[Cite as Murphy v. Hall, 2020-Ohio-163.]


                                    IN THE COURT OF APPEALS

                                ELEVENTH APPELLATE DISTRICT

                                     TRUMBULL COUNTY, OHIO


 JAMES E. MURPHY, JR., et al.,                    :        OPINION

                   Plaintiffs-Appellants,         :
                                                           CASE NO. 2019-T-0022
         - vs -                                   :

 MARGARET A. HALL,                                :
 INDIVIDUALLY AND IN HER
 CAPACITY AS EXECUTRIX                            :
 OF THE ESTATE OF
 CATHERINE M. MURPHY, et al.,                     :

                   Defendant-Appellee.            :


 Civil Appeal from the Trumbull County Court of Common Pleas, Probate Division, Case
 No. 2017 CVA 0012.

 Judgment: Affirmed.


 William M. Flevares, Flevares Law Firm, LLC, 1064 Niles Cortland Road, N.E., Warren,
 OH 44484 (For Plaintiffs-Appellants).

 Douglas J. Neuman, Neuman Law Office, LLC, 761 North Cedar Avenue, Suite 1, Niles,
 OH 44446 (For Defendant-Appellee).


MATT LYNCH, J.

        {¶1}      Plaintiffs-appellants, James E. Murphy, Jr., Martin W. Murphy, Sr., Jeanne

M. Murphy, Patrick B. Murphy, Donna M. Grombacher, and Sean M. Murphy, appeal the

March 14, 2019 Amended Judgment Entry of the Trumbull County Court of Common

Pleas, Probate Division, ordering the distribution of 403(b) retirement account funds to

them and to appellee, Margaret A. Hall, and the Estate of Catherine M. Murphy. For the
following reasons, we affirm the decision of the court below.

        {¶2}   On February 24, 2017, the plaintiffs filed a Complaint for Declaratory

Judgment in the Trumbull County Court of Common Pleas, Probate Division, against Hall,

individually and in her capacity as Executrix of the Estate of Murphy, Fidelity Investments

Institutional Operations Company, Inc., and The Mercy Health Partners Retirement Plan

Committee. The plaintiffs and Hall are siblings of the decedent. The plaintiffs sought a

declaration that they are the true owners of the decedent’s Fidelity Investment 403(b) plan

account managed by Mercy Health Partners.

        {¶3}   On May 24, 2017, Hall filed her Answer which contained the following: “As

an affirmative defense, the Defendant states that she is entitled to a set-off against the

claims of the Plaintiffs from life insurance proceeds that the Defendant has given to the

Plaintiffs.”

        {¶4}   On October 16-17, 2017, the case was tried before the court. During the

course of the trial, the following relevant testimony was given:

        {¶5}   Hall testified that the decedent had two Cigna life insurance policies of

which she was the beneficiary: a Basic Benefit policy worth about $94,000 and a

Supplemental Benefit policy worth about $187,000. The decedent indicated to Hall that

the larger policy was for her siblings and that the smaller was to be divided between her

nieces and nephews. During the decedent’s final hospitalization, an attempt was made

by a friend of the decedent, Stella Maiorana, to have the siblings, nieces, and nephews

added to the policies as beneficiaries. However, “the life insurance * * * told her she

[Maiorana] wasn’t allowed to list that many people, because she [the decedent] had so

many nieces and nephews and brothers and sisters to list on the insurance, that they




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didn’t have room for them. * * * So she put just my name on it for both life insurance

policies and then I would divide them.”

          {¶6}   In October 2015, Hall sent checks to the siblings and the nieces and

nephews dividing the proceeds of the two policies. Although not directed to do so by the

terms of the policies or the decedent’s will, Hall testified: “If it’s somebody’s last wish, you

do it.”

          {¶7}   The decedent’s attorney, Joshua Garris, testified that the decedent

expressed her wish “to benefit her siblings, nieces, nephews, but primarily her sister

Peggy [Hall].” The decedent also expressed “that there was either a death benefit or a

retirement benefit of which there were two parts. The greater part would be shared

amongst siblings * * * but * * * the smaller part would be shared amongst nieces and

nephews.”

