Title: New Destiny Treatment Ctr., Inc. v. Wheeler

State: ohio

Issuer: Ohio Supreme Court

Document:

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
New Destiny Treatment Ctr., Inc. v. Wheeler, Slip Opinion No. 2011-Ohio-2266.] 
 
 
NOTICE 
This slip opinion is subject to formal revision before it is published in 
an advance sheet of the Ohio Official Reports.  Readers are requested 
to promptly notify the Reporter of Decisions, Supreme Court of Ohio, 
65 South Front Street, Columbus, Ohio 43215, of any typographical or 
other formal errors in the opinion, in order that corrections may be 
made before the opinion is published. 
 
SLIP OPINION NO. 2011-OHIO-2266 
NEW DESTINY TREATMENT CENTER, INC., ET AL., APPELLEES, v. WHEELER  
ET AL., APPELLANTS. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as New Destiny Treatment Ctr., Inc. v. Wheeler,  
Slip Opinion No. 2011-Ohio-2266.] 
Legal-malpractice claim — Attorney-client relationship — Party hiring counsel 
on behalf of a corporation must have authority to do so. 
(No. 2010-0298 — Submitted February 15, 2011 — Decided May 18, 2011.) 
APPEAL from the Court of Appeals for Summit County, 
No. 24404, 2009-Ohio-6956. 
__________________ 
 
