Court Opinion

ID: 4275699
Source: CourtListenerOpinion
Date Created: 2018-05-16 18:43:23.633928+00
Date Added: 2024-06-11T14:33:50.949240
License: Public Domain

[Cite as Hinerman v. Grill on Twenty First, L.L.C., 2018-Ohio-1927.]

                                       COURT OF APPEALS
                                     LICKING COUNTY, OHIO
                                   FIFTH APPELLATE DISTRICT

STUART HINERMAN                                            JUDGES:
                                                           Hon. William B. Hoffman, P.J.
        Plaintiff-Appellee                                 Hon. Patricia A. Delaney, J.
                                                           Hon. Earle E. Wise, Jr., J.
-vs-
                                                           Case No. 17-CA-82
THE GRILL ON TWENTY FIRST,
LLC, ET AL.
                                                           OPINION
        Defendants-Appellants

CHARACTER OF PROCEEDING:                               Appeal from the Licking County Common
                                                       Pleas Court, Case No. 2015 CV 01046

JUDGMENT:                                              Affirmed

DATE OF JUDGMENT ENTRY:                                May 11, 2018

APPEARANCES:

For Plaintiff-Appellee                                 For Defendants-Appellants

JONATHAN A. VELEY                                      STEPHEN B. WILSON
2034 Cherry Valley Road                                35 South Park Place, Suite 150
Newark, Ohio 43055                                     Newark, Ohio 43055
Licking County, Case No. 17-CA-82                                                     2

Hoffman, P.J.

      {¶1}   Appellants The Grill on Twenty First, LLC; Twenty First Street Properties,

LLC; and Eric E. Mason appeal the judgment entered by the Licking County Common

Pleas Court ordering a former attorney for Appellants to answer questions posed in a

deposition by Appellee Stuart Hinerman.

                          STATEMENT OF THE FACTS AND CASE

      {¶2}   Appellee is a member in the limited liability companies The Grill on Twenty

First and Twenty First Properties, Appellants in this case. Appellant Mason and Appellee

agreed to go into business together operating a restaurant previously owned and

operated by Appellee.

      {¶3}   At the time they were discussing the new venture, Mason was represented

by Attorney Adam Vernau, who was a member of the Newark law firm of Morrow, Gordon

& Byrd.   Mason notified Hinerman he had contacted Vernau to draft the operating

agreements governing the new corporations. Hinerman was already a client of another

attorney at the same law firm, and agreed to have Vernau prepare the agreements.

      {¶4}   On December 20, 2006, Hinerman met with Vernau at the law firm’s office

and signed operating agreements with respect to both companies. The Grill on Twenty

First, LLC was organized to operate the restaurant business, while Twenty First Street

Properties, LLC was organized to own and manage the real estate on which the

restaurant was located.
Licking County, Case No. 17-CA-82                                                        3

      {¶5}   Appellee filed the instant case on December 7, 2015, seeking damages for

breach of contract and breach of fiduciary duty, as well as an accounting from Appellants.

Appellants filed a counterclaim against Appellee for breach of contract.

      {¶6}   A deposition of Attorney Adam Vernau was scheduled for June 15, 2017.

On the day of the deposition, Appellant Mason asserted all communications between

himself and Vernau regarding the preparation of the operating agreements for the two

companies were privileged. The deposition was cut short due to Appellant Mason’s

objections. Appellee sought a ruling from the court on the issue of whether attorney-client

privilege could be invoked.

      {¶7}   After an evidentiary hearing on the issue of attorney-client privilege, the

court allowed the parties to supplement the record with affidavits from any person who

testified at the hearing, as well as an affidavit from Vernau. The court found the joint

representation exception to the attorney-client privilege was demonstrated by the

evidence, and ordered Vernau to answer questions as to whether either party gave

special instructions when drafting the contract regarding the division of losses from the

company and the liability of Hinerman and Mason, and to answer the question as to

whether he drafted any contracts which are the subject of the dispute of this case.

