Court Opinion

ID: 2696329
Source: CourtListenerOpinion
Date Created: 2014-08-04 15:37:47.40779+00
Date Added: 2024-06-11T12:06:10.372581
License: Public Domain

[Cite as Grove v. Gamma Ctr., Inc., 2013-Ohio-1734.]

                      IN THE COURT OF APPEALS OF OHIO
                          THIRD APPELLATE DISTRICT
                              MARION COUNTY

STACY GROVE,

        PLAINTIFF-APPELLEE,
                                                         CASE NO. 9-12-41
        v.

GAMMA CENTER, ET AL.,

        DEFENDANTS-THIRD PARTY
        PLAINTIFFS-APPELLEES,                            OPINION

[INDI SINGH, THIRD-PARTY
  DEFENDANT - APPELLANT].

                 Appeal from Marion County Common Pleas Court
                           Trial Court No. 08-CV-0248

                      Judgment Reversed and Cause Remanded

                             Date of Decision: April 29, 2013

APPEARANCES:

        John W. Herbert for Appellant

        J. C. Ratliff, Jon L. Jensen and Jeff Ratliff for Appellees,
                Sudesh Reddy, M.D. and Parminder Singh, M.D.

        Brian S. Sullivan for Appellees, Dinsmore & Shohl, LLP and
                Jan E. Hensel
Case No. 9-12-41

PRESTON, P.J.

       {¶1} Third party defendant-appellant, Indi Singh, appeals the Marion

County Court of Common Pleas’ judgment overruling his motions for attorneys’

fees and sanctions. Singh argues the trial court erred when it dismissed the

motions for attorneys’ fees and sanctions, when it failed to hold the third party

complaint was frivolous, and when it failed to impose sanctions. For the reasons

that follow, we reverse.

       {¶2} On March 19, 2008, Stacy Grove filed a complaint against Gamma

Center, Inc., Sudesh Reddy, M.D., and Parminder Singh, M.D. (Doc. No. 1).

Grove alleged that defendants created a hostile work environment that

discriminated against the female employees, that Dr. Reddy and Dr. Singh had

sexually harassed her, that Gamma Center failed to take any disciplinary action

after she reported the doctors’ conduct, and that defendants terminated her

employment in retaliation for her sexual harassment complaint. (Id.).

       {¶3} On April 24, 2008, defendants filed their answer.           (Doc. No. 6).

Defendants asserted numerous affirmative defenses and denied Grove’s assertion

that she was entitled to punitive damages and attorneys’ fees. (Id.).

       {¶4} On July 28, 2008, defendants filed a third party complaint against

Singh, a Gamma Center shareholder. (Doc. No. 11). Defendants alleged that

Singh had failed to inform them that Grove had reported incidents of sexual

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Case No. 9-12-41

harassment, and that Singh was consequently liable for breach of fiduciary duty

and negligence. (Id.).

       {¶5} On September 10, 2008, Singh filed his answer. (Doc. No. 15). Singh

asserted a counterclaim alleging he was entitled to indemnification and an advance

for his expenses pursuant to Gamma Center’s bylaws. (Id.). On October 7, 2008,

defendants filed their answer to Singh’s counterclaim. (Doc. No. 17).

       {¶6} On January 20, 2009, Singh amended his answer and counterclaim to

assert that defendants had assumed the risk of their conduct. (Doc. No. 24).

       {¶7} On February 24, 2009, defendants filed a third party complaint against

Sanjeev Verma, another Gamma Center shareholder. (Doc. No. 33). Defendants

alleged that Verma also failed to inform them of Grove’s sexual harassment

report, and that Verma was liable for breach of fiduciary duty, negligence, and

breach of contract. (Id.).

       {¶8} On March 2, 2009, defendants filed an amended third party complaint

against Singh. (Doc. No. 34). Defendants included an additional count for breach

of contract. (Id.).

