State ex rel. McGirr v. Winkler (Slip Opinion)
93 N.E.3d 928
| Ohio | 2017Background
- Creditors (Connie McGirr and 18 others) obtained a $42 million Kentucky judgment against disbarred attorney Stanley Chesley for stealing settlement funds; Kentucky courts ordered Chesley to transfer his beneficial interest in WSBC to the creditors, which he did not do.
- Chesley had executed a wind-up agreement transferring beneficial ownership to Thomas Rehme, who later formed an Ohio corporation and (through that corporation) executed an assignment for the benefit of creditors (ABC) transferring WSBC shares to assignee Eric Goering; the deed was filed in Hamilton County Probate Court within ten days of execution.
- Federal court litigation and a TRO/injunction adjudicated likelihood of fraudulent-transfer and barred transfers or distributions of WSBC assets; federal judge criticized the ABC filing as potentially intended to frustrate creditors.
- Creditors filed an original-action writ of prohibition in the Ohio Supreme Court to stop the ABC action in Hamilton County Probate Court; the court granted an emergency stay and permitted Goering to intervene.
- Probate Judge Winkler and intervenor Goering moved to dismiss (and for judgment on the pleadings); creditors moved to strike one of Goering’s memoranda and sought prohibition to prevent the ABC action as vexatious; the Ohio Supreme Court denied the procedural motions and granted a peremptory writ of prohibition halting the ABC proceedings.
Issues
| Issue | Plaintiff's Argument (Creditors) | Defendant's Argument (Winkler/Goering/WSBC) | Held |
|---|---|---|---|
| Whether probate court (Judge Winkler) lacks jurisdiction over the ABC action | Kentucky orders and prior proceedings preclude probate jurisdiction; ABC is a sham to evade judgment | R.C. Chapter 1313 vests probate courts with jurisdiction upon timely filing of the transfer deed | Court: Probate jurisdiction is not patently and unambiguously lacking; jurisdiction exists |
| Whether res judicata / Full Faith and Credit bars the ABC action | Boone County/Kentucky rulings that the wind‑up agreement is a sham preclude Ohio proceedings | Res judicata and Full Faith defenses are affirmative and may be litigated by the probate court | Court: Those defenses do not deprive probate court of jurisdiction; they can be decided in probate |
| Whether a federal proceeding (fraudulent‑transfer suit) preempts the ABC action | Federal fraudulent‑transfer litigation should take precedence; ABC is an "end run" | State probate proceedings are proper; federal/state concurrent proceedings do not automatically deprive probate court of jurisdiction | Court: Federal proceedings do not invoke the state‑court priority rule; probate may proceed (subject to federal injunction) |
| Whether an extraordinary writ is appropriate to stop the ABC action as vexatious | Writ justified because ABC is a sham to frustrate creditors and there is pattern of abusive litigation; ordinary remedies inadequate | Because probate court has jurisdiction and appeals are available, prohibition should not lie | Court: Although jurisdiction exists and appeals are generally adequate, the court grants prohibition to prevent vexatious abuse of process given extensive record of misconduct |
Key Cases Cited
- O'Brien v. Univ. Community Tenants Union, Inc., 42 Ohio St.2d 242 (motion to dismiss standard under Civ.R. 12(B)(6))
- Whaley v. Franklin Cty. Bd. of Commrs., 92 Ohio St.3d 574 (Civ.R. 12(C) judgment on the pleadings presents questions of law)
- Commercial Savs. Bank v. Wyandot Cty. Court of Common Pleas, 35 Ohio St.3d 192 (1988) (writ of prohibition may be used to halt vexatious litigation)
- Leonhart v. Thirteenth Judicial Dist. Court, Sedgwick Cty., 138 Colo. 1 (interstate finality/Full Faith and Credit defenses are matters for the second tribunal to decide)
- Mitchell v. Lawson Milk Co., 40 Ohio St.3d 190 (pleadings accepted as true when deciding motion to dismiss)