Benkovits v. Bandi , 2021 Ohio 1877 ( 2021 )

[Cite as Benkovits v. Bandi, 2021-Ohio-1877.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
STEVE BENKOVITS, :
Plaintiff-Appellant/
Cross-Appellee, :
No. 109533
v. :
PETER BANDI, ET AL., :
Defendants-Appellees/
Cross-Appellants. :
JOURNAL ENTRY AND OPINION
JUDGMENT: AFFIRMED
RELEASED AND JOURNALIZED: June 3, 2021
Civil Appeal from the Cuyahoga County Court of Common Pleas
Case No. CV-16-871950
Appearances:
Jeffrey R. Froude, for appellant/cross-appellee.
Dinn, Hochman & Potter, L.L.C., Steven B. Potter, and
Shia N. Shapiro, for appellees/cross-appellants Peter
Bandi, Peter Bandi, Inc., d.b.a. The Ohio Connection,
Bandi Investment, L.L.C., Cleveland Transportation, Inc.,
and Barr Auto Body Company.
SEAN C. GALLAGHER, J.:
Plaintiff-appellant Steve Benkovits (“Benkovits”) appeals the decision
of the trial court that granted summary judgment on all claims raised in the
complaint in favor of Peter Bandi (“Bandi”), et al. (collectively “the Bandi
defendants”) and Katalin Rabb (“Rabb”).1 The Bandi defendants have appealed the
trial court’s decision that granted summary judgment in favor of Benkovits on the
counterclaims. Having thoroughly reviewed the record and fully considered the
arguments presented in the briefs, we affirm the judgment of the trial court in all
respects.
Background
Benkovits and Rabb, formerly married, were previously parties to a
divorce action in Cuyahoga County Court of Common Pleas, Division of Domestic
Relations (“the domestic relations court”).2 In the 2016 agreed judgment entry of
divorce,3 it was stated that the duration of the marriage was from May 1982 until
November 2008. In the agreed judgment, Rabb waived “any interest in The Ohio
Connection, Peter Bandi, Inc., The Ohio Connection, Inc., and Peter Bandi, LLC”
1 The Bandi defendants include Peter Bandi; Peter Bandi, Inc., d.b.a. The Ohio
Connection; Bandi Investment, L.L.C.; Cleveland Transportation, Inc.; and Barr Auto
Body Company. Katalin Rabb is also a defendant in this action but has not filed any
briefing in this appeal.
2 Divorce proceedings were originally initiated in 2010 in Cuyahoga C.P. No. DR-
10-332476. The original action was dismissed in March 2014, and refiled in Cuyahoga
C.P. No. DR-14-351403. The trial court took judicial notice of filings in these domestic
relations court cases.
3 We note that the judgment entry of divorce is dated January 19, 2016, and was
filed February 18, 2016.
and her marital interest was awarded to Benkovits, “whatever interest that may be.”
However, there was never any determination as to what, if any, interest Rabb had in
the subject business entities. As found by the trial court in this case, “the domestic
relations court did not define the marital interest that Rabb owned. Nor did the
domestic relations court determine the extent, nature, or scope of the marital
interest that Rabb owned. Instead, the domestic relations court described the
marital interest that Rabb owned as ‘whatever interest that may be.’” Those issues
remained to be determined at another setting. The judgment entry of divorce also
stated: “It remains [Rabb’s] position that The Ohio Connection, The Ohio
Connection Inc., Peter Bandi Inc., Peter Bandi LLC, Peter Bandi Inc., dba The Ohio
Connections are not marital properties.” Further, the judgment entry ordered that
“Peter Bandi is dismissed” from the action, as are “Peter Bandi, Peter Bandi, Inc.,
Peter Bandi, Inc., dba The Ohio Connection, The Ohio Connection, Inc., and Bandi
Investments, LLC.”
