[Cite as Buckeye Retirement Co., L.L.C., Ltd. v. Busch,

.]

IN THE COURT OF APPEALS OF OHIO SECOND APPELLATE DISTRICT GREENE COUNTY

BUCKEYE RETIREMENT CO., LLC, : LTD. : : Appellate Case No. 2016-CA-32 Plaintiff-Appellant/Cross- : Appellee : Trial Court Case Nos. 2007-CV-590 : and 2011-CV-428 v. : : (Civil Appeal from JOHN R. BUSCH, et al. : Common Pleas Court) : Defendants-Appellees/Cross- Appellants

...........

OPINION

Rendered on the 26th day of May, 2017.

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JAMES C. CARPENTER, Atty. Reg. No. 0012228, VINCENT I. HOLZHALL, Atty. Reg. No. 0074901, 41 South High Street, Suite 2200, Columbus, Ohio 43215 Attorneys for Plaintiff-Appellant/Cross-Appellee

GEORGE D. JONSON, Atty. Reg. No. 0027124, G. TODD HOFFPAUIR, Atty. Reg. No. 0064449, 36 East Seventh Street, Suite 2100, Cincinnati, Ohio 45202 JOHN D. SMITH, Atty. Reg. No. 0018138, ANDREW P. MEIER, Atty. Reg. No. 0083343, IRA H. THOMSEN, Atty. Reg. No. 0023965, 140 North Main Street, Suite B, P.O. Box 639, Springboro, Ohio 45066 Attorneys for Defendants-Appellees/Cross-Appellants

............. -2-

WELBAUM, J.

{¶ 1} In this case, Plaintiff-Appellant, Buckeye Retirement Co., LLC, Ltd.

(“Buckeye”) appeals from a judgment rendered in favor of Defendants-Appellees/Cross-

Appellants, John Busch, Thomas Noland, and Statman, Harris & Eyrich, LLC (“Statman”),

following a bench trial. Busch, Noland, and Statman have all filed cross-appeals

asserting assignments of error.

{¶ 2} Buckeye contends that the trial court erred in finding that Busch was not liable

for fraudulent concealment and/or fraudulent representation, and in finding that Noland

was not liable for tortious interference with contractual relations. Finally, Buckeye

contends that the trial court erred by failing to find Statman vicariously liable for the

conduct of Noland, who was a member in Statman.

{¶ 3} Noland’s assignments of error raise the trial court’s alleged error in

concluding that Buckeye purchased the tort rights asserted in this matter, and the court’s

alleged error in concluding that Noland could be sued, as USAT’s agent, for interference

with a contract. Likewise, Busch contends that Buckeye did not have the ability to pursue

its claims against any of the Appellees/Cross-Appellants.

{¶ 4} We conclude that the trial court did not err in awarding judgment in favor of

Noland, Statman, and Busch. Accordingly, the judgment of the trial court will be affirmed.

Furthermore, affirmance of the judgment in favor of Appellees/Cross-Appellants, Noland,

Statman, and Busch renders their assignments of error moot.

I. Facts and Course of Proceedings

{¶ 5} This action arose from events occurring prior to a bankruptcy proceeding filed -3-

by U.S. Aeroteam, Inc. (“USAT”) on December 24, 2003. When the bankruptcy was

filed, Suhas Kakde was the chief executive officer, president, and majority stockholder in

USAT, John Busch was the chief financial officer and vice-president of finance for USAT,

and Thomas Noland was legal counsel for USAT. Noland was a member in Statman,

and had practiced bankruptcy law, including Chapter 11 bankruptcies, for many years.

{¶ 6} In 1998, USAT was a preferred supplier, on a minority disadvantaged basis,

with General Motors Corporation (“GM”). USAT had primarily been involved in the

aerospace industry, but at GM’s behest, began submitting bids for automotive work with

GM and Delphi, which became a separate entity from GM in 1999. Based on discussions

with GM, USAT geared up to meet the GM/Delphi business, which required an infusion

of additional capital. At the time, USAT had an existing loan with First International Bank,

which subsequently became United Parcel Service Credit (“UPS”). UPS had a

considerable inventory credit line available for USAT, but could not expand the line to

match USAT’s business plan. As a result, USAT looked for other lenders and entered

into an asset based loan with Provident Bank (“Provident”) in November 2000.

{¶ 7} Asset based loans, also known as revolvers, are ones in which creditors

allow advances against collateral, inventory, and equipment. Remittances back to the

creditor (from accounts receivable of debtors) are typically made to a lock-box. The

amounts advanced vary up to the maximum amount of the note, and fluctuate based on

expansion or contraction of a debtor’s receivables and inventory. Advance rates reflect

the quality of a debtor’s receivables, and typically vary between 70 and 85% of the total

amount of the receivables. Generally, the advance rate applied to inventory is 50% of

the value of raw inventory or finished goods. These loan formulas, which discount the -4-

real value of assets, mean that creditors may be made whole upon liquidation without

recovering 100% of a debtor’s assets.

{¶ 8} The maximum amount of the Provident loan was the lesser of $2,500,000 or

the sum of: (1) 50% of the cost or market value, whichever was lower, of eligible inventory;

(2) 80% of the amount of eligible receivables; and (3) 100% of the balance of the cash

collateral account (collectively referred to as the “borrowing base”). In other words, the

maximum amount USAT could borrow was $2,500,000, and the amount available on a

given date varied, depending on the extent of USAT’s eligible inventory and receivables,

as well as how much money had already been borrowed. Ultimately, the amount of

eligible receivables increased to 85%, due to the quality of USAT’s receivables.

{¶ 9} The amount available under the loan was calculated through borrowing base

reports or certificates (BBCs), which USAT submitted to Provident. BBCs contained

reports of accounts receivable, inventory, and some other items that Provident used to

calculate the formula and the amount available to USAT on the loan.

{¶ 10} The loan agreement did not provide specific times for submission, nor did it

contain detailed requirements for content of the BBCs; instead, the agreement simply

stated that the bank could require USAT to deliver schedules of all outstanding accounts.

These schedules were to “be in form satisfactory to the Bank and shall show the age of

such Accounts in intervals of not more than 30 days, and contain such other information

and be accompanied by such supporting documentation as the Bank may from time to

time prescribe.” Joint Ex. 2, section 5.3, pp. 10-11. In addition, the agreement required

USAT to deliver copies of its “invoices, evidences of shipment or delivery and such other

schedules and information as the bank may reasonably request.” Id. at p. 11. The only -5-

time specification listed for any of these records was that they be provided “from time to

time solely for [the Bank’s] convenience in maintaining records of the Collateral.” Id.

{¶ 11} However, the agreement did require all collections on cash collateral to be

deposited in a cash collateral account maintained by Provident, and also stated that

Provident would apply all or part of the collected cash collateral on a daily basis against

the loan obligation. Joint Ex. 2, section 7.1, p. 16. Any part of the collected balance in

the cash collateral account that Provident elected not to apply to USAT’s obligations could

then be paid over to USAT’s commercial account, which USAT could write checks

against. Id. Although a lock box was used, at times creditors paid receivables directly

to USAT, and USAT would deposit these payments in the cash collateral account.

{¶ 12} Certain items were ineligible to be included in calculating how much money

USAT could obtain. For example, any receivables overdue more than 90 days were

excluded, and if more than 25% of a customer’s receivables were overdue by more than

90 days, all receivables from that customer were excluded. Money that USAT owed a

customer was also excluded, as were invoices representing tooling or invoices listing

receivables from non-U.S. based companies.

{¶ 13} The loan agreement also contained several financial and other covenants,

and allowed Provident to take various actions, including acceleration, upon default, or at

any time in its sole discretion, if the loan were due on demand.

{¶ 14} When the Provident loan was signed in November 2000, UPS had already

filed multiple UCC filings covering USAT’s business assets, but UPS agreed to

subordinate its interest in receivables and inventory only, pursuant to an inter-creditor

agreement. UPS, therefore, had a first lien on everything other than the inventory and -6-

receivables. Kakde personally guaranteed the loans to both UPS and Provident.

{¶ 15} USAT was in violation of major loan covenants on the first day the Provident

agreement was signed. For example, the loan agreement required a ratio of liabilities to

tangible net worth of 7.5 to 1. However, the ratio, based on an audit one month later,

was 17.8 to 1. Provident ignored this violation, and in June 2001 drastically increased

the ratio to 25 to 1. However, a financial assessment six months later showed that USAT

had failed that ratio, too.

