Barger v. Elite Mgt. Servs., Inc. , 119 N.E.3d 953 ( 2018 )

[Cite as Barger v. Elite Mgt. Servs., Inc., 2018-Ohio-3755.]
IN THE COURT OF APPEALS
FIRST APPELLATE DISTRICT OF OHIO
HAMILTON COUNTY, OHIO
NICOLE MCCLENDON BARGER, : APPEAL NO. C-170322
Individually, and on behalf of those TRIAL NO. A-1605871
similarly situated, :
O P I N I O N.
Plaintiff-Appellant, :
vs. :
ELITE MANAGEMENT SERVICES, :
INC.,
Defendant-Appellee. :
Civil Appeal From: Hamilton County Court of Common Pleas
Judgment Appealed From Is: Affirmed in Part, Reversed in Part, and Cause
Remanded
Date of Judgment Entry on Appeal: September 19, 2018
Montgomery, Rennie & Jonson, George D. Jonson and Anthony P. McNamara, and
Statman, Harris & Eyrich, L.L.C., Alan J. Statman and Sylvie Derrien, for Plaintiff-
Appellant,
Stagnaro, Saba, & Patterson Co., L.P.A., Jeffrey M. Nye and Christopher R. Jones,
for Defendant-Appellee.
OHIO FIRST DISTRICT COURT OF APPEALS
M ILLER , Judge.
{¶1} Nicole Barger appeals from the trial court’s Civ.R. 12(B)(6) dismissal
of her putative class action lawsuit against appellee Elite Management Services, Inc.,
(“EMS”). We affirm the dismissal of Barger’s claims for breach of contract, violations
of the Ohio Consumer Sales Practices Act (“OCSPA”) and the Ohio Planned
Community Law (“OPCL”), and for declaratory judgment. We reverse the dismissal
of Barger’s unjust enrichment claim, and remand for further proceedings.
Facts and Procedural Posture
{¶2} Barger owned a home in the Fairfield Ridge Subdivision. As such,
she was a member of the Fairfield Ridge Homeowners Association (“HOA”). The
HOA is not a party to this lawsuit. As is customary, Barger was required to pay HOA
assessments to cover the costs of operating, maintaining and governing the
subdivision. According to Barger’s complaint, to sell her house, Barger had to
provide the title company a letter certifying the amount of any HOA fees Barger may
have owed, or the sale would not have closed. Under the HOA’s Declaration, the
HOA could levy a “reasonable charge” to provide such certification letters to its
members.
{¶3} The HOA had contracted with EMS to provide certain management
services for the HOA. EMS provided Barger with the required certification letter.
EMS allegedly charged Barger $395 for the letter, along with a $100 fee to expedite
the letter for the closing. According to Barger, other companies typically charged
$25 to $50 for this service, making EMS’s fee unreasonable. Barger sued EMS on
behalf of herself and others similarly situated. In pertinent part, she claimed that the
fee breached EMS’s management contract with the HOA and the HOA’s Declaration,
violated the OPCL and the OCSPA, and constituted unjust enrichment.
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{¶4} EMS moved for and was granted dismissal of Barger’s complaint under
Civ.R. 12(B)(6) for the failure to state a claim upon which relief could be granted. In
a sole assignment of error, Barger contends that the trial court erred, and its
judgment must be reversed.
Standard of Review
{¶5} We review the granting of a Civ.R. 12(B)(6) motion to dismiss de novo.
Perrysburg Twp. v. Rossford, 103 Ohio St. 3d 79, 2004-Ohio-4362, 814 N.E.2d 44, ¶
5. In so doing, “we must presume that all factual allegations of the complaint are
true and make all reasonable inferences in favor of the non-moving party.” Mitchell
v. Lawson Milk Co., 40 Ohio St. 3d 190, 192, 532 N.E.2d 753 (1988). We may affirm
the trial court’s dismissal only if appears “beyond doubt” that Barger can prove no
set of facts entitling her to relief. See id. We are also mindful that the complaint
should contain “a short, plain statement of the claim,” see Civ.R. 8(A), and “be
simple, concise, and direct,” see Civ.R. 8(E), and that all pleadings should “be
construed as to do substantial justice.” See Civ.R. 8(F). In short, Ohio is a notice
pleading state.
Breach of Management Agreement Claim
{¶6} The HOA delegated a portion of its responsibilities to EMS in a
management contract. Barger contends that she was a third-party beneficiary of the
contract, and could therefore sue for breach of its provisions. This argument fails for
two reasons. First, Barger was not an intended beneficiary of the management
contract. Second, even if she was, the contract between the HOA and EMS did not
require EMS to provide certification letters to HOA members at a reasonable cost.
