Background
William Huth, Whitney Harris, and Roland Burns planned to acquire Bolivar Spirits and its real property through two LLCs. Harris’s company, Juicy X3, would hold the liquor licenses, while Burns’s company, Convst, would hold the property. Huth and Harris alleged that they paid Burns approximately $109,000 toward the acquisition and expected Huth to have an ownership interest in Convst.
Burns claimed that he was Convst’s sole member and that Huth was only a consultant. The appellants relied on an engagement letter Huth signed beneath Convst’s signature block, a text in which Burns answered “Both” when asked whether he and Huth were “on Convst,” and financial records documenting their payments. After Burns later mortgaged the property to Trevor Rice, the appellants sued Burns, Convst, and Rice on several fraud, fiduciary-duty, ownership, and equitable theories. The trial court granted summary judgment to all defendants.
The Court’s Holding
The Fifth District reversed the summary judgment for Burns and Convst. Construing the evidence in the appellants’ favor, the engagement letter, text exchange, and payment records created a genuine factual dispute over whether Huth and Burns intended Convst to be jointly owned. Burns’s contrary testimony presented credibility and competing-inference questions that could not be resolved at summary judgment.
The court also reinstated the unjust-enrichment claim against Burns and Convst. The trial court improperly treated proof that each payment was specifically intended to purchase the property as a separate element of unjust enrichment. Evidence that Burns received the appellants’ money, disputed its purpose, claimed sole ownership through Convst, and allegedly failed to account for the funds presented triable issues. The court nevertheless affirmed summary judgment for Rice because the appellants identified no evidence connecting him to Convst’s formation, its disputed ownership, or the alleged scheme.
Key Takeaways
- Documents and communications supporting competing reasonable inferences about LLC ownership can preclude summary judgment even without a formal written ownership agreement.
- A court may not resolve credibility disputes or choose between conflicting accounts of payments and business arrangements under Ohio Civil Rule 56.
- An unjust-enrichment plaintiff must show a knowingly received benefit whose retention would be unjust; the purpose of each payment is not an additional standalone element.
Why It Matters
The decision underscores that LLC organizational filings may not conclusively resolve disputes about ownership arrangements later made among participants. Informal communications, transaction documents, payment records, and the parties’ conduct can collectively create a triable issue about their intended relationship.
The ruling also illustrates the limits of such evidence: claims against a third-party lender cannot survive summary judgment without record evidence connecting that lender to the disputed ownership arrangement or alleged wrongdoing.