JOHN E. KOBAL v. EDWARD JONES SECURITIES, ET AL.
No. 109753
Court of Appeals of Ohio, Eighth Appellate District, County of Cuyahoga
April 1, 2021
[Cite as Kobal v. Edward Jones Secs., 2021-Ohio-1088.]
MARY J. BOYLE, A.J.
Civil Appeal from the Cuyahoga County Court of Common Pleas, Case No. CV-20-928021
JUDGMENT: AFFIRMED
RELEASED AND JOURNALIZED: April 1, 2021
Appearances:
John E. Kobal, pro se.
Porter Wright Morris & Arthur L.L.P., and C. Darcy Jalandoni, and W. Hunter West, for appellee Edward Jones & Co., L.P.
Darren W. DeHaven, for appellee Kathleen Kobal.
MARY J. BOYLE, A.J.:
{1} Plaintiff-appellant, John E. Kobal, appeals the trial court‘s judgment dismissing his claims against defendants-appellees, Kathleen Kobal (“Kathleen“)
- Misuse of Res Judicata as an excuse/reason for dismissal of this case due to fraud and misrepresentation. For res judicata to be properly applied as an acceptable doctrine for dismissal, the litigation shall be absent of fraud/misrepresentation. This case has numerous credible examples of fraud/misrepresentation.
- Misuse of Res Judicata as an excuse/reason for dismissal of the case due to collusion/situational circumstances of collusion between Plaintiff Attorney and opposing Counsel. For res judicata to be applied as an acceptable doctrine for dismissal, the litigation shall be absent of collusion and/or situations where collusion was evident considering actions and/or inactions of the parties. Many credible examples.
- Plaintiff[‘s] claims are not barred by [the] statute of limitations.
- Trial Court consistently finding ways to sidestep/avoid discovery phase of the legal process in Mr. Kobal‘s case(s) - including this case. Discovery protects the integrity of a fair proceeding and a fair trial for all parties.
- Dismissal of KMK Consulting, L.L.C. was unjustified, improper and legally abusive considering the overwhelming evidence, circumstances, obvious identity differences regarding specific offenses for specific defendants, prejudice and conflict of interest.
- The actions of the Defendants and the Trial Court are abuse of process.
- Trial Court[‘s] determination [that] Plaintiff failed to state a claim for which relief can be granted is improper, inaccurate and not legally sound when considering the evidence and circumstances.
{2} Finding no merit to his assignments of error, we affirm the trial court‘s judgment.
{3} This case is appellant‘s latest attempt to relitigate his divorce case against Kathleen, his ex-wife. A summary of the previous litigation, as explained in one of appellant‘s most recent appeals, will provide helpful context:
Kobal and Kathleen were married in 1976. In 2001, Kathleen filed for divorce, but later voluntarily dismissed her complaint. In October 2006, Kobal was arrested for criminal charges involving a minor in case number CR-06-487194-A. The same month, Kobal executed a general power of attorney naming Kathleen as his attorney-in-fact. The document provided Kathleen with various powers over Kobal‘s estates and affairs. In November 2006, Kobal and two of his business partners assisted Kathleen in organizing KMK. According to Kathleen, Kobal‘s goal in organizing this entity was to create a vehicle to “protect the family from financial ruin” related to his criminal case.
In March 2007, Kobal pleaded guilty to rape and other charges and was sentenced to 14 years in prison. Kobal did not appeal his criminal conviction. As of the date of this opinion, Kobal remains incarcerated; his prison term is set to expire on March 18, 2021. Before Kobal was incarcerated in April 2007, he transferred various assets, including an Edward Jones investment account and an RBC Wealth Management account, to KMK.
In December 2015, Kathleen again filed a complaint for divorce. In December 2016, a contested trial was held before a magistrate judge. Because Kobal was incarcerated at the time of the trial, he appeared by video. At trial, Kobal initially claimed that he had no memory of transferring an Edward Jones account worth approximately $160,000 to KMK. He ultimately testified that he had authorized this transfer, but he claimed that he and Kathleen had a verbal agreement that the funds were “not to be touched.” He also admitted that he transferred an RBC Wealth Management account to KMK, and he admitted that there was no verbal agreement regarding any limitations on Kathleen using or retaining these funds.