{¶7} “Ohio law * * * requires that for a third party to be an intended
beneficiary under a contract, there must be evidence that the contract was intended
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to directly benefit that third party. Generally, the parties’ intention to benefit a third
party will be found in the language of the agreement.” Huff v. FirstEnergy Corp., 130
Ohio St. 3d 196, 2011-Ohio-5083, 957 N.E.2d 3, ¶ 12; Blue Ash Auto Body, Inc. v.
Progressive Cas. Ins. Co., 1st Dist. Hamilton No. C-110083, 2011-Ohio-5785. Barger
points out that, in its contract with the HOA, EMS agreed to the “maintenance of
records and files for individual homeowners,” and to collect and account for
assessments. This apparently included the responsibility to provide certification
letters since EMS provided one here. But this was for the benefit of the HOA, not the
homeowners. Further, Barger advances no argument concerning how construing her
as a beneficiary would be favorable to the HOA, which was party to the contract. See
Westfield Ins. Co. v. Galatis, 100 Ohio St. 3d 216, 2003-Ohio-5849, 797 N.E.2d 1256,
¶ 14 (where a plaintiff is not a party to a contract, she is not in a position to urge that
a contract be strictly construed against a party to it).
{¶8} Also significant to our analysis is the fact that EMS was never limited
by its management agreement with the HOA to furnish the certification letter at a
reasonable cost to HOA members. Accordingly, there was no breach. Therefore, the
breach of management agreement claim was properly dismissed under Civ.R.
12(B)(6).
Breach of Declaration Claim
{¶9} The obligation to charge a reasonable fee for certification letters was
set forth under the HOA’s Declaration. As a homeowner, Barger could enforce the
Declaration as to the HOA, but the HOA is not a party to this lawsuit. Barger claims
that, as the HOA’s agent, EMS was automatically bound by the Declaration. EMS
was not a party to the Declaration nor, as we have determined, was it bound by its
management agreement to abide by the Declaration’s reasonable fee requirement.
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Since it had no obligation to adhere to the Declaration, it could not breach it.
Therefore, the trial court correctly dismissed Barger’s breach of the HOA’s
Declaration claim.
OPCL Claim
{¶10} Barger next argues that the trial court erred in holding that property
management services companies are not subject to the OPCL. Barger alleges that the
OPCL’s purpose is to afford consumer protection to association members, that it is
therefore a remedial statute to be broadly construed, and that management
companies acting as agents for an HOA are subject to it. Under the OPCL, Barger
contends that EMS was required to comply with the HOA’s Declaration, and charge a
reasonable fee for the certification letter.
{¶11} Assuming arguendo that the OPCL is a remedial statute, even broadly
construed the statute applies only to homeowner associations and those with an
ownership or possessory interest in a planned community. R.C. 5312.13,
“Compliance,” states:
The owners association and all owners, residents, tenants,
and other persons lawfully in possession and control of any
part of an ownership interest shall comply with any covenant,
condition, and restriction set forth in any recorded document to
which they are subject, and with the bylaws and the rules of the
owners association, as lawfully amended. Any violation is grounds
for the owners association or any owner to commence a civil
action for damages, injunctive relief, or both, and an award of court
costs and reasonable attorney's fees in both types of action.
(Emphasis added.)
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{¶12} Thus, the OPCL does not require EMS to comply with the declarations
and bylaws of the HOA. See Roxane Laboratories, Inc. v. Tracy, 75 Ohio St. 3d 125,
127, 661 N.E.2d 1011 (1996) (unambiguous statutes are to be applied according to the
plain meaning of the words used).
{¶13} Barger next contends that R.C. 5312.15 gives her the right to sue EMS.
In pertinent part, that provision states that the OPCL supplements “any planned
community governing document,” and in the event of a conflict between the OPCL
and the governing document, “the governing document shall control.” Barger claims
that the HOA’s Declaration gives Barger the right to sue EMS under the OPCL
because the Declaration “expressly authorizes civil lawsuits to enforce its obligations,
without limitation.” We have already determined that EMS was not obligated under
the Declaration to charge a reasonable fee for a certification letter. The trial court
therefore correctly dismissed Barger’s OPCL claim.
Consumer Sales Practices Act Claim
{¶14} Barger also argues that she should be able to pursue her CSPA claim.
