Court Opinion

ID: 6338061
Source: CourtListenerOpinion
Date Created: 2022-05-05 15:13:08.828603+00
Date Added: 2024-06-11T09:24:59.582468
License: Public Domain

[Cite as Allan v. Allan, 2022-Ohio-1488.]

                               COURT OF APPEALS OF OHIO

                              EIGHTH APPELLATE DISTRICT
                                 COUNTY OF CUYAHOGA

RAIDA ALLAN,                                        :

                 Plaintiff-Appellant,               :
                                                             Nos. 110177 and 110179
                         v.                         :

TAREQ ALLAN, ET AL.,                                :

                 Defendants-Appellees.              :

                                JOURNAL ENTRY AND OPINION

                 JUDGMENT: REVERSED AND REMANDED
                 RELEASED AND JOURNALIZED: May 5, 2022

            Civil Appeal from the Cuyahoga County Court of Common Pleas
                     Case Nos. CV-18-907570 and CV-19-922868

                                            Appearances:

                 RaslanPla & Company, LLC, Jorge Luis Pla, Nadia R.
                 Zaiem, and Erika Molnar, for appellants Raida Allan and
                 Tallan, LLC.

                 Dinn Hochman & Potter, LLC, and Edgar H. Boles, for
                 appellees Qais Allan, 871 Rocky River Drive, Inc., and
                 Pearl Road, Inc.

                 Blum & Associates Co., L.P.A., and Monica E. Russell, for
                 appellee 871 Rocky River Drive, Inc.
MICHELLE J. SHEEHAN, J.:

                  Plaintiff-appellant Raida Allan contests the grant of summary

judgment in favor of appellees Qais Allan, 871 Rocky River Drive, Inc. (“871 Rocky

River Dr.”), and Pearl Road, Inc. (“Pearl Road”) in a suit brought under Ohio’s

Fraudulent Transfer Act and the grant of summary judgment in favor of 871 Rocky

River Dr., in a declaratory judgment action. Because we find that issues of material

fact exist in both the Fraudulent Transfer Act suit and the declaratory judgment

action, we reverse the judgments of the trial court and remand these cases for further

proceedings.

      I. STATEMENT OF THE CASE AND FACTS

      A. The parties, property, and divorce proceedings

                  Raida Allan and Tareq Allan were married in October 2002. During

the marriage, Tareq acquired Pearl Road, a gas station business located in

Middleburg Heights, Ohio from Raida.1 In 2004, Tareq purchased 871 Rocky River

Dr., a gas station business located in Berea, Ohio. In that same year, Tallan, LLC,

1For ease of reference, individual parties will be referred to by their first names and we
refer to the business entities as follows:

    Pearl Road, Inc.              “Pearl Road”           The gas station in Middleburg
                                                         Heights, Ohio
    871 Rocky River Drive, Inc.   “871 Rocky River Dr.”  The gas station business
                                                         located in Berea, Ohio
    Tallan, LLC                   Tareq was the original Owns the real property 871
                                  member; divorce decree Rocky River Dr. is located
                                  granted Raida sole     upon; divorce decree awarded
                                  membership interest    this property to Raida
whose sole member was Tareq, acquired the real property upon which 871 Rocky

River Dr. was located.

              In 2010, Raida filed for divorce.       Raida dismissed the divorce

complaint on April 14, 2011. In 2015, Tareq filed for divorce. That case was resolved

after trial with the entry of divorce being journalized on April 20, 2018. The divorce

proceedings were the subject of litigation in this court in Allan v. Palos, 8th Dist.

Cuyahoga No. 103815, 2016-Ohio-3073; Allan v. Allan, 8th Dist. Cuyahoga

No. 107142, 2019-Ohio-2111; and T. A. v. R. A., 8th Dist. Cuyahoga No. 107166,

2019-Ohio-3179.

              Around the time that Raida filed an action for divorce, Tareq

attempted to transfer his interests in 871 Rocky River Dr. and Pearl Road to his

brother Qais. At the divorce trial, Tareq testified that he sold 871 Rocky River Dr.,

the gas station business, to Qais in two transactions, first selling 49 percent in

October 2010 and then selling the rest on September 14, 2012. Allan, 2019-Ohio-

2111, ¶ 26-27. In addition to the sale of the business, Tareq testified that in

November 2014, he borrowed $188,088 from Qais to pay the balance due on a loan

from Charter One Bank for his purchase of Rocky River Dr. Id. at ¶ 48.

