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Gary O'Nesti and Leon Zionts v. DeBartolo Realty Corp. and DeBartolo Property Management, Inc., Case no. 2005-2093
7th District Court of Appeals (Mahoning County)
Tara N. Fehrenbach et al. v. Kathryn O'Malley, M.D., et al., Case nos. 2005-2283 and 2005-2301
1st District Court of Appeals (Hamilton County)
Joyce A. Penrod v. Ohio Department of Administrative Services, Office of Employee Services, Case nos. 2005-2373 and 2005-2374
State Personnel Board of Review
National City Commercial Capital Corp., d.b.a., Information Leasing Corp. v. AAAA At Your Service, Inc., et al., Case no. 2006-0169
12th District Court of Appeals (Butler County)
Disciplinary Counsel v. Bryan Bright Johnson, Case no. 2006-1197
Franklin County
Gary O'Nesti and Leon Zionts v. DeBartolo Realty Corp. and DeBartolo Property Management, Inc., Case no. 2005-2093
7th District Court of Appeals (Mahoning County)
ISSUES: When one group of plaintiffs wins a judgment against a defendant, are other similarly situated plaintiffs who could have joined in the first lawsuit, but did not, entitled to summary judgment on their subsequent claims against the same defendant, based on the legal doctrine of res judicata? When a defendant who lost a case involving one set of plaintiffs defends itself against identical claims by a second set of plaintiffs, is the defendant barred by the doctrine of collateral estoppel (issue preclusion) from asserting against the new plaintiffs a new legal defense that it could have asserted but did not assert in the first case?
BACKGROUND: This case asks the Supreme Court to interpret and apply two legal doctrines that encourage judicial economy by barring parties whose dispute has already been adjudicated by a court from relitigating that dispute: (1) The principle of res judicata or “claim preclusion” bars a party to a lawsuit that has been decided from filing a new court action that asserts essentially the same claim(s) against the same defendant(s) that were adjudicated in the prior court case. (2) The principle of collateral estoppel or “issue preclusion” bars a party to a lawsuit that has already been adjudicated from relitigating specific issues that were decided in the prior court decision, or from challenging a prior court ruling by introducing new legal arguments or defenses that could and should have been raised during the earlier litigation, but were not.
In this case, two former employees of Youngstown-based DeBartolo Realty Corp., Gary O'Nesti and Leon Zionts, filed a civil lawsuit against their former employer in 2003 alleging that they were each entitled to receive 8,100 shares of DeBartolo Realty stock under a “change of control” vesting provision in the company's employee stock incentive plan. In their complaint, O'Nesti and Zionts cited a prior court decision, Agostinelli v. DeBartolo Realty, in which the Mahoning County Court of Common Pleas had made monetary awards to 27 of their former coworkers, based on the court's finding that DeBartolo's August 1996 merger with Simon Properties Group had triggered the same “change of control” provision in the DeBartolo stock incentive plan that was the basis for O'Nesti and Zionts' claims.
The trial court granted a motion for summary judgment in favor of O'Nesti and Zionts. The judge ruled that the Agostinelli decision had established the legal entitlement of DeBartolo employees who were participants in the stock incentive plan at the time of the merger to vesting of their deferred stock. Finding that O'Nesti and Zionts were “in privity with” (on exactly the same legal footing as) the Agostinelli plaintiffs, the trial court held that there were no material issues of fact in the O'Nesti/Zionts litigation that could be resolved in favor of DeBartolo, and therefore the new plaintiffs were entitled to summary judgment consistent with the Agostinelli judgment.
DeBartolo appealed, and the 7th District Court of Appeals affirmed the trial court's grant of summary judgment. The appellate panel agreed with the plaintiffs' argument that O'Nesti and Zionts were in privity with the Agostinelli plaintiffs, and that the principle of res judicata therefore precluded DeBartolo's attempts to relitigate its liability under the employee stock incentive plan. The court of appeals also overruled DeBartolo's argument that O'Nesti and Zionts had signed letters in June 1996 agreeing to waive their entitlement to DeBartolo stock in return for future shares of stock in the new, merged company. The 7th District held that this new argument was barred by the principle of collateral estoppel, because DeBartolo could have asserted it as a defense in the Agostinelli case, but had failed to do so.
