Lanzalaco v. Lanzalaco

[Cite as Lanzalaco v. Lanzalaco, 2012-Ohio-4053.]

Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA

JOURNAL ENTRY AND OPINION
No. 97767

GINA DIANNA LANZALACO, ET AL.
PLAINTIFFS-APPELLEES

vs.

RAFFAELA LANZALACO, ET AL.
DEFENDANTS-APPELLANTS

JUDGMENT:
REVERSED AND REMANDED

Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-729841

BEFORE: Cooney, P.J., S. Gallagher, J., and Rocco, J.

RELEASED AND JOURNALIZED: September 6, 2012
[Cite as Lanzalaco v. Lanzalaco, 2012-Ohio-4053.]
ATTORNEY FOR APPELLANT

Lester S. Potash
55 Public Square
Suite 1717
Cleveland, Ohio 44113

ATTORNEYS FOR APPELLEES

For Gina D. Lanzalaco, et al.

Stephen McGowan
19211 West Brooke Lane
Strongsville, Ohio 44149

For Anthony Zaccardelli

David M. Santoli
8251 Mayfield Road
Suite 210
Chesterland, Ohio 44026
[Cite as Lanzalaco v. Lanzalaco, 2012-Ohio-4053.]
COLLEEN CONWAY COONEY, P.J.:

{¶1} Defendant-appellant, Raffaela Lanzalaco (“Raffaela”), appeals the

trial court’s judgment against her on plaintiffs-appellees, Gina Lanzalaco

(“Gina”), Daniel A. Lanzalaco (“Daniel A.”), and Daniel M. Lanzalaco’s

(“Daniel M.” or “father”) (collectively “appellees”), claims for conversion,

punitive damages, and attorney fees. We find merit to the appeal and

reverse.

{¶2} Raffaela and Daniel M. are Gina and Daniel A.’s parents. Gina

and Daniel A. have lived primarily with father since their parents’ separation

in 2005. Gina Divito (“Divito”) died testate on April 12, 2008. In accordance

with her will, the probate court appointed Raffaela the executor of the estate.

Divito’s will also named Raffaela and her sister, Pasqualina Tekaucic

(“Tekaucic”), the sole beneficiaries of the estate. Father, on behalf of the

children, intervened in Divito’s probate case, alleging that Raffaela had

misappropriated the children’s funds from Divito’s Charter One Account No.

3694 (“Account No. 3694”). Account No. 3694 was a payable-on-death

(“POD”) account that named Gina and Daniel A. as the POD beneficiaries.

Their complaint in the probate court alleged:

8. The complainants were the paid on death beneficiaries on
Charter One certificate of deposit account no. * * * 369-4.

9. On or about March 27, 2008, Raffaela Lanzalaco fraudulently
converted the funds in that account to her own use by using a
 Power of Attorney allegedly executed by Gina Divito, without
legal authority or privilege to do so.
***

12. The conversion of these funds was initiated and instigated
by the misconduct of Raffaela Lanzalaco.

***

14. At the time of the conversion of these funds, the noted
account had approximately $50,000.00 on deposit.

15. The complainants are entitled to the proceeds of that
Charter One account.

{¶3} In their prayer for relief, appellees requested that the probate

court “determine the validity of the transfers of funds from the name of Gina

Divito, under the Power of Attorney as presented to Charter One by Raffaela

Lanzalaco.” They also requested that the court “order that punitive damages

be awarded to the complainants in an amount in excess of $25,000 against

Raffaela Lanzalaco.”

{¶4} In December 2009, the parties reached a settlement in which

Raffaela agreed to pay $25,000 to each of the children. Other parties also

settled claims against Raffaela in the probate court. Appellees’ settlement

agreement stated that it applied to “issues which are in dispute in the

Probate Court of Cuyahoga County.” The formal dismissal entry was

journalized on December 17, 2009.
[Cite as Lanzalaco v. Lanzalaco, 2012-Ohio-4053.]
{¶5} In June 2010, appellees filed the complaint in the instant case in

common pleas court. The complaint alleged two counts of fraud and

conversion, and one count of breach of fiduciary duty. Count 1 alleged that

Raffaela fraudulently converted the funds from Divito’s Account No. 3694 to

another account for her own benefit (“Account No. 1322”). Count 2 alleged

that she fraudulently converted federal savings bonds for her own benefit by

misrepresenting that she was the custodial parent of Gina and Daniel A., who

were the named beneficiaries on the bonds. Count 3 alleged that Raffaela

breached a fiduciary duty she owed to her children.