              As to Pearl Road, Tareq testified that he decided to sell the business to

Qais on November 22, 2013. Id. at ¶ 40. The purchase agreement for the sale as

provided in the record is first dated November 22, 2013, with a revised agreement

executed on September 12, 2014. On February 4, 2015, two weeks before Tareq filed

for divorce, mortgages in favor of Qais for the $188,088 loan noted above were
placed on the real estate that 871 Rocky River Dr. is located on as well as the marital

home. Id.

              In answering Tareq’s divorce complaint, Raida filed counterclaims

and j0ined Tareq’s brother, Qais, as well as the businesses 871 Rocky River Dr. and

Pearl Road, alleging that the business transfers from Tareq to Qais were the subject

of fraud. After Qais and the businesses were joined in the divorce proceedings and

their motion to dismiss Raida’s counterclaims was denied, Qais filed a writ of

prohibition in this court arguing that the domestic relations court did not have

jurisdiction over him. Palos, 2016-Ohio-3073. In dismissing the writ, we found that

the domestic relations court had subject-matter jurisdiction to “determine what

constitutes marital property versus separate property and divide the marital and

separate property equitably between the husband and wife.” Id. at ¶ 11.

              Before the divorce case was tried, the domestic relations court

dismissed Raida’s claims against Qais and the gas station businesses as well as Qais’s

counterclaims against Raida and Tareq. Allan, 2019-Ohio-2111, ¶ 5. However, Qais

and the businesses remained as parties in the divorce as stakeholders of property.

Id.

              After trial, the domestic relations court determined that the gas

station businesses, including the real estate 871 Rocky River Dr. operated on, were

to be considered marital property. Id. at ¶ 52–53. In the appeal of the divorce, we

noted that the domestic relations court found “that the gas stations were marital

property for purposes of its distributive award because it found that husband had
committed financial misconduct in attempting to divest himself of any property so

that he did not have to share any of it with wife — despite the fact that it was wife

who originally owned the first gas station and despite the fact that wife had

transferred title of that first gas station to him for mere pennies compared to what

she paid for it.” Id. at ¶ 79. As to the transfer of the gas stations, the domestic

relations court determined within the divorce decree that under R.C. 3105.171(F):

      (2) Assets and liabilities of the spouses: The parties had two
      businesses when the first divorce was filed. By the second divorce
      filing, [Tareq] had divested himself on paper of the two businesses,
      and mortgaged both the marital home and the only remaining
      business asset, the real property owned by Tallan, LLC at 871 Rocky
      River Drive for the same $181,088 alleged to be owed to Qais.

             The domestic relations court found that “[Tareq] has engaged in

financial misconduct in that he transferred the two gas station businesses with

convenience stores and the liquor licenses to his brother to avoid an equitable

division of property.”   Regarding Raida’s and Tareq’s relative earnings ability, it

found that there were “examples of Tareq’s expenses being paid by Qais or one of

the gas-station accounts that gave credence to Raida’s claim that Tareq has willfully

attempted to hide assets and income.”

              In addition to dividing the marital property, the divorce judgment

ordered Tareq to pay Raida almost $550,000 in spousal support, child support,

temporary support arrearages, and attorney fees. The judgment further awarded

title to the real estate 871 Rocky River Dr. operates on and the marital home to
Raida. The judgment also ordered Qais to extinguish the mortgages he held on the

real property at 871 Rocky River Dr. and the marital home.

   B. The Fraudulent Transfer Act lawsuit

      1. The complaint

                On November 28, 2018, Raida filed suit against Tareq, Qais, 871

Rocky River Dr. and Pearl Road alleging that the transfer of the businesses from

Tareq to Qais, his brother, were fraudulent and sought recission of the transfers in

an effort to collect on the judgment Raida obtained against Tareq through the

divorce decree. Tareq never entered an appearance in the lawsuit.

                In an amended complaint, Raida alleged that the transfers of the gas

station businesses from Tareq to Qais were not supported by consideration, the sales

of 871 Rocky River Dr. and Pearl Road were not completed under Ohio law, Tareq

had withdrawn money from the business accounts after the purported transfer

occurred, Tareq’s personal expenses were being paid from the business account

through April 2015, and the business continued to pay Tareq’s expenses through

October 2016.

