from the Franklin County Court of Common Pleas C.P.C. No.
& Papakirk, LLC, James Papakirk, and Hallie S. Borellis,
Porter, Wright, Morris & Arthur LLP, Kathleen M.
Trafford, Robert W. Trafford, and Jay A. Yurkiw, for
Kathleen M. Trafford.
1} Plaintiff-appellant, Ross Sinclaire and
Associates, LLC ("RSA"), appeals from a judgment of
the Franklin County Court of Common Pleas in favor of
defendant-appellee, The Huntington National Bank
("HNB"). For the reasons that follow, we affirm.
FACTS AND PROCEDURAL HISTORY
2} RSA is a full-service investment banking,
securities brokerage, and asset management firm with a
principal office in Cincinnati, Ohio. HNB is a national
banking association with its principal place of business
located in Columbus, Ohio. The events that have resulted in
this appeal began in 1998 when Montgomery County issued
approximately $5.8 million in Multifamily Housing Mortgage
Revenue Bonds. The county allocated the proceeds from the
sale of the bonds to a nonprofit corporation known as the
Trinity Foundation, Inc. ("Trinity") to finance the
redevelopment of the Squirrel Run Apartments ("Squirrel
Run") in Trotwood, Ohio for low-income families. In
conjunction with the receipt of the bond revenue, Trinity
executed and delivered to HNB, as indenture trustee, a
promissory note for each series of the bonds, secured by an
Open-End First Mortgage, Assignment of Lease and Rents, and
Security Agreement. (Ex. 3 attached to Joint Stipulation of
Facts and Exs. (hereinafter "Joint Ex.").) The
promissory notes obligated Trinity to fund the principal and
interest payments due under the bonds out of the rental
income derived from Squirrel Run. The existing 160-unit
Squirrel Run apartment complex provided the collateral for
the loan to Trinity. In 1998, the Squirrel Run property
appraised at $5.5 million using an income approach.
3} On November 8, 2001, HNB's trust
administrator and senior vice president, Candada Moore
("Trustee Moore"), issued the first Notice to
Holders of an Event of Default. The notice provides, in
relevant part, as follows:
As of the date of this notice, the Debt Service Reserve Fund
* * * was used to make up the deficiencies in the payments
for debt service due November 1, 2001 * * * and all holders
of the Series A and Series B have been paid in full for such
debt service that was due. To date, the Trinity Foundation,
Inc. has not replenished the Debt Service Reserve Fund.
Series C has not been paid for debt service due November 1,
(Joint Ex. 4 at 1.)
4} Trustee Moore subsequently issued a similarly
worded Notice to Holders of Continuing Events of Default on
May 8, 2002, January 8, July 1, and November 20, 2003.
Trustee Moore enclosed with the November 20, 2003 notice
audited financial reports received on January 5, 2003. On
December 10, 2003, Trinity and Montgomery County executed an
agreement whereby Trinity agreed to make installment payments
for delinquent property taxes.
5} On February 26, 2004, Trustee Moore notified
bondholders as follows:
We are writing to you in our capacity as Trustee * * * to
advise you that Trinity * * * as owner of the Project
property which serves as collateral for and secures the
Bonds, and as the obligor under the Loan Agreement which
provides the revenues to pay the Bonds, has contacted Reilly
Mortgage Group, Inc. ("Reilly") to apply for FHA
mortgage insurance and to place a mortgage loan to retire the
Bonds. * * * In order to proceed, Reilly requires an up front
payment of $23, 000 to pay for initial fees and expenses
[and] has requested your consent to use $23, 000 from the
Debt Service Reserve Fund which secures the Bonds, to pay
(Joint Ex. 10 at 1.) The notice also advised bondholders that
Trinity remained delinquent in its real property taxes and
acknowledged that "ongoing routine repair and
maintenance items, such as fixing storm drains and downspouts
and replacing carpet, have regularly fallen behind as
occupancy and revenues have not kept pace. There are frequent
roof repair needs, patio dividers and balcony floors and
railings have deteriorated wood and fogged up patio doors
have been an ongoing problem." (Joint Ex. 10 at 2.)
