Torrance v. Rom
| Decision Date | 06 August 2020 |
| Docket Number | No. 108818,108818 |
| Citation | 2020 Ohio 3971,157 N.E.3d 172 |
| Parties | Ronald TORRANCE, et al., Plaintiffs-Appellants, v. Davor ROM, et al., Defendants-Appellees. |
| Court | Ohio Court of Appeals |
DJKovach Law, L.L.C., and David J. Kovach, Cleveland, for appellant.
Blocker Law, L.L.C., and David S. Blocker, for appellees.
JOURNAL ENTRY AND OPINION
EILEEN T. GALLAGHER, A.J.:
{¶ 1} Plaintiff-appellant, Ronald Torrance ("Torrance"), appeals from the trial court's judgment dismissing his complaint against defendants-appellees (collectively "the appellees"), IIP Management, L.L.C. ("IIPM") and Violetta Varenkova ("Varenkova"), pursuant to Civ.R. 12(C). Torrance raises the following assignment of error for review:
1. The trial court committed reversible error when, pursuant to Civ.R. 12(C), Ohio Rules of Civil Procedure, it dismissed the claims for (1) breach of property-management agreements, (2) breach of fiduciary duty, (3) violation of the Ohio Deceptive Trade Practices Act, and (4) civil conspiracy which Torrance asserted against appellees.
{¶ 2} After a careful review of the record and relevant case law, we affirm in part, reverse in part, and remand for further proceedings consistent with this opinion. The trial court did not err by dismissing Torrance's claims for breach of contract and breach of fiduciary duty because Torrance does not have standing to pursue these claims against the appellees. However, construing the material allegations in the complaint in favor of Torrance as true, we are unable to conclude, beyond doubt, that Torrance could prove no set of facts in support of his claims for violation of the Ohio Deceptive Trade Practices Act ("ODTPA") and civil conspiracy that would entitle him to relief. Accordingly, we find the trial court erred in dismissing these claims pursuant to Civ.R. 12(C).
{¶ 3} This civil action stems from allegations that Torrance was defrauded by the appellees and their codefendants Davor Rom ("Davor"), Daniel Rom ("Daniel"), Anthony Halsall ("Halsall"), Assets Unlimited, L.L.C. ("Assets Unlimited"), IIP Ohio, L.L.C. ("IIP Ohio"), IIP Cleveland Regeneration, L.L.C. ("ICR"), IIP Cleveland Regeneration 2, L.L.C. ("ICR2"), Property Hotline, L.L.C. ("PH-Ohio"), and Property Hotline Ltd. ("PH-England") (collectively "the defendants").
{¶ 4} Torrance is a resident and citizen of Scotland. On November 11, 2014, the limited liability company, Realty World Traders, L.L.C. ("RWT"), was organized to facilitate Torrance's real-estate investments in Ohio. Torrance was the sole member of RWT until he sold his membership interest in the company in April 2017.
{¶ 5} IIPM is a property management company that provides certain services for property owners, including rent collection, property maintenance, property repairs, and the disbursement of contractual mortgage payments, property taxes, special assessments, and insurance premiums. During relevant time periods of this case, Varenkova served as the director of operations for IIPM.
{¶ 6} Prior to the organization of RWT, Torrance entered into a purchase and sale agreement with ICR on November 4, 2014, for real property located on Greenhurst Drive in Maple Heights, Ohio (the "Greenhurst property"). On the same date, Torrance entered into two separate purchase and sale agreements with ICR2 for real property located on Beachview Drive in Euclid, Ohio (the "Beachview property"); and Corkhill Road in Maple Heights, Ohio (the "Corkhill property"). Each purchase and sale agreement identified the "buyer" as Torrance "or his designee." RWT subsequently became the designee under the agreements. Thus, title to each property was transferred to RWT by limited warranty deed in February 2015.
