Olszeski Holcomb et al v. OP Ohio Corporation et al

OCR transcription for search; preserved printed pages are authoritative

The court incorporates by reference in this paragraph and adopts as the findings and orders
of this court the document set forth below.

Russ Kendig
United States Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF OHIO

EASTERN DIVISION
In re: )
) CHAPTER 11
HP OHIO CORP. & OP OHIO CORP., )
) CASE NO. 09-64631
Debtors. ) ADV. NO. 09-6131
)
) &
JUDY OLSZESKI HOLCOMB & )
JANE OLSZESKI TORTOLA, JOAN ) CASE NO. 09-64633
OLSZESKI & FREDA’S SHOPS, INC., ) ADV. NO. 09-6132
)
Plaintiffs, ) JUDGE RUSS KENDIG
)
V. )
)
HG OHIO CORP., OP OHIO CORP. & )
JAMES WILSON, ) MEMORANDUM OF OPINION
) (NOT FOR PUBLICATION)
Defendants. )
)

On June 18, 2010, plaintiffs Judy Olszeski Holcomb, Joan Olszeski, and Jane Olszeski
Tortola (collectively “Olszeski creditors”) filed a motion for partial summary judgment against

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defendant James Wilson (“Wilson”).' This motion is now before the Court.

The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334(b) and the
general order of reference entered in this district on July 16, 1984. This is a core proceeding

under 28 U.S.C. § 157(b)(2)(A) and (O).

This opinion is not intended for publication or citation. The availability of this opinion, in
electronic or printed form, is not the result of a direct submission by the Court.

BACKGROUND

A. Undisputed Facts

On May 31, 2006, the Olszeski creditors sold their respective interests in Olszeski
Properties, Inc. to Wilson. The assets sold included a shopping center in Hartville, Ohio known
as Hartville Center; a shopping center in Green, Ohio known as Green Super Center and a
shopping center in Plain Township, Stark County, Ohio known as Oakwood Plaza. Wilson
ultimately transferred Oakwood Plaza to OP Ohio Corporation (“OP Ohio”) and transferred
Hartville Center and Green Super Center to HP Ohio Corporation (“HP Ohio”). Wilson is the
sole shareholder in both companies.

As part of the purchase agreement, OP Ohio and Wilson signed a promissory note
(“Note”) in favor of the Olszeski creditors. The Note provides that a single balloon payment of
$3,530,000 was due on January 1, 2009. The purchase agreement provides that the Note is
without interest. Wilson admits that he has not made any payment on the Note. (Amended

Answer § 12).

In addition, the parties signed a no lien agreement, which provides in pertinent part that
the “[s]eller hereby expressly and forever waives any right to secure, attach or place any lien of
any kind upon any asset, income or stock of HG Ohio Corporation.” The parties also signed a
subordination agreement, by which the Olszesk1 creditors agreed to subordinate any lien they
hold on the HP Ohio’s property to Huntington National Bank.

On June 5, 2009, the Olszeski creditors filed a lawsuit in the Common Pleas Court for
Stark County, Ohio against the defendants. On November 11, 2008, HP Ohio and OP Ohio filed
bankruptcy. On February 11, 2010, the state court concluded that it lacked jurisdiction over all of
the defendants despite the fact that Wilson never filed for bankruptcy protection. On March 3,
2010, this Court issued an order declining to remand the claims against Wilson back to state

court.

1The motion is styled as a motion for summary judgment. However, because the motion
does not address all of the issues between the parties, it is a motion for partial summary

judgment.

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On April 21, 2010, the Olszeski creditors filed an amended complaint alleging five causes
of action. On May 5, 2010, Wilson answered, pleaded numerous affirmative defenses and filed
fourteen counterclaims. The motion for partial summary judgment is limited to Count I of the
amended complaint and all of Wilson’s counterclaims.

B. Disputed Facts

The parties disagree whether the Olszeski creditors made disparaging comments about the
defendants to Giant Eagle Corporation (“Giant Eagle”), which was the anchor tenant at Oakwood
Plaza. The Olszeski creditors have submitted affidavits by Joan Olszeski and Jane Olszeski
Tortola, which state that the Olszeski creditors never disparaged the defendants.

Wilson disagrees. He alleges that the Olszeski creditors made disclosures about the
defendants’ financial condition to Giant Eagle and that these disclosures had a negative effect on
OP Ohio’s business. Wilson has provided two affidavits, which he argues support this assertion.

