Fast Tract Title Servs. v. Barry

• Decision Date: 09 June 2022
• Docket Number: 110939
• Citation: 2022 Ohio 1943
• Parties: FAST TRACT TITLE SERVICES, INC., Plaintiff-Appellee, v. DENVER BARRY, Defendant-Appellant.
• Court: Ohio Court of Appeals

2022-Ohio-1943

FAST TRACT TITLE SERVICES, INC., Plaintiff-Appellee, v. DENVER BARRY, Defendant-Appellant.

No. 110939

Court of Appeals of Ohio, Eighth District, Cuyahoga

June 9, 2022

Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-18-897291

JUDGMENT VACATED

L Bryan Carr, for appellee.

Andrew J. Karas, for appellant.

JOURNAL ENTRY AND OPINION

KATHLEEN ANN KEOUGH, PRESIDING JUDGE

{¶1} Defendant-appellant, Denver Barry ("Barry") appeals from the trial court's judgment, rendered after a jury trial, finding him personally liable for fraud under a claim of piercing the corporate veil and awarding plaintiff-appellee, Fast Tract Title Services, Inc. ("Fast Tract"), compensatory damages, punitive damages, and attorney fees. For the reasons that follow, we vacate the trial court's judgment.

I. Background

{¶2} On May 7, 2018, Fast Tract filed suit against Barry asserting a fraud claim in Count 1 of the complaint and, in Count 2, that it was entitled to pierce the corporate veil of 1129 Summit L.L.C., an entity of which Barry is a member, to find Barry personally liable on its fraud claim.

{¶3} Paragraphs one through five of the complaint set forth the fact of Fast Tract's corporate entity and its address; Barry's home address and the fact that he is a member of 1229 Summit; the propriety of jurisdiction in Cuyahoga County; and an allegation that on May 22, 2017, Fast Tract was awarded a judgment in the amount of $16, 319.56 against 1229 Summit in Cuyahoga C.P. No. CV-16-860137.

{¶4} Paragraphs six through nine of the complaint, captioned "Count I," set forth Fast Tract's fraud claim against Barry as follows:

6. Plaintiff re-alleges and re-avers each and every allegation set forth in Paragraphs 1 through 5 above as if fully rewritten herein.

7. The Defendant made multiple representations to Plaintiff and concealed material facts which Defendant knew were false and/or which Defendant made with utter disregard and recklessness as to whether the representations were true or false.

8. The Defendant had the intent of misleading Plaintiff into relying upon his false and misleading representations (and concealment). Plaintiffs reliance was justifiable.

9. Defendant's fraud resulted in injury to the Plaintiff.

{¶5} Count II was set forth in paragraphs 10 through 16 of the complaint. Count 10 realleged the allegations set forth in paragraph one through nine. Paragraph 11 alleged that "the fiction known as 1229 Summit should be disregarded" because

(a) it is used, or is being used, as a means of perpetrating a fraud upon Plaintiff; (b) 1229 Summit was organized and operated as a tool or business conduit of Defendant; (c) 1229 Summit is resorted to as a means of evading existing legal obligations; (d) 1229 Summit is used to circumvent a statute; and (e) 1229 Summit is relied upon as a protection to justify a wrong.

Paragraph 12 alleged that "1229 should not shield fraud, evade existing obligations, circumvent statute and the like. This abuse necessitates disregarding 1229 Summit. As a result, the 'corporate veil' of 1229 Summit should be pierced to provide that Defendant is liable to Plaintiff in/for its judgment against 1229 Summit."

{¶6} Paragraph 13 of the complaint repeated the reasons for piercing the corporate veil set forth in paragraph 11 of the complaint and added that "1229 was inadequately capitalized and unable to pay its debts" and again, that "1229 perpetrated fraud." Paragraph 14 alleged that "[t]he control the Defendant had over 1229 Summit was so complete that 1229 Summit had no separate mind, will or existence of its own." Paragraphs 15 and 16 of the complaint asserted that "[t]he control the Defendant had over 1229 Summit was exercised in such a manner as to commit fraud and other unlawful acts upon the Plaintiff" and "Defendant's actions resulted in damages to Plaintiff."

{¶7} Barry subsequently filed a motion to dismiss the complaint pursuant to Civ.R. 12(B)(6), arguing that Fast Tract's fraud complaint was not pled with particularity, as required by Civ.R. 9(B), thereby requiring dismissal of the complaint for failure to state a claim upon which relief could be granted. Fast Tract filed a brief in opposition to Barry's motion, arguing that "what is before this court is not a fraud case" and that "Civil Rule 9 has absolutely no relevance to this case whatsoever" because Fast Tract was "seeking to pierce the corporate veil/disregard the corporate entity," a claim it contended was adequately set forth in its complaint. The trial court denied Barry's motion to dismiss. The court also denied Barry's later-filed motion for summary judgment.

