Peat Marwick Main & Co. v. John Elliott and Amfm, Inc.

• Decision Date: 10 January 1991
• Docket Number: 90AP-921,91-LW-1941
• Citation: Peat Marwick Main & Co. v. John Elliott and Amfm, Inc., 90AP-921, 91-LW-1941 (Ohio App. Jan 10, 1991)
• Parties: PEAT MARWICK MAIN & CO., Plaintiff-Appellant, v. JOHN ELLIOTT AND AMFM, INC. et al., Defendants-Appellees. Case
• Court: Ohio Court of Appeals

PEAT MARWICK MAIN & CO.Plaintiff-Appellant, v. JOHN ELLIOTT AND AMFM, INC. et al Defendants-Appellees.

No. 90AP-921

91-LW-1941 (10th)

Court of Appeals of Ohio, Tenth District Franklin.

January 10, 1991

APPEAL from the Franklin County Common Pleas Court

Vorys Sater, Seymour & Pease, Mr. Carl D. Smallwood, Mr. Philip A. Brown, and Mr. David B. Petrel, for appellant,

Means, Bichler, Burkholder & Baker Co., L.P.A., and Mr. Robert W. Morrow, for appelleesJohn Elliott and AMFM, Inc. et al.,

Bricker & Eckler, Mr. Charles D. Smith and Mr. Kenneth C. Johnson, for appelleeCecil Nichols,

Hoyer, Hoyer & Smith, and Mr. Christopher S. Smith, for appellee.

BRYANT J.

Plaintiff-appellant, Peat Marwick Main & Co., appeals from a judgment of the Franklin County Court of Common Pleas dismissing plaintiff's action in declaratory judgment.

Plaintiff's single assignment of error states:

"The trial court abused its discretion by sua sponte dismissing plaintiff's complaint because:

"1.Ohio was the first state to acquire jurisdiction over this dispute;

"2.The trial court used an inappropriate rationale to justify dismissal; and

"3.The trial court failed to make findings necessary for any proper refusal to decide a declaratory judgment action."

Defendants-appellees herein instituted an action against Main Hurdman and Arthur Young & Company in the United States District Court for the Southern District of West Virginia, alleging that those entities had breached their contracts with defendants, had negligently performed their obligations thereunder, and had fraudulently misrepresented their ability to perform.While that action was pending in West Virginia, plaintiff herein, the successor-in-interest via merger to the public accounting firm of KMG Main Hurdman, filed this action against defendants in the Franklin County Court of Common Pleas seeking declaratory relief regarding its performance under the contracts at issue in the West Virginia litigation.Specifically, plaintiff alleged that the "work performed on the engagements satisfied applicable standards, satisfied the terms of the contractual relationship, and were otherwise properly performed under the circumstances ***."As a result, plaintiff sought a declaratory judgment holding that plaintiff and its predecessor-in-interest "satisfied applicable professional standards in the course of the referenced engagements ***."

Given the pending action in West Virginia, which was subject to a motion to dismiss for lack of jurisdiction, the trial court stayed the present action pending determination of the Jurisdictional issue in West Virginia.When the district court dismissed the West Virginia action for lack of diversity jurisdiction, plaintiff herein applied to the trial court to lift the previously imposed stay.In the meantime, defendants refiled their West Virginia action in the statecourt of West Virginia.

On consideration of the matter, the trial courtsua sponte dismissed plaintiff's action, finding as follows:

"After the defendants filed a complaint in Federal Court, Peat Marwick filed this action for declaratory judgment.Undoubtedly, Peat Marwick was attempting to deprive the defendants of their day in court, so to speak, by obtaining a declaration that they were not' negligent.This Court refused to entertain a declaratory judgment action which would prejudice the defendants in presenting their negligence action in West Virginia.Furthermore, the Court, in the exercise of sound discretion, may choose not to entertain a declaratory judgment action where 'the resolution of the controversy involved *** depends largely on a determination of the facts,'[citation omitted].Again, the Court feels that the existence or absence of negligence on the part of Peat Marwick is more appropriately raised in a negligence action."

Plaintiff appeals therefrom, asserting that the trial court, for three separate reasons, must be reversed in its dismissal of plaintiff's complaint.In response, defendants contend that plaintiff is not entitled to declaratory judgment as a matter of right, and dismissal of plaintiff's complaint was not an abuse of discretion; that, given the sequence of events, the trial court properly determined that declaratory relief was not appropriate in this action; that, given no clear abuse of discretion herein, the trial court's dismissal of plaintiff's complaint should not be reversed; and that the common-law adoption of forum non conveniens supports the trial court's dismissal of plaintiff's complaint.The threshold issue before us is whether plaintiff's complaint presents a proper claim for declaratory judgment.A proper claim for declaratory relief must present: (1) a real controversy between the parties; (2) a controversy which is justifiable in character; and (3) a situation in which speedy relief is necessary to preserve the rights of the parties.Burger Brewing Co. v. Liquor Control. Comm.(1973), 34 Ohio St. 2d 93, 97;Buckeye Quality Care Centers, Inc. v. Fletcher(1988), 48 Ohio App. 3d 150, 154.Furthermore, the existence of other remedies does not necessarily bar an action for declaratory judgment if, in addition to the three prongs of Burger Brewing,the trial court"in the exercise of sound discretion, finds that the action is within the spirit of the Uniform Declaratory Judgments Act ***."Schaefer v. First Natl. Bank(1938), 134 Ohio St. 511, paragraph three of the syllabus.Because other remedies, including defense of the West Virginia negligence action, are available to plaintiff herein, we must determine whether plaintiff's claim for declaratory judgment satisfies the foregoing standard.

We first consider whether the action is within the spirit of the Declaratory Judgment Act, R.C. 2721, which "was fashioned to provide remedies where none exists, in the situation where a particular controversy has not advanced to the point where a conventional remedy is reasonably available."D. H. Overmyer Telecasting Co. V. American Home Assurance Co.(1986), 20 Ohio App. 3d 31, 32.The purpose of the Declaratory Judgment Act is:

"* * * [T]o provide an immediate remedy for the solution of legal rights where a cause of action has not yet accrued or where such legal rights exist but must await some act by others or the passing of time before the right of action can be asserted."Murray v. McCrystal(1955), 99 Ohio App. 441, 446.

Thus, claims within the spirit of the Declaratory Judgment Act include those to ascertain the rights of the parties before either a cause of action has matured, State, ex rel. Wilson, v. Preston(1962), 173 Ohio St. 203, 209, or before an adverse party who may be entitled to coercive relief files suit.SeeSchaefer, supra, at 519.

Plaintiff's claim for declaratory relief does not seek to ascertain the rights of the...