Shertok v. Wallace Group Gen. Dentistry For Today, Inc. , 2020 Ohio 4369 ( 2020 )

[Cite as Shertok v. Wallace Group Gen. Dentistry For Today, Inc., 2020-Ohio-4369.]
IN THE COURT OF APPEALS
FIRST APPELLATE DISTRICT OF OHIO
HAMILTON COUNTY, OHIO
DANIEL SHERTOK, D.D.S., : APPEAL NOS. C-190457
C-190464
Plaintiff-Appellant/ : TRIAL NO. A-1702101
Cross-Appellee,
:
vs. O P I N I O N.
:
WALLACE GROUP GENERAL
DENTISTRY FOR TODAY, INC.,
:
and
:
NANCY WALLACE,
:
Defendants-Appellees/
Cross-Appellants. :
Civil Appeals From: Hamilton County Court of Common Pleas
Judgment Appealed From Is: Affirmed
Date of Judgment Entry on Appeal: September 9, 2020
Avonte Campinha-Bacote, for Plaintiff-Appellant/Cross-Appellee,
Jacobs, Kleinman, Seibel & McNally, LPA, and Mark J. Byrne, for Defendants-
Appellees/Cross-Appellants.
OHIO FIRST DISTRICT COURT OF APPEALS
MYERS, Judge.
{¶1} Daniel Shertok, D.D.S., appeals the trial court’s judgment awarding
$2,200 in attorney fees to Nancy Wallace and Wallace Group General Dentistry For
Today, Inc., (“Wallace Group”), upon its finding that Shertok and his attorney
engaged in frivolous conduct for attempting to file an unauthorized-practice-of-law
claim against Wallace. Wallace and Wallace Group appeal the trial court’s judgment,
arguing that the court should have awarded them $48,585.75 in attorney fees
incurred as a result of defending Shertok’s other claims, which they contend were
frivolous. For the reasons that follow, we affirm the trial court’s rulings on both
issues.
I. Factual Background
{¶2} In September 2015, Wallace’s husband, William Wallace, D.D.S.,
executed an agreement with ddsmatch.com of Dental Capital Holdings, LLC, and its
broker Matthew Conrad to help with the sale of his dental practice, Wallace Group.
Around that time, Shertok was actively looking to buy a dental practice.
{¶3} After Dr. Wallace passed away in December 2015, Shertok expressed
interest in purchasing the Wallace Group, so Conrad arranged a meeting between
Shertok and Wallace. They met in January 2016 for Shertok to view the practice. In
late February 2016, Shertok made an offer of $655,000 to purchase Wallace Group.
Wallace rejected that offer and counter-offered $700,000. On March 2, Conrad sent
Shertok a letter of intent, unsigned by Wallace, listing a purchase price of $700,000.
The letter of intent indicated that the offer would expire on March 11. On March 9,
Conrad sent Shertok a second unsigned letter of intent with a later expiration date.
Shertok did not sign or return either letter of intent to Wallace.
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{¶4} Negotiations continued. On March 23, Shertok made a counter-offer
of $670,000 to purchase the practice. On March 30, Conrad responded to Shertok,
indicating that Wallace was firm on a $700,000 purchase price.
{¶5} On April 30, Conrad, Shertok, and Wallace met. During that meeting,
Wallace indicated that she wanted to raise the purchase price to $730,000 because
she was in the process of making some improvements to the office. At that point,
Shertok testified, his understanding from discussions with Wallace was that “the
purchase price was going to be $700,000 and then at that meeting [Wallace] seemed
to make it sound like she wanted it to be closer to $730,000 and that came as a
surprise to both me and [Conrad].”
{¶6} On May 27, Shertok made a final offer of $700,000. On June 2,
Conrad communicated to Shertok that Wallace said “it is ok to proceed and start
moving forward.” According to Shertok, it was at this point that Wallace accepted
his offer of $700,000. On June 10, Conrad emailed Shertok a third unsigned letter
of intent, which indicated a purchase price of $700,000.
{¶7} Throughout June, Wallace sent financial records to Shertok. Shertok’s
lawyer made changes to Conrad’s June letter of intent, and Shertok forwarded the
revised letter of intent to Conrad in July. By its terms, the third letter of intent would
expire on July 31. Wallace did not respond.
{¶8} On August 8, despite the fact that the third letter of intent already
expired, Shertok sent Conrad a notice that his offer would expire on August 12.
Shertok received no response.
