Cornell v. Rudolph Foods, Inc.

2011 Ohio 4322

• Court: Ohio Court of Appeals
• Decided: August 29, 2011
• Docket: 1-10-89
• Status: Published

Opinion

[Cite as Cornell v. Rudolph Foods, Inc., 2011-Ohio-4322.]

IN THE COURT OF APPEALS OF OHIO THIRD APPELLATE DISTRICT ALLEN COUNTY

N. THOMAS CORNELL,

PLAINTIFF-APPELLANT, CASE NO. 1-10-89

v.

JOHN RUDOLPH, ET AL., OPINION

DEFENDANTS-APPELLEES.

Appeal from Allen County Common Pleas Court Trial Court No. CV 2010 0057

Judgment Affirmed

Date of Decision: August 29, 2011

APPEARANCES:

John F. Murray and Robert H. Miller for Appellant

Matthew C. Huffman for Appellees Case No. 1-10-89

WILLAMOWSKI, J.

{¶1} Although this appeal has been placed on the accelerated calendar, this

court elects to issue a full opinion pursuant to Loc.R. 12(5).

{¶2} Plaintiff-Appellant, N. Thomas Cornell (“Cornell”), appeals a

judgment of the Allen County Court of Common Pleas granting summary

judgment in favor of Defendants-Appellees, John Rudolph, Mary Rudolph, and

Rudolph Foods Company, Inc. (collectively, “the Appellees”). On appeal, Cornell

contends that the trial court erred when it held that his declaratory judgment action

to determine his ownership interest in Rudolph Foods was barred by the statute of

limitations and res judicata. For the reasons set forth below, the judgment is

affirmed.

{¶3} On November 3, 1990, Cornell married Susan Cornell, nee Rudolph

(“Susan”). Susan’s parents, John and Mary Rudolph (“Mr. Rudolph” and “Mrs.

Rudolph”), are founders, officers, and shareholders of Rudolph Foods Company,

Inc. (“Rudolph Foods” or “the Company”), a family-owned business. Susan and

her five siblings also had stock/ownership interests in Rudolph Foods at the time

of her marriage to Cornell. Shortly after their marriage, Susan wrote a check to

her parents on December 31, 1990, for $20,000 (“the Check”) from the couple’s

joint checking account. Cornell claims that Susan and her brother, Phil Rudolph,

told him that the money was used to purchase shares in Rudolph Foods. Phil

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Rudolph was also an officer and shareholder of the Company at the time, but he is

now deceased. Susan denies that this was the purpose of the check.

{¶4} Some fifteen years later, in early 2006, Cornell began the process of

accounting for his assets because he and Susan were experiencing marital

difficulties and were contemplating divorce. Cornell requested a certificate for the

stock in the Company. It was at this time that he claims that he learned that no

stock had been issued and he was told that he did not have an interest in the

Company.

{¶5} Approximately three years later, on May 28, 2009, the couple’s

Agreed Judgment Entry Final Decree of Divorce (“Decree”) was filed in Allen

County Court of Common Pleas, Domestic Relations Division, Case No. DR

2008-0060. In the divorce decree, Susan was awarded her premarital interest in

Rudolph Foods. The Decree further stated that each party was to retain all

checking accounts, savings accounts, stocks and bonds in their respective names

free and clear of any claim of the other, relinquishing any and all rights in said

assets. And finally, the Decree contained a release and discharge clause stating

that “the parties agree that all matters arising out of their marital relationship are

fully and completely adjusted and settled * * *.” However, Cornell now asserts

that neither the purpose of the Check nor the ownership of any stock allegedly

purchased with the Check, was litigated, contested, or addressed in any way

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during the divorce proceedings. (Cornell’s Affidavit, Ex. A to Memorandum in

Opposition to Motion for Summary Judgment.)

