COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NOS. 67650 and 68266 CALFEE, HALTER & GRISWOLD : : Plaintiff-appellee : : JOURNAL ENTRY -vs- : AND : OPINION SAAD I. KHAYAT, ET AL. : : Defendant-appellants : : DATE OF ANNOUNCEMENT : JULY 13, 1995 OF DECISION : CHARACTER OF PROCEEDING : Civil appeal from Court of Common Pleas : Case No. CV-269249 JUDGMENT : REVERSED AND REMANDED DATE OF JOURNALIZATION : APPEARANCES: For plaintiff-appellee: For defendant-appellants: ROBERT B. WELTMAN, ESQ. MARTIN W. ELSON, ESQ. 323 Lakeside Avenue, W. LAWRENCE D. POLLACK, ESQ. Cleveland, OH 44113 Ulmer & Berne Suite 900 1300 East 9th Street Cleveland, OH 44114-1583 - 2 - PATTON, C.J. In July 1993, plaintiff law firm Calfee, Halter & Griswold obtained a judgment in the amount of $147,241 against defendant Saad I. Khayat. The firm subsequently filed a complaint under the Ohio Uniform Fraudulent Transfer Act against Khayat and defendant Three HB International, alleging Khayat had conveyed his interests in three parcels of real property to Three HB International with the intention of placing the properties beyond the firm's reach. The complaint sought to void the transfers to Three HB Inter- national, determine Khayat's interest in the properties, and confirm the firm's lien on the properties to the extent of Khayat's interest. When Khayat did not answer the complaint or otherwise appear in the action, the trial court granted a default judgment on 1 the complaint. Three HB International timely appealed from the default judgment in case no. 67650. We temporarily remanded the appeal so that Three HB International could file a motion for relief from judgment. The trial court denied the motion and Three HB International appealed from that ruling in case no. 68266. We have consolidated both appeals for hearing and disposition. 1 Although Khayat was the statutory agent for Three HB International at the time the firm commenced this action, he received a copy of the summons at his home in his individual capacity. Admitting he had no intention of answering the complaint, he left on an extended vacation shortly thereafter, apparently expecting to find a summons for Three HB International waiting for him at his business address when he returned. Unexpectedly, a tenant of the 3122 Euclid Avenue property signed for the summons, unaware of its contents or the fact that Khayat would not immediately return to Cleveland. - 3 - Three HB International raises three assignments of error that challenge the default judgment and trial court's refusal to grant relief from the default judgment. Because we find the trial court erred as a matter of law in granting the default judgment, we need not address the issue whether the court abused its discretion by failing to grant the motion for relief from judgment. Three HB International contends the default judgment was invalid because Khayat did not transfer the properties as alleged in the complaint. Three HB International maintains three separate corporations named 3310 Warrensville Center Association, DRC International and Aress Investment Company were the grantors in the conveyances to Three HB International and should have been named in the complaint. The firm argues it had no reason to name the three corporations because it only sought to attach Khayat's personal interests in the transferred properties. We review questions concerning the propriety of a default judgment for errors of law since the trial court has no discretion to grant the default judgment under Civ.R. 55(A). Alban Equipment Co. v. Styline Structures General Contractors (Nov. 29, 1988), Franklin App. No. 88AP-517, unreported; cf. Rhode v. Farmer (1970), 23 Ohio St.2d 82, paragraph two of the syllabus ("Where a new trial is granted by the trial court, for reasons which involve no exercise of discretion but only a decision on a question of law, the order granting a new trial may be reversed upon the basis of a showing that the decision was erroneous as a matter of law."). - 4 - The firm brought this action pursuant to R.C. 1336.01 et seq., the Uniform Fraudulent Transfer Act. R.C. 1336.04 provides: (A) A transfer made or an obligation incurred by a debtor is fraudulent as to a creditor, whether the claim of the creditor arose before or after the transfer was made or the obliga- tion was incurred, if the debtor made the transfer or incurred the obligation in either of the following ways; (1) With actual intent to hinder, delay or defraud any creditor of the debtor; (2) Without receiving a reasonably equiva- lent value in exchange for the transfer or obligation, and if either of the following applies: (a) The debtor was engaged or was about to engage in a business transaction for which the remaining assets of the debtor were unreason- ably small in relation to the business or the transaction; (b) The debtor intended to incur, or be- lieved or reasonably should have believed that he would incur, debts beyond his ability to pay as they became due. The firm attached three deeds as exhibits to the complaint. Exhibit A is a warranty deed showing 3310 Warrensville Center Association as the grantor of the property known as 3310 Warrensville Road. Exhibit B is a warranty deed showing DRC International as the grantor of Unit 305 in the 3310 Warrensville Road property. Exhibit C is a warranty deed showing Aress Investment Co. as the grantor of real property located at 3122 Euclid Avenue. All three properties were deeded to Three HB International for nominal consideration (which may not have been paid) and the deeds were not recorded until after the firm had obtained judgment against Khayat. - 5 - Although Khayat is not listed as the grantor of any of the properties, the firm argues Khayat's interests in the grantor corporations are such that the trial court could order a lien placed on the transferred properties to the extent of Khayat's interests. It maintains it could not name the three corporations as parties to this action because they were innocent transferors whose interests should remain intact insofar as they are separate from Khayat's interests. While the evidence now before this court shows Khayat's interests in 3310 Warrensville Center Association, DRC Inter- national and Aress Investment Co. are significant, the real issue before us is whether the trial court could enter a default judgment against an individual who did not and, could not, deed the properties. R.C. 1336.04 requires a transfer made by the debtor. The exhibits attached to the firm's complaint clearly show the transfers in question were not made by Khayat as grantor, but by 3310 Warrensville Center Association, DRC International and Aress Investment Co. Khayat may indeed own a percentage share of some of the transferred properties, but that percentage is not apparent from the face of the complaint. What is apparent is the default judgment placed a lien on all of the properties held by Three HB International, without specifying that it applied only to the extent of Khayat's interest in the transferor corporations. Because the complaint did not demonstrate Khayat's apparent - 6 - interest, if any, in the properties transferred, the trial court could not, as a matter of law, void the transfers as to Three HB International on grounds that Khayat had fraudulently transferred the properties. Although we do not reach the merits of this action, we note it appears from the evidentiary material submitted in opposition to the motion for relief from judgment that Khayat was either president or general partner of the three corporations. Additionally, it appears he is president and statutory agent of Three HB International, and holds power of attorney. Clearly, his involvement in the three corporations, as well as his ties to Three HB International, raise justiciable issues as to the validity of the property transfers under the fraudulent transfers act. Those issues may be explored more fully when the grantors of the property in question are made parties to the action. However, our narrow inquiry is whether the trial court could, on the face of this complaint, properly grant a default judgment against Khayat and void the transfer of property to Three HB International. We conclude that it could not; therefore, we sustain the first assignment of error, vacate the default judgment, and remand for further proceedings. Judgment vacated and remanded for further proceedings. - 7 - It is ordered that appellee recover of appellant its costs herein taxed. The Court finds there were reasonable grounds for this appeal. It is ordered that a special mandate issue out of this Court directing the Court of Common Pleas to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. LEO M. SPELLACY, J. DIANE KARPINSKI, J., CONCUR CHIEF JUSTICE JOHN T. PATTON N.B. This entry is made pursuant to the third sentence of Rule 22(D), Ohio Rules of Appellate Procedure. This is an announce- ment of decision (see Rule 26). Ten (10) days from the date hereof, this document will be stamped to indicate journalization, .