[Cite as Watch Tower Bible & Tract Soc. of Pennsylvania v. Fifth Third Bank,

.]

Court of Appeals of Ohio EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

JOURNAL ENTRY AND OPINION No. 96403

WATCH TOWER BIBLE & TRACT SOCIETY OF PENNSYLVANIA PLAINTIFF-APPELLANT

vs.

FIFTH THIRD BANK DEFENDANT-APPELLEE

JUDGMENT: REVERSED AND REMANDED

Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-676742

BEFORE: Jones, J., Kilbane, A.J., and Keough, J. RELEASED AND JOURNALIZED: October 6, 2011

ATTORNEYS FOR APPELLANT

Jacqueline Kim Roberts Jennifer L. Speck J.K. Roberts Law Group, Ltd. 17601 West 130th Street Suite 4B North Royalton, Ohio 44133

ATTORNEYS FOR APPELLEE

K. James Sullivan Christopher S. Williams Eric S. Zell Calfee, Halter & Griswold LLP 800 Superior Avenue Suite 1400 Cleveland, Ohio 44114

LARRY A. JONES, J.:

{¶ 1} Plaintiff-appellant, Watch Tower1 Bible and Tract Society of Pennsylvania

(“Watch Tower”), appeal the trial court’s decision denying its motion for summary

judgment and granting summary judgment in favor of defendant-appellee, Fifth Third

Bank. For the reasons that follow, we reverse.

{¶ 2} Luther Loy Dietrich (“Dietrich”) had two bank accounts with Fifth Third

1 There is a discrepancy in the trial record whether the name of the Society is spelled “Watchtower” or “Watch Tower.” Since all trial court pleadings submitted by the Society and its appellate brief spell its name as two words, we will list the name as “Watch Tower” in this opinion. Bank. Dietrich originally designated his mother, Amelia Dietrich, as the beneficiary to

the accounts in the event of his death. The bank’s computer system reflected that a

change in the designation was made on March 24, 2005, naming Watch Tower as the

beneficiary. Per bank policy, however, to change his “Payable on Death” (“POD”)

beneficiary, Dietrich had to fill out a written beneficiary form and fill out a new signature

card in order to supersede a prior POD designation.

{¶ 3} Dietrich died on October 24, 2005. At that time, his accounts totaled

$99,865.79. The bank sent notice to Watch Tower informing the society that the bank’s

records indicated Watch Tower was the beneficiary of Dietrich’s accounts. Dietrich’s

estate, however, believed that the accounts belonged to the estate. In March 2006, Fifth

Third decided to place a hold on the accounts until either the estate and Watch Tower

came to a written agreement regarding ownership of the accounts, or the bank was directed

by a court on how to distribute the funds.

{¶ 4} Subsequently, the estate filed a concealment action against Fifth Third Bank

in probate court pursuant to R.C. 2109.50. Watch Tower was not named in the lawsuit.

Watch Tower did retain one of its volunteer attorneys for the purpose of filing a notice of

appearance at a pretrial hearing.

{¶ 5} In June 2006, the probate court issued a judgment entry, which read, in part:

“The Court finds that there is no written contract or other agreement or obligation between Luther Loy Dietrich and Fifth Third Bank whereby the funds contained in the Fifth Third Bank [a]ccounts * * * became payable to Watch Tower Bible and Tract Society of Pennsylvania or any other individual or entity upon the death of Luther Loy Dietrich. Consequently, the Funds belong to the Estate of Luther Loy Dietrich, and Fifth Third Bank is ordered to release the Funds * * * .” {¶ 6} The bank subsequently released the funds to the estate.

{¶ 7} In November 2008, Watch Tower filed suit against Fifth Third setting forth

claims for negligence, breach of contract, conversion, and tortious interference with an

expectancy. Watch Tower moved for summary judgment. Fifth Third also moved for

summary judgment, arguing, in part, that Watch Tower was estopped from bringing their

claims. The trial court granted summary judgment in favor of the bank and issued a

written opinion.

