[Cite as Marck v. Partin, 2024-Ohio-4829.]
IN THE COURT OF APPEALS
TWELFTH APPELLATE DISTRICT OF OHIO
BROWN COUNTY
TINA MARCK, et al., : CASE NO. CA2023-11-013 Appellees, : OPINION : 10/7/2024 - vs - :
THOMAS PARTIN, et al., :
Appellants. :
CIVIL APPEAL FROM BROWN COUNTY COURT OF COMMON PLEAS Case No. 2020-0399
John Woliver; and O'Hara, Taylor, Sloan & Cassidy, and Michael J. O'Hara, for appellees.
Dinsmore & Shohl LLP, and Alan H. Abes; and Rose & Dobyns, and Richard L. Goettke, for appellants.
M. POWELL, J.
{¶ 1} Defendants-appellants, Thomas Partin and other related parties, appeal a
decision of the Brown County Court of Common Pleas granting class certification to
plaintiffs-appellees, Tina Marck, Nicholas and Diana Waldman, Cody Rutherford and
Bethanie Rothwell, and Charles and Ticey Elliot. Brown CA2023-11-013
{¶ 2} Appellants in this appeal are Thomas Partin, his wife Melissa Partin, Gary
Rowland, DECA Management, Inc., Equity Trust Company Custodian FBO Thomas
Partin IRA, Capital Investment Priorities, Brush Creek Motor Sports Complex LLC,
Heritage Unlimited, LLC, Regal Partnership, and E.T.C. Custodian FBO Edmond Taylor
IRA. Thomas Partin owns DECA, Capital Investment, Brush Creek, and Heritage. Equity
Trust Company Custodian FBO Thomas Partin IRA is owned and managed by Thomas
Partin as a retirement asset; E.T.C. Custodian FBO Edmond Taylor IRA is a retirement
asset for Edmond Taylor, Thomas Partin's former brother-in-law. Thomas Partin is a 50
percent owner and the active partner in a residential real estate business with Gary
Rowland.
{¶ 3} On August 11, 2020, appellees filed a complaint alleging that they and
members of their class were "victimized by an unlawful residential property scheme
devised and operated by Defendants." Specifically, the complaint alleged that appellees
and members of their class entered into written agreements with various appellants to
purchase homes and that the agreements "violate numerous federal and state laws
designed to protect residential purchasers and tenants from predatory practices." For
various reasons, appellees and members of their class are individuals who could not
obtain conventional mortgage loan financing. The residential property agreements at
issue were written by Thomas Partin and are either titled Lease with Option to Buy
("LWO") or Rent To Own ("RTO") (hereinafter, the various RTOs and LWOs will be
referred to collectively as "the Contracts"). Heritage services all the Contracts. Steve
Partin, the son of Thomas and Melissa Partin, is the office manager of Heritage and
administers the operation.
{¶ 4} The complaint set forth causes of action for (1) violation of R.C. Chapter
5313, Ohio's Land Installment Contract law; (2) violation of R.C. Chapter 5321, Ohio's
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Landlord-Tenant law; (3) violation of Ohio's Consumer Sales Practices Act under R.C.
1345.02 and 1345.03; (4) common law fraud; (5) violation of R.C. Chapter 1322, Ohio's
Residential Mortgage Lending Act; (6) violation of Ohio's Consumer Sales Practices Act
under R.C. 1345.031; (7) violation of the federal Truth in Lending Act ("TILA") and the
federal Home Ownership Equity Protection Act ("HOEPA"); and (8) common law breach
of contract. The complaint sought certification as a class action, declaratory and
injunctive relief, and money damages.
{¶ 5} Betty Curless and her mother Bertha Popp were added as named plaintiffs
in December 2020. On June 15, 2022, appellees filed a second amended complaint
adding Tyrea Bragg as a named plaintiff and asserting an additional cause of action:
violation of R.C. 1349.41, unfair and deceptive acts and practices by a nonbank mortgage
lender.
{¶ 6} Contemporaneously with the filing of their second amended complaint,
appellees moved for class certification pursuant to Civ.R. 23(B)(2) and (B)(3). The motion
asserted that during his deposition, Steve Partin estimated that the number of Contracts
exceeded 200. The motion sought class action certification for a class defined as
All persons who entered into a "Rent-to-Own" or "Lease with Option to Buy" agreement with any Defendant to rent and/or purchase, of residential real property in Ohio, or entered into any other form of agreement in which any such class member is obligated to make periodic payments to any Defendant for the rent and/or purchase of residential real property in Ohio. These contracts are best described as seller financed residential mortgage agreements but the sellers retain the right of a residential landlord to evict for non-payment. The class is limited to those individuals described above who are or were making payments to any of the defendants at any time since August 11, 2016, to the present.
Subclass A Definition: All individuals who fit the Class Definition and who continue to perform under such contract.
Subclass B Definition: All individuals who fit the Class
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Definition and who abandoned such contracts or otherwise terminated performance under such contracts.
