Belvino L.L.C. v. Empson (USA) Inc.

[Cite as Belvino L.L.C. v. Empson (USA) Inc., 2012-Ohio-3074.]

Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA

JOURNAL ENTRY AND OPINION
No. 97305

BELVINO LLC
PLAINTIFF-APPELLANT

vs.

EMPSON (USA) INC., ET AL.
DEFENDANTS-APPELLEES

JUDGMENT:
AFFIRMED IN PART; REVERSED IN PART
AND REMANDED

Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-730562

BEFORE: Kilbane, J., Stewart, P.J., and Keough, J.

RELEASED AND JOURNALIZED: July 5, 2012
ATTORNEYS FOR APPELLANT

Marc J. Kessler
Kerry R. Green
Hahn Loeser & Parks LLP
65 East State Street
Suite 1400
Columbus, Ohio 43215

ATTORNEYS FOR APPELLEES

Hansel H. Rhee
Steven D. Forry
Ice Miller LLP
250 West Street
Columbus, Ohio 43215

Jay E. Krasovec
H. Alan Rothenbuecher
Ice Miller, LLP
600 Superior Avenue, East
Suite 1701
Cleveland, Ohio 44115
MARY EILEEN KILBANE, J.:

{¶1} Plaintiff-appellant, BelVino LLC (“BelVino”), appeals from the trial

court’s judgments granting summary judgment in favor of defendants-appellees, il Molino

de Grace (“il Molino”) and Empson (USA) Inc. (“Empson”), and denying its motion for

relief from judgment under Civ.R. 60(B). Finding merit to the appeal, we affirm in part,

reverse in part and remand.

{¶2} The instant appeal arises from a lawsuit filed by BelVino against il Molino

and Empson, alleging that they wrongfully terminated BelVino’s franchise agreement

with il Molino in violation of Ohio’s Alcoholic Beverages Franchise Act (“OABFA”),

R.C. 1333.82, et seq. In May 2006, BelVino became the exclusive importer and

distributor of il Molino’s wines in Ohio. il Molino operates a vineyard in Italy. In

September 2008, BelVino partnered with Euro USA, LLC, and formed a new joint

venture known as Euro USA/BelVino. Euro USA/BelVino then became the exclusive

distributor of il Molino’s wines and BelVino became the exclusive importer.

{¶3} In the fall of 2009, il Molino and Empson, a national importing company,

began discussions regarding Empson becoming il Molino’s sole importer in the United

States. il Molino eventually retained Empson as its new exclusive importer in February

2010. In March 2010, il Molino advised BelVino that it was terminating its importer

relationship with BelVino and replacing BelVino with Empson. il Molino explained that
the switch to Empson was necessary to ensure il Molino’s financial objectives were met.

Separately, in April 2010, Empson terminated Euro USA/BelVino’s distribution franchise

with il Molino, stating that it intended to reassign distribution rights for il Molino in Ohio.

{¶4} As a result, BelVino filed a complaint against il Molino and Empson in

June 2010, alleging three causes of action. In Count I, BelVino alleges that il Molino

breached its contract with BelVino by terminating the franchise agreement under the

OABFA, without just cause. In Count II, BelVino alleges that Empson intentionally

interfered with il Molino’s contractual agreement with BelVino by convincing il Molino

to unilaterally terminate its agreement with BelVino. In Count III, BelVino alleges that

Empson interfered with its business relationships by inducing il Molino to discontinue its

relationship with BelVino.

{¶5} On August 5, 2010, BelVino entered into an agreement with Euro

USA/BelVino, where Euro USA/BelVino assigned to BelVino its right to distribute il

Molino wines and its litigation rights. BelVino then amended its complaint on August

11, 2010. In the amended complaint, BelVino reasserted its original causes of actions

and added a claim for declaratory judgment, asking the trial court to declare that il Molino

and Empson cannot unilaterally terminate BelVino’s franchise agreement under the

OABFA.

