BUSINESS DEVELOPMENT CORPORATION OF SOUTH CAROLINA v. RUTTER & RUSSIN, LLC; ROBERT P. RUTTER; JUSTIN P. RUDIN; GALLAGHER, GAMS, TALLAN, BARNES & LITTRELL, LLP; MARK HOWARD GAMS; STATE FARM FIRE & CASUALTY COMPANY - Articles

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BUSINESS DEVELOPMENT CORPORATION OF SOUTH CAROLINA v. RUTTER & RUSSIN, LLC; ROBERT P. RUTTER; JUSTIN P. RUDIN; GALLAGHER, GAMS, TALLAN, BARNES & LITTRELL, LLP; MARK HOWARD GAMS; STATE FARM FIRE & CASUALTY COMPANY

Posted by: Stacey Shrader Joslin on Jun 16, 2022

Court: 6th Circuit Court (Published Opinions)

Attorneys 1: ARGUED: Paul R. Kerridge, KEATING, MUETHING & KLEKAMP, PLL, Cincinnati, Ohio, for Appellant.

Attorneys 2: ARGUED: Holly Marie Wilson, REMINGER CO., L.P.A., Cleveland, Ohio, for Rutter & Russin Appellees.

Attorneys 3: ARGUED: Richard G. Witkowski, NICOLA, GUDBRANSON & COOPER, LLC, Cleveland, Ohio, for Gallagher, Gams, Tallan, Barnes & Littrell Appellees.

Attorneys 4: ARGUED: Jason R. Goldschmidt, DINSMORE & SHOHL, LLP, Cincinnati, Ohio, for Appellee State Farm Fire & Casualty.

Attorneys 5: ON BRIEF: Paul R. Kerridge, James E. Burke, KEATING, MUETHING & KLEKAMP, PLL, Cincinnati, Ohio, for Appellant.

Attorneys 6: ON BRIEF: Holly Marie Wilson, REMINGER CO., L.P.A., Cleveland, Ohio, for Rutter & Russin Appellees.

Attorneys 7: ON BRIEF: Richard G. Witkowski, Nicholas J. Dertouzos, NICOLA, GUDBRANSON & COOPER, LLC, Cleveland, Ohio, for Gallagher, Gams, Tallan, Barnes & Littrell Appellees.

Attorneys 8: ON BRIEF: Jason R. Goldschmidt, Gregory A. Harrison, DINSMORE & SHOHL, LLP, Cincinnati, Ohio, for Appellee State Farm Fire & Casualty.

Judge(s): SILER, CLAY, and MURPHY, Circuit Judges

Court Appealed: United States District Court for the Northern District of Ohio at Cleveland

MURPHY, Circuit Judge. Parties who fail to assert their rights during the litigation of a case sometimes seek to belatedly raise those rights in a collateral attack on the court’s judgment. This strategy usually does not end well—as Business Development Corporation of South Carolina (BDC) has come to learn. BDC held a mortgage on a home that had been damaged. The home’s owners sued their insurer in Ohio state court when the insurer denied coverage for the damage. They named BDC as a defendant because of its interest in the insurance proceeds. For reasons known only to BDC, it chose not to appear in the case. After the homeowners and insurer settled, the state court found that BDC had no right to the proceeds. When BDC learned of this result, it did not seek relief from the judgment in the state court. Rather, it filed this federal suit alleging that the insurer, its lawyers, and the homeowners’ lawyers all colluded to defraud it. The district court dismissed the suit under Ohio’s claim-preclusion law. Because BDC cannot meet the demanding test required to attack the state court’s judgment in this collateral fashion, we affirm.

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