                In the first and second counts of the amended complaint under Ohio’s

Fraudulent Transfer Act, Raida alleged that the transfer of 871 Rocky River Dr. and

Pearl Road should be considered as occurring immediately before the filing of the

lawsuit as a presumed date of transfer for the purpose of the statute of limitations

pursuant to R.C. 1336.02(A)(2)(a). Raida argued that this statute applies because

the transfer of the businesses from Tareq to Qais were 1) not perfected under Ohio
law and 2) there was no consideration for the transfer of the businesses. In the third

count of the amended complaint, Raida sought punitive damages. In her prayer, in

addition to other requested relief, Raida specifically sought a receiver to take control

of the gas station businesses and Qais’s and Tareq’s assets, avoidance of the

purported transfers of 871 Rocky River Dr. and Pearl Road to the extent necessary

to satisfy the judgment entered in the divorce decree, garnishment of the gas station

businesses, an injunction against further disposition of the gas station businesses,

and compensatory and punitive damages.

      2. Dispositive Motions

              Appellees filed a motion for summary judgment arguing that 1) the

statute of limitations barred the filing of the lawsuit, 2) the claims made in the

amended complaint were barred by the doctrine of issue preclusion, 3) the claims

made in the amended complaint were barred by the doctrine of collateral estoppel,

and 4) the claims made in the amended complaint were barred by the doctrine of

res judicata. Raida sought default judgment against Tareq.

      C. The Declaratory Judgment Action

              On October 8, 2019, 871 Rocky River Dr. filed a complaint for

declaratory judgment seeking the trial court’s determination that the underground

storage tanks, canopy, signs, fixtures, furnishings and equipment, and gas pumps

located at 871 Rocky River Dr., Berea, Ohio were assets of the business. The

complaint was supported by a bill of sale as well as state regulatory filings that

showed a history of registration of the underground storage tanks by 871 Rocky
River Dr., Tareq, or Qais. This action was consolidated with the Fraudulent Transfer

Act case.

              In seeking summary judgment, 871 Rocky River Dr. argued that it

owned the underground storage tanks, canopy, signs, fixtures, furnishings and

equipment, and gas pumps located at 871 Rocky River Dr., Berea, Ohio prior to any

transfer of the business from Tareq to Qais and, as such, there was no issue that 871

Rocky River Dr. was the owner of those assets.

              In opposition to the motion for summary judgment, Raida asserted

that the ownership of the underground storage tanks was registered with the fire

marshal by Tareq from 2005 until 2018 and thereafter by Raida, who asserted

ownership of the underground storage tanks as the real property owner.

      D. The trial court’s judgments

      1. The trial court’s grant of summary judgment

              On November 23, 2020, the trial court journalized an entry ruling

upon the motions for summary judgment and upon the declaratory judgment

action. In determining the summary judgment motions, the trial court found Raida

failed to set forth a genuine issue of material fact to support a judgment in her favor

and granted summary judgment in favor of Qais, 871 Rocky River Dr., and Pearl

Road. It denied Raida’s motions for summary judgment against Qais and Tareq,

and her motion for default judgment against Tareq. The trial court did not state its

reasons for granting summary judgment and denying default judgment.
               The trial court granted summary judgment in favor of 871 Rocky River

Dr. as to the declaratory judgment action, denied Raida’s motion for summary

judgment, and declared that 871 Rocky River Dr. to be the owner of the underground

storage tanks, canopy, signs, fixtures, furnishings and equipment, and gas pumps

located at 871 Rocky River Drive, Berea, Ohio. The trial court did not state reasons

for its rulings.

       II. LAW AND ARGUMENT

       A. Fraudulent Transfer Act Case

                   The appeal raises five assignments of error contesting summary

judgment in both the Fraudulent Transfer Act case and the declaratory judgment

case. The first and second assignments of error argue that the trial court erred by

granting summary judgment in the Fraudulent Transfer Act case on the basis of the

statute of limitations or on the basis of res judicata. In the third and fourth

assignments of error, Raida argues that the trial court erred by denying her motion

for default judgment against Tareq and by allowing appellees to oppose her

summary judgment on Tareq’s behalf.

               These assignments of error read:

       1.  THE TRIAL COURT ERRED IN GRANTING SUMMARY
       JUDGMENT IN FAVOR OF QAIS ALLAN, 871 ROCKY RIVER
       DRIVE, INC. AND PEARL ROAD, INC. BECAUSE RAIDA ALLAN S
       CLAIMS ARE NOT BARRED BY THE STATUTE OF LIMITATIONS.

