DeBlasio v. Sinclair

[Cite as DeBlasio v. Sinclair, 2012-Ohio-5848.]

STATE OF OHIO, MAHONING COUNTY

IN THE COURT OF APPEALS

SEVENTH DISTRICT

AL RHODES, PERSONAL )

REPRESENTATIVE OF THE ESTATE )

OF HENRY A. DIBLASIO, )

)

PLAINTIFF-APPELLANT, ) CASE NO. 08-MA-23

)

V. ) OPINION

)

R. ALLEN SINCLAIR et al., )

)

DEFENDANTS-APPELLEES. )

CHARACTER OF PROCEEDINGS: Civil Appeal from Court of Common

Pleas of Mahoning County, Ohio

Case No. 07CV697

JUDGMENT: Affirmed in part

Reversed in part and Remanded

APPEARANCES:

For Plaintiff-Appellant Atty. Alan J. Matavich

945 Windham Court, Suite 3

Youngstown, Ohio 44512

For Defendant-Appellee Atty. R. Allen Sinclair

11 Overhill Road

Youngstown, Ohio 44512

JUDGES:

Hon. Gene Donofrio

Hon. Joseph J. Vukovich

Hon. Mary DeGenaro

Dated: December 4, 2012

[Cite as DeBlasio v. Sinclair, 2012-Ohio-5848.]

DONOFRIO, J.

{¶1} Plaintiff-appellant Al Rhodes, Personal Representative of the Estate of

Henry A. DiBlasio appeals a decision of the Mahoning County Common Pleas Court

granting summary judgment in favor of defendants-appellants R. Allen Sinclair, et al.

on his claims of fraudulent conversion or transfer brought pursuant to the Ohio

Uniform Fraudulent Transfer Act, R.C. Chapter 1336.

{¶2} Upon becoming an attorney in 1991, R. Allen Sinclair (Sinclair) joined

DiBlasio, an attorney with an established practice, in a partnership to practice law.

(Sinclair dep., Vol. I, pp. 8, 29, 34.) Their law office was in a commercial building

owned by DiBlasio located at 11 Overhill Road in Boardman, Ohio. (Sinclair dep.,

Vol. I, p. 63.) DiBlasio steered cases to Sinclair and advanced advertising fees for

the partnership. (Sinclair dep., Vol. I, pp. 28-29, 38.)

{¶3} DiBlasio abruptly retired a few years later. (Sinclair dep., Vol. I, pp. 29,

35.) Consequently, Sinclair owed DiBlasio money for pending cases and the costs

that he had advanced in furtherance of the partnership. (Sinclair dep., Vol. I, p. 30)

Sinclair never denied owing DiBlasio any money. (Sinclair dep., Vol. I, p. 30.)

{¶4} Sinclair purchased the office building at 11 Overhill from DiBlasio

through a company named KAS Enterprises, a fictitious name created by Sinclair and

his wife, Kimberly Sinclair. (Sinclair dep., Vol. I, pp. 8, 32.) Kimberly was the owner

of KAS Enterprises. (Sinclair dep., Vol. I, p. 9.)

{¶5} Subsequently, DiBlasio obtained a judgment against Sinclair in the

Mahoning County Common Pleas Court in the amount of $25,610.64 plus interest in

case number 2003 CV 638 on February 27, 2003. (DiBlasio Appellate Brief,

Appendix 2, p. 2.)

{¶6} At the time, Sinclair and his wife resided at 104 Newport Drive in

Boardman, Ohio. Sinclair had purchased the home in late 2000. Sinclair purchased

the home for $275,000.00 and it was titled solely in his name. (Sinclair dep., Vol. I, p.

12; Sinclair dep., Vol. II, p. 115; Sinclair aff., ¶34; DiBlasio’s Exhibit 6.) Sinclair had

made a $10,000.00 down payment on the house. (Sinclair dep., Vol. I, p. 14.) And

while the property was valued at only $253,000.00, Sinclair and his wife were able to

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mortgage the home to ABN AMRO Mortgage Group, Inc. (ABN AMRO) for

$276,000.00. (Sinclair aff., ¶¶35, 37, Exhibit A.) Additionally, in August 2002, Sinclair

was able to acquire a $67,753.00 home equity line of credit on the home. (Sinclair

aff., ¶38, Exhibit B.)