{¶9} That was the last correspondence between the parties until Shertok
emailed Wallace on October 17, requesting reimbursement of his legal and
accounting fees. Shertok explained in his email, “[S]ince I conducted business with
The Wallace Group in good faith and did not receive the same in return, I am
requesting that I be reimbursed so that I can use the funds toward purchasing a
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OHIO FIRST DISTRICT COURT OF APPEALS
practice from a truly motivated seller.” Wallace replied that she had never signed a
letter of intent but was willing to meet to work out the matter in a mutually beneficial
way.
{¶10} On November 14, Shertok emailed Wallace, demanding
reimbursement for expenses of $5,588.75 incurred as a result of her “bad-faith
business dealings.” Thereafter, Shertok’s attorney emailed Wallace twice to let her
know that Shertok would file suit against her if she failed to pay Shertok’s expenses.
II. Procedural Background
{¶11} In January 2017, Shertok filed in the municipal court a pro se
complaint against Wallace and Wallace Group for breach of contract, breach of the
implied covenant of good faith and fair dealing, negligent misrepresentation, and
promissory estoppel. Wallace filed pro se motions to dismiss the complaint on
behalf of herself and Wallace Group. Shertok moved to strike Wallace Group’s
motion to dismiss on the ground that Wallace, a nonlawyer, could not represent the
Wallace Group corporation.
{¶12} In March 2017, counsel appeared in the case on behalf of Wallace and
Wallace Group and adopted the arguments and pleadings asserted by both
defendants in their motions to dismiss. The defendants filed a memorandum in
opposition to Shertok’s motion to strike Wallace Group’s motion to dismiss, arguing
that Shertok’s motion was moot because counsel now represented Wallace Group.
{¶13} Because the matter exceeded the jurisdictional amount of the
municipal court, it was transferred to the court of common pleas, which ordered the
case to mediation. In October 2017, the trial court struck Wallace Group’s motion to
dismiss because it was not filed by an attorney (it had been filed by Wallace) and
overruled Wallace’s motion to dismiss.
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OHIO FIRST DISTRICT COURT OF APPEALS
{¶14} In November 2017, the defendants filed an answer to Shertok’s
complaint. In December, the trial court scheduled the matter for trial in October
2018.
{¶15} In January 2018, three months after the trial court had stricken the
Wallace Group’s motion to dismiss, Shertok filed a motion for leave to amend his
complaint to add an unauthorized-practice-of-law cause of action under R.C.
4705.07 against Wallace for her February 2017 filing of a motion to dismiss on behalf
of Wallace Group. The defendants filed a memorandum in opposition, asserting that
the trial court had no subject-matter jurisdiction over a claim brought against a
person pursuant to R.C. 4705.07 until the Supreme Court of Ohio has first made a
finding that the person had engaged in the unauthorized practice of law. Shertok
filed a reply in which he acknowledged that, in order for a party to commence an
action under R.C. 4705.07, the Supreme Court must first find that a violation has
occurred. He requested that the trial court hold his motion to amend in abeyance
pending a finding from the Supreme Court. Citing Shertok’s failure to comply with
R.C. 4705.07, the trial court overruled his motion for leave to amend.
{¶16} Over the next several months, the parties continued to engage in
discovery and motion practice. Then, two weeks before the October 2018 trial date,
Shertok voluntarily dismissed the action.
{¶17} The defendants moved for attorney fees and costs as sanctions for
frivolous conduct, pursuant to R.C. 2323.51. An evidentiary hearing on the
defendants’ motion was initially scheduled for January 17, 2019, and Shertok’s
counsel, Avonte Campinha-Bacote, responded that he could not appear on that date.
On January 28, the court mailed notice to counsel that the hearing would be
February 21, 2019.
{¶18} On February 13, 2019, a week before the hearing, Campinha-Bacote
filed a motion to withdraw in which he asserted that he had provided Shertok with
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OHIO FIRST DISTRICT COURT OF APPEALS
“copies of all documents sent, received, and generated * * * [and] the client has been
apprised of all pending hearing dates and his obligations relative to such dates.” At
that time, the only pending hearing date was February 21. Campinha-Bacote alleged:
“[Shertok] indicated that he would be securing counsel for the upcoming hearing,
which Counsel understood to be Attorney Mark Woloshin[,] who has been in
communication with [defense counsel]. It is also Counsel’s understanding that the
extension that was granted for the hearing was at the request of Attorney Woloshin
and/or his communications with Defendants’ counsel.” The defendants opposed
Campinha-Bacote’s motion to withdraw.
