Perkins v. Rieser

[Cite as Perkins v. Rieser, 2016-Ohio-728.]

IN THE COURT OF APPEALS OF OHIO
SECOND APPELLATE DISTRICT
MONTGOMERY COUNTY

KATHLEEN E. PERKINS, Executrix of :
The Estate of Ruth M. Day, deceased :
: Appellate Case No. 26616
Plaintiff-Appellant :
: Trial Court Case No. 2012-CV-8688
v. :
: (Civil Appeal from
JOHN PAUL RIESER, et al. : Common Pleas Court)
:
Defendants-Appellees :

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OPINION

Rendered on the 26th day of February, 2016

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JAMES R. HARTKE, Atty. Reg. No. 0011584, 917 Main Street, Suite 400, Cincinnati,
Ohio 45202
Attorney for Plaintiff-Appellant, Kathleen Perkins

JOHN PAUL RIESER, Atty. Reg. No. 0017850, and DIANNE MARX, Atty. Reg. No.
0022988, Rieser & Marx LLC, 7925 Graceland Street, Dayton, Ohio 45459-3834
Attorneys for Defendants-Appellees, John Paul Rieser, et al.

GREGORY S. PAGE, Atty. Reg. No. 0065264, 7501 Paragon Road, Lower Level, Dayton,
Ohio 45459
Attorney for Defendant-Appellees, Disher Furniture, Inc., et al..
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.............
HALL, J.

{¶ 1} Kathleen Perkins, executor of the Estate of Ruth M. Day, appeals the entry

of summary judgment on her claims and the award made against her as sanction for

frivolous conduct. Finding no error, we affirm.

I. Background

{¶ 2} When Ruth Day died in 2001, all of her assets were held in a trust that she

and her husband, Louis Day, who had already died, had established. The beneficiaries

of the trust are Day’s three daughters, Diana Kallar, Carole Disher, and Kathleen Perkins.

And the trust’s co-trustees were John Paul Rieser and Michael Disher.

{¶ 3} In 2004, Perkins filed an action in the probate court against the co-trustees

for accounting and removal. In response, the co-trustees filed a declaratory-judgment

action in the general division of the court of common pleas for a declaration concerning

the disposition of the trust assets. The beneficiaries of the trust were parties to that action.

{¶ 4} The parties agreed to mediation and reached a settlement agreement. This

agreement was incorporated into a 2005 final judgment. Under the settlement agreement,

in addition to agreeing how the trust property would be distributed, the parties agreed to

release all claims—“whether now known or unknown”—that they had against each other.

Settlement Agreement, Release and Indemnification, ¶ 6. The trust assets were

distributed among Day’s three daughters according to the terms of the settlement

agreement.

{¶ 5} Ruth Day also had a will that left any assets that she owned at her death to

the trust. Likely because all of Day’s assets were already in the trust, the will was not
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submitted to probate at the time of the settlement agreement. But in 2007, Kathleen

Perkins filed an application in the probate court to probate the will. A magistrate

recommended that Perkins be appointed executor of Ruth Day’s estate. Carole Disher

filed objections, claiming that she lacked notice of Perkins’s application. But the probate

court overruled the objections. In February 2008, the court appointed Perkins executor.

{¶ 6} In September 2007, while the objections were pending in the probate court,

Perkins as executor of the Day estate filed an action in the United States district court

against Rieser and Michael Disher, both individually and as co-trustees, and others

seeking to recover assets allegedly belonging to the estate. The federal-court complaint

asserts two claims under the federal Racketeer Influenced and Corrupt Organizations Act

(RICO) and asserts state-law tort claims for tortious interference with a right of

expectancy, common-law fraud, and unjust enrichment.

{¶ 7} In August 2008, Rieser and Michael Disher filed a motion in the general

division of the court of common pleas asking that court to prohibit Perkins from proceeding

in the federal action, based on the Settlement Agreement. A magistrate filed a decision

overruling the motion, but the trial court sustained Rieser and Disher’s objections and

prohibited Perkins from proceeding in the federal action. Perkins appealed to this Court,

and we reversed, concluding that she had filed the federal action as executor and

therefore “the general division lacked the power to grant relief in that form because it is a

form of relief exclusive to the probate court’s exercise of the jurisdiction conferred on that

court by R.C. 2101.24(A).” Rieser v. Rieser, 191 Ohio App.3d 616, 2010-Ohio-6227, 947

N.E.2d 222, ¶ 20 (2d Dist.).