       {¶9} On March 3, 2009, Verma filed his answer. (Doc. No. 36). Verma

asserted a counterclaim, alleging that he was also entitled to indemnification and

an advance for his expenses pursuant to Gamma Center’s bylaws. (Id.). On

March 11, 2009, the defendants filed their answer to Verma’s counterclaim. (Doc.

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Case No. 9-12-41

No. 38). On September 30, 2009, Singh and Verma filed motions for summary

judgment. (Doc. Nos. 55, 56).

       {¶10} On November 18, 2009, Grove and defendants filed a joint

stipulation of dismissal pursuant to Civ.R. 41(B). (Doc. No. 62). The parties

stated that they had resolved the matter, and Grove dismissed her claims against

defendants. (Id.). The stipulation did not resolve the claims defendants had

asserted against Singh and Verma, or the counterclaims Singh and Verma had

asserted against defendants. (Id.).

       {¶11} On December 2, 2009, defendants filed their response to Singh and

Verma’s motions for summary judgment. (Doc. Nos. 65, 66). On December 16,

2009, Verma filed his reply to defendants’ response.       (Doc. No. 68).     On

December 18, 2009, Singh filed his reply to defendants’ response. (Doc. No. 69).

       {¶12} On April 16, 2010, the trial court granted Singh and Verma’s

motions for summary judgment. (Doc. No. 72). The trial court instructed Singh

and Verma to provide a detailed and itemized statement regarding the services

their counsel rendered in connection with the third party complaint for the trial

court’s consideration. (Id.).

       {¶13} On April 22, 2010, Verma filed an application for attorneys’ fees.

(Doc. No. 73). On May 17, 2010, Verma filed a motion for sanctions against Dr.

Reddy and Dr. Singh.       (Doc. No. 74).   Verma alleged that the claims were

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Case No. 9-12-41

frivolous, and the trial court should impose sanctions pursuant to R.C. 2323.51(B).

(Id.). On that same day, Singh filed an application for attorneys’ fees and a

motion requesting sanctions for the allegedly frivolous conduct of Dr. Reddy and

Dr. Singh. (Doc. No. 76).

       {¶14} On May 28, 2010, the trial court held a hearing on the applications

for attorneys’ fees and motions for sanctions. (Doc. No. 77). Following the

hearing, the trial court granted defendants permission to file responses to Verma

and Singh’s applications and motions. (Id.). On June 21, 2010, defendants filed

their responses to Verma and Singh’s applications and motions. (Doc. Nos. 80,

81).

       {¶15} On July 12, 2010, Verma and Singh filed a motion requesting Civ.R.

11 sanctions against Dinsmore & Shohl and Hensel, individually, relating to their

representation of Gamma Center, Dr. Reddy, and Dr. Singh. (Doc. No. 84).

Verma and Singh argued Hensel had filed a frivolous complaint against them, and

requested that the trial court order her to pay their attorneys’ fees. (Id.). On that

same day, Verma and Singh also filed their reply to the defendants’ responses to

their applications for attorneys’ fees and motions for sanctions. (Doc. No. 85).

       {¶16} On September 15, 2010, Dinsmore & Shohl and Hensel filed their

response to Verma and Singh’s motion for Civ.R. 11 sanctions. (Doc. No. 89).

On October 4, 2010, Verma and Singh filed their reply. (Doc. No. 92).

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Case No. 9-12-41

        {¶17} On August 24, 2011, the trial court held a hearing on the pending

motions. (Doc. No. 101). During the hearing, Dinsmore & Shohl, Hensel, Dr.

Reddy, and Dr. Singh made an oral motion to dismiss Verma and Singh’s motion

for sanctions.   (Id.).   On September 16, 2011, Verma and Singh filed their

response. (Doc. No. 105). Dinsmore & Shohl, Hensel, and the doctors filed their

reply on September 30, 2011. (Doc. No.108).