          {¶8}   Maiorana testified that the decedent “wanted her family to have everything

they possibly could” monetarily and she “wanted to make sure that Peggy [Hall] was going

to be set.”

          {¶9}   Martin Murphy, one of the decedent’s siblings, testified that, during the final

hospitalization, there was a paper stating that the insurance was to be divided between

the nieces and nephews while the Fidelity 403(b) was to be divided evenly between the

siblings.

          {¶10} Sean Murphy, one of the decedent’s siblings, testified that the decedent told

him directly that the “retirement,” i.e., the 403(b), was going to her siblings. He “had

thought Cigna was going to go to the kids [nieces and nephews], but [he] didn’t know that

for sure a hundred percent.”




                                                3
        {¶11} James Murphy, one of the decedent’s siblings, testified regarding a meeting

with the decedent at Garris’ office at which she stated, “I want the 403 to go to my brothers

and sisters, the insurance policy goes to my nieces and nephews.”

        {¶12} On November 21, 2017, the probate court issued a Judgment Entry,

denying the Complaint for Declaratory Judgment. The court’s Entry states, in relevant

part:

              The Plaintiffs argue that the change of beneficiary designation
              signed by Catherine M. Murphy shortly before her death, which
              leaves all seven of her siblings fourteen percent (14%) of the
              account, and which was received by Fidelity Investments Institutional
              Operations Company, Inc. after her death, should be followed.
              Defendant Hall argues that all of the proceeds of the 403(b) account
              should be paid to The Estate of Catherine M. Murphy, which had
              been the designation of the decedent prior to the execution of the
              change of beneficiary designation. The Court finds that the
              appropriate test to determine how the proceeds of the 403(b) account
              should be transferred is the clearly expressed intent test. * * * The
              Court finds that Margaret Hall reliably testified that the decedent
              intended the 403(b) account to go to her and that the smaller
              insurance policy was to be divided between the siblings and the
              nieces and nephews of the decedent. The Court finds that the
              change of beneficiary designation form does not accurately reflect
              the intent of the decedent.

        {¶13} The plaintiffs appealed the denial of the Complaint, arguing that the probate

court’s judgment was against the weight of the evidence.

        {¶14} On January 22, 2019, this court reversed the probate court’s decision for

the reason that “the weight of the evidence shows that the change of beneficiary form

was the decedent’s clearly expressed intent,” and remanded for further proceedings.

Murphy v. Hall, 11th Dist. Trumbull No. 2017-T-0114, 2019-Ohio-188, ¶ 17.

        {¶15} At a status conference subsequent to the remand, the parties agreed that

no further testimony would be necessary before a final disposition could be made.




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       {¶16} On March 12, 2019, the probate court issued its Judgment Entry which it

subsequently modified by an Amended Judgment Entry issued on March 14, 2019. The

court ruled as follows:

                      Because this Court [previously] ruled that the entirety of the
              403(b) account was an asset of the Estate in its November 21, 2017
              Judgment Entry, this Court did not address the affirmative defense
              of Defendant Margaret Hall that she is entitled to a set-off against the
              claims of the Plaintiffs from life insurance proceeds that she gave to
              the Plaintiffs. The opinion of the Eleventh District Court of Appeals
              similarly did not address the affirmative defense. The Court finds
              that it is now appropriate to rule on the affirmative defense of
              Defendant Hall.

                      Pursuant to Civ.R. 8(C), when a party has mistakenly
              designated a defense as a counterclaim or a counterclaim as a
              defense, the Court, if justice so requires, shall treat the pleading as
              if there had been a proper designation. The Court finds that justice
              requires it to construe the affirmative defense contained in
              Paragraph 21 of Defendant Hall’s Answer as a counterclaim for set-
              off.

                      The Court finds that Defendant Hall believed that the estate
              plan of the decedent was for Defendant Murphy to pay equal shares
              of the $187,000.00 Cigna life insurance benefit to each of the
              decedent’s siblings, to pay equal shares of the $94,000.00 Cigna life
              insurance benefit to the decedent’s nieces and nephews, and to
              retain the entirety of the 403(b) account for her own use.

