[Cite as Rayco Mfg., Inc. v Murphy, Rogers, Sloss & Gambel, 2019-Ohio-3756.]

 COURT OF APPEALS OF OHIO 

EIGHTH APPELLATE DISTRICT 

COUNTY OF CUYAHOGA 

RAYCO MANUFACTURING, INC., : 

 Plaintiff-Appellant/ : 

 Cross-Appellee, 

 : No. 106714 

 v. 

 : 

MURPHY, ROGERS, SLOSS & 

GAMBEL, A PROFESSIONAL LAW : 

CORPORATION, ET AL., 

 : 

 Defendants-Appellees/ 

 Cross-Appellants. : 

 

 

EN BANC DECISION AND JOURNAL ENTRY AND OPINION 

 JUDGMENT: AFFIRMED IN PART; REVERSED 

IN PART; REMANDED

RELEASED AND JOURNALIZED: September 19, 2019 

 

Civil Appeal from the Cuyahoga County Court of Common Pleas 

Case No. CV-13-815844 

 

Appearances: 

Kehoe & Associates, L.L.C., Robert D. Kehoe, and Kevin P. 

Shannon; Critchfield, Critchfield & Johnston, Ltd., J. 

Douglas Drushal, Steven J. Shrock, and Andrew P. Lycans, 

for appellant/cross-appellee. 

Baker Hostetler, Ernest E. Vargo, and Michael E. 

Mumford, for appellees/cross-appellants Murphy, 

Rogers, Sloss & Gambel, a Professional Law Corporation, 

Peter B. Sloss, Gary J. Gambel, Robert H. Murphy, and 
Donald R. Wing. 

Gallagher Sharp L.L.P., Timothy T. Brick and Steven D. 

Strang, for appellees/cross-appellants Cavitch, Familo & 

Durkin Co., L.P.A., Douglas A. DiPalma, Michael C. 

Cohan, and Eric J. Weiss. 

EILEEN A. GALLAGHER, J.: 

Pursuant to App.R. 26, Loc.App.R. 26, and McFadden v. Cleveland 

State Univ., 120 Ohio St.3d 54, 2008-Ohio-4914, 896 N.E.2d 672, the en banc court 

determined that a conflict existed between (1) the panel decision in this case, which 

followed our prior decision in Berry v. Lupica, 196 Ohio App.3d 687, 2011-Ohio5381, 965 N.E.2d 318 (8th Dist.), and (2) our prior decisions in R.C.H. Co. v. Classic 

Car Auto Body & Frame, Inc., 8th Dist. Cuyahoga No. 83697, 2004-Ohio-6852, and 

Mayfran Internatl. v. May Conveyor, Inc., 8th Dist. Cuyahoga No. 62913, 1993 

Ohio App. LEXIS 3511 (July 15, 1993), regarding whether attorney fees incurred as 

a result of a motion to enforce a settlement agreement are recoverable as 

compensatory damages. 

In this case, plaintiff-appellant/cross-appellee Rayco Manufacturing, 

Inc. (“Rayco”) appeals from the trial court’s decision granting defendantsappellees/cross-appellants’ (collectively, “appellees”)1 motion to enforce a 

settlement agreement that resolved legal malpractice claims Rayco had filed against 

 1 Appellees consist of Murphy, Rogers, Sloss & Gambel, a Professional Law 

Corporation, Peter B. Sloss, Gary J. Gambel, Robert H. Murphy, and Donald R. Wing 

(collectively, “Murphy”) and Cavitch, Familo & Durkin Co., L.P.A., Douglas A. DiPalma, 

Michael C. Cohan and Eric J. Weiss (collectively, “Cavitch”). 
appellees. Rayco contends that the trial court erred in finding that there was an 

enforceable settlement agreement. Appellees cross-appeal and contend that the 

trial court erred in denying their request to recover the attorney fees they incurred 

to enforce the settlement agreement. To secure and maintain uniformity of 

decisions within the district, we vacate the panel decision issued on November 29, 

2018, Rayco Mfg. Inc. v. Murphy, Rogers, Sloss & Gambel, 8th Dist. Cuyahoga No. 

106714, 2018-Ohio-4782, consider appellees’ cross-assignment of error en banc and 

issue this decision as the final decision in this appeal. 

This opinion is divided into two parts: (1) the decision of the en banc 

court and (2) the decision of the merit panel. The decision of the en banc court is 

limited to analysis and resolution of the issue raised in appellees’ cross-assignment 

of error regarding whether attorney fees incurred as a result of a motion to enforce 

a settlement agreement are recoverable as compensatory damages. The merit panel 

reissues the original panel decision with respect to Rayco’s three assignments of 

error, which is unaffected by this en banc review, and addresses appellees’ crossassignment of error in light of the en banc court’s decision. 

DECISION OF THE EN BANC COURT: 

The issue to be considered by the en banc court has been framed as 

follows: “Are attorney fees incurred as a result of a motion to enforce a settlement 

agreement recoverable as compensatory damages?” Upon en banc review, we hold 

that attorney fees can be awarded as compensatory damages to the prevailing party 
on a motion to enforce a settlement agreement when the attorney fees are incurred 

as a direct result of a breach of the settlement agreement. 

Ohio follows the “American Rule,” which provides that a prevailing 

party in a civil action may not generally recover its attorney fees as part of the “costs 

of litigation” unless attorney fees are provided for by statute, the nonprevailing party 

acts in bad faith or there is an enforceable contract that “specifically provides for the 

losing party to pay the prevailing party’s attorney fees.” Wilborn v. Bank One Corp., 

121 Ohio St.3d 546, 2009-Ohio-306, 906 N.E.2d 396, ¶ 7. 

In Berry v. Lupica, 196 Ohio App.3d 687, 2011-Ohio-5381, 965 

N.E.2d 318, this court held that, notwithstanding the American Rule, a party was 

entitled to recover its attorney fees as compensatory damages when the fees were 

incurred as a direct result of the breach of a settlement agreement. In that case, 

Berry filed suit against his supervisor and employer, Wachovia Securities 

(“Wachovia”), alleging that Wachovia breached an agreement to pay the full amount 

of Berry’s share of an arbitration award that had been entered against Berry in an 

arbitration between Berry and his former employer, Merrill Lynch. Id. at ¶ 1. The 

arbitration panel awarded Merrill Lynch $250,000 on its claims against Berry and 

awarded Berry $125,000 on his claim against Merrill Lynch. Id. at ¶ 2. Wachovia 

paid the $250,000 judgment against Berry. Id. at ¶ 3. Berry endorsed the $125,000 

check he received from Merrill Lynch and gave it to his Wachovia branch manager 

with a note requesting that the check be placed on deposit “to offset the interest due 

on our contract” and indicating that “[t]he $125,000 is to be returned on demand.” 
Id. at ¶ 3-4. The check was deposited into a Wachovia account dedicated to legal 

settlements. Berry later asked to have the check returned to him, but Wachovia 

refused to return it. Id. at ¶ 5. Berry filed suit, alleging that Wachovia had breached 

an agreement to hold Berry’s Merrill Lynch proceeds and produce them on demand; 

Wachovia filed a counterclaim, alleging that Berry had breached a settlement 

agreement that he would reimburse Wachovia for certain of the amounts it had paid 

to Merrill Lynch in satisfaction of the arbitration award. Id. at ¶ 1, 6. Wachovia 

sought to recover as damages the attorney fees it expended or would be required to 

expend to enforce the settlement agreement. Id. at ¶ 6. 

The jury found against Berry on all of his claims and in favor of 

Wachovia on its counterclaim; it awarded Wachovia $432,000 in damages for the 

attorney fees Wachovia expended in enforcing the settlement agreement. Id. at ¶ 8. 

Berry appealed to this court, asserting, among other arguments, that 

the award of attorney fees to Wachovia violated the American Rule. Id. at ¶ 18-19. 

This court disagreed. The court held that Berry had breached the settlement 

agreement when he filed suit against Wachovia, seeking the return of the $125,000. 

Id. at ¶ 15. The court further held that the attorney fees Wachovia incurred to 

enforce the settlement agreement were recoverable as compensatory damages 

resulting from Berry’s breach of their agreement. Id. at ¶ 19-20. As the court 

explained: 

Ohio adheres to the rule that “a prevailing party in a civil action may 

not recover attorney fees as a part of the costs of litigation.” Wilborn v. 

Bank One Corp., 121 Ohio St.3d 546, 2009-Ohio-306, 906 N.E.2d 396, 
at ¶ 7. However, attorney fees are allowed as compensatory damages 

when the fees are incurred as a direct result of the breach of a 

settlement agreement. See Raymond J. Schaefer, Inc. v. Pytlik, 6th 

Dist. Ottawa No. OT-09-026, 2010-Ohio-4714, ¶ 34; Tejada-Hercules 

v. State Auto. Ins. Co., 10th Dist. Franklin No. 08AP-150, 2008-Ohio5066, ¶ 10. The rationale behind the exception for allowing attorney 

fees expended as a result of enforcing a settlement agreement is that 

“any fees incurred after the breach of the settlement agreement were 

relevant to the determination of compensatory damages, including 

those fees [a party was] ‘forced’ to incur by filing the action.” TejadaHercules at ¶ 10. 

The legal fees awarded in this case were the measure of compensatory 

damages directly related to Wachovia’s need to enforce the settlement 

agreement. The court did not err by awarding Wachovia its attorney 

fees as compensatory damages. 

Id. at ¶ 19-20;2 see also Shelly Co. v. Karas Properties, Inc., 8th Dist. Cuyahoga No. 

98039, 2012-Ohio-5416, ¶ 41 (citing Berry and observing that “[c]ourts often award 

attorney fees incurred after the breach of a settlement agreement because ‘when a 

party breaches a settlement agreement to end litigation and the breach causes a 

party to incur attorney fees in continuing litigation, those fees are recoverable as 

compensatory damages in a breach of settlement claim,’” but ultimately concluding 

that Berry did not apply because the breach of contract claim at issue did not involve 

a settlement agreement), quoting Shanker v. Columbus Warehouse Ltd. 

