Reister v. Gardner , 2022 Ohio 4272 ( 2022 )

[Cite as Reister v. Gardner, 2022-Ohio-4272.]
IN THE COURT OF APPEALS
TWELFTH APPELLATE DISTRICT OF OHIO
BUTLER COUNTY
JOHN J. REISTER, RECEIVER, ON :
BEHALF OF CERTIFIED STEEL STUD
ASSOCIATION, INC., : CASE NO. CA2021-10-127
Appellee, : OPINION
11/30/2022
:
- vs -
:
WILLIAM A. GARDNER, et al., :
Appellees,
- vs -
CLARKWESTERN DIETRICH BUILDING
SYSTEMS LLC,
Appellant.
CIVIL APPEAL FROM BUTLER COUNTY COURT OF COMMON PLEAS
Case No. CV 2018 02 0442
Taft Stettinius & Hollister LLP, and Daniel R. Warncke and Brian A. Morris; Fox Rothschild
LLP, and Jeffrey M. Pollock and Robert J. Rohrberger, for appellee, William A. Gardner.
Millikin & Fitton Law Firm, and Steven A. Tooman; Helmer, Martins, Tate & Garrett Co.,
LPA, and James B. Helmer, Jr., B. Nathaniel Garrett, and James A. Tate, for appellee, John
J. Reister, Receiver, on behalf of Certified Steel Stud Association, Inc.
Butler CA2021-10-127
Dinsmore & Shohl LLP, and Peter J. Georgiton and Justin M. Burns; Chamberlain Hrdlicka
White Williams & Aughtry, and Scott M. Ratchick and John C. Guin, for appellee, Edward
R. Slish.
Frost Bown Todd LLC, and Matthew C. Blickensderfer; Dentons Cohen & Grigsby, P.C.,
and Anthony Cillo and Fridrikh V. Shrayber, for appellant, Clarkwestern Dietrich Building
Systems LLC.
BYRNE, J.
{¶1} Clarkwestern Dietrich Building Systems LLC ("ClarkDietrich") appeals from
the decision of the Butler County Court of Common Pleas, which dismissed ClarkDietrich
as an interested party in a declaratory judgment action. For the reasons discussed below,
we reverse the common pleas court's decision and reinstate ClarkDietrich as an interested
party.
I. Factual and Procedural History
{¶2} In 2013, in the Butler County Court of Common Pleas, ClarkDietrich sued the
Certified Steel Stud Association, Inc. ("CSSA") and the CSSA's member companies in a
lawsuit we will refer to as "the Defamation Action." The Defamation Action primarily alleged
that CSSA made defamatory statements about the quality of ClarkDietrich's products in a
trade publication.
{¶3} In 2015, a lengthy jury trial commenced. During the trial, ClarkDietrich settled
with each of CSSA's member companies, but did not settle with CSSA.
{¶4} Prior to closing arguments, ClarkDietrich presented CSSA with a walk-away,
no-cost settlement offer. That is, ClarkDietrich offered to dismiss its claims against CSSA,
with prejudice, and with no monetary or non-monetary terms. Despite CSSA having no
counterclaims against ClarkDietrich, CSSA's board of directors (composed of high-ranking
steel industry executives from CSSA's member companies), voted to reject that offer.
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{¶5} ClarkDietrich then moved the trial court to dismiss its claims against CSSA
pursuant to Civ.R. 41(A)(2). CSSA opposed that motion. The trial court denied
ClarkDietrich's request to dismiss the case. The parties then presented closing arguments.
{¶6} In what the Ohio Supreme Court would later describe as a "be careful what
you wish for" turn of events,1 the jury returned a unanimous verdict for ClarkDietrich and
awarded $49.5 million, of which $43 million was apportioned to CSSA. Accordingly, the
trial court issued a judgment against CSSA in the amount of $43 million. We affirmed that
judgment on appeal. Clarkwestern Dietrich Bldg. Sys., L.L.C. v. Certified Steel Stud Assn.,
Inc., 12th Dist. Butler No. CA2016-06-113, 2017-Ohio-2713.
