[Cite as Belvino L.L.C. v. Empson (USA) Inc., 2012-Ohio-3074.]
Court of Appeals of Ohio EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION No. 97305
BELVINO LLC PLAINTIFF-APPELLANT
vs.
EMPSON (USA) INC., ET AL. DEFENDANTS-APPELLEES
JUDGMENT: AFFIRMED IN PART; REVERSED IN PART AND REMANDED
Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-730562
BEFORE: Kilbane, J., Stewart, P.J., and Keough, J.
RELEASED AND JOURNALIZED: July 5, 2012 ATTORNEYS FOR APPELLANT
Marc J. Kessler Kerry R. Green Hahn Loeser & Parks LLP 65 East State Street Suite 1400 Columbus, Ohio 43215
ATTORNEYS FOR APPELLEES
Hansel H. Rhee Steven D. Forry Ice Miller LLP 250 West Street Columbus, Ohio 43215
Jay E. Krasovec H. Alan Rothenbuecher Ice Miller, LLP 600 Superior Avenue, East Suite 1701 Cleveland, Ohio 44115 MARY EILEEN KILBANE, J.:
{¶1} Plaintiff-appellant, BelVino LLC (“BelVino”), appeals from the trial
court’s judgments granting summary judgment in favor of defendants-appellees, il Molino
de Grace (“il Molino”) and Empson (USA) Inc. (“Empson”), and denying its motion for
relief from judgment under Civ.R. 60(B). Finding merit to the appeal, we affirm in part,
reverse in part and remand.
{¶2} The instant appeal arises from a lawsuit filed by BelVino against il Molino
and Empson, alleging that they wrongfully terminated BelVino’s franchise agreement
with il Molino in violation of Ohio’s Alcoholic Beverages Franchise Act (“OABFA”),
R.C. 1333.82, et seq. In May 2006, BelVino became the exclusive importer and
distributor of il Molino’s wines in Ohio. il Molino operates a vineyard in Italy. In
September 2008, BelVino partnered with Euro USA, LLC, and formed a new joint
venture known as Euro USA/BelVino. Euro USA/BelVino then became the exclusive
distributor of il Molino’s wines and BelVino became the exclusive importer.
{¶3} In the fall of 2009, il Molino and Empson, a national importing company,
began discussions regarding Empson becoming il Molino’s sole importer in the United
States. il Molino eventually retained Empson as its new exclusive importer in February
2010. In March 2010, il Molino advised BelVino that it was terminating its importer
relationship with BelVino and replacing BelVino with Empson. il Molino explained that the switch to Empson was necessary to ensure il Molino’s financial objectives were met.
Separately, in April 2010, Empson terminated Euro USA/BelVino’s distribution franchise
with il Molino, stating that it intended to reassign distribution rights for il Molino in Ohio.
{¶4} As a result, BelVino filed a complaint against il Molino and Empson in
June 2010, alleging three causes of action. In Count I, BelVino alleges that il Molino
breached its contract with BelVino by terminating the franchise agreement under the
OABFA, without just cause. In Count II, BelVino alleges that Empson intentionally
interfered with il Molino’s contractual agreement with BelVino by convincing il Molino
to unilaterally terminate its agreement with BelVino. In Count III, BelVino alleges that
Empson interfered with its business relationships by inducing il Molino to discontinue its
relationship with BelVino.
{¶5} On August 5, 2010, BelVino entered into an agreement with Euro
USA/BelVino, where Euro USA/BelVino assigned to BelVino its right to distribute il
Molino wines and its litigation rights. BelVino then amended its complaint on August
11, 2010. In the amended complaint, BelVino reasserted its original causes of actions
and added a claim for declaratory judgment, asking the trial court to declare that il Molino
and Empson cannot unilaterally terminate BelVino’s franchise agreement under the
OABFA.
{¶6} In response, il Molino and Empson each filed an answer and identical
counterclaims against BelVino. They sought a declaration that: (1) BelVino was not the distributor of il Molino wines in Ohio and was not entitled to any protection under the
OABFA; (2) Empson is a “successor manufacturer” under the OABFA; and (3) il Molino
does not “control” Empson as provided for in the OABFA.