{¶6} On January 19, 2010, Cornell filed a complaint for declaratory

judgment against the Appellees, requesting a declaration by the court that Cornell

has an ownership interest in Rudolph Foods as a result of the Check paid to Mr.

and Mrs. Rudolph; or, in the alternative, a declaration that he is entitled to the

return of the $20,000. The Appellees denied all of the allegations; they asserted

that the check was never used to purchase any stock in the Company; they raised

numerous affirmative defenses (including res judicata and statute of limitations);

and, they filed a counterclaim for abuse of process for bringing a false, fraudulent,

and malicious action.

{¶7} The Appellees moved for summary judgment, claiming that Cornell’s

claims were barred by collateral estoppel, by the statute of limitations, and by the

terms of the divorce decree, which had already settled all of the couple’s property

issues. Cornell opposed the motion, claiming that material facts in the case were

very much in dispute; that his claim was not collaterally estopped because the

Appellees were neither parties nor privities in the divorce proceedings; and, that

the statute of limitations was tolled by the discovery rule because Cornell did not

discover that his claims to stock ownership were disputed until sometime after

January 2006, when his request for a stock certificate was denied.

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{¶8} On November 22, 2010, the trial court filed its judgment entry

granting summary judgment in favor of the Appellees because Cornell’s claims

were barred by the statute of limitations and they were also barred by res judicata

because “any claims and/or marital property that [Cornell] thought he possessed as

a result of the check written in 1990 and/or discovered in 2006 was clearly

disposed of in the Final Judgment Entry [of the Divorce Decree.]” (Nov. 22, 2010

J.E., p. 7.) Although the Appellees still have a counter claim pending in the case,

the trial court stated that its decision resolving this cause of action was a final

judgment pursuant to Civ.R. 54(B) and that there was no just cause for delay.

{¶9} Cornell now appeals this judgment, raising the following two

assignments of error.

First Assignment of Error

The trial court erred as a matter of law in finding that [Cornell’s] claim was barred by the applicable statute of limitations.

Second Assignment of Error

The trial court erred as a matter of law in finding that [Cornell’s] claim was barred by collateral estoppel and/or res judicata.

{¶10} An appellate court reviews a summary judgment order de novo.

Hillyer v. State Farm Mut. Auto. Ins. Co. (1999), 131 Ohio App.3d 172, 175, 722

N.E.2d 108. Pursuant to Civ.R. 56(C), summary judgment may be granted when:

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(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, who is entitled

to have the evidence construed most strongly in his or her favor. Horton v.

Harwick Chemical Corp., 73 Ohio St.3d 679, 686-687, 1995-Ohio-286, 653

N.E.2d 1196.

{¶11} The party moving for summary judgment has the initial burden of

producing some evidence which demonstrates the lack of a genuine issue of

material fact. Dresher v. Burt, 75 Ohio St.3d 280, 293, 1996-Ohio-107, 662

N.E.2d 264. Once the moving party meets its initial burden, the nonmoving party

must then produce competent Civ.R. 56(C) evidence demonstrating that there is a

genuine, material issue for trial. Id. at 293. In order to defeat summary judgment,

the nonmoving party must produce evidence beyond allegations set forth in the

pleadings and beyond conclusory statements in an affidavit. Miller v. Potash

Corp. of Saskatchewan, Inc., 3d Dist. No. 1-09-58, 2010-Ohio-4291, ¶13.

{¶12} As a preliminary issue, Cornell claims that summary judgment is not

appropriate in this case because there is a genuine issue of material fact. Susan

and her family have stated in their affidavits that the Check was not used to

purchase any Rudolph Foods stock and that no stock was ever issued to Cornell.

Cornell’s affidavit states that “I have an ownership interest in some stock in

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Defendant Rudolph Foods *** as a result of the $20,000 paid to Defendants John

and Mary Rudolph ***” and that he was told by Phil Rudolph that stock had been

purchased for Cornell and Susan. However, Cornell has not provided evidence

that any such stock exists, other than his conclusory, self-serving affidavit and an

asserted hearsay statement from Susan’s deceased brother. “Generally, a party's

unsupported and self-serving assertions, offered by way of affidavit, standing

alone and without corroborating materials under Civ.R. 56, will not be sufficient

to demonstrate material issues of fact. Otherwise, a party could avoid summary

judgment under all circumstances solely by simply submitting such a self-serving

affidavit containing nothing more than bare contradictions of the evidence offered

by the moving party.” (Citations omitted.) TJX Cos., Inc. v. Hall, 183 Ohio

App.3d 236, 2009-Ohio-3372, 916 N.E.2d 862, ¶30.

