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Legacy Academy for Leaders v. Mt. Calvary Pentecostal Church

Court of Appeals of Ohio, Tenth District

September 26, 2013

Legacy Academy for Leaders and the Arts and Attorney General Mike DeWine, Plaintiffs-Appellees,
v.
Mt. Calvary Pentecostal Church et al., Defendants-Third-Party-Appellants, Carl Shye et al., Defendants-Appellees [Ohio Auditor of State Third-Party-Defendant-Appellee.]

APPEAL from the Court of Claims of Ohio (Ct. of Cl. No. 2012-06394)

Mike DeWine, Attorney General, and Randall W. Knutti, for plaintiffs-appellees.

William C. Wilkinson, for appellants.

DECISION

T. BRYANT, J.

(¶ 1} Defendants-Appellants, Mt. Calvary Pentecostal Church, Edward Bolling, Jerry McKinney, C. Wayne Brantley, Leonard Randall, Gary Brantley, and A Glenn Brady, appeal from a judgment of the Court of Claims of Ohio granting motions of plaintiff-appellee, Ohio Attorney General Mike DeWine ("attorney general"), and third- party defendant-appellant, Ohio Auditor of State, dismissing the church's counterclaim and dismissing the amended third-party complaint against the state auditor. For the reasons that follow, we affirm the judgment of the Court of Claims of Ohio dismissing the church's counterclaim, reverse the judgment of the Court of Claims dismissing the amended third-party complaint, and remand that portion for further proceedings consistent with this decision.

I. BACKGROUND

(¶ 2} On February 13, 2012, the attorney general, in a representative capacity on behalf of Legacy Academy for Leaders and the Arts ("Legacy"), a nonprofit corporation operating as an Ohio community school, filed a complaint in the Franklin County Court of Common Pleas to recover public money improperly expended or unaccounted for pursuant to R.C. 117.28, 117.36, and 117.42. In his complaint, the attorney general named several defendants, including appellants, Mt. Calvary Pentecostal Church ("church"), Edward Bolling, Jerry McKinney, C. Wayne Brantley, Leonard Randall, Gary Brantley, and A. Glenn Brady. The attorney general alleged that the church owns the land and was the lessor of the premises used by Legacy for operation of the community school, that Bolling was the chief financial officer for the church, and that McKinney, Wayne Brantley, Randall, Gary Brantley, and Brady were members of the Legacy school board. The attorney general claimed that based on findings of recovery in regular and special audits performed by the state auditor, he was seeking to collect certain amounts from defendants, including appellants.

(¶ 3} After the common pleas court denied appellants' motion to dismiss, they filed an answer, counterclaim, and third-party complaint. In the counterclaim, appellant church alleged that Legacy is liable for damages from its breach of lease agreements by its failure to pay the church the agreed upon rent. In their third-party complaint, appellants claimed that the state auditor prepared audit reports concerning Legacy that did not conform to generally accepted accounting principles and contained negligent representations that were relied on by appellants and others to the detriment of appellants.

(¶ 4} Upon the filing of the third-party complaint against the state auditor, appellants filed a notice of removal of the action to the Court of Claims of Ohio pursuant to R.C. 2743.03(E)(1). Legacy, through the attorney general, filed a Civ.R. 12(B) motion to dismiss the counterclaim, and the state auditor filed a Civ.R. 12(B) motion to dismiss the third-party claims. In response to the dismissal motions, appellants filed an amended answer and an amended third-party complaint against the state auditor. The amended answer did not include a counterclaim against Legacy or the attorney general. Appellants then filed a memorandum in opposition to appellees' motions to dismiss the counterclaim and the original third-party complaint on the basis that their filing of an amended answer and amended third-party complaint rendered the motions moot. The state auditor filed a motion to dismiss appellants' amended third-party complaint, and appellants filed a memorandum in opposition.

(¶ 5} On February 6, 2013, the Court of Claims granted the attorney general's motion to dismiss appellant church's counterclaim and the state auditor's motion to dismiss appellants' amended third-party complaint and remanded the case to the common pleas court pursuant to R.C. 2743.03(E)(2).

II. ASSIGNMENTS OF ERROR

(¶ 6} Appellants appeal from the judgment of the Court of Claims, and they assign the following errors:

1. The trial court erred when it determined that third party defendant Ohio Auditor David Yost is entitled to statutory ...

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