Court of Appeals of Ohio, Second District, Montgomery
JOHN ZELLER, et al. Plaintiffs-Appellants
FARMERS GROUP, INC., et al. Defendants-Appellees
Appeal from Common Pleas Court Trial Court Case No.
GILBERT J. GRADISAR, Atty. Reg. No. 0021782 and JOHN M.
GONZALES, Atty. Reg. No. 0038664, Attorneys for
D. WEINSTEIN, Atty. Reg. No. 0012174, and LORIANN E. FUHRER,
Atty. Reg. No. 0068037, 65 E. State Street, Suite 1800,
Columbus, Ohio 43215 Attorneys for Defendants-Appellees
1} Plaintiffs-appellants, Andrew Baker, David
Boevington, Alisa Boles, Temma Crismond, Rochell Graeber,
John Haldeman, Bradley Huey, Glenn Kamphaus, Gerald Marshall,
Joseph Mullins, Jason Roberts and Allison Runnells, appeal
from the trial court's entry of final judgment on May 9,
2018, in favor of Defendants-appellees, Farmers Group, Inc.,
Farmers Insurance Exchange, Farmers Insurance Group, Inc.,
Farmers New World Life Insurance Co., Fire Insurance
Exchange, Mid-Century Insurance Co., Truck Insurance
Exchange, and 21st Century Insurance. Raising six assignments
of error, Appellants argue that the trial court erred by
dismissing their claims for fraudulent inducement, breach of
contract and violation of R.C. Chapter 1334; by entering
judgment in favor of Appellees on their counterclaims against
Appellants; and by striking Appellants' attempt to
dismiss their claims without prejudice under Civ.R. 41(A).
2} We find that the trial court erred by dismissing
the claims of Appellants for fraudulent inducement to the
extent that the claims were based on the allegations in
Paragraphs 77(b)-(d) of Appellants' amended complaint.
Otherwise, we find that the trial court did not err by
dismissing Appellants' claims for breach of contract, by
dismissing Appellants' claims for Appellees' alleged
violations of R.C. Chapter 1334, or by entering judgment in
favor of Appellees on their counterclaims against Appellants.
Additionally, we find, as we have previously, that the trial
court did not err by striking Appellants' attempt to
dismiss their claims under Civ.R. 41(A).
Facts and Procedural History
3} Appellants allege that "[in] or before
2011," Appellees implemented a system in Ohio to promote
the opening of agencies for the sale of Appellees'
insurance products. See Amended Complaint ¶ 1-2
and 73, Nov. 19, 2014. Referring to the system as the
"Agency Point Program," Appellants allege further
that it was presented to them as a three-year curriculum in
which "person[s] would [be] train[ed] and [receive]
support, including a monthly subsidy, to open [their] own
insurance agenc[ies]" as independent business owners.
Id. at ¶ 73. Appellees "admit that [they]
opened Agency Points in Ohio in or before 2011," but
they otherwise deny the foregoing allegations. See
Answer to Amended Complaint ¶ 1-2 and 73, Dec. 30, 2014;
see also Appellees' Brief 1-6.
4} Appellants claim that they were among
"approximately 400 [prospective] agents" whom
Appellees "aggressively recruited, solicited and
induced" to enroll in the program. Amended Complaint
¶ 3 and 74. As "part of the recruitment and
solicitation," Appellants accuse Appellees of
"knowingly ma[king] material representations [about the
program] that were false." Id. at ¶ 75.
5} To participate, each of the appellants executed a
pair of contracts-the "Agent Appointment Agreement"
(the "AAA") and the "Horizontal Marketing
Agent Relationship Agreement" (the "HMARA"),
though the parties make no express reference to the HMARA in
the pleadings. See id. at ¶ 1-101; Answer
to Amended Complaint ¶ 1-14 and Exhibits 2, 4-8 and 15;
see also Defendants' Motion to Dismiss, Exhibits
5, 12, 14, 22 and 24, Nov. 13, 2013. According to Appellants,
the program was thereafter unilaterally terminated by
Appellees in October 2012. Amended Complaint ¶ 78.
