Barton v. Realty Corp. of Am.Barton v. Realty Corp. of Am.
Darryl E. Pittman
Michael Aten
Pittman, Alexander Attorneys
2490 Lee Boulevard
Suite 115
Cleveland, Ohio 44118
ATTORNEYS FOR APPELLEES
For Realty Corporation of America and Tony Viola
Timothy T. Brick
Matthew T. Norman
Gallagher Sharp
Bulkley Building, 6th Floor
1501 Euclid Avenue
Cleveland, Ohio 44115
For Uri Gofman
Frank P. Giaimo
23220 Chagrin Blvd.
Suite 360
Beachwood, Ohio 44122
For Gerald Spuzillo and GJS and Associates
Erin R. Flanagan
Erin R. Flanagan, Esq., Ltd.
75 Public Square
Suite 920
Cleveland, Ohio 44113
{¶1} Appellant Carlton Barton, Jr. (“Barton“) appeals the trial court‘s dismissal of his complaint based on the appellees’ motions for dismissal pursuant to
I. The trial court erred in holding that appellant‘s claims against appellees Uri Gofman and Real Asset Fund, Ltd. are barred by the doctrine of res judicata.
II. The trial court erred in holding that appellant‘s claims against appellee Gerald Spuzillo are barred by the doctrine of res judicata.
III. The trial court erred in holding that appellant‘s claims against appellee GJS Services Inc. are barred by the doctrine of res judicata.
IV. The trial court erred in holding that appellant‘s claims against appellees Tony Viola and Realty Corporation of American are barred by the doctrine of res judicata.
{¶2} Having reviewed the record and pertinent law, we reverse the trial court‘s decision and remand for further proceedings. The apposite facts follow.
{¶3} Barton‘s complaint shows that he responded to an advertisement in the newspaper regarding the purchase of multiple investment properties at an affordable price. He was informed that to participate in the program, he had to purchase a minimum of six properties and that two had to be located in the suburbs. In March 2005, Barton purchased 12 properties.1
{¶4} Thereafter, as shown by the pleadings attached to the appellees’ motion to dismiss and Barton‘s motion in opposition, several banks started foreclosure proceedings against several of the properties, resulting in Barton filing third-party complaints in response to the foreclosure proceedings. A recitation of the procedural history of the other cases is necessary in order to address the current appeal.
{¶5} In Case No. CV-588111, Mers filed a foreclosure action against Barton regarding his property located at 3095 East 83rd Street.2 In response, on April 13, 2007, Barton filed an answer with counterclaims and also included a third-party complaint against several of the appellees in the instant case [RAF, Viola, GJS, and Gofman], along with a few others not part of the instant appeal. On May 10, 2010, Barton dismissed his
{¶6} In Case No. CV-590008, Deutsche Bank filed a foreclosure action against Barton regarding his property located at 18412 Winslow. In response, on October 26, 2006, Barton filed counterclaims to the complaint and a third-party complaint against Gofman, RAF, RCA, and several other parties not part of the instant appeal. On November 11, 2008, the trial court dismissed Barton‘s third-party complaint based on Barton‘s failure to prosecute his claims.
{¶7} In Case No. CV-622016, Wells Fargo filed a foreclosure action against Barton regarding his property located at 24170 Glenbrook. On June 29, 2007, Barton filed counterclaims and a third-party complaint against RCA, Viola, and several other parties not relevant to the instant appeal. On November 11, 2010, Barton voluntarily dismissed the third-party complaint without prejudice.
{¶8} In Case No. CV-670851, Barton for the first time commenced the action by filing a complaint on September 17, 2008. The parties named that are relevant to the instant appeal were RCA, Viola, Spuzillo, GJS, Gofman, the Simkoviches, and Karka. The complaint concerned properties that were not the subject of the prior foreclosure proceedings, but concerned the following properties: 8749 Capitol, 3324 Desota, 6619 Consul, 2589 Beyerle Rd., 2260 Belvoir, 2847 Idlewood, and 12101 Oseola. He alleged ten causes of action including: violation of the mortgage broker act, breach of fiduciary duty, intentional and negligent emotional distress, violation of the TILA and RESPA,
{¶9} On October 18, 2010, Barton filed the complaint that is the subject of the instant appeal. In the complaint, he included all of his properties except for the property located at East 83rd Street. The parties named as defendants were: RCA, Viola, Puskorius, Spuzillo, GJS, Gofman, the Simkoviches, Karka, and RAF. He brought the same claims he did in the prior complaint, except for a claim for the violation of the TILA and RESPA, which concerned parties not parties to the new suit.
{¶10} RCA, Viola, and Puskorius filed a
{¶11} The trial court concluded that the two-dismissal rule and res judicata barred Barton‘s claims. The court concluded the claims against the Simkhoviches and Karka still remained pending because Barton had only dismissed his claims once as to these
Civ.R. 12(B)(6) Dismissal
{¶12} The issue in Barton‘s four assigned errors is whether Barton‘s claims were barred by the two-dismissal rule and res judicata; consequently, we will discuss the errors together.
