Opinion
No. 98-3617 No. 99-3062.
03-06-2000
TRI-MED FINANCE COMPANY, Plaintiff-Appellant, v. NATIONAL CENTURY FINANCIAL ENTERPRISES, INC., et al., Defendants-Appellees. SUPREMACY CAPITAL CORPORATION Plaintiff-Appellee, v. TRI-MED FINANCE COMPANY, Defendant-Appellant.
Unpublished Disposition
NOTICE: THIS IS AN UNPUBLISHED OPINION.
(The Court's decision is referenced in a "Table of Decisions Without Reported Opinions" appearing in the Federal Reporter. Use FI CTA6 Rule 28 and FI CTA6 IOP 206 for rules regarding the citation of unpublished opinions.) On Appeal from the United State District Court for the Southern District of Ohio.
Before NELSON and DAUGHTREY, Circuit Judges, and BERTELSMAN, District Judge.
The Hon. William O. Bertelsman, Unitd States District Judge for the Eastern District of Kentucky, sitting by designation.
Opinion
MARTHA CRAIG DAUGHTREY, Circuit Judge. *1 This appeal arises from what one district court has termed a "spoiled commercial agreement." The parties in the two consolidated diversity contract actions were partners in a joint venture to "securitize" health care accounts receivable. Plaintiff and counter-claimant Tri-Med Finance Company alleges that the individual officers of its partner, Supremacy Capital Company-also doing business as National Century Financial Enterprises-fraudulently usurped business opportunities that rightfully should have accrued to the partnership. Tri-Med sued National Century Finance and its principals (collectively "the NCFE defendants") under a variety of state contract theories. In a separate action, Supremacy sued Tri-Med on similar claims, and Tri-Med asserted related counterclaims. The two actions were consolidated in the district court. After almost two and a half years in district court, the district judge granted a motion by the NCFE defendants for judgment on the pleadings and for partial summary judgment, and dismissed with prejudice the case against the NCFE defendants and certain counterclaims against Supremacy. Alternatively, it also granted a motion for dismissal of both cases, without prejudice, based on Tri-Med's alleged lack of standing to sue. Finally, the court denied a subsequent motion by Tri-Med for leave to file a second amended complaint. Tri-Med now appeals the district court's rulings on its claims of breach of fiduciary duty, tortious interference with the partnership agreement and business expectancy, and fraud. Tri-Med further appeals the district court's dismissal based on lack of capacity to sue and the court's refusal to allow Tri-Med to further amend its complaint. Finally, Tri-Med appeals the dismissal of its counterclaims against Supremacy. For the reasons set out below, we affirm the district court's judgment, with two exceptions. Because we find that the court erred in dismissing Tri-Med's counterclaims for lack of "standing," and because that was the only basis for the dismissal of two of the counterclaims, we find it necessary to reverse the judgment in part and remand the case to the district court for consideration on the merits of Tri-Med's counterclaims against Supremacy for breach of contract and breach of fiduciary duty. PROCEDURAL AND FACTUAL BACKGROUND The district court summarized the relevant facts as follows:
The parties in these consolidated diversity actions blame each other for a failed business deal arising from a Partnership Agreement to purchase accounts receivable of health care providers. Both sides assert contract and business tort-related claims, including common law breach of contract, breach of fiduciary duty, fraud, misappropriation of trade secrets, and tortious interference with contract.
National Century Financial, Inc. ("NCFE") and individual parties move for judgment on the pleadings on the Second Amended Complaint filed by Tri-Med Finance Company ("Tri-Med"). NCFE, et al. also move for summary judgment against Tri-Med based on the preclusive effect of a ruling by another branch of this Court in a related case. In addition, NCFE, et al. move to dismiss based on lack of standing....
*2 Tri-Med is a Florida partnership that had its principal place of business in Connecticut. NCFE, et al. reside in Ohio.
In September 1991, Tri-Med entered into a partnership called American Healthcare Capital Company ("AHCC") with Supremacy Capital Corporation ("Supremacy") to purchase credit-worthy health care receivables and arrange for the issuance of $150 million worth of securities backed by the receivables.
In 1991 and 1992, AHCC acquired information about health care providers that were willing and/or had agreed to provide credit-worthy health care receivables which qualified for AHCC's securitization program. AHCC also evaluated the creditworthiness of health care providers' receivables. Tri-Med states that this information was proprietary or trade secret.
