Hammon v. Huntington Natl. Bank
102 N.E.3d 1248
Ohio Ct. App.2018Background
- Zachary Hammon received a $3.2M medical-malpractice settlement as a minor; National City was first guardian, later replaced by Huntington, with Jeffrey Consolo as counsel. Huntington (as guardian) funded two "Settlement Preservation Trusts" (SPT 1 funded $1M; SPT 2 funded $500K) for lifetime income with disputed payment guarantees; First Capital (formerly Morgan Chase) served as trustee.
- An agreed entry from 2000 (signed by Huntington rep, parents, and counsel) described guaranteed annual payments and a $1M principal reversion at age 35; trust documents, however, contained "no guarantee" language and variable-return disclaimers.
- Guardianship final accounting was approved by the probate court in March 2007; Hammon acknowledged receipt of the accounting in January 2007. Huntington later informed Hammon (Nov. 2009) the trusts "had not performed as anticipated." Hammon alleges he was not informed until 2013 of lack of guarantees.
- Hammon sued Huntington, First Capital, and Consolo in probate court (adversarial proceeding) asserting breach of contract, negligence, breach of fiduciary duty, fraud, civil conspiracy, conversion, and UPIA violations. Defendants moved to dismiss under Civ.R. 12(B)(6); Huntington also moved in the alternative for summary judgment.
- The probate court dismissed the entire second amended complaint; on appeal the court (Eighth Dist.) treated Huntington’s "in the alternative" filing as a summary-judgment motion (parties had responded with evidentiary materials) and reviewed de novo.
- Appellate disposition: affirmed dismissal of claims against First Capital and Consolo and most claims against Huntington (Counts 2, 3, 5–9), but reversed and remanded as to Hammon’s fraud claims (Counts 1 and 4) against Huntington, finding disputed issues about when fraud was discovered.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the probate court’s 2007 approval of the guardian’s final account bars Hammon’s claims (res judicata) | Hammon: claims based on separate assurances (agreed entry) were not litigated and thus not barred | Huntington: final accounting settles administration and bars claims arising from the guardianship | Court: Res judicata bars claims tied to administration, but fraud and breach-of-contract claims based on separate alleged assurances (agreed entry) are not barred |
| Whether Count 1 (breach of contract on agreed entry) is governed by contract or tort statute of limitations | Hammon: Count 1 is a contract claim (longer limitations) | Huntington: The agreed entry lacks contract consideration because Huntington acted as guardian; claim sounds in tort (fraud) with 4-year limitations | Court: Count 1 sounds in tort (fraud) not contract; 4-year limitations apply and the claim is subsumed into fraud Count 4 |
| Whether Hammon’s fraud claims are time-barred under the discovery rule | Hammon: he did not know (and could not reasonably know) the trusts were not guaranteed until 2013 | Huntington: receipt of final accounting in Jan 2007 (and later communications) put him on notice; claims time-barred | Court: Genuine dispute exists about when Hammon discovered or should have discovered the fraud; summary-judgment dismissal of Huntington’s fraud claims was erroneous and those claims survive |
| Whether claims against First Capital and Consolo survive 12(B)(6) review (pleading/limitations/particularity) | Hammon: First Capital and Consolo participated in negotiations and are liable for fraud/breach; Count 8 is contract-based | First Capital/Consolo: arguments include statute of limitations, choice-of-law, and insufficiently pleaded fraud; trustee duties give rise to breach-of-trust (not contract) | Court: Dismissal of First Capital and Consolo affirmed — First Capital’s breach-of-trust claim is time-barred; fraud against First Capital and Consolo fails Civ.R. 9(B) particularity requirement |
Key Cases Cited
- Applegate v. Fund for Constitutional Govt., 70 Ohio App.3d 813 (procedural notice sufficient when motion is styled "in the alternative" for summary judgment)
- Grafton v. Ohio Edison Co., 77 Ohio St.3d 102 (standard of review for summary judgment)
- Zivich v. Mentor Soccer Club, 82 Ohio St.3d 367 (summary judgment test under Civ.R. 56 explained)
- Grava v. Parkman Twp., 73 Ohio St.3d 379 (res judicata bars subsequent actions arising from same transaction)
- Kostelnik v. Helper, 96 Ohio St.3d 1 (elements of contract; consideration requirement)
- Cundall v. U.S. Bank, 122 Ohio St.3d 188 (discovery rule for accrual of fraud and conversion claims)
- Doe v. Archdiocese of Cincinnati, 109 Ohio St.3d 491 (purpose and construction of statutes of limitations)
- Flagstar Bank, F.S.B. v. Airline Union's Mtge. Co., 128 Ohio St.3d 529 (statutes of limitations are remedial and construed liberally)