                      The Court finds that, even though Defendant Hall was actually
              entitled to the entire value of both Cigna life insurance benefit
              payments, Defendant Hall paid the appropriate portions of the money
              to her siblings and to the nieces and nephews of the decedent to
              comply with the estate plan of the decedent. The Court finds that
              Defendant Hall paid to each of the Plaintiffs herein $26,857.14 from
              the Cigna life insurance benefit in compliance with what she believed
              was the decedent’s estate plan. The Court finds that Defendant Hall
              believed that she was required to make the payments to the Plaintiffs
              and took care to send each check by certified mail and retain copies
              for her records.

                    The Court finds that, while Defendant Hall also made
              payments to the decedent’s nieces and nephews in compliance with
              what she believed was the estate plan of the decedent even though



                                             5
             the policy was made payable to her, those nieces and nephews are
             not parties to this action.

                   Based upon the decision of the Eleventh District Court of
             Appeals, Defendant Hall was mistaken as to the estate plan of the
             decedent. The Eleventh District Court of Appeals ruled that the
             decedent actually intended for 14% of the 403(b) account to be paid
             to each of her seven siblings as beneficiaries.

                     The Court finds that the evidence is clear that Defendant Hall
             is the person with whom the decedent had the closest relationship
             and that Defendant Hall was the decedent’s primary caregiver during
             her illness. The Court finds that the clear intention of the decedent
             was that Defendant Hall would receive the bulk of her assets. This
             intention that Defendant Hall be the primary beneficiary of the
             decedent’s assets is clear from the evidence presented at the
             hearing, including the testimony of Joshua Garris, Esq. * * *. If the
             Court fails to grant the counterclaim, the Plaintiffs would receive a
             windfall, and the inequitable result would be that Defendant Hall
             would not receive the bulk of the decedent’s assets as the decedent
             intended.

                    The Court finds that, if the decedent intended for the 403(b)
             account to be paid to each of her seven siblings equally, as the
             Eleventh District Court of Appeals has ruled, she did not intend for
             the $187,000.00 Cigna life insurance benefit to be paid to each of
             her seven siblings equally and, instead, intended for the $187,000.00
             Cigna life insurance benefit to be retained by Defendant Hall in its
             entirety.

                    The Court finds that Defendant Hall is entitled to a set-off. The
             Court finds that it is necessary and appropriate that the money which
             was erroneously paid to the Plaintiffs in compliance with the
             decedent’s estate plan be returned to Defendant Hall now that the
             Eleventh District Court of Appeals has decided that the decedent’s
             estate plan was different than what Defendant Hall understood it to
             be.

      {¶17} Accordingly, the probate court ordered that the Fidelity 403(b) account be

divided amongst the decedent’s seven siblings with each sibling receiving 14%. The

amounts received by the six plaintiffs was reduced by $26,857.14 which was added to

Hall’s amount. The remaining 2% was ordered to be paid to Hall’s estate.




                                            6
       {¶18} On April 8, 2019, the plaintiffs filed a Notice of Appeal. On appeal, they

raise the following assignments of error:

       {¶19} “[1.] The trial court abused its discretion when it sua sponte construed

defendant-appellee Hall’s affirmative defense as a counterclaim.”

       {¶20} “[2.] The trial court erred as a matter of law when it sua sponte construed

defendant-appellee Hall’s affirmative defense as a counterclaim.”

       {¶21} “[3.] The trial court’s entry treating defendant-appellee Hall’s affirmative

defense of set-off as a counterclaim was against the manifest weight of the evidence.”

       {¶22} The plaintiffs’ first two assignments of error challenge the probate court’s

decision to construe Hall’s affirmative defense of setoff as a counterclaim. The arguments

raised under each assignment are similar. The difference lies with the standard of review

to be applied. The first assignment claims the trial court abused its discretion in the

application of Civil Rule 8(C). Under this deferential standard, “[i]t is not sufficient for an

appellate court to determine that a trial court [erred] simply because the appellate court

might not have reached the same conclusion or is, itself, less persuaded by the trial

court’s reasoning process than by countervailing arguments.” State v. Morris, 132 Ohio

St.3d 337, 2012-Ohio-2407, 972 N.E.2d 528, ¶ 14. The second assignment asserts an

error of law which requires this court to consider the decision de novo, i.e., “the appellate

court must * * * independently determine, without deference to the conclusion of the trial

court,” whether its decision satisfied the applicable legal standard. State v. Burnside, 100

Ohio St.3d 152, 2003-Ohio-5372, 797 N.E.2d 71, ¶ 8.

