[Cite as Bates Recycling v. Conaway, 2018-Ohio-5056.]

IN THE COURT OF APPEALS OF OHIO 

THIRD APPELLATE DISTRICT 

ALLEN COUNTY 

 

BATES RECYCLING, INC., 

 CASE NO. 1-18-41 

 PLAINTIFF - APPELLANT, 

 v. 

KYLE CONAWAY, ET AL., O P I N I O N 

 DEFENDANTS-APPELLEES. 

 

Appeal from Allen County Common Pleas Court 

Trial Court No. CV2014 0718 

Judgment Affirmed 

Date of Decision: December 17, 2018 

 

APPEARANCES: 

John C. Filkins for Appellant 

Thomas A. Gibson for Appellee 

 
Case No. 1-18-41 

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WILLAMOWSKI, P.J. 

{¶1} Plaintiff-appellant Bates Recycling, Inc. (“Bates Recycling”) appeals 

the judgment of the Allen County Court of Common Pleas for denying its motion 

for summary judgment. For the reasons set forth below, the judgment of the trial 

court is affirmed. 

Facts and Procedural History 

{¶2} On November 17, 2014, Bates Recycling filed a complaint against Kyle 

L. Conaway (“Conaway”) and Lee’s Hydraulic & Pneumatic Service, LLC (“Lee’s 

Hydraulics”), which is operated by Conaway. Doc. 1, 12. According to the 

complaint, Bates Recycling had delivered two hydraulic cylinders to Conaway for 

the purpose of obtaining a repair estimate. Doc. 1. Subsequently, Bates Recycling 

rejected Conaway’s repair estimate; contacted Conaway to schedule a time to 

retrieve their hydraulic cylinders; and discovered that Conaway had scrapped the 

hydraulic cylinders. Doc. 1. The complaint presented claims against the defendants 

for conversion and unjust enrichment. Doc. 1. 

{¶3} During the pendency of this litigation, Lee’s Hydraulics was located at 

a property that was owned by JAMAS Land, LLC (“JAMAS”). Doc. 101. JAMAS 

was not an affiliate of Lee’s Hydraulics. Doc. 68. In early 2016, Lee’s Hydraulics 

owed JAMAS approximately $6,000.00 in overdue rent. Doc. 101. To resolve this 

back rent, Lee’s Hydraulics returned the keys to the premises to JAMAS but did not 

remove all of its equipment. Doc. 101. 
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{¶4} On April 25, 2016, Lee’s Hydraulics tendered a bill of sale to JAMAS 

for the equipment left on the premises. Doc. 68, 101. In exchange for these assets, 

JAMAS gave Lee’s Hydraulics $25,000.00 in cash and forgave the $6,000.00 in 

past due rent. Doc. 68, 94 at 37, 101. The bill of sale did not reference the pending 

litigation between Lee’s Hydraulics and Bates Recycling, nor did it include the sale 

of any hydraulic cylinders. Doc. 101. On September 23, 2016, JAMAS arranged 

for the Beth Rose Auction Company (“Beth Rose”) to sell the equipment JAMAS 

obtained from Lee’s Hydraulics. Doc. 67, 97. 

{¶5} After a bench trial on September 19, 2016, the trial court entered a 

judgment in favor of Bates Recycling. Doc. 41. The trial court held Conaway and 

Lee’s Hydraulics jointly and severally liable for $50,000.00 in compensatory 

damages and $50,000.00 in punitive damages. Doc. 41. On November 8, 2016, 

Bates Recycling filed a motion in the trial court asserting a lien on the assets owned 

by Lee’s Hydraulics. Doc. 45. This motion was accompanied by documents that 

showed that Beth Rose was going to auction, on November 13, 2016, some 

equipment that had belonged to Lee’s Hydraulics.1

 Doc. 45. 

{¶6} In addition to requesting a lien, Bates Recycling also requested an order 

prohibiting dispersal of the proceeds of this auction. Doc. 45. The trial court 

 

1

 At the time this motion was filed, Bates Recycling was under the impression that the assets still belonged 

to Lee’s Hydraulics and was unaware of the transaction that transferred ownership of these assets to JAMAS. 