DeBartolo appealed the 7th District's ruling to the Supreme Court, which has agreed to hear arguments in the case. Attorneys for DeBartolo argue that the 7th District has misunderstood and misapplied the principle of claim preclusion, which they say has historically been applied only “defensively”– i.e. as a shield to protect defendants who have won their court cases against efforts by a losing plaintiff to introduce a new lawsuit reasserting the same claim. They point out that O'Nesti and Zionts could have joined their co-workers as plaintiffs in the Agostinelli case, but chose to “wait and see” how that case was decided rather than being bound by the Agostinelli court's decision. They argue that, under Ohio case law, claim preclusion and issue preclusion apply only where the same parties who were involved in a decided case are attempting to relitigate that specific case. DeBartolo asserts that prior to this case, no Ohio court has ruled that a defendant who loses a case against one set of plaintiffs is thereafter barred by res judicata or collateral estoppel from asserting the same defenses against later claims advanced by different plaintiffs.
Attorneys for O'Nesti and Zionts respond that the trial court never mentioned either res judicata or collateral estoppel in its decision, but simply found that the claims advanced by the plaintiffs in this case are identical to the claims that were found meritorious in the Agostinelli case, and were based on the same exact provision of the DeBartolo employee stock incentive plan that was addressed in the Agostinelli decision. Because the Agostinelli judgment was reviewed and affirmed by the 7th District, and the Supreme Court declined to hear DeBartolo's appeal of that decision, they assert, the trial court correctly found that O'Nesti and Zionts were entitled to summary judgment because Agostinelli was controlling precedent that eliminated any issues in their claim that could be decided in DeBartolo's favor.
With regard to the 7th District's ruling precluding DeBartolo's “new” defense involving the June 1996 letters of agreement, O'Nesti and Zionts note that all of the Agostinelli plaintiffs received and signed similar letters, and that DeBartolo's attorneys could and should have raised this argument as a defense in the earlier trial but did not do so. They contend that Ohio courts have and do recognize “offensive” uses of claim and issue preclusion in cases where the matter in dispute is virtually identical to a previously decided case. They say that invoking res judicata does not require identity of the parties in both cases, but only that there be a strong “mutuality” between the parties. In this case, they say, the compensation sought by O'Nesti and Zionts,' their legal relationship to DeBartolo and the contractual provision on which their claim rests were all identical to the facts of the Agostinelli case.
Contacts
Thomas S. Kilbane, 216.687.8564, for
DeBartolo Realty Corp.
Timothy A. Shimko, 216.241.8300, for Gary O'Nesti and Leon Zionts.
Tara N. Fehrenbach et al. v. Kathryn O'Malley, M.D., et al., Case nos. 2005-2283 and 2005-2301
1st District Court of Appeals (Hamilton County)
ISSUE: Does a state law that “tolls” the statute of limitations (extends the time limit) for a minor child to file a negligence claim until after the child reaches the age of majority also extend the time limit for the child's parents to file a “collateral” claim for loss of consortium and medical expenses that the parents have incurred as a result of the child's injuries?
BACKGROUND: Over a two-day period in October 1990, a Cincinnati pediatrician, Dr. Kathryn O'Malley, twice examined 14-month old Tara Fehrenbach and diagnosed her persistent high fever, vomiting and lethargy as an ear infection. When Tara's symptoms continued to worsen on the third day, her parents took her to a hospital emergency room, where a spinal tap disclosed that she was suffering from a severe case of bacterial meningitis. As a result of her meningitis, Tara suffered a number of strokes and experienced a series of complications that have required multiple surgeries and will require continuing medical attention throughout her life.
In 1997, attorneys representing Tara filed a malpractice action against Dr. O'Malley and the medical practice with which she was associated, Suburban Pediatrics. Along with Tara's claim, her parents filed their own claims against Dr. O'Malley and her practice for their damages arising from their daughter's injury, including claims for loss of consortium with Tara and for medical costs the parents had incurred for Tara's treatment since 1990.
