[Cite as Quality Car & Truck Leasing, Inc. v. Sark, 2013-Ohio-44.]
IN THE COURT OF APPEALS OF OHIO FOURTH APPELLATE DISTRICT LAWRENCE COUNTY
Quality Car & Truck Leasing, Inc., : : Plaintiff-Appellee, : : Case No. 12CA5 v. : : DECISION AND Michael L. Sark, et al, : JUDGMENT ENTRY : Defendants-Appellants. : Filed: January 7, 2013 ______________________________________________________________________
APPEARANCES:
John R. Haas, RUGGIERO & HAAS, Portsmouth, Ohio, for Appellants.
Chadwick K. Sayre, George L. Davis, III, and George L. Davis, IV, Portsmouth, Ohio, for Appellee. ______________________________________________________________________
Kline, J.:
{¶1} Michael Sark, Sr. (hereinafter “Michael Senior”), Paula Sark (hereinafter
“Paula”), and Michael Sark, Jr. (hereinafter “Michael Junior”)1 appeal the judgment of
the Lawrence County Court of Common Pleas. The trial court granted Quality Car &
Truck Leasing, Inc.’s (hereinafter “Quality Leasing”) motion for summary judgment.
Michael Senior and Paula sold their residence to Michael Junior for one dollar, and the
trial court determined that the transfer constituted a fraudulent conveyance under R.C.
1336.04(A)(2)(a). The Sarks contend that there are genuine issues of material fact
regarding whether the transfer constituted a fraudulent conveyance. Because there are
1 We will refer to Michael Senior, Paula, and Michael Junior collectively as the “Sarks.” Lawrence App. No. 12CA5 2
no genuine issues of material fact, we disagree. Accordingly, we affirm the judgment of
the trial court.
I.
{¶2} Michael Senior operates a logging business as a sole proprietorship. On
several occasions, Michael Senior borrowed money from Quality Leasing to acquire
equipment for the business. (Although Paula’s involvement in the logging business is
unclear, both Michael Senior and Paula signed various loan agreements with Quality
Leasing.) Around 2007, the business encountered financial difficulties. Michael Senior
was unable to pay his creditors, including Quality Leasing.
{¶3} Eventually, Michael Senior and Paula filed for Chapter 13 bankruptcy.
The Chapter 13 bankruptcy was converted to a Chapter 12 bankruptcy in order to make
the bankruptcy-plan payments more manageable. Michael Senior and Paula, however,
were unable to make the payments required by their Chapter 12 bankruptcy plan, and
they moved to dismiss their bankruptcy case on October 31, 2008.
{¶4} In December 2008, Michael Senior and Paula conveyed title to their
residence (hereinafter the “Property”) to Michael Junior. (Michael Senior and Paula
acquired the Property as a gift, and they have lived there since 1999.) According to
Michael Senior and Paula’s bankruptcy filings, the value of the Property is $203,500.
Michael Junior, however, paid Michael Senior and Paula one dollar for the Property.
(Michael Senior and Paula continued to reside at the Property following the transfer.)
{¶5} In January 2009, Quality Leasing filed a complaint for damages against
Michael Senior and Paula in the Scioto County Court of Common Pleas. The basis for
the complaint was the debts Michael Senior and Paula owed to Quality Leasing. In Lawrence App. No. 12CA5 3
March 2009, Quality Leasing received a judgment in its favor against Michael Senior
and Paula for $150,481.85.
{¶6} Quality Leasing then filed the claim that is the subject of this appeal.
Quality Leasing sought to set aside the transfer of the Property to Michael Junior as a
fraudulent conveyance. Eventually, Quality Leasing moved for summary judgment,
which the trial court granted. The court found that Michael Senior and Paula’s transfer
of the Property to Michael Junior constituted a fraudulent conveyance under R.C.
1336.04(A)(2)(a).
{¶7} The Sarks appeal and assert the following assignment of error: I. “The trial
court erred in awarding summary judgment in favor of plaintiff, Quality Leasing Car and
Truck Leasing, Inc. and against defendants due to the fact the evidence when viewed in
the light most favorable to defendants reveals genuine issues of material fact to be
determined by a jury, not the court.”
II.
{¶8} The Sarks claim that the trial court erred in granting Quality Leasing’s
motion for summary judgment.
