Stern v. Rob Oldham Properties, L.L.C. , 2022 Ohio 1232 ( 2022 )

[Cite as Stern v. Rob Oldham Properties, L.L.C., 2022-Ohio-1232.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JERRY M. STERN VICTIM OF NAZI :
PERSECUTION RESTITUTION
SUCCESSOR TRUST :
Plaintiff-Appellee, : No. 110357
v. :
ROB OLDHAM PROPERTIES, L.L.C., :
ET AL.,
:
Defendants-Appellants.
JOURNAL ENTRY AND OPINION
JUDGMENT: AFFIRMED IN PART; REVERSED IN PART,
AND REMANDED
RELEASED AND JOURNALIZED: April 14, 2022
Civil Appeal from the Cuyahoga County Court of Common Pleas
Case No. CV-19-917105
Appearances:
Harold Pollock Co., L.P.A., and Harold Pollock, for
appellee.
L. Bryan Carr, for appellants.
KATHLEEN ANN KEOUGH, P.J.:
Defendants-appellants, Rob Oldham (“Oldham”) and Rob Oldham
Properties, L.L.C. (“Oldham Properties”) (collectively “appellants”) appeal from the
trial court’s decision entering judgment and awarding attorney fees in favor of
plaintiff-appellee, Jerry M. Stern Victim of Nazi Persecution Successor Trust (“the
Trust”). Specifically, appellants challenge the trial court’s decisions (1) granting the
Trust’s motion for sanctions, which effectively prohibited appellants from
presenting evidence on their counterclaim and resulted in a judgment in favor of
appellee on those claims, and (2) awarding the Trust attorney fees in the amount of
$139,417.74, and not applying the appropriate amount of set-off for collected rents.
For the reasons that follow, we affirm in part, reverse in part, and remand for further
proceedings.
I. Factual History and Procedural Background
Both parties agree that this case should have been a simple collection
action on a promissory note. The nature of the proceedings, however, has been far
from simple.
In March 2018, Oldham Properties entered into a short-term loan
agreement with the Trust. The Trust loaned Oldham Properties $750,000 for the
purpose of funding the purchase of rental properties. The loan was secured by a
mortgage on ten single-family homes owned by Oldham Properties. Oldham, on
behalf of Oldham Properties, executed the mortgage note and mortgage deed and,
pursuant to Section 8 of the note, was personally liable. The loan terms required
monthly interest-only payments of $7,500 for a one-year period, with the principal
amount due in full on March 9, 2019.
It is undisputed that appellants made the monthly payments but
failed to pay the balance due on March 9, 2019. Oldham claimed that Howard Ross,
on behalf of the Trust, orally agreed to modify the terms of the note and accepted an
interest-only payment beyond the maturity date of the loan. The Trust denied this
assertion, contending that the mortgage deed prohibited any oral modifications of
the mortgage. Following appellants’ alleged breach, the Trust invoked Section 13 of
the mortgage, which authorized the Trust to collect rents from the tenants of the
mortgage-secured properties. The Trust contracted with Gentile Property
Management, Ltd. (“Gentile”) to manage the properties secured by the mortgage
and collect the rents on those properties. Notices were sent to the existing tenants
advising them to pay their rent to Gentile and that Gentile would manage the
properties going forward.
In June 2019, the Trust filed a complaint against appellants seeking
judgment on the note, attorney fees, late fees, costs, and interest pursuant to the
terms of the note. Service was perfected against Oldham Properties in August 2019,
and Oldham Properties filed an answer to the complaint on October 30, 2019. On
November 8, 2019, the Trust moved for summary judgment against Oldham
Properties. On December 13, 2019, the trial court partially granted the Trust’s
unopposed motion for summary judgment in part, but held the determination of
damages in abeyance.
Service was perfected against Oldham by a process server on
September 23, 2019, and again by regular U.S. Mail, sent October 7, 2019. On
December 5, 2019, Oldham filed his answer; Oldham Properties filed an amended
answer; and both appellants filed a combined counterclaim, seeking a restraining
order and other equitable relief.1 Appellants also asserted claims for fraud, breach
of contract, tortious interference with business and contractual relationships, unjust
enrichment, assault, defamation, and violation of the Fair Debt Collections Practices
Act. Appellants maintained that the Trust acted beyond its authority in its collection
of rents by initiating eviction proceedings, harassing tenants, and damaging
appellants’ rental properties.
