KERRY R. HICKS v. THE CADLE COMPANY, et al.
CASE NO. 2014-T-0103
ELEVENTH APPELLATE DISTRICT TRUMBULL COUNTY, OHIO
June 27, 2016
2016-Ohio-4728
TIMOTHY P. CANNON, J.
[Cite as Hicks v. Cadle Co., 2016-Ohio-4728.] THE HOME SAVINGS AND LOAN COMPANY OF YOUNGSTOWN, OHIO, Intervening Defendant.
Judgment: Affirmed in part, reversed in part, and remanded.
Christopher S. Williams and Ronald M. McMillan, Calfee, Halter & Griswold, LLP, The Calfee Building, 1405 East Sixth Street, Cleveland, OH 44114; Kris J. Kostolansky, Lewis Roca Rothgerber Christie LLP, One Tabor Center, Suite 3000, 1200 Seventeenth Street, Denver, CO 80202; John T. Dellick, Harrington, Hoppe & Mitchell, Ltd., 26 Market Street, Suite 1200, P.O. Box 6077, Youngstown, OH 44501-6077 (For Plaintiff-Appellee).
Victor O. Buente, Jr., Cadle Company, 100 North Center Street, Newton Falls, OH 44444-1321; F. Dean Armstrong, Armstrong Law Firm, 1324 Dartmouth Road, Flossmoor, IL, 60422 (For Defendants-Appellants).
TIMOTHY P. CANNON, J.
{¶1} Appellants, The Cadle Company (“TCC“), Daniel C. Cadle (“Cadle“), and United Joint Venture Limited Partnership (“United“), appeal the November 3, 2014
{¶2} Cadle is the former president and current owner and director of TCC, a debt collection company. TCC is the only general partner and registered agent of United, which is also a debt collection company. Litigation between the parties began in September 2003 when Buckeye Retirement Co., LLC (“Buckeye“) sued Hicks and his business partner. Buckeye is apparently another debt collection company and an alter ego of TCC and Cadle.
{¶3} The suit was brought in federal district court in Tennessеe and sought to collect the outstanding debt on a promissory note. Allegations of tortious misconduct were asserted by both sides. A history of litigation between the parties is detailed in three opinions of the United States Court of Appeals for the Tenth Circuit: Hicks v. Bank of Am., N.A., 218 Fed.Appx. 739 (10th Cir.2007); Hicks v. Cadle Co., 355 Fed.Appx. 186 (10th Cir.2009); Hicks v. Cadle, 436 Fed.Appx. 874 (10th Cir.2011).
{¶4} Hicks and others obtained a loan from Bank of America in 1999; Hicks was one of the signators on the note and two renewed versions thereof. However, Hicks contended he was not liable on the balance of $1,000,000.00 pursuant to an oral, collateral agreement with Bank of America—this was the аmount outstanding when
[a]ny controversy or claim between or among the parties hereto including but not limited to those arising out of or relating to this instrument, agreement or document or any related instruments, agreements or documents, including any claim based on or arising from an alleged tort[.]
The note also contained a venue provision that any litigation would take place in Tennessee. In proceedings before the Tenth Circuit, thе parties agreed that Tennessee law governed.
{¶5} Shortly after Buckeye purchased the note, TCC, acting on behalf of Buckeye, attempted to collect the debt from Hicks in an action filed in Tennessee. It was alleged that the debt collection activities of TCC and Buckeye are intertwined: TCC employees were, at times, also Buckeye employees; TCC employees, including Cadle, made collection calls and participated in collection-related correspondence in Buckeye‘s name; and TCC cоmputer systems and phones were also used in Buckeye‘s name. Three separate arbitrations in Colorado followed Buckeye‘s efforts to collect from Hicks. Hicks was successful in all three arbitrations and obtained significant damage awards against Cadle. The amount due on the note itself, if any, was assigned back to Bank of America in 2003.
{¶6} This Ohio action between Hicks and appellants began in May 2011 when Hicks sought declaratory judgment and injunctive relief to prevent appellants from transferring assets belonging to Cadle, a principal of TCC аnd United. Appellants were in negotiations with Home Savings to refinance an outstanding debt. Hicks was apparently concerned that funds from Cadle‘s IRA account would be used to pay Home
{¶7} At a June 28, 2011 hearing, Hicks’ request for a preliminary injunction was denied, and the temporary restraining order was dissolved. Thereafter, the arbitration award was paid, and Hicks voluntarily dismissed his claims.
