Natl. City Bank v. Semco, Inc. , 2011 Ohio 172 ( 2011 )

[Cite as Natl. City Bank v. Semco, Inc., 2011-Ohio-172.]
IN THE COURT OF APPEALS OF OHIO
THIRD APPELLATE DISTRICT
MARION COUNTY
NATIONAL CITY BANK,
PLAINTIFF-APPELLEE, CASE NO. 9-10-42
v.
SEMCO INC., ET AL., OPINION
DEFENDANTS-APPELLANTS.
Appeal from Marion County Common Pleas Court
Trial Court No. 2006-CV-0711
Judgment Reversed and Cause Remanded
Date of Decision: January 18, 2011
APPEARANCES:
J.C. Ratliff for Appellants
Yvette A. Cox for Appellee
Case No. 9-10-42
PRESTON, J.
{¶1} Defendants-appellants, Semco, Inc., and Leonard and Florence
Furman, appeal the judgment of the Marion County Court of Common Pleas,
which ordered the payment of the receiver-appellee’s attorneys’ fees in the amount
of $65,926.87. For the reasons that follow, we reverse.
{¶2} This matter stems from a promissory note between plaintiff National
City Bank and Semco, Inc. (“Semco”), and Leonard and Florence Furman (“the
Furmans”). On September 15, 2006, National City Bank filed a complaint against
Semco and the Furmans alleging that a promissory note executed by Semco on
October 6, 2004, was due and unpaid in the principal amount of $993,392.87, plus
interest, and that the Furmans had executed a commercial guaranty agreement
guaranteeing the payment of the promissory note. The trial court entered
judgment on September 15, 2006, in favor of National City Bank and against
Semco and the Furmans in the amount of $993,392.87, plus interest.
{¶3} Subsequently, National City Bank filed a motion for the appointment
of a receiver, and on September 22, 2006, the trial court granted the motion and
appointed appellee, Bruce Lazear (“Lazear”), as receiver. In this order, the trial
court enumerated several powers and responsibilities of the receiver, including the
power,
[t]o institute ancillary proceedings in this State or other states
and countries as are necessary to preserve and protect the
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receivership estate, and the Receiver may engage the services of
legal counsel, if necessary, without further application to this
Court * * *. Upon application to and approval by this Court,
the Receiver may pay for such services from the funds of the
receivership estate[.]
(Order Appt. Receiver, 9/22/06, p. 4, ¶ 6.) This order also established Lazear’s
rate of pay at $300 per hour and permitted him to “utilize other members,
associates and employees of his firm, Lazear Capital Partners, Ltd., to assist him
in his duties and they shall be compensated at their respective customary hourly
rates[.]” (id. at p. 4, ¶ 7.)
{¶4} On September 27, 2006, Semco and the Furmans (collectively
referred to hereinafter as “Semco”) filed a motion to set aside the order appointing
the receiver. A hearing on the motion was held on October 30, 2006, and seven
witnesses were presented before the trial court. On November 1, 2006, the trial
court issued an order and judgment entry denying the motion and declaring that
“the Receiver shall remain in place pursuant to the Court’s Order Appointing
Receiver entered on September 22, 2006 until further order of the Court.”
{¶5} In November of 2006, Semco was able to obtain new financing and
satisfied its judgment with National City Bank. Once this was accomplished,
Lazear returned custody and control of Semco’s assets. On December 1, 2006,
Semco filed a motion for Lazear to remit the fees that he paid himself and his
associates from Semco’s assets and requested leave to pursue Lazear for damages
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and an accounting. In this motion, Semco alleged that the receiver’s fees were
excessive. The trial court then set a briefing schedule for this issue. On December
13, 2006, National City Bank and Lazear filed a motion to extend the briefing
schedule, citing as their reasons the need for them to depose witnesses and to
obtain and analyze extensive documentation regarding Semco’s business
operations in order to fully respond to Semco’s motion to remit fees and for leave
to pursue the receiver for damages. This extension was granted. A second
extension was requested, this time on behalf of all of the parties due to a desire for
additional discovery on the matter. This extension was also granted.
{¶6} Prior to the briefing of this issue, Semco filed a motion to disqualify
counsel for National City Bank and Lazear based upon a conflict of interest as the
same attorneys represented both the bank and Lazear. Lazear responded to this
motion on March 26, 2007. Semco sought leave to file a reply to Lazear’s
response. Lazear filed a memorandum in opposition to this request, but the trial
court granted Semco’s request to file a reply. Semco then filed a reply to the
bank’s and Lazear’s response. On October 11, 2007, the trial court overruled
Semco’s motion to disqualify counsel for Lazear and gave Lazear until October
29, 2007, to file a response to Semco’s motion to remit fees.