{¶7} Following the appeal, ClarkDietrich moved the trial court to appoint a receiver
to pursue potential claims against CSSA's board of directors on CSSA's behalf. The trial
court agreed to do so and issued an order ("the Receivership Order"). In the Receivership
Order, the trial court found that CSSA had stipulated that it had insufficient assets to satisfy
the $43 million judgment. The court further found that,
CSSA possesses "property" in the form of potentially viable
claims and choses in action that may be used to satisfy the
judgment against it in whole or in part, including but not limited
to a cause of action against Directors, Officers or Agents of
CSSA for breach of fiduciary duty to CSSA. It appears to the
Court that CSSA has failed to take the necessary steps to
investigate and prosecute those claims.
Receivership Order at ¶ H. The court, quoting R.C. 2735.01(A)(4) and (5), found that it was
authorized to appoint a receiver "[a]fter judgment, to carry the judgment into effect" and
"[a]fter judgment, to dispose of the property according to the judgment, or to preserve it
during the pendency of an appeal * * *." Finally, the court found that,
ClarkDietrich has shown by clear and convincing evidence that
the appointment of a receiver is necessary to investigate and
prosecute CSSA's claims against its directors, officers and/or
1. Reister v. Gardner, 164 Ohio St.3d 546, 2020-Ohio-5484, ¶ 3.
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agents for breach of their fiduciary duties. The appointment of
a receiver is necessary to give ClarkDietrich an opportunity to
collect its judgment. If a receiver is not appointed, claims that
could fund the judgment may well lapse.
Receivership Order at ¶ L.
{¶8} We affirmed the Receivership Order. Clarkwestern Dietrich Bldg. Sys., L.L.C.
v. Certified Steel Stud Assn., 12th Dist. Butler No. CA2017-04-040, 2017-Ohio-8129. We
held that the trial court did not abuse its discretion in finding that ClarkDietrich demonstrated
that the appointment of a receiver was necessary to give it the opportunity to collect its
judgment. Id. at ¶ 23-24.
{¶9} The appointed receiver, John J. Reister ("Receiver"), filed the lawsuit now
before us ("the Receivership Action") against four CSSA directors, including defendants-
appellees William A. Gardner, III and Edward R. Slish, in the Butler County Court of
Common Pleas.2 The Receiver included ClarkDietrich in the Receivership Action as an
interested party.
{¶10} The complaint in the Receivership Action included two causes of action. The
first cause of action alleged that the CSSA directors breached their fiduciary duty to CSSA
by rejecting ClarkDietrich's settlement offer. The complaint alleged that the directors were
not acting in CSSA's best interests when they voted to reject the offer but were instead
acting in the best interests of their respective corporate employers. The second cause of
action was for declaratory judgment and asked the court to declare that the directors'
decision to reject the settlement offer was not a valid exercise of business judgment and
that the directors were not entitled to the protection of the common law business judgment
rule.
{¶11} Gardner and Slish subsequently moved to dismiss the Receivership Action or
2. The record reflects that the two other director defendants settled with the Receiver.
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for judgment on the pleadings. The trial court granted judgment on the pleadings on the
basis that the CSSA directors' actions were protected from liability by the litigation privilege
doctrine. We affirmed. Reister v. Gardner, 12th Dist. Butler Nos. CA2019-01-010, CA2019-
01-011, and CA2019-01-020, 2019-Ohio-4720. The Ohio Supreme Court reversed our
decision, held the litigation privilege doctrine inapplicable, and remanded for further
proceedings. Reister, 2020-Ohio-5484 at ¶ 14, 21.
{¶12} On remand, Gardner moved to dismiss ClarkDietrich from the Receivership
Action, arguing that ClarkDietrich was not an "interested party" under R.C. 2721.12. 3
Gardner argued that while ClarkDietrich had a practical interest in the outcome of the case,
it had no legal interest in the case that would permit it to be a party to the Receivership
Action under R.C. 2721.12(A).
