Rinehart v. Martin

2013 Ohio 4966

• Court: Ohio Court of Appeals
• Decided: November 12, 2013
• Docket: 2013-P-0036
• Status: Published

Opinion

[Cite as Rinehart v. Martin, 2013-Ohio-4966.]

IN THE COURT OF APPEALS

ELEVENTH APPELLATE DISTRICT

PORTAGE COUNTY, OHIO

SHERIDAN L. RINEHART, : OPINION

Plaintiff-Appellant, : CASE NO. 2013-P-0036 - vs - :

TED MARTIN, et al., :

Defendants-Appellees. :

Civil Appeal from the Portage County Court of Common Pleas, Case No. 2010 CV 0168.

Judgment: Affirmed.

Louis R. Bertrand, 409 South Prospect Street, Ravenna, OH 44266 (For Plaintiff- Appellant).

James E.J. Ickes and Joel A. Holt, Williams, Welser, Kratcoski & Can, L.L.C., 11 South River Street, Suite A, Kent, OH 44240 (For Defendants-Appellees Ted and Mindi Martin, Grandview Memorial Park, Inc. and Fairview Memorial Park, Inc.).

William D. Lentz, Sandvoss & Lentz, 228 West Main Street, P.O. Box 248, Ravenna, OH 44266 (For Defendant-Appellee Portage Community Bank).

COLLEEN MARY O’TOOLE, J.

{¶1} Sheridan L. Rinehart appeals from judgment entries of the Portage County

Court of Common Pleas, denying his motion for summary judgment, and granting the

motion for judgment on the pleadings of Ted and Mindi Martin, in a contract dispute.

We affirm. {¶2} From 1966 until 2008, appellant Mr. Rinehart was the Chief Operating

Officer of Grandview Memorial Park, Inc. (Grandview) a nonprofit corporation organized

under the laws of the state of Ohio, operating a public cemetery in Ravenna, Ohio.

From 1982 until 2008 Mr. Rinehart was also the Chief Operating Officer of Fairview

Memorial Park, Inc. (Fairview) a nonprofit corporation organized under the laws of the

state of Ohio, operating a public cemetery in Delaware County, Ohio. In 2006 both

properties were listed for sale with the Hoyt Matise real estate brokerage firm.

{¶3} On or about February 11, 2008, Mr. Rinehart purported to sell Grandview

and Fairview to Ted and Mindi Martin pursuant to a stock-asset purchase agreement

(Agreement 1). Pursuant to Agreement 1, the Martins were to buy the stock and assets

of Grandview and Fairview for $110,000.00, payable to Mr. Rinehart and secured by a

mortgage security agreement and fixture filing. Despite the fact that Grandview and

Fairview are nonprofit corporations, Agreement 1 identifies Mr. Rinehart as “doing

business as Grandview Memorial Park and Fairview Memorial Park.”

{¶4} According to the Martins, upon assuming control of Grandview and

Fairview they discovered the liabilities of the cemeteries far exceeded those disclosed

by Mr. Rinehart. The Martins also state that they discovered that Mr. Rinehart was

unable to sell the assets of the cemeteries as they were owned by nonprofit entities.

The Martins maintain that, in order to resolve these conflicts, they negotiated a second

agreement with Mr. Rinehart (Agreement 2) in May 2008. According to the Martins,

Agreement 2 terminated Agreement 1 and all liabilities related to the mortgage.

Agreement 2 also stated that Mr. Rinehart, as sole shareholder and trustee of

Grandview and a trustee of Fairview, appointed the Martins as directors and trustees of

2 both Grandview and Fairview and “assigns to the Martins all right, title and interests that

he (Mr. Rinehart) possesses in any capacity to own and operate Grandview and

Fairview.” Throughout this matter Mr. Rinehart has maintained that he never signed

Agreement 2, but did admit during deposition that the signature looks like his.

{¶5} In January 2010 Mr. Rinehart filed a breach of contract complaint in the

Portage County Court of Common Pleas seeking to have the court order the Martins to

specifically perform the conditions and provisions of Agreement 1, or order the Martins

to transfer back to him all stock, accounts receivables and any other assets the Martins

received under Agreement 1. Mr. Rinehart’s complaint does not reference Agreement

2. In their answer the Martins stated that Mr. Rinehart’s claims under Agreement 1

were barred under the terms of Agreement 2, a copy of which they attached to their

answer.

