## Facts

- Michael Liberato owned a commercial construction project and hired D&R Construction and Maintenance (D&R) as the general contractor.
- Liberato orally told D&R that he would fully compensate the entities D&R hired to perform subcontracted work on the project.
- D&R hired Anthony Filo (doing business as Filo Construction, Inc.) as a subcontractor.
- Filo provided labor and materials for concrete-related work, including curbing, sidewalks, footers, floors, a trash enclosure, and other excavation and concrete work.
- D&R fell behind in paying Filo for the work performed.
- After D&R failed to pay, Filo approached Liberato and requested payment of the past-due amounts; according to the complaint, Liberato promised Filo that he “would be fully paid,” but then refused to pay.
- Filo alleged he was owed roughly $33,600 and received only about $7,000.
- Filo alleged Liberato controlled the construction-loan draws and paid at least one other subcontractor in full, even though Filo remained unpaid.
- Filo sued Liberato for promissory estoppel, unjust enrichment, fraud, and conversion; the trial court dismissed all claims under Civ.R. 12(B)(6) based on the statute of frauds, and Filo appealed.

## Issues

1. Whether, at the pleading stage, the statute of frauds barred claims based on Liberato’s alleged oral promise to pay for D&R’s subcontractor work (as a promise to answer for another’s debt and/or as an unwritten sale-of-goods contract over $500).
2. Whether the amended complaint stated a claim for promissory estoppel based on Filo’s alleged reliance on Liberato’s promise of full payment, including allegations supporting the “leading object” (main purpose) exception.
3. Whether the amended complaint stated a claim for unjust enrichment based on Liberato’s retention of the benefit of Filo’s work without payment.
4. Whether the amended complaint pleaded fraud sufficiently to survive dismissal, notwithstanding a statute-of-frauds defense.
5. Whether the alleged nonpayment and handling of construction funds stated a conversion claim for specific, identifiable property.

## Decision

- The court affirmed dismissal of the conversion claim.
- The court reversed dismissal of the promissory estoppel, unjust enrichment, and fraud claims.
- The court remanded for further proceedings on the surviving claims.
- Applying Civ.R. 12(B)(6), the court accepted the complaint’s factual allegations as true and drew reasonable inferences in Filo’s favor.

## Legal Principles

- On a Civ.R. 12(B)(6) motion, dismissal is proper only when it appears beyond doubt from the complaint that the plaintiff can prove no set of facts entitling relief; the court must accept well-pleaded factual allegations as true and construe reasonable inferences for the nonmoving party.
- Ohio’s statute of frauds generally requires a writing for a “special promise to answer for the debt of another,” and the UCC statute of frauds requires a writing for contracts for the sale of goods priced at $500 or more.
- Under the “leading object” (main purpose) rule, an oral promise to pay another’s obligation may fall outside the statute of frauds when the promisor’s main purpose is to serve the promisor’s own business or financial interest rather than merely to guarantee another’s debt.
- Promissory estoppel may be available when a defendant makes a clear promise, the plaintiff reasonably relies on it, and the plaintiff suffers injury; at the pleading stage, allegations supporting the leading-object rule can defeat a statute-of-frauds dismissal.
- Unjust enrichment may be shown by alleging (1) a benefit conferred on the defendant, (2) the defendant’s knowledge of the benefit, and (3) retention of the benefit under circumstances where payment would be equitable; it is not automatically defeated at the pleading stage by a statute-of-frauds argument aimed at contract enforcement.
- Fraud requires a material misrepresentation (or concealment where there is a duty), made with knowledge or reckless disregard, intent to induce reliance, justifiable reliance, and resulting damages; sufficiently specific allegations can survive a motion to dismiss even if the defendant argues the dispute is tied to an unwritten promise.
- Conversion requires wrongful dominion over specific, identifiable personal property; a claim framed as nonpayment of money owed generally fails absent allegations tying the claim to a specific, segregated fund or identifiable property.

## Conclusion

The Seventh District held that Filo’s amended complaint plausibly alleged that Liberato promised Filo he would be fully paid and that Liberato’s reason for doing so could have been to protect Liberato’s own financial interest in completing the project, bringing the alleged promise within the leading-object rule and making dismissal under the statute of frauds inappropriate at the Civ.R. 12(B)(6) stage; accordingly, the court reinstated the promissory estoppel, unjust enrichment, and fraud claims, but affirmed dismissal of conversion because the allegations described an unpaid debt rather than wrongful control of specific, identifiable property.


Filo v. Liberato, 987 N.E.2d 707 (2013)