The Trust answered the counterclaim and subsequently sought leave
to amend its complaint to include additional causes of action for promissory
estoppel, to pierce the corporate veil, fraud and misrepresentation, to set aside a
fraudulent conveyance, constructive trust, equitable lien, and injunctive relief.2 The
amended complaint also added as parties: (1) RO Properties Family Trust; (2)
Robinson Oldham, as Trustee of the RO Properties Family Trust; and (3) Theresa
Oldham, as Trustee of the RO Properties Family Trust. The basis for the amended
complaint was that the Trust had discovered that Oldham did not own the real
property he listed in his personal financing statement, which he had provided to the
1Appellants did not raise any argument with the trial court that the amended
answer filed by Oldham Properties precluded the trial court from granting summary
judgment in favor of the Trust.
2 Although the Trust had previously obtained partial summary judgment against
Oldham Properties, it attempted to revive the action against Oldham Properties in its
amended complaint. In January 2021, the trial court recognized this attempt and
dismissed the amended complaint against Oldham Properties but noted that the issue of
damages remained pending.
Trust when he executed the note and mortgage. The financing statement reflected
that the real property had a value of over $2 million and Oldham had a personal net
worth of approximately $5 million. According to the Trust, this information induced
the Trust to extend the loan. According to the amended complaint, Oldham had
transferred his real property to the RO Properties Family Trust, in which both
Oldham and Theresa Oldham are trustees.
The next year of litigation involved extensive and exhausting motion
practice. Seemingly, every motion was met with opposition, and multiple motions
to compel or requests for sanctions were filed by both parties. In September 2020,
appellants voluntarily dismissed Count 6 of their counterclaim. In October 2020,
the Trust voluntarily dismissed Theresa Oldham from the action, and over objection,
the trial court subsequently granted her motion for a dismissal with prejudice.
II. December 21, 2020 Order
The trial court scheduled a bench trial for February 1, 2021. In
preparation for trial, the court issued an order on December 21, 2020 (“trial order”)
setting forth the deadline for the submission of trial briefs, proposed stipulations
and objections, exhibits, and motions in limine. The court noted that the deadline
was January 18, 2021. The court further clarified its requirements on presentation
of exhibits and expert witnesses. Regarding expert witnesses, the trial order
required that “each party shall include as one of their exhibits the curriculum vitae
of any expert(s) that may be called to present evidence or testimony at trial for the
use of the court.” The court order expressly provided that “witnesses or exhibits not
listed in the trial brief shall not testify or be introduced at trial absent a showing of
good cause.” The court then identified the parameters of a “complete trial brief,”
which included, “the estimated length of trial; a statement of the facts; a discussion
of the controlling law; a list of proposed witnesses along with a brief description of
the subject matter of the testimony of each witness; an index of all proposed exhibits
containing a brief description of each exhibit; and a discussion of any evidentiary
issues likely to arise at trial. In addition, counsel shall submit proposed findings of
fact and conclusions of law.” The court provided additional instructions on
depositions and transcripts. The court warned the parties in its order that “[f]ailure
to comply with any portion of this court’s orders may result in sanctions, including
dismissal or judgment.”
The Trust had previously filed a trial brief on September 29, 2020,
when trial was originally scheduled for October. The brief was not filed in
compliance with any specific order, but in accordance with the general rules of
procedure for civil cases, as found on the trial judge’s respective web page on the
Court of Common Pleas of Cuyahoga County, General Division website. The Trust
did not file a new trial brief in response to the specific trial order.
On January 18, 2021, appellants filed various independent
documents, including (1) proposed findings of fact and conclusions of law; (2)
proposed stipulations of fact; (3) an exhibit list and exhibits A through FF; and (4)
a witness list with a brief description of the subject matter of their testimony.
Appellants did not file a complete or all-in-one cohesive trial brief in accordance
with the trial order, however.
III. January 20, 2021 Hearing
On January 20, 2021, the trial court conducted an evidentiary hearing
on all pending motions, including motions (1) for summary judgment and briefs in
opposition, (2) for sanctions, (3) to compel, (4) to quash subpoenas, and (5) in
limine. Relevant to this appeal, the court noted that the Trust’s amended complaint
remained pending only against (1) Oldham, individually and as trustee of the RO
Family Trust; and (2) RO Properties Family Trust, and that the appellants’
counterclaim, except for Count 6, remained pending against the Trust.
Regarding the Trust’s July 13, 2020 motion for summary judgment
on its amended complaint, the trial court denied summary judgment on Counts 4,
5, 6, 7, and 8 of the amended complaint. The trial court granted summary judgment
against the remaining defendants and in favor of the Trust on Counts 1 (action on
the note), 2 (promissory estoppel), and 3 (piercing the corporate veil). The court
entered judgment but held damages in abeyance until after trial.3
Regarding the Trust’s motion for summary judgment on appellants’
counterclaims, the trial court granted summary judgment in favor of the Trust on
Counts 2, 3, and 5. The trial court denied the Trust’s motion on Counts 1 (seeking a
restraining order), Count 4 (tortious interference with business and contractual
3Prior to trial, the trial court granted the Trust’s motion to amend its amended
complaint to voluntarily dismiss with prejudice Counts 4, 5, 6, 7, and 8.
relationships), and Count 7 (defamation). The court noted that appellants dismissed
Count 8 during the hearing and had previously dismissed Count 6. During its ruling,
the court specifically noted appellants’ ability to raise its remaining claims at trial.