       2.  THE TRIAL COURT ERRED IN GRANTING SUMMARY
       JUDGMENT IN FAVOR OF QAIS ALLAN, 871 ROCKY RIVER
       DRIVE, INC. AND PEARL ROAD, INC. BECAUSE RAIDA ALLAN S
      CLAIMS ARE NOT BARRED BY THE DOCTRINE OF RES
      JUDICATA.

      3.  THE TRIAL COURT ERRED AND ABUSED ITS DISCRETION
      IN DENYING RAIDA ALLAN DEFAULT JUDGMENT AGAINST
      TAREQ ALLAN.

      4.   THE TRIAL COURT ERRED AND ABUSED ITS DISCRETION
      IN ALLOWING QAIS ALLAN, 871 ROCKY RIVER DRIVE, INC. AND
      PEARL ROAD, INC. TO OPPOSE SUMMARY JUDGMENT ON
      BEHALF OF TAREQ ALLAN UNDER R.C. 1336.04.

      1.    Issues of material fact remain regarding when the statute of
      limitations commenced under the Fraudulent Transfer Act

               Raida argues that her claims are not barred by the statute of

limitations because the transfer of the businesses from Tareq to Qais was never

perfected and thus the statute of limitations did not begin to run until the day prior

to the lawsuit being filed. Appellees argue that the trial court properly granted

summary judgment because Raida was aware of the transfer over four years prior to

the lawsuit being filed and the transfer of the stock certificates does not determine

that the gas stations were not in fact transferred to avoid the application of the

statute of limitations.

      a. Standards of Review

               Under Civ.R. 56, the grant of a motion for summary judgment is

appropriate where

      (1) there is no genuine issue as to any material fact; (2) the moving
      party is entitled to judgment as a matter of law; and (3) reasonable
      minds can come to but one conclusion, and that conclusion is averse
      to the party against whom the motion for summary judgment is made,
      who is entitled to have the evidence construed most strongly in his or
      her favor.
Legacy Village Investors, L.L.C. v. Bromberg, 2021-Ohio-2930, 176 N.E.3d 1181,

¶ 9 (8th Dist.); Civ.R. 56(C).

               Civ.R. 56(C) provides that summary judgment shall be rendered 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 as to any material fact and that the

moving party is entitled to judgment as a matter of law.” A trial court’s grant of

summary judgment is reviewed de novo. Grafton v. Ohio Edison Co., 77 Ohio St.3d

102, 105, 1996-Ohio-336, 671 N.E.2d 241

       b. Issues of fact remain as to when the statute of limitations
       commenced

               The complaint in this case was filed on November 28, 2018.

R.C. 1336.09 provides that a lawsuit under the Fraudulent Transfer Act must be

brought within four years. As such, at issue in determining whether or not the suit

was brought within the four-year statute of limitations contained in R. C. 1336.09 is

whether the businesses were transferred for purposes of the Ohio Fraudulent

Transfer Act and, if so transferred, when those transfers occurred.

                Under the Ohio Fraudulent Transfer Act, a transfer is defined as

“every direct or indirect, absolute or conditional, and voluntary or involuntary

method of disposing of or parting with an asset or an interest in an asset, and

includes payment of money, release, lease, and creation of a lien or other

encumbrance.” R.C. 1336.01(L). In arguing that 817 Rocky River Dr. and Pearl Road
were transferred to Qais, appellees cite evidence of the transaction in the form of

purchase agreements, filings with state agencies, and the findings of the domestic

relations court. Raida argues that transfer was not complete because it was not

supported by consideration and that because the corporate records of the businesses

were incomplete, no transfer of the gas stations were perfected under Ohio law.

              Raida and appellees cite differing law to be used to determine if and

when the transfer of the businesses to Qais took place. Raida argues that Ohio

corporation law is definitive for the purposes of determining whether or not the

ownership of the businesses changed. In addition to the failure of corporate records,

Raida alleges in the complaint that there was no consideration paid for the

businesses and, as such, the transfer never took place.

              Appellees assert that the lawsuit was filed outside the statute of

limitations. They argue that the transfer of the gas stations took place as evidenced

by the purchase agreements, public filings, and evidence and that Raida was aware

of the transfers prior to November 2014.