The magistrate made numerous findings relating to the division of the couple‘s property. The magistrate determined that the Edward Jones and RBC Wealth Management were Kathleen‘s separate property by virtue of her ownership of KMK consulting. In May 2017, the trial court
adopted the magistrate‘s decision. The divorce decree stated, in relevant part: The Edward Jones account and the RBC accounts presently owned by KMK Consulting shall be transferred to [Kathleen] and shall remain her property free and clear of any claim by the Defendant.
Kobal appealed, and this court affirmed the trial court‘s decision. Kobal v. Kobal, 2018-Ohio-1755, 111 N.E.3d 804 (8th Dist.).
Kobal v. RBC Wealth Mgt., 8th Dist. Cuyahoga No. 109775, 2021-Ohio-213, ¶ 3-6.
{4} The instant appeal stems from a case appellant initiated in January 2020 against Edward Jones, Kathleen, and KMK Consulting. The complaint states that when appellant was incarcerated in 2007, he assigned $160,000 in securities from his Edward Jones investment account to Walmatt, Inc., d.b.a ABC Bail Bonding “as collateral for his bond.” Appellant alleged that he instructed an Edward Jones representative to return the securities to his investment account after the bond period ended, creating an implied-in-fact contract. The complaint states that Edward Jones breached the implied-in-fact contract when it “allowed” ABC Bail Bonding to transfer the $160,000 in securities into an Edward Jones account held by KMK Consulting without appellant‘s “knowledge and express authority.”
{5} Appellant further alleged that in the 2016 divorce trial, Kathleen, her trial counsel, and KMK Consulting “knowingly and willfully misled” the trial court to believe that appellant voluntarily transferred ownership of his Edward Jones investment account to KMK Consulting. Appellant also claimed that KMK Consulting never registered to operate as a business in Ohio, and all its account activities with Edward Jones must be rescinded.
{7} In February 2020, Edward Jones and Kathleen filed answers, in which they denied appellant‘s allegations and raised affirmative defenses. Both answers raised the affirmative defenses of res judicata and failure to state a claim upon which relief can be granted.
{8} In March 2020, Kathleen filed a motion to dismiss appellant‘s claims against her pursuant to
{9} In May 2020, the trial court granted Kathleen‘s motion to dismiss and Edward Jones’ motion for judgment on the pleadings. The trial court found that all
{10} Appellant timely appeals from this judgment.
II. Standard of Review
{11} As an initial matter, we note that Kathleen filed her motion to dismiss pursuant to
{12} We apply a de novo standard of review to a trial court‘s decision on a motion for judgment on the pleadings filed under
III. Validity of Claims
{13} In his seventh assignment of error, appellant argues that the trial court erred in finding that his complaint failed to state a claim for which relief could be granted. In support of this argument, he maintains that fraud and collusion “hijacked” the divorce case.
{14} We find that appellant failed to state a claim for accounting, constructive trust, fraud, constructive fraud, and “deception and misrepresentation.” First, Kobal‘s claims for accounting and constructive trust are remedies, not independent causes of action. Graham v. Lakewood, 2018-Ohio-1850, 113 N.E.3d 44, ¶ 58 (8th Dist.) (“A constructive trust is a remedy, not a cause of action.“); Krohn v. Ostafi, 6th Dist. Lucas No. L-19-1002, 2020-Ohio-1536, ¶ 37
{15} Second, appellant failed to state a claim for fraud and “deception and misrepresentation” against Kathleen and KMK Consulting because his complaint does not plead these claims with particularity.1 A claim for fraud requires proof of the following elements: (1) a representation or, where there is a duty to disclose, omission of a fact, (2) which 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 inferred, (4) with the intent of misleading another into relying upon it, (5) justifiable reliance upon the representation or concealment, and (6) a resulting injury proximately caused by the reliance. Russ v. TRW, Inc., 59 Ohio St.3d 42, 49, 570 N.E.2d 1076 (1991).
{16} A plaintiff must state the circumstances constituting fraud with particularity.