       {¶23} In either case, the plaintiffs argue “the Trial Court overstepped its authority

in general when it sua sponte designated Defendant-Appellee Hall’s affirmative defense




                                              7
of set-off as a counterclaim.” Appellants’ brief at 10. They note that the court “should

have followed this Court’s mandate and issued a judgment entry ordering Fidelity to

distribute 14% of [the decedent’s] 403(b) account to each of the six Appellants and

Defendant-Appellee Hall with the remaining 2% to the Estate of Catherine M. Murphy.”

Id. at 7. Instead, they claim, the court acted as an advocate for Hall’s interests. They

note that Hall’s affirmative defense does not contain a “short and plain statement of the

claim” or a “demand for judgment” as required by Civil Rule 8(A) for counterclaims. Id. at

11. Moreover, the court’s action failed to comply with the basic motion requirements of

Civil Rule 7(B) (“a motion * * * shall state with particularity the grounds therefor”) and “its

timing was contrary to Civil Rule 15 given that it did not do this until after this Court

remanded this case to the Trial Court.” Id. at 6 and 10.

       {¶24} Civil Rule 8(C) provides: “When a party has mistakenly designated a

defense as a counterclaim or a counterclaim as a defense, the court, if justice so requires,

shall treat the pleading as if there had been a proper designation.” It has been recognized

generally that a claim for setoff should be raised as a counterclaim pursuant to Civil Rule

13(C) (“[a] counterclaim may or may not diminish or defeat the recovery sought by the

opposing party”). Kingston Natl. Bank v. Stulley, 4th Dist. Pike No. 443, 1990 WL 155741,

*5; Indus. Fabricators, Inc. v. Natl. Cash Register Corp., 10th Dist. Franklin No. 83AP-13,

1984 WL 4669, *5 (“[p]ursuant to Civ.R. 13(C), a counterclaim is now any claim, including

setoff or recoupment, which a defendant may have against a plaintiff”); Civ.R. 13, 1970

Staff Notes (“[t]he rule abolishes any distinction between such terms as set off or

recoupment as distinguished from the term counterclaim itself”).

       {¶25} We note that several courts have adopted the plaintiffs’ position that, in




                                              8
order for an affirmative defense to be construed as a counterclaim, it must be properly

pled and so construed in a timely manner. “This provision was intended to permit trial

courts to forgive clerical errors made in designating defenses and counterclaims; it was

not designed as a means by which a party could correct a substantive error in pleadings

long after the time for amendment to those pleadings had passed.”             Am. Outdoor

Advertising Co., L.L.C. v. P & S Hotel Group, Ltd., 10th Dist. Franklin No. 09AP-221,

2009-Ohio-4662, ¶ 26; BAC Home Loans Serv., L.P. v. Hall, 12th Dist. Warren No.

CA2009-10-135, 2010-Ohio-3472, ¶ 19 (the same). This position, however, has not been

universally adopted. See Eaton Corp. v. Taylor-Winfield Corp., 8th Dist. Cuyahoga No.

62361, 1993 WL 267113, *4 (“[a]lthough Civ.R. 8(A) requires a counterclaim to contain a

demand for relief, lack of a demand is of no consequence when an affirmative defense is

to be treated as a counterclaim”).

       {¶26} Given the particular circumstances of the present case, we find no

reversible error in the probate court’s decision to construe Hall’s affirmative defense as a

counterclaim. This court reversed the court’s prior judgment as being against the weight

of the evidence, specifically as to the decedent’s intent regarding the distribution of the

Fidelity 403(b) account. When a judgment is reversed as being against the weight of the

evidence, the proper procedure on remand is to hold a new trial. Eastley v. Volkman, 132

Ohio St.3d 328, 2012-Ohio-2179, 972 N.E.2d 517, ¶ 22. This court is aware of no rule

that prevents the raising of supplemental claims when a case is remanded for a new trial.