              “Application of a statute of limitations presents a mixed question of

law and fact; when a cause of action accrues is a question of fact, but in the absence

of a factual issue, application of the limitations period is a question of law.” Schmitz

v. NCAA, 155 Ohio St.3d 389, 2018-Ohio-4391, 122 N.E.3d 80, ¶ 11. “R.C. 1336.06

specifically and expressly addresses the narrower issue of ‘when a transfer is made’

for the purposes of the [Ohio Fraudulent Transfer] Act.” Comer v. Calim, 128 Ohio
App.3d 599, 604, 716 N.E.2d 245 (1st Dist.1998). In determining whether a transfer

is made under the Fraudulent Transfer Act, R.C. 1336.06 provides in relevant part:

      (A)(1) A transfer is made if either of the following applies:

      ***

      (b) With respect to an asset that is not real property or that is a fixture,
      when the transfer is so far perfected that a creditor on a simple
      contract cannot acquire a judicial lien otherwise than under this
      chapter that is superior to the interest of the transferee.

      (2)(a) If applicable law permits the transfer to be perfected as
      provided in division (A) of this section and the transfer is not so
      perfected before the commencement of an action for relief arising out
      of a transfer that is fraudulent under section 1336.04 or 1336.05 of the
      Revised Code, the transfer is deemed made immediately before the
      commencement of the action.

      (b) If applicable law does not permit the transfer to be perfected as
      provided in division (A) of this section, the transfer is made when it
      becomes effective between the debtor and the transferee.

              The Ohio Uniform Transfer Act was adopted in 1990 by Ohio with

language promulgated by the Uniform Law Commission. In 2014, the Uniform Law

Commission published an updated version of the laws, with commentary. The

commentary to section 6 of the uniform act, codified verbatim in R.C. 1336.06, reads

in pertinent part:

      One of the uncertainties in the law governing the avoidance of
      transfers and obligations of the nature governed by this Act is the time
      at which the cause of action arises. Section 6 clarifies that point in
      time. * * * For transfers of fixtures and assets constituting personalty,
      paragraph (1)(ii) fixes the time as the date of perfection against a
      judicial lien creditor not asserting rights under this Act. Perfection
      under paragraph (1) typically is effected by notice-filing, recordation,
      or delivery of unequivocal possession. * * * The provision for
      postponing the time a transfer is made until its perfection is an
      adaptation of Bankruptcy Code § 548(d)(1) (1984). When no steps are
      taken to perfect a transfer that applicable law permits to be perfected,
      the transfer is deemed by paragraph (2) to be perfected immediately
      before the filing of an action to avoid it; without such a provision to
      cover that eventuality, an unperfected transfer arguably would be
      immune to attack.
Uniform Voidable Transactions Act, https://www.uniformlaws.org/HigherLogic/

System/DownloadDocumentFile.ashx?DocumentFileKey=58b5d88d-a3b9-b3bf-

873d-8787811656b1 (accessed Apr. 6, 2022).

              Although this statute may usually provide a means of determining a

definite date of transfer for the purpose of the statute of limitations, in this case,

application of this statute to definitively determine when the transfer occurred as a

matter of law is precluded because there remain genuine issues of fact to determine

if the transfer of the gas stations actually took place and, if so transferred, when the

transfer of the gas stations occurred. There is contradictory evidence regarding

whether or not the transfer of the businesses took place.

               Appellees cite to the purchase agreements as evidence of the transfer

of the gas station businesses and argue further that required public filings made

regarding liquor licensing and registration of the underground storage tanks

indicate the transfers were perfected under R.C. 1336.06(A)(2)(a). In opposition,

Raida cites to R.C. 1308.27 that governs how corporate shares are to be transferred

as the applicable law to be applied to determine whether the transfers of the gas

station businesses were perfected under R.C. 1336.02(A)(2)(a), arguing that no
transfer of the businesses from Tareq to Qais took place as the shares reflecting

ownership of the businesses were never transferred or properly registered.

                Both parties submitted expert reports regarding the validity of the

transfers. Raida submitted an expert report that highlighted the irregularities in the

financial dealings between Tareq and Qais, and the report opined that the corporate

documents of Pearl Road and 871 Rocky River Dr. indicate that no transfer of the

businesses occurred. In contrast, Qais submitted a contrary report opining that the

transfers did in fact occur.

