COD Properties Ohio, L.L.C. v. Black Tie Title, L.L.C. , 2022 Ohio 17 ( 2022 )

[Cite as COD Properties Ohio, L.L.C. v. Black Tie Title, L.L.C., 2022-Ohio-17.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
COD PROPERTIES OHIO, L.L.C., :
Plaintiff-Appellant, :
Nos. 109714 and 109833
v. :
BLACK TIE TITLE, L.L.C., ET AL., :
Defendants-Appellees. :
JOURNAL ENTRY AND OPINION
JUDGMENT: REVERSED AND REMANDED
RELEASED AND JOURNALIZED: January 6, 2022
Civil Appeal from the Cuyahoga County Court of Common Pleas
Case No. CV-19-917765
Appearances:
Harold Pollock, Co., L.P.A., and Harold Pollock, for
appellant.
Stephanie J. Lane, for appellees.
EMANUELLA D. GROVES, J.:
{1} In this consolidated appeal, COD Properties, L.L.C. (“COD Properties”)
appeals the trial court’s decision to disqualify its attorney, Gregory Glick (“Glick”).
For the following reasons, we reverse the decision of the trial court.
Factual and Procedural History
{2} COD Properties is a limited liability company engaged in the purchase,
renovation, and ownership of real property. The managing member of COD
Properties is Christopher Ostlund (“Ostlund”), a resident of Oregon. COD
Properties would purchase a property and either a) immediately sell the property,
b) rehabilitate the property and then sell it, or c) rehabilitate and maintain the
property as rental property.
{3} In late 2018, COD Properties identified a property on Edgewood, in
Maple Heights, Ohio (“the property”) that it wanted to purchase. The property was
subject to a foreclosure action and came up for sheriff’s sale in early 2019. COD
Properties alleged that it hired Black Tie Title, L.L.C. (“BTT”) to act as an agent and
to purchase properties in Ohio on COD Properties’ behalf. Ryan Steigmeier
(“Steigmeier”) and Nicholas Varner (“Varner”) are principal members of BTT.
{4} BTT is a limited liability company engaged in the title business. COD
Properties alleged that it gave BTT a check for $5,000 payable to the Cuyahoga
County Sheriff to use as a down payment at the sheriff’s sale for the property.
{5} Steigmeier acknowledged that he went to the sheriff’s sale and filled out
the bidding paperwork at the direction of the sheriff’s department. However, there
was an error in the paperwork. COD Properties alleged that Steigmeier purposefully
botched the paperwork; BTT argued that it was inadvertent. In either event, COD
Properties was the successful bidder for the property; however, as a result of the
error, Steigmeier’s name was placed on the deed. Initially, COD Properties was
unaware that its name was not on the deed.
{6} Ostlund averred that in June 2019, COD Properties paid the balance due
to the Cuyahoga County Sheriff for the property. Around the same time, Ostlund
learned that the property was deeded to Steigmeier.
{7} Ostlund averred that he encountered Steigmeier at the Cuyahoga
County Sheriff’s office in June. According to Ostlund, Steigmeier asserted that he
was the owner of the property and had located a buyer for it. BTT denied that this
occurred. Further, Ostlund alleged the BTT defendants (Steigmeier, Varner, and
BTT) refused requests to transfer the property to COD Properties, despite BTT’s
acknowledgment it did not contribute any funds to the purchase of the property.
{8} Nonetheless, the BTT defendants justified their refusal to transfer the
property based on what they had learned about COD Properties’ business model.
Specifically, the BTT defendants argued that COD Properties “wholesaled” homes.
That is, COD Properties would acquire an interest in a property by winning the bid
at sheriff’s sale and then sell the property to a third-party purchaser.
{9} In an email exchange between Glick and BTT’s attorney, BTT indicated
they would transfer the property to COD Properties when the following evidence was
shown: 1) proof of payment by every person and entity who paid the purchase price,
including the down payment; 2) a written, signed resolution on behalf of every entity
involved in COD Properties’ “failed” partnership to acquire the property that
authorizes Steigmeier to transfer the property to COD Properties; 3) a written
release signed by every person and entity who contributed to the purchase price,
which authorizes Steigmeier to transfer the property to COD Properties; and 4) a
hold harmless agreement by COD Properties that indemnifies BTT in the event other
parties with an interest in the property later challenge the transfer.