{¶7} BelVino filed a partial motion for summary judgment and il Molino and
Empson each filed cross motions for summary judgment, asking the trial court to issue
judgment as a matter of law. On August 16, 2011, the trial court denied BelVino’s
partial motion for summary judgment and granted il Molino’s and Empson’s motions for
summary judgment.
{¶8} The trial court issued an opinion with its order. In its opinion, the trial
court first addressed the issue of standing raised by il Molino and Empson. il Molino
and Empson argued that Euro USA/BelVino’s assignment did not give BelVino standing
to sue on Euro USA/BelVino’s behalf. The trial court found that Euro USA/BelVino’s
assignment to BelVino gave BelVino the requisite standing to sue on behalf of Euro
USA/BelVino. The court then noted that the OABFA protects contractual relationships
between a manufacturer and distributor. Euro USA/BelVino was il Molino’s distributor
when Empson terminated Euro USA/BelVino’s franchise agreement. At that time, the
relationship that existed between il Molino and BelVino was a manufacturer-importer
relationship. Therefore, the court concluded that the OABFA did not apply to BelVino.
Even if BelVino was considered a manufacturer, the trial court concluded that the
OABFA did not protect the relationship between two manufacturers.
{¶9} As between Euro USA/BelVino and Empson, the trial court found that the OABFA did not apply “because they had no relationship, contractual or otherwise.” The
court noted that the OABFA does not contemplate a relationship between a wholly
unrelated importer (Empson) and distributor (Euro USA/BelVino).
{¶10} The trial court then found that the tortious interference with contract and
interference with business relationship claims failed. The tortious interference with
contract failed “because there was no franchise between il Molino and BelVino[.]
Therefore, Empson could not have interfered with a contract as a matter of law.”
Likewise, the trial court found that the intentional interference with BelVino’s business
relationship claim failed because the relationship involved two importers, Empson and
Euro USA/BelVino and there was no evidence suggesting that Empson used improper
means to become il Molino’s national importer.
{¶11} On August 22, 2011, BelVino moved for relief from judgment under Civ.R.
60(B), which the trial court denied.
{¶12} It is from these orders that BelVino appeals, raising the following two
assignments of error for review.
ASSIGNMENT OF ERROR ONE
The trial court erred in granting summary judgment in favor of [il Molino and Empson].
ASSIGNMENT OF ERROR TWO
The trial court erred in refusing to grant [BelVino] relief from judgment under [Civ.R. 60(B)].
Standard of Review {¶13} We review an appeal from summary judgment under a de novo standard of
review. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 1996-Ohio-336, 671
N.E.2d 241; Zemcik v. LaPine Truck Sales & Equip. Co., 124 Ohio App.3d 581, 585, 706
N.E.2d 860 (1998). In Zivich v. Mentor Soccer Club, 82 Ohio St.3d 367, 369-370,
1998-Ohio-389, 696 N.E.2d 201, the Ohio Supreme Court set forth the appropriate test as
follows:
Pursuant to Civ.R. 56, summary judgment is appropriate when (1) there is no genuine issue of material fact, (2) the moving party is entitled to judgment as a matter of law, and (3) reasonable minds can come to but one conclusion and that conclusion is adverse to the nonmoving party, said party being entitled to have the evidence construed most strongly in his favor. Horton v. Harwick Chem. Corp. (1995), 73 Ohio St.3d 679, 653 N.E.2d 1196, paragraph three of the syllabus. The party moving for summary judgment bears the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Dresher v. Burt (1996), 75 Ohio St.3d 280, 292-293, 662 N.E.2d 264, 273-274.
