Cook v. Pitter Patter Learning Ctr., L.L.C. , 2022 Ohio 961 ( 2022 )

[Cite as Cook v. Pitter Patter Learning Ctr., L.L.C., 2022-Ohio-961.]
IN THE COURT OF APPEALS OF OHIO
SECOND APPELLATE DISTRICT
MONTGOMERY COUNTY
LINDA K. COOK :
:
Plaintiff/Appellant : Appellate Case No. 29260
:
v. : Trial Court Case No. 2020-CV-1628
:
PITTER PATTER LEARNING : (Civil Appeal from
CENTER, LLC, et al. : Common Pleas Court)
:
Defendants/Appellees :
...........
OPINION
Rendered on the 25th day of March, 2022.
...........
JASON P. MATTHEWS, Atty. Reg. No. 0073144 and MATTHEW C. SCHULTZ, Atty.
Reg. No. 0080142, 130 West Second Street, Suite 924, Dayton, Ohio 45402
Attorneys for Plaintiff-Appellant
MATTHEW D. STOKELY, Atty. Reg. No. 0062611 and KRISTINA ELIZABETH CURRY,
Atty. Reg. No. 0084084, 40 North Main Street, Suite 2700, Dayton, Ohio 45423
Attorneys for Defendants-Appellees
.............
WELBAUM, J.
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{¶ 1} Plaintiff-Appellant, Linda Cook, appeals from a judgment dismissing her
complaint against Defendants-Appellees, Pitter Patter Learning Center, LLC, and Zandra
Phillips (collectively, “Appellees”). According to Cook, the trial court erred in dismissing
the complaint because it failed to apply the proper standard of review. Cook also argues
that the court failed to properly consider evidence about judicial estoppel.
{¶ 2} We conclude that dismissal of the complaint was partly based on incorrect
factual conclusions related to the application of judicial estoppel. Accordingly, the trial
court erred in dismissing Cook’s complaint. Furthermore, an alleged lacked of standing
due to Cook’s Chapter 13 bankruptcy filing does not provide an alternate reason to affirm
the dismissal. Cook had standing when the complaint was filed because she asserted
that Appellees had caused her injury and damages by unlawfully terminating her
employment, by failing to pay wages, by failing to pay minimum wages, and by illegally
accessing her electronically-stored information. At that point, Cook had not yet filed for
bankruptcy, and standing existed.
{¶ 3} Whether the bankruptcy trustee subsequently became a real party in interest,
depriving Cook of standing, or whether Cook had a concurrent interest for purposes of
standing due to differences between Chapter 7 and Chapter 13 bankruptcy proceedings
is for the trial court to decide on remand, along with the issue of judicial estoppel.
Accordingly, the judgment of the trial court will be reversed and remanded for further
proceedings.
I. Facts and Course of Proceedings
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{¶ 4} On April 3, 2020, Cook filed a complaint against Appellees, alleging that her
employment had been terminated in violation of R.C. 5113.52, Ohio’s “whistleblower”
statute, and R.C. 5104.10, which precludes childcare employers from taking retaliatory
actions against employees who have made good faith oral or written complaints to the
director of job and family services. Cook also alleged that Appellees had failed to pay
wages, had failed to pay minimum wages, and had illegally accessed her electronically-
stored communications in violation of state and federal law.
{¶ 5} The claims arose from Cook’s employment with Pitter Patter, which is a
licensed daycare facility. According to the complaint, Cook was employed at Pitter Patter
as an administrator from July 8, 2019 through October 9, 2019, and reported to Zandra
Phillips. Complaint, ¶ 5 and 7. Cook’s job performance and conduct were satisfactory
during her employment. Id. at ¶ 6. During her employment, Cook reported unsafe
conditions to Phillips, including children’s access to prescription medication and sharp
objects and improper staff-to-child ratios. However, Phillips failed to correct the
conditions. Id. at ¶ 7. As a result, Cook sent an email on October 8, 2019, to a Day
Care Licensing Specialist for the Ohio Department of Job and Family Services (“ODJFS”),
asking to speak with him about unsafe conditions at the daycare center. Id.
{¶ 6} Cook sent the email using her private mobile phone and personal email
account. Id. at ¶ 8. However, on October 9, 2019, Phillips handed Cook a printed copy
of email communications between ODJFS and Cook and terminated Cook’s employment.
Id. at ¶ 9. Cook then filed the current action against Appellees, Phillips and Pitter Patter.
{¶ 7} After receiving an extension of time to plead, Appellees filed an answer to
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the complaint on June 3, 2020. Following a pretrial conference, the court set various
litigation dates, including a January 21, 2021 discovery cutoff and a February 8, 2021 jury
trial.
{¶ 8} On December 3, 2021, Appellees filed a motion to dismiss the complaint
pursuant to Civ.R. 12(B)(1) and, alternatively, Civ.R. 12(C), based on Cook’s failure to
disclose the existence of her action against Appellees when she filed for a Chapter 13
bankruptcy. By agreement of the parties, the court vacated the trial date and granted
Cook an extension of time to reply to the motion to dismiss. Cook then filed a response
to the motion on December 29, 2020, arguing that her failure to list the claim against
Appellees was inadvertent. As support, Cook attached her trial attorney’s affidavit and
several other documents.