{¶7} As a result of the February 2003 Mahoning County Common Pleas

Court judgment DiBlasio obtained against Sinclair, DiBlasio perfected a lien on the

Sinclairs’ home at 104 Newport Drive. (Sinclair aff., ¶39.) In July 2004, Sinclair

transferred the property into his wife’s name solely, by quit claim deed. (Sinclair dep.,

Vol. I, pp. 12-13; Sinclair aff., ¶40; DiBlasio’s Exhibit 6.) According to Sinclair, at the

time he transferred the property into his wife’s name, the principal balance on the

ABN AMRO mortgage was $265,087.06 and $47,621.67 remained on the Bank One

home equity line of credit. (Sinclair aff., ¶¶41, 43, Exhibits B, C.)

{¶8} With the suspension of his law license looming, Sinclair turned to real

estate investing and created a company named Newport Investments, LLC in

September 2004.1 (Sinclair dep., Vol. I, p. 52.) He was the organizer and statutory

agent, yet Kimberly was designated as a one hundred percent member. (Sinclair

dep., Vol. I, p. 53.) Newport Investments, LLC is a property management company

and trustee for certain land trusts created by Sinclair to hold title to investment

properties. (Sinclair dep., Vol. I, p. 57.) It collects rents and manages property.

(Sinclair dep., Vol. I, p. 57.)

{¶9} Sinclair also created a company later incorporated as Newport

Development, Inc. (Sinclair dep., Vol. I, pp. 57, 87-89; DiBlasio’s Exhibits 20, 21.)

Newport Development, Inc. manages Newport Investments, LLC. (Sinclair dep., Vol.

I, p. 57, 110-111.) In effect, Newport Investments, LLC is a pass-through entity in

which whatever money came into it goes out to Newport Development, Inc. (Sinclair

dep., Vol. I, pp. 57-58.) According to Sinclair, it is common for real estate investment

1. Sinclair’s law license was indefinitely suspended in December 2004. (Sinclair dep., Vol. I, pp. 8, 27,

69; Mahoning Cty. Bar Assn. v. Sinclair, 105 Ohio St.3d 65, 2004-Ohio-7014, 822 N.E.2d 360.) His

license was reinstated in 2008, but in May 2012 his resignation was accepted with disciplinary action

pending. Mahoning Cty. Bar Assn. v. Sinclair, 117 Ohio St.3d 1205, 2008-Ohio-935, 881 N.E.2d 1258;

In re Resignation of Sinclair, 132 Ohio St.3d 1208, 2012-Ohio-2646, 970 N.E.2d 958.

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companies to be structured this way for accounting purposes and tax advantages.

(Sinclair dep., Vol. I, pp. 58-61.) Newport Development, Inc. controls all of Sinclair’s

real estate investments. (Sinclair dep., Vol. I, p. 112.) He is the sole director,

president, and treasurer of Newport Development, Inc. (Sinclair dep., Vol. I, pp. 112-

113.) Yet, again, his wife, Kimberly, is the sole shareholder. (Sinclair dep., Vol. I, pp.

94-95.)

{¶10} With the impending suspension of his law license and the pursuit of his

new venture into real estate investing, Sinclair began purchasing houses in 2004,

ultimately buying 22 properties in Mahoning County which he placed in the

aforementioned land trusts. Newport Development, Inc. is the beneficiary of most of

the land trusts with Newport Investments, LLC as trustee. (Sinclair dep., Vol. II, p.

57.) Of particular interest to DiBlasio in this case are seven homes that Sinclair or his

wife purchased and were at some point titled solely in Sinclair’s own name. (Sinclair

dep., Vol. II, p. 76, et seq., DiBlasio’s Exhibits 13-19.) Shortly after buying the

properties, Sinclair transferred them to Newport Investments, LLC which then later

sold them for a higher price than which Sinclair had paid for them.

{¶11} Meanwhile, in September 2005, DiBlasio obtained another judgment

against Sinclair; this time in federal court. The judgment was for $255,000.00 plus

interest in the United States District Court, Northern District of Ohio, case number 4:

03 CV 0348. (DiBlasio Appellate Brief, Appendix 3, p. 3.)

{¶12} In 2006, Newport Development, Inc. paid $22,625.16 for repairs and

renovations to the Sinclairs’ home at 104 Newport Drive. (Sinclair dep., Vol. II, p. 146;

DiBlasio’s Exhibit 34.) The home was placed in a trust called the 104 Newport Drive

Trust on February 12, 2006. (Sinclair aff., ¶45.) Tara Snyder, Sinclair’s sister, was

designated the sole beneficiary of the trust. (Sinclair aff., ¶46.) Sinclair’s wife sold

the home to Tara by way of land contract in February 2006. (Kimberly Sinclair dep.,

p. 116; Sinclair dep., Vol. I, p. 50; DiBlasio’s Exhibit 10.) The Sinclairs then

purchased a home for themselves at 171 Newport Drive for $300,000.00, which was

titled solely in Sinclair’s wife’s name. (Kimberly Sinclair dep., p. 59-60.)

