COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 68551 : ACCELERATED DOCKET WINFIELD GRAYSON, ET AL. : : JOURNAL ENTRY Plaintiffs-Appellants : : and -vs- : : OPINION : CADILLAC BUILDERS, INC., ET AL. : PER CURIAM : Defendants-Appellees : : DATE OF ANNOUNCEMENT SEPTEMBER 14, 1995 OF DECISION: CHARACTER OF PROCEEDING: Civil appeal from Common Pleas Court Case No. 273411 JUDGMENT: Affirmed in part, Reversed in part. DATE OF JOURNALIZATION: __________________________ APPEARANCES: FOR PLAINTIFFS-APPELLANTS: FOR DEFENDANT-APPELLEE KENNETH PEIZER: WAYNE J. BELOCK, ESQ. KENNETH PEIZER, Pro Se SHARON A. SZOLOSI, ESQ. 26300 Village Lane 750 Courthouse Square Bldg. Suite 213 310 Lakeside Avenue, West Beachwood, Ohio 44122 Cleveland, Ohio 44113 -2- -3- PER CURIAM: This appeal was filed and briefed as an accelerated appeal pursuant to Local App.R. 25. Winfield and Dorothy Grayson, plaintiffs-appellants, appeal the decision granting summary judgment in favor of Kenneth Peizer, defendant-appellee. The Graysons assign the following errors for our review: THE TRIAL COURT ERRED IN GRANTING DEFENDANT- APPELLEE'S MOTION FOR SUMMARY JUDGMENT BECAUSE GENUINE ISSUES OF MATERIAL FACT EXIST CONCERNING DEFENDANT-APPELLEE'S PERSONAL LIABILITY FOR VIOLATIONS OF OHIO CONSUMER LAW. THE TRIAL COURT ERRED IN GRANTING DEFENDANT- APPELLEE'S MOTION FOR SUMMARY JUDGMENT BECAUSE GENUINE ISSUES OF MATERIAL FACT EXIST CONCERN- ING WHETHER DEFENDANT-APPELLEE'S CONTROL AND DOMINATION OVER DEFENDANT CADILLAC BUILDERS, INC. MADE HIM LIABLE AS ITS ALTER-EGO. THE TRIAL COURT ERRED IN GRANTING DEFENDANT- APPELLEE'S MOTION FOR SUMMARY JUDGMENT BECAUSE GENUINE ISSUES OF MATERIAL FACT EXIST CONCERN- ING DEFENDANT-APPELLEE'S LIABILITY FOR HIS INDIVIDUAL FRAUDULENT ACTIONS AND FOR THE ACTIONS OF THE CORPORATION HE CONTROLLED. For the reasons set forth below, we affirm in part and reverse in part the decision of the trial court. In June of 1991, a telemarketing representative of Cadillac Builders, Inc. contacted Dorothy Grayson by telephone about home repairs. They discussed the repair and enlargement of the Graysons' two-story porch. Sales agents represented the porch could be repaired and enlarged for $3,000. The agents later claimed enlarging the porch would raise the price of the repairs to $5,000. -4- An agent of Cadillac Builders told them the extension was not possible but never reduced the price of the repairs. As an inducement to get the Graysons to sign a contract for $5,000 in repairs, Cadillac Builders' agent offered them $1,000 cash back upon completion of the job. On June 16, 1991, the Graysons signed a contract with Rolly F. Villello, a salesman with Cadillac Builders, Inc., for home improvements to their two story back porch at 1026 E. 79th Street at a cost of $5,000 with $1,000 cash back. The Graysons received the $1,000 once the work was completed. The written contract provided for the removal of the existing upper and lower porch, leaving the existing roof, building a new porch to the same specifications as the old porch, building new steps, painting the porch completely, installing new gutters on the porch and driveway side of the house, and clean-up and hauling away of debris. The contract also provided notice to the Graysons, as purchasers, of their right to cancel the agreement within three business days. Sub-contractors hired by Cadillac Builders installed a new porch in one day. A worker induced Dorothy Grayson to sign a note saying she was satisfied with the work. She felt obligated to sign it because the worker represented to her that he would not get paid if she did not sign the note. The Graysons immediately complained to Peizer about the poor workmanship and quality of the home improvements. Peizer came to their home and sent someone to repair the porch within a few days. The worker finished the repairs in one day and induced Dorothy -5- Grayson to sign a note saying she was satisfied with the work for the same reason as before. However, the Graysons quickly discovered additional problems. After the first rainfall following the construction of the new porch, the wood on the railing split and the floor boards warped. The second floor porch of the new porch was lowered nine inches below the height of the second floor making entry onto the porch difficult. Cadillac Builders failed to re-install downspouts for the rain gutters. Peizer visited their home again and sent workers several times, but they could not repair the faulty construction of the porch. The Graysons allege Peizer, as well as his employees, represented the fair market value of the work was $5,000, treated and new lumber was used in the construction of the porch, and the new porch would be built to the specifications of the old porch. The Graysons presented an expert report from Richard Peter Kraly, a registered architect. He listed eight deficiencies in the work of Cadillac Builders: They used old lumber, improperly used a nailing gun which made unsightly holes in the new structure and may have weakened its joints, improperly installed lattice enclosure hinges, installed railings too low to