McCruter v. Advantage Imaging of Lake Cty., L.L.C. , 2021 Ohio 433 ( 2021 )

[Cite as McCruter v. Advantage Imaging of Lake Cty., L.L.C., 2021-Ohio-433.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
DERRICK A. MCCRUTER, :
Plaintiff-Appellant, :
No. 109778
v. :
ADVANTAGE IMAGING OF LAKE :
COUNTY, L.L.C.,
Defendant-Appellee. :
JOURNAL ENTRY AND OPINION
JUDGMENT: AFFIRMED
RELEASED AND JOURNALIZED: February 18, 2021
Civil Appeal from the Cuyahoga County Court of Common Pleas
Case No. CV-20-928141
Appearances:
Luftman, Heck & Associates, L.L.P., and Matthew L.
Alden, for appellant.
Brouse McDowell, L.P.A., and Nicholas J. Kopcho, for
appellee.
LISA B. FORBES, J.:
Plaintiff-appellant Derrick A. McCruter (“McCruter”) appeals the trial
court’s order granting defendant-appellee Advantage Imaging of Lake County,
L.L.C.’s (“Advantage”) motion for judgment on the pleadings in this case alleging a
violation of the Consumer Sales Practices Act (“CSPA”). After reviewing the facts of
the case and pertinent law, we affirm the trial court’s judgment because McCruter’s
claim is preempted by federal bankruptcy law.
I. Facts and Procedural History
On June 24, 2019, McCruter filed a bankruptcy petition. See In re
Derrick A. McCruter, N.D.Ohio Bankr. N0. 19-13924 (Oct. 2, 2019). On October 2,
2019, McCruter received a bankruptcy discharge, and his case was closed.
Advantage was not named as a creditor in McCruter’s bankruptcy case and did not
receive notice of the discharge. On December 31, 2019, Advantage sent McCruter a
billing statement in the amount of $1,520 for medical services performed in
December 2012.
On January 21, 2020, McCruter filed a complaint in the trial court
alleging that Advantage “committed unfair, deceptive and unconscionable acts or
practices in violation of [R.C.] 1345.02(A) and 1345.03 (A) of the Consumer Sales
Practices Act including attempting to collect on a debt in violation of the discharge
injunction imposed by 11 U.S.C. 524” of the bankruptcy code. On June 17, 2020, the
trial court granted judgment on the pleadings in favor of Advantage, finding that
McCruter’s ‘“sole avenue of recourse * * * is to bring an action against the creditor
for contempt’ in the bankruptcy court that issued the discharge order.” (Quoting In
re Perviz, 302 B.R. 357, 370 (Bankr.N.D.Ohio 2003)).
It is from this order that McCruter appeals, alleging that “[t]he trial
court erred in granting Advantage Imaging of Lake County, LLC’s motion for
judgment on the pleadings.” McCruter argues two issues under his sole assignment
of error: first, “[w]hether a medical practice group incorporated as an Ohio limited
liability company is a ‘supplier’ subject to the provision of the Ohio Consumer Sales
Practices Act”; and second, “[w]hether a Consumer Sales Practices Act claim alleging
unfair and deceptive practices in the collection of a discharged debt is preempted by
the Bankruptcy Code.” We find the preemption issue dispositive of this case and
limit our analysis accordingly.
II. Law and Analysis
Pursuant to Civ.R. 12(C), “[a]fter the pleadings are closed but within
such time as not to delay the trial, any party may move for judgment on the
pleadings.” Appellate courts review a trial court’s decision regarding a motion for
judgment on the pleadings under a de novo standard. “The determination of a
motion for judgment on the pleadings is limited solely to the allegations in the
pleadings and any writings attached to the pleadings.” Bradigan v. Strongsville City
Schools, 8th Dist. Cuyahoga No. 88606, 2007-Ohio-2773, ¶ 11.
Under Civ.R. 12(C), dismissal is appropriate where a court (1) construes
the material allegations in the complaint, with all reasonable inferences
to be drawn therefrom, in favor of the nonmoving party as true, and (2)
finds beyond doubt, that the plaintiff could prove no set of facts in
support of his claim that would entitle him to relief. Thus, Civ.R. 12(C)
requires a determination that no material factual issues exist and the
movant is entitled to judgment as a matter of law.
(Citations omitted.) State ex rel. Midwest Pride IV v. Pontious, 75 Ohio St.3d 565,
570, 664 N.E.2d 931 (1996).
A de novo standard of review is also required when appellate courts
review whether federal law preempts state law. Bailey v. Manor Care of Mayfield
Hts., 8th Dist. Cuyahoga No. 99798, 2013-Ohio-4927, ¶ 12. The Ohio Supreme
Court reiterated “the controlling principles that govern” federal preemption in
Darby v. A-Best Prods. Co., 102 Ohio St.3d 410, 2004-Ohio-3720, 811 N.E.2d 1117:
(1) the critical question is whether Congress intended state law to be
superseded by federal law — the historic police powers of the state are
not to be superseded by federal law unless that is the clear and manifest
purpose of Congress, (2) a presumption exists against preemption of
state police-power regulations, and (3) federal law preempts state law
where Congress has occupied the entire field * * *.
Id. at ¶ 27. See also Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct.
1146, 91 L.Ed. 1447 (1947) (an intent to preempt may be inferred when “[t]he scheme
of federal regulation [is] so pervasive as to make reasonable the inference that
Congress left no room for the States to supplement it”).