{¶19} Shertok was represented by counsel Mark Woloshin at the February
21, 2019 evidentiary hearing at which Campinha-Bacote did not appear. At the
hearing, defense counsel Mark Byrne testified that Frank Recker was the lawyer who
was originally contacted by Wallace and that Recker’s total fees in the case were
$14,868.75. Byrne testified that he became involved in the case in March 2017. He
testified as to his extensive experience and standing in the legal community and
noted that he regularly engaged in expensive, protracted civil litigation. He testified
that his hourly rate in this case was lower than his regular rate and lower than he had
been awarded when he was an expert witness. He testified that his own fees were
$32,820.
{¶20} Byrne testified to the work expended on behalf of the defendants,
stating that “everything in the case was contested.” In his opinion, his and Recker’s
bills were “both reasonable, and the hourly rate and the services that were required
were necessary in order to adequately protect [Wallace and Wallace Group] in this
litigation.” Shertok did not cross-examine Byrne or object to Byrne’s testimony or
evidence.
{¶21} In March 2019, the trial court overruled Campinha-Bacote’s motion to
withdraw as counsel. In its entry, the court noted that its decision on the defendants’
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R.C. 2323.51 frivolous-conduct motion remained pending and indicated that
Campinha-Bacote might be found liable for attorney fees and costs.
{¶22} Shertok filed a supplemental memorandum in opposition to the
defendants’ motion for attorney fees. Shertok asserted that his conduct in moving
for leave to amend the complaint to add an unauthorized-practice-of-law claim was
not frivolous. Shertok attached to his memorandum an unsworn statement by
Campinha-Bacote, who alleged that he had alerted the court to Wallace’s
unauthorized practice of law by filing a motion to strike Wallace Group’s motion to
dismiss and by reporting her conduct to the bar:
I solicited the advice of several attorneys and peers experienced in
ethical issues, and also called the Columbus Bar Association’s ethics
hotline. I was advised by all of these individuals that reporting the
action to the Court and the Bar was either the correct thing to do, or an
acceptable thing to do.
{¶23} In addition, Shertok asserted that Campinha-Bacote had never been
informed by the court or anyone that the January 17 hearing date was being
continued. Shertok stated that by the time Campinha-Bacote learned of the February
21 hearing date, Campinha-Bacote did not have ample time to object or move for a
continuance.
{¶24} The court held an additional hearing on May 9, 2019, to allow
Shertok’s attorney to appear. At that hearing, the court limited evidence to that
relating to Shertok’s attempt to amend his complaint to add an unauthorized-
practice-of-law claim. The court indicated that it did not believe that Shertok’s other
claims were frivolous: “[W]ith regard to the contract claims, I think that they are
standard, and I don’t think they require damages or sanctions.” Shertok and
Campinha-Bacote testified at the hearing.
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OHIO FIRST DISTRICT COURT OF APPEALS
{¶25} In July 2019, the trial court granted the defendants’ motion for
attorney fees as it related to the attempt to amend the complaint to add an
unauthorized-practice-of-law claim. The court found that Shertok’s attempt to
amend his complaint was frivolous under R.C. 2323.51(A)(2)(a)(i) because it was an
attempt to harass the defendants, and under R.C. 2323.51(A)(2)(a)(ii) because he
had not first obtained the prerequisite determination by the Supreme Court of Ohio
that Wallace had engaged in the unauthorized practice of law. The court found that
Wallace, in filing a motion to dismiss on behalf of Wallace Group, had made a
common error “whereby an individual pro se co-defendant, not licensed to practice
law, will file an answer on behalf of herself and also file an answer on behalf of her
affiliated business entity.” The court noted that it had struck the motion to dismiss,
and found, therefore, that Wallace’s error in filing on behalf of her business “was
harmless and quickly rectified.” The court found that the defendants “were
financially adversely affected by having to respond to [Shertok’s] motion,” and
awarded the defendants $2,200 for their legal expenses related to Shertok’s motion.
The court further ordered that Shertok and Campinha-Bacote were jointly liable for
the amount awarded to the defendants. The defendants and Shertok now appeal.
{¶26} In six assignments of error, Shertok argues that the trial court erred (1)
by awarding fees against him and his counsel when it found that attempting to
amend the complaint constituted frivolous conduct; (2) in awarding fees by failing to
use the lodestar method; (3) by not letting him object to fees; (4) by awarding
defendants an unreasonable amount of fees; (5) by relying on a hearing that included
impermissible testimony concerning a confidential mediation; and (6) in relying
upon the February 19, 2019 hearing, which violated his constitutional rights.
