Matthews v. D'Amore, 2006 Ohio 5745 (Ohio App. 11/2/2006)
| Decision Date | 02 November 2006 |
| Docket Number | No. 05AP-1318.,05AP-1318. |
| Citation | 2006 Ohio 5745 |
| Parties | Ronald E. Matthews et al., Plaintiffs-Appellees, v. Regina D. D'Amore et al., Defendants-Appellants. |
| Court | Ohio Court of Appeals |
APPEAL from the Franklin County Court of Common Pleas, (C.P.C. No. 04CVH12-12864).
Onda, Labuhn & Rankin Co., L.P.A., Timothy S. Rankin and Benjamin W. Ogg, for appellee Ronald E. Matthews, Trustee.
Melick Law Firm, LLC, and Gregory Hall Melick, for appellee John L. MacDonald.
James R. Douglas and John A. Huettner, for appellants.
{¶1} Defendants-appellants, Regina D'Amore, Christine Dabramo and Rebecca Keith-Jones appeal from a judgment of the Franklin County Court of Common Pleas which denied their motion for summary judgment, granted the summary judgment motion of plaintiffs-appellees, Ronald E. Matthews, Trustee of the J. Harvey Crow Trust u/a dated December 13, 2003 ("Crow Trust"), and John MacDonald, and granted plaintiffs' motion to strike defendant D'Amore's affidavit in support of defendants' motion for summary judgment. Because the trial court properly granted summary judgment to plaintiffs, properly denied defendants' motion for summary judgment, and properly granted plaintiffs' motion to strike D'Amore's affidavit, we affirm.
{¶2} For decades prior to 1998, J. Harvey Crow owned approximately 90 acres of mostly undeveloped land near the city of Brecksville, in Cuyahoga County, Ohio ("Property"). Crow and MacDonald met in 1992. Between 1996 and 1998, MacDonald and Crow met 30-40 times to discuss ways in which they might develop the Property with residential and commercial construction. The two ultimately decided that they would form a limited liability company ("LLC") to develop the Property, that Crow would contribute the Property to the LLC, and that MacDonald would contribute capital to the LLC, obtain investors and tenants, and procure financing to pay off the Property's debts. According to MacDonald, he and Crow were to be the only members of the LLC.
{¶3} D'Amore was Crow's friend, and the two sometimes resided together. Keith-Jones was a commercial realtor. D'Amore and Keith-Jones attended only one of the Crow-MacDonald meetings concerning the formation of the LLC. Dabramo (the nature of whose relationship to Crow was not clearly established) did not attend any of the meetings. According to MacDonald, the defendants' only role regarding the Property was to procure tenants in exchange for a commission; defendants were not to obtain any membership interest in the LLC.
{¶4} On May 7, 1998, defendants signed and filed Articles of Organization for an LLC named Parkwood Place with the Ohio Secretary of State. Therein, defendants stated that they were "desiring to form a limited liability company, under Chapter 1705 of the Ohio Revised Code." The preprinted instructions accompanying the Articles of Organization state, in part, that "[a]rticles will be returned unless accompanied by a written appointment of agent signed by all or a majority of the members of the limited liability company * * *." Also, on May 7, 1998, defendants signed and filed an Original Appointment of Agent with the Ohio Secretary of State, naming Crow as statutory agent for Parkwood Place. The Original Appointment of Agent states that defendants, as the "undersigned," are "at least a majority of the members" of Parkwood Place. The preprinted word ("member") appears beneath each of defendants' signatures. The preprinted instructions accompanying the Original Appointment of Agent state, in part, that "[a]n original appointment of agent form must be signed by at least a majority of the members of the limited liability company." Crow prepared both the Articles of Organization and the Original Appointment of Agent.
{¶5} In June 1998, Crow transferred the property, by general warranty deed, to the LLC. Since that time, Parkwood Place has owned the property.
{¶6} On February 5, 1999, MacDonald and Crow executed a document entitled "Operating Agreement of Parkwood Place, Ltd." Article 2, Section 2.1 of the operating agreement states that the names and addresses of the members are set forth on "Schedule A" attached to the operating agreement. "Schedule A" provides spaces for the members' names, addresses, and capital contributions; however, the spaces are left blank. Article 2, Section 2.2 states that all of the authority of the LLC will be exercised by or under the direction of a management company consisting initially of two managers, Crow and MacDonald.