Partnership, 10th Dist. Franklin No. 99AP-772, 2000 Ohio App. LEXIS 2391 (June 

6, 2000). 

 2 Because it found the jury’s damages award to be “plainly excessive,” the court 

gave Wachovia the option of accepting a remittitur of the damages award to $133,691 — 

the amount that Wachovia requested and proved at trial — or a new trial. Id. at ¶ 44, 46. 
In Mayfran Internatl. v. May Conveyor, Inc., 8th Dist. Cuyahoga No. 

62913, 1993 Ohio App. LEXIS 3511, this court held that a party who prevailed on a 

motion to enforce a settlement agreement was not entitled to recover the attorney 

fees it incurred to enforce the agreement as compensatory damages because there 

had been no finding that the other party had acted in bad faith. In that case, Mayfran 

International, Inc. (“Mayfran”) sued May Conveyor, Inc. and several related 

defendants (collectively, “May Conveyor”), asserting various claims relating to the 

alleged misappropriation of trade secrets. Id. at 2-3. Prior to trial, the parties 

reached an alleged settlement. Id. at 2-4. After execution of a handwritten 

settlement agreement, but before execution of a final “definitive agreement,” a 

dispute arose as to the meaning of one of the terms of the alleged settlement, and 

Mayfran filed a motion to enforce the settlement agreement. Id. at 3-8. After a 

series of hearings, the trial court determined that the parties had entered into an 

enforceable settlement agreement and that May Conveyor had breached that 

agreement. It awarded Mayfran lost profits and its attorney fees as compensatory 

damages for breach of the settlement agreement. Id. at 8-9. May Conveyor 

appealed. On appeal, this court reversed the attorney fee award, concluding that the 

attorney fee award was “not proper” because there had been no finding that May 

Conveyor acted in bad faith and, “[a]bsent a statutory provision, a prevailing party 

is not entitled to an award of attorney fees unless the party against whom the fees 

are taxed was found to have acted in bad faith.” Id. at 15, citing State ex rel. Kabatek 

v. Stackhouse, 6 Ohio St.3d 55, 451 N.E.2d 248 (1983). 
In R.C.H. Co. v. Classic Car Auto Body & Frame, Inc., 8th Dist. 

Cuyahoga No. 83697, 2004-Ohio-6852, the parties reached a settlement agreement 

in a lease dispute. Id. at ¶ 2-5. The plaintiffs thereafter filed an “amended second 

cause of action,” alleging that the defendants had breached the settlement 

agreement. Id. at ¶ 7. The trial court entered judgment for the plaintiffs for rent 

due, utilities and attorney fees. Id. at ¶ 8. On appeal, this court reversed the 

attorney fee award based on the American Rule, noting that there was no contractual 

or statutory basis for an award of attorney fees and no finding that the defendants 

had acted in bad faith. Id. at ¶ 10-11. 

We follow Berry and hold that attorney fees can be awarded as 

compensatory damages to the prevailing party on a motion to enforce a settlement 

agreement when the fees are incurred as a direct result of a breach of the settlement 

agreement. 

Compensatory damages are awarded to a party to compensate it for 

damages, injury or other loss caused by another party. The object of compensatory 

damages is to make the aggrieved party whole, i.e., to put the party in as good a 

position as the party would have been had the agreement at issue been fully 

performed or the harm not occurred. See, e.g., Kovach v. Lazzano, 11th Dist. Geauga 

No. 1082, 1983 Ohio App. LEXIS 12491, 7 (Aug. 5, 1983) (“Compensatory damages 

in Ohio have been traditionally defined as the measure of actual loss suffered by the 

aggrieved party[.] * * * [T]he object of compensatory damages is to make the 

damaged party whole for the wrong done to him. * * * General compensatory 
damages are those which result from the wrongful act and which are traceable to 

and the necessary result of the act.”); Johnson v. Weiss Furs, 8th Dist. Cuyahoga No. 

76680, 2000 Ohio App. LEXIS 676, 4 (Feb. 24, 2000) (“[T]he purpose of monetary 

compensatory damages is to put the injured party in the position that he or she 

would have been in, had the wrong complained of not occurred.”). 

When parties settle a case, the end of litigation is an essential 

component of the consideration exchanged as part of the settlement. A party may 

pay more (or accept less) to resolve a case by settlement than the party believes it 

would have to pay (or would recover) if the dispute were to be fully litigated in 

exchange for (1) the certainty of result and (2) peace, i.e., an end to the time and 

expense associated with litigating the parties’ dispute. Where a party breaches a 

settlement agreement and the breach causes the nonbreaching party to incur 

attorney fees through continued litigation to enforce the settlement agreement, the 

nonbreaching party has lost an essential benefit of its bargain. As such, the 

nonbreaching party is entitled to recover the reasonable attorney fees it incurred in 

enforcing the settlement agreement — not as part of the “costs of litigation” — but 

rather, as compensatory damages for the other party’s breach of the settlement 

agreement. 

Courts have long recognized that, notwithstanding the American 

Rule, a plaintiff may recover attorney fees expended in an action brought by a third 

party as compensatory damages where the defendant’s breach of contract caused 

the plaintiff to engage in the litigation with the third party. See, e.g., S & D 
Mechanical Contrs., Inc. v. Enting Water Conditioning Sys., Inc., 71 Ohio App.3d 

228, 241, 593 N.E.2d 354 (2d Dist.1991); see also Annotation, Attorneys’ Fees 

Incurred in Litigation with Third Person as Damages in Action for Breach of 

Contract, 4 A.L.R.3d 270. 

Because the attorney fees recoverable on a successful motion to 

enforce a settlement agreement are compensatory damages — rather than “costs of 

litigation” — the American Rule does not preclude their recovery even where none 

of the other exceptions to the American Rule applies. 

A number of other Ohio appellate districts have reached the same 

conclusion. See, e.g., Brown v. Spitzer Chevrolet Co., 5th Dist. Stark No. 2012 CA 

00105, 2012-Ohio-5623, ¶ 19-21 (“attorney fees are allowed as compensatory 

damages when the fees are incurred as a direct result of the breach of a settlement 

agreement”); Raymond J. Schaefer, Inc. v. Pytlik, 6th Dist. Ottawa No. OT-09-026, 

2010-Ohio-4714, ¶ 33-34 (appellee entitled to an award of attorney fees as 

compensatory damages “because those fees were incurred as a direct result of 

appellants’ breach of the settlement agreement”); Myron C. Wehr Properties, L.L.C. 

v. Petraglia, 2016-Ohio-3126, 65 N.E.3d 242, ¶ 36, 38 (7th Dist.) (“[A]ttorney fees 

may be awarded where it can be established they were the result of the offending 

party’s breach of the settlement agreement and sought as compensatory damages 

and not merely as costs of the action.”); Tejada-Hercules v. State Auto. Ins. Co., 10th 

Dist. Franklin No. 08AP-150, 2008-Ohio-5066, ¶ 9-11 (recognizing “a distinction 

between cases in which attorney fees are awarded as costs and those in which the 
fees are awarded as part of the aggrieved party’s damages” and that “a party may 

receive attorney fees resulting from the other party’s breach of the settlement 

agreement as a form of compensatory damages”); Shanker, 10th Dist. Franklin No. 

99AP-772, 2000 Ohio App. LEXIS 2391, at 11-15 (“Because defendant’s attorney fees 

are attributable to and were incurred as the result of plaintiffs’ breach of the 

settlement agreement, defendant is entitled to recover those fees in order to make 

whole and compensate him for losses caused by plaintiffs’ breach.”); see also Rohrer 

Corp. v. Dane Elec Corp. USA, 482 Fed.Appx. 113, 115-117 (6th Cir.2012) (“Ohio law 

allows a court to award attorney’s fees as compensatory damages when a party’s 

breach of a settlement agreement makes litigation necessary, even where none of 

the exceptions to the American Rule have been shown.”); Wilson v. Prime Source 

Healthcare of Ohio, N.D.Ohio No. 1:16-cv-1298, 2018 U.S. Dist. LEXIS 34445, 8-9 

(Mar. 2, 2018) (where a settling party forces the other party to litigate a motion to 

enforce the settlement, the party forced to enforce the settlement agreement is 

“entitled to attorney’s fees stemming from this additional litigation as compensatory 

damages”). 

Allowing the recovery of attorney fees as compensatory damages on a 

motion to enforce a settlement agreement is consistent with the strong public policy 

that exists in encouraging settlements and enforcing settlement agreements. See, 

e.g., Spercel v. Sterling Industries, Inc., 31 Ohio St.2d 36, 38, 285 N.E.2d 324 (1972) 

(‘“The law favors the resolution of controversies and uncertainties through 

compromise and settlement rather than through litigation. * * * The resolution of 
controversies * * * by means of compromise and settlement * * * results in a saving 

of time for the parties, the lawyers, and the courts, and it is thus advantageous to 

judicial administration, and, in turn, to government as a whole.”’), quoting 15 

American Jurisprudence 2d, Compromise and Settlement, Section 4 at 938; 

Turoczy Bonding Co. v. Mitchell, 8th Dist. Cuyahoga No. 106494, 2018-Ohio-3173, 

¶ 16 (“Settlement agreements are generally favored in the law.”); Ortiz v. United 

States Fid. & Guar. Co., 8th Dist. Cuyahoga No. 85966, 2005-Ohio-5982, ¶ 21 

(“[P]ublic policy favors settlements. Without such, it would be difficult for parties 

to attempt the amicable adjustment or compromise of disputes. Moreover, when 

parties agree to settle cases, litigation is avoided, costs of litigation are contained, 

and the legal system is relieved of the burden of resolving the dispute with the 

resulting effect of alleviating an already overcrowded docket. Perhaps the most 

salubrious aspect of settlement is its finality; the conflict is resolved and the 

appellate process is avoided.”). 