{17} In his appellate brief, appellant argues that his attorney colluded with Kathleen‘s attorney at the divorce trial to deceive the magistrate. He also maintains that he was tricked at the divorce trial into agreeing that he voluntarily transferred his Edward Jones investment account to KMK Consulting because Kathleen‘s attorney misrepresented an Edward Jones financial document dated February 12, 2007. He argues he could have transferred securities worth no more than approximately $14,000 because the rest of the securities from the investment account were in the possession of ABC Bail Bonding at the time. Appellant attaches numerous exhibits, including the February 12, 2007 document, to his appellate brief and reply briefs as evidence of the fraud and collusion. However, we are not permitted to consider exhibits or arguments that are not part of the trial court record.
{19} Appellant‘s complaint in this case does not present a claim for fraud against either party‘s trial counsel; the only allegations of fraud relevant to Kathleen and KMK Consulting are that they presented false testimony. But appellant does not identify the content of the allegedly false representations. See Johnson v. Johnson, 8th Dist. Cuyahoga No. 108420, 2020-Ohio-1381, ¶ 28 (claimant did not plead fraud with the necessary particularity by alleging the defendant misled the court and other entities by spreading rumors, without further detail); Becker v. Becker, 12th Dist. Clermont No. CA97-01-001, 1997 Ohio App. LEXIS 3650, 8-9 (Aug. 11, 1997) (appellant‘s allegations that his ex-wife and her attorney made false statements regarding marital debts at the divorce trial did not meet
{21} In his complaint, appellant sets forth two paragraphs for his constructive fraud claim. In one paragraph, he alleges that Edward Jones breached its duty to appellant by allowing his assets to be transferred to KMK Consulting. In the other paragraph, he states that KMK Consulting was appellant‘s fiduciary agent and breached a legal duty by accepting the securities from ABC Bail Bonding “under a knowing and willful falsity of representation in a civil proceeding in 12/2016.” These allegations do not set forth a “special confidential or fiduciary relationship” between appellant and Edward Jones that would give rise to a claim for constructive fraud. Appellant has failed to state a constructive fraud claim.
IV. Res Judicata
{23} In his first assignment of error, appellant argues that res judicata does not bar his claims due to fraud and misrepresentation in the divorce trial. Likewise, in his second assignment of error, he argues that res judicata does not preclude his claims because his counsel at the divorce trial colluded with Kathleen and her trial counsel. We will therefore address these assignments of error together. Because we have already concluded that appellant failed to state a claim for accounting, constructive trust, fraud, constructive fraud, and “deception and misrepresentation,” we will address the application of res judicata to appellant‘s remaining claims for breach of contract, unjust enrichment, and “reckless negligence.”
{24} Res judicata precludes “the relitigation of a point of law or fact that was at issue in a former action between the same parties and was passed upon by a court of competent jurisdiction.” State ex rel. Kroger Co. v. Indus. Comm., 80 Ohio St.3d 649, 651, 687 N.E.2d 768 (1998), quoting Office of Consumers’ Counsel v. Pub. Util. Comm., 16 Ohio St.3d 9, 10, 475 N.E.2d 782 (1985). The doctrine of issue preclusion is one of two related concepts, along with claim preclusion, within the legal doctrine of res judicata. Grava v. Parkman Twp., 73 Ohio St.3d 379, 381, 653 N.E.2d 226 (1995). Under the concept of claim preclusion, “[a] valid, final judgment [] on 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.” Id. at syllabus.
{25} Issue preclusion, also known as collateral estoppel, provides that “a fact or a point that was actually and directly at issue in a previous action, and was passed upon and determined by a court of competent jurisdiction, may not be drawn into question in a subsequent action between the same parties or their privies, whether the cause of action in the two actions be identical or different[.]” Fort Frye Teachers Assn. v. State Emp. Relations Bd., 81 Ohio St.3d 392, 395, 692 N.E.2d 140 (1998). While claim preclusion prevents relitigation of the same cause of action, issue preclusion bars relitigation of an issue that has been actually and necessarily litigated and determined in a prior action. Id., citing Whitehead v. Gen. Tel. Co., 20 Ohio St.2d 108, 112, 254 N.E.2d 10 (1969). Here, we are concerned solely with issue preclusion or collateral estoppel.