The court stated:
The only part that’s going to be left, [appellants] are going to be able to
argue the issue of notice for the rents in trial. [Appellants are] going to
be able to argue the issue of defamation in trial. [Appellants are] going
to be able to argue tortious interference with business relationships in
trial
(Tr. 151-152.)
***
We are now set for trial February 1st. That is a bench trial. It should
be a very, very short trial because there’s only a few issues left to deal
with. The issue of damages will be dealt with that day. I’m assuming
that’s going to be the longest part of that. So make sure you come
prepared for the damages portion.
(Tr. 162.)
Despite the fact that the deadline had passed for the parties to submit
their respective trial briefs, compliance with the trial order was neither addressed
nor discussed by the trial court or the Trust. In fact, the trial court issued an order
on January 27, 2021, specifically setting forth that “a bench trial on the counterclaim
remains set for [February 1, 2021].” Again, the court made no mention of appellants’
noncompliance with the trial order.
Accordingly, the only issues that remained pending for the February
1, 2021 trial were Counts 1, 4, and 7 of appellants’ counterclaim. Following trial on
the counterclaim, the trial court planned to conduct a hearing on damages, including
attorney fees, with respect to the judgments against Oldham, individually, and
Oldham Properties, and any other damages resulting from trial.
IV. Motion for Sanctions and in Limine
On January 29, 2021, the Friday before trial, the Trust filed a motion
“to preclude [appellants] from further defending at trial, proceeding on
counterclaim or calling witnesses.” In essence, the Trust requested that the trial
court grant sanctions against appellants for failing to file a complete trial brief in
compliance with the trial order.
On February 1, 2021, the morning of trial, appellants filed a motion in
limine to preclude the Trust from presenting expert testimony on the issue of
attorney fees because the Trust had failed to comply with the trial order. Specifically,
appellants claimed that the Trust failed to include its expert’s curriculum vitae on its
exhibit list and produce it as an exhibit.
V. February 1, 2021 — Trial Date
Prior to trial, the court addressed all pending motions, including the
Trust’s motion requesting sanctions for appellants’ failure to file a trial brief, and
appellants’ motion in limine to exclude the Trust’s expert’s testimony. (Tr. 171.)4
Regarding the Trust’s motion, the trial court noted that appellants
filed a witness and exhibit list, exhibits, proposed stipulations of fact, and proposed
4 The trial court also considered appellants’ motions against the Trust to show
cause why the complaint should not be dismissed with prejudice and sanctions based on
the Trust’s alleged fraud against the court, fraudulent misrepresentation, gross
negligence, and fraud against appellants. Following a hearing, which included witness
testimony and the presentation of evidence, the trial court denied the motions.
findings of fact and conclusions of law. It concluded, however, that appellants failed
to file a complete trial brief, which was to include all the aforementioned filings.
Quoting from its order, the trial court stated, “witness or exhibits not listed in the
trial brief shall not testify or be introduced at trial absent a showing of good cause.”
(Tr. 171.) According to the trial court, filing the witness and exhibit lists separately
from the written trial brief was insufficient for compliance with its order.5
The trial court allowed appellants to provide “good cause” why they
failed to comply with the court’s order. Counsel explained that co-counsel had
suffered a medical condition over the weekend that precluded the completion of the
trial brief. Counsel admitted that despite the ailment, the trial brief was already late
pursuant to the order, but contended that the Trust was not prejudiced by
appellants’ failure to file a brief because the issues before the court had remained
unchanged, and the witnesses and exhibits had been provided.
Counsel for the Trust objected, contending that while it had complied
with all of the court’s orders “to the letter all the way through this case,” the
appellants had not. (Tr. 179.) It further stated that appellants’ filing of a trial brief
would not have been a difficult process because appellants had extensively briefed
the issues in the case “ad nauseam,” and could have used one of their summary
judgment responses and simply recaptioned it as a trial brief. Counsel for the Trust
argued, nevertheless, that the counterclaims were “entirely baseless.” (Tr. 179.)
5 The court also noted that appellants were not in compliance with its trial order
by submitting deposition and trial transcripts to the court on the day of trial. The court
also excluded the use of those transcripts.
