[Cite as Aurora Hill, Ltd. v. Bremner, 2023-Ohio-3766.]
IN THE COURT OF APPEALS OF OHIO ELEVENTH APPELLATE DISTRICT PORTAGE COUNTY
AURORA HILL, LTD., CASE NO. 2023-P-0005
Plaintiff-Appellant, Civil Appeal from the - vs - Court of Common Pleas
JOHN BREMNER, Trial Court No. 2021 CV 00185 Defendant-Appellee.
OPINION
Decided: October 16, 2023 Judgment: Affirmed
Joseph P. Szeman, Hennig, Szeman & Klammer Co., LPA, The Matchworks Building, 8500 Station Street, Suite 245, Mentor, OH 44060 (For Plaintiff-Appellant).
Gerrit M. denHeijer, Giulitto Law Office, 222 West Main Street, P.O. Box 350, Ravenna, OH 44266 (For Defendant-Appellee).
ROBERT J. PATTON, J.
{¶1} Appellant, Aurora Hill, Ltd. (“Aurora Hill”), appeals from the judgment of the
Portage County Court of Common Pleas, granting summary judgment in favor of
appellee, John Bremner, on Aurora Hill’s claim seeking recovery of partnership funds
which it claims were improperly retained by appellee in violation of the limited partnership
agreement to which the parties were subject. At issue is whether the trial court properly
determined there is no genuine issue of material fact to be litigated on Aurora Hill’s underlying complaint alleging it was entitled to restitution such that appellee is entitled to
judgment as a matter of law. We affirm.
{¶2} The facts in this matter are in large part undisputed. Appellee is a resident
of Illinois who is a commodities trader. Argo Wealth Management, Inc. (“Argo”) is the
general partner of appellant. Aurora Hill is governed by a partnership agreement.
{¶3} On January 16, 2019, appellee executed a subscription agreement to
become a limited partner of Aurora Hill. The partnership agreement provides, in pertinent
part:
After the Partnership begins operations, an investor will become a Limited Partner in the Partnership on the first day of the month following receipt by the Partnership of the investor’s capital contribution and acceptance by the General Partner of such investor’s executed Limited Partnership Agreement, Subscription Agreement/Power of Attorney, Purchaser Questionnaire and any other documents required by the General Partner (collectively, the “subscription documents”) no less than five (5) days preceding the first day of the month.
{¶4} On February 1, 2019, Aurora Hill sent a letter to appellee accepting him as
a limited partner. Appellee invested $200,000 into the partnership. Notwithstanding the
above, Argo did not admit appellee into the limited partnership until March 1, 2019.
Appellee was made aware by Argo he was not admitted to the partnership in mid-
February. Apparently, appellee was contacted by the president of Argo who advised him
that, due to advice from Argo’s attorney, Argo did not invest his funds on February 1, 2019
for failure to disclose a specific fund in the limited partnership. According to appellee,
Argo’s president represented that appellee would become a participating member of the
limited partnership starting March 1, 2019.
Case No. 2023-P-0005 {¶5} Aurora Hill experienced significant losses in the month of February 2019
which caused a substantial drawdown in the partnership’s capital. According to Aurora
Hill, had appellee’s funds been properly accounted for as of February 1, 2019, his capital
account would have been negatively adjusted to reflect the losses incurred for that month.
{¶6} In July 2019, appellee ended his participation in the limited partnership and
submitted a request for redemption. Appellee redeemed $95,993.78 of his original
investment. Appellee would ultimately file an arbitration claim with the National Futures
Commission based on this transaction. That claim was unsuccessful, but the conduct of
Argo was found to be improper by the Commission.
{¶7} On April 7, 2021, Aurora Hill filed a complaint that sought recovery of
partnership funds to which it alleged appellee owed due to his technical admission to the
limited partnership on February 1, 2019. Aurora Hill essentially alleged appellee received
improper preferential treatment, of which he was aware and to which he acquiesced, by
Argo when it bumped appellee’s membership back to March 1, 2019. In doing so, Aurora
Hill alleged appellee was extended special treatment in order to avoid the losses
sustained by other limited partners during the month of February. Although not
specifically pleaded, Aurora Hill alleges its complaint stated a claim for restitution.
