Scioto Cty. Bd. of Commrs./Revolving Loan Fund Bd. v. McDermott Industries, L.L.C. , 2014 Ohio 240 ( 2014 )

[Cite as Scioto Cty. Bd. of Commrs./Revolving Loan Fund Bd. v. McDermott Industries, L.L.C., 2014-Ohio-240.]
IN THE COURT OF APPEALS OF OHIO
FOURTH APPELLATE DISTRICT
SCIOTO COUNTY
SCIOTO COUNTY BOARD OF : Case No. 12CA3504
COMMISSIONERS/ REVOLVING
LOAN FUND BOARD, :
Plaintiff-Appellee, :
v. : DECISION AND
JUDGMENT ENTRY
MCDERMOTT INDUSTRIES, :
L.L.C., ET AL.,
: RELEASED: 01/17/14
Defendants-Appellants.
:
APPEARANCES:
Carl and Vera Pertuset, McDermott, Ohio, pro se appellants.
George L. Davis, IV, and George L. Davis, III, George L. Davis, III Co., L.L.C.,
Portsmouth, Ohio, for appellee.
Harsha, J.,
{¶1} Appellants, Carl and Vera Pertuset, are guarantors on a promissory note
executed and delivered by their corporation, McDermott Industries, L.L.C.
(“McDermott”), in favor of appellee, Scioto County Board of Commissioners/ Revolving
Loan Fund Board (“board”). After McDermott defaulted on the note, the board
demanded payment from it and the Pertusets, but they failed to pay. The board then
sued McDermott and the Pertusets for the amount due on the promissory note, and the
trial court granted summary judgment in favor of the board.
{¶2} On appeal, the Pertusets claim that the trial court erred in granting
summary judgment because the board lacks standing and is not the real party in
interest on the promissory note. But after the board submitted summary judgment
evidence establishing that it is the holder of the promissory note that McDermott and the
Scioto App. No. 12CA3504 2
Pertusets defaulted on, the Pertusets failed to rebut this evidence with specific facts
showing a genuine issue concerning the board’s standing to sue and interest in
collecting on the note.
{¶3} The Pertusets also contend that summary judgment is improper because
at the time the promissory note was executed, McDermott had already been dissolved.
This contention fails because a voluntary dissolution of a corporation is not effective
until the certificate of dissolution and accompanying documents are filed with the
secretary of state, and that did not occur until after McDermott executed and delivered
the promissory note to the board. And the Pertusets personally guaranteed the note
independent of any promise by their company.
{¶4} The Pertusets additionally claim that summary judgment is not appropriate
because the board did not establish the amount due on the note. We reject this claim
because the board submitted an affidavit proving the amount due.
{¶5} Finally, the Pertusets’ remaining arguments lack merit or are irrelevant to
the summary judgment entered by the trial court.
{¶6} Therefore, we reject the Pertusets’ assignments of error and affirm the
judgment of the trial court.
I. FACTS
{¶7} In April 2009, McDermott, through Carl Pertuset, and the Pertusets
executed and delivered a promissory note to the board. In the note, McDermott
amended the terms of two previous promissory notes and loan agreements by
promising to pay to the board the principal sum of $148,612.77 and interest in 240
monthly installments, with the first installment due on June 15, 2009. According to the
Scioto App. No. 12CA3504 3
terms of the note, should any default occur, the unpaid principal balance and accrued
interest would bear interest at the rate of 10% per annum, with a late charge of ten
cents for each dollar overdue. The note further provided that if default in payment of
any installment occurred or if McDermott ceased its business operation, the entire
principal sum and all interest accrued thereon shall become due and payable at the
option of the holder of the note. McDermott, through Carl Pertuset, guaranteed the
terms of the note, and the Pertusets personally guaranteed the terms and conditions of
the note.
{¶8} After McDermott and the Pertusets defaulted on the terms of the note and
failed to pay the board upon demand, the board filed a complaint in the Scioto County
Court of Common Pleas to collect on the note. Instead of filing an answer, the
Pertusets filed a “notice of objection to complaint request for judicial notice and
notification of administrative violations.” In its filing, the Pertusets generally denied all
allegations in the complaint. The Pertusets submitted numerous other filings, including
one challenging the standing of the board in which they attached a secretary of state
document certifying that the office had received for filing McDermott’s certificate of
dissolution on August 14, 2009, although the certificate claimed that the company was
dissolved on December 31, 2008.
{¶9} The board filed a motion for summary judgment and supported it with an
affidavit of Kendra Hobson, an authorized representative and keeper of records of the
board, and a copy of the promissory note. In her affidavit, Hobson specified that she
had personal knowledge of the board’s records, that the board had received the
personal guaranty executed and delivered by McDermott and the Pertusets, that the
Scioto App. No. 12CA3504 4
guarantors were in default, and that they owed the board the amount of $148,612.77,
plus interest at the rate of 10% per annum from June 15, 2009, a late charge of ten
cents for each dollar overdue, plus costs and all other proper relief.
