ASE Invests., L.L.C. v. Smith

2020 Ohio 3822

• Court: Ohio Court of Appeals
• Decided: July 24, 2020
• Docket: L-19-1182
• Status: Published

Opinion

[Cite as ASE Invests., L.L.C. v. Smith, 2020-Ohio-3822.]

IN THE COURT OF APPEALS OF OHIO SIXTH APPELLATE DISTRICT LUCAS COUNTY

ASE Investments, LLC, et al. Court of Appeals No. L-19-1182

Appellants Trial Court No. CI0201802729

v.

Robert C. Smith, Jr. DECISION AND JUDGMENT

Appellee Decided: July 24, 2020

*****

Jacob M. Lowenstein, for appellants.

John W. Rozic, Jeffrey C. Zilba and Howard B. Hershman, for appellee.

ZMUDA, P.J.

{¶ 1} This accelerated appeal is before the court on appeal from the Lucas County

Court of Common Pleas judgment granting summary judgment in favor of defendant-

appellee Robert C. Smith, Jr. and dismissing the complaint of plaintiffs-appellants

Jeffrey D. Wingate, trustee of the Donna D. Smith Living Trust and ASE Investments,

LLC. For the reasons that follow, we affirm. {¶ 2} Robert Smith was married to Jeffrey Wingate’s mother, Donna D. Smith. In

2002, ASE was formed as a real estate holding company, owning property at 5155

Telegraph Road in Toledo, Ohio. Wingate and Smith dispute who owned ASE from its

inception, with Smith claiming sole membership and control from 2002 until the date of

his divorce from Donna Smith, and Wingate claiming sole ownership and control from

2002 to the present. Robert Smith conveyed $190,000 to ASE to purchase the property.

Wingate characterized the transaction as a “gratuitous” transfer to ASE, used to acquire

the Telegraph Road property. Smith disputes this “gift” to Wingate, arguing he was the

sole member of ASE at the time of purchase.

{¶ 3} In the midst of divorce between Robert and Donna Smith, on January 16,

2008, Robert Smith executed a mortgage for the real property at 5155 Telegraph Road in

Toledo, Ohio, as a member of ASE Investments, LLC. The mortgage purportedly

secured a note in the amount of $190,000 plus interest, and was recorded on January 25,

2008. On July 10, 2009, Robert and Donna Smith entered a stipulated, consent judgment

entry in the divorce proceedings addressing issues related to the division of property.

The entry contained a stipulation concerning ownership of ASE as follows:

Re: ASE MEMBERSHIP INTEREST AND MORTGAGE. The parties

Stipulate and agree and the Court, by execution hereof, does Order Mr.

Robert C. Smith, Jr. to execute any and all documents as may be reasonable

or necessary to transfer and convey 100% of the ownership of ASE

Investments, LLC an Ohio limited liability company, free and clear of all

2. claims of Robert C. Smith, Jr., or any party claiming any interest therein

through him, to Donna D. Smith, or her order, and to execute any and all

documents as may be reasonable or necessary to assign a certain mortgage

issued by ASE Investments, LLC as mortgagee, in the original face amount

of $190,000.00 to Robert C. Smith, Jr., as mortgagor, the “Mortgage.” to

Donna D. Smith, or her order, free and clear of any claims or

encumbrances.

The entry also contained a provision regarding execution of documents, as follows:

Re: EXECUTION OF DOCUMENTS. The parties Stipulate and agree

and the Court, by execution hereof, does Order that each party shall

execute such deeds, titles, documents or other instruments that are

necessary to convey and/or record the title or other interest to each asset

described herein to the person designated herein, free and clear of any claim

by the other; and further, that in the event either party fails to execute the

document(s) required to effectuate the transfers contemplated here, a copy

of this Stipulation shall serve as a conveyance of the respective parties

interest, may be recorded in lieu of any other document of conveyance, and,

in such event, shall be given the full force and effect of a properly drafted,

fully executed document of conveyance, the same as if the document of

conveyance had been duly executed and recorded.