{¶ 8} The federal district court dismissed Perkins’s claims—the RICO claims with
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prejudice and the state-law claims without prejudice. Three months later, in December

2012, Perkins filed this action as executor of the Day estate against Rieser and Michael

Disher, both individually and as co-trustees, and others. The complaint asserts two claims

under Ohio’s RICO statute and asserts claims for tortious interference with a right of

expectancy, common-law fraud, and unjust enrichment.

{¶ 9} The defendants moved for summary judgment, which the trial court denied.

Later, Rieser and Michael Disher moved the court to reconsider their summary-judgment

motion. This time, in February 2014, the trial court granted the motion and entered

summary judgment on all claims, concluding that they are barred by res judicata and that

the fraud claim is barred by the applicable statute of limitations. Perkins filed a motion

asking the trial court to reconsider its summary-judgment decision. But the court overruled

her motion, and Perkins appealed the denial to this Court. We dismissed her appeal

because the trial court had not ruled on the defendants’ motion for sanctions and the

appealed judgment was not certified under Civ.R. 54(B).

{¶ 10} Back in 2013, the defendants had filed a motion for sanctions under R.C.

2323.51 and Civ.R. 11. In its February 2014 decision granting the defendants’ summary-

judgment motion, the trial court scheduled a hearing on the motion for the following month.

But when Perkins appealed, the trial court proceedings were suspended. In January

2015, after Perkins’s first appeal was dismissed, a sanctions hearing was held.

Afterwards, the trial court found that Perkins and her counsel engaged in frivolous conduct

under R.C. 2323.51 and that counsel violated Civ.R. 11. The court awarded the

defendants reasonable attorney’s fees of $14,279.

{¶ 11} Perkins appealed again.
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II. Analysis

{¶ 12} Perkins assigns three errors to the trial court. The first assignment of error

challenges the entry of summary judgment for the defendants. The second assignment

of error challenges the frivolous-conduct sanction. And the third assignment of error

challenges the trial court’s sanctioning Perkins individually.

A. Summary judgment

{¶ 13} The first assignment of error alleges that the trial court erred by granting the

defendants’ motion for reconsideration of summary judgment.

{¶ 14} “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.” (Citation omitted.) Zivich v. Mentor Soccer Club, Inc., 82 Ohio

St.3d 367, 369-370, 696 N.E.2d 201 (1998). “[T]he movant must be able to point to

evidentiary materials of the type listed in Civ.R. 56(C) that a court is to consider in

rendering summary judgment. The evidentiary materials listed in Civ.R. 56(C) include ‘the

pleadings, depositions, answers to interrogatories, written admissions, affidavits,

transcripts of evidence in the pending case, and written stipulations of fact, if any.’ These

evidentiary materials must 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. While the movant is

not necessarily obligated to place any of these evidentiary materials in the record, the

evidence must be in the record or the motion cannot succeed.” Dresher v. Burt, 75 Ohio
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St.3d 280, 292-293, 662 N.E.2d 264 (1996).

{¶ 15} Perkins contends that the affidavit supporting the defendants’ summary-

judgment motion is invalid. And she contends that her claims are not barred by res

judicata or the statute of limitations.

{¶ 16} In support of their motion for summary judgment, the defendants submitted

an affidavit by Carole Disher about the Settlement Agreement. Perkins contends that the

affidavit is invalid because it violates Civ.R. 56(E) by not specifically stating that it is based

on Disher’s “personal knowledge” and by not stating that she is competent to testify to the

matters stated in the affidavit.