{¶ 8} It is from this judgment that Watch Tower now appeals, raising the

following assignments of error for our review:

“I. The trial court erred in holding that the doctrine of collateral estoppel applies to the case at bar.

“II. The trial court erred in holding that Watch Tower had a duty to intervene in the concealment case.

“III. The trial court erred in denying Watch Tower’s motion for summary

judgment.”

Standard of Review

{¶ 9} Appellate review of summary judgment is de novo, governed by the standard

set forth in Civ.R. 56. Comer v. Risko,

,

,

, ¶8. Accordingly, we afford no deference to the trial court’s decision and

independently review the record to determine whether summary judgment is appropriate.

Hollins v. Shaffer,

,

,

. Under

Civ.R. 56(C), summary judgment is proper when the moving party establishes that “(1) no genuine issue of any material fact remains, (2) the moving party is entitled to judgment as

a matter of law, and (3) it appears from the evidence that reasonable minds can come to

but one conclusion, and construing the evidence most strongly in favor of the nonmoving

party, that conclusion is adverse to the party against whom the motion for summary

judgment is made.” State ex rel. Duncan v. Mentor City Council,

,

,

, citing Temple v. Wean United, Inc. (1977),

,

.

Collateral Estoppel

{¶ 10} In the first and second assignments of error, Watch Tower argues that the

trial court erred in finding that they were estopped from bringing forth its claims and

holding that Watch Tower had a “duty” to intervene in the probate court case.

{¶ 11} The doctrine of res judicata involves both claim preclusion, which

historically has been called estoppel by judgment, and issue preclusion, which traditionally

has been referred to as collateral estoppel. Grava v. Parkman Twp.,

,

,

. Under the claim preclusion branch of res judicata,

“[a] valid, final judgment rendered upon the merits bars all subsequent actions based upon

any claim arising out of the transaction or occurrence that was the subject matter of the

previous action.”

at the syllabus.

{¶ 12} Issue preclusion, or collateral estoppel, precludes relitigation of an issue that

has been “actually and necessarily litigated and determined in a prior action.” Krahn v.

Kinney (1989),

,

. In other words, under the doctrine of collateral estoppel, the party is precluded from relitigating in a second action

an issue that has been actually and necessarily litigated and determined in a prior action.

Ft. Frye Teachers Assn., OEA/NEA v. State Emp. Relations Bd.,

, 395,

,

, citing Whitehead v. Gen. Tel. Co. (1969),

,

.

{¶ 13} In the case at bar, the trial court found that Watch Tower’s claims were

barred by collateral estoppel. In order to prevail under the doctrine of collateral estoppel,

a party must plead and prove the following: (1) the party against whom estoppel is

sought was a party or in privity with a party to the previous case; (2) there was a final

judgment on the merits in the previous case after a full and fair opportunity to litigate the

issue; (3) the issue must have been admitted or actually tried and decided and must be

necessary to the final judgment; and (4) the issue must have been identical to the issue

involved in the previous case. Balboa Ins. Co. v. S.S.D. Distrib. Sys., Inc. (1996),

,

.

{¶ 14} Watch Tower argues that the issues of the Bank’s negligence, conversion,

breach of contract, and tortious interference with an expectancy were never litigated in the

probate court; therefore, the doctrine of collateral estoppel cannot apply to bar them from

bringing these claims. According to Watch Tower, it never claimed a right to the

proceeds of Dietrich’s accounts. Instead, the society claimed that it suffered damages

due to the bank’s actions and, but for the conduct of the bank and/or its employees, it

would have been the beneficiary of the accounts. Watch Tower further submits that it was only after the probate court’s judgment did its causes of action arise because it was

then that the society learned that Fifth Third acted negligently.

{¶ 15} Fifth Third claims that although Watch Tower was not a party to the probate

court case, they were in privity because, for the purposes of collateral estoppel, privity

applies both to the litigants and to those who could have entered the proceeding but did not

avail themselves of the opportunity. Howell v. Richardson (1989),

,

. We disagree with Fifth Third’s contention, however, and find that

the bank cannot show that Watch Tower was collaterally estopped from bringing their

claims.

