Pugh v. Capital One Bank USA N.A.Pugh v. Capital One Bank USA N.A.
CALLAHAN, Presiding Judge.
{¶1} Appellant, James Pugh, appeals from the judgment of the Lorain County Court of Common Pleas dismissing his complaint for failure to state a claim. For the reasons set forth below, this Court affirms.
I.
{¶2} Mr. Pugh filed a “Complaint in Equity for a Judicial Composition Agreement” wherein he sought to adjust his debts against thirty of his creditors via a “judicial composition agreement.” Mr. Pugh conceded he owed the debt, but claimed he was insolvent and offered to pay twenty-percent of the total debt. Mr. Pugh demanded a “lawful Judicial Composition Agreement be formulated, declared and ordered by the [c]ourt and that such judgment against Defendants be issued[.]”
{¶3} Three of the defendant creditors, LNVN Funding, LLC (“LNVN“), Citibank, N.A. (“Citibank“), and Midland Credit Management, Inc. (“Midland“) filed answers. Citibank also
{¶4} Thereafter, Mr. Pugh voluntarily dismissed two defendant creditors, Midland and Synchrony Bank Care Credit Pref. Dental, and filed a notice of acceptance of a compromise agreement with a third defendant creditor, Capital One Bank, USA. As to the remaining defendant creditors, Mr. Pugh filed a motion for judgment on the pleadings which was denied. Mr. Pugh then filed a motion for summary judgment. The trial court did not rule on this motion. Instead, the trial court gave Mr. Pugh notice of its intent to consider a dismissal for failure to state a claim and set a deadline for Mr. Pugh to file a brief in support of his complaint. In response, Mr. Pugh filed a supplemental motion for summary judgment. Thereafter, the trial court dismissed Ms. Pugh‘s complaint for failure to state a claim.
{¶5} Mr. Pugh timely appealed, asserting one assignment of error.
II.
ASSIGNMENT OF ERROR
THE TRIAL COURT COMMITTED PREJUDICIAL ERROR WHEN IT DISMISSED THE PLAINTIFF‘S CASE ON ITS OWN MOTION UNDER
CIV.R. 12(B)(6) AND IN DENYING AND FAILING TO GRANT PLAINTIFF‘S MOTION FOR JUDGMENT ON THE PLEADINGS (FILED 1/22/2019), PLAINTIFF‘S MOTION FOR SUMMARY JUDGMENT (FILED 4/02/2019) OR PLAINTIFF‘S SUPPLEMENTAL MOTION FOR SUMMARY JUDGMENT (FILED 3/27/2020)[.] THE TRIAL COURT COMMITTED PREJUDICIAL ERROR BY DISMISSING THE CASE AND IN ITS DENIAL OF [MR.] PUGH ACCESS TO THE [C]OURT. [MR.] PUGH WAS WRONGFULLY DENIED ACCESS TO THE COURT AND WRONGFULLY DENIED EQUITABLE RELIEF AND AN EQUITABLE ORDER AND JUDGMENT THAT HE SOUGHT FOR HIS REHABILITATION FROM THE TRIAL COURT.
{¶7} A motion to dismiss pursuant to
{¶8} In his brief, Mr. Pugh acknowledges that the trial court dismissed his complaint for failure to state a claim, but he “[b]elieve[s]” the dismissal was “more akin to a
{¶9} Mr. Pugh‘s argument involves two of the three recognized types of jurisdiction: “subject matter jurisdiction” and “jurisdiction over the particular case.” See State v. Parker, 95 Ohio St.3d 524, 2002-Ohio-2833, ¶ 22 (Cook, J., dissenting), citing State v. Swiger, 125 Ohio App.3d 456, 462 (9th Dist.1998). The Ohio Supreme Court has recognized that “[t]here is a distinction between a court that lacks subject-matter jurisdiction over a case and a court that improperly exercises that subject-matter jurisdiction once conferred upon it.” Pratts v. Hurley, 102 Ohio St.3d 81, 2004-Ohio-1980, ¶ 10.