{¶13} In any case, we do not find these factual differences to be material to

deciding the issues in this case pertaining to estoppel, res judicata and the statute

of limitations. All agree that Susan wrote the Check to her parents in late 1990.

In construing the “facts” in favor of Cornell, it does not matter whether he is trying

to settle the disposition of the $20,000 Check or any stock that may or may not

have been purchased with the $20,000. In either case, the outcome of our decision

is not affected.

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{¶14} We shall begin our review of the trial court’s decision with the

second assignment of error. Cornell claims that res judicata does not bar his

current claims because the decree only addresses Susan’s premarital stock interest

in Rudolph Foods;1 not any interest acquired after the date of the marriage. While

the decree states that Cornell will have no interest in Susan’s premarital property,

Cornell claims that it is “completely silent” as to the Check and stock purchased

with the Check, which would be the “joint marital property of [Cornell] and

Susan.” (Appellant’s Br., p. 8.) Furthermore, Cornell argues that the Appellees

were not a party or in privity to the divorce action, so res judicata and the decree’s

“release and discharge” language does not apply to them.

{¶15} The real issue at hand is not whether the Appellees owe Cornell any

stock, but rather, it involves the disposition of property from the couple’s marriage

and the determination as to who is entitled to that property. The determination as

to whether the $20,000 (or any property that may have been purchased with the

Check) was marital property or whether it was separate property, and how it was

to be divided, was a matter to be decided at the time of the divorce by the domestic

1 The divorce decree stated that “[Susan] is the owner of an interest in Rudolph Foods, Inc., it’s premarital property, and a general partnership known as Westminster Properties and shall continue to retain all right, title and interest to that, [Cornell] shall have no interest in any of that property.” (Divorce Decree, p. 7.) Cornell was granted his entire interest in Cornell Cottage LLC, Cornell & Finkelmeier, Inc., Insurance Agency, C&F Properties, LLC, and five other limited liability companies listed in the decree.

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relations court. See R.C. 3105.171(B) (stating that in divorce proceedings, the

court shall determine what constitutes marital property, what constitutes separate

property, and “the court shall divide the marital and separate property equitably

between the spouses” because the domestic relations court “has jurisdiction over

all property in which one or both spouses have an interest.”)

{¶16} We do not know why Cornell failed to raise this mater at the time of

the divorce proceedings. Civ.R. 75(B) allows for the joinder of parties in a

divorce action and states in pertinent part that, “[a] person or corporation having

possession of [or] control of *** an interest in property *** out of which a party

seeks a division of marital property *** may be made a party defendant.” Civ.R.

75(B)(1); Maloney v. Maloney, 160 Ohio App.3d 209, 2005-Ohio-1368, 826

N.E.2d 864, ¶56. Cornell was fully aware of this issue with the

Check/stock/property during his divorce proceedings. He could have, and should

have, joined the Appellees at that time to resolve any issues pertaining to the

ownership/disposition of the money/property resulting from the disbursement of

the Check. Cornell failed to join the Appellees to resolve the matter at that time

and now he is attempting to say that the issue of the money/property related to the

Check was not addressed in the divorce decree. It was Cornell himself who was

responsible for this specific issue not being brought up at the time of the divorce

proceedings. Although not mentioning the Check/stock specifically, the Decree

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divided all of the couples’ property and declared that all of the property from the

marriage had been divided and that all such matters were fully and completely

settled. Therefore, we find that Cornell is now estopped from attempting to

litigate this matter after having had a full opportunity to settle all property issues at

the time of the divorce.2

{¶17} Cornell’s cause of action against the Appellees appears to be an

attempt to circumvent the couple’s divorce Decree and modify the final property

division. Not only does R.C. 3105.171(I)3 prohibit a court from modifying a prior

property division, but Cornell’s effort to do so is barred by res judicata, i.e.,

collateral estoppel, in this case.