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{¶13} In a deed recorded on July 24, 2006, Snyder quitclaimed her interest in

104 Newport Drive back to Kimberly Sinclair. (Plaintiff’s Exhibit 6, p. 4; Kimberly

Sinclair dep., p. 58-59.) Then, just a week later, Kimberly transferred the property to

Sinclair’s mother Thelma Blosser, as trustee of the 104 Newport Drive Trust for

nominal consideration. (Plaintiff’s Exhibit 6, p. 6; Sinclair dep., Vol. II, p. 111.) After

the litigation that led to this appeal was initiated, Blosser resigned as trustee and

Sinclair became trustee of the 104 Newport Drive Trust. (Plaintiff’s Exhibit 51; Sinclair

dep., Vol. II, p. 120.) The property remains titled in Blosser’s name as trustee for the

trust and is listed as a rental on Newport Development, Inc.’s balance sheet.

(Plaintiff’s Exhibit 34.)

{¶14} On August 7, 2007, DiBlasio filed his amended complaint against

Sinclair. (T.d. 35.) It contained two counts. The first count was for fraudulent

conversion or transfer brought pursuant to the Ohio Uniform Fraudulent Transfer Act

(UFTA), R.C. Chapter 1336. The second count was for foreclosure on Sinclair’s

home at 104 Newport Drive. The amended complaint also named as party

defendants: Sinclair’s wife, Kimberly A. Sinclair; Newport Investments, LLC; Newport

Development, Inc.; ABN AMRO Mortgage Group, Inc.; Thelma J. Blosser as trustee;

the Mahoning County Treasurer; Tara and Lawrence Snyder; Newport Investments,

LLC as trustee of the various 22 land trusts; Sinclair as trustee of the 104 Newport

Drive Trust; the 22 land trusts; KAS Financial Group, LLC; Mama Go Shoppin, Inc.;

the 104 Newport Drive Trust; and John Doe’s 1-40.

{¶15} On October 26, 2007, Sinclair filed a motion for summary judgment.

(T.d. 76.) Concerning DiBlasio’s first claim under the UFTA, Sinclair argued that

neither he nor his wife had made any transfers. They insisted that all transfers of

investment properties were undertaken in their capacity as agents for Newport

Development, Inc. and Newport Investments, LLC. As for the 104 Newport Drive

property, Sinclair claimed the property never qualified as an asset for purposes of the

UFTA because it was encumbered by liens that exceeded the property’s value.

{¶16} On December 26, 2007, DiBlasio filed a brief in opposition to Sinclair’s

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motion for summary judgment. (T.d. 93.) In support of his first claim under the UFTA,

DiBlasio argued that there were seven transfers of property in which Sinclair signed

his own name without any agency designation. Also, DiBlasio argued that his

amended complaint included claims for civil conspiracy and to pierce the corporate

veil to address the alleged fraudulent transfers. He argued that the Sinclairs’ various

companies were constructed simply as means of avoiding his judgment liens and that

the companies’ funds were used for the Sinclairs’ personal use. Regarding the

second claim, DiBlasio argued that foreclosure was necessary to determine the

priority, validity, and extent of all liens on the subject property.

{¶17} On January 22, 2008, the trial court granted Sinclair’s motion for

summary judgment finding “that there exists no genuine issue as to any material fact

with regard to [DiBlasio’s] allegations of fraudulent conversion or transfer brought

pursuant to the Ohio Uniform Fraudulent Transfer Act, R.C. Chapter 1336.” (T.d. 96.)

The court concluded, “Summary Judgment is sustained with respect to [DiBlasio’s]

claims of fraudulent conversion or transfer brought pursuant to the Ohio Uniform

Fraudulent Transfer Act, only and judgment is entered in favor of [Sinclair, et al.] and

against [DiBlasio] upon those claims contained in [DiBlasio’s] Amended Complaint.]

(Emphasis added.) (T.d. 96.) The trial court did not provide any further explanation

as to why it believed that Sinclair was entitled to summary judgment on DiBlasio’s

claims brought pursuant to the Ohio Uniform Fraudulent Transfer Act. This appeal

followed.

{¶18} DiBlasio’s sole assignment of error states:

THE TRIAL COURT ERRED IN GRANTING SUMMARY

JUDGMENT AGAINST APPELLANT ON HIS FRAUDULENT

CONVEYANCE CLAIMS.