The Hamilton County Court of Common Pleas held that Tara's claims had been filed within allowable time limits because a provision of state law, R.C. 2305.16, “tolls” (stops the running of) the one-year statute of limitations for filing medical malpractice claims asserted on behalf of a minor child until the child achieves the age of legal majority. The trial court granted summary judgment dismissing the parents' claims, however, on the basis that their claims were not covered by the “tolling” provision applicable to their daughter, and the parents were therefore required to file their separate claims within one year after they discovered that Tara's medical problems arose from Dr. O'Malley's failure to promptly diagnose and treat her meningitis. On review, the 1st District Court of Appeals reversed the trial court's ruling and reinstated the parents' claims. The appellate panel held that, because the parents' claims were completely derived from Tara's claims, the interests of the parties were inseparable and the tolling statute therefore applied to both the child's and the parents' claims.
Attorneys for Dr. O'Malley cite decisions from several other Ohio appellate districts holding that the tolling provision of R.C.2305.16 extends only to claims asserted by a minor child or a person of unsound mind, and does not extend the filing deadline for separate “derivative” claims by parents, spouses or other parties who seek recovery for their own damages arising out of injury to a child or mentally incompetent adult. They assert that, if adopted statewide, the 1st District's decision in this would greatly delay the resolution of civil lawsuits by allowing not only claims of injured children but also claims on behalf of multiple family members to be filed up to 18 years after the actual time the child's injury took place.
Attorneys for the Fehrenbachs urge the Court to affirm the reinstatement of the parents' claims. They argue that the 1st District's analysis correctly applies language in the last sentence of R.C. 2305.16 that specifically extends the “tolling” provision not only to claims of minors, but also to derivative claims of persons whose interests are identical to and inseparable from those of the injured child. They argue that if the extended filing period granted by the tolling statute is applicable only to damages suffered by the child herself, and all related claims asserted by any other party are legally separate and distinct from the child's claims, then the last sentence of the tolling statute is meaningless because there could never be any other party whose claims are “inseparable” from the child's and who would therefore be eligible for extension of the filing deadline. They also argue that Tara's parents could not possibly have filed supportable claims for her medical costs within one year after her injury, because a great portion of those costs were not incurred until years later, when complications from meningitis required multiple follow-up surgeries.
Contacts
Michael F. Lyon, 513.421.6630, for
Kathryn O'Malley, M.D. and Suburban Pediatrics, Inc.
John H. Metz, 513.241.8844, for Tara, Gina and Thomas Fehrenbach.
Joyce A. Penrod v. Ohio Department of Administrative Services, Office of Employee Services, Case nos. 2005-2373 and 2005-2374
State Personnel Board of Review
ISSUE: When a public employer abolishes a civil service position as part of a claimed “reorganization for efficient operation” under former R.C. 124.321(D), may the employer satisfy legal requirements by showing that it “reasonably projected” greater efficiency as a result of the abolishment, or must the employer also show that the abolishment actually resulted in improved efficiency?
BACKGROUND: Joyce Penrod was employed as Facilities Planning Project Manager in the office of the state architect, a subunit of the Ohio Department of Administrative Services (ODAS), when she was notified that her position was being abolished under a provision of state law that allows state agencies to eliminate civil service positions as part of a “reorganization for efficient operation.”
Penrod, a 22-year public employee, appealed the department's action to the State Personnel Board of Review. At a hearing before an administrative judge after Penrod was laid off, witnesses representing the state architect's office and ODAS testified that the abolition had reduced the state architect's office payroll charged against the General Revenue Fund, but had also resulted in some reduction in the level of service provided by the architect's office to its customers. The judge issued a report finding that the state had not established sufficient justification for the job abolition, and recommended that Penrod be reinstated. The board of review considered the state's objections to the judge's findings and recommendation, and subsequently overruled the judge's report and upheld the abolition of Penrod's position.
Penrod appealed that ruling to the Franklin County Court of Common Pleas, which reversed the board of review and ruled in Penrod's favor. On review, the 10th District Court of Appeals affirmed the common pleas court decision but also certified that its holding was in conflict with a 1997 ruling of the 1 st District in McAlpin v. Shirey. The Supreme Court has agreed to hear arguments to resolve the conflict between appellate districts.
