651 F. App'x 438
6th Cir.2016Background
- Malek was Treasurer of First Place Bank and had a Change in Control Severance (CICS) agreement that could require a lump‑sum payment upon certain terminations.
- First Place Bank was acquired by Talmer after bankruptcy; Malek continued working but later was terminated in February 2014.
- Malek and Talmer executed a Release in February 2014 by which Malek received $33,313 and "unconditionally" released all known and unknown pre‑signing claims, including claims related to change‑of‑control and severance agreements.
- Malek later alleged Talmer had fraudulently misrepresented the OCC’s response to an extension request for the CICS, and in February 2015 he demanded arbitration for breach of the CICS.
- Talmer filed suit seeking injunctive and declaratory relief that the Release barred the arbitration; Malek counterclaimed for fraud, civil‑theft (Ohio statute), and rescission, seeking the difference in severance pay.
- Malek did not tender back the Release consideration until after he filed his original answer; the district court granted Talmer’s Rule 12(c) motion, dismissing Malek’s counterclaims as barred by Ohio’s tender‑back rule. The Sixth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Ohio’s tender‑back rule bar Malek’s fraud/rescission counterclaims because he did not tender consideration before suing? | Malek argued his later tender (and subsequent amended answer) cures any timing defect. | Talmer argued Ohio law requires tender before filing suit; failure to do so bars claims. | Held: Tender must precede suit; Malek’s untimely tender bars his counterclaims. |
| Does an amended pleading (Fed. R. Civ. P. 15) retroactively cure a plaintiff’s failure to tender before filing? | Malek: Amended Answer supersedes the original, curing the defect. | Talmer: Federal procedural doctrine cannot override state substantive tender requirement. | Held: Rule 15 does not excuse compliance with state‑law prerequisites; superseding pleadings do not nullify the tender‑back timing rule. |
| May federal court create an exception to Ohio’s tender‑back rule where tender after filing is impracticable or where amendment occurred? | Malek suggested equitable treatment via federal procedure. | Talmer and courts: Erie and precedent prohibit federal courts from crafting such exceptions to state substantive law. | Held: No exception recognized; federal court must apply Ohio rule as written. |
| Was Malek’s tender conditional such that it would be ineffective even if timely? | Malek claimed he tendered back consideration (and Talmer rejected it). | Talmer argued the tender was conditioned on rescission and thus insufficient. | Held: Court did not need to decide conditionality because untimeliness alone required dismissal. |
Key Cases Cited
- Berry v. Javitch, Block & Rathbone, LLP, 940 N.E.2d 1265 (Ohio 2010) (Ohio precedent requiring tender before attacking a release for fraud in the inducement)
- Haller v. Borror Corp., 552 N.E.2d 207 (Ohio 1990) (distinguishes fraud in the factum from fraud in the inducement; tender requirement applies to inducement)
- Walker v. Armco Steel Corp., 446 U.S. 740 (1980) (Erie principles limit federal courts from displacing state substantive rules)
- Ziegler v. IBP Hog Mkt., Inc., 249 F.3d 509 (6th Cir. 2001) (standard of review for Rule 12(c) judgments on the pleadings)
- JPMorgan Chase Bank, N.A. v. Winget, 510 F.3d 577 (6th Cir. 2007) (treatment of pleadings and standard for judgment on the pleadings)