In 1992, Prudential Securities, Inc. ("Prudential") approached an officer of Supremacy, Lance Poulsen, about the possibility of undertaking securitization of health care receivables. In April 1992, Poulsen, acting as chairman of an entity called National Physicians Funding-II, signed an engagement letter with Prudential to undertake such securitization.
In July 1994, Tri-Med filed suit against the individual defendants in federal district court in Connecticut, where Tri-Med was allegedly headquartered at the time. That suit was eventually dismissed for lack of personal jurisdiction over the defendants. In December 1994, Supremacy filed what Tri-Med describes as a "pre-emptive suit" against Tri-Med and its principals in Ohio state court. That action was removed to federal district court on diversity grounds. In October 1995, Tri-Med re-filed its original action against the NCFE defendants in federal district court in Ohio. The two actions-Supremacy v. Tri-Med and Tri-Med v. National Century Finance-were eventually consolidated before Judge Smith of the Southern District of Ohio. While these actions were pending, Tri-Med also initiated a suit against Prudential in federal court, also in the Southern District of Ohio, alleging similar facts and injuries. In September 1997, that case was dismissed by Judge Sargus for failure to state a claim upon which relief could be granted. *3 Finally, after almost two and a half years in district court, the NCFE defendants moved for a judgment on the pleadings on the grounds that Tri-Med had failed to state any cognizable legal claims, or alternatively, that Tri-Med lacked standing to bring the case under Ohio law because it had not registered its fictitious trade name with state officials. In addition, the NCFE defendants moved for summary judgment on the issues decided by Judge Sargus in the Prudential case. In March 1998, Judge Smith issued his opinion and order granting the motions filed by the NCFE defendants. Tri-Med filed motions for reconsideration and for leave to file a third amended complaint, and the defendants filed a motion for clarification, seeking to confirm, first, that the dismissal was with prejudice as to all counts and, second, that the ruling applied to both of the consolidated cases. The district court denied Tri-Med's motions for reconsideration and for leave to file an amended complaint and confirmed that the entire second amended complaint against the NCFE defendants had been dismissed with prejudice, as had Tri-Med's counterclaims against Supremacy for fraud and violations of the Connecticut Unfair Trade Practices Act (CUTPA). Tri-Med's remaining counterclaims were dismissed without prejudice for lack of standing, which the district judge also identified as an alternative ground for dismissing the entire complaint against the NCFE defendants. Tri-Med filed a notice of appeal in both cases. DISCUSSIONIn 1992 and thereafter, Poulsen, along with Donald Ayers, David Moses, and Rebecca Parrett, caused NCFE, which they owned and controlled, to form new corporate entities to undertake the securitization of health care receivables with Prudential. NCFE, et al. issued for their own account-to the exclusion of Tri-Med-four securitization transactions worth at least $150 million. Tri-Med argues that these transactions were accomplished using confidential information and business opportunities that belonged to AHCC.
Tri-Med also alleges that in October and November 1992, at meetings held in Columbus, Ohio, Poulsen, Ayers, and Moses represented to Tri-Med that it was not possible to proceed with the proposed securitization program because changing market conditions precluded issuance of securities. Poulsen, Ayers, and Moses also allegedly told Tri-Med that they would not proceed with efforts to develop the proposed financing and suggested that alternative financial ventures be pursued.
The individual parties are Lance K. Poulsen, Donald H. Ayers, David B. Moses, and Rebecca S. Parrett. The second amended complaint alleges that these individuals were officers of NCFE. They are collectively referred to in this opinion as "the individual NCFE defendants."
Tri-Med does not provide any more detail as to what this information consisted of, nor does it delineate any steps taken to ensure secrecy.
