GERALDINE M. CARTER, et al. v. SUSAN GERBEC, et al.
C.A. No. 27712
IN THE COURT OF APPEALS NINTH JUDICIAL DISTRICT
June 29, 2016
2016-Ohio-4666
WHITMORE, Judge.
APPEAL FROM JUDGMENT ENTERED IN THE COURT OF COMMON PLEAS COUNTY OF SUMMIT, OHIO CASE No. CV 2012 12 6845
Dated: June 29, 2016
WHITMORE, Judge.
{1} Appellants, Geraldine Carter and Geraldine Carter, LLC (collectively, “Carter“), appeal from the trial court‘s grant of summary judgment to Appellee, Coldwell Banker Hunter Realty (“CBH Realty“). We affirm.
I
{2} Carter fell ill in 2008 and required assistance with rental properties she owned in the Akron, Ohio area. Carter entered into property management agreements in April, 2008 with S&C Property Management Service, LLC (“S&C“), a property management business owned by Susan Gerbec. Under the agreements, S&C agreed to act as the exclusive agent to rent, lease, operate, control, and manage Carter‘s rental properties.
{3} In addition to running S&C and managing Carter‘s properties, Gerbec sold real estate as a licensed agent with CBH Realty. Prior to joining CBH Realty, and prior to entering into the property management agreements with Carter, Gerbec was a real estate agent with
{4} Kelley Realty merged with CBH Realty in late 2007. Kelley and Gerbec transferred their real estate licenses to CBH Realty. They moved their real estate sales practice to the CBH Realty Portage Lakes office. Kelley became the licensed broker at that CBH Realty office. Gerbec moved her property management business to the same office building. The building was owned by Barry Shaffer, a CBH Realty real estate sales agent and manager of the Portage Lakes office. Gerbec‘s property management business was located in a suite separate from the CBH Realty office and hаd a separate entrance.
{5} At or close to the time of the merger with CBH Realty, Gerbec purchased Kelley Realty‘s property management business. Kelley kept his former property management files in his office at CBH Realty, and Gerbec would access them in Kelley‘s office as needed. Kelley referred Carter to Gerbec for property management services after Carter contacted him. Other CBH Realty agents referred property management business to Gerbec.
{6} Gerbec signed an agreement with CBH Realty that specifically prohibited her from conducting property management activities on behalf and in the name of CBH Realty. The agreement specified that “[p]roperty management [could] not be done by and in the name of [CBH Realty].” Under the agreement, CBH Realty excluded “property management” from activities for which it would provide a legal defense to Gerbec in the event of a claim against her. Shaffer testified by affidavit that Gerbec was prohibited from conducting property management
{7} Gerbec testified in her deposition that S&C, her property management company, was not affiliated with CBH Realty in any way. Gerbec testified that she did not execute the property management agreements with Carter in her capacity as a representative of CBH Realty. Carter and S&C are the only parties to the contracts for the management of Carter‘s rental properties. CBH Realty is not a party to the agreements. Carter testified that she understood that the property management agreements were with S&C. Gerbec never represented to Carter that she was affiliated with CBH Realty or that CBH Realty authorized her to conduct property management activities on its behalf. Carter testified that she was not aware that Gerbec was affiliated with CBH Realty. Carter did not write any checks to CBH Realty or receive any payments from CBH Realty. She never received any phone calls or written correspondence from CBH Realty. CBH Realty had no contact or communication with Carter. Moreover, CBH Realty did not receive any compensation from the property management agreements. CBH Realty did not charge Gerbec a fee or commission for her property management activities.
{8} The business relationship between Carter and S&C began to sour in August, 2012. That month Carter did not receive the usual reporting from Gerbec detailing the month‘s activities. This, combined with a lack of communication from Gerbec, prompted Carter to visit her rental properties. Carter claims that she was denied access to one of her рroperties. Soon after, Carter brought on Lolita Adair, a friend and real estate broker, to help manage the properties. Around this time Carter allegedly discovered that Gerbec and S&C were in breach of the property management agreements. Carter fired Gerbec and S&C in October, 2012. This lawsuit followed.
