[Cite as Legacy Academy for Leaders v. Mt. Calvary Pentecostal Church, 2013-Ohio-4214.]

                             IN THE COURT OF APPEALS OF OHIO

                                  TENTH APPELLATE DISTRICT

Legacy Academy for Leaders and                     :
the Arts and Attorney General
Mike DeWine,                                       :

                Plaintiffs-Appellees,              :                 No. 13AP-203
                                                                 (Ct. of Cl. No. 2012-06394)
v.                                                 :
                                                         (ACCELERATED CALENDAR)
Mt. Calvary Pentecostal Church et al.,             :

                Defendants-Third-                  :
                Party-Appellants,
                                                   :
Carl Shye et al.,
                                                   :
                Defendants-Appellees
                                                   :
[Ohio Auditor of State
                                                   :
                Third-Party-Defendant-
                           Appellee.]              :


                                          D E C I S I O N

                                 Rendered on September 26, 2013.



                Mike DeWine, Attorney General, and Randall W. Knutti, for
                plaintiffs-appellees.

                William C. Wilkinson, for appellants.

                            APPEAL from the Court of Claims of Ohio

T. BRYANT, J.

        {¶ 1} Defendants-Appellants, Mt. Calvary Pentecostal Church, Edward Bolling,
Jerry McKinney, C. Wayne Brantley, Leonard Randall, Gary Brantley, and A. Glenn
Brady, appeal from a judgment of the Court of Claims of Ohio granting motions of
plaintiff-appellee, Ohio Attorney General Mike DeWine ("attorney general"), and third-
No. 13AP-203                                                                             2


party defendant-appellant, Ohio Auditor of State, dismissing the church's counterclaim
and dismissing the amended third-party complaint against the state auditor. For the
reasons that follow, we affirm the judgment of the Court of Claims of Ohio dismissing the
church's counterclaim, reverse the judgment of the Court of Claims dismissing the
amended third-party complaint, and remand that portion for further proceedings
consistent with this decision.
I. BACKGROUND
       {¶ 2} On February 13, 2012, the attorney general, in a representative capacity on
behalf of Legacy Academy for Leaders and the Arts ("Legacy"), a nonprofit corporation
operating as an Ohio community school, filed a complaint in the Franklin County Court of
Common Pleas to recover public money improperly expended or unaccounted for
pursuant to R.C. 117.28, 117.36, and 117.42. In his complaint, the attorney general named
several defendants, including appellants, Mt. Calvary Pentecostal Church ("church"),
Edward Bolling, Jerry McKinney, C. Wayne Brantley, Leonard Randall, Gary Brantley,
and A. Glenn Brady. The attorney general alleged that the church owns the land and was
the lessor of the premises used by Legacy for operation of the community school, that
Bolling was the chief financial officer for the church, and that McKinney, Wayne Brantley,
Randall, Gary Brantley, and Brady were members of the Legacy school board. The
attorney general claimed that based on findings of recovery in regular and special audits
performed by the state auditor, he was seeking to collect certain amounts from
defendants, including appellants.
       {¶ 3} After the common pleas court denied appellants' motion to dismiss, they
filed an answer, counterclaim, and third-party complaint. In the counterclaim, appellant
church alleged that Legacy is liable for damages from its breach of lease agreements by its
failure to pay the church the agreed upon rent. In their third-party complaint, appellants
claimed that the state auditor prepared audit reports concerning Legacy that did not
conform to generally accepted accounting principles and contained negligent
representations that were relied on by appellants and others to the detriment of
appellants.
       {¶ 4} Upon the filing of the third-party complaint against the state auditor,
appellants filed a notice of removal of the action to the Court of Claims of Ohio pursuant
to R.C. 2743.03(E)(1). Legacy, through the attorney general, filed a Civ.R. 12(B) motion to
No. 13AP-203                                                                               3


