Church at Warren v. Warzala

[Cite as Church at Warren v. Warzala, 2017-Ohio-6947.]

IN THE COURT OF APPEALS

ELEVENTH APPELLATE DISTRICT

TRUMBULL COUNTY, OHIO

CHURCH AT WARREN, : OPINION

Plaintiff-Appellant, :
CASE NO. 2016-T-0073
- vs - :

RICK WARZALA, d.b.a. :
WARZALA CONSTRUCTION, et al.,
:
Defendants-Appellees.

Civil Appeal from the Trumbull County Court of Common Pleas.
Case No. 2015 CV 00236.

Judgment: Affirmed.

Frank R. Bodor, 157 Porter Street, N.E., Warren, OH 44483 (For Plaintiff-Appellant).

Samuel F. Bluedorn, Bluedorn & Ohlin, L.L.C., 144 North Park Avenue, Suite 310,
Warren, OH 44481 (For Defendant-Appellee Rick Warzala, d.b.a. Warzala
Construction).

Lawrence E. Sutter and Brian E. Roof, Sutter O’Connell, 3600 Erieview Tower, 1301
East 9th Street, Cleveland, OH 44114-1831 (For Defendants-Appellees American
Builders & Contractors Supply Co., Inc., d.b.a. ABC Supply Co., Inc., and Mule-Hide
Products Co., Inc.).

TIMOTHY P. CANNON, J.

{¶1} Appellant, Church at Warren, appeals from the June 28, 2016 judgment of

the Trumbull County Court of Common Pleas, which granted the summary judgment

motion of Appellees American Builders & Contractors Supply Co., Inc., d.b.a. ABC

Supply Co., Inc. (“ABC”) and Mule-Hide Products Co., Inc. (“Mule-Hide”) and granted
judgment in favor of the remaining defendant, Appellee Rick Warzala, d.b.a. Warzala

Construction (“Warzala”).

{¶2} In 2009, appellant hired Warzala, a general contractor, to fix the leaking

roof of appellant’s church building. Warzala was hired to coat and seal the roof with

Mule-Hide A-300 finish (“A-300”), manufactured by Mule-Hide and purchased from

ABC.

{¶3} Appellant filed a complaint in the Trumbull County Court of Common Pleas

on February 6, 2015. In the complaint, appellant alleged it was a “religious organization

organized as a church for religious purposes.” It named Warzala, ABC, and Mule-Hide

as defendants and alleged causes of action for negligence, breach of express warranty,

and breach of implied warranty. The complaint stated the A-300 began to slough and

flake and the roof began to leak again in January 2012, causing damage to the interior

of the church. It stated appellees were notified of the problem but failed to remedy the

damages caused by the leaking water. Appellant demanded compensatory damages in

excess of $25,000 from appellees, jointly and severally.

{¶4} ABC and Mule-Hide answered on March 11, 2015, and filed amended

answers on June 23, 2015. On May 1, 2015, Warzala filed an answer and a cross-

claim against ABC and Mule-Hide. The cross-claim was later voluntarily dismissed

without prejudice, pursuant to Civ.R. 41(A).

{¶5} On February 26, 2016, ABC and Mule-Hide filed a joint motion for

summary judgment. They argued there were no genuine issues of material fact and

they were entitled to judgment as a matter of law for the following reasons: appellant did

not have standing to bring the lawsuit because it was not a legal entity and was

unincorporated at the time the lawsuit was filed; the Ohio Products Liability Act

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abrogated appellant’s negligence claim; appellant could not satisfy the elements of

negligence as a matter of law; and appellant’s breach of implied and express warranty

claims failed as a matter of law.

{¶6} On June 9, 2016, appellant filed a memorandum contra to ABC and Mule-

Hide’s motion for summary judgment. Appellant does not dispute that it was an

incorporated nonprofit organization at one time but ceased being incorporated in 2005

when its charter was cancelled by the Ohio Secretary of State. Appellant argued,

however, that it had standing pursuant to R.C. 1745.08, which recognizes

unincorporated nonprofit associations as legal entities. In support of its argument,

appellant included an affidavit from David Natale, a pastor of the Church at Warren.

{¶7} On June 28, 2016, the trial court granted the motion for summary

judgment. The trial court ruled that appellant “had no capacity to commence an action”

because it was not incorporated and was exempt from R.C. 1745.08 as a religious

organization. The trial court also ruled that, although Warzala did not join in the motion

for summary judgment, “a lack of standing” prevented appellant from pursuing its claims

against Warzala.

{¶8} Appellant filed a timely appeal from this entry and assigns three

assignments of error for our review:

[1.] The trial court prejudicially erred and abused its discretion in
finding that the Church at Warren had no capacity to commence an
action against the appellees and it was not raised by appellees as
an affirmative defense in appellees’ pleadings.

