Revocable Living Trust of Mandel v. Lake Erie Util. Co. , 2012 Ohio 5718 ( 2012 )

[Cite as Revocable Living Trust of Mandel v. Lake Erie Util. Co., 2012-Ohio-5718.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 97859
REVOCABLE LIVING TRUST OF
STEWART I. MANDEL
PLAINTIFF-APPELLANT
vs.
LAKE ERIE UTILITIES CO., ET AL.
DEFENDANTS-APPELLEES
JUDGMENT:
AFFIRMED IN PART, REVERSED
IN PART, AND REMANDED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Probate Division
Case No. 10 ADV 163717
BEFORE: Celebrezze, J., Stewart, P.J., and Sweeney, J.
RELEASED AND JOURNALIZED: December 6, 2012
ATTORNEY FOR APPELLANT
Orville E. Stifel, II
5310 Franklin Boulevard
P.O. Box 602780
Cleveland, Ohio 44102
ATTORNEYS FOR APPELLEES
For Lake Erie Utilities Co.
James C. Barney
Kocher & Gillum
101 1/2 Madison Street
Port Clinton, Ohio 43452
For Burgundy Bay Association, Inc.
David M. Buda
Burgundy Bay Association, Inc.
35 East Livingston Avenue
Columbus, Ohio 43215
For Harry Giltz, Sr.
Harry Giltz, Sr., pro se
4835 Munson
Canton, Ohio 44718
For David W. Thompson, et al.
David Thompson, pro se
9967 Sage Creek Drive
Galena, Ohio 43021
For Trust Beneficiaries
Joseph Rosalina
Russo, Rosalina & Co., L.P.A.
691 Richmond Road
Richmond Heights, Ohio 44143
FRANK D. CELEBREZZE, JR., J.:
{¶1} Appellant, Morris Mandel, trustee of the Revocable Living Trust of
Stewart I. Mandel, brings this appeal following the dismissal of his
declaratory judgment action pursuant to Civ.R. 12(b)(1) and 12(b)(6). The
trustee argues that he has standing to bring this contract dispute, the
Cuyahoga County Probate Court has jurisdiction to hear it, and Cuyahoga
county is the proper venue. After a thorough review of the record and law,
we affirm in part, reverse in part, and remand.
I. Factual and Procedural History
{¶2} Stewart Mandel established an inter vivos trust in 1996. The
trust instrument named Stewart trustee during his life and Farmer’s Trust
Company (“Farmers”) as successor trustee on Stewart’s death. Morris was
also tasked with serving as trustee during Stewart’s life if Stewart ever
became incapacitated. Morris was also named as a trust protector with the
power to supervise and remove Farmers and appoint a successor trustee after
Stewart’s death.
{¶3} Stewart owned three parcels of land on Middle Bass Island in
Ottawa county, Ohio, and on November 19, 1991, he entered into an
assessment agreement with Burgundy Bay Association, Inc. (“Burgundy
Bay”), a homeowners’ association, and Lake Erie Utility Company (“Lake
Erie”), the utility company servicing the neighborhood. The agreement
allowed homeowners with undeveloped contiguous parcels to defer or waive
assessments 1 on those parcels so long as they remained undeveloped. In
1996, the properties were transferred to the trust. The agreement stated it
was binding on successors and assignees.
{¶4} Following Stewart’s death in 2010, Farmers administered the
trust while Stewart’s estate was probated. Morris asserts in his opposition
to appellees’ motion to dismiss that following the close of the probate estate,
he exercised his powers as trust protector to remove Farmers and appoint
himself as successor trustee.
{¶5} While Farmers was trustee, it determined to sell the three parcels
on Middle Bass Island and market the two undeveloped parcels separately as
land capable of development. Burgundy Bay and Lake Erie filed liens
against the property for past assessments plus interest, which it alleged
became due when Farmers intended to sell the parcels as separate lots.
{¶6} On November 24, 2010, Morris brought a declaratory judgment
action in the Cuyahoga County Probate Court claiming to be brought in his
capacity as trustee as well as in his individual capacity as beneficiary of the
trust. He sought construction of the assessment agreement as well as
damages for slander of title and an injunction to remove the liens that created
a cloud on the title.
This is the crux of the dispute in this case.
