On Wednesday, March 20, 2024, Oxford Finance LLC filed a complaint for a writ of prohibition against Judge Timothy W. Clary of the Cuyahoga County Court of Common Pleas. The complaint stems from a case currently before Judge Clary regarding the receivership of several nursing home facilities.

Oxford Finance is a real estate lender that provided loans to Hana2.0 Property Group LP, a landlord that leased properties to nursing home operators. When the operators defaulted on rent payments, Hana2.0 filed a lawsuit seeking to place the operators and their facilities into receivership. Judge Clary has been overseeing that receivership case, known as Hana2.0 Property Group LP v. Embassy Healthcare Holdings, Inc.

Although Oxford Finance is not a party to the receivership case, on March 6th Judge Clary issued a journal entry interpreting the receivership orders as barring Oxford from taking actions to enforce its loans to Hana2.0 and collect over $70 million owed without the court’s permission. Specifically, the entry prohibited Oxford from declaring further defaults, filing separate lawsuits, pursuing self-help remedies, or acquiring ownership of Hana2.0’s membership interests without leave of the court.

Oxford argues in its complaint that Judge Clary lacks both subject matter and personal jurisdiction over disputes concerning Oxford’s loan agreements with Hana2.0 and Craig Bernfield, who guaranteed the loans. The complaint states that the relationship between Oxford, Hana2.0, and Bernfield is not at issue in the receivership case and that none of Oxford’s collateral is part of the receivership. Therefore, Judge Clary has exceeded the statutory scope of a receivership proceeding by asserting jurisdiction over an unrelated contract dispute between non-parties.

The complaint alleges that Judge Clary issued his March 6th order without receiving any relevant evidence from the parties. It claims Hana2.0 falsely represented that Oxford could interfere with the receivership proceedings, but provided no evidence to support this allegation. Oxford argues it has not taken any actions affecting the receivership.

Oxford is requesting a peremptory writ of prohibition from the Ohio Supreme Court, preventing Judge Clary from further exercising jurisdiction over disputes regarding the loan agreements. It asserts that allowing the receivership orders to restrict its ability to enforce the loans against Hana2.0 and Bernfield will cause Oxford irreparable financial harm.

In the complaint, Oxford states it filed an emergency motion on March 12th asking Judge Clary to vacate the March 6th order, and informed the court it would seek a writ of prohibition if the order was not removed by March 19th. However, Judge Clary declined to order an expedited briefing on the emergency motion. Oxford is now seeking the extraordinary relief of a writ from the Supreme Court to correct Judge Clary’s “patently and unambiguously flawed assertion of jurisdiction.”

The complaint raises important questions about the appropriate scope of a court’s authority in overseeing a receivership proceeding. It will be up to the Ohio Supreme Court to determine whether Judge Clary overstepped his bounds by asserting control over disputes beyond the receivership itself. A decision could provide clarification on the limits of a judge’s jurisdiction in similar receivership cases going forward.

Timothy Clary is a Republican judge serving in the Cuyahoga County Court of Common Pleas General Division in Ohio, having assumed office in January 2024 and currently running in a special election for the same position.

A copy of the original filing can be found here.