{¶ 16} The original loan document also required USAT to have a tangible net worth

of $750,000. However, an audit one month after the loan began showed that USAT had

only a tangible net worth of $369,000. Provident waived that requirement as well, and

reduced the net worth requirement to $215,000. USAT barely reached that amount the

first year and missed it by December 2002. Other violations related to the amount of

current debt requirements, timely delivery of audited financials, the fact that USAT owed

back taxes (more than $300,000 in early 2003); the fact that USAT was out of formula,

i.e., obtained loan amounts greater than the collateral base; the fact that the bank allowed

credit for receivables from one customer that were greater than 15% of the total

receivables; and the fact that USAT overstated collateral by about $500,000 in 2002.

{¶ 17} In January 2002, Provident notified Kakde that the loan was in default and

reminded him that he was personally liable. The loan was on the “watch list” in May

2002, and was still in default in August 2002. In the fall of 2002, the loan was transferred

to Provident’s Special Assets Division (“SAD”), and was assigned to Robert Burk, who

was the vice president of the division. The loan came to Burk because of continued

losses and tight cash position. When the loan was transferred, payments were current -7-

on the loan, but USAT was in violation of all financial covenants.

{¶ 18} In October 2002, Delphi cancelled a part of the Saginaw Steering contract;

the overall Saginaw contract had been expected to generate many millions of dollars in

business for USAT. USAT’s president, Kakde, communicated this information to Burk.

In October 2002, the outstanding loan balance was $2,085,000, and a field audit done in

December 2002 indicated that as of November 30, 2002, USAT had $1,865,000 in

collateral to cover a credit line of $1,994,000. This resulted in a negative collateral

position. Thus, at that time, USAT was out of formula on the loan. In addition, USAT

had overstated its collateral by $350,000 in its collateral report, meaning that the loan was

actually under-collateralized by almost $500,000.

{¶ 19} The audit also indicated that USAT was substantially in arrears with many

vendors and was $285,000 behind in property tax. Despite these defaults, Provident

continued to work with USAT and continued to lend money. This state of affairs

continued throughout 2002 and 2003, until USAT filed bankruptcy in December 2003.

{¶ 20} In June 2003, Delphi cancelled the balance of the Saginaw Steering

contract, which was a significant loss. At the time, Delphi accounted for 60% of USAT’s

business, and the Saginaw contract was one of two large contracts with Delphi. As a

result, USAT contacted Thomas Noland in July 2003 to discuss filing bankruptcy.

Noland met with USAT a few times in July, and concluded that USAT was in dire financial

condition. By mid-July, USAT had provided Noland with various information relative to

filing bankruptcy, and an extended meeting was held on July 31, 2003. Noland, Kakde,

Busch, and Jeff Maag, USAT’s vice-president of operations, were present at this meeting.

During the meeting, they discussed USAT’s financial situation, Chapter 11, creditors, -8-

leases, what USAT had to do to comply with requirements for filing forms with the court,

U.S. Trustee requirements – in all, a myriad of issues.

{¶ 21} As part of the discussion, Noland suggested that USAT open a non-lender

account to fund expenses for initial post-petition operation and for his firm’s retainer.

Noland explained that the bankruptcy code prevents parties from using cash or collateral

upon filing, without the consent of lenders or a subsequent court order. If no cash is

immediately available, contracts could not be completed and employees could leave,

causing reorganization to be over before it began. Noland further advised USAT to

“park” money in the non-lender account for filing, and not to notify Provident about the

account. However, if Provident asked, USAT was to tell Provident about the account.

{¶ 22} When Busch expressed concern about whether this was illegal or would

breach the contract with Provident, Noland indicated that telling Provident would serve no

purpose because Provident would take action to get the money back and USAT would

have no cash for filing. According to Kakde, Noland told USAT that the company would

be breaching a covenant, but also said that USAT had already breached many loan

covenants.

{¶ 23} Prior to the meeting, Kakde had asked Noland to be ready to file bankruptcy

as early as July 28, 2003. However, Kakde wanted to avoid Chapter 11 if possible, and

hoped to obtain over two million dollars in damages from Delphi, based on the cancelled

contract. On August 4, 2003, USAT opened an account with Bank One, using $50

supplied by Kakde. Kakde, Busch, and Maag were signatories on the account.

Subsequently, on August 11, 2003, a $92,600 check from British Air was deposited in the

Bank One account. Between August 4, 2003, and December 23, 2003, $544,299.10 -9-

was deposited into that account.

{¶ 24} In the meantime, Busch inaccurately reported items on the BCCs sent to

Provident. For example, a September 3, 2003 BCC showed the British Air receivable as

being in the 60-90 day range, when it had already been received on August 11, 2003.

However, the money from the British Air receivable was subsequently deposited into

Provident’s account on September 26, 2003, because it would otherwise be listed as

overdue by more than 90 days and would be removed from the cash collateral basis at

that point. Busch did this with other receivables as well, meaning that Provident obtained

the money; it was just not accurately reflected on a current BBC. USAT used some

money in the Bank One account to pay accounts payable and also remitted money back

to Provident. During the relevant time period, about $270,000 of the $544,299.10 was

transferred back to Provident.

{¶ 25} In late November 2003, another customer, Borg Warner, cancelled its

contract, and USAT began litigating the issue with Borg Warner. Furthermore, on

December 5, 2003, Kakde received a letter from Delphi, indicating that it would offer only

$150,000 for its cancelled account, instead of the 2.1 million dollar offer that Kakde had

expected. At that point, USAT began to prepare to file for bankruptcy. Ultimately,

Delphi indicated on December 15, 2003, that its final offer would be the $150,000 amount.

{¶ 26} In the meantime, Borg Warner wired $200,000 to USAT on December 8,

2003. This money was deposited into the Bank One account, which at that point,

contained only $33.00. The $200,000 was not a receivable, but was payment for the

contract cancellation. It was part of the total $544,299.10 amount put in the Bank One

account. On December 11, 2003, $50,000 was disbursed from the Bank One account -10-

to Noland’s law firm. $35,000 was a retainer for the bankruptcy, and $15,000 was

payment for Noland’s representation of USAT in the Borg Warner case.

{¶ 27} The last promissory note between USAT and Provident had expired on

November 1, 2003. However, Provident was not concerned about getting the note

renewed, and had decided to renew it for 90 days, upon the same terms and conditions

as before.

{¶ 28} On December 19, 2003, Burk went to USAT to discuss renewal of the line

of credit. Kakde, Busch, and Noland were present at the meeting. At that time, Burk

was informed that negotiations with Delphi were ongoing, and that USAT would probably

file bankruptcy. After the meeting, Burk engaged outside counsel, Mike Debbeler. The

record does not clearly indicate exactly when Provident learned about the Bank One

account, but Provident was aware of receivable errors and the non-lender account at least

by December 21 or 22, 2003.

{¶ 29} Rather than calling the loan, Provident asked for an audit, to which USAT

agreed. USAT then filed for bankruptcy on December 24, 2003. The day before the

bankruptcy filing, Provident did offset $455,000 in certificates of deposit owned by a friend

of Kakde’s, who had pledged the certificates to guarantee the loan. On December 30,

2003, Provident also obtained a judgment in the principal sum of $2,030,632.87, plus

interest, against Kakde based on his personal guaranty of the loan.

{¶ 30} Provident did not object to USAT’s request for an emergency order allowing

USAT to use cash collateral during the Chapter 11 proceeding; USAT’s motion to do so

was granted on December 29, 2003, after notice and a hearing. Subsequently,

Provident agreed to a February 5, 2004 cash collateral order. This occurred after -11-

Provident had completed its audit. Provident also agreed to additional orders allowing

USAT to use cash collateral during the bankruptcy. Provident’s continuing agreement

continued up to the time that Provident sold the USAT loan to Buckeye in December 2004.

{¶ 31} After Buckeye purchased the loan, it became involved in an adversary

proceeding against Kakde, who had filed a personal bankruptcy action. In that case, the

bankruptcy court concluded that Buckeye failed to prove that “Provident actually relied on

the Borrowing Base Certificates in making its decision to forbear or any other decisions

pertaining to the Loan as a whole, a prerequisite to finding the entire Loan balance debt

nondischargeable as to Mr. Kakde.” In re Kakde,

(S.D. Ohio 2008).

