Benchmark Bank v. Kimberly Office Park, L.L.C.
2016 Ohio 8338
Ohio Ct. App.2016Background
- Benchmark Bank filed foreclosure in 2012 against Kimberly Office Park, LLC and John Breen based on a mortgage note; the court entered a cognovit judgment on the note amount.
- A receiver (Jason Rowland) was appointed to manage and sell the mortgaged properties; the receiver sold one property by contract and later auctioned the Noe-Bixby Road property.
- The trial court disqualified Breen from representing Kimberly Office under Prof.Cond.R. 3.7.
- The court previously granted Breen leave in an April 7, 2014 agreed entry to file a motion against the receiver regarding the receiver’s accountability for actions allegedly affecting sale price.
- After the receiver sought discharge and approval of fees, appellants filed (without court leave) a third-party complaint alleging negligence by the receiver and seeking at least $750,000; the receiver moved to strike.
- The trial court struck the third-party complaint (finding appellants had not obtained leave and Breen remained improperly involved post-disqualification) and approved the receiver’s discharge; the court of appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court abused its discretion by striking appellants’ third-party complaint under Civ.R. 14(A) | Receiver/Benchmark: strike proper because appellants failed to obtain required leave to implead the receiver and Breen (disqualified counsel) continued to assert Kimberly Office’s positions | Breen/Kimberly Office: strike was an abuse; April 7, 2014 order granting leave to seek receiver accountability authorized pursuing claims; parties entitled to be heard on merit of negligence allegations | Court: No abuse of discretion — complaint struck for lack of leave and because Breen continued to act after disqualification; affirmed trial court |
| Whether the April 7, 2014 leave to file a motion against the receiver equated to leave to file a third-party complaint | Receiver/Benchmark: the April 7 leave permitted a motion, not an impleader/third-party complaint; circumstances (failed buyer) limited scope | Breen/Kimberly Office: the distinction was illusory; the court’s prior grant of leave should have allowed substantive claims against the receiver | Court: Leave to file a motion was not equivalent to leave to file a third-party complaint; trial court did not err |
| Whether striking the complaint violated the principle that cases should be heard on the merits | Receiver/Benchmark: procedural rules (Civ.R. 14) and court’s disqualification order govern; failure to follow procedure justified dismissal | Breen/Kimberly Office: procedural niceties should not bar meritorious claims that the receiver negligently destroyed value of collateral | Court: Procedural requirements were applied reasonably; no abuse of discretion in refusing the untimely/unauthorized third-party pleading |
Key Cases Cited
- Blakemore v. Blakemore, 5 Ohio St.3d 217 (Ohio 1983) (standard for abuse of discretion)
- INF Ent., Inc. v. Donnellon, 133 Ohio App.3d 787 (Ohio Ct. App. 1999) (receiver may be sued personally for exceeding authority or failing to use ordinary care)
- Franklin Cty. Dist. Bd. of Health v. Paxson, 152 Ohio App.3d 193 (Ohio Ct. App. 2003) (third-party liability must arise from the same transaction or occurrence giving rise to the plaintiff's claim)
- State ex rel. Jacobs v. Mun. Court of Franklin Cty., 30 Ohio St.2d 239 (Ohio 1972) (purposes of impleader under Civ.R. 14 include efficiency and avoiding duplicative actions)
- Renacci v. Martell, 91 Ohio App.3d 217 (Ohio Ct. App. 1993) (defendant's right to recover from third-party must arise from plaintiff's successful prosecution of main claim)