{¶13} The defense of res judicata is not properly raised in a motion to dismiss under
{¶15} The Ohio Supreme Court explained the double dismissal rule in Olynyk v. Scoles, 114 Ohio St.3d 56, 2007-Ohio-2878, 868 N.E.2d 254, ¶ 10, as follows:
It is well established that when a plaintiff files two unilateral notices of dismissal under
Civ.R. 41(A)(1)(a) regarding the same claim, the second notice of dismissal functions as an adjudication of the merits of that claim, regardless of any contrary language in the second notice stating that the dismissal is meant to be without prejudice. In that situation, the second dismissal is with prejudice under the double-dismissal rule, and res judicata applies if the plaintiff files a third complaint asserting the same cause of action. See 1970 Staff Note toCiv.R. 41 (When a dismissal is with prejudice, “the dismissed action in effect has been adjudicated upon the merits, and an action based on or including the same claim may not be retried“). (Internal citations omitted.)
{¶16} In the instant case, Barton is not subject to the two-dismissal rule. The record shows he dismissed his third-party complaint only once as to the property involved. His third-party complaint in Case No. CV-588111 was voluntarily dismissed
{¶17} In fact, it would have been legally improper for Barton to include in his third-party complaint, parties and properties that were not the subject of the primary complaint. As the Ohio Supreme Court in State ex rel. Jacobs v. Mun. Court of Franklin Cty., 30 Ohio St.2d 239, 241-42, 284 N.E.2d 584, 586 (1972) held:
Civ.R. 14(A) sets forth an express condition which must be satisfied before a third party may be impleaded, “a defending party, as a third-party plaintiff, may cause a summons and complaint to be served upon a person not a party to the actionwho is or may be liable to him for all or part of the plaintiff‘s claim against him.” This language presupposes that the liability sought to be “passed on” by the third-party claim arose out of the transaction or occurrence which is the subject matter of the primary claim. The transaction or occurrence which forms the subject matter of the primary claim must be the same transaction or occurrence that gives rise to legal rights in the defendant against the third-party defendant. If the claim asserted in the third-party complaint does not arise because of the primary claim, or is in some way derivative of it, then such claim is not properly asserted in a third-party complaint. See Lincoln Gateway Realty Co. v. Carri-Craft, supra (53 F.R.D. 303); Joe Grasso & Son v. United States (S.D.Tex.1966), 42 F.R.D. 329; Aetna Casualty & Surety Co. v. Kochenour (M.D.Pa.1968), 45 F.R.D. 248; Donaldson v. United States Steel Corp. (W.D.Pa.1971), 53 F.R.D. 228. See, also, 5 Wright and Miller, Federal Practice and Procedure, 245-259, Section 1146. (Emphasis added).
{¶18} A third-party complaint cannot be founded upon an independent cause of action even if the cause of action arises out of the same occurrence as the original complaint. State Farm Mut. Auto Ins. Co. v. Charlton, 41 Ohio App.2d 107, 322 N.E.2d 333 (10th Dist.1974). The appellees contend that a third-party complaint would have been proper because the claims all arose from properties that were purchased at the same time. However, as this court in Van Atta v. Akers, 8th Dist. Nos. 82361 and 82422, 2003-Ohio-6615, at ¶ 33, explained:
In order to be a proper subject of a third-party action, the alleged right of the defendant to recover, or the duty allegedly breached by the third-party defendant, must arise from the plaintiff‘s successful prosecution of the main action against the defendant. Renacci v. Martell (1993), 91 Ohio App.3d 217, 221, 632 N.E.2d 536. A
third-party claim must be derivative of the outcome of the main claim, and the third-party must be “secondarily liable.” Id.
{¶19} Here, the primary claim for each complaint concerned foreclosure proceedings on a particular property; thus, it would have been improper for Barton to implead the other properties that were not even in foreclosure at the time the complaint was filed and were brought by different banks.
{¶20} Under the doctrine of res judicata, “‘[a] valid, final judgment rendered upon the merits bars all subsequent actions based upon any claim arising out of the transaction or occurrence that was the subject matter of the previous action.‘” State ex rel. Denton v. Bedinghaus, 98 Ohio St.3d 298, 301, 2003-Ohio-861, 784 N.E.2d 99, quoting Grava v. Parkman Twp., 73 Ohio St.3d 379, 1995-Ohio-331, 653 N.E.2d 226, syllabus. Thus, a final judgment on the merits of an action precludes the parties from relitigating issues that were or could have been raised in that action. Trojanski v. George, 8th Dist. No. 83472, 2004-Ohio-2414. Thus, res judicata applies to situations where the plaintiff brought or should have brought claims during the prior suit. Here, because Barton was actually filing third-party complaints for the majority of his claims, he was limited by what the primary complaint was based upon. In three of the cases, the complaints dealt with foreclosure actions initiated by different banks on different properties. Barton could not have brought third-party claims against the appellees for all the other properties that were not the subject of the primary complaint. Therefore, res judicata would not apply. Accordingly, Barton‘s four assigned errors are sustained.
It is ordered that appellant recover from appellees 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.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure.
PATRICIA ANN BLACKMON, ADMINISTRATIVE JUDGE
SEAN C. GALLAGHER, J., and MARY EILEEN KILBANE, J., CONCUR