Court Opinion

ID: 3693207
Source: CourtListenerOpinion
Date Created: 2016-07-06 06:34:49.972454+00
Date Added: 2024-06-11T14:09:39.519102
License: Public Domain

{¶ 36} I respectfully dissent.
 {¶ 37} Stanwade Metal Products, Inc. ("Stanwade") sold a storage tank worth $19,258.26 to Environmental Construction and Design, Inc. ("Environmental Construction") and was never paid. The one undisputed fact in this case is that Stanwade is owed $19,258.26, plus interest. The issue raised by Stanwade's motion for partial summary judgment is whether Heintzelman, Environmental Construction's sole shareholder, is personally liable for the money owed to Stanwade.
 {¶ 38} In their zeal to find Heintzelman, an unsympathetic defendant, personally liable for the money owed to Stanwade, the majority ignores the arguments raised in Stanwade's motion for summary judgment and, through the exercise of a de novo review, renders a judgment on the pleadings in favor of Stanwade.
 {¶ 39} In the third count of its complaint, Stanwade alleged that Heintzelman fraudulently purchased the storage tank from Stanwade, as a representative of Environmental Construction, and then sold the tank "individually and under a trade name" to Garner Transportation Group, Inc. ("Garner Trucking"). *Page 238 
Specifically, Stanwade alleged that Heintzelman represented that Environmental Construction would conduct the resale of the tank to Garner Trucking and that Environmental Construction would pay Stanwade upon receipt of the funds from Garner Trucking. In his answer, Heintzelman denied all the allegations contained in the third count of the complaint.
 {¶ 40} Heintzelman's answer also raised, as affirmative defenses, the claims that Heintzelman "never conducted business as an individual" and that, at the "time of ordering equipment from [Stanwade], [Heintzelman] informed [Standwade] that All-American Construction, Inc. would be performing and billing for work completed." In his deposition, Heintzelman explained that it was Stanwade's decision to invoice the sale of the tank to Environmental Construction: "When I talked to Pete Hunkas [Stanwade's sales representative], I told him that [Environmental Construction] no longer did business. He said that's fine, we'll just keep it on [Environmental Construction's account]. [I] said that's up to you, but it's All American that's doing the work."
 {¶ 41} Stanwade would also have been apprised that Environmental Construction was not the true principal behind the transaction when the checks issued by Heintzelman to pay for the tank bore the trade name "The Home Medic."
 {¶ 42} Despite Heintzelman's denials, affirmative defense, and deposition testimony, the majority concludes that Heintzelman is personally liable because he "failed to continuously disclose his floating representative agency status to the detriment of Stanwade." In light of the preceding evidence, the only reasonable conclusion is that Heintzelman has raised a genuine issue of material fact whether or not he disclosed the true nature of his agency to Stanwade at the time the tank was purchased.
 {¶ 43} The majority avoids this difficulty by declaring that Heintzelman failed to assert, and hence waived, as an affirmative defense "the argument that All-American Environmental, Inc. using the dba of All-American Construction and The Home Medic, was a principal in this transaction."
 {¶ 44} This claim can only be supported by the most specious logic. As shown above, Heintzelman denied Stanwade's allegation that he fraudulently misrepresented that Environmental Construction was the principal in the transaction.4
Moreover, Heintzelman, both as an affirmative defense and in his deposition, maintains that he informed Stanwade that Environmental Construction was not the true principal. The majority argues that, although Heintzelman asserted the affirmative defense in respect to All-American Construction/The Home Medic, "Heintzelman never asserted by answer or amendment the role of *Page 239 
All-American Environmental, Inc. as an additional affirmative defense." Therefore, the majority concludes, Heintzelman cannot rely on the argument that he disclosed the true principal in the transaction to Stanwade and is personally liable under the majority's theory of undisclosed agency.
 {¶ 45} The flaws in this argument are several. In the first place, the claim that All-American Construction or All-American Environmental is the true principal is not an affirmative defense. Civ.R. 8(C) provides the following, non-exhaustive, list of affirmative defenses: "accord and satisfaction, arbitration and award, assumption of risk, contributory negligence, discharge in bankruptcy, duress, estoppel, failure of consideration, want of consideration for a negotiable instrument, fraud, illegality, injury by fellow servant, laches, license, payment, release, res judicata, statute of frauds, statute of limitations, waiver, and any other matter constituting an avoidance or affirmative defense." All these defenses have the character of being legal impediments to otherwise valid claims.5 Disclosure of the true principal is not a legal impediment to a valid claim, rather, it disputes the validity of the claim. In this case, Stanwade and the majority assert the claim that Heintzelman is personally liable because he failed to disclose the true principal. Heintzelman disputes the factual basis of that claim. This argument is not an affirmative defense and cannot be waived. Therefore, it does not matter whether Heintzelman makes this argument in his answer, in his deposition testimony, in his response to summary judgment, or, as in this case, in all three places.
 {¶ 46} In the second place, Stanwade has been fairly apprised of Heintzelman's argument that Environmental Construction is not the true principal since Heintzelman filed his answer. It does not matter, as the majority suggests, whether the true principal is All-American Construction, The Home Medic, or All-American Environmental. Nor does it matter whether Heintzelman has demonstrated with "acceptable" Civil Rule 56 evidence "that All-American Construction or The Home Medic were registered trade names or reported fictitious names of All-American Environmental." None of these entities are defendants in this case.
 {¶ 47} Herein lies the reason why summary judgment is not appropriate in this case under Stanwade's theory that All-American Construction and All-American Environmental were not corporations in good standing at the time of the sale as well as under the majority's theory of undisclosed principal. Stanwade only filed suit against Environmental Construction and Heintzelman. Stanwade's theory of Heintzelman's personal liability is essentially the same as the majority's *Page 240 
undisclosed principal theory: Heintzelman fraudulently misrepresented to Stanwade the true principal in the transaction. Heintzelman denied this in his answer and in his deposition. A genuine issue of material fact having been raised on this issue, Stanwade advanced an alternative theory of liability when it moved for partial summary judgment. Stanwade argued that the entities Heintzelman claims were the true principals were not corporations in good standing. However, because neither All-American Construction nor All-American Environmental is a defendant in this case, their corporate status cannot be the basis for Heintzelman's personal liability.
 {¶ 48} The majority has endeavored to find in Stanwade's favor by advancing the fraudulent representation theory under the guise of an undisclosed principal. The problem is that there is absolutely no evidence outside of the complaint that Heintzelman misrepresented the true principal in this transaction. The majority circumvents this problem by unconvincingly declaring that, as matter of law, Heintzelman is not entitled to oppose the argument that he failed to disclose the true principal.
 {¶ 49} Few people would approve of the way in which Heintzelman conducts his business. Mere disapproval, however, is not an adequate justification under Ohio law for imposing personal liability on a corporate shareholder. For these reasons, I respectfully dissent.
4 Stanwade has not introduced any evidence, aside the allegation in the complaint, to support its claim that Heintzelman misrepresented the true principal behind the transaction.
5 Cf. Black's Law Dictionary's definition of an affirmative defense: "[a] defendant's assertion raising new facts and arguments that, if true, will defeat the plaintiff's or prosecution's claim, even if all the allegations in the complaint are true." *Page 241