The first affidavit was executed by Michael D. Goth (“Goth”), who identifies himself as
the CFO of OP Ohio. Goth states that OP Ohio was having a difficult time obtaining Giant
Eagle’s permission to rent out space at Oakwood Plaza. On May 20, 2009, a phone conference
was held between various OP Ohio stakeholders and the attorney representing the Olszeski
creditors, Andrew Zumbar (“Zumbar”). At the meeting, Zumbar allegedly stated that the Olszeski
creditors had been in contact with Giant Eagle regarding the financial condition of the

defendants.

After the meeting, the OP Ohio stakeholders allegedly discussed the Olszeski creditors’
motivation for sharing financial information about the defendants with Giant Eagle. They
theorized that Giant Eagle wished to buy the defendants’ properties under favorable conditions,
and that the Olszeski creditors wanted the properties sold so that they could collect on the Note.
Thus, they speculated that Giant Eagle and the Olszeski creditors were conspiring to create
financial pressure on the defendants to sell their properties.

The second affidavit was executed by Eric E. Gass (“Gass”), who identifies himself as an
associate at Pine Street Investment Company. Gass states that he was a participant in the
conference call and that he heard Zumbar state that “he would not be surprised if one or more of

his clients had been speaking to Giant Eagle.”

LAW AND ANALYSIS

A. Standard of Review

The procedure for granting summary judgment is found in Federal Rule of Civil
Procedure 56(c), made applicable to this proceeding through Federal Rule of Bankruptcy

Procedure 7056, which provides in part:

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The judgment sought shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is entitled to
a judgment as a matter of law.

Fed. R. Civ. P. 56(c).

When considering a motion for summary judgment, the Court must view the evidence in
the light most favorable to the nonmoving party. Adickes v. S.H. Kress & Co., 398 U.S. 144,
158-59 (1970). Summary judgment is not appropriate if a material dispute exists over the facts,
“that is, if evidence is such that a reasonable jury could return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party shows a
presumptive entitlement to summary judgment if it points to the absence of any factual support
for the plaintiffs claim. Summary judgment is then appropriate unless the nonmoving party can
point out facts that demonstrate the need for a trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986); see also Matsushita Elec. Indus. Co.. Ltd. v. Zenith Radio Corp., 475 U.S. 574 (1986). In
defeating a motion for summary judgment, a plaintiff cannot merely rest on the pleadings. First
Nat?] Bank of Ariz. v. Cities Service Co., 391 U.S. 253, 289 (1968).

B. Count I of the Amended Complaint

Count I of the amended complaint seeks judgment on the Note in the amount of
$3,530,000 plus the statutory rate of pre-judgment interest. The Olszeski creditors show a
presumptive entitlement to summary judgment by pointing out that the defendants did not pay the
amount owing on the Note by the due date. Wilson admits that the defendants did not pay.
Furthermore, he does not argue any of the affirmative defenses that he pleads. Accordingly, the
Olszeski creditors are entitled to judgment in the principal amount of $3,530,000.

However, the Olszeski creditors are not entitled to pre-judgment interest. The Olszeski
creditors argue that because the Note does not provide an interest rate, the statutory rate applies.
However, Ohio Revised Code § 1303.13(A) states that “unless otherwise provided in the
instrument . . . [ajn instrument is not payable with interest.” In addition, the purchase agreement
states that the Note is without interest. See Ohio Rev. Code § 1303.13(B) (stating that the Court
may look at documents beyond the Note to ascertain the interest rate).

Accordingly, the Olszeski creditors’ motion for summary judgment on Count I of the
amended complaint is granted to the extent that it seeks judgment on the Note in the principal

amount of $3,530,000 and is denied to the extent that it seeks pre-judgment interest.

C. Counts I, II and III of the Counterclaim

Count I states that the Olszeski creditors “meddled” in the affairs of the defendants and

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made it difficult for the them to repay their loan obligations. Count II states that Olszeski
creditors “purposely caused and attempted to cause third persons not to enter into or continue
business relationships with the [d]efendants.” Count III states that the Olszeski creditors “have
engaged in a deceptive trade practice in making false representations of fact disparaging the
[d]efendants and the [d]efendants’ businesses.”

