Uren v. DahoudUren v. Dahoud
James R. Hartke, for Defendant-Appellant.
{1} This appeal is brought by defendant-appellant David Dahoud following the entry of summary judgment by the Hamilton County Court of Common Pleas in favor of plaintiffs-appellees James T. Uren and others, collectively “the class,” in the amount of $195,473 representing Dahoud‘s “net winnings” in an alleged “Ponzi scheme.” The trial court determined on cross-motions for summary judgment that the class was entitled to “claw back” Dahoud‘s alleged gain arising out of the scheme. Because the class established entitlement to summary judgment and Dahoud did not, we affirm.
Background Facts and Procedure
{2} This class-action lawsuit was filed in November 2014. According to the amended complaint, nondefendants Glen Galemmo and his affiliated entities, which we refer to collectively as “Galemmo,” perpetuated a criminal fraud by operating a Ponzi scheme. Some persons and entities who invested money in that scheme from January 1, 2002, to July 26, 2013, suffered a “net loss,” meaning “the funds invested exceeded the total of all funds received in the form of purported income or return of principal.”
{3} The class of “net losers” sought to claw back money from several named defendants, including Dahoud, on the theory that certain transfers they received from Galemmo, a “debtor” under Ohio‘s Uniform Fraudulent Transfer Act,
{4} Among other things, the class alleged that Dahoud received transfers of “cash or cash equivalents” from Galemmo during a time period when Galemmo
{5} In his answer, Dahoud denied all substantive allegations. The class moved for summary judgment against Dahoud in October 2016. In support, the class relied upon the affidavit of Brian P. O‘Connor, one of their attorneys, and certain exhibits attached to that affidavit. The class contended these exhibits, coupled with the stipulation concerning the business records of the banks, contained the detailed facts establishing the class claims under the caselaw related to Ponzi schemes and fraudulent transfers. See Bash v. Textron Fin. Corp., 524 B.R. 745, 757 (N.D.Ohio 2015); Warfield v. Byron, 436 F.3d 551, 558-560 (5th Cir.2006).
{6} Counsel for the class explained the import of the business record stipulation with respect to establishing the claims in the context of a Ponzi scheme: “If you deposit this money, you get credit for this. You withdrew this money, you get debited for this amount.”
{7} Dahoud also moved for summary judgment. In support, Dahoud filed his own affidavit with attached exhibits, and the affidavit of expert Joseph B. Mansour with attached exhibits. Dahoud primarily relied upon a legal argument, abandoned on appeal, that he could not be subject to the claw-back claims because he believed he was, by contract, only a “limited partner” in a specific Galemmo fund,
{8} Both parties opposed the other party‘s motion for summary judgment, and also moved to strike the affidavits submitted by the opposition in support of summary judgment. Dahoud then filed a reply in support of summary judgment and a supplemental affidavit with additional exhibits.
{9} On November 21, 2016, the trial court held a hearing on the motions. In an entry dated November 28, 2016, the trial court granted the class‘s motion for summary judgment against Dahoud, entered a judgment against Dahoud for $195,473 plus interests and costs, and denied Dahoud‘s cross-motion for summary judgment. The court also ruled on the pending motions to strike affidavits. In doing so, the court denied Dahoud‘s motion to strike O‘Connor‘s affidavit and granted the class‘s motion to strike Dahoud‘s and Mansour‘s affidavits, but noted that the later evidence was ineffective for summary-judgment purposes even if considered.
{10} Eventually, the claims against the other defendants in the case were resolved by way of settlement, dispositive motion, or trial. The trial court then entered a final judgment disposing of all claims. That July 11, 2017 judgment incorporated by reference the prior orders appealed in this case. Dahoud filed a timely appeal that this court consolidated with appeals filed by several other defendants. The consolidated appeals were delayed by a bankruptcy stay. That stay has been lifted and the appeals by the other defendants have been dismissed. Accordingly, we proceed only on Dahoud‘s appeal.
{11} Generally, Dahoud‘s three assignments of error challenge the court‘s resolution of the cross-motions for summary judgment and the evidentiary rulings leading to that determination.
{12} Summary judgment is governed by the provisions of
{13} When ruling on a motion for summary judgment, the court is permitted to consider only “the pleadings, depositions, answers to interrogatories, written admissions, affidavits, transcripts of evidence, and written stipulations of fact, if any, timely filed in the action.”
{14} Of particular importance to this case is
{15} Thus,
{16} Generally, we review a trial court‘s evidentiary decisions for an abuse of discretion. Douglass at ¶ 20. But we apply a de novo standard of review to issues of law, including whether summary judgment was proper. See Comer v. Risko, 106 Ohio St.3d 185, 2005-Ohio-4559, 833 N.E.2d 712, ¶ 8.
Class Carried Summary-Judgment Burden
{17} Dahoud‘s first and second assignments of error are related. In part, he contends the trial court erred when granting summary judgment for the class because O‘Connor‘s affidavit was not sufficient to authenticate the attached exhibits.
{18} Dahoud maintains that O‘Connor lacked the personal knowledge to authenticate the attached documents. The authenticity challenge is directed to whether the affiant, here O‘Connor, sufficiently demonstrated the attachments were true and accurate copies of what O‘Connor purported them to be; O‘Connor was not swearing to the truth of the underlying facts.
{19} In the introductory paragraph, O‘Connor swore that he was counsel for the class, he was over the age of 18, under no disability, and that he “ma[d]e this affidavit upon personal knowledge.”