Appellees deny this allegation, averring that they
"reorganized] [their] Ohio agency force" and simply
reassigned agents who formerly "work[ed] through * * *
Agency Point office[s]." See Answer to Amended
Complaint ¶ 78.
6} Thirty-four agents filed a complaint on September
16, 2013, identifying Appellees, two individual defendants,
and 100 John Does as the defendants. The agents presented causes
of action for fraudulent inducement, breach of contract,
tortious interference with business, unjust enrichment, civil
conspiracy, and violations of R.C. Chapter
7} Appellees and the two individual defendants moved
for dismissal of the complaint under Civ.R. 12(B)(6) on
November 13, 2013. Before the trial court issued a decision
on this motion, however, the agents moved for leave to file
an amended complaint, and in advance of the trial court's
ruling, the parties submitted a joint entry on April 9, 2014,
stipulating that the pending motion to dismiss would apply to
the amended complaint, if the trial court granted leave. On
May 7, 2014, the trial court sustained the agents' motion
for leave, and the agents thereafter filed their amended
complaint on November 19, 2014. The amended complaint joined
27 additional agents as plaintiffs; the causes of action were
8} On December 2, 2014, the trial court sustained
Appellees' motion to dismiss in part and overruled the
motion in part. Sustaining the motion in part, the court
dismissed the claims of all of the agents for civil
conspiracy; the claims of all of the agents for tortious
interference with business; the claims of all of the agents
for breach of contract against two of the appellees and the
two individual defendants; and "the unjust enrichment
claims of the 34 original [p]laintiffs" against six of
the appellees. Decision, Order and Entry on Defendants'
First Motion to Dismiss 10, 13, 15-16, 18-20 and 23, Dec. 2,
2014. Otherwise, the court overruled the motion. Id.
9} The agents then attempted to dismiss the balance
of their claims, filing a notice of voluntary dismissal under
Civ.R. 41(A) on December 22, 2014. Appellees moved to strike
the notice in reliance on precedent represented by the Ohio
Supreme Court's opinion in Pattison v. W.W. Grainger,
Inc., 120 Ohio St.3d 142, 2008-Ohio-5276, 897 N.E.2d
126. In its opinion, the Court held: "[W]hen a plaintiff
has asserted [several] claims against one defendant, and some
of those claims have been ruled upon but not converted into a
final order through Civ.R. 54(B), the plaintiff may not
create a final order by voluntarily dismissing [the remaining
claims] pursuant to Civ.R. 41(A)." Pattison at
10} On December 30, 2014, Appellees filed their
answer to the amended complaint, with which they included
four counterclaims. Of these, the first is relevant to the
instant appeal-a claim for breach of contract against 27 of
the agents for failure to repay their monthly subsidies as
required by the terms of an addendum to the AAA.
11} With Appellees' motion to strike pending,
the agents filed a notice of appeal to this court on January
20, 2015, challenging the trial court's decision of
December 2, 2014, on Appellees' motion to
dismiss. The trial court sustained Appellees'
motion to strike in its decision of February 6, 2015, and on
March 11, 2015, Appellees filed a second motion to dismiss,
seeking dismissal of the agents' claims for
"fraudulent] [inducement] and unjust enrichment" to
the "extent [those claims were] not previously
dismissed." Defendants' Second Motion to Dismiss 1,
Mar. 11, 2015.
12} In Montgomery App. No. 26559, we dismissed the
agents' appeal for want of a final, appealable order on
April 7, 2015. Two days later, Appellees moved for summary
judgment on the agents' claims under R.C. Chapter 1334.
On May 6, 2015, the trial court held Appellees' second
motion to dismiss in abeyance, and in a decision entered on
May 21, 2015, it sustained Appellees' motion for summary
judgment. The court sustained Appellees' second motion to
dismiss on November 30, 2015.
