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Wick v. Ach

Court of Appeals of Ohio, First District, Hamilton

June 19, 2019

CHAD P. WICK, Plaintiff-Appellant,

          Civil Appeal From: Hamilton County Court of Common Pleas TRIAL NO. A-1700400

          Lindhorst & Dreidame and Barry F. Fagel, for Plaintiff-Appellant,

          Strauss Troy Co., LPA, and Christopher R. McDowell, for Defendants-Appellees.


          Bergeron, Judge.

         {¶1} Stymied by his efforts to collect a judgment and convinced that the debtor was hiding assets in various corporations, the plaintiff-appellant here asks us to take a novel step under Ohio law and recognize a claim for "reverse piercing" of the corporate veil. We declined that invitation a few years ago and decline it again today-Ohio simply does not recognize such a cause of action. Creditors situated similarly to the plaintiff have an array of paths that they can pursue to secure satisfaction of their debts; breaking the new legal ground requested here is as unnecessary as it is unwise. We accordingly affirm the judgment of the trial court dismissing the relevant claims in this appeal.


         {¶2} This appeal originates with a 2009 money judgment that plaintiff Chad Wick obtained against defendant Roger Ach. After apparently years of unsuccessful efforts to collect on that judgment, Mr. Wick initially filed a complaint in common pleas court in January 2017, amending it in March of 2017. The amended complaint presents claims against Mr. Ach, the judgment debtor, and three companies, Chicago West Pullman, Ltd., SocialPoint, Inc., and Our Town Media, Inc., (collectively, the "Companies") all allegedly controlled by Mr. Ach in some capacity.

         {¶3} The amended complaint sought recovery on "reverse corporate veil piercing," fraud, unjust enrichment, and a creditor's bill theories. In response, Mr. Ach and the Companies moved to dismiss on Civ.R. 12(B)(6) grounds for failure to state a claim as well as under Civ.R. 9(B) (for failure to plead the fraud claim with particularity). Ultimately, the trial court granted dismissal on all of the claims except the creditor's bill (which remains pending) and certified the judgment for immediate appeal under Civ.R. 54(B). In granting the dismissal, the court noted that Ohio does not recognize reverse corporate veil piercing, the fraud claim failed to meet the pleading standard for such claims, and Mr. Wick failed to demonstrate a benefit conferred on the defendants necessary to support the unjust-enrichment claim. From this dismissal Mr. Wick now appeals and presents three assignments of error, all of which challenge the trial court's dismissal of his various causes of action.


         {¶4} On appeal, we review a motion to dismiss on Civ.R. 12(B)(6) grounds de novo. Burchard v. Ashland Cty. Bd. of Dev. Disabilities, 5th Dist. Ashland No. 17-COA-041, 2018-Ohio-4408, ¶ 19 ("Our standard of review on a Civil Rule 12(B) motion to dismiss is de novo."). Dismissing a complaint under Civ.R. 12(B)(6) tests the sufficiency of the complaint, and we construe the allegations in a light most favorable to the plaintiff. Id.


         {¶5} First, appreciating that no court in Ohio has adopted reverse corporate veil piercing, Mr. Wick implores this court to take that step here. Unlike a traditional piercing-the-corporate-veil scenario, where a corporation deemed an alter ego of an individual renders the individual liable for the debts of the corporation, reverse corporate veil piercing imposes liability on a corporation for an individual's debts. Mathias v. Rosser, 10th Dist. Franklin Nos. 01AP-768 and 01AP-770, 2002-Ohio-2772, ¶ 34. Reverse corporate veil piercing, however, has not been adopted in Ohio and was specifically rejected by this court only a few years ago. Gershuny v. Gershuny, 1st Dist. Hamilton No. C-140482, 2015-Ohio-4454, ¶ 14. As we explained in Gershuny, reverse piercing "allows a judgment creditor to bypass the normal judgment collection procedure of attaching the judgment to the debtor's shares in the corporation, and instead attach the corporate assets directly." Id. Such a shortcut thus places the creditor in a better position than the shareholder herself. After surveying the extant caselaw, we observed that "Ohio is not one of the few jurisdictions that have adopted the [reverse piercing] doctrine * * * [and] [w]e decline to adopt this theory here." Id.

         {¶6} Although Mr. Wick entreats us to distinguish Gershuny, we could not embrace his reverse piercing cause of action without overruling that precedent. We decline to take such a step, particularly when nothing in the caselaw suggests that reverse piercing is winning any more adherents. Indeed, adoption of reverse piercing raises a variety of policy-related concerns. For example, courts acknowledge that these types of creditor claims can be dealt with through other available remedies. See, e.g., Cascade Energy and Metals Corp. v. Banks, 896 F.2d 1557, 1577 (10th Cir.1990) ("more traditional theories of conversion, fraudulent conveyance of assets, respondeat superior and agency law are adequate to deal with situations where one seeks to recover from a corporation for the wrongful conduct committed by a controlling stockholder"). As one of our sister state courts explained:

Judgment collection procedures offer judgment creditors adequate protection in situations where outside reverse piercing would not harm innocent shareholders and creditors, legal remedies are inadequate, and the traditional requirements of proving alter ego are met. By levying on the debtor's shares, the ...

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