meet building codes, created a nine inch step in violation of building codes, failed to install downspouts, failed to install new foundations, and violated seven separate building codes. Kraly estimated the value of the work to be $2,100, and estimated it would cost an additional $2,200 to repair the defective work. -6- The Graysons and Cadillac Builders were subsequently cited by the city of Cleveland, Department of Community Development, Division of Building & Housing for ten building code violations. Peizer was the president and sole shareholder of Cadillac Builders, Inc. He was not involved in the contract negotiations for the repair to the Graysons' home. He claims the subcontractors who performed the work at the Graysons' home made all the decisions with respect to the materials used and how to rebuild the Graysons' porch. He met with Dorothy Grayson and asked the main sub- contractor, Tyrone McKinley, to make repairs. He claims Cadillac offered to repair the faulty work, but the Graysons refused. Cadillac Builders is no longer in business and Peizer is no longer in the home repair business. The Graysons filed a complaint against Cadillac Builders and Peizer alleging violations of the Consumer Sales Practices Act, the Ohio Retail Installment Sales Act, the Home Solicitation Sale Act, civil conspiracy, fraud, intentional and negligent infliction of emotional harm, breach of contract, and seeking to pierce the corporate veil and hold Kenneth Peizer personally liable for the actions of Cadillac Builders, Inc. After discovery, Peizer moved for summary judgment and the motion was granted. The court held there was insufficient evidence to pierce the corporate veil and hold Kenneth Peizer personally liable for violations of the Ohio Consumer Sales Practices Act. This appeal followed. The standard of review for an appeal from summary judgment is plenary. This court applies the same test as the trial court, -7- which is set forth in Civ.R. 56, and we evaluate the record according to Civ.R. 56. Civ.R. 56 specifically provides before summary judgment may be granted it must be determined that: "(1) No genuine issue as to any material fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of law; and (3) it appears from the evidence that reasonable minds can come to but one conclusion, and viewing such evidence most strongly in favor of the party against whom the motion for summary judgment is made, that conclusion is adverse to that party." Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327. Moreover, it is well settled that the party seeking summary judgment bears the burden of showing that no genuine issue of material fact exists for trial. Celotex Corp. v. Catrett (1987), 477 U.S. 317, 330; Mitseff v. Wheeler (1988), 38 Ohio St.3d 112, 115. Doubts must be resolved in favor of the nonmovant. Murphy v. Reynoldsburg (1992), 65 Ohio St.3d 356, 358-59. Under Civ.R. 56(E) "a nonmovant may not rest upon the mere allegations or denials of his pleadings but must set forth specific facts showing there is a genuine issue for trial." Chaney v. Clark Cty. Agricultural Soc. (1993), 90 Ohio App.3d 421, 424. The issue raised in the first assignment of error is whether Peizer may be held personally liable for his actions in violation of the Consumer Sales Practices Act as set forth in R.C. Chapter 1345. A corporate officer may be held individually liable for his acts which violate the Consumer Sales Practices Act. Gayer v. Ohio Business Trading Association (July, 7, 1988), Cuyahoga App. No. -8- 54897, unreported (where corporate officer held personally misrepresented to the plaintiffs that their home would be sided with aluminum siding). See, also, State ex rel. Fisher v. Warren Star Theater (1992), 84 Ohio App.3d 435 (where corporate officer of non-profit corporation held personally liable for selling tickets after show was cancelled); State ex rel. Fisher v. Harper (1993), 83 Ohio App.3d 754 (where corporate officer held personally liable for pyramid sales scheme which he promoted and from which he benefitted). In order to hold a corporate officer personally liable for his actions in violation of the Consumer Sales Practices Act, the evidence must show the officer took part in the commission of the act, specifically directed the particular act to be done, or participated or cooperated therein. State ex rel. Fisher v. American Courts, Inc. (July 21, 1994), Cuyahoga App. No. 65939, 1 unreported. The Graysons allege unfair trade practices. An unfair or deceptive act or practice may occur "***before, during, or after the transaction." See R.C. 1345.02(A). Deceptively representing the value and quality of the work performed, that the materials 1 The Consumer Sales Practices Act does not change the existing common law of tort, nor does it change the common law rule with respect to piercing the corporate veil. A corporate officer may not be held liable merely by virtue of his status as a corporate officer. It does, however, create a tort which imposes personal liability upon corporate officers for violations of the act performed by them in their corporate