Huntington Natl. Bank v. Bywood, Inc.
2017 Ohio 2740
| Ohio Ct. App. | 2017Background
- Huntington obtained summary judgment (Nov. 20, 2012) against Bywood, Inc. and guarantor Ashraf Ettayem for unpaid business loans; judgment later affirmed on appeal.
- Huntington conducted debtor examinations of Ettayem (Mar. 14, 2014; May 1, 2015) and learned Ettayem owned 100% of The Limited Investment Group Corp. stock but did not possess the physical certificate.
- Huntington filed an ex parte motion in aid of execution seeking (1) to freeze transfer of Ettayem’s Limited shares and (2) an order directing issuance of a replacement stock certificate so the sheriff could levy and sell it; the trial court granted relief (Apr. 8, 2016).
- Prior to that, Huntington served discovery (including requests for admission) and the trial court denied Ettayem’s motion to strike discovery (Feb. 11, 2016); Ettayem appealed that order, and while his appeal was pending the trial court entered an order deeming the requests for admission admitted (Apr. 7, 2016).
- On appeal to the Tenth District, Ettayem challenged (1) the trial court’s order deeming admissions admitted while an appeal was pending and (2) the court’s issuance of a replacement stock certificate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court had jurisdiction to enter an order deeming Huntington’s requests for admission admitted while Ettayem’s appeal of the discovery denial was pending | Huntington implicitly argued the court could proceed and enter the admission order | Ettayem argued the pending appeal divested the trial court of jurisdiction, making the admission order void | Court: Appeal from Feb. 11 order divested the trial court of jurisdiction; the April 7 order deeming admissions admitted is void and a nullity |
| Whether the trial court could issue (rather than order the issuer to issue) a replacement stock certificate to reach lost certificated securities under R.C. 1308.32(E) and R.C. 1308.41 | Huntington argued R.C.1308.32(E) authorized court aid to reach securities and requested the court create a replacement certificate so sheriff could levy it | Ettayem argued court aid was proper but court lacked authority to itself issue a corporate stock certificate | Court: Court may enjoin and order the owner/issuer to follow statutory replacement procedure, and may prohibit transfer, but a court lacks statutory authority to itself execute and sign a replacement stock certificate; issuance by the court was reversed |
Key Cases Cited
- State ex rel. Electronic Classroom of Tomorrow v. Cuyahoga Cty. Court of Common Pleas, 129 Ohio St.3d 30 (2011) (perfected appeal divests trial court of jurisdiction over matters inconsistent with the appellate court’s jurisdiction)
- Lingo v. State, 138 Ohio St.3d 427 (2014) (a void judgment is a nullity)
- State ex rel. Carnail v. McCormick, 126 Ohio St.3d 124 (2010) (void judgments are not final, appealable orders)
- Gehm v. Timberline Post & Frame, 112 Ohio St.3d 514 (2007) (appellate court lacks jurisdiction to review a nonfinal or void order)
- Hastings v. Furr, 177 B.R. 723 (S.D. Fla. 1995) (certificated securities generally must be actually seized to perfect creditor’s lien)
- Ho v. Hsieh, 181 Cal.App.4th 337 (2010) (construing UCC provision that certificated securities typically require actual seizure)
- Wolverine Flagship Fund Trading Ltd. v. American Oriental Bioengineering, Inc., 444 N.J. Super. 530 (App. Div. 2016) (discussing exceptions when securities are in hands of issuer or secured party)