Thus, the motion erroneously identified these assets as the property of Lee’s Hydraulics and requested a lien 

on the assets that were listed for auction. Doc. 45. 
Case No. 1-18-41 

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granted a lien on the assets owned by Lee’s Hydraulics and issued an order 

prohibiting the dispersal of the proceeds of the auction. Doc. 47. In response, Beth 

Rose submitted an affidavit that stated it had never entered into a contract with Lee’s 

Hydraulics for the sale of property. Doc. 67. Beth Rose further stated that the 

auction facilitated the sale of personal property that belonged to JAMAS. Doc. 67. 

{¶7} On February 24, 2017, Bates Recycling filed a motion to set aside the 

transfer of the equipment from Lee’s Hydraulics to JAMAS, alleging that this 

transfer was fraudulent. Doc. 64. Bates Recycling also submitted a motion that 

requested leave to name JAMAS as a third party defendant. Doc. 65. On April 17, 

2017, JAMAS and Bates Recycling entered into a consent agreement in which Beth 

Rose agreed to put the $29,496.12 obtained through the auction into a trust account. 

Doc. 72. JAMAS was also added as a third party defendant to this suit. Doc. 72. 

{¶8} On May 4, 2017, Bates Recycling filed a complaint against Conaway, 

Lee’s Hydraulics, and JAMAS. Doc. 98. This complaint alleged that the transfer 

of assets from Lee’s Hydraulics to JAMAS was a fraudulent conveyance and 

requested that this transfer be set aside. Doc. 98. On June 15, 2018, Bates Recycling 

and JAMAS each filed a motion for summary judgment. Doc. 96, 97. On July 11, 

2018, the trial court denied Bates Recycling’s motion for summary judgment and 

granted JAMAS’s motion for summary judgment. Doc. 101. 

 
Case No. 1-18-41 

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Assignment of Error 

{¶9} Bates Recycling filed its notice of appeal on August 3, 2018. Doc. 104. 

On appeal, appellant raises the following assignment of error: 

The trial court erred when it denied appellant’s motion for 

summary judgment for appellant established that appellee 

purchased all of the remaining assets of the defendants while 

litigation was pending against the defendants and as such the 

conveyance was fraudulent. 

Bates Recycling asserts that the trial court erred in determining that JAMAS was a 

good faith purchaser and that the transfer of assets from Lee’s Hydraulics to JAMAS 

was not a fraudulent conveyance.2

 Bates Recycling further argues that the doctrine 

of lis pendens applies to this action. 

Legal Standard 

{¶10} Appellate courts consider a summary judgment order under a de novo 

standard of review. James B. Nutter & Co. v. Estate of Neifer, 3d Dist. Hancock 

No. 5-16-20, 2016-Ohio-7641, ¶ 5. Under the Ohio Rules of Civil Procedure, 

[s]ummary judgment shall be rendered forthwith if the pleadings, 

depositions, answers to interrogatories, written admissions, 

affidavits, transcripts of evidence, and written stipulations of fact, 

if any, timely filed in the action, show that there is no genuine issue 

of material fact and that the moving party is entitled to judgment 

as a matter of law * * *. A summary judgment shall not be 

rendered unless it appears from the evidence or stipulation, and 

only from the evidence or stipulation, that reasonable minds can 

come to but one conclusion and that conclusion is adverse to the 

 

2

 In its assignment of error, Bates Recycling does not appeal the trial court’s decision to grant JAMAS’s 

motion for summary judgment. However, since the two motions were mutually exclusive, we will review 

the trial court order that granted JAMAS’s motion for summary judgment together with the denial of Bates 

Recycling’s motion for summary judgment. 
Case No. 1-18-41 

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party against whom the motion for summary judgment is made, 

that party being entitled to have the evidence or stipulation 

construed most strongly in the party’s favor. 

Civ.R. 56(C). “The party moving for summary judgment has the initial burden ‘to 

inform the trial court of the basis for the motion, identifying the portions of the 

record, including the pleadings and discovery, which demonstrate the absence of a 

genuine issue of material fact.’” Middleton v. Holbrook, 3d Dist. Marion No. 9-15-

47, 2016-Ohio-3387, ¶ 8, quoting Reinbolt v. Gloor, 146 Ohio App.3d 661, 664, 

767 N.E.2d 1197 (3d Dist.2001). 

{¶11} “The burden then shifts to the party opposing the summary judgment.” 

