Court Opinion

ID: 2692324
Source: CourtListenerOpinion
Date Created: 2014-08-01 21:22:49.265853+00
Date Added: 2024-06-11T08:32:54.025937
License: Public Domain

[Cite as Smith v. Boston Mut. Life Ins. Co., 2013-Ohio-2510.]
                IN THE COURT OF APPEALS
            FIRST APPELLATE DISTRICT OF OHIO
                 HAMILTON COUNTY, OHIO

KAREN L. SMITH, Executrix of the :                          APPEAL NO. C-120668
Estate of Daniel W. Smith, Jr.,                             TRIAL NO. A-1102562
                                 :
     Plaintiff-Appellant,
                                 :                                O P I N I O N.
  vs.
                                 :
BOSTON MUTUAL LIFE INSURANCE
COMPANY,                         :

    Defendant-Appellee,                           :

  and                                             :

UNIFIED CAPITAL SOLUTIONS,                        :
INC.,
                                                  :
     Defendant.

Civil Appeal From: Hamilton County Court of Common Pleas

Judgment Appealed From Is: Affirmed

Date of Judgment Entry on Appeal: June 19, 2013

Droder & Miller, Co., L.P.A., A. Dennis Miller, Richard J. Rinear and W. John
Sellins, for Plaintiff-Appellant,

Squire Sanders, LLP, Scott Kane and Colter L. Paulson, for Defendant-Appellee.

Please note: this case has been removed from the accelerated calendar.
                      OHIO FIRST DISTRICT COURT OF APPEALS

D E W INE , Judge.

        {¶1}    This is an appeal from a trial court decision granting a motion to dismiss.

Daniel Smith assigned certain insurance commissions that he was entitled to receive

from the Boston Mutual Life Insurance Company (“Boston Mutual”) to Unified Capital

Solutions, Inc., (“Unified Capital”). After Mr. Smith’s death, his estate (“the Estate”)

attempted to revoke the assignment. When Boston Mutual refused to recognize the

revocation of the assignment and continued to pay the commissions to Unified Capital,

the Estate instituted this lawsuit asserting claims for breach of contract, breach of

fiduciary relationship, fraud, conversion, and an accounting. We agree with the court

below that the assignment was irrevocable as a matter of law.               Based on the

irrevocability of the assignment and various other deficiencies in the claims asserted, we

affirm the trial court’s decision to dismiss the Estate’s claims against Boston Mutual.

        {¶2}    In August 2000, Daniel Smith entered into a general agent’s contract

(“Agent’s Contract”) with Boston Mutual to sell life and health insurance policies. The

contract provided that Smith was entitled to receive commissions from Boston Mutual.

On December 16, 2006, Mr. Smith entered into a Declaration of Trust and Assignment

(“the Assignment”) with Unified Capital. Under the terms of the Assignment, Mr. Smith

assigned commissions he was entitled to receive from Boston Mutual to Unified Capital.

At the time of the Assignment, Mr. Smith was President of Unified Capital and received

a salary.

        {¶3}    Mr. Smith died on June 17, 2010. On August 16, 2010, Karen Smith, the

executrix of his estate, notified Boston Mutual that the Estate was revoking the

Assignment, and that all commissions due Smith should be paid directly to the Estate.

When Boston Mutual continued to pay the commissions to Unified Capital, the Estate

brought this action against Boston Mutual and Unified Capital.

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                       OHIO FIRST DISTRICT COURT OF APPEALS

       {¶4}       The trial court granted a motion to dismiss filed by Boston Mutual,

concluding that all of the Estate’s claims against Boston Mutual were deficient as a

matter of law. See Smith v. Boston Mutual Life Ins. Co., Hamilton C.P. No. A-1102562,

2011 Ohio Misc. LEXIS 361 (Aug. 17, 2011). The Estate then dismissed its claims against

Unified Capital without prejudice. The Estate now appeals and asserts in a single

assignment of error that the trial court erred in dismissing the Estate’s claims against

Boston Mutual.

       {¶5}      Ms. Smith’s breach of contract claim against Boston Mutual is premised

on the allegation that the assignment was validly revoked and that commissions should

have been paid to the Estate instead of Unified Capital following Mr. Smith’s death. The

unambiguous terms of the assignment, however, are to the contrary. The assignment

provides as follows:

       The undersigned, DANIEL W. SMITH, JR., acknowledges that in his

       capacity as President and employee of UNIFIED CAPITAL SOLUTIONS,

       INC., he has maintained licensure as an insurance salesman/broker in

       various states of the United States in order to enable him to fulfill his

       duties of employment and maintain his relationship with various

       insurance companies. In connection with this employment, he has and

       will continue to receive commissions on the sale of insurance which he

       has received for and on behalf of UNIFIED CAPITAL SOLUTIONS, INC.,

       and in furtherance of such employment does hereby bargain, sell and

       assign all of such commissions, past, present and future, to UNIFIED

       CAPITAL SOLUTIONS, INC.