{¶7} Lazear filed a third request to extend the briefing schedule on the
issue of the remittance of fees. This request was granted, but an additional request
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to extend the briefing schedule was later made by all of the parties, which was also
granted. On February 22, 2008, Semco filed an amendment to its original motion
and deleted the portion of the motion seeking leave to pursue the receiver for
damages.1 On July 15, 2008, Semco filed a memorandum in support of its motion,
and Lazear responded by filing a motion in opposition and filing a motion for
three orders: (1) approving his compensation, (2) approving his inventory and final
report, and (3) discharging, terminating, and prohibiting actions against him and
his agents without leave of court.
{¶8} On January 20, 2009, the trial court issued a judgment entry finding
that the fees Lazear and his associates had charged of $300 per hour for each of
them were not reasonable, and as a result, the trial court reduced Lazear’s
compensation as receiver to $150 per hour and his associates’ compensation to
$75 per hour, resulting in a total compensation of $28,698.31. Accordingly, the
trial court ordered Lazear to return $75,110.81 to Semco.
{¶9} Lazear appealed this judgment to this Court. See Nat’l. City Bank v.
Semco, Inc., 183 Ohio App.3d 229, 2009-Ohio-3319, 916 N.E.2d 857 (“Semco I”).
In Semco I, we held that the trial court abused its discretion when it reduced the
amount of Lazear’s compensation to $150 per hour when its original order set
1
This amendment specifically reserved the right of Semco to further pursue the deleted portion in the
future but noted that it was amending the original motion “[f]or the purpose of narrowing the issues in this
case and allowing these proceedings to move to a more expeditious and less costly conclusion[.]”
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Lazear’s compensation at $300 per hour, this amount was not objected to by the
parties, and “the trial court failed to give sufficient reasons for utilizing its
discretion and departing from its originally prescribed hourly rate[.]” Id. at ¶¶ 10-
11. However, we affirmed the trial court’s decision to reduce the hourly rate
charged by Lazear for his associates’ time from $300 per hour to $75 per hour,
finding that the issues we found with the reduction in Lazear’s rate did not exist
with respect to his associates. Id. at ¶ 13. As a result, we remanded the matter to
the trial court to re-calculate the amount of compensation based upon an hourly
rate for Lazear’s services of $300 per hour. Id. at ¶¶ 12, 16.
{¶10} We issued our decision in Semco I, on July 6, 2009. On September
16, 2009, the trial court assigned the case for a conference in October. On
November 24, 2009, Lazear filed an application for the approval of fees and
expenses of his counsel. In support of this application, Lazear cited to page 4, ¶ 6
of the trial court’s September 22, 2006 order appointing him as the receiver and
granting him certain powers and responsibilities. Additionally, Lazear attached
invoices from three different law firms, totaling $115,833.62: (1) Bailey Cavalieri,
LLC, in the amount of $101,188.25; (2) Bartram & Bartram, in the amount of
$1,913.22; and (3) Baker & Hostetler, LLP, in the amount of $12,732.15.
Thereafter, Semco filed a motion for a hearing on the issue of attorneys’ fees and a
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response to the application for the approval of attorneys’ fees on December 15,
2009. Lazear then filed a reply to Semco’s response.
{¶11} On February 3, 2010, a hearing was held on the application for
attorneys’ fees. At this hearing, neither side presented any evidence. Rather,
Yvette Cox, an attorney with Bailey Cavalieri, LLC, who represented Lazear
through much of this litigation, made a professional representation to the trial
court that the exhibits attached to the application for attorneys’ fees regarding
Bailey Cavalieri, LLC, were kept in the ordinary course of business and were true,
correct, and complete. She also submitted the affidavit of Gregory Flax, an
attorney with Baker & Hostetler LLP, who represented Lazear during the appeal in
Semco I, who attested that the exhibits attached to Lazear’s application for
attorneys’ fees were true and accurate copies of his firm’s invoices for services
rendered in connection with its representation of Lazear, that these invoices
reflected the actual and necessary work performed by his firm in its representation
of Lazear, and that the rates reflected in those invoices were the usual and
customary rates charged by his firm for those services.2 Counsel for Lazear also
2
At the hearing, counsel for Lazear stated “before the Court today is the Affidavit of Gregory R. Flax who
is with the law firm of Baker and Hostettler out of the Columbus office. That law firm handled
representation of the receiver during the receiver’s appeal of the fee order.” (Attorneys’ Fees Hrg., 2/3/10,
p. 2.) However, the trial court record does not contain any such affidavit. Gregory Flax’s affidavit, dated
February 1, 2010, was provided to this Court as Exhibit G in Lazear’s second volume of his appendix to his
appellate brief. Notably, at the hearing, neither the trial court nor counsel for Semco disputed Lazear’s
counsel’s representation that the trial court had this affidavit before it. Further, Semco has not disputed in
its original brief or reply brief to this Court that this affidavit was before the trial court at the time of the
hearing. Thus, we will consider this affidavit for purposes of this appeal but caution parties in the future to
ensure that any records that they may want this Court to consider are properly made a part of the record.