{¶13} After the matter was fully briefed, the trial court issued an order dismissing
ClarkDietrich. The court agreed with Gardner that ClarkDietrich did not have a legal interest
in the Receivership Action, that ClarkDietrich was simply "tagging along," and that
ClarkDietrich only had a pecuniary interest. The court found that ClarkDietrich could not
"demonstrate any justiciable controversy beyond recovery of damages * * *."
{¶14} ClarkDietrich subsequently moved the court to reconsider its decision, or,
alternatively, to amend its order with Civ.R. 54(B) language. ClarkDietrich argued that it
was precisely because it was entitled to damages in the Defamation Action that it had a
legal interest in the Receivership Action. ClarkDietrich also pointed out several factual
issues that it believed the court was mistaken about and which had led the trial court to an
incorrect decision.
3. Gardner's motion was styled a "renewed" motion. Gardner had moved to dismiss ClarkDietrich on the
same grounds prior to the trial court's decision regarding the litigation privilege. In the litigation privilege
decision, the trial court did not address the issue of ClarkDietrich's legal interest in the case as it found that
the litigation privilege decision was outcome-determinative. Essentially, it deemed the issue moot.
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{¶15} In its entry denying the motion for reconsideration, the trial court rejected
ClarkDietrich's additional arguments, finding that nothing the court would decide in the
Receivership Action would impact ClarkDietrich's right of recovery in the Defamation Action
and therefore ClarkDietrich had no "justiciable claims" in the Receivership Action.
Additionally, the court noted that in its Receivership Order the court had ordered the
Receiver, not ClarkDietrich, to investigate and file claims against CSSA directors. The court
did, however, grant ClarkDietrich's request to certify the dismissal order with Civ.R. 54(B)
language.
{¶16} ClarkDietrich appealed, asserting two assignments of error.
II. Law and Analysis
A. Interested Party Analysis
{¶17} ClarkDietrich's Assignment of Error No. 1 states:
{¶18} THE TRIAL COURT ERRED BY GRANTING THE MOTION TO DISMISS
CLARKDIETRICH AS AN INTERESTED PARTY.
{¶19} ClarkDietrich contends that the trial court erred in dismissing ClarkDietrich
from the Receivership Action because ClarkDietrich had a legal interest in the Receivership
Action and therefore, under the Declaratory Judgment Act, R.C. 2721.12, ClarkDietrich was
required to be joined in the Receivership Action. The Receiver agrees.4 Gardner and Slish
argue that ClarkDietrich only possesses a "practical interest" in the outcome of the
Receivership Action, that ClarkDietrich does not possess a "legal interest," and therefore is
not entitled to participate as an interested party. We will briefly summarize the relevant
statute, determine the applicable standard of review, and then analyze the nature of
ClarkDietrich's interest.
4. Gardner, Slish, and the Receiver have all participated in this appeal and filed briefs. Gardner and Slish
filed briefs opposing ClarkDietrich's appeal. The Receiver filed a brief in support of ClarkDietrich's appeal.
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1. The Statute
{¶20} The statute at issue in this case, R.C. 2721.12, is part of Ohio's Declaratory
Judgment Act. The statute provides that "when declaratory relief is sought under this
chapter in an action or proceeding, all persons who have or claim any interest that would
be affected by the declaration shall be made parties to the action or proceeding." R.C.
2721.12(A). The absence of an interested and necessary party constitutes a jurisdictional
defect precluding a court from properly rendering a declaratory judgment. Cincinnati v.
Whitman, 44 Ohio St.2d 58, 59 (1975), citing Zanesville v. Zanesville Canal & Mfg. Co., 159
Ohio St. 203 (1953).