13} On December 8, 2015, Appellees filed a third
motion to dismiss, directed to the agents' claims for
breach of contract. The trial court overruled the motion in
part with respect to the agents' "breach of contract
allegations related to [Appellees]' alleged failure to
make available education and sales training programs and
failure to pay commissions in accordance with established
commission schedules and rules." Decision, Order and
Entry on Defendants' Third Motion to Dismiss 14, Feb. 23,
2016. In "all other respects," the court sustained
the motion. Id.
14} On October 31, 2016, Appellees moved for summary
judgment on their counterclaim against 27 of the agents for
failure to repay subsidies. The trial court sustained the
motion in part and overruled the motion in part in a decision
entered on February 7, 2017.
15} On October 10, 2017, Appellees moved for summary
judgment on the remainder of the agents' claims for
breach of contract, as well as their counterclaim against 27
of the agents, to the extent that the counterclaim had not
been resolved by the trial court in response to
Appellees' previous motion. The agents filed a reciprocal
motion for summary judgment on Appellees' counterclaim on
the same date. On December 17, 2017, the trial court
overruled the agents' motion, and on March 12, 2018, the
court sustained Appellees' motion in part and overruled
the motion in part.
16} In April 2018, the case proceeded to a trial by
jury on the claim of Appellant, Glenn Kamphaus, for breach of
contract with respect to Appellees' alleged failure to
pay commissions, and on Appellees' counterclaim against
Kamphaus for failure to repay his subsidies. The trial court
directed a verdict in favor of Appellees on Kamphaus's
claim against them, and the jury entered a verdict in favor
of Kamphaus on Appellees' counterclaim against him.
17} On May 9, 2018, the trial court entered its
final judgment, incorporating the foregoing verdicts. The
court further entered judgment in favor of Appellees on their
counterclaim for failure to repay subsidies as it related to
11 of the agents. Appellants timely filed their notice of
appeal to this court on May 30, 2018.
18} We address Appellants' first and second
assignments of error together because both of the assignments
relate to the trial court's dismissal of Appellants'
cause of action for fraudulent inducement. For their first
assignment of error, Appellants contend that:
APPELLANTS' COMPLAINT STATED VIABLE AND SPECIFIC CLAIMS
FOR FRAUDULENT INDUCEMENT[, ] AND THE TRIAL COURTS DISMISSAL
OF THOSE CLAIMS WAS ERROR.
their second assignment of error, Appellants contend that:
APPELLANTS' FRAUD ALLEGATIONS WERE SUFFICIENTLY SPECIFIC
UNDER CIV.R. 9(B), PARTICULARLY GIVEN THE NUMBER OF
PLAINTIFFS AND THE MULTIPLE LEVELS OF CORPORATE DEFENDANTS.
19} Appellants argue that the trial court erred by
dismissing their claims against Appellees for fraudulent
inducement. In its decisions of December 2, 2014, and
November 30, 2015, the court dismissed the claims pursuant to
Civ.R. 12(B)(6) because it determined that Appellants could
not prove their allegations of fraud without relying on
evidence excluded by the parol evidence rule, and because it
determined that the allegations were insufficient for
purposes of Civ.R. 9(B). Appellants maintain, to the
contrary, that the parol evidence rule was inapplicable to
their claims, and that their allegations of fraud were
sufficiently particular. Appellant's Brief 2-15.
20} A motion to dismiss pursuant to Civ.R. 12(B)(6)
"is [a] procedural [motion that] tests the sufficiency
of [a] complaint" as a matter of law. See State ex
rel. Hanson v. Guernsey Cty. Bd. of Commrs., 65 Ohio
St.3d 545, 548, 605 N.E.2d 378 (1992). When a court considers
a motion to dismiss, it "must presume that all factual
allegations of the complaint are true and make all reasonable
inferences in favor of the non-moving party." (Citations
omitted.) Mitchell v. Lawson Milk Co., 40 Ohio St.3d
190, 192, 532 N.E.2d 753 (1988). Given the purpose of a
motion to dismiss, the moving party "may not rely on
allegations or evidence outside the complaint."
Hanson at 548.