{¶ 32} In the meantime, Buckeye had filed an action for damages in Greene

County Common Pleas Court against Busch, Noland, and Statman in June 2007. In

June 2010, the trial court granted Busch’s motion for summary judgment, concluding that

Buckeye’s claims were barred by res judicata. The decision was based on the prior

proceeding in the adversarial proceeding in Kakde. See Buckeye Ret. Co., L.L.C., Ltd.

v. Busch, 2d Dist. Greene No. 2010-CA-51,

, ¶ 13. Specifically, the trial

court held that “although Busch was not a party to the Kakde litigation, the relationship

between Busch and Kakde was ‘close enough’ to include Busch within res judicata.”

The trial court also concluded that “while the claims in the Kakde case were ‘styled

differently’ from the complaint against Busch, ‘they reach the same conclusion.’ ”

(Emphasis sic.)

The appeal was a final appealable order because the trial court had

included a Civ.R. 54(B) certification, and Buckeye had also dismissed the claims against

Noland and Statman without prejudice.

{¶ 33} On appeal, we held that res judicata did not apply because Busch was not -12-

in privity with Kakde. Specifically, Busch was not a party in the bankruptcy case and

would not have been bound by the result in that case. Id. at ¶ 22. There was also no

evidence that Busch actively participated in or had control over the prior lawsuit. Id.

We, therefore, reversed the judgment and remanded it to the trial court for further

proceedings. In August 2011, the Supreme Court of Ohio declined further review. See

Buckeye Retirement Co., L.L.C. v. Busch,

,

,

.

{¶ 34} Following our remand, Buckeye filed another complaint in April 2011 and

the trial court consolidated the 2007 and 2011 actions. As with the original complaint,

the complaint filed in the 2011 action alleged fraudulent concealment against Busch, and

tortious interference with contractual relations and aiding and abetting against Noland.

Statman was sued based on its alleged respondeat superior liability for Noland’s actions.

{¶ 35} During January 2014, the case was tried before a magistrate for three days.

At trial, the magistrate heard evidence from John Busch, Thomas Noland, William Buseck

and William Bodoh (expert witnesses for Buckeye), John Gluckner (a Buckeye account

officer), and Jeffrey Morris and Alan Duvall (expert witnesses for the defense). In

addition, the parties stipulated to admission of the trial testimony of Robert Burk and

Suhas Kakde in the adversary proceeding in the case of In re Kakde (located at pp. 121-

284 and pp. 465-553 of the transcript of that proceeding).1

{¶ 36} After considering the evidence, the magistrate issued a decision in January

2015, concluding that there was insufficient evidence to support the claims against Busch.

1This is the bankruptcy case that was discussed in our decision in Busch, 2d Dist. Greene No. 2010-CA-51,

. -13-

The decision also concluded that Noland’s advice was prudent and consistent with advice

given by bankruptcy attorneys, and that Noland acted appropriately and without malice.

The finding in Noland’s favor additionally resolved the status of any claims against

Statman. Buckeye then filed objections in January 2015 and supplemental objections in

March 2015, after the transcript was filed. Busch, Noland, and Statman filed cross-

objections in January 2015, and responded to Buckeye’s objections and supplemental

objections.

{¶ 37} In July 2016, the trial court overruled all objections and granted judgment in

favor of Busch, Noland, and Statman. Buckeye timely filed a notice of appeal, and Busch

Noland, and Statman filed cross-notices of appeal.

II. Did the Court Err in Rejecting the Claims against Busch?

{¶ 38} Buckeye’s First Assignment of Error states that:

The Trial Court Erred in Finding that Defendant John R. Busch Was

Not Liable for Fraudulent Concealment and/or Fraudulent Representation.

{¶ 39} Under this assignment of error, Buckeye raises a manifest weight challenge

to the trial court’s decision that Busch was not liable for fraudulent concealment and

misrepresentation. In this regard, Buckeye argues that Busch falsely inflated financial

information on the BBCs, and that there was overwhelming evidence that Provident

justifiably relied on the false BBCs to advance money to USAT and not accelerate the

loan.

{¶ 40} “ ‘[I]n order for an appellate court to reverse a decision as against the

manifest weight of the evidence in a civil context, the court must determine whether the -14-

trier of fact, in resolving evidentiary conflicts and making credibility determinations, clearly

lost its way and created a manifest miscarriage of justice.’ ” Brewer v. Dick Lavy Farms,

L.L.C.,

,

, ¶ 46 (2d Dist.), quoting Alh Properties, P.L.L. v.

Procare Automotive Serv. Sols., L.L.C., 9th Dist. Summit No. 20991,

,

¶ 12. “ ‘[M]anifest weight of the evidence’ refers to a greater amount of credible evidence

and relates to persuasion * * * .” Eastley v. Volkman,

, 2012-Ohio-

2179,

, ¶ 19. “In a civil case, in which the burden of persuasion is only

by a preponderance of the evidence, rather than beyond a reasonable doubt, evidence

must still exist on each element (sufficiency) and the evidence on each element must

satisfy the burden of persuasion (weight).”

{¶ 41} In Eastley, the court stressed that “[i]n weighing the evidence, the court of

appeals must always be mindful of the presumption in favor of the finder of fact.” Id. at

¶ 21. Thus, the court cautioned that:

“[I]n determining whether the judgment below is manifestly against

the weight of the evidence, every reasonable intendment and every

reasonable presumption must be made in favor of the judgment and the

finding of facts. * * *

“If the evidence is susceptible of more than one construction, the

reviewing court is bound to give it that interpretation which is consistent with

the verdict and judgment, most favorable to sustaining the verdict and

judgment.”

Id., quoting Seasons Coal Co., Inc. v. Cleveland,

,

(1984), fn. 3. (Other citation omitted.) -15-

{¶ 42} Before addressing the evidence, we note that the elements of fraudulent

concealment and fraudulent misrepresentation are essentially the same. (Citations

omitted.) Gentile v. Ristas,

,

,

(10th Dist.) Accord States v. Wing, 11th Dist. Trumbull No. 2005-T-0145, 2006-

Ohio-4423, ¶ 25. “Fraud may be committed not only by affirmative misrepresentation or

concealment, but also by nondisclosure when there is a duty under the circumstances to

disclose.”

, citing Parahoo v. Mancini, 10th Dist. Franklin No. 97APE08-

1071,

(Apr. 14, 1998).

{¶ 43} To prove fraud, the party asserting the claim must establish: “(1) a

representation (or concealment of a fact when there is a duty to disclose) (2) that is

material to the transaction at hand, (3) made falsely, with knowledge of its falsity or with

such utter disregard and recklessness as to whether it is true or false that knowledge may

be inferred, and (4) with intent to mislead another into relying upon it, (5) justifiable

reliance, and (6) resulting injury proximately caused by the reliance.” (Citation omitted.)

Volbers-Klarich v. Middletown Mgt., Inc.,

,

,

, ¶ 27. Accord Seitz v. Harvey, 2d Dist. Montgomery No. 25867, 2015-Ohio-

122, ¶ 24. All these elements must be present, and the absence of any element

precludes recovery. (Citations omitted.) Westfield Ins. Co. v. HULS Am., Inc.,

,

(10th Dist. 1998).

{¶ 44} In rejecting the fraud claims, the magistrate thoroughly reviewed the

evidence and concluded that Buckeye had presented insufficient evidence about what it

would have done if it had known about the Bank One account and the inaccurate

borrowing BBCs. In addition, the magistrate found that Buckeye had not proven its loss, -16-

if any, based on the filing of the inaccurate statements. In reaching these conclusions,

the magistrate noted the statement of Buckeye’s expert that it was impossible to

determine what Provident would have done if it had known the facts, but that the expert,

himself, would have called the loan. The magistrate placed little weight on this

testimony, noting that Provident did not appear to lose trust in Busch because Provident

did not object to Busch staying on in his position with USAT during the bankruptcy.

{¶ 45} Furthermore, the magistrate placed great weight on the testimony of

defense expert, Alan Duvall, who indicated that Provident and USAT had a long history

of problems with the loan, including USAT’s violation of covenants for years, which

caused the loan to be in default. Nonetheless, Provident did not call the loan, and chose

to work with USAT in order to keep the company in business. The magistrate also noted

Duvall’s testimony that, in fact, even though Busch provided inaccurate BBCs in 2003,

the BBCs were actually understated, in terms of collateral, and Provident remained fully

secured on the loan. Magistrate’s Decision, Doc. #264, p. 11. And finally, the

magistrate noted the lack of evidence that Provident relied on the BBCs in terms of

keeping the loan in place.