                There exists disputed evidence as to whether, and when, the transfers

of the gas stations were made and, if so, when those transfers were perfected.2 The

parties’ reliance on either Ohio corporate law or the public filings alone are not

definitive as to transfer of the ownership of the gas station businesses. The issuance

of shares in a corporation is not necessarily determinative of ownership of the

corporation. See Estate of Thomas v. Thomas, 6th Dist. Lucas No. L-11-1064,

2012-Ohio-3992, ¶ 40 (“Further, the issuance of a stock certificate is not necessary

to establish corporate ownership.”), citing Algren v. Algren, 183 Ohio App.3d 114,

119, 2009-Ohio-3009, 916 N.E.2d 491 (2d Dist.); Graham v. Szuch, 8th Dist.

Cuyahoga No. 100228, 2014-Ohio-1727, ¶ 13. Similarly, the public filings asserting

2 We also note that factual disputes regarding the transfers of the gas stations are better
resolved at trial as the credibility of the parties was called into question during the divorce
proceedings. In the divorce decree, the domestic relations court found Tareq’s and Qais’s
testimony “lacked credibility” and that Raida’s testimony contained some “credibility
gaps.” See Allan, 2019-Ohio-2111, at ¶ 80.
ownership of a business are evidence that, but not determinative of, a transfer of a

business took place.

               Accordingly, to the extent that the grant of summary judgment was

based upon the grounds that the suit was filed beyond the statute of limitations, it

was improper. Appellant’s first assignment of error is sustained.

      2. The claims made in the complaint are not precluded by the
      doctrines of res judicata, claim preclusion, or issue preclusion

          a. Res Judicata

              “Under the doctrine of res judicata, ‘a valid, final judgment

rendered upon the merits bars all subsequent actions based upon any claim

arising out of the same transaction or occurrence that was the subject matter

of a previous action.’” E. Cleveland Firefighters v. E. Cleveland, 8th Dist.

Cuyahoga No. 107034, 2019-Ohio-534, ¶ 14, quoting Grava v. Parkman

Twp., 73 Ohio St.3d 379, 382, 1995-Ohio-331, 653 N.E.2d 226. Res judicata

further encompasses the concepts of both claim and issue preclusion. State

ex rel. A.N. v. Cuyahoga Cty. Pros. Dept., 2020-Ohio-5628, 164 N.E.3d 526,

¶ 8 (8th Dist.) Claim and issue preclusion have been explained by this court

as follows: “Claim preclusion prevents subsequent actions, by the same

parties or their privies, based upon any claim arising out of a transaction that

was the subject matter of a previous action.” O’Nesti v. DeBartolo Realty

Corp., 113 Ohio St.3d 59, 2007-Ohio-1102, 862 N.E.2d 803, ¶ 6. “Issue

preclusion, on the other hand, serves to prevent relitigation of any fact or
point that was determined by a court of competent jurisdiction in a previous

action between the same parties or their privies.” Id. at ¶ 7. For a claim or

suit to be barred by issue preclusion, it is necessary to show:

      “(1) a prior final, valid decision on the merits by a court of competent
      jurisdiction; (2) a second action involving the same parties, or their
      privies, as the first; (3) a second action raising claims that were or
      could have been litigated in the first action; and (4) a second action
      arising out of the transaction or occurrence that was the subject
      matter of the previous action.”

Portage Cty. Bd. of Commrs. v. Akron, 109 Ohio St.3d 106, 2006-Ohio-954, 846

N.E.2d 478, ¶ 84, quoting Hapgood v. Warren, 127 F.3d 490, 493 (6th Cir. 1997).

              In this case, appellees allege that litigation in the divorce proceedings

preclude a lawsuit brought under the Fraudulent Transfer Act. As to the elements

of applying the doctrine of res judicata based upon issue or claim preclusion, the

divorce decree satisfies the first element because it is a final decision on the merits

by a court of competent jurisdiction. The fourth element is also met because the

transfer of the businesses was considered in the divorce case in part in order for that

court to determine what was to be considered marital property.

              However, under the second element, we find that Qais was not a party

to the divorce and that he was not in privity with Tareq. The individual claims

against Qais could not have been fully litigated in the domestic relations court and

were dismissed by the court prior to trial. Although Qais and the businesses

remained as parties in the divorce proceedings as stakeholders of the property, they
were not parties to the proceeding subject to judgment or relief to the extent such

relief would be available under the Fraudulent Transfer Act.3

              As Qais was not a party subject to a personal judgment by the

domestic relations court, in order to apply res judicata in the Fraudulent Transfer

Act case, it would have to be determined Qais was in privity with Tareq. The Ohio

Supreme Court recognized that “what constitutes privity in the context of res

judicata is somewhat amorphous.” Brown v. Dayton, 89 Ohio St.3d 245, 248, 730

N.E.2d 958 (2000). In Wiggins Invest., Inc. v. Waterstreet Mgt., L.L.C., 8th Dist.

