BRUCE ARNOFF, Plaintiff-Appellant, v. PAJ ENTERPRISES, LLC, Defendant-Appellee.
No. 110714
COURT OF APPEALS OF OHIO, EIGHTH APPELLATE DISTRICT, COUNTY OF CUYAHOGA
May 26, 2022
[Cite as Arnoff v. PAJ Ents., Inc., 2022-Ohio-1759.]
KATHLEEN ANN KEOUGH, P.J.
JOURNAL ENTRY AND OPINION; JUDGMENT: AFFIRMED IN PART; REVERSED AND REMANDED IN PART; RELEASED AND JOURNALIZED: May 26, 2022; Civil Appeal from the Cuyahoga County Court of Common Pleas, Case No. CV-21-946524
Bruce Arnoff, pro se.
DeBlasis Law Firm, LLC, and Rick D. DeBlasis, for appellee.
KATHLEEN ANN KEOUGH, P.J.:
{¶ 1} This appeal is before the court on the accelerated docket pursuant to
I. Background
{¶ 3} In April 2021, Arnoff, on behalf of himself and his company, ATT Security, filed a pro se complaint captioned “Intentional Fraudulent Tort, Civil Conspiracy, Negligence, Recoupment & Damages” against PAJ. The complaint alleged that PAJ is a predatory lender that circumvents various state and federal lending laws through its alleged fraudulent practices. The gist of Arnoff‘s complaint was that he had an ownership interest or a mechanic‘s lien, or both, on real property at 5045 Harper Road in Solon, Ohio (the “property“), and PAJ engaged in unlawful conduct that caused him to lose his interest.
{¶ 4} Specifically, Arnoff‘s complaint alleged that PAJ made a fraudulent loan to the buyer of the property by encouraging him to create a shell company so PAJ could issue a commercial loan for the property, even though the buyer could not afford the down payment or monthly payments and 38 other residential properties he had purchased under various company names had been foreclosed upon since 2011. Arnoff alleged that when the unqualified buyer could not make the down
{¶ 5} Arnoff further alleged that he and ATT Security performed over $200,000 in renovations on the property, for which he was not paid by the owner, and that PAJ foreclosed on the property after the renovations were complete. Arnoff alleged that although he had two mechanic‘s liens on the property that should have been the primary liens, because the Cuyahoga County Auditor misfiled one lien and PAJ foreclosed without paying the other lien, PAJ was able to buy the property at the foreclosure sale for $60,000 after refusing to allow Arnoff‘s partner to make a cash offer of $170,000 on the home.
{¶ 6} Attached to Arnoff‘s complaint was a document entitled “Subpoena and Interrogatory for PAJ Enterprises, L.L.C.” The subpoena sought “all information and documentation used for loans/mortgages made on 5045 Harper Road in Solon, Ohio.” The interrogatories asked various questions regarding PAJ‘s lending practices generally and specifically regarding the property at 5045 Harper Road.
{¶ 7} In response, PAJ filed a
II. Law and Analysis
A. Civ.R. 12(B)(6) Motion to Dismiss
{¶ 8} In his first assignment of error, Arnoff contends that the trial court erred in granting PAJ‘s
{¶ 9} A
{¶ 10} For a court to dismiss a complaint under
{¶ 11} An appellate court conducts a de novo review of a trial court‘s ruling on a
{¶ 12} PAJ contends that we should affirm the trial court because in light of the foreclosure action regarding the property,1 all of Arnoff‘s claims are barred by the doctrine of res judicata. At first glance, this would appear to be a persuasive argument. In the complaint, Arnoff conceded there was a foreclosure action in which his interest in the property was resolved, albeit not to his satisfaction. Because Arnoff‘s claims in this case arise out of the same transaction that was the subject matter of the foreclosure case, they would indeed appear to be barred by the doctrine of res judicata.
{¶ 14} Arnoff‘s complaint alleged claims for fraud, civil conspiracy, and negligence. A case for common law fraud requires proof of (1) a representation or, where there is a duty to disclose, omission of a fact, (2) that is material to the transaction at hand, (3) made falsely, with knowledge of its falsity, or with such utter disregard and recklessness as to whether it is true or false that knowledge may be
{¶ 15} Moreover, “the elements of fraud must be directed against the alleged victim.” Wiles v. Miller, 10th Dist. Franklin No. 12AP-989, 2013-Ohio-3625, ¶ 33. Accordingly, “a plaintiff fails to plead a valid cause of action for fraud when he alleges that a third party relied on misrepresentations made by a defendant and that he suffered injury from that third party‘s reliance.” Id. Arnoff‘s complaint alleges that PAJ committed fraud by using false bank records and other documents to enable “unqualified individuals,” including the third-party buyer of the property at issue in this case, to qualify for mortgage loans. But these allegations allege fraud against a third party — the unnamed bank(s) that in reliance on allegedly false documents gave loans to “unqualified individuals” and to the third-party buyer — and thus are insufficient to establish Arnoff‘s fraud claim. “A fraud claim cannot be predicated upon misrepresentations made to third parties.” Lucarell v. Nationwide Mut. Ins. Co., 152 Ohio St. 3d 453, 2018-Ohio-15, 97 N.E.3d 458, ¶ 68.