{10} COD Properties subsequently filed suit against BTT, Varner, and
Steigmeier claiming breach of contract, promissory estoppel, unjust enrichment,
quiet title, ejectment, civil theft, conversion, fraud and misrepresentation,
conspiracy to commit fraud, conversion, and breach of fiduciary duty. COD
Properties also sought additional equitable remedies to preserve and protect their
interest in the property.
{11} COD Properties filed a motion requesting that a receiver be appointed
to take control of the property and BTT. BTT filed a response, objecting to the
appointment of a receiver for the company but agreeing to a receiver to take custody
of the property. COD Properties later withdrew the motion for the receiver without
stating a reason.
{12} On September 24, 2019, the BTT defendants filed a motion to
disqualify COD Properties’ attorneys, Glick and Harold Pollock (“Pollock”). The
BTT defendants argued that Glick and Pollock were necessary witnesses for the trial
in this case. The BTT defendants put forward several theories to support
disqualification; however, the most relevant to this appeal is their allegation that
COD Properties was engaged in a scheme to misuse the sheriff’s sale process.
{13} The BTT defendants argued that COD Properties’ business model
involved the sale of real estate without a real estate license in violation of R.C.
4735.02(A). Although BTT acknowledged having no ownership interest in the
property, they argued that they were justified in retaining title to the property in
Steigmeier’s name due to this illegal scheme and the possibility that another party
was the actual owner of the property.
{14} BTT alleged that Glick and Pollock were necessary witnesses who could
explain and clarify COD Properties’ business model as well as identify the actual
owner of the property. Furthermore, they argued that the crime-fraud exception to
attorney-client privilege applied due to Glick’s and Pollock’s involvement in COD
Properties’ illegal business model.
{15} The BTT defendants summarized their argument stating that Glick’s
and Pollock’s testimonies were necessary to determine whether a) COD properties
was actually the purchaser of the property, or whether COD was acting on behalf of
one or more other undisclosed entities; b) whether COD Properties and/or Glick
failed to do their due diligence on the property to ensure that the title was placed in
the correct entity; c) whether Glick committed malpractice in his representation of
COD Properties and whether that malpractice caused the damage to COD
Properties; d) whether Glick was engaged in abuse of process and sued the BTT
defendants to deflect attention from his own malfeasance; and e) whether COD
Properties comes to court with unclean hands. The BTT defendants alleged that the
attorneys’ representation was in violation of Prof.Cond.R. 3.7(a), 8.4(c), 1.2(d)(1)
and 1.7.
{16} In response, COD Properties argued that the BTT defendants’ motion
was a ruse to prolong the litigation and increase costs. Additionally, they argued
that if COD Properties was involved in an illegal scheme, BTT was “in pari delicto,”
i.e., equally at fault, and could not escape liability by arguing COD Properties was
engaged in said scheme. Further, COD Properties argued that BTT failed to
establish that the attorneys’ testimonies were “necessary” and “unobtainable from
other sources.” COD Properties also argued that even if the testimonies were
relevant, they would be inadmissible due to attorney-client privilege. Finally, COD
Properties argued that BTT failed to meet its burden of proof in support of
application of the crime-fraud exception to privilege.
{17} On April 21, 2020, the trial court ruled on BTT’s motion to disqualify
Glick and Pollock. Citing Prof.Cond.R. 3.7, the trial court found that Glick was a
necessary witness to the litigation due to his role in COD Properties’ business model.
The court specifically focused on BTT’s allegation that COD Properties was involved
in an illegal scheme designed to misuse the sheriff’s sale process. The court found
that Glick’s involvement in COD Properties’ business made him a necessary party
and made his testimony unobtainable from any other source. The court further
found that Glick’s testimony was relevant and material to the issues being litigated.
