2021 Ohio 77
Ohio Ct. App.2021Background
- Gevedon and Terry operated Wholesale Auto Parts from 2009 to Feb. 2018 under an oral partnership/agreement; Terry managed day-to-day operations while Gevedon handled some startup costs and vendor relationships.
- A CPA review showed substantial discrepancies between reported parts-sales revenue and bank deposits (allegedly $231,257 pilfered 2014–Jan.2018); Gevedon alleges Terry misappropriated funds and inventory and concealed it by returning inventory for credit.
- Terry and Andrea (married 2017) purchased a home, later opened A & T Auto Parts in early 2018, and purchased/stocked a commercial building in St. Paris; Gevedon claims these acts were funded by converted Wholesale assets.
- Gevedon ousted Terry in Feb. 2018, discovered A & T’s inventory resembled Wholesale’s missing inventory, and sued Terry and Andrea for fraudulent conversion and civil conspiracy (among other claims); Deckers counterclaimed.
- The trial court denied summary judgment as to Terry but granted summary judgment to Andrea on all claims against her; the appeals court affirmed in part, reversed in part, and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Andrea is personally liable for fraudulent conversion based on alleged use of converted funds to buy/renovate the Deckers’ home | Andrea benefited from converted funds used to buy/repair the home, so she should be liable | Andrea had no involvement, knowledge, or control over Wholesale funds; home was largely financed and loans documented | Held: Summary judgment for Andrea affirmed as to personal/home benefit theory — no evidence she knew of or exercised dominion over converted property |
| Whether Andrea is liable for conversion as partner/co-owner of A & T Auto Parts for acts by Terry that allegedly converted Wholesale assets to fund A & T | As a partner/co-owner of A & T, Andrea may be jointly liable for a partner’s conversion conducted in the ordinary course or for the partnership’s benefit | Andrea argues lack of involvement/knowledge and no evidence she participated in conversion | Held: Trial court erred to the extent conversion is alleged to have been committed by Terry on behalf of A & T — genuine issues remain whether Andrea (as A & T partner) may be liable; reversed in part and remanded |
| Whether Andrea is liable for civil conspiracy to breach Terry’s fiduciary duties to Gevedon (by opening a competing store and concealing conversion) | Andrea conspired with Terry to usurp business opportunities, conceal conversion, and harm Gevedon | Complaint insufficient and there is no evidence Andrea acted maliciously, knew of conversion, or aided/encouraged wrongful acts | Held: Summary judgment for Andrea on civil conspiracy affirmed — plaintiff produced no evidence Andrea acted with requisite malice, knowledge, or concerted action |
| Whether the complaint adequately pleaded a conspiracy claim based on breach of fiduciary duty | The complaint (liberally read) alleges conversion plus concealment through purchase/stocking of A & T and residence improvements constituting a conspiracy | Defendants contend complaint only alleges conversion and lacks conspiracy specifics | Held: Court found the complaint, read liberally, did allege conspiracy based on breach of fiduciary duty, but lack of evidentiary support doomed the claim against Andrea at summary judgment |
Key Cases Cited
- Zivich v. Mentor Soccer Club, Inc., 82 Ohio St.3d 367 (1998) (summary-judgment standard under Civ.R. 56)
- Mitseff v. Wheeler, 38 Ohio St.3d 112 (1988) (moving party’s initial burden on summary judgment)
- Dresher v. Burt, 75 Ohio St.3d 280 (1996) (nonmoving party’s burden to produce specific facts to create genuine issue)
- Dice v. White Family Cos., 173 Ohio App.3d 472 (2007) (elements of conversion: ownership/right of possession, wrongful dominion, damages)
- Vienna Beauty Prods. Co. v. Cook, 53 N.E.3d 808 (2015) (spouse’s benefit alone insufficient to impute conversion liability absent participation, knowledge, or control)
- Williams v. Aetna Fin. Co., 83 Ohio St.3d 464 (1998) (definition and elements of civil conspiracy)
- LeFort v. Century 21–Maitland Realty Co., 32 Ohio St.3d 121 (1987) (conspiracy requires malicious combination causing actual damages)