{¶6} In response, il Molino and Empson each filed an answer and identical

counterclaims against BelVino. They sought a declaration that: (1) BelVino was not
the distributor of il Molino wines in Ohio and was not entitled to any protection under the

OABFA; (2) Empson is a “successor manufacturer” under the OABFA; and (3) il Molino

does not “control” Empson as provided for in the OABFA.

{¶7} BelVino filed a partial motion for summary judgment and il Molino and

Empson each filed cross motions for summary judgment, asking the trial court to issue

judgment as a matter of law. On August 16, 2011, the trial court denied BelVino’s

partial motion for summary judgment and granted il Molino’s and Empson’s motions for

summary judgment.

{¶8} The trial court issued an opinion with its order. In its opinion, the trial

court first addressed the issue of standing raised by il Molino and Empson. il Molino

and Empson argued that Euro USA/BelVino’s assignment did not give BelVino standing

to sue on Euro USA/BelVino’s behalf. The trial court found that Euro USA/BelVino’s

assignment to BelVino gave BelVino the requisite standing to sue on behalf of Euro

USA/BelVino. The court then noted that the OABFA protects contractual relationships

between a manufacturer and distributor. Euro USA/BelVino was il Molino’s distributor

when Empson terminated Euro USA/BelVino’s franchise agreement. At that time, the

relationship that existed between il Molino and BelVino was a manufacturer-importer

relationship. Therefore, the court concluded that the OABFA did not apply to BelVino.

Even if BelVino was considered a manufacturer, the trial court concluded that the

OABFA did not protect the relationship between two manufacturers.

{¶9} As between Euro USA/BelVino and Empson, the trial court found that the
OABFA did not apply “because they had no relationship, contractual or otherwise.” The

court noted that the OABFA does not contemplate a relationship between a wholly

unrelated importer (Empson) and distributor (Euro USA/BelVino).

{¶10} The trial court then found that the tortious interference with contract and

interference with business relationship claims failed. The tortious interference with

contract failed “because there was no franchise between il Molino and BelVino[.]

Therefore, Empson could not have interfered with a contract as a matter of law.”

Likewise, the trial court found that the intentional interference with BelVino’s business

relationship claim failed because the relationship involved two importers, Empson and

Euro USA/BelVino and there was no evidence suggesting that Empson used improper

means to become il Molino’s national importer.

{¶11} On August 22, 2011, BelVino moved for relief from judgment under Civ.R.

60(B), which the trial court denied.

{¶12} It is from these orders that BelVino appeals, raising the following two

assignments of error for review.

ASSIGNMENT OF ERROR ONE

The trial court erred in granting summary judgment in favor of [il Molino
and Empson].

ASSIGNMENT OF ERROR TWO

The trial court erred in refusing to grant [BelVino] relief from judgment
under [Civ.R. 60(B)].

Standard of Review
 {¶13} We review an appeal from summary judgment under a de novo standard of

review. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 1996-Ohio-336, 671

N.E.2d 241; Zemcik v. LaPine Truck Sales & Equip. Co., 124 Ohio App.3d 581, 585, 706

N.E.2d 860 (1998). In Zivich v. Mentor Soccer Club, 82 Ohio St.3d 367, 369-370,

1998-Ohio-389, 696 N.E.2d 201, the Ohio Supreme Court set forth the appropriate test as

follows:

Pursuant to Civ.R. 56, summary judgment is appropriate when (1) there is
no genuine issue of material fact, (2) the moving party is entitled to
judgment as a matter of law, and (3) reasonable minds can come to but one
conclusion and that conclusion is adverse to the nonmoving party, said party
being entitled to have the evidence construed most strongly in his favor.
Horton v. Harwick Chem. Corp. (1995), 73 Ohio St.3d 679, 653 N.E.2d
1196, paragraph three of the syllabus. The party moving for summary
judgment bears the burden of showing that there is no genuine issue of
material fact and that it is entitled to judgment as a matter of law. Dresher
v. Burt (1996), 75 Ohio St.3d 280, 292-293, 662 N.E.2d 264, 273-274.