{¶ 16} Michael Lewis, Watch Tower’s manager of charitable planning, testified at

deposition that Watch Tower became aware of the probate case shortly after it was filed.

In a letter dated March 27, 2006, Watch Tower wrote its Ohio agent, attorney William

Carse, as follows:

“We would like to retain your services for the purpose of filing a notice of appearance on behalf of Watch Tower Bible and Tract Society of Pennsylvania, and appearing at the May 2006, hearing at [probate court] with regard to the [Fifth Third] matter.”

{¶ 17} Although Carse may have acted as Watch Tower’s agent in keeping a close

eye on the proceedings, at no time did Watch Tower intervene in the case. Carse testified

at deposition that he attended pretrial conferences and kept Watch Tower updated on the

status of the litigation, but was never informed that the case had been settled in the estate’s

favor. Neither the estate nor Fifth Third moved to have Watch Tower added as a party

and the probate court docket indicates that no formal hearings were held in the case. Shortly after it was filed, the case was “settled and dismissed,” and proceeds of the

account were paid to the estate.

{¶ 18} We disagree with the trial court’s determination that Watch Tower had a

duty to intervene in the probate court case in order to protect its interests and that because

Watch Tower “was both aware of the litigation and had an opportunity to intervene,” it

was required to intervene in order to protect its claim. Watch Tower argues that its

claims did not arise until the probate court determined that the account funds belonged to

the estate. Only then did the society learn that Fifth Third allegedly acted negligently in

failing to secure proper documentation for a POD designation. Thus, it may have been a

strategic decision on the part of the society to wait and see to whom the probate court

would award the account proceeds before pursuing its claims.

{¶ 19} We further find no merit to the bank’s contention that Watch Tower was

either required to intervene in the probate court case or otherwise file its claims at the time

of the probate court case. The statute of limitations applicable to Watch Tower’s claims

had not expired at the time it filed its lawsuit; there is no requirement that the society file

its claims at any time prior to the day the statute of limitations expires. If Fifth Third was

concerned about what rights Watch Tower may have had to the accounts, it could have

filed a declaratory judgment action in common pleas court.

{¶ 20} We further note that because the probate court case was a concealment case

brought pursuant to statute, it is possible that the probate court would not have had

jurisdiction to consider Watch Tower’s claims. The purpose of the concealment statute, R.C. 2109.50, “is to provide a speedy and effective method of discovering assets

belonging to an estate and securing possession of such assets. It is not intended as a

substitute for a civil action to collect a debt, obtain an accounting, adjudicate rights under

a contract or recover judgment for money owing an executor or administrator.” Harpster

v. Castle (June 28, 1993), Ashland App. No. CA 1022; Goodrich v. Anderson (1940),

,

.2

{¶ 21} Although what entity should be designated the beneficiary of Dietrich’s

accounts was the crux of the probate court case, it bears repeating that Watch Tower is not

claiming that it was the proper POD beneficiary. Instead, Watch Tower claims that the

intended bequest to Watch Tower from Dietrich was not consummated due to the bank’s

negligence. We agree with Watch Tower that these are two separate issues; therefore,

Watch Tower is not estopped from bringing its claims. Moreover, it could be argued that

Watch Tower could have participated in the probate court proceedings and still

subsequently filed an action for negligence.

{¶ 22} Based on the facts as presented, Fifth Third cannot prevail under the doctrine

of collateral estoppel; therefore, the trial court erred in determining that Watch Tower was

collaterally estopped from pursuing its claims against Fifth Third.

{¶ 23} The first and second assignments of error are sustained.

Summary Judgment

2 It is unnecessary at this time to determine whether the probate court would have had jurisdiction over Watch Tower’s claims. {¶ 24} In the third assignment of error, Watch Tower argues that the trial court

erred in denying its motion for summary judgment.

