State ex rel. Infinity Secs., Inc. v. Froment ( 2020 )

[Cite as State ex rel. Infinity Secs., Inc. v. Froment, 2020-Ohio-5090.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
State ex rel. Infinity Securities, Inc., :
Relator, :
v. : No. 19AP-197
Jillian Froment, in her official capacity :
as the Superintendent of the (REGULAR CALENDAR)
Ohio Department of Insurance, :
Respondent. :
D E C I S I O N
Rendered on October 29, 2020
On brief: Graff & McGovern, LPA, and John A. Izzo, for
relator. Argued: John A. Izzo.
On brief: Dave Yost, Attorney General, Crystal R. Richie, for
respondent.
IN MANDAMUS
ON OBJECTIONS TO THE MAGISTRATE'S DECISION
LUPER SCHUSTER, J.
{¶ 1} Relator, Infinity Securities, Inc., initiated this original action requesting that
this court issue a writ of mandamus ordering respondent, Jillian Froment, Superintendent
of the Ohio Department of Insurance, to issue an order in the pending administrative
proceedings before the department relative to relator's permit application.
{¶ 2} This matter was referred to a magistrate of this court pursuant to Civ.R. 53
and Loc.R. 13(M) of the Tenth District Court of Appeals. The magistrate issued the
appended decision, including findings of fact and conclusions of law. The magistrate
determined that the parties agreed the action has become moot through resumption of the
No. 19AP-197 2
administrative proceedings before respondent. Thus, the magistrate recommends this
court grant respondent's motion to dismiss and deny relator's motion for fees.
{¶ 3} Relator has filed objections to the magistrate's decision. Through its
objections, relator argues that the magistrate erred in denying its motion for fees.
Specifically, relator argues that even though the magistrate correctly determined the
request for the writ of mandamus was moot, the magistrate nonetheless erred when it
determined that relator was not a "prevailing party" within the meaning of R.C. 2335.39.
{¶ 4} Relator sought its award of fees under R.C. 2335.39(B)(1), which provides
that in a civil action in which the state is a party, a "prevailing eligible party is entitled, upon
filing a motion in accordance with this division, to compensation for fees incurred by that
party in connection with the action or appeal." Pursuant to R.C. 2335.39, a "[p]revailing
eligible party" is "an eligible party that prevails in an action or appeal involving the state."
R.C. 2335.39(A)(5). The magistrate determined that relator did not satisfy the definition
of "prevailing eligible party" because relator did not prevail in the present action by
obtaining its requested writ of mandamus.
{¶ 5} Here, the parties agree that the request for the writ is moot. Though relator
asks us to consider it a "prevailing party" on the basis that it likely would have prevailed
had respondent waited to take action and instead let this court consider the merits of the
petition for a writ of mandamus, relator cites no legal authority supporting that position.
Additionally, while relator argues it should be considered a "prevailing party" since it
obtained the relief it requested, we note that the statutory definition of "prevailing eligible
party" requires the party to prevail "in an action…" (Emphasis added.) R.C. 2335.39(A)(5).
Relator did not prevail in the action, rather it received the decision it requested before the
action terminated. Accepting relator's argument would require this court to ignore the
statutory definition of "prevailing eligible party," which we decline to do. Instead, we agree
with the magistrate that when the request for the writ of mandamus is moot, the "matter
lacks a 'prevailing party,' the presence of which would raise the question of attorney fee
recovery." State ex rel. Gallucci v. Brown, 10th Dist. No. 91AP-453, 1991 Ohio App. LEXIS
4569 (Sept. 26, 1991). Therefore, we overrule relator's objections to the magistrate's
decision.
No. 19AP-197 3
{¶ 6} After examination of the magistrate's decision, an independent review of the
record pursuant to Civ.R. 53, and due consideration of relator's objections, we overrule
relator's objections and adopt the magistrate's findings of fact and conclusions of law.
Accordingly, we grant respondent's motion to dismiss the complaint and deny relator's
motion for fees.
Objections overruled; motion for fees denied; case dismissed.
BROWN and BEATTY BLUNT, JJ., concur.
No. 19AP-197 4
APPENDIX
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
State ex rel. Infinity Securities, Inc., :
Relator, :
v. : No. 19AP-197
Jillian Froment, in her official capacity as : (REGULAR CALENDAR)
the Superintendent of the Ohio Department
of Insurance, :
Respondent. :
MAGISTRATE'S DECISION
Rendered on April 9, 2020
Graff & McGovern, LPA, and John A. Izzo, for relator.