{9} Carter brought a complaint against Gerbec, S&C, and CBH Realty, among others. Carter alleged that the defendants breached the property management agreements, were unjustly enriched, and also committed various torts, including: (1) fraud; (2) conversion; (3) negligence; (4) breach of fiduciary duty; (5) negligence per se; and (6) civil conspiracy.
{10} CBH Realty filed a motion for summary judgment. The trial court granted the motion in March, 2014. Carter settled her claims with the remaining parties during mediation in April, 2014, but failed to submit a dismissal entry to the trial court. Thus, a final judgment was not entered, and the case was still pending in the trial court when in November, 2014 Carter filed a motion to reconsider the grant of summary judgment to CBH Realty. The trial court denied the motion to reconsider.
{11} Carter now appeals. She raises two assignments of error for our review.
II.
Assignment of Error Number One
THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT IN FAVOR OF APPELLEE, [CBH REALTY].
{12} In Carter‘s first assignment of error, Carter argues that the trial court еrred when it granted summary judgment to CBH Realty on the issue of respondeat superior liability. We disagree.
{13} Appellate review of summary judgment is de novo. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105 (1996). Summary judgment is appropriate under
{14} The party seeking summary judgment initially bears the burden of informing the trial court of the basis for the motion and identifying portions of the record demonstrating an absence of genuine issues of material fact as to the essential elements of the nonmoving party‘s claims. Dresher v. Burt, 75 Ohio St.3d 280, 293 (1996). The movant must point to some evidence in the record of the type listed in
{15} As an initial matter, we note that Carter appeals only the trial court‘s determination оf summary judgment based on respondeat superior liability for Gerbec‘s alleged actions. Carter‘s appellate brief and reply brief do not address the award of summary judgment on the contract or unjust enrichment claims, or on claims that CBH Realty was liable in tort for its direct actions. We will confine our review accordingly. See State v. Rodriguez, 9th Dist. Summit No. 26858, 2014-Ohio-911, ¶ 15.
{16} “The respondeat superior doctrine makes an employer or principal vicariously liable for the torts of its employees or agents.” Auer v. Paliath, 140 Ohio St.3d 276, 2014-Ohio-3632, ¶ 13, citing Clark v. Southview Hosp. & Family Health Ctr., 68 Ohio St.3d 435, 438 (1994). “It is well-established that in order for an employer to be liable under the dоctrine of
{17} Carter argues that “scope of employment” in this matter is a question of fact and precluded summary judgment. Carter bases this assertion on the decision of the Supreme Court of Ohio in Auer, a case that was decided after the trial court awarded summary judgment to CBH Realty.
{18} In Auer, a purchaser of rental properties filed suit against a real estate sales person and real estate broker, alleging that the sales person committed fraud in the sale of the properties to her, and in the management and rehabilitation of those properties. Auer at ¶ 5-7. Specifically, the purchaser alleged that the sales agent “had fraudulently induced her to purchase the properties by misrepresenting their worth and their capacity to generate rental income.” Id. at ¶ 7. The sales agent paid her broker a 30 percent commission on her earnings from any real estate transaction. Id. at ¶ 2.
{19} At trial, the purchaser pursued her case against the broker solely on the basis of respondeat superior liability. Id. at ¶ 8. The jury found that the agent had fraudulently induced the purchaser to purchase properties, and that the broker was vicariously liable for the fraud. Id. at ¶ 9.
{20} The broker appealed. Id. at ¶ 10. The court of appeals determined that any error in the form of an allegedly erroneous jury instruction was harmless, because the scope of agency for a real estate broker was a matter of law that the jury did not need to address. Id., citing Auer v. Paliath, 2d Dist. Montgomery No. 25158, 2013-Ohio-391, ¶ 46-52.
