Greenspan v. Third Federal Savings & Loan Ass'n , 122 Ohio St. 3d 455 ( 2009 )

[Cite as Greenspan v. Third Fed. S. & L. Assn., 122 Ohio St.3d 455, 2009-Ohio-3508.]
GREENSPAN, APPELLEE, v. THIRD FEDERAL SAVINGS & LOAN
ASSOCIATION, APPELLANT.
[Cite as Greenspan v. Third Fed. S. & L. Assn., 122 Ohio St.3d 455, 2009-
Ohio-3508.]
Lawsuit seeking to recover for bank’s alleged unauthorized practice of law —
Document-preparation fee — A private right of action for the unauthorized
practice of law did not exist before September 15, 2004 — The Supreme
Court of Ohio has exclusive jurisdiction over the practice of law in Ohio,
including the unauthorized practice of law.
(No. 2008-1568 — Submitted June 2, 2009 — Decided July 23, 2009.)
APPEAL from the Court of Appeals for Cuyahoga County, No. 89850,
177 Ohio App.3d 372, 2008-Ohio-3528.
__________________
SYLLABUS OF THE COURT
1. A private right of action for the unauthorized practice of law did not exist
before September 15, 2004.
2. The Supreme Court of Ohio has exclusive jurisdiction over the practice of law
in Ohio, including the unauthorized practice of law.
__________________
O’CONNOR, J.
{¶ 1} This appeal calls upon the court to determine whether a private
cause of action existed for the unauthorized practice of law before R.C. 4705.07
was amended on September 15, 2004, to expressly allow a civil cause of action.
Because courts generally did not recognize a common-law cause of action for the
unauthorized practice of law prior to 2004, and because this court has exclusive
jurisdiction over the unauthorized practice of law, we hold that no such cause of
SUPREME COURT OF OHIO
action existed. We therefore reverse the judgment of the court of appeals and
reinstate the trial court’s order granting appellant Third Federal Savings & Loan
Association’s motion for judgment on the pleadings.
Relevant Background
{¶ 2} Appellee, Gary A. Greenspan, secured a $38,000 mortgage loan
from appellant, Third Federal Savings & Loan Association (“Third Federal”), in
2002. Third Federal charged Greenspan a $300 document-preparation fee in
connection with the loan. Greenspan later filed a putative class action in the
Cuyahoga County Court of Common Pleas seeking disgorgement of the
document-preparation fee and alleging common-law claims for (1) unjust
enrichment and (2) money had and received. Greenspan alleged that Third
Federal routinely charged customers a document-preparation fee for services
performed by nonattorney personnel in preparing or completing documents
relating to the issuance of mortgage loans, in violation of Ohio law. Greenspan
did not file a grievance against Third Federal with the Office of Disciplinary
Counsel or contact the local bar association about the matter.1
{¶ 3} Without issuing a written opinion, the trial court granted Third
Federal’s motion for judgment on the pleadings. In its journal entry granting
Third Federal’s motion, the trial court stated that prior to September 15, 2004,
there was no private right of action, either directly or collaterally, for the
unauthorized practice of law. Greenspan appealed the trial court’s judgment to
the Eighth District Court of Appeals.
{¶ 4} While Greenspan’s appeal was pending, the Eighth District
decided Crawford v. FirstMerit Mtge. Corp., Cuyahoga App. No. 89193, 2007-
Ohio-6074, 2007 WL 3379927, which presented issues nearly identical to those
1. The case does not require us to determine whether preparing mortgage documents by
nonattorney employees constitutes the unauthorized practice of law. Our holding is limited to
whether a private cause of action for the unauthorized practice of law existed before 2004.
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raised in Greenspan’s appeal. In Crawford, the trial court granted the defendant’s
motion for judgment on the pleadings, holding that the plaintiff’s claims were an
impermissible attempt to recover damages for the unauthorized practice of law.
Id., ¶ 14-15. The Eighth District affirmed, holding that the unauthorized practice
of law is within this court’s exclusive jurisdiction and that a person who claims to
have been harmed by conduct alleged to have constituted the unauthorized
practice of law must take his or her claim through the avenues prescribed by this
court. Id., ¶ 30. The court of appeals concluded that the plaintiff’s claims,
however styled, were an attempt to bring an action for the unauthorized practice
of law, and therefore, the trial court had properly granted judgment on the
pleadings. Id., ¶ 29.
{¶ 5} Despite the holding in Crawford, a different panel of the Eighth
District reversed the trial court’s grant of judgment on the pleadings in the case at
bar. Greenspan v. Third Fed. S. & L., 177 Ohio App.3d 372, 2008-Ohio-3528,
894 N.E.2d 1250. The court held that because the unauthorized practice of law
was available as a defense to breach-of-contract and fee-collection actions, it
“inexorably” followed that it was also available as an affirmative cause of action.
