Scioto Cty. Bd. of Commrs./Revolving Loan Fund Bd. v. McDermott Industries, L.L.C.

2014 Ohio 240

• Court: Ohio Court of Appeals
• Decided: January 17, 2014
• Docket: 12CA3504
• Status: Published

Opinion

[Cite as Scioto Cty. Bd. of Commrs./Revolving Loan Fund Bd. v. McDermott Industries, L.L.C., 2014-Ohio-240.]

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

SCIOTO COUNTY BOARD OF : Case No. 12CA3504 COMMISSIONERS/ REVOLVING LOAN FUND BOARD, :

Plaintiff-Appellee, :

v. : DECISION AND JUDGMENT ENTRY MCDERMOTT INDUSTRIES, : L.L.C., ET AL., : RELEASED: 01/17/14 Defendants-Appellants. : APPEARANCES:

Carl and Vera Pertuset, McDermott, Ohio, pro se appellants.

George L. Davis, IV, and George L. Davis, III, George L. Davis, III Co., L.L.C., Portsmouth, Ohio, for appellee. Harsha, J., {¶1} Appellants, Carl and Vera Pertuset, are guarantors on a promissory note

executed and delivered by their corporation, McDermott Industries, L.L.C.

(“McDermott”), in favor of appellee, Scioto County Board of Commissioners/ Revolving

Loan Fund Board (“board”). After McDermott defaulted on the note, the board

demanded payment from it and the Pertusets, but they failed to pay. The board then

sued McDermott and the Pertusets for the amount due on the promissory note, and the

trial court granted summary judgment in favor of the board.

{¶2} On appeal, the Pertusets claim that the trial court erred in granting

summary judgment because the board lacks standing and is not the real party in

interest on the promissory note. But after the board submitted summary judgment

evidence establishing that it is the holder of the promissory note that McDermott and the Scioto App. No. 12CA3504 2

Pertusets defaulted on, the Pertusets failed to rebut this evidence with specific facts

showing a genuine issue concerning the board’s standing to sue and interest in

collecting on the note.

{¶3} The Pertusets also contend that summary judgment is improper because

at the time the promissory note was executed, McDermott had already been dissolved.

This contention fails because a voluntary dissolution of a corporation is not effective

until the certificate of dissolution and accompanying documents are filed with the

secretary of state, and that did not occur until after McDermott executed and delivered

the promissory note to the board. And the Pertusets personally guaranteed the note

independent of any promise by their company.

{¶4} The Pertusets additionally claim that summary judgment is not appropriate

because the board did not establish the amount due on the note. We reject this claim

because the board submitted an affidavit proving the amount due.

{¶5} Finally, the Pertusets’ remaining arguments lack merit or are irrelevant to

the summary judgment entered by the trial court.

{¶6} Therefore, we reject the Pertusets’ assignments of error and affirm the

judgment of the trial court.

I. FACTS

{¶7} In April 2009, McDermott, through Carl Pertuset, and the Pertusets

executed and delivered a promissory note to the board. In the note, McDermott

amended the terms of two previous promissory notes and loan agreements by

promising to pay to the board the principal sum of $148,612.77 and interest in 240

monthly installments, with the first installment due on June 15, 2009. According to the Scioto App. No. 12CA3504 3

terms of the note, should any default occur, the unpaid principal balance and accrued

interest would bear interest at the rate of 10% per annum, with a late charge of ten

cents for each dollar overdue. The note further provided that if default in payment of

any installment occurred or if McDermott ceased its business operation, the entire

principal sum and all interest accrued thereon shall become due and payable at the

option of the holder of the note. McDermott, through Carl Pertuset, guaranteed the

terms of the note, and the Pertusets personally guaranteed the terms and conditions of

the note.

{¶8} After McDermott and the Pertusets defaulted on the terms of the note and

failed to pay the board upon demand, the board filed a complaint in the Scioto County

Court of Common Pleas to collect on the note. Instead of filing an answer, the

Pertusets filed a “notice of objection to complaint request for judicial notice and

notification of administrative violations.” In its filing, the Pertusets generally denied all

allegations in the complaint. The Pertusets submitted numerous other filings, including

one challenging the standing of the board in which they attached a secretary of state

document certifying that the office had received for filing McDermott’s certificate of

dissolution on August 14, 2009, although the certificate claimed that the company was

dissolved on December 31, 2008.

{¶9} The board filed a motion for summary judgment and supported it with an

affidavit of Kendra Hobson, an authorized representative and keeper of records of the

board, and a copy of the promissory note. In her affidavit, Hobson specified that she

had personal knowledge of the board’s records, that the board had received the

personal guaranty executed and delivered by McDermott and the Pertusets, that the Scioto App. No. 12CA3504 4

guarantors were in default, and that they owed the board the amount of $148,612.77,

plus interest at the rate of 10% per annum from June 15, 2009, a late charge of ten

cents for each dollar overdue, plus costs and all other proper relief.

