Rinehart v. Martin , 2013 Ohio 4966 ( 2013 )

[Cite as Rinehart v. Martin, 2013-Ohio-4966.]
IN THE COURT OF APPEALS
ELEVENTH APPELLATE DISTRICT
PORTAGE COUNTY, OHIO
SHERIDAN L. RINEHART, : OPINION
Plaintiff-Appellant, :
CASE NO. 2013-P-0036
- vs - :
TED MARTIN, et al., :
Defendants-Appellees. :
Civil Appeal from the Portage County Court of Common Pleas, Case No. 2010 CV
0168.
Judgment: Affirmed.
Louis R. Bertrand, 409 South Prospect Street, Ravenna, OH 44266 (For Plaintiff-
Appellant).
James E.J. Ickes and Joel A. Holt, Williams, Welser, Kratcoski & Can, L.L.C., 11 South
River Street, Suite A, Kent, OH 44240 (For Defendants-Appellees Ted and Mindi
Martin, Grandview Memorial Park, Inc. and Fairview Memorial Park, Inc.).
William D. Lentz, Sandvoss & Lentz, 228 West Main Street, P.O. Box 248, Ravenna,
OH 44266 (For Defendant-Appellee Portage Community Bank).
COLLEEN MARY O’TOOLE, J.
{¶1} Sheridan L. Rinehart appeals from judgment entries of the Portage County
Court of Common Pleas, denying his motion for summary judgment, and granting the
motion for judgment on the pleadings of Ted and Mindi Martin, in a contract dispute.
We affirm.
{¶2} From 1966 until 2008, appellant Mr. Rinehart was the Chief Operating
Officer of Grandview Memorial Park, Inc. (Grandview) a nonprofit corporation organized
under the laws of the state of Ohio, operating a public cemetery in Ravenna, Ohio.
From 1982 until 2008 Mr. Rinehart was also the Chief Operating Officer of Fairview
Memorial Park, Inc. (Fairview) a nonprofit corporation organized under the laws of the
state of Ohio, operating a public cemetery in Delaware County, Ohio. In 2006 both
properties were listed for sale with the Hoyt Matise real estate brokerage firm.
{¶3} On or about February 11, 2008, Mr. Rinehart purported to sell Grandview
and Fairview to Ted and Mindi Martin pursuant to a stock-asset purchase agreement
(Agreement 1). Pursuant to Agreement 1, the Martins were to buy the stock and assets
of Grandview and Fairview for $110,000.00, payable to Mr. Rinehart and secured by a
mortgage security agreement and fixture filing. Despite the fact that Grandview and
Fairview are nonprofit corporations, Agreement 1 identifies Mr. Rinehart as “doing
business as Grandview Memorial Park and Fairview Memorial Park.”
{¶4} According to the Martins, upon assuming control of Grandview and
Fairview they discovered the liabilities of the cemeteries far exceeded those disclosed
by Mr. Rinehart. The Martins also state that they discovered that Mr. Rinehart was
unable to sell the assets of the cemeteries as they were owned by nonprofit entities.
The Martins maintain that, in order to resolve these conflicts, they negotiated a second
agreement with Mr. Rinehart (Agreement 2) in May 2008. According to the Martins,
Agreement 2 terminated Agreement 1 and all liabilities related to the mortgage.
Agreement 2 also stated that Mr. Rinehart, as sole shareholder and trustee of
Grandview and a trustee of Fairview, appointed the Martins as directors and trustees of
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both Grandview and Fairview and “assigns to the Martins all right, title and interests that
he (Mr. Rinehart) possesses in any capacity to own and operate Grandview and
Fairview.” Throughout this matter Mr. Rinehart has maintained that he never signed
Agreement 2, but did admit during deposition that the signature looks like his.
{¶5} In January 2010 Mr. Rinehart filed a breach of contract complaint in the
Portage County Court of Common Pleas seeking to have the court order the Martins to
specifically perform the conditions and provisions of Agreement 1, or order the Martins
to transfer back to him all stock, accounts receivables and any other assets the Martins
received under Agreement 1. Mr. Rinehart’s complaint does not reference Agreement
2. In their answer the Martins stated that Mr. Rinehart’s claims under Agreement 1
were barred under the terms of Agreement 2, a copy of which they attached to their
answer.
{¶6} In January 2011 the Martins filed their first motion for summary judgment,
arguing that Agreement 2 superseded Agreement 1 and released the Martins from any
and all liabilities under Agreement 1. The Martins also alleged that as Mr. Rinehart
sought to profit from the sale of Grandview and Fairview, both nonprofit entities,
Agreement 1 was void under R.C. 1702.02(C), 1702.49 and 1721.06.