3. {¶ 4} Neither the assignment nor the consent judgment entry were recorded for the

property. In 2013, Donna Smith passed away, leaving Wingate the sole beneficiary of

her estate. On June 12, 2018, ASE and Wingate filed a three-count complaint, alleging

Robert Smith lacked authority to execute the mortgage and failed to assign the mortgage

to Donna Smith as required by the consent judgment entry. The complaint sought

damages based on slander of title (Count I), breach of the consent agreement contained

within the stipulated judgment entry (Count II), and declaratory judgment and order

setting the mortgage aside as invalid and void (Count III).

{¶ 5} Robert Smith filed his answer to the complaint, admitting to executing and

recording the mortgage, but denying the slander of title and breach of consent agreement

allegations. Smith raised affirmative defenses including the bar of the statute of

limitations and accord and satisfaction.

{¶ 6} On January 24, 2019, Robert Smith moved for summary judgment as to all

claims in the complaint, arguing the statute of limitations barred the claim for slander of

title, and his execution and delivery of the assignment barred the claim for breach of the

consent judgment entry. Smith further argued that, even if he failed to execute and

deliver the documents, the consent judgment provided a remedy to effect the assignment

of mortgage. In support, Smith attached a copy of the executed documents, assigning the

mortgage and his interest in ASE and dated September 18, 2009. The documents were

authenticated by an affidavit of his attorney, John Rozic, who attested to preparing the

4. documents for signature, and confirming delivery of the signed documents to the divorce

counsel for Donna Smith.

{¶ 7} As to the claim for declaratory judgment, Smith argued that Wingate and

ASE failed to demonstrate a basis for judgment, as they were on notice of the 2008

recording of the mortgage and failed to file suit before the statute of limitations ran on an

appropriate underlying cause of action arising from the alleged wrongful execution of the

mortgage.

{¶ 8} In response to Smith’s summary judgment motion, Wingate and ASE

requested extensions to file a memorandum in opposition, which the trial court granted up

to March 6, 2019. Wingate and ASE filed no response in opposition to the motion for

summary judgment, and requested no further extensions.

{¶ 9} Instead, on March 7, 2019, Wingate and ASE purported to dismiss Counts I

and II of the complaint pursuant to Civ.R. 41(A)(1), while maintaining suit as to Count

III, their declaratory judgment action.1 They indicated within their “notice of dismissal”

1 A notice of dismissal, pursuant to Civ.R. 41(A)(1), requires dismissal of the entire action, and does not permit a partial, voluntary dismissal of only some claims in the complaint. See, e.g., Pattison v. W.W. Grainger, Inc., 120 Ohio St.3d 142, 2008-Ohio- 5276, 897 N.E.2d 126, ¶ 19-20 (The plain language of Civ.R. 41(A)(1) permits dismissal of all claims against a defendant, without prejudice, with amendment of the complaint the appropriate procedure for dismissing fewer than all claims). Therefore, the attempted partial dismissal of certain claims was without legal effect. As the trial court entered judgment, dismissing the entire complaint, the matter is properly before us as an appeal of a final judgment.

5. that dismissal of the first two counts of the complaint “make the currently pending

motion for summary judgment moot.”

{¶ 10} On March 14, 2019, Wingate and ASE sought leave to amend the

complaint, instanter, in order to asset a quiet title action. Due to the request to amend the

complaint, the trial court vacated the scheduled April 23 trial date. The parties briefed

the issue of amendment, culminating in a response by Wingate and ASE to Smith’s sur-

reply brief. On July 26, 2019, the trial court held a status pretrial, and based on

representations of the parties, vacated the second scheduled trial date of August 28 for

ruling on the pending motions.

{¶ 11} On July 25, 2019, the trial court entered judgment, denying the motion to

amend the complaint to plead a quiet title action, and granting the motion for summary

judgment. Wingate and ASE filed a timely appeal of that judgment, but we remanded the

matter, noting the judgment of the court did not fully adjudicate the matter by including a

remedy consistent with the judgment granted to Robert Smith on summary judgment.

{¶ 12} On October 1, 2019, the trial court entered final judgment, stating, in

pertinent part:

It is further ORDERED, ADJUDGED, and DECREED that [Robert

Smith’s] January 24, 2019 Motion for Summary Judgment is well-taken

and GRANTED, and [Wingate’s and ASE’s] Complaint is DISMISSED.