{¶ 7} A hearing on the motion for class certification was held before a magistrate
on February 14-15, 2023. At the outset of the hearing, the common law fraud and breach
of contract claims were withdrawn by appellees as class claims. Several appellees and
Steve Partin testified at the hearing. The depositions of appellees Bertha Bopp, Nicolas
Waldman, and Charles and Ticey Elliot, the deposition of Thomas Partin, the deposition
of Steve Partin, and several exhibits were admitted into evidence and reviewed by the
magistrate in resolving the motion for class certification.
{¶ 8} The evidence at the hearing revealed that appellants were in the business
of self-financing home purchases by appellees and prospective class members. This was
accomplished pursuant to the Contracts. The Contracts provided for the rent and/or
purchase of residential real property. Upon reviewing the Contracts' specific provisions
and their servicing, the magistrate found that every Contract entered into by appellees
and prospective class members contained the following 12 factual elements common to
appellees and prospective class members:
1. Down Payment Obligation – The renter/purchaser is charged a down
payment of 7 percent of the established purchase price at the outset;
however, a renter/purchaser may choose to pay more to reduce the
monthly payments.
2. Payment Obligation of Plaintiffs – The renter/purchaser is required to
make monthly payments to appellants, which include the following three
components: a monthly "mortgage" or "Rent To Own" payment; a
property tax payment; and an insurance payment. A monthly $5.00
water bill processing fee is also typically included in the Contracts.
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3. Obligation to Keep the Premises Fit and Habitable – The obligation
to keep the premises fit and habitable lies with appellees and
prospective class members.
4. Defendants' Right to Evict – In the event a renter/purchaser is in
arrears of rent or any payment obligation for more than ten days,
appellants may evict the renter/purchaser as if appellants are residential
landlords. The evidence showed that appellants have issued three-day
notices to vacate to appellees when a water bill was not timely paid.
5. Recording of Documents – Appellants never record the Contracts with
the county recorder.
6. The Finance Terms – After the initial payment, the balance of the
purchase price is financed by appellants over 30 years at a 12 percent
interest rate. Appellants have developed an amortization schedule
setting forth the calculation of the payments over the life of the
Contracts.
7. Seller Financed Agreements – Appellants function as a nonbank
financer of the Contracts.
8. Escrow Accounts – Although appellants handle all the property tax
payments and insurance payments for the renter/purchaser, they do not
maintain separate escrow accounts for these payments.
9. Finance Disclosures – Other than advising the renter/purchaser that
the payment obligation is financed at 12 percent, no other finance
information or other disclosures which might be required under both
federal and state law are provided.
10. Insurance Information – the renter/purchaser is charged a monthly
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amount for "insurance," yet no policy is ever issued in the name of the
renter/purchaser. Additionally, the amount of coverage is limited to
appellants' interest in the property and may not cover the purchaser's
entire interest. Unless specifically requested, appellants never provide
the information to the renter/purchaser of the amount of insurance
coverage being purchased, the terms of coverage including the losses
which would be insured; the process by which a claim may be made;
and the identity of the insurer.
11. Late Payment Penalty – If the renter/purchase is not current in any
financial obligation by the seventh day of the due date, a $50.00 late fee
penalty is assessed.
12. No Determination of Ability to Make Scheduled Payments – Steve
Partin confirmed appellees' testimony that appellants never inquired of
any of the appellees or class members as to whether they had any
financial ability to make the scheduled payments pursuant to the terms
of the Contracts.
{¶ 9} On July 25, 2023, the magistrate granted appellees' motion for class
certification for the class and two subclasses as defined and requested by appellees. The
magistrate found that appellees had satisfied Civ.R. 23(A), (B)(2), and (B)(3). Appellants
filed objections to the magistrate's decision. On October 13, 2023, the trial court overruled
appellants' objections and adopted the magistrate's decision.
{¶ 10} Appellants now appeal the class certification, raising four assignments of
error. Appellants do not contest the trial court's findings regarding numerosity or
adequacy of representation by class counsel. Rather, they challenge the trial court's
findings regarding the existence of an identifiable class, commonality, typicality, and the
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propriety of granting class certification under Civ.R. 23(B)(2) and (B)(3).
{¶ 11} The purpose of a class action is to facilitate adjudication of disputes
involving common issues between multiple parties in a single action. Augustus v.
Progressive Corp., 2003-Ohio-296, ¶ 14 (8th Dist.). "[T]he representative of the putative
class is required to affirmatively demonstrate that each requirement of Civ.R. 23 has been
satisfied." Cullen v. State Farm Mut. Auto. Ins. Co., 2013-Ohio-4733, ¶ 2.
{¶ 12} Seven prerequisites must be met to certify a class action under Civ.R. 23:
(1) an identifiable and unambiguous class must exist; (2) the named representatives of
the class must be class members; (3) the class must be so numerous that joinder of all
members of the class is impractical; (4) there must be questions of law or fact common
to the class; (5) the claims or defenses of the representative parties must be typical of the
claims and defenses of the members of the class; (6) the representative parties must
fairly and adequately protect the interests of the class; and (7) one of the three
requirements of Civ.R. 23(B) must be satisfied. Stammco, L.L.C. v. United Tel. Co. of
Ohio, 2013-Ohio-3019, ¶ 19.