{¶21} The language of R.C. 2721.12(A) is quite broad, requiring even those who
merely "claim" to have "any" interest that would be affected to be made parties. Id.Gardner's counsel admitted at oral argument that ClarkDietrich would be an interested party
in the Receivership Action if the case were decided on the statutory language alone.
Normally, of course, it is our responsibility to decide matters of textual interpretation based
on the actual text—the language—of the statute. State v. Singer, 50 Ohio St.2d 103, 108
(1977). However, the Ohio Supreme Court interpreted the language in R.C. 2721.12(A) in
a more limited fashion in Rumpke Sanitary Landfill, Inc. v. State, 128 Ohio St.3d 41, 2010-
Ohio-6037. Under the supreme court's interpretation of the statute—which we as a lower
court are bound to apply here—only those who are "legally affected" by a potential
declaratory judgment are proper parties under R.C. 2721.12(A). Id. at ¶ 14. The supreme
court further found that a party is "legally affected" by a cause of action if the party "has a
legal interest in rights that are the subject matter of the cause of action." Id. A "legal interest"
is an interest "'recognized by law,'" or an interest that is "'legally protectable,' i.e. protected
by law." Id., quoting Black's Law Dictionary 886 (9th Ed.2009), and In re Schmidt, 25 Ohio
St.3d 331, 336 (1986). Thus, the supreme court held that "whether a nonparty is a
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necessary party to a declaratory-judgment action depends upon whether that nonparty has
a legally protectable interest in rights that are the subject matter of the action." (Emphasis
added.) Id. at ¶ 15.
2. Standard of Review
{¶22} As a threshold matter, the parties dispute the applicable standard of review
that this court should apply. Gardner and Slish argue that we should review the trial court's
decision to dismiss ClarkDietrich as an interested party for an abuse of discretion, but
ClarkDietrich and the Receiver argue that we should review the trial court's decision de
novo.
{¶23} Gardner cites a decision from this court, Liberty Twp. v. Woodland View, Inc.,
12th Dist. Butler No. CA2001-02-038, 2001 WL 938757 (Aug 20, 2001). In that case we
applied an abuse of discretion standard of review when reviewing a trial court's decision to
deny a Civ.R. 24 motion to intervene in a declaratory judgment action. Id. at *1. But that
case did not involve any argument that the intervening party was an interested party under
R.C. 2721.12(A); we only applied the law regarding appellate review of Civ.R. 24 motions
to intervene. Liberty Twp. is therefore inapplicable to the case before us, which does not
involve a Civ.R. 24 motion to intervene and instead turns on whether ClarkDietrich was
properly designated as an interested party under R.C. 2721.12(A).
{¶24} Slish cites two cases for the proposition that an abuse of discretion standard
of review applies. First, he cites GRE Ins. Group v. Intl. EPDM Rubber Roofing Sys., Inc.,
6th Dist. Lucas No. L-95-306, 1996 WL 354812 (June 28, 1996), for the following
proposition of law stated in that case:
Once the statutory requirements are met, see R.C. 2721.12, the
decision by a trial court as to whether to proceed in a declaratory
judgment action is a matter of judicial discretion. Bilyeu v.
Motorists Mutual Ins. Co. (1973), 36 Ohio St.2d 35, 37.
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Id. at *8. Though GRE Ins. was decided by the Sixth District Court of Appeals and is not
controlling in this district, the language cited by Slish is persuasive authority that we may
consider. Second, Slish cites to the First District Court of Appeals' decision—rather than
the Ohio Supreme Court decision mentioned above—in Rumpke Sanit. Landfill, Inc. v.
State, 184 Ohio App.3d 135, 2009-Ohio-4888, ¶11 (1st Dist.). The First District in that case
applied an abuse of discretion standard to the question of whether a party was an interested
party that should have been permitted to participate in the lawsuit. Id. at ¶ 11. However, in
the First District's Rumpke decision—also not controlling in this district—the court's analysis
solely concerned a motion to intervene under Civ.R. 24; as in Liberty Township, the court
did not discuss the applicable standard of review with respect to R.C. 2721.12.