{¶10} Subject matter jurisdiction refers to the power of a court to hear and decide a case on the merits. State ex rel. Tubbs Jones v. Suster, 84 Ohio St.3d 70, 75 (1998), citing Morrison v. Steiner, 32 Ohio St.2d 86 (1972), paragraph one of the syllabus. “A complaint may only be dismissed under
{¶11} The Ohio Supreme Court “has long held that the court of common pleas is a court of general jurisdiction, with subject-matter jurisdiction that extends to ‘all matters at law and in
{¶12} “The term ‘jurisdiction’ is also used when referring to a court‘s exercise of its jurisdiction over a particular case.” Pratts, 102 Ohio St.3d 81, 2004-Ohio-1980, at ¶ 12. Jurisdiction over the particular case involves the authority of the trial court “‘“‘to determine a specific case within that class of cases that is within its subject matter jurisdiction.‘“’ ” Id., quoting Parker, 95 Ohio St.3d 524, 2002-Ohio-2833, at ¶ 22 (Cook, J., dissenting), quoting Swiger at 462.
{¶13} Mr. Pugh‘s argument that the trial court refused and failed to exercise its equitable jurisdiction when it dismissed his complaint refers to the trial court‘s exercise of its jurisdiction over the particular case. See Pratts at ¶ 12. “‘To bring a cause within the jurisdiction of a court of equity, it is requisite that the primary right involved be an equitable right as distinguished from a legal right, or that the remedy at law as to the right involved is not full, adequate and complete.‘” Bd. of Edn. of the N. Olmsted City School Dist. v. Bd. of Edn. of the Cleveland Mun. School Dist., 108 Ohio St.3d 479, 2006-Ohio-1504, ¶ 51 (Lundberg Stratton, J., dissenting), quoting State ex rel. Lien v. House, 144 Ohio St. 238, 244 (1944), citing 30 Corpus Juris Secundum, Equity, Section
{¶14} In his complaint, Mr. Pugh asserted a single claim based in equity for the adjustment of his debts via a judicial composition agreement. Mr. Pugh identified thirty defendant creditors who had made demands to him for the payment of his debts and the amount owed to each creditor. Mr. Pugh admitted that he owed the debts totaling $14,700.05. Mr. Pugh alleged that he had insufficient non-exempt assets to pay the sums due and that he was judgment proof. In the complaint, Mr. Pugh made an “offer” to the defendant creditors of “a twenty (20%) compromise or composition” of their claimed debt to be paid monthly over a period of three years. Based upon these averments, Mr. Pugh demanded a “lawful Judicial Composition Agreement be formulated, declared and ordered by the [c]ourt and that such judgment against Defendants be issued[.]”
{¶15} Mr. Pugh argues that his complaint is premised upon the Ohio Supreme Court‘s decision in J. T. Way & Co. v. S. T. & R. Langley, 15 Ohio St. 392 (1864). Mr. Pugh claims that J. T. Way & Co. “validated” the law in Ohio that an embarrassed debtor could have his debts adjusted and may seek a composition agreement made in good faith. Mr. Pugh concludes that the law expressed in J. T. Way & Co. provides him, as an embarrassed debtor, an equitable right to have his debts adjusted pursuant to a “judicially ordered composition agreement” regardless of his creditors’ objections. Mr. Pugh‘s reliance upon J. T. Way & Co. is misplaced because it is factually distinguishable from the instant matter and Mr. Pugh has misconstrued J. T. Way & Co.
{¶16} In J. T. Way & Co., the embarrassed debtors and their creditors had entered into and completed a composition agreement prior to the suit being filed. Id. at 397. The debtors in J. T. Way & Co. relied upon the composition agreement to argue that subsequent promissory notes
{¶17} Unlike the debtors and creditors in J. T. Way & Co., Mr. Pugh and his creditors have not entered into a composition agreement. Nor does Mr. Pugh seek to invalidate another instrument based upon the validity and binding effect of an existing composition agreement. Rather, Mr. Pugh demands, based upon the authority of J. T. Way & Co., that the trial court create and order a judicial composition agreement between himself and his creditors that is based upon his offer to compromise contained in the complaint. Contrary to Mr. Pugh‘s position, J. T. Way & Co. did not address the equitable right of an embarrassed debtor to adjust his debt via a judicial composition agreement. Accordingly, J. T. Way & Co. does not support the equitable right asserted by Mr. Pugh in his complaint.
