Korodi v. Minot

Decision Date28 April 1987
Docket NumberNo. 86AP-862,86AP-862
Citation531 N.E.2d 318,40 Ohio App.3d 1
CourtOhio Court of Appeals
Parties, 123 Lab.Cas. P 57,146 KORODI, Appellant, v. MINOT et al., Appellees.

Syllabus by the Court

In assessing the adequacy of a complaint sounding in fraud for purposes of Civ.R. 12(B)(6), the "particularity" condition of Civ.R. 9(B) may be satisfied by meeting the following requirements: (1) plaintiff must specify the statements claimed to be false; (2) the complaint must state the time and place where the statements were made; and (3) plaintiff must identify the defendant(s) claimed to have made the statement(s). Although these requirements are intended to place potential defendants on notice of the precise statements alleged to be fraudulent, the importance of notice must be tempered by the provisions of Civ.R. 8(A)(1) and (E).

Bradley & Farris Co., L.P.A., Philip R. Bradley and Robert H. Stoffers, Columbus, for appellant.

Bricker & Eckler, Bruce G. Lynn and Richard C. Pfeiffer, Jr., Columbus, for appellees George Minot, CompuServe, Inc., James Seals and Chemical Abstracts Service, Inc.

Anthony J. Celebrezze, Jr., Atty. Gen., Vorys, Sater, Seymour & Pease, John C. Elam and Philip A. Brown, Special Counsel, Columbus, for appellees Edward Jennings and Larry Thompson.

Vorys, Sater, Seymour & Pease, John C. Elam and Philip A. Brown, Columbus, for appellees Patrick Meers, William Wells, Ohio Teleport Corp., M & R Co. and Jack Ruscilli.

STRAUSBAUGH, Presiding Judge.

Defendants moved the court of common pleas to dismiss plaintiff's complaint against the several defendants. The trial court granted the motion for dismissal as to all defendants except defendant Ohio Teleport Corporation and denied plaintiff leave to file a second amended complaint. Plaintiff appeals.

Defendant Ohio Teleport Corporation ("Teleport") was incorporated October 1, 1982 under the laws of this state to construct and operate a telecommunications center serving Central Ohio. Defendants Chemical Abstracts, CompuServe and M & R Company were the initial shareholders and investors in the fledgling corporation. The Ohio State University, although not named as a defendant, was also an investor and shareholder. Edward Jennings, President of the Ohio State University, was an individual shareholder and investor in Teleport, and was named a party-defendant in his individual capacity.

Defendants George Minot, Larry Thompson, Patrick Meers, James Seals and William Wells were officers and directors of Teleport. Each of these individual defendants was also an officer or partner in the various corporate and institutional shareholders/investors.

In 1984, defendants Minot and Teleport solicited plaintiff to become president and chief executive officer ("CEO") of Teleport pursuant to the terms of a written contract of employment. Plaintiff consented to serve in this capacity for the three-year term of the contract. Sometime prior to May 22, 1986, however, Teleport became financially unsound and collapsed.

Plaintiff initiated the instant action May 22, 1986 for payment of his salary, alleging fraud, breach of express contract, breach of implied contract and unjust enrichment as grounds for relief. The original complaint alleged a preincorporation agreement among the individual shareholders to contribute $35,000 apiece as initial funding for Teleport. Plaintiff specifically alleged that defendant Minot referenced this agreement when soliciting him for the position of president and CEO, and that defendant Jennings also represented that Ohio State University would make a similar contribution despite his knowledge that such an agreement was illegal and void as to the university.

Defendants answered on July 17, 1986. The individual defendants, except defendant Teleport, moved to dismiss plaintiff's complaint pursuant to Civ.R. 12(B)(6) and 9(B). Attached to this motion was the affidavit of Teleport's corporate attorney and a verified copy of the preincorporation agreement. That agreement squarely negated plaintiff's allegations concerning the $35,000 initial funding commitment to be made by the individual shareholders and investors. Plaintiff opposed this motion and filed an amended complaint which did not allege a specific funding commitment.

The matter came before the court on a nonevidentiary hearing on August 28, 1986, at which time plaintiff was granted leave to file the amended complaint. The court then granted the motion to dismiss all defendants but defendant Teleport and denied plaintiff's oral motion for leave to file a second amended complaint. Judgment was entered September 9, 1986 and this appeal followed on September 17, 1986.

Plaintiff assigns as error the following:

"I. The trial court erred as a matter of law in dismissing the claims against the appellees as contained in appellant's complaint and amended complaint.

"II. The trial court abused its discretion in dismissing the claims against appellees as contained in the complaint and amended complaint and by not granting appellant's motion for leave to file a second amended complaint."