O’DONNELL, J. 
{¶ 1} Attorney E. Marie Wheeler and the law firm of Roderick Linton, 
L.L.P., appeal from a decision of the Ninth District Court of Appeals reversing a 
grant of summary judgment entered in their favor in a legal malpractice action 
brought against them by New Destiny Treatment Center, Inc., and Christian 
Brotherhood Newsletter, both nonprofit corporations and successors to the 
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Barberton Rescue Mission, Inc.  The malpractice case arose from the 
representation of a dissident member of the board of trustees who tried to regain 
control of the corporation.  The issue that concerns us in this case is whether 
attorneys who were retained by a dissident member of a nonprofit corporation’s 
board of trustees, and who assisted the dissident in temporarily taking control of 
the corporation, may subsequently be sued by the corporation for malpractice.  
The answer is no, because no attorney-client relationship existed between the 
attorney and the corporation. 
{¶ 2} Here, Wheeler and the law firm of Roderick Linton represented 
only the dissident trustee and took action on behalf of the corporation as 
instructed by the dissident.  No attorney-client relationship ever existed between 
the corporation and the attorney or the law firm. Therefore, there is no basis for 
the corporation to maintain a cause of action for legal malpractice against either.  
Accordingly, we reverse the judgment of the court of appeals and reinstate the 
grant of summary judgment entered in favor of Wheeler and the law firm of 
Roderick Linton. 
Facts and Procedural History 
{¶ 3} New Destiny Treatment Center, Inc., is a nonprofit corporation 
located in Barberton, Ohio.  New Destiny and the Christian Brotherhood 
Newsletter were originally organized as a single nonprofit corporation known as 
the Barberton Rescue Mission, Inc., which operated a rehabilitation facility for 
people with substance abuse problems and provided a mutual aid program to 
assist those who subscribed to its Christian newsletter in paying their uninsured 
medical expenses. 
{¶ 4} In the late 1990s, the Internal Revenue Service, the Ohio Attorney 
General, and the Summit County Prosecuting Attorney began investigating 
whether Reverend Bruce Hawthorn, the founder and president of the Mission, had 
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abused the Mission’s tax-exempt status by diverting funds designated for a 
charitable purpose to his personal use and the use of friends and relatives. 
{¶ 5} Once he became aware of these investigations, Hawthorn invited 
Reverend Howard Russell and Reverend Richard Lupton to join the Mission’s 
board of trustees in 1999 to make it appear that the Mission had an independent, 
rather than a family, board.  Russell became chairman and Lupton became 
secretary of the board, and they discovered that the Mission had fallen as much as 
35 to 40 million dollars behind in paying its subscriber’s medical bills, even 
though the newsletter generated three to four million dollars per month in 
charitable contributions.  The board retained the law firm of Vorys, Sater, 
Seymour & Pease, L.L.P., as legal counsel in response to the investigations of the 
Mission’s tax-exempt status and of Hawthorn’s alleged misuse of charitable 
funds. 
{¶ 6} When a majority of the members of the board of trustees became 
concerned that Hawthorn’s leadership threatened the continued existence of the 
ministry, the board placed Hawthorn on a six-month leave of absence from his 
position controlling the daily activities of the ministry. It appointed Dan Beers, 
Hawthorn’s nephew, as executive director of the Mission and assigned 
Hawthorn’s duties to him; the minutes of a board meeting reflect that Beers 
resigned his position as a member of the board of trustees when he became 
executive director.  The board eventually replaced Beers with an interim CEO and 
a management team. 
{¶ 7} When Hawthorn began to reassert control over the Mission, 
members of the board of trustees determined that the best interests of the 
organization required his removal as president.  While divided on this issue, the 
board in November 2000 extended Hawthorn’s leave of absence indefinitely, and 
Russell and Lupton, at least, believed that this leave relieved him of all executive 
authority. 
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{¶ 8} Russell scheduled a meeting of the board of trustees for December 
4, 2000, to discuss the attorney general’s investigation, to remove Hawthorn and 
his brother-in-law, Ron Beers,  from the board, and to force Hawthorn to retire. 
{¶ 9} Hawthorn then retained Wheeler and the law firm of Roderick 
Linton to ensure that he retained control of the board.  He scheduled a board 
meeting on December 4, earlier in the day than the one scheduled by the board.  
Wheeler prepared a special meeting agenda for the earlier meeting that included 
removing Russell from the board and retaining Roderick Linton as counsel for the 
Mission.  Because neither faction could assemble a quorum, neither succeeded in 
removing the other from the board. 
{¶ 10} On December 6, 2000, Hawthorn changed the locks on the 
Mission’s building, fired the board-appointed management team, and announced 
to employees that he had control of the organization.  When Russell, who had 
been informed of Hawthorn’s actions, arrived at the building, Hawthorn purported 
to remove him from the board, and Wheeler ordered Russell to leave the 
premises. 
{¶ 11} Hawthorn then scheduled a teleconference meeting of the board for 
December 11, 2000.  Although Russell and Lupton were both given notice of the 
meeting and planned at that time to seek removal of Hawthorn and Ron Beers 
from the board, neither was permitted to participate. 
{¶ 12} At the meeting, Hawthorn and the board members present claimed 
that Dan Beers had not resigned from the board but rather  had returned from a 
leave of absence as a trustee, found that a quorum existed, and thus purported to 
remove Russell and Lupton from the board and elect a new slate of trustees more 
favorable to Hawthorn.  Hawthorn also informed the board that he had retained 
Wheeler on behalf of the Mission. 
{¶ 13} That same day, the attorney general, Russell, and Lupton brought 
an action in the name of the Mission against Hawthorn and others to recover 
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funds misappropriated from the organization.  Wheeler filed a notice to 
