Opinion
No. 109829
04-08-2021
HARRY E. FIGGIE IV, ET AL., Plaintiffs-Appellants, v. BETSY FIGGIE, ET AL., Defendants-Appellees.
Appearances: Baker & Hostetler L.L.P., Michael K. Farrell, Robert R. Galloway and Corey N. Barnes, for appellee Betsy Figgie, as Co-Trustee of the Harry E. Figgie II Trust Agreement dated July 15, 1976, as amended. Calfee Halter & Griswold L.L.P., Mitchell G. Blair, Colleen M. O'Neil, Kelly A. Callam and Alexandra Forkosh; Ulmer & Berne L.L.P., Steven S. Kaufman, Robin M. Wilson and Ashtyn N. Saltz, for appellee Brent Ballard, as Co-Trustee of the Harry E. Figgie, Jr. Trust Agreement dated July 15, 1976, as amended, Trustee of the Nancy F. Figgie Trust Agreement dated September 7, 1976, as amended, and Trustee of the Matthew P. Figgie Trust Agreement dated October 20, 1985, as amended. Reminger Co., L.P.A., Brian D. Sullivan, Franklin C. Malemud, Joseph S. Simms and Timothy J. Gallagher, for appellants.
JOURNAL ENTRY AND OPINION JUDGMENT: AFFIRMED Civil Appeal from the Cuyahoga County Court of Common Pleas Probate Division
Case No. 2018ADV239801
Appearances:
Baker & Hostetler L.L.P., Michael K. Farrell, Robert R. Galloway and Corey N. Barnes, for appellee Betsy Figgie, as Co-Trustee of the Harry E. Figgie II Trust Agreement dated July 15, 1976, as amended. Calfee Halter & Griswold L.L.P., Mitchell G. Blair, Colleen M. O'Neil, Kelly A. Callam and Alexandra Forkosh; Ulmer & Berne L.L.P., Steven S. Kaufman, Robin M. Wilson and Ashtyn N. Saltz, for appellee Brent Ballard, as Co-Trustee of the Harry E. Figgie, Jr. Trust Agreement dated July 15, 1976, as amended, Trustee of the Nancy F. Figgie Trust Agreement dated September 7, 1976, as amended, and Trustee of the Matthew P. Figgie Trust Agreement dated October 20, 1985, as amended. Reminger Co., L.P.A., Brian D. Sullivan, Franklin C. Malemud, Joseph S. Simms and Timothy J. Gallagher, for appellants. EILEEN A. GALLAGHER, J.:
{¶ 1} Plaintiffs-appellants Harry E. Figgie, IV ("Harry IV") and Catherine Figgie ("Katie") (collectively, "plaintiffs" or "appellants") appeal from the probate court's decision granting the Civ.R. 12(B)(6) motion to dismiss filed by defendant-appellee Brent Ballard ("Ballard"), as co-Trustee of the Harry E. Figgie, Jr. Trust Agreement dated July 15, 1976, as amended, Trustee of the Nancy F. Figgie Trust Agreement dated September 7, 1976, as amended, and Trustee of the Matthew P. Figgie Trust Agreement dated October 20, 1985, as amended (collectively, the "Trust Defendants"). Appellants contend that they sufficiently pled claims for fraud, tortious interference with expectancy of inheritance, unjust enrichment, and constructive trust arising out of a 2001 stock redemption against the Trust Defendants and that the probate court, therefore, erred in granting the Trust Defendants' motion to dismiss.
{¶ 2} For the reasons that follow, we affirm. Procedural and Factual Background
The following summary is based on the facts alleged in appellants' first amended complaint, which we assume as true for purposes of this appeal.
{¶ 3} Nancy Figgie ("Nancy") and Harry E. Figgie, Jr. ("Harry II") had three children — Harry E. Figgie, III ("Harry III), Mark P. Figgie ("Mark") and Matthew P. Figgie ("Matthew"). On August 23, 1983, Harry III executed a trust agreement that established the Figgie Family Trust (the "Harry III Trust"), of which his three children, Harry IV, Katie and Susie, were beneficiaries.
The trust agreement for the Harry III Trust was not attached to the first amended complaint. Accordingly, we assume, but cannot confirm, that the first amended complaint accurately sets forth the terms of the trust agreement.
{¶ 4} Harry III died on December 21, 1999. Among the assets of the Harry III Trust at the time of Harry III's death were classes of voting and nonvoting shares of Clark Reliance Corporation ("CRC"), a closely held corporation built by the Figgie family. Harry II had conveyed the CRC stock to the Harry III Trust while Harry III was alive.
{¶ 5} Prior to his death, Harry III had a "bitter falling out" with his parents (Harry II and Nancy) and brother Matthew. This estrangement continued until Harry III died. Pursuant to the terms of the trust agreement, after Harry III died, Harry II served as the trust advisor for the Harry III Trust, charged with decisions relating to the investment, sale and purchase of stock for the trust. Wilmington Trust Co. was the trustee of the Harry III Trust.
{¶ 6} Following Harry III's death, the Harry III Trust owned 4,000 shares of Class A CRC stock and 76,000 shares of Class B CRC stock (collectively, the "CRC stock"). On October 21, 2001, CRC redeemed the CRC stock from the Harry III Trust for a purchase price of $1,909,007 "through a transaction that was initiated and directed by [Harry II]" (the "2001 CRC stock redemption"). At the time of the 2001 CRC stock redemption, Harry II, Nancy, Mark and Matthew were all shareholders of CRC. Harry II was also an officer of CRC and/or a member of its board of directors. At the time of the 2001 CRC stock redemption, Harry IV was 18, Katie was a minor and Susie was "cognitively and/or medically disabled."
{¶ 7} Harry II died on July 14, 2009. Prior to their deaths, Harry II, Nancy and Matthew each executed trust agreements establishing separate trusts — the Harry E. Figgie Jr. Trust Agreement dated July 15, 1976, as amended (the "Harry II Trust"), the Nancy Figgie Trust Agreement dated September 7, 1976, as amended (the "Nancy Trust") and the Matthew P. Figgie Trust Agreement dated October 20, 1985, as amended (the "Matthew Trust").
{¶ 8} On December 20, 2018, Harry IV, individually and as conservator of Susie, and Katie filed suit in the Cuyahoga County Court of Common Pleas, Probate Division, against (1) defendant-appellee Betsy Figgie ("Betsy"), as co-trustee of the Harry E. Figgie II Trust Agreement dated July 15, 1976, as amended, (2) Ballard, as co-Trustee of the Harry E. Figgie II Trust Agreement dated July 15, 1976, as amended, Trustee of the Nancy F. Figgie Trust Agreement dated September 7, 1976, as amended, and Trustee of the Matthew P. Figgie Trust Agreement dated October 20, 1985, as amended and (3) CRC related to the 2001 CRC stock redemption (Case No. 2018ADV239801).
It is unclear from the first amended complaint when Ballard and Betsy became trustees of one or more of the trusts at issue. Betsy filed an appellate brief in which she asserted that she became co-trustee of the Harry E. Figgie II Trust Agreement dated July 15, 1976, as amended, on or about December 11, 2018. In his appellate brief, Ballard asserts that he was not serving as a trustee "at the time the fraud allegedly occurred." The first amended complaint does not identify the trustees of the Harry II Trust, the Nancy Trust or the Matthew Trust at the time of the 2001 CRC stock redemption.
{¶ 9} On April 20, 2019, appellants filed a first amended complaint in Case No. 2018ADV239801, asserting claims for declaratory judgment, fraud, tortious interference with expectancy of inheritance, unjust enrichment, constructive trust and civil conspiracy against CRC and the Trust Defendants (collectively, "defendants").
In the original complaint, the "unborn and unknown lineal descendants" of Harry IV, Katie and Susie were named as additional plaintiffs to the action. In the first amended complaint, they were named as additional defendants.