dismiss the counterclaim, and the state auditor filed a Civ.R. 12(B) motion to dismiss the
third-party claims. In response to the dismissal motions, appellants filed an amended
answer and an amended third-party complaint against the state auditor. The amended
answer did not include a counterclaim against Legacy or the attorney general. Appellants
then filed a memorandum in opposition to appellees' motions to dismiss the counterclaim
and the original third-party complaint on the basis that their filing of an amended answer
and amended third-party complaint rendered the motions moot. The state auditor filed a
motion to dismiss appellants' amended third-party complaint, and appellants filed a
memorandum in opposition.
       {¶ 5} On February 6, 2013, the Court of Claims granted the attorney general's
motion to dismiss appellant church's counterclaim and the state auditor's motion to
dismiss appellants' amended third-party complaint and remanded the case to the
common pleas court pursuant to R.C. 2743.03(E)(2).
II. ASSIGNMENTS OF ERROR
       {¶ 6} Appellants appeal from the judgment of the Court of Claims, and they
assign the following errors:
              1. The trial court erred when it determined that third party
              defendant Ohio Auditor David Yost is entitled to statutory
              immunity under R.C. 2743.02(3)(b).

              2. The trial court erred when it dismissed Mt. Calvary's
              counterclaim against Plaintiff Legacy Academy for Leaders
              and the Arts.

III. DISCUSSION
       {¶ 7} In their first assignment of error, appellants claim that the trial court erred
in dismissing their third-party complaint against the state auditor. "A motion to dismiss
for failure to state a claim upon which relief can be granted tests the sufficiency of the
complaint." Volbers-Klarich v. Middletown Mgt., Inc., 125 Ohio St.3d 494, 2010-Ohio-
2057, ¶ 11, citing Assoc. for Defense of Washington Local School Dist. v. Kiger, 42 Ohio
St.3d 116, 117 (1989). Dismissal under Civ.R. 12(B)(6) for failure to state a claim upon
which relief can be granted is appropriate if, after all factual allegations of the complaint
are presumed true and all reasonable inferences are made in favor of the plaintiffs, it
No. 13AP-203                                                                                4


appears beyond doubt that they can prove no set of facts entitling them to the requested
relief. State ex rel. Bell v. Pfeiffer, 131 Ohio St.3d 114, 2012-Ohio-54, ¶ 12.
       {¶ 8} In their amended third-party complaint, appellants claimed that the state
auditor's negligent audit reports of Legacy were relied on by others to the detriment of
appellants.
       {¶ 9} "It is well established that the government is not amenable to suit by a
private individual for a breach of a public duty." Ashland Cty. Bd. of Commrs. v. Ohio
Dept. of Taxation, 63 Ohio St.3d 648, 654 (1992), citing Anderson v. Ohio Dept. of Ins.,
58 Ohio St.3d 215 (1991). Therefore, under R.C. 2743.02(A)(3)(a), the state is generally
immune from liability in any civil action or proceeding involving the performance or
nonperformance of a public duty. Burr v. Ohio State Hwy. Patrol, 10th Dist. No. 12AP-
26, 2012-Ohio-4906, ¶ 19. Courts have regularly found that statutory duties imposed on
state officials to audit are public duties. Id.; see also Markowitz v. Ohio Dept. of Ins., 144
Ohio App.3d 155, 161 (10th Dist.2001); Oregon v. Ferguson, 57 Ohio App.2d 95 (10th
Dist.1978) (state auditor immune from suit for alleged negligence in auditing municipal
accounts); Ashland Cty. Bd. of Commrs. at 654 ("This court has regularly found that
statutory duties imposed upon state officials to regulate, inspect, license, or audit are
'public' duties.").
       {¶ 10} Appellants do not deny the general proposition that the state auditor is
normally immune from the claims of negligent auditing that their amended third-party
complaint raised; instead, they assert the existence of the statutory exception when the
state has a "special relationship" with the injured party.
       {¶ 11} Notwithstanding the general protection accorded the state auditor in
performing its auditing duty, "[t]he immunity afforded by R.C. 2743.02(A)(3)(a) 'does not
apply to any action of the state under circumstances in which a special relationship can be
established between the state and an injured party.' "           Burr at ¶ 20, quoting R.C.
2743.02(A)(3)(b); see also R.C. 2743.01(E)(2), excluding from the definition of "public
duty" any state action in which the state and the injured party have a special relationship.
"Thus, under R.C. 2743.02(A)(3)(b), the state can be held liable for its performance or
non-performance of a public duty, which is otherwise exempted from the state's waiver of
sovereign immunity, when it stands in a special relationship with the injured party." Burr
at ¶ 20.
No. 13AP-203                                                                            5


         {¶ 12} R.C. 2743.02(A)(3)(b) specifies that the special relationship providing an
exception to the state immunity provided in section (A)(3)(a) is established if all of the
following elements exist:
                 (i) An assumption by the state, by means of promises or
                 actions, of an affirmative duty to act on behalf of the party
                 who was allegedly injured;

                 (ii) Knowledge on the part of the state's agents that inaction of
                 the state could lead to harm;

                 (iii) Some form of direct contact between the state's agents
                 and the injured party;

                 (iv) The injured party's justifiable reliance on the state's
                 affirmative undertaking.

