Auer v. Paliath
2016 Ohio 5353
Ohio Ct. App.2016Background
- Plaintiffs Torri and Thomas Auer purchased multiple Dayton rental properties in 2007; repairs were to be performed by Miami Valley Home Improvements, LLC (MVHI) and managed by The Investment Genie (TIG).
- Properties were left in disrepair, produced little or no rental income, and the Auers sued Jamie Paliath, Hari Paliath, and Hometown Realty for fraud and related claims in 2008.
- A jury initially returned a large verdict against the Paliaths and Hometown; subsequent appeals and proceedings resulted in reinstatements and retrials on various issues, and Hari obtained relief from judgment in 2013.
- Hari moved for summary judgment in 2015, submitting a brief affidavit denying personal responsibility and asserting lack of role in the LLCs; the Auers moved to strike parts of the affidavit as conclusory.
- The trial court struck paragraph seven of the affidavit but left most of paragraph six intact, then granted summary judgment for Hari; the Auers appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether para. 6 of Hari's affidavit should be stricken as conclusory | Auer: paragraph 6 contains legal conclusions and meaningless denials, should be stricken | Hari: remaining statements are lay-fact/opinion admissible to show lack of personal responsibility | Court: partially agreed — struck the explicit legal conclusion but refused to strike the marginally factual portions |
| Whether Hari met the initial Dresher burden on summary judgment | Auer: Hari's affidavit is too cursory to carry his burden; genuine issues exist about fraud and veil-piercing | Hari: Auers offered no counter-affidavits; his affidavit shows lack of personal liability | Court: Hari failed to meet Dresher initial burden; summary judgment was improper |
| Whether individual liability or veil-piercing claims against Hari survive summary judgment | Auer: complaint alleges Hari participated in fraud and MVHI’s actions; members can be liable individually | Hari: argues lack of personal involvement and later raises indemnification via divorce decree | Court: genuine factual disputes exist about Hari’s personal liability and veil-piercing; indemnification not addressed on appeal |
| Whether the indemnification clause in Hari’s divorce decree supports summary judgment | Auer: N/A (issue raised by defendant) | Hari: divorce decree requires indemnification and relieves him of liability | Court: Remanded — trial court did not decide enforceability; appellate court declines to address it first |
Key Cases Cited
- Auer v. Paliath, 140 Ohio St.3d 276, 17 N.E.3d 561 (Ohio 2014) (supreme court decision affecting earlier jury verdict and agency issues)
- Dresher v. Burt, 75 Ohio St.3d 280, 662 N.E.2d 264 (Ohio 1996) (movant’s initial burden on summary judgment explained)
- Burr v. Board of County Commissioners of Stark County, 23 Ohio St.3d 69, 491 N.E.2d 1101 (Ohio 1986) (elements of common-law fraud)
- Belvedere Condominium Unit Owners' Assn. v. R.E. Roark Cos., Inc., 67 Ohio St.3d 274, 617 N.E.2d 1075 (Ohio 1993) (tests for piercing the corporate veil)
- Dombroski v. WellPoint, Inc., 119 Ohio St.3d 506, 895 N.E.2d 538 (Ohio 2008) (modification of Belvedere’s second prong to include egregious wrongs)
- Fryberger v. Lake Cable Recreation Assn., Inc., 40 Ohio St.3d 349, 533 N.E.2d 738 (Ohio 1988) (affidavits that state legal conclusions are insufficient for summary judgment)