In response, appellants agreed that the issues had been fully
evaluated in the summary judgment filings, which the trial court had recently
denied, finding genuine issues of material fact for trial. Appellants’ counsel
reiterated that the Trust was not prejudiced by appellants failure to file another brief
setting forth the same issues for trial.
The trial court found that appellants had failed to satisfy their burden
of demonstrating just cause for failing to file a trial brief. The court noted its harsh
ruling but found that the trial brief was integral to the trial. The court then
proceeded to address appellants’ remaining claims. It found that without any
witness testimony and exhibits in support, appellants could not support their claims,
and entered judgment in favor of the Trust on Counts 1, 4, and 7 of appellants’
counterclaim.
The trial court stated,
So because the defendant did not file a trial brief then his people that
are listed on this witness list cannot testify, and the documents cannot
be used. Now, I don’t know what’s left in the trial. If you don’t have
witnesses to call, then that is just that.
***
So with that ruling, the question is on behalf of the defense I don’t think
that there is anything that you have to put on because you did not do
your trial brief. So my thought is your last three things on your
counterclaim are gone. Is there any other way you could put on
somebody? I don’t know if you can if you didn’t file a trial brief, right?
(Tr. 190-191.)
The trial court subsequently stated,“Because there was no trial brief
filed and because I ruled that your counterclaim is — the remaining things were
dismissed because you did not have anything to go forward on those claims * * *.”
(Tr. 333.) However, when the trial court issued its written decision, the court did
not dismiss the counterclaim but rather entered judgment in favor of the Trust. The
trial court explained in its subsequent written decision:
On the morning of trial but prior to its commencement, the Court
addressed the issue of Defendants’ failure to adhere to this Court’s trial
orders entered on December 21, 2020 (the “Trial Order”).
Among other things, the Trial Order required all parties to file a trial
brief. Per this order, a trial brief must contain the following: the
estimated length of trial; statement of the facts; a discussion of the
controlling law; a list of proposed witnesses along with a brief
description of the subject matter of the testimony of each witness; an
index of all proposed exhibits containing a brief description of each
exhibit; and a discussion of any evidentiary issues likely to arise at trial.
Although the Plaintiff filed his trial brief, the Defendants failed to file a
trial brief.
The Trial Order further provided that any witnesses and exhibits not
listed in the trial brief shall not testify or be introduced at trial absent a
showing of good cause. Defendants filed a separate witness list and
exhibit list on January 18, 2021. The Court finds that Defendants failed
to show good cause as to why they did not file their trial brief.
The trial court next considered appellants’ motion in limine seeking
to exclude the Trust’s expert witness from testifying for failing to comply with the
trial order requiring that the expert’s curriculum vitae be included as an exhibit. The
Trust opposed the motion, contending that its disclosed expert report included a
paragraph discussing its expert’s qualifications. During this discussion, it was
further discovered that although the Trust had included an exhibit list in its
September 2020 trial brief, it did not give appellants a copy of any exhibits until the
morning of trial. These exhibits included detailed itemized billing statements and
invoices. The court found this late disclosure concerning, but ultimately denied
appellants’ motion in limine, despite the Trust failing to produce or list as an exhibit
its expert’s formal curriculum vitae.
Based on the trial court’s rulings, the only matter remaining for the
trial court to consider were damages on the Trust’s judgments against Oldham and
Oldham Properties. Following a hearing and presentation of evidence, the court
issued a written order awarding damages against Oldham and Oldham Properties,
jointly and severally, in the principal amount of $750,000, plus $30,000 in late fees,
plus interest at the contract rate of 18% per annum from the date of default, plus
attorney fees in the amount of $139,417.74. The court further ordered that
appellants were entitled to a credit of $48,728.23 from rents collected.
Appellants now appeal, raising two assignments of error.
VI. The Appeal
Appellants contend in their first assignment of error that the trial
court abused its discretion when it effectively dismissed its counterclaim by granting
the Trust’s motion to preclude appellants from further defending at trial, proceeding
on their counterclaim, and calling witnesses as a sanction for failing to file a trial
brief in compliance with the trial order.
A. Civ.R. 41(B)(1) 6
Pursuant to Civ.R. 41(B)(1), “[w]here the plaintiff fails to * * * comply
with these rules or any court order, the court upon motion of a defendant or on its
own motion may, after notice to the plaintiff's counsel, dismiss an action or claim.”
This rule equally applies to a dismissal of any counterclaim. Civ.R. 41(C). “A
dismissal under division (B) * * * operates as an adjudication upon the merits unless
the court, in its order for dismissal, otherwise specifies.” Civ.R. 41(B)(3).
A trial court’s decision dismissing an action pursuant to Civ.R.