{¶10} In response to the board’s motion, the Pertusets filed an “opposition”

affidavit, which failed to specify facts to rebut that they owed the amount due on the

note.

{¶11} The trial court granted the board’s motion and ordered that it recover from

McDermott and the Pertusets $148,612.77, with interest at a rate of 10% per annum

from June 15, 2009, plus a late charge of ten cents for each dollar overdue.

{¶12} The Pertusets appealed from the judgment.

II. ASSIGNMENT OF ERROR

{¶13} The Pertusets are not strangers to this court. See Ohio Valley Resource

Conservation & Development v. Pertuset, 4th Dist. Scioto No. 12CA3503, 2013-Ohio-

5406; Farm Credit Servs. of Mid. Am. v. Pertuset, 4th Dist. Scioto No. 11CA3443, 2013-

Ohio-567; Am. Savings Bank v. Pertuset, 4th Dist. Scioto No. 11CA3442, 2013-Ohio-

566; Quality Car & Truck Leasing, Inc. v. Pertuset, 4th Dist. Scioto No. 11CA3436,

2013-Ohio-1964. As in each of these previous cases, the Pertusets’ brief here does not

set forth any assignments of error as required by App.R. 16(A)(3).

{¶14} Although we consequently would be justified in refusing to address the

merits of the Pertusets’ arguments and dismissing their appeal, given the considerable

leniency that this court generally affords to the filings of pro se litigants like the

Pertusets, we will posit the following assignment of error that best summarizes their

arguments on appeal: Scioto App. No. 12CA3504 5

THE TRIAL COURT ERRED IN GRANTING THE BOARD’S MOTION FOR SUMMARY JUDGMENT.

III. STANDARD OF REVIEW

{¶15} When reviewing a trial court’s decision on a motion for summary

judgment, we conduct a de novo review governed by the standards set forth in Civ.R.

56. Vacha v. N. Ridgeville, 136 Ohio St.3d 199, 2013-Ohio-3020, 992 N.E.2d 1126, ¶

19. Summary judgment is appropriate when the movant has established: (1) there is

no genuine issue of material fact; (2) it 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 party against whom the motion for summary judgment is made. Civ.R. 56(C); Esber

Beverage Co. v. Labatt USA Operating Co., L.L.C., __ Ohio St.3d __, 2013-Ohio-4544,

__ N.E.2d __, ¶ 9.

{¶16} The movant bears the burden of establishing that no genuine issue of

material fact exists. Todd Dev. Co., Inc. v. Morgan, 116 Ohio St.3d 461, 2008-Ohio-87,

880 N.E.2d 88, ¶ 12. To meet its burden, the moving party must specifically refer to “the

pleadings, depositions, answers to interrogatories, written admissions, affidavits,

transcripts of evidence, and written stipulations of fact, if any, timely filed in the action,”

that affirmatively demonstrate the non-moving party has no evidence to support the

non-moving party’s claims. Bender v. Portsmouth, 4th Dist. Scioto No. 12CA3491,

2013-Ohio-2023, ¶ 9, citing Civ.R. 56(C). Once the movant supports the motion with

appropriate evidentiary materials, the non-moving 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 Scioto App. No. 12CA3504 6

genuine issue for trial.” Civ.R. 56(E). “If the party does not so respond, summary

judgment, if appropriate, shall be entered against the party.” Id.

IV. LAW AND ANALYSIS

{¶17} The Pertusets claim that the trial court erred in granting summary

judgment in favor of the board on the promissory note, with guarantees, executed and

delivered by McDermott and the Pertusets to the board. The board’s summary

judgment motion incorporated the affidavit of Kendra Hobson, its authorized

representative and records custodian, who stated that McDermott and the Pertusets

were in default of the note and guarantees. The board met its initial summary judgment

burden, which shifted the burden onto the Pertusets to submit evidentiary materials

setting forth specific facts showing that there is genuine issue of material fact for trial.

For the reasons that follow, the Pertusets failed to meet this burden.

{¶18} First, we have previously rejected claims similar to the only claims

specified by the Pertusets in the “ARGUMENT” section of their brief—that “[t]his case

demonstrates the utter disregard * * * of the realities facing working people in Ohio in

this period of economic crisis” and that the board “committed violations of ‘GAAP’

[generally accepted accounting principles] and ‘GAAS’ [generally accepted accounting

standards].” See Ohio Valley, 2013-Ohio-5406, at ¶ 10-11. Even if these claims were

true, the Pertusets failed to submit Civ.R. 56(C) evidentiary materials to show that they

were not in default of the note and guarantees.