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made the professional representation that the exhibits attached to the application
regarding the fees of Attorney John Bartram of Bartram & Bartram, who served as
local counsel for Lazear, fairly and accurately represented the time that he
expended as co-counsel for Lazear.3
{¶12} At the conclusion of counsel’s representations, counsel for Semco
made a motion to the court to dismiss the application because Lazear was not
present and presented no evidence in support of his application. Counsel then
proceeded to provide oral arguments as to why the application for fees should be
denied. After counsel for both sides were given the further opportunity to present
arguments in support of their respective positions, the trial court took the matter
under advisement.
{¶13} On May 14, 2010, the trial court issued its decision on the matter of
the re-calculation of Lazear’s compensation as receiver and the issue of attorneys’
fees. The trial court found that the total amount of compensation to Lazear Capital
Partners Ltd. should have been $33,385.81, which resulted in a credit balance due
to Semco of $70,423.31.
{¶14} The trial court further found that “some compensation to the three
law firms connected with the receiver’s representation is in order.” (Judg. Ent.,
5/14/10, p. 2.) The trial court noted that it had no independent testimony from a
3
Mr. Bartram was also present at this hearing but did not provide any testimony or professional statement
to the court.
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disinterested practicing attorney that the amount of hours and hourly rates charged
were reasonable and necessary under the circumstances. Thus, the court
concluded that it was “left to its own calculation of a reasonable number of hours
for the work involved as well as the hourly rate.” (id.) The court then determined
that the rate of $175 charged by Mr. Bartram was an average and “somewhat
prevailing rate among local attorneys.” The trial court found that the total
requested by Bartram & Bartram was reasonable and granted the request. The
court further found that the number of hours expended by Baker & Hostetler, LLP,
for its appellate work was reasonable but that the rate was to be calculated at $175
per hour, for a total amount of fees and expenses of $9,180.90.4 Lastly, the trial
court determined that “in the absence of some independent testimony from a
disinterested witness” the nearly 400 hours expended by the firm of Bailey
Cavalieri, LLC, listed in its invoices was excessive but that the firm should be
compensated for 300 hours of work at a rate of $175 per hour rather than the $220-
$465 per hour reflected in those invoices, for a total amount of fees and expenses
of $54,832.75. (id. at p. 3.) In light of these findings, the trial court determined
that the total due to the attorneys for Lazear was $65,926.87. The court then offset
4
Notably, the invoices submitted by Baker & Hostetler LLP did not provide an hourly rate for the services
rendered by a particular attorney. Rather, the invoices listed the number of hours expended for various
time periods by a particular attorney and an aggregate fee total for the relevant time period. These invoices
did, however, itemize the firm’s expenses and separated these amounts from the attorneys’ fees.
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that amount from the total owed to Semco by Lazear and ordered that Lazear
reimburse Semco $4,496.44.
{¶15} Semco now appeals raising two assignments of error for our review.
As these assignments of error are interrelated, we elect to address them together.
ASSIGNMENT OF ERROR NO. I
THE TRIAL COURT ERRED AND ABUSED ITS
DISCRETION IN AWARDING ATTORNEY FEES WHEN
THE FEES WERE ALLEGEDLY INCURRED BY THE
RECEIVER FOR HIS OWN PERSONAL INTERESTS AND
WERE NOT INCURRED FOR THE BENEFIT OF
PRESERVING OR PROTECTING THE RECEIVERSHIP
ESTATE.
ASSIGNMENT OF ERROR NO. II
THE TRIAL COURT ERRED AND ABUSED ITS
DISCRETION IN AWARDING ATTORNEY FEES ABSENT
ANY EVIDENCE OF THE REASONABLENESS AND
NECESSITY OF THE FEES, INCLUDING ANY EVIDENCE
OFFERED BY AFFIDAVIT OR EXPERT TESTIMONY.