{¶ 10} In their first amended complaint, appellants alleged that as trust advisor of the Harry III trust, Harry II owed fiduciary duties, including an "undivided duty of good faith and loyalty," to the Harry III Trust and to appellants as beneficiaries of the trust, and that, at the time of the 2001 CRC stock redemption, Harry II "was operating under several serious and insurmountable conflicts of interest." Appellants further alleged that CRC and Harry II's conduct in connection with the 2001 CRC stock redemption was "misleading, in bad faith and/or fraudulent in nature" and that the purchase price the Harry III Trust received for its CRC stock during the 2001 CRC stock redemption was "well below market value," resulting in losses to the Harry III Trust and to appellants as beneficiaries of the trust. Specifically, appellants alleged that Harry II and CRC (1) "did not properly, fairly or adequately secure or evaluate a valuation of the CRC [s]tock," (2) relied on a valuation of CRC prepared by a non-independent person/company, (3) did not secure an independent valuation of the CRC stock, (4) manipulated or relied on known and unreasonably manipulated data to reduce the valuation of the CRC stock and (5) "maliciously combined" to secure the redemption of CRC stock at a substantial savings to CRC in order to benefit CRC and other Figgie family shareholders at the expense of the Henry III Trust and its beneficiaries.
{¶ 11} Appellants claimed that as a result of the 2001 CRC stock redemption, CRC and its remaining shareholders recognized "a significant increase" in the value of their shares and that this appreciated value could be traced to assets currently held by CRC, the Harry II Trust, the Nancy Trust and the Matthew Trust. Appellants alleged that they had been deprived of the CRC stock (or its fair value in assets) as part of their inheritance, that the defendants had been unjustly enriched by the "wrongful, fraudulent conduct" that led to the 2001 CRC stock redemption and that appellants were, therefore, entitled to the imposition of a constructive trust over "the improper benefits, gains, appreciation, profits and unjust enrichment derived from the 2001 redemption of the CRC [s]tock."
{¶ 12} Appellants claimed that they did not discover, and had no way of discovering, "the false, flawed and concealed data and valuation process" that was used in the 2001 CRC stock redemption until November 25, 2018. Appellants requested an order declaring (1) that the 2001 redemption of the CRC stock was "below value," (2) that "improper benefits and proceeds" from the 2001 CRC stock redemption exist in the Harry II Trust, the Nancy Trust, the Matthew Trust and CRC, (3) the amount of the lost value and (4) that defendants are "equitably estopped from denying liability" or denying the "claims stemming from the fraudulent conduct" alleged in the first amended complaint. Appellants also sought compensatory and punitive damages, attorney fees, costs and expenses and an order imposing a constructive trust over the defendants' assets "derived or traced from the improper benefits, gains, appreciation [or] profits" from the 2001 CRC stock redemption.
It is unclear from the first amended complaint how appellants allegedly discovered these facts. The first amended complaint simply avers that certain, unidentified "disclosures" were made "in late November 2018" regarding the 2001 CRC stock redemption and that appellants "discovered" certain "information" on November 25, 2018 "that led them to later find out" about the circumstances surrounding the 2001 CRC stock redemption.
On April 24, 2019, Harry IV, as conservator of Susie, filed suit in the Probate Division of the Cuyahoga County Court of Common Pleas against Betsy, Ballard and CRC related to the CRC stock redemption (Case No. 2019ADV0242885). On May 5, 2019, Susie filed a first amended complaint against the Trust Defendants and CRC. Susie's first amended complaint contains similar allegations to appellants' first amended complaint, except that Susie also asserted a conversion claim against the defendants. The probate court's dismissal of Susie's claims against the Trust Defendants in Case No. 2019ADV0242885 is the subject of Appeal No. 109834.
{¶ 13} On May 24, 2019, CRC and the Trust Defendants filed separate motions to dismiss the first amended complaint pursuant to Civ.R. 12(B)(6). The Trust Defendants argued that the first amended complaint failed to state a claim for which relief could be granted against the Trust Defendants because: (1) it contained no allegations of actionable conduct by the Trust Defendants; (2) any liability on the part of Harry II could not be imputed to the Trust Defendants; (3) appellants' claims were barred by the applicable statute of limitations, including R.C. 2117.06, 2305.09(C), (D) and 2305.14; (4) appellants failed to plead their fraud claim against the Trust Defendants with particularity as required under Civ.R. 9(B); (5) appellants could not establish essential elements of their unjust enrichment claim against the Trust Defendants and (6) the imposition of a constructive trust is a remedy, not an independent cause of action.
{¶ 14} Appellants filed an opposition in which they maintained that the allegations of the first amended complaint — describing how the 2001 CRC stock redemption was fraudulent, "detail[ing] the concealment of material facts relating to the value of the stock transaction, 'with the knowledge, acquiescence and/or assistance of all Defendants (or their predecessors)'" and asserting that the Trust Defendants "knew about the fraud," "participated in it" and "retained the benefit of misrepresentations" that caused appellants "substantial damages" — were sufficient to state a claim for which relief could be granted under Civ.R. 12(B)(6). Appellants denied that the statute of limitations set forth in R.C. 2117.06 applied to their claims, argued that all applicable statutes of limitations were tolled through application of the discovery rule and asserted that constructive trust was a "stand-alone claim" or was "properly joined" pursuant to Civ.R. 18.
{¶ 15} On June 18, 2020, the probate court granted the Trust Defendants' motion to dismiss, dismissing all six counts against the Trust Defendants. With respect to appellants' fraud claim, the probate court held that although appellants had sufficiently pled a fraud claim against CRC — based on CRC's alleged concealment of information material to the 2001 CRC stock redemption — appellants had not sufficiently pled a fraud claim against the Trust Defendants. The probate court explained:
The Court finds that the essence of Plaintiffs' fraud claim alleges that [CRC] and [Harry II] had a duty to disclose information which was concealed from the Plaintiffs regarding the 2001 redemption of CRC stock. Specifically, Plaintiffs assert that CRC, [Harry II], and, upon information and belief, all other Defendants (or their predecessors in interest), knew the 2001 redemption of CRC stock was fraudulent, deflated, and manipulated, and that such information was concealed from Plaintiffs. Upon review of the allegations in the First Amended Complaint, Plaintiffs have sufficiently alleged with particularity that CRC had a duty to disclose, but instead concealed information, which was material to the transaction of the redemption of CRC stock, and that Plaintiffs justifiably relied upon the false and misleading information provided by CRC which resulted in an alleged monetary injury to the Plaintiffs. This Court cannot find, however, that Plaintiffs have sufficiently plead the allegations of fraudulent conduct against [the Trust Defendants], as Plaintiffs have not [pled] with particularity any alleged fraudulent conduct by the Trust Defendants in the redemption of CRC stock.
Plaintiffs allege that the Trust Defendants, or their predecessors in interest, knew of the allegedly fraudulent and/or manipulative redemption of CRC stock in 2001. As such, Plaintiffs assert that upon their information and belief, the Defendants, or their predecessors in interest, knew the 2001 redemption of CRC stock was fraudulent. Plaintiffs have failed to identify any specific representations or concealment of facts made by the Trust Defendants upon which Plaintiffs relied. Plaintiffs further request that this Court hold the Trust Defendants liable for alleged fraudulent conduct and actions, not of the named Trust Defendants, but of their predecessors in interest. The allegations asserted against the Trust Defendants, or their predecessors in interest, do not rise to the level of particularity as required by Civ.R. 9. Consequently, upon review of the First Amended Complaint, the Court finds that Plaintiffs have failed to plead the claim of fraud with particularity as to the Trust Defendants[.]
{¶ 16} With respect to appellants' claim for declaratory judgment, the probate court held that appellants' request for an order declaring that "improper benefits and proceeds" from the 2001 CRC stock redemption are in the Harry II Trust, the Nancy Trust and the Matthew Trust and that defendants are "equitably estopped from denying liability" or denying the "claims stemming from the fraudulent conduct" asserted in the complaint were not "justiciable controversies between adverse parties which fall under R.C. 2721" and, therefore, dismissed that claim as to the Trust Defendants.
{¶ 17} The probate court determined that appellants' claims of tortious interference with expectancy of inheritance, unjust enrichment, constructive trust and civil conspiracy against the Trust Defendants failed as well. The probate court held that appellants could not establish the expectancy-of-inheritance or causation elements for its tortious interference claim because appellants' expectancy of inheritance "occurred in 1999 when they inherited the trust assets upon Harry III's death." The probate court held that appellants' unjust enrichment claim was barred by the statute of limitations and that any alleged benefit conferred upon the Trust Defendants as a result of the 2001 CRC stock redemption was an indirect benefit, which could not support a claim for unjust enrichment against them. The probate court further held that constructive trust is "a form of equitable relief" in cases of fraud and unjust enrichment, not an independent claim, and that appellants could not prevail on their civil conspiracy claim against the Trust Defendants because the Trust Defendants had not been named in the civil conspiracy count and the underlying fraud claim against the Trust Defendants had been dismissed. The probate court also determined that there was no just reason for delay pursuant to Civ.R. 54.