 Were it otherwise, a party who had a “change of heart” regarding a 

settlement agreement would have nothing to lose by refusing to comply with the 

settlement agreement, challenging the existence or enforceability of the settlement 

agreement, and continuing to litigate the matter, notwithstanding the harm to the 

nonbreaching party.3 At worst, i.e., if the court were to rule against the breaching 

 3 Although an exception exists under the American Rule, permitting the recovery 

of attorney fees as litigation costs where the nonprevailing party acts in “bad faith,” this 

is a high bar for the recovery of attorney fees. See, e.g., Covenant Dove Holding Co., 

L.L.C. v. Mariner Health Care, Inc., 1st Dist. Hamilton No. C-120878, 2013-Ohio-3824, 

¶ 7 (‘“Bad faith’ is more than bad judgment or negligence. * * * It implies a dishonest 
party and enforce the settlement agreement, the breaching party would simply be 

required to comply with the settlement agreement as originally agreed. Allowing 

parties to recover attorney fees incurred to enforce a settlement agreement as 

compensatory damages “encourages parties to comply with the terms of their 

settlement agreements, lest they put themselves at risk of paying the nonbreaching 

parties’ attorney fees” incurred in enforcing the settlement agreement. TejadaHercules, 10th Dist. Franklin No. 08AP-150, 2008-Ohio-5066, at ¶ 22. 

Although in Berry, 196 Ohio App.3d 687, 2011-Ohio-5381, 965 

N.E.2d 318, the nonbreaching party sought enforcement of a settlement agreement 

in a separate action rather than by filing a motion to enforce the settlement 

agreement, we see no reason that a different rule should apply depending on how a 

party seeks to enforce a settlement agreement. See, e.g., Wilson, N.D., Ohio No.1:16-

CV-1298, 2018 U.S. Dist. LEXIS 34445, at 8-9 (“Attorney’s fees as compensatory 

damages are available whether a party files a separate breach of contract suit or a 

motion to enforce settlement before the original trial court.”). In both instances, a 

party seeking to enforce a settlement agreement is subjected to additional or 

continued litigation as a result of the other party’s attempted repudiation of a 

settlement agreement. A nonbreaching party should not be compelled to initiate a 

 

purpose, moral obliquity, conscious wrongdoing, breach of a known duty due to ulterior 

motive, ill will comparable to fraud, or an actual intent to mislead or deceive another.”); 

see also LEH Properties v. Pheasant Run Assn., 9th Dist. Lorain No. 1-CA009780, 2011-

Ohio-516, ¶ 23. Thus, a party could not recover attorney fees under the bad faith 

exception to the American Rule merely because a party had a “change of heart” regarding 

a settlement or in the ordinary case where a party simply fails to comply with the terms 

of a settlement agreement. 
separate action and file and serve a new complaint (or seek leave to amend a 

previously filed complaint), incurring even greater expense and further wasting 

limited judicial resources, in order to recover its compensatory damages incurred in 

enforcing a settlement agreement. 

 Accordingly, we hold that attorney fees can be awarded as 

compensatory damages on a motion to enforce a settlement agreement when the 

fees are incurred as a direct result of the breach of a settlement agreement. 

 To the extent R.C.H. Co. v. Classic Car Auto Body & Frame, Inc., 8th 

Dist. Cuyahoga No. 83697, 2004-Ohio-6852, and Mayfran Internatl. v. May 

Conveyor, Inc., 8th Dist. Cuyahoga No. 62913, 1993 Ohio App. LEXIS 3511 (July 15, 

1993), are inconsistent with this decision of the en banc court, we overrule them. 

____________________________ 

EILEEN A. GALLAGHER, JUDGE 

MARY EILEEN KILBANE, A.J.; MARY J. BOYLE, FRANK D. CELEBREZZE, JR., 

RAYMOND C. HEADEN, LARRY A. JONES, SR., and KATHLEEN ANN KEOUGH, 

JJ., CONCUR; 

 

MICHELLE J. SHEEHAN, J., DISSENTS WITH SEPARATE OPINION, with 

PATRICIA ANN BLACKMON, EILEEN T. GALLAGHER, SEAN C. GALLAGHER, 

and ANITA LASTER MAYS, JJ. 

MICHELLE J. SHEEHAN, J., DISSENTING: 

Respectfully, I dissent. “Ohio has long adhered to the ‘American 

[R]ule’ with respect to recovery of attorney fees: a prevailing party in a civil action 

may not recover attorney fees as a part of the costs of litigation.” Wilborn v. Bank 
One Corp., 121 Ohio St.3d 546, 2009-Ohio-306, 906 N.E.2d 396, ¶ 7, citing 

Nottingdale Homeowners’ Assn., Inc. v. Darby, 33 Ohio St.3d 32, 33-34, 514 N.E.2d 

702 (1987), and State ex rel. Beebe v. Cowley, 116 Ohio St. 377, 156 N.E. 214 (1927). 

The United States Supreme Court has repeatedly recognized this 

bedrock principle and recently affirmed that “the American Rule has roots in our 

common law reaching back to at least the 18th Century * * *.” Baker Botts L.L.P. v. 

ASARCO, L.L.C., 576 U.S. __, 135 S.Ct. 2158, 192 L.Ed.2d 208 (2015) (refusing to 

create a “judicial exception” to the American Rule to allow recovery of attorney fees 

for work performed in defending a fee application in Bankruptcy Court per Section 

330(a)(1) of the Bankruptcy Code). 

There are three well-established exceptions to the rule in Ohio. 

Attorney fees may be awarded if (1) a statute creates a duty to pay fees,4 (2) the losing 

party has acted in bad faith, or (3) the parties contract to shift fees. Wilborn at ¶ 7. 

See also Pegan v. Crawmer, 79 Ohio St.3d 155, 156, 679 N.E.2d 1129 (1997);

Krasny-Kaplan Corp. v. Flo-Tork, Inc., 66 Ohio St.3d 75, 77, 609 N.E.2d 152 (1993); 

State ex rel. Kabatek v. Stackhouse, 6 Ohio St.3d 55, 451 N.E.2d 248 (1983); 

Nottingdale; State ex rel. Crockett v. Robinson, 67 Ohio St.2d 363, 369, 423 N.E.2d 

 4 For example, R.C. 2335.39 authorizes an award of attorney fees to a prevailing 

party where an action by the state agency is not substantially justified. Collyer v. 

Broadview Dev. Ctr., 81 Ohio App.3d 445, 611 N.E.2d 390 (10th Dist.1992). R.C. 2323.51 

authorizes an award of attorney fees to a party to a civil action who is adversely affected 

by another party’s frivolous conduct. See Moore v. Cleveland, 8th Dist. Cuyahoga No. 

83070, 2004-Ohio-360.
1099 (1981); Sorin v. Bd. of Edn., 46 Ohio St.2d 177, 347 N.E.2d 527 (1976); and 

State ex rel. Grosser v. Boy, 46 Ohio St.2d 184, 347 N.E.2d 539 (1976). 

 The fourth exception endorsed by the court today appears to have 

originated in 2000 when a sister appellate court deviated from the American Rule 

to allow the recovery of attorney fees as compensatory damages in Shanker v. 

Columbus Warehouse Ltd. Partnership, 10th Dist. Franklin No. 99AP-772, 2000 

Ohio App. LEXIS 2391 (June 6, 2000). In Shanker, the parties reached an oral 

settlement agreement in court. Plaintiff, however, subsequently submitted a draft 

settlement agreement with a new term not in the original settlement agreement. 

Defendant filed a motion to enforce the settlement agreement the parties had 

reached in court. The trial court enforced the in-court settlement, and plaintiff 

appealed the trial court’s decision, which was affirmed on appeal. After the appeal, 

defendant refused to pay the settlement proceeds because plaintiff had continued to 

litigate after the parties had settled, causing defendant to incur additional attorney 

fees to defend the settlement. Plaintiff then filed a new lawsuit to enforce the 

settlement agreement. Defendant counterclaimed, claiming plaintiff breached the 

settlement by continuing to litigate and therefore defendant should be awarded 

attorney fees defending the settlement agreement in the first litigation. 

The trial court concluded both parties breached the settlement 

agreement and awarded defendant attorney fees incurred defending the settlement 

agreement. On appeal, the Tenth District affirmed the trial court’s decision, 

reasoning that the attorney fees were sought as compensatory damages flowing from 
plaintiff’s breach of the settlement agreement. The court of appeals also held 

plaintiff was entitled to attorney fees for defendant’s own breach of the settlement 

and remanded the case. 

Unfortunately, our sister districts and now this court applied the 

broad proposition in Shanker that attorney fees are recoverable for breach of a 

settlement agreement without any authorization or guidance from the Ohio 

Supreme Court or the legislature. In other words, appellate courts have now carved 

out a narrow exception and placed settlement agreements on a pedestal, above all 

other types of contracts. With a stroke of a pen, appellate courts now allow any party 

that disputes a settlement agreement and succeeds to gain a windfall in attorney fees 

and in effect encourages pursuit of further litigation over any minor breach or 

discrepancy involving a settlement agreement. 

A settlement agreement is a contract — one designed to terminate a 

claim by preventing or ending litigation. In re All Kelley & Ferraro Asbestos Cases, 

104 Ohio St.3d 605, 2004-Ohio-7104, 821 N.E.2d 159, ¶ 28. As a contract, a 

settlement agreement is governed by principles of contract law. Rulli v. Fan 

Company, 79 Ohio St.3d 374, 683 N.E.2d 337 (1997). 

In Ohio, attorney fees are generally not recoverable as costs of 

litigation in a contract action. Walton Commercial Ent. v. Assns., Conventions, 

Tradeshows, Inc., 71 Ohio App.3d 109, 115, 593 N.E.2d 64 (10th Dist.1990), citing 

Allen v. Std. Oil Co., 2 Ohio St.3d 122, 443 N.E.2d 497 (1982). However, the parties 

to a contract may provide for attorney fees to be awarded to the prevailing party. 
The American Rule allows for the shifting of attorney fees in this situation as one of 

the three well-settled exceptions. See Nottingdale, 33 Ohio St.3d at 36, 514 N.E.2d 

702 (when the right to recover attorney fees arises from a contractual term, the 

rationale permitting recovery is the parties’ fundamental right to contract freely). 