{¶7} In May 2011 Mr. Rinehart filed his own motion for summary judgment
stating that he did not knowingly sign Agreement 2 and that there was no evidence to
support the Martins’ assertion that Agreement 1 was void, and demanding enforcement
of Agreement 1. On July 19, 2011 the trial court denied both parties’ motions for
summary judgment.
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{¶8} After taking Mr. Rinehart’s deposition and obtaining an expert handwriting
analysis, the Martins filed their second motion for summary judgment in February 2012
arguing, among other things, that the evidence showed Mr. Rinehart did sign
Agreement 2. Mr. Rinehart filed his opposition to the Martins’ second motion in May
2012. On June 12, 2012 the trial court denied the Martins’ second motion for summary
judgment.
{¶9} On June 18, 2012 the Martins filed a motion for judgment on the pleadings
pursuant to Civ.R. 12(C), arguing that Mr. Rinehart’s attempt to sell the stock and
assets of the nonprofit corporations and retain the proceeds rendered Agreement 1 void
and unenforceable. Also on June 18, 2012 the Martins filed a counterclaim against Mr.
Rinehart for breach of contract and fraud. Mr. Rinehart responded to the motion for
judgment on the pleadings arguing that if Agreement 1 was void then the proper relief
was to transfer Grandview and Fairview back to him. Otherwise, Mr. Rinehart argued,
the Martins would retain control of the properties without due consideration. The
Martins responded that by assuming the debts and liabilities of Grandview and Fairview
under Agreement 2, they did pay consideration.
{¶10} On October 31, 2012, the trial court held that as Agreement 1 attempted
the sale of nonprofit corporations for pecuniary gain, it was void ab initio. The trial court
then dismissed Mr. Rinehart’s complaint. On March 28, 2013 the Martins voluntarily
dismissed their counterclaim under Civ.R. 41(A)(1). This appeal timely followed.
{¶11} Mr. Rinehart assigns the following errors for our review:
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{¶12} “[1.] The trial court erred by granting the Defendants-Appellees’ motion for
judgment on the pleadings pursuant to Civ.R. 12(C).
{¶13} “[2.] The trial court erred by overruling the Plaintiff-Appellant’s motion for
summary judgment.”
{¶14} Mr. Rinehart’s first assignment of error involves Civ.R. 12(C), which states
that “[a]fter the pleadings are closed but within such times as not to delay the trial, any
party may move for judgment on the pleadings.” A Civ.R. 12(C) motion “presents only
questions of law, and determination of the motion for judgment on the pleadings is
restricted solely to the allegations in the pleadings.” Peterson v. Teodosio, 34 Ohio
St.2d 161, 166 (1973). The party defending against the motion is “entitled to have all
the material allegations in the complaint, with all reasonable inferences to be drawn
therefrom, construed in her favor as true.” Id. at 165-166.
{¶15} “Because the review of a decision to dismiss a complaint pursuant to
Civ.R. 12(C) presents only questions of law, * * * our review is de novo.” Rayess v.
Educational Comm. for Foreign Med. Graduates, 134 Ohio St.3d 509, 2012-Ohio-5676,
¶18.
{¶16} It has long been established that profits may not be distributed to anyone
out of the funds of a cemetery corporation. Newell v. The Cleveland Cemetery Assn.,
61 Ohio App. 476, paragraph one of the syllabus (8th Dist.1938). The net effect of
Agreement 1 is to distribute profits from Grandview and Fairview to Mr. Rinehart.
“Courts of law and courts of equity will decline to enforce obligations created by contract
if the contract is illegal or the consideration given is illegal, immoral, or against public
policy.” Langer v. Langer, 123 Ohio App.3d 348, 354 (2d Dist. 1997).
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{¶17} The trial court correctly determined that there was no manner in which the
material allegations in his complaint, however construed, could result in judgment in his
favor.