Counts I, I, and III fail to state a claim for at least two reasons. First, the Counts fail to
identify a specific tort or other legal theory that entitles Wilson to relief. See Fed. R. Civ. Pro.
8(a)(2) (requiring “a short and plain statement of the claim showing that the pleader is entitled to
relief”). Second, they fail to identify facts that support the conclusive allegations that the
Olszeski creditors “meddled,” prevented business relationships with third parties, or engaged in
deceptive trade practices. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007)
(requiring that the pleader provide factual allegations to support the elements of a cause of

action).

Wilson argues that the sufficiency of the claims is not the proper subject of a motion for
summary judgment. But even if the Court were to believe that Counts I, II, and III raise a claim
for tortious interference with a business relationship, summary judgment against Wilson would
be appropriate. To prevail on a claim of tortious interference with a business relationship, a
plaintiff must show that the defendant caused him actual harm. A & B-Abell Elevator Co. v.
Columbus/Central Ohio Bldg. & Constr. Trades Counsel, 651 N.E.2d 1283, 1294 (Ohio 1995).
The Olszeski creditors correctly point out that there is no evidence of actual harm. Goth’s
affidavit alleges that the defendants speculated that the Olszeski creditors caused them harm but

provides absolutely no evidence.

Accordingly, the Olszeski creditors’ motion for summary judgment is granted with regard
to Counts I, II and III of the counterclaim.

D. Counts IV and V of the Counterclaim

Counts IV and V allege that the Olszeski creditors have violated the no lien agreement
and subordination agreement, respectively, by bringing this action. These Counts are frivolous
because the amended complaint does not seek to place a lien on the defendants’ assets.

Accordingly, the Olszeski creditors’ motion for summary judgment is granted with regard
to Counts IV and V of the counterclaim.

E. Counts VI through XIV of the Counterclaim
Counts VI through XI allege that HP and OP Ohio made fraudulent transfers to the
Olszeski creditors. Count XII alleges that OP and HP Ohio paid illegal corporate dividends or

distributions to the Olszeski creditors. Count XIII alleges that to the extent that the Olszeski
creditors’ claims in the present matter are allowed they should be subordinated to the other

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creditors of HP and OP Ohio. Count XIV alleges that any claim filed by the Olszeski creditors in
the bankruptcies of HP and OP Ohio should be disallowed.

The Olszeski creditors point out that these claims belong entirely to the debtors and not to
Wilson. As such, Wilson lacks the standing to pursue them. United States v. Hayes, 515 U.S.
737, 742-743 (1984) (requiring that a party have a legally protected interest to have standing).

Wilson argues that he has a legally protected interest under Ohio Revised Code §

1303.35(D) as the accommodation party to a negotiable instrument. However, section
1303.35(D) applies only to two situations: first, when fraud has induced the accommodated party
to sign the instrument with neither knowledge or reasonable opportunity to learn of its character
or essential terms; and second, in cases where duress, lack of legal capacity, or illegality nullifies
the obligation of the accommodated party. Claims VI through XIV implicate neither of these

situations.

Accordingly, the Olszeski creditors’ motion for summary judgment is granted with
regard to Counts VI through XIV of the counterclaim.

An order will accompany this opinion.
# # #
Service List:

Judy Olszeski Holcomb
c/o Jack Cooper, Esq.
Day Ketterer Ltd.

PO Box 24213

Canton, OH 44702

Joan Olszeski

c/o Jack Cooper, Esq.
PO Box 24213

Canton, OH 44701-4213

Jane Olszeski Tortola
c/o Jack Cooper, Esq.
Day Ketterer Ltd.

PO Box 24213

Canton, OH 44701-4213

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OP Ohio Corporation
c/o James G. Wilson
268 Main Street, Building One, Ste 7
Medfield, MA 02052

HG Ohio Corporation

c/o James G. Wilson

266 Main Street, Building One, Suite 7
Medfield, MA 02052

James G. Wilson

Pine Street Investment Co.
266 Main St, Bldg One
Medfield, MA 02052

Freda's Shops Inc.
c/o Jack Cooper, Esq.
Day Ketterer Ltd.
P.O. Box 24213
Canton, OH 44701

Jack B Cooper

Day Ketterer

200 Market Ave N

#300

Canton, OH 44701-4213

Anthony J DeGirolamo
116 Cleveland Ave., N.W.
Suite 307

Canton, OH 44702

Chrysanthe E Vassiles

Black McCuskey Souers and Arbaugh
220 Market Ave., South, Suite 1000
Canton, OH 44702

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