“The CSPA prohibits unfair or deceptive acts and unconscionable acts or practices by
suppliers in consumer transactions * * * .” Anderson v. Barclay’s Capital Real
Estate, Inc., 136 Ohio St. 3d 31, 2013-Ohio-1933, 989 N.E.2d 997, ¶ 8. Barger asserts
that she was a “consumer” and the furnishing of the certification letter was a
consumer transaction under CSPA. Not so. The CSPA does not apply to collateral
services that are solely associated with the sale of real estate and are necessary for a
“pure” real estate transaction. Id. at ¶ 14. Thus, mortgage loan servicing, appraisal
services and title services are not covered by the act. Anderson at ¶ 14; U.S. Bank v.
Amir, 8th Dist. Cuyahoga No. 97438, 2012-Ohio-2772 ¶ 42-43. Certification letters
are provided in connection with title services for the closing of the sale of real estate
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to ensure a clean title. Pursuant to Anderson, we hold that the furnishing of the
letter is not covered by the CSPA, and that the trial court correctly dismissed Barger’s
claim.
Unjust Enrichment
{¶15} Barger alleged, in the alternative as permitted by Civ.R. 8(E)(2), that
EMS was unjustly enriched by the fee it charged for the certification letter. To
establish a claim of unjust enrichment, Barger needed to plead facts establishing that
(1) she conferred a benefit on EMS, (2) EMS was aware of the benefit, and (3) it
would be unjust for EMS to retain the benefit. See Cincy Oil Queen City, LLC v.
Lehigh Gas-Ohio, LLC, 2016-Ohio-4611, 66 N.E.3d 1226, ¶ 19 (1st Dist.).
{¶16} Barger’s complaint states that EMS charged an exorbitant and
unjustifiable fee (ten to twenty times a typical fee) under circumstances where she
had no choice but to pay, i.e.—she had to pay the fee or could not sell her house—and
that equity requires EMS to return its ill-gotten gains. Specifically, Barger pleaded,
“In order to close on the sale of the Property she had to provide a Certification Letter
to the title company.” The complaint also alleged, “The furnishing of the
Certification Letter is a prerequisite to the closing of the sale or refinancing of a
property governed by a HOA. * * * Owners of condominium units or houses in
planned communities have no alternative other than obtaining the Certification
Letter from the HOA or its agent(s).” Barger “requested the certification letter from
EMS, which charged her $495 to provide it.” And finally, the complaint alleged that
the fee “is totally unrelated to the actual cost of the service it provides” and “is
substantially in excess of the price customarily charged by other property
management companies * * * .”
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{¶17} The trial court incorrectly dismissed this claim on the basis that Barger
was not a party to the management agreement between the HOA and EMS, and was
also not a third-party beneficiary of it. Thus, the court determined EMS did not
breach a duty to Barger by charging an allegedly exorbitant fee for the letter. While
this was the proper basis for dismissing Barger’s breach of the management
agreement claim, Barger’s unjust enrichment claim lies outside of that agreement.
This claim is sufficiently plead and stands on its own. We therefore reverse that part
of the trial court’s judgment dismissing Barger’s unjust enrichment claim.
Conclusion
{¶18} Barger’s assignment of error is sustained in part and overruled in part.
We reverse that part of the judgment dismissing her unjust enrichment claim, and
remand this cause for further proceedings. In all other respects, the trial court’s
judgment is affirmed.
Judgment affirmed in part, reversed in part, and cause remanded.
DETERS, J., concurs.
ZAYAS, P.J., concurs in part and dissents in part.
ZAYAS, P.J., concurring in part and dissenting in part.
{¶19} While I concur with most of the majority’s opinion, I would reach a
different result on Barger’s claim for unjust enrichment.
Barger Asked EMS Not the HOA For the Certificate
{¶20} The majority states that Barger “had no choice but to pay” EMS
because “she had to pay the fee or could not sell her house.” However, this is not
reflected in the record, and Barger’s complaint does not allege that certification
letters were not available from the HOA. Barger, as an owner of a lot in Fairfield
Ridge Subdivision, was a member of the HOA pursuant to the declarations. Barger
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alleges in her complaint that she needed a certification letter to close on the sale of
her property and that she requested it from EMS. Barger’s complaint does not state
why she asked EMS and not the HOA for the letter. Barger’s complaint also does not
allege that she did not know EMS’s fee when she asked for the certification letter.
The declarations, the bylaws, and the Ohio Revised Code only bind the HOA or its
board to provide certification letters to HOA members and to charge a reasonable fee
for the letters.