41(B)(1) is within the sound discretion of the trial court and will not be reversed
absent an abuse of that discretion. Quonset Hut, Inc. v. Ford Motor Co., 80 Ohio
St.3d 46, 47, 684 N.E.2d 319 (1997), citing Jones v. Hartranft, 78 Ohio St.3d 368,
371, 678 N.E.2d 530 (1997). A trial court abuses its discretion where its decision is
arbitrary, unreasonable, or unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d
217, 219, 450 N.E.2d 1140 (1983). Where a case is dismissed with prejudice,
reviewing courts apply a heightened abuse-of-discretion standard of review because
a dismissal with prejudice forever denies a party a review of its claims on the merits.
Jones at 372.
6 The record is ambiguous regarding whether the trial court dismissed appellants’
counterclaim pursuant to Civ.R. 41(B) or entered a judgment in favor of the Trust. The
court stated on the record that it dismissed the counterclaim (tr. 333), but in its written
judgment entry, the trial court entered judgment in favor of the Trust. The Trust’s motion
did not seek dismissal or judgment. However, in the trial order, the trial court warned
the parties that failure to comply with the order could result in dismissal or judgment.
Because the trial court did not address the merits of appellants’ counterclaim prior to
entering judgment, this court will address both possibilities.
Appellants cite to cases from this court interpreting Civ.R. 41(B)(1)
and holding that dismissal under this rule is a drastic remedy that should be used
sparingly and only in extreme situations where a “‘party’s conduct is so negligent,
irresponsible, contumacious, or dilatory.’” St. Vincent Charity v. Paluscsak, 8th
Dist. Cuyahoga No. 108641, 2020-Ohio-1501, ¶ 40, quoting Willis v. RCA Corp., 12
Ohio App.3d 1, 2, 465 N.E.2d 924 (8th Dist.1983); Perkowski v. Yonkov, 8th Dist.
Cuyahoga No. 109567, 2021-Ohio-1879; Whipple v. Estate of Prentiss, 2020-Ohio-
2825, 154 N.E.3d 550 (8th Dist.). In Paluscsak, Perkowski, and Whipple, this court
reversed the trial courts’ decisions dismissing a party’s action for failure to prosecute
pursuant to Civ.R. 41(B)(1).
In Paluscsak, this court reversed a dismissal of defendant’s
counterclaim after counsel failed to attend a scheduled pretrial. This court found
that counsel’s failure to attend was predicated on a miscommunication and a
scheduling error but was not willful conduct. This court further found that the trial
court provided insufficient notice to the defendant prior to dismissing the
counterclaim only hours after the missed pretrial, thus failing to afford the
defendant an opportunity to defend against dismissal.
In Perkowski, this court reversed a dismissal of plaintiffs’ complaint
after counsel failed to participate in a case management conference (“CMC”).
Because the electronic notice from the court was delivered to counsel’s “spam folder”
in his email. This court found that even though counsel had failed to attend a
previous CMC, which resulted in a dismissal without prejudice, counsel’s failure to
attend this time was not willful or in bad faith to justify forever denying the case to
be heard on the merits. Id. at ¶ 13. This court further found that the notice provided
to plaintiffs was insufficient because it did not provide an opportunity to defend
against dismissal. Id. at ¶ 12.
Finally, in Whipple, this court reversed a dismissal of plaintiff’s
complaint after counsel failed to appear for a pretrial and failed to contact the court
after the missed pretrial. Unlike the defendant in Paluscsak, Whipple had sufficient
notice that his case could be dismissed for failing to appear at the pretrial, and was
afforded a reasonable opportunity prior to the dismissal to contact the court and
explain why the case should not be dismissed for failure to comply with the court’s
order. Nevertheless, this court found that based upon the totality of the
circumstances, dismissal with prejudice was improper because counsel had actively
participated in the litigation for seven months, including engaging in settlement
negotiations and preparing for mediation, and the failure to appear was not willful
or in bad faith. Id. at ¶ 28.
Based on the foregoing cases, our review of the trial court’s dismissal
of appellants’ counterclaims involves two steps. First, we must determine whether
the trial court provided sufficient notice to appellants prior to the dismissal. Then
this court must determine whether the dismissal constituted an abuse of the trial
court’s discretion under the circumstances. Paluscak at ¶ 28, citing Walker v.
Cleveland Clinic Found., 8th Dist. Cuyahoga No. 91648, 2009-Ohio-2261, ¶ 8, citing
Asres v. Dalton, 10th Dist. Franklin No. 05AP-632, 2006-Ohio-507, ¶ 14.
1. Notice
Before a trial court can properly dismiss a party’s claim under Civ.R.
