March v. Statman
2016 Ohio 2846
Ohio Ct. App.2016Background
- Perrin G. March III (PMIII) loaned Cincinnati Incorporated (CI) over $17M via consolidated notes; by 2009 PMIII sought to transfer the note for estate‑planning and asked his advisors to value it as low as defensible for IRS scrutiny.
- CI was in poor financial condition; PMIII’s accountant (Rippe & Kingston) concluded the note had little or no value and prepared a valuation for a nominal transfer price.
- Schuitemaker (PMIII’s son‑in‑law and CI CEO) discussed the transaction with attorney Alan Statman about IRS defensibility and how the note would be treated in a CI bankruptcy; Statman gave legal opinions about potential subordination and market value.
- At a September 11, 2009 meeting, PMIII executed an assignment transferring the $17M note (document ultimately named Schuitemaker as assignee) for $50,000. R&K stated no one provided significant assistance to its valuation.
- PMIII’s successor trustee (PMIV) sued Statman and his firm for fraud and civil conspiracy, alleging Statman colluded with Schuitemaker to induce the undervalued transfer; the trial court granted summary judgment for Statman and SH&E.
- On appeal the First District affirmed, holding no evidence of actionable misrepresentation or justifiable reliance by PMIII and therefore no underlying unlawful act to support conspiracy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Statman made an actionable misrepresentation about the note’s value | Statman gave false opinions and assisted Schuitemaker to produce a low valuation to induce the transfer | Statman provided legal opinions about potential future events (bankruptcy priority), not false statements of present fact | No actionable misrepresentation; opinions about future treatment are not fraud |
| Whether PMIII justifiably relied on Statman (or his statements) | PMIII relied on Schuitemaker and Statman’s inputs to accept the low valuation | R&K prepared the valuation independently; PMIII sought the lowest defensible value and relied on his advisors and CI financials, not Statman | No justifiable reliance shown; R&K disclaimed outside influence and PMIII’s advisors did not rely on Statman |
| Whether civil‑conspiracy claim survives absent fraud | Conspiracy alleged based on coordinated scheme to deprive PMIII of the note’s value | Conspiracy cannot stand without an underlying unlawful act (fraud) | Conspiracy fails because the fraud claim fails |
Key Cases Cited
- Grafton v. Ohio Edison Co., 77 Ohio St.3d 102 (standard of appellate de novo review of summary judgment)
- Temple v. Wean United, Inc., 50 Ohio St.2d 317 (summary judgment standard)
- Williams v. Aetna Fin. Co., 83 Ohio St.3d 464 (elements of fraud and dependency of conspiracy on underlying tort)
- Kenty v. Transam. Premium Ins. Co., 72 Ohio St.3d 415 (definition of civil conspiracy)
- Lynch v. Dial Fin. Co., 101 Ohio App.3d 742 (opinions about future events do not constitute fraudulent misrepresentations)
- Scotts Co., LLC v. Liberty Mut. Ins. Co., 606 F.Supp.2d 722 (legal opinions and future contingencies are not actionable fraud)
- Aetna Ins. Co. v. Reed, 33 Ohio St. 283 (historical authority distinguishing opinion from actionable misrepresentation)