{¶14} Once the moving party satisfies its burden, the nonmoving party “may not
rest upon the mere allegations or denials of the party’s pleadings, but the party’s response,
by affidavit or as otherwise provided in this rule, must set forth specific facts showing
that there is a genuine issue for trial.” Civ.R. 56(E); Mootispaw v. Eckstein, 76 Ohio
St.3d 383, 385, 1996-Ohio-389, 667 N.E.2d 1197. Doubts must be resolved in favor of
the nonmoving party. Murphy v. Reynoldsburg, 65 Ohio St.3d 356, 358-359,
1992-Ohio-95, 604 N.E.2d 138.
Standing
{¶15} Before we address the OABFA, we first discuss il Molino and Empson’s
argument that BelVino was not the real party in interest and lacked standing to assert any claims on Euro USA/BelVino’s behalf.
{¶16} The issue of standing “is a threshold question for the court to decide in order
for it to proceed to adjudicate the action.” State ex rel. Jones v. Suster, 84 Ohio St.3d 70,
77, 1998-Ohio-275, 701 N.E.2d 1002. “Lack of standing challenges the capacity of a
party to bring an action, not the subject matter jurisdiction of the court.” Id., citing State
ex rel. Smith v. Smith, 75 Ohio St.3d 418, 420, 1996-Ohio-215, 662 N.E.2d 366. To
decide whether the requirement has been satisfied that an action be brought by the real
party in interest, “courts must look to the substantive law creating the right being sued
upon to see if the action has been instituted by the party possessing the substantive right
to relief.” Shealy v. Campbell, 20 Ohio St.3d 23, 25, 485 N.E.2d 701 (1985).
{¶17} Civ.R. 17(A) governs “real party in interest” and provides in pertinent part:
Every action shall be prosecuted in the name of the real party in interest. * * * No action shall be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest. Such ratification, joinder, or substitution shall have the same effect as if the action had been commenced in the name of the real party in interest.
{¶18} Like other procedural rules, “Civ.R. 17(A) ‘shall be construed and applied
to effect just results by eliminating delay, unnecessary expense and all other impediments
to the expeditious administration of justice.’” Ohio Cent. RR. Sys. v. Mason Law Firm
Co., L.P.A., 182 Ohio App.3d 814, 2009-Ohio-3238, 915 N.E.2d 397, ¶ 33 (10th Dist.),
quoting Civ.R. 1(B).
{¶19} il Molino and Empson argue that while Euro USA/BelVino may have assigned its rights to BelVino, this assignment did not occur until after BelVino’s initial
complaint was filed and when BelVino amended its complaint, it failed to assert any
claims on behalf of Euro USA/BelVino. In support of their argument, il Molino and
Empson rely primarily on Wells Fargo Bank, N.A. v. Jordan, 8th Dist. No. 91675,
2009-Ohio-1092. Jordan, however, is factually distinguishable from the matter before
us. Jordan involves a foreclosure action and stands for the proposition that the putative
mortgagee, who obtains the mortgage through an assignment or succession, must own the
mortgage at the time of the filing of the complaint, otherwise the putative mortgagee
lacks standing.
{¶20} Whereas, the instant case involves a business relationship among BelVino,
Euro USA/BelVino, and il Molino that spanned over four years. BelVino partnered with
Euro USA, LLC and formed Euro USA/BelVino to increase its geographical reach.
BelVino worked with Euro USA/BelVino to jointly distribute the il Molino brand in
Ohio. All of il Molino’s inventory was shipped to BelVino and il Molino representatives
always met with BelVino, even after the joint venture was formed. In August 2005,
BelVino entered into an agreement with Euro USA/BelVino, where Euro USA/BelVino
assigned to BelVino its right to distribute il Molino wines and its litigation rights. The
trial court found, and we agree, that this assignment gave BelVino the requisite standing
to sue on Euro USA/BelVino’s behalf.
{¶21} Having found that BelVino is a real party in interest and has the requisite
standing, we next address whether the trial court erred when it granted summary judgment in favor of il Molino and Empson.