Id. at ¶ 20. The appellate court acknowledged that its decision conflicted with
Crawford, but declared that Crawford was “simply in error.” Greenspan at ¶ 26.
Despite this court’s mandate in In re J.J., 111 Ohio St.3d 205, 2006-Ohio-5484,
855 N.E.2d 851, at ¶ 18, and its progeny, the Eighth District did not convene en
banc to settle the conflict between the two decisions.
{¶ 6} The case is now before us on our acceptance of a discretionary
appeal. Greenspan v. Third Fed. S. & L., 120 Ohio St.3d 1416, 2008-Ohio-6166,
897 N.E.2d 651.
Analysis
{¶ 7} Third Federal argues that the court of appeals erred in holding that
because the unauthorized practice of law may be an affirmative defense to breach-
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of-contract and fee-collection actions, it “inexorably” gives rise to a private cause
of action. Third Federal asserts that prior to September 2004, no common-law
cause of action in Ohio permitted a claim for the unauthorized practice of law. It
also claims that no such cause of action could have existed because this court has
exclusive jurisdiction over the regulation of attorneys, including the unauthorized
practice of law. Thus, according to Third Federal, a private cause of action such
as that asserted by Greenspan would necessarily require trial courts to make
findings regarding the unauthorized practice of law, thereby invading the
exclusive province of this court.
{¶ 8} Greenspan argues that courts have long recognized common-law
claims for unjust enrichment and money had and received to recover fees charged
by nonlicensed persons for services that must be performed by a licensed
professional. Greenspan also contends that because the unauthorized practice of
law has been recognized by courts as an affirmative defense in fee-collection
actions for services performed by nonlawyers, it follows that the unauthorized
practice of law provides a cause of action for recovery of fees already paid for
legal services rendered by nonattorneys. Finally, Greenspan argues that trial
courts can decide civil cases involving the unauthorized practice of law without
improperly invading the exclusive jurisdiction of this court.
No Common-Law Private Cause of Action Existed Prior to 2004
A
{¶ 9} As an initial matter, the court of appeals held that Greenspan’s
action did not make a direct claim for the unauthorized practice of law, but rather,
asserted common-law claims for unjust enrichment and money had and received.
Greenspan, 177 Ohio App.3d 372, 2008-Ohio-3528, 894 N.E.2d 1250, ¶ 24. We
disagree. Although Greenspan styled his claims as unjust enrichment and money
had and received, ultimately, he sought to recover for Third Federal’s purported
unauthorized practice of law. The fact that Greenspan creatively framed the
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action as one for unjust enrichment and money had and received does not alter the
essential nature of the action. “As this court has long recognized, the substance of
the subject matter of a case is determinative, not the form under which a party
chooses to bring it.” Motorists Mut. Ins. Co. v. Huron Rd. Hosp. (1995), 73 Ohio
St.3d 391, 394, 653 N.E.2d 235. Accord Love v. Port Clinton (1988), 37 Ohio
St.3d 98, 99, 524 N.E.2d 166, quoting Hambleton v. R.G. Barry Corp. (1984), 12
Ohio St.3d 179, 183, 12 OBR 246, 465 N.E.2d 1298 (“ ‘In determining which
limitation period will apply, courts must look to the actual nature or subject matter
of the case, rather than to the form in which the action is pleaded. The grounds
for bringing the action are the determinative factors, the form is immaterial’ ”).
{¶ 10} The unauthorized practice of law, as defined by this court, “ ‘is the
rendering of legal services for another by any person not admitted to practice in
Ohio under Rule I and not granted active status under Rule VI, or certified under
Rule II, Rule IX, or Rule XI of the Supreme Court Rules for the Government of
the Bar of Ohio.’ ” Lorain Cty. Bar Assn. v. Kocak, 121 Ohio St.3d 396, 2009-
Ohio-1430, 904 N.E.2d 885, ¶ 17, quoting Gov.Bar R. VII(2)(A).
{¶ 11} Greenspan’s complaint alleges that Third Federal charged him for
legal work performed by nonattorney employees. However styled, Greenspan
seeks to recover for Third Federal’s purported unauthorized practice of law.
B
{¶ 12} Prior to 2004, there was no statutory cause of action for the
unauthorized practice of law. R.C. Chapter 4705 prohibited nonattorneys from
rendering legal services, but did not provide a civil remedy for violation of the
statute. On September 15, 2004, the legislature amended R.C. 4705.07. R.C.