{¶10} In response to the board’s motion, the Pertusets filed an “opposition”
affidavit, which failed to specify facts to rebut that they owed the amount due on the
note.
{¶11} The trial court granted the board’s motion and ordered that it recover from
McDermott and the Pertusets $148,612.77, with interest at a rate of 10% per annum
from June 15, 2009, plus a late charge of ten cents for each dollar overdue.
{¶12} The Pertusets appealed from the judgment.
II. ASSIGNMENT OF ERROR
{¶13} The Pertusets are not strangers to this court. See Ohio Valley Resource
Conservation & Development v. Pertuset, 4th Dist. Scioto No. 12CA3503, 2013-Ohio-
5406; Farm Credit Servs. of Mid. Am. v. Pertuset, 4th Dist. Scioto No. 11CA3443, 2013-
Ohio-567; Am. Savings Bank v. Pertuset, 4th Dist. Scioto No. 11CA3442, 2013-Ohio-
566; Quality Car & Truck Leasing, Inc. v. Pertuset, 4th Dist. Scioto No. 11CA3436,
2013-Ohio-1964. As in each of these previous cases, the Pertusets’ brief here does not
set forth any assignments of error as required by App.R. 16(A)(3).
{¶14} Although we consequently would be justified in refusing to address the
merits of the Pertusets’ arguments and dismissing their appeal, given the considerable
leniency that this court generally affords to the filings of pro se litigants like the
Pertusets, we will posit the following assignment of error that best summarizes their
arguments on appeal:
Scioto App. No. 12CA3504 5
THE TRIAL COURT ERRED IN GRANTING THE BOARD’S MOTION
FOR SUMMARY JUDGMENT.
III. STANDARD OF REVIEW
{¶15} When reviewing a trial court’s decision on a motion for summary
judgment, we conduct a de novo review governed by the standards set forth in Civ.R.
56. Vacha v. N. Ridgeville, 136 Ohio St.3d 199, 2013-Ohio-3020, 992 N.E.2d 1126, ¶
19. Summary judgment is appropriate when the movant has established: (1) there is
no genuine issue of material fact; (2) it 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. Civ.R. 56(C); Esber
Beverage Co. v. Labatt USA Operating Co., L.L.C., __ Ohio St.3d __, 2013-Ohio-4544,
__ N.E.2d __, ¶ 9.
{¶16} The movant bears the burden of establishing that no genuine issue of
material fact exists. Todd Dev. Co., Inc. v. Morgan, 116 Ohio St.3d 461, 2008-Ohio-87,
880 N.E.2d 88, ¶ 12. To meet its burden, the moving party must specifically refer to “the
pleadings, depositions, answers to interrogatories, written admissions, affidavits,
transcripts of evidence, and written stipulations of fact, if any, timely filed in the action,”
that affirmatively demonstrate the non-moving party has no evidence to support the
non-moving party’s claims. Bender v. Portsmouth, 4th Dist. Scioto No. 12CA3491,
2013-Ohio-2023, ¶ 9, citing Civ.R. 56(C). Once the movant supports the motion with
appropriate evidentiary materials, the non-moving party “may not rest upon the mere
allegations or denials of the party’s pleadings, but the party’s response, by affidavit or
as otherwise provided in [Civ.R. 56], must set forth specific facts showing that there is a
Scioto App. No. 12CA3504 6
genuine issue for trial.” Civ.R. 56(E). “If the party does not so respond, summary
judgment, if appropriate, shall be entered against the party.” Id.IV. LAW AND ANALYSIS
{¶17} The Pertusets claim that the trial court erred in granting summary
judgment in favor of the board on the promissory note, with guarantees, executed and
delivered by McDermott and the Pertusets to the board. The board’s summary
judgment motion incorporated the affidavit of Kendra Hobson, its authorized
representative and records custodian, who stated that McDermott and the Pertusets
were in default of the note and guarantees. The board met its initial summary judgment
burden, which shifted the burden onto the Pertusets to submit evidentiary materials
setting forth specific facts showing that there is genuine issue of material fact for trial.
For the reasons that follow, the Pertusets failed to meet this burden.
{¶18} First, we have previously rejected claims similar to the only claims
specified by the Pertusets in the “ARGUMENT” section of their brief—that “[t]his case
demonstrates the utter disregard * * * of the realities facing working people in Ohio in
this period of economic crisis” and that the board “committed violations of ‘GAAP’
[generally accepted accounting principles] and ‘GAAS’ [generally accepted accounting
standards].” See Ohio Valley, 2013-Ohio-5406, at ¶ 10-11. Even if these claims were
true, the Pertusets failed to submit Civ.R. 56(C) evidentiary materials to show that they
were not in default of the note and guarantees.