{¶19} Second, the board established that it had standing to bring the action on

the note and that it is the real party in interest. “Subject-matter jurisdiction refers to the

statutory or constitutional authority to adjudicate a case,” whereas “[l]ack of standing, on Scioto App. No. 12CA3504 7

the other hand, challenges a party’s capacity to bring an action, not the subject-matter

jurisdiction of the tribunal.” Groveport Madison Local Schools Bd. of Edn. v. Franklin

Cty. Bd. of Rev., 137 Ohio St.3d 266, 2013-Ohio-4627, 998 N.E.2d 1132, ¶ 25, citing

Pratts v. Hurley, 102 Ohio St.3d 81, 2004-Ohio-1980, 806 N.E.2d 992, ¶ 11, and State

ex rel. Tubbs Jones v. Suster, 84 Ohio St.3d 70, 77, 701 N.E.2d 1002 (1998). Standing

is determined at the commencement of the action, and in actions on a note, the holder

or other person who has the rights of a holder of the note has standing to enforce it.

Fed. Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017,

979 N.E.2d 1214, ¶ 24-28; R.C. 1303.31. In addition, Civ.R. 17(A) is the procedural

requirement that a complaint be brought in the name of the real party in interest. A real

party in interest is one who is directly benefited or injured by the outcome of the case.

Florkey v. Malott, 4th Dist. Highland No. 11CA9, 2011-Ohio-5199, ¶ 14. The summary

judgment evidence submitted by the board established that it is the holder of the note,

which included the personal guarantee by the Pertusets, and the Pertusets failed to

properly rebut this evidence. The board is authorized by statute to sue. See R.C.

305.12 (“The board of county commissioners may sue and be sued”).

{¶20} The Pertusets’ reliance on Wells Fargo Bank, N.A. v. Byrd, 178 Ohio

App.3d 285, 2008-Ohio-4603, 897 N.E.2d 722, and In re Foreclosure Cases, N.D.Ohio

Nos. 1:07CV2282 et al., 2007 WL 3232430 (Oct. 31, 2007), to claim that the board

lacks standing is misplaced because in each of those cases, the entity seeking to

enforce the note did not hold it at the time of the filing of the complaint. There is no

evidence here that the board did not hold the note at any time, much less at the time it

filed the complaint to enforce its default terms. See U.S. Bank Natl. Assn. v. Kafantaris, Scioto App. No. 12CA3504 8

11th Dist. Trumbull No. 2011-T-0002, 2011-Ohio-5601, ¶ 29, similarly distinguishing the

cited cases.

{¶21} Third, the Pertusets’ contention that the board’s claim fails because

McDermott did not exist when the note was signed in April 2009 and they were not

members of the dissolved corporate entity is meritless. The certificate of dissolution for

the corporation was not filed with the secretary of state until August 14, 2009, months

after McDermott and the Pertusets executed and delivered the note to the board. The

certificate specified an earlier purported date of dissolution, but McDermott could not be

dissolved before the appropriate certificate and documents were filed with the secretary

of state. R.C. 1702.47(H) (“Upon the filing of a certificate of dissolution and those

accompanying documents or on a later date specified in the certificate that is not more

than ninety days after the filing, the corporation shall be dissolved”). The subsequent

dissolution of McDermott did not abate the board’s claim. See Bendure v. Xpert Auto,

Inc., 10th Dist. No. 11AP-144, 2011-Ohio-6058, ¶ 17 (even if a corporation is dissolved,

it may still be sued, and any judgment obtained may be enforced against the dissolved

corporation).

{¶22} More significantly, the dissolution of McDermott did not alter the Pertusets’

liability because they personally guaranteed McDermott’s timely payment of the note.

And the note specified that the entire principal sum and interest would become due

should McDermott and the Pertusets “cease operation of [their] business.”

{¶23} Fourth, notwithstanding the Pertusets’ claims to the contrary, the board

established the amount of damages to which it is entitled through the affidavit of its

representative and the note. Scioto App. No. 12CA3504 9

{¶24} Finally, any additional arguments raised by the Pertusets in their brief are

either irrelevant or meritless.

V. CONCLUSION

{¶25} Therefore, the trial court did not err in granting summary judgment in favor

of the board on the note. We overrule the Pertusets’ assignment of error and affirm the

JUDGMENT AFFIRMED. Scioto App. No. 12CA3504 10

JUDGMENT ENTRY

It is ordered that the JUDGMENT IS AFFIRMED and that Appellant shall pay the costs.

The Court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate issue out of this Court directing the Scioto County Court of Common Pleas to carry this judgment into execution.

Any stay previously granted by this Court is hereby terminated as of the date of this entry.

A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure.

Abele, P.J., & *Ringland, J.: Concur in Judgment and Opinion.

For the Court

BY: ________________________________ William H. Harsha, 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.

* Robert P. Ringland, from the Twelfth Appellate District, sitting by assignment of The Supreme Court of Ohio in the Fourth Appellate District.