{¶18} Cornell argues that collateral estoppel, also known as “issue

preclusion,” is not applicable because the Appellees were not a party to the

divorce action. This assertion is not based on a correct application of the concept

of collateral estoppel. Collateral estoppel prevents parties or their privies from re-

litigating facts and issues that were already decided in a previous case. Thompson

2 Furthermore, Cornell never appealed the final divorce decree. See, e.g., Smith v. Smith, 9th Dist. No. 23278, 2007-Ohio-512, ¶6 (finding that appellant's arguments regarding entitlement to funds could have been raised in a direct appeal of the original divorce decree and now are barred by res judicata, as the doctrine of res judicata bars all subsequent actions based upon any claim arising out of a transaction or occurrence that was previously decided as a final and valid judgment in a prior action.) 3 2010 H.B. 238, effective September 8, 2010 amended R.C. 3105.171(I) to provide that a court may modify a prior property division “upon the express written consent or agreement to the modification by both spouses.” Because the divorce and post-decree proceedings occurred before the effective date of this amendment, we apply the statute as it was previously written.

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v. Wing (1994), 70 Ohio St.3d 176, 183, 637 N.E.2d 917, 923. The division of

marital property was decided in the Decree. Collateral estoppel basically states

that “[a] party precluded under the principle from relitigating an issue with an

opposing party likewise is precluded from doing so with another person unless he

lacked full and fair opportunity to litigate that issue in the first action, or unless

other circumstances justify according him an opportunity to relitigate that issue.”

(Emphasis added.) Hicks v. De La Cruz (1977), 52 Ohio St.2d 71, 74, 369 N.E.2d

776, citing the Restatement of the Law 2d, Judgments.

{¶19} Cornell had a full and fair opportunity to settle all issues pertaining

to all property owned by the parties, or either of the parties, with his former wife

during the divorce proceedings and is precluded from relitigating those matters

with her. Likewise, he is also precluded from relitigating a matter of a property

issue now with the Appellees. See id. Therefore, the Appellees are asserting

defensive collateral estoppel against Cornell. Cornell was a party in the prior

divorce/property settlement action, and he is the party “against whom collateral

estoppel is asserted.” See Thompson v. Wing, supra. For collateral estoppel to

apply, the strict rule of mutuality of parties, usually applicable to res judicata

determinations, is relaxed, and the party seeking to apply the doctrine need show

only that the party against whom the doctrine is asserted (Cornell herein)

previously had his day in court and was permitted to fully litigate the specific issue

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sought to be raised in the latter action (the disposition of the marital property).

See Mitchell v. Internatl. Flavors & Fragrances, Inc., 179 Ohio App.3d 365,

2008-Ohio-3697, 902 N.E.2d 37, ¶¶26-27; Schroyer v. Frankel (C.A. 6, 1999),

197 F.3d 1170, 1178 (applying Ohio law). See, also, McAdoo v. Dallas Corp.

(C.A.6, 1991) 932 F.2d 522, 524-25 (discussing Ohio law pertaining to mutuality

in defensive collateral estoppel cases). The divorce Decree was a final judgment

settling the matter of all property owned by the couple or either of them.

{¶20} The domestic relations court was charged with deciding all issues

pertaining to Cornell and Susan’s marital and separate property division. Cornell

could have and should have previously raised the issue then. He did not. Cornell

is now estopped from trying to now litigate this property issue under the guise of a

different cause of action. Cornell’s claims are barred by res judicata (defensive

collateral estoppel) and his second assignment of error is overruled.

{¶21} Based on this finding, there is no need to review the first assignment

of error pertaining to the statute of limitations. Having found no error prejudicial

to the Appellant herein in the particulars assigned and argued, we affirm the

judgment of the trial court.

SHAW and PRESTON, J.J., concur.

/jlr

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