The OABFA
{¶22} The OABFA governs the franchise relationships between manufacturers and
distributors of alcoholic beverages in Ohio. R.C. 1333.82, et seq. “The OABFA affords
Ohio beer and wine distributors unique protections. It has been held the purpose of the
OABFA is ‘to remedy the lack of equal bargaining power between Ohio’s alcoholic
beverages wholesalers and out-of-state beverage manufacturers.”’ Esber Beverage Co.
v. Wine Group, Inc., 5th Dist. No. 2011CA00179, 2012-Ohio-1215, ¶ 12 (“Esber
Beverage”), quoting Esber Beverage Co. v. LaBatt USA Operating Co., Stark C.P. No.
2009CV03142 (Dec. 1, 2009). See also Beverage Distrib., Inc. v. Miller Brewing Co.,
803 F.Supp.2d 765 (S.D.Ohio 2011); Hill Distrib. Co. v. St. Killian Importing Co., Inc.,
S.D. Ohio No. 2:11-CV-706, 2011 WL 3957255 (Sept. 7, 2011).
{¶23} In furtherance of this goal, the OABFA requires every manufacturer of
alcoholic beverages to contract with or offer in good faith to their distributors a written
franchise specifying the rights and duties of both parties. R.C. 1333.83. Additionally,
[w]hen a distributor of beer or wine for a manufacturer, or the successors or assigns of the manufacturer, distributes the beer or wine for ninety days or more without a written contract, a franchise relationship is established between the parties, and sections [R.C.] 1333.82 to 1333.87 apply to the manufacturer, its successor or assigns, and the distributor.
Id.
The OABFA defines “manufacturer” as “a person, whether located in this state or
elsewhere, that manufactures or supplies alcoholic beverages to distributors in this state.” R.C. 1333.82(B). “Distributor” is defined as “a person that sells or distributes alcoholic
beverages to retail permit holders in this state, but does not include the state or any of its
political subdivisions.” Id. at (C).
{¶24} The OABFA also states that a franchise relationship cannot be terminated
absent prior consent unless “just cause” exists and notice is provided. R.C. 1333.85.
R.C. 1333.85(A) lists three situations that always constitute just cause: (1) voluntary
bankruptcy; (2) involuntary bankruptcy; or (3) loss of liquor permits. R.C. 1333.85(B)
lists four situations that never constitute just cause: (1) failure of a party to take action
that would result in a violation of federal or state law; (2) restructuring, other than in
bankruptcy, of a manufacturer’s business; (3) unilateral alteration of the franchise by a
manufacturer for a reason unrelated to any breach of the franchise or violation of R.C.
1333.82 and 1333.86; and (4) a manufacturer’s sale, assignment, or other transfer of the
manufacturer’s product or brand to another manufacturer over which it exercises control.
{¶25} R.C. 1333.85(D) provides an exception to the general rule requiring just
cause. Under R.C. 1333.85(D), if a successor manufacturer “acquires all or substantially
all of the stock or assets of another manufacturer through merger or acquisition or
acquires or is the assignee of a particular product or brand of alcoholic beverage from
another manufacturer,” then it can terminate, via written notice, a previous
manufacturer’s franchise agreements within 90 days of the date of the acquisition.
{¶26} BelVino argues that the evidence in the record supports a finding as a matter
of law that (1) Euro USA/BelVino had a protected franchise relationship with il Molino and (2) the OABFA applies to the relationship between Euro USA/BelVino and Empson.
In support of its position, BelVino relies primarily on St. Killian and Esber Beverage.
{¶27} In St. Killian, the manufacturer obtained a new importer, St. Killian, which
then attempted to terminate the manufacturer’s franchise agreement with Hill Distributing
(“Hill”). As a result, Hill filed a motion for a preliminary injunction, seeking to enjoin
St. Killian from terminating Hill’s franchise agreement with the manufacturer. The
United States District Court for the Southern District of Ohio, Eastern Division, granted
Hill’s motion, finding that although St. Killian bought the rights to import the alcohol
from the manufacturer, the manufacturer still had to approve of St. Killian as its new
importer, it continued to maintain control over its brands, and it was effectively
reorganizing its business structure. St. Killian at 4. The court further found that the
policy rationale behind the OABFA supports a decision in Hill’s favor. The court
concluded that “[t]he change of importer is likely a business rearrangement, and thus St.
