RHODODENDRON HOLDINGS, LLC, et al. v. THOMAS BRADLEY HARRIS, et al.
Appellate Case No. 28814
IN THE COURT OF APPEALS OF OHIO SECOND APPELLATE DISTRICT MONTGOMERY COUNTY
January 22, 2021
2021-Ohio-147
HALL, J.
Trial Court Case No. 2017-CV-5825; Civil Appeal from Common Pleas Court
Attorney for Plaintiffs-Appellants
DANIEL J. RUDARY, Atty. Reg. No. 0090482, 75 East Market Street, Akron, Ohio 44308
Attorney for Defendants-Appellees
OPINION
Rendered on the 22nd day of January, 2021.
HALL, J.
{¶ 2} Rhododendron advances four assignments of error. First, it contends the trial court erred in entering summary judgment without first ruling on a pending motion to compel discovery. Second, it claims the trial court erred in entering summary judgment on two counts in the second amended complaint alleging violations of the Ohio Uniform Trade Secrets Act. Third, it argues that the trial court erred in dismissing with prejudice under
{¶ 3} The present appeal stems from Rhododendron‘s 74-page, 15-count second amended complaint filed on April 15, 2019. That complaint raised legal claims against appellees Thomas Bradley Harris, Andrew Rynearson, John Diamond, The Progressive Orthopedic Company, LLC, and Modal Manufacturing Company, LLC. Despite the lengthy complaint, the detailed history set forth in the parties’ briefs, and the existence of thousands of pages of exhibits and depositions, the essential issues of fact and law underlying the present appeal are relatively narrow.
{¶ 5} In order to market its products, NovoSource required “510(k) clearance” from the FDA. That streamlined process involved developing a product from an existing device so that the two products were “substantially equivalent” although not necessarily identical. NovoSource ultimately created two knee implants and two hip implants through the 510(k) process and spent several million dollars developing the underlying intellectual property known as “design-history files.”
{¶ 6} When NovoSource began marketing its devices, SCM was its biggest distributor. Harris subsequently formed The Progressive Orthopedic Company, LLC (“TPOC“) in 2013, and TPOC acquired SCM in its entirety. In addition to his role as NovoSource‘s general counsel, Diamond served as TPOC‘s outside legal counsel. NovoSource continued its business relationship with the combined TPOC/SCM.
{¶ 7} Later in 2013, TPOC/SCM fell behind on payments to NovoSource, causing or contributing to financial distress for NovoSource. Diamond resigned from his role as a NovoSource board member and as the company‘s general counsel in February 2014.
{¶ 8} NovoSource CEO Andrew Cothrel discussed giving Harris the files with NovoSource board chairman Harold Linville, who opposed the idea. While Harris was seeking the design-history files, NovoSource began exploring a sale of the company to salvage some value. In July 2014, healthcare company Cardinal Health agreed to buy NovoSource for $12 million. The proposed transaction needed approval from NovoSource‘s board of directors, which included Harris. It was known that Cardinal Health was not going to use TPOC/SCM as a distributor if the sale occurred. Cothrel feared that Harris might vote to block the sale. Cothrel also knew Harris claimed a right to the NovoSource design-history files under the terms of SCM‘s earlier distributor agreement with NovoSource. Cothrel additionally knew that Cardinal Health viewed Harris’ claimed right to the design-history files as a potentially deal-killing issue.
{¶ 9} Cothrel eventually decided to send Harris NovoSource‘s design-history files on a flash drive. The files were sent to “Brad Harris/The Progressive Orthopedic Company” in North Palm Beach, Florida on August 25, 2014. When he sent the files, Cothrel knew that Harris would not be using them on behalf of NovoSource. Rather, Cothrel knew that Harris wanted the files to help him pursue a post-NovoSource life. According to Cothrel, he and Harris agreed to limitations on Harris’ use of the design-history files. One such restriction was that any product Harris developed could not be
{¶ 10} After receiving the design-history files, Harris used them to pursue TPOC‘s own 510(k) submissions to the FDA. Beginning in September 2014, TPOC began applying to the FDA for 510(k) clearances based on NovoSource‘s knee and hip designs. TPOC‘s applications were identical to NovoSource‘s earlier applications, and the products TPOC later manufactured after obtaining FDA approval were essentially identical to NovoSource‘s products. In January 2015, NovoSource‘s board of directors learned that TPOC had submitted 510(k) applications based on NovoSource‘s designs. At some point, the NovoSource design-history files were transferred from TPOC to Modal Manufacturing Company, LLC, with which Harris also was associated.
