[Cite as Smith v. Natl. W. Life, 2017-Ohio-4184.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 104898
ANTHONY SMITH
PLAINTIFF-APPELLANT
vs.
NATIONAL WESTERN LIFE, ET AL.
DEFENDANTS-APPELLEES
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-15-843767
BEFORE: Stewart, J., Kilbane, P.J., and E.T. Gallagher, J.
RELEASED AND JOURNALIZED: June 8, 2017
ATTORNEY FOR APPELLANT
Margaret Mary Meko
The Meko Law Office, L.L.C.
2778 SOM Center Road, Suite 202
Willoughby Hills, OH 44094
ATTORNEY FOR APPELLEES
Natalia Steele
Vorys, Sater, Seymour & Pease, L.L.P
200 Public Square, Suite 1400
Cleveland, OH 44114
MELODY J. STEWART, J.:
{¶1} Plaintiff-appellant Anthony Smith sold annuity policies as an agent for
defendant-appellee National Western Life Insurance Company. After National Western
settled a lawsuit brought by one of Smith’s clients, it terminated Smith’s agency contract
and charged him back for the commissions it paid him on that account under Smith’s
personal guaranty. Smith filed for bankruptcy and a third party satisfied the charge-back.
National Western listed Smith’s name with Vector One, an insurance industry service
that provides agent screening tools to insurance companies, such as indicating that an
agent, or potential agent, has a debit balance with another insurance company.
{¶2} Claiming that publication of the debt was false because the debt had been
discharged in bankruptcy and otherwise satisfied, Smith raised claims for defamation and
tortious interference with prospective economic advantage, claiming that he had been
denied a position with a different issuer of annuities because of his listing with Vector
One.
{¶3} The court dismissed the defamation claim as barred by the statute of
limitations. It granted National Western summary judgment on the tortious interference
claim because Smith did not sufficiently identify a business relationship with which
National Western had interfered, nor did he sufficiently identify damages caused by
National Western.
I. Dismissal of Defamation Claim
{¶4} Smith first argues that the court erred by granting National Western’s motion
to dismiss the defamation claim on grounds that he did not file his claim within the
one-year statute of limitations.
{¶5} The tort of defamation has a one-year statute of limitations. See R.C.
2305.11(A). In paragraph 14 of his complaint, Smith alleged that National Western first
reported the debt to Vector One “later in 2010.” Smith filed his complaint on April 6,
2015. These facts conclusively show that Smith did not file his complaint within one
year of publication to Vector One. See Civ.R. 12(B)(6); Doe v. Archdiocese of
Cincinnati, 109 Ohio St.3d 491, 2006-Ohio-2625, 849 N.E.2d 268, ¶ 11.
{¶6} Smith conceded below that he did not file his defamation claim within one
year of when he first became aware of the publication of his debt with Vector One. See
plaintiff’s response to defendant’s amended motion to dismiss the complaint, at 4. He
argued, however, that dismissal was premature because “[w]ithout discovery Plaintiff
cannot determine how often the report was made to a third party, the nature of the report,
how often it was updated and the extent of the accuracy of the report.” Id.
{¶7} Smith sought and received three extensions of time in which to respond to the
motion to dismiss the complaint: the first motion gave no reason why he needed an
extension of time; the other two were based on counsel’s workload and preexisting
obligations that prevented timely filing a brief in opposition to the motion to dismiss.
None of the three motions for an extension of time were based on the need for additional
time in which to conduct discovery and raise substantive claims in opposition to the
motion to dismiss. The claim that counsel needed additional time to conduct discovery
was never raised before Smith filed his brief in opposition to the motion to dismiss.
{¶8} In any event, Smith was not entitled to discovery in order to seek out facts to
defeat a motion to dismiss. A Civ.R. 12(B)(6) motion to dismiss is a challenge to the
facts pleaded in the complaint. For that reason, a Civ.R. 12(B)(6) motion cannot be
decided on facts that are not contained in the complaint. State ex rel. Findlay Publishing
Co. v. Schroeder, 76 Ohio St.3d 580, 581, 669 N.E.2d 835 (1996). And although a
statute of limitations affirmative defense often invokes facts beyond the complaint, a
complaint can be dismissed when on its face it conclusively indicates that the action is
time-barred under the applicable statute of limitations. Ohio Bur. of Workers’ Comp. v.
McKinley, 130 Ohio St.3d 156, 2011-Ohio-4432, 956 N.E.2d 814, ¶ 13.
