MJM Holdings Inc. v. Sims

• Decision Date: 13 February 2019
• Docket Number: No. 28952,28952
• Citation: 2019 Ohio 514,130 N.E.3d 1093
• Parties: MJM HOLDINGS INC., Appellant v. David Michael SIMS, et al., Defendants and Dickinson & Wheelock PC, et al., Appellees
• Court: Ohio Court of Appeals

130 N.E.3d 1093

2019 Ohio 514

MJM HOLDINGS INC., Appellant

v. David Michael SIMS, et al., DefendantsandDickinson & Wheelock PC, et al., Appellees

No. 28952

Court of Appeals of Ohio, Ninth District, Summit County.

Dated: February 13, 2019

CLAIR E. DICKINSON and CHRISTOPHER T. TEODOSIO, Attorneys at Law, Akron, for Appellant.

STEPHEN J. PRUNESKI, Attorney at Law, Akron, for Appellees.

DECISION AND JOURNAL ENTRY

CALLAHAN, Judge.

{¶1} Appellant, MJM Holdings Inc. ("MJM"), appeals from the judgment of the Summit County Common Pleas Court in favor of Appellees, Thomas Dickinson and Dickinson & Wheelock PC (collectively "the Dickinson defendants"). For the reasons set forth below, this Court reverses.

I.

{¶2} On April 24, 2014, MJM, an Ohio corporation, entered into a written loan agreement and promissory note with David Sims,¹ a citizen of Nevada who had business interests in Texas. Thomas Dickinson, an attorney licensed in Texas ("attorney Dickinson"), and Dickinson & Wheelock PC, a law firm based in Texas ("the Dickinson law firm"), participated in the drafting and negotiating of various loan documents on behalf of Mr. Sims.

{¶3} MJM loaned Mr. Sims $ 275,000, plus a $ 5,000 loan processing fee. To secure the loan, Mr. Sims, in his capacity as an authorized representative of Platinum Premier Corporation Limited ("Platinum Premier Corp."), a Gibraltar entity, executed a security agreement in which Platinum Premier Corp. provided MJM with a first priority security interest in a yacht. Mr. Sims also provided MJM with a Platinum Premier Corporation Limited Officers' Certificate which certified that Mr. Sims was the president and chief executive officer of Platinum Premier Corp. Before entering into this loan, MJM requested, and its counsel received, an opinion letter from the Dickinson defendants, as counsel for Platinum Premier Corp., confirming the validity of the lien on the yacht. Mr. Sims subsequently defaulted on the note, and MJM sued Mr. Sims for breach of contract, fraud, and rescission and the Dickinson defendants for fraud/collusion and negligent misrepresentation.

{¶4} After filing an answer, the Dickinson defendants moved to dismiss, or alternatively, for judgment on the pleadings, on three bases: 1) the trial court lacked personal jurisdiction over the Dickinson defendants, 2) MJM failed to state a claim against the Dickinson defendants upon which relief could be granted, and 3) MJM failed to join necessary parties. Once the briefs were submitted, the trial court scheduled an evidentiary hearing as to the legal issue of personal jurisdiction. Following the hearing, the trial court dismissed MJM's complaint as to the Dickinson defendants for lack of personal jurisdiction. The trial court certified that there was no just reason to delay an appeal of its order and stayed the remainder of the case.

{¶5} MJM timely appeals from this judgment entry, asserting one assignment of error. The Dickinson defendants have also filed an assignment of error.

II.

MJM'S ASSIGNMENT OF ERROR

THE TRIAL COURT INCORRECTLY GRANTED [THE DICKINSON DEFENDANTS'] MOTION TO DISMISS [MJM'S] COMPLAINT AGAINST THEM FOR LACK OF PERSONAL JURISDICTION.

{¶6} MJM argues that the trial court erred in dismissing its complaint against the Dickinson defendants for lack of personal jurisdiction. This Court agrees.

{¶7} Whether personal jurisdiction exists is a question of law that is reviewed de novo. Kauffman Racing Equip, L.L.C. v. Roberts , 126 Ohio St.3d 81, 2010-Ohio-2551, 930 N.E.2d 784, ¶ 27. Accord Goodrich Corp. v. Polyone Corp. , 9th Dist. Summit, 2016-Ohio-1068, 60 N.E.3d 858, ¶ 12. A de novo review encompasses an independent examination of the trial court's decision without deference to the underlying decision.

Ohio Receivables, L.L.C. v. Landaw , 9th Dist. Wayne No. 09CA0053, 2010-Ohio-1804, 2010 WL 1643594, ¶ 6, quoting State v. Consilio , 9th Dist. Summit No. 22761, 2006-Ohio-649, 2006 WL 335646, ¶ 4.

{¶8} This Court applies a two-part inquiry when deciding whether an out-of-state defendant is subject to personal jurisdiction in an Ohio court. Goodrich Corp. at ¶ 13, quoting Fraley v. Estate of Oeding , 138 Ohio St.3d 250, 2014-Ohio-452, 6 N.E.3d 9, ¶ 12. " ‘First, the court must determine whether the defendant's conduct falls within Ohio's long-arm statute or the applicable civil rule. If it does, then the court must consider whether the assertion of jurisdiction over the nonresident defendant would deprive the defendant of due process of law under the Fourteenth Amendment to the United States Constitution.’ " (Internal citations omitted sic.). Id.