Id. “In order to defeat summary judgment, the nonmoving party may not rely on 

mere denials but ‘must set forth specific facts showing that there is a genuine issue 

for trial.’” Byrd v. Smith, 110 Ohio St.3d 24, 2006-Ohio-3455, 850 N.E.2d 47, ¶ 

10, quoting Civ.R. 56(E). “[B]ecause summary judgment is a procedural device to 

terminate litigation, it must be awarded with caution.” Williams v. ALPLA, Inc., 

2017-Ohio-4217, 92 N.E.3d 256 (3d Dist.), quoting Murphy v. Reynoldsburg, 65 

Ohio St.3d 356, 358-359, 604 N.E.2d 138 (1992). “The court must thus construe 

all evidence and resolve all doubts in favor of the non-moving party * * *.” Webster 

v. Shaw, 63 N.E.3d 677, 2016-Ohio-1484, ¶8 (3d Dist.). 

{¶12} Several sections of the Ohio Uniform Fraudulent Transfer Act 

(“OUFTA”) govern the issues in this case. R.C. Chapter 1336. R.C. 1336.04(A) 

defines a fraudulent conveyance as follows: 
Case No. 1-18-41 

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(A) A transfer made or an obligation incurred by a debtor is 

fraudulent as to a creditor, whether the claim of the creditor arose 

before, or within a reasonable time not to exceed four years after, 

the transfer was made or the obligation was incurred, if the 

debtor made the transfer or incurred the obligation in either of 

the following ways: 

(1) With actual intent to hinder, delay, or defraud any creditor of 

the debtor; 

(2) Without receiving a reasonably equivalent value in exchange 

for the transfer or obligation, and if either of the following 

applies: 

(a) The debtor was engaged or was about to engage in a business 

or a transaction for which the remaining assets of the debtor were 

unreasonably small in relation to the business or transaction; 

(b) The debtor intended to incur, or believed or reasonably should 

have believed that the debtor would incur, debts beyond the 

debtor’s ability to pay as they became due. 

R.C. 1336.04(A). For the purpose of determining whether actual intent exists under 

R.C. 1336.04(A)(1), “R.C. 1336.04(B) lists several statutory factors, or the so-called 

‘badges of fraud,’ that a court considers to determine if an inference of fraud exists.” 

Baker & Sons Equip. Co. v. GSO Equip. Leasing, Inc., 87 Ohio App.3d 644, 650, 

622 N.E.2d 1113 (10th Dist.). Under R.C. 1336.04(B) courts may consider the 

following factors in addition to any other relevant factors: 

(1) Whether the transfer or obligation was to an insider; 

(2) Whether the debtor retained possession or control of the 

property transferred after the transfer; 

(3) Whether the transfer or obligation was disclosed or concealed; 
Case No. 1-18-41 

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(4) Whether before the transfer was made or the obligation was 

incurred, the debtor had been sued or threatened with suit; 

(5) Whether the transfer was of substantially all of the assets of 

the debtor; 

(6) Whether the debtor absconded; 

(7) Whether the debtor removed or concealed assets; 

(8) Whether the value of the consideration received by the debtor 

was reasonably equivalent to the value of the asset transferred or 

the amount of the obligation incurred; 

(9) Whether the debtor was insolvent or became insolvent shortly 

after the transfer was made or the obligation was incurred; 

(10) Whether the transfer occurred shortly before or shortly after 

a substantial debt was incurred; 

(11) Whether the debtor transferred the essential assets of the 

business to a lienholder who transferred the assets to an insider 

of the debtor. 

R.C. 1336.04(B). “If the party alleging fraud is able to demonstrate a sufficient 

number of badges, the burden of proof then shifts to defendant to prove that the 

transfer was not fraudulent.” Baker & Sons Equip. Co. at 650-651. 

{¶13} R.C. 1336.08(A) provides a defense for good faith purchasers against 

liability for a fraudulent conveyance and reads as follows: 

(A) A transfer or an obligation is not fraudulent under division 

(A)(1) of section 1336.04 of the Revised Code against a person who 

took in good faith and for a reasonably equivalent value or against 

any subsequent transferee or obligee. 
Case No. 1-18-41 

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Thus, under R.C. 1336.08(A), “a party that demonstrates that it participated in the 

transfer in good faith and paid reasonably equivalent value rebuts the presumption 

of fraud created by the badges of fraud.” Individual Business Servs. v. Carmack, 2d 

Dist. Montgomery No. 25286, 2013-Ohio-4819, ¶ 27. R.C. 1336.04(A). See 

Thomas v. Othman, 2017-Ohio-8449, 99 N.E.3d 1189, ¶ 24 (1st Dist.); Blood v. 