{¶ 46} In challenging the decision as being against the manifest weight of the

evidence, Buckeye points to testimony from Robert Burk, who stated that the bank relies

on the accuracy of the financial information in determining what funds are available to a

customer, and on the testimony of Noland, Kakde, and Busch, that Provident might

accelerate the loan if it knew about the Bank One account.

{¶ 47} “The question of justifiable reliance is one of fact and requires an inquiry

into the relationship between the parties.” (Citation omitted.) Crown Property Dev., Inc. -17-

v. Omega Oil Co.,

,

(12th Dist. 1996).

“Reliance is justifiable if the representation does not appear unreasonable on its face and

if there is no apparent reason to doubt the veracity of the representation under the

circumstances. * * * However, reliance and responsibility must be balanced * * * .”

(Citation omitted.) Lapos Constr. Co. v. Leslie, 9th Dist. Lorain No. 06CA008872, 2006-

Ohio-5812, ¶ 21.

{¶ 48} We stressed these points in Amerifirst Savings Bank of Xenia v. Krug,

,

(2d Dist. 1999). We further noted that “ ‘[t]he rule

of law is one of policy and its purpose is, while suppressing fraud on the one hand, not to

encourage negligence and inattention to one's own interests. There would seem to be

no doubt that while in ordinary business transactions, individuals are expected to exercise

reasonable prudence and not to rely upon others with whom they deal to care for and

protect their interests, this requirement is not to be carried so far that the law shall ignore

or protect positive, intentional fraud successfully practiced upon the simple-minded or

unwary.’ ”

, quoting 50 Ohio Jurisprudence 3d, Fraud and Deceit, Section

132 (1984).

{¶ 49} The case before us does not involve a simple-minded or unwary participant.

Instead, Provident was a sophisticated financial institution which chose to excuse

repeated defaults, including ones occurring from the very beginning of the transaction.

Moreover, Buckeye failed to present evidence from Provident that it would have

accelerated the loan had it known of the Bank One account and the inaccuracies in the

BBCs. Buckeye’s response to this is that one cannot know what Provident would have

done because Provident did not have all the facts at the time. However, Burk, who was -18-

in charge of the loan, stated only that if Provident had known USAT was providing false

information, it “would not have set well,” and that the bank “could have accelerated the

entire obligation and proceeded to move against the collateral.” (Emphasis added.)

Transcript of Adversary Hearing, p. 151.

{¶ 50} Burk further indicated that Provident would evaluate its options and various

factors once it became aware of the situation, including where it was going to preserve

the most value. Id. at p. 180. Additionally, Burk noted that while USAT was in default

pretty consistently on loan covenants throughout 2002 and 2003, USAT was generating

more receivables, and receivable collection had not been a problem for USAT, which

historically had collected all its receivables. Id. at pp. 217-218, 224, and 271. According

to Burk, the reporting of BBCs and review by the bank was an internal control the bank

put in place to make sure the loan did not get out of balance with the collateral. Id. at p.

138.

{¶ 51} Consistent with Burk’s testimony, Duvall (the expert the magistrate found

credible), commented that:

Well note, [USAT has] been in loan covenant violation since day one.

They’ve got serious financial issues. The bank is well aware of their

serious financial issues. Audit reports – they’re doing internal audits but

the loan has been moved into you know the SAP division and yet, during

this point in time, they allow this loan to go from March 31, 2003 to August

29, 2003, they allow it to grow $700,000.00 even though it’s a troubled loan.

Now, then, still knowing it’s a troubled loan, from August 29th to

November 30th, it grows another $490,000.00. You know, if you, really, if -19-

you graph this out it’s almost a solid straight line up; about a $140,000 to

150,000 a month increase; so the question you have to raise is why did they

allow that to grow during that point in time? And if there was something

you know was there any factor after August 29th that happened that

influenced them as opposed to what they knew back in March 31st, 2003.

You see a growth the whole time and your conclusion has to be that * * *

they saw the collateral base increasing, particularly with Delphi, and they

were riding the pony * * * along with [USAT].

Transcript of Trial Proceedings, Vol. 6, pp. 806-807 (Testimony of Alan Duvall).

{¶ 52} Duvall further testified that nothing in his investigation demonstrated that

the increase in the borrowing base was related to any inaccurate BBCs. Id. at p. 826.

Duvall also said that instead of relying on the BBCs in terms of keeping the loan in place,

Provident “actively ignored” the BBCs, “actively lent in excess of their lending authority

and * * * knew there were issues with the borrowing base certificates back in November

2002. And they ignored all those issues.” Id. at 827.

{¶ 53} Provident’s response after learning of Busch’s actions and the intended

bankruptcy is also inconsistent with justifiable reliance. Provident did not accelerate the

loan prior to bankruptcy, even though it learned of the intended bankruptcy several days

before USAT filed. Provident also did not accelerate the loan when it learned of Busch’s

actions; instead, Provident requested an audit. Transcript of Adversary Hearing, p. 190;

Transcript of Trial Proceedings, Vol. 1, pp. 85-87; Vol. 3, pp. 428-429.

{¶ 54} After the audit was conducted, Provident did not object to the use of

emergency cash collateral, and subsequently consented to USAT’s temporary and -20-

permanent use of cash collateral in the bankruptcy proceeding, which allowed USAT to

use, in part, Provident’s capital to continue to operate. Transcript of Adversary Hearing,

p. 153; Transcript of Trial Proceedings, Vol. 4, pp. 488-489; Vol. 5, p. 674. Provident

also continued to work with USAT and with Busch during the bankruptcy proceedings; in

particular, Busch was signing BBCs during the bankruptcy proceedings. Transcript of

Proceedings, Vol. 3, pp. 425-426, and 433-435; Transcript of Adversary Hearing, p. 506.

In addition, Provident did not ask for a trustee or receiver to be appointed during the

bankruptcy. Id. at 433-434.

{¶ 55} Under the circumstances, we cannot say that the trial court’s decision was

against the manifest weight of the evidence. The trial court gave more weight to the

testimony of certain witnesses, and this was a credibility issue, to which we accord

substantial deference. Bayes v. Dornon,

,

, ¶ 54 (2d

Dist.). Credibility of witnesses and the weight to be given their testimony are primarily

matters for triers of facts to resolve. State v. DeHass,

,

(1967).

{¶ 56} “Because the factfinder, be it the jury or, as in this case, the trial judge, has

the opportunity to see and hear the witnesses, the cautious exercise of the discretionary

power of a court of appeals to find that a judgment is against the manifest weight of the

evidence requires that substantial deference be extended to the factfinder's

determinations of credibility. The decision whether, and to what extent, to credit the

testimony of particular witnesses is within the peculiar competence of the factfinder, who

has seen and heard the witness.” State v. Lawson, 2d Dist. Montgomery No. 16288,

, *4 (Aug. 22, 1997). Accord

. -21-

{¶ 57} As an additional matter, the trier of fact has the same ability to decide the

credibility of expert witnesses and the weight to be given their testimony. In re Estate of

Secoy,

,

(2d Dist. 1984). (Citation omitted.)

See also Schutz v. Schutz, 2d Dist. Darke No. 2016-CA-6,

; Vance

v. Vance,

,

,

(2d Dist.).

{¶ 58} This case does not present the exceptional situation in which the trier of fact

“ ‘clearly lost its way and created a manifest miscarriage of justice.’ ” Brewer, 2016-Ohio-

4577,

, at ¶ 46, quoting Alh Properties, 9th Dist. Summit No. 20991, 2002-

Ohio-4246, at ¶ 12. Instead, the finding of lack of justifiable reliance was supported by

more than adequate evidence.

{¶ 59} Because the lack of justifiable reliance is fatal to Buckeye’s claim against

Busch, we need not consider issues concerning whether the reliance proximately caused

injury to Buckeye. Volbers-Klarich,

,

,

, at ¶ 27; HULS Am., Inc.,

,

. We do note that

Duvall, the defense expert, presented a detailed explanation of why no damages were

caused, and the trier of fact gave great weight to that testimony.

{¶ 60} Based on the preceding discussion, the First Assignment of Error is

overruled.