capacities. See, also, Roberts and Martz, Consumerism Comes of Age: Treble Damages and Attorney Fees in Consumer Transactions-The Ohio Consumer Sales Practices Act (1981), 42 Ohio St.L.J. 927, 932- 933. -9- used were new, and that work has been performed as promised constitute deceptive trade practices. See R.C. 1345.02(B)(2)(3) and (5). In an affidavit in support of their brief in opposition to summary judgment, the Graysons alleged that, in their personal meetings with Peizer, he falsely represented the value and quality of their new porch. He falsely represented the type of repairs, the quality of the materials used to make the repairs (treated wood and new lumber), that the fair market value of the improvements was $5,000 and that the new porch was built to the specifications of the old porch. The Graysons' affidavit sufficiently put forth evidence that Kenneth Peizer personally made deceptive representations after the transaction between the Graysons and Cadillac Builders in violation of R.C. 1345.02. Therefore, he should be held personally liable for deceptive consumer sales practices. The Graysons also alleged Peizer committed unconscionable consumer sales practices. "In order to recover under R.C. 1345.03, a consumer must show that a supplier acted unconscionably and knowingly." Karst v. Goldberg (1993), 88 Ohio App.3d 413, 418. While proof of intent is not required to prove deception under R.C. 1345.02, proof of knowledge is a requirement to prove an unconscionable act under R.C. 1345.03. Id. "Knowledge," under R.C. 1345.01(E), "means actual awareness, but such actual awareness may be inferred where objective manifestations indicate that the individual involved acted with such awareness." The Graysons have -10- failed to produce evidence that Peizer acted with knowledge of the unconscionability of his company's work. Therefore, he should not be held liable for unconscionable consumer sales practices. The issue raised in the second assignment of error is whether the Graysons can pierce the corporate veil and hold Peizer personally liable for the acts of Cadillac Builders. In order to pierce the corporate veil, it must be shown that "***(1) control over the corporation by those to be held liable was so complete that the corporation has no separate mind, will, or existence of its own, (2) control over the corporation by those to be held liable was exercised in such a manner as to commit fraud or an illegal 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. (1993), 67 Ohio St.3d 274, 289. As the sole shareholder and president of Cadillac Builders, Inc., Peizer did have complete control over the company. However, there is no evidence to suggest he used that control to commit fraud or an illegal act. The evidence tends to suggest the company suffered from a lack of control over the quality and workmanship of the subcontractors it hired. Accordingly, the corporate veil of Cadillac Builders should not be pierced. The issue raised in the third assignment of error is whether Peizer committed fraud. Fraud is a serious matter, and therefore, it should be set forth with some particularity. Civ.R. 9(B), Staff Notes. See, also, Korodi v. Minot (1987), 40 Ohio App.3d 1. The -11- elements of fraud are: (a) a representation or, where there is a duty to disclose, concealment of a fact, (b) which is material to the transaction at hand, (c) made falsely, with knowledge of its falsity, or with such utter disregard and recklessness as to whether it is true or false that knowledge may be inferred, (d) with the intent of misleading another into relying upon it, (e) justifiable reliance upon the representation or concealment, and (f) a resulting injury proximately caused by the reliance." Burr v. Stark Cty. Bd. of Commrs. (1986), 23 Ohio St.3d 69 at paragraph two of the syllabus. The Graysons failed to state with particularity the represen- tations made by Peizer personally. Neither their complaint nor their affidavit distinguishes which statements were made by Peizer personally and which statements were made by other agents of Cadillac Builders. Without some indication of which representa- tions, if any, were actually made by Peizer, there is insufficient proof of the first element of fraud, a false representation or the concealment of a fact. Therefore, the cause of action for fraud must fail. For the reasons stated, the action against Kenneth Peizer is reversed and remanded only on the claim of unfair or deceptive consumer sales practices under R.C. 1345.02. Judgment affirmed in part and reversed in part. -12- Affirmed in part and reversed in part. It is ordered that Appellees and Appellants share their 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 Common Pleas Court 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. PATRICIA ANN BLACKMON PRESIDING J. DAVID T. MATIA, JUDGE JAMES M. PORTER, JUDGE N.B. This entry is made pursuant to the third sentence of Rule 22(D), Ohio Rules of Appellate Procedure. This is an announcement of decision (see Rule 26). Ten (10) days from the date hereof this document will be stamped to indicate journaliza- .