Shore v. Hards ( 2017 )

[Cite as Shore v. Hards, 2017-Ohio-7123.]
IN THE COURT OF APPEALS
ELEVENTH APPELLATE DISTRICT
GEAUGA COUNTY, OHIO
MICHAEL A. SHORE CO., L.P.A., : OPINION
Plaintiff-Appellee/ :
Cross-Appellant, CASE NO. 2015-G-0038
:
- vs -
:
ESTATE OF BERTINA HARDS,
BY & THRU JACQUELINE ADAMS, :
ADMINISTRATOR WWA, et al.,
:
Defendants-Appellants/
Cross-Appellees, :
DANIEL S. WHITE, :
Third Party :
Defendant-Appellee/
Cross-Appellant. :
Civil Appeal from the Geauga County Court of Common Pleas, Case No. 04 M
000045.
Judgment: Affirmed in part, reversed in part, and remanded.
A. Pearce Leary, 100 Park Place, Chagrin Falls, OH 44022 (For Plaintiff-
Appellee/Cross-Appellant, Michael A. Shore Co., L.P.A.).
Daniel S. White, Daniel S. White, Esq., 34 Parmelee Drive, Hudson, OH 44067 (Third
Party Defendant-Appellee/Cross Appellant).
Jacqueline and Kenneth Adams, pro se, 9441 Pekin Road, Novelty, OH 44072
(Defendants-Appellants/Cross-Appellees).
CYNTHIA WESTCOTT RICE, P.J.
{¶1} Appellants/cross-appellees, Jacqueline and Kenneth Adams (“the
Adams”), appeal from the judgment of the Geauga County Court of Common Pleas,
awarding them $10,000.00 compensation for the frivolous conduct of appellees/cross-
appellants, Michael A. Shore Co., L.P.A. and Daniel S. White (collectively “Shore”) as
well as the trial court’s determination that they were not entitled to an accounting of
funds expended to Shore in the course of its representation of the former guardianship
of Ms. Adams mother, Bertina Hards, deceased. Alternatively, Shore cross appeals,
contesting the trial court’s award of summary judgment to the Adams on their underlying
complaint, as well as the finding of frivolous conduct and the $10,000.00 sanction. The
judgments are affirmed in part, reversed in part and remanded for further proceedings.
{¶2} In June 1997, Daniel S. White, Esq., filed a complaint in the Cuyahoga
County Court of Common Pleas against Dean Witter Reynolds, Inc., and Thomas E.
Moore, on behalf of Jacquelyn Adams, in her capacity of Guardian for her mother,
Bertina Hards. The suit concerned claims that Dean Witter Reynolds, Inc., and Thomas
E. Moore negligently and/or fraudulently managed the investments and funds of the
ward. Attorney White was a member of the law firm of Michael A. Shore Co., LPA. The
Cuyahoga County Court of Common Pleas entered summary judgment against the
plaintiffs and in favor of the defendants based upon the expiration of the statute of
limitations. The judgment was affirmed on appeal. Adams v. Dean Witter Reynolds,
Inc., 8th Dist. Cuyahoga No. 74379, 1999 WL 401394 (June 17, 1999).1
{¶3} For legal services in the above case, Shore was paid $5,000 from the
Bertina Hards Guardianship account and an additional $10,573.69 from an inter vivos
1. In that matter, Ms. Adams asserted that the statute of limitations tolled, pursuant to R.C. 2305.16, due
to her mother’s impaired mental state. The Eighth District concluded, however, that the cause of action
was governed by the two-year, rather than the four-year, limitations period; as a result, the court held the
cause of action accrued and the statute of limitations expired prior to the ward’s impairment.
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trust of which Bertina Hards was the beneficiary. Jacquelyn Adams sought approval
from the Lake County Probate Court and from the Trustee of the trust for payments to
the firm.
{¶4} In December 1999, Michael A. Shore Co., LPA, represented by Attorney
White, filed a complaint in the Shaker Heights Municipal Court, naming Kenneth J.
Adams; Jacquelyn A. Adams; and Jacquelyn A. Adams, Guardian for Bertina Hards,
and Incompetent person, as defendants. The complaint alleged defendants were
personally liable to Shore for $12,861.90 on account as a result of an agreement the
parties allegedly entered relating to the Dean Witter litigation. According to Shore,
Jacqueline Adams agreed to personally reimburse Shore for any outstanding fees
relating to the litigation that the estate rejected.