{¶8} Appellee filed a motion to dismiss to which Aurora Hill duly opposed. The
trial court denied the motion, concluding Aurora Hill sufficiently stated a restitution claim
to withstand a Civ.R.12(B)(6) challenge. The parties subsequently filed joint stipulations
and, in December 2022, filed their respective motions for summary judgment. The parties
additionally filed memoranda in opposition to the respective motions for summary
judgment.
Case No. 2023-P-0005 {¶9} On January 27, 2023, the trial court granted appellee summary judgment,
concluding that Aurora Hill’s complaint alleged a claim for unjust enrichment. And,
because the matter at issue was derivative of the partnership agreement, it was governed
by an express contract. The court therefore concluded there was no genuine issue of
material fact to support a claim for unjust enrichment and appellee was entitled to
judgment as a matter of law. Aurora Hill now appeals and assigns the following as error:
{¶10} “The trial court erred in granting the defendant-appellee summary
judgment.”
{¶11} Under its sole assignment of error, Aurora Hill asserts the trial court erred
in concluding that its cause of action was an unjust enrichment claim; instead, it insists
the complaint stated a cause of action in restitution and therefore genuine issues of
material fact remain for litigation. We do not agree.
{¶12} We review a trial court’s entry of summary judgment de novo, i.e.,
“‘independently and without deference to the trial court’s determination.’” Johnson v.
North Kingsville, 11th Dist. Ashtabula No. 2020-A-0031, 2021-Ohio-1012, ¶ 10, quoting
Brown v. Scioto Cty. Bd. of Commrs., 87 Ohio App.3d 704, 711, 622 N.E.2d 1153 (4th
Dist.1993) (citation omitted).
{¶13} Civ.R. 56(C) provides that summary judgment is proper when:
(1) [n]o genuine issue as to any material fact remains to be litigated;
(2) the moving party is entitled to judgment as a matter of law; and
(3) it appears from the evidence that reasonable minds can come to but one
conclusion, and viewing such evidence most strongly in favor of the party against whom
Case No. 2023-P-0005 the motion for summary judgment is made, that conclusion is adverse to that
party. Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327, 364 N.E.2d 267 (1977).
{¶14} “[T]he moving party bears the initial responsibility of informing the trial court
of the basis for the motion, and identifying those portions of the record before the trial
court [e.g., pleadings, depositions, answers to interrogatories, etc.] which demonstrate
the absence of a genuine issue of fact on a material element of the nonmoving party’s
claim.” Dresher v. Burt, 75 Ohio St.3d 280, 292, 662 N.E.2d 264 (1996), citing Civ.R.
56(C) and Celotex Corp. v. Catrett, 477 U.S. 317, 323-324, 106 S.Ct. 2548, 91 L.Ed 2d
265 (1986). If the moving party satisfies this burden, the nonmoving party has the burden
to provide evidence demonstrating a genuine issue of material fact, pursuant to Civ.R.
56(E). Id. at 293.
{¶15} Aurora Hill asserts the trial court erroneously framed its cause of action as
a claim for unjust enrichment. Initially, it maintains the trial court rendered inconsistent
rulings when it (1) denied appellee’s motion to dismiss for failure to state a claim
concluding Aurora Hill’s complaint sufficiently pleaded a claim for restitution, but (2)
granted appellee’s motion for summary judgment concluding Aurora Hill’s complaint was
premised upon a claim for unjust enrichment.
{¶16} Although the trial court initially framed Aurora Hill’s complaint as one
alleging a claim for restitution, it bears noting that the complaint fundamentally failed to
set forth a specific cause of action. The complaint detailed copious facts regarding the
parties’ association and why Aurora Hill believed it suffered damages; namely, because
Argo gave appellee preferential treatment to the detriment of the limited partnership. The
complaint relied upon the limited partnership agreement as a basis for its position, but did 5
Case No. 2023-P-0005 not plead breach of contract. And, throughout the underlying proceedings, it is
fundamentally clear Aurora Hill is seeking equitable relief, not damages at law for a breach
of contract.