{¶25} Notably, all three of these cases—Liberty Twp., GRE Ins., and the First
District's Rumpke decision—were decided before the Ohio Supreme Court's decision in
Arnott v. Arnott, 132 Ohio St.3d 401, 2012-Ohio-3208, the primary case relied on by
ClarkDietrich in support of its argument that we should apply a de novo standard of review.
In Arnott, the Ohio Supreme Court held that "an appellate court reviewing a declaratory-
judgment matter should apply an abuse-of-discretion standard in regard to the trial court's
holding concerning the appropriateness of the case for declaratory judgment, i.e., the
matter's justiciability, and should apply a de novo standard of review in regard to the trial
court's determination of legal issues in the case." Id. at ¶ 1.
{¶26} This appeal does not involve any question of justiciability. Instead, it involves
the question of whether ClarkDietrich was an interested party under R.C. 2721.12(A) as
interpreted by the Ohio Supreme Court in Rumpke. This is a "legal issue[] in the case"
beyond the threshold question of justiciability, and thus according to Arnott we must apply
de novo review. Arnott at ¶ 1. There are no facts in dispute; there are no facts to weigh.
ClarkDietrich is already involved in the case and so there is no consideration of prejudice.
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The issue of whether ClarkDietrich has a "legal interest" as opposed to a "practical interest"
in the declaratory judgment action turns on the interpretation of legal authority and concepts.
Accordingly, we will follow the broadly worded admonition of the Ohio Supreme Court in
Arnott and review the trial court's decision de novo.
3. Analysis of ClarkDietrich's Interest
{¶27} As explained above, the Ohio Supreme Court has interpreted R.C. 2721.12(A)
as providing that a party with a legal interest must be joined in a declaratory judgment action
when that party has a legal interest in rights that are the subject matter of the action.
Rumpke, 2010-Ohio-6037 at ¶ 14. A "legal interest" is an interest "'recognized by law,'" or
an interest that is "'legally protectable,' i.e. protected by law." Id., quoting Black's Law
Dictionary 886 (9th Ed.2009) and Schmidt, 25 Ohio St.3d at 336. This standard is not clear
on its face, so we turn to the Ohio Supreme Court's relevant precedents applying that
standard for guidance.
{¶28} The Ohio Supreme Court in Rumpke, applying R.C. 2721.12(A), found that
Colerain Township was not a necessary party in a declaratory judgment action in which
Rumpke sought a declaration that a statute was enacted in violation of the Ohio
Constitution's one-subject rule. Id. at ¶ 1-3. The supreme court concluded that while the
relevant statute impacted Colerain's zoning power with respect to Rumpke's landfill and
could impact Colerain's ongoing litigation with Rumpke, Colerain was not a necessary party
because it did not have a "legally protectable interest in the authority of the General
Assembly to enact a bill," and the declaratory judgment action concerned only whether the
one-subject rule was violated. Id. at ¶ 10, 20-21.
{¶29} In Driscoll v. Austintown Assocs., 42 Ohio St.2d 263 (1975), the supreme
court examined whether landowners adjacent to a parcel of property owned by a developer
were necessary parties to a declaratory judgment action brought by the developer that
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challenged the constitutionality of township zoning as it applied to the parcel. Id. at 271-73.
The court, applying R.C. 2721.12(A), held that while the landowners had a practical interest
in the outcome of the action (whether the developer would be permitted to construct
apartment buildings on the land), the landowners had no legal interest in a determination of
the constitutionality of the zoning resolution that affected that parcel. Id. at 273.