{¶9} “Because this case was decided upon summary judgment, we review this
matter de novo, governed by the standard set forth in Civ.R. 56.” Comer v. Risko, 106
Ohio St.3d 185, 2005-Ohio-4559, 833 N.E.2d 712, ¶ 8. Summary judgment is
appropriate only when the following have been established: (1) that there is no genuine
issue as to any material fact; (2) that the moving party is entitled to judgment as a
matter of law; and (3) that reasonable minds can come to only one conclusion, and that
conclusion is adverse to the nonmoving party. Civ.R. 56(C). Accord Bostic v. Connor, Lawrence App. No. 12CA5 4
37 Ohio St.3d 144, 146, 524 N.E.2d 881 (1988); Grimes v. Grimes, 4th Dist. No.
08CA35, 2009-Ohio-3126, ¶ 14. In ruling on a motion for summary judgment, the court
must construe the record and all inferences therefrom in the opposing party’s favor.
Doe v. First United Methodist Church, 68 Ohio St.3d 531, 535, 629 N.E.2d 402 (1994).
{¶10} The burden of showing that no genuine issue of material fact exists falls
upon the party who moves for summary judgment. Dresher v. Burt, 75 Ohio St.3d 280,
294, 662 N.E.2d 264 (1996). However, once the movant supports his or her motion with
appropriate evidentiary materials, 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 [Civ.R. 56], must set forth specific facts showing that there is a
genuine issue for trial.” Civ.R. 56(E). Accord Grimes at ¶ 15.
{¶11} “In reviewing whether an entry of summary judgment is appropriate, an
appellate court must independently review the record and the inferences that can be
drawn from it to determine if the opposing party can possibly prevail.” Grimes at ¶ 16.
“Accordingly, we afford no deference to the trial court’s decision in answering that legal
question.” Morehead v. Conley, 75 Ohio App.3d 409, 412, 599 N.E.2d 786 (4th
Dist.1991). Accord Grimes at ¶ 16.
{¶12} The trial court found that summary judgment was proper under R.C.
1336.04(A)(2)(a). That statute provides as follows:
A transfer made or an obligation incurred by a debtor
is fraudulent as to a creditor, whether the claim of the
creditor arose before or after the transfer was made Lawrence App. No. 12CA5 5
or the obligation was incurred, if the debtor made the
transfer or incurred the obligation * * * [w]ithout
receiving a reasonably equivalent value in exchange
for the transfer or obligation, and * * * [t]he debtor was
engaged or was about to engage in a business or a
transaction for which the remaining assets of the
debtor were unreasonably small in relation to the
business or transaction * * *.
{¶13} The trial court found “that [Michael Senior and Paula] made a transfer
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[Cite as Quality Car & Truck Leasing, Inc. v. Sark, 2013-Ohio-44.]
IN THE COURT OF APPEALS OF OHIO FOURTH APPELLATE DISTRICT LAWRENCE COUNTY
Quality Car & Truck Leasing, Inc., : : Plaintiff-Appellee, : : Case No. 12CA5 v. : : DECISION AND Michael L. Sark, et al, : JUDGMENT ENTRY : Defendants-Appellants. : Filed: January 7, 2013 ______________________________________________________________________
APPEARANCES:
John R. Haas, RUGGIERO & HAAS, Portsmouth, Ohio, for Appellants.
Chadwick K. Sayre, George L. Davis, III, and George L. Davis, IV, Portsmouth, Ohio, for Appellee. ______________________________________________________________________
Kline, J.:
{¶1} Michael Sark, Sr. (hereinafter “Michael Senior”), Paula Sark (hereinafter
“Paula”), and Michael Sark, Jr. (hereinafter “Michael Junior”)1 appeal the judgment of
the Lawrence County Court of Common Pleas. The trial court granted Quality Car &
Truck Leasing, Inc.’s (hereinafter “Quality Leasing”) motion for summary judgment.
Michael Senior and Paula sold their residence to Michael Junior for one dollar, and the
trial court determined that the transfer constituted a fraudulent conveyance under R.C.
