Fast Tract Title Servs., Inc. v. Barry
2022 Ohio 1943
Ohio Ct. App.2022Background
- Fast Tract Title Services sued Denver Barry alleging fraud and asking the court to pierce the corporate veil of 1229 Summit L.L.C. to hold Barry personally liable for a prior judgment against 1229 Summit.
- The complaint recited that Fast Tract had a judgment against 1229 Summit and alleged Barry made “multiple representations” and “concealed material facts,” and that 1229 Summit was a “fiction” used to perpetrate fraud.
- Barry moved to dismiss under Civ.R. 12(B)(6), arguing Fast Tract failed to plead fraud with the particularity required by Civ.R. 9(B); the trial court denied the motion and also denied summary judgment.
- The case was tried; the jury found Barry liable for fraud, awarded compensatory and punitive damages and found in favor of piercing the corporate veil (but awarded $0 on the veil claim); the court later awarded attorney fees and adjusted damages.
- On appeal the Eighth District held Fast Tract had indeed pled fraud as the underlying tort for veil-piercing and that those fraud allegations were not pled with the required particularity under Civ.R. 9(B), vacating the trial judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the fraud claim was pleaded with particularity under Civ.R. 9(B) | Fast Tract contended the action was primarily a veil-piercing claim and its complaint adequately alleged facts to disregard 1229 Summit | Barry argued the complaint’s fraud allegations were conclusory and failed to specify time, place, content, or resulting transaction required by 9(B) | The court held the fraud allegations lacked the particularity required by Civ.R. 9(B) and were therefore deficient |
| Whether piercing the corporate veil asserted independently avoids Rule 9(B) | Fast Tract argued piercing the veil was the operative claim and Rule 9(B) was irrelevant | Barry argued that because Fast Tract relied on fraud as the underlying tort to pierce the veil, Rule 9(B) applied | The court held veil-piercing is a remedy dependent on an underlying tort; because Fast Tract alleged fraud as that tort, Rule 9(B) applied |
| Whether denial of the 12(B)(6) motion was proper and impact on judgment | Fast Tract maintained the complaint was sufficient and trial rulings were correct | Barry maintained the trial court should have dismissed the deficient fraud/veil-piercing claim before trial | The court found denial of 12(B)(6) was error, sustained the assignment of error, and vacated the judgment against Barry |
Key Cases Cited
- Dombroski v. Wellpoint, Inc., 895 N.E.2d 538 (Ohio 2008) (explains veil-piercing principles and that fraud is one basis to pierce)
- Belvedere Condominium Unit Owners’ Assn. v. R.E. Roark Cos., 617 N.E.2d 1075 (Ohio 1993) (sets three-prong test for piercing the corporate veil)
- Cohen v. Lamko, Inc., 462 N.E.2d 407 (Ohio 1984) (lists elements of fraud)
- RCO Internatl. Corp. v. Clevenger, 904 N.E.2d 941 (Ohio Ct. App. 2008) (piercing the corporate veil is a remedy, not an independent cause of action)
- Hersh v. Grumer, 176 N.E.3d 1135 (Ohio Ct. App. 2021) (standard of review for Civ.R. 12(B)(6) dismissal)
- NorthPoint Props. v. Petticord, 901 N.E.2d 869 (Ohio Ct. App. 2008) (discussion of de novo review and motion to dismiss standards)