On November 16, 2016, Benkovits, relying on the judgment entry of
divorce and findings made during the divorce proceedings, filed a complaint against
the Bandi defendants and Rabb in the Cuyahoga County Court of Common Pleas,
General Division. Benkovits raised claims for a determination of business interest,
financial misconduct with marital assets, interference with marital contract,
conversion, embezzlement, theft, pattern of corrupt activity, civil conspiracy, and
frivolous conduct. He demanded that “his portion of ownership of the companies in
question be determined” and sought compensatory and punitive damages along
with attorney fees. The defendants filed an answer and counterclaims. Among other
affirmative defenses raised was that the complaint is barred by the applicable
statutes of limitations. The counterclaims alleged tortious interference and
frivolous conduct.
On October 11, 2017, the trial court issued an order in which it
recognized the marital interest at issue originated with shares Rabb purchased in L
and F Connection, Inc. (“L & F”), a transportation company, during her marriage to
Benkovits.4 The trial court adopted a finding of the domestic relations court “that
Rabb purchased what turned out to be a 50% interest in L & F during her marriage
to Benkovits, now divorced, that L & F continued to operate throughout the
marriage, and that Rabb’s interest in L & F is marital property of Rabb & Benkovits.”
Because the parties in the current action disputed whether Rabb had an interest in
the business entities involved, the trial court ordered the parties to brief “the status
of the ownership and assets of L & F at the time it became marital property” and to
document each transfer of ownership and transfer of assets in order for the court to
determine if any interest exists in the various business entities. The trial court
declined to adopt any other findings or rulings by the domestic relations court.
On August 7, 2018, following briefing from the parties, the trial court
issued a judgment entry addressing Benkovits’s claim to an ownership interest in
the various corporate entities controlled by Bandi. The trial court recognized that
4 At the time Rabb purchased her interest, L & F’s assets were valued at $7,000.
the parties “agree that [Benkovits] possesses whatever interest Ms. Rabb had in L &
F Connection, Inc. and The Ohio Connection, Inc., although Bandi argues that this
interest was transferred to him by the 2009 oral agreement with Ms. Rabb[.]” The
trial court found that Rabb purchased a 45 percent ownership interest in L & F in
September 2005, that Rabb and Bandi each eventually owned 50 percent of L & F,
that they formed a new corporation named The Ohio Connection, Inc. in December
2005 to continue the transportation business, that they each owned 50 percent of
the outstanding shares, and that they moved the assets of L & F into The Ohio
Connection, Inc. The trial court also found that in 2009, Rabb and Bandi
purportedly entered an oral contract where Rabb sold her interest in The Ohio
Connection, Inc. to Bandi for consideration that included “(1) $1; (2) payment of
college tuition and associated expenses of the daughter of Ms. Rabb and [Benkovits];
and (3) granting an option to that daughter after graduation from college to buy for
$1 half of Bandi’s interest in his transportation business.” Although there was some
inconsistency relating to Rabb’s affidavit, which referenced the transfer of assets as
opposed to her interest in The Ohio Connection, Inc., the trial court recognized that
Bandi claimed he was the 100 percent owner, that the daughter had a buy back
option, and that there was no evidence of any transfer of assets until 2011, which
was two years after the alleged oral contract for sale. As the trial court found, “Bandi
claims that he transferred the assets from The Ohio Connection to Peter Bandi, Inc.
Thereafter, Bandi alleges that he operated substantially the same business in this
corporate entity as the 100% owner.”
The trial court acknowledged that the domestic relations court had
found in a 2015 entry relating to the terms of the divorce that the oral contract for
the sale of Rabb’s stock in The Ohio Connection, Inc. to Bandi was unenforceable
and that Rabb’s interest in the businesses remained. Nevertheless, the trial court
determined that collateral estoppel or issue preclusion did not apply because there
was never a final order regarding these issues and the court had expressly reserved
the issues until the final hearing occurred. However, in the 2016 agreed judgment
entry of divorce, the named corporate entities were dismissed without prejudice. As
a result, the trial court determined that collateral estoppel could not be relied upon
by Benkovits in this matter.
The trial court then determined that whether the 2009 oral contract
for the sale of Rabb’s interest in The Ohio Connection, Inc. to Bandi was fully
performed so as to remove the agreement from the statute of frauds was an
unresolved and contested issue. There was evidence to reflect that in exchange for
Rabb’s interest in The Ohio Connection, Inc., Bandi agreed to pay for the college
tuition and expenses of Rabb’s daughter, and that Bandi fulfilled his obligations and
paid the tuition and expenses and provided spending money for Rabb’s daughter.