Killian may not qualify as a ‘successor manufacturer’ under [R.C. 1333.85(D)].” Id.
{¶28} In Esber Beverage, Esber had an exclusive franchise relationship with the
manufacturer. The manufacturer advised Esber that it was in its best interests to move
distribution of its wine products in Ohio to a single statewide distributor. Id. at ¶ 3. The
court reviewed the meaning of “just cause” and found the reasoning in Tri-County
Wholesale Distrib. Inc. v. The Wine Group, Inc., S.D. Ohio No. 2:10-CV-693, 2010 WL
3522973 (Sept. 2, 2010) and Dayton Heidelberg Distrib. Co. v. Vintners Internatl. Co. of
New York, S.D. Ohio No. C-3-87-436, 1991 WL 1119912 (Apr. 8, 1991), persuasive. {¶29} In Vintners, the court analyzed the meaning of R.C. 1333.85(B) and stated
that,
the legislature was aware that, in the absence of any formal definition of just cause, courts interpreting [R.C. 1333.85] were applying a “case-by-case” analysis. By specifically defining what is not just cause, and leaving undefined what is just cause, the legislature has effectively agreed with the courts that the term “just cause” does not lend itself to a single, bright-line definition but, instead, is highly dependent upon the facts of the particular case.
***
[A]pplying this fact-sensitive concept of just cause to the case at bar, there
is little doubt that the Ohio legislature fully intended the result which the
Court has reached. By amending the former [R.C. 1333.85] to expressly
prohibit franchise terminations based solely upon a manufacturer’s
unilateral decision to alter its distribution network, the legislature made
clear its intent to disallow actions such as Vintners’ cancellation of
Plaintiffs’ franchises, even though done in good faith. Id. at 10.
{¶30} Relying on The Wine Group and Vintners, the Esber Beverage court found
that the manufacturer’s “legitimate business reason to consolidate its distributors, without
evidence of a breach or violation of the OABFA by Esber, [the distributor], does not
constitute just cause to unilaterally terminate the franchise between [the manufacturer]
and Esber. Id. at ¶ 28.
{¶31} The matter before us presents a situation similar to St. Killian and Esber
Beverage. In the instant case, there is no dispute that Euro USA/BelVino was the exclusive distributor of il Molino’s wines when the franchise relationship was terminated
in April 2010. Furthermore, there is no dispute that Euro USA/BelVino distributed il
Molino’s wines for more than 90 days without a written contract. Euro USA/BelVino
was registered as the exclusive distributor of il Molino wines in the state of Ohio in July
2009. il Molino, as the maker of wine, is considered as a manufacturer under the
OABFA. Therefore, Euro USA/BelVino and il Molino had a manufacturer-distributor
franchise relationship that was protected under the OABFA. Unilateral termination and
restructuring are the exact situations contemplated in R.C. 1333.85 that do not constitute
just cause.
{¶32} il Molino and Empson argue that Empson could terminate Euro
USA/BelVino’s distributorship without “just cause” because Empson is a “successor
manufacturer” under the OABFA. Under R.C. 1333.85(D), a successor manufacturer
can terminate, via written notice, a previous manufacturer’s franchise agreements within
90 days of the date of the acquisition provided that it “acquires all or substantially all of
the stock or assets of another manufacturer through merger or acquisition or acquires or is
the assignee of a particular product or brand of alcoholic beverage from another
manufacturer[.]”
{¶33} However, “‘[a] manufacturer can only rely on [R.C. 1333.85(D)] ‘when
there is a change in ownership and control of brands through an arms-length merger or
acquisition.’” St. Killian at 3, quoting InBev USA LLC v. Hill Distrib. Corp., S.D. Ohio
No. 2:05-CV-00298, 2006 WL 2010218 (Apr. 3, 2006). Thus, “an entity can only qualify as a ‘successor manufacturer’ under subsection (D) if one of the situations in
subsection (B) does not apply.” Id.