Cuyahoga No. 103820, 2016-Ohio-4869, ¶ 15-16, we explained that there is a broad

definition to determine privity and that a mutuality of interest may create privity in

order to apply res judicata.

              Although Tareq and Qais had a common interest in having the

transfers found valid in the divorce proceedings, we cannot say that they were in

privity on the ultimate issue in the case as the determination of whether the

businesses constituted marital property would not be detrimental to Qais’s interests.

That determination would affect Tareq’s interest and affect the distribution of

marital assets but would not, and did not, subject Qais to any personal judgment or

damages for fraud as alleged in the instant lawsuit.

3Additionally, we note Qais argued that those claims against him could not be brought
against him in the divorce proceedings. Palos, 2016-Ohio-3073, at ¶ 10.
              Further, to find a claim is barred by issue preclusion, there must be,

in part, a determination that the issue was admitted or actually tried and decided as

well as necessary to the final judgment. Kelley v. Kelley, 8th Dist. Cuyahoga

No. 55944, 1989 Ohio App. LEXIS 5006, 3-4 (Sept. 28, 1989), citing Monahan v.

Eagle Pieher Industries, Inca, 21 Ohio App.3d 179, 486 N.E.2d 1165 (1st Dist.1984).

The domestic relations court heard evidence to determine whether or not the

businesses constituted marital property. Whether or not the transfers actually took

place was not necessary for the domestic relations court to fashion an equitable

distribution of the marital property.      Accordingly, we cannot say that a final

determination of whether the transfers were legitimate, whether they consisted of

fraud on Tareq’s part, or whether they consisted of fraud on Qais’s part was an issue

that was material and necessary to the final judgment in the divorce decree in order

to distribute marital property.

               The second assignment of error is sustained.

      3. The trial court abused its discretion in denying Raida’s
      motion for default judgment

      a. Standard of review and applicable law

              A trial court’s ruling on a motion for default judgment is reviewed

under the abuse of discretion standard. Deutsche Bank Trust C0. Ams. v. Smith,

8th Dist. Cuyahoga No. 89738, 2008-Ohio-2778, ¶ 30. Civ. R. 55 provides in

pertinent part that “[w]hen a party against whom a judgment for affirmative relief

is sought has failed to plead or otherwise defend as provided by these rules, the party
entitled to a judgment by default shall apply in writing or orally to the court

therefore.”

               “[A] default judgment should not be granted when the complaint fails

to state a claim upon which relief could be granted.” X-S Merchandise, Inc. v.

Wynne Pro, L.L.C., 8th Dist. Cuyahoga No. 97641, 2012-Ohio-2315, ¶ 11, citing

Streeton v. Roehm, 83 Ohio App. 148, 81 N.E.2d 133 (1st Dist.1948) (A “court should

make its decision conform to the law as applicable to the facts proven, and if no cause

of action is shown no default judgment in plaintiff's favor should be rendered.”)

State ex rel. Pullins v. Eyster, 5th Dist. Knox No. 2009-CA-09, 2009-Ohio-2846,

¶ 8.

               Civ.R. 8(C) requires that a party is required to plead affirmative

defenses, including the “statute of limitations,” “res judicata,” or “any other matter

constituting an avoidance or affirmative defense.” Where a defendant does not enter

an appearance, the defendant is precluded from raising an affirmative defense.

Shikner v. S & P Solutions, 11th Dist. Lake No. 2004-L-108, 2006-Ohio-127, ¶ 18

(“Thus, when a defendant fails to answer, default judgment under Civ.R. 55(A) is

appropriate because the defendant has admitted liability to the averments of the

plaintiff's pleading and the defendant is precluded from raising an affirmative

defense.”) .
         b. The trial court abused its discretion in denying the motion
         for default judgment

              Tareq has not appeared in the case and has not raised any affirmative

defenses as raised by appellees. Raida argues that default judgment against him is

appropriate on her claims.

              Appellees argue that the trial court properly denied the motion for

default judgment where the trial court had exclusive jurisdiction of the marital

property. This court has rejected this argument and found that a spouse may bring

an action under the Fraudulent Transfer Act when attempting to collect a judgment

entered in the divorce proceedings against an ex-spouse. Dinu v. Dinu, 8th Dist.