1
{¶7} From various title records submitted by appellees, Morris appears
not to have been trustee at the time the suit was filed. Morris filed a notice
of successor trustee effective May 2, 2011, indicating he removed Farmers
and named himself third successor trustee on April 29, 2011. In the mean
time, Burgundy Bay and Lake Erie used this apparent lack of authority to
attempt to have the case terminated for lack of standing by filing a motion to
dismiss or in the alternative to transfer venue. They also argued that the
probate court lacked subject matter jurisdiction and that venue did not lie in
Cuyahoga county. Morris opposed the motion, and the trial court allowed
significant briefing and a hearing on the issues raised by appellees.2
{¶8} On December 22, 2011, the trial court granted the motion to
dismiss filed by Burgundy Bay and Lake Erie, finding that Morris did not
have standing because he was not the trustee at the time the action was filed,
the probate court did not have subject matter jurisdiction over what
amounted to a contract dispute, and venue was appropriate in Ottawa, not
Cuyahoga, county. The probate court dismissed the case, but the journal
entry memorializing its decision did not indicate whether the dismissal was
with or without prejudice. Morris, as trustee, timely appealed that decision to
this court for review, assigning four errors:
The trial court provided the parties with an opportunity for a hearing, but both parties
2
decided to rely on significant briefing instead.
I. The trial court erred in holding that Morris Mandel lacked
standing to maintain the underlying lawsuit.
II. The trial court erred in holding that it lacked jurisdiction
over the subject matter of the complaint.
III. The trial court erred in rendering a purely advisory opinion
regarding venue, opining that, “Cuyahoga county is not the
proper venue.”
IV. The trial court erred in failing to specify that its dismissal
was a dismissal without prejudice.
II. Law and Analysis
{¶9} The trustee first argues that he had standing to institute the
declaratory judgment actions against appellees.
A. Standing
{¶10} “Standing determines ‘whether a litigant is entitled to have a
court determine the merits of the issues presented.’ Whether a party has
established standing to bring an action before the court is a question of law,
which we review de novo.” (Citations omitted.) Moore v. Middletown, Ohio
133 Ohio St.3d 55, 2012-Ohio-3897, 975 N.E.2d 977, ¶ 20.
“To succeed in establishing standing, plaintiffs must show that
they suffered (1) an injury that is (2) fairly traceable to the
defendant’s allegedly unlawful conduct, and (3) likely to be
redressed by the requested relief. These three factors — injury,
causation, and redressability — constitute ‘the irreducible
constitutional minimum of standing.’” (Citations omitted.)
Id. at ¶ 22.
{¶11} “A motion to dismiss for lack of standing is treated as a motion to
dismiss pursuant to Civ.R. 12.” Estate of Okos v. Farley, 6th Dist. No.
L-03-1343, 2004-Ohio-2882, ¶ 7, citing A-1 Nursing Care of Cleveland, Inc. v.
Florence Nightingale Nursing, Inc., 97 Ohio App.3d 623, 626-627, 647 N.E.2d
222 (8th Dist.1994). Specifically, a lack of standing may properly be raised
in a motion to dismiss premised on Civ.R. 12(B)(6). Culler v. Culler, 5th
Dist. No. 2010 CA 0042, 2010-Ohio-5095. However, the court must confine
its analysis of the standing issue to the complaint, just as it must for all
motions to dismiss for failure to state a claim, unless the court converts the
motion to one for summary judgment and gives the parties proper notice. Id.
at ¶ 18.
{¶12} Here, the complaint and amended complaint both stated Morris
was the trustee of the Mandel Trust at the time the action was filed. They
also stated Morris was a present interest trust beneficiary. Evidence that
Morris was not the trustee at the time the complaint was filed was submitted,
but the trial court could not rely on this information unless it converted the
motion to one for summary judgment. The court must presume as true
factual allegations made in the complaint. Id.
{¶13} Therefore, taking the allegations in the complaint as true, Morris
had standing to bring suit. There is no evidence in the record that the trial
court converted the motion to dismiss to one for summary judgment, even
though the court allowed ample opportunity to brief the issue and allowed the
parties to submit evidence during a hearing.
{¶14} Even if evidence was submitted showing that Morris was not the
trustee at the time, the action was properly filed before the trial court
because Morris still had standing to bring the action in his individual
capacity. Papiernik v. Papiernik, 45 Ohio St.3d 337, 544 N.E.2d 664 (1989).
Here, we find Morris, as a present trust beneficiary, had an interest in the
contract dispute. Burgundy Bay and Lake Erie had filed liens against
property of the trust, which significantly affected the property’s value. This
injury would be borne directly by Morris because of the diminution in value of
trust assets. This injury is directly traceable to the actions of Burgundy Bay
and Lake Erie. Finally, the declaratory judgment action would provide relief
to Morris. The three factors of standing — injury, causation, and
redressability — are all met in this case.