6. II. Assignments of Error

{¶ 13} Wingate and ASE now appeal the judgment, asserting the following

assignments of error:

I. THE TRIAL COURT ERRED IN [DENYING] THE

APPELLANTS’ MOTION FOR LEAVE TO [AMEND] THE

COMPLAINT AS THE MOTION WAS NOT BROUGHT IN BAD

FAITH, WOULD NOT [CAUSE] UNDUE PREJUDICE OR DELAY,

AND A PRIMA [FACIE] SHOWING OF SUPPORT WAS PROVIDED.

II. THE TRIAL COURT ERRED IN GRANTING SUMMARY

JUDGMENT IN LIEU OF GRANTING THE MOTION TO AMEND THE

COMPLAINT.

III. Analysis

{¶ 14} As part of the assignments of error, Wingate and ASE argue issues of fact

remained regarding the validity of the mortgage executed and recorded by Smith, and the

propriety of a quiet title action to set aside the void mortgage. Additionally, they argue

that an amended complaint would have rendered the motion for summary judgment moot.

Wingate and ASE primarily challenge the validity of the mortgage, arguing Smith’s lack

of authority to execute the document in 2008.

{¶ 15} Smith, in contrast, argued the issues raised regarding the mortgage

execution were time-barred. Furthermore, he argued, the mortgage execution had no

relevance, because Smith executed the assignment in 2009, and the consent judgment

7. entry provided a remedy even if he had failed to execute this assignment. Therefore,

Smith argued, he ceased having any legal interest in the subject property in 2009,

rendering the claims against him without merit.

{¶ 16} We address the assignments of error in turn.

A. Amended Complaint

{¶ 17} Wingate and ASE first argue that the trial court abused its discretion in

denying his motion for leave to file an amended complaint and reframe his claim as a

quiet title action. The rule governing amended pleadings, in this case, required leave of

court to file an amended complaint, but also provided that a “court shall freely give leave

when justice so requires.” Civ.R. 15(A). We review the trial court’s decision for an

abuse of discretion, and will reverse only if we find the trial court acted unreasonably,

arbitrarily, or unconscionably. (Citations omitted.) Wilmington Steel Products, Inc. v.

Cleveland Elec. Illum. Co., 60 Ohio St.3d 120, 122, 573 N.E.2d 622, 624 (1991);

Blakemore v. Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d 1140 (1983). “[W]here a

plaintiff fails to make a prima facie showing of support for new matters sought to be

pleaded, a trial court acts within its discretion to deny a motion to amend the pleading.”

Wilmington Steel at 123.

{¶ 18} Wingate and ASE sought leave to amend the complaint and reframe the

claim as one seeking to quiet title, based on the same facts in the original pleading. The

trial court appropriately considered whether the amendment stated a prima facie claim, in

8. addition to considerations of timeliness and prejudice. Hollinghead v. Bey, 6th Dist.

Lucas No. L-99-1351, 2000 WL 1005205, *9 (July 21, 2000).

{¶ 19} Pursuant to R.C. 5303.01, a quiet title action “may be brought by a person

in possession of real property * * * against any person who claims an interest therein

adverse to him, for the purpose of determining such adverse interest.” In finding no

support for a quiet title action, the trial court noted, “Smith has been precluded by Court

Order, since July 10, 2009, from claiming any interest at all under the subject Mortgage

and, therefore, the proposed quiet title action cannot be maintained against him.”

{¶ 20} In arguing a prima facie quiet title claim, Wingate and ASE argue the 2009

assignment of the mortgage interest to Wingate’s mother constituted the present, adverse

claim to the property contemplated by R.C. 5303.01. In support, they argue that Smith

had no right, in 2008, to execute and record the mortgage that he subsequently assigned.

The factual basis for their claim, as acknowledged by Wingate and ASE, is a 2009

transfer of Smith’s interest to Wingate’s mother. The facts alleged negate the claim.

{¶ 21} A quiet title action is a statutory cause of action, with the purpose to

“conclusively determine the allocation of property interests.” (Citation omitted.)

Ochsenbine v. Cadiz, 166 Ohio App.3d 719, 2005-Ohio-6781, 853 N.E.2d 314, ¶ 13 (7th

Dist.). Wingate and ASE are not claiming that Smith holds any present interest in the

subject property, but instead argue that Smith improperly granted the interest to himself,

and then transferred the interest to Wingate’s mother within the divorce proceedings.