{¶6} Raffaela filed a motion to transfer venue back to the probate court.

In her motion, Raffaela explained:

[T]he suit that was filed on June 21, 2010 is not the first lawsuit
filed by these very same Plaintiffs against these very same
Defendants involving the very same bank account and allegations
of malfeasance.

On July 23, 2009, the Plaintiffs filed a Motion to Intervene in an
adversary proceeding then pending in the Cuyahoga County
Probate Court as Case No. 2008 ADV 0142143. The Motion to
Intervene was accompanied by a Complaint for Declaratory
Judgment, Money Damages, Attorney Fees and Other Relief.
The Plaintiffs’ Motion to Intervene was heard and granted by the
Probate Court on September 22, 2009. * * * The Probate Court
adversary proceeding was settled in the midst of a bench trial
* * * and a formal dismissal entry was journalized.

If the Plaintiffs now insist on re-litigating the disposition of the
Charter One bank account, the case should be sent back to the
Probate Court, which is the Court most familiar with the parties,
facts, and issue in question.
 {¶7} Raffaela also asserted that pursuant to Civ.R. 73(B) and R.C.

Chapters 2101 through 2131, the probate court is the proper venue to hear

claims alleging conversion of estate assets. The trial court denied the

motion to transfer venue, and the case proceeded to a bench trial.

{¶8} Although Raffaela never filed a motion for summary judgment,

Raffaela asserted res judicata as an affirmative defense in her answer and

raised it in her trial brief, arguing that:

The issues relating to the Charter One account and any claims of
Gina and Daniel A. were litigated in and resolved in the Probate
Division, Cuyahoga County Common Pleas Court * * * [and] thus
constitute res judicata and collateral estoppel as to any claims
before this Court.

{¶9} After a bench trial, the court found there was insufficient evidence

of fraud and breach of fiduciary duty. The court found in appellees’ favor on

their conversion claims but noted that appellees’ right to restitution was set

off by the payment of $50,000 in the probate court settlement. However, the

court awarded punitive damages on appellees’ conversion claims in the

amount of $9,000. The court also awarded restitution on appellees’ claim

for conversion of the savings bonds, in the amount of $1,525.66. Following a

post-trial hearing, the court awarded appellees $12,532.50 in attorney fees.

{¶10} Raffaela now appeals, raising five assignments of error.

Standing
[Cite as Lanzalaco v. Lanzalaco, 2012-Ohio-4053.]
{¶11} In her first assignment of error, Raffaela claims the trial court

erred in failing to dismiss Daniel M., individually, as a party-plaintiff. She

contends that because he was not a beneficiary of any of the misappropriated

funds, he was not a real party in interest and did not have standing to sue.

{¶12} “Every action shall be prosecuted in the name of the real party in

interest.” Civ.R. 17(A). A real party in interest is one who is directly

benefitted or injured by the outcome of the case. Shealy v. Campbell, 20

Ohio St.3d 23, 24, 485 N.E.2d 701 (1985). Under Ohio law, a minor has no

standing to sue before reaching the age of majority and must, therefore, sue

in the name of a guardian or fiduciary. Civ.R. 17(B). Where a guardian

brings suit on behalf of a minor child pursuant to Civ.R. 17(B), he is not

himself the “party” but is acting in the “name” of the “real party in interest.”

Boyd v. Edwards, 4 Ohio App.3d 142, 145, 446 N.E.2d 1151 (8th Dist.1982).