{¶ 13} As to the seventh prerequisite and as applicable here, Civ.R. 23(B) requires
that the court make a finding that
(2) the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole; or
(3) the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.
{¶ 14} A trial court has broad discretion in determining whether to certify a class
and its determination will not be disturbed absent an abuse of discretion. Id. at ¶ 25.
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However, such discretion is not unlimited, and the trial court is required to conduct a
rigorous analysis when determining whether to certify a class. Cullen, 2013-Ohio-4733
at ¶ 16. The trial court may grant certification only after finding that all the requirements
of Civ.R. 23 have been satisfied. Id.
{¶ 15} With these guiding principles in mind, we turn to appellants' assignments of
error. The fourth assignment of error will be addressed out of order.
{¶ 16} Assignment of Error No. 1:
{¶ 17} THE TRIAL COURT ABUSED ITS DISCRETION BY CERTIFYING AN
AMBIGUOUS AND FACIALLY OVERBROAD CLASS DEFINITION.
{¶ 18} Appellants argue that the trial court abused its discretion by certifying the
class because (1) the class is ambiguous and overbroad as it includes individuals whose
claims are barred by applicable statutes of limitations, and (2) the trial court exceeded its
authority by considering the merits of appellees' claims in determining whether class
certification was appropriate.
{¶ 19} Pursuant to Civ.R. 23, the class must be identifiable and unambiguous.
Warner v. Waste Mgt., 36 Ohio St.3d 91, 96 (1988). The definition of the class must be
"sufficiently definite so that it is administratively feasible for the court to determine whether
a particular individual is a member." Hamilton v. Ohio Sav. Bank, 82 Ohio St.3d 67, 71-
73, 1998-Ohio-365. Thus, the class definition must be precise enough to permit
identification within a reasonable effort. Id.
{¶ 20} Noting that the class definition includes individuals who have entered into
Contracts since August 11, 2016, appellants argue that the class was improperly certified
because it includes individuals whose claims are barred by various applicable statutes of
limitations. Appellants point out that the statutes of limitations for landlord-tenant claims
and Ohio Consumer Sales Practices Act claims are two years, and that the statute of
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limitations for TILA claims is one or three years. Appellants argue the trial court abused
its discretion by failing to distinguish between the limitations periods for the various claims
and including class members no longer allowed to sue for certain claims as of August 11,
2020, the day the complaint was filed.
{¶ 21} In support of their argument, appellants cite a decision from the Seventh
District Court of Appeals for the proposition that "a class definition including claims barred
by the statute of limitations is not an 'unambiguous identifiable class' that can be certified."
Unifund CCR Partners v. Young, 2013-Ohio-4322 (7th Dist.). However, this case differs
from Unifund. First, unlike Unifund, this case does not involve a single representative
plaintiff asserting only a time-barred claim. Appellants do not contend that any of the
representative appellees have asserted time-barred claims. Second, appellants only
assert that some of the Ohio Consumer Sales Practices Act, landlord-tenant, and TILA
claims would be time-barred. However, appellees' complaint asserts several other
causes of action, not all of which would have been time-barred by August 11, 2020.
{¶ 22} Furthermore, the Ohio Supreme Court has held that a statute of limitations
is not a reason to deny certification when some, but not all, class members' claims may
be time-barred. "The focus at this stage is on how the class is defined. The test is whether
the means is specified at the time of certification to determine whether a particular
individual is a member of the class" under Civ.R. 23(A). Hamilton, 82 Ohio St.3d at 73.
"The question as to whether there are differing factual and legal issues does not enter
into the analysis until the court begins to consider the Civ.R. 23(B)(3) requirement of
predominance and superiority." Id. Subsequently, while addressing Civ.R. 23(B)(3), the
supreme court held, "'That a statute of limitations may bar the claims of some, but not all,
class members does not compel a finding that individual issues predominate over
common ones. . . . Rather, as long as there is a sufficient nucleus of common issues,
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differences in the application of a statute of limitations to individual class members will
not preclude certification under Rule 23(b)(3).'" Id. at 84, quoting 5 Moore, Federal
Practice, § 23.46[3], at Paragraphs 23-210 to 23-211 (3d Ed. 1997). The Eighth District
Court of Appeals has likewise held that "'possible differences in the application of a statute
of limitations to individual class members, including the named plaintiffs, does not
preclude certification of a class action so long as the necessary commonality and, in a
23(b)(3) class action, predominance, are otherwise present.'" Westgate Ford Truck
Sales, Inc. v. Ford Motor Co., 2007-Ohio-4013, ¶ 97 (8th Dist.), quoting In re Energy
Systems Equip. Leasing Sec. Litigation, 642 F. Supp. 718 (E.D.N.Y. 1986). We therefore
find no merit to appellants' statute of limitations argument.
{¶ 23} Appellants also argue that the trial court exceeded its authority by
considering the merits of appellees' claims in determining whether class certification was
appropriate.