The trial court recognized that Bandi, believing he was the 100 percent owner after
the 2009 sale, transferred the assets in 2011 to other corporations. Bandi
maintained that Benkovits never had an interest in those corporations.
The trial court proceeded to briefly express its views regarding the
issues and the claims, bifurcated the issues remaining in the case, and ordered the
parties to conduct discovery and file dispositive motions with regard to “(1)
[Benkovits’s] right to avoid the 2009 sale of Ms. Rabb’s interest in The Ohio
Connection, Inc. including whether the statute of fraud applies, whether the statute
of limitations applies, and (2) any claims [Benkovits] may have against Defendants
arising out of the transfer of assets out of The Ohio Connection, Inc. to the various
successor companies.”
On October 24, 2018, Rabb filed a motion to dismiss her from the
action, which she later amended to a motion for summary judgment. Rabb argued
that she has no interest, financial or otherwise, in any of the corporations or assets
of any of the Bandi defendants. On October 26, 2018, the Bandi defendants filed a
motion for summary judgment on the claims raised in the complaint. The Bandi
defendants argued, in part, that Benkovits’s claims accrued at the latest in July 2011,
when Benkovits filed an amended complaint naming new party defendants in the
divorce action. On October 29, 2018, Benkovits filed a motion for summary
judgment on his complaint, in which he argued his claims accrued in February 2016
when the judgment of divorce was entered because he “could not know of the
damages he incurred until a determination was made of his relationship to the
business entities.”
On December 17, 2018, the trial court granted the motions for
summary judgment of the Bandi defendants and Rabb, and the court denied
Benkovits’s motion. The trial court found that it lacked jurisdiction over Count 2 for
financial misconduct with marital assets and Count 9 for frivolous conduct, and that
all the other claims raised in the complaint were barred by the applicable statute of
limitations. The trial court found that the discovery rule did not apply to a number
of the claims, and for the claims to which it did apply, the discovery date was no later
than September 30, 2011, which is when Benkovits became aware of all the material
facts surrounding the transfer of Rabb’s interest in The Ohio Connection, Inc. to
Bandi and the subsequent formation of Peter Bandi, Inc. The trial court also
determined that the savings statute did not apply and that equitable estoppel and
equitable tolling are unavailable. Additionally, the trial court denied Benkovits’s
motions to amend the complaint, finding a claim for breach of fiduciary duty would
also be barred by the statute of limitations. Because the trial court found the claims
were barred, the trial court did not address the parties’ arguments pertaining to the
merits of the claims. Finally, the trial court determined that because of the judgment
entry of divorce, the claims against Rabb were subject to res judicata. An initial
appeal from the trial court’s decision was dismissed for a lack of a final appealable
order because the counterclaims were not resolved.
On February 13, 2019, Benkovits filed a motion for summary
judgment on the Bandi defendants’ counterclaims. The trial court granted the
motion on January 23, 2020, stating in part that because of the uncertainty created
by the domestic relations court in describing the marital interest that Rabb owned
as “whatever interest that may be,” that Benkovits had the right to institute actions
to enforce rights he legitimately believed he had.
A timely appeal and cross-appeal have now been filed. Benkovits has
appealed the trial court’s decision to grant summary judgment in favor of the
defendants on his claims. The Bandi defendants have appealed the trial court’s
decision to grant summary judgment in favor of Benkovits on their counterclaims.
Law and Analysis
Appellate review of summary judgment is de novo, governed by the
standard set forth in Civ.R. 56. Argabrite v. Neer, 149 Ohio St.3d 349, 2016-Ohio-
8374, 75 N.E.3d 161, ¶ 14. Summary judgment is appropriate only when “[1] no
genuine issue of material fact remains to be litigated, [2] the moving party is entitled
to judgment as a matter of law, and, [3] viewing the evidence in the light most
favorable to the nonmoving party, reasonable minds can reach a conclusion only in
favor of the moving party.” Id., citing M.H. v. Cuyahoga Falls, 134 Ohio St.3d 65,
2012-Ohio-5336, 979 N.E.2d 1261, ¶ 12.