{¶ 11} Several months before Cothrel sent Harris the NovoSource design-history files, Rhododendron acquired the notes securing the Dayton Regional Signature Fund‘s $1.12 million loan to NovoSource. In December 2014, Rhododendron sued NovoSource to foreclose on the notes and received a $3 million cognovit judgment. Rhododendron later sought assurances that NovoSource had not allowed TPOC or any other third party to access NovoSource‘s design-history files. Cothrel responded by telling NovoSource‘s counsel to make no representation regarding whether TPOC had access since several former employees could have shared something with Harris. At that time, Cothrel did not disclose to Rhododendron that he had shared the files with Harris. In April 2015,
{¶ 12} By July 2015, NovoSource had ceased to operate and went into receivership. In the summer of 2017, the receiver sold NovoSource‘s assets to Rhododendron in satisfaction of the $3 million cognovit judgment. Rhododendron filed its initial complaint in the above-captioned case in December 2017. Thereafter, Rhododendron filed first and second amended complaints. Portions of the second amended complaint later were voluntarily dismissed. Rhododendron also filed a motion to compel discovery, and the defendants filed a
{¶ 13} On May 15, 2020, the trial court sustained the defendants’ motion for summary judgment and overruled Rhododendron‘s competing motion. In support of its decision, the trial court incorporated by reference and adopted all of the defendants’ summary judgment briefing and arguments. The trial court amended its summary judgment order nunc pro tunc on May 18, 2020 to make clear that it had entered summary judgment on all remaining counts of Rhododendron‘s second amended complaint. The trial court‘s entry of summary judgment included
{¶ 14} In its first assignment of error, Rhododendron challenges the trial court‘s
{¶ 15} The record reflects that Rhododendron moved to compel the production of certain documents on July 30, 2019. Thereafter, the defendants moved for summary judgment in January 2020. The motion to compel remained pending when the trial court sustained the defendants’ summary-judgment motion on May 15, 2020. On appeal, Rhododendron‘s entire substantive argument regarding the motion to compel is as follows: “In failing to rule on Rhododendron‘s Motion to Compel, the trial court denied [Rhododendron] its procedural due process rights. Rhododendron was denied the opportunity to explore a critical issue in the case and the opportunity to obtain perhaps dispositive discovery materials. Consequently, the trial court‘s omission constitutes reversible error.” (Appellant‘s Brief at 14.)
{¶ 16} We find Rhododendron‘s argument to be unpersuasive. “When a trial court enters summary judgment without expressly determining a pending motion, the motion impliedly is denied. * * * Where the pending motion is a motion to compel, the party opposing summary judgment must seek a delay of the trial court‘s ruling pursuant to
{¶ 17} Here Rhododendron has not identified anywhere in the record where it sought a delay under
{¶ 18} In its second assignment of error, Rhododendron contends the trial court erred in entering summary judgment against it on counts three and four of the second amended complaint. These counts alleged violations of the Ohio Uniform Trade Secrets Act,
{¶ 19} Rhododendron advances six arguments under its second assignment of error. First, it contends the trial court engaged in impermissible fact-finding and failed to apply
{¶ 20} We begin our analysis with the language of the Ohio Uniform Trade Secrets Act,
(D) “Trade secret” means information, including the whole or any portion or phase of any scientific or technical information, design, process, procedure, formula, pattern, compilation, program, device, method, technique, or improvement, or any business information or plans, financial information, or listing of names, addresses, or telephone numbers, that satisfies both of the following:
(1) It derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.