6} On May 18, 2004, Trustee Moore issued another
Notice to Holders of Continuing Events of Default. On May 19,
Reilly had the Squirrel Run property appraised in furtherance
of its efforts to secure FHA refinancing. The appraiser
estimated the fair market value of the property, using a
cost-basis approach, between $3.3 and $3.5 million.
7} On November 5, 2004, November 8, 2005, and May 5,
2006, Trustee Moore issued a Notice to Holders of Continuing
Events of Default and Partial Interest payment. The November
5, 2004 notice informed bondholders that Reilly was unable to
secure refinancing because "it has not been able to
obtain FHA mortgage insurance due to receipt of an appraisal
that was lower than needed for a full refinancing."
(Joint Ex. 13 at 2.) The notice indicated "[o]ther
refinancing alternatives are being explored." (Joint Ex.
13 at 2.)
8} In February 2006, RSA made its first purchase of
the bonds at issue, by and through RSA employee Philip Lucas.
Lucas knew the loan to Trinity was in default status when he
made the purchase. Lucas and RSA also had access to all prior
notices of default, but Lucas did not recall reviewing any of
the notices to bondholders issued prior to the time he
purchased the bonds in 2006. In his deposition, Lucas
maintained he was not concerned the loan was in default
status because he believed the collateral securing the loan
and the bonds had value. Lucas testified that over several
years he engaged in some direct communications with Trustee
Moore regarding the status of the project and the value of
the collateral. The parties disagree as to the precise nature
and import of RSA's communications with Trustee Moore.
9} RSA did receive some scheduled interest payments
associated with the Squirrel Run bonds purchased in 2006, but
RSA received no such payments after December 2006. Trustee
Moore subsequently issued a Notice to Holders of Continuing
Events of Default on December 17, 2006, May 8, and November
8, 2007. A Squirrel Run "Balance Sheet" provided to
all bondholders as an attachment to the December 27, 2006
notice shows "Total Assets" of $4, 559, 229.84 and
"Total Liabilities" of $5, 909, 991.73 as of
December 31, 2005. (Joint Ex. 16.)
10} In February 2007, RSA records show it made a
profit of $4, 487.55 when Lucas sold some of the Squirrel Run
bonds it had purchased in 2006. Lucas shared in these profits
pursuant to a profit-sharing agreement with RSA. The record
also shows on January 1, 2009, RSA held Squirrel Run bonds
purchased by Lucas with a total face value of $250, 000. From
January 1 to March 24, 2009, Lucas purchased additional
Squirrel Run bonds on behalf of RSA with a total face value
of $530, 000, for which it paid $58, 415, approximately 11
cents on the dollar.
11} On April 2, 2009, HNB, "as Trustee for the
Multifamily Housing Mortgage Revenue Bonds, " filed a
"Complaint on Notes, Foreclosure, Sale of Collateral,
Specific Performance of Assignment of Rents, Appointment of a
Receiver, and for an Accounting and Inspection" against
Trinity and several other defendants in the Montgomery County
Court of Common Pleas. (Joint Ex. 19 at 1, 2.) On April 10,
2009, Trustee Moore issued a Notice of Default and
Acceleration notifying bondholders of the action.
12} RSA continued to buy Squirrel Run bonds after
HNB filed the foreclosure action. RSA bought Squirrel Run
bonds with a total face value of $755, 000 for $80, 865, or
9.3 cents on the dollar. The post-foreclosure purchases
increased the total face value of RSAs holdings in Squirrel
Run bonds to $1, 535, 000 for which it paid a total of $217,
055, roughly 14 cents on the dollar on average.