Although public policy and the law favor the resolution of 

controversies and uncertainties through settlement agreements rather than 

litigation, Spercel v. Sterling Industries, Inc., 31 Ohio St.2d 36, 285 N.E.2d 324 

(1972), there is no compelling reason to elevate a settlement agreement above all 

other contracts for purposes of recovery of attorney fees as damages. As in any 

contract, it is entirely foreseeable that a settlement agreement may be breached or 

its terms may be disputed. The parties are free — as they often do — to negotiate 

and provide for an award of attorney fees in the settlement agreement itself in the 

event of a breach. In other words, the parties themselves could easily contract for 

an award of attorney fees to the prevailing party in the event of further litigation 

necessitated by an allegation of a breach of the settlement agreement. The parties’ 

failure to negotiate and incorporate such a term in their agreement does not warrant 

the courts to impose such a rule or deviate from the American Rule. As this court 

stated in R.C.H. Co. v. Classic Car Auto Body & Frame, Inc., 8th Dist. Cuyahoga No. 

83697, 2004-Ohio-6852, ¶ 11, attorney fees are allowable as damages “where the 

parties have bargained for this result.” 

The Tenth District reasoned that the attorney fees incurred as a result 

of enforcing a settlement agreement are recoverable because they constitute 
compensatory damages flowing from a party’s breach of the settlement agreement. 

Shanker, 10th Dist. Franklin No. 99AP-772, 2000 Ohio App. LEXIS 2391, at 12, and

Tejada-Hercules v. State Auto Ins. Co., 10th Dist. Franklin No. 08AP-150, 2008-

Ohio-5066, ¶ 9. This, however, can be said of attorney fees in all breach of contract 

actions. In every breach of contract litigation, the expenditure of attorney fees by 

the nonbreaching party to enforce the contract is a direct result of the other party’s 

breach; the nonbreaching party is forced to incur attorney fees to enforce the 

contract. Whether attorney fees are labeled compensatory damages or costs is a 

distinction without a difference. Attorney fees are attorney fees. Calling them 

compensatory damages does not change the nature of the fees. 

The majority here notes that compensatory damages are awarded to 

make the aggrieved party whole — to put the party in the position where the party 

would have been in had the agreement been fully performed. Again, this can be said 

of attorney fees in all breach of contract actions. The nonbreaching party can truly 

be made whole only by recovering the attorney fees incurred as the result of the other 

party’s breach, yet attorney fees are generally not recoverable unless expressly 

contracted for. 

The trial court in this case recognized the same issue when it held: 

Despite its lengthy exegesis on the subject, the Shanker court’s 

affirmance of the award of attorney[] fees to a party enforcing a 

settlement agreement was based only on the fact that the fees were 

incurred because the agreement was breached. Yet that can be said for 

any successful plaintiff on a breach of contract claim. Adopting the 

Shanker rationale throughout Ohio would nullify the American rule 

that each party to a lawsuit is responsible for its own attorney[] fees 
unless they agreed otherwise, had a statutory entitlement to fees, or the 

other side acted in bad faith. Perhaps the abrogation of that rule would 

be salutary, but that is hardly a policy decision for a discrete threejudge appellate panel — much less a single common pleas judge — to 

make. 

 

Journal Entry, Dec. 14, 2017. 

Within the parameters of the American Rule, it is traditionally within 

the sound discretion of the trial court to determine whether attorney fees are 

warranted under the facts of each case. Charvat v. Ryan, 116 Ohio St.3d 394, 2007-

Ohio-6833, 879 N.E.2d 765, ¶ 27. See also Lima Pub. Library Bd. of Trustees v. 

State Emp. Rels. Bd., 3d Dist. Allen No. 1-10-51, 2011-Ohio-1730, ¶ 39. An award 

of attorney fees should be “fair, just and reasonable as determined by the trial court 

upon full consideration of all of the circumstances of the case.” Wilborn, 121 Ohio 

St.3d 546, 2009-Ohio-306, 906 N.E.2d 396, at ¶ 19, fn. 3, citing Nottingdale, 33 

Ohio St.3d 32, 33-34, 514 N.E.2d 702, at syllabus. A bright-line rule holding that 

attorney fees are recoverable as compensatory damages in litigation involving an 

alleged breach of settlement agreement unnecessarily interferes with the trial court’s 

discretionary power in matters of attorney fees and it has procedural consequences. 

“If the fees are damages, then the availability and amount of such fees have to be 

determined by the jury.” Christe v. GMS Mgmt. Co., 88 Ohio St.3d 376, 378, 726 

N.E.2d 497 (2000). However, calculating attorney fee awards requires 

consideration of the time and labor involved in maintaining the litigation, the 

novelty and difficulty of the questions presented, the professional skill required to 

perform the necessary legal services, the reputation of the attorney, and the results 
obtained, and consideration of all of these issues is best undertaken by courts rather 

than juries. Id. at 378-379. 

 One of the important public policy considerations underlying the 

American Rule is that requiring the parties to pay for their own legal fees encourages 

and promotes settlement. Awarding attorney fees to the prevailing party in 

litigation involving disputes over a settlement agreement, however, encourages 

more litigation, rather than resolution. If a party knows they can collect their 

attorney fees from the other side for a breach of a settlement agreement in an already 

contentious matter, any alleged breach will be litigated and result with an award of 

attorney fees likely greater than the original amount in dispute. 

As for a party who merely “had a change of heart” regarding a 

settlement, this scenario would likely fall under the bad faith exception if the court 

finds the “change of heart” to be “conscious wrongdoing or a breach of known duty 

due to ulterior motive.” See State v. Powell, 132 Ohio St.3d 233, 2017-Ohio-2577, 

71 N.E.2d 865, ¶ 81 (bad faith “imports a dishonest purpose, moral obliquity, 

conscious wrongdoing, breach of a known duty through some ulterior motive or ill 

will partaking of the nature of fraud”). In any event, the parties can always contract 

for an award of attorney fees to preclude a “change of heart.” 

Ohio is an “American Rule” jurisdiction. Under the rule, the parties 

involved in litigation bear their own litigation costs and they are free to alter the 

effect of the rule contractually. Absent an express contractual provision, the court 

can award attorney fees within its discretion if a party breaches a settlement 
agreement in bad faith. Shanker and its progeny disturb Ohio’s long tradition of 

adhering to the American Rule. I believe this court should continue to apply the 

American Rule with its well-established exceptions until the Supreme Court of Ohio 

or the legislature provides otherwise. Respectfully, I dissent. 

 

DECISION OF THE MERIT PANEL: 

EILEEN A. GALLAGHER, P.J.: 

Rayco appeals from the trial court’s decision granting appellees’ 

motion to enforce a settlement agreement that resolved legal malpractice claims 

Rayco had filed against appellees. Rayco contends that the trial court erred in 

finding that there was an enforceable settlement agreement. Appellees cross-appeal 

and contend that the trial court erred in denying their request to recover the attorney 

fees they incurred to enforce the settlement agreement. For the reasons that follow, 

we affirm the trial court’s decision to the extent that it grants appellees’ motion to 

enforce the settlement agreement, reverse the trial court’s decision to the extent that 

it denies appellees’ motion for attorney fees and remand the case for further 

proceedings. 
Factual Background and Procedural History 

In October 2013, Rayco filed a complaint against appellees for legal 

malpractice arising out of appellees’ handling of a prior lawsuit Rayco had filed 

against Deutz Corporation and Deutz AG (collectively, “Deutz”) for breach of 

warranty and other claims arising out of Deutz’s sale of engines to Rayco. In that 

case, summary judgment was granted in favor of Deutz and affirmed by the United 

States Court of Appeals for the Sixth Circuit. 

In February 2015 and June 2016, the parties attempted to mediate 

their dispute with the assistance of a retired judge as the mediator. At the second 

mediation, Rayco authorized the mediator to convey a settlement demand of 

$3,050,000, in the aggregate, to appellees. At the conclusion of the second 

mediation, no agreement had been reached but efforts to settle the case continued. 

In July 2016, the mediator issued a written recommendation to the 

parties, recommending that they settle the case for $2,650,000 in the aggregate. 

Rayco’s counsel advised the mediator that Rayco did not agree with the 

recommendation and that appellees would have to pay the full $3,050,000 it had 

demanded to settle the case. In September 2016, with the consent of all parties, the 

mediator met with Rayco’s chief executive, John Bowling, to further discuss the 

possibility of resolving the case. After the meeting, the mediator continued to have 

settlement discussions with Rayco and its counsel by telephone. 

In the fall of 2016, several pretrial conferences were cancelled at the 

parties’ request due to ongoing settlement negotiations. During this time period, 
one of Rayco’s attorneys, Robert Kehoe, had discussions with appellees’ counsel in 

which he reiterated that the only way to settle the case would be to pay Rayco’s full 

settlement demand of $3,050,000. Given the amount of the demand, appellees 

needed to request additional authority from their insurance carriers to settle the 

case. To that end, in late 2016, Murphy’s counsel and Cavitch’s counsel separately 

requested written settlement demands from Rayco that Murphy and Cavitch could 

submit to their insurance carriers. In January 2017, Cavitch’s counsel emailed 

Attorney Kehoe inquiring about the status of the “demand letter” from Rayco. 

Attorney Kehoe replied that he was “working on it.” 