{¶18} Mr. Rinehart argues vigorously that if Agreement 1 was illegal and void,
then the trial court should have applied the equitable remedy of rescission, and returned
Grandview and Fairview to him. In his merit brief, Mr. Rinehart cited no authority to us
establishing that rescission is applicable to this situation, but October 17, 2013, he filed
supplemental authority, that being this court’s decision in Dahlstrom v. Roulette Pontiac-
Cadillac GMC, Inc., 11th Dist. Lake No. 9-182, 1983 Ohio App. LEXIS 15118 (June 24,
1983). In that case, Ms. Dahlstrom signed two contracts with Roulette, to purchase two
cars, financing part of the deal with a trade-in of her old car. Id. at *1. Several days
later, she returned to Roulette, demanding that the contracts be cancelled, and her old
car returned to her. She stated she had been drunk when signing the contracts, and
lacked capacity to enter them. Id. at *2. Roulette refused to return her old car (which it
later sold), or to rescind the contracts. Id.
{¶19} The matter went to jury trial. The jury awarded Ms. Dahlstrom $5,000, and
Roulette, $1,000, on a counterclaim. Roulette appealed. Id. It argued that Ms.
Dahlstrom failed to establish that she lacked capacity to enter the contracts due to
intoxication, and that she also failed to establish that rescission was required by the
necessary evidentiary standard. Id. at *3-4. This court affirmed the judgment of the trial
court. Id. at *5.
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{¶20} Mr. Rinehart argues that Dahlstrom establishes that rescission may be an
appropriate remedy, even when dealing with a contract that is void ab initio. Assuming,
arguendo, that this is correct, does not help in this particular situation. When the trial
court granted the Martins’ motion for judgment on the pleadings, their counterclaim
remained pending. The time had not yet arrived for application of a remedy.
Thereafter, the Martins voluntarily dismissed their counterclaim, which meant nothing
remained before the trial court to decide.
{¶21} The first assignment of error lacks merit.
{¶22} In his second assignment of error Mr. Rinehart states that the trial court
erred by overruling his motion for summary judgment. Mr. Rinehart filed his motion
along with his memorandum in opposition to the Martins’ motion for summary judgment.
In his motion, Mr. Rinehart sought summary judgment on the mortgage security
agreement that was part of Agreement 1.
{¶23} “Summary judgment is a procedural tool that terminates litigation and thus
should be entered with circumspection. Davis v. Loopco Industries, Inc., 66 Ohio St.3d
64, 66, * * * (1993). Summary judgment is proper where (1) there is no genuine issue of
material fact remaining to be litigated; (2) the movant is entitled to judgment as a matter
of law; and (3) it appears from the evidence that reasonable minds can come to but one
conclusion, and, viewing the evidence in the non-moving party’s favor, that conclusion
favors the movant. See e.g. Civ.R. 56(C).
{¶24} “When considering a motion for summary judgment, the trial court may not
weigh the evidence or select among reasonable inferences. Dupler v. Mansfield
Journal Co., 64 Ohio St.2d 116, 121, * * * (1980). Rather, all doubts and questions
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must be resolved in the non-moving party’s favor. Murphy v. Reynoldsburg, 65 Ohio
St.3d 356, 359, * * * (1992). Hence, a trial court is required to overrule a motion for
summary judgment where conflicting evidence exists and alternative reasonable
inferences can be drawn. Pierson v. Norfork Southern Corp., 11th Dist. Ashtabula No.
2002-A-0061, 2003-Ohio-6682, ¶36. In short, the central issue on summary judgment is,
‘whether the evidence presents sufficient disagreement to require submission to a jury
or whether it is so one-sided that one party must prevail as a matter of law.’ Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 251-252, * * * (1986). On appeal, we review a trial
court’s entry of summary judgment de novo. Grafton v. Ohio Edison Co., 77 Ohio St.3d
102,105, * * * (1996). (Parallel citations omitted.) Meloy v. Circle K Store, 11th Dist.
Portage No. 2012-P-0158, 2013-Ohio-2837, ¶5-6.
{¶25} Mr. Rinehart argues that the trial court erred in overruling his motion for
summary judgment because Agreement 2 did not comply with R.C. 5301.01 and was
therefore void. However, Mr. Rinehart’s own motion for summary judgment was
directed to enforcement of the mortgage security agreement which was part of
Agreement 1. We have already determined that the trial court correctly found
Agreement 1 to be illegal and void. Consequently, the trial court did not err in failing to
enforce the unenforceable rights under the mortgage security agreement forming part of
Agreement 1.
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{¶26} For the foregoing reasons, appellant’s assignments of error are not well-
taken. The judgment of the Portage County Court of Common Pleas is affirmed. It is
the further order of this court that appellant is assessed costs herein taxed. The court
finds there were reasonable grounds for this appeal.
DIANE V. GRENDELL, J.,
CYNTHIA WESTCOTT RICE, J.,
concur.
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