{¶ 18} Appellants appealed, raising the following four assignments of error for review:
Assignment of Error No. 1: The probate court improperly dismissed Plaintiffs' constructive trust claim against the Trust Defendants.
Assignment of Error No. 2: The probate court incorrectly dismissed Plaintiffs' claim for unjust enrichment against the Trust Defendants.
Assignment of Error No. 3: The probate court incorrectly determined that Plaintiffs failed to state a claim of fraud against the Trust Defendants.
Assignment of Error No. 4: The probate court incorrectly dismissed Plaintiffs' claim for tortious interference with expectancy of inheritance against all Defendants.
Appellants do not challenge the probate court's dismissal of their claims for declaratory judgment or civil conspiracy. Accordingly, we do not further address those claims here.
Law and Analysis
Standard of Review
{¶ 19} A Civ.R. 12(B)(6) motion to dismiss for failure to state a claim tests the sufficiency of the complaint. Widok v. Estate of Wolf, 8th Dist. Cuyahoga No. 108717, 2020-Ohio-5178, ¶ 26. In deciding whether a complaint should be dismissed pursuant to Civ.R. 12(B)(6), the court's review is limited to the four corners of the complaint along with any documents properly attached to or incorporated within the complaint. High St. Properties L.L.C. v. Cleveland, 8th Dist. Cuyahoga No. 101585, 2015-Ohio-1451, ¶ 17, citing Glazer v. Chase Home Fin. L.L.C., 8th Dist. Cuyahoga Nos. 99875 and 99736, 2013-Ohio-5589, ¶ 38. The court accepts as true all the material factual allegations of the complaint and construes all reasonable inferences to be drawn from those facts in favor of the nonmoving party. See, e.g., Bandy v. Cuyahoga Cty., 8th Dist. Cuyahoga No. 106635, 2018-Ohio-3679, ¶ 12; Brown v. Carlton Harley-Davidson, Inc., 8th Dist. Cuyahoga No. 99761, 2013-Ohio-4047, ¶ 12.
{¶ 20} However, a complaint must consist of more than "'bare assertions of legal conclusions.'" Fisher v. Ahmed, 2020-Ohio-1196, 153 N.E.3d 612, ¶ 8 (9th Dist.), quoting Copeland v. Summit Cty. Probate Court, 9th Dist. Summit No. 24648, 2009-Ohio-4860, ¶ 10. Allegations in a complaint must be supported by facts. Minaya v. NVR, Inc., 2017-Ohio-9019, 103 N.E.3d 160, ¶ 15, 17 (8th Dist.). "Conclusions not supported by factual allegations in the complaint cannot be deemed admitted and are insufficient to withstand a motion to dismiss." Krohn v. Ostafi, 6th Dist. Lucas No. L-19-1002, 2020-Ohio-1536, ¶ 10, citing State ex rel. Hickman v. Capots, 45 Ohio St.3d 324, 544 N.E.2d 639 (1989); Mitchell v. Lawson Milk Co., 40 Ohio St.3d 190, 193, 532 N.E.2d 753 (1988) ("Unsupported conclusions that appellant committed an intentional tort are not taken as admitted by a motion to dismiss and are not sufficient to withstand such a motion.") (emphasis deleted); Godwin v. Facebook, Inc., 2020-Ohio-4834, 160 N.E.3d 372, ¶ 14 (8th Dist.) ('"[E]ven under Ohio's notice-pleading standard, a cause of action must be factually supported and courts need not accept bare assertions of legal conclusions.' * * * [U]nsupported legal conclusions are not accepted as true for purposes of a motion to dismiss."), quoting Enduring Wellness, L.L.C. v. Roizen, 8th Dist. Cuyahoga No. 108681, 2020-Ohio-3180, ¶ 24; Minaya at ¶ 17 ("[a] trial court need not accept unsupported conclusions in a complaint for purposes of Civ.R. 12(B)(6)").
{¶ 21} To prevail on a Civ.R. 12(B)(6) motion, it must appear beyond doubt from the complaint that the plaintiff can prove no set of facts entitling the plaintiff to relief. Doe v. Archdiocese of Cincinnati, 109 Ohio St.3d 491, 2006-Ohio-2625, 849 N.E.2d 268, ¶ 11, citing O'Brien v. Univ. Comm. Tenants Union, Inc., 42 Ohio St.2d 242, 245, 327 N.E.2d 753 (1975). If there is "'a set of facts, consistent with the plaintiff's complaint, which would allow the plaintiff to recover, the court may not grant a defendant's motion to dismiss.'" High St. Properties at ¶ 16, quoting York v. Ohio State Hwy. Patrol, 60 Ohio St.3d 143, 145, 573 N.E.2d 1063 (1991). Thus, a dismissal under Civ.R. 12(B)(6) '"is reserved for the rare case that cannot possibly succeed."' Demeraski v. Bailey, 2015-Ohio-2162, 35 N.E.3d 913, ¶ 12 (8th Dist.), quoting Tri-State Computer Exchange, Inc. v. Burt, 1st Dist. Hamilton No. C-020345, 2003-Ohio-3197, ¶ 12.
{¶ 22} A trial court's decision to grant a Civ.R. 12(B)(6) motion to dismiss is reviewed de novo, i.e., we undertake an independent review of the record and accord no deference to the trial court's decision. Perrysburg Twp. v. Rossford, 103 Ohio St.3d 79, 2004-Ohio-4362, 814 N.E.2d 44, ¶ 5; Hendrickson v. Haven Place, Inc., 8th Dist. Cuyahoga No. 100816, 2014-Ohio-3726, ¶ 12. Here, accepting all of the factual allegations of the first amended complaint as true and construing all reasonable inferences to be drawn from those facts in favor of appellants, we find the probate court did not err in dismissing appellants' first amended complaint as to the Trust Defendants.
Constructive Trust
{¶ 23} In their first assignment of error, appellants contend that the probate court improperly dismissed their constructive trust claim against the Trust Defendants because it believed, incorrectly, that a constructive trust is an equitable remedy that could not survive independently of their fraud or unjust enrichment claims against the Trust Defendants. Appellants assert that a constructive trust claim is "an independent claim for relief" that "remedies ill-gotten gains when equity dictates the recipient should not hold and enjoy certain benefits" regardless of whether the property holder committed any wrongdoing or was otherwise unjustly enriched. Appellants further contend that they sufficiently pled a claim for constructive trust against the Trust Defendants based on their allegations that the Trust Defendants "held the property that had been improperly taken from Plaintiffs," i.e., that the Trust Defendants had benefited from the 2001 CRC stock redemption through the appreciation of their CRC shares and that that benefit was traceable to assets currently held by the Trust Defendants. We disagree.
{¶ 24} A constructive trust is
"a trust by operation of law which arises contrary to intention and in invitum, against one who, by fraud, actual or constructive, by duress or abuse of confidence, by commission of wrong, or by any form of unconscionable conduct, artifice, concealment, or questionable means, or who in any way against equity and good conscience, either has obtained or holds the legal right to property which he ought not, in equity and good conscience, hold and enjoy."Ferguson v. Owens, 9 Ohio St.3d 223, 225, 459 N.E.2d 1293 (1984), quoting 76 American Jurisprudence 2d, Trusts, Section 221, at 446 (1975); see also Estate of Cowling v. Estate of Cowling, 109 Ohio St.3d 276, 2006-Ohio-2418, 847 N.E.2d 405, ¶ 18; Cundall v. U.S. Bank, 122 Ohio St.3d 188, 2009-Ohio-2523, 909 N.E.2d 1244, ¶ 39. It is "'the formula through which the conscience of equity finds expression.'" Ferguson at 225, quoting Beatty v. Guggenheim Exploration Co., 225 N.Y. 380, 386, 122 N.E. 378 (1919). When imposing a constructive trust, a court orders a person who owns the legal title to property to hold or use the property for the benefit of another, or to convey the property to another, to avoid unjust enrichment. Ferguson v. Demore, 8th Dist. Cuyahoga No. 103289, 2016-Ohio-5620, ¶ 26, citing Everhard v. Morrow, 8th Dist. Cuyahoga No. 75415, 1999 Ohio App. LEXIS 5705, *7-9 (Dec. 2, 1999). The party seeking to have a constructive trust imposed '"bears the burden of producing clear and convincing evidence justifying it.'" Cowling at ¶ 23, quoting Univ. Hosps. of Cleveland, Inc. v. Lynch, 96 Ohio St.3d 118, 2002-Ohio-3748, 772 N.E.2d 105, paragraph three of the syllabus.
