2019 Ohio 2405
Ohio Ct. App.2019Background
- Plaintiff Chad Wick obtained a 2009 money judgment against defendant Roger Ach and, after years of unsuccessful collection efforts, sued Ach and three companies allegedly controlled by him (Chicago West Pullman, Ltd.; SocialPoint, Inc.; Our Town Media, Inc.) in 2017.
- Wick amended his complaint to assert reverse corporate veil piercing, fraud, and unjust enrichment; he also maintained a creditor’s bill claim that the trial court did not dismiss.
- Defendants moved to dismiss under Civ.R. 12(B)(6) and Civ.R. 9(B); the trial court dismissed the reverse-piercing, fraud, and unjust-enrichment claims and certified the order for immediate appeal under Civ.R. 54(B).
- On appeal the First District reviewed the dismissals de novo, construing Wick’s allegations in his favor but applying the heightened pleading standard for fraud under Civ.R. 9(B).
- The court declined to recognize a cause of action for reverse corporate veil piercing in Ohio (reaffirming Gershuny), held Wick’s fraud claim failed to meet Civ.R. 9(B) and to plead justifiable reliance, and found the unjust-enrichment claim lacked allegations that Wick conferred a benefit on the corporate defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Ohio should recognize reverse corporate veil piercing | Wick urged adoption so he could attach corporate assets to satisfy Ach’s judgment | Defendants argued Ohio does not recognize reverse piercing and other remedies suffice | Court refused to adopt reverse piercing; affirmed dismissal (Ohio does not recognize the claim) |
| Whether fraud claim met Civ.R. 9(B) and pleaded reliance | Wick alleged false statements by an agent and companies that concealed Ach’s assets/affiliations | Defendants argued fraud allegations lacked particularity, failed to identify speakers, and lacked pleaded justifiable reliance | Dismissed: allegations failed Civ.R. 9(B) and did not allege reasonable reliance |
| Whether unjust enrichment was sufficiently pleaded | Wick claimed Companies were unjustly enriched by retaining money that belonged to him | Defendants argued Wick did not allege a benefit he conferred on the Companies | Dismissed: complaint failed to allege specific benefit conferred by Wick |
| Whether dismissal was appropriate under Civ.R. 12(B)(6) de novo review | Wick contended his pleadings were adequate to state claims | Defendants maintained pleadings were legally insufficient | Court affirmed dismissals after de novo review |
Key Cases Cited
- Cascade Energy and Metals Corp. v. Banks, 896 F.2d 1557 (10th Cir. 1990) (other traditional remedies often suffice instead of reverse piercing)
- Postal Instant Press, Inc. v. Kaswa Corp., 162 Cal.App.4th 1510 (Cal. Ct. App. 2008) (judgment-collection procedures protect creditors and avoid harming shareholders; levy on debtor’s shares preserves parity)
- Floyd v. I.R.S., 151 F.3d 1295 (10th Cir. 1998) (recognizing reverse piercing risks unsettling corporate creditors’ expectations)
- C.F. Trust, Inc. v. First Flight L.P., 580 S.E.2d 806 (Va. 2003) (reverse piercing, if used, must weigh impact on innocent investors and availability of other remedies)
- LFC Marketing Group, Inc. v. Loomis, 8 P.3d 841 (Nev. 2000) (reverse piercing appropriate only in limited instances where equities require ignoring corporate fiction)
- Tisch v. Tisch, 439 P.3d 89 (Colo. App. 2019) (reverse piercing recognized only when no other remedies exist and innocent shareholders will not be harmed)