[2.] The trial court committed prejudicial error in sustaining
appellees’ motion for summary judgment where the facts are
undisputed that the church was operating as an unincorporated
nonprofit association, but even if disputed it required appellees [sic]
motion to be overruled and tried by a trier of the facts.

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 [3.] The trial court committed prejudicial error and abused its
discretion in ruling that ‘a lack of standing’ prevents appellant from
pursing its claims against Appellee Warzala.

{¶9} ABC and Mule-Hide have jointly assigned one cross-assignment of error

pursuant to R.C. 2505.22 and Loc.R. 16(C):

{¶10} “The trial court’s judgment dismissing the Church’s lawsuit with prejudice

should be affirmed because of the other arguments raised in ABC Supply and Mule-

Hide’s Motion for Summary Judgment.”

{¶11} Pursuant to Civ.R. 56(C), summary judgment is proper when

(1) [n]o genuine issue as to any material fact remains to be
litigated; (2) the moving party is entitled to judgment as a matter of
law; and (3) it appears from the evidence that reasonable minds
can come to but one conclusion, and viewing such evidence most
strongly in favor of the party against whom the motion for
summary judgment is made, that conclusion is adverse to that
party.

Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327 (1977). “[T]he moving party bears

the initial responsibility of informing the trial court of the basis for the motion, and

identifying those portions of the record before the trial court [e.g., pleadings,

depositions, answers to interrogatories, etc.] which demonstrate the absence of a

genuine issue of fact on a material element of the nonmoving party’s claim.” Dresher v.

Burt, 75 Ohio St.3d 280, 292 (1996), citing Civ.R. 56(C) and Celotex Corp. v. Catrett,

477 U.S. 317, 323-324 (1986). If the moving party satisfies this burden, the nonmoving

party has the burden to provide evidence demonstrating a genuine issue of material

fact, pursuant to Civ.R. 56(E). Id. at 293.

{¶12} On appeal, we review a trial court’s entry of summary judgment de novo,

i.e., “independently and without deference to the trial court’s determination.” Brown v.

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Cty. Commrs. of Scioto Cty., 87 Ohio App.3d 704, 711 (4th Dist.1993) (citation omitted);

see also Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105 (1996).

{¶13} Appellant argues in its first assignment of error that ABC and Mule-Hide

could not raise the issue of capacity for the first time in their motion for summary

judgment, because it is an affirmative defense that was waived when not raised in their

answers or amended answers. ABC and Mule-Hide respond that a standing argument

is not waived if not pled in an answer and that they did not waive the argument because

they raised it in their motion for summary judgment. They further respond that appellant

waived its own argument on appeal because it did not raise the issue of waiver in its

memorandum contra to the motion for summary judgment.

{¶14} Before addressing the merits of this assignment of error, we must discuss

the fact that standing and capacity are separate and distinct legal concepts. The parties

do not appear to agree on the appropriate term to use for the specific argument in which

they are engaged. The trial court further confounded the issue by entering judgment in

favor of ABC and Mule-Hide because appellant “had no capacity” and entering

judgment in favor of Warzala because of “a lack of standing.”

{¶15} A party must have both—standing and capacity—in order to sue. Mousa

v. Mt. Carmel Health Sys., Inc., 10th Dist. Franklin No. 12AP-737, 2013-Ohio-2661, ¶12.

“Standing concerns the issue of whether a plaintiff can show an injury traceable to the

conduct of the defendant. Capacity involves the issue of whether a party may properly

sue, either as an entity or on behalf of another.” Dennis v. Ford Motor Co., 121 Ohio

App.3d 318, 320, fn. 1 (9th Dist.1997), citing Country Club Townhouses—N.

Condominium Unit Owners Assn. v. Slates, 9th Dist. Summit No. 17299, 1996 WL

28003, *3-4 (Jan. 24, 1996); see also Mousa, supra, at ¶12-13.

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 {¶16} ABC and Mule-Hide did not raise either defense in their answers or

amended answers. In their motion for summary judgment, they made the following

argument: “The Church does not have standing to pursue this lawsuit because its

articles of incorporation were cancelled in 2005.” (Emphasis added.) The case law

they cite in support, however, states that an entity whose articles of incorporation have

been cancelled has “no capacity to commence an action.” (Emphasis added; citation

omitted). ABC and Mule-Hide clearly raised a question of capacity, not standing, as it

turns on whether appellant has a legal existence, not whether appellant could

demonstrate an injury traceable to the defendants.