      {¶8}   It is from this October 3, 2017 judgment Appellants prosecute their appeal,

assigning as error:

             THE TRIAL COURT ERRED IN FINDING THERE WAS JOINT

      REPRESENTATION BETWEEN PLAINTIFF-APPELLEE, DEFENDANT-

      APPELLANT AND ATTORNEY ADAM VERNAU AND IN ENTERING A
Licking County, Case No. 17-CA-82                                                           4

       DISCOVERY ORDER THAT BREACHES THE CONFIDENTIALITY

       GUARANTEED BY THE ATTORNEY-CLIENT PRIVILEGE.

       {¶9}   Generally, discovery orders are not immediately appealable. Walters v.

Enrichment Center of Wishing Well, Inc., 78 Ohio St.3d 118, 676 N.E.2d 890(1997).

However, if the judgment orders a party to disclose allegedly privileged material, it is

appealable pursuant to R.C. 2505.02(A)(3) and (B)(4). Northeast Professional Home

Care, Inc. v. Advantage Home Health Servs., Inc., 188 Ohio App.3d 704, 936 N.E.2d 964,

2010–Ohio–1640 at ¶ 34.

       {¶10} {¶ 15} “The attorney-client privilege is one of the oldest recognized

privileges for confidential communications.” Swidler & Berlin v. United States, 524 U.S.

399, 403, 118 S.Ct. 2081, 141 L.Ed.2d 379(1998). In Jackson v. Greger, 110 Ohio St.3d

488, 2006–Ohio–4968, 854 N.E.2d 487, the court stated, “R.C. 2317.02(A) provides a

testimonial privilege—i.e.,    it prevents an      attorney from      testifying concerning

communications made to the attorney by a client or the attorney's advice to a client. A

testimonial privilege applies not only to prohibit testimony at trial, but also to protect the

sought-after communications during the discovery process.” Id. at ¶ 7, fn. 1, 854 N.E.2d

487.

       {¶11} There are a number of well-established exceptions to the attorney-client

privilege. Squire, Sanders & Dempsey, L.L.P. v. Givaudan Flavors Corp., 127 Ohio St.3d

161, 937 N.E.2d 533, 2010–Ohio–4469, ¶ 24–43.             One such exception is the joint

representation exception:
Licking County, Case No. 17-CA-82                                                        5

             In addition, Ohio courts have applied the common-law joint-

      representation exception to the attorney-client privilege, which provides that

      a client of an attorney cannot invoke the privilege in litigation against a co-

      client. See, e.g., Emley v. Selepchak (1945), 76 Ohio App. 257, 262, 31

      O.O. 558, 63 N.E.2d 919, quoting 8 Wigmore on Evidence (3d Ed.1940),

      Section 2312 (“Another exception * * * is ‘when the same attorney acts for

      two parties having a common interest, and each party communicates with

      him. Here the communications are clearly privileged from disclosure at the

      instance of a third person. Yet they are not privileged in a controversy

      between the two original parties, inasmuch as the common interest and

      employment forbade concealment by either from the other * * *.’ ” [Emphasis

      sic]); Netzley v. Nationwide Mut. Ins. Co. (1971), 34 Ohio App.2d 65, 78, 63

      O.O.2d 127, 296 N.E.2d 550 (following Emley); see also Weissenberger's

      Ohio Evidence Treatise (2009) 246–247, Section 501.8 (“A similar

      exception applies when an action arises between parties who were

      previously co-clients within an attorney-client relationship”).

      Id. at ¶ 32.

      {¶12} “Whether an attorney-client relationship exists is not governed solely by

whether the person to whom advice is given or for whom service is rendered pays the

attorney who gives the advice or renders the service.” Lillback v. Metro. Life Ins. Co., 94

Ohio App.3d 100, 108–09, 640 N.E.2d 250, 256 (2nd Dist. Montgomery 1994). The test

for determining the existence of an attorney-client relationship is both subjective and
Licking County, Case No. 17-CA-82                                                          6

objective; it is a question of both what the putative client believed and whether or not that

belief was reasonable based on the surrounding circumstances. Stuffleben v. Cowden,

8th Dist. Cuyahoga No. 82537, 2003-Ohio-6334, ¶ 22.