9. Wingate and ASE failed to allege facts in support of a quiet title action against Smith,

who no longer has any interest in the subject property.

{¶ 22} The trial court, therefore, did not abuse its discretion in denying the motion

to file the amended pleading, because the proposed pleading failed to state a prima facie

quiet title action. Accordingly, we need not address whether the request for amendment

was untimely or prejudicial. We find the first assignment of error not well-taken.

B. Summary Judgment

{¶ 23} In the second assignment of error, Wingate and ASE argue that the trial

court erred in granting Smith’s motion for summary judgment, because the trial court

should have granted leave to file the amended pleading. They fail to address the merits

of their remaining claim, however, in the alternative.

{¶ 24} We review a summary judgment decision de novo, applying the same

standard used by the trial court. Grafton v. Ohio Edison, 77 Ohio St.3d 102, 105, 671

N.E.2d 241 (1996). Summary judgment is appropriate where the moving party

demonstrates the absence of issues of material fact, entitlement to judgment as a matter of

law, and that the only reasonable conclusion is judgment in their favor, after weighing the

evidence most favorably for the opposing party. Civ.R. 56(C).

{¶ 25} Wingate and ASE appeared to abandon their claims for slander of title and

breach of the consent judgment entry in response to Smith’s motion for summary

judgment. All that remained was the declaratory judgment action to declare the mortgage

void. Pursuant to R.C. 2721.03, any person may request determination of the validity of

10. a written instrument, “and obtain a declaration of rights, status, or other legal relations

under it.”

{¶ 26} “The purpose of a declaratory judgment action is to dispose of ‘uncertain or

disputed obligations quickly and conclusively,’ and to achieve that end, the declaratory

judgment statutes are to be construed ‘liberally.’” Mid-Am. Fire & Cas. Co. v. Heasley,

113 Ohio St.3d 133, 2007-Ohio-1248, 863 N.E.2d 142, ¶ 8, quoting Ohio Farmers

Indemn. Co. v. Chames, 170 Ohio St. 209, 213, 163 N.E.2d 367 (1959). Even so, there

are limits to liberally construing the statutes, with a declaratory judgment action

permitted only to determine “an actual controversy, the resolution of which will confer

certain rights or status upon the litigants.” Mid-Am. at ¶ 9, quoting Corron v. Corron, 40

Ohio St.3d 75, 79, 531 N.E.2d 708 (1988).

{¶ 27} In this case, the trial court carefully considered the issue in controversy,

and determined the 2009 consent judgment entry “belies the existence of any real,

justiciable controversy” between the parties, as Smith conveyed any interest he may have

had to Donna Smith, either by execution and delivery of the assignment or through the

self-executing provision contained within the consent judgment entry. The trial court,

furthermore, determined it lacked jurisdiction to “entertain collateral attacks” on the

consent judgment entry.

{¶ 28} Having independently reviewed the record, we find no justiciable

controversy between the parties, based on the claims alleged and the language of the

consent judgment entry. Clearly, Smith transferred any interest he may have had in the

11. subject property to Donna Smith, with no evidence indicating otherwise. Accordingly,

Smith was entitled to summary judgment on the declaratory judgment action as a matter

of law. We find the second assignment of error not well-taken.

IV. Conclusion

{¶ 29} Having found substantial justice has been done, we affirm the judgment of

the Lucas County Court of Common Pleas. Appellants Wingate and ASE are ordered to

pay the costs of this appeal pursuant to App.R. 24.

Judgment affirmed.

A certified copy of this entry shall constitute the mandate pursuant to App.R. 27. See also 6th Dist.Loc.App.R. 4.

Thomas J. Osowik, J. _______________________________ JUDGE Christine E. Mayle, J. _______________________________ Gene A. Zmuda, P.J. JUDGE CONCUR. _______________________________ JUDGE

This decision is subject to further editing by the Supreme Court of Ohio’s Reporter of Decisions. Parties interested in viewing the final reported version are advised to visit the Ohio Supreme Court’s web site at: http://www.supremecourt.ohio.gov/ROD/docs/.

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