{¶19} Second, the board established that it had standing to bring the action on
the note and that it is the real party in interest. “Subject-matter jurisdiction refers to the
statutory or constitutional authority to adjudicate a case,” whereas “[l]ack of standing, on
Scioto App. No. 12CA3504 7
the other hand, challenges a party’s capacity to bring an action, not the subject-matter
jurisdiction of the tribunal.” Groveport Madison Local Schools Bd. of Edn. v. Franklin
Cty. Bd. of Rev., 137 Ohio St.3d 266, 2013-Ohio-4627, 998 N.E.2d 1132, ¶ 25, citing
Pratts v. Hurley, 102 Ohio St.3d 81, 2004-Ohio-1980, 806 N.E.2d 992, ¶ 11, and State
ex rel. Tubbs Jones v. Suster, 84 Ohio St.3d 70, 77, 701 N.E.2d 1002 (1998). Standing
is determined at the commencement of the action, and in actions on a note, the holder
or other person who has the rights of a holder of the note has standing to enforce it.
Fed. Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017,
979 N.E.2d 1214, ¶ 24-28; R.C. 1303.31. In addition, Civ.R. 17(A) is the procedural
requirement that a complaint be brought in the name of the real party in interest. A real
party in interest is one who is directly benefited or injured by the outcome of the case.
Florkey v. Malott, 4th Dist. Highland No. 11CA9, 2011-Ohio-5199, ¶ 14. The summary
judgment evidence submitted by the board established that it is the holder of the note,
which included the personal guarantee by the Pertusets, and the Pertusets failed to
properly rebut this evidence. The board is authorized by statute to sue. See R.C.
305.12 (“The board of county commissioners may sue and be sued”).
{¶20} The Pertusets’ reliance on Wells Fargo Bank, N.A. v. Byrd, 178 Ohio
App.3d 285, 2008-Ohio-4603, 897 N.E.2d 722, and In re Foreclosure Cases, N.D.Ohio
Nos. 1:07CV2282 et al., 2007 WL 3232430 (Oct. 31, 2007), to claim that the board
lacks standing is misplaced because in each of those cases, the entity seeking to
enforce the note did not hold it at the time of the filing of the complaint. There is no
evidence here that the board did not hold the note at any time, much less at the time it
filed the complaint to enforce its default terms. See U.S. Bank Natl. Assn. v. Kafantaris,
Scioto App. No. 12CA3504 8
11th Dist. Trumbull No. 2011-T-0002, 2011-Ohio-5601, ¶ 29, similarly distinguishing the
cited cases.
{¶21} Third, the Pertusets’ contention that the board’s claim fails because
McDermott did not exist when the note was signed in April 2009 and they were not
members of the dissolved corporate entity is meritless. The certificate of dissolution for
the corporation was not filed with the secretary of state until August 14, 2009, months
after McDermott and the Pertusets executed and delivered the note to the board. The
certificate specified an earlier purported date of dissolution, but McDermott could not be
dissolved before the appropriate certificate and documents were filed with the secretary
of state. R.C. 1702.47(H) (“Upon the filing of a certificate of dissolution and those
accompanying documents or on a later date specified in the certificate that is not more
than ninety days after the filing, the corporation shall be dissolved”). The subsequent
dissolution of McDermott did not abate the board’s claim. See Bendure v. Xpert Auto,
Inc., 10th Dist. No. 11AP-144, 2011-Ohio-6058, ¶ 17 (even if a corporation is dissolved,
it may still be sued, and any judgment obtained may be enforced against the dissolved
corporation).
{¶22} More significantly, the dissolution of McDermott did not alter the Pertusets’
liability because they personally guaranteed McDermott’s timely payment of the note.
And the note specified that the entire principal sum and interest would become due
should McDermott and the Pertusets “cease operation of [their] business.”
{¶23} Fourth, notwithstanding the Pertusets’ claims to the contrary, the board
established the amount of damages to which it is entitled through the affidavit of its
representative and the note.
Scioto App. No. 12CA3504 9
{¶24} Finally, any additional arguments raised by the Pertusets in their brief are
either irrelevant or meritless.
V. CONCLUSION
{¶25} Therefore, the trial court did not err in granting summary judgment in favor
of the board on the note. We overrule the Pertusets’ assignment of error and affirm the
judgment of the trial court.
JUDGMENT AFFIRMED.
Scioto App. No. 12CA3504 10
JUDGMENT ENTRY
It is ordered that the JUDGMENT IS AFFIRMED and that Appellant shall pay the
costs.
The Court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this Court directing the Scioto
County Court of Common Pleas to carry this judgment into execution.
Any stay previously granted by this Court is hereby terminated as of the date of
this entry.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
Abele, P.J., & *Ringland, J.: Concur in Judgment and Opinion.
For the Court
BY: ________________________________
William H. Harsha, Judge
NOTICE TO COUNSEL
Pursuant to Local Rule No. 14, this document constitutes a final judgment
entry and the time period for further appeal commences from the date of filing
with the clerk.
* Robert P. Ringland, from the Twelfth Appellate District, sitting by assignment of The
Supreme Court of Ohio in the Fourth Appellate District.