Quality Car & Truck Leasing Inc v Sark Case Brief

Case Brief 1: Quality Car & Truck Leasing, Inc. v.Sark
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Quality Car & Truck Leasing, Inc. v. Sark
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Quality Car & Truck Leasing, Inc. v. Sark
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Opinion
Case No. 12CA5
01-07-2013
Quality Car & Truck Leasing, Inc., Plaintiff-Appellee, v. Michael L. Sark, et al, DefendantsAppellants.
John R. Haas, RUGGIERO & HAAS, Portsmouth, Ohio, for Appellants. Chadwick K. Sayre, George
L. Davis, III, and George L. Davis, IV, Portsmouth, Ohio, for Appellee.
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Kline
DECISION AND
JUDGMENT ENTRY
APPEARANCES:
John R. Haas, RUGGIERO & HAAS, Portsmouth, Ohio, for Appellants. Chadwick K. Sayre, George
L. Davis, III, and George L. Davis, IV, Portsmouth, Ohio, for Appellee. Kline, J.:
{¶1} Michael Sark, Sr. (hereinafter “Michael Senior”), Paula Sark (hereinafter “Paula”), and
Michael Sark, Jr. (hereinafter “Michael Junior”)appeal the judgment of the Lawrence County
Court of Common Pleas. The trial court granted Quality Car & Truck Leasing, Inc.’s (hereinafter
“Quality Leasing”) motion for summary judgment. Michael Senior and Paula sold their residence
to Michael Junior for one dollar, and the trial court determined that the transfer constituted a
fraudulent conveyance under R.C. 1336.04(A)(2)(a). The Sarks contend that there are genuine
issues of material fact regarding whether the transfer constituted a fraudulent conveyance.
Because there are no genuine issues of material fact, we disagree. Accordingly, we affirm the
judgment of the trial court.
We will refer to Michael Senior, Paula, and Michael Junior collectively as the “Sarks.”
I.
{¶2} Michael Senior operates a logging business as a sole proprietorship. On several occasions,
Michael Senior borrowed money from Quality Leasing to acquire equipment for the business.
(Although Paula’s involvement in the logging business is unclear, both Michael Senior and Paula
signed various loan agreements with Quality Leasing.) Around 2007, the business encountered
financial difficulties. Michael Senior was unable to pay his creditors, including Quality Leasing.
{¶3} Eventually, Michael Senior and Paula filed for Chapter 13 bankruptcy. The Chapter 13
bankruptcy was converted to a Chapter 12 bankruptcy in order to make the bankruptcy-plan
payments more manageable. Michael Senior and Paula, however, were unable to make the
payments required by their Chapter 12 bankruptcy plan, and they moved to dismiss their
bankruptcy case on October 31, 2008.
{¶4} In December 2008, Michael Senior and Paula conveyed title to their residence (hereinafter
the “Property”) to Michael Junior. (Michael Senior and Paula acquired the Property as a gift,
and they have lived there since 1999.) According to Michael Senior and Paula’s bankruptcy
filings, the value of the Property is $203,500. Michael Junior, however, paid Michael Senior and
Paula one dollar for the Property. (Michael Senior and Paula continued to reside at the Property
following the transfer.)
{¶5} In January 2009, Quality Leasing filed a complaint for damages against Michael Senior and
Paula in the Scioto County Court of Common Pleas. The basis for the complaint was the debts
Michael Senior and Paula owed to Quality Leasing. In March 2009, Quality Leasing received a
judgment in its favor against Michael Senior and Paula for $150,481.85.
{¶6} Quality Leasing then filed the claim that is the subject of this appeal. Quality Leasing
sought to set aside the transfer of the Property to Michael Junior as a fraudulent conveyance.
Eventually, Quality Leasing moved for summary judgment, which the trial court granted. The
court found that Michael Senior and Paula’s transfer of the Property to Michael Junior
constituted a fraudulent conveyance under R.C. 1336.04(A)(2)(a).
{¶7} The Sarks appeal and assert the following assignment of error: I. “The trial court erred in
awarding summary judgment in favor of plaintiff, Quality Leasing Car and Truck Leasing, Inc.
and against defendants due to the fact the evidence when viewed in the light most favorable to
defendants reveals genuine issues of material fact to be determined by a jury, not the court.”
II.
{¶8} The Sarks claim that the trial court erred in granting Quality Leasing’s motion for summary
judgment.
{¶9} “Because this case was decided upon summary judgment, we review this matter de novo,
governed by the standard set forth in Civ.R. 56.” Comer v. Risko, 106 Ohio St.3d 185, 2005-Ohio4559, 833 N.E.2d 712, ¶ 8. Summary judgment is appropriate only when the following have
been established: (1) that there is no genuine issue as to any material fact; (2) that the moving
party is entitled to judgment as a matter of law; and (3) that reasonable minds can come to
only one conclusion, and that conclusion is adverse to the nonmoving party. Civ.R.