        {¶18} On June 12, 2012, the trial court filed its judgment entry. (Doc. No.

111).    The trial court sustained the motion to dismiss Verma and Singh’s

applications for attorneys’ fees and motions for sanctions, determining Verma and

Singh had failed to “produce testimony from a disinterested witness as to the

reasonableness and necessity of the attorneys’ fees incurred as a result of this

alleged frivolous conduct.” (Id.).

        {¶19} On July 12, 2012, Singh filed a notice of appeal. (Doc. No. 115).

Singh now raises three assignments of error for our review.

                            Assignment of Error No. I

        The Trial Court erred when it dismissed Appellant’s motions for
        sanctions pursuant to R.C. §2323.51 and Rule 11, O.R.C.P.
        because they were not supported by evidence from a
        disinterested [sic] that the legal services for which he sought
        compensation were necessary and the fees charged for those
        services were reasonable.

        {¶20} In his first assignment of error, Singh argues the trial court erred

when it dismissed his motions for sanctions because he had failed to support them

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Case No. 9-12-41

with evidence from a disinterested witness. Singh contends that neither R.C.

2323.51 nor Civ.R. 11 require evidence from a disinterested witness before

imposing sanctions.     Singh further argues this Court has not required such

evidence from a disinterested witness and that the trial court misinterpreted this

Court’s decision in Natl. City Bank v. Semco, 3d Dist. No. 9-10-42, 2011-Ohio-

172 (Semco II).

         {¶21} Generally, we review a trial court’s decision regarding an award of

attorneys’ fee for an abuse of discretion.     United Assn. of Journeyman and

Apprentices of the Plumbing and Pipe Fitting Industry v. Jack’s Heating, Air

Condition & Plumbing, Inc., 3d Dist. No. 6-12-06, 2013-Ohio-144, ¶ 15, citing

Bittner v. Tri-Cty. Toyota, Inc., 58 Ohio St.3d 143, 146 (1991). An abuse of

discretion suggests the trial court’s decision is unreasonable, arbitrary, or

unconscionable.     Blakemore v. Blakemore, 5 Ohio St.3d 217, 219 (1983).

However, in the present case the dispute involves a question of law, which we

review de novo. Patton v. Ditmyer, 4 Dist. Nos. 05CA12, 05CA21, 05CA22,

2006-Ohio-7107, ¶ 73, citing Burns v. Henne, 115 Ohio App.3d 297 (2d Dist.

1996).

         {¶22} Singh contends that he is entitled to attorneys’ fees and sanctions

pursuant to R.C. 2323.51 and Civ.R. 11. R.C. 2323.51(B)(1) provides, “any party

adversely affected by frivolous conduct may file a motion for an award of court

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Case No. 9-12-41

costs, reasonable attorneys’ fees, and other reasonable expenses incurred in

connection with the civil action or appeal.”            R.C. 2323.51(A)(2)(a) defines

conduct as frivolous if:

       (i)   It obviously serves merely to harass or maliciously injure

       another party to the civil action or appeal or is for another improper

       purpose, including, but not limited to, causing unnecessary delay or

       a needless increase in the cost of litigation.

       (ii) It is not warranted under existing law, cannot be supported by a

       good faith argument for an extension, modification, or reversal of

       existing law, or cannot be supported by a good faith argument for the

       establishment of new law.

       (iii) The conduct consists of allegations or other factual contentions

       that have no evidentiary support or, if specifically so identified, are

       not likely to have evidentiary support after a reasonable opportunity

       for further investigation or discovery.

       (iv) The conduct consists of denials or factual contentions that are

       not warranted by the evidence or, if specifically so identified, are not

       reasonably based on a lack of information or belief.

“‘Whether a claim is warranted under existing law is an objective consideration.

The test * * * is whether no reasonable lawyer would have brought the action in

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Case No. 9-12-41

light of the existing law. In other words, a claim is frivolous if it is absolutely

clear under the existing law that no reasonable lawyer could argue the claim.’”

