State ex rel. DeWine v. Roth

• Decision Date: 25 July 2012
• Docket Number: No. 25939.,25939.
• Citation: 977 N.E.2d 112
• Parties: STATE of Ohio, ex rel. Mike DeWINE, Attorney General of Ohio, Appellee, v. 9150 GROUP, L.P., et al., Appellees, v. Edwin M. Roth, Appellant.
• Court: Ohio Court of Appeals

977 N.E.2d 112

STATE of Ohio, ex rel. Mike DeWINE, Attorney General of Ohio, Appellee,

v.9150 GROUP, L.P., et al., Appellees,

v.Edwin M. Roth, Appellant.

No. 25939.

Court of Appeals of Ohio,

Ninth District, Summit County.

July 25, 2012.

David W. Mellot and E. Mark Young, Attorneys at Law, for Appellant.

Robert J. Karl and R. Benjamin Franz, Attorneys at Law, Columbus, for Appellees.

Brian A. Ball, Assistant Attorney General, for Appellee.

MOORE, Judge.

{¶ 1} Appellant, Edwin M. Roth, appeals from the judgment of the Summit County Court of Common Pleas. This Court reverses.

I.

{¶ 2} In 2006, the State of Ohio brought suit alleging environmental violations against 9150 Group and members of the 9150 Group, as the owners of record of real property located in Macedonia, Ohio. These defendants (“Appellees”) filed a third-party complaint for indemnification against the companies that operated at the Macedonia facility from 1988 through 2002, including Aerosol Systems (“Aerosol”) and Specialty Chemical Resources, Inc. (“Specialty”). In the third party complaint, Appellees named Roth, who had served as a director and as an officer of Aerosol and Specialty, as a third party defendant in his individual capacity. Roth, who had not resided in Ohio since 1984, did not answer the complaint and did not appear at the proceedings in this matter.

{¶ 3} In 2010, the State and Appellees settled the State's claims against Appellees and entered into a consent order. Thereafter, Appellees moved for default judgment against certain third party defendants, including Roth. Appellees attached to their motion the affidavit of an environmental consultant, who set forth estimates pertaining to the costs of implementing the environmental actions agreed to in the 2010 consent order. The trial court granted the motion, entering judgment in the amount of $1,740,974.56 in favor of Appellees and against Roth and others.

{¶ 4} Roth filed a motion to vacate the default judgment, arguing that the court lacked personal jurisdiction over Roth in his individual capacity, or, alternatively, that the default judgment should be vacated under Civ.R. 60(B) for excusable neglect in failing to answer the third party complaint. The trial court denied Roth's motion to vacate and Civ.R. 60(B) motion without a hearing. Roth timely filed a notice of appeal and presents one assignment of error for our review.

II.ASSIGNMENT OF ERROR

THE TRIAL COURT ERRED BY DENYING THE MOTION TO VACATE DEFAULT JUDGMENT.

{¶ 5} In his sole assignment of error, Roth argues that the trial court erred in denying his motion to vacate the default judgment rendered against him, as the trial court lacked personal jurisdiction over Roth in his individual capacity. Alternatively, Roth argues that he made sufficient showing of excusable neglect to establish that the default judgment should be vacated pursuant to Civ.R. 60(B).

{¶ 6} A judgment rendered by a court that lacks personal jurisdiction over a defendant is void. Maryhew v. Yova, 11 Ohio St.3d 154, 156, 464 N.E.2d 538 (1984). An objection to the lack of jurisdiction over a person generally must be raised either in the defendant's answer or in a motion filed prior to the filing of an answer. Franklin v. Franklin, 5 Ohio App.3d 74, 75–76, 449 N.E.2d 457 (7th Dist.1981). However, if the defendant does not appear in the action, the defense is not waived for failing to object. Maryhew, 11 Ohio St.3d at 156–159, 464 N.E.2d 538 (defendant had not submitted to the court's jurisdiction, where submission to jurisdiction would have waived the issue of lack of personal jurisdiction), and Mortgage Lenders Network USA, Inc. v. Riggins, 9th Dist. No. 22901, 2006-Ohio-3292, 2006 WL 1751251 (trial court acquired personal jurisdiction over appellant when she made a voluntary appearance in the matter).

{¶ 7} Therefore, where the defendant has not made an appearance in the matter, the defendant may challenge the judgment as void for lack of personal jurisdiction by filing a common law motion to vacate or to set aside the judgment. CompuServe v. Trionfo, 91 Ohio App.3d 157, 161, 631 N.E.2d 1120 (10th Dist.1993). “A party should not file a Civ.R. 60(B) motion for relief from judgment in order to have the void judgment vacated or set aside, since Civ.R. 60(B) motions apply only to judgments that are voidable rather than void.” Beachler v. Beachler, 10th Dist. No. CA2006–03–007, 2007-Ohio-1220, 2007 WL 805526, ¶ 18;see also Thomas v. Fick, 9th Dist. No. 19595, 2000 WL 727531, *2 (June 7, 2000). This is because “[t]he power to vacate a void judgment does not arise from Civ.R. 60(B), but rather, from an inherent power possessed by the courts in this state.” Thomas, quoting Patton v. Diemer, 35 Ohio St.3d 68, 518 N.E.2d 941 (1988), paragraph four of the syllabus. Therefore, a common law motion to vacate a void judgment need not meet the standards applicable to a Civ.R. 60(B) motion. See Thomas;see also CompuServe, 91 Ohio App.3d at 161, 631 N.E.2d 1120 (insignificant that a common law motion to vacate is mistakenly styled as a Civ.R. 60(B) motion).