{¶30} In Whitman, 44 Ohio St.2d 58, the supreme court examined whether the
director of the Ohio Environmental Protection Agency ("EPA") was a necessary party to a
declaratory judgment action challenging the constitutionality of R.C. 6111.13, a statute
requiring the fluoridation of water supplied to a public water system. Id. at 59-60. The court
held that the director was a necessary party pursuant to R.C. 2721.12(A) because another
statute, R.C. 6111.12, imposed "clear duties" on the director to investigate and enforce
compliance with R.C. 6111.13 and a holding that R.C. 6111.13 was unconstitutional would
remove the director's duties. Id. The supreme court further explained that "Properly, when
declaratory relief is sought which involves the validity or construction of a statute and affects
the powers and duties of public officers, such officers should be made parties to the action
or proceeding in which the relief is sought." Id. at 61. The court also noted that "in the
absence of the Director as a party, the judgment would not terminate the uncertainty or
controversy, for the judgment would not prejudice the right of the Director to issue
compliance orders or to perform his other duties. The anomalous result would be that the
Director would retain the right and duty to order compliance with R.C. 6111.13, and that the
object of that order would have the right and duty to disobey it." Id. at 60.
{¶31} In Portage Cty. Bd. of Commrs. v. Akron, 109 Ohio St.3d 106, 2006-Ohio-954,
the supreme court examined whether several affected communities needed to join the
director of the Ohio Department of Natural Resources as a party to a declaratory judgment
action concerning whether a city violated the communities' riparian rights by diverting water
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from a river. Id. at ¶ 98-100. The court held that the director was a necessary party because
he or she is charged with the exclusive statutory duty to issue and enforce water diversion
permits. Id. at ¶ 100.
{¶32} Finally, in Natl. Solid Wastes Mgt. Assn. v. Stark-Tuscarawas-Wayne Joint
Solid Waste Mgt. Dist., 124 Ohio St.3d 197, 2009-Ohio-6765, the supreme court held that
the director of the Ohio EPA was not a necessary party to a declaratory judgment action
challenging local rules adopted by a solid-waste-management district because the director
had no statutory authority to enforce those rules. Id. at ¶ 1-3.
{¶33} These cases demonstrate that it is not sufficient for a party that purports to be
an interested party under R.C. 2721.12(A) to simply be affected by a potential declaratory
judgment. A party must be able to point to some distinct legal right that will or could be
affected by the declaration. In Driscoll, the landowners had no property rights in the
challenged parcels and thus could not demonstrate that distinct legal interest. In Whitman
and Portage Cty., the legally interested parties could point to a statutory right that could be
affected by the declaration—that is, a state agency director's statutory duty to enforce the
agency's rules or permits. In Natl. Solid Wastes Mgt. Assn., the director of the Ohio EPA
could point to no such statutory right, so the director was not legally interested.
{¶34} Here, Slish cites various cases for the proposition that a judgment creditor like
ClarkDietrich has no "legal interest" in its judgment debtor's claims against others."5 Slish
cites Harsh v. GEICO Gen. Ins. Co., S.D.Ohio No. 2:17-cv-00814, 2018 WL 4521934 (Sept.
21, 2018), and ReliaStar Life Ins. Co. v. MKP Invests. LLC, S.D.Ohio Nos. 2:09-cv-700,
2:09-cv-707, and 2:09-cv-718, 2013 WL 12099305 (July 11, 2013).
5. Slish admits there is a "single, statutory exception for insurance-coverage claims[,]" citing Indiana Ins. Co.
v. Murphy, 165 Ohio App.3d 812, 2006-Ohio-1264 (3d Dist.) and Cincinnati Ins. Co. v. Consolidated Equip.
Co., 2d Dist. Montgomery No. 19390, 2003-Ohio-47. In those cases, a tort claimant with pending claims
against an insured was found to have a "legal interest" in a declaratory judgment action between the insured
and its insurer.