{¶18} In his appellate brief, Mr. Pugh explains that his complaint sought to have the trial court recognize his “embarrassed circumstances, his exemptions under law, a lack of recoverable assets, and his reasonably asking [the trial court] to approve the structure of a proposed repayment plan proposed in good faith invoking the equitable jurisdiction of [the trial court] and seeking an order for an equitable judicial composition compromising his debt.” Other than J. T. Way & Co., Mr. Pugh provides no other law in support of his claimed equitable right. Nor does Mr. Pugh cite to any statutory or constitutional provision providing for such an equitable right.
{¶20} Mr. Pugh analogizes that because the probate court adjusts the debts of “‘dead people[,]‘” “[s]urely living humans can * * * receive absolution of debt” in the trial court. We do not agree that the actions of the probate court are of a similar nature as those being asserted by Mr. Pugh in this case. The probate court does not order the estate‘s creditors to accept a percentage of the claims owed based upon a good faith offer from the administrator of the estate to compromise the debt. Rather, the probate court, after a hearing, confirms or disapproves the administrator‘s classification and allowance of claims.
{¶22} Mr. Pugh‘s request for a judicial composition agreement to adjust his debts also fails to state a claim upon which relief can be granted because it contradicts the courts’ equity powers in relation to contracts, usurps the fundamental right of the freedom to contract, and violates and supplants the common law right of debtors and creditors to enter into a composition agreement.
{¶23} A composition agreement, as the words suggests, is an agreement or contract between a debtor and two or more of his creditors wherein the creditors agree to accept as full satisfaction of the debt an amount less than the full amount due:
A composition with creditors is generally defined as an agreement between an insolvent or embarrassed debtor and the debtor‘s creditors under which the creditors for some consideration, such as an immediate payment, agree to accept payment of less than the whole amount owing in full satisfaction of their respective claims.
24 Ohio Jurisprudence 3d, Creditors’ Rights, Section 506 (Feb. 2021 Update). See Columbus Concrete Constr. Co., Inc. v. Ross, 10th Dist. Franklin No. 86AP-441, 1986 WL 15181, *4 (Dec. 30, 1986). See also 15B American Jurisprudence 2d, Composition with Creditors, Section 1 (Feb. 2021 Update) (recognizing a composition agreement under the common law theories of contract); 21 Corpus Juris Secundum, Creditor and Debtor, Section 88 (Mar. 2021 Update). Because it is a
{¶24} Mr. Pugh, however, seeks a judicial composition agreement. Mr. Pugh has not provided any legal authority, nor has this Court found any, defining or explaining what a judicial composition agreement is. Mr. Pugh‘s complaint provides some insight as to what he proposes to be a judicial composition agreement.
{¶25} In his complaint, Mr. Pugh made an offer to his creditors to compromise his debt. Mr. Pugh stated that he was “seeking [a composition] agreement for an order for an equitable composition agreement” wherein he would pay the amount offered in the complaint and each creditor would “be paid upon acceptance of the judicial compromise offer as set forth” in the complaint. Mr. Pugh‘s complaint also proposed the scope and substance of his obligations and rights under the “judicially ordered composition agreement.” He demanded “a lawful Judicial Composition Agreement be formulated, declared and ordered by the [trial court] and that such judgment against [the creditors] be issued[,]” and that the original debt owed by Mr. Pugh and any claims by the creditors be “discharged, declared satisfied and terminated[.]”