Nofzinger, 162 Ohio App.3d 545, 2005-Ohio-3859, 834 N.E.2d 358 (6th Dist.);

Witschey, Witschey & Firestine Co., L.P.A. v. Daniele, 9th Dist. Summit No. 26811, 

2013-Ohio-5724, ¶ 8; Baker & Sons Equip. Co. at 651. 

Legal Analysis 

{¶14} In its motion for summary judgment, Bates Recycling alleged that the 

transfer of assets from Conaway and Lee’s Hydraulics to JAMAS was a fraudulent 

conveyance under R.C. 1336.04(A)(1). Doc. 96. To substantiate this claim, Bates 

Recycling pointed to several “badges of fraud” under R.C. 1336.04(B) that indicated 

that Lee’s Hydraulics and Conaway may have possessed the “actual intent” to 

defraud a creditor. Doc. 96. These allegations establish that Conaway and Lee’s 

Hydraulics may have transferred assets with the actual intent to defraud. Doc. 96. 

However, these allegations are not sufficient to hold JAMAS liable under R.C. 

1336.08(A). R.C. 1336.08(A) exempts a third party from liability if the third party 

acted in good faith and tendered a “reasonably equivalent value” for the assets. 

Thus, for JAMAS to be liable, Bates Recycling had to demonstrate that JAMAS 

acted in bad faith or that JAMAS did not tender a reasonably equivalent value for 
Case No. 1-18-41 

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the assets. R.C. 1336.08(A). Bates Recycling did not allege any such facts. Doc. 

96. 

{¶15} In the alternative, Bates Recycling argued in its motion for summary 

judgment that the doctrine of lis pendens applied to this case.3

 R.C. 2703.26 

codified the doctrine of lis pendens and reads as follows: 

When a complaint is filed, the action is pending so as to charge a 

third person with notice of its pendency. While pending, no 

interest can be acquired by third persons in the subject of the 

action, as against the plaintiff’s title. 

(Emphasis added.) R.C. 2703.26. Further, the Supreme Court of Ohio has held that 

all of the following elements must be present for lis pendens to be held applicable: 

(1) The property must be of a character to be subject to the rule; 

(2) the court must have jurisdiction both of the person and the 

res; and (3) the property or res involved must be sufficiently 

described in the pleadings. It may be added that the litigation 

must be about some specific thing that must be necessarily 

affected by the termination of the suit. 

Beneficial Ohio, Inc. v. Ellis, 121 Ohio St.3d 89, 2009-Ohio-311, 902 N.E.2d 452, 

¶ 14, quoting Cook v. Mozer, 108 Ohio St. 30, 36-37, 140 N.E. 590 (1923), quoting 

25 Cyc. 1450. 

{¶16} In order for lis pendens to apply, “[c]ourts have held that the property 

described in the complaint must be directly affected by the judgment in the pending 

suit.” Katz v. Banning, 84 Ohio App.3d 543, 548, 617 N.E.2d 729 (10th Dist. 1992), 

 

3

 Bates Recycling stated in its motion for summary judgment that the application of the doctrine of lis pendens 

was “unnecessary in order to prevail on its motion for summary judgment.” Doc. 96. Thus, Bates Recycling 

presented this separate assertion as an alternative argument. 
Case No. 1-18-41 

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citing Levin v. George Fraam & Sons, Inc., 65 Ohio App.3d 841, 842, 585 N.E.2d 

527, 528 (9th Dist. 1990); Stone v. Equitable Mortg. Co., 25 Ohio App. 382, 388, 

158 N.E. 275, 276 (9th Dist. 1927). “Consequently, the property described ‘must 

be at the very essence of the controversy between the litigants.’” Katz at 548, 

quoting Levin at 846. “[I]f the object of the action is merely to recover a money 

judgment, there can be no lis pendens, though the cause of action may arise out of 

property specified in the petition or complaint * * *.” Katz at 549, quoting Stone at 

388. 