{¶ 24} As pertinent here, the trial court defined the class as "All persons who
entered into a 'Rent-to-Own' or 'Lease with Option to Buy' agreement with any Defendant
to rent and/or purchase of residential real property in Ohio . . . . These contracts are best
described as seller financed residential mortgage agreements but the sellers retain the
right of residential landlord to evict for non payment." Appellants claim the trial court
"made a premature merits determination amounting to an improper fail-safe class" by
defining the class to include members having seller-financed residential mortgage
agreements where the nature of the Contracts is an unresolved merits issue, and by
repeatedly making "adverse merits determinations" throughout the certification process.
Such alleged determinations include "anyone who signed such an agreement is a
member of the class of persons damaged by the actions and illegal practices of [Thomas]
Partin and his organizations," "all the members of the class appear to be damaged by the
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illegal actions of the Defendants," and "[the Contracts] appear to be written by someone
with no regard to Ohio law and who desires to find a way around the law without regard
to the rights of those affected by the documents." The trial court made the first two
statements when overruling appellants' objections to the magistrate's decision regarding
the lack of an identifiable class and failure to establish typicality.
{¶ 25} "Class action certification does not go to the merits of the action." Ojalvo v.
Ohio State Univ. Bd. of Trustees, 12 Ohio St.3d 230, 233 (1984). "However, deciding
whether a claimant meets the burden for class certification pursuant to Civ.R. 23 requires
the court to consider what will have to be proved at trial and whether those matters can
be presented by common proof." Cullen, 2013-Ohio-4733 at ¶ 17. Thus, at the
certification stage in a class-action lawsuit, a trial court's rigorous analysis may include
probing the underlying merits of the plaintiff's claim, but only for the purpose of
determining whether the plaintiff has satisfied the prerequisites of Civ.R. 23. Stammco,
2013-Ohio-3019 at ¶ 44. "A fail safe class definition is one in which the putative class is
defined by reference to the merits of the claim." Id. at ¶ 8, fn. 2. "It requires a court to
rule on the merits of the claim at the class certification stage in order to tell who was
included in the class." Id. "Such a class definition is improper because a class member
either wins or, by virtue of losing, is defined out of the class and is therefore not bound by
the judgment." Id.
{¶ 26} Notwithstanding the characterization of the Contracts in the class definition,
the class consists of those individuals who entered into RTO or LWO agreements with
appellants during the specified time frame. All appellees and prospective class members
entered into RTOs or LWOs and any merits determination on the nature of the Contracts
will not affect class membership. Regardless of how the Contracts are ultimately
characterized, the class definition does not create a "fail-safe" class. Likewise, and
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notwithstanding the trial court's inartful reference to the illegality of appellants' actions and
practices, the court's statements in overruling appellants' objections do not create a "fail-
safe" class. Those statements are not part of the class definition and the class definition
is not based on the resolution of the merits of the case.
{¶ 27} Furthermore, the characterization of the Contracts as "seller financed
mortgage agreements" is supported by the record, and specifically by Steve Partin's
testimony during his deposition and the class certification hearing. Steve Partin testified
that appellants consider themselves as the seller in these transactions and that appellants
finance the sales. In any event, the "seller financed mortgage agreements" in the class
definition is surplusage. The gist of the class definition and its essential attribute is
individuals who entered into RTOs and LWOs with appellants during the requisite time
frame.
{¶ 28} Finally, the trial court's statement that the Contracts were written by
someone without regard to Ohio law is not included in the class definition and played no
part in the class certification. The statement was made in an entry denying appellants'
motion for judgment on the pleadings as to certain causes of action, and not during the
court's consideration of class certification.
{¶ 29} In light of the foregoing, the first assignment of error is overruled.
{¶ 30} Assignment of Error No. 4:
{¶ 31} THE TRIAL COURT ABUSED ITS DISCRETION BY CERTIFYING A
CLASS UNDER AN INCORRECT STANDARD FOR "TYPICALITY."
{¶ 32} Civ.R. 23(A)(3) provides that one or more members of a class may sue as
representative parties on behalf of all members "only if . . . the claims or defenses of the
representative parties are typical of the claims or defenses of the class." Appellants
challenge the trial court's typicality finding, arguing the trial court merely assumed
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typicality by presuming the representative plaintiffs sustained damages without regard to
whether the damages arose from the same claims.
{¶ 33} "[T]he requirement of typicality serves the purpose of protecting absent
class members and promoting the economy of class action by ensuring that the interests
of the named plaintiffs are substantially aligned with those of the class." Baughman v.
State Farm Mut. Auto. Ins. Co., 88 Ohio St.3d 480, 484, 2000-Ohio-397. "Typicality
determines whether a sufficient relationship exists between the injury to the named
plaintiff and the conduct affecting the class, so that the court may properly attribute a
collective nature to the challenged conduct." Id. at 485.