{¶ 25} We find that questions of material fact remain whether Fifth Third acted

negligently in failing to secure a proper POD designation. Brenda Harris, the employee

who changed Dietrich’s POD designation, testified that she could not remember meeting

Dietrich, but the bank’s records indicate that she handled the transaction. Harris was

aware that the bank’s policy and procedures required written authorization and a new

signature card in order to change a POD designation, but the bank could not locate either.

Harris could not remember if Dietrich actually filled out a new signature card, but testified

that she would not change a POD designation without the consent of the customer. She

also admitted that she could not remember personally looking for the signature card but

her records indicated the bank had searched for it. Thus, the issue of whether the bank

and/or its employees acted negligently in failing to properly change Dietrich’s POD

designation is a question of fact best suited for a jury to determine.

{¶ 26} Because questions of material fact remain that preclude summary judgment,

the trial court did not err in denying Watch Tower’s motion for summary judgment.

{¶ 27} Accordingly, the third assignment of error is overruled.

Judgment is reversed and remanded.

It is ordered that appellant recover of appellee costs herein taxed.

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate issue out of this court directing the Cuyahoga County Court of Common Pleas to carry this judgment into execution.

A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the

Rules of Appellate Procedure.

LARRY A. JONES, JUDGE

MARY EILEEN KILBANE, A.J., CONCURS; KATHLEEN ANN KEOUGH, J., DISSENTS WITH SEPARATE OPINION

KATHLEEN ANN KEOUGH, J., DISSENTING

{¶ 28} I respectfully dissent. Although I agree with the majority that the doctrine

of collateral estoppel does not apply in this matter, I would nevertheless find that the trial

court properly granted Fifth Third’s motion for summary judgment. Under our de novo

standard of review, I would find that Watch Tower’s complaint is barred by the doctrine of

laches, which was also raised by Fifth Third in its motion for summary judgment.

{¶ 29} Laches is ‘“an omission to assert a right for an unreasonable and

unexplained length of time, under circumstances prejudicial to the adverse party.”’

Connin v. Bailey (1984),

,

, quoting Smith v. Smith

(1957),

,

. See, also, Hayman v. Hayman,

,

,

.

{¶ 30} “‘The elements of the defense of laches are ‘(1) conduct on the part of the

defendant * * * giving rise to the situation of which complaint is made and for which the complainant seeks a remedy * * *; (2) delay in asserting the complainant’s rights, the

complainant having had knowledge or notice of defendant’s conduct and having been

afforded an opportunity to institute a suit; (3) lack of knowledge or notice on the part of

the defendant that the complainant would assert the right on which he bases his suit; and

(4) injury or prejudice to the defendant in the event relief is accorded to the complainant.’”

Smith v. Smith (1959),

, 455,

, quoting 19 American

Jurisprudence, [1939] 343, [Equity] Section 498; see, also, State ex rel. Cater v. N.

Olmsted,

,

,

(“elements of a laches

defense are (1) unreasonable delay or lapse of time in asserting a right, (2) absence of an

excuse for such delay, (3) knowledge, actual or constructive, of the injury or wrong, and

(4) prejudice to the other party”).

{¶ 31} Delay in asserting a right does not of itself constitute laches, and in order to

successfully invoke the equitable doctrine of laches it must be shown that the person for

whose benefit the doctrine will operate has been materially prejudiced by the delay of the

person asserting his claim. Hayman at ¶47, citing

; see, also, Smith, 168

Ohio St. at paragraph three of the syllabus.

{¶ 32} “Issues of waiver, laches, and estoppel are ‘fact-driven.’” Riley v. Riley,

Knox App. No. 2005-CA-27,

, quoting Dodley v. Jackson, Franklin

App. No. 05AP11,

. Once a defendant has set forth each of the elements

of the defense, the burden shifts to the plaintiff to explain away the delay. Stevens v.

Natl. City Bank (1989),

,

, citing Russell v. Fourth Natl. Bank (1921),

,

.