{¶17} Moreover, the complaint alleged that appellee received a benefit, of which
he knew, and retained the same which redounded to the economic disadvantage of
Aurora Hill. The claim did not, however, expressly assert what equitable remedy it was
seeking to make it whole. The complaint was, at best, vague and open-ended. In effect,
although the trial court framed Aurora Hill’s complaint in terms of restitution, after
considering the parties’ motions for summary judgment and memoranda in opposition,
the court had more evidentiary quality material permitting it to recast the complaint as
seeking restitution due to appellee’s alleged unjust enrichment. We consequently fail to
see how the trial court’s initial construction of the complaint has any meaningful bearing
on its ultimate order concluding Aurora Hill had failed to establish unjust enrichment as a
matter of law.
{¶18} Next, Aurora Hill vehemently denies that it is seeking damages for unjust
enrichment, and instead argues it is seeking equitable restitution. Aurora Hill asserts it
“certainly reiterated the nature of the claim in all of its pleadings.” The record, however,
does not support Aurora Hill’s overstatement.
{¶19} In Aurora Hill’s brief in opposition to appellee’s motion to dismiss, it sets
forth elements of the “remedy” of equitable restitution. It follows this recitation with citing
the elements for the “cause of action” of unjust enrichment. Aurora Hill proceeds to argue
that its claim does not depend upon the intent of the parties. “Rather, it turns on equitable
considerations that require the imposition of a constructive trust because the person
Case No. 2023-P-0005 holding the property would be unjustly enriched if permitted to keep the property.”
(Emphasis added.) (Aurora Hill’s opposition to dismiss, p.4). Aurora Hill makes the
identical argument using the same citations in its motion for summary judgment. (See
Aurora Hill’s motion for summary judgment, p.7). Although Aurora Hill somewhat
reverses course in its memorandum in opposition to appellee’s motion for summary
judgment (stating “* * * Aurora Hill’s complaint is one for restitution, it is not and never has
been an unjust enrichment claim * * *”), its vacillation between its theory of the case is
conspicuous. In short, Aurora Hill is far from decisive as to the nature of its allegations
or how the court should construe its ambiguous complaint.
{¶20} Next, Aurora Hill appears to advance a new dimension to its insistence that
its complaint merely sought restitution. It argues that restitution is a well-recognized form
of relief for the recovery of sums improperly paid pursuant to an underlying contractual
relationship between parties. Aurora Hill observes that “[m]oney paid under the mistaken
supposition of the existence of a specific fact which would entitle the payee to the money,
which money would not have been paid had it been known to the payer that the fact did
not exist, may be recovered [in restitution].” Firestone Tire & Rubber Co. v. Central Nat.
Bank of Cleveland, 159 Ohio St. 423, 112 N.E.2d 636 (1953), paragraph two of the
syllabus. Aurora Hill continues “[t]he law of Ohio is clear that a payer, even if negligent
in making payment under a mistake of fact, may recover if his act has not resulted in a
change in the position of the innocent payee to his detriment.” Id. at 439. Apparently,
Aurora Hill, for the first time on appeal, claims that the alleged preferential treatment was
based upon a mistake and, to the extent appellee would suffer no detriment, it is entitled
to restitution.
Case No. 2023-P-0005 {¶21} It is a well-established rule of appellate review that a court will not consider
issues that an appellant fails to raise initially at the trial court. Warmuth v. Sailors, 11th
Dist. Lake No. 2007-L-198, 2008-Ohio-3065, ¶ 36, citing Lippy v. Society Natl. Bank, 88
Ohio App.3d 33, 40, 623 N.E.2d 108 (11th Dist.1993) (appellant cannot raise an argument
on appeal for the first time when there was no indication that the argument was brought
to the trial court’s attention and considered below). “The well-settled rule which requires
the parties to adhere on appeal to the theory upon which they presented the case in the
trial court, operates to limit the scope of the review * * * the case, on appeal, must be
reviewed and decided on the theory on which it was tried in the court below * * *.” Webb
v. Grimm, 116 Ohio App. 63, 74, 186 N.E.2d 739 (2d Dist.1961), quoting 3 American
Jurisprudence, Section 830, at 372. While we are entitled to disregard Aurora Hill’s
argument because it was not preserved in the trial court, even if it were raised, it lacks
merit.
