Ohio Security Insurance Company v. Dent et al
Filing
82
Opinion and Order For the reasons stated in the Order, Defendant's Motion for summary judgment is denied (Related Doc # 68 ). Signed by Judge Dan Aaron Polster on 10/23/2018.(K,K)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
OHIO SECURITY INS. COMP.,
Plaintiff,
v.
WILLIAM DENT, et al.,
Defendants.
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CASE NO. 1:17-cv-884
JUDGE DAN AARON POLSTER
OPINION & ORDER
This case is before the Court on Defendant William Dent’s Motion for Summary
Judgment (“Motion”), Doc #: 68, on Defendant Dent Properties, LLC’s (“DPL”) cross claims
against him. For the following reasons, Dent’s Motion is DENIED.
I.
Background
a.
The Federal Action
Plaintiff Ohio Security Insurance Company (“OSIC”) filed this tort action on April 26,
2017 against Defendants Dent and DPL. Doc #: 1. DPL filed its Answer and Cross Claim
against Dent on August 25, 2017. Doc #: 23. On January 23, 2018, OSIC filed its First
Amended Complaint adding Defendants Brite Metal, Inc. and AirFasco, Inc. Doc #: 36. 1 OSIC
is an insurance company who insured Alsoussou & Son, Inc. (“Alsoussou”). Compl. ¶¶ 2-3.
DPL is located adjacent to Alsoussou on East 55th Street in Cleveland. Id. ¶¶ 3-4. In May 2015,
Dent sold his 100% interest in DPL to GO55, LLC (“GO55”). Doc #: 23 at ¶ 3. The transaction
closed on May 1, 2015. Id. at ¶ 8. On or about May 2, 2015, OSIC alleges that Dent and
employees, agents, and/or representatives of DPL were disposing of solid wastes by burning the
waste at DPL. Compl. ¶ 14. The fire was uncontained and spread to Alsoussou, causing
1
All “Compl.” citations are to the First Amended Complaint.
damage. Id. at ¶ 15. OSIC made payments to or on behalf of Alsoussou to cover the damage
caused by the fire. Id. at ¶ 17. OSIC now seeks to recover the amount of those payments from
Defendants. DPL’s cross claims seek to recover from Dent the damages to DPL from the fire.
Doc #: 23 at ¶¶ 24-53. DPL also seeks contribution from Dent for the damages to Alsoussou.
Id. at ¶¶ 54-56.
b.
The Stark County Action
On December 9, 2015, Dent filed a breach of contract case in the Stark County Court of
Common Pleas against GO55, DPL, and GO55’s principals Henry Brownell and August Garofoli
(the “GO55 Defendants”). Doc #: 68-1. Dent’s claims also stemmed from the sale of DPL to
GO55 in May 2015. Id. at 2. Pursuant to the Equity Purchase Agreement of DPL to GO55
(“Agreement”), GO55 agreed to pay Dent $209,000. Id. GO55 and Dent also executed a
cognovit promissory note (“Note”), wherein GO55 agreed to pay Dent certain monthly
installment payments. Id. Dent alleged in the Stark County action that the GO55 Defendants
failed to make the agreed-upon installment payments. Id. at 3. On December 16, 2015, the Stark
County judge, Judge Chryssa Hartnett, entered judgment in favor of Dent on the Note.
Doc #: 68-2. The GO55 Defendants filed an answer as to the breach of contract claims and
counterclaims on March 21, 2016. Doc #: 68-3. The GO55 Defendants expressly stated that
none of their counterclaims were intended to state a claim to recover from the damages caused
by the fire at DPL. Id. at ¶ 17. Dent filed a Motion for Summary Judgment as to GO55’s
counterclaims on September 23, 2016. Doc #: 68-4. On October 11, 2016, the GO55
Defendants voluntarily dismissed their counterclaims. Doc #: 68-5. On November 30, 2016,
Judge Hartnett granted summary judgment in favor of Dent on the breach of contract claims.
Doc #: 68-6. The GO55 Defendants filed a Motion for Relief from Judgment on July 26, 2017.
Doc #: 68-7. Judge Hartnett denied that motion on September 19, 2017. Doc #: 68-8.
c.
The Instant Motion
Dent filed the instant Motion on August 30, 2018, arguing that DPL’s cross claims are
barred as a matter of law because the GO55 Defendants, including DPL, failed to pursue the
cross claims as compulsory counterclaims in the Stark County case. DPL filed its Opposition
brief on October 1, 2018. Doc #: 75. Dent filed his Reply brief on October 16, 2018. Doc #: 79.
II.
Analysis
Dent argues that DPL is barred from pursuing its cross claims against Dent because those
cross claims should have been brought as compulsory counterclaims in the Stark County action.
Mot. at 1. This Court disagrees. A compulsory counterclaim is one that (a) “arises out of the
transaction or occurrence that is the subject matter of the opposing party’s claim;” and (b) “does
not require adding another party over whom the court cannot acquire jurisdiction.” FED. R. CIV.
PRO 13(a)(1). A “party’s failure to plead a compulsory counterclaim forever bars that party from
raising the claim in another action.” Bauman v. Bank of America, N.A., 808 F.3d 1097, 1101
(6th Cir. 2015) (quotation omitted). Thus, to determine whether DPL’s cross claims were
compulsory counterclaims in the Stark County action, the Court must determine whether they
arose out of Dent’s breach of contract claims. Rather than look to whether the original claim and
would-be counterclaims literally arise out of the same transaction or occurrence, courts must ask
whether there is a “logical relationship” between the two claims. Id. Under this test, the Court
must “determine whether the issues of law and fact raised by the claims are largely the same and
whether substantially the same evidence would support or refute both claims.” Id. (quotation
omitted). “A partial overlap in issues of law and fact does not compel a finding that two claims
are logically related.” Id.
In this case, DPL’s would-be counterclaims do not meet the logical relationship test
because they involve separate issues of law and fact from Dent’s breach of contract claims.
First, Dent’s breach of contract claims involve contract law; DPL’s cross claims are rooted in
tort. Second, the factual issues are distinct. As Judge Hartnett pointed out in her Order denying
DPL’s Motion for Relief from Judgment, the damage caused by the fire had no bearing on the
amounts DPL owed to Dent under the Note. Doc #: 68-8 at 3. The fire occurred on May 2,
2015, the day after the sale transaction closed. Id. at 4. There is no evidence that the warehouses
were in any way damaged on the date of purchase or at the time of closing. Id. Further, the
Agreement contained no representations or guarantees regarding the continued condition of the
warehouses or the ability of DPL to sell the warehouses for any particular price after the
transaction closed. Id. Thus, DPL’s tort claims regarding the fire damage arose independently
of Dent’s breach of contract claims and were not compulsory counterclaims in the Stark County
action. Accordingly, the Court cannot dismiss DPL’s cross claims.
III.
Conclusion
For the foregoing reasons, Dent’s Motion is DENIED.
IT IS SO ORDERED.
/s/Dan Aaron Polster Oct. 23, 2018
DAN AARON POLSTER
UNITED STATES DISTRICT COURT
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