Attorneys for ODAS argue that the common pleas court and 10th District rulings in Penrod's case went beyond the requirements of the law, which they say requires only a showing that a state agency abolishing a position on efficiency grounds make a reasonable advance projection that operating efficiency would be enhanced. In this case, they argue, ODAS not only made a reasonable projection but actually accomplished an equal amount of work with fewer workers after Penrod was laid off, an outcome they say constitutes increased efficiency by yielding equal outputs from reduced inputs. They assert that the law does not require a showing of equal service quality after a job abolition so long as the state can show satisfactory performance of the same work at a reduced cost.
Attorneys for Penrod respond that R.C.124.321(D) requires a state agency to do more than simply make a self-serving “projection” of improved efficiency as justification for abolishing a civil service job, but also to show by pre and post-event factual evidence that the same level of service is being delivered more efficiently. They point out that, within several months of eliminating Penrod's job, the state architect's office added five new assistant architect positions paid from non-general-revenue sources that it did not count in its assessment of equal output with less staff.. They also assert that, if simply reducing payroll constitutes sufficient justification for eliminating a civil service job on “efficiency” grounds, then any state agency can eliminate any civil service position on that basis, rendering civil service laws meaningless.
Contacts
David L. Strait, 614,620.9123, for
Joyce Penrod.
Diane Richards Brey, 614.466.8980, for the Ohio Dept. of Administrative Services.
National City Commercial Capital Corp., d.b.a., Information Leasing Corp. v. AAAA At Your Service, Inc., et al., Case no. 2006-0169
12th District Court of Appeals (Butler County)
ISSUE: When a trial court dismisses a legal action other than on the merits, and that dismissal effectively prevents the plaintiff from re-filing the same claim in the trial court, is the dismissal order a “final, appealable order” subject to review by an Ohio court of appeals?
BACKGROUND: This case involves a group of non-Ohio businesses that entered into contracts with New Jersey-based NorVergence Inc. for “package deals” of monthly telecommunications and Internet services. AAAA At Your Service, Inc. (AAAA) and other customers signed long-term contracts in which they agreed to lease a “matrix box” provided by NorVergence that was portrayed as an essential component necessary to receive low-cost phone and Internet service through NorVergence's service network. Immediately after obtaining signed lease agreements from these customers, NorVergence assigned or “sold” the contracts to a lease financing company, National City Commercial Capital Corp. (NCC), which is located in Butler County, Ohio. NorVergence sold other customer lease contracts to other Ohio financial institutions located in Cuyahoga and Summit counties.
NorVergence subsequently declared bankruptcy and failed to provide the promised services to its customers, who then stopped making payments on the lease contracts NorVergence had sold to NCC. NCC brought legal actions in the Butler County Court of Common Pleas to compel individual customers to continue making payments on their NorVergence contracts, invoking a “choice of law/choice of forum” clause included in the customers' contracts stating that any dispute between the parties would be resolved in the courts of the state where the principal office of NorVergence or of its assignee was located. The Butler County Common Pleas Court consolidated NCC's claims against the NorVergence lessees into a single case. The defendants filed a motion to dismiss NCC's claims. The judge granted that motion, dismissing all claims asserted by NCC on the basis that the Butler County common pleas court did not have personal jurisdiction over NorVergence's customers because their businesses were based in foreign states and they had no close contact with Ohio. In denying jurisdiction, the trial court did not rule on the merits of NCC's claims, but held that it was contrary to public policy for an Ohio court to enforce the “choice of forum” provision in lease agreements entered into by a New Jersey company and out-of-state defendants, none of whom had any corporate presence in Ohio.
NCC appealed the trial court's dismissal of its claims to the 12th District Court of Appeals. AAAA and the other defendants filed a motion seeking dismissal of NCC's appeal. They argued that because the trial court's ruling did not dispose of NCC's claims on the merits, but merely dismissed them without prejudice based on the trial court's lack of personal jurisdiction over the defendants, that ruling was not a “final appealable order” under Ohio law and therefore was not subject to review by a court of appeals. The 12th District denied the defendants' motion to dismiss, but certified that its holding on that issue was in conflict with a ruling by the 8th District Court of Appeals in a nearly identical case, Preferred Capital, Inc. v. Strellec. In Strellec, the 8th District dismissed the appeal of Cleveland-based Preferred Capital, which had also purchased NorVergence lease contracts involving non-Ohio companies. The Strellec court held that a trial court's dismissal of claims based on lack of personal jurisdiction over the defendants was not a final appealable order. The Supreme Court agreed to hear arguments to resolve the conflict between districts.