{¶22} In Firestone, a buyer filed suit against a bank to recover monies paid to the
bank under the mistaken belief that the sums were due on accounts assigned by a seller
to the bank as security for a loan. The Supreme Court of Ohio determined that,
notwithstanding the buyer’s arguable negligence in remitting payment, the bank did not
change its position regarding a portion of the sum paid by the buyer which was credited
against the loan made to the seller such that recovery to the buyer would be precluded.
Firestone, 159 Ohio St. at 440. As such, the Court determined “there [was] a clear basis
for recovery of the money paid under mistake of fact.” Id.
{¶23} The record does not support the conclusory proposition that the general
partner, Argo, via its agents, engaged in any mistake. Indeed, it appears Argo withheld
Case No. 2023-P-0005 appellee’s investment contribution deliberately and, whether in violation of the limited
partnership agreement or not, advised appellee in mid-February that, despite his
acceptance into the limited partnership, he would not be participating until March 1, 2019.
We can discern no mistake of fact and nothing suggests Argo’s actions were anything but
intentional. Aurora Hill’s “mistake-of-fact” argument is without merit.
{¶24} Furthermore, Firestone does not stand for the principle that restitution is a
cause of action; to the contrary, the buyer in Firestone mistakenly paid sums to the bank
which, under the circumstances, the court determined the buyer was entitled to recover.
If anything, Firestone underscores that restitution, whether full or partial, is the remedy
for a mistake of fact. Firestone, consequently, is distinguishable from this case and does
not support Aurora Hill’s position.
{¶25} Next, Aurora Hill cites the Fourth Appellate District’s decision in WesBanco
Bank, Inc. v. Smoked Ribs, Inc., 2016-Ohio-177, 45 N.E.3d 1066 (4th Dist.2016). In that
case, a bank employee used an incorrect code for credit card transactions relating to a
hotel’s account. As a result, a restaurant (Smoked Ribs, Inc.) was paid instead of the
hotel, resulting in an overpayment of approximately $239,000 to the restaurant. Id. at ¶ 4-
5. Consistent with Firestone, the bank was allowed to partially recover the overpayments.
The recovery, however, was limited because Smoked Ribs was able to establish that it
believed, in good faith, the money was a result of profits. As such, when it used the
money for improvements, it detrimentally relied on this belief to pay for the improvements
which it would not have otherwise made. Furthermore, the restaurant made the
improvements before receiving notice of the overpayments. Id. at ¶ 48-49.
Case No. 2023-P-0005 {¶26} Similar to Firestone, we discern no basis to conclude that restitution was a
cognizable cause of action. Indeed, the court noted that the bank filed a complaint
“seeking restitution of the $239,814.38 it mistakenly paid to Smoked Ribs based on
contract, common law, and statute.” (Empahsis added.) WesBanco, at ¶ 7. The court
therefore underscored that restitution was the remedy the bank was seeking, not its
primary cause of action or theory upon which the remedy was premised. WesBanco does
not support Aurora Hill’s argument.
{¶27} Finally, Aurora Hills cites the First District’s decision in Chiquita Brands Int’l.,
Inc. v. Nat’l Union Fire Ins. Co. Pittsburgh PA, 2015-Ohio-5477, 57 N.E.3d 97 (1st
Dist.2015). In that case, an insured brought an action against a liability insurer for
declaratory judgment alleging that they owed a duty to defend the insured in an underlying
tort action. The trial court entered judgment in favor of the insured declaring that the
insurer had a duty to defend. The insurer funded the defense but reserved a right to seek
reimbursement of the payments. Id. at ¶ 2. The insurer ultimately appealed the
declaratory order and the appellate court reversed the judgment, holding the insured did
not have a duty to defend. The appellate court remanded the matter to the trial court to
determine whether the insurer was entitled to recoup the payments. Id. at ¶ 3.