III. Did the Court Err in Rejecting the Claims against Noland?

{¶ 61} Buckeye’s Second Assignment of Error states that:

The Trial Court Erred in Finding that Defendant Thomas R. Noland

Was Not Liable for Tortious Interference With Contractual Relations. -22-

{¶ 62} Under this assignment of error, Buckeye contends, first, that the trial court

applied the wrong legal standard in considering the tortious interference with contract

claim against Thomas Noland. Specifically, Buckeye argues that the trial court

incorrectly applied a legal malpractice standard instead of standards that apply to claims

for interference with contractual relationships. Buckeye’s second point is that the

judgment in Noland’s favor is against the manifest weight of the evidence. We will

address these issues separately.

A. Legal Standards

{¶ 63} As an initial point, we note that the magistrate specifically found in his

decision that the claim against Noland was not a legal malpractice claim; instead, the

claim was for tortious interference with a business relationship. Magistrate’s Decision,

Doc. #264, p. 12. The magistrate then concluded that Noland “acted professionally

without malice and gave good-faith legal representation to USAT which is the standard in

the State of Ohio.” Id. at pp. 15-16. As a result, judgment was rendered in Noland’s

favor on Buckeye’s claim.

{¶ 64} According to Buckeye, the trial court improperly used a standard from legal

malpractice cases to decide if Noland was entitled to qualified immunity for his legal

advice. Buckeye contends that the trial court, instead, should have used a seven-factor

test from Fred Siegel Co., L.P.A. v. Arter & Hadden,

,

(1999), to decide whether Noland lacked justification to interfere with Provident’s contract.

{¶ 65} In Siegel, the Supreme Court of Ohio reaffirmed the existing elements of

tortious interference with contract, holding that they are “(1) the existence of a contract,

(2) the wrongdoer's knowledge of the contract, (3) the wrongdoer's intentional -23-

procurement of the contract's breach, (4) lack of justification, and (5) resulting damages.”

, paragraph one of the syllabus, affirming and following Kenty v.

Transamerica Premium Ins. Co.,

,

(1995), paragraph

two of the syllabus.

{¶ 66} In Siegel, the Supreme Court of Ohio also stated that establishing the fourth

element, lack of justification, would require “proof that the defendant's interference with

another's contract was improper.” (Citation omitted.) Id. at 172, paragraph three of the

syllabus. To evaluate this particular point, the court adopted the following seven factor-

test:

In determining whether an actor has acted improperly in intentionally

interfering with a contract or prospective contract of another, consideration

should be given to the following factors: (a) the nature of the actor's conduct,

(b) the actor's motive, (c) the interests of the other with which the actor's

conduct interferes, (d) the interests sought to be advanced by the actor, (e)

the social interests in protecting the freedom of action of the actor and the

contractual interests of the other, (f) the proximity or remoteness of the

actor's conduct to the interference, and (g) the relations between the

parties.

Id. at paragraph three of the syllabus, adopting Restatement of the Law 2d, Torts, Section

767 (1979).

{¶ 67} Like the case before us, Siegel involved allegations of contractual

interference. However, the facts in Siegel were substantially different and had nothing

to do with advice given during an attorney-client relationship. Specifically, in Siegel, an -24-

attorney and her new law firm were sued for contractual interference because they

solicited her former firm’s clients. Siegel,

,

. After

reaffirming the existing elements of the tort of contractual interference and adopting

Section 767 of the Restatement of Torts 2d, the court concluded that summary judgment

had been improperly granted on behalf of the attorney and her new law firm. In this

regard, the court reasoned that the record contained “unresolved issues of fact”

concerning whether the attorney and her new law firm had used wrongful means in

competing with the attorney’s former law firm.

.

{¶ 68} As noted, Siegel did not involve an attorney’s legal advice to a client and

allegations that a contractual interference claim could arise from that activity.

Nonetheless, in arguing that the trial court used the wrong standard, Buckeye contends

that Siegel “recognized a claim for tortious interference could be maintained against a law

firm.” (Emphasis added.) January 12, 2016 Brief of Appellant and Cross-Appellee,

Buckeye Retirement Co., LLC, Ltd., p. 1. This is incorrect. Siegel did not establish a

new theory of liability against law firms, and the involvement of attorneys was simply a

factual matter in the case, not a basis for the claim.

{¶ 69} In fact, cases based on tortious interference of contract by attorneys and

law firms existed well before Siegel. See Sonkin & Melena Co., L.P.A. v. Zaransky,

,

(8th Dist. 1992) (in case involving law firm’s claim

against former attorney employee, court of appeals agreed with trial court that under

totality of circumstances, former employee did not interfere with law firm’s clients when

he left the firm); Shane, Shane & Summers Co., L.P.A. v. Caravona, 8th Dist. Cuyahoga

No. 52690,

, *2 (Nov. 19, 1987) (in suit involving former partners of law -25-

firm, jury found that former law firm interfered with partners’ contractual relations and

prospective business advantage by persuading a doctor not to perform services for the

partners’ new firm); Hilliard v. Lease, 10th Dist. Franklin No. 93AP-1029,

, *3 (Dec. 23, 1993) (in case involving law firm’s claims of tortious interference

with business relationship by attorney who left firm and took clients, the court of appeals

reversed dismissal of the case, concluding that the complaint adequately stated a claim).2

{¶ 70} In Siegel, the Supreme Court of Ohio did reject the suggestion of the

attorney and her new firm that the Disciplinary Rules for lawyers justified their actions.

In this regard, the court stated that a finding of tortious interference with contract is not

precluded by the fact that clients have a right to discharge attorneys, or by the fact that

attorneys may inform clients of their departure and willingness to provide services at a

new location without violating ethical rules. Siegel,

,

. The court also rejected the suggestion that “the propriety of an attorney’s conduct

for purposes of a tortious interference analysis should be determined solely by application

of the Disciplinary Rules.”

. The court noted that violation of the Disciplinary

Rules does not create a private cause of action, and that “the power to determine

violations of the Disciplinary Rules is reserved” to the Supreme Court of Ohio.

{¶ 71} As a result, the court concluded that “consistent with our adoption in Kenty

2 In a later appeal, the court of appeals agreed with the trial court, which held a bench trial and decided that the facts did not support the business interference claim. Hilliard v. Lease, 10th Dist. Franklin No. 95APE04-473,

, *5 (Jan. 16, 1996). However, the court of appeals did reverse the trial court’s finding that the attorney had no fiduciary duty to his former law firm. On remand, the trial court held that the attorney did not breach a fiduciary duty to the firm by improperly handling or delaying settlements in the cases of the clients he took, and the court of appeals affirmed this decision. Hilliard v. Lease, 10th Dist. Franklin No. 97APE05-637,

, *3 (Nov. 18, 1997). -26-

of Restatement Section 766, which sets forth the elements of tortious interference with

contract, the propriety of the appellants' conduct in contacting Siegel's clients and

suggesting that they follow [the attorney] to [the new firm] should be determined by

applying relevant legal tests as defined in Section 766 et seq. of the Restatement.”

citing Kenty,

,

. The court then adopted the seven-

factor test mentioned above.

{¶ 72} In the case before us, the magistrate specifically found in his decision that

the claim against Noland was not a legal malpractice claim, but was a claim for tortious

interference with a business relationship. Magistrate’s Decision, Doc. #264, p. 12. The

magistrate then referred to Shoemaker v. Gindlesberger,

, 2008-Ohio-

2012,

, which held that “attorneys in Ohio are not liable to a third party

for the good-faith representation of a client, unless the third party is in privity with the

client for whom the legal services were performed.” Id. at ¶ 9, citing Scholler v. Scholler,

,

(1984), paragraph one of the syllabus. According to

Shoemaker, “[t]his rule is rooted in the attorney's obligation to direct attention to the needs

of the client, not to the needs of a third party not in privity with the client.”

citing Simon

v. Zipperstein,

,

(1987). The court also commented

that “[t[he necessity for privity may be overridden if special circumstances such as ‘fraud,

bad faith, collusion or other malicious conduct’ are present.” Shoemaker at ¶ 11, quoting

.

{¶ 73} Shoemaker involved a negligence claim that beneficiaries brought against

an attorney for preparing a deed that resulted in increased tax for the estate. Id. at ¶ 1.

The attorney had prepared the deed at the decedent’s request, as she wanted to transfer -27-

property to one child and reserve a life estate for herself. Id. at ¶ 2. When the estate

was probated after her death, the remaining children found out that estate assets would

have to be sold to pay taxes on the transfer. As a result, they brought an action for

negligence against the attorney and an action for unjust enrichment against their brother.