{¶13} Daniel M. brought suit against Raffaela on behalf of his minor

children. While the case was pending, Gina reached the age of majority and

was substituted as an adult by agreement of the parties. In granting

judgment on the conversion claims, the court’s judgment entry states that

judgment was rendered “in favor of Plaintiffs Gina Dianna Lanzalaco and

Daniel A. Lanzalaco.” Although the better practice may have been to grant

judgment to Gina, individually, and to Daniel A., through his representative

father, the trial court clearly intended the award to benefit the children alone.
 Indeed, the court did not award father any damages on the conversion

claim.

{¶14} Daniel M. brought a claim for attorney fees in his individual

capacity because he was the party responsible for paying the fees associated

with the probate case. Because he was directly affected by the court’s ruling

on attorney fees, he was the real party in interest on that claim. Therefore,

any error in failing to dismiss father individually was harmless.

{¶15} Accordingly, the first assignment of error is overruled.

Res Judicata

{¶16} In her second assignment of error, Raffaela argues the trial court

erred in not dismissing appellees’ claims related to Account No. 3694 as

barred by res judicata. In the fourth and fifth assignments of error, Raffaela

argues the court erred in awarding punitive damages and attorney fees

because these claims were also previously litigated in the probate court and

barred by res judicata. We discuss these assigned errors together because

they are interrelated.

{¶17} Under the doctrine of res judicata, “a valid, final judgment bars

all subsequent actions based on any claim arising out of the transaction or

occurrence that was the subject matter of the prior action.” Grava v.

Parkman Twp., 73 Ohio St.3d 379, 382, 1995-Ohio-331, 653 N.E.2d 226. The
doctrine of res judicata bars a claim when the following four elements are

met: (1) there is a final, valid decision on the merits by a court of competent

jurisdiction; (2) there is a second action that involves the same parties, or

their privies, as the first action; (3) the second action raises claims that were

or could have been litigated in the first action; and (4) the second action arises

out of a transaction or occurrence that was the subject matter of the first

action. Portage Cty. Bd. of Commrs. v. Akron, 109 Ohio St.3d 106,

2006-Ohio-954, 846 N.E.2d 478, ¶ 84.

{¶18} Raffaela contends that appellees’ claims are barred by res

judicata because they were previously litigated and resolved in the probate

court case. Appellees concede they settled the conversion claim relating to

Account No. 3694 but maintain they “reserved” the right to bring additional

claims related to the conversion claim because they did not agree to a

“global settlement” as did the other claimants in the probate case. They

argue that without a “global settlement,” any related claims not included in

the settlement were preserved for further litigation. We disagree.

{¶19} According to the final judgment entry in the probate court, the

parties to the probate action stipulated that the case was “Settled and

Dismissed pursuant to the terms and conditions contained in the attached

Transcript which was recorded on the 23rd day of September, 2009.”
According to this transcript, appellees’ counsel never stated, and Raffaela

never agreed, that appellees preserved the right to bring additional claims

related to Account No. 3694. Moreover, their claims for punitive damages

and attorney fees related to the conversion claim were properly before the

probate court in the prior action.

{¶20} Although the probate court’s jurisdiction is limited to those

powers conferred by statute, the probate court has supplemental authority to

address collateral matters, including “plenary power at law and in equity to

dispose fully of any matter that is properly before the court.” R.C. 2101.24(C);

State ex rel. Sladoje v. Belskis, 149 Ohio App.3d 190, 2002-Ohio-4505, 776

N.E.2d 557 (10th Dist.). The legislative grant of plenary power authorizes

the probate court to grant any relief required to fully adjudicate the subject

matter within the probate court’s exclusive jurisdiction. State ex rel. Lewis v.

Moser, 72 Ohio St.3d 25, 29, 647 N.E.2d 155 (1995), citing Goff v. Ameritrust

Co., N.A., 8th Dist. Nos. 65196 and 66016, 1994 WL 173544 (May 5, 1994).