{¶7} Article 3, Section 3.2 of the operating agreement states that MacDonald entered into a separate agreement, "Exhibit B" (which is incorporated by reference into the operating agreement), setting forth the duties and responsibilities of "each of the two members" of the LLC. "Exhibit B" sets forth a detailed outline of Crow's and MacDonald's interests in, and obligations to, Parkwood Place. More particularly, "Exhibit B" provides that MacDonald initially contributed $25,000 in cash to Parkwood Place and in exchange received 1,000 membership units. "Exhibit B" further provides that MacDonald had procured a 1.35 million dollar bank loan to pay off liens on the property, secured by a mortgage on the property and a promissory note signed by Parkwood Place, MacDonald, and Crow. According to "Exhibit B," MacDonald was to secure investors to pay off the loan for which he would receive an additional 6,000 membership units. "Exhibit B" also provides that Crow initially contributed the property to Parkwood Place and in exchange received 300,000 membership units. "Exhibit B" also sets forth how the LLC's profits would be distributed between Crow and MacDonald. Crow and MacDonald signed the operating agreement as "Members." The operating agreement does not list defendants as members nor is it signed by defendants.
{¶8} The financing arrangement referenced in "Exhibit B" was memorialized in an agreement dated April 24, 1999, which is signed by Crow and MacDonald as "Managing Member[s]" of Parkwood Place. The promissory note was signed by MacDonald and Crow in their individual capacities, and by Crow as "Managing Member" of Parkwood Place. The mortgage was signed by Crow as "Managing Member" of Parkwood Place.
{¶9} On December 13, 2003, the Crow Trust was created. Matthews, Crow's grandson, was named trustee. Crow transferred his entire interest in Parkwood Place to the trust. Crow passed away on August 18, 2004.
{¶10} On August 23, 2004, at defendants' direction, defendants' attorney filed a "Statutory Agent Update" with the Ohio Secretary of State naming himself as the new statutory agent for Parkwood Place. On September 28, 2004, defendants' attorney wrote to Patrick Flanagan, counsel for Parkwood Place, asserting that defendants were the only members of the LLC and that Crow had taken certain actions with regard to Parkwood Place that he was without authority to perform, as he was not a member of the LLC.
{¶11} On December 8, 2004, plaintiffs filed a "Verified Complaint for Monetary Damages, Declaratory Relief, and Injunctive Relief" in the Franklin County Court of Common Pleas, asserting three causes of action. First, plaintiffs sought a declaratory judgment that they, and not defendants, are the only members of the Ohio limited liability company known as Parkwood Place, Ltd. ("Parkwood Place" or "LLC"). Second, plaintiffs sought monetary damages resulting from defendants' alleged fraudulent conduct in holding themselves out to be members of the LLC. Third, plaintiffs sought monetary damages resulting from defendants' alleged tortious interference in plaintiffs' contracts and business relationships arising out of plaintiffs' membership in the LLC. Plaintiffs contemporaneously filed a motion for an ex parte temporary restraining order ("TRO") and a preliminary injunction.
{¶12} Pursuant to plaintiffs' motion, the trial court issued a TRO against defendants, enjoining them from: (1) interfering with plaintiffs' ownership interest in the LLC; (2) interfering with any business of the LLC; (3) interfering in any pending or future legal proceedings involving the LLC; (4) interfering with any agreements or business relationships of the LLC; and (5) taking any actions or otherwise representing to any third party that defendants possess any ownership interest in the LLC. The trial court set plaintiffs' motion for preliminary injunction for hearing before a magistrate.
{¶13} Thereafter, defendants filed a motion to change venue to Cuyahoga County. Via judgment entry filed February 3, 2005, the trial court denied the motion, finding venue to be proper in Franklin County.
{¶14} Following a three-day evidentiary hearing on plaintiffs' motion for a preliminary injunction, the magistrate, on January 31, 2005, filed a decision denying the motion. Plaintiffs filed timely objections to the magistrate's decision.
{¶15} The parties filed cross-motions for summary judgment, and defendants filed a Civ.R. 12(B)(6) motion to dismiss plaintiffs' verified complaint. By decision and entry filed April 19, 2005, the trial court denied the cross-motions for summary judgment as well as defendants' motion to dismiss.
{¶16} Thereafter, plaintiffs and defendants filed renewed motions for summary judgment. The parties agreed that there are no disputed factual issues and that either plaintiffs or defendants are entitled to judgment as a matter of law on the determinative issue in the case, i.e., the identity of the members of Parkwood Place. The pleadings establish that the Property owned by Parkwood Place is valued in excess of $7 million. Plaintiffs supported their motion with the transcript from the January 2005 preliminary injunction hearing and the trial transcript from a 2003 action filed by Crow against D'Amore in the Summit County Court of Common Pleas. Defendants supported their motion with, inter alia, D'Amore's affidavit and a 1995 agreement that...
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...as a member of an LLC but does not sign the operating agreement does not have a membership interest in that LLC. Matthews v. D'Amore , 2006 Ohio 5745 (10th Dist. 2006). In Matthews , the defendants were in discussions to become part of an LLC and signed the Articles of Organization on a for......