{¶8} After dismissal of Hicks’ complaint, appellants’ counterclaim remained pending. With regard to appellants’ counterclaim, Hicks filed a motion to stay litigation and compel arbitration or, in the alternative, to dismiss all counts pursuant to
{¶9} Hicks then filed a motion to dismiss the amended counterclaim. This motion contained numerous exhibits, copies of court orders, and excerpts from depositions and arbitration testimony. Because the motion was supported by materials outside of the pleadings, the trial court converted it to a motion for summary judgment
{¶10} After appellants filed their supplemental Opposition, but prior to Hicks filing a supplemental Rеply, Hicks appealed the trial court‘s denial of his motion to compel arbitration, and the trial court proceedings were stayed pending our decision. This court affirmed the trial court‘s ruling, holding Hicks could not compel arbitration, and the matter proceeded below. Hicks v. Cadle Co., 11th Dist. Trumbull No. 2013-T-0017, 2014-Ohio-872.
{¶11} After the stay was lifted, Hicks filed a supplemental Reply in support of his converted motion for summary judgment. Appellants moved the trial court to strike portions of the reply primarily due to the fact it contained additional evidentiary material in the form of affidavits and additional arguments. The trial court overruled appellants’ motion to strike and granted Hicks’ motion for summary judgment on all three counts of appellants’ counterclaim.
{¶12} Appellants filed a timely notice of appeal and raise the following assignments of error for our review:
- [1.] The Trial Court erred in denying the Cadle Parties’ Motion to Strike the portions of Hicks’ Supplemental Brief that went beyond the arguments and evidence submitted in Hicks’ Motion for Summary Judgment.
- [2.] The Trial Court erred in granting Summary Judgment in favor of Hicks on the Cadle Parties’ Counterclaims.
{¶14} A trial court‘s decision to grant or deny a motion to strike is reviewed under an abuse of discretion standard. Johnsonite, Inc. v. Welch, 11th Dist. Geauga No. 2011-G-3012, 2011-Ohio-6858, ¶21, citing State ex rel. Mora v. Wilkinson, 105 Ohio St.3d 272, 2005-Ohio-1509, ¶10. An abuse of discretion is the trial court‘s “failure to exercise sound, reasonable, and legal decision-making.” State v. Beechler, 2d Dist. Clark No. 09-CA-54, 2010-Ohio-1900, ¶62, quoting Black‘s Law Dictionary 11 (8th Ed.2004).
{¶15} On the other hand, we review a trial court‘s decision on a motion for summary judgment de novo. Fed. Home Loan Mtge. Corp. v. Zuga, 11th Dist. Trumbull No. 2012-T-0038, 2013-Ohio-2838, ¶13, citing Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105 (1996). Pursuant to
(1) [n]o genuine issue as to any material fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of law; and (3) it appears from the evidence that reasonable minds can come to but one conclusion, and viewing such evidence most strongly in favor of the party against whom the motion for summary judgment is made, that conclusion is adverse to that party.
Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327 (1977). “Since summary judgment denies the рarty his or her ‘day in court’ it is not to be viewed lightly as docket control or as a ‘little trial.’ The jurisprudence of summary judgment standards has
{¶16}
{¶17} Here, Hicks filed a motion to dismiss appellants’ amended counterclaim for failure to state a claim. The trial court issued an entry converting Hicks’ motion to one of summary judgment and first instructed appellants, the nonmoving parties, to file a “supplemental Opposition to Motion for Summary Judgment by no later than March 08, 2013.” It then instructed that Hicks, the moving party, may file a “supplemental Reply by no later than March 22, 2013.” Both parties eventually filed as instructed, and appellants moved to strike portions of Hicks’ supplemental reply.
It is well-established that a party moving for summary judgment must expressly delineate each basis on which it seeks summary judgment in its motion so as to provide the opposing party a meaningful opportunity to respond. The danger in allowing a new argument to be asserted in a reply or a supplemental motion is that the opposing party does not have an opportunity to respond and may be subjected to summary judgment by ambush. Therefore, when a new argument is raised in a reply or supplemental motion for summary judgment, the proper procedure is to strike the reply or supplemental motion or, alternatively, to allow the opposing party to file a surreply.
Baker v. Coast to Coast Manpower, LLC, 3d Dist. Hancock No. 5-11-36, 2012-Ohio-2840, ¶35 (internal citations omitted).
{¶19} The trial court further stated that the “pertinent portion” of
{¶20} To prevail on a motion for summary judgment, the moving party has the initial burden to affirmatively demonstrate that there is no genuine issue of material fact to be resolved in the case, relying on evidence in the record pursuant to
{¶21} When a conventional motion for summary judgment is filed, “[u]nless otherwise provided by local rule or by order of the court, the adverse party may serve responsive arguments and opposing affidavits within twenty-eight days after service of the motion, and the movant may serve reply arguments within fourteen days after service of the adversе party‘s response.”