{¶5} Defendants filed an answer, counterclaim, and third-party complaint in
response to the complaint. The answer denied all claims. The counterclaim and third-
party complaint alleged Michael A. Shore Co., LPA; Daniel White, esq., and Michael A.
Shore, esq., individually committed legal malpractice and fraud in their representation in
the Dean Witter litigation. The counterclaim and third-party complaint sought damages
in excess of $5,000,000. Because the amount claimed by the Adams exceeded the
monetary jurisdiction of the municipal court, the case was transferred to the Cuyahoga
County Court of Common Pleas.
{¶6} In an attempt to resolve the fee dispute, Jacqueline Adams moved the
Lake County Probate Court for authority to expend funds to pay the $12,681.90. The
Lake County Probate Court deferred ruling on the Adams’ motion to allow the parties an
opportunity to discuss a possible settlement. Later, the Lake County Probate Court
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determined the $12,861.90 in fees requested by Shore was reasonable and granted
Adams’ motion to expend funds.
{¶7} Later, however, Adams contested the expenditure of funds from the
estate, despite her previous motion. The Lake County Probate Court, sua sponte,
appointed a special master commissioner to resolve the issue. The special master
eventually concluded that the fee amount Shore had been previously awarded for
representing the estate, in excess of $15,000.00, was sufficient and it was not entitled to
an additional $12,861.90 from the estate. This court affirmed that determination in In re
The Guardianship of Bertina Hards, 11th Dist. Lake No. 2002-L-032, 2003-Ohio-1207.
{¶8} While the Cuyahoga Case was pending, Bertina Hards passed away. An
estate was opened in the Geauga County Probate Court and Jacqueline A. Adams was
appointed administrator of the Estate of Bertina Hards. In June 2002, Michael A. Shore,
LPA filed a claim against the Estate of Bertina Hards, seeking payment of the
outstanding $12,861.90 in fees. The claim was subsequently rejected by Jacquelyn
Adams as Administrator of the Estate of Bertina Hards.
{¶9} In August 2002, Michael A. Shore Co., LPA, filed a complaint against
Jacqeline A. Adams as Administrator of the Estate of Bertina Hards, as well as
Jacqueline and Kenneth Adams individually, in the Geauga County Court of Common
Pleas seeking payment of the $12,861.90. The defendants filed an answer and
counterclaim alleging an abuse of process; they also sought an accounting of all fees
previously paid to Shore. The Cuyahoga County case was subsequently transferred to
the Geauga County Court of Common Pleas in 2004 and the actions were purportedly
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consolidated.2 Prior to the transfer, on October 15, 2003, Shore moved to voluntarily
dismiss its complaint without prejudice. The Adams objected to the voluntary dismissal
and the case proceeded.
{¶10} In March 2004, the Adams moved for summary judgment on Shore’s
claims. The Adams also sought a determination regarding whether Shore’s claims were
frivolous. Shore filed a motion for summary judgment on the counterclaim. On June 16,
2004, the trial court granted the Adams’ motion for summary judgment on Shore’s claim
for attorney fees. The trial court observed:
{¶11} Plaintiff cannot make a believable or an ethical claim that a portion
of its services were performed for these Defendants when this
Plaintiff participated in submitting a claim for the entire amount to
the Guardianship for Bertina Hards. It is clear that Plaintiff knew
and approved of a submittal of its fee bill to the Guardianship.
Plaintiff cannot be permitted to allow such a submittal if, as Plaintiff
now contends, some of the services were performed for individuals
and not the Guardianship.
{¶12} Plaintiff also cannot succeed on its claims that these Defendants
orally obligated themselves to pay the attorney fees if those fees
were not approved by the Lake County Probate Court. If the
attorney fees were an obligation of the Guardianship as submitted
to the Probate Court, any guarantee or promise to pay those fees
by the individual Defendants had to be a written agreement.
{¶13} The court additionally denied Shore’s motion for summary judgment on
the Adams’ counterclaim for an accounting, but granted Shore’s motion for summary
judgment on the abuse-of-process claim.