1336.04(A)(2)(a). The Sarks contend that there are genuine issues of material fact
regarding whether the transfer constituted a fraudulent conveyance. Because there are
1 We will refer to Michael Senior, Paula, and Michael Junior collectively as the “Sarks.” Lawrence App. No. 12CA5 2
no genuine issues of material fact, we disagree. Accordingly, we affirm the judgment of
the trial court.
I.
{¶2} Michael Senior operates a logging business as a sole proprietorship. On
several occasions, Michael Senior borrowed money from Quality Leasing to acquire
equipment for the business. (Although Paula’s involvement in the logging business is
unclear, both Michael Senior and Paula signed various loan agreements with Quality
Leasing.) Around 2007, the business encountered financial difficulties. Michael Senior
was unable to pay his creditors, including Quality Leasing.
{¶3} Eventually, Michael Senior and Paula filed for Chapter 13 bankruptcy.
The Chapter 13 bankruptcy was converted to a Chapter 12 bankruptcy in order to make
the bankruptcy-plan payments more manageable. Michael Senior and Paula, however,
were unable to make the payments required by their Chapter 12 bankruptcy plan, and
they moved to dismiss their bankruptcy case on October 31, 2008.
{¶4} In December 2008, Michael Senior and Paula conveyed title to their
residence (hereinafter the “Property”) to Michael Junior. (Michael Senior and Paula
acquired the Property as a gift, and they have lived there since 1999.) According to
Michael Senior and Paula’s bankruptcy filings, the value of the Property is $203,500.
Michael Junior, however, paid Michael Senior and Paula one dollar for the Property.
(Michael Senior and Paula continued to reside at the Property following the transfer.)
{¶5} In January 2009, Quality Leasing filed a complaint for damages against
Michael Senior and Paula in the Scioto County Court of Common Pleas. The basis for
the complaint was the debts Michael Senior and Paula owed to Quality Leasing. In Lawrence App. No. 12CA5 3
March 2009, Quality Leasing received a judgment in its favor against Michael Senior
and Paula for $150,481.85.
{¶6} Quality Leasing then filed the claim that is the subject of this appeal.
Quality Leasing sought to set aside the transfer of the Property to Michael Junior as a
fraudulent conveyance. Eventually, Quality Leasing moved for summary judgment,
which the trial court granted. The court found that Michael Senior and Paula’s transfer
of the Property to Michael Junior constituted a fraudulent conveyance under R.C.
1336.04(A)(2)(a).
{¶7} The Sarks appeal and assert the following assignment of error: I. “The trial
court erred in awarding summary judgment in favor of plaintiff, Quality Leasing Car and
Truck Leasing, Inc. and against defendants due to the fact the evidence when viewed in
the light most favorable to defendants reveals genuine issues of material fact to be
determined by a jury, not the court.”
II.
{¶8} The Sarks claim that the trial court erred in granting Quality Leasing’s
motion for summary judgment.
{¶9} “Because this case was decided upon summary judgment, we review this
matter de novo, governed by the standard set forth in Civ.R. 56.” Comer v. Risko, 106
Ohio St.3d 185, 2005-Ohio-4559, 833 N.E.2d 712, ¶ 8. Summary judgment is
appropriate only when the following have been established: (1) that there is no genuine
issue as to any material fact; (2) that the moving party is entitled to judgment as a
matter of law; and (3) that reasonable minds can come to only one conclusion, and that
conclusion is adverse to the nonmoving party. Civ.R. 56(C). Accord Bostic v. Connor, Lawrence App. No. 12CA5 4
37 Ohio St.3d 144, 146, 524 N.E.2d 881 (1988); Grimes v. Grimes, 4th Dist. No.
08CA35, 2009-Ohio-3126, ¶ 14. In ruling on a motion for summary judgment, the court
must construe the record and all inferences therefrom in the opposing party’s favor.
Doe v. First United Methodist Church, 68 Ohio St.3d 531, 535, 629 N.E.2d 402 (1994).
{¶10} The burden of showing that no genuine issue of material fact exists falls
upon the party who moves for summary judgment. Dresher v. Burt, 75 Ohio St.3d 280,
294, 662 N.E.2d 264 (1996). However, once the movant supports his or her motion with
appropriate evidentiary materials, 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 [Civ.R. 56], must set forth specific facts showing that there is a
genuine issue for trial.” Civ.R. 56(E). Accord Grimes at ¶ 15.
