Childs v. Charske

129 Ohio Misc.2d 50

2004-Ohio-7331

822 NE 2d 853

2004-Ohio-7331

CHILDS et al. v. CHARSKE et al.

No. 03-8072.

Court of Common Pleas of Ohio, Montgomery County.

Decided March 22, 2004.

COPYRIGHT MATERIAL OMITTED

Scott L. Braum and Timothy R. Rudo, for plaintiffs.

Robert B. Holman, Oakwood Village, and John A. Mazi, for defendant Chelsea Title Agency of Dayton, Inc.

William G. Knapp III, Dayton, for defendant William Cole.

Thomas H. Pyper, Dayton, for defendants Leroy T. Culp and Tim Purcell.

Hans H. Soltau, Centerville, for defendant Southwest Title Agency.

Ralph E. Burnham and George D. Jonson, Cincinnati, for defendant Yvonne Frey.

James A. Matre, for defendant Fidelity Land Title Agency of Cincinnati, Inc.

James T. Ambrose, Dayton, for defendant Gregory Romer.

Richard W. Schulte, Dayton, for defendant Neal Charske.

JEFFREY E. FROELICH, Judge.

{¶ 1} The plaintiffs have filed a complaint for damages and other relief against numerous individuals and companies arising "out of a massive and complex multi-property and multi-player predatory lending scheme involving mortgage companies, appraisers, title companies, lenders and their respective employers, agents, and principals." The plaintiffs allege that this scheme is generally known as "flipping" and involves, among other things, "blind eye title companies," which are "fully aware of what is actually transpiring."

{¶ 2} Fidelity Land Title Agency of Cincinnati, Inc., and Chelsea Title Agency of Dayton, Inc., were allegedly "privy to the essence of what was transpiring." Fidelity and/or Chelsea are alleged to have provided, for seven of the properties, title and closing services that included "processing certain documents for and making certain representations to Plaintiffs and other participants."

{¶ 3} The defendants (spoken of collectively in most of the complaint) are allegedly responsible for damages to the plaintiffs as a result of fraudulent misrepresentation, promissory estoppel, fraudulent concealment, negligent misrepresentation, civil conspiracy, fraudulent inducement to contract, breach of duty of loyalty and good faith, fraud, conversion, unconscionability, negligence, and violation of Ohio's Consumer Sales Practices Act.

{¶ 4} Fidelity and Chelsea have filed motions to dismiss, basically arguing that neither had any duty to the plaintiffs, since the title agencies' responsibility was only to provide title and closing services, which each states it performed appropriately.

STANDARD ON MOTION TO DISMISS

{¶ 5} Civ.R. 12(B)(6) permits the court, upon motion of an adverse party, to dismiss a claim or claims for relief for failure to state a claim upon which relief may be granted. Such a motion necessarily asserts that the pleader has failed to plead the operative grounds constituting a claim. Mitchell v. Lawson Milk Co. (1988), 40 Ohio St.3d 190, 532 N.E.2d 753. The motion may be granted only when, from the face of the pleadings in a complaint, the court "finds beyond doubt * * * that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief." State ex rel. Midwest Pride IV, Inc. v. Pontious (1996), 75 Ohio St.3d 565, 570, 664 N.E.2d 931. For this purpose, all factual allegations in the complaint are presumed true, and all reasonable inferences are made in favor of the nonmovant. Id. A complaint may be dismissed pursuant to Civ.R. 12(B)(6) only when it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief. O'Brien v. Univ. Community Tenants Union (1975), 42 Ohio St.2d 242, 71 O.O.2d 223, 327 N.E.2d 753. Furthermore, in order for a Civ.R. 12(B)(6) motion to be sustained, the court must determine that no amendment to the pleading could cure the defect. State ex rel. Hanson v. Guernsey Cty. Bd. of Commrs. (1992), 65 Ohio St.3d 545, 605 N.E.2d 378.

{¶ 6} In other words, in order to sustain a Civ.R. 12(B)(6) motion, the court must find beyond doubt from the allegations in the pleadings and without resort to any extraneous material that there are no facts that could conceivably be proved (even with amended pleadings) by the party against whom the motion is made that would allow the case to be submitted to the jury. "Rule 12(B)(6) basically is a `so what?' provision that allows a court to summarily dismiss a cause of action by finding beyond cavil that even if everything the Plaintiff claims were true, the law simply does not provide a remedy." Hull-Kitchen v. Merrill, Lynch, Pierce, Fenner & Smith (Jan. 8, 2004), Montgomery C.P. 03-4008.

ANALYSIS

{¶ 7} The title agencies state that since they provided only "closing services" or "settlement services," they had no contract or privity with the plaintiffs and, further, that anything the agencies did or any statements they made were after the plaintiffs had made their decisions about purchasing the properties under certain terms. Therefore, they argue, they owed no duty to the plaintiffs and, even if they did, the plaintiffs could not have relied to their detriment on anything that happened at the closings.