Standard of Review
A judgment on the pleadings under Fed.R.Civ.P. 12(c) is treated under the same standards applied to a dismissal for failure to state a claim under Fed.R.Civ.P. 12(b)(6). See Morgan v. Church's Fried Chicken, 829 F.2d 10, 11 (6th Cir.1987). Whether the district court correctly dismissed a suit pursuant to Fed.R.Civ.P. 12(b)(6) is a question of law subject to de novo review. Sistrunk v. City of Strongsville, 99 F.3d 194, 197 (6th Cir.1996). We must construe the complaint in a light most favorable to the plaintiff, accept all factual allegations as true, and determine whether the plaintiff can prove no set of facts in support of its claims that would entitle him or her to relief. Sistrunk, 99 F.3d at 197. Though decidedly liberal, this standard of review does require more than the bare assertion of legal conclusions. The complaint should give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests. Gazette v. City of Pontiac, 41 F.3d 1061, 1064 (6th Cir.1994). Furthermore, while the decision to dismiss is subject to de novo review, the decision to dismiss with prejudice is subject to an abuse of discretion standard. Craighead v. E.F. Hutton & Co., 899 F.2d 485, 495 (6th Cir.1990). We review an order granting summary judgement de novo. Terry Barr Sales Agency, Inc. v. All-Lock Co., 96 F.3d 174, 178 (6th Cir.1996). Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). *4 Finally, the decision whether to grant or deny leave to amend under Rule 15(a) of the Federal Rules of Civil Procedure is entrusted to the sound discretion of the trial court. Moore v. City of Paducah, 790 F.2d 557, 559 (6th Cir.1986); Zenith Radio Corp. v. Bazletine Research, Inc., 401 U.S. 321, 330 (1971). "Abuse of discretion occurs when a district court fails to state the basis for its denial or fails to consider the competing interests of the parties and likelihood of prejudice to the opponent ." Moore at 559.
Capacity to Sue
As noted above and discussed at greater length below, the district court dismissed with prejudice both the complaint against the NCFE defendants and two of the four counterclaims against Supremacy, for failing to state a claim upon which relief could be granted. However, as an alternative ground for dismissal of both actions in their entirety without prejudice, the district court also cited Tri-Med's lack of capacity to sue under Ohio law, framed in terms of lack of standing, due to its failure to register its fictitious trade name with authorities prior to the court's final judgment. Although consideration of this ground is superfluous with respect to the claims dismissed with prejudice, two of the four counterclaims against Supremacy were dismissed solely for Tri-Med's lack of capacity to sue. For this reason, we treat this threshold issue before reaching the merits of the appeal. Section 1329.10(B) of the Ohio Revised Code provides:
No person doing business under a trade name or fictitious name shall commence or maintain an action in the trade name or fictitious name in any court in this state or on account of any contracts made or transactions had in the trade name or fictitious name until it has first [registered the name with authorities], but upon compliance, such an action may be commenced or maintained on any contracts and transactions entered into prior to compliance.Tri-Med does not contest the district court's finding that it failed to comply with this section prior to final judgment. Instead, Tri-Med argues that the NCFE defendants and Supremacy waived their right to object to its capacity by failing to raise the issue by "specific negative averment" at the pleading stage, in accordance with Fed.R.Civ.P. 9(a). Tri-Med further argues that the defendants' motion to dismiss pursuant to Rule 17(b) was inappropriate, since an allegation of lack of capacity requires an evidentiary showing, unavailable on a motion to dismiss. Finally, Tri-Med asserts that lack of capacity is curable under Ohio law and that it has in fact now registered with the proper state officials. In response, Tri-Med's opponents attempt to frame the question of capacity as one of standing, arguing that since objections to standing are jurisdictional and non-waivable, they could not have waived their right to object by failing to do so in accordance with Rule 9(a). However, the NCFE defendants cite only one Ohio case to support their contention that R.C. § 1329.10(B) determines a party's standing to bring suit, rather than simply their capacity. Review of that case reveals that the defendants have misconstrued its holding; although the party at issue there was found to lack standing, that determination did not rest on the application of R.C. § 1329.10(B). Buckeye Foods v. Cuyahoga, 678 N.E.2d 917, 78 Ohio St.3d 459 (1997). In fact, the Ohio Supreme Court discussed the statute only with respect to the party's lack of capacity to sue. Id at 919. As that court properly recognized, capacity and standing are two distinct legal questions, and § 1329.10(B) has to do only with the former. Hence, we hold that the defendants' insistence that they were actually objecting to standing is unavailing, and we treat the question as one of Tri-Med's capacity to sue. *5 Federal Rule of Civil Procedure 9(a) provides:
It is not necessary to aver the capacity of a party to sue or be sued... except to the extent required to show the jurisdiction of the court. When a party desires to raise an issue as to the legal existence of any party or the capacity of any party to sue or be sued...the party desiring to raise the issue shall do so by specific negative averment, which shall include such supporting particulars as are peculiarly within the pleader's knowledge.Although our research has failed to turn up a published opinion from this circuit dealing with the necessity of pleading a "specific negative averment," at least one Seventh Circuit case has held that the "specific negative averment" provision is mandatory, and that proper enforcement of the rule requires early waiver of the right to object to capacity. Wagner Furniture v. Kemner, 929 F.2d 343, 345 (7th Cir.1991). We note that Professors Wright and Miller agree:
[A]lthough an objection to a party's capacity is not an affirmative defense, it can be analogized to an affirmative defense and treated as waived if not asserted by motion or responsive pleading .... Early waiver is necessary to give meaning to the requirement in Rule 9(a) that capacity must be put in issue by a "specific negative averment." Moreover, an objection to capacity ... should fall within the class of "threshold defenses"-issues that must be raised and disposed of at the outset of the suit.5 Wright & Miller, Federal Practice and Procedure § 1295 at 574 (2d ed. 1990). The NCFE defendants did not file an objection to Tri-Med's capacity to sue until January 1998, over two years after the complaint was filed. Under these circumstances, and in the interest of judicial economy, we conclude that dismissal of both suits without prejudice was unwarranted, notwithstanding the fact that Tri-Med actually lacked capacity to commence and maintain the lawsuit under Ohio law. We therefore find it necessary to reverse the district court's ruling on the question of capacity. The effect is to revive the two counterclaims dismissed on this ground alone, as discussed in the final section of this opinion.
Because Tri-Med is now in full compliance with R.C. § 1329.10(B), upon dismissal it would be permitted to re-file its claims.
Breach of Fiduciary Duty
Tri-Med asserts that as officers of its corporate partner, the individual NCFE defendants had a fiduciary duty to Tri-Med that was breached by their alleged self-dealing. The individual defendants respond that their only fiduciary duty was to their corporation, not to the partnership or to Tri-Med. In support of its position, Tri-Med insists that when a managing partner establishes a fiduciary relationship with a third party to act on behalf of the partnership, that third party's fiduciary responsibility extends to the partnership as a whole and to each individual partner, citing Goldstein v. Christiansen, 638 N.E.2d 541, 70 Ohio St.3d 232 (1994); Arpadi v. First MSP Corp., 628 N.E.2d 1335, 68 Ohio St.3d 453 (1994); and Life Care Centers v. Charles Town Associates, 79 F.3d 496 (6th Cir.1996). These cases, however, involve an agent who is engaged to work for the benefit of the partnership and thus are not dispositive here, where the officers are agents of only one partner, not of the partnership itself. In this case, the individual defendants, as officers of the corporate partner, are shielded by the corporate veil. See, e.g., Miller v. Wikel Mfg. Co., 545 N.E.2d 76, 79, 46 Ohio St.3d 76, 79 (1989); Bommel v. Micco, 602 N.E.2d 1259, 1262, 76 Ohio App.3d 690, 697 (1991). The district court was correct to conclude that their fiduciary duty extended only to their corporation and not to Tri-Med, and the claim for breach of fiduciary duty was properly dismissed. *6 Alternatively, Tri-Med argues that a fiduciary relationship existed between the individual defendants and Tri-Med as a matter of fact, if not of law. Although Ohio recognizes de facto fiduciary relationships in certain circumstances (see, e.g., Stone v. Davis, 419 N.E.2d 1094, 1097-98, 66 Ohio St.2d 74, 78 (1981) ("A fiduciary relationship need not be created by contract; it may arise out of an informal relationship where both parties understand that a special trust or confidence has been reposed.")), Tri-Med pleads no set of facts sufficient to conclude that such a de facto relationship existed in this case.