(2) It is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
{¶ 21} The trade-secrets act defines “misappropriation” as any of the following:
(1) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means;
(2) Disclosure or use of a trade secret of another without the express or implied consent of the other person by a person who did any of the following:
(a) Used improper means to acquire knowledge of the trade secret;
(b) At the time of disclosure or use, knew or had reason to know that the knowledge of the trade secret that the person acquired was derived from
or through a person who had utilized improper means to acquire it, was acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use, or was derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use;
(c) Before a material change of their position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.
{¶ 22} The trial court disposed of Rhododendron‘s complaint by entering summary judgment in favor of the defendants-appellees. We review a trial court‘s ruling on a summary-judgment motion de novo. Schroeder v. Henness, 2d Dist. Miami No. 2012-CA-18, 2013-Ohio-2767, ¶ 42. Under
{¶ 23} In its first argument under the second assignment of error, Rhododendron contends the trial court engaged in impermissible fact-finding when it adopted and incorporated by reference the entirety of the appellees’ summary judgment filings. Rhododendron notes that summary judgment motions themselves are not “evidence.” Rhododendron argues that the trial court could not have adopted the appellees’ legal arguments as its own without also adopting the appellees’ version of the facts and construing those facts in favor of the appellees. To the extent that the trial court did so,
{¶ 24} Upon review, we find the foregoing argument to be unpersuasive. As an initial matter, the trial court‘s act of entering summary judgment by adopting the appellees’ entire summary judgment filings is not particularly helpful. But it also does not constitute per se reversible error. We have recognized that a trial court is not required to issue findings of fact or conclusions of law when ruling on a summary judgment motion. Huber v. Mues, 2d Dist. Montgomery No. 2011-CA-75, 2012-Ohio-2540, ¶ 8-9. In Huber, we affirmed the trial court‘s entry of summary judgment where, as here, it adopted the reasoning in the appellee‘s summary judgment memorandum.
{¶ 25} We note too that the trial court did make limited findings to explain why it granted the appellees summary judgment on counts three and four of the second amended complaint. These findings were sufficient to facilitate appellate review. In particular, the trial court reasoned:
Counts III and IV of Plaintiff‘s Second Amended Complaint for violation of Ohio‘s Uniform Trade Secrets Act are HEREBY DISMISSED WITH PREJUDICE because NovoSource voluntarily disclosed its design history files to Harris/TPOC thereby destroying any trade secret protection that might otherwise have existed; NovoSource‘s purported efforts to maintain secrecy of its design history files are objectively unreasonable in light of voluntarily providing those files to Harris/TPOC for their own use; Plaintiff‘s OUTSA claim against Rynearson is unsupported by any credible evidence that Rynearson acquired or disclosed the design history files with any knowledge that they were acquired by improper means; Plaintiff‘s
OUTSA claim against Diamond is unsupported by any evidence that Diamond acquired or disclosed any of NovoSource‘s purported trade secrets and, in any event, the claim is time-barred.
(May 15, 2020 Order at 2.)
{¶ 26} As for whether the trial court erred in adopting the appellees’ arguments, resolution of that issue depends on whether those arguments were predicated on undisputed material facts. Under its first argument, Rhododendron asserts in the abstract that genuine issues of material fact exist. But it does not identify any particular factual dispute that the trial court overlooked. Consequently, we will proceed to Rhododendron‘s remaining arguments, which are more specific.
{¶ 27} Rhododendron‘s second argument challenges the trial court‘s finding that NovoSource‘s voluntary disclosure of its design-history files to Harris/TPOC destroyed trade-secret protection that otherwise existed. Construing the evidence most strongly in its favor, Rhododendron argues that the limited, one-time disclosure occurring in this case did not destroy the trade-secret status of the design-history files or, at a minimum, that a genuine issue of material fact exists. For their part, the appellees insist that NovoSource‘s disclosure to Harris for his own benefit did destroy trade-secret protection for the design-history files as a matter of law.