Id. at ¶ 3-4. In turn, the brother asserted a cross-claim against the attorney for

negligence. Id. at ¶ 5.

{¶ 74} The trial court granted summary judgment in the attorney’s favor, based on

the lack of an attorney-client relationship, or lack of privity between the attorney and the

children. Id. On appeal, the Supreme Court of Ohio held that the limited exception to

the privity rule, i.e., for cases of fraud and malice, should not be expanded, Id. at ¶ 7.

Thus, because the beneficiaries were not in privity and had not alleged fraud or malice,

they did not have standing to file a negligence action against the attorney. Id. at ¶ 10.

{¶ 75} In rejecting expansion of the exceptions to privity, the court stressed that

public policy justified adherence to the privity rule, because it primarily “is used to protect

the attorney's duty of loyalty and the attorney's effective advocacy for the client.”

(Citations omitted.) Id. at ¶ 14. The court also focused on the fact that, in the estate

planning context, attorneys would have conflicting duties and loyalties without the rule.

Id. at ¶ 15. And finally, in a more general context, the court concluded that expanding

the exceptions could cause “unlimited potential liability for the lawyer.” (Citations

omitted.) Id.

{¶ 76} In a recent decision, we thoroughly considered issues pertaining to the

extent to which attorneys can be sued by third parties to the attorney-client relationship –

a subject that was not involved in Siegel. See Omega Riggers & Erectors, Inc. v. -28-

Koverman,

,

(2d Dist.).

{¶ 77} Omega involved individual claims of minority shareholders against a

corporate attorney. These claims arose from the attorney’s involvement in a sale of

assets of the closely held corporation. Id. at ¶ 3-4. The complaint sought damages

against the attorney for breach of fiduciary duty, legal malpractice, and negligence. Id.

at ¶ 16. When the attorney filed a motion for summary judgment based on lack of

standing, the plaintiffs responded that they were in privity with the corporation, that the

attorney had acted with malice, and that their injuries were not in common with other

stockholders. Id. After the trial court granted summary judgment for the attorney, the

plaintiffs appealed.

{¶ 78} Our decision initially noted that the attorney’s summary judgment motion

had argued, among other things, that the claims for breach of fiduciary duty and generic

negligence were not independent claims, and that plaintiffs lacked standing to assert

individual claims. Id. at ¶ 21. We then commented that only the lack of an attorney-

client relationship, or a substitute for the relationship, had been appealed. Id.

{¶ 79} In discussing the issues, however, we first observed that “[a] claim against

an attorney for actions taken in his professional capacity is a claim sounding in legal

malpractice no matter how artfully the pleadings attempt to raise some other claim.”

Omega,

,

, at ¶ 22. We then stressed that:

“ ‘An action against one's attorney for damages resulting from the manner

in which the attorney represented the client constitutes an action for

malpractice * * *, regardless of whether predicated upon contract or tort or

whether for indemnification or for direct damages. * * * Malpractice by any -29-

other name still constitutes malpractice.’ ” Pierson v. Rion, 2d Dist.

Montgomery No. 23498,

, ¶ 14, quoting Muir v. Hadler Real

Estate Mgmt. Co.,

,

(10th Dist. 1982).

Although the trial court correctly found that the only viable claim is one for

legal malpractice, and that conclusion is not on appeal, we reiterate the

nature of the claim to emphasize that the plaintiffs' various claims need to

be analyzed in a legal-malpractice context.

Omega at ¶ 22.

{¶ 80} Notably, in Pierson, the complaint alleged “legal malpractice,

fraud/fraudulent misrepresentation, negligent misrepresentation, and breach of contract”

on the attorney’s part.

. We concluded in Pierson that all these claims

“were subsumed within [the plaintiff’s] legal malpractice claim.” Id. at ¶ 13.

{¶ 81} Based on the above authority, the magistrate could have concluded that the

claims against Noland for interference with contract were, in fact, legal malpractice claims.

Furthermore, if this were the case, the magistrate’s resort to qualified immunity was

appropriate.

{¶ 82} Courts have held that “not all fraudulent conduct committed by an attorney

will fall under the umbrella of a general malpractice claim, although the elements of fraud

must be specifically pled in the complaint.” Gullatte v. Rion,

,

(2d Dist. 2000), citing DiPaolo v. DeVictor,

,

(10th Dist. 1988). In DiPaolo, the Tenth District Court of Appeals stated

that “[i]n order to rebut that presumption [of good faith in handling a client’s affairs] and

sufficiently allege a cause of action for fraud against attorneys in a situation where the -30-

gist of the complaint involves legal malpractice * * *, plaintiffs must have specifically

alleged that defendants committed the actions for their own personal gain. To hold

otherwise would be to undermine the purpose and focus of the malpractice statute.”

(Citation omitted.)

.

{¶ 83} One theme asserted by Buckeye at trial was that Noland’s alleged

misconduct was based on a desire for personal gain, i.e., for payment of his firm’s

retainer. However, we commented in Gullatte that, despite the holding in DiPaolo, the

Tenth District Court of Appeals “recently held that a desire to obtain a settlement and

resulting contingent fee was not the type of personal gain that would support an action

for fraud separate from a malpractice action.”

, citing Endicott v. Johrendt,

10th Dist. Franklin No. 99AP-935,

(June 22, 2000). As a result, the

Tenth District concluded in Endicott that the plaintiff’s claim for fraud against her former

attorneys was subsumed within her malpractice claim.

.

{¶ 84} In Endicott, the court of appeals did hold that one component of the

plaintiff’s claim for intentional infliction of emotional distress covered matters not within

the scope of her former attorneys’ representation, because it was based on their actions

during an arbitration proceeding, well after their representation ended. Id. at *5.

Specifically, the plaintiff alleged that the attorneys had falsely characterized her as an

abuser of prescription drugs and had caused her physical distress. Id. However, there

is no contention in the case before us that Buckeye’s claim against Noland involved

actions taken after Noland’s representation of USAT ended.

{¶ 85} Applying the above discussion to the case before us, we conclude that the

magistrate should have evaluated Buckeye’s claims as ones for legal malpractice. All -31-

the claims against Noland arose from “ ‘the manner in which’ ” Noland represented his

client and should be considered in that context, regardless of how they were styled in the

trial court. Dottore v. Vorys, Sater, Seymour & Pease, L.L.P., 8th Dist. Cuyahoga No.

98861,

, quoting Muir,

,

. See

also Omega,

,

, at ¶ 22. While representing his client,

Noland advised USAT to open a non-lender account and to deposit funds in the account

in preparation for bankruptcy. If these actions caused damage, they would have been

the subject of a legal malpractice action. Furthermore, even if Noland had been partially

motivated by the prospect of funding a retainer, this was not the type of personal gain that

would support an action beyond an action for malpractice.

;

(desire to keep a client’s business is not the type of personal gain elevating concealment

from an act of malpractice to an act of fraud).

{¶ 86} Nonetheless, even if the magistrate erred in failing to consider the claim

against Noland as one for legal malpractice, the magistrate did apply the correct standard

for malpractice claims. As was noted, the magistrate applied qualified immunity, which

prevents lawsuits against attorneys unless a party is in privity with the attorney.

Shoemaker,

,

,

, at ¶ 9.

{¶ 87} Furthermore, even if Buckeye’s claim were solely based on interference

with contractual or business relations, and Siegel applied, any error by the magistrate

was harmless. As was noted, the factors in Siegel include “(a) the nature of the actor's

conduct, (b) the actor's motive, (c) the interests of the other with which the actor's conduct

interferes, (d) the interests sought to be advanced by the actor, (e) the social interests in

protecting the freedom of action of the actor and the contractual interests of the other, (f) -32-

the proximity or remoteness of the actor's conduct to the interference, and (g) the relations

between the parties.” Siegel,

,

.

{¶ 88} In concluding that Noland acted without malice, professionally, and in good

faith, the magistrate did consider Noland’s conduct and motives, the interests of

Provident, the interests of USAT that Noland was attempting to advance, the time

between Noland’s advice and the alleged interference, and the relations between the

parties. See Magistrate’s Decision, Doc. #264, pp. 5, 9, and 12-16. Although the

magistrate did not explicitly discuss the societal interests in qualified immunity for

attorneys, the magistrate’s citation to Shoemaker indicates that this issue was implicitly

considered. In Shoemaker, the court stressed public policy, and the fact that the privity

rule is primarily “used to protect the attorney's duty of loyalty and the attorney's effective

advocacy for the client.” Shoemaker at ¶ 14. As a result, consideration of societal

interests was inherent in the magistrate’s decision.