{¶34} In the instant case, when Empson took over as il Molino’s exclusive
importer in February 2010, Empson did not acquire any ownership rights in il Molino.
The record demonstrates that il Molino continues to maintain control over its brands and
can terminate its relationship with Empson at any time.
{¶35} il Molino’s reasoning for the change was that it was effectively reorganizing
its business structure. Because the wine remains under the ownership and control of il
Molino, Empson does not qualify as a “successor manufacturer” under R.C. 1333.85(D).
Rather, the record reveals that prior to its relationship with il Molino, Empson was
considered a manufacturer, who supplied alcohol to another Ohio distributor. As a
manufacturer, Empson should have complied with the mandates of the OABFA, by
offering in good faith a written franchise specifying the rights and duties of both parties
and by not terminating BelVino/Euro USA’s distributor relationship without just cause.
By failing to do so, il Molino and Empson failed to comply with the mandates of the
OABFA when il Molino’s franchise relationship with Euro USA/BelVino was
unilaterally terminated.
{¶36} Moreover, the policy rationale behind OABFA supports finding in favor of
BelVino and Euro USA/BelVino. As the court in Beverage Distrib., Inc. v. Miller
Brewing Co., S.D.Ohio Nos. 2:08-CV-827, 2:08-CV-931, 2:08-CV-1112, 2:08-CV-1131,
and 2:09-CV-0022, 2009 WL 1542730 (June 2, 2009), stated: The [OABFA] is designed in part to protect distributors from certain practices of beverage manufacturers. It recognizes that distributors often have a substantial investment in their businesses, including the physical assets and real property used to distribute the manufacturers’ products, and that to allow a manufacturer unilaterally to terminate a franchise agreement puts the franchise distributors at great risk of harm. The just cause requirement for terminating a franchise agreement is intended to protect the franchisee from this type of arbitrary and potentially coercive act. Id. at 5.
See also St. Killian at 4, quoting Beverage Distrib., Inc.
{¶37} Thus, just as in St. Killian and Esber Beverage, we find that il Molino’s
reasons for terminating its franchise agreement, coupled with its retention of ownership
and control of its brand did not constitute “just cause” to terminate Euro USA/Belvino’s
distributor relationship.
{¶38} Accordingly, we reverse the trial court’s judgment on BelVino’s declaratory
judgment and breach of contract claims (Counts I and II) and remand with instructions for
the trial court to enter judgment, as a matter of law, in favor of BelVino. See App.R.
12(B).
Interference with Contract and Business Relationships
{¶39} In Count III, BelVino claims that Empson intentionally interfered with il
Molino’s performance of its franchise agreement. As a result of the assignment, BelVino
argues that this claim is based on Euro USA/BelVino’s relationship with il Molino.
BelVino argues that when Empson convinced il Molino to unilaterally and without just
cause terminate its agreement with Euro USA/BelVino, Empson interfered with Euro
USA/BelVino’s franchise agreement. To prevail on a claim of intentional interference
with a contract, BelVino must prove “(1) the existence of a contract, (2) [Empson’s] knowledge of the contract, (3) [Empson’s] intentional procurement of the contract’s
breach, (4) the lack of justification, and (5) resulting damages.” Kenty v. Transamerica
Premium Ins. Co., 72 Ohio St.3d 415, 1995-Ohio-61, 650 N.E.2d 863, paragraph two of
the syllabus.
{¶40} In Count IV, BelVino claims that Empson intentionally destroyed Euro
USA/BelVino’s business when it purposefully caused il Molino to discontinue its existing
relationship with Euro USA/BelVino. Tortious interference with a business relations
occurs when “a person, without privilege, induces or otherwise purposely causes a third
party not to enter into, or continue, a business relationship, or perform a contract with
another.” Castle Hill Holdings, LLC v. Al Hut, Inc., 8th Dist. No. 86442,
2006-Ohio-1353, ¶ 47, citing Juhasz v. Quik Shops, Inc., 55 Ohio App.2d 51, 379 N.E.2d
235, paragraph two of the syllabus (9th Dist.1978). However, one is privileged
purposely to cause a third person not to enter into or continue a business relation with a
competitor of the actor if “(a) the relation concerns a matter involved in the competition
between the actor and the competitor and (b) the actor does not employ wrongful means
and (c) his action does not create or continue an unlawful restraint of trade and (d) his
purpose is at least in part to advance his interest in competing with the other.”