41(B)(1), the record must show that the party had notice of the possibility of
dismissal. Mokrytzky v. Capstar Capital Corp., 8th Dist. Cuyahoga No. 91287,
2009-Ohio-238, ¶ 12, citing Logsdon v. Nichols, 72 Ohio St.3d 124, 647 N.E.2d 1361(1995). The purpose of the notice requirement is to provide a party who is in default
of a court order an opportunity to correct or explain the circumstances of the party’s
default and to provide reasons as to why the case should not be dismissed with
prejudice. Id. Civ.R. 41(B)(1)’s notice requirement is satisfied “when counsel has
been informed that dismissal is a possibility and has had a reasonable opportunity
to defend against dismissal.” Quonset Hut, Inc. v. Ford Motor Co., 80 Ohio St.3d
46, 49, 684 N.E.2d 319 (1997). What constitutes notice and an opportunity to be
heard regarding a possible dismissal is examined on a case-by-case basis. Hill v.
Marshall, 10th Dist. Franklin No. 12AP-805, 2013-Ohio-5538, ¶ 8.
In this case, the trial court warned the parties in its trial order that
“failure to comply with any portion of this court’s orders may result in sanctions,
including dismissal or judgment.” This notice was at the end of a two-page order
regarding trial preparation and requirements. Despite trial being scheduled on at
least two other occasions, the trial court had never issued this type of specific trial
order regarding those trials. Admittedly, a general order existed on the trial court’s
webpage regarding trial, but the trial order set forth additional requirements not
included in the general order. Additionally, the record reflects that the trial court
included similar boilerplate language in all of its journal entries pertaining to
scheduling hearings, pretrials, or trials — “failure to appear at any court scheduled
event in the future may result in dismissal of plaintiff’s claims for want of
prosecution or judgment rendered against defendant.” In Paluscak, this court
concluded that this type of boilerplate language in a court’s judgment entries may
not constitute sufficient notice under Civ.R. 41 when circumstances exist
demonstrating that the parties were actively engaged in the proceedings and
dismissal would be unreasonable. Paluscak at ¶ 45.
In this case, additional circumstances existed that rendered the notice
insufficient, or at least demonstrate that counsel’s conduct was not willful or in bad
faith. Despite the warning in the trial order, the trial court made subsequent
statements that would have led counsel to believe that the trial would go forward
without the filing of a complete or cohesive trial brief.
The deadline to file the trial brief was January 18, 2021. On that day,
appellants filed 17 documents, which included: (1) proposed findings of fact and
conclusions of law; (2) proposed stipulations of fact; (3) an exhibit list and exhibits
A through FF; and (4) a witness list. Two days later, on January 20, 2021, the trial
court conducted a hearing on the Trust’s motions for summary judgment and other
pending motions filed by the parties. During that hearing, the trial court denied the
Trust’s motion for summary judgment on Counts 1, 4, and 7 of appellants’
counterclaim. The court specifically stated that appellants would have the
opportunity to raise these remaining claims at trial. (Tr. 151-152.) Additionally, the
trial court repeated that “[w]e are now set for trial February 1st.” (Tr. 162.)
Subsequently, on January 27, 2021, the trial court issued a written journal entry
setting forth that a bench trial on the counterclaim remained set for February 1,
2021.
Accordingly, we find that the trial court’s statements at the January
20, 2021 hearing and in the January 27, 2021 subsequent journal entry that a bench
trial on the counterclaim would proceed would lead appellants to reasonably believe
that a trial on its counterclaim would occur on February 1, 2021. The imposed
January 18, 2021 deadline had already passed, yet the court did not indicate that
appellants’ counterclaims would not be decided on its merits. Arguably, appellants
were not on notice that their counterclaims would be subsequently dismissed five
days later for failing to file a comprehensive trial brief.
2. Abuse of Discretion
Even if notice of possible dismissal had been sufficient, the totality of
the circumstances dictate that dismissal of or judgment on the counterclaim as a
sanction for failing to strictly comply with the trial order was an abuse of discretion.
The trial court sanctioned appellants by preventing their witnesses from testifying
and exhibits from being introduced because its independently filed witness and
exhibit lists were not included in one complete trial brief
The trial court recognized the harshness of its decision but concluded
that adherence to its order was required. Interestingly, our review of the trial order
and comparison of the filings by both parties demonstrates that neither party fully
complied with the trial order, yet only appellants were sanctioned by failing to
comply with the court’s order ─ despite appellant also filing a motion in limine
because of the Trust’s strict noncompliance with the trial order.
