Stepp v. Proficient Transport, Inc. , 2017 Ohio 8007 ( 2017 )

[Cite as Stepp v. Proficient Transport, Inc., 2017-Ohio-8007.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
Shawn Stepp, :
Plaintiff-Appellee, :
No. 17AP-376
v. : (C.P.C. No. 15CV-11457)
Proficient Transport, Inc., : (ACCELERATED CALENDAR)
Defendant-Appellant. :
D E C I S I O N
Rendered on September 29, 2017
On brief: Robert Huff Miller LLC, and Robert Huff Miller,
for appellee. Argued: Robert Huff Miller.
On brief: Scott R. Mergenthaler, for appellant. Argued:
Scott R. Mergenthaler.
APPEAL from the Franklin County Court of Common Pleas
DORRIAN, J.
{¶ 1} Defendant-appellant, Proficient Transport, Inc. ("Proficient"), appeals from
a judgment of the Franklin County Court of Common Pleas granting the motion for
summary judgment filed by plaintiff-appellee, Shawn Stepp, on Proficient's
counterclaims. Because we conclude the trial court did not err by finding that Proficient
was prohibited from bringing claims in Ohio courts because it was a foreign corporation
transacting business in Ohio, and was not exempt from the foreign corporation licensure
requirement under Ohio law, we affirm.
I. Facts and Procedural History
{¶ 2} On December 18, 2015, Stepp filed a complaint in the Franklin County
Court of Common Pleas for conversion, replevin, breach of contract, deceptive trade
practices, wrongful competition, tortious interference, defamation, unjust enrichment,
No. 17AP-376 2
negligence, and injunctive relief. As relevant to the present appeal, Stepp asserted
Proficient was an Illinois corporation operating in the regional intermodal markets of
Chicago and Elwood, Illinois, and Columbus, Ohio, and that one of Proficient's two
primary facilities was located in Obetz, Ohio. Stepp further asserted he drove trucks as an
independent contractor for Proficient, and that he entered into an agreement to purchase
two trucks from Proficient under an installment plan whereby payments would be
deducted from amounts Proficient owed to Stepp. Stepp claimed that the agreed amount
was deducted over time but that Proficient failed to deliver title to the trucks and
wrongfully repossessed one of them. Stepp also filed a motion for temporary restraining
order and preliminary injunction.
{¶ 3} Proficient filed an answer and counterclaim in which it asserted that it was
an Illinois corporation with offices in Chicago, Illinois, and Obetz, Ohio. Proficient
admitted it entered into a purchase agreement with Stepp for two trucks. Proficient
further asserted that on December 21, 2015, the parties reached a settlement agreement
resolving their disputes. Proficient asserted counterclaims against Stepp for breach of
contract, breach of settlement agreement, action on account, unjust enrichment,
promissory estoppel, trespass, trespass to chattels, fraudulent inducement, negligent
misrepresentation, and conversion.
{¶ 4} Stepp filed a motion for summary judgment on Proficient's counterclaims,
asserting that Proficient lacked capacity to maintain any cause of action because it was a
foreign corporation and had not complied with the licensure requirement for foreign
corporations under Ohio law. Proficient filed a memorandum in opposition, asserting
that it was exempt from the foreign corporation licensure requirement pursuant to
statute. The trial court granted Stepp's motion for summary judgment finding Proficient
was a foreign corporation and had not obtained a license to transact business in Ohio
from the secretary of state. The trial court concluded Proficient was not exempt from the
licensure requirement because it was not solely engaged in interstate commerce in Ohio
and, for purposes of the transactions at issue in the counterclaim, was not a public utility
company engaged in interstate commerce in Ohio.
No. 17AP-376 3
II. Assignment of Error
{¶ 5} Appellant appeals and assigns the following sole assignment of error for our
review:
The Trial Court erred in dismissing the Counterclaim of
Defendant-Appellant where it failed to find that Defendant-
Appellant was not except from registration in Ohio by virtue
of the provisions of Ohio R.C. Section 1703.02.