{¶15} While this may raise issues regarding the joining of necessary
parties if the actual trustee was not joined in the suit, at the time the trial
court dismissed the action, Morris had affirmatively demonstrated that he
was the trustee. A line of cases involving a different area of jurisprudence in
this jurisdiction holds that the question of standing must be examined at the
time the complaint is filed. Wells Fargo Bank, N.A. v. Jordan, 8th Dist. No.
91675, 2009-Ohio-1092; CitiMortgage, Inc. v. Slack, 8th Dist. No. 94899,
2011-Ohio-613, ¶ 10; Deutsche Bank Natl. Trust Co. v. Triplett, 8th Dist. No.
94924, 2011-Ohio-478. See also Fed. Home Loan Mtge. Corp. v.
Schwartzwald, Supreme Court Nos. 2011-1201 and 2011-1362,
2012-Ohio-5017 (Apr. 4, 2012). However, those decisions hinge on Civ.R.
17(A) and whether a plaintiff is the real party in interest in a foreclosure
action. Jordan at ¶ 21. Here, as a trust beneficiary, Morris is an interested
party with a stake in the litigation at the time it was filed. This satisfied
Civ.R. 17(A).
{¶16} After taking the allegations from the complaint as true, the
trustee had standing to bring a declaratory judgment action against
Burgundy Bay and Lake Erie.
B. Subject Matter Jurisdiction
{¶17} Appellees also argued in their motion to dismiss that the trial
court lacked subject matter jurisdiction, an argument premised on Civ.R.
12(B)(1).
After a party files a Civ.R. 12(B)(1) motion to dismiss, the trial
court must determine whether the complaint contains allegations
of a cause of action that the trial court has authority to decide.
The Ohio Supreme Court has further noted that the “trial court is
not confined to the allegations of the complaint when determining
its subject-matter jurisdiction pursuant to a Civ.R. 12(B)(1)
motion to dismiss, and it may consider material pertinent to such
inquiry.” (Citation omitted.)
Bank of Am. v. Macho, 8th Dist. No. 96124, 2011-Ohio-5495, ¶ 7, quoting
Southgate Dev. Corp. v. Columbia Gas Transm. Corp., 480 Ohio St.2d 211,
358 N.E.2d 526 (1976). We review a motion to dismiss de novo, pursuant to
Civ.R. 12(B)(1), applying the same standard as the trial court but without
deference to the trial court’s determination. Mellion v. Akron City School
Dist. Bd. of Edn., 9th Dist. No. 23227, 2007-Ohio-242, ¶ 6, citing Crestmont
Cleveland Partnership v. Ohio Dept. of Health, 139 Ohio App.3d 928, 936, 746
N.E.2d 222 (10th Dist.2000).
{¶18} “[A]n action for declaratory judgment must be brought in a court
that has subject matter jurisdiction over the underlying controversy.”
Bollenbacher v. Wayne Cty. Bd. of Commrs., 9th Dist. No. 11CA0062,
2012-Ohio-4198, ¶ 12, citing Urbana ex rel. Newlin v. Downing, 43 Ohio St.3d
109, 110, 539 N.E.2d 140 (1989). “The probate division of the court of
common pleas has concurrent jurisdiction with, and the same powers at law
and in equity as, the general division of the court of common pleas to issue
writs and orders and to hear and determine any action that involves an inter
vivos trust.” (Emphasis added.) R.C. 5802.03.
{¶19} Similarly, R.C. 2101.24(B)(1)(b) provides that “[t]he probate court
has concurrent jurisdiction with, and the same powers at law and in equity
as, the general division of the court of common pleas to issue writs and
orders, and to hear and determine actions * * * that involves an inter vivos
trust * * *.” Further, “[t]he probate court has plenary power at law and in
equity to dispose fully of any matter that is properly before the court, unless
the power is expressly otherwise limited or denied by a section of the Revised
Code.” R.C. 2101.24(C).
{¶20} The Fourth District has found that matters involving claims
against trust property were encompassed by this broad language. Zahn v.
Nelson, 170 Ohio App.3d 111, 2007-Ohio-667, 866 N.E.2d 58, ¶ 16-20 (4th
Dist.). In Zahn, the probate court was asked to interpret the trust
instrument itself, which clearly involves an inter vivos trust. The same
statute was analyzed by the Sixth District in a case involving the
interpretation of a trust instrument and an ancillary document. Natl. City
Bank v. de Laville, 170 Ohio App.3d 317, 2006-Ohio-5909, 867 N.E.2d 416(6th Dist.).