{¶16} In its two assignments of error, Semco asserts that the trial court
erred in awarding attorneys’ fees because (1) the fees were not incurred for the
benefit of preserving or protecting the receivership estate but were incurred for the
personal interest of the receiver;5 and (2) Lazear failed to present any evidence or
5
In his brief to this Court, Lazear asserts that Semco failed to raise this issue to the trial court. However,
upon reviewing the record, including the transcript of the hearing in this matter, we disagree. Although
Semco did not state this issue in precisely the same terms as it did in its brief to this Court, Semco
continuously maintained that Lazear engaged counsel after the receivership was completed and to defend
his actions that went beyond the scope of the receivership. We find that this sufficiently raised the issue of
whether legal fees were incurred to benefit the receivership estate or for Lazear’s personal interests.
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the affidavit required by Marion County Local Rule 11.07 to show the
reasonableness or necessity of the requested fees.
{¶17} As we noted in Semco I, “[t]he primary purpose of a receiver is to
carry out the orders of the respective appointing court, which has the power ‘to
exercise its sound discretion to limit or expand a receiver’s powers as it deems
appropriate.’” Semco, 2009-Ohio-3319, at ¶ 8, quoting State ex rel. Celebrezze v.
Gibbs (1991), 60 Ohio St.3d 69, 74, 573 N.E.2d 62. Accordingly, “a reviewing
court must not disturb a trial court’s judgment with regard to receivers absent an
abuse of discretion.” Id. An abuse of discretion is more than an error of law;
rather, it suggests that the trial court’s decision is unreasonable, arbitrary, or
unconscionable. Blakemore v. Blakemore (1983), 5 Ohio St.3d 217, 219, 450
N.E.2d 1140. After a review of the record and based on the circumstances of this
case, we find that the trial court abused its discretion in awarding Lazear’s
attorneys’ fees.
{¶18} First, Lazear’s reliance upon the portion of the trial court’s order
appointing him receiver that states he may engage the services of legal counsel is
misplaced. Lazear correctly notes that he was given the power to engage the
services of legal counsel, if necessary, without further application to the trial court
and that upon application to and approval by the trial court, Lazear could pay for
such services from the funds of the receivership estate. However, this power must
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be put into context. More specifically, this power is granted in conjunction with
the power to institute ancillary proceedings as are necessary to preserve and
protect the receivership estate. Thus, the power to engage the services of legal
counsel was given to Lazear as an aid to assist him in preserving and protecting
the receivership estate.
{¶19} There is no dispute that the receivership was of a very short duration,
the assets of the estate having been returned to Semco in less than two months.6
Likewise, the parties agree that Lazear did not engage the services of counsel
during the time of the receivership because he did not believe such services were
necessary. In fact, during the hearing on the matter of attorneys’ fees, counsel for
Lazear stated that Lazear “had no intent of engaging counsel in this case until
December 1, 2006, after the assets had been returned to Semco.” (Attorneys’ Fees
Hrg., 2/3/10, p. 3.) Lazear engaged the services of counsel when Semco filed its
motion to remit the receiver’s fees and to pursue damages and an accounting from
the receiver. Thus, Lazear presented no evidence that legal counsel was obtained
to assist him in preserving and protecting the receivership estate. To the contrary,
the record demonstrates that counsel was obtained to assist in preserving and
protecting Lazear’s private interests.
6
During the hearing on Lazear’s application for the approval of attorneys’ fees and expenses, counsel for
Lazear stated that the receivership “was concluded in – what I think it’s probably a record, 52 days.”
(Attorneys’ Fees Hrg., 2/3/10, p. 2.)
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{¶20} Nevertheless, Lazear asserts that much of the cost associated with
his representation involved the allegations by Semco that he engaged in some sort
of wrongdoing while acting as receiver rather than whether he properly charged
$300 per hour for his and his associates’ services. Thus, Lazear maintains that the
fees were a necessary part of the receivership. Once again, we disagree.
{¶21} “[T]he general test of the obligation [sic] of a court to pay counsel
for a receiver is that the services to be performed are necessary to produce,
preserve or protect a fund which has, or may be, brought into the hands of the
receiver and that such payment is to the interest of the receivership.” Liberty
Folder Co. v. Anderson (1949), 55 Ohio Law Abs. 268, 89 N.E.2d 500, 501. The
allegations of possible wrongdoing were against Lazear personally and had
nothing to do with him protecting and preserving the receivership estate. If
anything, these allegations were that he did not protect and preserve the
receivership estate, which was the purpose of his appointment.