In Pertuso v. Ford Motor Credit Co., 233 F.3d 417, 200 U.S. App.
LEXIS 29583 (6th Cir.2000), the United States Court of Appeals for the Sixth Circuit
held that state law claims alleging violations of a bankruptcy discharge order were
preempted by the Bankruptcy Code.
As Ford correctly points out, the Pertusos’ state law claims presuppose
a violation of the Bankruptcy Code. Permitting assertion of a host of
state law causes of action to redress wrongs under the Bankruptcy Code
would undermine the uniformity the Code endeavors to preserve and
would “stand as an obstacle to the accomplishment and execution of
the full purposes and objectives of Congress.” Accordingly, and
because Congress has preempted the field, the Pertusos may not assert
these claims under state law.
(Citations omitted.) Id. at 426.
As the trial court in the case at hand stated, 11 U.S.C. 524 provides the
exclusive remedy for a violation of a bankruptcy discharge. A “debtor injured by a
violation of the discharge injunction has no right to statutory damages. Instead,
when a violation of the discharge injunction does occur, a debtor’s sole avenue of
recourse * * * is to bring an action against the creditor for contempt” in federal
bankruptcy court. In re Perviz, 302 B.R. at 370 (Bankr.N.D. Ohio 2003).
On appeal, McCruter argues that Pertuso does not apply to his case
because Pertuso did not involve claims under the CSPA. We find this to be a
distinction without a difference. “Under the law as it now stands * * * we have no
hesitancy in joining those courts (a clear majority) that have held [11 U.S.C.] 524
does not impliedly create a private right of action.” Pertuso at 422-423. Pertuso’s
application extends to private causes of action in general and is not limited to a
particular action under a specific statutory scheme or at common law.
Other federal circuit courts, as well as bankruptcy courts, align with
Pertuso’s analysis and holding. In Gaitor v. U.S. Bank, N.A. (In re Gaitor),
M.D.N.C. Bankr. No. 13-80530, 2015 Bankr. LEXIS 2545 (July 31, 2015), the debtor
filed suit against a bank alleging that, after he received his bankruptcy discharge, the
bank “continued to send him statements that he was in default on his mortgage
payments.” Id. at 2. In addition to a claim for “civil contempt for willful violations
of the permanent discharge injunction,” the debtor sought relief under two state
consumer protection statutes, as well as the general notion of “good faith and fair
dealing.” Id. at 3. The court dismissed the debtor’s latter state law claims. “Courts
applying the law of preemption to debtors’ efforts to remedy violations of the
discharge injunction have generally found nonbankruptcy causes of action to be
preempted, at least to the extent that the nonbankruptcy cause of action depends on
proof of the discharge violation.” Id. at 8-9.
In Walls v. Wells Fargo Bank, N.A., 276 F.3d 502, 504, 2002 U.S.
App. LEXIS 202 (9th Cir.2002), the Ninth Circuit Court of Appeals addressed
“whether a discharged debtor may pursue a simultaneous claim under the Fair Debt
Collections Practices Act, 15 U.S.C. 1692f.” The court held that the debtor may not
pursue simultaneous claims, “as to do so would circumvent the Bankruptcy Code’s
remedial scheme.” Id. The court further explained:
Implying a private remedy here could put enforcement of the discharge
injunction in the hands of a court that did not issue it (perhaps even in
the hands of a jury), which is inconsistent with the present scheme that
leaves enforcement to the bankruptcy judge whose discharge order
gave rise to the injunction. This makes a good deal of sense, given that
the equities at issue are bankruptcy equities, and it would undermine
Congress’s deliberate decision to place supervision of discharge in the
bankruptcy court * * *.
Id. at 509.
In his complaint, McCruter refers to the billing statement that
Advantage sent him — which is the sole alleged “unfair, deceptive and
unconscionable” act at issue in this case — as a “violation of the discharge order.”
McCruter further claims that sending this statement violated the CSPA by
“attempting to collect on a debt in violation of the discharge injunction imposed by
11 U.S.C. 524.” McCruter does not allege any other means by which Advantage may
have violated the CSPA. Despite McCruter’s designation of this claim as a violation
of the CSPA, the language in the complaint clearly reveals that McCruter seeks to be
compensated for Advantage allegedly having violated McCruter’s bankruptcy
discharge. See, e.g., Blank v. Secrux, Inc., 123 Ohio App.3d 248, 254, 704 N.E.2d
21 (8th Dist.1997) (although the claim is labeled “as one for breach of fiduciary duty,
* * * we conclude this claim is merely a disguised R.C. 1701.85 claim and was
properly dismissed due to the plaintiffs’ failure to comply with the statute of
limitations set forth in R.C. 1701.85(A)(2)”).
In looking only at the allegations in the pleadings, because we must
when reviewing a trial court’s granting of a motion for judgment on the pleadings,
whether McCruter is entitled to relief depends on a finding that Advantage violated
the bankruptcy discharge. That determination must be made in bankruptcy court.
Furthermore, McCruter’s exclusive remedy lies in bankruptcy court in the form of a
contempt action. Therefore, no material factual issues exist in this case, and
Advantage is entitled to judgment as a matter of law.
For these reasons, we find that the trial court properly granted
Advantage’s motion for judgment on the pleadings, and McCruter’s sole assignment
of error is overruled.
Judgment affirmed.
It is ordered that appellee recover from appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said 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.
_____
LISA B. FORBES, JUDGE
KATHLEEN ANN KEOUGH, P.J., and
EILEEN T. GALLAGHER, J., CONCUR