{¶ 9} On the same day, Cook also filed a motion in the trial court seeking to
substitute the bankruptcy trustee as a real party in interest under Civ.R. 17(A). Again,
Cook attached several documents, including the docket sheet for her bankruptcy case
and her trial attorney’s affidavit.
{¶ 10} Another pretrial order was filed on January 7, 2021, setting trial for October
25, 2021. On February 9, 2021, Appellees responded to the motion to add the
bankruptcy trustee and to Cook’s memorandum concerning the motion to dismiss.
{¶ 11} Along with a subsequent memorandum, Cook included her own affidavit, in
which she said she had informed her bankruptcy attorney of the pending litigation. She
further stated that this attorney and his staff had prepared the bankruptcy filings and had
not given her an opportunity to review them before filing. Cook therefore claimed she
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had no knowledge that the common pleas court litigation had been omitted until
Appellees’ motion to dismiss was filed. Plaintiff’s Reply Memorandum in Support of Her
Motion to Substitute Bankruptcy Trustee as Real Party in Interest (Feb. 16. 2021)
(“Substitution Motion”), Cook Affidavit, p. 1-2. Appellees filed a surrreply to this
memorandum on February 23, 2021.
{¶ 12} On September 9, 2021, the trial court filed an order and entry sustaining
Appellees’ motion to dismiss and dismissing Cook’s complaint. This timely appeal
followed.
II. Alleged Error in Dismissal of the Complaint
{¶ 13} Cook’s sole assignment of error states that:
The Trial Court Erred by Granting the Motion to Dismiss Filed by
Defendants-Appellees.
{¶ 14} Cook first contends that the trial court failed to apply the correct standard of
review under Civ.R. 12(B)(1) or Civ.R.12(C). Specifically, Cook argues that the court
made judgments on facts outside the pleadings, which is appropriate for summary
judgment situations but not for motions to dismiss or motions for judgment on the
pleadings. Cook further contends that because her intent was in question, this matter
was not suitable for disposition by summary judgment. Following that discussion, Cook
addresses the merits of dismissing the case. Before we consider these issues, we will
outline the relevant standards.
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A. Applicable Standards
{¶ 15} As noted, Appellees’ motion to dismiss was based on Civ.R. 12(B)(1) and,
alternatively, on Civ.R. 12(C). Civ.R. 12(B)(1) concerns dismissal based on “lack of
jurisdiction over the subject matter,” and Civ.R. 12(C) pertains to motions for judgment on
the pleadings.
{¶ 16} “The standard of review for a dismissal pursuant to Civ.R. 12(B)(1) is
whether any cause of action cognizable by the forum has been raised in the complaint.”
State ex rel. Bush v. Spurlock, 42 Ohio St.3d 77, 80, 537 N.E.2d 641 (1989), citing Avco
Fin. Servs. Loan, Inc. v. Hale, 36 Ohio App.3d 65, 67, 520 N.E.2d 1378 (10th Dist.1987).
“In determining whether a plaintiff has alleged a cause of action sufficient to withstand a
Civ.R. 12(B)(1) motion to dismiss for lack of subject matter jurisdiction, a trial court is not
confined to the allegations of the complaint, and it may consider evidentiary material
pertinent to such inquiry without converting the motion to a motion for summary
judgment.” Tibbs v. Kendrick, 93 Ohio App.3d 35, 39-40, 637 N.E.2d 397 (8th
Dist.1994), citing Southgate Dev. Corp. v. Columbia Gas Transm. Corp., 48 Ohio St.2d
211, 358 N.E.2d 526 (1976).
{¶ 17} Appellate review of dismissals under Civ.R. 12(B)(1) is de novo. State ex
rel. Ohio Civ. Serv. Emps. Assn. v. State of Ohio, 146 Ohio St.3d 315, 2016-Ohio-478,
56 N.E.3d 913, ¶ 12. This means we apply the same standards as the trial court. Carter
v. Trotwood-Madison City Bd. of Edn., 181 Ohio App.3d 764, 2009-Ohio-1769, 910
N.E.2d 1088, ¶ 26 (2d Dist.).
{¶ 18} Unlike Civ.R. 12(B)(1), a decision on “a motion for judgment on the
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pleadings is restricted solely to the allegations in the pleadings and any writings attached
to the complaint.” Dearth v. Stanley, 2d Dist. Montgomery No. 22180, 2008-Ohio-487,
¶ 24, citing Peterson v. Teodosio, 34 Ohio St.2d 161, 165, 297 N.E.2d 113 (1973).
{¶ 19} “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
that the movant is entitled to judgment as a matter of law.” State ex rel. Midwest Pride
IV, Inc. v. Pontious, 75 Ohio St.3d 565, 570, 664 N.E.2d 931 (1996).
{¶ 20} Appellate review of decisions made under Civ.R. 12(C) is also de novo.
Rayess v. Educational Comm. for Foreign Med. Graduates, 134 Ohio St.3d 509, 2012-
Ohio-5676, 983 N.E.2d 1267, ¶ 18. This is because the motion presents only questions
of law. Id.{¶ 21} With these standards in mind, we return to consideration of Cook’s
arguments.
B. Trial Court Application of Standards
{¶ 22} Cook’s first argument is that the trial court erred in failing to apply the correct
standards for dismissal under Civ.R. 12 and in considering matters outside the pleadings.
The trial court’s decision was very brief and did not indicate whether it was relying on
Civ.R. 12(B)(1) or (C). However, the trial court could not have relied solely on the
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pleadings, because the fact of Cook’s bankruptcy case was not disclosed in the pleadings
and was brought to the court’s attention well after the pleadings had closed.