{¶14} Once the moving party satisfies its burden, the nonmoving party “may not

rest upon the mere allegations or denials of the party’s pleadings, but the party’s response,

by affidavit or as otherwise provided in this rule, must set forth specific facts showing

that there is a genuine issue for trial.” Civ.R. 56(E); Mootispaw v. Eckstein, 76 Ohio

St.3d 383, 385, 1996-Ohio-389, 667 N.E.2d 1197. Doubts must be resolved in favor of

the nonmoving party. Murphy v. Reynoldsburg, 65 Ohio St.3d 356, 358-359,

1992-Ohio-95, 604 N.E.2d 138.

Standing

{¶15} Before we address the OABFA, we first discuss il Molino and Empson’s

argument that BelVino was not the real party in interest and lacked standing to assert any
claims on Euro USA/BelVino’s behalf.

{¶16} The issue of standing “is a threshold question for the court to decide in order

for it to proceed to adjudicate the action.” State ex rel. Jones v. Suster, 84 Ohio St.3d 70,

77, 1998-Ohio-275, 701 N.E.2d 1002. “Lack of standing challenges the capacity of a

party to bring an action, not the subject matter jurisdiction of the court.” Id., citing State

ex rel. Smith v. Smith, 75 Ohio St.3d 418, 420, 1996-Ohio-215, 662 N.E.2d 366. To

decide whether the requirement has been satisfied that an action be brought by the real

party in interest, “courts must look to the substantive law creating the right being sued

upon to see if the action has been instituted by the party possessing the substantive right

to relief.” Shealy v. Campbell, 20 Ohio St.3d 23, 25, 485 N.E.2d 701 (1985).

{¶17} Civ.R. 17(A) governs “real party in interest” and provides in pertinent part:

Every action shall be prosecuted in the name of the real party in interest. *
* * No action shall be dismissed on the ground that it is not prosecuted in
the name of the real party in interest until a reasonable time has been
allowed after objection for ratification of commencement of the action by,
or joinder or substitution of, the real party in interest. Such ratification,
joinder, or substitution shall have the same effect as if the action had been
commenced in the name of the real party in interest.

{¶18} Like other procedural rules, “Civ.R. 17(A) ‘shall be construed and applied

to effect just results by eliminating delay, unnecessary expense and all other impediments

to the expeditious administration of justice.’” Ohio Cent. RR. Sys. v. Mason Law Firm

Co., L.P.A., 182 Ohio App.3d 814, 2009-Ohio-3238, 915 N.E.2d 397, ¶ 33 (10th Dist.),

quoting Civ.R. 1(B).

{¶19} il Molino and Empson argue that while Euro USA/BelVino may have
assigned its rights to BelVino, this assignment did not occur until after BelVino’s initial

complaint was filed and when BelVino amended its complaint, it failed to assert any

claims on behalf of Euro USA/BelVino. In support of their argument, il Molino and

Empson rely primarily on Wells Fargo Bank, N.A. v. Jordan, 8th Dist. No. 91675,

2009-Ohio-1092. Jordan, however, is factually distinguishable from the matter before

us. Jordan involves a foreclosure action and stands for the proposition that the putative

mortgagee, who obtains the mortgage through an assignment or succession, must own the

mortgage at the time of the filing of the complaint, otherwise the putative mortgagee

lacks standing.

{¶20} Whereas, the instant case involves a business relationship among BelVino,

Euro USA/BelVino, and il Molino that spanned over four years. BelVino partnered with

Euro USA, LLC and formed Euro USA/BelVino to increase its geographical reach.

BelVino worked with Euro USA/BelVino to jointly distribute the il Molino brand in

Ohio. All of il Molino’s inventory was shipped to BelVino and il Molino representatives

always met with BelVino, even after the joint venture was formed. In August 2005,

BelVino entered into an agreement with Euro USA/BelVino, where Euro USA/BelVino

assigned to BelVino its right to distribute il Molino wines and its litigation rights. The

trial court found, and we agree, that this assignment gave BelVino the requisite standing

to sue on Euro USA/BelVino’s behalf.

{¶21} Having found that BelVino is a real party in interest and has the requisite

standing, we next address whether the trial court erred when it granted summary judgment
in favor of il Molino and Empson.