The court found that its decision would not substantially harm COD Properties since
Pollock would be allowed to remain as counsel. The court further found that the
BTT defendants had established probable cause under the crime-fraud exception
and therefore the attorney-client privilege would not attach to Glick’s testimony.
{18} COD Properties assigns the following errors for our review:
Assignment of Error No. 1
The trial court erred in disqualifying Appellant’s counsel Glick where
the motion to disqualify counsel was not timely filed.
Assignment of Error No. 2
The trial court erred in granting Appellees’ motion to disqualify counsel
where Appellees failed to demonstrate that the information sought
from Glick was not obtainable from any other person.
Assignment of Error No. 3
The trial court erred in finding that Glick was required to testify about
an alleged illegal real estate scheme where such issue was a fabricated
misdirection and not relevant to any issue in this case.
Assignment of Error No. 4
The trial court erred in disqualifying Glick where such disqualifications
would work a substantial hardship to Appellant.
Assignment of Error No. 5
The trial court erred in finding that Glick is a necessary witness where
there had been no prior attempt to obtain the discovery sought from
other persons and no showing that the testimony sought from Glick
was not obtainable from anyone else.
Assignment of Error No. 6
The trial court erred in finding the crime-fraud exception to be
applicable to Glick where there had been an insufficient showing of its
application but merely allegations of same.
Assignment of Error No. 7
The trial court erred in entertaining the meritless defense that a
violation of R.C. 4735.02 occurred here where such defense could not
possibly be a defense to theft/conversion claims asserted herein.
Assignment of Error No. 8
The trial court erred in finding that Civ.R. 60(B) cannot be used to
correct a legal error made by court where courts can grant motions
under rule 60(B)(1) to alter or amend judgment if there is a clear error
of law. Gencorp, Inc. v. American Intern. Underwriters, 178 F.3d 804,
834 (6th Cir. 1999).
{19} We find COD Properties’ second and fifth assignments of error are
dispositive of this appeal. COD Properties argues that Glick was not a necessary
party because BTT failed to establish that his testimony was unobtainable from any
other source. For the following reasons, we agree.
Legal Analysis
{20} As a preliminary matter, we note that “disqualification of an attorney
is a drastic measure that should not be taken unless absolutely necessary.”
Gonzalez-Estrada v. Glancy, 2017-Ohio-538, 85 N.E.3d 273, ¶ 10 (8th Dist.), citing
Brown v. Spectrum Networks, Inc., 180 Ohio App.3d 99, 2008-Ohio-6687, 904
N.E.2d 576, ¶ 11 (1st Dist.), citing A.B.B. Sanitec W., Inc. v. Weinsten, 8th Dist.
Cuyahoga No. 88258, 2007-Ohio-2116, ¶ 18.
{21} When reviewing a trial court’s decision to disqualify an attorney, we
apply an abuse of discretion standard. Id. “An abuse of discretion suggests that the
trial court’s attitude in reaching its decision was unreasonable, arbitrary, or
unconscionable.” Champoir v. Champoir, 2019-Ohio-2235, 138 N.E.3d 530, ¶ 15
(8th Dist.), citing Blakemore v. Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d 1140(1983).
{22} There is an unavoidable conflict between the roles of advocate and
witness. Id., citing Amos v. Cohen, 156 Ohio App.3d 492, 495, 2004-Ohio-1265, 806
N.E.2d 1014 (1st Dist.), citing Mentor Lagoons, Inc. v. Rubin, 31 Ohio St.3d 256,
257, 510 N.E.2d 379 (1987). When the basis for disqualification is that the attorney
is a potential witness, courts have recognized that disqualification “should be viewed
with disfavor because of [the] potential to interfere with a [litigant’s] right to choose
his own counsel and [the] ‘strong potential for abuse.’” A.B.B. Sanitec W., Inc. at ¶
1, quoting United States v. Poulsen, S.D. Ohio Case No. CR 2-06-129, 2007 U.S. Dist.