Scope of Appealed Judgment Entry

{¶19} Initially, DiBlasio has made an issue of the scope of the trial court’s

decision in this matter. In its entry ruling on Sinclair’s motion for summary judgment,

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the trial court concluded, “Summary Judgment is sustained with respect to

[DiBlasio’s] claims of fraudulent conversion or transfer brought pursuant to the Ohio

Uniform Fraudulent Transfer Act, only and judgment is entered in favor of [Sinclair, et

al.] and against [DiBlasio] upon those claims contained in [DiBlasio’s] Amended

Complaint.] (Emphasis added.) (T.d. 96.) It then added, “All other claims and causes

of action remain pending for further adjudication upon the merits.” (T.d. 96.)

{¶20} As mentioned earlier, DiBlasio’s amended complaint set forth two

counts – one for fraudulent conversion or transfer under the Ohio Uniform Fraudulent

Transfer Act and the other for foreclosure on 104 Newport Drive. In his response to

Sinclair’s motion for summary judgment and again now on appeal, DiBlasio maintains

that the first count in his complaint also contained two additional causes of action for

civil conspiracy and piercing the corporate veil. In response, Sinclair argues that

those causes of action were not contained in the amended complaint.

{¶21} Ohio is a notice-pleading state. York v. Ohio State Highway Patrol, 60

Ohio St.3d 143, 144, 573 N.E.2d 1063 (1991). Civ.R. 8(A) requires only that a

complaint “contain (1) a short and plain statement of the claim showing that the party

is entitled to relief, and (2) a demand for judgment for the relief to which the party

claims to be entitled.” Under this rule, “a plaintiff is not required to prove his or her

case at the pleading stage,” and the complaint is sufficient “as long as there is a set

of facts, consistent with the plaintiff's complaint, which would allow the plaintiff to

recover.” York, 60 Ohio St.3d at 145, 573 N.E.2d 1063.

{¶22} The elements of a civil-conspiracy claim include (1) a malicious

combination, (2) involving two or more persons, (3) causing injury to person or

property, and (4) the existence of an unlawful act independent from the conspiracy

itself. Universal Coach, Inc. v. New York City Transit Auth., Inc. (1993), 90 Ohio

App.3d 284, 292, 629 N.E.2d 28.

{¶23} The elements for piercing the corporate veil are:

(1) control over the corporation by those to be held liable was so

complete that the corporation has no separate mind, will, or existence

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of its own, (2) control over the corporation by those to be held liable

was exercised in such a manner as to commit fraud, [an illegal act, or a

similarly unlawful act] against the person seeking to disregard the

corporate entity, and (3) injury or unjust loss resulted to the plaintiff from

such control and wrong.” Belvedere Condominium Unit Owners’ Assn.

v. R.E. Roark Cos., Inc., 67 Ohio St.3d 274, 617 N.E.2d 1075 (1993), at

paragraph three of the syllabus, and as modified (bracketed language)

by the syllabus in Dombroski v. WellPoint, Inc., 119 Ohio St.3d 506,

2008-Ohio-4827, 895 N.E.2d 538.

{¶24} A review of the first count of DiBlasio’s amended complaint shows that

it is primarily confined to a claim under the Ohio Uniform Fraudulent Transfer Act.

The first count begins by identifying the two court judgments DiBlasio obtained

against Sinclair. It then identifies DiBlasio as a creditor and Sinclair as debtor under

the Ohio Uniform Fraudulent Transfer Act, R.C. Chapter 1336. It refers to the

remaining defendants as an affiliate and/or insider of Sinclair, clearly referencing the

language used by the Ohio Uniform Fraudulent Transfer Act and R.C. Chapter 1336.

The remaining paragraphs of the first count track R.C. Chapter 1336’s language for a

claim under the Ohio Uniform Fraudulent Transfer Act.

{¶25} While there is no mention of the word “conspiracy” and the language of

the complaint tracks the language of the Ohio Uniform Fraudulent Transfer Act,

paragraph twenty-four references all of the named defendants (i.e., two or more) and

their “malicious” disregard of DiBlasio’s rights and paragraph twenty-three mentions

how all of the defendants were “complicit” therein – satisfying the first, second, and

third elements of a civil-conspiracy claim. The fourth element can be fairly construed

from the allegation of the unlawful transfers themselves.

{¶26} As for piercing the corporate veil, the first element can be found in

paragraph seventeen where DiBlasio alleges that Sinclair used Newport

Development, LLC and Newport Investments, Inc. as “alter-egos” and that they were,

in fact, “fictions” and “shams.” The second element can be construed as before from

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the alleged fraudulent transfers themselves. The injury referenced in paragraph

twenty-four satisfies the third element. Lastly, and moreover, in setting for the relief

sought for his first claim, DiBlasio specifically seeks an order piercing the corporate

veil.

