Opinion
A1102562
05-09-2012
KAREN L. SMITH, EXECUTRIX OF THE ESTATE OF DANIEL W. SMITH, JR., Plaintiff v. UNIFIED CAPITAL SOLUTIONS, INC., Defendant
DECISION
This case is before the Court on Plaintiffs Motion to Dismiss Defendant's Tenth Defense and Motion to Strike. For the reasons discussed below, the Motion is denied.
STANDARD
In order to dismiss a complaint pursuant to Civ. R. 12(B)(6) for failure to state a claim upon which relief can be granted, "it must appear beyond doubt from the complaint that the plaintiff can prove no set of facts entitling him to recovery." O'Brien v. University Community Tenants Union, Inc. (1975), 42 Ohio St.2d 242, 327 N.E.2d 753, syllabus. When ruling on a motion to dismiss, the Court must accept all allegations of the Complaint as true and make all reasonable inferences in favor of the non-moving party. Vail v. Plain Dealer Publishing Co. (1995), 72 Ohio St.3d 279, 280, 649 N.E.2d 182, 184 (citing Mitchell v. Lawson Milk Co. (1988), 40 Ohio St.3d 190, 192, 532 N.E.2d 753, 756).
DISCUSSION
Plaintiff claims that Defendant's 10th defense (originally brought as a counterclaim) is barred under the statute of limitations. If Defendant brought a claim against Plaintiff for conversion, it would be barred - actions against an Estate must be brought within six months. R.C. § 2117.06. That statute provides:
§ 2117.06. Presentation and allowance of credit's claims - pending action against decedent
(C) Except as provided in section 2117.061 of the Revised Code, a claim that is not presented within six months after the death of the decedent shall be forever barred as to all parties, including, but not limited to, devisees, legatees, and distributees. No payment shall be made on the claim and no action shall be maintained on the claim, except as otherwise provided in sections 2117.37 to 2117.42 of the Revised Code with reference to contingent claims,
The question is whether a defense for set off or recoupment based on the same allegations is also barred.
The First District Court of Appeals stated in Easy Living, Inc. v. Whitehead, 65 Ohio App.2d 206 (1 Dist. 1979):
Dist. 2009):
It is well established that recoupment, when used only to defeat a plaintiffs claim, is not barred by the statute of limitations, if the main action is timely brought.
Thus, a party may reduce the amount owed by him if he establishes a right to recoupment; he may not recover any amount above this amount. Eaver v. McGinnis, 41 Ohio App.3d 153 (9Dist. 1987).
Dist. 2007), 2007 Ohio 6640, stated it this way:
As stated by the Supreme Court of Ohio in Riley v. Montgomery, 11 Ohio St.3d 75 (1984):
We hold that a claim which would be barred by the statute of limitations if brought in an action for affirmative relief is available as a defense or under the common-law theory of recoupment, when the claim of the defendant arises out of the same transaction as the plaintiffs claim for relief, and when it is offered to reduce the plaintiffs right to relief.
At this motion to dismiss stage, the Court does not decide definitively that this is a defense of recoupment (rather than set-off), only that Defendant has stated a defense of recoupment. The Court notes that as stated by the Court in Tejeda v. Toledo Heart Surgeons, Inc., 186 Ohio App.3d 465(6
The Ohio Supreme Court defined setoff as. "that which exists between two parties, each of whom under an independent contract owes a definite amount to the other, to set off their respective debts by way of mutual deduction." Witham v. South Side Bldg. & Loan Ass'n of Lima (1938), 133 Ohio St. 560, 562, 15 N.E.2d 149. The right to setoff exists both at law and in equity. Walter v. Nat'l City Bank of Cleveland (1975), 42 Ohio St.2d 524, 525, 330 N.E.2d 425. Recoupment, on the other hand, is, "a demand arising from the same transaction as the plaintiff s claim." Akron Nat'l Bank & Trust Co. v. Roundtree (1978), 60 Ohio App.3d 13, 18, 395 N.E.2d 525. Recoupment is an affirmative defense and. therefore, must be raised during the pleadings or it is waived. Haddad v. English (2001), 145 Ohio App.3d 598, 602, 763 N.E.2d 1199.
"[Recoupment] does not confess the indebtedness alleged in the complaint, as is understood by a setoff, but its proposition is that the plaintiffs claim is based on a particular contract or transaction and that to entitle the plaintiff to the sum claimed, he must prove compliance with certain obligations of the contract; that he failed to do so; and therefore that the defendant has been so damaged in the transaction that the plaintiff is not entitled to recover." Cauffiel Mach. Co. v. E. Steel & Metal Co. (1978), 59 Ohio App.2d 1, 6, 391 N.E.2d 743, quoting 20 American Jurisprudence 2d 235, Counterclaim, Recoupment and Setoff, Section 11.
For recoupment to apply, the amount to be reduced must arise out of the same transaction as the original obligation. In Re Laureen Reeves (N.D. Ohio B.R. 2001), 265 B.R. 766. Some courts hold that the test is satisfied if it arises out of a single integrated transaction. Id. Some courts take a restrictive view of "transaction" and require a single contract or even a single transaction under a contract. In Re Scott Dunning (N.D. Ohio B.R. 2001), 269 B.R. 357. Others apply a more liberal test. The Court in Columbus Steel Casing Company v. Transportation & Transit Associates, LLC. (10
"[T]he key question in most recoupment cases is whether the relevant obligations constitute part of the 'same transaction.' Courts have avoided setting out a precise definition of the 'same transaction' requirements, preferring instead to focus on the particular facts of each case." Collier on Bankruptcy (15 Ed.2007), 553-101, P553.10 [1] (Footnote omitted.)
CONCLUSION
The Court finds that Defendant has stated a defense of recoupment and that such a defense is not barred by R.C. § 2117.06. The parties are referred to Local Rule 17 for preparation of an Entry.