{¶27} In a single assignment of error, the defendants argue that the trial
court erred by denying their motion for sanctions in the amount of $48,585.75 where
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OHIO FIRST DISTRICT COURT OF APPEALS
the evidence demonstrated that all of Shertok’s claims against them were legally
groundless and therefore frivolous as defined in R.C. 2323.51(A)(2)(a)(ii).
III. Frivolous Conduct
{¶28} We begin with Shertok’s first assignment of error and the defendants’
sole assignment of error because they challenge the trial court’s frivolous-conduct
findings.
{¶29} A motion for sanctions under R.C. 2323.51 requires a trial court to
determine whether the challenged conduct constitutes frivolous conduct as defined
by the statute, and, if so, whether any party has been adversely affected by the
frivolous conduct. Riston v. Butler, 149 Ohio App.3d 390, 2002-Ohio-2308, 777
N.E.2d 857, ¶ 17 (1st Dist.). As relevant here, R.C. 2323.51(A)(2)(a) defines frivolous
conduct as conduct that satisfies at least one of the following conditions:
(i) It obviously serves merely to harass or maliciously injure another
party to the civil action or appeal or is for another improper purpose,
including, but not limited to, causing unnecessary delay or a needless
increase in the cost of litigation[;]
(ii) It 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[.]
R.C. 2323.51(A)(2)(a)(i) and (ii).
{¶30} The standard of review to be applied to a trial court’s decision on a
request for sanctions under R.C. 2323.51 depends on whether there are questions of
law or of fact or mixed questions of law and fact. Fed. Natl. Mtge. Assn. v.
Hirschhaut, 1st Dist. Hamilton No. C-180473, 2019-Ohio-3636, ¶ 26. We review
questions of law de novo. Riston at ¶ 22. On factual issues, we give deference to the
trial court’s factual determinations, which we will not disturb if they are supported
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by competent, credible evidence. Pitcher v. Waldman, 1st Dist. Hamilton No. C-
160245, 2016-Ohio-5491, ¶ 16.
{¶31} The ultimate decision as to whether to grant sanctions under R.C.
2323.51 rests within the sound discretion of the trial court. 217 Williams, LLC v.
Worthen, 1st Dist. Hamilton No. C-180101, 2019-Ohio-2559, ¶ 17; Gianetti v.
Teakwood, Ltd., 10th Dist. Franklin Nos. 17AP-606 and 17AP-618, 2018-Ohio-1621,
¶ 13 (“If a trial court finds frivolous conduct, the decision whether to assess a penalty
lies within the sound discretion of that court.”). An abuse of discretion occurs if the
trial court’s decision is “unreasonable, arbitrary, or unconscionable.” Blakemore v.
Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d 1140 (1983).
A. R.C. 2323.51(A)(2)(a)(ii) (Not Warranted by Law)
{¶32} The trial court found that Shertok’s attempt to amend his complaint to
add an unauthorized-practice-of-law claim constituted frivolous conduct under R.C.
2323.51(A)(2)(a)(ii), as conduct that was “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.” But the trial court declined to find that Shertok’s conduct in bringing
his remaining claims was frivolous. Because legally groundless frivolous conduct
involves a question of law, we review it de novo. Riston, 149 Ohio App.3d 390, 2002-
Ohio-2308, 777 N.E.2d 857, at ¶ 22. The test is whether no reasonable lawyer would
have brought the action in light of existing law. Pitcher at ¶ 15.
{¶33} This standard requires courts to perform an objective review of the
allegedly frivolous conduct. Calypso Asset Mgt., LLC v. 180 Indus., LLC, 2019-Ohio-
2, 127 N.E.3d 507, ¶ 43 (10th Dist.). “ ‘As a matter of law, an attorney’s ignorance of
the law or failure to investigate the law is not deemed objectively reasonable.’ ” Id.,quoting Kozar v. Bio-Medical Applications of Ohio, Inc., 9th Dist. Summit No.
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21949, 2004-Ohio-4963, ¶ 17. A finding that counsel engaged in frivolous conduct is
justified where reasonable inquiry by counsel should have revealed the inadequacy of
a claim. Ron Scheiderer & Assoc. v. London, 81 Ohio St.3d 94, 97-98, 689 N.E.2d
552 (1998).
i. Unauthorized Practice of Law
{¶34} In January 2018, Shertok sought leave to amend his complaint to add
a claim against Wallace for unauthorized practice of law under R.C. 4705.07(A)(3),
which provides: “No person who is not licensed to practice law in this state shall * *
* [c]ommit any act that is prohibited by the supreme court as being the unauthorized
practice of law.” He alleged that Wallace, a nonlawyer, committed the unauthorized
practice of law in February 2017 when she filed a pro se motion to dismiss on behalf
of Wallace Group, and that he suffered damage as a result.