{¶9} The burden of proving that personal jurisdiction exists rests with the plaintiff. ComDoc v. Advance Print Copy Ship Ctr. , 9th Dist. Summit No. 24212, 2009-Ohio-2998, 2009 WL 1799228, ¶ 3. Upon the filing of a motion to dismiss for lack of personal jurisdiction, the trial court has the discretion to rule upon the motion with or without a hearing. See Giachetti v. Holmes , 14 Ohio App.3d 306, 307, 471 N.E.2d 165 (8th Dist.1984). When the court decides the issue of personal jurisdiction without a hearing, the factual allegations relevant to personal jurisdiction are construed in favor of the plaintiff and the plaintiff must only present a prima facie showing of personal jurisdiction. See Herbruck v. LaJolla Capital , 9th Dist. Summit No. 19586, 2000 WL 1420282, *2 (Sept. 27, 2000). However, since the issue of jurisdiction is often not apparent from the face of the pleadings, the trial court may conduct an evidentiary hearing. See Sherry v. Geissler U. Pehr GmbH , 100 Ohio App.3d 67, 72, 651 N.E.2d 1383 (8th Dist.1995). When an evidentiary hearing is held, the plaintiff must prove by a preponderance of the evidence that jurisdiction exists. Id.

Ohio's Long-Arm Statute and Civ.R. 4.3

{¶10} Ohio's long-arm statute sets forth nine specific acts by a defendant which give rise to personal jurisdiction. R.C. 2307.382(A). Civ.R. 4.3(A), which parallels the long-arm statute, is a complementary rule governing service of process upon a person who is outside of Ohio. See Kauffman Racing Equip., L.L.C. , 126 Ohio St.3d 81, 2010-Ohio-2551, 930 N.E.2d 784, at ¶ 35.

{¶11} In support of personal jurisdiction, MJM relies upon R.C. 2307.382(A)(1) and (6), which provide as follows:

(A) A court may exercise personal jurisdiction over a person who acts directly or by an agent, as to a cause of action arising from the person's:

(1) Transacting any business in this state;

* * *

(6) Causing tortious injury in this state to any person by an act outside this state committed with the purpose of injuring persons, when he might reasonably have expected that some person would be injured thereby in this state[.]

Additionally, MJM cites to Civ.R. 4.3(A)(1) and (9), the corresponding rules for service of process upon nonresidents, which state:

(A) * * * Service of process may be made outside of this state, as provided in this rule, in any action in this state, upon a person who, at the time of service of process, is a nonresident of this state or is a resident of this state who is absent from this state. "Person" includes an individual, an individual's executor, administrator, or other personal representative, or a corporation, partnership, association, or any other legal or commercial entity, who, acting directly or by an agent, has caused an event to occur out of which the claim that is the subject of the complaint arose, from the person's:

(1) Transacting any business in this state;

* * *

(9) Causing tortious injury in this state to any person by an act outside this state committed with the purpose of injuring persons, when the person to be served might reasonably have expected that some person would be injured by the act in this state[.]

MJM asserts there is personal jurisdiction over the Dickinson defendants because MJM's claims for fraud/collusion and negligent misrepresentation against the Dickinson defendants "grow directly out of the letter Mr. Dickinson sent to MJM Holdings in Ohio and the transactions negotiated by [the Dickinson defendants]."

R.C. 2307.382(A)(1) / Civ.R. 4.3(A)(1)

{¶12} The Ohio Supreme Court has recognized " ‘transacting any business’ " as being "a broad statement of jurisdiction" and questions concerning the application of R.C. 2307.382(A)(1) are resolved upon " ‘highly particularized fact situations, thus rendering any generalization unwarranted.’ " U.S. Sprint Communications Co. Ltd. Partnership v. Mr. K's Foods, Inc. , 68 Ohio St.3d 181, 185, 624 N.E.2d 1048 (1994), quoting 22 Ohio Jurisprudence 3d, Courts and Judges, Section 280 (1980). Thus, a court must determine, case-by-case, whether a nonresident is transacting business in the state of Ohio. U.S. Sprint at 185, 624 N.E.2d 1048. Accord Herbruck , 2000 WL 1420282, at *2.

{¶13} In light of the broad nature of the statutory phrase "transacting any business," this Court has applied the definition adopted by the Ohio Supreme Court. See Morgan Adhesives Co. v. Sonicor Instrument Corp. , 107 Ohio App.3d 327, 332, 668 N.E.2d 959 (9th Dist.1995), citing Goldstein v. Christiansen , 70 Ohio St.3d 232, 236, 638 N.E.2d 541 (1994) ; Herbruck at *2. In Kentucky Oaks Mall Co. v. Mitchell's Formal Wear, Inc. , 53 Ohio St.3d 73, 75, 559 N.E.2d 477 (1990), the Ohio Supreme Court determined that the word " ‘[t]ransact’ " in the context of the long-arm statute means " ‘to prosecute negotiations; to carry on business; to have dealings’ " and it " ‘is a broader term than the word "contract." ’ " (Emphasis deleted.) Id. , quoting Black's Law Dictionary 1341 (5th Ed.1979).

{¶14} Transacting business in Ohio does not require the nonresident party to have a physical presence in Ohio. See Kentucky Oaks Mall Co. at 76, 559 N.E.2d 477. One factor that may be considered, but is not determinative as to transacting business, is whether the nonresident initiated the business dealing. Barnabus Consulting Ltd. v. Riverside Health Sys., Inc. , 10th Dist. Franklin No. 07AP-1014, 2008-...