{¶ 89} Accordingly, we reject Buckeye’s claim that the judgment should be

reversed because the trial court used an incorrect standard to evaluate the claims against

Noland.

B. Manifest Weight Challenge

{¶ 90} Buckeye’s second argument is that the judgment in Noland’s favor is

against the manifest weight of the evidence. As support for this, Buckeye relies on

testimony from Busch and Kakde that Noland was aware that receivables would be used

to fund the Bank One Account, and that Noland’s response during their discussion was

that Busch should “do what you have to do.”

{¶ 91} Again, for us to reverse decisions based on manifest weight, we “ ‘must -33-

determine whether the trier of fact, in resolving evidentiary conflicts and making credibility

determinations, clearly lost its way and created a manifest miscarriage of justice.’ ”

Brewer,

,

, at ¶ 46, quoting Alh Properties, 9th Dist. Summit

No. 20991,

, at ¶ 12.

{¶ 92} In Omega, we stressed that only three methods could substitute for the

essential requirement of an attorney-client relationship: “(1) the claimant is so situated

that it is deemed in ‘privity’ with the actual client, (2) the attorney acted with malice toward

the claimant such that an action for recovery is justified, or (3) the injury or damages

caused by a tortfeasor to a corporate shareholder claimant are unique and distinct from

those suffered by other shareholders, which justify a direct claim by the shareholder

against the tortfeasor.” Omega,

,

, at ¶ 23. The only

potential exception that would apply in the case before us is malice. In this respect, the

magistrate concluded that Buckeye’s claim survived a motion to dismiss based on

whether Noland’s advice was based on “something other than sound legal advice.”

Magistrate’s Decision, Doc. #264, p. 12.3 At that point, Noland had not yet presented his

case. However, after considering the entirety of the evidence, the magistrate concluded

that Noland did not act maliciously, nor did he have an ulterior motive in connection with

his legal advice. In addition, the magistrate found that Noland acted professionally and

in good faith. Id. at pp. 15-16.

{¶ 93} In Omega, we discussed the subject of malice at length. Id. at ¶ 31-37.

3 The parties and trial court referred to the motions made at the end of Buckeye’s case as motions for “directed verdict,” but since the trial was to the bench, the motions were for dismissal under Civ. R. 41(B)(2). The distinction is a matter of semantics, as the correct standards were applied. -34-

We observed that normally, malice is defined as “ ‘(1) that state of mind under which a

person's conduct is characterized by hatred, ill will or a spirit of revenge, or (2) a conscious

disregard for the rights and safety of other persons that has a great probability of causing

substantial harm.’ ” Id. at ¶ 31, quoting Preston v. Murty,

,

(1987). Because ill will, hatred, and revenge were not at issue, we further

discussed only the issue of conscious disregard.

As in Omega, hatred, ill will, and

revenge are not present in the case before us.

{¶ 94} Regarding “conscious disregard,” we stressed in Omega that:

In the context of a legal-malpractice action, resolving whether an

attorney's actions could be construed as “a conscious disregard for the

rights and safety of other persons that has a great probability of causing

substantial harm” requires a subtle, but indispensable, distinction regarding

applicable facts. An attorney should not suffer potential liability to third

parties for advising and pursuing a client's non-criminal goals, even if those

goals will subject the client to potential civil liability. If Omega, by direction

of Foreman, its majority shareholder and president, intentionally decided to

freeze out Cotter and Anthony, and Koverman was engaged to handle the

legal process to do so, Koverman would not be liable in malpractice to the

minority shareholders even though those facts arguably could be construed

as the majority shareholder's conscious disregard of others’ rights that

probably would cause substantial harm, and even though those facts would

expose the corporation and its majority shareholder to damages from the

freeze out, as it did here. To hold otherwise would mean no attorney could -35-

advise a client about, or legally participate in, the freeze out of a minority

shareholder without incurring malpractice liability. But that is not the law.

Omega,

,

, at ¶ 32.

{¶ 95} In light of these observations, we held that “malice, as a substitute for an

attorney-client relationship, cannot be predicated on actions by the attorney that the

attorney is permitted to take, or even negligently may take, as part of the representation

of plaintiffs’ adversarial client. To constitute malice, the actions of the attorney must

include a disregard of rights that the attorney, not the client, is required to protect and

must include harm beyond that which legal action necessarily may inflict. In most

circumstances, an attorney is not obligated to protect the rights of an adversary.” Id. at

¶ 35.

{¶ 96} Viewing the evidence through this prism, we conclude that the judgment in

Noland’s favor is not against the manifest weight of the evidence. As a preliminary

matter, we note that Buckeye’s argument about manifest weight relies on incomplete

testimony of Busch and Kakde, and ignores the testimony of Noland and the defense

expert.

{¶ 97} According to Noland, the discussion on July 31, 2003, about opening the

bank account, occupied only one percent of a very long meeting that was held when filing

bankruptcy appeared imminent. Noland stated that he told USAT to open an account

and “park” money in it in preparation for bankruptcy. Noland denied having any

discussion and direction telling USAT it was to do anything other than build the account

so it would be available if filing bankruptcy were necessary.

{¶ 98} The purpose of the account was to protect employees and preserve asset -36-

values. Noland explained to USAT that if a business does not have cash available when

it files bankruptcy, it cannot operate unless it obtains consent or an order from the court.

If no cash is available, contracts go into default and employees will walk out the door with

equipment, product, and whatever they can take, if they have not been paid. In that

situation, the chance of reorganization ends before it has a chance to succeed.

{¶ 99} Noland also denied that Busch had said at the meeting that he was going

to put receivables into the non-lender account. Transcript of Trial Proceedings, Vol. 2,

p. 199. Noland believed that Busch had said receivables were the source of cash that

USAT had to put into that account. However, Noland also stressed that he stated at the

meeting “that Mr. Kakde or other sources should be explored to fund that account * * *.”

Id. at p. 201. In addition, Noland told Busch that if he were to obtain a receivable he

turned into cash, Busch would have to accurately report that. Id. at p. 217. Finally,

Noland told Busch that if Provident asked about a secondary bank account, Busch should

reveal the account.

{¶ 100} USAT’s president, Kakde, was present during the July 31, 2003 meeting.

Kakde testified that a discussion occurred during the meeting about opening a bank

account. According to Kakde, Noland indicated that opening a bank account would be

a breach of contract, but that a breach was not illegal; USAT had already breached many

covenants and this would just be another one. Concerning discussion about money for

the account, Kakde testified that:

* * * I don’t know exactly how it transpired, but my recall is about reporting

to the bank, if you put the money in that account, how am I going to report

that to Provident, because all source of money is receivables only, you -37-

know. * * * John [Busch] asked, you know, this is the borrowing base, what

should I do with it and all that. Tom said, I’m not an accountant, you do

what you have to do. John started running the scenario again and Tom

said, I don’t understand. And I said, John, I don’t understand that either,

what you need to do is if you have any questions about anything, touch

base with Tom, get an answer from Tom. Because between you two, I’m

pretty sure you’ll be able to resolve it. And my patter [sic] is full, I need to

take care of other issues.

Transcript of Adversary Proceeding, p. 489.

{¶ 101} After the July 31, 2003 meeting, the next time that Noland met with USAT

was when he handled litigation involving Borg Warner in November 2003. When the

Borg Warner issue came up, they discussed the Chapter 11 proceeding. However, there

was no evidence that Busch contacted Noland about anything pertaining to BBCs until

mid-December 2003, when Busch called Noland and said he was uncomfortable with a

report he was to submit to the bank. At that time, Noland told Busch to consult with

Kakde and have Kakde sign it, if he would. Transcript of Trial Proceedings, Vol. 2, pp.

285-286.

{¶ 102} Notably, Busch signed almost all the BBCs after the July 31, 2003 meeting,

other than ones on December 9 and December 16, 2003. Kakde signed these two

BBCs. According to Kakde, Busch only told him of an issue about signing after Kakde

had signed the BBC on December 16. Kakde indicated that Busch’s concern was that

USAT’s collateral might not have the value due to the Delphi cancellation.4 At that point,

4 Delphi’s final offer of $150,000 rather than the anticipated $2,000,000 on the contract -38-

Kakde told Busch that they would talk to Noland. Transcript of Adversary Proceeding,

p. 505. The bankruptcy was filed shortly thereafter.