Dave Yost, Attorney General, Crystal R. Richie, for
respondent.
IN MANDAMUS ON RESPONDENT'S
MOTION TO DISMISS AND MOTION FOR FEES
{¶ 7} Relator in this original action, Infinity Securities, Inc., sought a writ of
mandamus ordering respondent, Jillian Froment, Superintendent of the Ohio
Department of Insurance, to issue an order in pending administrative proceedings before
the department. Respondent has moved to dismiss this action as moot, a posture that
relator does not dispute except for relator's pending motion for fees.
Findings of Fact:
{¶ 8} 1. Relator initiated this original action with a complaint in mandamus filed
April 5, 2019.
No. 19AP-197 5
{¶ 9} 2. The complaint avers that relator is an independent investment advisor
based in Oakland, California, with 52 branch offices across the United States. On or about
November 2, 2016, relator applied for a license to conduct business as an insurance agent
in Ohio.
{¶ 10} 3. The Ohio Department of Insurance is a state agency created pursuant to
R.C. 3901.01 whose powers are defined in the ensuing provisions.
{¶ 11} 4. Respondent is charged with issuing and renewing insurance licenses
pursuant to Title 39 of the Ohio Revised Code. Under R.C. 3905.14(B)(1), respondent may
refuse a license if the applicant has provided incorrect, misleading, incomplete, or
materially untrue information in the application.
{¶ 12} 5. Respondent's main offices are in Franklin County, Ohio. Jurisdiction
and venue over this original action lie with the court pursuant to Section 3(B)(1), Article
IV, Ohio Constitution, and R.C. 2731.02.
{¶ 13} 6. Relator's complaint concedes that a clerical error on its application with
the department led to the omission of necessary information regarding an administrative
action previously considered by the Alabama Division of Securities in 2012.
{¶ 14} 7. Relator's complaint states that the department and relator could not
agree on the steps necessary to resolve the application error. Respondent proposed a
consent order involving a civil penalty and administrative costs. Relator declined on the
basis that accepting a civil penalty would create repercussions with other state regulators,
which relator felt was unwarranted for an inadvertent mistake.
{¶ 15} 8. Relator's complaint avers that relator requested that respondent initiate
formal charges so that an impartial hearing examiner, pursuant to respondent's
administrative adjudication process, could examine the matter.
{¶ 16} 9. Attached to relator's complaint is a copy of the resulting hearing officer's
report and recommendation. This report "recommends that no formal violation be cited
since it appears that there was an honest mistake made on the application. Infinity
Securities can be assessed administrative costs for the mistake." (Report and
Recommendation, at 6.)
No. 19AP-197 6
{¶ 17} 10. Relator filed objections to the hearing officer's report and
recommendation raising only procedural points. Relator complained that the hearing
officer erred in refusing to take judicial notice of evidence and apply R.C. 119.14, and
further erred in declining to consider that Ohio Governor's Executive Order 2011-01K
applied to the matter. Relator did not object to the hearing officer's conclusions and
recommendation.
{¶ 18} 11. The stipulated record of administrative proceedings in this matter has
not yet been filed, but neither party disputes the accuracy and relevance of the documents
from the administrative proceedings that were attached to relator's complaint and the
parties' subsequent pleadings.
{¶ 19} 12. Relator's complaint further avers that, one year after the hearing
officer's report and recommendation issued, respondent has held no further proceedings,
nor rendered an order resolving the permit application. Relator has been unable to
conduct business in Ohio in the interim. Relator's complaint avers that relator received
assurances from counsel for respondent on August 30, 2018 that an order would be
forthcoming. As of the filing of this mandamus action, no such order had been issued by
respondent.
{¶ 20} 13. In the absence of an answer to the complaint, relator moved for default
judgment on May 24, 2019.
{¶ 21} 14. Respondent moved for an extension of time in which to answer on
May 30, 2019.
{¶ 22} 15. The magistrate denied relator's motion for default judgment on May 31,
2019, and in the same order granted respondent until June 6, 2019 to file an answer.
{¶ 23} 16. Respondent filed an answer on June 6, 2019, which did not contest the
substance and chronology presented in relator's complaint.
{¶ 24} 17. On June 18, 2019, respondent filed a motion to dismiss the complaint
as moot, asserting that respondent had issued an order on June 7, 2019 that resumed
administrative proceedings in the matter and rendered the present mandamus action
moot.
No. 19AP-197 7
{¶ 25} 18. The administrative order issued by respondent on June 6, 2019
approves in part and modifies in part the hearing officer's report and recommendation.