{¶28} On remand, the insurer moved the trial court for restitution or, in the
alternative, for reimbursement of defense costs. The trial court determined the insurer
was entitled to recoup the payments based on an implied-in-fact contractual right to
reimbursement. Id. at ¶ 4. The appellate court, however, disagreed that an implied-in-
fact contract existed, but affirmed the substance of the trial court’s judgment stating that
“Restitution is the Appropriate Remedy[.]” (Emphasis added.) Id. at heading II.
Case No. 2023-P-0005 {¶29} The appellate court emphasized that its prior determination that no duty to
defend existed was premised upon the insured’s intentional conduct, conduct not covered
by its policies with the insurer. As such, there was never a duty to defend. Id. at ¶ 13.
Instead, once the insurer began financing the defense, it sent the insured letters
specifically stating it was reserving its right to appeal and to seek reimbursement for its
payments. Id. at ¶ 17-18. Restitution, in this case, was the “means to enforce adherence
to a contract through ordering repayment of a sum to which the recipient was never
entitled under the contract’s terms.” Id. at ¶ 8, citing 1 Restatement of the Law 3d,
Restitution and Unjust Enrichment, Section 35, comment a (2011).
{¶30} The foundation of the foregoing holding is premised upon a declaratory
judgment action, the ultimate outcome of which resulted in the insurer having no duty to
defend. In other words, the cause of action in that case was contractual in nature and
focused upon whether the insurer had a duty to defend. The appellate court answered
that question in the negative. The conclusion that the insurer was entitled to the remedy
of restitution is based upon justice, i.e., to prevent unjust enrichment due to
overperformance under a contract or extra-contractual performance. “Performance in
such cases is not the result of mistake, because the claimant has consciously and
justifiably resisted a demand for a performance that was not in fact due.” See Id. at
comment a. Where a party who objects to performance and submits a reservation of
rights, the party receiving the benefit that was not legally due is unjustly enriched and thus
entitled to the remedy of restitution. See Id.
{¶31} In the instant matter, Aurora Hills allegedly sought equitable relief in
restitution for losses it purportedly experienced due to the general partner’s failure to
Case No. 2023-P-0005 include appellee in the limited partnership at the appropriate time. This relief or remedy
is not, however, premised on any underlying legal or equitable theory. Without a
foundational legal claim, the remedy has nothing to which it might be anchored. Chiquita,
therefore, is also distinguishable.
{¶32} Unjust enrichment occurs when an individual “has and retains money or
benefits which in justice and equity belong to another[.]” Hummel v. Hummel, 133 Ohio
St. 520, 528, 14 N.E.2d 923 (1938). It bears significant emphasis, however, that
restitution is not a claim or a cause of action, it is a remedy. Cirino v. Bureau of Workers’
Compensation, 2021-Ohio-1382, 171 N.E.3d 840, ¶ 16 (10th Dist.), citing Santos v. Ohio
Bur. Of Workers’ Comp., 101 Ohio St.3d 74, 2004-Ohio-28, 801 N.E.2d 441, ¶ 11
(“[h]istorically, restitution has been available both in equity and in law as the remedy for
an unjust enrichment of one party at the expense of another”) (emphasis added). See
also Johnson v. Microsoft Corp., 106 Ohio St.3d 278, 2005-Ohio-4985, 834 N.E.2d 791,
¶ 20 (restitution is the remedy for unjust enrichment); Musial Offices Ltd. v. County of
Cuyahoga, 2020-Ohio-5426, 163 N.E.3d 84, ¶ 27 (8th Dist.) The remedy of restitution is
designed “‘to prevent one from retaining property to which he is not justly entitled.’” San
Allen v. Buehrer, 2014-Ohio-2071, 11 N.E.3d 739, ¶ 114 (8th Dist.), quoting Keco
Industries, Inc. v. Cincinnati & Suburban Bell Tel. Co., 166 Ohio St. 254, 256, 141 N.E.2d
465 (1957).
{¶33} Pursuant to the equitable doctrine of unjust enrichment, “‘[a] person who
has been unjustly enriched at the expense of another is required to make restitution to
the other.’” Kammer Asphalt Paving Co., Inc. v. East China Twp. Sch., 443 Mich. 176,
185, 504 N.W.2d 635 (1993), quoting Restatement Restitution 1st, Sec. 1, p. 12 (second
Case No. 2023-P-0005 alteration in original). “A claimant entitled to restitution may obtain a judgment for money
in the amount of the defendant’s unjust enrichment.” 2 Restatement Restitution & Unjust
Enrichment, 3d, Sec. 49(1).