{¶ 33} Fifth Third argues that it was unreasonable for Watch Tower to wait for two

years after Fifth Third distributed the proceeds of Dietrich’s bank accounts to Dietrich’s

estate to assert its right to those accounts, when Watch Tower knew that ownership of

Dietrich’s bank accounts was at issue in the probate court proceeding and Watch Tower

participated in those proceedings. Watch Tower counters by contending that it filed its

complaint against Fifth Third within the applicable statute of limitations and that any delay

or prejudice was attributable to Fifth Third for its failure to join Watch Tower in the

probate action.

{¶ 34} Filing an action within the statute of limitations time frame is not in and of

itself sufficient to defeat a defense of laches. “Delay for a shorter period than the

statutory limit, accompanied by other conditions, may be sufficient to destroy the

beneficiary’s remedy.”

. Accordingly, laches may still apply even though

the applicable statute of limitations has not run.

{¶ 35} I find it irrelevant whether Fifth Third or Dietrich’s estate should have

petitioned the probate court to join Watch Tower in the probate proceeding because Watch

Tower did, in fact, participate in the proceeding through Attorney Carse. I agree with the

trial court that Watch Tower had a duty to intervene or request joinder considering that the

underlying issue in the probate court was whether Dietrich’s bank accounts were assets of

his estate. When Watch Tower recognized that it was not being joined in the action, it

had a duty to assert its right because an action for concealment under R.C. 2109.50 focuses first on ownership of the asset and then on whether possession of the asset is being

impermissibly concealed or withheld from the estate. See Fecteau v. Cleveland Trust Co.

(1960),

,

(ownership of joint and survivorship bank

accounts were properly brought in probate court under concealment statute).

{¶ 36} Moreover, the record demonstrates that the probate court converted the

concealment action to a declaratory judgment action because (1) the deposition of

Attorney Carse indicated that the magistrate converted the matter as such; and (2) the trial

court’s journal entry made a finding regarding ownership of Dietrich’s bank accounts and

did not make any finding regarding Fifth Third’s guilt. Because the probate court

seemingly converted the action to a declaratory judgment, Watch Tower had even more of

a duty to intervene because it had an interest in the asset to which Dietrich’s estate was

claiming ownership.

{¶ 37} Both Watch Tower and Dietrich’s estate sent letters to Fifth Third claiming

ownership of Dietrich’s bank accounts and demanded distribution. On March 3, 2006,

Fifth Third sent a letter to both parties explaining the disagreement regarding who is the

correct and legal beneficiary under the accounts, the reason for the dispute (the signature

card is missing), and the action Fifth Third was taking (placing distribution on hold until

an agreement between the parties was reached or until it receives a court order directing

distribution). Thus, all parties were on notice of the legal situation, the reasons why the

problem existed, and Fifth Third’s intentions. Accordingly, Watch Tower was on notice

as early as March 3, 2006 that Fifth Third was unable to locate the signature card, which is the underlying basis for Watch Tower’s complaint against Fifth Third.

{¶ 38} On March 7, 2006, the estate filed a concealment action in probate court

against Fifth Third claiming that it was concealing assets belonging to the estate.

Michael Lewis, who testified at deposition on behalf of Watch Tower testified that Watch

Tower became aware of the probate case from Fifth Third’s attorney in March 2006.

{¶ 39} Attorney Carse testified at his deposition that he was contacted by Watch

Tower to observe the concealment proceedings in probate court and report back to Watch

Tower’s legal department. Attorney Carse received a letter dated April 6, 2006 from

Watch Tower with Ohio case law enclosed “that [Watch Tower] hope[d] [would] prove

helpful to you in the matter of Luther Dietrich and Fifth Third.” In a subsequent letter

Watch Tower sent Attorney Carse on April 27, 2006, it sought to “retain [his] services for

the purpose of filing an appearance on behalf of Watch Tower Bible and Tract Society of

Pennsylvania, and appearing at the May 2006, hearing at Cuyahoga County Probate Court

with regard to the Fried v. Fifth Third Bank matter. We appreciate your assistance in this

regard.”