Tortious Interference
Tri-Med asserts in its complaint that the individual defendants tortiously interfered with the partnership agreement and with Tri-Med's reasonable business expectancy arising from the partnership when they allegedly usurped business opportunities that should have gone to the partnership. The individual defendants respond that as officers of the corporate partner, they were not capable of interfering with the corporation's contract or business opportunities. As the district court correctly found, under Ohio law only a third party can be found liable for tortious interference. See, e.g., Kenty v. Transamerica Premium Ins., 650 N.E.2d 863, 866, 72 Ohio St.3d 415, 418 (1995); A & B-Abell Elevator Co. v. Columbus/Central Ohio Bldg. & Constr. Trades Council, 651 N.E.2d 1283, 1294, 73 Ohio St.3d 1, 14 (1995). Generally, corporate officers are not capable of interfering with contracts to which their principal is party. See Erebia v. Chrysler Plastic Products Corp., 891 F.2d 1212, 1215-6 (6th Cir.1989). However, an exception to this rule exists in cases where a corporate officer acts contrary to the corporation. See Purisch v. Tenn. Tech. Univ., 76 F.3d 1414, 1420 (6th Cir. 1996). On appeal, Tri-Med simply argues that it did plead specific facts alleging that the individual defendants were acting contrary to the corporation and highlights the relevant portions of its complaint. However, examination of these passages again reveals only conclusory allegations, or facts asserted "on information and belief," without any proffer of specific facts showing how the individual defendants acted contrary to the interests of Supremacy. The district court was correct in concluding that such allegations fail to state a claim for tortious interference under Ohio law, by failing adequately to advise each of the individual defendants of the specific claims against him or her.
Fraud
Tri-Med asserted in its pleadings that the individual defendants committed fraud when they falsely told Tri-Med principals that they were continuing to work for the benefit of the partnership and, later, that market conditions dictated that they should abandon the partnership. The defendants responded that Tri-Med has failed to plead its fraud claim with particularity sufficient to satisfy Fed.R.Civ.P. 9(b), despite having had two opportunities to amend its complaint. Tri-Med now argues that Rule 9(b) does not apply to "elements" of fraud but only to its "circumstances," which it has adequately pleaded. The defendants respond that as fraud cannot be established unless each of its elements is proved, the "elements" must be coextensive with the "circumstances," meaning that each element must be pleaded with particularity. *7 We have held that although Rule 9(b) must be read in conjunction with Rule 8, which calls for short, concise statements, see, e.g., American Town Center v. Hall 83 Assoc., 912 F.2d 104, 1093 (6th Cir.1990), failure to plead an essential element of a claim of fraud warrants dismissal of the claim under Rule 9(b). See, e.g., Craighead v. E.F. Hutton & Co., 899 F.2d 485, 491 (6th Cir.1990). There is no question that justifiable reliance is an element of fraud in Ohio. See, e.g., Burr v. Stark Cty. Bd. of Commrs., 491 N.E.2d 1101, 23 Ohio St.3d 69 (1986). Tri-Med does not deny that it failed to plead justifiable reliance with particularity. Hence, the district court correctly dismissed the fraud claim.
Leave to Amend
Tri-Med argues that the district court abused its discretion when it refused to allow further amendment of its complaint, in order to address the inadequacies the court found when it dismissed the complaint for failing to state a claim. The defendants respond that Tri-Med has had four years and six different opportunities to adequately plead its claim, and that the district court exercised sound discretion in declining to permit another amendment. We agree. Rule 15(a) of the Federal Rules of Civil Procedure provides that leave to amend a pleading should be "freely given when justice so requires." However, the cases recognize several circumstances under which leave to amend need not be granted. Among these are "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [and] futility of the amendment." Foman v. Davis, 371 U.S. 178, 182 (1962). In this case, Tri-Med had amended its complaint twice. After its first attempt to refine its pleadings, the district court dismissed the complaint for failing to state a claim, finding that "Tri-Med's amended complaint pushes the envelope of notice pleading," and that it was "impossible to discern from the Amended Complaint how the conduct of each defendant fits within the various causes of action." The court dismissed the complaint without prejudice, however, granting Tri-Med leave to file a second amended complaint "which...shall allege with greater specificity the factual basis for the liability of each corporate and individual National Century defendant." The court continued by "caution[ing] Tri-Med that any Second Amended complaint must comport with the requirements of Fed.R.Civ.P. 11(b)(3)." After reviewing Tri-Med's second amended complaint, the district court concluded that it still failed to state any cognizable legal claims. In its opinion, the court, in the context of its discussion of Tri-Med's fraud claim, noted that "[i]f the Court had been examining Tri-Med's original complaint, it might have been inclined to invite Tri-Med to re-file. At this juncture, however, Tri-Med has had more than sufficient opportunity to refine its pleadings." In a later order, the court emphasized that the proposed amendments could have been brought in the first complaint and were, nevertheless, futile. The court concluded: "Tri-Med has had several opportunities to plead its claims against the individual defendants, and the Court rejects its attempt to take yet another bite at the apple at this late juncture." *8 Given these facts and the legal standard identified by the Supreme Court in Foman, we conclude that the district court did not abuse its discretion in denying Tri-Med leave to amend its complaint for a third time.
