Full Spectrum Invests., L.L.C. v. Victory Marketing & Consultant, Inc. ( 2021 )


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  • [Cite as Full Spectrum Invests., L.L.C. v. Victory Marketing & Consultant, Inc., 
    2021-Ohio-4169
    .]
    COURT OF APPEALS OF OHIO
    EIGHTH APPELLATE DISTRICT
    COUNTY OF CUYAHOGA
    FULL SPECTRUM
    INVESTMENTS, L.L.C.,                                   :
    Plaintiff-Appellee,                   :
    No. 110431
    v.                                    :
    VICTORY MARKETING AND
    CONSULTANT, INC., ET AL.,                              :
    Defendants-Appellants.                :
    JOURNAL ENTRY AND OPINION
    JUDGMENT: AFFIRMED
    RELEASED AND JOURNALIZED: November 24, 2021
    Civil Appeal from the Cuyahoga County Common Pleas Court
    Case No. CV-19-923678
    Appearances:
    Law Office of Mark E. Porter, L.L.C., Mark E. Porter, and
    Sean R. Porter, for appellee.
    L. Bryan Carr, for appellants.
    SEAN C. GALLAGHER, P.J.:
    Victory Marketing and Consultant, Inc., Victory Marketing and
    Consultant, L.L.C., and Vicky Cartwright (collectively “Victory”) appeal the trial
    court’s decision denying Victory’s motion in which Victory sought sanctions against
    Full Spectrum Investments, L.L.C. (“FSI”) and its attorney of record, filed under
    R.C. 2323.51 and Civ.R. 11. For the following reasons, we affirm.
    FSI filed a complaint alleging breach of contract, fraud, forcible entry
    and detainer, foreclosure, and unjust enrichment stemming from the purchase of
    real property owned and sold by Victory. During the pretrial proceedings, FSI and
    Victory settled their claims and executed a written document memorializing their
    agreement.    In that “Release and Settlement Agreement,” Victory agreed, in
    exchange for FSI dismissing them from the action, that they would pay off the
    encumbrances on the property including the mortgages owed to Third Federal
    Savings & Loan Association and the outstanding debt to Bartlett Pointe
    Homeowners Association “on or before September 30, 2020.” The homeowners
    association held a lien on the property’s title based on an outstanding debt. In
    addition, Victory agreed to reimburse FSI for a mortgage payment “on or before
    October 30, 2020.”
    In the documentation that Victory submitted to the trial court in
    support of its motion for sanctions, the latter two of those payments were late.
    Bartlett Pointe received the check for the balance owed on November 24, 2020, and
    Victory issued a check to FSI on December 2, 2020. FSI’s then counsel of record
    accepted the payment for FSI and filed a notice of voluntary dismissal of the claims
    against Victory. Theodore Parker, Jr., the sole member of FSI, immediately fired his
    attorney of record, and retained new counsel, who filed a motion to vacate the
    dismissal entry under Civ.R. 60(B). According to Parker, he had instructed his then
    counsel of record to reject the late payments that were not tendered in accordance
    with the parties’ express agreement.
    The trial court denied the motion to vacate, concluding that
    Plaintiff’s motion does not allege or address whether plaintiff has a
    meritorious claim. Plaintiff’s motion does not include an affidavit or
    any supporting evidence. It should be noted that the brief in opposition
    to plaintiff’s motion alleges that the plaintiff, defendants Victory
    Marketing Consultant and Vicky Cartwright settled this action.
    Defendants include a copy of a signed settlement agreement as Exhibit
    A to their motion. Moreover, the signed settlement agreement was
    notarized. A deed from plaintiff to defendants was executed as shown
    in Exhibit B of the motion and the deed was notarized and mailed to
    defendants along with the settlement agreement from Theodore Parker
    with an address in Georgia. Additionally, defendants, as set forth in the
    settlement agreement, paid Third Federal approximately $140,000.00
    (see Exhibit D) and paid defendant Bartlett $2,629.50 (see Exhibit E).
    Defendants paid plaintiff the sum of $1,244.81 (see Exhibit H). As set
    forth in the settlement agreement, plaintiff’s claims against the
    aforementioned defendants were to be dismissed with prejudice after
    the sums of money were paid. Said claims were dismissed by entry.
    Thus, the trial court elevated the spirit of the agreement over a fastidious adherence
    to the express terms. In response to the trial court’s decision, Victory filed a motion
    for sanctions, claiming that the motion to vacate was “obviously frivolous and a
    vexatious, bad faith filing.” According to Victory, it had complied with the terms of
    the settlement agreement according to the trial court and FSI and “his counsel knew
    full well [that Victory was] to be dismissed from the litigation.” The trial court
    denied that motion for sanctions.
    In the sole assignment of error, Victory claims the trial court erred by
    denying its motion for sanctions.
    Under R.C. 2323.51, a trial court may award attorney fees to a party
    aggrieved by frivolous conduct in a civil action. Grimes v. Oviatt, 
    2019-Ohio-1365
    ,
    18, 
    135 N.E.3d 378
     (8th Dist.). Frivolous conduct is defined under R.C. 2323.51 as
    conduct that “obviously” serves merely to harass or maliciously injure another party
    to the civil action or appeal or is for another improper purpose; 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; and 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. The decision to grant or deny sanctions under R.C.
    2323.51 is well within the sound discretion of the trial court. Bikkani v. Lee, 8th
    Dist. Cuyahoga No. 89312, 
    2008-Ohio-3130
    , ¶ 30.              Determining whether an
    attorney is subject to sanctions for a willful violation of Civ.R. 11 requires application
    of a subjective standard. Id. at ¶ 21. The violation must be willful and not merely
    negligent to warrant sanctions under Civ.R. 11. Id.
    The decision to grant sanctions under R.C. 2323.51 and Civ.R. 11 rests
    with the sound discretion of the trial court. Taylor v. Franklin Blvd. Nursing Home,
    Inc., 
    112 Ohio App.3d 27
    , 
    677 N.E.2d 1212
     (8th Dist.1996). “An appellate court will
    not reverse a trial court’s decision either granting or denying sanctions absent
    finding an abuse of discretion. Grimes at ¶ 20. We are mindful, however, that
    simply advancing a losing argument does not amount to frivolous conduct.” Musial
    Offices, Ltd. v. Cuyahoga Cty., 8th Dist. Cuyahoga No. 108810, 
    2021-Ohio-2325
    ,
    ¶ 20.
    In addition, and as a general rule, the trial court is not required to
    hold a hearing before denying a motion for sanctions “when the court determines,
    upon consideration of the motion and in its discretion, that [the motion] lacks
    merit.” Pisani v. Pisani, 
    101 Ohio App.3d 83
    , 88, 
    654 N.E.2d 1355
     (8th Dist.1995).
    However, courts have found that a trial court abuses its discretion when it arbitrarily
    denies a motion for sanctions. Bikkani at ¶ 31. This court has held that a trial court
    abuses its discretion by denying a motion for sanctions without a hearing if either
    the “record clearly evidences frivolous conduct” or “an arguable basis exists for an
    award of sanctions.” 
    Id.
     Further, concluding that a party engaged in frivolous
    conduct in and of itself is insufficient to support an award of attorney fees under the
    statute. Id. at ¶ 28. The court “must also determine whether the frivolous conduct
    adversely affected the party moving for attorney fees.” Id., citing Stohlmann v. Hall,
    