{¶22} Here, the trial court simultaneously overruled appellants’ motion to strike the new evidence and granted Hicks’ motion for summary judgment. In its judgment entry, the trial court acknowledged that Hicks included new supporting evidentiary materials in his supplemental reply brief. The trial court stated, in part, that “while the Court described the supplemental submission to be filed by Plaintiff as a ‘supplemental Reply,’ this did not, as Defendants claim, preclude Plaintiff from submitting any evidence beyond what had already been included in its original motion to dismiss.” Perhaps not; but because the court instructed the moving party to file its supplemental brief last in time, it should not then have prevented the nonmoving party a meaningful opportunity to respond to new evidence presented by the moving party in that supplemental reply.
{¶23} In addition, the trial court‘s decision tо convert the motion was based on its assertion that Hicks “submitted extensive outside evidentiary materials in support of his motion” to dismiss. We note, however, that although Hicks did attach nearly 50 exhibits, they were not of evidentiary quality as required by
{¶24} Appellants’ first assignment of error is without merit.
{¶25} As noted, the trial court granted summary judgment in the same entry in which it denied the motion to strike. The trial court statеd appellants should have “requested an opportunity” to “offer additional evidentiary materials.” We agree. However, under the particular circumstances of this case, allowing the affidavits in the supplemental reply effectively shifted the burden to appellants, for the first time, to submit evidentiary material in response. Once the trial court, in its discretion, denied the motion to strike, it should have allowed additional time for appellants to respond. As a result, we find the trial court erred in granting summary judgment in favor of Hicks without first providing appellants a reasonable opportunity to respond to the evidentiary material after overruling the motion to strike. Additionally, we find the procedure utilized by the trial court in converting the motion to dismiss and the standard it applied in ruling on the motion for summary judgment improperly placed the initial burden of production on appellants.
{¶26} “The moving party cannot discharge its initial burden under
{¶27} Here, the trial court stated: “Thus, it is clear from the foregoing that Plaintiff, prior to conversion of his motion, expressly argued that Defendants could prove no facts which would support any of their Amended Counterclaims. Defendants were then given the full opportunity to respond to these arguments and submit evidentiary materials of their own[.]” This reflects an improper placement of the burden on appellants. Hicks did argue in his motion to dismiss that appellants could prove no facts to support their counterclaim. However, this is not a proper argument in support of a
{¶28} Contrary to the trial court‘s entry, appellants should not have had the initial burden of coming forward with facts to support their counterclaim based solely on an allegation that no supporting facts existed. Nevertheless, the first evidentiary material submitted to the court regarding summary judgment was submitted by appellants, the nonmoving parties. A review of the record indicates that, prior to appellants’ submission, Hicks had not presented evidentiary material sufficient to shift the burden to appellants to overcome the motion for summary judgment. Parenthetically, we note that Hicks’ counsel conceded this fact at oral argument and also acknowledged that the
{¶29} We note that the dissenting opinion mischaracterizes our basis for finding error. The trial court‘s decision to convert the motion to dismiss to one for summary judgment was based on the fact that Hicks attached numerous exhibits to his motion. The trial court did not rely on those exhibits, however, in reaching its decision to grant summary judgment. Whether appellants objected to the trial court relying on those exhibits is therefore irrelevant. The trial court relied only on the proper evidentiary material before it. The procedurе it employed to receive that evidentiary material improperly placed the initial burden of production on the nonmoving party. Therein lies the error.
{¶30} Appellants’ second assignment of error has merit.
{¶31} This does not end our analysis, however, as Hicks has also raised two cross-assignments of error for our review:
- [1.] In addition to the grounds relied on by the Trial Court, the Trial Court‘s decision to grant Plaintiff‘s motion for summary judgment should also be upheld on the basis of the litigation privilege.
- [2.] In addition to the grounds relied on by the Trial Court, the Trial Court‘s decision to grant Plaintiff‘s motion for summary judgment as to the IIED claim should also be uphеld on the basis that it is outside the statute of limitations.
{¶33} Hicks first argues the grant of summary judgment on all counts should be upheld “on the alternative grounds that all conduct alleged by Defendants is protected conduct under the litigation privilege.” Because of the outcome under appellants’ second assignment of error—i.e., that the trial court improperly placed the initial burden of production on appellants—we cannot uphold the grant of summary judgment on alternative grounds that also require supporting evidentiary material.
{¶34} Hicks’ first cross-assignment of еrror is without merit.
