UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

 

ASCENTIUM CAPITAL, LLC, Case No. 1:17-cv-744

Plaintiff, Bowman, M.J.

v.

CENTRAL USA WIRELESS, LLC, et al.,

Defendants.

MEMORANDUM OPINION AND ORDER

I. Background

Plaintiff filed a complaint against Defendants on November 6, 2017, asserting 

diversity jurisdiction under 28 U.S.C. §1332, and alleging breach of contract, breach of 

guaranty, and a breach of possession of equipment. The allegations of the complaint 

focus on a lease of certain equipment by Defendant Central USA Wireless, LLC 

(“Central”), as identified in the Lease Agreement attached to Plaintiff’s complaint. 

Defendants admit that “after Central had been experiencing a significant reduction in its 

cash flow, Central ceased operations and ultimately defaulted on its payments under the 

Lease.” (Doc. 28 at 1). 

On November 21, 2017, Plaintiff filed a motion seeking an Order granting Plaintiff 

possession of the Equipment. (Doc. 8). Pursuant to a joint agreement, Defendants 

subsequently agreed to return the subject Equipment. (See Docs. 16, 17). In accord with 

the parties’ representations, a January 2018 Agreed Order states that all of the Equipment 

was then located in San Antonio, Texas. Defendants agreed that they would cause the 

Equipment to remain at that location and would voluntarily surrender the Equipment to 

Asentium under certain conditions. (Doc. 17 at ¶¶ 4, 8). Defendants further agreed to 
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provide Asentium with proof of insurance as required under the Lease Agreement. (Id. 

at 3, ¶5). 

After the parties consented under 28 U.S.C. § 636(c), this case was reassigned to 

the undersigned magistrate judge. (Doc. 24). The Court entered a Calendar Order on 

May 14, 2018, which reflects that any motions to amend the pleadings should be filed by 

June 15, 2018.

Ten days following the expiration of the deadline for amendment, Plaintiff moved 

to file an amended complaint in order to assert new claims that pertain to one of the pieces 

of Equipment (hereinafter “Missing Equipment”). The Missing Equipment was explicitly 

referenced in the Agreed Order of Possession. (Doc. 17). Notwithstanding that Order, 

there is no dispute that the Missing Equipment was not found in the expected location 

and has not yet been returned to Plaintiff. Plaintiff now seeks to add claims for conversion 

and unjust enrichment, as well as a claim for punitive damages, based upon the 

Defendants’ failure to return the Missing Equipment. Plaintiff states that not only have 

the Defendants failed to return the Missing Equipment, but in December 2017, 

Defendants represented that none of the Equipment (including the Missing Equipment) 

remains insured. 

Defendants have filed a memorandum in opposition to Plaintiff’s motion to amend 

the complaint, to which Plaintiff has filed a reply. Without leave of Court, Plaintiff also 

filed a supplemental reply to Defendants’ response in opposition to the motion for leave 

to amend. In addition, Defendants have filed a sur-reply.1 Local Rules provide that 

 1A sur-reply, while not provided for by the Rules of Civil Procedure, may be authorized when a reply 

memorandum presents new material, as Plaintiff’s equally unauthorized “supplemental reply” appears to 

do in this case. In the interests of justice and on this one occasion, the Court has considered both the 

supplemental reply and the sur-reply.
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briefing of any pending motion is complete upon the filing of a reply memorandum. See

L.R. 7.2(b)(2) (“No additional memoranda beyond those enumerated are permitted except 

upon leave of court for good cause shown”) (emphasis added). Both parties are strongly 

advised to avoid filing unauthorized memoranda in the future.

II. Analysis of Motion To Amend

Rule 15(a)(2) of the Federal Rules of Civil Procedure provides that leave to amend 

a complaint should be freely given “when justice so requires.” “In the absence of any 

apparent or declared reason—such as undue delay, bad faith or dilatory motive on the 

part of the movant, repeated failure to cure deficiencies by amendments previously 

allowed, undue prejudice to the opposing party by virtue of allowance of the 

amendment, futility of amendment, etc.—the leave sought should, as the rules require, 

be ‘freely given.’” Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230 (1962). “[T]he 

grant or denial of an opportunity to amend is within the discretion of the District Court” 

and a court’s discretion is appropriately exercised in the absence of an “outright refusal 

to grant the leave without any justifying reason appearing for the denial.” Id.

Despite the expiration of the Court’s deadline for filing a motion to amend, the 

Court finds no undue delay in this case. Neither party appears to have undertaken any 

discovery, and the parties have been attempting to resolve their dispute extrajudicially. 

This is Plaintiff’s first motion to amend its complaint; therefore, leave will not be denied 

based on a “repeated failure to cure deficiencies” in prior amendments. However,

Defendants vigorously oppose the tendered amendment on grounds of “futility.” 

Defendants contend that the proposed amendment contains no more than conclusory 

assertions and does not adequately state claims either for conversion or unjust 

enrichment. 
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Notwithstanding the parties’ agreement on the presumed location and the Court’s 

prior Order, the parties agree that the Missing Equipment has yet to be found. In its 

amended complaint, Plaintiff alleges that “Defendants...asserted in May 2018 that the 

Unreturned Equipment was stolen.” (Doc. 27-1 at ¶54). Plaintiff further alleges that 

Defendants “asserted that a claim was made...to an insurer of the ...[Missing]

Equipment,” and that any insurance proceeds “are property or collateral of Ascentium 

pursuant of the Lease Agreement.” (Id. at ¶¶55-56). Plaintiff’s proposed amended 

complaint goes on to allege that one or both of the Defendants “is in possession, custody, 

or control of” either the Missing Equipment, or alternatively, the proceeds from that 

Missing Equipment, and that the Defendants’ retention of such possession, custody, 

control or disposition of the Missing Equipment or proceeds “constitutes larceny,” which 

is both “willful” and “malicious,” entitling Plaintiff to punitive damages and attorney’s fees. 