{¶8} At trial, the proceedings were bifurcated to allow the jury to consider liability and punitive damages in separate phases. Following the liability phase, the jury found Barry liable for fraud and awarded Fast Tract $26, 000 in compensatory damages. The jury also found for Fast Tract on its claim for piercing the corporate veil but awarded $0 in damages. Following argument and instructions regarding punitive damages, the jury awarded Fast Tract $10, 000 in punitive damages plus attorney fees in an amount to be determined by the court. After a hearing, the court awarded Fast Tract $26, 952.72 in attorney fees. Later, following post-trial motion practice, the trial court reduced the compensatory damage award to $21, 267.02. Barry now appeals.

II. Civ.R. 12(B)(6) Motion to Dismiss

{¶9} In his first assignment of error, Barry contends that the trial court erred in denying his Civ.R. 12(B)(6) motion to dismiss the complaint because Fast Tract did not plead its fraud claim with particularity, as required by Civ.R. 9(B).

{¶10} In Hersh v. Grumer, 2021-Ohio-2582, 176 N.E.3d 1135, ¶ 5 (8th Dist.), this court reiterated the appropriate standard of review regarding Civ.R. 12(B)(6) motions to dismiss as follows:

We review rulings on Civ.R. 12(B)(6) motions to dismiss under a de novo standard. "A motion to dismiss for failure to state a claim upon which relief can be granted in procedural and tests the sufficiency of the complaint. * * * Under a de novo analysis, we must accept all factual allegations of the complaint as true and all reasonable inferences must be drawn in favor of the nonmoving party." NorthPoint Props. v. Petticord, 179 Ohio App.3d 342, 2008-Ohio-5996, 901 n.E.2d 869, ¶ 1 (8th Dist.). "'For a trial court to grant a motion to dismiss for failure to state a claim upon which relief can be granted, it must appear 'beyond doubt from the complaint that the plaintiff can prove no set of facts entitling her to relief.'" Graham v. Lakewood, 8th Dist. Cuyahoga No. 106094, 2018-Ohio-1850, 113 N.E.3d 44, ¶ 47, quoting Grey v. Walgreen Co., 197 Ohio App.3d 418, 2018-Ohio-6167, 967 N.E.2d 1249, ¶ 3 (8th Dist.)

{¶11} The elements of fraud are: (1) a representation of fact (or where there is a duty to disclose, concealment of a fact); (2) that is material to the transaction at issue; (3) made falsely, with knowledge of its falsity or with utter disregard and recklessness as to whether it is true or false; (4) with the intent of misleading another into relying upon it; (5) justifiable reliance upon the misrepresentation (or concealment); and (6) resulting injury proximately caused by the reliance. Cohen v. Lamko, Inc., 10 Ohio St.3d 167, 169, 462 N.E.2d 407 (1984).

{¶12} Civ.R. 9(B) states that "[i]n all averments of fraud * * *, the circumstances constituting fraud * * * shall be stated with particularity." The rule "places a higher burden than is normally required upon the person asserting such a claim to support general allegations with specific facts." Reasoner v. State Farm Mut. Auto. Ins. Co., 10th Dist. Franklin No. 01AP-490, 2002-Ohio-878, 20-21. To comply with the Civ.R. 9(B) requirement, "'the pleading must contain allegations of fact which tend to show each and every element of a cause of action for fraud.'" Parmatown S. Assn. v. Atlantis Realty Co., 8th Dist. Cuyahoga No. 106503, 2018-Ohio-2520, ¶ 7, quoting Minaya v. NVR Inc., 2017-Ohio-9019, 103 N.E.3d 160, ¶ 11 (8th Dist.). "This means that a defendant must state 'the time, place, and content of the false representation, the fact misrepresented, and the nature of what was obtained or given as a consequence of the fraud.'" Cord v. Victory Solutions, L.L.C, 8th Dist. Cuyahoga No. 106006, 2018-Ohio-590, ¶ 14, quoting Carter Jones Lumber Co. v. Denune, 132 Ohio App.3d 430, 433, 725 N.E.2d 330 (10th Dist.1999). Such particularity is required to both apprise the opposing party of the act that is the subject of the fraud claim and to allow the opposing party to prepare an effective defense. Turner v. Salvagnini Am., Inc., 12th Dist. Butler No. CA 2007-09-233, 2008-Ohio-3596, ¶ 26.

{¶13} Fast Tract's fraud claim was clearly not pled with sufficient particularity. Its vague allegations that Barry made "multiple representations" and "concealed material facts" with the "intent of misleading" Fast Tract into relying on the representations are wholly insufficient under the heightened pleading standard of Civ.R. 9(B) to state a fraud claim with particularity. The complaint does not specify the time, place, and content of the alleged false representations, nor does it state what was obtained or given as a result of the alleged representations. See Stancik v. Deutsche Natl. Bank, 8th Dist. Cuyahoga No. 102019, 2015-Ohio-2517, ¶ 51-52 (fraud claim not pled with particularity where complaint did not specify the time, place, and content of the alleged material false representation). In short, the complaint does not contain facts that, if true, would establish all the elements of a fraud claim.

{¶14} As noted above, in its brief in opposition to Barry's motion to dismiss, Fast Tract...