Drivetime Car Sales Co. v. Pettigrew

DRIVETIME CAR SALES COMPANY, LLC, Plaintiff, v. BRYAN PETTIGREW, et al., Defendants.

Case No.: 2:17-cv-371

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF OHIO EASTERN DIVISION

February 7, 2018

JUDGE GEORGE C. SMITH

Magistrate Judge Vascura

OPINION AND ORDER

This matter is before the Court upon Defendant Pauley Motor Car Co. Preowned Vehicles, LLC's Motion for Judgment on the Pleadings ("Pauley Motor's Motion") (Doc. 16) and Defendant Bryan Pettigrew's Motion for Judgment on the Pleadings ("Pettigrew's Motion") (Doc. 19). The motions are both fully briefed and ripe for disposition. For the following reasons, Pauley Motor's Motion is GRANTED and Pettigrew's Motion is GRANTED IN PART and DENIED IN PART.

I. BACKGROUND

Plaintiff DriveTime Car Sales Company, LLC ("DriveTime"), a citizen of Arizona, is a used vehicle retailer who acquires its vehicles primarily from used vehicle auctions around the country. (Doc. 12, Am. Compl. ¶ 11). Defendant Bryan Pettigrew (a citizen of Ohio) is a former employee of DriveTime (a citizen of West Virginia), who was responsible for purchasing vehicles on DriveTime's behalf at the Columbus Fair Auto Auction. (Id. ¶ 16). During the period of January through June 2016, Pettigrew purchased an unusually large number of vehicles from Defendant Pauley Motor at what DriveTime contends were above-market rates. (Id. ¶¶ 26- 39). DriveTime also alleges that Pettigrew was observed, by another vehicle wholesaler, receiving cash from a representative of Pauley Motor in the restroom at the Columbus auction. (Id. ¶ 25). On the basis of these facts, DriveTime alleges that "Pettigrew received improper pecuniary compensation, i.e., kickbacks, for purchasing vehicles for [DriveTime] at inflated prices from Defendant Pauley" (Id. ¶ 45) and that "Defendant Pauley conspired . . . to and engaged in a scheme to induce Pettigrew to violate his duties to DriveTime by purchasing vehicles on behalf of [DriveTime] at the Columbus Auction at inflated prices to Defendant Pauley's benefit." (Id. ¶ 46). DriveTime estimates that it has been damaged in an amount in excess of $250,000 as a result of Pettigrew's overpayments for vehicles purchased from Pauley Motor. (Id. ¶ 38).

Further, DriveTime alleges that during the January-June 2016 period, Pauley Motor regularly gave purchasers of vehicles at the Columbus auction a gift card or other remuneration in the amount of $100. (Id. ¶ 40). However, Pettigrew "retained for himself the value of these gift cards for vehicles purchased from Pauley Motor on behalf of DriveTime and "failed to turn over gift cards or the cash equivalent to [DriveTime]." (Id. ¶¶ 41, 54). DriveTime alleges that Pettigrew purchased 572 such vehicles from Pauley Motor, and that therefore DriveTime has further been damaged in the amount of $57,200. (Id. ¶¶ 41-42).

DriveTime commenced this action on May 1, 2017, and, after amending its Complaint on July 11, 2017, asserts seven causes of action: (1) theft of the gift cards, under Ohio Revised Code § 2703.61, against Pettigrew; (2) conversion of the gift cards, against Pettigrew; (3) fraud, against Pettigrew; (4) breach of the duty of good faith and loyalty, against Pettigrew; (5) unjust enrichment, against Pauley Motor; (6) theft of the vehicle overpayments, under § 2703.61,against both Pettigrew and Pauley Motor; and (7) civil conspiracy to commit theft of the vehicle overpayments, against both Pettigrew and Pauley Motor. (Id. ¶¶ 52-104).

Both defendants filed Answers to DriveTime's Amended Complaint (Docs. 14-15). On August 9 and August 22, 2017, respectively, Pauley Motor and Pettigrew filed separate Motions for Judgment on the Pleadings. (Docs. 16, 19). Pettigrew has moved for judgment on both theft claims and the conversion and civil conspiracy claims, but does not challenge in this motion DriveTime's claims for fraud or breach of the duty of good faith and loyalty against him. Pauley Motor has moved for judgment on the theft and civil conspiracy claims against it, but does not challenge Drive Time's claim for unjust enrichment.

II. JUDGMENT ON THE PLEADINGS STANDARD

Pettigrew and Pauley Motor bring these motions pursuant to Rule 12(c) of the Federal Rules of Civil Procedure. Rule 12(c) provides that "[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." The standard of review for a motion for judgment on the pleadings under Rule 12(c) is the same as that used to address a motion to dismiss under Rule 12(b)(6). Id.; Lindsay v. Yates, 498 F.3d 434, 438 (6th Cir. 2007).