{¶27} While it does appear that DiBlasio may have sufficiently pleaded

causes of action for civil conspiracy or piercing the corporate veil, such a

determination is likely premature. As indicated, in its entry ruling on Sinclair’s motion

for summary judgment, the trial court concluded, “Summary Judgment is sustained

with respect to [DiBlasio’s] claims of fraudulent conversion or transfer brought

pursuant to the Ohio Uniform Fraudulent Transfer Act, only and judgment is entered

in favor of [Sinclair, et al.] and against [DiBlasio] upon those claims contained in

[DiBlasio’s] Amended Complaint.] (Emphasis added.) (T.d. 96.) By employing the

use of the word “only,” it appears the trial court was limiting its decision to the claims

DiBlasio was advancing under the Ohio Uniform Fraudulent Transfer Act. Therefore,

it cannot be said that the trial court necessarily considered and dismissed any of

DiBlasio’s claims, whether or not they included civil conspiracy and piercing the

corporate veil. The trial court’s decision seems confined to DiBlasio’s claims under

the Ohio Uniform Fraudulent Transfer Act.

Summary Judgment

{¶28} An appellate court reviews a trial court’s decision on a motion for

summary judgment de novo. Bonacorsi v. Wheeling & Lake Erie Ry. Co., 95 Ohio

St.3d 314, 2002-Ohio-2220, 767 N.E.2d 707, ¶24. Summary judgment is properly

granted when: (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 adverse to the party against whom the

motion for summary judgment is made. Harless v. Willis Day Warehousing Co., 54

Ohio St.2d 64, 66, 375 N.E.2d 46 (1976); Civ.R. 56(C).

{¶29} “[A] party seeking summary judgment, on the ground that the

nonmoving party cannot prove its case, bears the initial burden of informing the trial

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court of the basis for the motion, and identifying those portions of the record that

demonstrate the absence of a genuine issue of material fact on the essential

element(s) of the nonmoving party’s claims. The moving party cannot discharge its

initial burden under Civ.R. 56 simply by making a conclusory assertion that the

nonmoving party has no evidence to prove its case. Rather, the moving party must

be able to specifically point to some evidence of the type listed in Civ.R. 56(C) which

affirmatively demonstrates that the nonmoving party has no evidence to support the

nonmoving party’s claims. * * *” (Emphasis sic.) Dresher v. Burt, 75 Ohio St.3d 280,

293, 662 N.E.2d 264 (1996).

{¶30} The “portions of the record” or evidentiary materials listed in Civ.R.

56(C) include the pleadings, depositions, answers to interrogatories, written

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

have been filed in the case. The court is obligated to view all the evidentiary material

in a light most favorable to the nonmoving party. Temple v. Wean United, Inc., 50

Ohio St.2d 317, 364 N.E.2d 267 (1977).

{¶31} “If the moving party fails to satisfy its initial burden, the motion for

summary judgment must be denied. However, if the moving party has satisfied its

initial burden, the nonmoving party then has a reciprocal burden outlined in Civ.R.

56(E) to set forth specific facts showing that there is a genuine issue for trial and, if

the nonmovant does not so respond, summary judgment, if appropriate, shall be

entered against the nonmoving party.” Dresher, 75 Ohio St.3d at 293, 662 N.E.2d

264.

{¶32} Summary judgment is appropriate when there is no genuine issue as to

any material fact. A “material fact” depends on the substantive law of the claim being

litigated. Hoyt, Inc. v. Gordon & Assoc., Inc., 104 Ohio App.3d 598, 603, 662 N.E.2d

1088 (1995), citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-248, 106 S.Ct.

2505, 91 L.Ed.2d 202 (1986).

Ohio Uniform Fraudulent Transfer Act

{¶33} The claims that were adjudicated herein fall under the Ohio Uniform

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Fraudulent Transfer Act. “Ohio’s Uniform Fraudulent Transfer Act was enacted to

create a right of action for a creditor to set aside an allegedly fraudulent transfer of

assets. Sanderson Farms, Inc. v. Gasbarro, 10th Dist. No. 01AP-461, 2004-Ohio-

1460, at ¶40. The Act defines certain types of transfers from a debtor to a transferee

as fraudulent. See R.C. 1336.04(A) & R.C. 1336.05. If a transfer is fraudulent, then a

creditor has the right to sue the original transferee and any subsequent transferee for

the value of the transferred property, subject to certain defenses. R.C. 1336.08.”