(Id. at ¶¶64-68). 

To a limited extent, Plaintiff’s allegations accord with statements in Defendants’ 

memorandum in opposition. Defendants represent to this Court that “one or more of the 

locations storing the Equipment were broken into on three separate occasions and it is 

possible that certain pieces of Equipment were stolen during those events. Central is 

actively pursuing an insurance claim for any Missing Equipment.” (Doc. 28 at 2). While 

also conceding that insurance on the Equipment “lapsed in July of 2017,” Defendants 

suggest that “the Missing Equipment would be covered under the policies [assuming] 

...any theft likely occurred while the policies were still in force.” (Id.) The Plaintiff’s 

supplemental reply memorandum and Defendants’ sur-reply attach email 

correspondence between counsel. The correspondence suggests that Defendants have 

put their insurer on verbal notice of the potential claim but have not yet made a formal 
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written claim under the now-lapsed policy. 

None of the email correspondence or other “evidence” may be considered by this 

Court in determining whether to grant the Plaintiff’s motion to file an amended complaint. 

Instead, in considering whether the proposed pleading would survive a motion to dismiss, 

this Court must limit itself to the standards applicable under Rule 12(b)(6). Although the 

Court may take judicial notice of prior judicial proceedings (like the January 2018 Order) 

or of documents attached to the first amended complaint, the Court may not evaluate 

evidence outside the pleadings. 

Returning then, to the allegations in the tendered amended complaint, Ascentium 

clearly alleges that one or more of the Defendants actually (currently) “is” in possession 

or control of either the Missing Property or the proceeds from the same. By including 

such allegations in its amended complaint, Plaintiff’s counsel is certifying to this Court 

that to the best of counsel’s knowledge, information, and belief, formed after an inquiry 

“reasonable under the circumstances,” that the new claims for conversion and for unjust 

enrichment are “warranted by existing law or by a nonfrivolous argument for extending, 

modifying, or reversing existing law or for establishing new law,” and that “the factual 

contentions have evidentiary support.” Rule 11(b)(2) and (b)(3) (emphasis added).

With respect to the conversion claim, Defendants insist that because they no 

longer have the Missing Equipment and are not in possession or control of any insurance 

proceeds (regardless of whether they have or have not yet made a formal claim), they 

have not “refused” to return either the Missing Equipment or proceeds and Plaintiff cannot 

prevail. Some of the correspondence (which again, is in the nature of evidence outside 

the pleadings) implies that Defendants may even be pursuing an insurance claim on 

Plaintiff’s behalf, or at least with acknowledgment of Plaintiff’s potential lien on the 
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proceeds.

In support of denial of the proposed amendment, Defendants cite Ohio case law 

that defines a conversion claim as requiring an intentional “refusal” to return property, as 

opposed to fact patterns in which property is lost, stolen, or destroyed unintentionally.

Not every failure to deliver upon demand...will constitute a conversion. The 

defendant does not become a converter when the goods are no longer in 

his possession or control, so that the defendant is unable to comply with the 

demand, even though they may have been lost or destroyed through the 

defendant’s own fault. The remedy in such a case is an action for 

negligence.

Tolson v. Triangle Real Estate, 2004-Ohio-2640 at ¶18, 2004 WL 1157473 (Ohio Ct. App. 

May 25, 2004) (emphasis original, quoting Prosser & Keeton, Law of Torts (5 Ed. 1984) 

99, Section 15), affirming grant of summary judgment to garage owner on claim of 

conversion after clerical error resulted in stored items being hauled away, holding renter’s 

statements that garage owner took property and converted it to his own use were 

improper legal conclusions). With respect to the proposed claim for unjust enrichment, 

Defendants similarly argue that Plaintiff’s claim is without any factual basis – again, based 

on Defendants’ assertion that they no longer have the Missing Equipment and have not 

obtained or been unjustly enriched by any related insurance proceeds. 

While the Court does not quibble with the representation of Ohio law made by 

Defendants, the Court cannot ignore the fact that Plaintiff’s tendered amended complaint

very clearly alleges that one or more of the Defendants actually retains the Missing 

Property or the proceeds therefrom. Prior to any discovery being conducted, this Court 

will not preclude Plaintiff from amending its complaint to assert both conversion and unjust 

enrichment claims, with the caveat that the Court assumes counsel will file the amended 

complaint only if it complies with Rule 11. In addition, the Court will grant the Plaintiff’s 

motion without prejudice to Defendants to file any dispositive motion that Defendants find 
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to be appropriate in the future, including but not limited to a motion under Rule 12 or Rule 

56. 

While the Court will permit the Plaintiff to file the amendment to include the two 

new state law claims, the Court declines to allow amendment to add a claim for punitive 

damages. In its memoranda, Plaintiff argues that such a claim is based on alleged 

“inconsistencies” in defense counsel’s representations about the Missing Equipment 

and/or insurance claim and is supported by the conversion claim. However, the tendered 

amended complaint includes no factual allegations that reasonably would support a claim 

for punitive damages on the conversion claim under Ohio law. 

III. Conclusion and Order

Accordingly, IT IS ORDERED:

1. That Plaintiff’s motion for leave to amend (Doc. 27) is GRANTED in part;

2. That Plaintiff shall file its Amended Complaint, excluding any claim for punitive 

damages, on or before September 28, 2018.

s/ Stephanie K. Bowman 

Stephanie K. Bowman

United States Magistrate Judge