{¶ 103} Noland testified that he first learned of borrowing base issues with USAT’s

account from Provident’s attorney in December 2003, after USAT told Provident it was

going to declare bankruptcy. Transcript of Trial Proceedings, Vol. 2, p. 282. Kakde also

testified that he was shocked when he learned that Busch had provided inaccurate

information on the BBCs. Transcript of Adversary Proceeding, p. 548. Kakde said that

he had trusted Busch and still trusted him. He went on to say that “I did not understand

the extent of [Busch’s] genuine, genuine lack of understanding. There’s clearly a gap

between what Mr. Noland wanted to see and could not fully articulate and what Mr. Busch

understood he should do to keep that account from Provident, to keep the Bank One

account from Provident. That’s how I see the situation.” Id. at pp. 548-549.

{¶ 104} In addition, Busch never testified that Noland told him to put receivables in

the account or to falsify documents. His testimony was that in order to open an account

and fund it, it was not possible to record the receivables accurately without Provident

knowing. Transcript of Trial Proceedings, Vol. 1, p. 128. Busch then stated that “You

couldn’t do both; so what I did was I opened the account and did not record the information

on the books and records of USAero Team to keep it secret. Now I thought when Mr.

Noland said to do what you needed to do that is the only thing I could see that could be

done.” (Emphasis added.) Id.

{¶ 105} At a minimum, the above testimony demonstrates ambiguity about was

what meant by “do what you have to do.” At a maximum, there are credibility issues that

cancellation was received on December 15, 2003. -39-

were resolved in Noland’s favor by the finding that he acted professionally and in good

faith. Certainly, if one believes Noland and Kakde, no discussion or instruction about

inaccurately reporting BBCs was given. And, even Busch’s testimony is based on what

he “thought” was meant by Noland’s statement.

{¶ 106} Buckeye contends that the advice to “do what you have to do” was not

sound legal advice because making false statements to banks to influence lending is a

crime under 18 U.S.C. 1014. However, that assumes Noland’s statement was both

unambiguous and undisputed. It was not, and as we have stressed, triers of fact

primarily resolve witness credibility and weight, and we give substantial deference to the

fact-finder’s determination. DeHass,

,

; Bayes,

,

, at ¶ 54. The reason for this is that “the factfinder * * *

has the opportunity to see and hear the witnesses * * *.” Lawson, 2d Dist. Montgomery

No. 16288,

, at *4. Furthermore, “[t]he fact that the evidence is subject

to different interpretations does not render the judgment against the manifest weight of

the evidence.” (Citation omitted.) Seitz, 2d Dist. Montgomery No. 25867, 2015-Ohio-

122, at ¶ 41.

{¶ 107} We also note that Noland presented testimony from an expert bankruptcy

practitioner (Jeffrey Morris), who testified that all of Noland’s conduct, including his pre-

bankruptcy advice, was appropriate and prudent, and was within the standard of care for

bankruptcy attorneys in Ohio. In addition, Provident’s expert (William Bodoh) did not

indicate that Noland did anything “unethical or illegal.” Transcript of Trial Proceedings,

Vol. 4, p. 562. Bodoh acknowledged that setting up a non-lender account was pretty

routine in pre-bankruptcy proceedings, but was critical of the length of time the account -40-

was open. Bodoh also criticized Noland’s suggestion to Busch that “false and fraudulent”

statements be submitted to Provident. Id. at p. 565. However, this criticism assumed

the truth of facts that were actually disputed. Again, the trier of facts was entitled to

assess the credibility of expert witnesses and what weight to give their testimony. In re

Estate of Secoy,

,

; Schutz, 2d Dist. Darke No.

2016-CA-6,

.

{¶ 108} Based on the preceding discussion, we conclude that the trial court’s

judgment as to Noland’s lack of liability was not against the manifest weight of the

evidence. We also note, for the reasons previously expressed, that our decision would

be the same even if we evaluated the manifest weight issue based on Siegel and the

seven-factor test for deciding if interference with a contract lacks justification.

{¶ 109} Based on the preceding discussion, the Second Assignment of Error is

overruled.

IV. Respondeat Superior

{¶ 110} Buckeye’s Third Assignment of Error states that:

The Trial Court Erred in Finding that Defendant Statman, Harris &

Eyrich, LLC Was Not Vicariously Liable under Respondent Superior for the

Conduct of Its Employee, Defendant Thomas R. Noland.

{¶ 111} Under this assignment of error, Buckeye argues that if Noland is liable for

tortious interference with the contract between Provident and USAT, then Statman is also

liable under the theory of respondeat superior. Buckeye concedes that if Noland is not

liable, then Statman has no vicarious liability. We agree. -41-

{¶ 112} “Respondeat superior speaks only to the vicarious liability of an employer;

it does not simultaneously create an express cause of action against individual agents

and servants of the employer. ‘Respondeat superior’ means ‘[l]et the master answer,’

and [has been defined] * * * as the doctrine holding ‘a master * * * liable in certain cases

for the wrongful acts of his servant, and a principal for those of his agent.’ ” (Emphasis

sic.) Hauser v. Dayton Police Dept.,

,

,

, quoting Black's Law Dictionary 1546 (3d Ed. 1933).

{¶ 113} Because the judgment pertaining to Noland’s lack of liability is being

affirmed, the Third Assignment of Error is without merit and is overruled.

V. Cross-Appellants’ Assignments of Error

A. Noland’s and Statman’s Assignments of Error.

{¶ 114} Noland and Statman have filed the following assignments of error, as

Cross-Appellants:

(1) The Trial Court Erred in Overruling Noland and SH&E’s Motions

to Dismiss; Motions for Summary Judgment; Motion to Dismiss as a Matter

of Law Whether Language of the Asset Sale Agreement is Ambiguous; and

Motion for Directed Verdict, Specifically in Regard to Determining Whether

Buckeye Had Purchased from Provident the Tort Rights Asserted Against

the Defendants in the Underlying Matter.

(2) The Trial Court Erred in Overruling Noland and SH&E’s Motion

for Summary Judgment and Motion for Directed Verdict, Specifically in

Regard to Determining that Noland Was Not USAT’s Agent for Purposes of -42-

the Transactions at Issue and Could Be Prosecuted for Tortious

Interference With the Contract Between USAT and Provident.

{¶ 115} Under these assignments of error, Noland and Statman present two main

arguments. The first is that Buckeye did not purchase the right to sue Noland and

Statman based on the terms of the loan acquisition documents and applicable law.

They, therefore, contend that the trial court should have dismissed the complaint, granted

summary judgment in their favor, or granted their motion for “directed verdict.”

{¶ 116} The second argument is that Noland and Statman could not be sued for

tortious interference with the contract between Provident and USAT because Noland was

acting as USAT’s agent at all relevant times and was legally deemed a party to the

contract. Since a party cannot tortuously interfere with its own contract under Ohio law,

Noland and Statman contend that the trial court erred by failing to grant their motion for

summary judgment and motion for “directed verdict,” both of which raised these points.

{¶ 117} Because the trial court’s judgment in favor of Noland and Statman is

being affirmed, these assignments of error are moot and need not be considered. See

App.R. 12(A)(1)(c).

B. Busch’s Assignment of Error

{¶ 118} Busch has filed the following assignment of error:

The Trial Court Erred in Overruling Busch, Noland, and SH&E’s

Various Motions Asserting Plaintiff Buckeye Retirement Co., LLC, Ltd. Did

Not Purchase from The Provident Bank the Tort Rights Asserted Against

the Defendants in the Underlying Matter and Did Not Have the Ability to -43-

Pursue the Claim Against the Defendants.

{¶ 119} For the reasons just discussed, this assignment of error is moot and need

not be considered, pursuant to App.R. 12(A)(1)(c).

VI. Conclusion

{¶ 120} All of Buckeye’s assignments of error having been overruled, and the

assignments of error of Cross-Appellants, Noland, Statman, and Busch having been

rendered moot, the judgment of the trial court is affirmed.

.............

FROELICH, J. and TUCKER, J., concur.

Copies mailed to:

James C. Carpenter Vincent I. Holzhall George D. Jonson G. Todd Hoffpauir John D. Smith Andrew P. Meier Ira H. Thomsen Hon. Michael A. Buckwalter