{¶ 23} The Ohio Rules of Civil Procedure define “pleadings” as a complaint and an
answer; a reply to a counterclaim denominated as such; an answer to a cross-claim, if
the answer contains a cross-claim; a third-party complaint, if a person who was not an
original party is summoned under the provisions of Civ.R. 14; and a third-party answer, if
a third-party complaint is served.” Civ.R. 7(A). The pleadings, as relevant here, were
Cook’s complaint and Appellees’ answer. Nothing in these documents indicates any
deficiency in Cook’s ability to bring or maintain an action, and judgment therefore could
not have been based on Civ.R. 12(C).
{¶ 24} The crux of the argument against Cook is that she failed to disclose her
pending lawsuit when she filed for bankruptcy. This would not have been discovered
during the pleading stage because Cook had not yet filed the bankruptcy action when the
complaint was filed. In fact, Cook did not file the bankruptcy action until two months later.
Matters pertinent to the bankruptcy filing would obviously have been outside the pleadings
in the pending lawsuit.
{¶ 25} As indicated, Civ.R. 12(B)(1) allows consideration of matters outside the
pleadings. We have not found authority in Ohio discussing judicial estoppel in the
context of Civ.R. 12(B)(1), which applies to dismissals based on “lack of jurisdiction over
the subject matter.”
{¶ 26} Judicial estoppel is an equitable doctrine that courts use at their discretion
“to prevent ‘improper use of judicial machinery.’ ” New Hampshire v. Maine, 532 U.S.
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742, 750, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001), quoting Konstantinidis v. Chen, 626
F.2d 933, 938 (D.C.Cir.1980). In New Hampshire, the United States Supreme Court
decided that judicial estoppel fit best a controversy between two states over a river
boundary that these states had previously litigated. Id. at 749. While the procedural
context of New Hampshire involved dismissal of an original complaint, the Supreme Court
did not mention any particular dismissal vehicle such as lack of jurisdiction or failure to
state a claim. Id. at 745. However, the court only considered documents filed in the
prior action and did not consider other facts outside the record. Id. at 746-748 and 751-
754. That contrasts with the situation before us, where the evidence included pleadings
in another case (the bankruptcy), as well as affidavits from both Cook and her attorney
about events that occurred.
{¶ 27} In the context of bankruptcy situations, summary judgment is typically
employed, due to reliance on facts that would be outside the record. E.g. White v.
Wyndham Vacation Ownership, Inc., 617 F.3d 472, 475 (6th Cir.2010) (converting a
Fed.Civ.R. 12(B)(6) motion into a motion for summary judgment). See also Saha v.
Research Inst. at Nationwide Children's Hosp., 10th Dist. Franklin No. 12AP-590, 2013-
Ohio-4203, ¶ 8 and 16-17 (converting a motion to dismiss to a summary judgment
motion). Thus, converting Appellees’ motion into one for summary judgment would
probably have been the better course of action here.
{¶ 28} From the documents in the record, it appears that Cook first disclosed the
bankruptcy filing in her answers to interrogatories, which were sent to Appellees on
September 18, 2020. See Response in Opposition to Defendants’ Motion to Dismiss
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(Dec. 29, 2020), Affidavit of Matthew Schultz attached as Ex. A, ¶ 4-5, and Ex.1A attached
to Schultz’s Affidavit, p. 5 and 14.
{¶ 29} Shortly after Cook’s deposition was taken on November 11, 2020,
Appellees’ counsel “confirmed” the bankruptcy filing. Defendants’ Motion to Dismiss
(December 2, 2021), p. 3 and Affidavit of Matthew Stokely, attached as Ex. F.
Appellees then filed their motion to dismiss on December 2, 2020.1
{¶ 30} When the motion to dismiss was filed, the summary judgment deadline had
expired. However, on December 17, 2020, the trial court vacated the trial date at the
parties’ joint request and allowed Cook two additional weeks to reply to the motion.
Agreed Decision, Order, and Entry Vacating the Trial Date (Dec. 17, 2020), p. 1. On
December 29, 2020, Cook filed a response, which included her attorney’s affidavit and
documents. She also filed her own affidavit on February 16, 2021, as part of her request
to substitute the bankruptcy trustee as plaintiff.
{¶ 31} In view of these facts, Cook was aware that the trial court would be
considering matters outside the record in deciding Appellees’ motion. She did not object,
and, in fact, it would have been impossible to decide the motion without reviewing
evidence that was not in the pleadings. As a result, Cook waived any objection to the
procedure and to the court’s review of matters outside the record. Courts have
“ ‘consistently held that an appellate court need not consider an error which a party
complaining of the trial court's judgment could have called, but did not call, to the trial
1 Appellees did not explain the nearly three-month delay in filing the motion to dismiss.
After receiving the interrogatory answers, the information could have easily been
“confirmed” by looking at the bankruptcy records.
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court's attention at a time when such error could have been avoided or corrected by the
trial court.’ ” State v. Simmons, 2d Dist. Montgomery No. 23991, 2011-Ohio-5561, ¶ 31,
quoting State v. Williams, 51 Ohio St.2d 112, 117, 364 N.E.2d 1364 (1977), vacated in
part on other grounds, 438 U.S. 911, 98 S.Ct. 3137, 57 L.Ed.2d 1156 (1978).