{¶ 8} The plaintiffs respond that "regardless of the title agencies' direct involvement, however, at a minimum all the Defendants were negligent in that they turned a blind eye to the scheme when a reasonable person in their position would have acted appropriately."

DOES THE COMPLAINT STATE A CLAIM OF ACTION FOR NEGLIGENCE?

{¶ 9} "Negligence is conduct which falls below the standard established by law for the protection of others against unreasonable risk of harm." 2 Restatement of the Law 2d, Torts (1965), Section 282. This "standard established by law" can be set by a statute or developed by the common law. Wallace v. Ohio Dept. of Commerce (2002), 96 Ohio St.3d 266, 773 N.E.2d 1018.

{¶ 10} Examples of statutory duty in the state context are the dram shop laws, R.C. Chapter 4301, political subdivision liability, R.C. Chapter 2744, and laws for a safe work environment, R.C. Chapter 4101, and, in the federal context, the money-laundering laws, e.g. Section 1956, Title 18, U.S.Code, and, more recently, the inclusion of title agencies as "financial institutions" in the reach of the laws pursuant to the USA Patriot Act, Section 5312(a)(2)(U), Title 31, U.S.Code.

{¶ 11} "Its is rudimentary that in order to establish actionable negligence, it is rudimentary that * * * one must show the existence of a duty, a breach of duty, and an injury resulting proximately therefrom. * * * The existence of a duty depends on the foreseeability of the injury. The test for foreseeability is whether a reasonably prudent person would have anticipated that an injury was likely to result from the performance or nonperformance of an act. * * * The foreseeability of harm usually depends on the defendant's knowledge." Menifee v. Ohio Welding Products, Inc. (1984), 15 Ohio St.3d 75, 77, 15 OBR 179, 472 N.E.2d 707.

{¶ 12} Identically, in a case of nonfeasance, the existence of a legal duty is critical and, unless a duty is established, the defendant's failure to act does not create liability. Clemets v. Heston (1985), 20 Ohio App.3d 132, 135, 20 OBR 166, 485 N.E.2d 287.

WAS THERE A DUTY OWED?

{¶ 13} "Duty, as used in Ohio tort law, refers to the relationship between the plaintiff and the defendant from which arises an obligation on the part of the defendant to exercise due care toward the plaintiff." Commerce & Industry Ins. Co. (1989), 45 Ohio St.3d 96, 98, 543 N.E.2d 1188; see, also, Huston v. Konieczny (1990), 52 Ohio St.3d 214, 217, 556 N.E.2d 505. The Supreme Court "has often stated that the existence of a duty depends upon the foreseeability of harm: if a reasonably prudent person would have anticipated that an injury was likely to result from a particular act, the court could find that the duty element of negligence is satisfied. Texler v. D.O. Summers Cleaners & Shirt Laundry Co. (1998), 81 Ohio St.3d 677, 680, 693 N.E.2d 271; Commerce & Industry, 45 Ohio St.3d at 98, 543 N.E.2d 1188; Menifee v. Ohio Welding Products, 15 Ohio St.3d at 77, 15 OBR 179, 472 N.E.2d 707. In addition, we have also stated that the duty element of negligence may be established by common law, by legislative enactment, or by the particular circumstances of a given case. Chambers v. St. Mary's School (1998), 82 Ohio St.3d 563, 565, 697 N.E.2d 198; Eisenhuth v. Moneyhon (1954), 161 Ohio St. 367, 53 O.O. 274, 119 N.E.2d 440, paragraph one of the syllabus. Admittedly, however, the concept of duty in negligence law is at times an elusive one." Wallace, 96 Ohio St.3d at 274, 773 N.E.2d 1018.

{¶ 14} "Duty `* * *is the court's "expression of the sum total of those considerations of policy which lead the law to say that the particular plaintiff is entitled to protection." (Prosser, Law of Torts (4th ed.1971) pp. 325-326). Any number of considerations may justify the imposition of duty in particular circumstances, including the guidance of history, our continually refined concept of morals and justice, the convenience of the rule, and social judgment as to where the loss should fall. (Prosser, Palsgraf Revisited (1953), 52 Mich.L.Rev. 1, 15). * * *' Weirum v. RKO General, Inc. (1975), 15 Cal.3d 40, 46, 123 Cal.Rptr. 468, 471, 539 P.2d 36, 39." Mussivand v. David (1989), 45 Ohio St.3d 314, 318, 544 N.E.2d 265.

{¶ 15} As Dean Prosser said in his seminal work, "The statement that there is or is not a duty begs the essential question — whether the plaintiff's interests are entitled to legal protection against the defendant's conduct. * * * `Duty' is not sacrosanct in itself, but is only an expression of the sum total of those considerations of policy which lead the law to say that the plaintiff is entitled to protection." (Footnote omitted.) Prosser, Law of Torts (5th Ed.1984) 357-358, Section 53.

{¶ 16} It follows from the considerations set out in Mussivand that if the defendant title agencies were aware of fraud being committed...