We shall begin by addressing Benkovits’s assignments of error under
which he challenges the trial court’s decision to grant summary judgment in favor
of the defendants on his claims by (1) refusing to accept the rulings in the domestic
relations action, issuing a conflicting decision on jurisdiction, and finding the statute
of limitations had run on Benkovits’s claims, and (2) arbitrarily deciding
jurisdictional issues between the domestic relations division and general division of
the common pleas court.
Benkovits argues the trial court erred by disregarding rulings of the
domestic relations court, which found he had, as marital property, an interest in the
subject entities, though the interest was not determined. He further claims that
although the domestic relations court had rejected the purported sale of Rabb’s
stock and found she retained an interest in the businesses, the trial court in this
action required the parties to relitigate the issue and ultimately found Benkovits’s
claims were barred by the applicable statutes of limitations. Benkovits argues the
trial court never decided what the interest is that was awarded to him in the
domestic relations action. He further states that an appeal from the domestic
relations action was withdrawn, and therefore he claims relitigation of issues
decided in the domestic relations action are barred by res judicata.
The doctrine of res judicata “involves both claim preclusion
(historically called estoppel by judgment in Ohio) and issue preclusion (traditionally
known as collateral estoppel).” Grava v. Parkman Twp., 73 Ohio St.3d 379, 381,
653 N.E.2d 226 (1995). “Under the doctrine of res judicata, ‘a final judgment or
decree rendered on the merits by a court of competent jurisdiction is a complete bar
to any subsequent action on the same claim between the same parties or those in
privity with them.’” Jones v. Wainwright, 162 Ohio St.3d 491, 2020-Ohio-4870, 165
N.E.3d 1253, ¶ 6, quoting Brooks v. Kelly, 144 Ohio St.3d 322, 2015-Ohio-2805, 43
N.E.3d 385, ¶ 7. “Issue preclusion ‘prevents parties or their privies from relitigating
facts and issues in a subsequent suit that were fully litigated in a prior suit.’” State
ex rel. Jefferson v. Russo, 159 Ohio St.3d 280, 2020-Ohio-338, 150 N.E.3d 873, ¶ 9,
quoting Thompson v. Wing, 70 Ohio St.3d 176, 183, 637 N.E.2d 917 (1994).
Contrary to Benkovits’s argument, the issue of Rabb’s interest in the
subject entities was not resolved by the domestic relations court. Although the
domestic relations court found Rabb’s interest to be marital property, it never
determined the percentage, value, or extent of Rabb’s interest in the subject entities.
In the 2016 agreed judgment entry of divorce, Rabb waived “any interest in The Ohio
Connection, Peter Bandi, Inc., The Ohio Connection, Inc., and Peter Bandi, LLC”
and her marital interest was awarded to Benkovits, “whatever interest that may be.”
Also, although the domestic relations court issued a ruling in October 2015 that set
forth terms of the divorce and found that Rabb possessed a marital interest in the
various businesses, the final judgment entry of divorce stated that Rabb denied
having any interest in the subject entities. Further, Peter Bandi and the named
business entities were voluntarily dismissed from the domestic relations action.
Benkovits agreed to the dismissal of these parties, without a final determination of
Rabb’s interest in the subject entities. Bandi Investment, L.L.C., Cleveland
Transportation, Inc., and Barr Auto Body Company were never parties to that case.
Because there was never a final judgment rendered upon these issues against Bandi,
the named business entities, or their privies, the doctrine of res judicata does not
apply in this action.
Accordingly, the trial court in this matter was not required to accept
the October 2015 ruling from the domestic relations court. The trial court found
that Rabb sold her interest in The Ohio Connection, Inc. to Bandi in 2009 and that
Peter Bandi, Inc. acquired “whatever The Ohio Connection, Inc. had” at the latest in
July 2011. Through the causes of action raised in this case, Benkovits claimed that
his marital property interest was affected and that he suffered damages by the
defendants’ alleged wrongful conduct toward the business ventures. The trial court
determined it lacked jurisdiction over two of the claims and found the other claims
were barred by the applicable statutes of limitations.