Appellants do not dispute that they did not comply with the trial
court’s order by failing to file a complete, all-in-one trial brief — the missing parts
were (1) estimated length of trial, (2) statement of facts, (3) discussion of the
controlling law, an (4) discussion of any evidentiary issues that could arise at trial.
Although appellants filed a witness list that thoroughly identified the subject matter
of the witness testimony and an exhibit list, those two lists were not combined into
one separate cohesive trial brief, which according to the trial court was fatal to its
proceedings at trial. However, appellants further complied with the trial court’s
order by (1) submitting proposed findings of fact and conclusions of law; and (2)
proposed stipulations as to undisputed facts.
In comparison, the record reflects that the Trust did not (1) submit
proposed findings of fact and conclusions of law; (2) submit proposed stipulations
as to undisputed facts; (3) identify in its exhibit list the curriculum vitae of the
Trust’s attorney fee expert; (4) estimate the length of trial; and (5) discuss any
evidentiary issues that could arise at trial. Moreover, the trial brief filed by the Trust
on September 29, 2020, was essentially obsolete because subsequent to this filing,
the court ruled on the Trust’s motions for summary judgment on both the amended
complaint and counterclaims, thus rendering a significant portion of its trial brief
irrelevant.
Despite the Trust failing to strictly comply with the trial court’s order,
the trial court denied appellants’ motion in limine precluding the Trust’s expert from
presenting expert testimony on the issue of attorney fees. We find that the trial
court’s selective enforcement of its trial order was arbitrary and unreasonable.
Moreover, nothing in the record demonstrates that counsel’s actions were willful or
in bad faith, or an attempt to delay trial. In fact, appellants were prepared to go
forward with trial on their counterclaim based on the trial court’s statements at the
January 20 hearing and the January 27 journal entry.
Additionally, it is arguable that the trial court considered the Trust’s
request as a motion in limine for a discovery sanction pursuant to Civ.R. 37(B)(1)(a-
g) (failure to comply with discovery orders may warrant sanctions including
exclusion of evidence, striking of pleadings, and rendering default judgment.)
The motion requested that appellants be precluded from further
defending at trial, proceeding on their counterclaim, and calling witnesses. It did
not specifically request dismissal of the counterclaim or judgment in the Trust’s
favor. After the court granted the motion, the court stated:
So because the defendant did not file a trial brief then his people that
are listed on this witness list cannot testify, and the documents cannot
be used. Now, I don’t know what’s left in the trial. If you don’t have
witnesses to call, then that is just that.
***
So with that ruling, the question is on behalf of the defense I don’t think
that there is anything that you have to put on because you did not do
your trial brief. So my thought is your last three things on your
counterclaim are gone. Is there any other way you could put on
somebody? I don’t know if you can if you didn’t file a trial brief, right?
(Tr. 190-191.) These statements reflect that the trial court may have treated the
Trust’s motion as one in limine.
In fact, this court has also considered that the failure to file a trial brief
is akin to a discovery sanction. In Stross v. Laderman, 8th Dist. Cuyahoga No.
74686, 1999 Ohio App. LEXIS 4452 (Sept. 23, 1999), this court upheld the trial
court’s decision prohibiting appellant from presenting a witness as a sanction for
failing to file a trial brief. On appeal, appellant contended that the imposed sanction
was too harsh under the circumstances because without the witness, judgment in
his favor was impossible. Further, appellant contended that the trial court could
have considered his motion for summary judgment as a trial brief. This court
rejected the argument, finding that even if the court accepted the summary
judgment motion as a trial brief, the motion did not refer to any witnesses and thus,
the defendant lacked notice of witnesses. This court noted that “[t]he purpose of the
discovery rules is to prevent surprise and the secreting of evidence favorable to one
party.” Id. at 3, citing Lakewood v. Papadelis, 32 Ohio St.3d 1, 3, 511 N.E.2d 1138(1987). Accordingly, this court determined that failing to file a trial brief is similar
to a discovery violation because the trial brief discloses to opposing counsel the
witnesses and exhibits to be used at trial.
The Trust cites to Evans v. Corbett, 5th Dist. Muskingum No. 82-CA-
22, 1982 Ohio App. LEXIS 15163 (Dec. 1, 1982), in support of the trial court’s ruling.
In Evans, much like in Stross, plaintiff did not comply with the trial court’s local rule
requiring the filing of a trial brief. The trial court sanctioned plaintiff by dismissing
Counts 2 and 3 of the complaint. On appeal, appellant claimed that the answer brief
to the motion for summary judgment was sufficient to comply with the local rule.
The Fifth District upheld the trial court’s decision, finding that the content included
in a summary judgment is different from that of a trial brief, because a trial brief
includes evidentiary issues and witness information. Id. at 6.