C. Alleged Material Facts
{¶ 32} Cook’s second argument is that the trial court should not have decided the
issue of her intent, as that was a factual issue for trial. In view of our finding that Cook
waived objection to the court’s considering matters outside the pleadings, a summary
judgment standard is appropriate here.
{¶ 33} “Summary judgment is appropriate if (1) no genuine issue of any material
fact remains, (2) the moving party 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
construing the evidence most strongly in favor of the nonmoving party, that conclusion is
adverse to the party against whom the motion for summary judgment is made.” State ex
rel. Duncan v. Mentor City Council, 105 Ohio St.3d 372, 2005-Ohio-2163, 826 N.E.2d
832, ¶ 9, citing Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327, 364 N.E.2d 267(1977). The law is well-settled that in reviewing summary judgment decisions, we
conduct de novo review, “which means that we apply the same standards as the trial
court.” GNFH, Inc. v. W. Am. Ins. Co., 172 Ohio App.3d 127, 2007-Ohio-2722, 873
N.E.2d 345, ¶ 16 (2d Dist.).
{¶ 34} The issue before the trial court was whether Cook was precluded from
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proceeding with her action against Appellees because she failed to disclose that she had
filed for bankruptcy two months after she filed the complaint in the common pleas court.
A considerable body of law exists indicating that judicial estoppel can apply in such
situations.
{¶ 35} Judicial estoppel is used where a litigant fails to disclose bankruptcy
proceedings because “[a] debtor has an affirmative duty to disclose all of its assets to the
bankruptcy court.” Browning v. Levy, 283 F.3d 761, 775 (6th Cir.2002), citing 11 U.S.C.
521. These assets would include sums a party expects to recover or has recovered in
litigation because they could be used to satisfy creditors’ claims.
{¶ 36} “The doctrine of judicial estoppel forbids a party ‘from taking a position
inconsistent with one successfully and unequivocally asserted by the same party in a prior
proceeding.’ ” Teledyne Industries, Inc. v. N.L.R.B., 911 F.2d 1214, 1217 (6th Cir.1990),
quoting Reynolds v. Commr. of Internal Revenue, 861 F.2d 469, 472-473 (6th Cir.1988).
See also Greer-Burger v. Temesi, 116 Ohio St.3d 324, 2007-Ohio-6442, 879 N.E.2d 174,
¶ 5 and 24-31 (applying judicial estoppel where plaintiff discharged attorney fees in
bankruptcy, but failed to list her pending retaliation claim, for which she ultimately
received attorney fees, on the schedule of assets in the bankruptcy case).
{¶ 37} “Judicial estoppel is an equitable doctrine that preserves the integrity of the
courts by preventing a party from abusing the judicial process through cynical
gamesmanship, achieving success on one position, then arguing the opposite to suit an
exigency of the moment.” Teledyne Industries at 1217-1218; see also Greer-Burger at
¶ 25. This doctrine “ ‘applies only when a party shows that his opponent: (1) took a
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contrary position; (2) under oath in a prior proceeding; and (3) the prior position was
accepted by the court.’ ” Cavins v. S & B Health Care, Inc., 2015-Ohio-4119, 39 N.E.3d
1287, ¶ 84 (2d Dist.), quoting Smith v. Dillard Dept. Stores, Inc., 139 Ohio App.3d 525,
744 N.E.2d 1198 (8th Dist.2000).
{¶ 38} Judicial estoppel could apply here because Cook filed for bankruptcy on
June 4, 2020, about two months after she filed the current litigation, in which she claimed
damages in excess of $25,000. See Complaint, p. 7; and Docket for Bankruptcy Case
No. 3:20-bk-31450, attached to Substitution Motion, p. 1-2. The Chapter 13 bankruptcy
petition that Cook filed specifically required disclosure of whether the petitioner had been
a party to any legal action within the year prior to filing for bankruptcy. Cook answered
“no” both when she filed the petition and when she filed an amended petition on July 16,
2020. See Motion to Dismiss (Dec. 2, 2020), Ex. A, p. 26, and Ex, D, p. 6. Cook also
denied in the original petition that she had any legal claims against third parties, and she
did not correct that when she amended the petition. Ex. A at p. 15.
{¶ 39} The bankruptcy court accepted Cook’s position, as an October 24, 2020
order was filed confirming her Chapter 13 plan. See Ex. E attached to the Motion to
Dismiss.
{¶ 40} In the context of bankruptcy proceedings, the Sixth Circuit Court of Appeals
has applied an exception (or third prong) to the analysis, which is that “ ‘judicial estoppel
is inappropriate in cases of conduct amounting to nothing more than mistake or
inadvertence.’ ” White, 617 F.3d at 476, quoting Browning, 283 F.3d at 776. In deciding
whether a party’s “conduct resulted from mistake or inadvertence,” the Sixth Circuit
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“considers whether: (1) she lacked knowledge of the factual basis of the undisclosed
claims; (2) she had a motive for concealment; and (3) the evidence indicates an absence
of bad faith.” Id. at 478.
{¶ 41} Cook argues that intent is a factual issue to be resolved at trial. However,
this is not always true, because “intent is rarely provable by direct evidence, it may be
inferred from the ‘totality of the circumstances.’ ” Davis v. Sun Refining & Marketing Co.,
109 Ohio App.3d 42, 56, 671 N.E.2d 1049 (2d Dist.1996), quoting Klapchar v. Dunbarton
Properties, Ltd., 5th Dist. Stark No. CA-8521, 1991 WL 249432, *2 (Nov. 4, 1991).