13} On August 31, 2009, HNB moved the Montgomery
County Court of Common Pleas to appoint a receiver. On that
same date, the Montgomery County Court of Common Pleas
appointed a receiver to "take charge of, preserve, [and]
manage" Squirrel Run. (Joint Ex. 21 at 1.) On November
15, 2010, Trustee Moore issued a Notice of Default and
Receiver Sale. On August 8, 2011, Trustee Moore issued an
Urgent Request for Immediate Direction to all bondholders,
which requested bondholder approval of a proposed sale of the
Squirrel Run property for $2.45 million, conditioned on the
buyer obtaining tax credit financing to rehabilitate the
property. The request also indicates "[t]o date the
receiver has received a number of offers in the $1, 600, 000
range and attempted to negotiate them higher." (Joint
Ex. 23 at 1.)
14} On August 29, 2012, Squirrel Run sold for $1.6
million. After deducting outstanding expenses, taxes, and
fees from the sale proceeds, RSA received a distribution out
of the net proceeds of $164, 043.05. HNB received a total of
$134, 462 for its services as indenture trustee from November
1998 through December 2012.
15} On July 31, 2013, RSA filed a complaint against
HNB in the Montgomery County Court of Common Pleas alleging
breach of contract and breach of fiduciary duty. That
complaint was dismissed without prejudice, and on September
24, 2014, RSA refiled the complaint against HNB in the
Hamilton County Court of Common Pleas. On February 18, 2015,
the Hamilton County Court of Common Pleas transferred venue
of the case to Franklin County. On April 25, 2015, RSA moved
the trial court to amend the complaint to add claims for
negligence and breach of trust. The trial court granted the
motion on May 19, 2015.
16} On May 29, 2015, HNB moved the trial court to
dismiss the complaint pursuant to Civ.R. 12(B)(6). The trial
court dismissed RSAs claims for common-law negligence and
breach of contract on November 20, 2015 for failure to state
a claim on which relief may be granted. On August 19, 2016,
HNB filed a motion for summary judgment as to the remaining
claims for breach of fiduciary duty and breach of trust. HNB
argued the four-year statute of limitations barred RSAs
claims because as early as 2007, RSA knew or should have
known of the alleged breach of trust. RSA argued its claims
for breach of trust and breach of fiduciary duty did not
accrue until 2012 when it received the distribution of
proceeds from the sale of Squirrel Run. RSA argues,
alternatively, there are genuine issues of fact as to what
RSA knew and when, precluding summary judgment.
17} The trial court found the only reasonable
conclusion to be drawn from the evidence is that RSAs claims
for breach of fiduciary duty and breach of trust accrued at
the latest in April 2009 when HNB filed the complaint in
foreclosure and notified bondholders of the action.
Accordingly, the trial court held the four-year statute of
limitations barred RSAs claims against HNB because they did
not file the complaint in Montgomery County until July 31,
2013. The trial court journalized a final judgment entry in
favor of HNB on April 17, 2017.
18} RSA timely appealed to this court from the
judgment of the trial court.
ASSIGNMENT OF ERROR
19} RSA sets forth the following assignment of
The trial court erred in granting summary judgment to
Huntington National Bank  on Ross Sinclaire and Associates,
LLC's  claims for breach of fiduciary duty and breach
of trust when substantial questions of material fact exist
and HNB is not entitled to judgment as a matter of law.
STANDARD OF REVIEW
20} Pursuant to Civ.R. 56(C), summary judgment
"shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, written admissions,
affidavits, transcripts of evidence, and written stipulations
of fact, if any, timely filed in the action, 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." "Accordingly, summary judgment is appropriate
only under the following circumstances: (1) no genuine issue
of material fact remains to be litigated, (2) the moving
party is entitled to judgment as a matter of law, and (3)
viewing the evidence most strongly in favor of the nonmoving
party, reasonable minds can come to but one conclusion, that
conclusion being adverse to the nonmoving party."
Slane v. Hilliard, 10th Dist. No. 15AP-493,
2016-Ohio-306, ¶ 12, citing Byrd v. Arbors E.
Subacute & Rehab. Ctr., 10th Dist. No. 14AP-232,
2014-Ohio-3935, ¶ 6, citing Harless v. Willis Day
Warehousing Co, 54 Ohio St.2d 64, 66 (1978).
