3379, this court explained:
This court has held that an enterprise must be a separate entity that acts apart from the pattern of activity in which it engages. U.S. Demolition & Contracting, Inc. v. O'Rourke Constr. Co. (1994), 94 Ohio App.3d 75, 640 N.E.2d 235, citing Old Time Enterprises, Inc. v. Internatl. Coffee Corp., (C.A.5, 1989), 862 F.2d 1213. A pattern of racketeering activity alone is insufficient to establish an enterprise. Id. Although Patton is correct that a corporation may be part of an...
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