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Keybank National Assoc. v. Guarnieri & Secrest

December 2, 2008

KEYBANK NATIONAL ASSOC., PLAINTIFF-APPELLANT,
v.
GUARNIERI & SECREST, P.L.L., ET AL., DEFENDANTS-APPELLEES.



CHARACTER OF PROCEEDINGS: Civil Appeal from Common Pleas Court, Case No. 05CV505.

The opinion of the court was delivered by: Vukovich, J.

OPINION

JUDGMENT: Reversed and Remanded.

JUDGES: Hon. Joseph J. Vukovich, Hon. Gene Donofrio, Hon. Mary DeGenaro.

¶{1} Plaintiff-appellant KeyBank appeals the decision of the Columbiana County Common Pleas Court granting summary judgment to defendants-appellees Guarnieri & Secrest, P.L.L., Randil J. Rudloff Co. L.P.A. and Randil J. Rudloff (collectively referred to as the G&S appellees) on KeyBank's conversion and breach of trust claims. The first issue is whether conversion requires the party converting the property to derive a benefit from the conversion. The second issue is whether the trial court erred when it dismissed KeyBank's breach of trust claim against G&S for failure to state a claim upon which relief could be granted. For the reasons stated below, the judgment of the trial court is reversed and this case is remanded.

STATEMENT OF FACTS

¶{2} The underlying litigation giving rise to this appeal involved Stephen and Rebecca Labate and Labate Chrysler, Jeep, Dodge, Inc. (collectively referred to as Labate) suing Anthony Pesce; Dennis Denoi; Janice Courtney; Phillip Courtney; Tony Pesce Chrysler-Dodge Jeep, Inc.; Punxsutawney Land Company, LTD (collectively referred to as Pesce); Guarnieri & Secrest, P.L.L. and James McDonnell. At the heart of the action was the sale of Pesce's car dealership, real property, and inventory to Labate. The sale, for the most part fell apart, and resulted in litigation. Labate claimed that Pesce breached the contract, committed fraud, and made misrepresentations.

¶{3} Randil J. Rudloff from Guarnieri & Secrest was the escrow agent in the contract for sale. In all, Labate deposited $272,651.11 into the escrow account. At the time of litigation, $115,872.95 was left in the account.

¶{4} During the underlying litigation, Labate sought to have the escrowed funds turned over to it. Guarnieri & Secrest filed a Motion for Interpleader of Money and sought to have the remaining amount deposited with the Columbiana County Clerk of Court. In the motion, Guarnieri & Secrest explained that both Labate and Pesce have creditors -- Labate's creditor was Fifth Third Bank and Pesce's creditor was KeyBank. Thus, it reasoned that depending on how the court ruled on the causes of action, the money would most likely end up with one of the creditors. The trial court granted the motion and released Guarnieri & Secrest from further liability.

¶{5} As a result of the above, Fifth Third Bank moved to intervene and enforce judgment. It sought the $115,872.95 that Guarnieri & Secrest had deposited with the court. It explained that it was Labate's lender; it lent Labate the money to purchase the dealership and inventory. Labate, however, defaulted on the loan and Fifth Third had obtained a valid cognovit judgment against Labate. The court granted the motion and ordered the funds disbursed to Fifth Third Bank.

¶{6} Months after that occurred, KeyBank moved to intervene in the suit and filed a third party complaint. KeyBank holds security agreements on various aspects of Pesce's dealership and inventory. The third party complaint alleged causes of action sounding in conversion and breach of trust against Guarnieri & Secrest, P.L.L., Randil J. Rudloff Co, L.P.A. and Randil J. Rudloff and later a claim against Fifth Third. KeyBank alleged that it had the first perfected security interest and the G&S appellees were not entitled to disburse funds from the escrow account without its approval.

¶{7} In response to the complaint, the G&S appellees filed a Civ.R. 12(B)(6) motion moving to dismiss Count II (breach of trust claim) of KeyBank's third party complaint. The motion was granted. 08/30/06 J.E. The G&S appellees then filed an answer to the conversion claim and additionally moved for summary judgment on that claim. 09/07/06 Answer and Summary Judgment Motion. Prior to the trial court ruling on that summary judgment motion, KeyBank amended its third party complaint (03/07/07 Amended Complaint). In the amended complaint, KeyBank reasserted the breach of trust claim against the G&S appellees that had been previously dismissed, and maintained its conversion claim against the G&S appellees. On April 23, 2007, the trial court ruled on the G&S appellees motion for summary judgment on the conversion claim by granting summary judgment to the G&S appellees. In that ruling, the trial court also dismissed the reasserted breach of trust claim that was exactly the same as the previously dismissed claim; thus, it was once again dismissed for failure to state a claim upon which relief could be granted.

¶{8} All remaining claims by the multiple parties in this case were eventually resolved with the final issue being disposed of in the trial court's December 7, 2007 judgment entry, thereby rendering all earlier orders final and appealable. KeyBank now timely appeals from the trial court's decision granting summary judgment in favor of the G&S appellees on the conversion claim and dismissing its breach of trust claim against the G&S appellees for failure to state a claim. It raises three assignments of error. However, it addresses those assignments out of order; the third assignment of error is addressed first. Thus, we will begin with that assignment of error.

THIRD ASSIGNMENT OF ERROR

ΒΆ{9} "THE TRIAL COURT ERRED BY GRANTING APPELLEES MOTION FOR SUMMARY JUDGMENT ON COUNT I OF KEYBANK'S AMENDED THIRD-PARTY COMPLAINT (CONVERSION) BECAUSE APPELLEES FAILED TO DEMONSTRATE THE ABSENCE OF A GENUINE ISSUE OF MATERIAL FACT ...


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