{26} In Thompson v. Wing, 70 Ohio St.3d 176, 637 N.E.2d 917 (1994), the Ohio Supreme Court set forth three requirements for the application of collateral estoppel or issue preclusion:
Collateral estoppel applies when the fact or issue (1) was actually and directly litigated in the prior action, (2) was passed upon and determined by a court of competent jurisdiction, and (3) when the party against whom collateral estoppel is asserted was a party in privity with a party to the prior action.
{27} We first note that res judicata is generally not a proper ground for dismissal pursuant to a
{28} In the divorce case, the trial court found that appellant voluntarily transferred the Edward Jones investment account to KMK Consulting, and the
[Appellant] testified that his mother left him money when she died in 2002, which he invested in the account with Edward Jones. He estimated that at the time he was incarcerated in April 2007, the account was worth approximately $160,000. At the time of trial, the account had a value of $165,795.90. At trial, [appellant] initially claimed to have no memory of transferring the money, claiming “[Kathleen] moved the money from my [Edward Jones] account into KMK Consulting.” On cross-examination, Kathleen‘s counsel presented [appellant] with a receipt of the transfer authorization with his signature. [Appellant] then admitted to authorizing the transfer, explaining that he transferred the account to KMK Consulting to insulate this asset from attachment in any potential civil action related to the criminal charges he faced. [Appellant] further testified that he and Kathleen had “a verbal understanding that [the funds were] not to be touched,” because it was his “inheritance money.” He admitted there was no written agreement providing Kathleen could not use or retain the funds. [Appellant] further admitted he had transferred the Edward Jones and RBC Wealth Management accounts to KMK Consulting to protect these assets.
{29} Collateral estoppel applies here to bar appellant‘s claims for breach of contract, unjust enrichment, and “reckless negligence.” First, the issue of whether appellant voluntarily transferred the investment account to KMK Consulting was actually and directly litigated in the divorce case. Second, the Cuyahoga County
{30} Appellant argues that the doctrine of res judicata does not preclude his claims due to fraud, misrepresentation, and collusion during the divorce case. “A judgment obtained by way of fraud or collusion may not be used as a basis for applying principles of res judicata.” Fought v. Fought, 8th Dist. Cuyahoga No. 54824, 1988 Ohio App. LEXIS 5189, 2-3 (Dec. 22, 1988). However, a party attempting to avoid the application of res judicata by asserting allegations of fraud must plead “this assertion with the required particularity.” Carman v. LeMasters, 4th Dist. Jackson No. 638, 1990 Ohio App. LEXIS 4472, 10 (Oct. 1, 1990); see also Green v. Cumberland, 4th Dist. Highland No. 92 CA 801, 1992 Ohio App. LEXIS 5687, 10-11 (Oct. 28, 1992) (appellant failed to sufficiently allege fraud or collusion in the prior judgment when he alleged only that the court colluded with the appellees by preventing depositions and acting “unfairly“).
{32} Accordingly, we find that the doctrine of res judicata bars appellant‘s claims for breach of contract, unjust enrichment, and “reckless negligence.”2 Accordingly, we overrule appellant‘s first and second assignments of error.
V. Statute of Limitations
{33} In his third assignment of error, appellant contends that his claims are timely because he did not discover the defendants’ misconduct until the 2016 divorce trial. We first note that all of appellant‘s claims either failed to state a claim upon which relief can be granted or are precluded by the doctrine of res judicata (or both). However, most of his claims are also time barred.
{34} Claims for breach of oral contracts and unjust enrichment have a six-year statute of limitations.
{35} Appellant‘s claims for fraud and “deception and misrepresentation” arise from the December 2016 divorce trial. Appellant therefore timely brought these claims in his January 2020 complaint. However, appellant‘s claims for breach of contract, unjust enrichment, “reckless negligence,” and constructive fraud stem from the 2007 transfer of securities from ABC Bail Bonding to KMK Consulting‘s investment account with Edward Jones. Therefore, the statute of limitations for these claims have long since expired.