{¶ 25} In support of their contention that constructive trust is an independent, stand-alone cause of action, appellants focus, in their appellate briefs, on Ferguson v. Owens, 9 Ohio St.3d 223, 459 N.E.2d 1293 (1984). In Ferguson, a husband and wife with five children divorced. As part of the divorce decree, entered in August 1978, the husband agreed to purchase "through his company" a $100,000 "life insurance policy" for the benefit of his children. The policy was to be owned by, and the premiums paid by, the wife. Id. at 223. In 1979, the husband obtained a $100,000 "accidental death and dismemberment policy" through his then-employer, the beneficiaries of which were the couple's five children (the "accidental death policy"). The husband charged the premiums against child support he owed. That policy remained in effect until the husband's death. Id. at 224.
{¶ 26} Shortly after he acquired the accidental death policy, the husband's employment terminated. The husband obtained a new position, which included as a fringe benefit, a $40,000 life insurance policy (the "life insurance policy"). The husband named Ferguson, a woman with whom he was then living, as the beneficiary of the $40,000 life insurance policy. Id. The husband died, but not from an accidental death, so it was not covered under the accidental death policy. Ferguson and the wife and children filed separate suits to recover the proceeds of the $40,000 life insurance policy. Id. Ferguson claimed that as the named beneficiary of the life insurance policy, she had an absolute right to the proceeds. The wife and children claimed that they possessed an equitable right to those proceeds, which was superior to Ferguson's contractual right. Id. Both parties filed motions for summary judgment. Id. at 224-225.
{¶ 27} The trial court granted summary judgment in favor of Ferguson and the wife and children appealed. Id. at 225. The First District affirmed the trial court, concluding that there was no genuine issue of material fact that Ferguson had not "acquired a right to those proceeds by any means contradictory to the fundamental principles of equity." Id. The wife and children appealed to the Ohio Supreme Court. The court identified the issue on appeal as "whether a constructive trust may reasonably be impressed under the facts of the instant case." Id. In making that determination the court identified two additional issues for consideration: (1) whether, as a general matter, "a named beneficiary of the proceeds of a life insurance policy may be divested of his right to such proceeds by one having a superior equitable right therein" and (2) if so, whether, "upon the facts in [the] record, there was presented a genuine issue of material fact that the appellants possess a superior equitable right to the proceeds of the $40,000 life insurance policy." Id.
{¶ 28} With respect to the first issue, the court defined a constructive trust and further explained:
A constructive trust is, in the main, an appropriate remedy against unjust enrichment. This type of trust is usually invoked when property has been acquired by fraud. However, a constructive trust may also be imposed where it is against the principles of equity that the property be retained by a certain person even though the property was acquired without fraud.Id. at 226, citing 53 Ohio Jurisprudence 2d, Trusts, Section 88, at 578-579 (1962); V Scott on Trusts, Section 462, at 3412 (3d Ed.1967). The court noted that other jurisdictions "have applied the doctrine of constructive trust in situations involving after-acquired life insurance policies in determining the equities as between the title owner of such policies and those who were to be named beneficiaries by the terms of a separation agreement embodied within a divorce decree." Id.
{¶ 29} With respect to the second issue, the court found that, based on the record before the trial court, there were genuine issues of material fact regarding what the divorce decree required and whether the husband had complied with the divorce decree in purchasing the accidental death policy. Id. at 226-227. The Ohio Supreme Court, therefore, reversed and remanded the case for further proceedings. Id. at 227.
{¶ 30} Contrary to appellants' assertion, there is no indication in Ferguson that the court sought to analyze whether a constructive trust was an independent cause of action, much less that it concluded that a constructive trust was an independent, stand-alone cause of action. As noted above, the court explicitly stated that imposition of a constructive trust is a "remedy," "usually invoked" in cases where fraud is established, but that it could also be "an appropriate remedy against unjust enrichment," "where it is against the principles of equity that the property be retained by a certain person even though the property was acquired without fraud." Id. at 226.
{¶ 31} At oral argument, appellants shifted their focus from Ferguson to Estate of Cowling, 109 Ohio St.3d 276, 2006-Ohio-2418, 847 N.E.2d 405, in arguing that the Ohio Supreme Court had recognized an independent claim for constructive trust.
{¶ 32} In Estate of Cowling, a husband and wife owned various brokerage accounts and stock investments jointly with rights of survivorship. Id. at ¶ 3. Each had children from a prior marriage, but no children together. Id. at ¶ 2. During their marriage, the husband transferred the couple's stocks from their joint account into a transfer-on-death ("TOD") account, with his children named as the beneficiaries. Id. at ¶ 3. He later gifted some of the stocks to his children and transferred additional assets from the couple's joint brokerage accounts into other TOD accounts. Id. The assets in the TOD accounts passed to the husband's children upon his death. Id.
{¶ 33} The wife filed suit, asserting "an equitable claim" against the children "for a declaratory judgment to establish a constructive trust over the assets transferred" by the husband to his children. Id. at ¶ 4. The wife also asserted claims against the husband's estate for breach of contract, conversion, breach of fiduciary duty, negligent misrepresentation and fraud. Id.
{¶ 34} The case proceeded to trial. A jury found that the husband had withdrawn funds from the couple's joint accounts in excess of the contributions attributable to him and that the wife had sustained $255,354 in resulting damages. Id. at ¶ 6. The trial court entered a default judgment in that amount against the husband's estate, which had not answered or participated in the trial, and "declared a constructive trust" in the amount of $ 255,354, which it imposed on each of the children in proportion to the amount he or she had received from their father. Id. at ¶ 6-7. The trial court did not designate the specific property or assets over which the constructive trust was to be imposed. Id. at ¶ 7. The children filed motions for a new trial and for judgment notwithstanding the verdict. Id. The trial court denied the motions, and the children appealed. Id. at ¶ 7-8.
{¶ 35} The Ninth District reversed the trial court's denial of the children's motions for directed verdict and judgment notwithstanding the verdict and the trial court's order imposing a constructive trust. Id. at ¶ 10. The wife's estate then appealed to the Ohio Supreme Court. Id. at ¶ 10-11. The Ohio Supreme Court identified the issue to be addressed as "whether the court of appeals properly reversed the trial court's decisions to deny motions for directed verdict and judgment notwithstanding the verdict." Id. at ¶ 1.
While the appeal was pending, the wife died. Her estate was then substituted as the plaintiff by the Ninth District. Id. at ¶ 9.
{¶ 36} After discussing the ownership of assets in a joint and survivorship account and the evidentiary burden necessary to prove net contributions to a joint and survivorship account, the court turned to the constructive trust issue. Id. at ¶ 12-15. As in Ferguson, there is no indication in Estate of Cowling that the court sought to analyze whether a constructive trust was an independent cause of action — much less that it concluded that a constructive trust was an independent, stand-alone cause of action that could be imposed on a party without proof of unjust enrichment or proof of wrongdoing, such as fraud. The court began by defining a constructive trust. Citing Ferguson, 9 Ohio St.3d at 226, 459 N.E.2d 1293, and Aetna Life Ins. Co. v. Hussey, 63 Ohio St.3d 640, 642, 590 N.E.2d 724 (1992), the court explained that "[a] constructive trust is an equitable remedy that protects against unjust enrichment and is usually invoked when property has been obtained by fraud" but that "[s]uch a trust 'may also be imposed where it is against the principles of equity that the property be retained by a certain person even though the property was acquired without fraud.'" Estate of Cowling at ¶ 19, quoting Ferguson at 226.