{¶ 17} Civ.R. 56(E) pertinently provides that “[s]upporting and opposing affidavits

shall be made on personal knowledge, shall set forth such facts as would be admissible

in evidence, and shall show affirmatively that the affiant is competent to testify to the

matters stated in the affidavit.” “In the absence of a specific statement of personal

knowledge, personal knowledge may be inferred from the contents of an affidavit.” Bank

One, N.A. v. Swartz, 9th Dist. Lorain No. 03CA008308, 2004-Ohio-1986, ¶ 15. No

talismanic words are necessary. OhioHealth Corp. v. Ryan, 10th Dist. Franklin No. 10AP-

937, 2012-Ohio-60, ¶ 32 (finding that the affidavit established personal knowledge despite

not using the “ ‘magic words’ ”).

{¶ 18} Disher’s five-paragraph affidavit states:

1. Attached hereto and incorporated herein by reference is a true and

accurate copy of the Settlement Agreement, Release and Indemnification

signed, on or about December 20, 2005, by all parties involved in

Montgomery County Common Pleas Court Case No. 2004 CV 3372 (“the
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Lawsuit”);

2. Pursuant to and in accordance with the Settlement Agreement, Release

and Indemnification, all assets related to the Lawsuit have been accounted

for and distributed as directed therein;

3. All parties to the Settlement Agreement, Release and Indemnification

have complied with its terms and obligations, with the exception of the

litigation brought by Kathleen Perkins;

4. All parties to the Settlement Agreement, Release and Indemnification had

the opportunity to review the Settlement Agreement, Release and

Indemnification with his/her attorney prior to executing the Settlement

Agreement, Release and Indemnification;

5. Kathleen Perkins represented to all parties that she reviewed the

Settlement Agreement, Release and Indemnification with her attorney prior

to executing the Settlement Agreement, Release and Indemnification.

{¶ 19} We think that Disher’s personal knowledge of the matters stated in her

affidavit may be inferred. “ ‘Personal knowledge’ is ‘[k]nowledge gained through firsthand

observation or experience, as distinguished from a belief based on what someone else

has said.’ ” Bonacorsi v. Wheeling & Lake Erie Ry. Co., 95 Ohio St.3d 314, 2002-Ohio-

2220, 767 N.E.2d 707, ¶ 26, quoting Black’s Law Dictionary 875 (7th Ed.1999). Disher’s

knowledge of the affidavit matters comes from her own observations and experience as

beneficiary of the trust and a party to the Settlement Agreement. Her competence to

testify about these matters is also plain.

{¶ 20} Perkins contends that her claims are not barred by res judicata because the
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estate was not a party in the 2004 case. It is true that the estate was not a party to the

settlement agreement. And it is also true that, at that time, Perkins had not yet been

appointed the executor of the estate. But in the current action, Perkins herself is the real

party in interest.

{¶ 21} In our decision concluding that the general division of the common pleas

court lacked jurisdiction to prohibit Perkins as executor from prosecuting the federal-court

action, we briefly discussed the doctrine of res judicata. We said that “ ‘[a]lthough the

doctrine of res judicata generally requires an identity of parties, strict identity is not always

required. The doctrine has been applied when the party in the subsequent action, though

not named as a party in the prior action, was a real party in interest in that prior action. In

applying the doctrine, the court will look beyond the nominal parties to the substance of

the cause to determine the real party in interest. Identity of parties is not a mere matter of

form, but of substance.’ ” (Citations omitted.) Rieser, 191 Ohio App.3d 616, 2010-Ohio-

6227, 947 N.E.2d 222, at ¶ 16, quoting Deaton v. Burney, 107 Ohio App.3d 407, 412, 669

N.E.2d 1 (2d Dist.1995). We noted that neither the probate court nor the federal court had

attempted to look “beyond the nominal difference in her status as executor to the

substance of the action before the court to determine whether Kathleen Perkins is a real

party in interest in both the general division and federal actions.” Id. at ¶ 17.

{¶ 22} Ruth Day’s will is a pour-over will, which means that all of the estate’s assets

go to the trust. In other words, the sole beneficiary of the will is the trust. Perkins does not

contest the will, and no creditor is seeking payment from the estate. So if Perkins

successfully recovers the assets that she alleges belong to the estate, those assets will

simply flow into the trust and be distributed to the trust beneficiaries. The fiduciaries of
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the trust, and the beneficiaries, including Perkins, have already settled all the trust-related

issues. So it is difficult to perceive any independent interest the estate has in this action.