{¶14} On September 23, 2005, a hearing was held on the Adams’ motion for
sanctions, pursuant to R.C. 2323.51, Ohio’s frivolous conduct statute. From the bench,
the trial court ruled that it would only consider evidence of fees relating to work Adams’
counsel engaged in while defending the underlying cause of action brought by Shore
2. It appears the Adams’ counterclaims, previously pending in the Cuyahoga County case, were
dismissed by the Cuyahoga County Court of Common Pleas on September 28, 2000.
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and those fees relating to work preparing for the frivolous-conduct hearing. The court
determined it would hear no evidence relating to fees generated by the accounting
counterclaim or the defense of Shore’s claims after Shore moved to voluntarily dismiss
the action and the Adams opposed the dismissal. Testimony was taken only on the
Adams’ attorney fees and whether these fees were reasonable and necessary.
{¶15} After the hearing in 2005, there was little activity in the case until March 4,
2015, when the parties reconvened for a final hearing. On August 20, 2015, the trial
court issued a judgment finding that the complaint filed by Shore, seeking to hold the
Adams individually liable on the outstanding fee bill, was frivolous. The court noted that
the parties appeared to have originally entered into an oral agreement to Shore hourly
for legal services relating to estate matters, but then converted that arrangement into a
contingency fee agreement for the purpose of obtaining the Lake County Judge’s
approval of the fees. The court observed:
{¶16} Although Shore entered into the contingency fee agreement
regarding the Dean Witter Reynolds lawsuit, Shore has sued
Defendants for $12,861.90 claiming that those fees were due for
services rendered prior to the contingent fee agreement or were for
services other than the Dean Witter Reynolds matter. Despite
those claims, Shore has failed to adequately explain why all of the
$12,861 was presented to the Lake County Probate Judge as fees
owed by the Estate of Bertina Hards.
{¶17} The court determined that once Shore submitted the fees to the probate
court to secure payment from the estate, it could not pursue the underlying action
against the Adams. In effect, the court ruled Shore “lost any viable claim to the
$12,861.90 that had previously been submitted to the same Court as expenses of the
Estate of Bertina Hards.” Accordingly, the court ruled Shore’s cause of action, pursuing
the $12,861.90 in fees against the Adams, must be frivolous because it “was not
warranted under existing law, cannot be supported by good faith argument for an
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extension, modification, or reversal of existing law, or cannot be supported by a good
faith argument for the establishment of new law.” The court further determined the
Adams were entitled to $10,000 as reasonable compensation for the expenses incurred
by Shore’s frivolous conduct. Finally, the court ruled:
{¶18} Previously, this Court determined that Michael Shore Co., LPA,
should be required to account for the fees paid to it. Upon review
of the record in this matter, it is the Court’s conclusion that such an
accounting shall not be required. The $5,000 paid by the Guardian
for the Estate of Bertina Hards was authorized by the Lake County
Probate Court and any accounting for those funds should have
occurred at that Court. As for the $10,573.69, any accounting
would be to the trustee of inter vivos trust, not to any of the
beneficiaries of that trust.
{¶19} On appeal the Adams assign three errors for our review and Shore
assigns three errors on cross-appeal for our review. For ease of discussion, we shall
address Shore’s third assignment of error on cross appeal first. It provides:
{¶20} “The trial court erred in granting summary judgment on the original Shore
complaint for attorney fees originally filed in the Shaker Heights Municipal Court.”
{¶21} Pursuant to Civil Rule 56(C), summary judgment is proper when (1) the
evidence shows “that there is no genuine issue as to any material fact” to be litigated;
(2) “the moving party is entitled to judgment as a matter of law;” and (3) “it appears from
the evidence * * * that reasonable minds can come to but one conclusion and that
conclusion is adverse to the party against whom the motion for summary judgment is
made, that party being entitled to have the evidence * * * construed most strongly in the
party’s favor.” A trial court’s decision to grant summary judgment is analyzed by an
appellate court under a de novo standard of review. Grafton v. Ohio Edison Co., 77
Ohio St. 3d 102, 105 (1996). “A de novo review requires the appellate court to conduct
an independent review of the evidence before the trial court without deference to the
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trial court’s decision.” (Citation omitted.) Peer v. Sayers, 11th Dist. Trumbull No. 2011-T-
0014, 2011-Ohio-5439, ¶27.