We find Stross and Evans distinguishable. In this case, like Stross,
without appellants’ witnesses or exhibits, judgment in appellants’ favor was
impossible. However, unlike in Stross, appellants filed witness and exhibit lists;
thus, the element of surprise did not exist. Moreover, the Trust admitted that the
issues were discussed “ad nauseum” in appellants’ opposition to the Trust’s
summary judgment motions, which were considered only two weeks prior to trial.
The trial court recognized that the case had been pending for a lengthy period of
time and was well-aware of the issues of the case.
Evans is equally distinguishable because the information that the
Fifth District found relevant, yet absent, are present in this case. Here, appellants
filed both witness and exhibit lists, proposed findings of fact, conclusions of law, and
stipulations of fact. Accordingly, there was no element of surprise to the parties or
to the court warranting the preclusion of appellants’ witnesses and exhibits. In fact,
the Trust never argued that appellants’ defective trial brief hindered its defense of
appellants’ counterclaims.
Whether this court views the trial court’s decision as a dismissal with
prejudice under Civ.R. 41 for failing to comply with the court’s order, a discovery
sanction, or a judgment in favor of the Trust, the court’s ruling operates as an
adjudication of the merits. See Civ.R. 41(B)(3). “It is a basic tenant of Ohio’s
jurisprudence that cases should be decided on their merits.” Perkowski, 8th Dist.
Cuyahoga No. 109567, 2021-Ohio-1879, at ¶ 17. The power of a trial court to prevent
undue delays and control its docket must be weighed and considered alongside the
policy that favors the disposition of all litigation on its merits. Whipple, 2020-Ohio-
2825, 154 N.E.3d 550, at ¶ 18, citing Willis, 12 Ohio App.3d 1, at 3, 465 N.E.2d 924.
We find no actual disadvantage to the trial court in not having a
complete trial brief for trial in this case. This matter was set for a bench trial in front
of the judge who had presided over the entire two years of the case. The trial court
recognized that because it was a bench trial, it would “go fast.” (Tr. 52, Aug. 19,
2020). Additionally, at the January 20, 2021 hearing, the court explained that the
February 1, 2021 trial “is a bench trial. It should be very, very short because there’s
only a few issues left to deal with.” (Tr. 162.) As the trial court noted on several
occasions, it was aware of the limited issues for trial. Additionally, we note that just
two weeks prior to trial, the court considered the Trust’s motions for summary
judgment and appellants’ briefs in opposition at a hearing, where the court
thoroughly discussed and carefully considered each motion and argument made at
the hearing, articulated its ruling on each count, and entered judgment where
appropriate. The court found that three of appellants’ claims warranted a trial.
Accordingly, appellants’ failure to file certain portions of a trial brief or combine the
witness and exhibit list into one document does not reasonably warrant forever
barring the consideration of their claims on the merits.
Moreover, we find that there was no undue delay because trial was
scheduled to go forward, all parties were prepared to proceed with trial, and the
Trust’s hearing on damages was scheduled for the same day. Accordingly, the trial
court was set to resolve the case that day.
VII. Conclusion
We recognize that this case has been contentious and unreasonably
drawn out by the parties. Litigation in this case has been pending since June 2019.
And, as the trial court noted, the parties filed approximately 65 motions over the life
of this case. The record is abundantly clear that appellants’ counsel actively
participated in this case; this is not a situation of ongoing or repeated dilatory or
irresponsible conduct. Our review of the trial court’s docket reveals that both parties
received substantial consideration in their filings, including extensions and leave of
court. This court can appreciate the frustration the trial court may have experienced
over the course of litigation in this case. And much like the appellate court file, the
trial court file contains multiple requests for sanctions and oppositions. However,
based on the entire record before this court, it was error for the trial court to dispose
of the counterclaim for failing to strictly adhere to the trial order when arguably no
reasonable notice under the circumstances was given, there was no surprise or
undue prejudice to the Trust, there was no delay to the court or to proceeding with
trial, and the court exercised arbitrary selection of enforcement of its trial order.
Disposing of appellants’ counterclaim on a technicality was unreasonable.
Accordingly, the first assignment of error is sustained.
Judgment affirmed in part; reversed in part; and remanded. The trial
court’s decision dismissing appellants’ counterclaims is reversed, and the case is
remanded to the trial court for trial, if necessary, on Counts 1, 4, and 7 of appellants’
counterclaims, and to conduct a new hearing on damages, including attorney fees
and set-off. All other orders not otherwise addressed are affirmed.
It is ordered that the parties share equally in the 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.
KATHLEEN ANN KEOUGH, PRESIDING JUDGE
EILEEN A. GALLAGHER, J., and
EMANUELLA D. GROVES, J., CONCUR