Dismissal of Tri-Med's Consolidated Counterclaims
Tri-Med urges that the district court acted sua sponte in dismissing Tri-Med's counterclaims against Supremacy when it dismissed the complaint against the NCFE defendants and argues that this sua sponte dismissal was prejudicial and clear error. Supremacy responds that the court was in fact responding to a motion when it dismissed the consolidated counterclaims and, further, that even if the court did act sua sponte, Tri-Med had ample notice and opportunity to brief the issues addressed by the court's ruling. Rule 42(a) of the Federal Rules of Civil Procedure permits actions involving common questions of law or fact to be consolidated for the economy and convenience of the court and of the parties. "Cases consolidated under Rule 42(a), however, retain their separate identity," and "it is the district court's responsibility to ensure that parties are not prejudiced by consolidation." Lewis v. ACB Business Services, Inc., 135 F.3d 389, 412-13 (6th Cir.1998). Hence, a motion to dismiss filed by the defendants in one case will not automatically cover grounds for objection to a counterclaim in a consolidated action. Still, when the scope of consolidation is broad and the issues and parties are virtually identical, more leniency is permitted in treating the cases as one. See Advey v. Celotex Corporation, 962 F.2d 1177, 1181 (6th Cir.1992). On the other hand, sua sponte dismissals on the merits are disfavored in this circuit. See Catz v. Chalker, 142 F.3d 279, 286 (6th Cir.1998). Nevertheless, they are permitted in cases where the parties have had ample notice of the court's intent to dismiss, or have had opportunity to address the issues raised by the dismissal. Id; see also Jacobs v. E.I. DuPont de Nemours & Co., 67 F.3d 1219, 1243 (6th Cir.1996). In this case, it can be argued either that the district court was acting sua sponte or that it ruled in response to a motion when it dismissed Tri-Med's counterclaims along with its complaint. Supremacy correctly notes that its motions for dismissal were each captioned with the names and case numbers of both of the consolidated actions and that the motions were explicit in requesting dismissal of the counterclaims as well as the complaint. However, it is also true that each of defendants' motions was prominently identified as a motion by the NCFE defendants, not Supremacy. Although the overlap of these consolidated cases is significant, we conclude that a ruling that would permit distinct parties to make motions disposing of each other's claims would arguably stretch the principle of consolidation nearly to the breaking point. However, sua sponte dismissal-if that's what occurred here-is not sufficient ground for reversal. As we have previously noted, if Tri-Med had notice of the court's intention or had ample opportunity to address the issues raised by the dismissal, no prejudice is shown, and sua sponte dismissal is allowed. That is obviously the case here, and, for the reasons set out below, we find no reversible error on the part of the district court in dismissing Tri-Med's counterclaims for fraud and for unfair trade practices.
For example, although NCFE and Supremacy are technically distinct legal entities, they are in fact comprised of the same four individual persons. The same counsel appears and the same arguments are advanced on behalf of all defendants. Furthermore, the issues raised by Tri-Med against each corporation are nearly identical, and they arise from an identical set of facts.
Counterclaim for Fraud
*9 Tri-Med asserts the same claim of fraud against Supremacy that it does against the NCFE defendants and advances the same arguments in its defense on appeal. The language of the two claims is virtually identical, and the issues are not separately briefed on appeal. Given the functional equivalence of these two claims and Tri-Med's explicit admission that it has no new arguments to offer against Supremacy that were not already advance against the NCFE defendants, it is hard for us to imagine how Tri-Med could have suffered any prejudice whatsoever from the a sua sponte dismissal of the fraud claim against Supremacy. By its own admission, Tri-Med had ample opportunity to brief the issue prior to judgment. We hold that the claim was properly dismissed.