III. Discussion
{¶ 6} An order granting summary judgment is subject to de novo review. Capella
III, L.L.C. v. Wilcox, 190 Ohio App.3d 133, 2010-Ohio-4746, ¶ 16 (10th Dist.), citing
Andersen v. Highland House Co., 93 Ohio St.3d 547, 548 (2001). "[D]e novo appellate
review means that the court of appeals independently reviews the record and affords no
deference to the trial court's decision." (Internal quotations and citations omitted.) Holt
v. State, 10th Dist. No. 10AP-214, 2010-Ohio-6529, ¶ 9. Summary judgment is
appropriate where "the moving party demonstrates that: (1) there is no genuine issue of
material fact, (2) the moving party is entitled to judgment as a matter of law, and
(3) reasonable minds can come to but one conclusion and that conclusion is adverse to the
party against whom the motion for summary judgment is made." Cappella III at ¶ 16,
citing Gilbert v. Summit Cty., 104 Ohio St.3d 660, 2004-Ohio-7108, ¶ 6. In ruling on a
motion for summary judgment, the court must resolve all doubts and construe the
evidence in favor of the non-moving party. Pilz v. Ohio Dept. of Rehab. & Corr., 10th
Dist. No. 04AP-240, 2004-Ohio-4040, ¶ 8. Therefore, we undertake an independent
review to determine whether Stepp was entitled to judgment as a matter of law on
Proficient's counterclaims.
{¶ 7} Ohio law provides that, with certain exceptions, "[n]o foreign corporation
* * * shall transact business in this state unless it holds an unexpired and uncanceled
license to do so issued by the secretary of state." R.C. 1703.03. The law further provides
that "no foreign corporation that should have obtained such license shall maintain any
action in any court until it has obtained such license." R.C. 1703.29(A). The licensure
requirements for foreign corporations "do not apply to corporations engaged in this state
solely in interstate commerce * * *; to credit unions, title guarantee and trust companies,
No. 17AP-376 4
bond investment companies, and insurance companies; or to public utility companies
engaged in this state in interstate commerce." R.C. 1703.02.
{¶ 8} Proficient argued in opposition to Stepp's motion for summary judgment
that it was exempt from the foreign corporation licensure requirement under R.C. 1703.03
because it was engaged solely in interstate commerce in Ohio or because it was a public
utility engaged in interstate commerce in Ohio. The trial court rejected these contentions,
holding that Proficient was not engaged solely in interstate commerce in Ohio because it
had a permanent facility and employees in Ohio. Thus, the court concluded, Proficient
was doing business in Ohio. The court further held that Proficient did not meet the
statutory definition of a public utility for purposes of the transactions at issue in the
counterclaims because they involved the sale of motor vehicles to an Ohio resident and
the financing of those purchases, rather than the transportation of persons or property.
{¶ 9} It is undisputed that Proficient is incorporated under Illinois law and,
therefore, is a foreign corporation for purposes of R.C. Chapter 1703. It is also undisputed
that Proficient has not obtained a license to do business in Ohio from the secretary of
state. Therefore, we must consider whether either of the potentially relevant exceptions to
the foreign corporation licensure requirement apply to Proficient.
{¶ 10} First, we will consider whether Proficient was exempt from the licensure
requirement as a "corporation[] engaged in [Ohio] solely in interstate commerce." R.C.
1703.02. Other appellate courts considering this exception have noted that the term
"interstate commerce" is not defined in R.C. Chapter 1703 and have referred to general
rules of common usage. See Dot Sys., Inc. v. Adams Robinson Ents., Inc., 67 Ohio App.3d
475, 480 (4th Dist.1990); First Natl. Bank of Omaha v. Spirit Med. Transport, 2d Dist.
No. 2016-CA-8, 2017-Ohio-1468, ¶ 12. Those courts have held that interstate commerce
generally involves:
[C]ommerce between a point in one state and a point in
another state, between points in the same state through
another state or through a foreign country, between points in
a foreign country or countries through the United States, and
commerce between a point in the United States and a point in
a foreign country or in a territory or possession of the United
States, but only insofar as such commerce takes place in the
United States.
No. 17AP-376 5
Dot Sys. at 480, citing Black's Law Dictionary 735 (5th Ed.1979). In its memorandum in
opposition to summary judgment, Proficient asserted that its intermodal and motor
carrier business was solely engaged in interstate commerce, and supported this claim with
an affidavit from its president asserting that its intermodal business solely involved
interstate commerce. Beyond this bare assertion, however, the affidavit lacked any facts
to establish that Proficient's business in Ohio was limited to conducting interstate
commerce." Affidavits that merely set forth legal conclusions without stating supporting
facts are insufficient under Civ.R. 56." Deutsche Bank Natl. Trust Co. v. Thomas, 10th
Dist. No. 14AP-809, 2015-Ohio-4037, ¶ 19, citing Tolson v. Triangle Real Estate, 10th
Dist. No. 03AP-715, 2004-Ohio-2640, ¶ 12.