    158 Ohio App.3d 499
    , 
    2004-Ohio-5219
    , 
    817 N.E.2d 118
    , ¶ 8 (8th Dist.). “The party
    seeking R.C. 2323.51 attorney’s fees must affirmatively demonstrate that he or she
    incurred additional attorney’s fees as a direct, identifiable result of defending the
    frivolous conduct in particular.” 
    Id.,
     citing Stohlmann and Wiltberger v. Davis, 
    110 Ohio App.3d 46
    , 54, 
    673 N.E.2d 628
     (10th Dist.1996).
    Frivolous conduct under R.C. 2323.51(A)(2)(a) for the purposes of the
    factual component of a claim, “is judged under an objective, rather than a subjective
    standard and must involve egregious conduct.” (Citation omitted.) State ex rel.
    DiFranco v. S. Euclid, 
    144 Ohio St.3d 571
    , 
    2015-Ohio-4915
    , 
    45 N.E.3d 987
    , ¶ 15,
    citing State ex rel. Striker v. Cline, 
    130 Ohio St.3d 214
    , 
    2011-Ohio-5350
    , 
    957 N.E.2d 19
    , ¶ 21. A party cannot base the claim of frivolous conduct upon merely providing
    a winning theory over the dispute or proving the opposing party’s factual assertions
    were incorrect. 
    Id.,
     citing Ohio Power Co. v. Ogle, 4th Dist. Hocking No. 12CA14,
    