{¶9} The complaint showed no set of facts that would enable Smith to defeat
National Western’s statute of limitations affirmative defense on the defamation claim.
Additional facts would have no bearing on the merits of the motion to dismiss. Under
certain circumstances, a motion to dismiss can be converted into a motion for summary
judgment, but only when the “motion to dismiss for failure to state a claim upon which
relief can be granted presents matters outside the pleading and such matters are not
excluded by the court[.]” Civ.R. 12(B). In other words, conversion is possible only if the
movant raises matters outside the complaint in a motion to dismiss — the nonmoving
party cannot raise additional facts in response to a motion to dismiss with the hope of
having the motion converted to a motion for summary judgment. Smith’s only option
was to seek leave to amend the complaint under Civ.R. 15 or voluntarily dismiss the case
without prejudice under Civ.R. 41(A) and refile it with additional facts. Having done
neither, he has failed to show that the court erred by dismissing the defamation claim.1
II. Summary Judgment on Tortious Interference
with Prospective Economic Advantage Claim
{¶10} Our disposition of Smith’s first assignment of error relating to the
defamation claim controls the disposition of his second assignment error relating to the
summary judgment on the tortious interference claim: the tortious interference claim was
based on the same facts as the defamation claim, so if the defamation claim fails under
the statute of limitations, then so does the tortious interference claim.
{¶11} The statute of limitations for a claim of tortious interference is four years.
See R.C. 2305.09(D); Samman v. Nukta, 8th Dist. Cuyahoga No. 85739, 2005-Ohio-5444,
¶ 23. However, “[t]he ground of the action and the nature of the demand determine
which statute of limitation is applicable.” Peterson v. Teodosio, 34 Ohio St.2d 161, 173,
297 N.E.2d 113 (1973), citing State ex rel. Lien v. House, 144 Ohio St. 238, 58 N.E.2d
675 (1944), paragraph one of the syllabus.
Smith argues for the first time on appeal that the continuing publication of his name by
1
Vector One was a new publication that restarted the statute of limitations period. We adhere to the
rule that a party may not raise arguments for the first time on appeal. Niskanen v. Giant Eagle, Inc.,
122 Ohio St.3d 486, 2009-Ohio-3626, 912 N.E.2d 595, ¶ 34. Nevertheless, that claim would not
have prevailed if raised because Ohio has not adopted a continuing publication rule for defamation;
instead, it is the first publication that controls for purposes of the statute of limitations. Fleming v.
Ohio Atty. Gen., 10th Dist. Franklin No. 02AP-240, 2002-Ohio-7352, ¶ 14; Greer v. Natl. City
Corp., 5th Dist. Delaware No. 08 CAE 12 0076, 2009-Ohio-5172, ¶ 51.
{¶12} As pleaded by Smith, the defamation and tortious interference claims were
based on the same underlying fact — National Western’s publication of Smith’s debt with
Vector One. Because the separate claims were based on the same tortious act, “only a
single cause of action arises, the different injuries occasioned thereby being separate
items of damage from such act.” Rush v. Maple Hts., 167 Ohio St. 221, 224, 147 N.E.2d
599 (1958), syllabus. Stated differently, “multifold aspects of the same wrongful act * *
* do not permit multiple suits.” Henderson v. Ryan, 13 Ohio St.2d 31, 35, 233 N.E.2d
506 (1968).
{¶13} Courts have overwhelmingly found that if a defamation claim fails on the
statute of limitations, so too must a tortious interference claim based on the same conduct
as the defamation claim. See, e.g., Wild v. Rarig, 302 Minn. 419, 447, 234 N.W.2d 775
(1975); Evans v. Philadelphia Newspapers, Inc., 411 Pa.Super. 244, 249-252, 601 A.2d
330 (1991) (“We conclude that since Appellants’ claim for tortious interference is based
upon the alleged false and defamatory character of the communication complained of, and
it is indistinguishable from the claims of libel and slander, the same one year limitation
period should apply to both.”); Nath v. Texas Children’s Hosp., 446 S.W.3d 355, 370
(Tex.2014) (“We now similarly conclude that if a tortious interference claim is based
solely on defamatory statements, the one-year limitations period for defamation claims
applies.”); Ramsay v. Mary Imogene Bassett Hosp., 113 A.D.2d 149, 151, 495 N.Y.S.2d
282 (1985) (finding essence of plaintiff’s alleged claims to be defamation); Rutherford v.
Johnson, 250 Cal. App. 2d 316, 58 Cal. Rptr. 546 (Cal. Ct. App. 1967); Eddy’s Toyota v.