{¶ 28} Upon review, we find this aspect of Rhododendron‘s argument to be persuasive. As a threshold matter, we agree with Rhododendron that a trier of fact could find that NovoSource‘s design-history files at least initially qualified as a “trade secret” under
{¶ 29} We see no genuine issue of material fact as to whether Cothrel voluntarily disclosed the design-history files to Harris, and Harris likewise did not improperly acquire them as a matter of law. Indeed, Cothrel‘s own deposition established that he elected to give Harris the files to help Harris “advance his post-NovoSource life” and “get started charting his own destiny away from NovoSource.” (Cothrel depo. at 232, 236.) We note, however, that
{¶ 30} The foregoing analysis leads directly into Rhododendron‘s third argument, which lies at the heart of the parties’ dispute. Rhododendron contends the design-history files retained trade-secret protection because Harris was restricted or limited in his use of
{¶ 31} To resolve Rhododendron‘s argument, we turn first to
{¶ 32} In their motion for summary judgment, which the trial court adopted in full, the appellees claimed that Cothrel voluntarily sent Harris the design-history files “without any restriction on their use.” On appeal, Rhododendron challenges this adopted finding by the trial court. Rhododendron argues that a duty to maintain secrecy arose through a fiduciary duty Harris owed to NovoSource based on his status as a member of its board of directors. We note, however, that Cothrel did not sent the files to Harris for use in his capacity as a member of NovoSource‘s board. Cothrel knew that Harris would not be using the files on behalf of NovoSource. To the contrary, Cothrel admittedly sent the files because he knew Harris’ company, TPOC, was about to lose its status as a distributor for NovoSource, and he wanted to help Harris start a “post-NovoSource life.” In light of Cothrel‘s decision to send the files knowing that Harris would not use them in his capacity as a NovoSource director, we see no genuine issue of material fact as to whether Harris’ fiduciary relationship with NovoSource imposed a duty of secrecy.
{¶ 34} In our view, the only real issue is whether a trier of fact could find that Harris misappropriated the design-history files by exceeding the scope of use to which he and Cothrel purportedly had agreed. As set forth above, misappropriation under
{¶ 35} In its appellate brief, Rhododendron cites evidence establishing a genuine issue of material fact as to whether Cothrel and Harris had agreed to limitations on Harris’ use of the design-history files and whether Harris exceeded those limitations. In his deposition, Cothrel claimed the purpose of his disclosure was to enable Harris to use the “template” of the design-history files “to get things in motion.” According to Cothrel, Harris was “incapable of handling design development and progression through the regulatory traps of an orthopedic implant.” (Cothrel depo. at 226, 235.) That being so, Cothrel sent Harris the files “to communicate to [Harris] that this is what [a 510(k)] looks like, this is the package you have to put together. This is the testing you have to do. This is what a design-history file looks like.” (Id. at 224.)
{¶ 36} Cothrel explained that he never intended for Harris to use NovoSource‘s design-history files to submit a “mirrored 510(k)” to the FDA for products essentially identical to NovoSource‘s. Moreover, Cothrel testified that Harris understood and agreed that he was only permitted to pursue non-identical products that were not based on a mirrored 510(k). (Id. at 223-224, 227.) Based on conversations with Harris leading up to Cothrel‘s disclosure of the design-history files, it “never entered [Cothrel‘s] mind” that
{¶ 37} Viewed most strongly in Rhododendron‘s favor, the evidence concerning Harris’ use of NovoSource‘s design-history files establishes a genuine issue of material fact as to whether he misappropriated a trade secret under
{¶ 38} In its fourth argument, Rhododendron contends the trial court erred in overruling its own summary judgment motion. In the course of its argument, Rhododendron suggests that the trial court improperly resolved genuine issues of material fact. At the same time, however, Rhododendron claims it was entitled to judgment as a matter of law because the record demonstrates conclusively that there was no waiver of trade-secret protection when Cothrel disclosed NovoSource‘s design-history files to Harris.
{¶ 39} We find Rhododendron‘s fourth argument to be unpersuasive for at least
{¶ 40} In its fifth argument, Rhododendron contends the trial court erred in entering summary judgment in favor of appellees Andrew Rynearson and Jack Diamond on count four of the second amended complaint. In particular, Rhododendron argues the existence of a genuine issue of material fact as to whether Rynearson and Diamond misappropriated NovoSource‘s design-history files through their improper “use” of the files.