{¶21} Here, we are dealing with an ancillary contract between the
settlor of the trust and third parties who are strangers to the trust.
However, Lake Erie and Burgundy Bay have made claims against trust
property by filing liens against trust property pursuant to their interpretation
of the assessment agreement. This is a matter of contract interpretation
that is not so removed from the governance of the trust that would preclude a
common pleas court, and thus a probate court, with concurrent jurisdiction
from exercising jurisdiction over the matter as claims made against trust
property.
{¶22} At first blush, the Cuyahoga County Probate Court seems an
unlikely place to bring a contract dispute involving property in Ottawa
county. However, a reading of the broad jurisdictional provisions for the
probate courts of Ohio relating to matters involving trusts demonstrates that
this is a matter involving claims against property of an inter vivos trust,
which R.C. 2101.24(B)(1)(b) allows to be heard by a probate court. State ex
rel. Sladoje v. Belskis, 149 Ohio App.3d 190, 2002-Ohio-4505, 776 N.E.2d 557(10th Dist.). Where a contract has no bearing on trust property or the
administration of a trust, then a probate court is without jurisdiction to
entertain a declaratory judgment action seeking the court’s interpretation.
In re Estate of Martin, 115 Ohio App. 515, 185 N.E.2d 785 (12th Dist.1962)
(stating the same for contracts having no bearing on estate property or the
administration of an estate). But here, the contract in question directly
affects trust property and the validity of the liens levied against it. Those
liens create a cloud on the title, something the trustee is attempting to
extinguish with this action.
{¶23} Cases holding that the jurisdiction of the probate court is limited
to “matters involved in the enhancement or depletion of the estate and
distribution of that estate to the proper heirs” Ivancic v. Enos, 11th Dist. No.
2011-L-050, 2012-Ohio-3639, ¶ 38, citing 1 Baldwin’s Ohio Practice,
Merrick-Rippner Probate Law, Section 3:4 (2011), were decided before Ohio
adopted the Uniform Trust Code and added the broad language of R.C.
2101.24(B)(1)(b). See In re Frank, 181 Ohio App.3d 686, 2009-Ohio-1285, 910
N.E.2d 523, ¶ 11 (2d Dist.). When codifying the broad jurisdictional grant
for the probate court, Ohio adopted the provisions outlined in the Uniform
Trust Code. Section 203(b), Uniform Trust Code (2005). That language is
not limited in its scope by other provisions as it is in other states. See, e.g.,
Betty G. Weldon Revocable Trust v. Weldon, 231 S.W.3d 158, 173
(Mo.App.2007).
{¶24} Once it is determined that the probate court has jurisdiction over
the declaratory judgment action, it may exercise jurisdiction over the
remainder of the trustee’s claims because the probate court also has plenary
power to fully dispose of any matter properly before the court unless the
power is expressly otherwise limited or denied by statute. Wolfrum v.
Wolfrum, 2 Ohio St.2d 237, 208 N.E.2d 537 (1965).
C. Venue
{¶25} The trial court also determined that venue was not appropriate
in Cuyahoga county, which the trustee asserts is an advisory opinion given
that the court found it lacked subject matter jurisdiction and the trustee
lacked standing.
{¶26} “Subject-matter jurisdiction of a court connotes the power to hear
and decide a case upon its merits, while venue connotes the locality where the
suit should be heard.” Morrison v. Steiner, 32 Ohio St.2d 86, 87, 290 N.E.2d
841 (1972), citing Fireproof Constr. v. Brenner-Bell Inc., 152 Ohio St. 347, 89
N.E.2d 472 (1949).
{¶27} Generally, venue is determined by the proper application of
Civ.R. 3(B). Recognizing this analysis insufficient for probate practice,
Civ.R. 73(A) makes the general venue provision inapplicable to the probate
court. However, Civ.R. 73 only applies to those actions instituted under one
of the provisions of Ohio’s probate code set forth in R.C. Chapters 2101
through 2131. Staff note to Civ.R. 73(B). Specifically, the staff notes
recognize that
[R.C.] 2725.01, et seq., and [R.C.] 2721.01, et seq., which govern
habeas corpus and declaratory judgment, do not attempt to state
the forums in which habeas corpus or declaratory judgment may
be filed. These sections are outside Chapter 2101 through
Chapter 2131 of the Revised Code and therefore, outside the
ambit of the Rule 73(B) limitation.
