Fraudulent Transfer Act

Allan v. Allan,  8th Dist. Cuyahoga Nos. 110177, 110179, 2022-Ohio-1488

In this appeal, the Eighth Appellate District reversed the trial court's decision under the Fraudulent Transfer Act case to the extent it was based upon the grounds that the statute of limitations expired under R.C. 1336.09 because there was disputed evidence as to whether, and when, the transfers of the gas stations were made and, if so, when those transfers were perfected.

The Bullet Point: At issue in this case was the date of transfer of two businesses under the statute of limitations of Ohio's Fraudulent Transfer Act. R.C. 1336.09 provides that a lawsuit under Ohio's Fraudulent Transfer Act must be brought within four years. As such, at issue in determining whether or not plaintiff's suit was brought within the four-year statute of limitations was whether the businesses were transferred for purposes of the Ohio Fraudulent Transfer Act and, if so transferred, when those transfers occurred. Under the Ohio Fraudulent Transfer Act, a transfer is defined as “every direct or indirect, absolute or conditional, and voluntary or involuntary method of disposing of or parting with an asset or an interest in an asset, and includes payment of money, release, lease, and creation of a lien or other encumbrance.” R.C. 1336.01(L). In determining whether a transfer is made under the Fraudulent Transfer Act, R.C. 1336.06 provides that for transfers of fixtures and assets constituting personalty, the cause of action arises on the date of perfection against a judicial lien creditor not asserting rights under the Act. Perfection typically is effected by notice-filing, recordation, or delivery of unequivocal possession. If applicable law permits the transfer to be perfected and the transfer is not perfected before commencement of an action for relief, the transfer is deemed made immediately before the commencement of the action.


Grande Voiture D'Ohio La Societe des 40 Hommes et 8 Chevaux v. Simpson, 2d Dist. Montgomery No. 29330, 2022-Ohio-1422

In this appeal, the Second Appellate District affirmed the trial court's decision denying the corporation's motion to intervene under Civ.R. 24(A) because it was not a necessary party to the foreclosure action.

The Bullet Point: At issue in this dispute was whether a third party entity was a necessary party to a foreclosure action. Civ.R. 24(A), which governs interventions of right, states: “Upon timely application anyone shall be permitted to intervene in an action: (1) when a statute of this state confers an unconditional right to intervene; or (2) when the applicant claims an interest relating to the property or transaction that is the subject of the action and the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant's ability to protect that interest, unless the applicant's interest is adequately represented by existing parties.” Simply stated, anyone who claims an interest relating to the subject matter of a lawsuit may file a motion to intervene in said suit under Civ.R. 24(A) if the result of said suit would harm the party's ability to protect its interest.

As noted by the appellate court, Civ.R. 24(A) is to be liberally construed so as to permit intervention. That being said, the appellate court agreed with the trial court that the entity was not a necessary party to the instant foreclosure action. “The only parties necessary to an action in foreclosure are those who have any title, right, or interest in the subject of the real estate.” Defendant did not claim, and the record did not show, that the entity had an interest in the property at issue. Moreover, the entity's inability to intervene would not “impair or impede” its “ability to protect” any interest it may have in indemnifying defendant. To the extent the entity agreed to or was legally required to indemnify defendant, it remained able to do so despite the denial of its motion to intervene. Consequently, the entity was not a necessary party and the motion to intervene was properly denied.

Acceptance of Goods

Digitalight Sys. v. Cleveland Clinic Found., 8th Dist. Cuyahoga No. 110723, 2022-Ohio-1400

In this appeal, the Eighth Appellate District affirmed the trial court's decision, agreeing that Cleveland Clinic did not accept the shipment of KN95 masks pursuant to R.C. 1302.64(A)(1) and cancelled its purchase order following Digitalight's failure to perform under the contract.