Patton, 2006-Ohio-7107, at ¶ 81, quoting Riston v. Butler, 149 Ohio App.3d 390,

2002-Ohio-2308, ¶ 30 (1st Dist.).

       {¶23} Civ.R. 11 also permits a party to recover attorneys’ fees when an

action lacks support. Civ.R. 11 provides:

       The signature of an attorney or pro se party constitutes a certificate

       by the attorney or party that the attorney or party has read the

       document; that to the best of the attorney’s or party’s knowledge,

       information, and belief there is good ground to support it; and that it

       is not interposed for delay. * * * For a willful violation of this rule,

       an attorney or pro se party, upon motion of a party or upon the

       court’s own motion, may be subjected to appropriate action,

       including an award to the opposing party of expenses and reasonable

       attorney fees incurred in bringing any motion under this rule.

       {¶24} Attorneys’ fees are governed by the Rules of Professional Conduct.

Semco II, 2011-Ohio-172, at ¶ 29. Prof.Cond.R. 1.5(a) provides the factors the

trial court should consider when determining whether the amount of requested

attorneys’ fees is reasonable:

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Case No. 9-12-41

      (1) the time and labor required, the novelty and difficulty of the

      questions involved, and the skill requisite to perform the legal

      service properly;

      (2) the likelihood, if apparent to the client that the acceptance of the

      particular employment will preclude other employment by the

      lawyer;

      (3) the fee customarily charged in the locality for similar legal

      services;

      (4) the amount involved and the result obtained;

      (5) the time limitations imposed by the client or by the

      circumstances;

      (6) the nature and length of the professional relationship with the

      client;

      (7) the experience, reputation, and ability of the lawyer or lawyers

      performing the services;

      (8) whether the fee is fixed or contingent.

The party requesting the attorneys’ fees has the burden of providing evidence that

the hours worked were necessary to the action and that the amount of the fees is

reasonable. Southeast Land Dev., Ltd. v. Primrose Mgt., L.L.C., 3d Dist. Nos. 5-

10-04, 5-10-11, 2011-Ohio-2341, ¶ 15.

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Case No. 9-12-41

       {¶25} In the present case, the trial court relied on this Court’s decision in

Semco II to find that it did not have adequate evidence on which to base an award

of attorneys’ fees because it did not have independent evidence from a

disinterested attorney regarding the amount of hours spent and the hourly rate

charged. We disagree with this interpretation of our case law.

       {¶26} The case at issue was before this Court twice, first in Natl. City Bank

v. Semco, Inc., 183 Ohio App.3d 229, 2009-Ohio-3319 (Semco I), and again in

Semco II. In Semco I, the trial court had filed an order appointing a receiver and

establishing his rate of pay at $300 per hour. Semco I at ¶ 11 . The trial court

subsequently issued a judgment entry finding that the fees the receiver and his

associates had charged at $300 per hour were unreasonable. Id. The trial court

reduced the receiver’s compensation to $150 per hour and his associates’

compensation to $75 per hour. Id. at ¶ 9. The trial court ordered the receiver to

return $75,110.81 of the fees he had collected. Id. at ¶ 5. The receiver appealed

the trial court’s order, and this Court held that the trial court abused its discretion

when it set the receiver’s compensation at $300 per hour and then later reduced it

to $150 per hour. Id. However, this Court affirmed the trial court’s decision to

reduce the hourly rate of the receiver’s associates from $300 to $75 per hour,

because the trial court had not previously issued an order setting the associates’

rate. Id. at ¶ 12-16. This Court remanded the case to the trial court to recalculate

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Case No. 9-12-41

the amount of compensation based upon an hourly rate for the receiver’s services

at $300 per hour. Id.