{¶ 34} "Thus, a plaintiff's claim is typical if it arises from the same event or practice
or course of conduct that gives rise to the claims of other class members, and if his or her
claims are based on the same legal theory." Id. "When it is alleged that the same unlawful
conduct was directed at or affected both the named plaintiff and the class sought to be
represented, the typicality requirement is usually met irrespective of varying fact patterns
which underlie individual claims." Id. Furthermore, typicality does not require that the
class representatives possess claims or defenses that are identical to those of the
putative class members. Barrow v. New Miami, 2016-Ohio-340, ¶ 32 (12th Dist.). Rather,
where a class representative's interests are substantially aligned or not in express conflict
with those of the class, typicality is satisfied. Id.
{¶ 35} Citing Baughman, the magistrate found that the typicality requirement was
satisfied because the claims of appellees and the class members are based upon the
same Contracts and appellants' course of conduct. Specifically, the magistrate found that
"Defendants' acts in entering into and administering the Contracts as described above
were unquestionably 'directed at' and 'affected both the named Plaintiffs and class sought
to be represented' in the same manner." Appellants objected to the typicality finding on
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the ground appellees "have very diverse situations," with each having his or her own
unique story to tell. The trial court adopted the magistrate's decision and overruled the
objection, finding that "each member of the class does not have to have the exact same
claim as all of the other members of the class. All the members of the class appear to be
damaged by the illegal actions of the Defendants. The Court is at a loss to understand
how that is not typical."
{¶ 36} The trial court did not abuse its discretion by finding that the class satisfied
the typicality requirement under Civ.R. 23(A)(3). The claims of appellees and the
prospective class members arise from the same practice or course of conduct—
appellants' practice of financing the purchase of a home by appellees and prospective
class members by entering into substantially similar Contracts. Appellants' conduct was
directed at or affected both appellees and the class sought to be represented. The claims
of appellees and the prospective class members are based on the same legal theories—
violations of Ohio's Land Installment Contract law, Ohio's Landlord-Tenant law, Ohio's
Consumer Sales Practices Act, Ohio's Residential Mortgage Lending Act, and TILA and
HOEPA.
{¶ 37} The fourth assignment of error is overruled.
{¶ 38} Assignment of Error No. 2:
{¶ 39} THE TRIAL COURT ABUSED ITS DISCRETION BY CERTIFYING A
CLASS UNDER CIV.R. 23(B)(3).
{¶ 40} Appellants argue the trial court abused its discretion by certifying the class
under Civ.R. 23(B)(3), raising three issues for review.
{¶ 41} Certification of a class under Civ.R. 23(B)(3) requires the trial court to make
two findings: first, "that the questions of law or fact common to the members of the class
predominate over any questions affecting only individual members" and, second, "that a
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class action is superior to other available methods for the fair and efficient adjudication of
the controversy." This inquiry requires a court to balance questions common among class
members with any dissimilarities between them, and if the court is satisfied that common
questions predominate, it then should "consider whether any alternative methods exist
for resolving the controversy and whether the class action method is in fact superior."
Cullen, 2013-Ohio-4733 at ¶ 29.
{¶ 42} In their first and second issues for review, appellants argue the trial court
erred by finding that common questions of fact predominate over questions affecting only
individual members. Appellants assert that based upon the trial court’s earlier
observation that the Contracts are ambiguous regarding whether they are land installment
contracts, leases, or mortgages, resolution of that ambiguity will require "an individualized
case-by-case analysis into the parties' intent at the time of contracting," thus defeating
predominance.1 Appellants further assert that individual factual issues predominate
because most of appellees' claims relate to "ordinary landlord-tenant claims: failure to
repair, fitness or habitability of the property, undisclosed latent defects, [and]
unreimbursed improvements to the property," thereby requiring "an inherently
individualized factual inquiry into pre-contractual negotiations" and necessarily resulting
in varying damage awards. This assertion assumes that the Contracts are determined to
be residential leases subject to R.C. Chapter 5321.
{¶ 43} The trial court found that the predominance requirement was met because
1. Early in the proceedings below, appellants moved for judgment on the pleadings as to appellees' first, fifth, sixth, and seventh causes of action, arguing that the Contracts were not land installment contracts. On May 6, 2021, the trial court denied the motion, stating, "It is abundantly clear that the documents in question are poorly drafted and ambiguous. They appear to be written by someone with no regard to Ohio law and who desires to find a way around the law without regard to the rights of those affected by the documents." The trial court further stated, "The Plaintiffs, after completing the discovery process, will have to choose which theory they wish to proceed upon at trial, but it is premature to require that election before discovery." - 15 - Brown CA2023-11-013
appellees' class claims are "subject to generalized proof" without need to examine each
class member's individual situation and are "amenable to class wide determinations."
That is, the trial court found that considering the identical provisions of the Contracts and
appellants' actions and practices, it could determine on a class wide basis whether the
statutory definitions and provisions set forth in federal statutes (TILA and HOEPA) and
Ohio's Land Installment Contract statute, Ohio's Landlord-Tenant statute, Ohio's
Consumer Sales Practices statute, and Ohio's Consumer Protection statute apply to the
Contracts. For example, the trial court found that "Plaintiffs' claim that each transaction
between Defendants and each class member violates the provisions in R.C. 1349.41 will
hinge upon a determination that these transactions constitute a mortgage and whether
each Defendant is a 'lender' as defined by that statute. Once again, this would be a class-
wide determination."