LEXIS 27933 (Apr. 16, 2007). “Therefore, courts considering disqualification of
counsel must be sensitive to the competing public interests of requiring professional
conduct by an attorney and of permitting a party to retain the counsel of his choice.”
Id.{23} Citing Prof.Cond.R. 3.7, the trial court found that
Attorney Glick should be disqualified in the instant matter. Attorney
Glick appears to be deeply involved in the plaintiff’s business model,
which defendants allege includes misuse of the sheriff’s sale process.
This business model is the basis of the instant lawsuit. Because the
properties involved went through the sheriff’s sale process, the courts
and therefore Glick, as the attorney for the plaintiff, were necessary
parts of the alleged process. The court finds that Glick is a necessary
witness regarding his role in plaintiff’s business model, and the actions
he undertook in that role, as well as how those actions pertain to the
instant case. Because of Glick’s involvement in plaintiff’s process in
light of the allegations in the instant lawsuit, his testimony is
unobtainable from another source. Furthermore, Glick’s testimony is
relevant and material to the issues being litigated in the instant case.
{24} In determining whether disqualification is appropriate, we are mindful
that “[i]t is the burden of the party moving for disqualification of an attorney to
demonstrate that the proposed testimony may be prejudicial to that attorney’s client
and that disqualification is necessary.” WFG Natl. Title Ins. Co. v. Meehan, 8th Dist.
Cuyahoga No. 105677, 2018-Ohio-491 ¶ 24, citing Mentor Lagoons, Inc. v. Teague,
71 Ohio App.3d 719, 724, 595 N.E.2d 392 (11th Dist.1991).
{25} In the instant case, the trial court ruled on the parties’ respective
motions without an evidentiary hearing. “[T]he case law establishes that while a
trial court is required to hold a hearing to consider whether a lawyer should be
disqualified under Prof.Cond.R. 3.7, no particular type of hearing is required.” Reo
v. Univ. Hosps. Health Sys., 11th Dist. Lake No. 2018-L-110, 2019-Ohio-1411, ¶ 34.
An oral hearing is “generally unnecessary” as long as it is established that the court
“has sufficient evidence to consider the required factors for disqualification * * *.”
In re Carney, 8th Dist. Cuyahoga No. 110034, 2021-Ohio-1819, ¶ 24.
{26} Disqualification is proper under Prof.Cond.R. 3.7 when a court finds
that “the lawyer is likely to be a necessary witness,” unless “1) the testimony relates
to an uncontested issue; 2) the testimony relates to the nature and value of legal
services; or 3) the disqualification of the lawyer would work substantial hardship on
the client.” Prof.Cond.R. 3.7(a).
{27} A “necessary” witness under Prof.Cond.R. 3.7 “is one whose testimony
must be admissible and unobtainable through other trial witnesses.” Cty. Risk
Sharing Auth. v. Robson, 5th Dist. Licking No. 15-CA-62, 2016-Ohio-1460, ¶ 22,
citing King v. Pattison, 5th Dist. Muskingum No. CT2013-0010, 2013-Ohio-4665,
citing Popa Land Co., Ltd. v. Fragnoli, 9th Dist. Medina No. 08CA0062-M, 2009-
Ohio-1299, ¶ 15. “Testimony may be relevant and even highly useful but still not
strictly necessary.” Reo v. Univ. Hosps. Health Sys., 2019-Ohio-1411, 131 N.E.3d
986, ¶ 52 (11th Dist.), citing Holbrook v. Benson, 5th Dist. Stark No. 2013CA00045,
2013-Ohio-5307, ¶13.
{28} In determining whether a witness’s testimony is “necessary” courts
look at “the significance of the matters, weight of the testimony and availability of
other evidence.” Carney at ¶ 2, citing Akron v. Carter, 190 Ohio App.3d 420, 2010-
Ohio-5462, 942 N.E.2d 409, ¶ 20 (9th Dist.), quoting Puritas Metal Prods. v. Cole,
9th Dist. Lorain Nos. 07CA009255, 07CA009257, and 07CA009259, 2008-Ohio-
4653, ¶ 34.