{¶35} Under R.C. 4705.07(B)(2), “[o]nly the supreme court may make a
determination that any person has committed the unauthorized practice of law in
violation of division (A)(3) of this section.” R.C. 4705.07(C)(2) allows civil recovery
for actual damages caused by the unauthorized practice of law, Greenspan v. Third
Fed. S. & L. Assn., 122 Ohio St.3d 455, 2009-Ohio-3508, 912 N.E.2d 567, ¶ 12, but
the statute requires a determination by the Supreme Court that a person has
committed the unauthorized practice of law before an action may be filed against the
person based upon that conduct. R.C. 4705.07(C)(2) provides:
Any person who is damaged by another person who commits a
violation of division (A)(3) of this section may commence a civil action
to recover actual damages from the person who commits the violation,
upon a finding by the supreme court that the other person has
committed an act that is prohibited by the supreme court as being the
unauthorized practice of law in violation of that division. The court
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in which that action for damages is commenced is bound by the
determination of the supreme court regarding the unauthorized
practice of law and shall not make any additional determinations
regarding the unauthorized practice of law.
(Emphasis added.) “Clearly, the statute requires a finding by the Supreme Court that
the unauthorized practice of law occurred, prior to commencement of a civil action
based on that finding.” Sarum Mgt., Inc. v. Alex N. Sill Co., 9th Dist. Summit No.
23167, 2006-Ohio-5710, ¶ 32.
{¶36} Shertok argues that neither he nor his counsel was aware that a
prerequisite for filing an unauthorized-practice-of-law claim was a determination by
the Supreme Court that Wallace had engaged in the unauthorized practice of law. He
asserts that his filing of a motion to add the claim without a prior finding by the
Supreme Court was a simple mistake. However, R.C. 2323.51 employs an objective
standard in determining whether a party or the party’s attorney has engaged in
frivolous conduct, without reference to what the individual knew or believed.
Walters v. Carter, 8th Dist. Cuyahoga No. 108555, 2020-Ohio-807, ¶ 14; Southard
Supply, Inc. v. Anthem Contrs., 10th Dist. Franklin No. 16AP-545, 2017-Ohio-7298,
¶ 29, citing State ex rel. Striker v. Cline, 130 Ohio St.3d 214, 2011-Ohio-5350, 957
N.E.2d 19, ¶ 21.
{¶37} Under the clear language of R.C. 4705.07(C)(2), no action could be
commenced against Wallace for committing an act prohibited by the Supreme Court
as being the unauthorized practice of law before the Supreme Court made a finding
that Wallace had committed such an act. A reasonable inquiry by counsel would
have revealed the inadequacy of an unauthorized-practice-of-law claim against
Wallace in the absence of such a finding by the Supreme Court. See Ron Scheiderer
& Assoc., 81 Ohio St.3d at 97-98, 689 N.E.2d 552. In addition, as the trial court
pointed out, Shertok suffered no damage as a result of Wallace’s filing because the
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court had stricken the pleading well before Shertok tried to amend his complaint to
add an unauthorized-practice-of-law claim.
{¶38} Therefore, we agree with the trial court’s determination that the
attempt to amend Shertok’s complaint to add an unauthorized-practice-of-law claim
without first obtaining a finding by the Supreme Court that Wallace engaged in the
unauthorized practice of law in violation of R.C. 4705.07(A)(3) constituted frivolous
conduct under R.C. 2323.51(A)(2)(a)(ii) because it was not warranted under existing
law, cannot be supported by a good faith argument for an extension, modification, or
reversal of existing law, and cannot be supported by a good faith argument for the
establishment of new law.1 We overrule Shertok’s first assignment of error.
ii. Breach of Contract and
Breach of Implied Covenant of Good Faith and Fair Dealing
{¶39} Next, we address the defendants’ arguments that Shertok’s conduct in
filing claims for breach of contract, breach of the implied covenant of good faith and
fair dealing, negligent misrepresentation, and promissory estoppel constituted
frivolous conduct under R.C. 2323.51(A)(2)(a)(ii).