{¶22} Shore asserts that even though the parties did not enter a written contract,
the Adams orally obligated themselves, individually, to pay any outstanding fees from its
representation of the guardianship estate. In support, it maintains that, unless a written
contract expressly provides otherwise, “‘executors and administrators are generally
personally liable for services of attorneys employed by them * * *.’” In re: The Estate of
Simons, 11th Dist. Trumubll No. 2004-T-0066, 2005-Ohio-2362, ¶28, quoting Wilcox &
Schlosser Co., L.P.A. v. Rich, 10th Dist. Franklin No. 81AP-269, 1981 WL 3687, *3
(Dec. 22, 1981). Further, even though the statute of frauds may generally bar recovery
where a plaintiff seeks to hold a defendant responsible for the debt of another, Shore
maintains the Adams secured its services for their own benefit, not merely for the
benefit of the estate. Under such circumstances, where the “leading object” is to
subserve the defendant’s interests, “the oral promise would constitute an original
obligation of the defendant, and would not be subject to the Statute of Frauds.” Drake,
Phillips, Kuenzli & Clark v. Skundor, 27 Ohio App. 3d 337 (3d Dist.1986), citing Wolf v.
Friedman, 20 Ohio St. 2d 49 (1969), paragraph one of the syllabus.
{¶23} In this case, there was evidence that, on March 18, 1997, Shore, via
Attorney White, sent Jacqueline Adams a letter relating to his representation on behalf
of the guardianship. The letter provided, in relevant part:
{¶24} Pursuant to the Probate Court’s request, I am forwarding this letter
to you so that you can in turn present it to the Court. As we have
discussed, you have indicated a desire to retain me to attempt to
recover for this Guardianship losses you have estimated to be
substantial caused by transactions that you believe to be improper
and/or fraudulent involving a number of individuals and firms that
dealt with your mother, Mrs. Hards. In turn, I have requested a
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retainer in the amount of $5,000 to proceed. As we have
discussed, my hourly rate in this matter will be $125 per hour.
{¶25} The foregoing letter related to the initiation of the Dean Witter litigation. A
contingency fee agreement was entered by the parties in March 1998. Consequently,
the evidence indicates that, aside from the retainer, the parties had an ostensible oral
agreement for Shore to represent the interests of the Hards’ guardianship estate when
the Dean Witter litigation commenced in June 1997.
{¶26} In Simons, supra, this Court observed executors and administrators are
personally liable for the services of the attorneys employed by them. Id. at ¶28. In so
noting, this court quoted the Third District’s opinion in Schnieder and cited the Supreme
Court of Ohio’s opinion in Judd v. City Trust & Savings Bank, 133 Ohio St. 81, 91 (1937)
(“Strictly speaking, ‘executors and administrators are personally liable for the services of
attorneys employed by them.’” Id., quoting Adams & Hosford, Ohio Probate Practice
and Procedure, 2d Ed., 655, subdivision 15.) See also Thomas v. Moore, 52 Ohio St.
200 (1894), paragraph two of syllabus. In this case, however, the alleged oral
agreement to enlist Shore for its legal services occurred not when Jacqueline Adams
was administrator of her mother’s estate, but when she was guardian of the estate.
With this in mind, R.C. 2111.151(B) provides:
{¶27} A guardian of the estate, a guardian of the person and estate, a
guardian of the person, * * * is not personally liable for any debt of
the ward * * * unless one or more of the following applies:
{¶28} (1) The guardian * * * agrees to be personally responsible for the
debt.
{¶29} (2) The debt was incurred for the support of the ward or the
physically infirm, competent adult, and the guardian* * *.
{¶30} (3) The negligence of the guardian * * * gave rise to or resulted in
the debt.
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{¶31} (4) An act of the guardian * * * that was beyond the guardian’s * * *
authority gave rise to or resulted in the debt.