The Bullet Point: Pursuant to R.C. 1302.64(A)(1), “Acceptance of goods occurs when the buyer: (1) after a reasonable opportunity to inspect the goods signifies to the seller that the goods are conforming or that he will take or retain them in spite of their non-conformity.” Cleveland Clinic acknowledged its loading dock clerk took possession of the second shipment of 85,000 masks but that said shipment was delivered by an unknown carrier and dropped off with the carrier leaving before Cleveland Clinic could inspect and reject the shipment. Further, it took possession of said second shipment after 1) cancelling the purchase order, 2) instructing Digitalight not to ship the masks, and 3) advising Digitalight that Cleveland Clinic would not be paying for the masks if they were shipped.

As the appellate court explained, Cleveland Clinic's taking of physical possession of the second shipment was not an acceptance of said shipment. On the contrary, Cleveland Clinic cancelled the purchase order before the masks were shipped and rejected the masks before they were delivered. It took possession of the second shipment without having an opportunity to inspect the contents of the shipment. Finally, after discovering the contents of the shipment that Cleveland Clinic took possession of, Cleveland Clinic rejected the shipment and invited Digitalight to retrieve the masks from Cleveland Clinic's warehouse at any time. Accordingly, Cleveland Clinic did not “accept” the second shipment of masks pursuant to R.C. 1302.64(A)(1) and instead cancelled the order following Digitalight's failure to perform under the contract.

Jury trial under the CSPA

Sharp v. M3C Invests. LLC, 8th Dist. Cuyahoga No. 110442, 2022-Ohio-1394

In this appeal, the Eighth Appellate District reversed the trial court's decision and remanded the case, finding that the plaintiff had a right to a jury trial on the issue of damages in her Ohio Consumer Sales Practices Act (CSPA) claim.

The Bullet Point:  The eighth appellate district previously considered a party's right to a jury trial on damages in the context of a default judgment. In consideration of that right, this court noted that Civ.R. 55(A), which governs the entry of default judgment and the necessity of a hearing on damages, gives the trial court the discretion to conduct a hearing following an entry of default judgment in order to determine the measure of damages. However, this discretion under Civ.R. 55(A) is tempered with a party's constitutional and substantial right to a jury trial. Ohio's Constitution provides that “[t]he right to a trial by jury shall be inviolate * * *.” Section 5, Article I, Ohio Constitution; Civ.R. 38(A). Under long-standing Ohio law, “[C]ourts have determined that the language of Civ.R. 55(A) — “the court * * * shall when applicable accord a right of trial by jury to the parties” — mandates the right to a jury trial. Nevertheless, this constitutional guarantee is limited by certain procedural rules in that a party must take affirmative action to invoke the right to a jury trial. Under Civ.R. 38(B), any party may demand a trial by jury on any issue triable of right by a jury by serving upon the other parties a demand therefore at any time after the commencement of the action. Once a jury demand has been made by any party, it cannot be withdrawn without the consent of all parties, and the trial must be by jury, even in the case of a trial on the issues of damages following the entry of a default judgment as to liability.

In this case, plaintiff alleged CSPA violations, where the resultant damages were all “triable issues.” Plaintiff demanded a jury trial in her complaint, renewed that demand in her motion for default judgment, and never abandoned her demand. The appellate court also noted that although no defendant appeared in the action, the Civil Rules explicitly mandate that once a jury demand is made by one party, it may not be withdrawn without the consent of all parties, regardless of the fact that default judgment has been entered. Accordingly, the trial court erred in denying plaintiff's request for a jury trial on the issue of damages in her CSPA claim.


Recovery of Attorney's Fees from a Prior Foreclosure

Colombo v. Robertson Anshutz, No. 4D20-1719 (Fla. 4th DCA May 4, 2022)

The Fourth District held a bank's law firm did not violate the Florida Consumer Collection Practices Act (FCCPA) by sending a borrower a mortgage reinstatement letter requiring payment of attorney's fees incurred in a prior foreclosure action as a condition of reinstatement.

The Bullet Point: Where the plain language of a mortgage contract contains a provision requiring payment of all expenses incurred in enforcing the mortgage as a condition of reinstatement, a lender is entitled to recover the expense of attorney's fees it incurred in a prior foreclosure action.