4705.07(C)(2) now expressly allows civil recovery for actual damages caused by
the unauthorized practice of law. Because the events giving rise to this action
occurred before the 2004 amendment, this case turns on whether a common-law
right of action for the unauthorized practice of law existed prior to 2004.
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{¶ 13} Greenspan cites a myriad of cases from various state and federal
courts for the proposition that courts have long recognized common-law claims
for unjust enrichment and money had and received when a person without a
license performs a service for which a license is required.2 But the caselaw upon
which Greenspan relies almost exclusively relates to architectural and engineering
services. Caselaw acknowledging a common-law claim for recovery of fees
charged by unlicensed architects and engineers does not establish the existence of
a common-law claim for the unauthorized practice of law.
{¶ 14} Greenspan also points to three cases involving legal services
rendered by nonattorneys in support of his argument: Middleton & Assoc. v. Weiss
(June 19, 1997), Cuyahoga App. No. 71416, 1997 WL 337616; Med Controls,
Inc. v. Hopkins (1989), 61 Ohio App.3d 497, 573 N.E.2d 154; and Cocon, Inc. v.
Botnick Bldg. Co. (1989), 59 Ohio App.3d 42, 570 N.E.2d 303. However, none
of these cases recognizes an affirmative common-law claim for either unjust
enrichment or money had and received arising from the unauthorized practice of
law. Instead, the cases involve breach-of-contract and fee-collection actions in
which the court allowed defendants to raise the unauthorized practice of law as a
defense to the plaintiffs’ attempts to recover fees for services rendered by
nonattorneys.
2. McClennan v. Irvin & Co. (Jan. 30, 1978), Cuyahoga App. No. 36798, 1978 WL 217728(architect); Diversified Property Corp v. Winters Natl. Bank & Trust Co. (1967), 13 Ohio App.2d
190, 42 O.O.2d 307, 234 N.E.2d 608 (securities broker); Elephant Lumber Co. v. Johnson (1964),
120 Ohio App. 266, 29 O.O.2d 91, 202 N.E.2d 189 (architect); Fanning v. College of Steubenville
(1961), 31 O.O.2d 495, 197 N.E.2d 422 (architect); McGill v. Carlos (1947), 39 O.O. 502, 81
N.E.2d 726 (architect); Hedla v. McCool (C.A.9,1973), 476 F.2d 1223 (architect); Food Mgt., Inc.
v. Blue Ribbon Beef Pack, Inc. (C.A.8, 1969), 413 F.2d 716 (architect/engineer); Bauman &
Vogel, C.P.A. v. Del Vecchio (E.D.Pa.,1976), 423 F.Supp. 1041 (certified public accountant);
Markus & Nocka v. Julian Goodrich Architects, Inc. (1969), 127 Vt. 404, 250 A.2d 739(architect); S. Metal Treating Co. v. Goodner (1960), 271 Ala. 510, 125 So.2d 268 (engineer);
Johnson v. Delane (1955), 77 Idaho 172, 290 P.2d 213 (engineer); F.F. Bollinger Co. v. Widmann
Brewing Corp. (1940), 339 Pa. 289, 14 A.2d 81 (architect/engineer); Keenan v. Tuma (1926), 240
Ill. App. 448 (architect); Douglas v. Smulski (1957), 20 Conn.Supp. 236, 131 A.2d 225 (architect).
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January Term, 2009
{¶ 15} Contrary to the Eighth District’s holding, it does not “inexorably”
follow that because the unauthorized practice of law may be an affirmative
defense in breach-of-contract and fee-collection actions, an affirmative cause of
action for the unauthorized practice of law must exist. Greenspan cites no
caselaw, and this court is not aware of any, that recognizes an affirmative
common-law cause of action for the unauthorized practice of law.
C
{¶ 16} In addition to the lack of caselaw recognizing a common-law claim
for the unauthorized practice of law, Greenspan simply cannot escape the fact that
the Supreme Court of Ohio has exclusive jurisdiction over the practice of law in
Ohio, including the unauthorized practice of law. Section 2(B)(1)(g), Article IV
of the Ohio Constitution confers on this court “exclusive power to regulate,
control, and define the practice of law in Ohio.” Cleveland Bar Assn. v.
CompManagement, Inc., 104 Ohio St.3d 168, 2004-Ohio-6506, 818 N.E.2d 1181,
¶ 39. “Our jurisdiction thus extends to regulating the unauthorized practice of law
* * *.” Lorain Cty. Bar Assn. v. Kocak, 121 Ohio St.3d 396, 2009-Ohio-1430,
904 N.E.2d 885, ¶ 16.
{¶ 17} In light of our exclusive jurisdiction over the unauthorized practice
of law, this court established the Board on the Unauthorized Practice of Law to
hear complaints regarding the unauthorized practice of law. Gov.Bar R. VII sets
forth the procedures that must be followed in the investigation and adjudication of
such claims.