Kmart Corp., 945 F.Supp. 220, 226 (D.Kan.1996) (“Courts have also held that an expired
claim for defamation cannot form the basis for a tortious interference claim * **.”); Prof.
Recovery Servs., Inc. v. Gen. Elec. Capital Corp., 642 F.Supp.2d 391, 408 (D.N.J. 2009)
(noting that where tortious interference claim was “based on allegedly defamatory
statements and the defamation cause of action fails for lack of evidentiary support, the
tortious interference claim necessarily fails as well.”); Guelen v. Distinctive Personnel,
Inc., E.D.N.Y. No. 11-CV-01204, 2011 U.S. Dist. LEXIS 86064, 11-13 (Aug. 4, 2011)
(“I conclude that the tortious interference claim is subject to the same one-year limitations
period that attends the defamation claim.”).
{¶14} Directly on point is Hill v. Allianz Life Ins. Co. of N. Am., M.D.Fla. No.
6:14-cv-950-Orl-41KRS, 2016 U.S. Dist. LEXIS 31101 (Feb. 17, 2016). The district
court considered facts very similar to those in this appeal: an insurance company whose
agent refused to pay a charge-back had the agent’s name listed with Vector One and the
agent filed claims for defamation (publishing his name with Vector One) and tortious
interference with an expectancy (the agent claimed that he had been denied employment
with another insurer because of the Vector One listing). After finding the defamation
claim barred by the statute of limitations, the district court cited Florida law for the
proposition that under that state’s “single publication/single action rule,” “a single
wrongful act gives rise to a single cause of action, and that the various injuries resulting
from it are merely items of damage arising from the same wrong.” Id. at 27, citing
Orlando Sports Stadium, Inc. v. Sentinel Star, Co., 316 So.2d 607, 609 (Fla.4th DCA
1975). The district court stated the relevant law as follows:
Thus, “[w]hen claims are based on analogous underlying facts and the
causes of action are intended to compensate for the same alleged harm, a
plaintiff may not proceed on multiple counts for what is essentially the same
defamatory publication or event,” and courts should “dismiss [the]
concurrent counts for related torts based on the same publication and
underlying facts as the failed defamation count.” Klayman v. Judicial
Watch, Inc., 22 F. Supp. 3d 1240, 1256 (S.D. Fla. 2014), aff’d, No.
14-13855, 2015 U.S. App. LEXIS 23022 (11th Cir. Feb. 17, 2015). “The
rule is designed to prevent plaintiffs from circumventing a valid defense to
defamation by recasting essentially the same facts into several causes of
action all meant to compensate for the same harm.” Callaway Land &
Cattle Co., 831 So. 2d at 208 (quotation omitted).
Id. at 24-25. Finding that the tortious interference claim “is based on the same
publication and underlying facts as his failed defamation claim[,]” the district court
granted summary judgment on the tortious interference claim. Id. at 25-26.
{¶15} We recognize that the First Appellate District appears to hold to the contrary
in Kienow v. Cincinnati Children’s Hosp. Med. Ctr., 1st Dist. Hamilton No. C-140720,
2015-Ohio-4396. Kienow alleged that her supervisor placed what she believed was
“false, negative and misleading information” in her personnel file. She claimed that her
manager agreed that the information should be removed from her personnel file, but it
was not. Kienow resigned her position in protest. She sought other employment and
more than one year later received a verbal offer of employment, but the prospective
employer withdrew the offer, allegedly because the former supervisor made “negative,
misleading and false statements” about her to the hiring manager at the prospective place
of employment.
{¶16} Kienow brought an action against the former employer asserting, as relevant
here, claims for defamation and tortious interference. The trial court granted Civ.R.
12(B)(6) dismissals on both claims for being outside their respective statutes of
limitations. The court of appeals upheld the dismissal of the defamation claim, but found
that the trial court erred by dismissing the tortious interference claim. Acknowledging
that trial courts could look beyond the face of the claim to determine its true subject
matter, it held that the tortious interference claim was not really a defamation claim
subject to a shorter limitations period. It found that a tortious interference claim “goes
beyond damage to reputation[,]” and did not hinge on disseminating information but on
“hindering a prospective and known business relationship[.]” Id. at ¶ 13. The court of
appeals concluded that a tortious interference claim “is not of the same nature as a
defamation claim.” Id.