The OABFA

{¶22} The OABFA governs the franchise relationships between manufacturers and

distributors of alcoholic beverages in Ohio. R.C. 1333.82, et seq. “The OABFA affords

Ohio beer and wine distributors unique protections. It has been held the purpose of the

OABFA is ‘to remedy the lack of equal bargaining power between Ohio’s alcoholic

beverages wholesalers and out-of-state beverage manufacturers.”’ Esber Beverage Co.

v. Wine Group, Inc., 5th Dist. No. 2011CA00179, 2012-Ohio-1215, ¶ 12 (“Esber

Beverage”), quoting Esber Beverage Co. v. LaBatt USA Operating Co., Stark C.P. No.

2009CV03142 (Dec. 1, 2009). See also Beverage Distrib., Inc. v. Miller Brewing Co.,

803 F.Supp.2d 765 (S.D.Ohio 2011); Hill Distrib. Co. v. St. Killian Importing Co., Inc.,

S.D. Ohio No. 2:11-CV-706, 2011 WL 3957255 (Sept. 7, 2011).

{¶23} In furtherance of this goal, the OABFA requires every manufacturer of

alcoholic beverages to contract with or offer in good faith to their distributors a written

franchise specifying the rights and duties of both parties. R.C. 1333.83. Additionally,

[w]hen a distributor of beer or wine for a manufacturer, or the successors or
assigns of the manufacturer, distributes the beer or wine for ninety days or
more without a written contract, a franchise relationship is established
between the parties, and sections [R.C.] 1333.82 to 1333.87 apply to the
manufacturer, its successor or assigns, and the distributor.

Id.

The OABFA defines “manufacturer” as “a person, whether located in this state or

elsewhere, that manufactures or supplies alcoholic beverages to distributors in this state.”
 R.C. 1333.82(B). “Distributor” is defined as “a person that sells or distributes alcoholic

beverages to retail permit holders in this state, but does not include the state or any of its

political subdivisions.” Id. at (C).

{¶24} The OABFA also states that a franchise relationship cannot be terminated

absent prior consent unless “just cause” exists and notice is provided. R.C. 1333.85.

R.C. 1333.85(A) lists three situations that always constitute just cause: (1) voluntary

bankruptcy; (2) involuntary bankruptcy; or (3) loss of liquor permits. R.C. 1333.85(B)

lists four situations that never constitute just cause: (1) failure of a party to take action

that would result in a violation of federal or state law; (2) restructuring, other than in

bankruptcy, of a manufacturer’s business; (3) unilateral alteration of the franchise by a

manufacturer for a reason unrelated to any breach of the franchise or violation of R.C.

1333.82 and 1333.86; and (4) a manufacturer’s sale, assignment, or other transfer of the

manufacturer’s product or brand to another manufacturer over which it exercises control.

{¶25} R.C. 1333.85(D) provides an exception to the general rule requiring just

cause. Under R.C. 1333.85(D), if a successor manufacturer “acquires all or substantially

all of the stock or assets of another manufacturer through merger or acquisition or

acquires or is the assignee of a particular product or brand of alcoholic beverage from

another manufacturer,” then it can terminate, via written notice, a previous

manufacturer’s franchise agreements within 90 days of the date of the acquisition.

{¶26} BelVino argues that the evidence in the record supports a finding as a matter

of law that (1) Euro USA/BelVino had a protected franchise relationship with il Molino
and (2) the OABFA applies to the relationship between Euro USA/BelVino and Empson.

In support of its position, BelVino relies primarily on St. Killian and Esber Beverage.

{¶27} In St. Killian, the manufacturer obtained a new importer, St. Killian, which

then attempted to terminate the manufacturer’s franchise agreement with Hill Distributing

(“Hill”). As a result, Hill filed a motion for a preliminary injunction, seeking to enjoin

St. Killian from terminating Hill’s franchise agreement with the manufacturer. The

United States District Court for the Southern District of Ohio, Eastern Division, granted

Hill’s motion, finding that although St. Killian bought the rights to import the alcohol

from the manufacturer, the manufacturer still had to approve of St. Killian as its new

importer, it continued to maintain control over its brands, and it was effectively

reorganizing its business structure. St. Killian at 4. The court further found that the

policy rationale behind the OABFA supports a decision in Hill’s favor. The court

concluded that “[t]he change of importer is likely a business rearrangement, and thus St.