{¶17} In this case, the complaint filed by Bates Recycling did not mention 

or describe the equipment transferred from Lee’s Hydraulics to JAMAS. Doc. 1. 

See Beneficial Ohio, Inc., supra, at ¶ 14. Rather, the complaint filed by Bates 

Recycling sought damages for the loss of two hydraulic cylinders. Doc. 1. “The 

doctrine of lis pendens is not applicable in a suit for money damages only.” Aveyard 

v. Shelron Enterprises, Inc., 2d Dist. Montgomery No. 83-2499, 1985 WL 6675 

(Jan. 11, 1985), citing Stone, supra, at 388. Bradford v. Reid, 126 Ohio App.3d 448, 

452, 710 N.E.2d 761 (1st Dist. 1998); Pournaras v. Hopkins, 11 Ohio App.3d 51, 

52, 463 N.E.2d 67 (8th Dist. 1983); Katz, supra, at 549. Further, the equipment was 

not the “essence of the controversy.” Levin at 846. The equipment “was merely a 

potential source of revenue from which appellant could be compensated upon 

prevailing in the underlying action.” ProMedica Fed. Credit Union v. Waldrop, 6th 
Case No. 1-18-41 

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Dist. Lucas No. L-13-1075, 2014-Ohio-965, ¶ 26. For these reasons, we find that 

the doctrine of lis pendens does not apply to this case. 

{¶18} In its response to Bates Recycling’s motion for summary judgment, 

JAMAS raised the R.C. 1336.08(A) defense and argued that the doctrine of lis 

pendens did not apply to the facts of this case. JAMAS then submitted a motion for 

summary judgment that included documents and depositions in support of its R.C. 

1336.08(A) defense. Doc. 97, 98. In one of the depositions, James E. Jones 

(“Jones”)—the partner in JAMAS who oversaw the purchase of the assets from 

Lee’s Hydraulics—stated that JAMAS was unaware of any pending litigation until 

after the sale was completed; that JAMAS had done a lien search on the assets; and 

that the lien search did not reveal any conflicting claims. Doc. 94 at 34-35, 45. 

{¶19} Further, Jones testified that JAMAS gave Lee’s Hydraulics 

consideration worth $31,000.00 in exchange for the transferred assets.4

 Doc. 94 at 

37. The gross proceeds from the auction of the assets totaled $38,271.00. Doc. 97. 

After expenses and fees were paid to Beth Rose, JAMAS received a total of 

$29,496.12 from the auction. Doc. 97. Based on these documents, the trial court 

determined that JAMAS was a good faith purchaser and had tendered to Lee’s 

Hydraulics a “reasonably equivalent value” for the transferred assets. R.C. 

 

4

 Jones testified that JAMAS tendered two checks that totaled $25,000.00 to Conaway and Lee’s Hydraulics. 

JAMAS submitted copies of these two returned checks. Doc. 97. Jones also testified that part of the purchase 

agreement included forgiveness for the $6,000.00 in overdue rent. Doc. 94 at 37-38. Thus, the total 

consideration was $31,000.00. 
Case No. 1-18-41 

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1336.08(A). Doc. 97. The content of JAMAS’s motion for summary judgment was 

sufficient to shift the burden to Bates Recycling to show that a genuine issue of 

material fact existed for trial to Bates Recycling. 

{¶20} In its response to JAMAS’s motion for summary judgment, Bates 

Recycling argued that the doctrine of lis pendens gave JAMAS notice of the pending 

action. However, as we have already demonstrated, the doctrine of lis pendens does 

not apply to the facts of this case. Thus, Bates Recycling did not take the necessary 

steps to defeat JAMAS’s motion for summary judgment. After viewing all of the 

evidence in a light most favorable to the non-moving party, we find that the trial 

court did not err in denying Bates Recycling’s motion for summary judgment or in 

granting JAMAS’s motion for summary judgment. For these reasons, Bates 

Recycling’s first assignment of error is overruled. 

Conclusion 

{¶21} Having found no error prejudicial to the appellant in the particulars 

assigned and argued, the judgment of Allen County Court of Common Pleas is 

affirmed. 

Judgment Affirmed 

ZIMMERMAN and PRESTON, J.J., concur. 

/hls