Rule 12(b)(6) permits dismissal of a lawsuit for "failure to state a claim upon which relief can be granted." To meet this standard, a party must allege sufficient facts to state a claim that is "plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). A pleading will satisfy this plausibility standard if it contains "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In considering whether a complaint fails to state a claim upon which relief can be granted, the Court must "construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of theplaintiff." Ohio Police & Fire Pension Fund v. Standard & Poor's Fin. Servs. LLC, 700 F.3d 829, 835 (6th Cir. 2012) (quoting Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007)). However, "the tenet that a court must accept a complaint's allegations as true is inapplicable to threadbare recitals of a cause of action's elements, supported by mere conclusory statements." Iqbal, 556 U.S. at 663. Thus, while a court is to afford plaintiff every inference, the pleading must still contain facts sufficient to "provide a plausible basis for the claims in the complaint;" a recitation of facts intimating the "mere possibility of misconduct" will not suffice. Flex Homes, Inc. v. Ritz-Craft Corp of Mich., Inc., 491 F. App'x 628, 632 (6th Cir. 2012); Iqbal, 556 U.S. at 679.

In sum, "[f]or purposes of a motion for judgment on the pleadings, all well-pleaded material allegations of the pleadings of the opposing party must be taken as true, and the motion may be granted only if the moving party is nevertheless clearly entitled to judgment." JPMorgan Chase Bank, N.A. v. Winget, 510 F.3d 577, 581 (6th Cir. 2007) (quoting S. Ohio Bank v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 479 F.2d 478, 480 (6th Cir. 1973)).

III. DISCUSSION

Collectively, Pettigrew and Pauley Motor seek judgment in their favor on Counts 1 (theft of the gift cards), 2 (conversion of the gift cards), 6 (theft of the vehicle overpayments), and 7 (conspiracy to commit theft of the overpayments). The Court will consider each count in turn.

A. Count 1: Theft of the gift cards by Pettigrew

1. Statutory authority for civil action for damages arising from a criminal theft offense

DriveTime brings its claims for theft under Ohio Revised Code § 2703.61, which authorizes the recovery of damages from "any person . . . who commits a theft offense" by a property owner who "brings a civil action pursuant to division (A) of section 2307.60 of theRevised Code." § 2307.61(A). Section 2307.60(A) provides that "[a]nyone injured in person or property by a criminal act has, and may recover full damages in, a civil action unless specifically excepted by law."

Pettigrew initially argued that §§ 2307.60-61 do not authorize a civil cause of action, citing since-overruled Ohio case law. Biomedical Innovations, Inc. v. McLaughlin, 103 Ohio App.3d 122, 126, 658 N.E.2d 1084 (10th Dist. 1995). For some time, Ohio appellate courts disagreed about whether § 2307.60's statement that anyone injured by a criminal act "has . . . a civil action" actually created a civil cause of action, or was "merely a codification of the common law that a civil action is not merged in a criminal prosecution." Sollenberger v. Sollenberger, 173 F. Supp. 3d 608, 636 (S.D. Ohio 2016). But in 2016, the Ohio Supreme Court clarified that the plain language of the statute "creates a statutory cause of action for damages resulting from any criminal act." Jacobson v. Kaforey, 149 Ohio St. 3d 398, 2016-Ohio-8434, ¶ 10.

Once DriveTime pointed out the overruling of the case law relied on by Pettigrew, Pettigrew changed tacks and argued that DriveTime had brought its theft claims under the wrong statute: in its Amended Complaint, DriveTime cited § 2703.61 (which creates the remedy), not § 2703.60 (which creates the cause of action). In support of this argument, Pettigrew cited Shaw v. Marion Laborers Local 574, in which the plaintiff also invoked § 2703.61 instead of § 2703.60. 3d Dist. Marion No. 9-13-31, 2014-Ohio-3672, ¶ 43. While the Shaw court did note that the plaintiff "never brought a civil action pursuant to the proper section of the Revised Code," and that "[i]t appears [the plaintiff] mislabeled the section under which it was bring its claim for civil damages resulting from the alleged criminal act," the Shaw court then went on to analyze the plaintiff's claim as one brought under § 2703.60. The court ultimately dismissed theclaim, not because the plaintiff cited the incorrect Code section, but because the elements of § 2703.60 were not met. Id. ¶ 46. Shaw is therefore of no aid to Pettigrew on this point.

Indeed, a court would impermissibly elevate form over substance to bar claims expressly invoking § 2703.61 merely because the complaint did not also expressly invoke § 2703.60. "[T]he Rules require that we not rely solely on labels in a complaint, but that we probe deeper and examine the substance of the complaint. Indeed, [the Sixth Circuit] has made clear that 'the label which a plaintiff applies to a pleading does not determine the nature of the cause of action which he states.'" Minger v. Green, 239 F.3d 793, 799 (6th Cir. 2001) (quoting United...