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Fenway Financial, LLC v. Greater Columbus Realty, LLC

Court of Appeals of Ohio, Tenth District

August 22, 2013

Fenway Financial, LLC dba Commission Express, Plaintiff-Appellant,
v.
Greater Columbus Realty, LLC dba Keller Williams Greater Columbus Realty, LLC et al., Defendants-Appellees.

APPEAL from the Franklin County Court of Common Pleas. C.P.C. No. 08CVH 7 10611

Dinsmore & Shohl, LLP, Donald B. Leach, Jr., Michael J. King, and Gregory P. Mathews, for appellant.

Kevin R. Nose, for appellee Greater Columbus Realty, LLC, dba Keller Williams Greater Columbus Realty, LLC.

Michael DeWine, Attorney General, Cheryl R. Hawkinson, Keith L. OKorn, and Jennifer S. M. Croskey, for appellee Ohio Department of Commerce.

DECISION

BROWN, J.

(¶ 1} This is an appeal by plaintiff-appellant, Fenway Financial, LLC dba Commission Express, from a decision and entry of the Franklin County Court of Common Pleas granting summary judgment in favor of defendant-appellee, Greater Columbus Realty, LLC, dba Keller Williams Greater Columbus Realty, LLC ("Keller Williams"), and defendant-appellee, Kimberly A. Zurz, Director, Ohio Department of Commerce ("director").

(¶ 2} On July 24, 2008, appellant filed a complaint against Keller Williams, seeking a declaratory judgment and alleging breach of contract. In the complaint, appellant alleged it had purchased accounts receivable, comprised of earned but unpaid sales commissions, from real estate agent Stacey Lambright ("Lambright"). Appellant alleged that Lambright's real estate license is associated with Keller Williams, a real estate broker, and that Keller Williams had failed to pay funds due to appellant following notice of Lambright's assignment of certain accounts receivable attributable to five transactions.

(¶ 3} On October 15, 2008, appellant filed an amended complaint, naming the director as a defendant; appellant asserted a claim for declaratory relief after the Ohio Department of Commerce (hereafter "the department") issued subpoenas to appellant in which the department alleged that appellant's business model violated provisions of R.C. 1321.02 (requiring a person engaged in the business of lending to obtain a license from the division of financial institutions). On November 18, 2008, the director filed an answer and counterclaim, seeking in the counterclaim a declaration that R.C. 4735.20 precluded Keller Williams from paying the amounts allegedly owed to appellant.

(¶ 4} On July 21, 2010, the parties entered into a joint stipulation and agreed statement of facts ("joint stipulation"); the parties subsequently submitted the matter to the trial court on cross-motions for summary judgment. The following facts, set forth in the trial court's decision on the motions for summary judgment, are based upon the joint stipulation:

Plaintiff, as a franchisee, conducted its business in accordance with the national model established by Commission Express, set forth in a manual. * * * Plaintiff requires a real estate agent with whom it does business to execute a Master Repurchase and Security Agreement * * * and a Business Purpose Checklist and Declaration * * *. Ms. Lambright executed both documents. * * * Thereafter, Plaintiff filed a UCC-1 Financing Statement, listing Plaintiff as the Secured Party and Ms. Lambright as the Debtor. * * * Each time Plaintiff purchased one of Ms. Lambright's real estate commission accounts, it requested that Ms. Lambright execute five documents (collectively "Transaction Documents"): 1) an Application to Sell Receivable; 2) a Certification; 3) an Account Receivable Sale and Assignment Agreement; 4) a Notice of Assignment; and 5) a Receivable Summary. * * * Ms. Lambright or her husband executed almost all of the Transaction Documents for eighteen properties for which she expected to receive commission. * * * Plaintiff then sent a Notice of Assignment to Defendant Keller Williams for each of the eighteen transactions and a Reminder of Commission Assignment before the closing dates for the properties.
Keller Williams never sent Plaintiff any of the money it received for commissions earned by Ms. Lambright or her husband. * * * Instead, Keller Williams informed Plaintiff that it was precluded from sending Plaintiff the money under R.C. 4735.20(F). * * * Six of the transactions Ms. Lambright entered into with Plaintiff are in default. * * * Plaintiff sent Ms. Lambright a Notice of Default for each of those accounts, demanding payment of the full amount of the commission, plus eighteen percent interest per annum on the unpaid balance. * * * Plaintiff also sent a Notice of Default and Demand for Future Commissions to Keller Williams, demanding payment of the full amount of the commission, plus eighteen percent interest per annum on the unpaid balance.

(¶ 5} On March 2, 2012, the trial court filed a decision granting summary judgment in favor of Keller Williams and the director, and denying appellant's motion for summary judgment. The trial court concluded that the transactions between appellant and Lambright constituted a series of loans by appellant (and not the purchase of accounts receivable), therefore making appellant a third-party creditor under R.C. 4735.20(F) and precluding Keller Williams from transferring commissions earned by Lambright to appellant. The court also determined that the loans at issue violated the statutory provisions of R.C. 1321.02 and that there existed no conflict between the provisions of R.C. 4735.20(F) and 1309.406(F).

(¶ 6} On appeal, appellant sets forth the following five assignments of error for this court's review:

First Assignment of Error: The trial court erred in granting the Defendants' motions for summary judgment and denying Plaintiffs motion for summary judgment because the transactions at issue effected assignments of accounts receivable.
Second Assignment of Error: The trial court erred in granting the Defendants' motions for summary judgment and denying Plaintiffs motion for summary judgment because the transactions at issue do not violate R.C. 1321.02.
Third Assignment of Error: The trial court erred in granting the Defendants' motions for summary judgment and denying Plaintiffs motion for summary judgment because R.C. 4735.20(F) does not preclude Defendant Keller Williams from transferring commissions earned by a real estate agent to Plaintiff.
Fourth Assignment of Error: The trial court erred in granting the Defendants' motions for summary judgment and denying Plaintiffs motion for summary judgment because R.C. 1309.406(F) precludes the trial court's application of R.C. 4735.20(F).
Fifth Assignment of Error: The trial court erred in granting the Defendants' motions for summary judgment and denying Plaintiffs motion for summary judgment because it should have severed the repurchase provision from the Master Repurchase and Security Agreement.

(¶ 7} Appellant's assignments of error are interrelated and will be considered together. Under these assignments of error, appellant argues that the trial court erred in granting summary judgment in favor of Keller Williams and the director because: (1) the transactions at issue effected assignments of accounts receivable (and not loans), (2) the transactions do not violate the provisions of R.C. 1321.02, (3) R.C. 4735.20(F) does not preclude Keller Williams from transferring commissions earned by a real estate agent to appellant, (4) R.C. 1309.406(F) precludes the trial court's application of R.C. 4735.20(F), and (5) the trial court should have severed the repurchase provision from the Master Repurchase and Service Agreement.

(¶ 8} Pursuant to Civ.R. 56(C), summary judgment shall be granted if the filings in the action, including pleadings and affidavits, "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." This court's review of a trial court's decision granting summary judgment is de novo. Bonacorsi v. ...


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