{20} He then purported to authenticate “as a true and correct copy” three exhibits: (1) a copy of “the Plea Agreement entered into by Galemmo in United States v. Galemmo, United States District Court, Southern District of Ohio[,] Case No. : 13-
{21} Dahoud suggests that nothing short of a certified copy of the plea agreement satisfies the authentication requirement. But, the “[v]erification required by
{22} Although O‘Connor could have used more precise words when authenticating the plea agreement, his statement conveys his knowledge that the attached plea agreement is a true and accurate copy filed in the federal criminal action not because someone told him, but because he obtained it from the docket for the criminal case. Considering that O‘Connor is an attorney and the exhibit contains an electronic file stamp across the top of each page showing it was filed on “12/17/13 in case:1:13-cr-00141-HJW,” the trial court‘s acceptance of O‘Connor‘s averment is reasonably based and not an abuse of discretion.
{23} Dahoud argues the trial court took “judicial notice” of the plea agreement, even though a court may not take judicial notice of another court‘s docket. See, e.g., Natl. Distillers & Chem. Corp. v. Limbach, 71 Ohio St.3d 214, 643 N.E.2d 101 (1994). The trial court did note in its entry that it was taking “judicial notice” of the “Court records attached to” O‘Connor‘s affidavit. But it is unclear whether the court was merely taking judicial notice that plea agreements are docketed in criminal cases, which is permissible under
{24} We arrive at a different conclusion with respect to the excerpted portions of the Galemmo deposition. O‘Connor failed to assert facts explaining where he obtained the deposition excerpts, and the attached pages do not indicate that the deposition was taken in this case. The class, however, presents an additional theory for consideration of those deposition pages.
{25} The class contends that O‘Connor‘s failure to authenticate the pages as “true and accurate” was remedied when the class filed the complete Galemmo deposition with the trial court. See
{26} A deposition filed in the action is one type of evidentiary material identified in
{28} The import of O‘Connor‘s affidavit was to verify that the attached financial records were those subpoenaed from the financial institutions. As O‘Connor explained that he is an attorney in the case, we cannot say the trial court abused its discretion by accepting O‘Connor‘s verification of the attached records from the financial institutions.
{29} Based on this analysis, we conclude that the trial court did not err by considering the exhibits attached to O‘Connor‘s affidavit as “true and correct” copies that could be considered for summary-judgment purposes. Thus, Dahoud has failed to demonstrate that the trial court erred by granting summary judgment for the class because this evidence was not authenticated.
Dahoud‘s Supplemental Affidavit and Attached Exhibits were Insufficient
{30} Dahoud additionally argues that the court erred by entering summary judgment against him. To that end, Dahoud contends that his supplemental affidavit tendered with his reply memorandum introduced evidence of other transactions that
{31} Dahoud attached to his supplemental affidavit several groups of documents. The first relate to schedule K-1 forms issued by Galemmo that showed losses not reflected in the class‘s net-loser analysis. Dahoud however, acknowledged that the K-1 forms issued by Galemmo were fraudulent. Thus, this evidence did not demonstrate an absence of a genuine issue of material fact.
{32} The next group of documents relate to Dahoud‘s argument that $165,000 transferred to him from Galemmo represented “employment commissions received from Galemmo” for his work related to “Fund II” and should not have counted as “winnings” in the net-loser analysis. In this case, that argument mainly implicates the part of the fraudulent-transfer statute addressing constructively-fraudulent transfers. Specifically, it implicates the provision concerning whether the “debtor“—here Galemmo—received “a reasonably equivalent value in exchange for the transfer.”
{33} Dahoud provides no legal authority for his contention that he should be credited for his “commissions” related to Galemmo‘s fraudulent scheme. The caselaw we found is contrary to his position. See Warfield, 436 F.3d at 559-560. Thus, we conclude that this evidence did not demonstrate the absence of a genuine issue of material fact.
{34} Finally, Dahoud presented a check issued to him from Galemmo in the amount of $49,500. He contends that the bank records collected by the class
{35} Dahoud averred that “he received check no[.] 1206 from Fund II and signed the back of this check back to Fund II to add as an additional investment-deposit to my account.” Dahoud also attached to his supplemental affidavit a document containing a copy of the front of the check and a handwritten note indicating that “[t]his check was not cashed by David Dahoud but was given back to Queen City to reinvest.”
{36} The class argues the notation on the exhibit indicates that the check was written but never cashed and, therefore, the check never actually caused any funds to move between accounts. This is why, the class explains, the check did not show up in Galemmo‘s bank records. The class concludes that because money never changed hands as a result of the check, evidence of the check does not affect the analysis of whether and to what extent Dahoud profited from the Ponzi scheme. Secondarily, the class argues that if the check had been deposited by Dahoud and caused a financial transaction to occur, those funds would have been an additional profit for Dahoud for which he would have been liable to the net losers in the Ponzi scheme. Dahoud does not refute these class arguments, which are supported by the record and the caselaw.
{37} Based on our review, we conclude that none of the evidence Dahoud submitted with his supplemental affidavit demonstrates the existence of a genuine issue of material fact as to the class claims. Further, we conclude that reasonable minds can come to but one conclusion and that conclusion is adverse to Dahoud, even when the evidence and stipulation is construed most strongly in his favor. Thus, we affirm the trial court‘s entry of summary judgment for the class on the cross-
No Error with Respect to Initial Dahoud and Mansour Affidavits
{38} In his third and final assignment of error, Dahoud contends the trial court erred in striking his initial affidavit in support of summary judgment and that of his expert, Mansour. With respect to this evidence, the trial court explained that even if it considered the evidence, that evidence would not affect the court‘s analysis. In other words, the evidence did not weigh on the existence or absence of a material fact.
{39} A harmless evidentiary ruling is not a ground for reversal. See
Conclusion
{40} In summary, we affirm the trial court‘s grant of summary judgment for the class on the cross-motions for summary judgment.
Judgment affirmed.
MYERS, P.J., and CROUSE, J., concur.
Please note:
The court has recorded its own entry on the date of the release of this opinion.