Cuyahoga No. 91705, 2009-Ohio-2879, ¶ 8-10.

              In this case, the trial court did not explain its reasoning for denying

the motion for default judgment and we are left to presume that because the trial

court granted summary judgment against Raida, it therefore exercised its discretion

to deny the default judgment motion. However, in resolving Raida’s first and second

assignments of error, we determined summary judgment was not appropriate on

the basis of the affirmative defenses raised by appellees in their motion for summary

judgment. Accordingly, where summary judgment was not appropriate based upon

affirmative defenses alleged by appellees, we find that the trial court abused its

discretion by denying the motion for default judgment.

              The third assignment of error is sustained. Based on our resolution

of this assignment of error, we find the fourth assignment of error moot.
      B. Declaratory Judgment Action

              Raida’s fifth assignment of error reads:

      THE TRIAL COURT ERRED IN GRANTING SUMMARY
      JUDGMENT IN FAVOR OF 871 ROCKY RIVER DRIVE, INC.
      DECLARING IT THE OWNER OF THE UNDERGROUND STORAGE
      TANKS, CANOPY, SIGNS, FIXTURES, FURNISHINGS AND
      EQUIPMENT, AND GAS PUMPS LOCATED AT 871 ROCKY RIVER
      DRIVE, BEREA, OHIO.

              871 Rocky River Dr. sought declaratory judgment over the ownership

of the underground storage tanks, canopy, signs, fixtures, furnishings and

equipment, and gas pumps located at 871 Rocky River Drive, Berea, Ohio and filed

for and was granted summary judgment.

              An action for declaratory judgment “enables a court to declare the

rights, status, and other legal relations of the parties.” Priore v. State Farm Fire &

Cos. Co., 8th Dist. Cuyahoga No. 99692, 2014-Ohio-696, ¶ 14; Civ.R. 57;

R.C. 2721.02(A). The ownership of underground gasoline storage tanks is subject to

certain registration requirements under Ohio Law. R.C. 3737.88, et seq.; see also

State ex rel. Dewine v. Klepper, Cuyahoga C.P. No. 2012CV0422, 2014 Ohio Misc.

LEXIS 3402 (Nov. 21, 2014) (The Ohio State Fire Marshall is tasked with

“monitoring and compelling compliance with state laws and rules governing the

ownership and operation of underground storage tanks in Ohio.”).

               In this case, Tareq acquired the ownership of the gas station business

and underground storage tanks when he bought the gas station and real property in

2004. Thereafter, 871 Rocky River Drive and Tallan, LLC were created. 871 Rocky
River Dr. argues that it acquired ownership of the underground storage tanks in

2005, as evidenced by Tareq’s initial registration of 871 Rocky River Dr. as both the

owner and operator of the underground storage tanks with the state fire marshal

and through the further registration of the tanks through 2018. Additionally, 871

Rocky River Dr. argues that the bill of sale executed by Tareq on behalf of Tallan,

Inc. and by Qais as president of 871 Rocky River Dr. evidenced ownership of the

tanks.

                Raida argues that underground storage tanks are customarily a part

of the real property and that when she was granted the membership interest in

Tallan, LLC and thus title to the real property in which the underground storage

tanks are located, she took steps to register her ownership of the underground

storage tanks with the fire marshal.

                In resolving the first and second assignments of error, we found that

there remain issues of fact as to whether the transfer of 871 Rocky River Dr. took

place and, if so, when the transfer took place. As such, in determining the ownership

of the underground tanks, there remains conflicting evidence of the transfer of

ownership of the underground storage tanks and the grant of summary judgment in

the declaratory judgment action is reversed.

                Appellant’s fifth assignment of error is sustained.

         III.   CONCLUSION

                We reverse the trial court’s grant of summary judgment in both the

Fraudulent Transfer Act case and the Declaratory Judgment Action because there
remain issues of material fact regarding whether the transfer of the 871 Rocky River

Drive and Pearl Road occurred and, if it did occur, when the transfer was perfected.

This case is remanded to the trial court for further proceedings.

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

      The court finds there were reasonable grounds for this appeal.

      It is ordered that a special mandate issue out of this court directing the

common pleas court to carry this judgment into execution.

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

of the Rules of Appellate Procedure.

________________________________
MICHELLE J. SHEEHAN, JUDGE

KATHLEEN ANN KEOUGH, P.J., and
EMANUELLA D. GROVES, J., CONCUR