{¶28} In opposition to appellees’ motion to dismiss, the trustee argued
that Civ.R. 3 did not apply because the probate division had its own venue
rules set forth in Civ.R. 73. That argument is contrary to the staff notes and
impermissibly enlarges the venue of the probate court beyond constitutional
bounds. Therefore, Civ.R. 3(B) determines what venue is appropriate in this
case.
{¶29} Generally, this court reviews a lower court’s decision regarding
venue for an abuse of discretion. State v. Mohamed, 178 Ohio App.3d 695,
2008-Ohio-5591, 899 N.E.2d 1071, ¶ 12 (8th Dist.). An abuse of discretion
connotes the trial court’s decision was unreasonable, arbitrary, or
unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d
1140 (1983). However, the trial court did not make a decision to transfer the
case, as Civ.R. 3 requires. Instead, it made the determination that venue
was not appropriate in Cuyahoga county after deciding to dismiss the case on
other grounds.
{¶30} Civ.R. 3(C) provides,
[w]hen an action has been commenced in a county other than
stated to be proper in division (B) of this rule, upon timely
assertion of the defense of improper venue as provided in Civ.R.
12, the court shall transfer the action to a county stated to be
proper in division (B) of this rule.
The movant must affirmatively demonstrate that venue is inappropriate in
the forum chosen by the plaintiff. The movant must also show where an
appropriate forum lies.
{¶31} We agree with the trial court that Cuyahoga county is not the
proper venue for this case. Civ.R. 3(B) does not provide a basis for haling
Burgundy Bay and Lake Erie before a court in Cuyahoga county for a
declaratory judgment action involving property in Ottawa county.
{¶32} The trustee now argues, for the first time on appeal, that Stewart
Mandel signed the assessment agreement in Cuyahoga county and argues
that Cuyahoga county is an appropriate venue because actions of the
defendants conducted in Cuyahoga county in connection with the drafting or
execution of the agreement satisfies Civ.R. 3(B)(3) — “[a] county in which the
defendant conducted activity that gave rise to the claim for relief.” However,
from the face of the agreement, only Stewart signed in Cuyahoga county.
Burgundy Bay and Lake Erie both executed the agreement in Stark county.
The trustee made no argument that any negotiations took place in Cuyahoga
county or that the appellees did anything in Cuyahoga county. That
distinguishes this case from others where venue was found to be appropriate
where contracting parties conducted negotiations in the forum giving rise to
venue under Civ.R. 3(B)(3). See, e.g., Paparodis v. Snively, 7th Dist. No.
06-CO-5, 2007-Ohio-6910.
{¶33} Finally, resort to Civ.R. 3(B)(12), “the county where the plaintiff
resides[,]” is proper only where available forums in subsections (1) through
(10) of the rule are not appropriate. Fuller v. Fuller, 32 Ohio App.2d 303,
306, 290 N.E.2d 852 (10th Dist.1972). Here, Civ.R. 3(B)(2), “the county in
which the defendant has its principle place of business[,]” or Civ.R. 3(B)(5),
“the county in which the property * * * is situated[,]” is appropriate.
{¶34} Therefore, venue is not appropriate in Cuyahoga county.
Pursuant to Civ.R. 3(C)(1) and the trial court’s prior finding that venue was
not appropriate in Cuyahoga county, the trial court must transfer the case to
an appropriate venue.
III. Conclusion
{¶35} The trustee has standing to bring this action as a present
interest trust beneficiary and trustee at the time the action was dismissed.
Further, the probate court of Cuyahoga county has subject matter jurisdiction
over this case according to R.C. 2101.24(B)(1)(b) because it involves a claim
against trust property. Finally, venue is not appropriate in Cuyahoga county
because the provisions of Civ.R. 73 do not apply to the trustee’s declaratory
judgment action. Therefore, the case is remanded to the trial court with
instructions to transfer this case to an appropriate venue. This holding
renders the trustee’s final assignment of error, regarding whether the
dismissal should be with or without prejudice, moot.
{¶36} Judgment affirmed in part, reversed in part, and remanded to
the lower court for further proceedings consistent with this opinion.
It is ordered that appellant and appellees 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.
FRANK D. CELEBREZZE, JR., JUDGE
MELODY J. STEWART, P.J., and
JAMES J. SWEENEY, J., CONCUR