21} " '[T]he moving party bears the initial
responsibility of informing the trial court of the basis for
the motion, and identifying those portions of the record
before the trial court which demonstrate the absence of a
genuine issue of fact on a material element of the nonmoving
party's claim.' " Byrd at ¶ 7,
quoting Dresher v. Burt, 75 Ohio St.3d 280, 292
(1996). Once the moving party meets its initial burden, the
nonmovant must set forth specific facts demonstrating a
genuine issue for trial. Byrd at ¶ 7, citing
Dresher at 293. Because summary judgment is a
procedural device to terminate litigation, courts should
award it cautiously after resolving all doubts in favor of
the nonmoving party. Byrd at ¶ 7, citing
Murphy v. Reynoldsburg, 65 Ohio St.3d 356, 358-59
22} Appellate review of summary judgment is de novo.
Byrd at ¶ 5. When an appellate court reviews a
trial court's disposition of a summary judgment motion,
it applies the same standard as the trial court and conducts
an independent review, without deference to the trial
court's determination. Id., citing Maust v.
Bank One Columbus, NA, 83 Ohio App.3d 103, 107 (10th
Dist.1992); Brown v. Cty. Commrs., 87 Ohio App.3d
704, 711 (4th Dist.1993).
23} In appellant's sole assignment of error,
appellant contends the trial court erred when it granted
summary judgment in favor of HNB as to the claims for breach
of fiduciary duty and breach of trust because there are
genuine issues of fact whether the statute of limitations
barred appellant's claims. We disagree.
24} One asserting a claim of breach of fiduciary
duty must establish the existence of a fiduciary duty, breach
of that duty, and injury proximately caused by the breach.
Newcomer v. Natl. City Bank, 6th Dist. No.
WM-12-007, 2014-Ohio-3619, ¶ 9, appeal
dismissed, 141 Ohio St.3d 1429, 2015-Ohio-12, citing
Strock v. Pressnell, 38 Ohio St.3d 207, 216 (1988);
Sudnick v. Klein, 11th Dist. No. 2001-G-2356,
2002-Ohio-7341, ¶ 25. Appellant's complaint alleges
claims for breach of fiduciary duty under the common law and
for breach of trust as defined in R.C. 5810.01 et seq. R.C.
2305.09(D) provides a four-year limitations period for a
cause of action seeking recovery for "an injury to the
rights of the plaintiff not arising on contract nor
enumerated in sections 1304.35, 2305.10 to 2305.12, and
2305.14 of the Revised Code." This court has determined
the four-year limitations period in R.C. 2305.09(D) applies
to a common-law claim for breach of fiduciary duty.
Clemens v. Nelson Fin. Group, Inc., 10th Dist. No.
14AP-537, 2015-Ohio-1232, ¶ 46, citing Wells v. C.J.
Mahan Constr. Co., 10th Dist. No. 05AP-180,
2006-Ohio-1831, ¶ 26.
25} Under the common law, a cause of action for
breach of fiduciary duty which could be brought prior to the
termination of a trust is barred by the statute of
limitations if not timely filed. Cundall v. U.S.
Bank, 122 Ohio St.3d 188, 2009-Ohio-2523, ¶ 29,
citing Paschall v. Hinderer, 28 Ohio St. 568, 576
(1876). When, however, a trustee's misconduct is
surreptitious or obscured and remains so until the
trustee's death or removal, a cause of action by trust
beneficiaries against a trustee accrues and the statute of
limitations begins to run when the fiduciary relationship
ends. Cundall at ¶ 27, citing State ex rel.
Lien v. House, 144 Ohio St. 238 (1944).
26} In this instance, RSA's claims for breach of
fiduciary duty and breach of trust are predicated on the same
operative facts. The gravamen of the complaint is that
Trustee Moore failed to timely file a foreclosure action
which, according to RSA, would have preserved a greater
portion of trust assets for distribution to the
bondholders. RSA alleges that HNB, by and through
Trustee Moore, breached a duty it owed to RSA by failing to
provide the bondholders with relevant information regarding
the financial difficulties experienced by Trinity and the
deteriorating condition of the Squirrel ...