{¶27} “A court of equity will not undertake to make a contract for the parties[.]” Pater v. Schumaker, 21 Ohio App. 528, 531 (1st Dist.1926). See Liberal S. & L. Co. v. Frankel Realty Co., 137 Ohio St. 489, 500 (1940) (“[E]quity does not * * * make a new contract for the parties.“). See, e.g., Nordlinger v. Libow, 136 Misc. 438, 240 N.Y.S. 193 (1930) (Finding there was no composition agreement made by the parties, the court held “[i]t is not for the court to make a composition agreement or any other agreement.“). See generally Smitt v. Aultman & Taylor Co., 28 Ohio C.D. 46, 54, 38 Ohio C.C. 46, 25 Ohio C.C.(N.S.) 561, 1916 WL 914 (5th Dist.1916) (Recognizing the plain provision in the contract, the court held that “equity does not permit courts to make other or change plain provisions of a contract.“); Mitchell v. Aetna Ins. Co., 6 Ohio Dec. 420, 428 (C.P.1897) (In relation to a request for reformation of a contract, the court recognized when there is no meeting of the minds, there is no contract and “[c]ourts do not make contracts; they only enforce them when justice and equity require it.“). Moreover, there is a recognized deep-seated right to the freedom to contract. Cincinnati City School Dist. Bd. of Edn. v. Conners, 132 Ohio St.3d 468, 2012-Ohio-2447, ¶ 15. See Sec. Savs. Assn. of Dayton v. DeWeese, 12 Ohio Law Abs. 565, 567, 1932 WL 2375 (2d Dist.1932), rev‘d on other grounds 126 Ohio St. 480 (1933) (“The law favors the right of contract.“). Mr. Pugh‘s claim for a judicial composition agreement is essentially a contract made by the court which is prohibited in equity. Additionally, a contract made by the court would erode the parties’ fundamental right to freely contract.
{¶29} Upon review of Mr. Pugh‘s complaint and the attachments thereto, and presuming all factual allegations as true and construing the reasonable inferences in Mr. Pugh‘s favor, Mr. Pugh has failed to state a claim upon which relief can be granted under equity. Accordingly, we conclude that the trial court did not err in dismissing Mr. Pugh‘s complaint pursuant to
{¶30} Mr. Pugh also claims that by dismissing his complaint and not exercising its equity jurisdiction, the trial court denied him his constitutional right to open courts pursuant to the Ohio Constitution, Section 16, Article I. Mr. Pugh argues that the open courts provision “mandates” that the trial court “accept [his] complaint for equitable relief and grant him an equitable relief as prayed for in his complaint[.]”
{¶31}
{¶32} Based upon our disposition above, Mr. Pugh failed to state a claim upon which relief can be granted. Because Mr. Pugh has failed to satisfy the threshold issue of asserting a cognizable claim that is entitled to a remedy, we conclude that Mr. Pugh was not denied his constitutional rights under
{¶33} Lastly, we note that Mr. Pugh‘s stated assignment of error also references the trial court‘s alleged error in failing to grant his motion for judgment on the pleadings, motion for summary judgment, and supplemental motion for summary judgment. Notably, Mr. Pugh does not challenge the trial court‘s judgments granting LNVN‘s motion for judgment on the pleadings
{¶34} Based upon our conclusion that the trial court did not err in dismissing Mr. Pugh‘s complaint for failure to state a claim upon which relief can be granted, Mr. Pugh was not entitled to judgment on the pleadings. See King v. Stump, 4th Dist. Ross No. 97CA2349, 1998 WL 903494, *1-2, 4 (Dec. 28, 1998) (Based upon the trial court‘s sua sponte dismissal of plaintiff‘s complaint as being “fatally defective on its face, [the plaintiff] was not entitled to judgment on the pleadings.“). Additionally, Mr. Pugh‘s pending motions for summary judgment and supplemental summary judgment became moot when the trial court, on its own motion, dismissed Mr. Pugh‘s complaint for failure to state a claim. See Parker v. Mausser, 10th Dist. Franklin No. 18AP-137, 2018-Ohio-4296, ¶ 10-13, 24, 26 (The plaintiff‘s pending motions for summary judgment and default judgment were rendered moot when the trial court, on its own motion, dismissed the plaintiff‘s complaint for failure to state a claim.). Accordingly, we conclude that the trial court did not err in denying each of Mr. Pugh‘s motions.
{¶35} Mr. Pugh‘s assignment of error is overruled.
III.
{¶36} Mr. Pugh‘s sole assignment of error is overruled. The judgment of the Lorain County Court of Common Pleas is affirmed.
Judgment affirmed.
There were reasonable grounds for this appeal.
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.
LYNNE S. CALLAHAN
FOR THE COURT
HENSAL, J.
TEODOSIO, J.
CONCUR.
APPEARANCES:
ROBERT J. GARGASZ, Attorney at Law, for Appellant.
ANTHONY J. HUSPASKA and ROBERT LEE HENGGE, Attorneys at Law, for Appellee.