Esteco, Inc. v. Kimpel, 7th Dist. No. 07 CO 3, 2007-Ohio-7201, ¶ 8.

{¶34} The Ohio Uniform Fraudulent Transfer Act provides various ways in

which a creditor can prove that a debtor’s transfer of property was fraudulent. One

way is to demonstrate that the debtor made the transfer with actual intent to hinder,

delay, or defraud the creditor. R.C. 1336.04(A)(1). The act also allows the creditor to

set aside fraudulent transfers in other more specific situations. One such situation is

when the debtor does not receive a reasonably equivalent value in exchange for the

transfer of the property. In that case, the creditor can show that the transfer was

fraudulent by proving that (1) 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 or (2) the debtor was

insolvent at that time or the debtor became insolvent as a result of the transfer. R.C.

1336.04(A)(2)(a); R.C. 1336.05(A).

{¶35} The summary judgment pleadings and this appeal concerns the transfer

of seven investment properties and the Sinclairs’ previous home at 104 Newport

Drive. From November 19, 2004 through July 24, 2006, Sinclair purchased seven

investment properties in which he was designated the grantee. (DiBlasio’s Exhibits

13-19.) Five of them he bought in his own name and subsequently transferred to

Newport Investments, LLC or Newport Investments, LLC, Trustee for no money. One

(the sixth) was bought by Kimberly Sinclair who transferred it to Sinclair who then

subsequently transferred it to Newport Investments, LLC for no money. One (the

seventh) was purchased by Newport Investments, LLC and transferred to Sinclair for

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no money who then subsequently transferred it back to Newport Investments, LLC.

Sinclair sold each of the properties through Newport Investments, LLC to individual

home buyers for more money than the Sinclairs had originally paid for them, realizing

$336,100.00.

{¶36} Sinclair acknowledges the transfers but argues that they do not qualify

under the Ohio Uniform Fraudulent Transfer Act because he and his wife, Kimberly,

purchased the properties as agents for Newport Investments, LLC. However, as

DiBlasio points out, in none of those transfers are the Sinclairs designated as agents

for Newport Investments, LLC. DiBlasio’s Exhibits thirteen through nineteen reflect

evidence that seven of the investment properties that the Sinclairs purchased were at

one time titled solely in Sinclair’s name. It is well settled law of agency that an agent

who discloses neither the existence of the agency nor the identity of the principal

subjects themselves to personal liability. Dunn v. Westlake, 61 Ohio St.3d 102, 106,

573 N.E.2d 84 (1991).

{¶37} Moreover, if they were indeed acting as agents for Newport

Investments, LLC, why did they see the need to subsequently re-transfer the

properties to Newport Investments, LLC? If they were acting as agents for Newport

Investments, LLC, there would have been no need for the subsequent transfers to

that company. At the very least, the absence of any agency designation on the

transfers creates a genuine issue of material fact with regard to that aspect of

DiBlasio’s fraudulent transfer claim.

{¶38} Given that there appears to be genuine issues of material fact

concerning the status of the transfers themselves, the inquiry next turns to intent. As

indicated earlier, the Ohio Uniform Fraudulent Transfer Act allows a creditor to prove

that a debtor’s transfer of property was fraudulent by demonstrating that the debtor

made the transfer with actual intent to hinder, delay, or defraud the creditor. R.C.

1336.04(A)(1.) While the burden of proof lies with the creditor to prove actual intent,

it is recognized that direct proof of actual intent may be impossible. McKinley Fed. S.

& L. v. Pizzuro Enterprises, Inc., 65 Ohio App.3d 791, 796, 585 N.E.2d 496 (8th

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Dist.1990). In Stein v. Brown, 18 Ohio St.3d 305, 308-09, 480 N.E.2d 1121 (1985),

the Ohio Supreme Court noted that “[d]ue to the difficulty in finding direct proof of

fraud, courts of this state began long ago to look to inferences from the

circumstances surrounding the transaction and the relationship of the parties

involved.” Thereafter, statutory provisions in the Act provided guidance.

{¶39} R.C. 1336.04(B) provides that actual intent may be determined by

consideration given to all relevant factors, including, but not limited to, the following:

(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;

(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.

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{¶40} Some of R.C. 1336.04(B)’s factors are present in this case. Sinclair

made the transfers to an insider, namely Newport Investments, LLC. R.C.

1336.04(B)(1). If the debtor is an individual, the Ohio Uniform Fraudulent Transfer

Act defines an insider to include:

(a) A relative of the debtor or of a general partner of the debtor;

(b) A partnership in which the debtor is a general partner;

(c) A general partner in a partnership described in division

(G)(1)(b) of this section;

(d) A corporation of which the debtor is a director, officer, or

person in control.