Barger Failed to Establish that the Authority to Provide
Certification Letters was Delegated to EMS
{¶21} Barger’s complaint alleges that under the management contract
between the HOA and EMS, EMS “agreed to assume the Board’s obligations under
the recorded Declaration and to be bound by the terms of the recorded Declaration.”
However, Barger did not plead any facts to support that the HOA delegated the task
of providing certification letters to EMS. Rather, Barger’s complaint recites the
clauses of the contract outlining the services EMS would perform for a flat fee and
services that would be billed at an hourly rate implying certification letters are
somehow included. Neither of these sections, however, mention certification letters.
While the rest of the management contract specifies which of the HOA’s and the
board’s obligations were delegated to EMS, it does not enumerate the obligation to
provide certification letters to EMS. The contract does not address certification
letters at all.
{¶22} The majority concedes that the management contract between the
HOA and EMS does not specifically delegate the obligation to provide certification
letters to EMS, but states, “in its contract with the HOA, EMS agreed to the
‘maintenance of records and files for individual homeowners,’ and to collect and
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account for assessments. This apparently included the responsibility to provide
certification letters since EMS provided one here.” (Emphasis added.) Accordingly,
the majority assumes EMS is obligated under the management contract to provide
the letter to HOA members, but the complaint contains no factual basis for that
assumption. In fact, this assumption actually contradicts paragraph 14 of the
contract which provides that there be a single point of contact between the HOA
board and EMS, and that EMS would be available to individual members of the HOA
only in the event of “extreme emergency.” The fact that Barger asked EMS for a
certification letter and it provided her with one did not obligate them to charge a
“reasonable fee” for it.
Unjust Enrichment
{¶23} Barger alleges that “EMS has been unjustly enriched at the expense of
Plaintiff” but unsupported conclusions are not taken as admitted by a motion to
dismiss and are not sufficient to withstand such a motion. Mitchell, 40 Ohio St. 3d at
193, 532 N.E.2d 753; Richardson v. Clinical Computing P.L.C., 2016-Ohio-8065, 69
N.E.3d 754, ¶ 38 (1st Dist.). Barger’s complaint only alleges that EMS charged
substantially more than other management companies and that the amount was not
the actual cost of providing the certification letter. While the majority sets out the
elements of unjust enrichment for Barger, unjust enrichment does not lie in
situations where there is a “valid but unequal bargain.” Lehigh Gas-Ohio, L.L.C.,
2016-Ohio-4611, 66 N.E.3d 1226, at ¶ 20-21, citing Ryan v. Rival Mfg. Co., 1st Dist.
Hamilton No. C-810032, 1981 WL 10160 (Dec. 16, 1981).
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Standard of Review
{¶24} The majority correctly cites our standard of review on a motion to
dismiss. “[W]e must presume that all factual allegations of the complaint are true
and make all reasonable inferences in favor of the non-moving party.” Mitchell, 40
Ohio St. 3d at 192, 532 N.E.2d 753. The majority, however, presumes facts that were
not pleaded in Barger’s complaint and makes inferences that are not supported by
the record. See Fancher v. Fancher, 8 Ohio App. 3d 79, 83, 455 N.E.2d 1344 (1st
Dist.1982) (a complaint must allege facts from which an inference may fairly be
drawn); Munday v. Lincoln Hts., 1st Dist. Hamilton No. C-120431, 2013-Ohio-3095
¶ 28 (a complaint must at least set forth the circumstances entitling the party to
relief); Poole v. Lenzly, 1st Dist. Hamilton No. C-130141, 2013-Ohio-4148 ¶ 7
(pleading standards may be minimal but they are not meaningless). The majority
infers that Barger had no choice but to ask EMS for the certification letter, that she
had no choice but to pay EMS’s fee, that EMS had a duty to provide certification
letters albeit without the requirement of charging a reasonable fee, that because EMS
charged more than other companies for certification letters Barger has stated a claim
for unjust enrichment, that under these circumstances it would be unjust for EMS to
retain the benefit, and “that equity requires EMS to return its ill-gotten gains.” None
of those facts are pleaded in the complaint.
Conclusion
{¶25} While it may be true that EMS provided the certification letter for a
larger fee than that charged by others, we are ultimately bound by the record and
pleadings before us. Taking the facts actually pleaded in Barger’s complaint as true
and construing them in her favor, Barger fails to state a claim for unjust enrichment,
and I would affirm the trial court’s dismissal of all of Barger’s claims.
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Please note:
This court has recorded its own entry on the date of the release of this opinion.
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