On January 26, 2017, Attorney Kehoe sent letters to Murphy’s counsel 

and Cavitch’s counsel. He indicated that he was writing “to follow up on the June 

23, 2016 mediation and subsequent settlement discussions with [appellees’ counsel] 

and the mediator.” He stated that Rayco had authorized the mediator to convey a 

“firm demand” of $3,050,000 to settle the case and had “made it clear” that 

“$3,050,000 was an absolute aggregate amount necessary to settle the case.” He 

further indicated that “[w]e have not explored the possibility of resolving Rayco’s 

claims against [the Murphy and Cavitch appellees] independent[ly]” but that there 

was “enough insurance coverage” for appellees “[i]n combination” to “meet Rayco’s 

demand.” 

At a pretrial conference on January 30, 2017, the parties advised the 

trial court that settlement negotiations were ongoing. A month later, on February 
23, 2017, one of Murphy’s attorneys, Ernie Vargo, sent an email to Rayco’s counsel, 

with the consent of Cavitch’s counsel, stating as follows: 

This is in response to Rayco’s offer of settlement as set forth in your 

letter of January 26, 2017 to me. Counsel for Cavitch indicates that he 

has received a substantively similar letter on behalf of the Cavitch firm 

and named attorneys. 

The Murphy firm, Cavitch firm, and named lawyers from each firm 

accept the collective settlement demand of $3,050,000 in the 

aggregate. This acceptance is conditioned upon a full release and 

dismissal and other customary provisions to be negotiated and 

memorialized in a formal settlement agreement. Defendants agree to 

provide the initial draft of the written agreement to you for comments. 

Please expect the draft within 14 days of this email. 

Thank you for your efforts in negotiating this resolution with us. 

Later that day, Attorney Kehoe responded to the email. He left a 

voicemail message for Attorney Vargo, thanking him and requesting that he return 

his call, indicating, “I’d like to talk to you briefly about the logistics and I note that 

you’ll take the first cut at the settlement documents and have them in about 14 days, 

which is fine.” The following day, another of Rayco’s attorneys, J. Douglas Drushal, 

emailed Attorney Vargo. He thanked Attorney Vargo for his February 23, 2017 email 

and stated that “[i]f he has not done so yet, [Attorney Kehoe] will be in touch shortly 

with how we would like to proceed to finalize things.” 

On March 2, 2017, Attorney Drushal emailed appellees’ counsel, 

stating, “I believe we are waiting for the final versions of what your side wants signed 

in the way of releases, etc. before presenting the package to Rayco. We need to know 

every detail before we can finalize. Anything you could do to expedite that would be 

helpful. Thanks.” 
On March 7, 2017, Murphy’s counsel emailed “defendants’ draft 

settlement agreement and release” to Rayco’s counsel. Murphy’s counsel also 

inquired whether the parties should notify the court that they had “an agreement in 

principle” given that a pretrial conference was scheduled with the trial court for the 

following day. Attorney Drushal responded: “Agree that we should contact [the] 

court and say we don’t need the conference. I will defer to the rest of you to 

coordinate that, assuming all others concur.” The trial court cancelled the March 8, 

2017 pretrial conference at the parties’ request. 

On March 10, 2017, Attorney Kehoe forwarded a red-lined version of 

the settlement agreement “with suggested changes from Plaintiff’s counsel” along 

with a proposed dismissal entry. The suggested changes included a mutual release 

provision, i.e., in addition to Rayco’s release of its claims against Murphy and 

Cavitch, Murphy and Cavitch would release any claims they had against Rayco, and 

a provision that the trial court would retain jurisdiction over any disputes related to 

the settlement agreement. Attorney Kehoe stated: “Kindly review and let us know if 

[the suggested changes] are acceptable. If so, we will proceed to obtain our client’s 

signature.” 

Appellees’ counsel made additional changes to the revised settlement 

agreement circulated by Rayco’s counsel and sent a red-lined version of the 

document to Rayco’s counsel on March 16, 2017.5 On April 4, 2017, Attorney Kehoe 

 5 All drafts of the settlement agreement exchanged between the parties, including 

the “final” version of the settlement agreement, included a “costs” provision that stated, 

“[t]he Parties shall bear their own costs, expenses, and attorney fees in connection with 
left a voicemail message for Attorney Vargo. He indicated that “[t]he settlement 

document itself is fine” and that “[w]e had John [Bowling’s] commitment to settle 

with the number that we agreed upon, but he’s being a little bit difficult in getting 

the document signed.” 

Rayco never signed the settlement agreement. 

On June 16, 2017, appellees filed a motion to enforce the settlement 

agreement. Appellees asserted that the parties had agreed to settle the case on 

February 23, 2017 but that Rayco refused to sign the settlement agreement. 

Appellees requested that the court enforce the settlement agreement and award 

them the attorney fees they incurred to enforce the settlement agreement. 

Rayco opposed the motion. It argued that there was no settlement 

agreement because, by the time appellees “accepted” the $3,050,000 settlement 

offer Rayco made at the June 2016 mediation, it had lapsed. Rayco further argued 

that its counsel’s January 26, 2017 letters simply summarized the parties’ past 

settlement positions and indicated Rayco’s “willingness to re-open negotiations” 

and were not settlement offers. 

The trial court held an evidentiary hearing on the motion to enforce 

the settlement. The hearing was held before an advisory jury, which the trial court 

 

this agreement,” and a “specific performance” provision that stated, “[t]he Parties agree 

that, in the event of a breach of the terms of this Agreement, there will be no adequate 

remedy at law to remedy such breach and, accordingly, the Parties agree that specific 

performance may be awarded to enforce the terms of this Agreement.” 
empaneled, sua sponte, to address the issue of “whether the parties entered into a 

contract to settle the lawsuit.” 

Attorney Vargo (one of Murphy’s attorneys), Attorney Timothy Brick 

(one of Cavitch’s attorneys), and two of Rayco’s attorneys, Attorneys Kehoe and 

Drushal, testified at the hearing. The parties also submitted a joint stipulation of 

undisputed facts. The 38 facts to which the parties stipulated detailed the history of 

the parties’ settlement negotiations and included 15 documents created or 

exchanged by the parties during the course of their settlement negotiations.6

During their testimony, Attorneys Vargo and Brick “walked through” 

the parties’ stipulations and incorporated exhibits. Appellees argued there were at 

least three potential “offers” and three potential “acceptances” that gave rise to an 

enforceable settlement agreement. Appellees argued that Rayco’s counsel’s January 

26, 2017 letters to appellees’ counsel constituted offers that appellees accepted by 

means of Attorney Vargo’s February 23, 2017 email to Rayco’s counsel. They argued 

that the subsequent conduct of counsel, i.e., exchanging drafts of the settlement 

agreement, constituted further evidence of the parties’ agreement to settle the case. 

Alternatively, appellees argued that (1) Murphy’s counsel’s February 23, 2017 email 

constituted a counteroffer to settle the case for $3,050,000 that Rayco accepted (a) 

 6 Prior to the hearing, the parties filed a joint motion for leave to file a stipulation 

of undisputed facts regarding appellees’ motion to enforce the settlement agreement. In 

their joint motion, the parties asserted that there were no disputed questions of material 

fact relevant to the motion to enforce the settlement agreement, that an advisory jury was 

no longer necessary and that “[t]he sole remaining question is whether the undisputed 

facts give rise to a binding settlement agreement as a matter of law.” The trial court 

denied the motion. 
by means of Attorney Kehoe’s voicemail message to Attorney Vargo later that day or 

(b) by means of the email Attorney Drushal sent to Attorney Vargo the following day 

or (2) Rayco’s counsel submission of the revised settlement agreement (which 

included mutual releases and other changes) to appellees’ counsel on March 10, 

2017 constituted an offer to settle the case for $3,050,000 that appellees accepted 

on March 16, 2017 when they made additional changes to the revised settlement 

agreement and returned the document to Rayco’s counsel. 

Attorney Kehoe testified upon cross-examination. He acknowledged 

the “tru[th] and accura[cy]” of the facts set forth in the parties’ joint stipulation and 

confirmed that he was authorized to enter into the stipulation on behalf of Rayco. 

He indicated that he sent the January 26, 2017 letters to appellees’ counsel in 

response to their request for a written settlement demand and that Rayco had 

authorized him to send the letters. He further acknowledged receipt of Attorney 

Vargo’s February 23, 2017 email, indicating that appellees agreed to pay the amount 

Rayco had demanded ($3,050,000 in the aggregate), that he understood the email 

was sent on behalf of both Murphy and Cavitch and that he and appellees’ counsel 

thereafter exchanged various emails congratulating and thanking one another for 

“working so hard to get this done.” Attorney Kehoe testified that after he received 

Attorney Vargo’s February 23, 2017 email, he reported the settlement to Bowling. 

He indicated that Bowling accepted his congratulations on the settlement and did 

not dispute that the case had been settled or object to the settlement at that time. 

He further testified, however, that when Bowling was presented with the settlement 
documents, he was “unwilling to sign” them. According to Attorney Kehoe, Bowling 

told him that he believed the settlement of the lawsuit was like a real estate 

transaction, i.e., that the deal was not finalized and there was no settlement until he 

signed the written settlement agreement. Attorney Kehoe further testified, however, 

that he had fully intended to consummate a settlement through his communications 

with appellees’ counsel. 

Attorney Drushal testified that he interpreted his co-counsel’s 

January 26, 2017 letters not as a “renewed demand” or “offer that could be accepted” 

but rather, as a “recitation of the history of what had happened” and “as seeking an 

offer from the lawyers, law firms, and their insurance company which would be 

presented to Mr. Bowling to see if he would accept it at that point.” He further 

testified that, as he communicated in his March 2, 2017 email, in his view, 

“everybody needed to sign off on” the final version of the agreement before the 

parties had a settlement. 

After the parties concluded their presentation of evidence and gave 

closing arguments, the advisory jury deliberated. Six interrogatories were 

submitted to the advisory jury. The advisory jury answered interrogatories 

indicating that the parties had entered into a settlement agreement and signed a 

verdict form in favor of appellees and against Rayco on the motion to enforce the 

settlement agreement.7

 7 One of the trial court’s November 9, 2017 journal entries states: “The jury 

answered interrogatories to the effect that the parties did enter into an enforceable 

settlement agreement and signed a verdict form in favor of the defendants.” The 
After dismissing the jury, the trial court stated that “[b]ased upon the 

evidence hearing and having taken into consideration or under consideration the 

jury’s verdict in this case, I find that the motion to enforce the settlement is well 

taken.” 

