Wells Fargo v. Smith
2013 Ohio 855
Ohio Ct. App.2013Background
- Third-party plaintiff Donald Ray Smith, executor of Evelyn Mae Smith, appeals a Brown County trial court summary-judgment ruling favoring AmeriFirst Financial and Gary Hamminga.
- The suit arises from a failed investment in unregistered securities tied to Diversified Lending Group (DLG) sold via American Benefits Concepts (ABC).
- ABC solicited mortgage closings on behalf of clients investing in DLG; AmeriFirst closed mortgages for ABC clients; Hamminga was a AmeriFirst loan officer.
- Mrs. Evelyn Smith obtained a mortgage through AmeriFirst in 2008 and invested loan proceeds in DLG; DLG later defaulted and went into receivership.
- Wells Fargo filed foreclosure; Evelyn Smith died in 2011; her son, Donald Ray Smith, continued the suit as executor; AmeriFirst and Hamminga moved for summary judgment, which the trial court granted on March 12, 2012.
- The appellate court affirms, with partial sustainment of the first assignment of error regarding admissibility of portions of a supporting affidavit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Juberg affidavit should have been stricken | Smith; Juberg relied on attached documents not attached to affidavit | AmeriFirst; Juberg was properly admissible as ABC president with personal knowledge | Partially sustained; some paragraphs stricken, rest admissible |
| R.C. 1707.43 liability for aiding in sale of securities | Smith; AmeriFirst/A. Hamminga aided in sale of DLG securities | AmeriFirst/Hamminga engaged in normal banking activities not aiding sale | No genuine issue of material fact; summary judgment affirmed for AmeriFirst and Hamminga |
| Aiding and abetting fraud under Restatement 876 | Smith; AmeriFirst/Hamminga aided ABC in defrauding Smith | Ohio does not recognize aiding-and-abetting fraud claim in these facts | Courts do not recognize such claim; affirmed for AmeriFirst and Hamminga |
| R.C. 1345.031 and R.C. 1349.41 claims; good faith and disclosures | Smith; disclosures improper; bad faith/ fraud alleged | AmeriFirst provided disclosure form; no bad faith shown | No genuine issue; refusal to find violation; summary judgment sustained |
| Civil conspiracy claim | Smith; conspiracy alleged with AmeriFirst | No underlying tort; no concerted action proven | Court correctly granted summary judgment; conspiracy claim failS |
Key Cases Cited
- Fed. Mgt. Co. v. Coopers & Lybrand, 137 Ohio App.3d 366 (10th Dist. 2000) (factors for liability under R.C. 1707.43(A))
- Boomershire v. Lifetime Capital, Inc., 2008-Ohio-14 (2nd Dist. 2008) (bank involvement in investment disputes varies by activity)
- Hild v. Woodcrest Assn., 59 Ohio Misc. 13 (M.C. 1977) (deference to banking involvement not per se liability)
- Third Federal S. & L. Assn. of Cleveland v. Farno, 2012-Ohio-5245 (12th Dist. 2012) (striking unsupported affidavit references)
- Re v. Kessinger, 12th Dist. No. CA2007-02-044 (2008) (definition of personal knowledge for Civ.R. 56(E))
- Sacksteder v. Senney, 2012-Ohio-4452 (2nd Dist. 2012) (Restatement 876 adoption implications in Ohio)