Killian may not qualify as a ‘successor manufacturer’ under [R.C. 1333.85(D)].” Id.

{¶28} In Esber Beverage, Esber had an exclusive franchise relationship with the

manufacturer. The manufacturer advised Esber that it was in its best interests to move

distribution of its wine products in Ohio to a single statewide distributor. Id. at ¶ 3. The

court reviewed the meaning of “just cause” and found the reasoning in Tri-County

Wholesale Distrib. Inc. v. The Wine Group, Inc., S.D. Ohio No. 2:10-CV-693, 2010 WL

3522973 (Sept. 2, 2010) and Dayton Heidelberg Distrib. Co. v. Vintners Internatl. Co. of

New York, S.D. Ohio No. C-3-87-436, 1991 WL 1119912 (Apr. 8, 1991), persuasive.
 {¶29} In Vintners, the court analyzed the meaning of R.C. 1333.85(B) and stated

that,

the legislature was aware that, in the absence of any formal definition of
just cause, courts interpreting [R.C. 1333.85] were applying a
“case-by-case” analysis. By specifically defining what is not just cause,
and leaving undefined what is just cause, the legislature has effectively
agreed with the courts that the term “just cause” does not lend itself to a
single, bright-line definition but, instead, is highly dependent upon the facts
of the particular case.

***

[A]pplying this fact-sensitive concept of just cause to the case at bar, there

is little doubt that the Ohio legislature fully intended the result which the

Court has reached. By amending the former [R.C. 1333.85] to expressly

prohibit franchise terminations based solely upon a manufacturer’s

unilateral decision to alter its distribution network, the legislature made

clear its intent to disallow actions such as Vintners’ cancellation of

Plaintiffs’ franchises, even though done in good faith. Id. at 10.

{¶30} Relying on The Wine Group and Vintners, the Esber Beverage court found

that the manufacturer’s “legitimate business reason to consolidate its distributors, without

evidence of a breach or violation of the OABFA by Esber, [the distributor], does not

constitute just cause to unilaterally terminate the franchise between [the manufacturer]

and Esber. Id. at ¶ 28.

{¶31} The matter before us presents a situation similar to St. Killian and Esber

Beverage. In the instant case, there is no dispute that Euro USA/BelVino was the
exclusive distributor of il Molino’s wines when the franchise relationship was terminated

in April 2010. Furthermore, there is no dispute that Euro USA/BelVino distributed il

Molino’s wines for more than 90 days without a written contract. Euro USA/BelVino

was registered as the exclusive distributor of il Molino wines in the state of Ohio in July

2009. il Molino, as the maker of wine, is considered as a manufacturer under the

OABFA. Therefore, Euro USA/BelVino and il Molino had a manufacturer-distributor

franchise relationship that was protected under the OABFA. Unilateral termination and

restructuring are the exact situations contemplated in R.C. 1333.85 that do not constitute

just cause.

{¶32} il Molino and Empson argue that Empson could terminate Euro

USA/BelVino’s distributorship without “just cause” because Empson is a “successor

manufacturer” under the OABFA. Under R.C. 1333.85(D), a successor manufacturer

can terminate, via written notice, a previous manufacturer’s franchise agreements within

90 days of the date of the acquisition provided that it “acquires all or substantially all of

the stock or assets of another manufacturer through merger or acquisition or acquires or is

the assignee of a particular product or brand of alcoholic beverage from another

manufacturer[.]”

{¶33} However, “‘[a] manufacturer can only rely on [R.C. 1333.85(D)] ‘when

there is a change in ownership and control of brands through an arms-length merger or

acquisition.’” St. Killian at 3, quoting InBev USA LLC v. Hill Distrib. Corp., S.D. Ohio

No. 2:05-CV-00298, 2006 WL 2010218 (Apr. 3, 2006). Thus, “an entity can only
qualify as a ‘successor manufacturer’ under subsection (D) if one of the situations in

subsection (B) does not apply.” Id.

