908 N.E.2d 975 | Ohio Ct. App. | 2009
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *255
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *256
{¶ 2} The record shows that Greene and Whiteside were cousins. Greene resided in Ohio, and Whiteside resided in Texas. Greene was an experienced businessman who had invested in a start-up company. Other than these facts, the parties' versions of events differ substantially.
{¶ 4} Greene stated that Whiteside had told him that the corporate structure was already in place and that Whiteside had a partner in Connecticut with expertise in the product. Whiteside also told Greene that he had an initial deadline to obtain $150,000 in funding from other investors and that he had the capitalization and "machinery" to produce and market the product. Based on these representations and Whiteside's claim that the investment "was as close to a slam dunk as I have ever seen," Greene sent him a check for $25,000.
{¶ 5} Despite repeated inquiries "regarding his investment, Greene heard nothing from Whiteside. Subsequently, he received a certificate for "ten units" in a company called R S Technologies, L.L.C. Whiteside had signed the certificate as both president and secretary.
{¶ 6} Greene did not find out until after filing his lawsuit that Whiteside's expert partner was no longer involved in the deal. He did not know whether FuSaCo had ever existed, and Whiteside did not inform him that instead of *258 creating a corporation, he had formed a new company totally under Whiteside's control. Greene also discovered that Whiteside had only $25,000 besides Greene's $25,000 investment.
{¶ 8} Whiteside subsequently sent written materials and a video about the product to Greene in Ohio. A few days later, Greene called Whiteside in Texas and asked if he could invest $25,000. Greene's check was payable to FuSaCo, and Whiteside deposited it in FuSaCo's bank account.
{¶ 9} A short time later, Whiteside's Connecticut partner attempted to modify the terms of their proposed agreement by seeking substantially more money. Whiteside would not agree to his terms and ceased doing business with him and FuSaCo. He then started a new Texas company called R S Technologies, L.L.C. He claimed that this new company would do the same thing as FuSaCo — produce and market the explosion-mitigation technology. Whiteside used Greene's investment for that purpose.
{¶ 12} In determining whether an Ohio court has personal jurisdiction over a nonresident defendant, the court must apply a two-part test.5 It must determine (1) whether Ohio's long-arm statute6 and the complementary civil rule7 confer jurisdiction and (2) whether granting jurisdiction comports with due process.8
{¶ 14} Several cases support the conclusion that disseminating financial information to Ohio investors constitutes transacting business in Ohio.11 With the facts construed in Greene's favor, the record shows that Whiteside had repeatedly *260 solicited Greene in Ohio to invest in his company. Therefore, he was transacting business in Ohio. Given that Greene's investment ended up being a substantial percentage of Whiteside's capital to run his business, it is disingenuous to say that he was not transacting business in Ohio.
{¶ 15} Whiteside relies on a case from this court, Estate of Poole v. Grosser, 12 for the proposition that his conduct was too isolated to justify an Ohio court in asserting jurisdiction. In that case, we held that Kentucky doctors and a Kentucky hospital had not engaged in the sort of regular, continuous activity required to justify an Ohio court in assuming jurisdiction, when they had taken out listings in Ohio phone books, sent a brochure to Ohio, and maintained a few advertisements in Ohio.13
{¶ 16} But Poole did not involve R.C.
{¶ 18} The unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum state. The defendant must purposely avail itself of the privilege of acting *261 in the forum state, thus invoking the benefits and protections of its laws.17 The defendant's actions in the forum state must have a substantial enough connection with the forum state to make the exercise of jurisdiction reasonable.18
{¶ 19} In this case, a magistrate had originally found that maintaining the suit in Ohio would "offend traditional notions of fair play and substantial justice in violation of the Due Process Clause." In so holding, the magistrate had relied upon Whiteside's version of events, which was improper.
{¶ 20} The trial court rejected the magistrate's decision. It stated that "[t]he Court finds that Whiteside purposely established contacts with the state of Ohio and should have reasonably anticipated being haled into court in Ohio. Mr. Green [sic] stated in his deposition that he first had a conversation about investing in Whiteside's company FuSaCo in Cincinnati, Ohio. Mr. Green [sic] states that he received a phone call in Cincinnati soliciting his involvement. Mr. Green [sic] stated in his affidavit that, `I never seriously contemplated any involvement or investment in this venture before being solicited multiple times in Cincinnati by the Defendant in writing and by telephone or before receiving the supportive, collateral, materials delivered to promote its authenticity.'"
{¶ 21} Thus, the court concluded that Greene "had made a prima facie case of jurisdiction." We agree with the trial court's analysis. With the facts construed in Greene's favor, he demonstrated that Whiteside had purposely availed himself of the privilege of acting in Ohio, thus invoking the benefits and protection of Ohio law. Whiteside had sufficient contacts with Ohio so that Greene's suit in Ohio did not offend traditional notions of justice and fair play. Consequently, we overrule Whiteside's assignment of error.
{¶ 24} Whiteside's version of the facts differed radically from Greene's. As we have previously stated, "[t]his case presents a classic example of what cannot be resolved by summary judgment: namely, two different versions of a story, with the outcome dependent on credibility."21
{¶ 26} We disagree. Greene's affidavit did not contradict his deposition testimony. Whiteside has taken passages from Greene's deposition out of context. Greene did acknowledge that ultimately the name of the company marketing the technology did not matter to him. But from the beginning, Greene contended that the existence of a corporation with the proper corporate structure, whatever its name, and the involvement of Whiteside's partner with expertise in the technology were important factors that he had considered in investing his money. He claimed that he did not agree to invest in a limited-liability company solely under Whiteside's control. Consequently, his affidavit merely clarified his deposition testimony, and the trial court erred in failing to consider it. *263
{¶ 28} Greene cites numerous examples of how Whiteside's conduct was a breach of fiduciary duty under Texas law. We agree with the trial court that these arguments are irrelevant because Greene did not plead breach of fiduciary duty in his complaint. The plaintiff cannot fulfill his burden to show a triable issue of fact by asserting new claims in response to a properly supported motion for summary judgment.24.
{¶ 29} Nevertheless, while Greene did mistakenly assert in his complaint that Whiteside had deposited his check into his personal account, he still presented sufficient evidentiary materials to meet his burden to show that material issues of fact existed for trial. Specifically, issues of fact existed as to whether Whiteside had materially misrepresented the facts or had concealed information related to FuSaCo's existence and its corporate formalities, and his relationship with his expert partner.25
{¶ 30} Consequently, we hold that the trial court erred in granting Whiteside's motion for summary judgment on the issue of fraudulent misrepresentation, and we sustain Greene's two assignments of error.
Judgment affirmed in part and reversed in part, and cause remanded.
HENDON, P.J., and HILDEBRANDT, J., concur.