See, e.g., Rejas Invests. v. Natl. City Bank, 2d Dist. Montgomery No. 23349, 2010-Ohio-

5163, ¶ 47 (affirming the trial court’s decision to grant a jury demand contained in

supplemental counterclaims raised on remand); Civ.R. 13(F) (“[w]hen a pleader fails to




                                             9
set up a counterclaim through oversight, inadvertence, or excusable neglect, or when

justice requires, he may by leave of court set up the counterclaim by amendment”); Civ.R.

15(E) (“[p]ermission [to file supplemental pleadings] may be granted even though the

original pleading is defective in its statement of a claim for relief or defense”).

       {¶27} Nor do we find error in the probate court’s decision to construe the

affirmative defense erroneous because it was taken sua sponte.              This court’s prior

Opinion established as the law of the case that the decedent’s intent with respect to the

distribution of the 403(b) account was reflected in the change of beneficiary form. Murphy,

2019-Ohio-188, at ¶ 17. Neither this court nor the probate court considered or made any

ruling regarding the distribution of the Cigna policies. Given that the lower court’s prior

judgment denied the plaintiffs’ claim for declaratory judgment, there was no reason for

either court to address what effect payment of the Cigna policies would have had on a

judgment in the plaintiffs’ favor. The issue was raised in Hall’s answer and was litigated

at trial. Virtually every witness testified regarding the policies and documentary evidence

of their value and of the distribution to the siblings, nieces, and nephews was introduced.

Rather than hold a new trial, however, the parties agreed that no further testimony would

be necessary in order for a final disposition to be rendered. The plaintiffs may have

believed that the court’s only option on remand was to enter judgment in their favor, but

that was not the case.

       {¶28} The first two assignments of error are without merit.

       {¶29} In the third assignment of error, the plaintiffs argue that the probate court’s

decision that Hall was entitled to a setoff in the amount of the insurance distribution to the

siblings was against the manifest weight of the evidence. We disagree.




                                              10
       {¶30} “Weight of the evidence concerns ‘the inclination of the greater amount of

credible evidence, offered in a trial, to support one side of the issue rather than the other.’”

(Citation omitted.) Eastley, 132 Ohio St.3d 328, 2012-Ohio-2179, 972 N.E.2d 517, at ¶

12. Being “mindful of the presumption in favor of the finder of fact,” the reviewing court

“‘weighs the evidence and all reasonable inferences, considers the credibility of witnesses

and determines whether in resolving conflicts in the evidence, the [finder of fact] clearly

lost its way and created such a manifest miscarriage of justice that the [judgment] must

be reversed and a new trial ordered.’” (Citations omitted.) Id. at ¶ 21, 20.

       {¶31} Hall’s distribution of the proceeds from the Cigna Supplemental Benefit

policy valued at $187,000 to the plaintiffs does not constitute a setoff as understood in

Ohio law. “The right to setoff mutual debts exists as a remedy under Ohio law.” Lewis v.

United Joint Venture, 691 F.3d 835, 839 (6th Cir.2012). It has been defined as “that right

which exists between two parties, each of whom under an independent contract owes a

definite amount to the other, to set off their respective debts by way of mutual deduction.”

Witham v. S. Side Bldg. & Loan Assn. of Lima, Ohio, 133 Ohio St. 560, 562, 15 N.E.2d

149 (1938); In re U.S. Aeroteam, Inc., 327 B.R. 852, 861 (S.D.Ohio 2005), citing Citizens

Bank of Maryland v. Strumpf, 516 U.S. 16, 18, 116 S.Ct. 286, 133 L.Ed.2d 258 (1995)

(“[s]etoff is a doctrine that allows entities who owe money to each other to cancel out or

apply their mutual debts against each other thereby avoiding the ‘absurdity of making A

pay B when B owes A’”) (citation omitted); King v. King, 11th Dist. Geauga No. 2011-G-

3046, 2013-Ohio-432, ¶ 33-34.