{¶ 18} Greenspan argues that because trial courts have “original
jurisdiction in all civil cases” pursuant to R.C. 2305.01, they must have
jurisdiction over civil actions arising from claims related to the unauthorized
practice of law. We are not persuaded by that argument. A common-law claim
for the unauthorized practice of law would require trial courts to make
determinations explicitly reserved for this court.
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{¶ 19} Our holding is consistent with the legislature’s 2004 amendment to
R.C. 4705.07. In enacting a statutory cause of action for the unauthorized
practice of law, the General Assembly avoided invading this court’s exclusive
jurisdiction over the practice of law by creating a statutory scheme under which a
claimant may commence a civil action for the unauthorized practice of law only
“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.”
R.C. 4705.07(C)(2). Moreover, the statute provides that “[t]he court in which the
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.” Id. Thus, although
trial courts will preside over actions brought pursuant to R.C. 4705.07(C)(2), all
determinations regarding the unauthorized practice of law remain within this
court’s exclusive jurisdiction.
D
{¶ 20} Because courts did not recognize a common-law cause of action
for the unauthorized practice of law, and because such a cause would invade this
court’s exclusive jurisdiction over the practice of law, a private right of action for
the unauthorized practice of law did not exist before September 15, 2004.
Appellate Courts Must Convene En Banc to Resolve Intradistrict Conflicts
{¶ 21} As we reiterated recently, “ ‘[a]ppellate courts are duty-bound to
resolve conflicts within their respective appellate districts through en banc
proceedings.’ ” McFadden v. Cleveland State Univ., 120 Ohio St.3d 54, 2008-
Ohio-4914, 896 N.E.2d 672, ¶ 7, quoting In re J.J., 111 Ohio St.3d 205, 2006-
Ohio-5484, 855 N.E.2d 851, paragraph two of the syllabus; See In re C.F., 113
Ohio St.3d 73, 2007-Ohio-1104, 862 N.E.2d 816, ¶ 40 (“appellate courts should
resolve internal conflicts through en banc proceedings before initiating a
procedure to certify a conflict between districts”).
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January Term, 2009
{¶ 22} Courts of appeals have discretion to determine whether an
intradistrict conflict exists. However, if the judges of a court of appeals determine
that two or more of the court’s decisions are in conflict, they must convene en
banc to resolve the conflict. McFadden, 120 Ohio St.3d 54, 2008-Ohio-4914, 896
N.E.2d 672, ¶ 19. An en banc proceeding is necessary in such situations to
promote uniformity, finality, and predictability within appellate districts. See
Textile Mills Secs. Corp. v. Commr. of Internal Revenue (1941), 314 U.S. 326,
333-335, 62 S.Ct. 272, 86 L.Ed. 249.
{¶ 23} The Eighth District acknowledged that this case involves facts and
arguments that are virtually identical to those in Crawford and that its decision in
this case conflicts with Crawford. Greenspan v. Third Fed. S. & L., 177 Ohio
App.3d 372, 2008-Ohio-3528, 894 N.E.2d 1250, ¶ 26. However, the court of
appeals declined to convene en banc to resolve the conflict, instead stating that the
holding in Crawford was “simply in error.” Id.{¶ 24} Although the Eighth District erred by not convening en banc to
resolve the intradistrict conflict, given our disposition, we need not remand the
cause for additional proceedings. We note, however, that courts of appeals must
heed the rule of In re J.J. and its progeny.
Conclusion
{¶ 25} Because courts did not recognize a common-law cause of action
for the unauthorized practice of law prior to 2004, and because this court has
exclusive jurisdiction over the unauthorized practice of law, no private cause of
action existed for the unauthorized practice of law before the amendment of R.C.
4705.07 on September 15, 2004. We therefore reverse the judgment of the court
of appeals and reinstate the trial court’s order granting Third Federal’s motion for
judgment on the pleadings.
Judgment reversed.
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SUPREME COURT OF OHIO
MOYER, C.J., and LUNDBERG STRATTON, O’DONNELL, LANZINGER, and
CUPP, JJ., concur.
PFEIFER, J., dissents and would affirm the judgment of the court of
appeals.
__________________
Mark Schlachet; Cohen & Malad, L.L.P., Richard E. Shevitz, and Vess
Miller; and Arend J. Abel, for appellee.
Baker & Hostetler, L.L.P., John D. Parker, Thomas D. Warren, Brett A.
Wall, and Karl Fanter, for appellant.
______________________
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