{¶ 37} The initial focus of the court's decision as it related to the imposition of a constructive trust was the extent to which tracing of property or assets was required for a constructive trust. The court explained:
When they have addressed tracing, courts in Ohio have required the claimant to offer sufficient proof of tracing the property through any changes in form or possessor to the possessor of the property over whom the constructive trust should be placed. * * * We are in accord with these decisions and hold that before a constructive trust can be imposed, there must be adequate tracing from the time of the wrongful deprivation of the relevant assets to the specific property over which the constructive trust should be placed.(Emphasis added.) Id. at ¶ 22-26.
We have previously held that a party seeking the judicial imposition of a constructive trust "bears the burden of producing clear and convincing evidence justifying it." [Univ. Hosps. of Cleveland, Inc. v.] Lynch, 96 Ohio St.3d 118, 2002-Ohio-3748, 772 N.E.2d 105, paragraph three of the syllabus. Lynch specifically referred to the claimant's burden of proof and the evidentiary standard for proving the unjust-enrichment aspect of a constructive trust. Id. at 130, 772 N.E.2d 105. We conclude that the same evidentiary burden should apply to tracing and that the burden of proof is on the claimant.
A claimant seeking the imposition of a constructive trust must specify the particular property over which the constructive trust is to be placed. * * * A constructive trust is an equitable remedy that must be imposed on particular assets, not on a value. For example, if a party is inequitably deprived of 100 shares of stock that are valued at $ 10,000, a constructive trust should be imposed over 100 shares of stock, not $10,000. * * * Constructive trusts should be placed over the property of the party who wrongfully obtained the property. When, as in this case, the property was subsequently transferred to third parties, a constructive trust can be imposed.
{¶ 38} Thus, in Estate of Cowling, as in Ferguson, the Ohio Supreme Court expressly recognized that constructive trust is "an equitable remedy." The court further acknowledged, citing Lynch, that there is an "unjust-enrichment aspect of a constructive trust." Id. at ¶ 19, 23, 25; see also Lynch at ¶ 60 ("A constructive trust is imposed 'not because of the intention of the parties but because the person holding the title to property would profit by a wrong, or would be unjustly enriched if he were permitted to keep the property.'"), quoting Restatement of the Law, Restitution, Section 160, Comment b.
{¶ 39} Applying these principles, the court then considered whether the trial court had properly denied the children's motions for a new trial or judgment notwithstanding the verdict. Specifically, the court considered whether the wife's estate (1) "presented clear and convincing evidence of the inequitable situation or unjust enrichment that would result if the [children] retained the assets" and (2) "provided clear and convincing evidence tracing the assets from the joint and survivorship accounts * * * to property held by the [children]." Id. at ¶ 32.
{¶ 40} The court held that because the husband withdrew all of the assets he subsequently transferred to his children from joint and survivorship accounts that were in his and his wife's names and because evidence was presented that the husband's withdrawals had exceeded his contributions to those accounts, "reasonable minds could only conclude that inequity had been proven by clear and convincing evidence" and that the wife's estate had "presented sufficient evidence with respect to this element of a constructive-trust claim to survive motions for a directed verdict and judgment notwithstanding the verdict." Id. at ¶ 33. The court noted that "[d]espite the imprecision of some of the standards we apply in equity, we can only conclude, under any standard, that the [children] would unjustly benefit in the absence of a constructive trust." Id. at ¶ 35. (Emphasis added.)
{¶ 41} As to the tracing requirement, the parties stipulated that, at the time of the trial, the assets the husband had transferred to his children were in the same form in which the husband had received them, that the children had retained the assets throughout the trial and that the children (with the exception of one child, who had turned over her share of the assets to the wife's estate) had then sold the assets to post cash deposits for the appeal and had deposited the proceeds with the Lorain County Clerk of Courts. The court held that the evidence presented at trial and the parties' stipulations were "sufficient to satisfy the tracing requirement" but that the trial court's order for a constructive trust could not "stand unmodified." Id. at ¶ 34-35. The court found that the trial court had erred because it did not specify the particular assets over which the constructive trust was imposed and that the constructive trust "should have been placed over the proportion of the specific assets held by the [children] that equaled Father's net contributions, as determined by the jury." Id. at ¶ 36. Accordingly, the court reversed the decision of the Ninth District, reinstated the trial court's order imposing a constructive trust and ordered that the constructive trust be imposed over the proportionate share of the assets then held by the Lorain County Clerk of Courts. Id. at ¶ 37-38.
{¶ 42} Accordingly, we do not read Ferguson or Estate of Cowling as recognizing a constructive trust as an independent claim that may be maintained against a party without establishing fraud (or some other wrongdoing) or unjust enrichment as to that party.
{¶ 43} Furthermore, this court (and others) have explicitly held that a constructive trust is not an independent cause of action. See, e.g., Graham v. Lakewood, 2018-Ohio-1850, 113 N.E.3d 44, ¶ 58 (8th Dist.) ("constructive trust is a remedy, not a cause of action"); Widok, 2020-Ohio-5178, at ¶ 85-86 ("constructive trust is not an independent cause of action"); see also Krohn, 2020-Ohio-1536, at ¶ 37 ("An accounting, like a constructive trust, is an equitable remedy, not a cause of action."); Lapoint v. Templeton, 6th Dist. Fulton No. F-07-014, 2008-Ohio-1792, ¶ 42 ("Since appellants have not demonstrated fraud or unjust enrichment, a constructive trust cannot be created."); Kostyo v. Kaminski, 9th Dist. Lorain No. 12CA010266, 2013-Ohio-3188, ¶ 17 ("Generally speaking, * * * there is no such thing as a cause of action for constructive trust.").
{¶ 44} Appellants argue that this court's decisions in Graham and Widok conflict with its prior decision in Cooper v. Cooper, 8th Dist. Cuyahoga No. 76899, 2000 Ohio App. LEXIS 3955 (Aug. 31, 2000), and that Cooper recognizes that "a constructive trust claim is an independent claim separate and apart from a claim for fraud or unjust enrichment." Once again, we disagree.
{¶ 45} In Cooper, several siblings appealed the trial court's decision dismissing a declaratory judgment action they had filed against their stepmother, individually and as administratrix of their father's estate. Id. at 1. The stepmother had been named the primary beneficiary of several of their father's investment accounts. Id. at 12-13. In their complaint, the children alleged that their father and stepmother had had a verbal "trust agreement" that, upon the father's death, the stepmother would acquire a life estate in the father's investment accounts and that, upon her death, the investment accounts would pass to the children. Id. at 2-3. The children sought a declaration that the investment accounts were intended to be included within the "trust agreement" and that the investment accounts were part of the father's estate. Id. at 3. The children also requested that the probate court impose a constructive trust on the investment accounts "in order to affect [their father's] intent." Id.
{¶ 46} The stepmother filed a motion to dismiss the complaint for failure to state a claim upon which relief could be granted pursuant to Civ.R. 12(B)(6), arguing that imposing a constructive trust against her would be "improper" since she "had not committed fraud or been unjustly enriched." Id. at 3-4. The children opposed the motion, arguing that they need not demonstrate "wrongdoing" by the stepmother in order to obtain a constructive trust, only that it would be "inequitable" for the stepmother to retain the property. Id. at 4. The trial court granted the motion to dismiss, concluding that "there is no basis in Ohio law for what Plaintiffs are asking of this court." Id. at 7-8.
{¶ 47} On appeal, this court affirmed the trial court's dismissal of the action. This court found that there was "no evidence beyond the [children's] bare allegations" that their stepmother had "improperly obtained title" to their father's retirement assets, that even if the father had verbally expressed his intent to leave his children a beneficial interest in his retirement accounts, he never manifested that intent, either in his will or by changing the beneficiary designation on his retirement accounts and that the stepmother's alleged verbal promise to distribute the retirement funds to the children upon her death was an unenforceable executory promise. Accordingly, this court held that the trial court did not err in denying the children's request for a constructive trust. Id. at 19-20.