Perkins’s interest in this action, however, is clear. In the Settlement Agreement, Perkins

agreed that “after investigation and review of Day Trust documents, including but not

limited to financial documents, there was no breach of fiduciary duty by John Paul Rieser,

Esq. as Co-Trustee of the Day Trust or Michael B. Disher as Co-Trustee of the Day Trust;

and at no time were there ever any missing assets of the Day Trust.” Settlement

Agreement, ¶ 14. And Perkins released all her claims—“whether now known or

unknown”—against Rieser and Michael Disher, the defendants in this case. Technically

the Settlement Agreement was before the estate was opened and therefore the

settlement does not prohibit the Day estate from pursuing claims against Rieser or Disher.

But it is undoubtedly Perkins who is the real party in interest in this action that she has

already settled. Which means that her claims are barred by res judicata.

{¶ 23} Perkins also contends that her fraud claim is not barred by the applicable

statute of limitations. Because we have concluded that all her claims are barred by res

judicata, this contention is moot.

{¶ 24} The first assignment of error is overruled.

B. Sanctions

{¶ 25} The second assignment of error alleges that the trial court erred by

sanctioning Perkins for frivolous conduct. Perkins contends that the court failed to hold a

proper evidentiary hearing and failed to make the appropriate findings.

{¶ 26} R.C. 2323.51 allows a court to award “court costs, reasonable attorney’s

fees, and other reasonable expenses” to any party “who was adversely affected by
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“frivolous conduct.” R.C. 2323.51(B)(1). Before making an award, the court must hold a

hearing “to determine whether particular conduct was frivolous, to determine, if the

conduct was frivolous, whether any party was adversely affected by it, and to determine,

if an award is to be made, the amount of that award.” R.C. 2323.51(B)(2)(a).

{¶ 27} In this case, the trial court held a frivolous-conduct hearing on January 6,

2015. Perkins says that the hearing concerned attorney’s fees only and that the court did

not allow evidence as to whether her conduct was frivolous. Our review of the hearing

transcript shows that some evidence regarding frivolousness was admitted. Exhibit B is

a statement of the defendants’ legal fees incurred in defending against the federal action.

The trial court noted, and defendants’ counsel agreed, that “[t]he purpose of Exhibit B is

just to indicate that it’s harassment, continual—[expenses].” (Hearing Tr. 27). Later in the

hearing, though, the court said that attorney’s fees was “all we’re talking about today.” (Id.

at 56). It appears that the court had already determined that bringing the 2012 action was

frivolous. At a sidebar, the court said, “the case was dismissed by me, the underlying

case, because I don’t see any merit to it which makes it kind of frivolous I guess or could

be * * *. If you want to kind of brief this after this hearing, you’re welcome to it.” (Id. at 33).

{¶ 28} Perkins did not present any evidence at the hearing. She did not call any

witnesses or present any exhibits for admission into evidence. Also, Perkins did not make

any objections to the trial court about the scope of the hearing. Therefore we cannot

conclude that the hearing constitutes reversible error.

{¶ 29} Perkins also contends that the trial court failed to make the appropriate

findings. Specifically, she says that the court failed to make the appropriate findings to

determine whether her conduct was frivolous and failed to find that she engaged in
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frivolous conduct.

{¶ 30} R.C. 2323.51 defines “conduct” as “[t]he filing of a civil action, the assertion

of a claim, defense, or other position in connection with a civil action, the filing of a

pleading, motion, or other paper in a civil action, including, but not limited to, a motion or

paper filed for discovery purposes, or the taking of any other action in connection with a

civil action.” R.C. 2323.51(A)(1)(a). And the statute defines “frivolous conduct” to include

“conduct” by a party or counsel that

(i) * * * obviously serves merely to harass or maliciously injure another party

to the civil action or appeal or is for another improper purpose, including,

but not limited to, causing unnecessary delay or a needless increase in the

cost of litigation[;] or

(ii) * * * is not warranted under existing law, cannot be supported by a good

faith argument for an extension, modification, or reversal of existing law, or

cannot be supported by a good faith argument for the establishment of new

law.

R.C. 2323.51(A)(2)(a).