{¶ 44} To establish predominance under Civ.R. 23(B)(3), "it is not sufficient that
common questions [of law or fact] merely exist; rather, the common questions must
represent a significant aspect of the case and they must be able to be resolved for all
members of the class in a single adjudication." Howland v. Purdue Pharma L.P., 2004-
Ohio-6552, ¶ 19. "To meet the predominance requirement, a plaintiff must establish that
issues subject to generalized proof and applicable to the class as a whole predominate
over those issues that are subject to only individualized proof." Cullen, 2013-Ohio-4733
at ¶ 30. "[A] claim will meet the predominance requirement when there exists generalized
evidence which proves or disproves an element on a simultaneous, class-wide basis,
since such proof obviates the need to examine each class member's individual position."
Baughman, 88 Ohio St.3d at 489.
{¶ 45} The trial court did not err by finding that the predominance requirement was
met under Civ.R. 23(B)(3). This case involves two types of contracts written and used by
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appellants over the years, RTOs and LWOs. Steve Partin's testimony indicates that
LWOs were typically used before 2015 but were eventually phased out and replaced by
RTOs, and that as years passed and appellants "evolved," so did the terminology used
in the Contracts. Nonetheless, Partin testified that the parties' obligations were the same
under the RTOs and LWOs, that the Contracts contain identical provisions and are
financed by appellants, and that the purpose of the Contracts was to sell residential
property to individuals who were unable to obtain conventional financing and who could
not otherwise afford to buy residential property. Appellees' testimony and depositions
strongly indicate that appellees signed the Contracts believing and intending to purchase
a property from appellants whether the Contracts were RTOs or LWOs. In other words,
the Contracts and surrounding circumstances indicate the parties intended the Contracts
to be purchase agreements.
{¶ 46} Appellants claim, without identifying them, that the Contracts "have material
textual differences affecting payment structure and the obligations of the parties."
However, regardless of the terminology used in the Contracts, all Contracts contain
identical provisions and share identical servicing: (1) an initial upfront payment
representing 7 percent of the purchase price, (2) a monthly payment for the purchase of
the property that includes real estate taxes and insurance, (3) the balance of the purchase
price being financed by appellants over a 30-year term at an annual rate of 12 percent,
(4) an insurance policy issued solely in appellants' names and only covering appellants'
interest in the property, (5) appellants' failure to maintain a separate escrow account for
appellees' and class members' payments for real estate tax and insurance, (6) appellants'
failure to record the Contracts or any memoranda thereof with the county recorder, (7)
responsibility for all repairs and maintenance of the property lying solely with appellees
and prospective class members, and appellants assuming no responsibilities of a
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residential landlord under R.C. Chapter 5321, (8) payments that are seven days in arrears
being subject to a $50 late fee, and (9) regardless of when the deed is transferrable
(theoretically after five years for older LWOs and upon full payment of the purchase price
for a RTO and newer LWOs), appellants' authority to terminate the Contracts for non-
payment of any financial obligation at any time during the term of the Contracts and evict
appellees and class members, in which case appellants keep all payments already made
by appellees and class members and any equity appellees and class members may have
in the property.
{¶ 47} The Ohio Supreme Court has recognized that "a wide variety of claims may
be established by common proof" where the claims arise from standardized forms,
identical or similar form documents, or routinized procedures and practices,
notwithstanding the need to prove reliance. Cope v. Metro. Life Ins. Co., 82 Ohio St.3d
426, 430, 1998-Ohio-405; Hamilton, 82 Ohio St.3d at 84. Likewise, "claims based on an
underlying scheme are particularly subject to common proof." Cope at 431. "It is the
underlying scheme which demands attention. Each plaintiff is similarly situated with
respect to it." Id. at 432. The gravamen of appellees' complaint is that appellants
engaged in a scheme to collect payments from individuals who could not obtain a
conventional loan to purchase a home by offering contracts whose hybrid provisions
solely benefited appellants and allegedly circumvented statutory and regulatory
disclosure requirements. The ambiguity as to the actual nature of the Contracts and the
attendant legal obligations of the parties applies across the entire class. In that sense,
resolving that ambiguity is the predominate question.
{¶ 48} While individual class members' damages may involve separate proof, this
does not defeat predominance of common factual questions as supporting class
certification. "When 'one or more of the central issues in the action are common to the
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class and can be said to predominate, the action may be considered proper . . . even
though other important matters will have to be tried separately, such as damages or some
affirmative defenses peculiar to some individual class members.'" Black v. Girard, 2020-
Ohio-1563, ¶ 28 (11th Dist.), quoting Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442,
453 (2016). "The inquiry into whether there is damage-in-fact is distinct from the inquiry
into actual damages[.]" Felix v. Ganley Chevrolet, Inc., 2015-Ohio-3430, ¶ 34. "'When
evaluating damages in the predominance inquiry, '[t]he amount of damages is invariably
an individual question and does not defeat class action treatment.''" Id., quoting Gonzales
v. Comcast Corp., 2012 U.S. Dist. LEXIS 196 (E.D. Cal. Jan.3, 2012), quoting Blackie v.