{¶ 41} With regard to Rynearson, the second amended complaint named him as a defendant only “in his capacity as Director of Engineering for The Progressive Orthopedic Company, LLC and Modal Manufacturing Company, LLC.” (April 15, 2019 Second Amended Complaint at caption.) Count four alleged that Rynearson was a senior product development engineer at a company identified as “IDMS” when he signed engineering and testing reports submitted to the FDA in connection with Harris’ mirrored 510(k) submission. Count four also alleged that Rynearson knew or should have known that the NovoSource IP included in TPOC‘s 510(k) submissions, which included his prior work for NovoSource, was acquired by improper means. Count four further alleged that Rynearson
{¶ 42} Upon review, we see no error in the trial court‘s entry of summary judgment in favor of Rynearson. Because he was sued in his corporate capacity as director of engineering for TPOC and a related company, Modal, the sole basis for imputing liability to him was by way of his employment with one of those companies. In the proceedings below, however, Rynearson averred that he never had been employed by Modal and that he was not employed by TPOC until January 2015. Thus, according to Rynearson‘s affidavit, he was not an employee of TPOC when Cothrel gave Harris NovoSource‘s design-history files in August 2014 or when those files were submitted to the FDA (i.e., “used” by Harris/TPOC) later that year.
{¶ 43} Based on evidence of Rynearson‘s use of both personal and work e-mail accounts around the time of his employment, Rhododendron suggests on appeal that he may have worked for TPOC prior to January 2015. (Appellant‘s Brief at 28-30.) Having reviewed Rynearson‘s entire deposition, including his discussion of his personal and work email use, we fail to see how it supports a reasonable inference that he was employed by TPOC prior to January 2015. (See, e.g., Rynearson December 6, 2019 depo. at 14-15, 178, 190-193.) Rhododendron also asserts that Rynearson failed to comply with a discovery request to search his personal email for additional relevant evidence. Assuming that this is true, it does not support a reasonable inference that such a search would have
{¶ 44} In any event, regardless of Rynearson‘s employment date, we see no basis for a claim against him on the theory that he knew or should have known NovoSource‘s design-history files had been acquired by improper means, as alleged in count four. As set forth above, Harris did not acquire the design-history files by improper means. Cothrel voluntarily gave Harris the files. The only real question is whether Harris exceeded the scope of his permissible use of the files in contravention of a purported oral agreement he had with Cothrel. Although we have found a genuine issue of material fact as to whether Harris misappropriated the design-history files by using them improperly, we see no evidence that Rynearson knew or should have known of any use restrictions imposed by an oral agreement between Cothrel and Harris.
{¶ 45} In his deposition, Rynearson testified Harris already had filed 510(k) applications with the FDA long before Rynearson began his employment with TPOC. After Rynearson started working at TPOC, Harris repeatedly told him the company was contractually entitled to use NovoSource‘s design-history files for the 510(k)s once NovoSource ceased being able to supply TPOC with inventory. (Rynearson December 6, 2019 depo. at 84-89, 170-172, 221, 246.) Rynearson did not question that explanation, which was outside the scope of his engineering work. (Id. at 173.)
{¶ 46} On appeal, Rhododendron claims a genuine issue of material fact exists
{¶ 47} Smith‘s recollection is consistent with what Rynearson stated in his own deposition. (See, e.g., Rynearson December 13, 2019 depo. at 13-14.) Rhododendron claims the fact that multiple FDA reviewers asked questions about the presence of NovoSource materials in the applications should have caused Rynearson to know that the design-history files had been acquired through improper means. In our view, this is not a reasonable inference for at least three reasons. First, the design-history files were not “acquired” through improper means. Second, Rynearson‘s response to the questions apparently satisfied the FDA. Third, we see nothing in the FDA‘s general inquiries that should have made Rynearson aware of Harris exceeding the scope of an oral agreement Harris purportedly had with Cothrel. Even construing the evidence in a light most
{¶ 48} Rhododendron also suggests that Rynearson‘s responses to the FDA‘s inquires “changed” over time. But the record does not support a finding that his responses changed in a meaningful way. Rhododendron cites one reference to a breach of contract by NovoSource and another reference to NovoSource being insolvent. Of course, insolvency by NovoSource is a logical reason for its inability to supply TPOC with inventory in breach of a contract between the companies. In fact, that is precisely what was discussed during Rynearson‘s deposition. He was asked about an explanation to the FDA involving “NovoSource filing for insolvency and thus having an inability to fulfil its obligation.” (Rynearson December 6, 2019 depo. at 245.) Based on our review of the record, we see no error in the trial court‘s entry of summary judgment in favor of Rynearson.