Prior to oral argument on these issues, defendants moved this court to dismiss plaintiff's appeal on the basis that the order of the trial court was not a final appealable order pursuant to Civ.R. 54(B). The motion is overruled.

Although the judgment entry did not contain Civ.R. 54(B) language citing "no just reason for delay," plaintiff subsequently requested a nunc pro tunc entry which contained the appropriate language. That entry was filed October 31, 1986.

This court has held that the mere incantation by a court of the language "no just reason for delay" does not convert an otherwise interlocutory order into a final appealable judgment. R & H Trucking, Inc. v. Occidental Fire & Cas. Co. (1981), 2 Ohio App.3d 269, 2 OBR 298, 441 N.E.2d 816; Mager v. American Select Risk Ins. Co. (Dec. 1, 1983), Franklin App. No. 83AP-797, unreported. At issue in R & H Trucking, Inc., supra, was the validity of Civ.R. 54(B) language affecting only one issue of a single claim for relief. Clearly, under those circumstances the mere use of Civ.R. 54(B) language is insufficient where only one claim for relief is present.

However, where an order dismisses some, but not all, claims of a complaint presenting multiple theories of recovery, such order is final and appealable if the court finds there is no just reason for delay. Douthitt v. Garrison (1981), 3 Ohio App.3d 254, 3 OBR 286, 444 N.E.2d 1068, paragraph two of the syllabus. This rule obtains even where, as here, the trial court has entered a nunc pro tunc determination of "no just reason for delay." See Hughes v. Miner (1984), 15 Ohio App.3d 141, 15 OBR 233, 473 N.E.2d 53, paragraph two of the syllabus.

This logic finds further support in R.C. 2505.02. Although Civ.R. 54(B) governs appellate procedure, R.C. 2505.02 grants certain substantive rights. That section provides, in part, that "[a]n order that affects a substantial right in an action which in effect determines the action and prevents a judgment * * * is a final order * * *." This case presents a factual situation where application of this principle is appropriate.

Here, plaintiff has brought several claims against multiple defendants. Although the claims against corporate defendant Teleport are still pending before the trial court, the claims against the remaining defendants have been finally adjudicated. Accordingly, defendants' motion is denied and we proceed to the merits.

Plaintiff's first assigned error challenges the dismissal of this suit on four separate grounds. Plaintiff alleges that each claim--one sounding in fraud, two in contract and a fourth for unjust enrichment--is sufficiently pleaded to withstand a Civ.R. 12(B) motion for dismissal on the pleadings. Inasmuch as our decision regarding the fraud claim is dispositive of this appeal, we will consider it first.

Generally, a motion to dismiss will only be granted where the party opposing the motion is unable to prove any set of facts which would entitle him to recover. O'Brien v. University Community Tenants Union, Inc. (1975), 42 Ohio St.2d 242, 71 O.O.2d 223, 327 N.E.2d 753. In ruling on a motion to dismiss, the court is required to interpret all material allegations in the complaint as true and taken as admitted. State, ex rel. Alford, v. Willoughby (1979), 58 Ohio St.2d 221, 223, 12 O.O.3d 229, 230, 390 N.E.2d 782, 785; Royce v. Smith (1981), 68 Ohio St.2d 106, 108, 22 O.O.3d 332, 333-334, 429 N.E.2d 134, 136; Phung v. Waste Management, Inc. (1986), 23 Ohio St.3d 100, 102, 23 OBR 260, 262, 491 N.E.2d 1114, 1116.

It is also well-established that when fraud is alleged as the basis for an action, five elements must be asserted in the complaint: (1) a false representation; (2) knowledge by the person making the representation that it is false; (3) the intent by the person making the representation to induce the other to rely on that representation; (4) rightful reliance by the other to his detriment; (5) an injury as a result of the reliance. Schwartz v. Capital Savings & Loan Co. (1978), 56 Ohio App.2d 83, 86, 10 O.O.3d 117, 119, 381 N.E.2d 957, 959; Noland v. Bryant (Jan. 12, 1984), Franklin App. No. 83AP-31, unreported, at 5

Additionally, Civ.R. 9(B) requires that an allegation of fraud be pleaded with sufficient particularity. There are usually three reasons cited for the requirement of particularity. First, particularity is required to protect defendants from the potential harm to their reputations which may attend general accusations of acts involving moral turpitude. Second, particularity ensures that the obligations are concrete and specific so as to provide defendants notice of what conduct is being challenged. Finally, the particularity requirement inhibits the filing of complaints as a pretext for discovery of unknown wrongs. See In re Commonwealth Oil/Tesoro Petroleum Corp. Securities...

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