{¶ 48} There is nothing in Cooper that recognizes a constructive trust claim as an independent claim. The court stated:
While a constructive trust may arise when the property is acquired through fraud, duress, undue influence or mistake, or breach of fiduciary duty, it may also arise where the property holder has not committed any wrongdoing but is not equitably entitled to retain the property.Id. at 9-10, citing In re The Estate of Cole, 12th Dist. Butler No. CA99-03-059, 2000 Ohio App. LEXIS 1869 (May 1, 2000) ("A constructive trust is a remedial device utilized to prevent fraud and unjust enrichment."), Ferguson, 9 Ohio St.3d at 226, 459 N.E.2d 1293, and Union S. & L. Assn. v. McDonough, 101 Ohio App.3d 273, 276, 655 N.E.2d 426 (12th Dist.1995) ("A constructive trust is a trust created by operation of law against the holder of a legal right to property which that person should not, in equity and good conscience, hold or enjoy; it is a relationship associated with property subjecting the title holder to an equitable duty to convey it to another because otherwise the title holder would be unjustly enriched. * * * A constructive trust will not attach to property acquired by a bona fide purchaser — one who acquires title to property for value and without notice of another's equitable interest in that property.").
{¶ 49} This statement by the court is not, as appellants contend, a recognition that "a claim of constructive trust can exist without being tied to another stand-alone claim." This is simply an acknowledgement that a constructive trust may be an appropriate remedy even in the absence of wrongdoing where a party is "not equitably entitled to retain the property" at issue, i.e., where one party has been unjustly enriched.
{¶ 50} As the court further explained: "A constructive trust is imposed 'where a person holding title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it.'" (Emphasis added.) Id. at 9, quoting Estate of Cole at 4. General unfairness or "a showing that there has been a 'moral wrong' is not sufficient to warrant imposition of a constructive trust." Id. at 11.
{¶ 51} That a constructive trust is not an independent cause of action is further supported by the Ohio Supreme Court's application of statutes of limitation in cases seeking the imposition of a constructive trust. As the court stated in Peterson v. Teodosio, 34 Ohio St.2d 161, 297 N.E.2d 113 (1973), a constructive trust cannot be imposed where the underlying "cause of action in which imposition of a constructive trust is sought as a remedy" is time-barred:
In Ohio, statutes of limitation attach to causes of action and not to the remedial form in which the action is brought. * * * If the cause of action in which imposition of a constructive trust is sought as a remedy is
barred by a statute of limitation, the imposition of a constructive trust is likewise barred. It is a rule of universal application that limitation statutes will run with respect to actions seeking imposition of constructive trusts.Id. at 172; see also Cundall, 122 Ohio St.3d 188, 2009-Ohio-2523, 909 N.E.2d 1244, at ¶ 39-41 (constructive trust could not be imposed where the underlying causes of action were time-barred); Krohn at ¶ 34-35 (after determining that appellant's claims for fraud and breach of fiduciary duty were time-barred by the four-year statute of limitations in R.C. 2305.09, concluding that appellant's "remedy sought for a constructive trust" was also time-barred).
{¶ 52} "Dismissal under Civ.R. 12(B)(6) is warranted where remedies claimed are not independent causes of action." Krohn at ¶ 32, citing Franklin v. Gwinnett Cty. Pub. Schools, 503 U.S. 60, 73-74, 112 S.Ct. 1028, 117 L.Ed.2d 208 (1992). Accordingly, the probate court did not err in dismissing appellants' constructive trust claim. We overrule appellants' first assignment of error.
Unjust Enrichment
{¶ 53} In their second assignment of error, appellants challenge the probate court's determinations that their unjust enrichment claim was time-barred under R.C. 2305.07 and that appellants failed to allege a "sufficiently direct harm" to state a claim for unjust enrichment.
{¶ 54} Unjust enrichment occurs when a person '"has and retains money or benefits which in justice and equity belong to another.'" Johnson v. Microsoft Corp., 106 Ohio St.3d 278, 2005-Ohio-4985, 834 N.E.2d 791, ¶ 20, quoting Hummel v. Hummel, 133 Ohio St. 520, 528, 14 N.E.2d 923 (1938); see also Jamison v. Jamison, 8th Dist. Cuyahoga No. 106185, 2018-Ohio-1626, ¶ 16. The purpose of an unjust enrichment claim is not to compensate the plaintiff for loss or damage suffered by the plaintiff, but to enable the plaintiff to recover the benefit he or she conferred on the defendant under circumstances in which it would be unjust to allow the defendant to retain it. Johnson at ¶ 21, citing Hughes v. Oberholtzer, 162 Ohio St. 330, 335, 123 N.E.2d 393 (1954); Cleveland Cent. Catholic High School v. Mills, 2018-Ohio-4873, 125 N.E.3d 328, ¶ 41 (8th Dist.).
{¶ 55} To prevail on a claim for unjust enrichment, a plaintiff must prove by a preponderance of the evidence that (1) the plaintiff conferred a benefit upon the defendant, (2) the defendant had knowledge of such benefit and (3) the defendant retained that benefit under circumstances in which it would be unjust for him or her to retain that benefit. Johnson at ¶ 21; Hambleton v. R.G. Barry Corp., 12 Ohio St.3d 179, 183, 465 N.E.2d 1298 (1984); see also Cleveland Cent. Catholic at ¶ 42; Pomeroy v. Schwartz, 8th Dist. Cuyahoga No. 99638, 2013-Ohio-4920, ¶ 41.
{¶ 56} A showing of '"[e]nrichment alone'" is insufficient for a plaintiff to prevail on a claim for unjust enrichment. Chesnut v. Progressive Cas. Ins. Co., 166 Ohio App.3d 299, 2006-Ohio-2080, 830 N.E.2d 751, ¶ 30 (8th Dist.), quoting Directory Servs. Group v. Staff Builders Internatl., 8th Dist. Cuyahoga No. 78611, 2001 Ohio App. LEXIS 3108 (July 12, 2001). To prove a cause of action for unjust enrichment, the plaintiff '"must go further and show that under the circumstances [the plaintiff] has a superior equity so that, as against [the plaintiff], it would be unconscionable for the defendant to retain the benefit.'" Lotfi-Fard v. First Fed. of Lakewood, 8th Dist. Cuyahoga No. 87207, 2006-Ohio-3727, ¶ 52, quoting Cincinnati v. Fox, 71 Ohio App. 233, 239, 49 N.E.2d 69 (1st Dist.1943); see also United States Health Practices, Inc. v. Blake, 10th Dist. Franklin No. 00AP-1002, 2001 Ohio App. LEXIS 1291, 6-7 (Mar. 22, 2001); Cleveland Cent. Catholic at ¶ 50.
{¶ 57} A six-year statute of limitations applies to claims for unjust enrichment. R.C. 2305.07; see also Cleveland v. Ohio Bur. of Workers' Comp., 2018-Ohio-846, 109 N.E.3d 84, ¶ 82 (8th Dist.), reversed on other grounds, Cleveland v. Ohio Bur. of Workers' Comp., 159 Ohio St.3d 459, 2020-Ohio-337, 152 N.E.3d 172; State ex rel. Cty. of Cuyahoga v. Jones Lang Lasalle Great Lakes Co., 8th Dist. Cuyahoga No. 104157, 2017-Ohio-7727, ¶ 118, citing Hambleton, 12 Ohio St.3d at 182, 465 N.E.2d 1298; Pomeroy, 2013-Ohio-4920, at ¶ 41. '"[A] claim for unjust enrichment accrues on the date that money is retained under circumstances that make it unjust to do so.'" Pomeroy at ¶ 41, quoting Palm Beach Co. v. Dun & Bradstreet, 106 Ohio App.3d 167, 175, 665 N.E.2d 718 (1st Dist.1995); Shrock v. Mullet, 7th Dist. Jefferson No. 18 JE 0018, 2019-Ohio-2707, ¶ 67; Bank of Am., N.A. v. Darkadakis, 2016-Ohio-7694, 76 N.E.3d 577, ¶ 43 (7th Dist.); see also Desai v. Franklin, 177 Ohio App.3d 679, 2008-Ohio-3957, 895 N.E.2d 875, ¶ 20, 22-23 (9th Dist.) (unjust enrichment claim accrues at "the last point in time that the plaintiff conferred and a defendant unjustly received a benefit"); Chaplain Kieffer Post 1081 v. Wayne Cty. Veterans Assn., 9th Dist. Wayne No. 2358, 1988 Ohio App. LEXIS 3815, 1-2, 7-8 (Sept. 21, 1988) (unjust enrichment claim accrued when defendant's retention became unjust). Dismissal under Civ.R. 12(B)(6) is warranted where the complaint on its face conclusively indicates that a plaintiff's claims are time-barred due to the applicable statute of limitations. Krohn, 2020-Ohio-1536, at ¶ 29.