{¶32} The context of the March 18, 1997 letter and the ensuing Dean Witter
litigation indicate Jacqueline Adams was interested in filing that lawsuit to recoup funds
allegedly mismanaged by the company. Because there is no written contract, we do not
know the scope of the parties’ agreement; nevertheless, the letter and theme of the
litigation demonstrate Jacqueline Adams wished to bring the suit and hire Shore on her
mother’s behalf. Although R.C. 2111.151 sets forth various circumstances in which a
guardian may be personally liable for the ward’s debt, there is simply no competent
evidence, other than Shore’s unsubstantiated allegation, that Ms. Adams orally agreed
to assume personal responsibility for any outstanding fees. Shore contends Ms. Adams
made an oral promise obligating her personally to pay fees not covered by the estate; it
failed, however, to attach an affidavit, made on personal knowledge, that she, in fact,
made the affirmative representation. Without some competent evidence to support
Shore’s assertion that Ms. Adams agreed to obligate herself personally to the ward’s
outstanding debt, her general immunity from liability for such debt is not lifted. Given
the circumstances of this case, Ms. Adams, as the then-guardian of her mother, cannot
be held responsible for the fees at issue. We therefore hold Shore failed to create a
material fact for litigation on its claim that an oral contract was breached.
{¶33} Furthermore, because Shore failed to provide competent evidence at the
summary judgment stage to establish an oral contract, we need not address whether, in
entering into the alleged agreement, Ms. Adams’ “leading object” was to subserve her
pecuniary interests over that of the estate. To be sure, had Shore submitted some
Civ.R. 56(E) evidence to support its claim of an oral contract, there would be issues of
material fact to resolve regarding whether the “leading object” rule removed the
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agreement from the purview of R.C. 1335.05, Ohio’s statute of frauds. Under the
circumstances, however, we need not reach this issue.
{¶34} The trial court held that the Adams were entitled to summary judgment
because (1) Shore’s submission of the $12,861.90 attorney fees to the guardianship
estate ethically precluded it from obtaining relief against the Adams’ individually; (2) the
statute of frauds required the alleged oral agreement to be in writing; and (3) that
because the fees were submitted to the guardianship estate and denied on several
occasions, that denial is binding on all parties and therefore the claim is res judicata.
{¶35} With respect to res judicata, Shore moved the guardianship estate for
payment because it was enlisted to do the work for the ostensible benefit of the estate.
The estate’s rejection and the affirmance of that rejection on appeal renders the issue of
the former estate’s liability res judicata. Because Shore has sought to hold the Adams’
individually liable for the fees, based upon Jacqueline Adams’ alleged oral assumption
of personal liability, the probate and appellate courts’ affirmance of the former estate’s
rejection does not bear upon the instant claim. We know of no procedural or
substantive legal rule preventing a firm from seeking reimbursement of fees from a
guardian individually simply because the guardianship estate has denied those fees.
Neither the trial court, in its entry, nor appellees, in their brief, have offered authority for
this proposition. Moreover, if pleaded properly, the “leading object” rule could have
operated to remove the alleged agreement from the statute of frauds. We therefore
decline to endorse the trial court’s rationale in granting the Adams’ summary judgment.
Because, however, we conclude Shore failed to adduce sufficient evidence to create a
genuine issue of material fact on the issue of whether Ms. Adams made an oral promise
obligating herself to the debt, we affirm the trial court’s judgment.
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{¶36} Shore’s third assignment of error on cross-appeal is without merit.
{¶37} We shall next address Shore’s second assignment of error on cross-
appeal, relating to the trial court’s determination that Shore, in filing the underlying
complaint, involved frivolous conduct under R.C. 2323.51. It alleges:
{¶38} “The trial court erred in finding Michael A. Shore Co., LPA actions
constituted frivolous conduct.”
{¶39} The trial court found Shore’s conduct to be frivolous under R.C.
2323.51(A)(2)(a)(ii) as not warranted under existing law, that it cannot be supported by
a good-faith argument for an extension, modification, or reversal of existing law, or that
it cannot be supported by a good-faith argument for the establishment of new law; it
also found the conduct frivolous under R.C. 2323.51(A)(2)(a)(iii) to the extent it
consisted 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.
{¶40} As discussed above, even though summary judgment was properly
entered in this case, this does not imply there were no legal and factual bases for the
allegation that the Adams may be personally liable for the fees at issue. If Shore had
provided some evidence, via, e.g., an affidavit made on personal knowledge, that Ms.