{¶21} Pursuant to R.C. 2101.24, a probate court has exclusive

jurisdiction over an action for conversion of estate assets. Johnson v. Allen,

101 Ohio App.3d 181, 184, 655 N.E.2d 240 (8th Dist.1995). It is undisputed

that the probate court exercised jurisdiction over appellees’ conversion claims.

With plenary power in both law and equity, the probate court had
jurisdiction to hear appellees’ claims for both punitive damages and attorney

fees related to the conversion claims. Appellees’ prayer for relief in the

probate court specifically requested punitive damages, and Raffaela agreed

to pay appellees’ attorney fees as part of the settlement in addition to the

$50,000 in compensatory damages.

{¶22} With respect to attorney fees, the transcript of the settlement

agreement provides:

The $10,000 of cost shall be taken from the portion of the estate
due and owing to Raffaela. That’s 3500 due and owing to the
children’s attorney, Steve McGowan; 3500 due and owing to the
child’s attorney Becky Blair; and the remaining costs of the case *
* * to the extent of $10,000.

The remaining costs shall be borne by each party * * *.

When the court later asked if any party wished to make any other additions

to the agreement, appellees’ counsel stated: “Not on our behalf.” Moments

later, appellees’ counsel stated:

On behalf of Gina Diana Lanzalaco and Daniel A. Lanzalaco, and
in conference with the agreement of their father who is in the
back of the courtroom, we agree to the settlement as it pertains to
case number 2008EST1037031 as it pertains to the issues which
are in dispute in the Probate Court.

{¶23} Appellees argue they preserved the right to sue for punitive

damages and attorney fees by avoiding a “global settlement.” In support of
this argument, they refer to a portion of the settlement transcript, which

states:

Each of the parties shall, * * * with the exception of the three
minor children, shall execute mutual release of any and all claims
that they have against and between and amongst each other,
excluding the minor children for any waiver of claims or releases
of claims.

{¶24} The reference to an exception of the three minor children from

the execution of mutual releases belies appellees’ “global settlement”

argument. At the time of the settlement, Gina was no longer a minor child

and, therefore, not excluded from the “mutual release of any and all claims”

she had against Raffaela. The inclusion of two other minor children who

were parties to the “global settlements” were excepted from the execution of

releases even though their “global settlements” barred them from pursuing

further litigation. The minor children were “excluded” from executing

releases because, as previously explained, they lacked standing to bring the

lawsuit on their own and their parents or guardians executed the releases on

their behalf.

{¶25} Moreover, at trial, Daniel M. was unable to identify any specific

claims that were preserved in the settlement agreement. With respect to

other claims, Daniel M. testified:

Q: What in the transcript was spelled out as to the claims that
were reserved? * * * I want to know in the transcript in the
 agreement read into the record before Magistrate Brown what
claims were reserved specifically? * * * Which claims were not
waived?

***

A: States that my children have the right to pursue other
damages and/or claims.

Q: What claims? Were there any claims listed? Let me try
that?

A: According to what I just read [the transcript], no.

{¶26} Because the settlement agreement did not preserve any right to

bring additional claims for punitive damages and attorney fees after

settlement of the probate case and because these claims were previously

litigated and settled, they are barred by res judicata. The trial court erred in

awarding both punitive damages and attorney fees on any claims related to

Account No. 3694.

{¶27} Accordingly, the second, fourth, and fifth assignments of error

are sustained.
 Other Conversion Claims

{¶28} In her third assignment of error, Raffaela argues that because

neither Gina nor Daniel A. had an ownership interest in Account No. 3694

prior to Divito’s death, and because the funds were allegedly converted prior

to her death, they did not have a cause of action for conversion. Raffaela also

contends that because appellees lacked an ownership interest in Account No.

3694, they did not suffer damages as a result of Raffaela’s actions. However,

having determined that all claims related to Account No. 3694 were barred by

res judicata, we find these issues are moot.

{¶29} Raffaela also argues that the trial court erred in finding that she

wrongfully converted the savings bonds for her own benefit. She contends

the court’s finding is against the manifest weight of the evidence.