Attorneys for NCC point to language in R.C. 2505.02(B)(1) that defines a final, appealable order as “an order that affects a substantial right in an action that in effect determines the action and prevents a judgment.” In this case, they argue, the Butler County trial court's dismissal of their claims against the NorVergence lessees for lack of personal jurisdiction effectively “determines the action” and “prevents a judgment” on their claims because the ruling denies them access to the only venue in which they can bring a claim under the terms of their contracts, which specify that disputes must be resolved “in the courts … where the principle office of the (lease) assignee is located.” By denying NCC the ability to sue in its legal home of Butler County, Ohio, NCC asserts, the trial court's dismissal leaves them with no legal recourse or opportunity for review of the trial court's holding, and thus is a “final, appealable order” that the 12th District Court of Appeals has correctly agreed to hear.
Attorneys for AAAA and the other defendants respond that, in finding the trial court's dismissal order to be final and appealable, the 12th District went beyond the plain language and meaning of R.C. 2505.02(B)(1). They argue that the Butler County trial court's order dismissing NCC's claims did not “determine the action” or “prevent a judgment” in the case. They say the order simply prevented a judgment in a non-Ohio dispute from improperly being rendered in Ohio, but did nothing to preclude NCC from re-filing its claims against non-Ohio defendants in courts that do have jurisdiction over those defendants, i.e., the courts of the states in which the defendant companies are located. They urge the Supreme Court to follow the 8th District's ruling denying appellate review in Strellec, and assert that to adopt the 12th District's interpretation of R.C 2505.02(B)(1), the Court would have to improperly read the words “in Ohio” into a statute that does not include that limiting language.
Contacts
Matthew R. Chasar, 513.621.2120, for
AAAA At Your Service et al.
William P. Coley II, 513.723.8400, for National City Commercial Capital Corp.
Disciplinary Counsel v. Bryan Bright Johnson, Case no. 2006-1197
Franklin County
The Board of Commissioners on Grievances & Discipline has recommended that Columbus attorney Bryan Johnson be publicly reprimanded for ethical violations arising from his overbilling of two elderly sisters for whom he served as court-appointed guardian.
The board adopted findings by a three-member hearing panel which concluded that Johnson had violated the Ohio attorney discipline rules that prohibit charging a clearly excessive fee and engaging in conduct that reflects adversely on the attorney's fitness to practice law when he billed the sisters for approximately $157,000 in legal fees to accomplish the recovery of approximately $190,000 from another attorney who had earlier misappropriated more than $800,000 of their funds after they entrusted her with control over their financial affairs.
Johnson has filed objections to the board's recommendation, arguing that his billings were not excessive for the work he performed and that, if they should be found excessive, any violation of ethical rules was minimal and not deserving of a disciplinary sanction. He asserts that he actually collected only $94,000 in fees for extensive services he provided to the clients over a 30-month period, and points to a judgment entry in which a Franklin County Probate Court judge approved his accounting for his representation of the sisters and the amount of his fees
The Office of Disciplinary Counsel, which prosecuted the charges against Johnson, has also filed objections to the board's report. They argue that Johnson used his position as legal guardian over one sister and holder of a power of attorney for the other to deliberately shield most of his billings from the scrutiny and prior approval of the probate court, to undertake unnecessary legal tasks for which he charged exorbitant rates, and to bill his clients for fees that the board of commissioners found to be “in excess of what was reasonable and well beyond what any competent client would knowingly consent to based upon the expected outcome.”
Contacts
Jonathan E. Coughlan, 614.461.0256, for the
Office of Disciplinary Counsel.
Benson A. Wolman, 614.280.1000, for Bryan Bright Johnson.
These summaries are prepared by the Office of Public Information solely to help news reporters determine if they want to cover the arguments. The summaries are not part of the case record and are not considered by the Court at any point during its deliberations.
Parties interested in receiving additional information are encouraged to review the case file available in the Supreme Court Clerk's Office (614.387.9530), or to contact counsel of record.