{¶34} In the instant case, when Empson took over as il Molino’s exclusive

importer in February 2010, Empson did not acquire any ownership rights in il Molino.

The record demonstrates that il Molino continues to maintain control over its brands and

can terminate its relationship with Empson at any time.

{¶35} il Molino’s reasoning for the change was that it was effectively reorganizing

its business structure. Because the wine remains under the ownership and control of il

Molino, Empson does not qualify as a “successor manufacturer” under R.C. 1333.85(D).

Rather, the record reveals that prior to its relationship with il Molino, Empson was

considered a manufacturer, who supplied alcohol to another Ohio distributor. As a

manufacturer, Empson should have complied with the mandates of the OABFA, by

offering in good faith a written franchise specifying the rights and duties of both parties

and by not terminating BelVino/Euro USA’s distributor relationship without just cause.

By failing to do so, il Molino and Empson failed to comply with the mandates of the

OABFA when il Molino’s franchise relationship with Euro USA/BelVino was

unilaterally terminated.

{¶36} Moreover, the policy rationale behind OABFA supports finding in favor of

BelVino and Euro USA/BelVino. As the court in Beverage Distrib., Inc. v. Miller

Brewing Co., S.D.Ohio Nos. 2:08-CV-827, 2:08-CV-931, 2:08-CV-1112, 2:08-CV-1131,

and 2:09-CV-0022, 2009 WL 1542730 (June 2, 2009), stated:
 The [OABFA] is designed in part to protect distributors from certain
practices of beverage manufacturers. It recognizes that distributors often
have a substantial investment in their businesses, including the physical
assets and real property used to distribute the manufacturers’ products, and
that to allow a manufacturer unilaterally to terminate a franchise agreement
puts the franchise distributors at great risk of harm. The just cause
requirement for terminating a franchise agreement is intended to protect the
franchisee from this type of arbitrary and potentially coercive act. Id. at 5.

See also St. Killian at 4, quoting Beverage Distrib., Inc.

{¶37} Thus, just as in St. Killian and Esber Beverage, we find that il Molino’s

reasons for terminating its franchise agreement, coupled with its retention of ownership

and control of its brand did not constitute “just cause” to terminate Euro USA/Belvino’s

distributor relationship.

{¶38} Accordingly, we reverse the trial court’s judgment on BelVino’s declaratory

judgment and breach of contract claims (Counts I and II) and remand with instructions for

the trial court to enter judgment, as a matter of law, in favor of BelVino. See App.R.

12(B).

Interference with Contract and Business Relationships

{¶39} In Count III, BelVino claims that Empson intentionally interfered with il

Molino’s performance of its franchise agreement. As a result of the assignment, BelVino

argues that this claim is based on Euro USA/BelVino’s relationship with il Molino.

BelVino argues that when Empson convinced il Molino to unilaterally and without just

cause terminate its agreement with Euro USA/BelVino, Empson interfered with Euro

USA/BelVino’s franchise agreement. To prevail on a claim of intentional interference

with a contract, BelVino must prove “(1) the existence of a contract, (2) [Empson’s]
knowledge of the contract, (3) [Empson’s] intentional procurement of the contract’s

breach, (4) the lack of justification, and (5) resulting damages.” Kenty v. Transamerica

Premium Ins. Co., 72 Ohio St.3d 415, 1995-Ohio-61, 650 N.E.2d 863, paragraph two of

the syllabus.

{¶40} In Count IV, BelVino claims that Empson intentionally destroyed Euro

USA/BelVino’s business when it purposefully caused il Molino to discontinue its existing

relationship with Euro USA/BelVino. Tortious interference with a business relations

occurs when “a person, without privilege, induces or otherwise purposely causes a third

party not to enter into, or continue, a business relationship, or perform a contract with

another.” Castle Hill Holdings, LLC v. Al Hut, Inc., 8th Dist. No. 86442,

2006-Ohio-1353, ¶ 47, citing Juhasz v. Quik Shops, Inc., 55 Ohio App.2d 51, 379 N.E.2d

235, paragraph two of the syllabus (9th Dist.1978). However, one is privileged

purposely to cause a third person not to enter into or continue a business relation with a

competitor of the actor if “(a) the relation concerns a matter involved in the competition

between the actor and the competitor and (b) the actor does not employ wrongful means

and (c) his action does not create or continue an unlawful restraint of trade and (d) his

purpose is at least in part to advance his interest in competing with the other.”