R.C. 1336.01(G)(1). Here, Sinclair was the person in control of Newport

Investments, LLC. R.C. 1336.01(G)(1)(d). He was the organizer and statutory agent.

(Sinclair dep., Vol. I, p. 53.) He testified that he was one of two front people for the

company, in control of buying the investment properties. (Sinclair dep., Vol. I, p. 113.)

{¶41} Given his position at Newport Investments, LLC and his position as sole

director, president, and treasurer of Newport Development, Inc., the company where

the money realized on the investment properties flowed to, it is fair to say that Sinclair

retained possession or control over the properties after they were transferred. R.C.

1336.01(G)(2). Before the transfers were made, Sinclair had been sued or

threatened with suit by DiBlasio. R.C. 1336.01(G)(4). DiBlasio had obtained the

Mahoning County Common Pleas Court judgment against Sinclair and the federal

suit had already been filed. When Sinclair made the transfers, the transfers were

substantially all of his assets. R.C. 1336.01(G)(5). It is apparent from his deposition

testimony that he had, in fact, no assets – or, at least, no assets in his name other

than the seven aforementioned investment properties which were transferred to

Newport Investments, LLC. DiBlasio’s Exhibits thirteen through nineteen reflect that

Sinclair received nominal consideration for the properties that valued in the tens of

thousands of dollars. R.C. 1336.01(G)(8). Lastly, Sinclair was insolvent or became

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insolvent shortly after the transfers. (Sinclair dep., Vol. II, p. 43.) Each of these

factors creates the existence of genuine issue of material fact concerning Sinclair’s

actual intent. They also demonstrate that the transfers may be set aside as

fraudulent under the Ohio Uniform Fraudulent Transfer Act’s other provisions.

{¶42} Sinclair’s failure to receive a reasonably equivalent value in exchange

for the transfers of the property leaves open the possibility that DiBlasio could set

aside the transfers under other provisions in the Act that do not necessarily require

proof of actual intent. A creditor can show that the transfer was fraudulent by proving

that (1) 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 or (2) the debtor was insolvent at that time or

the debtor became insolvent as a result of the transfer. R.C. R.C. 1336.04(A)(2)(a);

R.C. 1336.05(A). Here, Sinclair’s remaining assets were unreasonably small

(perhaps nonexistent) in relation to the transactions and he was either insolvent or

became insolvent shortly thereafter. Thus, there is enough evidence in the record

whereby DiBlasio may be able to sustain his fraudulent transfer claim without having

to prove Sinclair’s actual intent.

{¶43} DiBlasio also sought to set aside the transfer of Sinclair’s 104 Newport

Drive home from Sinclair to his wife under the Ohio Uniform Fraudulent Transfer Act.

In this instance, Sinclair acknowledges that for purpose of the Act, DiBlasio is a

creditor and he is an insolvent debtor with respect to the 104 Newport Drive property.

However, he argues that the transfer to his wife did not qualify as a transfer under the

Act because the property was not an asset.

{¶44} The Act defines an asset to mean property of the debtor, but does not

include property to the extent that it is encumbered by a valid lien. R.C.

1336.01(B)(1).

{¶45} Sinclair purchased the home in late 2000 for $275,000.00. (Sinclair

dep., Vol. I, p. 12; Sinclair dep., Vol. II, p. 115; Sinclair aff., ¶34; DiBlasio’s Exhibit 6.)

Sinclair had made a $10,000.00 down payment on the house. (Sinclair dep., Vol. I, p.

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14.) Sinclair and his wife were able to mortgage the home to ABN AMRO Mortgage

Group, Inc. (ABN AMRO) for $276,000.00. (Sinclair aff., ¶ 37.) Additionally, in

August 2002, Sinclair was able to acquire a $67,753.00 home equity line of credit on

the home. (Sinclair aff., ¶38, Exhibit B.)

{¶46} In July 2004, Sinclair transferred the property into his wife’s name

solely, by quit claim deed. (Sinclair dep., Vol. I, pp. 12-13; Sinclair aff., ¶40;

DiBlasio’s Exhibit 6.) According to Sinclair, at the time he transferred the property

into his wife’s name, the principal balance on the ABN AMRO mortgage was

$265,087.06 and $47,621.67 remained on the Bank One home equity line of credit.

(Sinclair aff., ¶¶41, 43, Exhibits B, C.) Thus, when Sinclair transferred the property

into his wife’s name, the property was essentially encumbered by a $312,708.73 valid

lien.