         {¶ 13} In their amended third-party complaint, appellants alleged that the state
auditor assumed the following special relationship with them, which overcame the
immunity:
                 Auditor Yost assumed a special relationship with the Third-
                 Party Plaintiffs for the reason, unlike treasurers' for other
                 public schools, treasurers for charter schools are not required
                 by Ohio law to be licensed. Yost is aware of the fact that
                 charter school treasurers are not required to be licensed.
                 Accordingly, the volunteer members of boards of directors of
                 charter schools rely on their sponsors and the State Auditor to
                 assure that charter school operations and expenditures are
                 lawful. In this connection the State Auditor has (a) "assumed
                 an affirmative duty to act" on behalf of the Third-Party
                 Plaintiff volunteer board members, (b) knew that inaction on
                 his part "could lead to harm" given that there is no state
                 requirement for a licensed treasurer and (c) had "direct
                 contact" with the Third-Party Plaintiffs through his agents
                 and employees. The Third-Party Plaintiffs justifiably relied on
                 Yost and the State of Ohio to protect and advise them in
                 relation to charter school expenditures given the State's
                 failure to require charter school treasurers to be licensed.
(R. 16, ¶ 22.)
         {¶ 14} In assessing appellants' amended third-party complaint, the trial court
found:
                 [It] does not set forth sufficient factual matter which, if
                 proven, would demonstrate a special relationship and entitle
                 [them] to relief [because] [t]he pleading lacks adequate
No. 13AP-203                                                                               6


              underlying factual allegations of promises or actions by the
              Auditor of State to demonstrate that the office assumed
              affirmative duties beyond those that it owed on the public's
              behalf, nor are there factual allegations to demonstrate direct
              contact between the state's agents and the third-party
              complainants.

(R. 30, at 4.) In essence, the trial court required something more than notice pleading for
appellants' third-party claim.
       {¶ 15} "Civ.R. 12(B)(6) motions, however, merely ascertain whether the complaint
alleges the elements of the claim with sufficient particularity so that reasonable notice is
given to the opposing parties, i.e., Ohio generally follows notice, rather than fact,
pleading." In re Election Contest of Democratic Primary Held May 4, 1999 for Clerk,
Youngstown Mun. Court, 87 Ohio St.3d 118, 120 (1999). Plaintiffs need not prove their
case at the pleading stage. Ferron v. Dish Network, L.L.C., 195 Ohio App.3d 686, 2011-
Ohio-5235, ¶ 23 (10th Dist), citing York v. Ohio State Hwy. Patrol, 60 Ohio St.3d 143, 145
(1991). Notice pleading requires only that a claim concisely set forth those operative facts
sufficient to give a defendant fair notice of the nature of the action. Montgomery v. Ohio
State Univ., 10th Dist. No. 11AP-1024, 2012-Ohio-5489, ¶ 20.
       {¶ 16} Appellants' amended third-party claim sets forth operative facts sufficient to
give the state auditor fair notice of its claim that any asserted immunity is overcome by
the special relationship contained in R.C. 2743.02(A)(3)(b). They alleged the following
underlying facts, which, when presumed true, minimally places the state auditor on notice
of appellants' asserted special relationship under R.C. 2743.02(A)(3)(b) with the auditor:
(1) charter school treasurers are not required by Ohio law to be licensed; (2) volunteer
members of boards of directors of charter schools rely on their sponsors and the state
auditor to assure that charter school operations and expenditures are lawful; (3) the state
auditor assumed an affirmative duty to act on behalf of appellant volunteer board
members; (4) the state auditor knew that inaction on his part could lead to harm given
that there is no state requirement for a licensed treasurer; (5) the state auditor had direct
contact with appellants through his agents and employees; and (6) appellants justifiably
relied on the state auditor and the state to protect and advise them in relation to charter
school expenditures given the state's failure to require charter school treasurers to be
licensed. Although further proceedings may ultimately disprove appellants' claim, for
No. 13AP-203                                                                            7


