Huntington Natl. Bank v. Bywood Inc.
2017 Ohio 2829
Ohio Ct. App.2017Background
- Huntington obtained summary judgment (Nov. 20, 2012) against Bywood, Inc. and guarantor Ashraf Ettayem for unpaid business loans; judgment affirmed on appeal.
- Huntington conducted debtor exams 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 asking the trial court to (1) enjoin transfer of Ettayem’s Limited shares and (2) issue a replacement stock certificate for levy; the court granted relief on April 8, 2016.
- Prior to that, Huntington served discovery (including requests for admission) in Dec. 2015; the trial court denied Ettayem’s objections on Feb. 11, 2016 and Huntington obtained an order deeming the admissions admitted on April 7, 2016 while an appeal of the Feb. 11 order was pending.
- Ettayem appealed both the April 7 and April 8 orders. The appellate court held the April 7 order void for lack of jurisdiction (appeal divested the trial court) and ruled the trial court exceeded its authority by issuing a replacement stock certificate (court may order issuer to issue a replacement but cannot itself sign/issue the certificate).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether trial court had jurisdiction to deem requests for admission admitted while appeal of denial of discovery objections was pending | Huntington argued the court could deem admissions admitted despite the pending appeal | Ettayem argued the appeal divested the trial court of jurisdiction to act on the discovery matter | The appeals court held the trial court lacked jurisdiction and the April 7 order deeming admissions admitted is void |
| Whether a trial court may order issuance of a replacement stock certificate or may itself issue the certificate to aid execution | Huntington argued R.C. 1308.32(E) and equity authorize the court to create a replacement certificate so the sheriff can seize it | Ettayem argued the court improperly issued a certificate and exceeded statutory authority | Court held it may enjoin transfers and order the issuer to comply with statutory procedures for replacement, but the court cannot itself issue/sign a replacement stock certificate |
| Whether creditor may reach certificated securities without physical seizure when certificate is lost | Huntington relied on R.C. 1308.32(E) to obtain equitable aid because the certificate could not be seized | Ettayem pointed to UCC rules requiring actual seizure absent statutory exceptions | Court held general rule requires actual seizure; R.C. 1308.32(E) permits court aid but not direct issuance of certificates by the court |
| Proper remedy when issuer refuses to issue replacement certificate | Huntington sought direct court creation of certificate to enable levy | Ettayem relied on statutory replacement regime and issuer’s obligations | Court held it can compel the issuer to follow R.C. 1308.41 procedures (indemnity, bond, reasonable requirements) and exercise jurisdiction to resolve disputes, but cannot substitute by issuing the certificate itself |
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 appellate review)
- State ex rel. Rock v. School Employees Retirement Board, 96 Ohio St.3d 206 (2002) (appeal divests trial court of jurisdiction)
- Lingo v. State, 138 Ohio St.3d 427 (2014) (void judgments are nullities)
- Gehm v. Timberline Post & Frame, 112 Ohio St.3d 514 (2007) (appellate court lacks jurisdiction to review nonfinal/void orders)
- Hastings v. Furr, 177 B.R. 723 (S.D. Fla. Bankr. 1995) (construing UCC provision and holding certificated securities generally must be actually seized)
- Wolverine Flagship Fund Trading Ltd. v. American Oriental Bioengineering, Inc., 444 N.J. Super. 530 (App. Div. 2016) (discussing methods to reach certificated securities and exceptions)
- Ho v. Hsieh, 181 Cal. App. 4th 337 (2010) (California court construing UCC rule requiring seizure of certificated securities except for statutory exceptions)