{¶35} Hicks also asserts that the grant of summary judgment on the count of intentional infliction of emotional distress should be upheld because it is barred by the statute of limitations. In his brief on appeal, Hicks makes the following arguments: “[t]he vast majority of [his] alleged wrongful conduct relates to [his] allegedly defamatory statements, thus requiring application of the one year limitations period for defamation“; certain other claims “are subject to the one-year statute of limitations for false imprisonment or malicious prosecution“; and “[a]ll of this conduct occurred in the summer of 2007.” In response, Cadle asserts that “under the continuous course of
{¶36} As a result, a determination as to whether Cadle‘s intentional infliction of emotional distress claim was barred by the statute of limitations is fact-intensive. The trial court did not reach this issue in its entry and thus made no findings as to whether, inter alia, the alleged wrongful conduct amоunted to defamation, false imprisonment, or malicious prosecution; whether it all occurred in the summer of 2007; whether the conduct took place in Colorado or Ohio; and whether the continuous course of doctrine applies. On remand, Cadle will have an opportunity to submit evidentiary material in support of his position with regard to this cause of action. It would be inappropriate for this court to address these factual allegations and legal arguments for the first time on appeal. We therefore decline to addrеss the statute of limitations issue until the trial court has first engaged in a review of the issue. See, e.g., McDonald v. Corning, 5th Dist. Perry No. 13-CA-00011, 2014-Ohio-1614, ¶26; Schmucker v. Kurzenberger, 9th Dist. Wayne No. 10CA0045, 2011-Ohio-3741, ¶14; Lang v. Holly Hill Motel, Inc., 4th Dist. Jackson No. 05CA6, 2005-Ohio-6766, ¶22; see also Murphy v. Reynoldsburg, 65 Ohio St.3d 356, 360 (1992).
{¶37} Hicks’ second cross-assignment of error is without merit.
{¶38} The judgment of the Trumbull County Court of Common Pleas is affirmed in part and reversed in part, and the matter is remanded for further proceedings consistent with this opinion.
COLLEEN MARY O‘TOOLE, J., dissents with a Dissenting Opinion.
COLLEEN MARY O‘TOOLE, J., dissents with a Dissenting Opinion.
{¶39} I would affirm the trial court‘s grant of summary judgment to Mr. Hicks.
{¶40} Initially, the majority contends the trial court relied on evidence outside the bounds of Civil Rule 56 when it converted Mr. Hicks’ motion to dismiss to one for summary judgment, thus improperly shifting the initial burden of proof in the summary judgment exercise to appellants. I respectfully disagree. Improper summary judgment evidence may be considered by a trial court if no objection is made to it. Millstone Condos. Unit Owners Assn. v. 270 Main St., 11th Dist. Lake No. 2011-L-078, 2012-Ohio-2562, ¶62. It does not appear appellants did object to the trial court relying on the evidence submitted initially by Mr. Hicks.
{¶41} Second, the majority contends the trial court improperly denied appellants the opportunity to respond to new affidavits and evidentiary material appended by Mr. Hicks to his reply brief. As the trial court noted, the new materials submitted by Mr. Hicks respondеd to new materials submitted by appellants with their brief in opposition. Thus, the materials submitted by Mr. Hicks with his reply brief were perfectly proper. See, e.g., Capital One Bank (USA), NA v. Reese, 11th Dist. Portage No. 2014-P-0034, 2015-Ohio-4023, ¶98. However, as the trial court observed, appellants never sought to submit further materials on the allegedly new issues set forth by Mr. Hicks, by way of
{¶42} The majority takes umbrage for an alleged mischaracterization of the basis for its opinion. It asserts the trial court did not rely on the numerous exhibits attached to Mr. Hicks’ motion to dismiss, once the trial court made the decision to convert the motion to one for summary judgment. I disagree for two reasons.
{¶43} First, why would the trial court convert the motion, if it did not intend to rely on the evidentiary materials attached to it? Under
{¶44} Second, the majority inaccurately relates what the trial court stated in its February 22, 2013 judgment entry converting the motion to dismiss. To quote:
{¶45} “In order to prevail on a
{¶46} “Here, Plaintiff has submitted extensive outside evidentiary materials in support of his motion, and the Court finds it proper to convert Plaintiff‘s
{¶47} Further, in its November 3, 2014 judgment entry granting summary judgment to Mr. Hicks, the trial court reiterated it had converted his motion to dismiss into one for summary judgment specifically because of the “extensive outside evidentiary materials” submitted in conjunction with that motion, then allowed the parties to fully respond and submit any other relevant materials.
{¶48} It belies the facts set forth in the trial court‘s judgment entries, as well as the trial court‘s duty to review the record before it, to assume the trial court did not give full consideration to the relevant evidentiary materials presented to it, and apply summary judgment procedures properly.
{¶49} I respectfully dissent.