Court of Appeals of Ohio, Seventh District, Mahoning
Appeal from Court of Common Pleas of Mahoning County, Ohio
Case No. 2014 CV 02981
Plaintiffs-Appellants Attorney Thomas Hull II Attorney David
Defendants-Appellees Attorney Thomas Hill.
Amicus Curiae Attorney Timothy McGranor Attorney Mitchell
Gene Donofrio, Hon. Mary DeGenaro, Hon. Carol Ann Robb.
Plaintiffs-Appellants, Thomas Dundics and IBIS Land Group,
Ltd., appeal the dismissal of their complaint by the Mahoning
County Court of Common Pleas for failure to state a claim
upon which relief can be granted.
Appellants filed a complaint on November 14, 2014 against
Defendants-Appellees, Eric Petroleum Corporation and Bruce
Broker. Appellants' complaint included five counts. In
count one of their complaint, Appellants alleged that they
entered into an agreement with Appellees whereby Appellants
would find property owners, negotiate gas leases, and work
with Appellees to obtain executed gas leases. For
compensation, Appellants alleged they were to receive $10.00
per leased acre and a 1% working interest in all wells placed
on the leased acreage. Appellants further claimed in their
complaint that oil and gas leases are not real estate and
that, therefore, they did not need to be licensed real estate
brokers to perform these services for Appellees. Appellants
complained that they performed their end of the bargain and
received some compensation. Now, Appellants complain, the
leases may have been sold but Appellees refuse to provide an
accounting or pay the monies due Appellants for services
rendered. In counts two, three, four, and five of their
complaint, Appellants assert alternative theories of
conversion, fraud, unjust enrichment, and quantum meruit for
the requested relief.
On January 28, 2015, Appellees filed a motion to dismiss
Appellants' complaint for failure to state a claim upon
which relief could be granted because Appellants did not
allege they were licensed real estate brokers as required by
R.C. 4735.21, because the breach of contract claims were
barred by the statute of frauds, because Appellants failed to
plead fraud in their complaint with the particularity
required by Civ.R. 9(B), and because Appellants failed to
include in their complaint sufficient allegations necessary
on any legal theory pled. Appellants filed a brief in
opposition along with a motion to amend their complaint.
On March 16, 2015, a hearing was held before a magistrate.
The magistrate filed a Magistrate's Decision on May 27,
2015. The magistrate concluded that Appellants were required
to have a real estate broker's license to perform the
alleged services and Appellants were required to allege the
same in their complaint pursuant to R.C. 4735.21. Because
they did not make such an allegation, the magistrate
concluded that Appellants failed to state a claim upon which
relief could be granted and that their complaint must be
dismissed. The magistrate denied Appellants' motion to
amend their complaint because there was no set of
circumstances that would provide them with a cognizable claim
in law or equity.
On June 17, 2015, Appellants filed objections to the
Magistrate's Decision. Appellees filed a response on June
24, 2015. Appellants filed a motion for leave to supplement
their objections on August 6, 2015, based on new information.
On August 12, 2015, the trial court overruled Appellants'
objections but did not rule on Appellants' August 12,
2015 motion for leave to supplement Appellants'
objections. Appellants filed a timely appeal.
Appellants assign two errors to the trial court. Their first
assignment of error states:
THE TRIAL COURT ERRED IN GRANTING DEFENDANTS/APPELLANTS'
[sic] MOTION TO DISMISS.
In Javorsky v. Sterling Med, 7th Dist. No. 14 MA 87,
2015-Ohio-2113, ¶ 11-12, we reiterated the standard of
review regarding a trial court's dismissal of a complaint
for failure to state a claim upon which relief can be
granted. A Civ.R. 12(B)(6) motion to dismiss for failure to
state a claim upon which relief can be granted is a
procedural motion that tests the sufficiency of the
complaint. Id. citing State ex rel. Hanson v.
Guernsey Cty. Bd. of Commrs., 65 Ohio St.3d 545, 548,
1992-Ohio-73, 605 N.E.2d 378. In order to dismiss a complaint
for failure to state a claim upon which relief can be
granted, the court must find beyond doubt that the plaintiff
can prove no set of facts warranting relief after it presumes
all factual allegations in the complaint are true, and
construes all reasonable inferences in the plaintiffs favor.
Javorsky, at ¶ 11-12 citing State ex rel.
Seikbert v. Wilkinson, 69 Ohio St.3d 489, 490,
1994-Ohio-39, 633 N.E.2d 1128. The appellate court is
required to independently review the complaint to determine
if the dismissal was appropriate. Javorsky, at
¶ 11-12 citing Ferreri v. Plain Dealer Publishing
Co., 142 Ohio App.3d 629, 639, 756 N.E.2d 712 (8th
The parties and Amicus Curiae agree that there are two
decisions which have previously decided the issue before this
court, Binder v. OG Land Development and Exploration,
LLC N.D.Ohio No. 4:11-cv-02621, 2012 WL 1970239 (May 31,
2012), and Wellington Resource Group, LLC v. Beck Energy
Corp., 975 F.Supp.2d 833 (S.D.Ohio 2013). The courts in
Binder and Wellington reached conflicting
results. The Binder court concluded that one who
engages in the brokering of oil and gas leases is subject to
the provisions of R.C. 4735.21. The Wellington court
concluded that such individuals are not limited by R.C.
4735.21. Appellants argue that the Wellington
decision is the correct one and Appellees argue
Binder is the correct decision.
Appellants and Landmen (unless noted otherwise, collectively
referred to as "Appellants") argue that R.C.
4735.21 is inapplicable because oil and gas leases are not
interests in real estate. Appellants assert that
Wellington is directly on point and that its
reasoning requires that the trial court's decision be
reversed. They suggest that to require a real estate
broker's license to perform the services which Appellants
performed here would require needless regulation and
increased costs. Further, Appellants argue that the recent
decision of the Ohio Supreme Court in Chesapeake
Exploration LLC, v. Buell, 144 Ohio St.3d 490,
2015-Ohio-4551, 45 N.E.3d 185, does not invalidate
Wellington nor otherwise resolve the issue regarding
the interpretation of R.C. 4735.21. Appellees argue that oil
and gas rights are real estate under Ohio law and that the
decisions interpreting the nature of these rights, including
the recent decision by the Ohio Supreme Court in
Buell, support the decision of the trial court.
R.C. 4735.21 provides, in pertinent part:
No right of action shall accrue to any person, partnership,
association, or corporation for the collection of
compensation for the performance of the acts mentioned in
section 4735.01 of the Revised Code, without alleging and
proving that such person, partnership, association, or
corporation was licensed as a real estate broker or foreign
real estate dealer.
R.C. 4735.01 defines a "real estate broker as one who
engages in certain specified conduct for compensation. The
trial court concluded that Appellants' complaint alleged
that they engaged in conduct identified in the statute.
Specifically, the trial court concluded that Appellants'