{21} Specifically, the appellate court decided that
Under
R.C. 4735.21 , a real estate salesperson cannot complete a real estate transaction outside of his or her association with a licensed real estate broker. As a result, when a real estate salesperson acts in the name of a real estate broker in connection with the type of real estate transaction for which he or she was hired and the broker collects a commission for the transaction, the salesperson‘s actions in connection with that real estate transaction are within the scope of the salesperson‘s employment, as a matter of law.
Auer, 40 Ohio St.3d 276, 2014-Ohio-3632 at ¶ 19, quoting Auer, 2013-Ohio-391 at ¶ 46. The court of appeals held that the agent was working within her agency as a matter of law when she committed her fraud because: (1) the agent worked as a real estatе salesperson for the broker; (2) the agent assisted the purchaser in purchasing properties; and (3) the agent gave the broker commissions from the sales. Auer, 140 Ohio St.3d 276, 2014-Ohio-3632 at ¶ 19.
{22} The Supreme Court of Ohio reversed the appellate court. In so doing, the Court rejected a “bright-line rule” that “a broker is always liable as a matter of law for the tortious conduct of rogue agents whenever the broker receives a portion of the agent‘s sales commission.” Id. at ¶ 20. The Court explained that, because the “scope-of-agency determination necessаrily turns upon a multitude of considerations and fact-specific inquiries that
{23} Seizing upon the Supreme Court‘s determination in Auer that a real estate agent‘s scope of employment under a broker ordinarily is a question of fact, Carter argues that a question of fact must bar summary judgment here, where CBH Realty held Gerbec‘s real estate license. Contrary to Carter‘s argument, Auer does not compel the same result in the case at bar.
{24} Despite the Supreme Court‘s determination in Auer that a real estate agent‘s scope of employment cannot be defined by statute and therefore generally remains a jury question, the Court did not hold that whether a particular action falls within the scope of agency may never be decided on a motion for summary judgment. Indeed, the Court did not suggest that it intended to remove the scope of agency question from typical summary judgment practice. In other words, when a broker moves for summary judgment on a vicarious liability claim on the basis that there is no evidence that the agent‘s tortious conduct was within the scope of the agency relationship, the motion is still subject to the provisions of
{25} Indeed, the Auer Court‘s reliance on its previous decision in Osborne supports a conclusion that the Court did not intend to alter the typical summary judgment requirements by
{26} Relying on Byrd, another of the Supreme Court‘s prior decisions, the Auer Court specified the type of evidence necessary to establish that a tortious act was committed within the scope of employment. When (as here) an intentional tort is allеged, a determination that the conduct was within the scope of employment requires evidence that the employee‘s conduct “giving rise to the tort” was “calculated to facilitate or promote the business for which the servant was employed * * *.” Auer, 140 Ohio St.3d 276, 2014-Ohio-3632 at ¶ 22, quoting Byrd, 57 Ohio St.3d at 58. “[A]n employer is not liable for independent self-serving acts of his employees which in no way facilitate or promote his business.” Byrd at 59. “[I]f an employee‘s actions are self-serving or have no relationship to the employer‘s business, then the conduct is ‘manifestly outside the scope of emрloyment’ * * *” Theobald v. University of Cincinnati, 111 Ohio St.3d 541, 2006-Ohio-6208, ¶ 28, quoting
{27} Here, CBH Realty presented evidence that Gerbec did not intend for her property management activities for Carter to “facilitate or promote” CBH Realty‘s real estate business. See Byrd at 59. Gerbec signed an agreement with CBH Realty that she would not perform property management functions on behalf of, or in the name of, CBH Realty. She testified that S&C was not affiliated with CBH Realty in any way. Gerbec did not hold herself out to Carter as a CBH Realty representative. Carter testified that she was not even aware that Gerbec was
{28} In contrast to the situation in Auer, there is no countervailing evidence in this case that would create a genuine issue of material fact that Gerbec “acted, or believed [herself] to have acted, at least in part, in [CBH Realty‘s] interest.” See Auer at ¶ 22, quoting Ohio Govt. Risk Mgt. Plan v. Harrison, 115 Ohio St.3d 241, 2007-Ohio-4948, ¶ 17. It is undisputed that, unlike the real estate agent in Auer, Gerbec did not hold herself out to be an agent of her broker in any capacity when she entered into the property management agreements or when she engaged in the alleged tortious activity.3 It is also undisputed that Gerbec, unlike the agent in Auer, did not pay a commission or royalty to CBH Realty based on her fees as a property manager. Moreover, none of Carter‘s allegations of misconduct demonstrate an intended or actual benefit to CBH Realty. At the time of summary judgment, Carter‘s allegations of misconduct included:
- “[d]uplicate payments” made to another defendant for work on the property;
- “[f]abricat[ed] invoices from subcontractors * * * to justify payments inputted into the check register“;
- “[a]llowing tenants to stay in certain units ‘off the books‘“;
- “[f]orging Dr. Carter‘s name on Section 8 documents“; and
“[a]ppliances disappearing“.