Adams orally bound herself personally to pay any outstanding fees (subsequent to
enlisting Shore to pursue the Dean Witter litigation and pay at an hourly rate), there
would be a genuine issue of material fact regarding whether her general immunity from
the ward’s debt was lifted per R.C. 2111.151(B). Had Shore cleared this obstacle, a
trier of fact could conclude her “leading object” in pursuing the Dean Witter litigation was
to advance her own pecuniary interests (and not merely that of the guardianship estate).
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With these premises in mind, the breach of oral contract could have proven successful.
As such, the complaint was supported by an established legal theory and was premised
upon factual allegation that could have had some evidentiary support. Accordingly,
Shore’s conduct in filing the action cannot be deemed frivolous.
{¶41} Shore’s second assignment of error on cross appeal has merit.
{¶42} With respect to the amount of sanctions awarded by the trial court, the
Adams assert for their first assignment of error:
{¶43} “The trial court erred by allowing only $10,000.00 as sanctions for the
frivolous conduct of Michael A. Shore and his firm, and Daniel S. White. (T.D. 134, p.5,
paragraph 4 and p.6, paragraph 1) Ohio Revised Code Section 2323.51(B)(1).”
{¶44} Similarly, Shore’s first assignment of error on cross appeal alleges:
{¶45} “The trial court erred in awarding damages in the amount of $10,000.00 in
favor of defendants and against Michael Shore Co., LPA and Daniel White, jointly and
severally.”
{¶46} Because we have held that, as a matter of law, Shore’s conduct in filing
the underlying complaint, was not frivolous, there was no basis for sanctions. These
assignments of error are overruled as moot.
{¶47} The Adams’ second and third assignments of error are related and will be
addressed together. They provide:
{¶48} “[2.] The trial court erred by holding that Jacqueline Adams, individually,
as the sole successor-in-interest to the Hards Trust, did not have standing to obtain an
accounting for the expense payments made to the Michael A. Shore firm (T.D. 134, p.6,
paragraph 2)(T.d. 14, p.1, paragraph 3)(T.D. 15 p.1, paragraph 3 and p.2-3, paragraph
III)(T.D. 16).
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{¶49} “[3.] The trial court erred by not granting the Defendants’ counterclaim for
an accounting which had been previously granted in its prior Decision of June 16, 2004
in Case Number 04M000045. Such an accounting was needed to determine the actual
amount and to obtain return of the unused two retainers that attorney Shore had
received from the Bertina Hards Guardianship, and from the Bertina Hards Trust.”
{¶50} Although the Adams’ second assignment of error presents an issue of law,
it is unclear, from the existing record, how they are prejudiced by the trial court’s
judgment denying them an accounting from Shore. The Adams’ arguments are
premised upon their assertion that the retainers “were not for attorney fees, but rather
for discovery expenses such as depositions and bank research fees.” Even assuming
the Adams have standing to obtain an accounting, it is unclear that the Lake County
Probate Court limited the use of the $5,000.00 retainer to costs and expenses. The
payment was approved for legal services. Similarly, it is unclear that the payment of
over $10,000.00 from the trust was limited to costs and expenses. Although the record
indicates there was a hearing on the accounting issue, this court does not have a
transcript of the hearing. Without some evidence that the funds that were approved
were limited to a specific purpose, we fail to discern how the Adams would be entitled to
any reimbursement of those funds. There is nothing to suggest the approved funds
were used for anything else than legal services. Accordingly, this court has no basis to
reverse the trial court’s judgment concluding the Adams are not entitled to an
accounting of the funds paid from the estate and the trust pursuant to the approved
requests.
{¶51} The Adams’ second and third assignments of error lack merit.
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{¶52} For the reasons discussed in this opinion, the trial court did not err in
granting the Adams’ motion for summary judgment. Given the facts and legal theories
advanced in this case, however, we hold the trial court erred in concluding Shore’s
conduct was frivolous and, as a result, also erred in sanctioning Shore. Those orders
are reversed. Finally, the trial court’s decision denying the Adams’ request for an
accounting of previously-approved funds for legal services is affirmed. Thus, the
judgments of the Geauga County Court of Common Pleas is affirmed in part, reversed
in part, and remanded.
THOMAS R. WRIGHT, J.,
COLLEEN MARY O’TOOLE, J.,
concur.
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