{¶ 49} Under its fifth argument, Rhododendron challenges the trial court‘s entry of summary judgment for Jack Diamond. As with its argument regarding Rynearson, Rhododendron claims a genuine issue of material fact exists as to whether Diamond “used” NovoSource‘s design-history files while having reason to know that Harris had misappropriated them. (Appellant‘s Brief at 31.) Rhododendron argues at length that Diamond made substantial investments in TPOC and Modal Manufacturing, a company affiliated with Harris and TPOC, and eventually obtained the 510(k) clearances from TPOC. Rhododendron also asserts that Diamond, an attorney, advised Harris and TPOC in the dispute with NovoSource and positioned TPOC‘s interests against NovoSource both before and after resigning as NovoSource‘s general counsel.
{¶ 51} In the sixth argument under its second assignment of error, Rhododendron contends genuine issues of material fact exist as to whether the trade-secret misappropriation claim against Diamond was barred by the applicable statute of limitation. This argument is moot in light of our determination that the trial court properly entered summary judgment for Diamond on the merits of that claim.
{¶ 52} Based on the reasoning set forth above, Rhododendron‘s second assignment of error is sustained in part and overruled in part. The assignment of error is sustained insofar as we have found a genuine issue of material fact as to whether Harris misappropriated a trade secret under
{¶ 54} Rhododendron notes that the trial court dismissed the claims for lack of standing based on arguments raised by the appellees in a prior
{¶ 55} Upon review, we find Rhododendron‘s arguments to be unpersuasive. In count nine of the second amended complaint, Rhododendron asserted a breach of contract claim against SCM and TPOC. Rhododendron brought the claim as assignee and successor in interest to the rights of NovoSource. Count nine alleged that SCM/TPOC had breached the terms of a contractual “Forbearance Agreement” with NovoSource by failing to make certain required monthly payments. Count ten of the second amended complaint asserted a breach of contract claim against Harris and TPOC. Rhododendron again brought the claim as assignee and successor in interest to the rights of NovoSource. Count ten alleged that Harris and TPOC had breached a contractual non-disclosure agreement with NovoSource by disclosing trade secrets.
{¶ 56} On May 10, 2019, the appellees moved to dismiss counts nine and ten pursuant to
{¶ 57} The May 10, 2019 motion to dismiss remained pending when the appellees moved for summary judgment on January 21, 2020. The appellees specifically sought summary judgment on counts nine and ten, once again arguing that Rhododendron lacked standing to enforce the contracts because (1) Rhododendron was not a party to the contracts and (2) Rhododendron‘s acquisition of NovoSource‘s assets explicitly excluded any and all contracts to which NovoSource was a party.
{¶ 58} On May 15, 2020, the trial court filed an order entering summary judgment in favor of the appellees. In so doing, the trial court specifically adopted and incorporated by reference “the authority, analysis, and evidentiary materials” contained in the appellees’ motion for summary judgment, which included the argument that Rhododendron lacked standing to enforce the contracts at issue.