Counterclaim for Violation of CUTPA
Tri-Med's final argument is that the district court erred in granting summary judgment against Tri-Med on its counterclaim that Supremacy committed violations of CUTPA, Connecticut's unfair trade practices act. It contends that the district court's collateral estoppel and choice of law analyses are improperly applied to Supremacy, which had substantially more contact with Connecticut than did the other parties involved. As previously noted, Tri-Med filed its first complaint against the individual NCFE defendants in federal district court in Connecticut, where the case was eventually dismissed for lack of personal jurisdiction over the defendants. See Tri-Med Finance Company v. National Century Financial Enterprises, Inc. et al., Case No. 3:94CV1245 (AVC) (D. Conn. Dec 12, 1994) (holding that record did not support application of Connecticut's long-arm statutes). Eventually, Tri-Med re-filed that lawsuit in Ohio district court; that is the NCFE matter on appeal here. Tri-Med also initiated a lawsuit against Prudential (the corporation that allegedly induced Supremacy to violate its partnership agreement with Tri-Med) in Ohio district court, alleging similar claims to those here, including claims arising under CUTPA and the Ohio Uniform Trade Secrets Act. Tri-Med Financial Company v. Prudential Securities, Inc., Case No. C-2-96-795 (S.D.Ohio Sept. 30, 1997). That case was eventually dismissed on Prudential's motion for summary judgment. In his decision, Judge Sargus engaged in an Ohio choice-of-law analysis and concluded that Tri-Med had alleged insufficient contacts with Connecticut for that state's law to apply. The court raised and declined to consider the possibility that Tri-Med's Connecticut claims would also be collaterally estopped by the Connecticut district court's earlier ruling on personal jurisdiction. Finally, in the context of considering allegations under the Ohio Uniform Trade Secrets Act, Judge Sargus found that Tri-Med had "utterly failed to establish the existence of a trade secret" held by Tri-Med and Supremacy as partners. In the consolidated cases now before us, the district court concluded that Tri-Med was collaterally estopped from bringing CUTPA claims against the defendants by virtue of Judge Sargus's ruling in Prudential. The court briefly noted that Tri-Med's CUTPA claims would also be collaterally estopped by the Connecticut district court's decision regarding personal jurisdiction. The district court held, in addition, that application of Ohio's choice-of-law principles indicated insufficient contacts between the parties and Connecticut and concluded that Tri-Med's CUTPA claims were barred on that ground as well. *10 On appeal, Tri-Med now argues that none of these justifications for dismissing the CUTPA claims against Prudential, NCFE, or the individual NCFE defendants is properly applied to Supremacy; that Tri-Med had never been afforded an opportunity to develop its CUTPA argument with respect to Supremacy; and that no court has ever given consideration to that specific argument. We cannot agree. A federal court sitting in diversity looks to federal law on collateral estoppel to determine any preclusive effect of a prior federal judgment in a diversity action. J.Z.G. Resources, Inc. V. Shelby Ins. Co., 84 F.3d 211, 213-14 (6th Cir.1996). In this circuit, we have identified four requirements for the application of collateral estoppel:
(1) the precise issue raised in the present case must have been raised and actually litigated in the prior proceeding;N.A.A.C.P. v. Detroit Police Officers Association, 821 F.2d 328, 330 (6th Cir.1987). We conclude that Tri-Med is now collaterally estopped by the Prudential decision from raising CUTPA claims against Supremacy. In Prudential, Judge Sargus ruled that Tri-Med had "utterly failed to establish the existence of a trade secret" between Tri-Med and Supremacy. Although that ruling was made in the context of an analysis under the Ohio Uniform Trade Secrets Act, and not CUTPA, the identification of a trade secret is fundamental to a claim under either statute. That Tri-Med did not brief the issue of trade secrets in the Prudential matter, but chose to stand on the allegations of its complaint alone was, of course, a strategic decision, and one that does not prevent us from concluding that Tri-Med "had a full and fair opportunity to litigate the issue in the prior proceeding." Given these circumstances, we conclude that the district court's finding of collateral estoppel was correct, and we therefore decline to reverse the court's sua sponte dismissal of the CUTPA claims. Nor do we conclude that the district court erred in its choice-of-law ruling. In diversity actions, a federal court applies the forum state's choice-of-law provisions. See Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938); Spence v. Miles Laboratories, Inc., 37 F 3d 1185, 1188 (6th Cir.1994). Ohio has adopted the Restatement (Second) of Conflict of Laws to determine choice-of-law questions. See Morgan v. Biro Manfuacturing Co., 474 N.E.2d 286, 288-9, 15 Ohio St.3d 339, 341-2 (1984). Relying on the Restatement, the Ohio Supreme Court has identified the following factors for consideration in the choice-of-law balancing analysis:
(2) determination of the issue must have been necessary to the outcome of the prior proceeding;
(3) the prior proceeding must have resulted in a final judgment on the merits;
(4) the party against whom estoppel is sought must have had a full and fair opportunity to litigate the issue in the prior proceeding.