Barrack, 524 F.2d 891, 905 (9th Cir.1975). Furthermore, "[T]he fact that a defense may
arise and may affect different class members differently does not compel a finding that
individual issues predominate over common ones." Hicks v. State Farm Fire & Cas. Co.,
965 F.3d 452, 460 (6th Cir. 2020). "[W]hen adjudication of questions of liability common
to the class will achieve economies of time and expense, the predominance standard is
generally satisfied even if damages are not provable in the aggregate." Id.
{¶ 49} In other words, the question of whether class members have suffered
damage-in-fact may be resolved in a class action even though the quantification of the
damages must be resolved individually in separate proceedings. Here, at the class-
certification stage, appellees adduced common evidence suggesting that all class
members suffered an injury-in-fact (notwithstanding questions regarding the individual
damages calculations for each class member), thereby showing predominance under
Civ.R. 23(B)(3). See Felix.
{¶ 50} In their third issue for review, appellants challenge the trial court's finding
that a class action is the superior method of adjudication. Appellants assert that the action
"will inevitably involve a series of mini-trials to determine liability and damages."
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{¶ 51} Civ.R. 23(B)(3)'s superiority requirement tests whether "class wide litigation
of common issues will reduce litigation costs and promote greater efficiency." Valentino
v. Carter-Wallace, Inc., 97 F.3d 1227, 1234 (3d Cir. 1996). The key is whether the
efficiency and economy of common adjudication outweigh the difficulties and complexity
of individual treatment of class members' claims. Warner, 36 Ohio St.3d at 96.
{¶ 52} The trial court found that a class action is superior to individual actions
because (1) it will achieve economies of time, effort, and expenses, and prevent the risk
of inconsistent judgments, and (2) although the damage amount for appellees and class
members will vary on some of the claims, the method of calculating damages on many of
the claims is constant and can be determined on the basis of appellants' detailed payment
records for each appellee and class member.
{¶ 53} The trial court did not err by finding that a class action is superior to
individual actions. Civ.R. 23(B)(3) is designed to "enabl[e] numerous persons who have
small claims that might not be worth litigating in individual actions to combine their
resources and bring an action to vindicate their collective rights." Hamilton, 82 Ohio St.3d
at 80. "'The policy at the very core of the class action mechanism is to overcome the
problem that small recoveries do not provide the incentive for any individual to bring a
solo action prosecuting his or her rights. A class action solves this problem by
aggregating the relatively paltry potential recoveries into something worth someone's
(usually an attorney's) labor.'" Id., quoting Amchem Prods. v. Windsor, 521 U.S. 591, 617
(1997).
{¶ 54} Here, the questions of law and fact which have already been shown to be
common to each respective subclass arise from Contracts with identical or materially
similar provisions. The gravamen of every complaint within each subclass is the same
and relates to appellants' use of standardized procedures and practices. Class
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certification will promote the uniform interpretation of the identical or materially similar
Contracts by determining the nature of the Contracts and the attendant legal obligations
of the parties, will eliminate any potential danger of varying or inconsistent judgments
while providing a forum for the vindication of rights of groups of people who individually
would be without effective strength to litigate their claims, and will more efficiently
adjudicate the individual class members' claims. Furthermore, disparity in damages
among class members is not a basis for denying class certification. Hamilton at 80, citing
Ojalvo, 12 Ohio St.3d at 232.
{¶ 55} In light of the foregoing, the trial court did not abuse its discretion by
certifying the class action under Civ.R. 23(B)(3). The second assignment of error is
overruled.
{¶ 56} Assignment of Error No. 3:
{¶ 57} THE TRIAL COURT ABUSED ITS DISCRETION BY CERTIFYING A
CLASS WITH INADEQUATE COHERENCE BETWEEN ITS MEMBERS UNDER CIV.R.
23(B)(2).
{¶ 58} Civ.R. 23(B)(2) "entails two requirements: (1) the action must seek primarily
injunctive relief, and (2) the class must be cohesive." Wilson v. Brush Wellman, Inc.,
2004-Ohio-5847, ¶ 13. Claims for individualized relief are not compatible with Civ.R.
23(B)(2), because the relief sought must affect the entire class at once. Cullen, 2013-
Ohio-4733 at ¶ 21. Thus, certification depends on "what type of relief is primarily sought,
so where the injunctive relief is merely incidental to the primary claim for money damages,
Civ.R. 23(B)(2) certification is inappropriate." Id. at ¶ 22.
{¶ 59} Appellants argue the trial court abused its discretion by certifying the class
under Civ.R. 23(B)(2) because (1) appellees do not primarily seek injunctive relief, and
(2) the trial court failed to address the cohesiveness of the class. In support of their
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argument that appellees do not primarily seek injunctive relief, appellants merely point
out appellees' allegation they suffered damages of more than $25,000.
{¶ 60} We first address the trial court's failure to determine whether the class was
cohesive. The record shows that the magistrate failed to address the cohesiveness of
the class in his analysis under Civ.R. 23(B)(2). Although appellants filed objections to the
magistrate's decision granting appellees' motion for class certification, they did not
specifically object to the magistrate's failure to address the cohesiveness of the class.