{¶ 59} In light of the foregoing, we reject Rhododendron‘s argument that the trial court improperly converted the appellees’ motion to dismiss into a motion for summary judgment. The appellees separately filed a motion to dismiss and a motion for summary judgment. Both motions raised the issue of Rhododendron‘s lack of standing to enforce the contracts. In its May 15, 2020 order, the trial court made clear that it was resolving the standing issue by ruling on the appellees’ summary-judgment motion. Contrary to Rhododendron‘s assertion on appeal, we see no reason why a lack of contractual
{¶ 60} We also reject Rhododendron‘s argument that the trial court‘s dismissal for lack of contractual standing should have been without prejudice. Rhododendron‘s argument is premised on the notion that a dismissal for lack of standing under
{¶ 61} Rhododendron cites A-1 Nursing Care of Cleveland, Inc. v. Florence Nightingale Nursing, Inc., 97 Ohio App. 3d 623, 647 N.E.2d 222 (8th Dist.1994) for the proposition that a
{¶ 62} In the present case, however, we are unpersuaded that whether Rhododendron could sue for breach of contract involved a jurisdictional question. Unlike jurisdictional standing, contractual standing ” ‘is assessed in conjunction with the merits of the claim, not as a threshold issue.’ ” U.S. Bank Natl. Assn. for Registered Holders of GE Commercial Mtge. Corp., Commercial Mtge. Pass-Through Certificates, Series 2006-C1 v. Courthouse Crossing Acquisitions, LLC, 2017-Ohio-9231, 101 N.E.3d 1243, ¶ 41
{¶ 63} Finally, Rhododendron contends a genuine issue of material fact exists as to whether it could sue for breach of contract. We disagree. Rhododendron purchased most of NovoSource‘s assets in 2017. The transaction resulted in the creation of a Fiduciary Bill of Sale dated August 23, 2017. (Exhibit 1 to Rhododendron‘s Second Amended Complaint.) That document specifically identified which NovoSource assets Rhododendron was purchasing. “Acquired Assets” included, among other things, “all pending legal claims of the Company (whether pending or otherwise), claims, refunds, causes of action, choses in action and rights of recovery with respect to the ‘Business, Acquired Assets and Assumed Liabilities.‘” (Id.) The Fiduciary Bill of Sale expressly stated, however, that “Acquired Assets” “shall not include any Excluded Assets.” The Bill of Sale then specified that among the Excluded Assets were “each and every Contract to which the Company is a party or by which it is, or the Business of the Company or any of the Acquired Assets are, bound.” (Emphasis added.) (Id.)
{¶ 65} In opposition to our conclusion, Rhododendron cites an affidavit from NovoSource receiver Myron Terlecky attached to its own competing summary judgment motion. Thereon, Terlecky avers: “When executing the Fiduciary Bill of Sale and Intellectual Property Assignment as Receiver for NovoSource, Inc., it was understood and intended that Rhododendron Holdings, LLC was assigned all legal claims and rights of recovery that belonged to NovoSource, Inc., including claims for breach of contract.” (Terlecky affidavit at paragraph 20, filed on January 21, 2020.) But regardless of Terlecky‘s intent and belief, Rhododendron could not have been assigned NovoSource‘s legal claims for breach of contract because all contracts to which NovoSource was a party were explicitly excluded from the transaction. Terlecky‘s averment fails to create a genuine issue of material fact as it is contrary to the language of the Fiduciary Bill of Sale
{¶ 66} In its fourth assignment of error, Rhododendron contends the trial court erred in dismissing with prejudice counts one, two, and fourteen of the second amended complaint pursuant to
{¶ 67} Rhododendron argues that the appellees did not seek summary judgment on counts one, two, and fourteen. Instead, Rhododendron asserts that the appellees moved for dismissal of those counts under
{¶ 68} Rhododendron‘s real complaint appears to be that the appellees’ summary-judgment motion partially incorporated by reference arguments made in their earlier motion to dismiss counts one, two, and fourteen. But the act of incorporating by reference arguments made in a prior motion to dismiss did not “convert” the motion to dismiss into one for summary judgment. We note too that Rhododendron engaged in the same
{¶ 69} Having sustained a portion of Rhododendron‘s second assignment of error, we affirm in part and reverse in part the judgment of the Montgomery County Common Pleas Court and remand the case for further proceedings consistent with this opinion.
TUCKER, P.J. and FROELICH, J., concur.
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