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                       OHIO FIRST DISTRICT COURT OF APPEALS

       {¶6}       A non-gratuitous assignment of a contract right is said to “extinguish the

right in the assignor and recreate[] the same right in the assignee.” ’ 9 Murray, Corbin

on Contracts, Section 47:2 (Rev.Ed.2007). According to the Restatement:

              ‘assignment’ is used to refer to an act which extinguishes in whole

              or in part the assignor’s right and creates a similar right in the

              assignee. See §§ 317, 324. On proof of an unconditional

              assignment, the assignee can recover on an assigned right; the

              assignor cannot. The assignor may be entitled to revoke the

              assignment because it is gratuitous or by virtue of a reserved

              power, or the assignment may be voidable for fraud or other

              invalidating cause.

Restatement of the Law 2d, Contracts, Assignment and Delegation, Section 331 (1981).

       {¶7}       Ohio courts are in accord in concluding that there is no right to revoke

such an assignment unless the power to revoke is reserved. See Fyda v. Habuda

Concrete and Supply Co., 7th Dist. No. 85 C.A. 120, 1987 Ohio App LEXIS 6292, *5

(Mar. 27, 1987); see also Hsu v. Parker, 116 Ohio App.3d 629, 631-633, 688 N.E.2d 1099

(11th Dist.1996). Here, Mr. Smith made a deal: he unconditionally bargained away

present and future commissions from Boston Mutual in furtherance of his employment

relationship with Unified Capital. The Estate was not entitled to undo the bargain that

Mr. Smith made, and the trial court properly dismissed the contract claim.

       {¶8}       The trial court also properly dismissed the Estate’s claim that Boston

Mutual breached its fiduciary obligations.        The amended complaint fails to allege a

relationship with the requisite “special confidence and trust” necessary to establish a

fiduciary duty.    See Ed Schory & Sons, Inc. v. Francis, 75 Ohio St.3d 433, 442, 662

N.E.2d 1074 (1996). Further, the Agent’s Contract between Mr. Smith and Boston

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                        OHIO FIRST DISTRICT COURT OF APPEALS

Mutual defines Mr. Smith as an independent contractor.1 “Under Ohio law, there is

generally no fiduciary relationship between an independent contractor and his employer

unless both parties understand that the relationship is one of special trust and

confidence.” Schulman v. Wolske & Blue Co., L.P.A., 125 Ohio App.3d 365, 708 N.E.2d

753 (10th Dist.1998).

         {¶9}    We also conclude that the trial court appropriately dismissed the fraud

claim.    Civ.R. 9(B) requires that a fraud claim be “stated with particularity.”          The

necessary elements of fraud are:

         (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.

Volbers-Klarich v. Middletown Mgt., Inc., 125 Ohio St.3d 494, 2010-Ohio-2057, 929

N.E.2d 434, ¶ 27.

         {¶10}   The Estate has failed to identify any specific materially false

representation made by Boston Mutual to Mr. Smith. Rather, the amended complaint

alleges only that “Boston Mutual intentionally and knowingly made the decision to

unilaterally ignore the revocation” and that its actions were undertaken either “willfully,

wantonly and with actual malice” or in complete disregard of its contractual obligations.

Such allegations are not sufficient to support a fraud claim. See Curran v. Vincent, 175

Ohio App.3d 146, 2007-Ohio-3680, 885 N.E.2d 964, ¶ 13-14 (1st Dist.).

1 The amended complaint incorporated exhibits that were attached to the complaint, including the
Agent’s Contract.

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                      OHIO FIRST DISTRICT COURT OF APPEALS

        {¶11}   The trial court also properly dismissed the Estate’s conversion claim. A

claim for conversion will lie only when the money at issue is “ ‘earmarked’ or is * * *

capable of identification, e.g., money in a bag, coins or notes that have been entrusted to

defendant’s care, or funds that have been otherwise sequestered, and where there is an

obligation to keep intact and deliver this specific money rather than merely deliver a

certain sum.” Haul Transport of Va, Inc. v. Morgan, 2d Dist. No. CA14859, 1995 Ohio

App. LEXIS 2240, *9 (June 2, 1995), quoting Gray v. Liberty Natl. Life Ins. Co., 623

So.2d 1156, 1160 (Ala.1993). Here, the Estate failed to identify any such segregated

funds, but alleged only that Boston Mutual wrongfully refused to pay commissions owed

under the Agent’s Contract.

        {¶12}   Dismissal of the Estate’s claim for an accounting was also appropriate.

The amended complaint sought an accounting of “the amount of commission money

due from Defendants to Plaintiff.” In light of the trial court’s decision dismissing the

Estate’s other claims, no commission money was due to the Estate and the Estate could

not state a claim for the equitable remedy of an accounting.

        {¶13}   Finally, we reject the Estate’s contention that the trial court erred in

dismissing the claim for promissory estoppel.        The amended complaint does not

include a promissory-estoppel claim against Boston Mutual, and the trial court’s

decision does not address any such claim. The Estate cannot raise this claim on

appeal because it was not brought against Boston Mutual in the first instance in the

trial court. See Roth v. Natl. City Bank, 1st Dist. No. C-100216, 2010-Ohio-5812, ¶

20.

        {¶14}   We overrule the sole assignment of error and affirm the judgment of the

trial court.
                                                                     Judgment affirmed.

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                     OHIO FIRST DISTRICT COURT OF APPEALS

HENDON, P.J, and CUNNINGHAM, J., concur.

Please note:
       The court has recorded its own entry this date.

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