Opinion
No. 91CV08047.
Decided October 17, 1991.
Thomas D. Heekin, Jr., for plaintiff.
Eugene J. Stagnaro, Jr., for defendants Steven Muse and Allan Muse.
Constance Potter, for defendant Carol Stewart.
This case was tried on October 4, 1991 and taken under advisement for decision. At issue here is a funeral bill in the amount of $4,312.90. It is not contested that the plaintiff, Busse Borgmann Company, performed its services for Marie Glines, mother of the three individual defendants and, apparently, sole heirs to her estate.
Plaintiff has filed this action on account and for fraud, conversion and conspiracy. (The court, for whatever it is worth, remains unschooled in the theory of civil conspiracy.) However, an unpleaded claim for express and implied contract was tried, in this court's opinion, with the implied consent of the parties. Pursuant to Civ.R. 15(B), the court will permit an amendment of the complaint to raise this claim in order to conform the pleadings with the evidence.
Gary Liles, funeral director for the plaintiff funeral home, testified that he met on July 23, 1990 with the three children of the deceased to discuss the services his company was to provide. A contract was signed by defendant Steven Muse. Carol Stewart, the oldest and apparently only daughter of the deceased, produced a Prudential policy on the life of the deceased in the amount of $7,000. All present indicated a desire to permit the funeral bill to be paid from the proceeds of the policy; so an assignment of the proceeds to the funeral home was prepared and signed by all three children.
Defendant Allan Muse then made contact with Liles and obtained both the policy and the assignment, whereupon he presented only the policy to the insurance company, which paid the face value of the policy to the three children in equal amounts as per the obligations of the policy.
The position of the Muse brothers, Steven and Allan, is that the funeral home should have filed a claim for its services with the probate court and should be paid out of the assets of the estate. Two rather obvious reasons dictate why a business would find that option unattractive: (1) there may be no assets within the probate umbrella to pay creditors, and (2) cash flow problems experienced at times by many businesses would be compounded by having to wait until probate cases lumber along to completion. It was, rather, the intention of all parties to satisfy the claim of the funeral home for compensation in return for its services out of the proceeds of the insurance policy. Carol Stewart, through her counsel, has expressed her desire to pay one third of the bill and has set aside a portion of her insurance proceeds for such a purpose. She objects to any interest since she had no part in causing the assignment to bypass Prudential.
The contract was signed by Steven Muse. The commitments of Steven Muse as expressed in the written agreement were not kept. Plaintiff has established a claim for breach of contract against Steven Muse and is entitled to recover the entire amount of the bill, $4,312.90, from him. It would seem that this is so obvious as to need no recitation of precedent.
It is the court's view that plaintiff has also established a claim for implied contract against the other two siblings. In St. Clare Center, Inc. v. Mueller (1986), 34 Ohio App.3d 69, 517 N.E.2d 236, the court was confronted with a very analogous set of facts. The application for a rest home was signed by one sibling in the presence of the other. When expenses began to exceed the income of the patient (the mother of the two siblings), a lawsuit developed because neither wished to pay the entire bill. Judge Sandra S. Beckwith, then of the Hamilton County Municipal Court, held that an implied contract resulted from the circumstances and her decision to that effect was affirmed on appeal.
Allan Muse and Carol Stewart are in the same position as that of Catherine Wersching (the nonsigning child in St. Clare Center, supra). An implied contract existed and because of the executed assignment, a fact not found in St. Clare Center, supra, the plaintiff's case for implied contract is even stronger. Plaintiff is entitled to recover one third of the $4,312.90 from each of the two defendants, Allan Muse and Carol Stewart. However, Allan Muse shall bear the interest expense alone.
Plaintiff charges in Count I of the complaint that defendant Allan Muse is guilty of fraud in disposing of the assignment. The facts support this claim. Although Allan Muse denies disposing of the assignment, it is clear that he obtained it from Liles and presented only the policy to Prudential, providing immediate remuneration to him at the expense of a legitimate business provider. This behavior satisfies the elements of a false statement of fact, knowledge of its falsity, intent to deceive and justifiable reliance. Defendant's conduct was fraudulent. See Hershman v. Univ. of Toledo (1987), 35 Ohio Misc.2d 11, 519 N.E.2d 871.
"A person injured by fraud is entitled to such damages as will fairly compensate him for the wrong suffered, that is, the damages sustained by reason of the fraud or deceit, and which have naturally and proximately resulted therefrom." Foust v. Valleybrook Realty Co. (1981), 4 Ohio App.3d 164, 4 OBR 264, 446 N.E.2d 1122, at paragraph two of the syllabus. We determine this to be the amount of the funeral bill, $4,312.90, and award plaintiff that amount plus interest at one-half percent per month from July 23, 1990 as per the terms of the contract, and costs of court from the defendant, Allan Muse.
Additionally, plaintiff requests an award of punitive damages. To obtain such an award, plaintiff must prove malice or ill will or particularly egregious wrongdoing. See Charles R. Combs Trucking, Inc. v. International Harvester Co. (1984), 12 Ohio St.3d 241, 12 OBR 322, 466 N.E.2d 883, and Logsdon v. Graham Ford Co. (1978), 54 Ohio St.2d 336, 8 O.O.3d 349, 376 N.E.2d 1333.
In Logsdon, supra, the court distinguished what it called base or constructive fraud, where punitive damages are not allowed, from gross fraud, wherein punitive damages are possible, by means of this statement:
"`The general rule is said to be that exemplary damages may properly be awarded where the plaintiff has suffered actual damages as a result of fraud intentionally committed with the purpose of injuring him. * * *'" Id. at 339, 8 O.O.3d at 351, 376 N.E.2d at 1335.
After commenting about the difficulty in distinguishing the varying degrees of culpability relative to fraud claims, the court at 340, 8 O.O.3d at 352, 376 N.E.2d at 1336, fn. 2, suggested that the defendant in Saberton v. Greenwald (1946), 146 Ohio St. 414, 32 O.O. 454, 66 N.E.2d 224, who fabricated a watch with a new case but old parts, sold it to a consumer as new, apparently collected repair funds from the consumer on several occasions and then refused to return the purchaser's purchase price, would be guilty of gross fraud. This behavior was contrasted with that of the salesman in Logsdon, supra, who represented a used garbage packer as new. The salesman's conduct in Logsdon was a base or garden variety fraud which did not support an award of punitive damages.
The court finds the fraud committed in this case to be of the base or garden variety. While Allan Muse contacted Liles and misrepresented his intentions with regard to the disposition of the Prudential policy and then procured the payoff from the policy to his advantage and to the detriment of the plaintiff, there is no direct proof that he formulated the plan to defraud plaintiff. It also cannot be said that the purpose of his actions was to permanently deprive the funeral home of its payment for services, since he could not have been charged with the knowledge that the plaintiff would not file a claim with the probate court or that had plaintiff filed a claim, there would not have been sufficient assets to pay the claim. In short, Allan Muse simply rearranged the priorities and installed himself in a secured financial position.
Since an award of attorney fees must be based on an award of punitive damages, and since the court has concluded that this is not a proper case for an award of punitive damages, no attorney fees are awarded. See 51 Ohio Jurisprudence 3d (1984) 72, Fraud and Deceit, Section 213.
In summary, judgment is rendered to plaintiff against Allan Muse on the basis of fraud and Steven Muse on the theory of express contract for the entire amount of the funeral bill. Allan Muse shall pay all interest and costs of court since it was his behavior which caused the interest to accrue. Judgment is also awarded plaintiff against Carol Stewart on the theory of implied contract to the extent of one third of the funeral bill.
Judgment accordingly.