In this case, the borrower was awarded prevailing party attorney's fees after a foreclosure action against him was dismissed for lack of prosecution. Thereafter, the bank filed a new foreclosure action against the borrower concerning the same property, and the bank's law firm sent him a reinstatement letter setting forth the amount due to reinstate the loan, including the attorney's fees incurred in the prior foreclosure action. The borrower then sued the law firm for violation of the FCCPA, contending the reinstatement letter sought an illegitimate debt.

The Fourth District ruled the law firm did not violate the FCCPA by sending the reinstatement letter because it sought to recover a legitimate expense it was entitled to recover pursuant to the mortgage. The Court noted the mortgage contract contained a provision requiring payment of all expenses incurred in enforcing the mortgage, including reasonable attorney's fees and specified foreclosure litigation expenses. The Court further reasoned that the borrower was under no obligation to pursue reinstatement, and if the borrower did not elect reinstatement, there could be no money owed for past debt under the reinstatement provision. Therefore, the Court concluded the trial court correctly found that the law firm did not violate the FCCPA.

Prevailing Party in a Voluntary Dismissal

Mauriello v. POA Lake Parker Estates, Inc., No. 2D21-500 (Fla. 2d DCA April 13, 2022)

The Second District determined whether a party seeking attorney's fees in an action it voluntarily dismissed was the substantially prevailing party.

The Bullet Point: Generally, when a plaintiff voluntarily dismisses an action, the defendant is considered the prevailing party. However, when an action is voluntarily dismissed because it has become moot, the court can look to the results, not simply the dismissal, to determine whether the party seeking fees was the ‘substantially prevailing party.'

In this case, the plaintiff homeowner's association sought a mandatory injunction against the defendant homeowners requiring them to maintain their lawn and landscaping in good condition. The parties litigated over the condition of the property for years. Eventually, the defendants sold the property and after the new owner cured the alleged violations, the association agreed to dismiss the suit. The association then moved for fees and costs, arguing it was entitled to prevailing party fees because the defendants' volitional act of selling the property rendered the action moot.

The Second District held the association was not the prevailing party, reasoning that the sale of the house did not prompt the dismissal for mootness. Rather, the association only dismissed the action once the new owners cured the violations. Thus, while the association ultimately received the benefit it sought, it was not from the defendants it dismissed. Accordingly, the Second District reversed the portion of the final judgment awarding attorney's fees to the association.

Double Recovery of Attorney's Fees

Philip Morris USA Inc. v. Gore, No. 4D20-932 (Fla. 4th DCA April 13, 2022)

The Fourth District held that because an attorney is entitled only to a reasonable fee under the proposal for settlement statute, the trial court must consider any fees and costs previously paid by settling parties when fashioning an award and make appropriate reductions to avoid a double recovery.

The Bullet Point: Florida's proposal for settlement statute specifically provides that any attorney's fees awarded pursuant to a rejected proposal for settlement must be reasonable. Therefore, when a settlement with one defendant covers the same fees and costs a plaintiff is trying to recover from a non-settling defendant, reasonableness dictates the party cannot recover the same costs twice.

This appeal stemmed from an award of attorney's fees and costs pursuant to a rejected proposal for settlement that included amounts the appellee previously recovered from a settling defendant. The appellant argued that the award should be reduced by the amount the appellee recovered from the settling defendant in order to prevent an unreasonable double recovery, and the appellee argued that the deterrent principle at the heart of a proposal for settlement allows for such double recovery. The Fourth District agreed with the appellant, ruling that if a reduction is not permitted in cases where fees are paid by other parties, the result is an unreasonable and impermissible windfall. The Fourth District further noted that a litigant's decision to pursue a claim in the face of a rejected proposal for settlement does not hinge on the prospect of recovering attorney's fees multiple times for the same litigation activities. The Fourth District therefore reversed the attorney's fees award and remanded to the trial court to award a reasonable fee that does not include duplicative amounts.

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