{29} Disqualification is not warranted and a trial court abuses its discretion
in disqualifying, unless it can be established that 1) the sought-after testimony was
admissible, 2) the testimony was necessary in that it is a) relevant and material to
the issue being litigated, and b) unobtainable from any other source. Brown v.
Spectrum Networks, Inc., 180 Ohio App.3d 99, 2008-Ohio-6687, 904 N.E.2d 576,
¶ 15 (1st Dist.).
{30} A review of the record in this case shows that while the trial court made
the necessary findings for disqualification, the findings are unsupported by the
record. Specifically, there was no evidentiary support for the trial court’s finding
that Glick’s testimony was unobtainable from any other source.
{31} The trial court made its decision solely based on BTT’s attachments to
its motion to disqualify. These documents establish that Glick’s involvement
included the fact that he filed the paperwork to create COD Properties in Ohio, filed
motions on behalf of COD Properties, and prepared deeds on behalf of COD
Properties. BTT’s evidence does not establish that Glick’s knowledge extended
beyond what was necessary to draft documents on behalf of his client.
{32} The only other evidence BTT provided of Glick’s knowledge of COD
Properties’ business were conclusory statements in their motion to disqualify. BTT
did not include any affidavits from witnesses declaring firsthand knowledge of
Glick’s interactions with COD Properties or its principal member, Ostlund.
{33} Therefore, we find that there was a lack of evidence in the record from
which the trial court could have adequately determined that Glick’s testimony was
necessary. The trial court focused on the portion of COD Properties’ business model
that involved the court system and Glick’s activity in court to find that Glick’s
testimony was unobtainable elsewhere and therefore necessary. Unfortunately, the
record is devoid of evidence upon which the trial court could have made that
determination. There was no evidence presented as to what Glick’s testimony would
be beyond the filing of motions and preparation of documents for his client all of
which BTT demonstrated it was able to determine from the public record. See
Fordeley v. Fordeley, 11th Dist. Trumbull No. 2014-T-0079, 2015-Ohio-2610, ¶ 37
(trial court had insufficient evidence before it to determine necessity of lawyer’s
testimony when the substance of that testimony was unknown).
{34} Furthermore, the documents BTT submitted as attachments to its
motion identified several witnesses who could testify as to BTT’s defense, such as
COD Properties’ principal member, Ostlund. These documents included the deeds
COD Properties issued transferring the properties it acquired at sheriff’s sale. All
four deeds were signed by Ostlund. Furthermore, BTT attached a joint venture
agreement to its motion that described COD Properties’ financing for its business in
Ohio. That document named Ostlund, acting as COD properties, as a party, as well
as another potential witness.
{35} Based on the foregoing, the trial court abused its discretion when it
found that Glick’s testimony was unobtainable from any other witness.
Consequently, the trial court failed to establish that Glick’s testimony was necessary
pursuant to Prof.Cond.R. 3.7. As a result, the trial court abused its discretion in
disqualifying Glick.
{36} Accordingly, COD Properties’ second and fifth assignments of error are
sustained. The resolution of assignments of error two and five renders’ assignments
of error one, three, four, six, and seven moot.
{37} In the eighth assignment of error, COD Properties cites as error the trial
court’s refusal to grant its Civ.R. 60(B) motion to alter or amend a judgment.
However, although COD Properties has assigned this as error, they did not analyze
or argue this issue in their brief. “The court may disregard an assignment of error
presented for review if the party raising it fails to identify in the record the error on
which the assignment of error is based or fails to argue the assignment separately in
the brief, as required under App.R. 16(A).” App.R. 12(A)(2); Curtin v. Mabin, 8th
Dist. Cuyahoga No. 89993, 2008-Ohio-2040, ¶ 8.
{38} Judgment reversed and remanded for further proceedings.
It is ordered that appellant recover from appellees costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court 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.
__________________________
EMANUELLA D. GROVES, JUDGE
MARY J. BOYLE, P.J., and
KATHLEEN ANN KEOUGH, J., CONCUR