On December 14, 2017, the trial court issued a written decision 

granting appellees’ motion to enforce the settlement agreement. The trial court 

determined, “[b]ased upon all the evidence,” that the parties had “a contract to settle 

with terms clear and enforceable” as a result of Rayco’s “acceptance” of appellees’ 

February 23, 2017 “offer” to settle the case for $3,050,000. As the trial court 

explained: 

In this case, on February 23 the defendants unambiguously offered the 

plaintiff a settlement of $3,050,000 in exchange for a dismissal of all 

claims against all defendants. The plaintiff — through counsel but with 

the authority of Rayco’s chief executive — accepted that offer as shown 

by trial counsel’s February 23 voicemail and as further evidenced by: 1) 

plaintiff’s co-counsel’s email that same day, 2) the plaintiff’s March 10 

proposed release of all claims leaving the figure of $3,050,000 

undisturbed and 3) the plaintiff’s confirmation on April 4 that “the 

settlement document (release dated March 16 and drafted by the 

defendants) is fine” and that Bowling had previously accepted the 

proffered settlement. 

The trial court ordered the parties to “conclude the settlement under 

the terms outlined in the March 16, 2017, written settlement agreement.” The trial 

court, however, denied appellees’ request to recover the attorney fees they had 

 

interrogatories submitted to the advisory jury, the advisory jury’s answers to those 

interrogatories and the jury’s signed verdict form were not included in the record this 

court received on appeal. The jury’s answers to the interrogatories were not read into the 

record. Accordingly, we do not know what specific findings were made by the advisory 

jury. 
incurred to enforce the settlement agreement based on the American Rule. Because 

the parties did not agree to shift fees, because there was no applicable statute 

providing for the recovery of attorney fees and because there was “insufficient 

evidence of the reasons for, and nature of, Bowling’s resistance to finalizing the 

settlement” to support a finding that Rayco acted in bad faith by refusing to finalize 

the settlement, the trial court held that appellees were not entitled to recover the 

attorney fees they incurred in enforcing the settlement agreement. 

Rayco appealed, raising the following three assignments of error for 

review: 

I. The trial court erred in finding that there was an enforceable 

settlement agreement entered into by the parties. 

II. The trial court erred by permitting appellees’ counsel to testify in 

violation of the witness advocate rule. 

III. The trial court erred in applying a preponderance of the evidence 

standard to determine whether there was an enforceable settlement 

agreement. 

Murphy and Cavitch cross-appealed, raising the following single 

assignment of error for review: 

Whether the trial court erred as a matter of law when it failed to award 

appellees reasonable attorney fees incurred to enforce the settlement 

agreement. 

For ease of discussion, we address Rayco’s assignments of error out 

of order. 
Law and Analysis 

Motion to Enforce Settlement Agreement 

Standard of Review 

The standard of review applied when reviewing a ruling on a motion 

to enforce a settlement agreement depends on the question presented. If the 

question is a factual or evidentiary one, the reviewing court will not overturn the 

trial court’s finding if there was sufficient evidence to support the finding. Turoczy 

Bonding Co. v. Mitchell, 8th Dist. Cuyahoga No. 106494, 2018-Ohio-3173, ¶ 15, 

citing Chirchiglia v. Ohio Bur. of Workers’ Comp., 138 Ohio App.3d 676, 679, 742 

N.E.2d 180 (7th Dist.2000). If the issue is a question of contract law, the reviewing 

court must determine whether the trial court’s order is based on an erroneous 

standard or a misconstruction of the law. Turoczy at ¶ 15. Rayco raises both factual 

and legal issues in its appeal. 

Requirements for an Enforceable Settlement Agreement 

 A settlement agreement is a contract designed to terminate a claim 

by preventing or ending litigation. Continental W. Condominium Unit Owners 

Assn. v. Howard E. Ferguson, Inc., 74 Ohio St.3d 501, 502, 660 N.E.2d 431 (1996). 

Like any other contract, it requires an offer, acceptance, consideration and mutual 

assent between two or more parties with the legal capacity to act. See, e.g., Kostelnik 

v. Helper, 96 Ohio St.3d 1, 2002-Ohio-2985, 770 N.E.2d 58, ¶ 16; Rulli v. Fan Co., 

79 Ohio St.3d 374, 376, 683 N.E.2d 337 (1997). For a contract to be enforceable, 

there must be a “meeting of the minds” as to the essential terms of the agreement. 
Kostelnik at ¶ 16-17. The essential terms of the agreement must be “‘reasonably 

certain and clear’” and mutually understood by the parties. Id., quoting Rulli at 376. 

As the Ohio Supreme Court explained in Rulli: 

“A court cannot enforce a contract unless it can determine what it is. 

* * * [The parties] must have expressed their intentions in a manner 

that is capable of being understood. It is not even enough that they had 

actually agreed, if their expressions, when interpreted in the light of 

accompanying factors and circumstances, are not such that the court 

can determine what the terms of that agreement are.” 

Rulli, at 376, quoting 1 Corbin on Contracts, Section 4.1, at 525 (Rev.Ed.1993). 

The burden of establishing the existence and terms of a settlement 

agreement lies with the party who claims the agreement exists. Turoczy at ¶ 19, 

citing Nilavar v. Osborn, 127 Ohio App.3d 1, 11, 711 N.E.2d 726 (2d Dist.1998). 

Once a settlement offer has been accepted, the settlement agreement 

is mutually binding; the settlement agreement cannot be set aside simply because 

one of the parties later changes its mind. See, e.g., Turoczy at ¶ 18 (“Once there is 

* * * a meeting of the minds, one cannot refuse to proceed with settlement due to a 

mere change of mind.”), citing Mack v. Polson Rubber Co., 14 Ohio St.3d 34, 36-37, 

470 N.E.2d 902 (1984); Clark v. Corwin, 9th Dist. Summit No. 28455, 2018-Ohio1169, ¶ 13 (‘“[W]hen the parties agree to a settlement offer, [the] agreement cannot 

be repudiated by either party, and the court has the authority to sign a journal entry 

reflecting the agreement and to enforce the settlement.’”), quoting Shetler v. Shetler, 

9th Dist. Wayne No. 00CA0070, 2001 Ohio App. LEXIS 2289, 4-5 (May 23, 2001); 

Kostelnik at ¶ 17 (‘“[A]ll agreements have some degree of indefiniteness and some 
degree of uncertainty’”; however, “‘people must be held to the promises they 

make.’”), quoting 1 Corbin on Contracts, Section 4.1 at 530 (Perillo Rev.Ed.1993). 

It is only where the parties intend that there will be no contract until 

the agreement is fully reduced to writing and executed that no settlement exists 

unless the final, written settlement agreement is signed by all of the parties. PNC 

Mtge. v. Guenther, 2d Dist. Montgomery No. 25385, 2013-Ohio-3044, ¶ 15. If a 

client authorizes its attorney to negotiate a settlement and the attorney negotiates a 

settlement within the scope of that authority, the client is bound by it. See, e.g., 

Bromley v. Seme, 2013-Ohio-4751, 3 N.E.3d 1254, ¶ 25 (11th Dist.) (‘“It is wellrecognized that a party may be bound by the conduct of his or her attorney in 

reaching a settlement.’”), quoting Saylor v. Wilde, 11th Dist. Portage No. 2006-P0114, 2007-Ohio-4631, ¶ 12. A party cannot avoid a settlement that was negotiated 

through counsel by claiming that his attorney lacked actual authority to enter into 

the settlement. See, e.g., Fugo v. White Oak Condominium Assn., 8th Dist. 

Cuyahoga No. 69469, 1996 Ohio App. LEXIS 2725, 8-12 (June 27, 1996); Klever v. 

Stow, 13 Ohio App.3d 1, 4-5, 468 N.E.2d 58 (9th Dist.1983); see also Argo Plastic 

Prods. Co. v. Cleveland, 15 Ohio St.3d 389, 392-393, 474 N.E.2d 328 (1984). 

The Existence of an Enforceable Settlement Agreement 

 In its first assignment of error, Rayco contends that the trial court 

erred in finding that the parties entered into an enforceable settlement agreement 

because (1) the $3,050,000 settlement offer Rayco made at the June 2016 mediation 

had lapsed by the time appellees purported to accept it and (2) its counsel’s January 
26, 2017 letters simply indicated Rayco’s “willingness to re-open negotiations” and 

were not sufficiently “certain and clear regarding the settlement terms” to constitute 

a valid settlement offer. Rayco asserts that these letters simply summarized the 

parties’ past settlement positions and made it clear that Rayco was still willing to 

consider settlement rather than specifying the terms upon which Rayco would settle 

the case. Rayco further contends that the letters could not be deemed settlement 

offers because they did not specifically allocate settlement amounts between 

Murphy and Cavitch and because they lacked “other essential settlement terms 

required to execute a proper settlement agreement.” 

The trial court, however, did not find an enforceable settlement 

agreement based on the settlement demand Rayco made at the mediation or its 

counsel’s January 26, 2017 letters to appellees’ counsel. Rather, the trial court found 

that Murphy’s counsel’s February 23, 2017 email constituted an “unambiguous 

offer” to Rayco to settle the case for $3,050,000, which Rayco accepted when its 

counsel, Attorney Kehoe, left a voicemail message for Murphy’s counsel later that 

day. The trial court found that the parties’ agreement was “further evidenced” by (1) 

Attorney Drushal’s February 24, 2017 email, (2) Rayco’s counsel’s circulation of its 

proposed revisions to the settlement agreement on March 10, 2017 leaving the figure 

of $3,050,000 undisturbed and (3) Attorney Kehoe’s statement on April 4, 2017 that 

“the settlement document is fine” and that Bowling had previously agreed to the 

settlement. 