       {¶13} The trial court found the joint representation exception existed in this case.

The court found Appellee had an honest belief the former attorney was employed by both

himself and Appellants, and this belief was reasonable based on the surrounding

circumstances. The court further concluded the parties had a common interest when

hiring the former attorney. Appellant argues the court erred in finding Vernau jointly

represented both Mason and Hinerman in the drafting the agreements surrounding the

establishment of the two limited liability companies at issue.

       {¶14} Although issues surrounding an assertion of privilege are generally subject

to de novo review, with respect to questions of fact, an appellate court must determine

whether the trial court abused its discretion. MA Equip. Leasing I, L.L.C. v. Tilton, 10th

Dist. Franklin No. 12AP-564, 2012-Ohio-4668, 980 N.E.2d 1072, ¶ 18. Accordingly, we

review the trial court's determination of factual issues, including the existence of an

attorney-client relationship between Appellee and counsel retained by Appellant Mason,

for an abuse of discretion. Id.

       {¶15} In his affidavit, Appellee avers as follows:

              2. Prior to my involvement with the Defendant Eric Mason and in the

       businesses known as The Grill on Twenty First, LLC and Twenty First Street

       Properties, LLC, I was a client of Morrow, Gordon & Byrd, a Newark, Ohio

       law firm.
Licking County, Case No. 17-CA-82                                                            7

                  3.   When Defendant Eric Mason and I had decided to go into

       business together, Eric Mason told me that he had found Adam Vernau, an

       attorney at Morrow, Gordon & Byrd, to draft our operating agreements for

       both of us.

                  4. I readily agreed to have Adam Vernau prepare our agreements

       because I was already a client of Morrow, Gordon & Byrd.

                  5. Adam Vernau prepared the operating agreements at issue in this

       case.

                  6. Adam Vernau never advised me that he was representing Eric

       Mason only and he never advised me that I should consult my own lawyer

       if I wanted to be represented.

                  7. I thought Adam Vernau was representing both me and Eric Mason

       jointly.

                  8. Eric Mason and I both shared a common interest in having our

       operating agreements drawn up to reflect the terms that we had agreed

       upon.

       {¶16} Adam Vernau averred in his affidavit filed subsequent to the evidentiary

hearing, “In regard to creating the new limited liability companies, including the

preparation of the operating agreements, my client was Eric E. Mason.” However, in his

testimony at the original deposition which gave rise to the initial question of attorney-client

privilege, he testified the client would have been the LLCs, and the members, so “I guess,

Eric, Stu and there’s two LLCs, is my recollection.” Deposition of Adam Vernau, p.6. He
Licking County, Case No. 17-CA-82                                                          8

further testified he thinks as a matter of law he represented Appellee, but his interaction

with him was limited. Deposition of Adam Vernau, p. 16.

       {¶17} The trial court did not abuse its discretion in finding Appellee believed

Vernau represented himself and Mason jointly. His affidavit provided direct evidence as

to his belief. The court further did not abuse its discretion in finding Appellee’s belief of

joint representation to be reasonable. Appellee was already a client of the law firm when

Mason came to him and suggested Vernau draw up the operating agreements. His

affidavit recites he was never advised by Vernau he was representing Mason only. He

and Mason shared a common interest in the operating agreements which created their

limited liability companies for their joint business venture. Further, Vernau acknowledged

while most of his interaction was with Mason, he believed his clients legally were both

Mason and Appellee, as well as the two limited liability companies.

       {¶18} Because the court did not abuse its discretion in finding joint representation

based upon the evidence before it, the trial court did not err in finding the attorney-client

privilege inapplicable based on the joint representation exception.

       {¶19} The assignment of error is overruled.
Licking County, Case No. 17-CA-82                                                9

      {¶20} The judgment of the Licking County Common Pleas Court is affirmed.

By: Hoffman, P.J.

Delaney, J. and

Wise, Earle, J. concur