{¶40} The duty of good faith and fair dealing is integral to any contract, so
the breach of that duty is integral to a breach-of-contract claim. Hillier v. Fifth Third
Bank, 2d Dist. Miami No. 2019-CA-21, 2020-Ohio-3679, ¶ 56. “In essence, a claim
for breach of contract subsumes the accompanying claim for breach of the duty of
good faith and fair dealing.” Id., quoting Krukrubo v. Fifth Third Bank, 10th Dist.
Franklin No. 07AP-270, 2007-Ohio-7007, ¶ 19. Because a claim for breach of the
covenant of good faith and fair dealing is not a separate action from a breach-of-
1Because we have determined that the trial court properly found the conduct in attempting to
amend the complaint to be frivolous conduct as defined in R.C. 2323.51(A)(2)(a)(ii), we do not
reach the trial court’s finding of the same conduct to be frivolous under R.C. 2323.51(A)(2)(a)(i).
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contract claim, we address those claims together. See Richardson v. Clinical
Computing P.L.C., 2016-Ohio-8065, 69 N.E.3d 754, ¶ 39 (1st Dist.).
{¶41} The essential elements of a contract include an offer, acceptance,
contractual capacity, consideration, a manifestation of mutual assent, and legality of
object and of consideration. R & A Lawn Care, LLC v. Back, 1st Dist. Hamilton No.
C-160682, 2017-Ohio-4404, ¶ 16, citing Kostelnik v. Helper, 96 Ohio St.3d 1, 2002-
Ohio-2985, 770 N.E.2d 58, ¶ 16. The terms of an oral contract are often not as easily
discernable as the terms of a written contract. Id., citing Kodu v. Medarametia, 1st
Dist. Hamilton No. C-160319, 2016-Ohio-8020, ¶ 9. Thus, the terms of an oral
contract may be determined based on the parties’ words, deeds, acts, and silence. Id.{¶42} Shertok’s breach-of-contract claim alleged that the defendants
breached their contract with him by failing to sell the dental practice to him, contrary
to the defendants’ oral and written assertions. Shertok asserted that the defendants
breached their duty of good faith and fair dealing by failing to make honest
representations concerning the sale of the practice and by “recruiting, luring,
encouraging, or otherwise allowing [Shertok] to incur expense as it related to the sale
of Wallace Group.”
{¶43} Three letters of intent had been sent to Shertok, the final one expiring
by its terms on July 31, 2016. Then Shertok, through his lawyer, revised the final
letter of intent. Neither Wallace nor Shertok signed any of the letters of intent, each
of which contained the following language:
Binding Effect. This Letter does not constitute a binding agreement by
any party to purchase or sell the Assets but merely expresses the
parties’ good faith intent to discuss, determine the feasibility of and
negotiate the terms [of] the Transaction.
{¶44} Because the letters of intent were nonbinding by their own terms and
had not been signed by either party, there was no written contract between the
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parties. Even Shertok’s counsel acknowledged that no such written contract existed.
In his November 23, 2016 letter to Wallace, advising her to seek counsel, Campinha-
Bacote stated:
[S]uffice it to say that parties do not have to be in a contract with one
another to be subject to a lawsuit. A breach of contract (which is
probably what you are referring to) has nothing to do with the claims
we will be suing you and your practice for, because like you correctly
note, there was no written contract here. There are several laws which
govern the conduct of parties (without the need for a written contract),
as well as many other equitable claims such as promissory estoppel.
{¶45} According to Shertok, after he made an offer of $700,000, Conrad
communicated that Wallace agreed that it was okay to then start moving forward,
and Conrad sent Shertok a letter of intent indicating a $700,000 purchase price. It
may have been reasonable for Shertok to believe that he and Wallace had an oral
agreement on a $700,000 purchase price and that Wallace breached the agreement
when she indicated that she was increasing the price to $730,000. Although
Shertok’s claims for breach of contract and breach of the covenant of good faith and
fair dealing may not have survived a summary-judgment motion or been successful
at trial, we cannot say that they were legally groundless.
iii. Negligent Misrepresentation
{¶46} “The elements of negligent misrepresentation are as follows:
‘One who, in the course of his business, profession or employment, or
in any other transaction in which he has a pecuniary interest, supplies
false information for the guidance of others in their business
transactions, is subject to liability for pecuniary loss caused to them by
their justifiable reliance upon the information, if he fails to exercise
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reasonable care or competence in obtaining or communicating the
information.’ ”
Veterinary Dermatology, Inc. v. Bruner, 1st Dist. Hamilton No. C-040648, 2005-
Ohio-5552, ¶ 40. A claim for negligent misrepresentation requires an affirmative
false statement. Id. at ¶ 41.