Accordingly, Rayco’s first assignment of error is meritless. 
Standard of Proof 

 In its third assignment of error, Rayco contends that the trial court 

instructed the jury regarding, and itself applied, the wrong standard of proof. Rayco 

argues that if the trial court had properly instructed the jury that appellees needed 

to prove the existence of a settlement agreement by clear and convincing evidence 

rather than a preponderance of the evidence, “the jury may well have ruled in 

Rayco’s favor.” Rayco further argues that “[t]o the extent the trial court acted 

independently of the advisory jury,” the trial court erred in applying a 

preponderance of the evidence standard rather than a clear and convincing evidence 

standard in determining whether a settlement agreement existed. 

This was a bench trial with an advisory jury pursuant to Civ.R. 

39(C)(1). The advisory jury was not the factfinder in this case. After receiving 

answers to interrogatories and the verdict from the advisory jury, the trial court 

made its own findings of fact and conclusions of law. As the trial court stated in its 

journal entry: “Based upon all the evidence, I find that there is a contract to settle 

with terms that are clear and enforceable.” As such, any error in the trial court’s 

instructions to the advisory jury was harmless. 

There is no indication in either the trial transcript or the trial court’s 

decision what standard of proof the trial court applied in determining that a 

settlement agreement existed. As a general matter, “[a] presumption of regularity 

attaches to all judicial proceedings.” State v. Raber, 134 Ohio St.3d 350, 2012-Ohio5636, 982 N.E.2d 684, ¶ 19. This presumption of regularity extends to the trial 
court’s application of the correct burden of proof. Thus, we presume that the trial 

court applied the correct legal standard absent an affirmative demonstration 

otherwise. See, e.g., In re Adoption of K.N.W., 4th Dist. Athens Nos. 15CA36 and 

15CA37, 2016-Ohio-5863, ¶ 44; Wilson v. Jones, 3d Dist. Seneca No. 13-13-06, 2013-

Ohio-4638, ¶ 28. 

Citing Brilla v. Mulhearn, 168 Ohio App.3d 223, 2006-Ohio-3816, 

859 N.E.2d 578, ¶ 21 (9th Dist.), Foor v. Columbus Real Estate Pros.com, 5th Dist. 

Delaware No. 12 CAE 08 0063, 2013-Ohio-2848, ¶ 26, and Ivanicky v. Pickus, 8th 

Dist. Cuyahoga No. 91690, 2009-Ohio-37, ¶ 8, 13, Rayco contends that “[w]hen 

asked to enforce a settlement agreement,” the “correct legal standard” is whether 

the record contains clear and convincing evidence of both the terms of the 

settlement agreement and the parties’ assent to those terms. Rayco further contends 

that since the trial court instructed the advisory jury that appellees needed to prove 

the existence of a settlement agreement by a preponderance of the evidence, we 

must assume that the trial court applied a preponderance of the evidence standard 

in determining that the parties had agreed to settle the case for $3,050,000. 

Following a thorough review of the record and the relevant case law, 

we cannot say that the trial court applied the wrong standard of proof in determining 

that a settlement agreement existed in this case. In the cases cited by Rayco, the 

evidence the court relied upon when referencing the clear and convincing evidence 

standard was evidence of an oral settlement agreement. See Brilla at ¶ 20-21 

(observing that “a settlement agreement may be enforced regardless of whether it 
has been reduced to writing, as long as the terms of the agreement can be established 

by clear and convincing evidence” and concluding that an enforceable settlement 

agreement existed where, “even disregarding the magistrate’s documentation of [the 

parties’ settlement] agreement,” it was clear to the court that the terms of the 

agreement and appellant’s assent to those terms “may be established by clear and 

convincing evidence”), citing Shetler, 9th Dist. Wayne No. 00CA0070, 2001 Ohio 

App. LEXIS 2289, at 3 (“An oral settlement agreement ‘can be enforced by the court 

in those circumstances where the terms of the agreement can be established by clear 

and convincing evidence.’”), quoting Pawlowski v. Pawlowski, 83 Ohio App.3d 794, 

799, 615 N.E.2d 1071 (10th Dist.1992); Foor at ¶ 5, 26 (where during a telephone 

conversation, counsel agreed that the parties would each “walk away” but the parties 

did not mutually understand what that meant, trial court erred in finding that a 

“completed settlement agreement” was proven by clear and convincing evidence); 

see also Cugini & Capoccia Builders, Inc. v. Tolani, 5th Dist. Delaware No. 15 CAE 

10 0086, 2016-Ohio-418, ¶ 18 (“when the alleged settlement agreement is verbal and 

not written, the existence and the terms of such agreement must be established by 

clear and convincing evidence”); Stanton v. Holler, 7th Dist. Belmont No. 07 BE 29, 

2008-Ohio-6208, ¶ 14 (“A settlement agreement that has not been reduced to 

writing may be enforced if its terms can be established by clear and convincing 

evidence.”). 
In this case, by contrast, the purported settlement agreement is 

evidenced by writings on all sides, including the mutual exchange of drafts of the 

written settlement agreement that set forth the essential terms of the settlement. 

Further, in Ivanicky, although the appellant argued on appeal that 

the trial court had erred in enforcing appellee’s motion to enforce a settlement 

agreement because appellee did not offer clear and convincing evidence that an oral 

settlement agreement had been reached, this court held only that the trial court had 

erred in failing to hold an evidentiary hearing prior to confirming the settlement; it 

did not indicate what standard should be applied in determining whether an 

enforceable settlement agreement existed. Ivanicky at ¶ 8, 13. 

Particularly where, as here, there is written evidence of a settlement 

agreement, other courts — including this court — have indicated that a 

preponderance of the evidence standard applies in determining whether a 

settlement agreement exists. See, e.g., Hillbrook Bldg. Co. v. Corporate Wings, 8th 

Dist. Cuyahoga No. 68619, 1996 Ohio App. LEXIS 3854, 9-13 (Sept. 5, 1996) 

(‘“Reduced to its simplest terms, a settlement agreement is a contract. The party 

asserting the contract (settlement agreement) must prove by a preponderance of the 

evidence the existence of the elements of the contract, including an offer, acceptance 

and consideration as to the existence of the contract and as to its terms.’”), quoting 

Ohio State Tie & Timber, Inc. v. Paris Lumber Co., 8 Ohio App.3d 236, 456 N.E.2d 

1309 (10th Dist.1982); Sutter v. Henkle, 3d Dist. Mercer No. 10-15-14, 2016-Ohio1143, ¶ 9; Savoy Hospitality, L.L.C. v. 5839 Monroe St. Assocs. L.L.C., 6th Dist. 
Lucas No. L-14-1144, 2015-Ohio-4879, ¶ 26; Burrell Industries, Inc. v. Cent. Allied 

Ents., 7th Dist. Belmont Nos. 96 BA 18 and 96 BA 25, 1998 Ohio App. LEXIS 6176, 

12-13 (Dec. 15, 1998); Rondy, Inc. v. Goodyear Tire Rubber Co., 9th Dist. Summit 

No. 21608, 2004-Ohio-835, ¶ 7; State v. Lomaz, 11th Dist. Portage Nos. 2002-P0118 and 2003-P-0062, 2006-Ohio-3886, ¶ 48; see also DSW, Inc. v. Zina Eva, Inc., 

S.D.Ohio No. 2:11-cv-0036, 2011 U.S. Dist. LEXIS 143377, 5 (Dec. 13, 2011) 

(“Although there is some suggestion that if the agreement is oral only, the burden of 

proof is by clear and convincing evidence, * * * where there is a written agreement, 

the burden (under Ohio law) appears to be the same as in any other case based on 

breach of contract, and that is to ‘prove by a preponderance of the evidence the 

existence of the elements of the contract, including offer, acceptance and 

consideration both as to the existence of the contract and as to its terms.’”), quoting 

Ohio State Tie & Timber at 240. 

In this case, however, regardless of whether a preponderance of the 

evidence or a clear and convincing evidence standard applies, a review of the record 

shows that the trial court’s finding that the parties entered into an enforceable 

settlement agreement is supported by sufficient competent, credible evidence. 

Here, the material facts relating to the parties’ settlement negotiations were 

undisputed. Based on the facts set forth in the parties’ joint stipulation of 

undisputed facts, not only was there a clear offer and acceptance showing a mutual 

understanding of the essential terms, the parties thereafter confirmed their 

settlement agreement in various follow-up communications. The only evidence 
Rayco offered to refute the existence of a settlement agreement was Attorney 

Drushal’s testimony that he believed “everybody needed to sign off” on the final 

version of the agreement before the parties had a settlement. However, that 

testimony was contradicted by (1) his co-counsel’s April 4, 2017 voicemail message 

to Attorney Vargo (in which Attorney Kehoe stated indicated that “[t]he settlement 

document itself is fine” and that “[w]e had John [Bowling’s] commitment to settle 

with the number that we agreed upon, but he’s being a little bit difficult in getting 

the document signed”) and (2) Attorney Kehoe’s testimony at the hearing that he 

had intended, by his words and actions, to consummate a settlement with appellees’ 

counsel. Thus, the uncontroverted evidence in this case was not only sufficient to 

prove the existence of a settlement agreement by the greater weight of the evidence 

under a preponderance of the evidence standard but was also sufficient to produce 

a firm belief or conviction in the mind of the trier of fact as to the existence of a 

settlement agreement, so as to establish the existence of a settlement agreement 

under a clear and convincing evidence standard. See In re Phillips, 3d Dist. Marion 

Nos. 9-96-44, 9-96-45, and 9-96-46, 1997 Ohio App. LEXIS 1152, 4-8 (Mar. 13, 

1997) (trial court’s improper use of a lower standard of proof was harmless error 

where the evidence plainly demonstrated that the movant had proven its case by the 

requisite clear and convincing evidence). 