56(C). Accord Bostic v. Connor, 37 Ohio St.3d 144, 146, 524 N.E.2d 881 (1988); Grimes v.
Grimes, 4th Dist. No. 08CA35, 2009-Ohio-3126, ¶ 14. In ruling on a motion for summary
judgment, the court must construe the record and all inferences therefrom in the opposing
party’s favor. Doe v. First United Methodist Church, 68 Ohio St.3d 531, 535, 629 N.E.2d
402 (1994).
{¶10} The burden of showing that no genuine issue of material fact exists falls upon the party
who moves for summary judgment. Dresher v. Burt, 75 Ohio St.3d 280, 294, 662 N.E.2d
264 (1996). However, once the movant supports his or her motion with appropriate evidentiary
materials, 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 [Civ.R. 56],
must set forth specific facts showing that there is a genuine issue for trial.” Civ.R. 56(E). Accord
Grimes at ¶ 15.
{¶11} “In reviewing whether an entry of summary judgment is appropriate, an appellate court
must independently review the record and the inferences that can be drawn from it to
determine if the opposing party can possibly prevail.” Grimes at ¶ 16. “Accordingly, we afford
no deference to the trial court’s decision in answering that legal question.” Morehead v.
Conley, 75 Ohio App.3d 409, 412, 599 N.E.2d 786 (4th Dist.1991). Accord Grimes at ¶ 16.
{¶12} The trial court found that summary judgment was proper under R.C. 1336.04(A)(2)(a).
That statute provides as follows:
A transfer made or an obligation incurred by a debtor is fraudulent as to a creditor, whether the
claim of the creditor arose before or after the transfer was made
or the obligation was incurred, if the debtor made the transfer or incurred the obligation * * *
[w]ithout receiving a reasonably equivalent value in exchange for the transfer or obligation, and
* * * [t]he debtor was engaged or was about to engage in a business or a transaction for which
the remaining assets of the debtor were unreasonably small in relation to the business or
transaction * * *.
{¶13} The trial court found “that [Michael Senior and Paula] made a transfer without the
exchange of reasonably equivalent value and that the debtor was engaged or was about to
engage in a business where [sic] a transaction for which the remaining assets of the debtor
were unreasonably small in relation to the business or transaction.” Feb. 10, 2012 Decision and
Judgment Entry at 2.
{¶14} The Sarks do not challenge these findings by the trial court. Instead, the Sarks argue that
summary judgment was not proper because there is a genuine issue of material fact regarding
whether they intended to defraud Quality Leasing. The Sarks’ argument fails because intent is
not relevant to an analysis under R.C. 1336.04(A)(2)(a). A creditor does not need to show that a
transfer was made with intent to defraud in order to prevail under R.C. 1336.04(A)(2)(a). See
Blood v. Nofzinger, 162 Ohio App.3d 545, 2005-Ohio-3859, 834 N.E.2d 358, ¶ 52 (6th
Dist.); Ford v. Star Bank, N.A., 4th Dist. No. 97CA39, 1998 WL 553003, *4 (Aug. 27, 1998). Thus,
the Sarks cannot defeat summary judgment by showing that they did not act with fraudulent
intent when Michael Senior and Paula transferred the Property to Michael Junior.
{¶15} The Sarks also claim that summary judgment was improper because there is an issue of
fact regarding whether Michael Senior and Paula are actually Quality Leasing’s debtors. Micheal
Senior apparently returned the equipment that secured the debts owed to Quality Leasing.
According to the Sarks, Quality Leasing’s appraisals of the equipment showed that the value of
the equipment would be enough to satisfy the debts.
{¶16} The Sarks’ argument, however, does not address the fact that they are clearly judgment
debtors to Quality Leasing and that the judgment has not been satisfied. In March 2009, Quality
Leasing obtained a judgment from the Scioto County Court of Common Pleas for the debts
Michael Senior and Paula owed to Quality Leasing. The Sarks have not challenged the validity of
the judgment against them nor have they shown that the judgment has been satisfied. Thus,
there is no genuine issue of material fact regarding whether Paula and Michael Senior are
debtors to Quality Leasing.
{¶17} In conclusion, there is no genuine issue as to any material fact. Quality Leasing is entitled
to judgment as a matter of law. And reasonable minds can come to only one conclusion, and
that conclusion is adverse to the Sarks.
{¶18} Accordingly, we overrule the Sarks’ assignment of error and affirm the judgment of the
trial court.
JUDGMENT AFFIRMED.
JUDGMENT ENTRY
It is ordered that the JUDGMENT BE AFFIRMED. Appellants shall pay the 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 Lawrence County Court
of Common Pleas 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. Exceptions. Abele, J.: Concurs in Judgment & Opinion.
Harsha, J.: Concurs in Judgment Only.
For the Court
BY: ________
Roger L. Kline, Judge
NOTICE TO COUNSEL
Pursuant to Local Rule No. 14, this document constitutes a final judgment entry and the time
period for further appeal commences from the date of filing with the clerk.