{¶ 42} In contrast to Cook’s position, Appellees argue that “ ‘[a] motive to conceal
claims from the bankruptcy court always exists as a matter of law, since “it is always in a
Chapter 13 petitioner's interest to minimize income and assets.” ’ ” Appellees’ Brief, p.
14-15, quoting Moore v. Hodge, 1st Dist. Hamilton No. C-180633, 2019-Ohio-4752, ¶ 14,
which, in turn, quotes Saha, 10th Dist. Franklin No. 12AP-590, 2013-Ohio-4203, at ¶ 19.2
{¶ 43} This legal presumption about motive applies, however, to whether a plaintiff
“received potential financial benefits from concealing the claim, and thus had a motive to
do so.” Stanley v. FCA US, LLC, N.D.Ohio No. 3:19-cv-640, 2021 WL 5760546, *6 (Dec.
3, 2021). See also Davis v. Fiat Chrysler Autos. U.S., LLC, 747 Fed.Appx. 309, 316 (6th
Cir.2018). Once that presumption is established, “the burden shifts to Plaintiff to set forth
2 Moore’s reference to Saha is incorrect, as Saha does not contain such a quote in
paragraph 19 or at any other place in the opinion. See Saha, 10th Dist. Franklin No.
12AP-590, 2013-Ohio-4203. The Tenth District Court of Appeals did make such a quote
in a later decision in Saha. See Saha v. Research Institute at Nationwide Children's
Hosp., 10th Dist. Franklin No. 18AP-661, 2019-Ohio-1792, ¶ 19 (quoting from the trial
court’s decision), and ¶ 33 (quoting from Lewis v. Weyerhaeuser Co., 141 Fed.Appx. 420,
426 (6th Cir. 2005), and White, 617 F.3d at 479).
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evidence showing a lack of bad faith.” Stanley at *7, citing White, 617 F.3d at 479, and
Finney v. Volvo Group N. Am., LLC, 562 B.R. 914, 918 (M.D.Tenn 2015). See also
Moore at ¶ 14. Thus, while Cook’s motive to conceal could have been inferred as a
matter of law, she was still allowed to establish that she had not acted in bad faith.
{¶ 44} “The Sixth Circuit has made clear that the bad faith analysis for applying
judicial estoppel in the bankruptcy context generally focuses on three attributes: effort,
effectiveness, and timing. To avoid estoppel, a party generally must show they made a
good-faith, effective effort to inform the bankruptcy court about the potential claim.”
Couch v. Certified Flooring Installation, Inc., 439 F.Supp.3d 964, 972 (S.D.Ohio 2020),
citing Eubanks v. CBSK Fin. Group, Inc., 385 F.3d 894, 898-899 (6th Cir. 2004).
“Likewise, a court is less inclined to find bad faith when the party attempted to inform the
bankruptcy court about the potential action before a motion to dismiss forced the party's
hand.” (Emphasis sic.) Id., citing Newman v. Univ. of Dayton, 751 Fed. Appx. 809, 814-
815 (6th Cir.2018).
{¶ 45} In the case before us, the trial court’s decision was quite short – just about
a page long. After noting Cook’s claim that her failure to disclose had been inadvertent,
the court stated:
However, notwithstanding the offer of Plaintiff’s counsel to contact
his client’s bankruptcy counsel, there was no affirmative action to correct
the error or any evidence before the Court as to why or how the Plaintiff
herself did not disclose this action to her bankruptcy lawyer, if in fact she
did not. Ohio courts have held, as urged by Defendants, that a motive to
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conceal claims from the bankruptcy court always exists, because it is
always in the best interest of a petitioner to minimize income and assets.
See, e.g. Moore v. Hodge, 2019-Ohio-4752.
(Emphasis added.) Order and Entry Sustaining Defendant’s Motion to Dismiss (Sept. 9,
2021), p. 1.
{¶ 46} However, contrary to the trial court’s statement, Cook’s affidavit indicates
that she did, in fact, tell her bankruptcy attorney about the pending lawsuit. See
Substitution Motion, Cook Affidavit.
{¶ 47} Specifically, Cook stated in the affidavit that she had decided in late spring
2020 that she needed to investigate bankruptcy protection. As a result, she contacted
attorney Tim Deerfield to discuss the bankruptcy. Cook further said that she told
Deerfield she had been terminated from her job and that a lawsuit was pending in
Montgomery County Common Pleas Court. Cook Affidavit at ¶ 3-5. Cook’s affidavit
then said that she had decided to file bankruptcy and retained Deerfield; that he and his
staff had prepared the bankruptcy papers; and that they had not given her an opportunity
to review the papers before they were filed. Id. at ¶ 6-7. In addition, Cook stated that
she had had no intention of hiding the fact of the pending lawsuit and that she did not
have any idea that her claim against Appellees had been omitted from the bankruptcy
filing until she learned of the motion to dismiss. Id. at ¶ 8-9.