         {¶27} On remand, the trial court held a hearing regarding the receiver’s

application for fees and expenses of his counsel. Semco II, 2011-Ohio-172, at ¶

10-11.     The trial court determined that the receiver’s attorneys were owed

$65,926.87. Id. at ¶ 14. On appeal in Semco II, Semco argued the fees were not

incurred for the benefit of preserving or protecting the receivership estate but were

incurred for the personal interest of the receiver and that the receiver failed to

present any evidence regarding the reasonableness or necessity of the requested

fees. Id. at ¶ 16.

         {¶28} This Court agreed, finding that the receiver did not engage the

services of counsel until Semco filed a motion to remit the receiver’s fees and to

pursue damages and an accounting from the receiver. Id. at ¶ 19. Thus, the

receiver did not present any evidence that he obtained legal counsel to assist him

in preserving and protecting the receivership estate. Id. Rather, allegations of

possible wrongdoing were against the receiver personally and had nothing to do

with protecting and preserving the receivership estate. Id. at ¶ 21. This Court

found that the attorneys failed to specify what time was spent on the issue of the

amount of the receiver’s fees versus the issue of the receiver’s wrongdoing and

that the trial court did not make a distinction between these issues in its award of

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Case No. 9-12-41

attorneys’ fees. Id. at ¶ 22. This Court noted that many of the invoices failed to

provide the name of the client for whom the services were rendered, did not

specify the amount of time expended on each item of activity, and also did not

distinguish between the issue of receiver’s fees and the allegations of wrongdoing.

Id. at ¶ 24. This Court also determined that the receiver failed to establish any bad

faith on Semco’s part which would require Semco to pay the receiver’s attorneys’

fees for litigating the issue of his alleged wrongdoing. Id. at ¶ 27.

       {¶29} This Court found that even if the fees were incurred to protect or

preserve the receivership estate, the trial court did not have the necessary evidence

to determine whether the time spent was reasonable or whether the hourly rate

charged by each firm was reasonable. Id. at ¶ 28. This Court stated:

       As previously noted, the trial court expressly stated that no

       independent evidence from a disinterested attorney was given

       regarding the reasonableness of the amount of hours spent and the

       hourly rate charged.      Instead, the court was ‘left to its own

       calculation’ and its own experience as to the prevailing rate. The

       court then examined the exhibits attached to the application for fees

       and determined that the time spent by two of the firms was

       reasonable but that approximately 100 hours expended by Bailey

       Cavalieri, LLC, were not reasonable. The court also determined that

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Case No. 9-12-41

       $175 was a reasonable hourly rate. In so doing, the court made no

       reference to Prof. Cond. R. 1.4 or any of the factors listed therein.

       Absent any evidence regarding the reasonableness of the hours

       expended and the reasonableness of the hourly rate, we find such

       determinations were arbitrary.

Id. at ¶ 30. This Court further stated, “regarding the invoices of Baily Cavalieri,

LLC, no affidavit was provided regarding the reasonableness of any of these

hours, no testimony was provided regarding the reasonableness of these hours, and

counsel’s professional statement did not address the reasonableness of any of these

hours.” Id. at ¶ 31. This Court noted that while Baker & Hostetler, LLP, provided

an affidavit in support of its fees that indicated the invoices reflected the “actual

and necessary work” performed, “there is no mention of the reasonableness of

these fees or any information as to the relevant factors of Prof. Cond. R. 1.5. In

addition, this affidavit is not of a disinterested person but is the self-serving

affidavit of a person who was not present at the hearing for cross-examination.”

Id. at ¶ 33.

       {¶30} Thus, the receiver’s failure to provide a disinterested witness

regarding the reasonableness of his attorneys’ fees was only one of the reasons

why we sustained Semco’s assignments of error. The attorneys’ fees were also

sought for expenses resulting from the receiver’s personal litigation rather than

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Case No. 9-12-41

litigation regarding the protection and preservation of the receivership, there was

no evidence that Semco acted in bad faith, the attorneys failed to adequately

designate the time spent on the issue of attorneys’ fees versus the issue of the

receiver’s alleged wrongdoing, and the attorneys’ statements that their fees were

actual and necessary were not subject to cross-examination.           Id. at ¶ 33-34.