{¶ 11} The relevant question for determining whether Proficient was exempt from
the foreign corporation licensure requirement is whether it is engaged solely in interstate
commerce in this state or whether it is also doing business within Ohio.
"It is well-recognized * * * that a foreign corporation transacts
business within a state when 'it has entered the state by its
agents and is there engaged in carrying on and transacting
through them some substantial part of its ordinary or
customary business, usually continuous in the sense that it
may be distinguished from merely casual, sporadic, or
occasional transactions and isolated acts.' "
State ex rel. Physicians Commt. for Responsible Medicine v. Bd. of Trustees of Ohio State
Univ., 108 Ohio St.3d 288, 2006-Ohio-903, ¶ 21, quoting Auto Driveway Co. v. Auto
Logistics of Columbus, 188 F.R.D. 262, 265 (S.D.Ohio 1999), quoting Dot Sys. at 481. The
Supreme Court of Ohio has suggested that a foreign corporation's activities must be
"permanent, continuous, and regular to constitute 'doing business' in Ohio." Physicians
Commt. at ¶ 21.
{¶ 12} In Dot Systems, the Fourth District Court of Appeals held that a Kentucky
corporation was not engaged solely in interstate commerce in Ohio where it entered into a
subcontract to perform concrete work on a wastewater treatment plant being constructed
in Lawrence County, Ohio. The court reasoned that performance of the subcontract
would involve more than casual, sporadic, or occasional acts in Ohio, and that the
corporation would be transacting a substantial part of its ordinary or customary business
in the state. Id. at 481. Similarly, in L & W Supply Co., Inc. v. Constr. One, Inc., 3d Dist.
No. 17AP-376 6
No. 5-99-55 (Mar. 31, 2000), the Third District Court of Appeals held that a drywall
subcontractor with a principal place of business in Illinois was engaged in business in
Ohio when it contracted to provide labor and materials for installation of drywall at a site
in Ohio and brought workers in from outside the state to perform the work, which lasted
approximately three months. See also First Natl. at ¶ 13-14 (holding that a bank
transacted business in Ohio because it had an agent located in Ohio that solicited business
on its behalf on more than a casual or sporadic basis). Compare Cassorla Bros., Inc. v.
Midwest Fireworks, Mfg. Co., Inc., 11th Dist. No. 97-P-0082 (June 26, 1998) (holding
that trial court did not err by concluding that company was engaged solely in interstate
commerce in Ohio because it had no offices in Ohio, employed no sales people in the
state, did not specifically direct advertising to Ohio customers, and, other than the sale at
issue in the litigation, had never sold any products in Ohio).
{¶ 13} Proficient stated in its counterclaim that its principal office is located in
Chicago and that it also has a facility located in Obetz, Ohio. Further, Proficient stated
that two of its eight total employees are located at the facility in Obetz. Thus, while
Proficient may be engaged in interstate commerce in Ohio through its intermodal
business, it also has a permanent presence in Ohio. Without any indication by affidavit or
other evidence to the contrary, this indicates continuous activity in this state rather than
mere casual, sporadic, or occasional acts. Moreover, the counterclaims Proficient asserted
in the trial court involved sales of trucks within Ohio, the financing of those sales, and a
settlement agreement purporting to resolve Stepp's claims related to those transactions.
Therefore, Proficient was not engaged solely in interstate commerce in Ohio and was not
exempt from the foreign corporation licensure requirement on that basis. See Bendix
Autolite Corp. v. Midwesco Ents., Inc., 486 U.S. 888, 899 (1988) (Rehnquist, C.J.,
dissenting), citing Union Brokerage Co. v. Jensen, 322 U.S. 202 (1944) ("[W]here a
foreign corporation is engaged in both interstate and intrastate commerce in a particular
commodity, a State may require licensure in order to sue in connection with an intrastate
aspect of the business.").
{¶ 14} Second, we will consider whether Proficient was exempt from the licensure
requirement as a "public utility compan[y] engaged in [Ohio] in interstate commerce."
