Rutledge v. LilleyRutledge v. Lilley
Dated: May 24, 2010
WHITMORE, Judge.
{¶1} Plaintiff-Appellant, Tina Rutledge, appeals from the judgment of the Lorain County Court of Common Pleas, granting summary judgment in favor of Defendant-Appellee, Britt Lilley. This Court affirms.
I
{¶2} Coral J. Abraham created a trust on September 27, 1999, naming herself as trustee and her children, Lilley and Leslie Dunfee, as successor co-trustees. Abraham died on May 2, 2000, and Lilley and Dunfee assumed their respective roles as co-trustees. Pursuant to the terms of the trust, Rutledge was to be paid $100,000. Both parties agree, however, that “the trust had insufficient liquid funds to distribute to Rutledge at the time of Abraham‘s death” due to the estate‘s potential tax liability. As such, Rutledge‘s distribution was delayed. Lilley and Dunfee ultimately distributed all $100,000 to Rutledge, paying her the following amounts on the
{¶3} Before Rutledge received her final $85,000 distribution, she filed suit against Lilley and Dunfee on February 26, 2004, seeking the remainder of her bequest and interest at the statutory rate. After Rutledge received her entire bequest, she still maintained that the trust owed her interest.1 On December 13, 2004, Lilley moved for summary judgment. On May 9, 2005, Rutledge filed a memorandum in opposition to summary judgment as well as her own motion for summary judgment against Lilley and Dunfee. On June 8, 2005, Lilley filed a memorandum in opposition to Rutledge‘s motion for summary judgment. Dunfee filed her own memorandum in opposition June 13, 2005, but never moved for summary judgment. On May 8, 2009, the court denied Lilley‘s and Rutledge‘s motions, concluding that genuine issues of material fact existed. Subsequently, the parties asked the court to reconsider their motions for summary judgment, and Rutledge and Lilley filed numerous stipulations of fact. On September 21, 2009, the court issued a journal entry. The entry provided that, upon reconsideration, Rutledge‘s motion was denied and Lilley‘s motion was granted.
{¶4} Rutledge now appeals from the court‘s judgment and raises one assignment of error for our review.
Assignment of Error
“THE TRIAL COURT ERRED IN REFUSING TO GRANT A BENEFICIARY STATUTORY INTEREST PURSUANT TO
R.C. § 1343.03(A) ON A $100,000 BEQUEST DUE HER UNDER A WRITTEN TRUST INSTRUMENT WHERE SHE HAD TO WAIT MORE THAN FOUR YEARS TO RECEIVE THE PRINCIPAL[.]”
{¶5} In her sole assignment of error, Rutledge argues that the trial court erred by granting Lilley‘s motion for summary judgment. Specifically, Rutledge argues that she is entitled to statutory interest under
{¶6} This Court reviews an award of summary judgment de novo. Grafton v. Ohio Edison Co. (1996), 77 Ohio St.3d 102, 105. We apply the same standard as the trial court, viewing the facts of the case in the light most favorable to the non-moving party and resolving any doubt in favor of the non-moving party. Viock v. Stowe-Woodward Co. (1983), 13 Ohio App.3d 7, 12.
{¶7} Pursuant to
“(1) No 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. (1977), 50 Ohio St.2d 317, 327.
The party moving for summary judgment bears the initial burden of informing the trial court of the basis for the motion and pointing to parts of the record that show the absence of a genuine issue of material fact. Dresher v. Burt (1996), 75 Ohio St.3d 280, 292-93. Specifically, the moving party must support the motion by pointing to some evidence in the record of the type listed in
{¶8} Both parties agree as to the facts in this case. At the time of Abraham‘s death, her estate had a potential federal estate tax liability of over $1,000,000 and the trust had insufficient liquid funds to distribute Rutledge $100,000 in light of the potential tax liability. Both Lilley and Dunfee had control over non-liquid trust assets, however, including: (1) a house and barn valued at approximately $150,000 at the time of Abraham‘s death; and (2) sole membership interest in an LLC whose assets were valued at approximately $2,254,452. Abraham‘s trust permitted, but did not require, the estate taxes to be paid from the trust at the discretion of the trustees. Rather than immediately sell the trust‘s non-liquid assets so as to create additional liquid funds, pay the estate taxes, and pay Rutledge her bequest, Lilley and Dunfee sold the LLC‘s assets at a later date for a larger profit. As a result, Rutledge did not receive her full $100,000 bequest for over four years.