{¶ 48} While Cook did not refer to specific dates in her affidavit, the structure of the
outlined facts indicates that Cook did inform her bankruptcy attorney at the outset about
the pending lawsuit. Furthermore, although Cook should have reviewed the documents
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before signing, she says she was not given the opportunity. The signatures on the
original petition filed on June 4, 2020, and on the amended documents filed on July 16,
2020 were electronic; they were not signed by hand, with Cook’s signature. Motion to
Dismiss, Ex. A at p. 6, 33, and 40; Ex. C, p. 13; and Ex. D at p. 9. Therefore, as the
record stands, there is nothing contradicting Cook’s claim, and part of the basis for the
trial court’s decision was simply incorrect.
{¶ 49} Accordingly, the trial court’s decision must be reversed. This is not to say
that Cook will ultimately prevail against a judicial estoppel claim. We express no opinion
on that point.
D. Standing
{¶ 50} In their brief, Appellees have offered an alternate basis for affirming the trial
court’s decision. We will address this point, because “[a]n appellate court may affirm
based on different reasoning than found by a trial court, but an appellate court cannot
disturb a judgment or order that is legally correct based on different reasoning.” John A.
Becker Co. v. Jedson Eng., Inc., 2018-Ohio-3924, 121 N.E.3d 788, ¶ 19 (2d Dist.), citing
State ex rel. Sommers v. Perkins Local Schools Bd. of Edn., 2017-Ohio-7991, 98 N.E.3d
1117, ¶ 26 (6th Dist.). “The fundamental questions in an appeal are, one, whether the
appealed decision itself is erroneous and, two, whether that error is prejudicial. A
decision that achieves the right result must be affirmed, even if the wrong reasoning is
used to justify the decision, because an error in reasoning is not prejudicial.” Id.{¶ 51} According to Appellees, Cook lacked standing to pursue her employment
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claims in the trial court because all property, including civil claims, is the property of the
bankruptcy estate. Consequently, only the bankruptcy trustee had standing to pursue
such claims, unless the trustee abandoned them. In their brief, Appellees equate a lack
of standing with subject matter jurisdiction and also suggest that we should dismiss the
appeal on this basis. Appellees’ Brief at p. 17.
{¶ 52} Under established law, we have the ability to consider our jurisdiction and
may even raise it on our own motion. E.g., In re Guardianship of Igah, 2d Dist.
Montgomery No. 26416, 2015-Ohio-4511, ¶ 14, citing State ex rel. White v. Cuyahoga
Metro. Hous. Auth., 79 Ohio St.3d 543, 544, 684 N.E.2d 72 (1997). As an example,
“failure to comply with time requirements of App.R. 4(A) is a jurisdictional defect, which is
fatal to an appeal.” CitiBank v. Abu-Niaaj, 2d Dist. Greene No. 2011-CA-45, 2012-Ohio-
2099, ¶ 7, citing In re H.F., 120 Ohio St.3d 499, 2008-Ohio-6810, 900 N.E.2d 607, ¶ 17.
(Other citations omitted.) Likewise, lack of a final appealable order requires that we
dismiss an appeal for lack of jurisdiction. Igah at ¶ 18.
{¶ 53} “ ‘Subject-matter jurisdiction of a court connotes the power to hear and
decide a case upon its merits’ and ‘defines the competency of a court to render a valid
judgment in a particular action.’ ” Cheap Escape Co. v. Haddox, LLC, 120 Ohio St.3d
493, 2008-Ohio-6323, 900 N.E.2d 601, ¶ 6, quoting Morrison v. Steiner, 32 Ohio St.2d
86, 87, 290 N.E.2d 841 (1972). The subject matter jurisdiction of courts of appeals is
granted by Ohio Constitution, Article IV, Section 3(B)(1)(f), which gives them original
jurisdiction over certain matters like mandamus actions, and in “any cause on review as
may be necessary to its complete determination.”
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{¶ 54} In addition, courts of appeals have “such jurisdiction as may be provided by
law to review and affirm, modify, or reverse judgments or final orders of the courts of
record inferior to the court of appeals within the district” (other than direct appeals of
judgments imposing death), and “such appellate jurisdiction as may be provided by law
to review and affirm, modify, or reverse final orders or actions of administrative officers or
agencies.” Id. at (B)(2).
{¶ 55} However, jurisdiction is also restricted by R.C. 2505.03(A), which only
allows appellate courts to consider “final orders” in cases over which the court has
jurisdiction. Flynn v. Fairview Village Retirement Community, Ltd., 132 Ohio St.3d 199,
2012-Ohio-2582, 970 N.E.2d 927, ¶ 5. This is why we must dismiss cases for lack of
final appealable orders.
{¶ 56} In the case before us, a final appealable order existed because the trial
court dismissed Cook’s action. We also clearly have jurisdiction under Section 3, Article
IV of the Ohio Constitution to review the trial court’s final order. Moreover, we have not
found the trial court’s judicial estoppel dismissal to be proper. And finally, the trial court
has not yet considered whether the bankruptcy trustee should be allowed to be
substituted as the “real party in interest.”
{¶ 57} There is also a difference between subject matter jurisdiction and standing
to pursue an action, although courts often confuse the matter by equating the terms
“jurisdiction” and “standing” without considering the difference between “subject matter
jurisdiction” and the more general notion of jurisdiction.