{¶30} Although a parent has no legal or beneficial interest in the

property of her child, the parent does have a duty to care for and manage the

child’s property. R.C. 2111.08. This responsibility is not negated by the fact

that she is not the residential parent of the child. R.C. 3109.03. Therefore,

without a court order to the contrary, Raffaela had the same right as Daniel

M. to control the children’s savings bonds, provided she did so for their

benefit.
[Cite as Lanzalaco v. Lanzalaco, 2012-Ohio-4053.]
{¶31} Appellees bore the burden of proving every element of their

conversion claim. Hanna v. Groom, 10th Dist. No. 07AP-502, 2008-Ohio-765,

¶ 39. To prevail on a claim of conversion, the plaintiff must prove by a

preponderance of the evidence that the defendant wrongfully exercised

dominion and control over the plaintiff’s property to the exclusion of, or

inconsistent with, the plaintiffs’ rights. Joyce v. Gen. Motors Corp., 49 Ohio

St.3d 93, 96, 551 N.E.2d 172 (1990).

{¶32} Although there was evidence at trial that Raffaela cashed the

children’s savings bonds, there was no evidence demonstrating that she took

the funds “to the exclusion of” her children. When Daniel M. was asked if he

knew what Raffaela did with the savings bonds, he replied: “Oh, I don’t know.

She cashed them.” There is no evidence showing how Raffaela spent the

proceeds. Although Raffaela was not the residential parent, Daniel M.

admitted that the children stayed with her for extended periods. Without

evidence that she wrongfully deprived the children of their money, the court

erred in finding conversion of the savings bonds, and that part of the

judgment is against the manifest weight of the evidence.

{¶33} Therefore, the third assignment of error is sustained.

{¶34} Judgment reversed.
[Cite as Lanzalaco v. Lanzalaco, 2012-Ohio-4053.]
It is ordered that appellant recover of said appellees costs herein taxed.

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate issue out of this court directing the

common pleas court 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.

___________________________________________________
COLLEEN CONWAY COONEY, PRESIDING JUDGE

KENNETH A. ROCCO, J., CONCURS;
SEAN C. GALLAGHER, J., CONCURS IN PART AND DISSENTS IN PART
(WITH SEPARATE OPINION ATTACHED)

SEAN C. GALLAGHER, J., CONCURRING IN PART AND DISSENTING IN PART:

{¶35} I concur with the majority decision with respect to the finding regarding

Account No. 3694 based on the language of the final judgment entry of the probate court and

the transcript of the proceedings. Any claims regarding that settlement are barred by res

judicata. I dissent, however, with respect to the issue involving the savings bonds. Under

the circumstances of this case, I do not think it can be surmised that Raffaela was essentially

managing the savings bonds on behalf of her children.

{¶36} The majority acknowledges that Raffaela cashed the children’s savings bonds.

While Daniel M. may not have been aware of what was done with the money, he testified that

around the time Raffaela cashed the bonds, he did not see the children get any new clothes,
computers, or other items. Daniel A. testified he did not remember his mother ever telling

him that the money she took from the bonds was for him and that his mother had not

purchased him any clothing, computers, or other extraordinary items. Likewise, Gina

testified that her mother never indicated that she was going to take the money and spend it on

the children and that she had not received any personal belongings or extraordinary items from

her mother.

{¶37} The trial court recognized that the evidence showed that Raffaela wrongfully

negotiated the savings bonds and that she failed to rebut evidence that she exercised dominion

over the funds designated to the children. Indeed, evidence was presented that Raffaela

cashed the savings bonds and that the funds were not used for the benefit of her children.

Because there was competent, credible evidence to support the conversion claim on the

savings bonds, I would affirm the trial court’s judgment on Count II of the complaint in the

amount of $1,525.66. I would remand the matter to the trial court for a redetermination of an

award of attorney fees, limited to the time and fees expended upon this claim only. Further,

to the extent that the finding of punitive damages was related solely to the alleged conversion

of the account or to the claim involving the savings bonds, an adjustment of that figure would

have to be made.
[Cite as Lanzalaco v. Lanzalaco, 2012-Ohio-4053.]