{¶ 7} The investment properties were advertised on a website, www.investorincomeproperties.com, which was "employed by defendant[s] Assets Unlimited, IIP Ohio, and other limited liability companies that Davor Rom owned, directly or indirectly." The properties were marketed as "hands-free, turnkey, renovated, fully-tenanted, and professionally managed to produce net returns of investment greater than 18%." The "mission statement" displayed on the website promised "a comprehensive process for the acquisition, stabilization, management, and performance of investment properties with 10-20% return on investment." "Our team," the website declared, "handles the entire purchase and management process, providing an essentially automated stream of income and increased [return on investment] levels delivered hands-free and turnkey to [Investor Income Properties] clients."
{¶ 8} On February 16, 2015, RWT entered into separate property-management agreements with IIPM for the Greenhurst and Corkhill properties. On February 27, 2015, RWT entered into a third property-management agreement with IIPM for the Beachview property. Each property-management agreement identified RWT as the property "owner." The agreements required IIPM to provide property management services for each property. In exchange, RWT was required to pay IIPM management fees and 10 percent of gross collected rents. The agreements were signed by Torrance in his capacity as the owner of RWT.
{¶ 9} Having received substantially less return on the investments than had been "promised, assured, or otherwise represented," Torrance and RWT filed a civil complaint against the defendants on July 5, 2018. In general, the complaint alleged that, through a series of misrepresentations or concealments, Torrance was fraudulently induced to (1) create RWT, (2) purchase the subject properties, and (3) enter into the property-management agreements with IIPM.
{¶ 10} The complaint asserted causes of action for fraudulent inducement of the purchase and sale agreements (Count 1), negligent misrepresentation of the purchase and sale agreements (Count 2), fraudulent inducement of the property-management agreements (Count 3), negligent misrepresentation of the property-management agreements (Count 4), breach of the property-management agreements (Count 5), breach of fiduciary duty (Count 6), violations of the ODTPA (Count 7), and civil conspiracy (Count 8). Relevant to this appeal, the appellees were only named in Counts 5, 6, 7, and 8 of the complaint.
{¶ 11} As stated, Torrance sold his interest in RWT to a third party in April 2017. By September 2018, RWT voluntarily dismissed all claims against the defendants with prejudice. Accordingly, Torrance filed an amended complaint, raising the same causes of action against the defendants in his individual capacity.
{¶ 12} On January 4, 2019, IIPM and Varenkova filed a joint motion for judgment on the pleadings pursuant to Civ.R. 12(C). The appellees argued that Torrance does not have standing to assert claims arising from the property-management agreements entered into between RWT and IIPM because Torrance was not a party to the agreements. Alternatively, the appellees argued that Torrance's claims were barred by res judicata because RWT dismissed all of its claims against each defendant with prejudice, resulting in a final judgment on the merits.
{¶ 13} On February 4, 2019, Torrance filed a brief in opposition, arguing that he has standing to pursue the claims against the appellees because he has a personal stake in the outcome of the claims. He noted that he invested $48,630 of his own money and assumed an additional $118,170 in debt to purchase the subject properties. In addition, Torrance argued that he is a third-party beneficiary under the property-management agreements with IIPM.
{¶ 14} On February 6, 2019, Torrance sought leave of court to file a second amended complaint. On February 22, 2019, the trial court issued an order adopting the parties' stipulation that the appellees' motion for judgment on the pleadings would apply to a second amended complaint that Torrance intended to file. On February 28, 2019, Torrance filed a second amended complaint, setting forth the same causes of action against the defendants.
{¶ 15} In an opinion and order dated March 25, 2019, the trial court granted the appellees' motion and dismissed all counts pertaining to IIPM and Varenkova. The trial court determined that Torrance lacked standing to pursue the claims against IIPM and Varenkova because he was neither a party to, nor a beneficiary of, the property-management agreements between RWT and IIPM. The court stated, in relevant part:
{¶ 16} Codefendants Davor, Daniel, Halsall, and their various real estate companies filed separate motions to dismiss pursuant to Civ.R. 12. These motions were addressed in the trial court's March 25, 2019 judgment entry. As to these codefendants, the trial court dismissed Counts 3, 4, 5, and 6. However, the trial court determined that it was premature to dismiss Counts 1, 2, 7, and 8 against these codefendants. Accordingly, portions of Torrance's complaint remain pending against the codefendants.
{¶ 17} Torrance now appeals from the trial court's judgment dismissing all claims against IIPM and Varenkova.
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