{¶ 40} No appearance was ever filed, but Attorney Carse testified at deposition that

Watch Tower admittedly had an interest in the outcome of the litigation or he would not

have been there. Even with this knowledge, Watch Tower did not assert its claim to

Dietrich’s bank accounts, but just watched the asset and its interest disappear. Therefore,

irrespective of whether Attorney Carse acted as a mere observer or as Watch Tower’s

attorney in the probate proceedings, Watch Tower had actual knowledge of the nature of the probate proceedings, the claim made by Dietrich’s estate regarding ownership of

Dietrich’s bank accounts, and the possible adverse and detrimental effect the outcome of

the proceedings could have on its interest and receipt of the proceeds from those accounts.

{¶ 41} Finally, Watch Tower’s assertion that it did not know that Fifth Third had

paid Dietrich’s estate is not a sufficient excuse justifying its delay in filing the within

action, and does not create a genuine issue of material fact. Watch Tower knew that the

decision of the probate court was adverse to Watch Tower as early as June 5, 2006 because

Attorney Carse sent Watch Tower’s legal department a letter outlining the magistrate’s

opinion from the June 1, 2006 hearing and also advising Watch Tower that the magistrate

asked him to “confer with Watch Tower and respond to all parties.” Attorney Carse’s

subsequent correspondence on June 12, 2006 indicated that Carse was an active participant

in the proceedings because he “would be calling the parties in a week or so to see if they

reached an agreement” and advised the attorney for Fifth Third “that Watch Tower was

keeping its options open.”

{¶ 42} The evidence attached to Fifth Third’s motion for summary judgment

establishes that Watch Tower knew that it was listed as the POD beneficiary under

Dietrich’s Fifth Third bank accounts and that Dietrich’s estate was also asserting a claim

to those accounts. Rather than defend or assert a claim to the contested asset, Watch

Tower sat idly by and acquiesced to the probate court’s determination. The situation

presented before this court is precisely the purpose for the doctrine of laches — to prevent

acquiescence or neglect in asserting a right for a period of time that prejudices an adverse party.

{¶ 43} Accordingly, because Watch Tower knew of the probate proceedings and

understood that its outcome could adversely affect its interest in Dietrich’s bank accounts,

I would find its excuse for delay is only attributable to itself for its own failure to join or

intervene. Moreover, Watch Tower’s transfer of blame to Fifth Third is insufficient to

rebut Fifth Third’s defense of laches. Watch Tower “‘was fully put upon inquiry, and the

hardship of which [it] complains is the result of [its] own negligence and imprudence.

“‘Courts of equity give relief to the vigilant, not to the negligent. They refuse their aid to

those who by their own negligence, and by that alone, have incurred a loss. 1 Story’s

Eq.Jur.Sec. 146, and notes.’”

, quoting Crist v. Dice (1869),

, 542.

{¶ 44} Finally, Fifth Third has demonstrated material prejudice due to Watch

Tower’s delay in filing this cause of action. Fifth Third argues that due to Watch

Tower’s failure to assert its claim in the probate matter, it will potentially have to pay on

the same account twice. This possible detrimental change in Fifth Third’s financial

position would not have occurred had Watch Tower timely asserted its right to Dietrich’s

bank accounts.

{¶ 45} Additionally, under the doctrine of res judicata, Fifth Third will not be able

to assert that Watch Tower is the rightful and legal owner of Dietrich’s bank accounts

because the probate court already determined that Dietrich’s estate is the beneficiary of

those accounts. This is prejudicial to Fifth Third because had Watch Tower asserted a claim to the asset and defended its position in the probate action, the result quite possibly

would have been different.

{¶ 46} Watch Tower has not raised any argument to rebut the prejudice established

by Fifth Third, but only reiterates that any prejudice was because of Fifth Third’s failure to

join Watch Tower. Having found that Fifth Third owed no duty to put forward or defend

Watch Tower’s rights in probate court or assert Watch Tower’s claim to Dietrich’s bank

accounts, I would find that Watch Tower’s joinder argument is insufficient to establish a

genuine issue of material fact thereby defeating summary judgment.

{¶ 47} Accordingly, I would find that summary judgment in favor of Fifth Third

was proper.