{36} Appellant maintains that the statute of limitations for his claims did not begin to run until December 2016 because he did not discover the defendants’ misconduct until the divorce trial. The Ohio Supreme Court has explained the discovery rule:
Generally, a cause of action accrues and the statute of limitations begins to run at the time the wrongful act was committed. However, the discovery rule is an exception to this general rule and provides that a cause of action does not arise until the plaintiff discovers, or by the exercise of reasonable diligence should have discovered, that he or she was injured by the wrongful conduct of the defendant.
Norgard v. Brush Wellman, 95 Ohio St.3d 165, 2002-Ohio-2007, 766 N.E.2d 977, ¶ 8. “A court may invoke the discovery rule ‘in situations where the injury complained of may not manifest itself immediately and, therefore, fairness necessitates allowing the assertion of a claim when discovery of the injury occurs beyond the statute of limitations.‘” Cristino v. Admr., 2012-Ohio-4420, 977 N.E.2d 742, ¶ 40 (10th Dist.), quoting NCR Corp. v. United States Mineral Prods. Co., 72 Ohio St.3d 269, 271, 649 N.E.2d 175.
{37} We decline to apply the discovery rule to this case to extend the time limitations for appellant‘s claims for breach of contract, unjust enrichment, “reckless negligence,” and constructive fraud. This is not a case “where the injury complained of may not manifest itself immediately.” Appellant knew since 2007, or should have known by the exercise of reasonable diligence, that ABC Bail Bonding did not return approximately $160,000 worth of securities to his Edward Jones investment account. Appellant did not bring these claims until 13 years later. We do not believe that, under these circumstances, “fairness necessitates allowing the assertion of a claim when discovery of the injury occurs beyond the statute of limitations.” We find that appellant‘s claims for breach of contract, unjust enrichment, “reckless negligence,” and constructive fraud are time barred.
{38} Accordingly, we overrule appellant‘s third assignment of error. Although his claims for fraud and “deception and misrepresentation” against Kathleen and KMK Consulting would have been timely, he failed to plead them with the required particularity, as we previously discussed.
VI. Discovery
{39} In his fourth assignment of error, appellant argues that the trial court improperly “sidestep[ped]” discovery in this case and in other, unidentified proceedings. He requests that this court require discovery to be completed in this case. However, appellant cannot challenge here the discovery proceedings from
VII. Dismissal of KMK Consulting
{40} In his fifth assignment of error, appellant argues that the trial court erred when it dismissed his claims against KMK Consulting because it acted as both the “defense lawyer and [the] judge.” “In general, a court may dismiss a complaint on its own motion pursuant to
{41} In his sixth assignment of error, appellant raises a claim for abuse of process against the defendants and the domestic relations court. Appellant makes this argument for the first time on appeal, and as such has waived all but plain error. Appellant, however, failed to invoke the plain-error doctrine on appeal, much less make a showing that plain error occurred below. Under these circumstances, we need not address it. See State v. Gavin, 4th Dist. Scioto No. 13CA3592, 2015-Ohio-2996, ¶ 25, citing State v. Quarterman, 140 Ohio St.3d 464, 2014-Ohio-4034, 19 N.E.3d 900 (an appellate court need not consider plain error where appellant fails to timely raise plain-error claim); State v. Sims, 10th Dist. Franklin No. 14AP-1025, 2016-Ohio-4763, ¶ 11 (appellant cannot meet burden of demonstrating error on appeal when she preserved only plain error and did not argue plain error on appeal); In re A.R., 12th Dist. Butler No. CA2015-08-143, 2016-Ohio-4919, ¶ 33 (appellant is precluded from raising plain error on appeal where he does not argue it in his brief).
{42} Accordingly, we overrule appellant‘s sixth assignment of error.
{43} Even construing the allegations in the complaint in favor of appellant, we find that he can prove no set of facts that would entitle him to relief on any of his claims. The trial court properly granted the motions of Kathleen and Edward Jones and dismissed the claims against KMK Consulting.
{44} Judgment affirmed.
It is ordered that appellees recover from appellant the costs herein taxed.
The court finds there were reasonable grounds for this appeal.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure.
MARY J. BOYLE, ADMINISTRATIVE JUDGE
LARRY A. JONES, SR., J., and MICHELLE J. SHEEHAN, J., CONCUR