{¶17} “Standing to sue is required to invoke the jurisdiction of the common pleas

court in every lawsuit, and standing is to be determined at the commencement of suit.”

Mousa, supra, at ¶12, citing Fed. Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio

St.3d 13, 2012-Ohio-5017, ¶24. A lack of standing defense may be raised at any time

during the proceedings, but it does not affect the subject-matter jurisdiction of a court

nor can it be used to collaterally attack a judgment. Bank of Am., N.A. v. Kuchta, 141

Ohio St.3d 75, 2014-Ohio-4275, paragraphs two and three of the syllabus.1

{¶18} A lack of capacity defense, on the other hand, is an affirmative defense

that is waived if not specifically raised in an answer or amended answer. Bank of Am.,

1. The appellate brief provided to this court on behalf of ABC and Mule-Hide blatantly misquotes the
applicable law in a manner so apparently intentional it should not be ignored. The appellate brief
presents the following to this court: “The Ohio Supreme Court has expressly held that lack of standing is a
jurisdictional defense that vitiates a court’s subject matter jurisdiction over the plaintiff’s lawsuit: ‘Standing
is certainly a jurisdictional requirement; a party’s lack of standing vitiates a court’s subject matter
jurisdiction * * * – over the party’s attempted action.’ Bank of Am., N.A. v. Kuchta, 141 Ohio St.3d 75,
2014-Ohio-4275, 21 N.E.2d 1040, ¶22.” The italicized portion of this misquote from Kuchta has been
added by appellate counsel, without indication of such, and states the exact opposite of what the Ohio
Supreme Court actually held in Kuchta, to wit: “Standing is certainly a jurisdictional requirement; a party’s
lack of standing vitiates the party’s ability to invoke the jurisdiction of a court—even a court of
competent subject-matter jurisdiction—over the party’s attempted action. But an inquiry into a party’s
ability to invoke a court’s jurisdiction speaks to jurisdiction over a particular case, not subject-matter
jurisdiction.” Id. at ¶22 (internal citations omitted) (italics sic; bold added).

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N.A. v. Stewart, 7th Dist. Mahoning No. 13 MA 48, 2014-Ohio-723, ¶47 (citations

omitted). “When a party desires to raise an issue as to the legal existence of any party

or the capacity of any party to sue or be sued or the authority of a party to sue or be

sued in a representative capacity, he shall do so by specific negative averment, which

shall include such supporting particulars as are peculiarly within the pleader’s

knowledge.” Civ.R. 9(A); see also Civ.R. 8(C) (any matter constituting an avoidance or

affirmative defense must be set forth in the answer) and Civ.R. 12(B) (defenses must be

set forth in the responsive pleading).

{¶19} Nevertheless, “[w]hen issues not raised by the pleadings are tried by

express or implied consent of the parties, they shall be treated in all respects as if they

had been raised in the pleadings.” Civ.R. 15(B); see also Chelsea GCA Realty

Partnership, L.P. v. Pilgrim Silk Flowers, Inc., 11th Dist. Portage No. 2003-P-0013,

2004-Ohio-5320, ¶30, and Ford v. Tandy Transp., Inc., 86 Ohio App.3d 364, 381-382

(4th Dist.1993) (citations omitted). A trial court may properly consider an affirmative

defense that was raised for the first time in a motion for summary judgment where

implied consent is established. Parker Fin. v. Matthews, 4th Dist. Adams No. 97CA652,

1999 WL 74686, *8-9 (Feb. 3, 1999), citing Pine Creek Farms v. Hershey Equip. Co.,

Inc., 4th Dist. Scioto No. 96CA2458, 1997 WL 392767, *4-5 (July 7, 1997). Implied

consent is established where it appears “the parties understood the evidence was

aimed at the unpleaded issue.” State ex rel. Evans v. Bainbridge Twp. Trustees, 5 Ohio

St.3d 41 (1983), paragraph two of the syllabus.

{¶20} Here, the first time the affirmative defense of lack of capacity was raised

was in the motion for summary judgment, albeit used interchangeably with the term

“standing.” In its memorandum contra, appellant did not argue that the failure to raise

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the affirmative defense in the pleadings constituted waiver. Additionally, it is clear

appellant understood the evidence was aimed at a capacity defense, despite the

“standing” misnomer, because appellant responded to the merits of the argument:

appellant claimed it was a legal entity and attached an affidavit from Pastor Natale in an

attempt to support that claim.