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{¶35} In Harsh, a judgment debtor (Harsh) sued his insurer (Geico) for various
claims. Harsh at *2. The judgment creditor (Weaver) sought to intervene. Id. In overruling
objections to a federal magistrate judge’s recommendation that intervention be denied, the
United States District Court for the Southern District of Ohio held,
The magistrate judge correctly determined that as a Judgment
Creditor, Weaver is not entitled to intervene either permissively
or as of right. First, Weaver lacks a direct and substantial legal
interest in this case as he is interested solely in collecting his
interest in Harsh's potential recovery and otherwise has "no
direct claim against [GEICO]." (ECF No. 12 at 9, n.2.); Reliastar
Life Ins. Co. v. MKP Invs., 565 F. App'x 369, 372 (6th Cir. 2014)
("... an applicant is not due intervention as a matter of right
where the applicant seeks only to protect the assets of a party
to the litigation in order to ensure that its own contingent claims
to those assets remain valuable in the future.") (citing United
States v. Tennessee, 260 F.3d 587, 595 (6th Cir. 2001)
(rejecting as insufficient the proposed intervenor's "economic
interest in assuring adequate funding for implementation of the
settlement agreements and its contractual rights in
agreements") ).
Id. at *6.
{¶36} ReliaStar also involved a judgment creditor seeking intervention in a lawsuit
filed by the judgment debtor against a third party. Quoting United States v. Alisal Water
Corp., 370 F.3d 915, 920 (9th Cir.2004), the federal district court observed that,
the impaired ability to collect judgments that may arise from
future claims does not give rise to a right of intervention. The
underlying reasoning in Hawaii-Pacific supports the conclusion
that an allegedly impaired ability to collect judgments arising
from past claims does not, on its own, support a right to
intervention. To hold otherwise would create an open invitation
for virtually any creditor of a defendant to intervene in a lawsuit
where damages might be awarded. See Public Serv. Comp, of
New Hampshire v. Patch, 136 F.3d 197, 205 (1st Cir. 1998)
(holding that "[i]t is settled beyond peradventure ... that an
undifferentiated, generalized interest in the outcome of an
ongoing action is too porous a foundation on which to premise
intervention as of right").
Id. *6.
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{¶37} The ReliaStar court, at footnote 2, quoted from Wright & Miller, Federal Prac.
& Proc., Section 1908.2 as supporting the proposition that a mere economic interest in the
outcome of a lawsuit is insufficient to serve as basis to intervene:
It has been recognized that interests in property are the most
elementary type of right that Rule 24(a) is designed to protect.
Thus, many of the cases in which a sufficient interest has been
found under amended Rule 24(a)(2) have been cases in which
there is a readily identifiable interest in land, or some other form
of property, such as intellectual property or personal property. A
sufficient interest also has been found when the intervener
claims an identifiable interest in funds that are the subject of
litigation. For example, insurers have been allowed to intervene
as of right in lawsuits between their insured and third parties
who either are filing claims against the insured or who are being
sued by the insured. It surely is sufficient also if the judgment
will have a binding effect on the would-be intervener.
{¶38} Harsh and ReliaStar—which, again, are not controlling in our district—make
a persuasive case that a mere judgment creditor may not be a necessary party in a
declaratory judgment action. But, once again, these cases do not concern necessary
parties under R.C. 2721.12(A), but instead involve Fed.R.Civ.P 24(a) and (b). The case
before us is therefore distinguishable from Harsh and ReliaStar.
{¶39} Even if Harsh and ReliaStar applied in the R.C. 2721.12(A) context, we find
that ClarkDietrich, in the circumstances of this case, is more than just a common judgment
creditor. ClarkDietrich sought the Receiver's appointment for the specific purpose of
investigating and bringing a claim against CSSA’s board of directors for breach of fiduciary
duty to obtain a judgment from which ClarkDietrich’s Defamation Action judgment could be
satisfied. The court appointed the Receiver for the sole purpose advanced by ClarkDietrich.
The Receivership is a statutorily authorized, judicially-created judgment collection vehicle.