{¶17} The facts in Kienow are distinguishable because the defamation and tortious
interference in that case were based on two different acts: the defamation claim consisted
of allegedly false information contained in Kienow’s personnel file; the tortious
interference claim consisted of remarks made to the hiring manager of a prospective
employer more than one year later. For this reason, the First District held that the
tortious interference claim was specifically intended to hinder a prospective and known
business relationship. In this case, there is no factual dispute that the defamation and
tortious interference claims arose from a single act — National Western’s listing Smith’s
name with Vector One.
{¶18} We are aware that when ruling on National Western’s motion for summary
judgment, the court stated that it would not analyze any arguments related to the statute of
limitations with respect to the tortious interference claim. Nevertheless, there is no
question that Smith’s tortious interference claim was based on the same conduct
underlying the defamation claim. Because the claims were based on the same conduct,
we find as a matter of law for purposes of Civ.R. 56 that the one-year statute of
limitations for defamation applied to both claims.
{¶19} Even were we to address the merits of Smith’s assignment of error relating
to the summary judgment on the tortious interference claim, we would find no error.
Smith offered no evidence to show a genuine issue of material fact with respect to
National Western’s privilege to list his name with Vector One.
{¶20} The elements of a claim for tortious interference with a business relationship
or contract are: (1) a business relationship or contract; (2) the defendant’s knowledge of
the relationship or contract; (3) the defendant’s intentional or improper action taken to
prevent a contract formation, procure a contractual breach, or terminate a business
relationship; (4) a lack of privilege; and (5) resulting damages. Byrne v. Univ. Hosps.,
8th Dist. Cuyahoga No. 95971, 2011-Ohio-4110, ¶ 28, citing Castle Hill Holdings, L.L.C.
v. Al Hut, Inc., 8th Dist. Cuyahoga No. 86442, 2006-Ohio-1353, ¶ 46.
{¶21} Because it is a tort, a claim of tortious interference requires an improper act.
Syed v. Poulos, 8th Dist. Cuyahoga Nos. 103137 and 103499, 2016-Ohio-3168, ¶ 17,
citing Baseball at Trotwood, L.L.C. v. Dayton Professional Baseball Club, S.D.Ohio No.
C-3-98-260, 2003 U.S. Dist. LEXIS 27460 (Sept. 2, 2003). One of the elements of the
tort, the lack of privilege, makes it clear that some acts, while potentially falling within
the definition of the tort, may not constitute improper conduct. “[O]ne is privileged to
purposely cause another not to perform a contract with a third person where he in good
faith is asserting a legally protected interest of his own, which he believes will be
impaired or destroyed by the performance of the contract.” Pearse v. McDonald’s Sys. of
Ohio, Inc., 47 Ohio App.2d 20, 25, 351 N.E.2d 788 (10th Dist.1975). See also Castle
Hill Holdings, L.L.C., at ¶ 48.
{¶22} Smith argued below that National Western wrongly listed him as having a
credit balance because his debt was discharged in bankruptcy and later satisfied by a third
party. We disagree with Smith’s interpretation of a bankruptcy: it discharges a debtor’s
liability on a debt, but it does not extinguish the underlying debt. See FB Acquisition
Prop. I, L.L.C. v. Gentry (In re Gentry), 807 F.3d 1222, 1228 (10th Cir.2015) (“A
bankruptcy court can grant a discharge, but a discharge does not extinguish the underlying
debt rather it changes a debtor’s liability for that debt.”). Smith, despite his personal
guaranty, did not personally satisfy the debt to National Western consistent with his
personal guaranty. His bankruptcy is proof of that fact.
{¶23} Smith goes on to argue that National Western wrongly listed him despite a
third party having paid the charge back — he claims that the debt was fully satisfied.
Smith’s complaint made it clear that the third party did not pay off the debt until after his
name was listed in the Vector One report. The tortious interference claim was based on
the initial listing with Vector One, so National Western acted in furtherance of its own
legally protected interest by reporting him to Vector One. In any event, the fact remains
that Smith was unable to live up to his promise to personally guarantee any debts that he
owed to National Western. He declared personal bankruptcy to avoid satisfying the
charge back. By any measure, his listing on the Vector One report truthfully indicated
that he failed to fulfill his financial obligations to National Western. On that basis, the
court did not err by granting summary judgment on the tortious interference claim.
{¶24} Judgment affirmed.
It is ordered that appellee recover of appellant 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.
______________________________________________
MELODY J. STEWART, JUDGE
MARY EILEEN KILBANE, P.J., and
EILEEN T. GALLAGHER, J., CONCUR