    2013-Ohio-1745
    , ¶ 29-30 (“‘A party is not frivolous merely because a claim is not
    well-grounded in fact. * * * [R.C. 2323.51] was designed to chill egregious,
    overzealous, unjustifiable, and frivolous action. * * * [A] claim is frivolous if it is
    absolutely clear under the existing law that no reasonable lawyer could argue the
    claim’”), and Hickman v. Murray, 2d Dist. Montgomery No. CA-15030, 
    1996 Ohio App. LEXIS 1028
    , 5 (Mar. 22, 1996).
    Initially, it bears noting that parties seeking to claim frivolous
    conduct based on allegations that opposing parties breached a settlement agreement
    had best come to the court with clean hands. Victory’s sole claim, underlying the
    allegations of frivolity and the willful misconduct of FSI’s counsel of record, is based
    on the allegation that FSI breached the settlement agreement by seeking to vacate
    the dismissal despite the undisputed fact that Victory failed to comply with the
    agreed deadlines under their written settlement agreement. Victory was entitled to
    the dismissal of the action only if it complied with the terms of the settlement
    agreement. As a general principle, parties are not permitted to pick and choose
    which provisions of a contract they choose to enforce. McInnis v. Spin Cycle-Euclid,
    L.L.C., 8th Dist. Cuyahoga No. 91905, 
    2009-Ohio-2370
    , ¶ 20.
    In this case, Victory’s claim that FSI and its counsel of record engaged
    in frivolous conduct is entirely premised on its demonstration that Victory complied
    with the terms of the settlement agreement and FSI was required to dismiss them
    from the action. In other words, Victory is claiming FSI breached the clear and
    unambiguous terms of the settlement agreement by seeking to vacate the dismissal
    entry contractually required.
    Victory, however, did not demonstrate that it complied with the
    deadlines to tender the payments as agreed within the settlement agreement; it
    issued checks to the homeowners association and to FSI undisputedly after the self-
    imposed deadlines in light of the evidence Victory submitted. As a result, Victory
    opened the door to contesting its adherence to the terms of the settlement
    agreement, giving rise to a colorable claim that the action should not have been
    dismissed by FSI’s then attorney. Although FSI failed to present a prima facie case
    for vacating the dismissal entry under Civ.R. 60(B) and Victory asserted a theory
    under which the trial court could deny the motion to vacate, merely providing a
    winning theory is not sufficient to demonstrate frivolous conduct. DiFranco, 
    144 Ohio St.3d 571
    , 
    2015-Ohio-4915
    , 
    45 N.E.3d 987
    , at ¶ 15, citing Striker, 
    130 Ohio St.3d 214
    , 
    2011-Ohio-5350
    , 
    957 N.E.2d 19
    , at ¶ 21. If the deadlines to submit the
    payments were unimportant, Victory should not have agreed to those terms in the
    written settlement agreement.
    Having demonstrated a colorable basis to support the motion to
    vacate the dismissal entry, it cannot be concluded that FSI or its counsel of record
    engaged in frivolous or willful misconduct based on the arguments presented. As a
    result, we affirm the decision of the trial court denying Victory’s motion for
    sanctions.
    It is ordered that appellee recover from appellants costs herein taxed.
    The court finds there were reasonable grounds for this appeal.
    It is ordered that a special mandate issue out of this court directing the
    common pleas 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.
    _________________________________
    SEAN C. GALLAGHER, PRESIDING JUDGE
    ANITA LASTER MAYS, J., and
    KATHLEEN ANN KEOUGH, J., CONCUR
    

Document Info

Docket Number: 110431

Judges: S. Gallagher

Filed Date: 11/24/2021

Precedential Status: Precedential

Modified Date: 11/24/2021