Restatement of the Law, 2d, Torts, Section 768(1) (1979).
{¶41} In the instant case, there is no evidence that Empson used improper means to
become il Molino’s national importer. Moreover, Empson’s purpose in becoming il
Molino’s importer was to further its interests in business competition. As a result, Empson was privileged to compete with Euro USA/BelVino. Thus, we find that the trial
court properly granted summary judgment in favor of Empson on Counts III and IV.
{¶42} Accordingly, the first assignment of error is sustained in part and overruled
in part.
Motion for Relief from Judgment
{¶43} In the second assignment of error, BelVino argues that the trial court erred
when it denied its motion for relief from judgment under Civ.R. 60(B). However, based
on our disposition of the first assignment of error, this assignment of error is overruled as
moot. See App.R.12(A)(1)(c).
{¶44} Judgment is reversed with respect to Counts I and II and affirmed with
respect to Counts III and IV. The matter is remanded with instructions for the trial court
to enter judgment in favor of BelVino on Counts I and II.
It is ordered that appellant recover from appellees costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this judgment into
execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
MARY EILEEN KILBANE, JUDGE KATHLEEN ANN KEOUGH, J., CONCURS; MELODY J. STEWART, P.J., DISSENTS (SEE SEPARATE DISSENTING OPINION)
MELODY J. STEWART, P.J., DISSENTING:
{¶45} I would find that at the time BelVino filed its complaint, Euro USA/BelVino
was the real party in interest under Civ.R. 17(A) and that the court should have dismissed
all of BelVino’s claims that derived from the assignment of Euro USA/BelVino’s choses
in action sounding in violations of the Franchise Act.
{¶46} It is a familiar proposition that a party in interest may assign its legal claims
to a third party, typically by a contract assigning its full and exclusive interest in a legal
claim to the assignee. Sprint Communications Co. v. APCC Servs., Inc., 554 U.S. 269,
284-285, 128 S.Ct. 2531, 171 L.Ed.2d 424 (2008). When a legal claim or “chose in
action” is assigned, Civ.R. 17 is implicated. That rule states that “[e]very action shall be
prosecuted in the name of the real party in interest.” A real party in interest is one who is
directly benefitted or injured by the outcome of the case. U.S. Bank Natl. Assn. v.
Marcino, 181 Ohio App.3d 328, 2009-Ohio-1178, 908 N.E.2d 1032 (5th Dist.), citing
Shealy v. Campbell, 20 Ohio St.3d 23, 24, 485 N.E.2d 701 (1985).
{¶47} In Wells Fargo, N.A. v. Jordan, 8th Dist. No. 91675, 2009-Ohio-1092
(“Jordan”), we held that an assignment of judicial rights after a complaint had been filed
was ineffectual because the plaintiff could not have been the real party in interest at the
time the action was filed. Wells Fargo, a mortgagee, filed a foreclosure action against
mortgagors. The note and mortgage, however, named a different party as the original lender. When Wells Fargo sought summary judgment, it attached an assignment of the
note and mortgage from the named lender to the mortgagee. The assignment, however,
was dated more than one month after the complaint had been filed. The trial court
dismissed the case and we affirmed, finding that Wells Fargo “was not the real party in
interest on the date it filed its complaint seeking foreclosure against Jordan.” See also
Deutsche Bank Natl. Trust Co. v. Triplett, 8th Dist. No. 94924, 2011-Ohio-478, ¶ 12;
Wells Fargo Bank N.A. v. Byrd, 178 Ohio App.3d 285, 2008-Ohio-4603, 897 N.E.2d 722
(1st Dist.) (“Byrd”).