voluntarily dismiss the action on behalf of the Mission.  Importantly, the attorney 
general, Russell, and Lupton moved to strike the notice and asserted that Wheeler 
and another Roderick Linton attorney represented only Hawthorn and the other 
defendants, but were “not attorneys for Plaintiff Barberton Rescue Mission, Inc., 
nor [was] there any way they conceivably could be.” 
{¶ 14} On December 22, 2000, the attorney general, Russell, and Lupton 
filed a separate action on behalf of the Mission in the Ninth District Court of 
Appeals seeking a writ of quo warranto to restore Russell and Lupton as members 
of the Mission’s board of trustees.  They alleged that Hawthorn usurped control 
over the Mission and operated it without corporate authority to do so. 
{¶ 15} Wheeler subsequently ended her association with Roderick Linton 
in February 2001, and in April 2001, the common pleas court appointed R. Scott 
Haley as operating receiver for the Mission.  Although neither Russell nor Lupton 
acknowledged Wheeler’s authority to represent the Mission, Haley formally 
terminated her as counsel for the Mission.  She continued to represent Hawthorn 
in the court matter, however, until she withdrew in August 2001.  The common 
pleas court litigation proceeded with new defense counsel and resulted in a 
$2,950,000 jury verdict against Hawthorn. 
{¶ 16} On October 3, 2001, the court of appeals entered a summary 
judgment in the quo warranto action in favor of the attorney general, finding that 
Dan Beers had not taken a leave of absence from the board of trustees but had 
resigned from that position.  The court therefore determined that the December 
11, 2000 meeting, during which Hawthorn had attempted to oust Russell and 
Lupton from the board of trustees, was invalid for lack of a quorum, and it further 
held that  “[b]ecause the meeting was invalid, any and all actions taken at that 
meeting [were] void.” State ex rel. Montgomery v. Hawthorn (October 3, 2001), 
Summit App. No. 20391. 
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{¶ 17} New Destiny then filed this legal malpractice action against 
Wheeler and Roderick Linton, asserting that they had breached their obligations 
as attorneys and had negligently represented that a quorum had been present at the 
December 11, 2001 meeting, which allowed Russell and Lupton to be removed 
from the board and left Hawthorn in control of the Mission. 
{¶ 18} The trial court entered summary judgment in favor of Wheeler and 
Roderick Linton, concluding that no genuine issue of material fact existed 
regarding whether the attorneys had entered into an attorney-client relationship 
with the Mission.  As the court explained, “[t]he facts of this case do not provide 
for a legal malpractice cause of action because there was never an attorney-client 
relationship between Defendants and Plaintiffs.  In fact, the opposite is true: the 
current parties had an adversarial relationship * * *. The factions had separate 
interests, separate Boards, and separate attorneys.” 
{¶ 19} The court of appeals reversed the trial court on the issue of the 
existence of an attorney-client relationship, explaining that because a corporation 
is an entity separate from its constituents, testimony from Russell and Lupton that 
Wheeler did not represent the Mission is not conclusive.  The appellate court 
determined that the fact Hawthorn hired Wheeler in his capacity as president of 
the Mission established a genuine issue of material fact regarding the existence of 
an attorney-client relationship.  The appellate court rejected the argument that 
New Destiny should be judicially estopped from asserting the existence of an 
attorney-client relationship, holding that Wheeler and Roderick Linton had 
unclean hands, having “represented themselves as attorneys for the Mission,” and 
thus could not assert the defense of judicial estoppel. 
Arguments on Appeal 
{¶ 20} Wheeler and Roderick Linton assert that they were not the 
attorneys for the Mission but rather that they represented one faction seeking to 
control the Mission’s board.  They note that the lawfully constituted board of 
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trustees never considered Wheeler to be the attorney for the board or for the 
Mission, and that Hawthorn’s leave of absence deprived him of both actual and 
apparent authority to engage an attorney on the Mission’s behalf.  Wheeler and 
Roderick Linton also contend that the Mission should be judicially estopped from 
asserting that an attorney-client relationship existed because it had successfully 
argued a contrary position in prior litigation. 
{¶ 21} Finally, they argue that a court of appeals may not reverse a trial 
court’s judgment if alternative grounds for affirming it are preserved in the record 
and raised on appeal. 
{¶ 22} New Destiny, on the other hand, maintains that Wheeler and 
Roderick Linton acted as the corporate counsel for six months, that Hawthorn 
controlled the corporation and held out Wheeler and Roderick Linton as 
representing the Mission during that time, and that its employees treated them as 
counsel.  Also, New Destiny relies on the doctrine of equitable estoppel to bar 
Wheeler and Roderick Linton from denying that they had an attorney-client 
relationship with the corporation, asserting that the attorneys represented that they 
were attorneys for the Mission and that the Mission relied to its detriment on 
those representations by paying their attorney fees. 
{¶ 23} Accordingly, the question presented is whether an attorney 
retained by a dissident member of a nonprofit corporation’s board of trustees in an 
effort to gain control of the corporation may subsequently be sued for malpractice 
by the corporation. 
Standard of Review 
{¶ 24} Our review of cases decided on summary judgment is de novo, 
governed by the standard set forth in Civ.R. 56.  Comer v. Risko, 106 Ohio St.3d 
185, 2005-Ohio-4559, 833 N.E.2d 712, ¶ 8.  A trial court should enter summary 
judgment in favor of the moving party if “ ‘(1) there is no genuine issue of 
material fact; (2) the moving party is entitled to judgment as a matter of law; and 
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(3) it appears from the evidence that reasonable minds can come to but one 
conclusion when viewing evidence in favor of the nonmoving party, and that 
conclusion is adverse to the nonmoving party.’ ”  Doe v. Shaffer (2000), 90 Ohio 