{¶ 31} Here, in its written frivolous-conduct decision, the trial court said: “Upon a

review of the Pleadings, the Decisions/Entries in this case coupled with the testimony

received during the hearing, the court finds that by the filing of the instant cause of action

and subsequent actions/inactions related to it, Plaintiff and Plaintiff’s counsel have

engaged in frivolous conduct as defined in R.C. Sections 2323.51(A)[(2)(a)](i) and (ii).”

Decision and Order (Feb. 19, 2015).

{¶ 32} “No single standard of review applies to appeals of rulings on R.C. 2323.51
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motions.” Groves v. Groves, 10th Dist. Franklin No. 09AP1107, 2010-Ohio-4515, ¶ 18.

“The standard an appellate court uses depends upon whether the trial court’s

determination resulted from factual findings or a legal analysis. When the question

regarding what constitutes frivolous conduct calls for a legal determination, ‘e.g., whether

a claim is warranted under existing law or could be supported by a good faith argument

for the extension, modification, or reversal of existing law or the establishment of new

law,’ we employ a de novo standard of review.” Bell v. Nichols, 10th Dist. Franklin No.

10AP-1036, 2013-Ohio-2559, ¶ 18, quoting id.

{¶ 33} The trial court’s determination here depends on the legal determination that

the claims in this action are barred by res judicata. Consequently the trial court found that

the action “is not warranted under existing law, cannot be supported by a good faith

argument for an extension, modification, or reversal of existing law, or cannot be

supported by a good faith argument for the establishment of new law,” R.C.

2323.51(A)(2)(a)(ii). We agree with this determination

{¶ 34} The second assignment of error is overruled.

C. Sanctions against Perkins individually

{¶ 35} Under R.C. 2323.51, a frivolous-conduct award may be made against “a

party, the party’s counsel of record, or both.” R.C. 2323.51(B)(4). The third assignment of

error alleges that the trial court erred by making the frivolous-conduct award against

Perkins in her individual capacity. Perkins argues that she is a party to the case only in a

representative capacity, so the court did not have jurisdiction over her.

{¶ 36} “[A] hearing on sanctions is considered collateral to the underlying

proceedings.” Stone v. House of Day Funeral Serv., Inc., 140 Ohio App.3d 713, 719, 748
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N.E.2d 1200 (6th Dist.2000). Accord Beaver Excavating Co. v. Perry Twp., 79 Ohio

App.3d 148, 153, 606 N.E.2d 1067 (5th Dist.1992) (“We conclude that for the purposes

of implementation of R.C. 2323.51, contempt proceedings against a non-party witness

constitute a civil action.”); Master v. Chalko, 8th Dist. Cuyahoga No. 75973, 2000 WL

573200, *5 (May 11, 2000) (quoting Beaver Excavating). It is irrelevant that Perkins is not

a party in her individual capacity in the underlying lawsuit because she was made a party

to the frivolous-conduct action. She received notice of the frivolous-conduct proceeding

against her and appeared and defended herself on the merits. Compare Master at *5

(concluding that sanctions were properly awarded against the appellant in his individual

capacity). Nor does it matter that the pleadings do not name Perkins in her individual

capacity. “A misnomer is not fatal to the jurisdiction of the court over the person of the

defendant whose name is involved, and such mistake becomes a mere irregularity when

the real party to be sued answers to the merits at issue in the case.” (Citations omitted.)

Lamberty v. Streetsboro Sales & Supplies, 11th Dist. Portage No. 1729, 1987 WL 18012,

*2 (Sept. 30, 1987) (noting that the appellant appeared and offered a defense in the action

and also filed a counterclaim).

{¶ 37} We note too that the motion for a frivolous-conduct award was filed against

Perkins in February 2013. She has never raised this issue until now, not even in her

written opposition to the award that she filed after the hearing.

{¶ 38} The third assignment of error is overruled.

III. Conclusion

{¶ 39} We have overruled the three assignments of error presented. The trial

court’s judgment is affirmed.
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FAIN, J., and WELBAUM, J., concur.

Copies mailed to:

James R. Hartke
John Paul Rieser
Dianne Marx
Gregory S. Page
Hon. Neal B. Bronson
(sitting for Hon. Gregory F. Singer)