Benkovits challenges the trial court’s decision to dismiss his claim to
determine his interest in the subject entities. He argues the discovery rule should
be applied in this matter and asserts he did not become aware of his right to his
interest in The Ohio Connection and the related business entities until the
February 18, 2016 judgment of the domestic relations court.
“‘Ordinarily, a cause of action accrues and the statute of limitations
begins to run at the time the wrongful act was committed.’” Doe v. Archdiocese of
Cincinnati, 109 Ohio St.3d 491, 2006-Ohio-2625, 849 N.E.2d 268, ¶ 21, quoting
Collins v. Sotka, 81 Ohio St.3d 506, 507, 692 N.E.2d 581 (1998). However, when
application of the discovery rule is appropriate, “the statute of limitations begins to
run when the plaintiff discovers or, through the exercise of reasonable diligence,
should have discovered a possible cause of action.” Id., citing O’Stricker v. Jim
Walter Corp., 4 Ohio St.3d 84, 90, 447 N.E.2d 727 (1983). When applicable, the
discovery rule may be invoked where the injury complained of does not manifest
itself immediately and fairness necessitates allowing the assertion of a claim when
the discovery of the injury occurs beyond the statute of limitations. See Kobal v.
Edward Jones Secs., 8th Dist. Cuyahoga No. 109753, 2021-Ohio-1088, ¶ 36, citing
Cristino v. Admr., 2012-Ohio-4420, 977 N.E.2d 742, ¶ 40 (10th Dist.).
In seeking a determination of his interest in the business entities
under Count 1, Benkovits must show that he is entitled to avoid the 2009 oral
contract for the sale of Rabb’s interest to Bandi. Benkovits claims the oral contract
was voidable and unenforceable. Pursuant to R.C. 2305.07, a claim upon a contract
not in writing must be brought “within six years after the cause of action accrued.”
The discovery rule does not apply to a breach of an oral contact claim. Pomeroy v.
Schwartz, 8th Dist. Cuyahoga No. 99638, 2013-Ohio-4920, ¶ 39-40. Indeed, “no
Ohio court has ever applied the discovery rule to a claim for a breach of contract.”
Schmitz v. NCAA, 2016-Ohio-8041, 67 N.E.3d 852, ¶ 16 (8th Dist.). Also, although
Benkovits argues that he was not aware of his right to his marital interest until the
2016 judgment entry of divorce, we decline to apply the discovery rule to extend the
time limitations. See Kobal at ¶ 36-37. Because the oral contract for the sale of
Rabb’s interest to Bandi was entered in 2009, the breach of oral contract claim,
which challenges the enforceability of the contract, is barred by the statute of
limitations.
Benkovits’s claims for financial misconduct with marital assets,
tortious interference with marital contract,5 conversion, and civil conspiracy, as well
as any claim for breach of fiduciary duty, all appear to be subject to the four-year
5 The discovery rule is inapplicable to a claim for tortious interference with
contract. Casciani v. Critchell, 1st Dist. Hamilton No. C-140338, 2015-Ohio-977, ¶ 15;
Porter v. Probst, 2014-Ohio-3789, 18 N.E.3d 824, ¶ 22 (7th Dist.).
limitations period under R.C. 2305.09. Also, in regard to the tortious interference
claim, amatory actions have been abolished in Ohio pursuant to R.C. 2305.09.
Benkovits’s claim for a pattern of corrupt activity is subject to either the four-year
limitations period under R.C. 2305.09 or the five-year limitations period under R.C.
2923.34(J). These claims, as well as the claims for embezzlement and theft, are all
barred by the applicable statutes of limitations.
To the extent the discovery rule applies to some of the claims, our
review of the record shows that Benkovits was aware that Rabb had sold her interest
in The Ohio Connection, Inc. to Bandi in 2009 and that Benkovits became aware of
the relevant facts underlying his claims no later than September 30, 2011. As the
trial court determined,
[r]easonable minds can come to but one conclusion: For the purpose
of the statute of limitations discovery rule, Plaintiff was aware of all of
these facts no later than September 30, 2011, having filed in July 2011
an amended complaint in the Domestic Relations Court alleging
unlawful transfer of Defendant Rabb’s interest in the Bandi Defendants
and seeking the appointment of a receiver to trace and collect these
assets from Bandi, Inc. dba The Ohio Connection.