{¶ 8} In his motion to vacate for lack of personal jurisdiction, Roth argued that the trial court lacked personal jurisdiction over him in his individual capacity. “Challenges to a trial court's jurisdiction present questions of law and are reviewed by this Court de novo.” (Citation and quotations omitted). Eisel v. Austin, 9th Dist. No. 09CA009653, 2010-Ohio-816, 2010 WL 759231, ¶ 8. “Once a defendant has challenged the trial court's personal jurisdiction over him or her, the plaintiff bears the burden of proving jurisdiction by a preponderance of the evidence.” (Internal citations and quotations omitted.) ComDoc v. Advance Print Copy Ship Ctr., 9th Dist. No. 24212, 2009-Ohio-2998, 2009 WL 1799228, ¶ 3.

{¶ 9} In determining whether a state court has personal jurisdiction over a non-resident defendant, courts engage in a two-prong analysis. U.S. Sprint Communications Co. Ltd. Partnership v. Mr. K's Foods, Inc., 68 Ohio St.3d 181, 183, 624 N.E.2d 1048 (1994). As to the first prong, we must determine if Ohio's “long-arm” statute and civil rules apply to confer personal jurisdiction. Id. at 184, 624 N.E.2d 1048. If so, we must determine if application of personal jurisdiction “would deprive the defendant of the right to due process of law pursuant to the Fourteenth Amendment to the United States Constitution.” Id.

{¶ 10} Ohio's long-arm statute is set forth in R.C. 2307.382. This statute authorizes personal jurisdiction of Ohio courts over persons who take certain actions creating relationships with Ohio, including transacting business or causing tortious injury in this state. R.C. 2307.382(A)(1), (A)(3), and (A)(4); see alsoCiv.R. 4.3(A)(1), (A)(3), and (A)(4) (allowing service of process on nonresident defendants who transact business or cause tortious injury in Ohio). As used in the long-arm statute and Civ.R. 4.3, “ ‘transactingbusiness in this state’ connotes a broad statement of jurisdiction.” Joffe v. Cable Tech, Inc., 163 Ohio App.3d 479, 2005-Ohio-4930, 839 N.E.2d 67, ¶ 15 (10th Dist.), citing Kentucky Oaks Mall Co. v. Mitchell's Formal Wear, Inc. 53 Ohio St.3d 73, 75, 559 N.E.2d 477 (1990). However, when jurisdiction over a party is based upon the long-arm statute, “only a cause of action arising from acts enumerated in th[at] section may be asserted against him.” R.C. 2307.382(C).

{¶ 11} Here, the trial court determined that “[t]he same facts that give rise to jurisdiction over the corporations—that the parties engaged in the generation, storage and disposal of hazardous waste in violation of environmental law within Summit County, Ohio—are the same facts which justify jurisdiction over[ ]Roth as an individual.” However, Roth argues that personal jurisdiction over him was precluded by the fiduciary shield doctrine. Roth contends that this doctrine prevents a court from exercising personal jurisdiction over a corporate agent, when the claims are based upon the agent's official actions. Therefore, Roth maintains that the trial court could not exercise jurisdiction over him in his individual capacity where the jurisdiction was premised upon alleged activities that Roth performed in his official capacity.

{¶ 12} Similar to Roth's interpretation of the fiduciary shield doctrine, the Seventh District Court has described the doctrine as preventing “the court from considering an individual's acts done in an official capacity when analyzing whether the individual is subject to personal jurisdiction in the forum state.” State ex rel. De Wine v. S & R Recycling, Inc., 195 Ohio App.3d 744, 2011-Ohio-3371, 961 N.E.2d 1153, ¶ 27 (7th Dist.); see also Interior Servs., Inc. v. Iverson, 1st Dist. No. C–020501, 2003-Ohio-1187, 2003 WL 1093982, ¶ 12 (“in determining personal jurisdiction over Iverson as an individual, we must look at his actions taken only as an individual”). However, other districts have phrased the doctrine to provide that “jurisdiction over individual officers of a partnership or corporation cannot be based merely on jurisdiction over that partnership or corporation.” (Emphasis added.) Galloway v. Lorimar Motion Picture Mgmt., Inc., 55 Ohio App.3d 78, 83, 562 N.E.2d 949 (5th Dist.1989). See also Balance Dynamics Corp. v. Schmitt Industries, Inc., 204 F.3d 683, 698 (6th Cir.2000) quoting Weller v. Cromwell Oil Co., 504 F.2d 927, 929 (6th Cir.1974). Based upon the latter phrasing of the doctrine, courts have determined that an individual's status as a director or officer of a corporation alone does not preclude a court's exercise of jurisdiction over the officer individually. Intera Corp. v. Henderson, 428 F.3d 605, 616 (6th Cir.2005), and Balance Dynamics, 204 F.3d at 698. Although these interpretations appear to be in conflict, the United States District Court for the Northern District of Ohio reconciled similar interpretations by determining that, “while Ohio courts recognize the fiduciary...