{¶ 17} Arnoff also contends that PAJ committed fraud by allegedly violating unspecified foreclosure laws during the foreclosure action. But the facts alleged in the complaint fail to demonstrate that PAJ made a misrepresentation to Arnoff or failed to disclose anything it had a duty to disclose under the unspecified foreclosure laws, that PAJ‘s alleged violation of the unspecified laws was made with the intent of misleading Arnoff into relying on the alleged misrepresentation or omission, and that he justifiably relied on the misrepresentation or concealment. Moreover, PAJ‘s alleged violation of the unspecified foreclosure laws, if true, would appear to be fraud against a third-party, i.e., the court, instead against Arnoff. Accordingly, because the operative facts alleged in the complaint do not demonstrate that Arnoff has a viable claim of fraud against PAJ, the trial court properly granted PAJ‘s motion to dismiss this claim.
{¶ 18} Arnoff‘s complaint also alleged that PAJ committed a civil conspiracy by applying his downpayment monies to its own buyer‘s loan. To maintain a claim of civil conspiracy, a plaintiff must demonstrate (1) a malicious combination of two or more persons, (2) causing injury to another person or property, and (3) the existence of an unlawful act independent from the conspiracy itself. Syed v. Poulos, 8th Dist. Cuyahoga Nos. 103137 and 103499, 2016-Ohio-3168, ¶ 28, citing Kenty v. Transamerica Premium Ins. Co., 72 Ohio St. 3d 415, 419, 650 N.E.2d 863 (1995). A claim of civil conspiracy rests upon an actual agreement to participate in wrongful activity. Williams v. Aetna Fin. Co., 83 Ohio St. 3d 464, 475, 700 N.E.2d 859 (1998). Arnoff‘s complaint alleges no operative facts constituting an agreement between PAJ and others to commit unlawful acts. Moreover, “[a] civil conspiracy claim is derivative and cannot be maintained absent an underlying tort that is actionable without the conspiracy.” Adams v. Margarum, 10th Dist. Franklin No. 16AP-515, 2017-Ohio-2741, ¶ 21. Arnoff‘s complaint alleged no underlying fraud claim with respect to the conspiracy and, in any event, as noted above, the operative facts do not support a fraud claim. Accordingly, the civil conspiracy claim necessarily fails.
{¶ 19} Arnoff‘s complaint also failed to establish a claim for negligence. The elements of a negligence claim are (1) a duty, (2) a breach of that duty, and (3) damages proximately caused by that breach. Texler v. D.O. Summer Cleaners & Shirt Laundry Co., 81 Ohio St. 3d 677, 680, 693 N.E.2d 271 (1998). The facts alleged in the complaint do not demonstrate that Arnoff was a borrower impacted by PAJ‘s alleged fraudulent lending practices nor does the complaint identify a creditor/debtor relationship between PAJ and Arnoff, or any relationship, that would give rise to a duty owed by PAJ to Arnoff. Arnoff‘s negligence claim therefore failed to state a claim upon which relief could be granted.
{¶ 20} Accordingly, because on the basis of the facts and law alleged, Arnoff could prove no set of facts that would entitle him to relief, the trial court properly
{¶ 21} The court erred, however, in dismissing ATT Security‘s claims with prejudice. The caption of the complaint listed “Bruce Arnoff, et al.” as plaintiffs. The case classification form filed with the complaint listed “Bruce Arnoff/ATT Security” as plaintiffs. It also listed “Keith Eckmeyer P.O.A.” as attorney of record. Arnoff was the only signatory to the complaint, however; neither Keith Eckmeyer nor any attorney of record signed the complaint. Accordingly, we conclude the action was filed solely by Arnoff.
{¶ 22} Arnoff is not an attorney, however, and although he may represent his own interests in court, he may not represent ATT Security, even if he is a member of the corporation. Mun. Realty Corp. v. Ergur, 6th Dist. Lucas No. L-13-1241, 2014-Ohio-1557, ¶ 7 (an Ohio corporation must be represented by an attorney and cannot be represented in court by a nonattorney officer). Consequently, the trial court‘s dismissal of ATT Security should have been without prejudice rather than with prejudice. As this court stated in Kinasz v. S.W. Gen. Health Ctr., 8th Dist. Cuyahoga No. 100182, 2014-Ohio-402, “[w]hen a non-attorney files a complaint in
{¶ 23} With respect to the listing of “Keith Eckmeyer P.O.A.” on the complaint as attorney of record, we note that a nonlawyer with a power of attorney may not appear in court on behalf of another or otherwise practice law. Office of Disciplinary Counsel v. Coleman, 88 Ohio St. 3d 155, 158, 724 N.E.2d 402 (2000). However, because only Arnoff signed the complaint and Keith Eckmeyer did not sign in any capacity, we point out the error but need not address it in any way.
{¶ 24} Accordingly, the first assignment of error is sustained in part and overruled in part. The trial court‘s judgment dismissing Arnoff‘s claims with prejudice is affirmed; the court‘s judgment dismissing ATT Security‘s claims with
B. Summary Judgment
{¶ 25} In his second assignment of error, Arnoff contends that the trial court should have granted summary judgment in his favor because PAJ did not answer the complaint within 28 days as required by
{¶ 26}
{¶ 27} In his third assignment of error, Arnoff contends that the trial court should have granted summary judgment in his favor because PAJ did not answer the interrogatories attached to his complaint. This argument is likewise without merit.
{¶ 29} The record contains nothing demonstrating that Arnoff made any effort to obtain a response to his discovery requests, as required by
{¶ 30} Judgment affirmed in part; reversed and remanded in part.
It is ordered that the parties share equally the costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this judgment into execution.
KATHLEEN ANN KEOUGH, PRESIDING JUDGE
LISA B. FORBES, J., and EILEEN T. GALLAGHER, J., CONCUR