{¶48} It is true, as BelVino argues, that Jordan has not been followed by other
districts. For example, in Deutsche Bank Natl. Trust Co. v. Traxler, 9th Dist. No.
09CA009739, 2010-Ohio-3940 (“Traxler”), the Ninth District Court of Appeals declined
to follow Jordan, stating that it has held that “a bank need not possess a valid assignment
at the time of filing suit so long as the bank procures the assignment in sufficient time to
apprise the litigants and the court that the bank is the real party in interest.” Id. at ¶ 11,
citing Bank of New York v. Stuart, 9th Dist. No. 06CA008953, 2007-Ohio-1483, ¶ 12.
The distinction between Jordan and Traxler is one highlighted by the Tenth
District Court of Appeals in Wells Fargo Bank, N.A. v. Sessly, 188 Ohio App.3d 213,
2010-Ohio-2902, 935 N.E.2d 70 (10th Dist.). That court, citing to the First District’s
decision in Byrd, noted the “glaring distinction” in Byrd that “the real party in interest
had neither been substituted nor joined in the foreclosure suit.” Sessly at ¶ 16.
{¶49} BelVino filed its initial complaint June 2010, before it took an assignment of Euro USA/BelVino’s chose in action. Even though BelVino had relinquished its
status as a distributor in September 2008 when forming the joint venture known as Euro
USA/BelVino, it represented itself in the complaint as the distributor of il Molino wines
at the time Empson was hired as the new importer. BelVino filed an amended complaint
in August 2010, shortly after taking an assignment of Euro USA/BelVino’s chose in
action. The amended complaint did not mention Euro USA/BelVino much less state that
BelVino was asserting Euro USA/BelVino’s rights by assignment.
{¶50} I find no functional difference between the cited mortgage cases and this
case. Civ.R. 17 permits a plaintiff to cure a real-party-in-interest problem by (1) showing
that the real party in interest has ratified the commencement of the action or (2) joining or
substituting the real party in interest. Ohio Cent. RR. Sys. v. Mason Law Firm Co.,
L.P.A., 182 Ohio App.3d 814, 2009-Ohio-3238, 915 N.E.2d 397 (10th Dist.), ¶ 33. At
the time it filed its original complaint, BelVino was not the real party in interest. It did
not cure any defect in that regard in the amended complaint because it did not join or
substitute Euro USA/BelVino as the real party in interest. And it did not show that Euro
USA/BelVino ratified the commencement of the action even though Euro USA/BelVino
did not dissolve until December 2010 — some four months after filing the amended
complaint.
{¶51} What is more, there is no practical distinction between Jordan and this case.
It is true that il Molino and BelVino had a longstanding relationship, but that fact is
immaterial to the question of who was the real party in interest. The Euro USA/BelVino joint venture supplanted BelVino as the sole distributor of il Molino wines, so il Molino
could rightfully understand that BelVino’s lawsuit, filed in its own name, was in relation
to its status as an importer. il Molino was not required to read between the lines to
ascertain the real party in interest.
{¶52} The majority’s citation to the old bromide that the civil rules should be
liberally construed is unnecessary here: Civ.R. 17(A) specifically grants a party a
reasonable time to permit substitution of a party. BelVino had the opportunity to amend
its complaint after receiving the assignment of the joint venture’s legal rights, but failed
to mention that it was suing under rights obtained from Euro USA/BelVino as the sole
distributor of il Molino wines. In fact, BelVino failed to mention Euro USA/BelVino at
all in the amended complaint. This was a fatal omission and could not be cured simply
because BelVino had a course of dealing with il Molino as an importer of il Molino
wines. BelVino and Euro USA/BelVino were distinct corporate entities with distinct
roles under Ohio’s Franchise Act.
{¶53} BelVino should have been barred from asserting any claims relating to the
termination of Euro USA/BelVino as the distributor of il Molino wines. With all of the
claims asserted by BelVino stemming from Euro USA/BelVino’s status as a distributor, I
would find that there are no justiciable claims remaining for review. Therefore, I
respectfully dissent.