       {¶32} Although Hall’s defense was denominated a “set-off” and the probate court

purported to construe it thus as a counterclaim, the court’s Entry demonstrates it was




                                              11
contemplating another remedy.       The court’s Entry frankly states that, “even though

Defendant Hall was actually entitled to the entire value of both Cigna life insurance benefit

payments, [she] paid the appropriate portions of the money to her siblings * * * in

compliance with what she believed was the decedent’s estate plan.” By estate plan, the

court is apparently referencing the decedent’s desire to make Hall the primary beneficiary

of her estate or, in the court’s words, that Hall should “receive the bulk of her assets.”

This overarching purpose, according to the lower court’s construal of the evidence, was

frustrated by the decedent’s own conduct in executing the change of beneficiary form

shortly before her death. Hall “was mistaken as to the estate plan of the decedent,” not

with respect to her being the primary beneficiary, but with respect to the 403(b) account

comprising the bulk of those assets that she was to receive. Accordingly, the court

concludes, if it failed “to grant the counterclaim, the Plaintiffs would receive a windfall,

and the inequitable result would be that Defendant Hall would not receive the bulk of the

decedent’s assets.”

       {¶33} The plaintiffs argue “[t]his court’s decision [in Murphy, 2019-Ohio-188] that

it was [the decedent’s] clearly expressed intent that the 403(b) account be split equally

between Defendant-Appellee Hall and the six Appellants does not alter [the decedent’s]

intent that Defendant-Appellee Hall was to distribute the proceeds of the two Cigna life

insurance policies in the manner that she did: One to Defendant-Appellee Hall and the

six Appellants and the other to the nieces and nephews.” Appellants’ brief at 17.

       {¶34} The probates court’s judgment, however, does not rest on the decedent’s

specific intent as to the insurance policies. Per the terms of the policies, they were paid

to Hall. The relevant intent, for the purposes of the court’s judgment, was the decedent’s




                                             12
intent as to her estate plan. As determined by the lower court, the estate plan did not

envisage the appellants receiving a share of the 403(b) account as well as the proceeds

of the supplemental benefit policy inasmuch as Hall was intended to receive “the bulk” of

decedent’s assets. This conclusion is supported by the testimony of Garris, Maiorana,

and Hall and is entitled to our deference. Home Builders Assn. of Dayton and the Miami

Valley v. Beavercreek, 89 Ohio St.3d 121, 129, 729 N.E.2d 349 (2000) (“[w]hen reaching

a factual determination, the trial court is in the best position to evaluate the testimony of

witnesses and the evidence presented”).

       {¶35} Furthermore, we note that the probate court’s focus on the decedent’s broad

intent regarding her estate is not inconsistent with the equitable nature of restitution which

may be applied in circumstances where the retention of a benefit by a party would be

unjust and/or where a party is entitled to compensation for a benefit conferred on another.

Johnson v. Microsoft Corp., 106 Ohio St.3d 278, 2005-Ohio-4985, 834 N.E.2d 791, ¶ 20-

21; Resco Holdings, L.L.C. v. AIU Ins. Co., 2018-Ohio-2844, 112 N.E.3d 503, ¶ 41 (8th

Dist.) (“equity gives the court flexibility to reach a just result depending upon the facts and

circumstances of each case” and a reviewing court “will not disturb a trial court’s exercise

of its equity discretion absent an abuse of discretion”).

       {¶36} The third assignment of error is without merit.

       {¶37} In their reply brief, the appellants attempt to raise a fourth assignment of

error on the grounds that the probate court could not rely on the doctrine of mistake in

rendering its judgment. We decline to address this argument as it is presented in a

manner contrary to both the appellate rules and precedent. Cleveland v. Dancy, 8th Dist.

Cuyahoga No. 107241, 2019-Ohio-2433, ¶ 36 (“[p]ursuant to App.R. 16(C), reply briefs




                                              13
are to be used to rebut arguments raised in the appellee’s brief; an appellant may not use

a reply brief to raise new issues or assignments of error not addressed in the appellant’s

opening brief”) (citation omitted).

       {¶38} For the foregoing reasons, the Amended Judgment of the Trumbull County

Probate Court is affirmed. Costs to be taxed against the appellants.



TIMOTHY P. CANNON, P.J.,

THOMAS R. WRIGHT, J.,

concur.




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