In the Receivership Order, the trial court found that the Receivership was appropriate and
necessary to "carry [ClarkDietrich's] judgment [against CSSA] into effect" and to "dispose
of property according to [ClarkDietrich’s] judgment, or to preserve it during the pendency of
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an appeal"—two of the purposes which R.C. 2735.01(A)(4) and (5) provide may be the
bases for a trial court's appointment of a receiver. The court found that appointment of the
Receiver was warranted to avoid "irreparable loss or injury" to ClarkDietrich. ClarkDietrich
has a legally protectable interest in the Defamation Action judgment that the Receivership
was created to carry out. The declaratory judgment sought by the Receiver could affect or
impair the ability of the Receivership to fulfill its statutory and court-ordered function with
respect to ClarkDietrich. By virtue of the statutes that authorized the Receivership and the
court order authorizing the Receivership, ClarkDietrich also has a legal interest in the
subject matter of the Receivership Action.
{¶40} In this case, the Receiver seeks a declaratory judgment that the directors'
rejection of ClarkDietrich's settlement offer was not a valid exercise of the business
judgment rule. This issue is tied to the viability of the claims asserted in the Receivership
Action. If the business judgment rule applies, it could shield the directors from liability and
bar the Receiver's recovery on behalf of CSSA. A decision adverse to the Receiver on
whether the business judgment rule applies will have a clear and obvious legal effect on
ClarkDietrich's rights to recover on its judgment through the Receivership. Accordingly, we
conclude that ClarkDietrich has a legally protectable interest "that would be affected by the
declaration." R.C. 2721.12(A); Rumpke, 2010-Ohio-6037, at ¶ 15.
{¶41} In the many cases cited by the parties in their briefing, none involve the
procedural posture presented in this case. ClarkDietrich is not like the property owners in
Driscoll that were only practically interested, rather than legally interested, in litigation
involving an adjoining property. ClarkDietrich is not like the government officials in Portage
Cty. and Whitman who were legally interested in a declaratory judgment that would impact
their legal authority to enforce statutes. Nor is ClarkDietrich a common judgment creditor
with a mere practical interest in ensuring that funds are available to satisfy the judgment.
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This case is different: here, ClarkDietrich requested the creation of the Receivership for the
sole purpose of seeking funds to satisfy its judgment; the court, authorized by statute to do
so, created the Receivership for that purpose; and the Receivership Order makes clear that
the Receivership exists to benefit ClarkDietrich. ClarkDietrich's "interest" in the Receiver's
declaratory judgment action is neither "undifferentiated nor generalized" as mentioned in
ReliaStar. Pursuant to the Receivership Order, ClarkDietrich has the necessary "readily
identifiable interest" in the Receiver's claims against CSSA’s directors and any resulting
judgment. ReliaStar at fn. 2, citing Federal Prac. & Proc. at Section 1908.2. ClarkDietrich
is "legally affected" and therefore has a legal interest that required the Receiver to add it as
an interested party when the Receiver initiated the Receivership Action. R.C. 2721.12(A);
Rumpke, 2010-Ohio-6037 at ¶ 14.
{¶42} Based on the foregoing, we find that the trial court erred by dismissing
ClarkDietrich on the basis that it lacked a legal interest in the declaratory judgment action.
Accordingly, we sustain ClarkDietrich's first assignment of error.
B. Motion to Reconsider
{¶43} Assignment of Error No. 2 states:
{¶44} THE TRIAL COURT ERRED BY DENYING CLARKDIETRICH'S MOTION TO
RECONSIDER.
{¶45} ClarkDietrich did not separately argue its second assignment of error, but
instead argued it in conjunction with the first assignment of error. Regardless, the resolution
of the first assignment of renders Assignment of Error No. 2 moot, and we need not address
it. App.R. 12(A)(1)(c).
III. Conclusion
{¶46} ClarkDietrich has a legal interest in the Receivership Action that requires its
inclusion as an interested party in that action pursuant to R.C. 2721.12(A).
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{¶47} Judgment reversed, cause remanded for further proceedings, and
ClarkDietrich is reinstated as an interested party.
M. POWELL, P.J., and S. POWELL, J., concur.
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