21} Dismissal under Civ.R. 12(B)(6) is warranted
only if the plaintiff can prove no set of facts in support of
the claim or claims asserted in the complaint that would
entitle the plaintiff to the relief requested. See Ohio
Bur. of Workers' Comp. v. McKinley, 130 Ohio St.3d
156, 2011-Ohio-4432, 956 N.E.2d 814, ¶ 12, citing
O'Brien v. Univ. Community Tenants Union, Inc.,
42 Ohio St.2d 242, 245, 327 N.E.2d 753 (1975), and LeRoy
v. Allen, Yurasek & Merklin, 114 Ohio St.3d 323,
2007-Ohio-3608, 872 N.E.2d 254, ¶ 14; see also
Sacksteder v. Senney, 2d Dist. Montgomery No. 24993,
2012-Ohio-4452, ¶ 35-46. Appellate "review of a
trial court's decision [on a motion] to dismiss * * *
pursuant to Civ.R. 12(B)(6) is de novo." (Citation
omitted.) McKinley at ¶ 12.
The Parol Evidence Rule
22} Appellants' first assignment of error
concerns the trial court's application of the parol
evidence rule, a principle "of substantive law"
that, "when applicable, defines the limits of a
contract." Charles A. Burton, Inc. v. Durkee,
158 Ohio St. 313, 109 N.E.2d 265 (1952), paragraph one of the
syllabus. According to the rule, absent "claims of
fraud, mistake, or some other invalidating cause, [a] written
agreement may * * * not be varied, contradicted, or
supplemented by or on account of evidence of prior or
contemporaneous oral agreements, or by [subsidiary] written
agreements that the terms of the principal contract do not
expressly authorize." Evilsizor v. Becraft &
Sons Gen. Contrs., Ltd., 156 Ohio App.3d 474,
2004-Ohio-1306, 806 N.E.2d 614, ¶ 12 (2d Dist.), citing
Galmish v. Cicchini, 90 Ohio St.3d 22, 27-28, 734
N.E.2d 782 (2000). The rule, regardless, "does not
prohibit a party from introducing parol or extrinsic evidence
for the purpose of proving fraudulent inducement."
Simon Property Group, LP. v. Kill, 3d Dist. Allen
No. 1-09-30, 2010-Ohio-1492, ¶ 15, citing
Galmish at 28. Yet, in a further convolution, the
"rule may not be avoided 'by [means of] a fraudulent
inducement claim [premised on the allegation] that the
inducement to [execute a written contract] was a promise, the
terms of which are directly contradicted by the signed
writing.'" Galmish at 29, quoting
Marion Prod. Credit Assn. v. Cochran, 40 Ohio St.3d
265, 533 N.E.2d 325 (1988), paragraph three of the syllabus.
Thus, an oral agreement, or a subsidiary written agreement,
"cannot be enforced in preference to a signed writing
which pertains to exactly the same subject matter [but
states] different terms." Id.
23} Here, pursuant to the AAA, Appellants
"accept[ed] appointment[s] as * * * [agents] for
[Appellees]" in particular districts. See,
e.g., Answer to Amended Complaint, Ex. 2. The AAA
obligated Appellees to: (1) "pay new business and
service commissions or any other commission to [agents] in
accordance with commission schedules and rules"; (2)
"arrange for Group Life and Comprehensive Medical
Insurance plans and pay a portion of the premium[s] [for
agents] elect[ing] to apply for coverage * * *"; (3)
"provide approved * * * manuals, forms and policyholder
records necessary to carry out the provisions of [the
agreement]"; (4) "provide advertising
assistance"; and (5) "make * * * education and
sales training programs" available to agents.
Id. Appellants, in return, were obligated to: (1)
"sell insurance exclusively for [Appellees]"; (2)
"provide the facilities necessary to furnish insurance
services to [Appellees'] policyholders"; (3)
"permit [Appellees'] authorized representatives * *
* to review and examine [agencies'] records [to] verify
compliance" with the agreement; (4) "provide a
fidelity bond"; (5) "meet at all times performance
standards"; (6) "conduct ...