{¶47} When he purchased the home in 2000, Sinclair’s mortgage lender had

the home appraised at $253,000.00. (Sinclair aff., ¶ 35, Exhibit A.) In an affidavit

attached to his motion for summary judgment, Sinclair incorporated a copy of that

appraisal as Exhibit A. In his affidavit dated 2007 he also stated that the Mahoning

County Auditor lists the total market value of the property for tax purposes at

$276,200.00. (Sinclair aff., ¶ 50.) Using either of these values for the property, the

property is encumbered by liens beyond its value. The property therefore does not

qualify as an asset under R.C. 1336.01(B)(1).

{¶48} DiBlasio argues that the “unsworn copy” of the 2000 appraisal should

not have been considered by the trial court as it was not evidentiary material required

by Civ.R. 56(E). Civ.R. 56, the civil rule governing summary judgment motions, and

case law does not support DiBlasio’s argument in this regard.

{¶49} Civ.R. 56 allows a court to consider only “the pleadings, depositions,

answers to interrogatories, written admissions, affidavits, transcripts of evidence, and

written stipulations of fact, if any, timely filed in the action” when ruling on a motion for

summary judgment. Civ.R. 56(C). The copy of the 2000 appraisal does not fit any of

these categories.

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{¶50} “The proper procedure for introducing evidentiary matter not specifically

authorized by Civ.R. 56(C) is to incorporate it by reference in a properly framed

affidavit pursuant to Civ.R. 56(E).” Biskupich v. Westbay Manor Nursing Home, 33

Ohio App.3d 220, 222, 515 N.E.2d 632 (8th Dist.1986). “The requirement of Civ.R.

56(E) that sworn or certified copies of all papers referred to in the affidavit be

attached is satisfied by attaching the papers to the affidavit, coupled with a statement

therein that such copies are true copies and reproductions.” State ex rel. Corrigan v.

Seminatore (1981), 66 Ohio St.2d 459, 467, 423 N.E.2d 105. The referenced papers

may also be “sworn or certified” by a certification contained within the paper itself.

Olverson v. Butler, 45 Ohio App.2d 9, 12, 340 N.E.2d 436 (10th Dist.1975). Finally, it

is well settled that unauthenticated documents which are not sworn, certified, or

authenticated by way of affidavit have no evidentiary value and may not be

considered by the trial court in ruling on a motion for summary judgment. Citizens Ins.

Co. v. Burkes, 56 Ohio App.2d 88, 95–96, 381 N.E.2d 963 (8th Dist.1978); Sparks v.

Erie Cty. Bd. of Commrs., 6th Dist. No. E–97–007, 1998 WL 15929 (Jan. 16, 1998).

{¶51} In this case, Sinclair attached a copy of the 2000 appraisal. Paragraph

thirty-five of his affidavit incorporates the appraisal by reference:

At the time of the purchase, my mortgage lender secured an

appraisal of 104 Newport from David DiBernardi that estimated the

market value of the property as of November 13, 2000 as $253,000, a

true and accurate copy of which is attached hereto as Exhibit A.

(Emphasis added.) (Sinclair aff., ¶35.) This statement by Sinclair in his affidavit was

sufficient to allow the trial court to consider the appraisal as summary judgment

evidence.

{¶52} The 2000 appraisal aside, Sinclair stated in his affidavit that the

Mahoning County Auditor listed the property at $276,200 for tax purposes, well below

the outstanding encumbrances of $312,708.73. (Sinclair aff., ¶50.) Yet DiBlasio does

not take issue with the Sinclairs’ statement concerning the auditor’s valuation. So

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this uncontested evidence would have been sufficient for the court to find that the

property did not qualify as an asset.

{¶53} In conclusion, we find there is no genuine issue of material fact

concerning whether the 104 Newport Drive property could be set aside under the

Ohio Uniform Fraudulent Transfer Act since it was encumbered by liens beyond its

value and, therefore, did not constitute an asset under the Act. However, concerning

the seven investment properties, DiBlasio did present sufficient evidence to create a

genuine issue of material fact as to whether those transfers could be set aside under

the Act.

{¶54} Accordingly, DiBlasio’s sole assignment of error has merit to the extent

indicated.

{¶55} The trial court’s summary judgment decision is affirmed in part with

respect to its treatment of the 104 Newport Drive property under the Ohio Uniform

Fraudulent Transfer Act. The trial court’s decision is reversed in part and remanded

for trial concerning whether the transfers of the seven investment properties should

be set aside under the Act. As the trial court’s decision itself so indicates, all other

claims and causes of action remain pending in that court for further adjudication upon

the merits.

Vukovich, J., concurs.

DeGenaro, J., concurs.