{¶9} The sole issue in this case is whether, as a matter of law, Rutledge is entitled to statutory interest on her bequest under the trust. Rutledge argues that her bequest vested at the time of Abraham‘s death and she became a creditor of the trust when Lilley and Dunfee failed to pay her. According to Rutledge, she is entitled to interest under
“In cases other than those provided for in sections
1343.01 and1343.02 of the Revised Code, when money becomes due and payable upon any *** instrument of writing, *** the creditor is entitled to interest at the rate per annum determined pursuant to section5703.47 of the Revised Code, unless a written contract provides a different rate of interest in relation to the money that becomes due and payable, in which case the creditor is entitled to interest at the rate provided in that contract. Notification of the interest rate per annum shall be provided pursuant to sections319.19 ,1901.313 ,1907.202 ,2303.25 , and5703.47 of the Revised Code.”R.C. 1343.03(A) .2
“An award of prejudgment interest encourages prompt settlement and discourages defendants from opposing and prolonging, between injury and judgment, legitimate claims.” Royal Electric Constr. Corp. v. Ohio State Univ. (1995), 73 Ohio St.3d 110, 116-17. “The purpose of postjudgment interest awards is to guarantee a successful plaintiff that the judgment will be paid promptly, and to prevent a judgment debtor from profiting by withholding money belonging to the plaintiff.” Lovewell v. Physicians Ins. Co. of Ohio (1997), 79 Ohio St.3d 143, 147.
{¶11} Upon our review of the record, we agree with the trial court‘s determination that Rutledge was not entitled to interest under
{¶12} An award of either prejudgment or post-judgment interest first and foremost requires a judgment. See Royal Electric Constr. Corp., 73 Ohio St.3d at 116-17 (providing that prejudgment interest compensates for the passage of time between injury and judgment); Lovewell, 79 Ohio St.3d at 147 (providing that post-judgment interest ensures judgments will be paid promptly). See, also, Myers v. Garson (July 12, 1989), 9th Dist. No. 13939, at *5 (noting that, had the trial court decided the case upon a different theory, the plaintiff “may well have [had] no judgment upon which to claim interest“). In analyzing a demand for interest under
“As a general rule, where a contract is silent as to interest so that, if it can be recovered at all, it is as an incident of the debt sued for, and only as damages to make good to the creditor the loss he has sustained by reason of breach or default, an action to recover it cannot be maintained after the payment of the principal, since such interest cannot exist without the debt; with the extinguishment of the debt, the right to claim interest must necessarily be extinguished also[.]” Kuntz Drug Stores, Inc. v. Ohio Department of Public Welfare (Aug. 3, 1982), 10th Dist. No. 82AP-23, at *2, quoting 45 Am.Jur. 2d 261, Interest and Usury, Section 345.
Thus, the elimination of an underlying debt on a contract that is silent as to interest also eliminates any right to demand interest on that debt because the demand for interest is parasitic in nature and cannot survive without the claim for debt. Id.
{¶14} The dissent points to Hobart Bros. Co. v. Welding Supply Serv., Inc. (1985), 21 Ohio App.3d 142, to argue that a plaintiff may obtain statutory interest even after receiving the full amount of principal outstanding on a past due account. The Tenth District‘s decision in Hobart is distinguishable, however, because the contract in Hobart was not silent as to interest. Hobart, 21 Ohio App.3d at 144. The contract specified that interest would accrue; it simply failed to specify the rate of that interest. Id. (“[T]he contract merely states that interest will be charged without specifying the percentage or amount of interest to be charged[.]“). As the Tenth District held in Kuntz Drug Stores, Inc., a different rule applies when a contract is altogether silent as to interest. Because the trust at issue was altogether silent as to interest on Rutledge‘s distribution, this case is analogous to the Tenth District‘s decision in Kuntz Drug Stores, Inc., not its decision in Hobart.
{¶15} Even assuming that
{¶16} Rutledge‘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.
We order that a special mandate issue out of this Court, directing the Court of Common Pleas, County of Lorain, State of Ohio, to carry this judgment into execution. A certified copy of this journal entry shall constitute the mandate, pursuant to App.R. 27.
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(E). 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.
BETH WHITMORE FOR THE COURT
MOORE, J. CONCURS
{¶17} I respectfully dissent. I disagree with the majority‘s conclusion that
{¶18} In fact, the statute has been used as a mechanism solely to obtain interest on a past due account after the principal had been paid. In Hobart Bros. Co. v. Welding Supply Serv., Inc. (1985), 21 Ohio App.3d 142, Welding was delinquent in paying on accounts owed to Hobart. Welding ultimately paid the principal amount due. Hobart subsequently brought suit against Welding solely for the interest it claimed Welding owed. Both parties agreed that
{¶19} The majority at paragraph 12 cites an earlier case out of the Tenth District for the broad proposition that a claim for interest is extinguished upon the extinguishment of the debt. This proposition must be narrowly construed within the factual context of that case, however. In Kuntz Drug Stores, Inc. v. Ohio Dept. of Pub. Welfare (Aug. 3, 1982), 10th Dist. No. 82AP-23, the plaintiffs sought late payment of money due from a state agency. The appellate court noted that as the plaintiffs brought their action against the state, it is governed by
{¶20} Only when the Kuntz court assumed that the principal payment was predicated upon contract (specifically, “Medicaid provider agreements“), rather than statute, did it assert that
{¶21}
{¶23} Based on a reading of
APPEARANCES:
IAN ROBINSON, Attorney at Law, for Appellant.
KENNETH P. FRANKEL, Attorney at Law, for Appellee.
LESLIE DUNFEE, pro se, Appellee.