{¶34} Aurora Hill’s contention that its complaint alleged a claim or cause of action
for restitution is inconsistent with the nature of restitution as a remedy. Historically,
restitution can refer both to liabilities and to remedies leading to misunderstanding about
its correct meaning in some contexts. See 1 Restatement Restitution & Unjust
Enrichment, 3d, Sec. 1, comment e. This confusion likely has an historical cause: in the
centuries before the Restatement, “[s]o long as legal obligations were classified by the
procedures available to enforce them, what we now call restitution did not need an
underlying theory of liability.” Id. at Sec 4, comment b. Today, references to restitution,
particularly in Ohio law, are most common in the remedial context, such as statutes
requiring a criminal defendant to pay a victim of his or her crime. See e.g., R.C.
2929.18(A). Or matters relating to the equitable remedy, as discussed infra.
{¶35} Interestingly, “restitutionary remedies and unjust enrichment are simply flip
sides of the same coin” because “[t]he generative purpose of a restitutionary remedy is
the prevention of unjust enrichment.” Alternatives Unlimited, Inc. v. New Baltimore City
Bd. of Sch. Comm'rs, 155 Md. App. 415, 454, 843 A.2d 252 (2004). See also 1
Restatement Restitution & Unjust Enrichment, 3d, Sec. 4, comment b (explaining that the
first Restatement of Restitution, in 1937, adopted the view “that liabilities and remedies
drawn from law on the one hand, and equity on the other, were best understood and
described as components of a unified law of unjust enrichment”). This point is illustrated
by the Supreme Court of Ohio’s recognition that one must establish a threshold cause of
Case No. 2023-P-0005 action for unjust enrichment before asserting an entitlement to restitution. Specifically,
the Court has observed that entitlement to restitution requires a party to demonstrate,
inter alia the “‘retention of [a] benefit by [a] defendant under circumstances where it would
be unjust to do so without payment (“unjust enrichment ”).’” (Emphasis added.) Johnson,
2005-Ohio-4985, at ¶ 20, quoting Hambleton v. R.G. Barry Corp. (1984), 12 Ohio St.3d
179, 183, 465 N.E.2d 1298 (1984).
{¶36} With these points in mind, Aurora Hill has incorrectly argued on appeal that
its complaint set forth a cause of action in restitution. In equity, restitution is the remedy
for unjust enrichment. That said, in general, “Ohio law does not permit recovery under
the theory of unjust enrichment when an express contract covers the same subject
matter.” Bunta v. Superior Vacupress, L.L.C., --- Ohio St.3d ----, 2022-Ohio-4363, ---
N.E.3d ----, ¶ 36, citing Hughes v Oberholtzer, 162 Ohio St. 330, 335, 123 N.E.2d 393
(1954). (“It is generally agreed that there cannot be an express agreement and an implied
contract for the same thing existing at the same time.”). “The doctrine of unjust
enrichment is limited when an express contract exists that concerns the same subject
because “‘“the parties have fixed their contractual relationship in an express contract,”’”
and thus, “‘“ there is no reason or necessity for the law to supply an implied contractual
relationship between them.”’” (Citations omitted.) Bunta at ¶ 39.
{¶37} Here, the alleged violation of the limited partnership agreement by Argo is
the basis for Aurora Hill’s position. There was accordingly an express contract that
addressed the alleged misdoings at the heart of the complaint. Accordingly, because
Aurora Hill could not establish an unjust enrichment claim in this case, it is not entitled to
the remedy of restitution as a matter of law.
Case No. 2023-P-0005 {¶38} Aurora Hill’s sole assignment of error lacks merit.
{¶39} For the reasons discussed in this opinion, the judgment of the Portage
County Court of Common Pleas is affirmed.
MARY JANE TRAPP, J.,
MATT LYNCH, J.,
concur.
Case No. 2023-P-0005