Restatement of the Law, 2d, Torts, Section 768(1) (1979).

{¶41} In the instant case, there is no evidence that Empson used improper means to

become il Molino’s national importer. Moreover, Empson’s purpose in becoming il

Molino’s importer was to further its interests in business competition. As a result,
Empson was privileged to compete with Euro USA/BelVino. Thus, we find that the trial

court properly granted summary judgment in favor of Empson on Counts III and IV.

{¶42} Accordingly, the first assignment of error is sustained in part and overruled

in part.

Motion for Relief from Judgment

{¶43} In the second assignment of error, BelVino argues that the trial court erred

when it denied its motion for relief from judgment under Civ.R. 60(B). However, based

on our disposition of the first assignment of error, this assignment of error is overruled as

moot. See App.R.12(A)(1)(c).

{¶44} Judgment is reversed with respect to Counts I and II and affirmed with

respect to Counts III and IV. The matter is remanded with instructions for the trial court

to enter judgment in favor of BelVino on Counts I and II.

It is ordered that appellant recover from appellees costs herein taxed.

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate be sent to said 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.

MARY EILEEN KILBANE, JUDGE
KATHLEEN ANN KEOUGH, J., CONCURS;
MELODY J. STEWART, P.J., DISSENTS (SEE SEPARATE DISSENTING OPINION)

MELODY J. STEWART, P.J., DISSENTING:

{¶45} I would find that at the time BelVino filed its complaint, Euro USA/BelVino

was the real party in interest under Civ.R. 17(A) and that the court should have dismissed

all of BelVino’s claims that derived from the assignment of Euro USA/BelVino’s choses

in action sounding in violations of the Franchise Act.

{¶46} It is a familiar proposition that a party in interest may assign its legal claims

to a third party, typically by a contract assigning its full and exclusive interest in a legal

claim to the assignee. Sprint Communications Co. v. APCC Servs., Inc., 554 U.S. 269,

284-285, 128 S.Ct. 2531, 171 L.Ed.2d 424 (2008). When a legal claim or “chose in

action” is assigned, Civ.R. 17 is implicated. That rule states that “[e]very action shall be

prosecuted in the name of the real party in interest.” A real party in interest is one who is

directly benefitted or injured by the outcome of the case. U.S. Bank Natl. Assn. v.

Marcino, 181 Ohio App.3d 328, 2009-Ohio-1178, 908 N.E.2d 1032 (5th Dist.), citing

Shealy v. Campbell, 20 Ohio St.3d 23, 24, 485 N.E.2d 701 (1985).

{¶47} In Wells Fargo, N.A. v. Jordan, 8th Dist. No. 91675, 2009-Ohio-1092

(“Jordan”), we held that an assignment of judicial rights after a complaint had been filed

was ineffectual because the plaintiff could not have been the real party in interest at the

time the action was filed. Wells Fargo, a mortgagee, filed a foreclosure action against

mortgagors. The note and mortgage, however, named a different party as the original
lender. When Wells Fargo sought summary judgment, it attached an assignment of the

note and mortgage from the named lender to the mortgagee. The assignment, however,

was dated more than one month after the complaint had been filed. The trial court

dismissed the case and we affirmed, finding that Wells Fargo “was not the real party in

interest on the date it filed its complaint seeking foreclosure against Jordan.” See also

Deutsche Bank Natl. Trust Co. v. Triplett, 8th Dist. No. 94924, 2011-Ohio-478, ¶ 12;

Wells Fargo Bank N.A. v. Byrd, 178 Ohio App.3d 285, 2008-Ohio-4603, 897 N.E.2d 722

(1st Dist.) (“Byrd”).

