9th District reverses fraud case due to vague judgment entry
Legal News Associate Editor
Published: August 10, 2012
The 9th District Court of Appeals recently reversed and remanded a Summit County Court of Common Pleas summary judgment in a civil action that alleged fraud and breach of fiduciary duty during the sale of a property to the city of Akron. In a lone dissent more than twice the length of the majority opinion, Judge Clair E. Dickinson supported a reversal and remand for drastically different reasons.
Appellant Mark Mourton owned 25 percent of BMJ, LTD., which owned a single property on Embassy Parkway. The building was leased to ActionLink, a company owned by Bruce Finn, who also owned half of BMJ. In September 2007, Finn bought Mourton’s share of BMJ for $15,000; each man contends the other started the negotiations, which began in July that year.
In August of 2007, Finn met with Akron officials to discuss buying a new property on Romig Road for ActionLink, which he believed had outgrown its Embassy Parkway facility. Eventually, Finn agreed to sell the Embassy Parkway building to the city for $1.3 million– the profits from the sale would go toward the buying the city’s property on Romig Road.
Soonafter, Mourton sued Finn and BMJ, alleging that Finn had breached his fiduciary duty, negligently misrepresented the Embassy Road property transfer negotiations and committed fraud. He claimed he did not know of Finn’s plans to sell the property to the city when he agreed to sell his stake in BMJ and that Finn had intentionally swindled him out of the future profits arising from the sale.
Though Finn and BMJ “repeatedly failed to comply” during the discovery process, Judge Lynne Callahan denied Mourton’s motion for summary judgment, granting instead the defendants’ motion for summary judgment.
Mourton appealed, contending that the trial court erred in granting the appellees’ motion for summary judgment. Reviewing the summary judgment award de novo, the 9th District found that it could not properly discern the trial court’s decision because it lacked any explanation of its reasoning. According to the 9th District’s majority opinion, authored by Judge Eve Belfance, the involved parties filed over 600 pages of depositions in addition to several exhibits. The defendants offered several alternative grounds for summary judgment in their motion and the judgment entry proved too vague for the appellate court to discern which played into Judge Callahan’s decision.
Judge Belfance wrote that “a bare-bones judgment entry in a case as complex as this … is also unfair to the parties, who are essentially forced to simply refile their summary judgment motion in the appellate court due to being unsure why the trial court rendered the decision it did.” Because the appellate court would virtually transform to a fact-finding trial court, it reversed and remanded the matter back to Summit County.
To support its decision, the 9th District cited Murphy v. Reynoldsburg, a 1992 Ohio Supreme Court case. Murphy stated that if “a trial court does not consider all the evidence before it, an appellate court does not sit as a reviewing court, but, in effect, becomes a trial court.”
Though Judge Carla Moore concurred, Judge Claire E. Dickenson dissented, supporting a reversal on different grounds. He disagreed with the majority’s assertion that a trial court’s failure to adequately explain its reason for granting summary judgment is reversible error.
“The problem in Murphy was not that the trial court failed to adequately state its reasons for granting summary judgment; it was that it failed to carry out its duty to examine the evidence before it,” he wrote. “There is nothing that indicates a similar failure by the trial court in this case.
“Remanding this matter at this juncture without addressing the merits merely delays final adjudication and increases the costs for the parties.”
Judge Dickenson then systematically reviewed the available evidence in a light most favorable to Mourton. Regarding Finn’s alleged breach of fiduciary duty, he found a “genuine issue of material fact remaining for trial,” because records show Finn failed to inform Mourton of his efforts to sell the Embassy Parkway building to the city – information which would have impacted Mourton’s decision to relinquish his interest in BMJ.
As for the fraud allegation, Judge Dickenson found that Finn sent Mourton emails predicting he would lose money in the building sale. Finn testified that he wanted to help Mourton avoid losses on the deal, which eventually earned him a six-figure profit. Accordingly, Judge Dickenson found that the trial court’s summary judgment on the fraud and negligent misrepresentation should be reversed.
The case is cited as Mourton v. Finn, 2012-Ohio-3341.