R.C. 1703.02. The term "public utility" is not defined in R.C. Chapter 1703. The trial
No. 17AP-376 7
court applied the definition of that term contained in R.C. Chapter 4905. Under those
statutes, a "public utility" is defined to include a "for-hire motor carrier." R.C.
4905.02(B)(1). The statutes further provide that a person or entity:
[Is a] for-hire motor carrier, when engaged in the business of
transporting persons or property by motor vehicle for
compensation, except when engaged in any of the operations
in intrastate commerce described in divisions (B)(1) to (9) of
section 4921.01 of the Revised Code, but including the
carrier's agents, officers, and representatives, as well as
employees responsible for hiring, supervising, training,
assigning, or dispatching drivers and employees concerned
with the installation, inspection, and maintenance of motor-
vehicle equipment and accessories.
R.C. 4905.03(B). The trial court concluded that Proficient generally qualified as a public
utility under this definition, but found that it was not a public utility for purposes of the
transactions at issue in the counterclaims because those transactions did not involve the
transportation of persons or property for compensation.
{¶ 15} Assuming for purposes of analysis that the definition contained in R.C.
Chapter 4905 applies to the use of the term "public utility" in R.C. 1703.02, we must
consider whether Proficient qualified as a public utility under that definition.1 Proficient
appears to argue that the trial court added additional exceptions to the definition of public
utility beyond those contained in the statue. We disagree. In construing a statute, it is
presumed that every word in the statute is intended to have some effect. DHSC, LLC v.
Ohio Dept. of Job & Family Servs., 10th Dist. No. 11AP-424, 2012-Ohio-1014, ¶ 29. R.C.
4905.02(B)(1) specifies that the term "public utility" includes a "for-hire motor carrier."
R.C. 4905.03(B) further provides that an individual or entity is a for-hire motor carrier
"when engaged in the business of transporting persons or property by motor vehicle for
compensation." (Emphasis added.) Thus, by implication, when an individual or entity is
not engaged in the business of transporting persons or property by motor vehicle for
compensation, it is not a for-hire motor carrier and, correspondingly, is not a public
1We note that some appellate courts have held that the definition of the term public utility contained in R.C.
Chapter 4905 may not apply to other contexts where the Revised Code refers to public utilities. See, e.g.,
Coventry Twp. v. Ecker, 101 Ohio App.3d 38, 41 (9th Dist.1995) ("[T]his court has repeatedly held that even
though an entity is considered a public utility for purposes of PUCO regulation under R.C. Chapter 4905,
that designation does not make it a public utility in fact for purposes of the zoning exemption in R.C.
519.211(A).").
No. 17AP-376 8
utility. As explained above, the transactions at issue in Proficient's counterclaims did not
involve the transportation of persons or property; rather, they involved sales of trucks and
financing of those sales. Therefore, Proficient was not operating as a for-hire motor
carrier for purposes of those transactions. In construing a similar definition for the term
"telephone company" pursuant to R.C. 4905.03(A), the United States District Court for
the Southern District of Ohio has held that a telephone company does not constitute a
public utility when it is not engaged in the business of transmitting telephonic messages.
Directory Sales Mgt. Corp. v. Ohio Bell Tel. Co., S.D.Ohio No. C84-773 (June 23, 1986)
("Thus, if engaged in the business of selling, advertising or listings in classified business
telephone directories, a telephone company is not a public utility and not within the
power and jurisdiction of the PUCO."). See also Yocca v. Leaders Moving Co., Franklin
C.P. No. 2014CV-4214 (Dec. 19, 2014) (holding that a moving company was not covered
by for-hire motor carrier exemption under Ohio Consumer Sales Practices Act because the
claims asserted in the case involved storage services rather than transportation of persons
or property). Because the transactions at issue in the counterclaims did not involve the
transportation of persons or property by motor vehicle for compensation, Proficient was
not exempt from the foreign corporation licensure requirement as a public utility engaged
in Ohio in interstate commerce.
{¶ 16} Accordingly, we overrule Proficient's assignment of error.
IV. Conclusion
{¶ 17} For the foregoing reasons, we overrule Proficient's sole assignment of error,
and affirm the judgment of the Franklin County Court of Common Pleas.
Judgment affirmed.
BROWN and HORTON, JJ., concur.