{¶6} In January 2011 the Martins filed their first motion for summary judgment,

arguing that Agreement 2 superseded Agreement 1 and released the Martins from any

and all liabilities under Agreement 1. The Martins also alleged that as Mr. Rinehart

sought to profit from the sale of Grandview and Fairview, both nonprofit entities,

Agreement 1 was void under R.C. 1702.02(C), 1702.49 and 1721.06.

{¶7} In May 2011 Mr. Rinehart filed his own motion for summary judgment

stating that he did not knowingly sign Agreement 2 and that there was no evidence to

support the Martins’ assertion that Agreement 1 was void, and demanding enforcement

of Agreement 1. On July 19, 2011 the trial court denied both parties’ motions for

summary judgment.

3 {¶8} After taking Mr. Rinehart’s deposition and obtaining an expert handwriting

analysis, the Martins filed their second motion for summary judgment in February 2012

arguing, among other things, that the evidence showed Mr. Rinehart did sign

Agreement 2. Mr. Rinehart filed his opposition to the Martins’ second motion in May

2012. On June 12, 2012 the trial court denied the Martins’ second motion for summary

judgment.

{¶9} On June 18, 2012 the Martins filed a motion for judgment on the pleadings

pursuant to Civ.R. 12(C), arguing that Mr. Rinehart’s attempt to sell the stock and

assets of the nonprofit corporations and retain the proceeds rendered Agreement 1 void

and unenforceable. Also on June 18, 2012 the Martins filed a counterclaim against Mr.

Rinehart for breach of contract and fraud. Mr. Rinehart responded to the motion for

judgment on the pleadings arguing that if Agreement 1 was void then the proper relief

was to transfer Grandview and Fairview back to him. Otherwise, Mr. Rinehart argued,

the Martins would retain control of the properties without due consideration. The

Martins responded that by assuming the debts and liabilities of Grandview and Fairview

under Agreement 2, they did pay consideration.

{¶10} On October 31, 2012, the trial court held that as Agreement 1 attempted

the sale of nonprofit corporations for pecuniary gain, it was void ab initio. The trial court

then dismissed Mr. Rinehart’s complaint. On March 28, 2013 the Martins voluntarily

dismissed their counterclaim under Civ.R. 41(A)(1). This appeal timely followed.

{¶11} Mr. Rinehart assigns the following errors for our review:

4 {¶12} “[1.] The trial court erred by granting the Defendants-Appellees’ motion for

judgment on the pleadings pursuant to Civ.R. 12(C).

{¶13} “[2.] The trial court erred by overruling the Plaintiff-Appellant’s motion for

summary judgment.”

{¶14} Mr. Rinehart’s first assignment of error involves Civ.R. 12(C), which states

that “[a]fter the pleadings are closed but within such times as not to delay the trial, any

party may move for judgment on the pleadings.” A Civ.R. 12(C) motion “presents only

questions of law, and determination of the motion for judgment on the pleadings is

restricted solely to the allegations in the pleadings.” Peterson v. Teodosio, 34 Ohio

St.2d 161, 166 (1973). The party defending against the motion is “entitled to have all

the material allegations in the complaint, with all reasonable inferences to be drawn

therefrom, construed in her favor as true.” Id. at 165-166.

{¶15} “Because the review of a decision to dismiss a complaint pursuant to

Civ.R. 12(C) presents only questions of law, * * * our review is de novo.” Rayess v.

Educational Comm. for Foreign Med. Graduates, 134 Ohio St.3d 509, 2012-Ohio-5676,

¶18.

{¶16} It has long been established that profits may not be distributed to anyone

out of the funds of a cemetery corporation. Newell v. The Cleveland Cemetery Assn.,

61 Ohio App. 476, paragraph one of the syllabus (8th Dist.1938). The net effect of

Agreement 1 is to distribute profits from Grandview and Fairview to Mr. Rinehart.

“Courts of law and courts of equity will decline to enforce obligations created by contract

if the contract is illegal or the consideration given is illegal, immoral, or against public

policy.” Langer v. Langer, 123 Ohio App.3d 348, 354 (2d Dist. 1997).

5 {¶17} The trial court correctly determined that there was no manner in which the

material allegations in his complaint, however construed, could result in judgment in his

favor.