{¶21} The trial court’s ruling was also based on capacity, not standing, despite

its own use of the terms somewhat interchangeably. The trial court held, in relevant

part:

Because the articles of incorporation have been cancelled for 11
years, Church at Warren was not a nonprofit corporation at the time
of the suit. Therefore, Church at Warren, acting as a corporation,
had no capacity to commence an action. Nor can the Court find
that the Church is an unincorporated nonprofit association as
suggested by the Plaintiff, based upon the evidence in the record.
Clearly the church is a religious organization which is specifically
exempted from the definition of unincorporated nonprofit
organizations by 1745.05(M)(5).

{¶22} Under these circumstances of implied consent, it was not error for the trial

court to consider the applicability of the lack of capacity defense when ruling on the

motion for summary judgment. Further, it is also correct that appellant cannot raise the

waiver issue for the first time on appeal. Had it been raised before the trial court, it

would have given appellees an opportunity to request leave to amend their answers and

the trial court a chance to exercise its discretion in granting same.

{¶23} Appellant’s first assignment of error is without merit.

{¶24} Appellant argues in its second assignment of error that a genuine issue of

material fact exists regarding its capacity to sue, which should have precluded the trial

court from granting summary judgment in favor of appellees. Appellant does not deny

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that it is no longer incorporated. Rather, appellant claims it qualifies as a legal entity

under R.C. 1745.08.

{¶25} An unincorporated nonprofit association “is a legal entity distinct from its

members and managers” that “has the same powers as an individual to do all things

necessary or convenient to carry on its activities.” R.C. 1745.08. “Unincorporated

nonprofit association” does not include, however, “[a] religious organization that

operates according to the rules, regulations, canons, discipline, or customs established

by the organization, including any ministry, apostolate, committee, or group within that

organization.” R.C. 1745.05(M)(5).

{¶26} Appellant specifically stated in its complaint that it “is a religious

organization organized as a church for religious purposes.” Nevertheless, in support of

its argument, appellant attached to its memorandum contra an affidavit from Pastor

Natale, which states: “The Church of Warren operates as a legal entity pursuant to

O.R.C. §1745.08 and operated as such at the time and prior to the filing of its

Complaint[.]” This affidavit is not sufficient to create a genuine issue of material fact, as

it merely sets forth a legal conclusion, not facts based on Pastor Natale’s personal

knowledge. See Civ.R. 56(E) (“Supporting 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.”); see also Shirley v. St. Joseph Riverside Hosp., 11th Dist. No. 99-T-0035,

2000 WL 527848, *2 (Apr. 28, 2000) (citation omitted) (“statements in affidavits must be

based on personal knowledge because legal conclusions are inappropriate”).

{¶27} Furthermore, “a party may not create a factual issue by simply filing an

affidavit that contradicts his/her earlier deposition testimony[.]” Spatar v. Avon Oaks

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Ballroom, 11th Dist. Trumbull No. 2001-T-0059, 2002-Ohio-2443, ¶20. During Pastor

Natale’s deposition, the following exchange took place:

Q: And is the Church at Warren a non-profit organization?

A: It’s a church.

Q: Do you know if it’s a non-profit?

A: I don’t know the terminology of non-profit.

Although in his affidavit Pastor Natale stated appellant operated as an R.C. 1745.08

unincorporated nonprofit association “at the time and prior to the filing of its Complaint in

the above cited case,” this contradicts his deposition testimony that he did not know the

meaning of “nonprofit” and that appellant is a church. Appellant provided no

explanation for this contradiction in its opposition to the motion for summary judgment.

{¶28} Neither Pastor Natale’s affidavit nor any other evidentiary material

produced by appellant contradicts the application of R.C. 1745.05(M)(5) to exempt it

from legal entity status. Appellant did not establish a genuine issue of material fact

exists regarding its capacity to sue and thus failed to meet its reciprocal burden on

summary judgment.

{¶29} Appellant’s second assignment of error is without merit.

{¶30} Appellant argues in its third assignment of error that the trial court erred in

granting judgment in favor of Warzala for the same reasons advanced in its first two

assignments of error. Although Warzala did not move for summary judgment, we rely

on the fact, discussed above, that the issue of capacity was properly before the trial

court with appellant’s implied consent. Because the trial court found appellant lacks

capacity to sue, appellant was prevented from pursuing its claims against each

defendant in this matter.

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 {¶31} Appellant’s third assignment of error is without merit.

{¶32} Pursuant to R.C. 2505.22, because we have not found merit with

appellant’s assignments of error, we will not address the cross-assignment of error

raised by ABC and Mule-Hide. See Hicks v. The Cadle Co., 11th Dist. Trumbull No.

2014-T-0103, 2016-Ohio-4728, ¶32.

{¶33} The judgment of the Trumbull County Court of Common Pleas is affirmed.

CYNTHIA WESTCOTT RICE, P.J.,

COLLEEN MARY O’TOOLE, J.,

concur.

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