(1) the place of injury; (2) the place where the conduct causing the injury occurred; (3) the domicile, residence, nationality, place of incorporation, and place of business of the parties; (4) the place where the relationship between the parties, if any, is located; and (5) any factors under Section 6 [relating to public policy concerns]. All of these factors are to be evaluated according to their relative importance to the case.*11 Id. at 289 (footnotes omitted). In this case, the district court conducted its own choice-of-law analysis under Ohio law. It concluded (1) that Tri-Med failed to plead facts from which it could be inferred that its injury occurred in Connecticut; (2) that the conduct causing the alleged injury occurred in Ohio; (3) that Tri-Med is a Florida general partnership whose partners are Massachusetts, New York, and Florida corporations and partnerships, that the NCFE defendants are all located in Ohio, and that Tri-Med's principal place of business was Connecticut; (4) that the parties' relationship, as determined by the Partnership Agreement, is located in Ohio; and (5) that Tri-Med had not pleaded any facts implicating the public policy considerations of the Restatement's Section 6. Tri-Med does not appeal these findings with respect to its claims against the NCFE defendants. Tri-Med instead asserts that the district court's sua sponte dismissal of its CUTPA counterclaim against Supremacy was both unwarranted and unfairly prejudicial, because Tri-Med had no opportunity to argue Supremacy's alleged greater contacts with Connecticut. However, examination of the counterclaim reveals again that it is framed in language which is materially identical to that of the complaint against the NCFE defendants. Hence, the record indicates that Tri-Med has had ample opportunity to brief these claims. Furthermore, even accepting them as true, none of the allegations Tri-Med now makes of Supremacy's substantial contacts with Connecticut alters or substantially expands on the basic allegations of the counterclaims, and none requires any material revision of the district court's findings as described above. We thus conclude that the district court's ruling was sound with respect to both the NCFE defendants and Supremacy, and that no credible evidence of unfair surprise or prejudice to Tri-Med by the court's sua sponte dismissal has been offered. We therefore find no basis on which to overturn the district court's dismissal of the CUTPA counterclaim against Supremacy on choice-of-law grounds.
Counterclaims for Breach of Fiduciary Duty and Breach of Contract
There remain two counterclaims brought by Tri-Med against Supremacy. They were dismissed along with the other two counterclaims, but not on the merits. Instead, as noted above, the district judge dismissed them for lack of "standing," a ruling we must vacate for the reasons previously discussed. The two remaining counterclaims are for breach of fiduciary duty and breach of faith and fair dealing, the merits of which have apparently never been briefed or argued before the district court because of the order dismissing them without prejudice. Tri-Med did raise similar claims against NCFE that were dismissed for failure to state a claim because, as a matter of law, neither NCFE nor its principals owed a fiduciary duty or a duty of good faith or fair dealing to Tri-Med. The same reasoning, however, cannot be applied to the counterclaims against Supremacy, which was the corporate partner of Tri-Med and could conceivably owe such duties. We offer no opinion on the merits of either of these two remaining counterclaims, but leave it to the district court to determine under Ohio law whether or not they can survive a substantive motion to dismiss. CONCLUSION *12 For the reasons set out above, we AFFIRM the dismissal with prejudice of Tri-Med's entire complaint against the NCFE defendants and of its counterclaims against Supremacy for fraud and for violation of Connecticut's unfair trade practices act. However, we REVERSE the district court's order of dismissal on the ground that Tri-Med lacked the capacity to sue and REMAND the case to permit Tri-Med's remaining counterclaims for breach of fiduciary duty and breach of contract to proceed.