{¶ 58} “The general term ‘jurisdiction’ can be used to connote several distinct
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concepts, including jurisdiction over the subject matter, jurisdiction over the person, and
jurisdiction over a particular case.” Bank of Am., N.A. v. Kuchta, 141 Ohio St.3d 75,
2014-Ohio-4275, 21 N.E.3d 1040, ¶ 18, citing Pratts v. Hurley, 102 Ohio St.3d 81, 2004-
Ohio-1980, 806 N.E.2d 992, ¶ 11-12. As noted in Kuchta:
Subject-matter jurisdiction is the power of a court to entertain and
adjudicate a particular class of cases. * * * A court's subject-matter
jurisdiction is determined without regard to the rights of the individual parties
involved in a particular case. * * * A court's jurisdiction over a particular case
refers to the court's authority to proceed or rule on a case that is within the
court's subject-matter jurisdiction. * * * This latter jurisdictional category
involves consideration of the rights of the parties. If a court possesses
subject-matter jurisdiction, any error in the invocation or exercise of
jurisdiction over a particular case causes a judgment to be voidable rather
than void.
(Citations omitted.) Kuchta at ¶ 19.
{¶ 59} While standing is a “jurisdictional” requirement, a lack of standing does not
invalidate a court’s subject matter jurisdiction. Id. at ¶ 20. See also Lundeen v. Turner,
164 Ohio St.3d 159, 2021-Ohio-1533, 172 N.E.3d 150, ¶ 25 (“a plaintiff's alleged lack of
standing to sue on a note and maintain a foreclosure action does not affect the subject-
matter jurisdiction of a common pleas court to entertain a foreclosure action”). Instead,
“[a] determination of standing necessarily looks to the rights of the individual parties to
bring the action, as they must assert a personal stake in the outcome of the action in
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order to establish standing.” Id. at ¶ 23, citing Ohio Pyro, Inc. v. Ohio Dept. of
Commerce, 115 Ohio St.3d 375, 2007-Ohio-5024, 875 N.E.2d 550, ¶ 27. “Lack of
standing is certainly a fundamental flaw that would require a court to dismiss the action,
* * * and any judgment on the merits would be subject to reversal on appeal. But a
particular party's standing, or lack thereof, does not affect the subject-matter jurisdiction
of the court in which the party is attempting to obtain relief.” (Citations omitted.) Id.{¶ 60} In the context of judicial estoppel and bankruptcy proceedings, federal
courts have also distinguished between Article III jurisdiction and standing. See
Martineau v. Wier, 934 F.3d 385, 391 (4th Cir. 2019) (holding that bankruptcy debtor was
the real party in interest to pursue tort claims against defendants).
{¶ 61} Federal courts also have distinguished between the interests of Chapter 7
debtors and those filing under Chapter 13 (as is the case here). See Wilson v. Dollar
Gen. Corp., 717 F.3d 337, 343 (4th Cir. 2013) (joining five other Circuit Courts of Appeal
that had considered the question, and concluding that “Chapter 13 debtors have standing
to bring causes of action in their own name on behalf of the estate”).3
3 The Sixth Circuit Court of Appeals is not one of these circuits. Recently, the Sixth
Circuit decided a case on other grounds and stated that it, therefore, “need not resolve
this question today” as to whether a Chapter 13 debtor in general “ ‘is the real party in
interest’ or whether he is ‘an interloper, trying to prosecute a claim that belongs to his
estate in bankruptcy.’ ” Kolesar v. Allstate Ins. Co., 814 Fed.Appx. 988, 990 (6th Cir.
2020), quoting Biesek v. Soo Line R. Co., 440 F.3d 410, 413 (7th Cir. 2006). See also
Perry v. Allstate Indemnity Co., N.D.Ohio No. 1:16-cv-01522, 2021 WL 3560195, *3 (Aug.
12, 2021) (stating, after discussing Kolesar, that “the overwhelming authority militates in
favor of finding that a debtor in a Chapter 13 bankruptcy [proceeding] is the real party in
interest to prosecute an action”); In re Connor, M.D.Tenn. No. 3:21-bk-00276, 2022 WL
108356, *4 (Jan. 4, 2022) (noting that six Circuit Courts of Appeals had ruled in favor of
the “concurrent jurisdiction” of the trustee and a Chapter 13 debtor. The court also
projected that the Sixth Circuit would rule in favor of this idea as well.) The circuit courts
in question are the Second, Third, Fourth, Seventh, Tenth, and Eleventh Circuit Courts of
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{¶ 62} Wilson provided the following explanation of the differences between
Chapter 7 and Chapter 13 cases:
Chapter 7 and Chapter 13 provide two distinct methods for an
individual to cure his indebtedness. Chapter 7 adopts the “much more
radical solution,” Cable [v. Ivy Tech State College, 200 F.3d [467] at 472
[7th Cir. 1999], of requiring the debtor to relinquish possession of the estate
to the trustee for liquidation and distribution to creditors. See 11 U.S.C.
§ 704. To effectuate this purpose, the trustee’s management of the estate
– including causes of action that are part of the estate – must necessarily
be free from interference by the debtor. Cable, 200 F.3d at 472. Thus,
under Rule 17’s real-party-in-interest requirement, it is the Chapter 7
trustee, but not the Chapter 7 debtor, who may possess standing on behalf
of the estate to bring a pre-petition claim. * * * 4
Chapter 13, however, provides a different framework. Under Chapter
13, the debtor remains in possession of the property of the estate and cures
his indebtedness, under the supervision of the trustee, by way of regular
payments to creditors from his earnings through a court approved payment
plan. See 11 U.S.C. §§ 1306(b), 1322; Olick [v. Parker & Parsley
Appeals. Id.4 Cable was overruled on other grounds in Hill v. Tangherlini, 724 F.3d 965, 967, fn. 1
(7th Cir. 2013), which overruled various prior decisions “to the extent that they suggest a
plaintiff may not rely on ‘self-serving’ evidence to create a material factual dispute.”
