Rose v. Cochran

2014 Ohio 4979
Ohio Court of Appeals·Decided November 4, 2014·No. 14CA3445·Published·Cited by 6 cases

Opinion

IN THE COURT OF APPEALS OF OHIO FOURTH APPELLATE DISTRICT ROSS COUNTY

J.R. ROSE, : Case No. 14CA3445 Plaintiff-Appellant, :

v. : DECISION AND JUDGMENT ENTRY

WAYNE COCHRAN, :

Defendant-Appellee. : RELEASED: 11/4/2014 APPEARANCES:

J.R. Rose, Chillicothe, Ohio, pro se appellant.

Michael W. Sandner, Pickrel, Schaeffer & Ebeling Co., L.P.A., Dayton, Ohio, for appellee. Harsha, J.

{¶1} J.R. Rose is a former insurance agent who was convicted and sentenced

to prison for the sale of unregistered securities, perjury, and forgery in connection with his fraudulently purchasing annuities with forged signatures. Rose filed a complaint in the Ross County Court of Common Pleas against Wayne Cochran, a former client, alleging claims of insurance fraud, libel and slander, fraud, and unjust enrichment against Cochran. The trial court granted summary judgment in Cochran’s favor and dismissed the complaint.

{¶2} In his first assignment of error Rose asserts that the trial court committed five instances of prejudicial error when it failed to comply with applicable law. In his first contention, Rose claims that the trial court erred in denying his motion to amend his complaint under Civ.R. 15(E). Rose’s claim is meritless because he could not supplement his complaint under Civ.R. 15(E) to add new claims. Insofar as his motion

Ross App. No. 14CA3445 2

could be construed as a motion to amend his complaint under Civ.R. 15(A), the trial court did not abuse its discretion in denying the motion because he could not file an amended complaint as a matter of right after Cochran had submitted a timely answer to the original complaint; moreover, he failed to make a prima facie showing of support for the new claims he sought to be pleaded.

{¶3} In his second contention Rose claims that the trial court erred in denying his motion to compel discovery. The trial court did not abuse its discretion in doing so because Rose did not establish that Cochran had failed to comply with discovery.

{¶4} In his third and fourth contentions Rose asserts that the trial court erred in granting Cochran’s motion for summary judgment because the motion was premature, the trial court considered material outside the complaint, Cochran’s affidavit in support of his motion was defective because it was undated and had been previously filed, and Rose’s affidavit and exhibits raised a genuine issue of material fact. There is no merit in any of these contentions.

{¶5} In his fifth contention Rose argues that the trial court erred in determining that he did not provide sufficient evidence of fraud to preclude summary judgment. The trial court properly determined, however, that Rose failed to submit any evidence that he was the victim of the alleged fraud. Therefore, we overrule Rose’s first assignment of error.

{¶6} In his second assignment of error Rose contends that the trial court erred by failing to impose sanctions against Cochran’s counsel for misconduct during the proceedings. Rose’s contention is meritless because he did not establish any misconduct. Thus, we overrule Rose’s second assignment of error and affirm the judgment of the trial court.

I. FACTS

{¶7} Rose was a licensed insurance agent in Ohio, but he lacked a securities license and failed to register any securities. Rose established bank and brokerage accounts registered in his name and entities under his control to pool money received from investors in Butler County, Ohio. Rose defrauded investors of their money, commingled investor funds with his own money, and paid personal expenses out of the accounts. Eventually, his fraudulent practices acted like a Ponzi scheme in which he was dependent on deposits from new investors to continue paying existing investors. Ultimately, he received millions of dollars from investors who he was unable to fully reimburse.

{¶8} In 2007, the director of the Ohio Department of Commerce filed a verified complaint in the Lucas County Court of Common Pleas for injunctive relief and the appointment of a receiver to act on behalf of the investors who had been defrauded by Rose. Rose consented to the receivership, and the court appointed a receiver and issued a preliminary injunction preventing Rose from selling securities in violation of the Ohio Securities Act.

{¶9} That same year Rose entered a guilty plea to a bill of information filed in the Butler County Court of Common Pleas charging him with felony counts of sale of an unregistered security, perjury, and forgery. In April 2008, the court sentenced Rose to an aggregate prison term of 20 years. A month later the receiver issued an amended report in the Butler County Court of Common Pleas setting forth the classification and priority of claims of the victims of the fraud perpetrated by Rose. The receiver determined that Cochran had paid over $101,000 to Rose and that the ending value of the annuities purchased was about $26,000, but because of the money to be paid out to other claimants injured by Rose’s misconduct, Cochran’s net claim would only be $10,375.82.

{¶10} After Rose was convicted and sentenced, Cochran wrote a letter to National Western Life Insurance Company (“National Western”) to terminate an annuity contract Rose set up with the company and to surrender the account value without any fees or penalties. Cochran also sent a letter provided by the receiver noting that investors like Cochran had suffered more than $13,000,000 in losses resulting from Rose’s forgeries and other illegal acts, including those who owned annuities that were purchased with their forged signatures, and requesting companies to waive any penalties in light of these circumstances. The application contained the signatures of Cochran and agent Robin Whiles, but did not include Rose’s signature. Sometime thereafter, National Western terminated the annuity.

{¶11} In January 2011, Rose filed a complaint in the Ross County Court of Common Pleas alleging that by sending letters to National Western detailing Rose’s misconduct, the company terminated the annuity, which resulted in a reversal of the $585 sales commission received by Rose to his detriment. Rose claimed that Cochran’s actions constituted insurance fraud under R.C. 2913.47, libel and slander, unjust enrichment, and fraud. Cochran filed a Civ.R. 12(B)(6) motion to dismiss Rose’s complaint for failure to state a claim upon which relief can be granted, but relied on an

Ross App. No. 14CA3445 5

affidavit of himself and exhibits that were not attached to the complaint. The trial court granted Cochran’s motion and dismissed the cause.

{¶12} We reversed the judgment and remanded the cause because the trial court erred when it considered additional evidence beyond the complaint without converting the motion to dismiss to a motion for summary judgment as required by Civ.R. 12(B). Rose v. Cochran, 4th Dist. Ross No. 11CA3243, 2012-Ohio-1729.

{¶13} After a tortuous procedural history following remand, the case finally ended up back in Ross County Court of Common Pleas. Subsequently, Rose filed motions to compel discovery and to amend his complaint. After the trial court denied both motions, the parties filed motions for summary judgment. Cochran filed his previously filed affidavit and exhibits. Rose filed his own affidavit and exhibits. The trial court granted Cochran’s motion, overruled Rose’s motion, and dismissed the cause.

II. ASSIGNMENTS OF ERROR

{¶14} Rose assigns the following errors for our review:

I. Whether the trial court committed prejudicial error when it failed to comply with Ohio Law.

II. Whether the lower court abused its discretion in failing to sanction the misconduct of counsel.

III. LAW AND ANALYSIS

A. First Assignment of Error

{¶15} In his first assignment of error, Rose contends that the trial court committed prejudicial error by acting contrary to law in five separate circumstances.

Motion to Amend Complaint

Ross App. No. 14CA3445 6

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