{¶47} In his complaint, Shertok alleged that the defendants, directly or
through their agent/broker, failed to provide complete and accurate information to
him about the sale of their dental practice. Specifically, Shertok testified that when
Wallace mentioned that she was making improvements to the practice and trying to
bring in new doctors, he “believe[d] it was untrue that she was planning to sell me
the practice.” Whether or not Shertok’s negligent-misrepresentation claim would
have been successful, we cannot say that no reasonable lawyer would have brought
the claim.
iv. Promissory Estoppel
{¶48} A successful claim for promissory estoppel requires that “ ‘[t]he party
claiming the estoppel must have relied on conduct of an adversary in such a manner
as to change his position for the worse and that reliance must have been reasonable
in that the party claiming estoppel did not know and could not have known that its
adversary’s conduct was misleading.’ ” Olympic Holding Co., L.L.C. v. ACE Ltd., 122
Ohio St.3d 89, 2009-Ohio-2057, 909 N.E.2d 93, ¶ 39, quoting Shampton v.
Springboro, 98 Ohio St.3d 457, 2003-Ohio-1913, 786 N.E.2d 883, ¶ 34. “Thus,
promissory estoppel is an adequate remedy for a fraudulent oral promise or breach
of an oral promise, absent a signed agreement.” Id. at ¶ 40.
{¶49} In his complaint, Shertok alleged that the defendants made false
representations to him regarding the sale, and their intent to sell, their dental
practice. He asserted that he was duped into thinking the defendants were selling
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the practice and incurred significant cost and expense in relying on their
representations. Because Shertok allegedly relied on Wallace’s communications, he
may have reasonably believed that she intended to sell him the practice, and he
incurred expenses in doing so.
{¶50} We cannot conclude that no reasonable lawyer would have filed the
claims for breach of contract, breach of the covenant of good faith and fair dealing,
negligent misrepresentation, or promissory estoppel, so they were not legally
groundless under R.C. 2323.51(A)(2)(a)(ii). Therefore, we overrule the defendants’
sole assignment of error.
IV. Calculation of Fees
{¶51} In his second assignment of error, Shertok argues that the trial court
erred by awarding attorney fees without using the lodestar method. In his fourth
assignment of error, he argues that the court erred by awarding an unreasonable
amount of fees. Because both assignments of error relate to the court’s calculation of
a reasonable award of attorney fees, we address them together.
{¶52} Under R.C. 2323.51(B)(1), sanctions for frivolous conduct may include
reasonable attorney fees. 217 Williams, LLC, 1st Dist. Hamilton No. C-180101, 2019-
Ohio-2559, at ¶ 15. A trial court may make an award of attorney fees “against a
party, the party’s counsel of record, or both.” R.C. 2323.51(B)(4).
{¶53} “[T]here is a strong presumption that the reasonable hourly rate
multiplied by the number of hours worked, which is sometimes referred to as the
‘lodestar,’ is the proper amount for an attorney-fee award.” Phoenix Lighting Group,
L.L.C. v. Genlyte Thomas Group, L.L.C., Slip Opinion No. 2020-Ohio-1056, ¶ 19. A
reasonable hourly rate is the prevailing market rate in the community, taking into
consideration the complexity of the issues and the attorney’s experience. Id. at ¶ 11.
Although a trial court exercises broad discretion in applying the lodestar method, it
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must state the basis for the fee determination to allow for meaningful appellate
review. Calypso Asset Mgt., LLC, 2019-Ohio-2, 127 N.E.3d 507, at ¶ 29.
{¶54} At the February 2019 hearing, defense counsel testified to the work
expended on behalf of the defendants, about his own experience with protracted civil
litigation, and about the reasonableness of his rates and services. Shertok did not
cross-examine defense counsel or object to defense counsel’s testimony. Shertok
offered no expert testimony of his own regarding the reasonableness of the rates or
the hours spent. Nor did Shertok object to the admission of defense counsel’s
invoices or question the reasonableness of the hours expended or of the rates
charged.