{¶ 58} The discovery rule has not been extended to unjust enrichment claims. Jones Lang at ¶ 118; Drozeck v. Lawyers Title Ins. Corp., 140 Ohio App.3d 816, 749 N.E.2d 775 (8th Dist.2001); Darkadakis at ¶ 42; Marok v. Ohio State Univ., 10th Dist. Franklin No. 13AP-12, 2014-Ohio-1184, ¶ 25; Binsack v. Hipp, 6th Dist. Huron No. H-97-029, 1998 Ohio App. LEXIS 2370, 17-18 (June 5, 1998); see also Patel v. Krisjal, L.L.C., 10th Dist. Franklin No. 12AP-16, 2013-Ohio-1202, ¶ 30 ("The statute of limitations for an unjust enrichment claim is not subject to equitable tolling or a discovery rule.").
{¶ 59} Citing Cleveland v. Ohio Bur. Workers' Comp., 2018-Ohio-846, 109 N.E.3d 84, and KeyBank Natl. Assn. v. Correct Custom Drywall, Inc., Franklin C.P. 09-CV-0164008, 2014 Ohio Misc. LEXIS 5567 (Apr. 25, 2014), appellants argue that the statute of limitations does not bar their unjust enrichment claim against the Trust Defendants because appellants pled that "the benefits continue to accrue to this day," that the unjust enrichment and resulting harm to appellants was "ongoing" and that "the full potential benefit had not yet been determined." Appellants contend that because they claim the Trust Defendants continue to "possess the benefit" they received from the 2001 CRC stock redemption, the last date a benefit was conferred by appellants requires a factual analysis and cannot be resolved on a Civ.R. 12(B)(6) motion to dismiss. These cases are readily distinguishable.
{¶ 60} KeyBank involved a bank's efforts to collect a commercial debt from an individual, Wilkie, who, in 1997, had executed a guaranty promising to repay the debt. Id. at 1-2. Wilkie filed a third-party complaint against Wade that included an unjust enrichment claim. Wilkie alleged that KeyBank and Wade conspired to induce Wilkie to sign the guaranty by misrepresenting to Wilkie that Wade would also be a guarantor and that Wade had been unjustly enriched as a result. Id. at 1-3. The Franklin County Court of Common Pleas denied Wade's motion to dismiss Wilkie's unjust enrichment claim against him on statute-of-limitations grounds, concluding that the claim had "not yet fully accrued" because neither Wilkie nor Wade had yet been "adjudged liable for the debt at issue" and, therefore, the "full potential benefit has not yet been determined/conferred." Id. at 11. That is not the situation here.
{¶ 61} In Cleveland v. Ohio Bur. of Workers' Comp., 2018-Ohio-846, 109 N.E.3d 84, the city of Cleveland asserted a claim for unjust enrichment against the Ohio Bureau of Workers' Compensation ("BWC"), alleging that the BWC had unlawfully charged the city excessive workers' compensation insurance premiums from 1997-2009 in order to subsidize overly generous premium discounts given to public employers who participated in the BWC's group-rating program. In that case, this court held that the city's cause of action for unjust enrichment did not accrue until 2009, when the city made its last premium "overpayment," i.e., the last point in time at which the BWC allegedly unjustly received a benefit from the city. Id. at ¶ 90. The court reasoned that where one party confers benefits on another, with the other's knowledge, over a period of time, each benefit conferred does not give rise to a separate cause of action with a separate statute of limitations. Rather, the entire period of time over which the party conferred benefits gives rise to a single claim for unjust enrichment, subject to a single statute of limitations that accrues when the last benefit was conferred that unjustly enriched the defendant. Id. at ¶ 84-90.
{¶ 62} Once again, that is not the situation here. This is not a case in which appellants were engaged in series of continuing transactions with the defendants. Here, there was only a single transaction — a transaction in which the Trust Defendants were not direct participants — that occurred in 2001.
{¶ 63} This case is similar to Binsack v. Hipp, 6th Dist. Huron No. H-97-029, 1998 Ohio App. LEXIS 2370 (June 5, 1998). In Binsack, the plaintiff, a minority shareholder, sold her shares of a closely held corporation back to the defendants, majority shareholders, in 1979. Id. at 2-4. Ten years later, when the value of the company and the shares held by the defendants and their children had greatly increased, the plaintiff learned that her shares had been redeemed for much less than they were worth. Id. at 4, 17. The plaintiff filed suit against the defendants for fraud, breach of fiduciary duty and unjust enrichment. Id. at 4-5. The trial court granted summary judgment on the plaintiff's unjust enrichment claim on the ground that it was barred by the statute of limitations. Id. at 6. The Sixth District affirmed, concluding that her cause of action for unjust enrichment accrued in 1979 when the plaintiff had last conferred a benefit on the defendant rather than the date upon which she discovered her alleged injury, and that her unjust enrichment claim was, therefore, time-barred. Id. at 17-18.
{¶ 64} At issue in this case is a single transaction — a transaction that occurred in 2001. Any benefit that may have been conferred upon the Trust Defendants as a result of the 2001 stock redemption was conferred upon them in 2001, when the stock that had been owned by the Harry III Trust was redeemed by CRC. If the stock redemption was "unjust," as appellants allege, it was "unjust" from the beginning. See Pomeroy, 2013-Ohio-4920, at ¶ 46; cf. Patel, 2013-Ohio-1202, at ¶ 1-5, 28-30 (unjust enrichment claim against an Ohio limited liability company to recover funds diverted from a British company accrued at the time of the transfer of the funds in 1999, not when the transfer was allegedly discovered in 2007, because "[t]he statute of limitations for an unjust enrichment claim is not subject to equitable tolling or a discovery rule").
{¶ 65} Given that appellants' original complaint was not filed until 2018 — more than 17 years after the 2001 CRC stock redemption — appellants' unjust enrichment claim is time-barred, and the probate court did not err in dismissing appellants' unjust enrichment claim against the Trust Defendants. We overrule appellants' second assignment of error.
Because we find that the probate court properly concluded that appellants' unjust enrichment claim was time-barred, we need not address appellants' argument that the probate court erred in concluding that appellants failed to allege a "sufficiently direct harm" to state a claim for unjust enrichment.
Fraud
{¶ 66} In their third assignment of error, appellants contend that they "met the pleading standard for fraud set forth by Civ.R. 9" and that the probate court, therefore, erred in dismissing their fraud claim against the Trust Defendants for failure to plead fraud with particularity.
{¶ 67} The elements of fraud are: (1) a representation of fact (or where there is a duty to disclose, concealment of a fact); (2) that is material to the transaction at issue; (3) made falsely, with knowledge of its falsity or with utter disregard and recklessness as to whether it is true or false; (4) with the intent of misleading another into relying upon it; (5) justifiable reliance upon the misrepresentation (or concealment) and (6) resulting injury proximately caused by the reliance. Cohen v. Lamko, Inc., 10 Ohio St.3d 167, 169, 462 N.E.2d 407 (1984).
{¶ 68} Civ.R. 9(B) states that "[i]n all averments of fraud * * *, the circumstances constituting fraud * * * shall be stated with particularity." To comply with this requirement, '"the pleading must contain allegations of fact which tend to show each and every element of a cause of action for fraud.'" Parmatown S. Assn. v. Atlantis Realty Co., 8th Dist. Cuyahoga No. 106503, 2018-Ohio-2520, ¶ 7, quoting Minaya v. NVR, Inc., 2017-Ohio-9019, 103 N.E.3d 160, ¶ 11. Pleading the circumstances constituting fraud with particularity also requires identification of the time, place and content of the misrepresentation, the fact misrepresented, the individual who made the misrepresentation and what was obtained or given as a result of the fraud. See, e.g., Cord v. Victory Solutions, L.L.C., 8th Dist. Cuyahoga No. 106006, 2018-Ohio-590, ¶ 14; Stancik v. Deutsche Natl. Bank, 8th Dist. Cuyahoga No. 102019, 2015-Ohio-2517, ¶ 51; Aluminum Line Prods. Co. v. Brad Smith Roofing Co., 109 Ohio App.3d 246, 259, 671 N.E.2d 1343 (8th Dist.1996). "Particularity in pleading serves three purposes: (1) protecting defendants' reputations from ill-defined accusations of deceitful conduct, (2) notifying defendants of the challenged conduct, and (3) discouraging plaintiffs' fishing expeditions for undiscovered fraudulent conduct." Cord at ¶ 14, citing Reinglass v. Morgan Stanley Dean Witter, 8th Dist. Cuyahoga No. 86407, 2006-Ohio-1542, ¶ 20.