Accordingly, we overrule Rayco’s third assignment of error. 
The Witness-Advocate Rule 

 In its second assignment of error, Rayco argues that the trial court 

erred by permitting appellees’ counsel to testify at the hearing in violation of the 

“witness-advocate rule.” The “witness-advocate rule” is based on Prof.Cond.R. 

3.7(a). That rule provides: 

A lawyer shall not act as an advocate at a trial in which the lawyer is 

likely to be a necessary witness unless one or more of the following 

applies: 

(1) the testimony relates to an uncontested issue; 

(2) the testimony relates to the nature and value of legal services 

rendered in the case; 

(3) the disqualification of the lawyer would work substantial hardship 

on the client. 

Prof.Cond.R. 3.7(a), however “does not render a lawyer incompetent 

to testify as a witness on behalf of his client. Rather, * * * the [r]ule functions to 

allow the court to exercise its inherent power of disqualification to prevent a 

potential violation of [the ethics rules].” Damron v. CSX Transp., Inc., 184 Ohio 

App.3d 183, 2009-Ohio-3638, 920 N.E.2d 169, ¶ 39 (2d Dist.); see also Mentor 

Lagoons, Inc. v. Rubin, 31 Ohio St.3d 256, 258-259, 510 N.E.2d 379 (1987) (noting 

that the “Code of Professional Responsibility ‘does not delineate rules of evidence 

but only sets forth strictures on attorney conduct’” and that “[w]hen an attorney 

seeks to testify, his employment as counsel goes to the weight, not the competency, 

of his testimony”), quoting Universal Athletic Sales Co. v. Am. Gym, Recreational 

& Athletic Equip. Corp., 546 F.2d 530, 539 (3d Cir. 1976). In Mentor Lagoons, the 
Ohio Supreme Court, applying the disciplinary rules then in place, set forth a 

procedure for courts to follow in determining whether a lawyer can serve as both an 

advocate and a witness. Mentor Lagoons at paragraph two of the syllabus; see also 

155 N. High, Ltd. v. Cincinnati Ins. Co., 72 Ohio St.3d 423, 427-428, 650 N.E.2d 869 

(1995). As the Second District explained in Damron, when applying that procedure 

in the context of the subsequently adopted Ohio Rules of Professional Conduct: 

In determining whether a lawyer can serve as both an advocate and a 

witness, a court must first determine the admissibility of his testimony 

without reference to the Disciplinary Rules. If the court finds the 

testimony admissible, and a party or the court moves for the attorney 

to withdraw or be disqualified, the court must then consider whether 

any exceptions to Prof.Cond.R. 3.7(a) apply to permit the attorney to 

both testify and continue representation. 

Id. at ¶ 39. Where a party moves for disqualification, the moving party bears the 

burden of proving that disqualification is necessary. McCormick v. Maiden, 6th 

Dist. Erie No. E-12-072, 2014-Ohio-1896, ¶ 11, citing Baldonado v. Tackett, 6th Dist. 

Wood No. WD-08-079, 2009-Ohio-4411, ¶ 20. The burden of proving that one of 

the exceptions in Prof.Cond.R. 3.7(a)(1)-(3) applies falls upon the attorney seeking 

to claim the exception. McCormick at ¶ 11. 

 In this case, the trial court was not asked to exercise its “inherent 

power of disqualification” to prevent a potential violation of the Rules of 

Professional Conduct. Instead, after appellees’ counsel conducted voir dire, gave 

their opening statements and called their first witness — Attorney Vargo — Rayco’s 

counsel objected to his testimony based on the witness-advocate rule. 
It should have come as no surprise that counsel for appellees would 

testify at the evidentiary hearing. This is not a case in which the testimony presented 

could have been elicited by other means. Aside from the mediator and the clients 

themselves, who were not directly involved in the settlement negotiations after the 

parties stopped working with the mediator, the only persons with personal 

knowledge regarding the parties’ settlement negotiations were the parties’ 

attorneys. Although the parties had attempted to avoid having their attorneys testify 

by submitting a joint motion for leave to file a stipulation of undisputed facts 

regarding appellees’ motion to enforce settlement agreement, the trial court denied 

their request to have appellees’ motion decided based on the stipulation. 

 As explained in the comments to Prof.Cond.R. 3.7, the rationale for 

the advocate-witness rule is as follows: 

The tribunal has proper objection when the trier of fact may be 

confused or misled by a lawyer serving as both advocate and witness. 

The opposing party has proper objection where the combination of 

roles may prejudice that party’s rights in the litigation. A witness is 

required to testify on the basis of personal knowledge, while an 

advocate is expected to explain and comment on evidence given by 

others. It may not be clear whether a statement by an advocate-witness 

should be taken as proof or as an analysis of the proof. 

Comment 2, Prof.Cond.R. 3.7. 

 Rayco argues that it was prejudiced by appellees’ counsel serving as 

both witnesses and advocates at the hearing because it enabled appellees’ counsel to 

refer to their own testimony during closing arguments and urge the jury to accept 
their recitation of the facts — in essence vouching for “the truthfulness of their own 

testimony.” 

However, in this case, the jury had only an advisory role. The advisory 

jury gave its “advice,” based on its view of the evidence, to the trial court, but its 

decision was not binding on the trial court. The trial court was required to make its 

own independent findings of fact and conclusions of law as if there had been no 

verdict from the advisory jury. The trial court was well aware of the different roles 

assumed by appellees’ counsel at the hearing and was not likely to be confused or 

misled by the lawyers’ dual capacities. See Michael P. Harvey Co., L.P.A. v. Ravida, 

2012-Ohio-2776, 972 N.E.2d 1087, ¶ 5 (8th Dist.) (noting that “[t]he concerns 

expressed in the comments to Prof.Cond.R. 3.7(a)(2)” had “no applicability” where 

the case was tried to the court, the court “fully understood” that lawyer was acting 

pro se and “should have been able to distinguish between his role as advocate and 

his role as a witness without the same risk of confusion that might have been present 

had the case been tried to a jury”). 

Further, the matters as to which appellees’ counsel testified were not 

in dispute. See Prof.Cond.R. 3.7(a)(1). Appellees’ counsel’s testimony tracked the 

stipulation of undisputed facts the parties had jointly submitted and admitted into 

evidence at the hearing. When testifying on cross-examination, Attorney Kehoe 

acknowledged that 95 percent of appellees’ counsel’s testimony was “substantively 

accurate” and that the “few details around the edges that [he] might * * * state 

differently” were not material. 
Accordingly, Rayco was not prejudiced by appellees’ attorneys’ 

testimony and the trial court did not abuse its discretion or otherwise err in 

permitting appellees’ attorneys to testify at the hearing. See Erie Air Conditioning 

& Heating, Inc. v. S.C. Co., 8th Dist. Cuyahoga No. 63216, 1993 Ohio App. LEXIS 

3652, 19-22 (July 22, 1993) (trial court did not abuse its discretion in failing 

disqualify plaintiff’s counsel or in allowing plaintiff’s counsel to testify in defense of 

counterclaim and in rebuttal of defendants’ case-in-chief where motion to disqualify 

counsel was filed on the eve of trial and to have prevented counsel from testifying 

would have worked a substantial hardship on the client given counsel’s unique role 

in the contested dealings). Rayco’s second assignment of error is overruled. 

Request for Attorney Fees Incurred to Enforce the Settlement 

Agreement 

 In their cross-assignment of error, appellees argue that the trial court 

erred in denying their request for an award of the reasonable attorney fees they 

incurred to enforce the parties’ settlement agreement. Rayco argues that the 

American Rule “applies to actions seeking to enforce a settlement agreement” and 

that the trial court properly denied appellees’ request for attorney fees because “in 

the absence of a finding of bad faith, a trial court commits reversible error in 

awarding attorney fees on a motion to enforce a settlement agreement.” Applying 

the decision of the en banc court above, we find that the trial court erred in refusing 

to award appellees their reasonable attorney fees incurred in enforcing the 
settlement agreement as compensatory damages for Rayco’s breach of the 

settlement agreement. 

Rayco also argues that we should affirm the trial court’s decision to 

deny appellees’ request for attorney fees because appellees presented no evidence at 

the hearing regarding the amount of attorney fees they incurred in enforcing the 

settlement agreement or the reasonableness of those fees. However, as stated in the 

trial court’s journal entry, the issue to be decided at the hearing was “whether the 

parties entered into a contract to settle the lawsuit.”8 After that issue was decided, 

the trial court inquired whether it had “enough law [and] evidence” to decide 

“whether to award fees or not.” The trial court granted the parties leave to submit 

“legal briefs” on the “legal question of what circumstances give rise to an award of 

attorneys’ fees in favor of [a] prevailing movant to enforce [a] settlement agreement” 

and whether “a motion to enforce in and of itself gives rise to a potential entitlement 

for fees.” There was no opportunity for appellees to present evidence as to the 

amount of attorney fees they contended should have been awarded. 

Accordingly, appellees’ cross-assignment of error is sustained. 

The trial court’s judgment is affirmed to the extent that it grants 

appellees’ motion to enforce the settlement agreement and reversed to the extent 

that it denies appellees’ motion for attorney fees. Case remanded for a 

 8 Appellees also filed a motion in limine to limit testimony and evidence at the 

hearing to the issue of the “settlement between the parties,” which the trial court granted. 
determination of the amount of reasonable attorney fees appellees incurred to 

enforce the settlement agreement. 

Judgment affirmed in part; reversed in part; case remanded. 

It is ordered that appellees recover from appellant the costs herein taxed. 

 The court finds there were reasonable grounds for this appeal. 

It is ordered that a special mandate be sent to the Cuyahoga County Court of 

Common Pleas to carry this judgment into execution. 

 A certified copy of this entry shall constitute the mandate pursuant to Rule 

27 of the Rules of Appellate Procedure. 

_________________________________ 

EILEEN A. GALLAGHER, PRESIDING JUDGE 

MARY J. BOYLE, J., and 

RAYMOND C. HEADEN, J., CONCUR