"[T]he recommendation is modified to reflect that Infinity submitted incorrect,
misleading, and/or materially untrue information in its license application and in
violation of R.C. 3905.14(B)(1). * * * The hearing officer further recommended that
Infinity 'can be assessed administrative costs[.]' This recommendation is affirmed and
approved. Accordingly, Infinity is hereby assessed administrative costs in the total
amount of eight hundred seventy-six dollars and 21 cents ($876.21), to be paid in full
within (30) days of the effective date of this order. Upon timely and total payment of the
administrative costs, the license application of Infinity will be approved." (June 6, 2019
Order, at 3.)
{¶ 26} 19. Relator filed on June 20, 2019 a memorandum in opposition to the
motion to dismiss combined with a motion for an award of fees for attorney fees and costs
incurred in filing and prosecuting this mandamus action.
{¶ 27} 20. Relator's motion for fees seeks $1,878 in fees and costs pursuant to
R.C. 2335.39(B)(1). Attached to the motion is an itemized fee statement describing the
time expended by counsel for relator in this mandamus action billed at $275 per hour, for
a total of 7.1 hours worked. The total attorney time billed amounts to $1,775, to which
relator has added $103 in filing fees.
{¶ 28} 21. Respondent filed a memorandum in opposition on July 9, 2019,
asserting that relator is not entitled to fees under R.C. 2335.39, and that moreover, the
hourly rate applied in the fee statement is three times that allowed by law.
{¶ 29} 22. Relator filed a reply memorandum on July 11, 2019.
Discussion and Conclusions of Law:
{¶ 30} Relator seeks an award of fees under Ohio's Equal Access to Justice Act,
R.C. 2335.39(B)(1), providing in pertinent part as follows:
Except as provided in divisions (B)(2) and (F) of this section, in
a civil action, or appeal of a judgment in a civil action, to which
the state is a party, or in an appeal of an adjudication order of
an agency pursuant to section 119.12 of the Revised Code, the
prevailing eligible party is entitled, upon filing a motion in
accordance with this division, to compensation for fees
incurred by that party in connection with the action or appeal.
No. 19AP-197 8
Compensation, when payable to a prevailing eligible party
under this section, is in addition to any other costs and
expenses that may be awarded to that party by the court
pursuant to law or rule.
R.C. 2335.39(B)(1) thus applies in favor of "prevailing parties" in a civil action or appeal
to which the state is party.
{¶ 31} Because the parties agree that, apart from the present fee issue, the action
has become moot through resumption of the administrative proceedings before
respondent, relator is not a "prevailing party" because relator did not prevail in the
present action by obtaining a writ. State ex rel. Gallucci v. Brown, 10th Dist. No. 91AP-
453 (Sept. 26, 1991) ("Because the question is moot, this matter lacks a 'prevailing party,'
the presence of which would raise the question of attorney fee recovery.") While relator
doubtless would take the position that the mandamus action has achieved the desired
effect by stimulating respondent's issuance of the June 6, 2019 administrative order, that
does not make relator a prevailing party as required by R.C. 2335.39(B)(1). Moreover,
this court has at least questioned whether this statute applies to mandamus actions before
this court, where an award of fees is recoverable as damages under R.C. 2731.11 or made
under specific statutes relating to various types of action, such as R.C. 149.43(C) for public
records actions. See generally, Gallucci; but see, Arcenio v. Youngstown State Univ., 7th
Dist. No. 14 MA 0163, 2016-Ohio-4812 (proposing broader interpretation of terms "civil
action" and "initiated by the state.") The magistrate further notes that, while this is not
pertinent to the question of whether relator prevailed in the present action, relator was
not the prevailing party in administrative proceedings either, since the final order finds a
sanctionable deficiency in relator's license application.
{¶ 32} In summary, the magistrate agrees with the parties that this mandamus
action has become moot. Respondent's motion to dismiss for failure to state a claim is
granted based upon lack of a justiciable controversy. Relator's motion for fees is denied.
/S/ MAGISTRATE
MARTIN L. DAVIS
No. 19AP-197 9
NOTICE TO THE PARTIES
Civ.R. 53(D)(3)(a)(iii) provides that a party shall not assign as
error on appeal the court's adoption of any factual finding or
legal conclusion, whether or not specifically designated as a
finding of fact or conclusion of law under Civ.R. 53(D)(3)(a)(ii),
unless the party timely and specifically objects to that factual
finding or legal conclusion as required by Civ.R. 53(D)(3)(b).