{¶48} It is true, as BelVino argues, that Jordan has not been followed by other

districts. For example, in Deutsche Bank Natl. Trust Co. v. Traxler, 9th Dist. No.

09CA009739, 2010-Ohio-3940 (“Traxler”), the Ninth District Court of Appeals declined

to follow Jordan, stating that it has held that “a bank need not possess a valid assignment

at the time of filing suit so long as the bank procures the assignment in sufficient time to

apprise the litigants and the court that the bank is the real party in interest.” Id. at ¶ 11,

citing Bank of New York v. Stuart, 9th Dist. No. 06CA008953, 2007-Ohio-1483, ¶ 12.

The distinction between Jordan and Traxler is one highlighted by the Tenth

District Court of Appeals in Wells Fargo Bank, N.A. v. Sessly, 188 Ohio App.3d 213,

2010-Ohio-2902, 935 N.E.2d 70 (10th Dist.). That court, citing to the First District’s

decision in Byrd, noted the “glaring distinction” in Byrd that “the real party in interest

had neither been substituted nor joined in the foreclosure suit.” Sessly at ¶ 16.

{¶49} BelVino filed its initial complaint June 2010, before it took an assignment
of Euro USA/BelVino’s chose in action. Even though BelVino had relinquished its

status as a distributor in September 2008 when forming the joint venture known as Euro

USA/BelVino, it represented itself in the complaint as the distributor of il Molino wines

at the time Empson was hired as the new importer. BelVino filed an amended complaint

in August 2010, shortly after taking an assignment of Euro USA/BelVino’s chose in

action. The amended complaint did not mention Euro USA/BelVino much less state that

BelVino was asserting Euro USA/BelVino’s rights by assignment.

{¶50} I find no functional difference between the cited mortgage cases and this

case. Civ.R. 17 permits a plaintiff to cure a real-party-in-interest problem by (1) showing

that the real party in interest has ratified the commencement of the action or (2) joining or

substituting the real party in interest. Ohio Cent. RR. Sys. v. Mason Law Firm Co.,

L.P.A., 182 Ohio App.3d 814, 2009-Ohio-3238, 915 N.E.2d 397 (10th Dist.), ¶ 33. At

the time it filed its original complaint, BelVino was not the real party in interest. It did

not cure any defect in that regard in the amended complaint because it did not join or

substitute Euro USA/BelVino as the real party in interest. And it did not show that Euro

USA/BelVino ratified the commencement of the action even though Euro USA/BelVino

did not dissolve until December 2010 — some four months after filing the amended

complaint.

{¶51} What is more, there is no practical distinction between Jordan and this case.

It is true that il Molino and BelVino had a longstanding relationship, but that fact is

immaterial to the question of who was the real party in interest. The Euro USA/BelVino
joint venture supplanted BelVino as the sole distributor of il Molino wines, so il Molino

could rightfully understand that BelVino’s lawsuit, filed in its own name, was in relation

to its status as an importer. il Molino was not required to read between the lines to

ascertain the real party in interest.

{¶52} The majority’s citation to the old bromide that the civil rules should be

liberally construed is unnecessary here: Civ.R. 17(A) specifically grants a party a

reasonable time to permit substitution of a party. BelVino had the opportunity to amend

its complaint after receiving the assignment of the joint venture’s legal rights, but failed

to mention that it was suing under rights obtained from Euro USA/BelVino as the sole

distributor of il Molino wines. In fact, BelVino failed to mention Euro USA/BelVino at

all in the amended complaint. This was a fatal omission and could not be cured simply

because BelVino had a course of dealing with il Molino as an importer of il Molino

wines. BelVino and Euro USA/BelVino were distinct corporate entities with distinct

roles under Ohio’s Franchise Act.

{¶53} BelVino should have been barred from asserting any claims relating to the

termination of Euro USA/BelVino as the distributor of il Molino wines. With all of the

claims asserted by BelVino stemming from Euro USA/BelVino’s status as a distributor, I

would find that there are no justiciable claims remaining for review. Therefore, I

respectfully dissent.