Carter does not explain how Gerbec‘s alleged tortious conduct could reasonably be construed as benefitting CBH Realty or as anything other than self-serving acts that do not give rise to vicarious liability. See Auer, 140 Ohio St.3d 276, 2014-Ohio-3632 at ¶ 22; Byrd, 57 Ohio St.3d at 58-59.
{29} Nonetheless, Carter argues that summary judgment is inappropriate in light of evidence that Gerbec: (1) had connections to CBH Realty; (2) had her property management business in the same office as CBH Realty; (3) рurchased Kelley‘s former property management business; (4) received property management referrals from CBH Realty, whose broker and agents knew that she had a property management business; (5) had reasons for not paying a commission to CBH Realty, and (6) paid for the ability to advertise her property management expertise on CBH Realty‘s website. Carter essentially contends that the cumulative weight of these facts signifies that there must have been some intended or actual benefit to CBH Realty. Carter‘s argument is untenable because Cаrter does not articulate what that intended benefit was or provide evidence that a benefit was in fact conferred upon the broker.
{30} Moreover, the possibility that Gerbec‘s property management business was facilitated by CBH Realty‘s referrals and advertisement of Gerbec‘s property management expertise on its website does not show an intent on behalf of Gerbec to benefit CBH Realty. In this scenario, Gerbec is the beneficiary, not CBH Realty. Therefore, the possibility that Gerbec benefitted from an association with CBH Realty is not enough to establish a question of fact regarding CBH Realty‘s vicarious liability. See Groob v. KeyBank, 108 Ohio St.3d 348, 2006-Ohio-1198, ¶ 58 (it is not enough to establish scope of agency that the agent‘s position within the principal‘s business simply aided her in committing the tort“).
{31} Carter‘s argument further fails to the extent that she intends to imply that allowing Gerbec to advertise a property management specialty on CBH Realty‘s website must have facilitated CBH Realty‘s business development because it would have appealed to clients of the CBH Realty real estate sales practice. There is no specific evidence on the record to support such a contention.4
{32} Carter further argues that a question of fact exists as to Gerbec‘s scope of employment because Ohio law requires that a real estate agent must be supervised by a real estate broker. See
{33} Further, the Auer Court specifically rejected that
{34} We find that, although scope of agency typically is a jury question, the Supreme Court of Ohio has not carved out an exception to summary judgment practice under
{35} Even when the evidence is viewed in a light most favorаble to Carter, none of the evidence demonstrates that Gerbec and S&C acted, or intended to act, in furtherance or promotion of CBH Realty‘s business. Accordingly, there is no genuine issue of material fact as to whether Gerbec‘s alleged tortious conduct was committed within the scope of Gerbec‘s agency relationship with CBH Realty. Absent a genuine issue of material fact, reasonable minds can only conclude that CBH Realty is not vicariously liable for the alleged actions of Gerbec and S&C. Carter‘s first assignment of error is overruled on this basis.