{¶ 61} Civ.R. 53(D)(3) governs the procedure for objecting to a magistrate's
decision. The rule requires a party to make timely, specific objections in writing to the
trial court, identifying any error of fact or law in the magistrate's decision. Lineback v.
Lineback, 2017-Ohio-5673, ¶ 15 (12th Dist.). A failure to file specific objections is treated
the same as a failure to file any objections. Ashley v. Kevin O'Brien & Assocs. Co., L.P.A.,
2023-Ohio-4677, ¶ 34 (10th Dist.). "Except for a claim of plain error, a party is prohibited
from assigning as error on appeal the trial court's adoption of any finding of fact or legal
conclusion, unless that party has objected to that finding or conclusion." Lineback at ¶
15; Civ.R. 53(D)(3)(b)(iv).
{¶ 62} Because appellants did not file an objection in accordance with Civ.R.
53(D)(3)(b), they have waived all but plain error on appeal. Mallikarjunaiah v. Shankar,
2020-Ohio-4508, ¶ 22 (12th Dist.). Plain error is only found in exceptional circumstances
where error, to which no objection was made at the trial court, seriously affects the basic
fairness, integrity, or public reputation of the judicial process, thereby challenging the
legitimacy of the underlying judicial process itself. Id.; Goldfuss v. Davidson, 1997-Ohio-
401, syllabus. Appellants do not claim plain error on appeal.
{¶ 63} Upon reviewing the record, we find that the trial court's failure to address
the cohesiveness of the class does not constitute plain error because the record indicates
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the class is cohesive. Both subclasses complain of conduct and practice perpetrated by
appellants against the class as a whole under the Contracts. The propriety of certification
under Civ.R. 23(B)(2) thus turns upon the type of relief sought.
{¶ 64} By its own terms, Civ.R. 23(B)(2) does not require both remedies of
injunctive and declaratory relief. Appellees sought declaratory and injunctive relief as to
the nature of the Contracts and the attendant legal obligations of the parties to the
Contracts. Specifically, appellees sought declarations that appellants violated Ohio's
Land Installment Contract Law, including its provisions protecting the right of vendees, as
well as their obligations as landlords under R.C. 5321.04 and 5321.13. Appellees sought
a permanent injunction prohibiting appellants from collecting rent payments without
assuming their obligations as landlords and monthly payments without recording the
Contracts. Appellees further sought declaratory and injunctive relief regarding appellants'
violations of their obligations as mortgage lender and mortgage broker under R.C.
Chapter 1322; appellants' unconscionable acts or practices regarding real estate
mortgage under Ohio Consumer Sales Practices Act; and appellants' deceptive and
unconscionable practice of charging and collecting insurance premiums without providing
an actual insurance policy in violation of Ohio Consumer Sales Practices Act.
{¶ 65} Although appellees also sought damages in conjunction with the legal
theories above, the declaratory and injunctive relief sought by appellees does not become
merely incidental to their claim for money damages. The class does not primarily seek
money damages; rather, their primary object is to terminate appellants' practice of
financing individuals' purchase of homes under the Contracts used by appellants which,
the record shows, results in an ambiguous legal status of all class members. "The fact
that money damages are also sought in addition to injunctive relief does not defeat
certification under Civ.R. 23(B)(2)." Hamilton, 82 Ohio St.3d at 86.
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{¶ 66} Both subclasses—individuals still operating under the Contracts and
individuals who, for various reasons, moved out of the home they were trying to purchase
from appellants—will benefit from the requested declaratory relief. Likewise, injunctive
relief is an important aspect of appellees' claims. Appellants argued below that the
subclass of individuals no longer operating under the Contracts would make certification
for that subclass inappropriate under Civ.R. 23(B)(2) because they would not benefit from
injunctive or declaratory relief. However, the Ohio Supreme Court has advocated for
certification of incidental aspects of a case under Civ.R. 23(B)(2):
If the Rule 23(a) prerequisites have been met and injunctive or declaratory relief has been requested, the action usually should be allowed to proceed under subdivision (b)(2). Those aspects of the case not falling within Rule 23(b)(2) should be treated as incidental. Indeed, quite commonly they will fall within Rule 23(b)(1) or Rule 23(b)(3) and may be heard on a class basis under one of those subdivisions. Even when this is not the case, the action should not be dismissed. The court has the power under subdivision (c)(4)(A), which permits an action to be brought under Rule 23 'with respect to particular issues,' to confine the class action aspects of a case to those issues pertaining to the injunction and to allow damage issues to be tried separately.
Hamilton at 87, quoting 7A Wright, Miller & Kane, Federal Practice and Procedure, §
1775, at 470 (2d Ed. 1986).
{¶ 67} In light of the foregoing, the trial court did not abuse its discretion by
certifying the class under Civ.R. 23(B)(2). The third assignment of error is overruled.
{¶ 68} Judgment affirmed.
PIPER, P.J., and S. POWELL, J., concur.
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