purposes of the state auditor's Civ.R. 12(B)(6) motion, they alleged sufficient facts to
withstand dismissal.
       {¶ 17} Therefore, after accepting the truth of the material factual allegations of
appellants' amended third-party complaint and making all reasonable inferences
therefrom in their favor, it does not appear beyond doubt that the state auditor is immune
from liability under R.C. 2743.02(A)(3)(a). The Court of Claims thus erred in dismissing
appellants' amended third-party complaint for failure to state a claim upon which relief
can be granted. Appellants' first assignment of error is sustained.
       {¶ 18} In their second assignment of error, appellants assert that the trial court
erred when it dismissed the church's counterclaim against Legacy for its alleged
nonpayment of rent on leases with the church. The Court of Claims dismissed the
counterclaim because the attorney general, who had instituted the suit in a representative
capacity for the recovery of public money, is not amenable to suit.
       {¶ 19} R.C. 117.28 provides that when an audit report shows that public money has
been illegally expended, not accounted for, uncollected, converted, or misappropriated,
the attorney general may bring an action on behalf of the public office to which the money
is due or the public property belongs for recovery of the public money. In this case, the
attorney general brought the recovery action on behalf of Legacy in a representative
capacity. Appellants do not suggest that the church's counterclaim could be interposed
against the attorney general, who was suing them in his representative capacity.
Benjamin v. Ernst & Young, L.L.P., 167 Ohio App.3d 350, 2006-Ohio-2739, ¶ 7 (10th
Dist.) ("A counterclaim may only be asserted against an opposing party and only against
that party in the capacity in which that party sued."), citing Quintus v. McClure, 41 Ohio
App.3d 402 (9th Dist.1987).
       {¶ 20} Instead, appellants claim that Legacy was a party to the suit and that their
counterclaim was properly directed to it.      Appellants, however, cite no authority to
support their contention that a recovery action instituted by the attorney general on
behalf of a community school includes the community school as the real party in interest
in the case so as to permit counterclaims against the school. They cannot meet their
burden of demonstrating reversible error under these circumstances.         State ex rel.
Capretta v. Zamiska, 135 Ohio St.3d 177, 2013-Ohio-69, ¶ 12, citing In re Application of
Columbus S. Power Co., 129 Ohio St.3d 271, 2011-Ohio-2638, ¶ 14 (court can reject
No. 13AP-203                                                                          8


argument on appeal when the appellant fails to cite any legal authority in support);
Lundeen v. State Med. Bd. of Ohio, 10th Dist. No. 12AP-629, 2013-Ohio-112, ¶ 16
("According to App.R. 12(A)(2), we may disregard an assignment of error if an appellant
fails to cite to any legal authority in support of an argument as required by App.R.
16(A)(7).").
       {¶ 21} Moreover, appellants effectively conceded that the church's counterclaim
ceased to exist when they claimed below that their filing of an amended answer and
amended third-party complaint rendered moot the attorney general's motion to dismiss
the church's counterclaim contained in their original answer and the state auditor's
motion to dismiss their third-party complaint.
       {¶ 22} Therefore, appellants' second assignment of error is overruled. By so
holding, we need not address the merits of the attorney general's cross-assignment of
error. R.C. 2505.22 (reviewing court will consider cross-assignments of error raised by
an appellee who does not file a cross-appeal only if the judgment being appeal would
otherwise be reversed in whole or in part).
IV. CONCLUSION
       {¶ 23} Having overruled appellants' second assignment of error, the judgment of
the Court of Claims dismissing appellant church's counterclaim is affirmed. Having
sustained appellants' first assignment of error, the judgment of the Court of Claims of
Ohio dismissing appellants' amended third-party complaint is reversed and remanded for
further proceedings on that pleading.
                                                              Judgment affirmed in part,
                                                   reversed in part, and cause remanded.


                          KLATT, P.J., and BROWN, J., concur.

               T. BRYANT, J., retired, formerly of the Third Appellate
               District, assigned to active duty under authority of the Ohio
               Constitution, Article IV, Section 6(C).
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