{¶55} In its entry awarding attorney fees to the defendants, the trial court
noted that defense counsel submitted detailed and itemized invoices for legal
services, and that Shertok did not object to the reasonableness of defense counsel’s
fees or invoices. The court incorporated into its entry copies of defense counsel’s
invoices and the court’s own detailed notations on those invoices which reflected the
hourly rate and number of hours worked. Therefore, we are persuaded that the court
appropriately stated the basis for its use of the lodestar method in determining the
award of fees. Given the uncontroverted evidence presented, we cannot say that the
court abused its discretion in awarding the amount of fees that it determined were
related to Shertok’s frivolous conduct. We overrule Shertok’s second and fourth
assignments of error.
V. Shertok’s Failure to Object to Fees
{¶56} In his third assignment of error, Shertok argues that the trial court
erred by not allowing him to object to evidence of the defendants’ attorney fees. This
assertion is simply not supported by the record. Shertok was represented by counsel
at the February 2019 hearing and raised no objection to the evidence of the
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OHIO FIRST DISTRICT COURT OF APPEALS
defendants’ attorney fees or to the reasonableness of the fees. And Shertok’s counsel,
Campinha-Bacote, appeared at the May 2019 hearing, but did not attempt to
examine defense counsel.
{¶57} The trial court gave Shertok more than enough opportunity to object
to the evidence. We overrule Shertok’s third assignment of error.
VI. Testimony about Mediation
{¶58} In his fifth assignment of error, Shertok argues that the trial court
erred in relying on impermissible testimony at the February 2019 hearing from
defense counsel concerning a confidential mediation. He relies on R.C. 2710.03 and
2710.07 for the proposition that mediation communications are privileged and
confidential and generally inadmissible in evidence. Specifically, Shertok objects to
the following statement by defense counsel: “[B]ut it was almost as if it was a shake
down, Judge, because we were talking about * * *, a little bit more than * * *. Even
when we went to the mediation, they wanted * * * for a bill that was * * *?” However,
Shertok failed to object to the testimony at the hearing. He cannot complain on
appeal about an error he did not bring to the court’s attention at a time when the
error could have been avoided or corrected. Griffin v. Griffin, 1st Dist. Hamilton No.
C-180550, 2019-Ohio-5260, ¶ 27, quoting LeFort v. Century 21-Maitland Realty Co,
32 Ohio St.3d 121, 123, 512 N.E.2d 640 (1987). Moreover, given that the trial court
awarded the defendants only $2,200 of their claimed $48,000 attorney fees, Shertok
cannot demonstrate that the trial court considered, let alone relied on, defense
counsel’s statement in awarding fees to the defendants. We overrule Shertok’s fifth
assignment of error.
VII. Notice of the February Hearing
{¶59} In his sixth assignment of error, Shertok argues that the trial court
erred by “relying on the February 21, 2019 hearing, which violated [his]
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OHIO FIRST DISTRICT COURT OF APPEALS
constitutional rights.” He asserts that the court should not have relied on evidence
given in the February hearing because his attorney, Campinha-Bacote, did not
receive sufficient notice of the hearing.
{¶60} However, the record demonstrates that Campinha-Bacote did receive
sufficient notice of the February 21 hearing. Shertok testified that Campinha-Bacote
had apprised him of the February 21 hearing date in advance of the hearing and told
him that he would not be present at that hearing. Shertok also testified Campinha-
Bacote had spoken to Woloshin about a week or two before the February 21 hearing.
And Campinha-Bacote’s February 13 motion to withdraw indicated that he had
apprised Shertok of “all pending hearing dates.” The only pending hearing date at
that time was the February 21 hearing date.
{¶61} Campinha-Bacote testified that he received the court’s email notice of
the February 21 hearing, but said that he “did not access that until after the hearing.”
Campinha-Bacote admitted that he knew of the February 21 hearing before it
occurred, and that he failed to take steps to continue the matter or to otherwise
contact the court. The court asked Campinha-Bacote, “[Y]ou didn’t think to call in
and talk to [courtroom personnel] or email him or anything like that? Because we
are pretty lenient in here about that[.]” Campinha-Bacote replied that he should
have simply filed a motion for continuance and he did not.
{¶62} The record demonstrates that Campinha-Bacote received sufficient
notice of the February 21 hearing and that Shertok was represented by counsel at the
hearing. Consequently, Shertok has not demonstrated how the court’s hearing
violated his constitutional rights. We overrule Shertok’s sixth assignment of error.
IV. Conclusion
{¶63} Having overruled each of Shertok’s assignments of error and the
defendants’ sole assignment of error, we affirm the judgment of the trial court.
Judgment affirmed.
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ZAYAS, P.J., and CROUSE, J., concur.
Please note:
The court has recorded its own entry this date.
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