Assignment of Error Number Two
THE TRIAL COURT ERRED IN DENYING APPELLANTS’ MOTION TO RECONSIDER.
{36} In her second assignment of error, Carter argues that the trial court erred in denying Carter‘s motion for reconsideration of the summary judgment award to CBH Realty. We disagree.
{37} CBH Realty filed the motion for summary judgment on January 10, 2014, and Carter opposed that motion. The trial court granted the motion on March 20, 2014. Carter settled her claims with all of the other defendants during a mediation in April, 2014. However, Carter failed to submit a dismissal entry to the trial court, and the court did not enter a final judgment. Thus, claims against parties other than CBH Realty remained outstanding such that the ordеr granting summary judgment to CBH Realty was not yet a final appealable order when Carter filed a motion to reconsider on November 20, 2014. See D.I.C.E., Inc. v. State Farm Ins. Co., 6th Dist. Lucas No. L-11-1006, 2012-Ohio-1563, ¶ 53. Thus, the trial court was within its discretion to reconsider its decision. Id.
{38} In the trial court, Gerbec opposed the motion for reconsideration on the grounds that, inter alia, the motion was based on improper evidence under
{39} When, as here, the trial court decides to reconsider a previous interlocutory order, the “‘appellate court must apply the standard of review applicable to the merits of the motion being reconsidered.‘” Hull v. Astro Shapes, Inc., 7th Dist. Mahoning No. 10 MA 26, 2011-Ohio-1656, ¶ 28, quoting Klocinski v. American States Ins. Co., 6th Dist. Lucas No. L-03-1353, 2004-Ohio-6657, ¶ 12. We review a reconsideration of a grant of summary judgment under a de novo standard of review. See D.I.C.E., Inc. at ¶ 55, citing Dunn v. N. Star Resources, Inc., 8th Dist. Cuyahoga No. 79455, 2002-Ohio-4570, ¶ 10. In so doing, we do not give any deference to the trial court decision. Id.. Instead, we review the record in a light most favorable to the party opposing summary judgment to determine whether summary judgment is apрropriate. Id.. Summary judgment is appropriate under
{40} On appeal, Carter contends that the motion for reconsideration is based on new evidence confirming that CBH Realty directly benefitted from actions taken by Gerbec in relation to her management of Carter‘s properties. Specifically, Carter argues that Gerbec, working with another CBH Realty agent, used Carter‘s federal tax identification number to set up utilities for CBH Realty listed properties.
{41} In support of the claim that Gerbec fraudulently used Carter‘s tax identification number to benefit CBH Realty, Carter submitted the affidavit of Lolita Adair and electric bills from Ohio Edison. However, this evidence is not admissible for purposes of summary judgment.
{42} Adair claims in her affidavit that “[a]n Ohio Edison representative confirmed directly to [her]” that Carter‘s tax identification number was used by Gerbec to open accounts fоr CBH Realty listed properties. This assertion is not based on Adair‘s personal knowledge, but rather is a statement by an out of court declarant asserted for its truth. As such, it is hearsay. See
{43} Further, the Ohio Edison bills are not admissible evidence under
{44} The only evidence that Carter presented in connection with her motion for reconsideration that we have not already discussed above did not comply with
III.
{45} Carter‘s assignments of error are overruled. The judgment of the Summit County Court of Common Pleas is affirmed.
Judgment affirmed.
There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy of this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is instructed to mail a notice of entry of this judgment to the parties and to make a notation of the mailing in the docket, pursuant to App.R. 30.
Costs taxed to Appellant.
BETH WHITMORE
FOR THE COURT
CARR, P. J.
SCHAFER, J.
CONCUR.
DAVID S. NICHOL, Attorney at Law, for Appellant.
TIMOTHY T. BRICK, COLLEEN A. MOUNTCASTLE and MAIA E. JERIN, Attorneys at Law, for Appellee.