However, Benkovits did not file his complaint in this case until November 16, 2016,
which was more than five years after he knew or ought to have known of his potential
claims and was beyond the applicable statutes of limitations.
Insofar as Benkovits asserts that Rabb’s sale of stock to Bandi was not
valid and that a constructive trust was formed with regard to the transferred assets,
it does not appear the constructive-trust issue was raised in the trial court. A claim
for a constructive trust is a remedy, not an independent cause of action. Kobal, 8th
Dist. Cuyahoga No. 109753, 2021-Ohio-1088, at ¶ 14, citing Graham v. Lakewood,
2018-Ohio-1850, 113 N.E.3d 44, ¶ 58 (8th Dist.). Under Ohio law, “‘[i]f the cause of
action in which imposition of a constructive trust is sought as a remedy is barred by
a statute of limitation, the imposition of a constructive trust is likewise barred.’”
Cundall v. U.S. Bank, 122 Ohio St.3d 188, 2009-Ohio-2523, 909 N.E.2d 1244, ¶ 40,
quoting Peterson v. Teodosio, 34 Ohio St.2d 161, 172, 297 N.E.2d 113 (1973).
Benkovits next asserts that even if he is subject to the six-year statute
of limitations on a sale not in writing that occurred in 2009, the doctrine of equitable
tolling should be applied because he was diligently and lawfully pursuing his rights
and the domestic relations court had disavowed a sale occurred. “[E]quitable tolling
is to be applied sparingly and only in exceptional circumstances.” McCualsky v.
Appalachian Behavioral Healthcare, 2017-Ohio-8841, 100 N.E.3d 1049, ¶ 18 (10th
Dist.), citing Byers v. Robinson, 10th Dist. Franklin No. 08AP-204, 2008-Ohio-
4833, ¶ 56. “‘[It] is only available in compelling cases that justify a departure from
established procedure.’” Id., quoting Sharp v. Ohio Civ. Rights Comm., 7th Dist.
Mahoning No. 04 MA 116, 2005-Ohio-1119, ¶ 11. “A litigant seeking equitable tolling
must demonstrate that he or she diligently pursued his or her rights, but some
extraordinary circumstance stood in his or her way and prevented timely action.”
McCualsky at ¶ 18, citing In re Regency Village Certificate of Need Application,
10th Dist. Franklin No. 11AP-41, 2011-Ohio-5059, ¶ 37. We recognize Benkovits
received Rabb’s marital interest in the subject business entities in the divorce action,
albeit undetermined, and he believes the trial court herein erred by failing to
determine his interest. However, Benkovits does not identify any misrepresentation
of fact that prevented him from filing the claims raised in this matter. Further, the
record shows he was aware of his claims during the domestic relations action and he
agreed to the judgment entry of divorce, which did not define his interest and
dismissed the named business entities. That Benkovits’s claims were ultimately
barred in this case was not the result of any injustice, but rather, the failure to pursue
the claims in a timely manner. We do not find the circumstances in this case to
warrant application of equitable tolling.
We also find the trial court properly determined that it lacked
jurisdiction over Benkovits’s claim for financial misconduct with marital assets,
which purportedly relates to the division of marital property, and his claim for
frivolous conduct, which pertains to an appeal that was filed from the domestic
relations action. However, Benkovits argues that the trial court erred by finding it
lacked jurisidiction over Count 2 for financial misconduct with marital assets
because he had been awarded an undetermined interest in the subject business
entities. The trial court aptly recognized that the assets of The Ohio Connection, Inc.
are not marital assets and Benkovits has cited no authority that would allow this
type of action to be maintained.
We find no merit to any other arguments presented by Benkovits, and
we decline to address arguments regarding the merits of the claims, which were not
addressed by the trial court in the first instance. We overrule all the assignments of
error raised by Benkovits.
Next, we address the Bandi defendants’ cross-appeal, which
challenges the trial court’s decision to grant summary judgment in favor of
Benkovits on their counterclaims for tortious interference and frivolous conduct.