{¶11} “In reviewing whether an entry of summary judgment is appropriate, an
appellate court must independently review the record and the inferences that can be
drawn from it to determine if the opposing party can possibly prevail.” Grimes at ¶ 16.
“Accordingly, we afford no deference to the trial court’s decision in answering that legal
question.” Morehead v. Conley, 75 Ohio App.3d 409, 412, 599 N.E.2d 786 (4th
Dist.1991). Accord Grimes at ¶ 16.
{¶12} The trial court found that summary judgment was proper under R.C.
1336.04(A)(2)(a). That statute provides as follows:
A transfer made or an obligation incurred by a debtor
is fraudulent as to a creditor, whether the claim of the
creditor arose before or after the transfer was made Lawrence App. No. 12CA5 5
or the obligation was incurred, if the debtor made the
transfer or incurred the obligation * * * [w]ithout
receiving a reasonably equivalent value in exchange
for the transfer or obligation, and * * * [t]he debtor was
engaged or was about to engage in a business or a
transaction for which the remaining assets of the
debtor were unreasonably small in relation to the
business or transaction * * *.
{¶13} The trial court found “that [Michael Senior and Paula] made a transfer
without the exchange of reasonably equivalent value and that the debtor was engaged
or was about to engage in a business where [sic] a transaction for which the remaining
assets of the debtor were unreasonably small in relation to the business or transaction.”
Feb. 10, 2012 Decision and Judgment Entry at 2.
{¶14} The Sarks do not challenge these findings by the trial court. Instead, the
Sarks argue that summary judgment was not proper because there is a genuine issue
of material fact regarding whether they intended to defraud Quality Leasing. The Sarks’
argument fails because intent is not relevant to an analysis under R.C.
1336.04(A)(2)(a). A creditor does not need to show that a transfer was made with intent
to defraud in order to prevail under R.C. 1336.04(A)(2)(a). See Blood v. Nofzinger, 162
Ohio App.3d 545, 2005-Ohio-3859, 834 N.E.2d 358, ¶ 52 (6th Dist.); Ford v. Star Bank,
N.A., 4th Dist. No. 97CA39, 1998 WL 553003, *4 (Aug. 27, 1998). Thus, the Sarks Lawrence App. No. 12CA5 6
cannot defeat summary judgment by showing that they did not act with fraudulent intent
when Michael Senior and Paula transferred the Property to Michael Junior.
{¶15} The Sarks also claim that summary judgment was improper because there
is an issue of fact regarding whether Michael Senior and Paula are actually Quality
Leasing’s debtors. Micheal Senior apparently returned the equipment that secured the
debts owed to Quality Leasing. According to the Sarks, Quality Leasing’s appraisals of
the equipment showed that the value of the equipment would be enough to satisfy the
debts.
{¶16} The Sarks’ argument, however, does not address the fact that they are
clearly judgment debtors to Quality Leasing and that the judgment has not been
satisfied. In March 2009, Quality Leasing obtained a judgment from the Scioto County
Court of Common Pleas for the debts Michael Senior and Paula owed to Quality
Leasing. The Sarks have not challenged the validity of the judgment against them nor
have they shown that the judgment has been satisfied. Thus, there is no genuine issue
of material fact regarding whether Paula and Michael Senior are debtors to Quality
Leasing.
{¶17} In conclusion, there is no genuine issue as to any material fact. Quality
Leasing is entitled to judgment as a matter of law. And reasonable minds can come to
only one conclusion, and that conclusion is adverse to the Sarks.
{¶18} Accordingly, we overrule the Sarks’ assignment of error and affirm the
judgment of the trial court.
JUDGMENT AFFIRMED. Lawrence App. No. 12CA5 7
JUDGMENT ENTRY
It is ordered that the JUDGMENT BE AFFIRMED. Appellants shall pay the costs herein taxed.
The Court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this Court directing the Lawrence County Court of Common Pleas 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. Exceptions.
Abele, J.: Concurs in Judgment & Opinion. Harsha, J.: Concurs in Judgment Only.
For the Court
BY:_____________________________ Roger L. Kline, Judge
NOTICE TO COUNSEL
Pursuant to Local Rule No. 14, this document constitutes a final judgment entry and the time period for further appeal commences from the date of filing with the clerk.