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Petroleum Co.], 145 F.3d [513] at 516 [(2d Cir.1998)].
(Footnote added; citations omitted.) Wilson at 343-344.
{¶ 63} In this context, Wilson went on to note that:
Chapter 13 also modifies other powers generally given to the debtor
and trustee. For example, not only does the Chapter 13 debtor retain
possession of the property of the estate, the Chapter 13 debtor also
assumes “exclusive of the trustee, the rights and powers of a trustee[,]” 11
U.S.C. § 1303, found in many of the provisions of § 363 regarding the
general administration of bankruptcy estates. In other words, in addition to
his power to possess property, the Chapter 13 debtor is explicitly given the
authority, exclusive of the trustee, to use, sell, or lease property of the estate
in certain circumstances. As the Seventh Circuit recognized, “[i]t would
frustrate the essential purpose of § 1306 to grant the debtor possession of
the chose in action yet prohibit him from pursuing it for the benefit [of] the
estate.” Cable, 200 F.3d at 473.
Implicit in that act of possession, as authorized by statute, is the right
of the Chapter 13 debtor – unlike the Chapter 7 debtor – to sue in his own
name in such actions pursuant to Rule 17(a) of the Federal Rules of Civil
Procedure. See Fed.R.Civ.P. 17(a)(1)(G) (permitting “a party authorized
by statute” to sue in his or her own name without joining the person for
whose benefit the action is brought). Accordingly, because the Chapter 13
debtor is explicitly given the power to possess and use the property, and
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implicit within that use is the permissible maintenance of a cause of action
that is part of the estate, the Chapter 13 debtor has standing to maintain a
prepetition claim.
Federal Rule of Bankruptcy Procedure 6009 envisions the same
result. Under Rule 6009 “the trustee or debtor in possession may
prosecute or may enter an appearance and defend any pending action or
proceeding by or against the debtor....” Fed. R. Bankr.P. 6009; see Smith
[v. Rockett], 522 F.3d [1080], at 1082 & n. 2 [(10th Cir.2008)] (recognizing
that although “debtor in possession” is a term of art in the Chapter 11
context, a Chapter 13 debtor possesses the Chapter 13 estate and has thus
been considered analogous to a Chapter 11 debtor due to their enhanced
representative and operational capacities); Cable, 200 F.3d at 472 (same).
In this sense, the Chapter 13 debtor “steps into the role of trustee and
exercises concurrent authority to sue and be sued on behalf of the estate.”
Cable, 200 F.3d at 473 (citing Fed. R. Bankr.P. 6009).
Wilson, 717 F3d. at 344. See also Olick, 145 F.3d at 516 (noting that “[i]t is also the case
that in Chapter 13 proceedings (unlike Chapter 7 proceedings) the creditors’ recovery is
drawn from the debtor's earnings, not from the assets of the bankruptcy estate; it is only
the Chapter 13 debtor who stands to gain or lose from efforts to pursue a cause of action
that is an asset of the bankruptcy estate. Accordingly, the trustee's participation in such
an action is generally not needed to protect the Chapter 13 creditors’ rights.”)
{¶ 64} Like Fed.R.Civ.P. 17(a)(1)(G), Ohio’s Civ.R. 17(A), which deals with real
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parties in interest, provides that “a party authorized by statute may sue in his name as
such representative without joining with him the party for whose benefit the action is
brought.”
{¶ 65} For purposes of standing, “[a] real party in interest is directly benefited or
injured by the outcome of the case rather than merely having an interest in the action
itself.” State ex rel. Sinay v. Sodders, 80 Ohio St.3d 224, 226, 685 N.E.2d 754 (1997).
“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.” Moore v. Middletown, 133 Ohio St.3d 55, 2012-
Ohio-3897, 975 N.E.2d 977, ¶ 22, citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-
561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992).
{¶ 66} When Cook filed suit on April 3, 2020, she clearly had standing to sue
Appellees. Cook’s complaint alleged that Appellees had caused her injury and damages
by unlawfully terminating her employment, by failing to pay wages, by failing to pay
minimum wages, and by illegally accessing her electronically-stored information. At that
time, Cook had not yet filed for bankruptcy, and standing existed.
{¶ 67} Whether the bankruptcy trustee subsequently became a real party in
interest, depriving Cook of standing, or whether Cook had a concurrent interest for
purposes of standing is for the trial court to decide. Accordingly, we cannot dismiss
Cook’s appeal based on lack of standing, nor can we affirm the trial court’s dismissal on
the alternate ground that Appellees have advanced.
{¶ 68} Based on the preceding discussion, Cook’s sole assignment of error is
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sustained.
III. Conclusion
{¶ 69} Cook’s assignment of error having been sustained, the judgment of the trial
court is reversed, and this cause is remanded for further proceedings consistent with this
opinion.
.............
DONOVAN, J. and EPLEY, J., concur.
Copies sent to:
Jason P. Matthews
Matthew C. Schultz
Matthew D. Stokely
Kristina Elizabeth Curry
Hon. Timothy N. O’Connell, Administrative Judge