Under their first cross-assignment of error, the Bandi defendants
argue summary judgment was not warranted on the counterclaim for tortious
interference because genuine issues of material fact remain regarding Benkovits’s
justifications for bringing the claims outside their respective statutes of limitations
and because he pursued those claims knowing he had no ownership interest in
appellees’ business entities. The Bandi defendants argue that determining whether
Benkovits is liable for tortious interference requires the trier of fact to determine
whether the elements of tortious interference were met by the evidence. Among
other arguments, they claim that Benkovits pursued litigation in an attempt to
improperly obtain an interest in the business entities.
Under the second cross-assignment of error, the Bandi defendants
argue summary judgment was not warranted on the counterclaim for frivolous
conduct because they claim Benkovits engaged in frivolous conduct by bringing
claims outside their respective statutes of limitations and when no legal or factual
basis existed to support those claims. They argue that whether a party’s actions
constitute frivolous conduct is a factual determination. Among other arguments,
they claim that Benkovits was aware he was litigating meritless claims, he failed to
reasonably investigate his claims, and his claims were not warranted under existing
law.
Our review reflects that the counterclaim for tortious interference
alleges that neither Rabb nor Benkovits has any financial claim or ownership
interest in the Bandi defendants, that Benkovits’s claims alleging a property interest
in the defendant Bandi entities are unfounded, and that the Bandi defendants were
financially damaged by having to defend the claims brought by Benkovits. The claim
for frivolous conduct alleges that Benkovits’s conduct in filing his complaint and
motions was meant to harass the Bandi defendants and that the claims were made
with wanton disregard for the truth.
Among the elements of the tort of tortious interference with contract
is a “lack of justification” for the interference. See Fred Siegel Co., L.P.A. v. Arter &
Hadden, 85 Ohio St.3d 171, 176, 707 N.E.2d 853 (1999), citing Kenty v.
Transamerica Premium Ins. Co., 72 Ohio St.3d 415, 650 N.E.2d 863 (1995),
paragraph one of the syllabus. To establish the element of lack of justification, there
must be “proof that the defendant’s interference was improper.” Id. Similarly, to
establish tortious interference with a business relationship, a plaintiff must establish
a lack of justification or a lack of privilege that would render the interference
improper. See Vogel v. Albi, 1st Dist. Hamilton No. C-190746, 2020-Ohio-5242,
¶ 37; Smith v. Natl. W. Life, 2017-Ohio-4184, 92 N.E.3d 169, ¶ 20-21 (8th Dist).
“‘[O]ne is privileged to purposely cause another not to perform a contract with a
third person where he in good faith is asserting a legally protected interest of his
own, which he believes will be impaired or destroyed by the performance of the
contract.’” Smith at ¶ 21, quoting Pearse v. McDonald’s Sys. of Ohio, Inc., 47 Ohio
App.2d 20, 25, 351 N.E.2d 788 (10th Dist.1975); see also Hicks v. Cadle Co., 2019-
Ohio-5049, 150 N.E.3d 381, ¶ 100 (11th Dist.).
In granting Benkovits summary judgment on the counterclaims, the
trial court recognized that because of the uncertainty created by the domestic
relations court in describing the marital interest of Rabb in the business entities that
was awarded to Benkovits as “whatever interest that may be,” Benkovits had the
right to institute this action “to enforce rights he legitimately believed he had.” We
agree.
Our review shows that Benkovits demonstrated he acted in good faith
by bringing this action to determine his interest, whatever it might be, and by
asserting claims in relation to a purported legally protected interest of his own. The
Bandi defendants failed to set forth sufficient facts to demonstrate Benkovits acted
without justification or privilege so as to demonstrate a genuine issue on their
tortious interference claim. That Benkovits’s claims were ultimately found barred
by the applicable statutes of limitations, or were otherwise dismissed, does not
render Benkovits’s conduct or the alleged interference improper in this matter. As
the trial court determined, “there was justification for plaintiff bringing the claims
and asserting in the pleadings he had an ownership interest in the Bandi
defendants.” Accordingly, we uphold the trial court’s decision to grant summary
judgment in favor of Benkovits on the tortious interference claim.