{¶ 69} Appellants argue that they pled their fraud claim against the Trust Defendants with sufficient particularity, as required under Civ.R. 9(B), because they alleged that (1) all defendants, including the Trust Defendants, "had knowledge of, acquiesced to and/or participated in Harry [II] and CRC's fraudulent valuation and redemption of the CRC stock," (2) the Trust Defendants "had knowledge of the value of the CRC stock that enabled the fraudulent 2001 redemption," (3) the Trust Defendants benefited from the 2001 CRC stock redemption and (4) appellants "justifiably relied upon the manipulated and deflated data upon which the 2001 redemption of CRC Stock was based," resulting in losses to appellants.
{¶ 70} We disagree. The only fraudulent conduct alleged in the first amended complaint is conduct by CRC and Harry II. The first amended complaint alleges that "CRC and Harry [II] had a duty to disclose" information related to the 2001 CRC stock redemption, and that "CRC and Harry [II] proximately caused the Plaintiffs and/or their beneficial interest in the Harry III Trust damages." (Emphasis added.) Although the first amended complaint includes general, conclusory allegations that the Trust Defendants (or their unidentified "predecessors in interest") had knowledge that "the 2001 redemption of CRC stock was fraudulent, intentionally deflated and/or based on manipulated data" or in some way "acquiesce[d]" or "participat[ed]" in events surrounding the 2001 CRC stock redemption, it contains no allegations that any of the Trust Defendants made any material, false representations to appellants or concealed any material facts from appellants that they owed a duty to appellants to disclose. Nor are there any allegations in the first amended complaint that any of the Trust Defendants engaged in any conduct with the intent to mislead or deceive appellants, that appellants justifiably relied on any false representations by the Trust Defendants or that any of the Trust Defendants proximately caused any harm to appellants. These are essential elements of a fraud claim that must be pled with particularity. See, e.g., Stancik at ¶ 51-52 (fraud claim, which was premised on Trust's alleged use of false documents in a foreclosure action, was not pled with particularity where complaint did not specify the time, place and content of the alleged material, any misrepresentation by the Trust, plaintiff's reliance on the misrepresentation or plaintiff's damages); Glazer v. Chase Home Fin. L.L.C., 8th Dist. Cuyahoga Nos. 99875 and 99736, 2013-Ohio-5589, ¶ 83 ("Failure to plead the elements of fraud with particularity results in a defective claim that cannot withstand a Civ.R. 12(B)(6) motion to dismiss.").
Specifically, the first amended complaint alleges that CRC and Harry II had a duty to disclose the following facts: (1) that "the CRC data and/or valuation relied upon in the redemption of the CRC [s]tock was inaccurate, manipulated and/or false," (2) that the "2001 CRC [p]urchase [p]rice was deflated and well below reasonable value" and (3) that "misleading information was knowingly relied on in forming and/or accepting the terms of the 2001 redemption of the CRC [s]tock." --------
{¶ 71} Because the first amended complaint does not contain facts that, if true, would establish all elements of a fraud claim against the Trust Defendants, the probate court did not err in dismissing appellants' fraud claim against the Trust Defendants pursuant to Civ.R. 9(B) and 12(B)(6). Appellant's third assignment of error is overruled.
Tortious Interference with Expectancy of Inheritance
{¶ 72} In their fourth and final assignment of error, appellants contend that the probate court erred in dismissing their claim for tortious interference with expectancy of inheritance against the Trust Defendants based on its "misguided belief" that "a beneficiary who has a certain expectancy prior to vesting and who fails to discover the interference until after his or her interest vests is barred from bringing such a claim."
{¶ 73} The elements of a claim for tortious interference with expectancy of inheritance are (1) an existence of an expectancy of inheritance in the plaintiff, (2) an intentional interference by a defendant with the expectancy of inheritance, (3) tortious conduct constituting such interference, such as fraud, duress or undue influence, (4) a reasonable certainty the expectancy of inheritance would have been realized, but for the interference by the defendant and (5) damage resulting from the interference. Firestone v. Galbreath, 67 Ohio St.3d 87, 88, 616 N.E.2d 202 (1993), citing Restatement of the Law 2d, Torts, Section 774B (1979); Widok, 2020-Ohio-5178, at ¶ 96; Miller v. Key Bank Natl. Assn., 8th Dist. Cuyahoga No. 86327, 2006-Ohio- 1725, ¶ 35. We agree with the probate court that the first amended complaint did not state a claim against the Trust Defendants for tortious interference with expectancy of inheritance.
{¶ 74} The first amended complaint alleges that, during Harry III's lifetime, Harry III established the Harry III Trust for the benefit of his children and that Harry II conveyed the CRC stock to the Harry III Trust. Accordingly, during Harry III's lifetime, appellants may have had an "expectancy of inheritance" of a share of the assets of the Harry III Trust, including the CRC stock. However, that "expectancy" was extinguished upon Harry III's death, when appellants realized their inheritance and became beneficiaries of the Harry III Trust. See, e.g., Brown v. Ralston, 2016-Ohio-4916, 67 N.E.3d 15, ¶ 20 (8th Dist.) ("an inheritance means that the property passes after the owner's death"); Restatement of the Law 2d, Torts, Section 774B, Comment b (1979) ("inheritance * * * includes any devise or bequest that would otherwise have been made under a testamentary instrument or any property that would have passed to the plaintiff by intestate succession").
{¶ 75} In 2001, when the CRC stock redemption occurred, appellants no longer had an "expectancy" of "inheritance" with respect to the CRC stock; they had a present interest in the Harry III Trust and/or the assets of the trust as beneficiaries of the trust. In this case, the alleged tortious interference occurred after appellants had already inherited an interest in the stock as beneficiaries of the Harry III Trust. Events allegedly occurring nearly two years after appellants had realized their inheritance, as expected, could not constitute interference with an expectancy of that inheritance as required to state a claim for tortious interference with expectancy of inheritance. Cf. Baillis v. Ross, 8th Dist. Cuyahoga No. 97259, 2012-Ohio-705, ¶ 26-29 (plaintiffs' allegations that they had an expectancy of inheritance based on language of a settlement agreement entitling them to a percentage of decedent's trust and that defendants had interfered with plaintiffs' expectancy of inheritance by instituting guardianship proceedings over the decedent prior to his death did not support a claim for tortious interference with expectancy of inheritance where the guardian proceedings were instituted before the parties began negotiating the settlement agreement). Appellants cite no authority to support their position that a claim for tortious interference with expectancy of inheritance can be maintained under Ohio law where the alleged interference occurred after the property or property interest at issue has been inherited, as expected, by the plaintiffs.
{¶ 76} Furthermore, appellants' first amended complaint contains no allegations of any actionable conduct by the Trust Defendants related to appellants' tortious interference claim, i.e., the complaint contains no reference to any facts from which it could be reasonably inferred that Trust Defendants intentionally and tortiously interfered with any expectancy of inheritance on the part of appellants. The first amended complaint alleges only that Harry II and CRC's conduct was fraudulent and that appellants' "reasonable certainty of inheritance would have been realized but for [the] fraudulent conduct of CRC and Harry [II]." Appellants acknowledge as much in their appellate brief, asserting that "[w]hen Harry [II] and CRC sold the stock at a decreased value, this directly and tortious interfered with [appellants'] reasonable expectation of inheritance." (Emphasis added.)
{¶ 77} Because appellants failed to plead sufficient facts that, if true, would establish that they had a reasonable expectancy of inheritance at the time of the 2001 CRC stock transaction and that that expectancy of inheritance would have been realized, but for the interference of the Trust Defendants, the probate court did not err in dismissing appellants' claim for tortious inference with expectancy of inheritance against the Trust Defendants. Appellants' fourth assignment of error is overruled.
{¶ 78} Judgment affirmed.
It is ordered that appellees recover from appellants costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to the Cuyahoga County Common Pleas Court, Probate Division, 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. /s/_________
EILEEN A. GALLAGHER, JUDGE KATHLEEN ANN KEOUGH, P.J., and
EMANUELLA D. GROVES, J., CONCUR