{¶18} Mr. Rinehart argues vigorously that if Agreement 1 was illegal and void,

then the trial court should have applied the equitable remedy of rescission, and returned

Grandview and Fairview to him. In his merit brief, Mr. Rinehart cited no authority to us

establishing that rescission is applicable to this situation, but October 17, 2013, he filed

supplemental authority, that being this court’s decision in Dahlstrom v. Roulette Pontiac-

Cadillac GMC, Inc., 11th Dist. Lake No. 9-182, 1983 Ohio App. LEXIS 15118 (June 24,

1983). In that case, Ms. Dahlstrom signed two contracts with Roulette, to purchase two

cars, financing part of the deal with a trade-in of her old car. Id. at *1. Several days

later, she returned to Roulette, demanding that the contracts be cancelled, and her old

car returned to her. She stated she had been drunk when signing the contracts, and

lacked capacity to enter them. Id. at *2. Roulette refused to return her old car (which it

later sold), or to rescind the contracts. Id.

{¶19} The matter went to jury trial. The jury awarded Ms. Dahlstrom $5,000, and

Roulette, $1,000, on a counterclaim. Roulette appealed. Id. It argued that Ms.

Dahlstrom failed to establish that she lacked capacity to enter the contracts due to

intoxication, and that she also failed to establish that rescission was required by the

necessary evidentiary standard. Id. at *3-4. This court affirmed the judgment of the trial

court. Id. at *5.

6 {¶20} Mr. Rinehart argues that Dahlstrom establishes that rescission may be an

appropriate remedy, even when dealing with a contract that is void ab initio. Assuming,

arguendo, that this is correct, does not help in this particular situation. When the trial

court granted the Martins’ motion for judgment on the pleadings, their counterclaim

remained pending. The time had not yet arrived for application of a remedy.

Thereafter, the Martins voluntarily dismissed their counterclaim, which meant nothing

remained before the trial court to decide.

{¶21} The first assignment of error lacks merit.

{¶22} In his second assignment of error Mr. Rinehart states that the trial court

erred by overruling his motion for summary judgment. Mr. Rinehart filed his motion

along with his memorandum in opposition to the Martins’ motion for summary judgment.

In his motion, Mr. Rinehart sought summary judgment on the mortgage security

agreement that was part of Agreement 1.

{¶23} “Summary judgment is a procedural tool that terminates litigation and thus

should be entered with circumspection. Davis v. Loopco Industries, Inc., 66 Ohio St.3d

64, 66, * * * (1993). Summary judgment is proper where (1) there is no genuine issue of

material fact remaining to be litigated; (2) the movant is entitled to judgment as a matter

of law; and (3) it appears from the evidence that reasonable minds can come to but one

conclusion, and, viewing the evidence in the non-moving party’s favor, that conclusion

favors the movant. See e.g. Civ.R. 56(C).

{¶24} “When considering a motion for summary judgment, the trial court may not

weigh the evidence or select among reasonable inferences. Dupler v. Mansfield

Journal Co., 64 Ohio St.2d 116, 121, * * * (1980). Rather, all doubts and questions

7 must be resolved in the non-moving party’s favor. Murphy v. Reynoldsburg, 65 Ohio

St.3d 356, 359, * * * (1992). Hence, a trial court is required to overrule a motion for

summary judgment where conflicting evidence exists and alternative reasonable

inferences can be drawn. Pierson v. Norfork Southern Corp., 11th Dist. Ashtabula No.

2002-A-0061, 2003-Ohio-6682, ¶36. In short, the central issue on summary judgment is,

‘whether the evidence presents sufficient disagreement to require submission to a jury

or whether it is so one-sided that one party must prevail as a matter of law.’ Anderson

v. Liberty Lobby, Inc., 477 U.S. 242, 251-252, * * * (1986). On appeal, we review a trial

court’s entry of summary judgment de novo. Grafton v. Ohio Edison Co., 77 Ohio St.3d

102,105, * * * (1996). (Parallel citations omitted.) Meloy v. Circle K Store, 11th Dist.

Portage No. 2012-P-0158, 2013-Ohio-2837, ¶5-6.

{¶25} Mr. Rinehart argues that the trial court erred in overruling his motion for

summary judgment because Agreement 2 did not comply with R.C. 5301.01 and was

therefore void. However, Mr. Rinehart’s own motion for summary judgment was

directed to enforcement of the mortgage security agreement which was part of

Agreement 1. We have already determined that the trial court correctly found

Agreement 1 to be illegal and void. Consequently, the trial court did not err in failing to

enforce the unenforceable rights under the mortgage security agreement forming part of

Agreement 1.

8 {¶26} For the foregoing reasons, appellant’s assignments of error are not well-

taken. The judgment of the Portage County Court of Common Pleas is affirmed. It is

the further order of this court that appellant is assessed costs herein taxed. The court

finds there were reasonable grounds for this appeal.

DIANE V. GRENDELL, J.,

CYNTHIA WESTCOTT RICE, J.,

concur.