Next, we address the frivolous conduct claim. 6 R.C. 2323.51(B)(1)
provides in relevant part:
at any time not more than thirty days after the entry of final judgment
in a civil action or appeal, any party adversely affected by frivolous
conduct may file a motion for an award of court costs, reasonable
attorney’s fees, and other reasonable expenses incurred in connection
with the civil action or appeal.
Generally, a trial court’s decision on whether to award sanctions
under R.C. 2323.51 will not be reversed absent a showing of an abuse of discretion.
State ex rel. Bell v. Madison Cty. Bd. of Commrs., 139 Ohio St.3d 106, 2014-Ohio-
1564, 9 N.E.3d 1016, ¶ 10, citing State ex rel. Striker v. Cline, 130 Ohio St.3d 214,
2011-Ohio-5350, 957 N.E.2d 19, ¶ 11. Pursuant to R.C. 2323.51(A)(2)(a), “‘frivolous
conduct’ includes conduct by a party to a civil action that is ‘not warranted under
existing law, cannot be supported by a good faith argument for an extension,
modification, or reversal of existing law, or cannot be supported by a good faith
argument for the establishment of new law.’” Bell at ¶ 12, quoting R.C.
2323.51(A)(2)(a)(ii).
6 We recognize there has been some split in authority on whether a claim for
frivolous conduct may be raised in a counterclaim instead of a motion. See Vogel, 1st Dist.
Hamilton No. C-190746, 2020-Ohio-5242, at ¶ 53 (finding R.C. 2323.51(B)(1) “clearly and
unequivocally provides that a request for costs and fees based on frivolous conduct should
be made by motion.”) This court has previously considered counterclaims for frivolous
conduct. See, e.g., O’Toole v. Hamman, 8th Dist. Cuyahoga No. 109193, 2020-Ohio-4753,
¶ 13-22; Scheel v. Rock Ohio Caesars Cleveland, L.L.C., 8th Dist. Cuyahoga No. 105037,
2017-Ohio-7174, ¶ 16 (recognizing several “Ohio courts have recognized requests for
sanctions under R.C. 2323.51 may be brought by counterclaim as well as by motion.”)
Without deciding this issue herein, we find that in either event, the trial court’s decision
to grant summary judgment in favor of Benkovits on this claim was proper.
As this court recognized in O’Toole, “R.C. 2323.51 was not intended
to punish mere misjudgment or tactical error.” O’Toole at ¶ 20, citing Turowski v.
Johnson, 70 Ohio App.3d 118, 123, 590 N.E.2d 434 (9th Dist.1991). “Instead, the
statute was designed to chill egregious, overzealous, unjustifiable, and frivolous
action.” Id., citing Turowski v. Johnson, 68 Ohio App.3d 704, 706, 589 N.E.2d 462(9th Dist.1990). “‘R.C. 2323.51 employs an objective standard in determining
whether sanctions may be imposed for frivolous conduct.’” Striker at ¶ 21, quoting
Stafford v. Columbus Bonding Ctr., 177 Ohio App.3d 799, 2008-Ohio-3948, 896
N.E.2d 191, ¶ 8 (10th Dist.).
In this matter, the record demonstrates that Benkovits acted in good
faith reliance on the judgment entry of the domestic relations court in filing this
action. As determined by the trial court, Benkovits’s conduct in bringing the claims
in this action “was done for proper purpose, was warranted, had evidentiary
support, and was reasonable.” We do not find the trial court abused its discretion,
and we uphold the trial court’s decision to grant summary judgment on the
counterclaim for frivolous conduct. We find no merit to any other arguments raised
by the Bandi defendants regarding their counterclaims and overrule the cross-
assignments of error presented in their cross-appeal.
Judgment affirmed.
It is ordered that appellant/cross-appellee and appellees/cross-appellants
share the costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the
common pleas court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27
of the Rules of Appellate Procedure.
__________________________________
SEAN C. GALLAGHER, JUDGE
MARY J. BOYLE, A.J., and
EMANUELLA D. GROVES, J., CONCUR