St.3d 388, 390, 738 N.E.2d 1243, quoting Grafton v. Ohio Edison Co. (1996), 77 
Ohio St.3d 102, 105, 671 N.E.2d 241. 
The Attorney-Client Relationship 
{¶ 25} To establish a cause of action for legal malpractice, a claimant 
must demonstrate the existence of an attorney-client relationship giving rise to a 
duty, a breach of that duty, and damages proximately caused by that breach.  
Krahn v. Kinney (1989), 43 Ohio St.3d 103, 105, 538 N.E.2d 1058.  Accordingly, 
as we explained in Shoemaker v. Gindlesberger, 118 Ohio St.3d 226, 2008-Ohio-
2012, 887 N.E.2d 1167, “[i]f a plaintiff fails to establish a genuine issue of 
material fact as to any of the elements, [the attorney] is entitled to summary 
judgment.”  Id. at ¶ 8. 
{¶ 26} To determine whether an attorney-client relationship exists, the 
law looks to the manifest intentions of the attorney and the prospective client.  1 
Hazard & Hodes, The Law of Lawyering (2005) 2-8, Section 2.5.  A relationship 
of attorney and client arises when a person manifests an intention to obtain legal 
services from an attorney, and the attorney either consents or fails to negate 
consent when the person has reasonably assumed that the relationship has been 
established.  Id.; 1 Restatement of the Law 3rd, The Law Governing Lawyers 
(2000) 126-128, Section 14.  Thus, the existence of an attorney-client relationship 
does not depend on an express contract but may be implied based on the conduct 
of the parties and the reasonable expectations of the putative client.  Hazard & 
Hodes, supra, at 2-9; Becker, Guttenburg & Snyder, The Law of Professional 
Conduct in Ohio (2009-2010) 1-15 to 1-16, Section 1.07[1]; Flamm, Lawyer 
Disqualification: Conflicts of Interest and Other Bases (2003) 221-222, Section 
11.2; see also Cuyahoga Cty. Bar Assn. v. Hardiman, 100 Ohio St.3d 260, 2003-
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Ohio-5596, 798 N.E.2d 369, ¶ 10 (“The determination of whether an attorney-
client relationship was created turns largely on the reasonable belief of the 
prospective client”). 
{¶ 27} However, in this case, the putative client is a corporate entity, and 
an attorney employed or retained by a corporation represents the organization 
acting through its constituents; the attorney does not owe allegiance to a 
stockholder, director, officer, or other person connected with the corporation. 
Prof.Cond.R. 1.13(a); former EC 5-19.  Thus, because a corporate attorney 
represents the organization acting through its agents, id., in order to form an 
attorney-client relationship with a corporation, the party hiring counsel on behalf 
of the corporation must necessarily have authority to do so and must reasonably 
believe that an attorney-client relationship has been established. 
{¶ 28} Here, no one with authority to employ counsel for the Mission 
retained either Wheeler or the firm of Roderick Linton, and no corporate 
resolution exists to that effect.  While Hawthorn purported to retain them in his 
capacity as president of the Mission in December 2000, the board of trustees had 
placed him on a leave of absence in May 2000 and had extended that leave of 
absence indefinitely in November 2000.  Both Russell and Lupton testified that 
Hawthorn had been relieved of his authority to control the daily activities of the 
corporation during this period of time. Thus, Hawthorn lacked authority in his 
capacity as president to retain counsel on behalf of the Mission in December 
2000. 
{¶ 29} Further, New Destiny does not point to anything in this record 
showing that any other constituent of the Mission with authority to obtain counsel 
retained Wheeler, nor does it indicate any board meeting took place at which the 
duly elected directors established a quorum and ratified Wheeler’s employment or 
that of the law firm of Roderick Linton as the Mission’s counsel.  In fact, both 
Russell and Lupton testified that Wheeler did not represent the Mission as its 
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attorney, because they considered her to be the attorney for Hawthorn and his 
faction. 
{¶ 30} Moreover, the complaint filed by New Destiny in this case states 
that Wheeler and Roderick Linton never had authority to represent the Mission, 
alleging that Wheeler and the law firm provided advice to the Hawthorn faction of 
the board that “purported to result in her retention as counsel” (emphasis added) 
for the Mission but that their employment was actually “void and invalid.”  New 
Destiny cites no legal principle that would allow it to deny the existence of an 
attorney-client relationship between the Mission and Wheeler or the law firm in 
its complaint while simultaneously seeking to recover a judgment against them 
for legal malpractice. 
{¶ 31} Accordingly, New Destiny has not met its burden to establish the 
existence of an attorney-client relationship between the Mission and Wheeler or 
Roderick Linton, and no evidence of such a relationship exists.  Thus, summary 
judgment is appropriate in connection with New Destiny’s legal malpractice 
claims, and the question whether an appellate court may reverse a trial court’s 
judgment if alternative grounds for affirming it are preserved in the record and 
raised on appeal therefore becomes moot. 
Conclusion 
{¶ 32} A claimant may not maintain a cause of action for malpractice 
against an attorney in the absence of an attorney-client relationship.  Because 
neither Wheeler nor Roderick Linton ever represented the Mission, but rather 
represented only a dissident faction of the corporation, the trial court properly 
entered summary judgment on the legal malpractice claim asserted against them.  
Accordingly, we reverse the judgment of the court of appeals and reinstate the 
summary judgment entered by the trial court in favor of Wheeler and Roderick 
Linton. 
Judgment reversed. 
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PFEIFER, ACTING C.J., and ROGERS, LUNDBERG STRATTON, CUPP, and 
MCGEE BROWN, JJ., concur. 
 
LANZINGER, J., concurs in judgment only. 
 
RICHARD M. ROGERS, J., of the Third Appellate District, sitting for 
O’CONNOR, C.J. 
__________________ 
 
Gibson & Lowry, Michael J. Moran, and Kenneth L. Gibson, for appellee 
New Destiny Treatment Center. 
 
Gallagher Sharp, Alan M. Petrov, Timothy J. Fitzgerald, Jay Clinton Rice, 
and Theresa A. Richthammer, for appellant Roderick Linton, L.L.P. 
 
Reminger Co., L.P.A., Brian D. Sullivan, Martin T. Galvin, and John P. 
O’Neil, for appellant E. Marie Wheeler. 
______________________