Consequently, we conclude that Semco II does not stand for the proposition that

testimony from a disinterested witness regarding the reasonableness of attorneys’

fees is required, and that the trial court’s reliance on this case was misplaced.

       {¶31} This Court also recently addressed the issue of attorneys’ fees in

Jack’s Heating, 2013-Ohio-144.         In that case, we recognized “that merely

submitting an attorney’s itemized bill is insufficient to establish the reasonableness

of the amount of work billed.” Id. at ¶ 24, citing Whitaker v. Kear, 123 Ohio

App.3d 413, 424 (4th Dist.1997). This Court acknowledged that “[o]ften, parties

offer expert testimony to establish that the hours charged was reasonable in light

of the litigation’s particular facts.” Jack’s Heating at ¶ 24, citing Hawkins v.

Miller, 11th Dist. No. 2011-L-036, 2011-Ohio-6005, ¶ 28 and Whitaker at 424-

425. However, we also stated that “in some matters, the requesting party refrains

from offering expert testimony from other individuals to corroborate the attorney’s

self-serving testimony that the fee request is reasonable.” Jack’s Heating at ¶ 24,

citing Koblenz & Koblenz v. Summers, 8th Dist. No. 94806, 2011-Ohio-1064, ¶ 14

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Case No. 9-12-41

and Shottenstein, Zox & Dunn Co., L.P.A. v. Reineke, 9th Dist. No. 10CA0138-M,

2011-Ohio-6201, ¶ 26-28. Thus, this Court has recognized that testimony from a

disinterested person may be the better practice when establishing the

reasonableness of attorneys’ fees, but we have not gone so far as to hold that this

testimony is a threshold requirement in all circumstances. See Semco II, 2011-

Ohio-172; Jack’s Heating, 2013-Ohio-144.

       {¶32} After reviewing the applicable law, this Court disagrees with the trial

court’s conclusion that Singh cannot prevail on his motions for attorneys’ fees

solely because he failed to provide evidence from a disinterested witness regarding

the amount of hours spent and the hourly rate charged. While we agree that

whether Singh provided this evidence may be one part of the analysis, we reverse

and remand this case for the trial court’s consideration of the remaining factors.

       {¶33} Singh’s first assignment of error is, therefore, sustained.

                           Assignment of Error No. II

       The Trial Court erred when it failed to hold the third party
       complaint was frivolous and sanction third party plaintiffs and
       their counsel for prosecuting it.

                           Assignment of Error No. III

       The Court erred when it failed to hold that third party
       plaintiffs’ counsel violated Rule 11, O.R.C.P. by prosecuting the
       third party complaint on behalf of third party plaintiffs.

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Case No. 9-12-41

       {¶34} In his second and third assignments of error, Singh argues the trial

court erred when it failed to find that the third party complaint was frivolous and

sanction appellees. Singh also argued the trial court erred by failing to hold that

Hensel violated Civ.R. 11.

       {¶35} The trial court did not reach the issue of whether Hensel’s conduct

was frivolous and violated Civ.R. 11. Since we agree with Singh that the matter

must be reversed for the trial court’s consideration of the factors regarding

attorneys’ fees, including whether Hensel’s conduct was frivolous, we need not

reach these issues and find them moot pursuant to App.R. 12(A)(1)(c).

       {¶36} Singh’s second and third assignments of error are moot and,

therefore, will not be discussed.

       {¶37} Having found error prejudicial to the appellant herein in the

particulars assigned and argued, we reverse the judgment of the trial court and

remand for further proceedings consistent with this opinion.

                                                          Judgment Reversed and
                                                               Cause Remanded

ROGERS and SHAW, J.J., concur.

/jlr

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