{¶22} Furthermore, the descriptions provided in the invoices of Bailey
Cavalieri, LLC, do not specify what time was spent on which issue, i.e., the issue
of fees or the issue of wrongdoing, and the trial court made no such distinction in
its award of attorneys’ fees. Semco also withdrew the portion of its motion related
to pursuing a damages claim against Lazear for possible wrongdoing on February
22, 2008, yet numerous hours and thousands of dollars in legal fees were charged
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by Bailey Cavalieri, LLC, long after this date. Therefore, even if we were to find
that the hours charged by the attorneys in providing legal services to Lazear in
regards to the actions he took as a receiver were properly considered expenses of
the receivership, which we expressly decline to do, any representation that was
provided after this portion of the motion was withdrawn were not properly
considered expenses of the receivership.
{¶23} As to the fees of Baker & Hostetler, LLP, its representation of
Lazear was limited solely to the appeal of the trial court’s decision to reduce the
hourly rate charged by Lazear and his associates and in no way involved
allegations of wrongdoing. This portion of the litigation was entirely for the
pecuniary benefit of Lazear and his associates, not for the preservation and
protection of the receivership estate. Accordingly, an award of attorneys’ fees for
this representation was improper.
{¶24} The same is true for much of Bartram & Bartram’s representation.
In particular, of the ten dates of activity provided in the first invoice, seven of
them occurred after Semco withdrew the portion of its motion regarding its request
for leave to pursue Lazear for damages. In addition, this invoice does not provide
the name of the client for whom services were rendered, does not specify the
amount of time expended on each item of activity, and does not differentiate
between the issue of receiver’s fees and the allegations of wrong doing. Further,
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the second invoice for Bartram & Bartram’s fees are wholly for activities relating
to the appeal of the trial court’s January 2009 judgment on the remittance of fees.
As with the first invoice, this invoice does not provide the name of the client and
does not specify the amount of time expended on each activity. In fact, one
description of activity simply states, “[n]umerous telephone conferences between
February 2, 2009 and February 18, 2009[,]” and does not break those down into
any amounts of time. Thus, there is nothing in the record to evidence that these
charges were properly assessed to the receivership estate because they were
incurred for its protection or preservation.
{¶25} In short, the trial court had no evidence before it to conclude that the
services performed by counsel were necessary to produce, preserve, or protect a
fund brought into the hands of the receiver or that payment of counsel’s fees was
to the interest of the receivership estate. Rather, the record reflects that these
services were for the personal benefit of Lazear and his associates.
{¶26} Second, Ohio adheres to the “American Rule,” which “requires that
each party involved in litigation pay his or her own attorney fees in most
circumstances.” McConnell v. Hunt Sports Ent. (1999), 132 Ohio App.3d 657,
699, 725 N.E.2d 1193; Sorin v. Bd. of Edn. of Warrensville Hts. School Dist.
(1976), 46 Ohio St.2d 177, 179, 347 N.E.2d 527. Because these fees were not
incurred for the protection or preservation of the receivership estate but for the
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personal interests of Lazear and his associates and, hence, were not properly
assessed as an expense of the receivership, in order to otherwise award attorneys’
fees, the court had to rely upon “statutory authorization or upon a finding of
conduct which amounts to bad faith.” Vance v. Roedersheimer, 64 Ohio St.3d
552, 556, 1992-Ohio-24, 597 N.E.2d 153, citing e.g., Sorin, supra; State ex rel.
Durkin v. Ungaro (1988), 39 Ohio St.3d 191, 529 N.E.2d 1268.
{¶27} Lazear did not provide any statutory authority to the trial court or to
this Court for the awarding of attorney’s fees. In addition, no evidence was
presented to the trial court to establish any bad faith conduct on the part of Semco.
To the contrary, the record reveals that Semco challenged the fees charged by
Lazear and his associates and requested that Lazear be ordered to return those
monies to Semco. The trial court agreed with Semco and ordered the return of
$75,110.81 to Semco. While this Court ultimately concluded that the trial court
erred in reducing Lazear’s rate, we affirmed the trial court’s decision setting
Lazear’s associates’ rates at $75 per hour and ordering the return of the extra $225
per hour that Lazear originally took from Semco. The end result of this litigation
was a determination that Lazear Capital Partners Ltd. owed Semco $70,423.31.
Thus, Semco largely prevailed in its pursuit to have funds returned to it and the
trial court could not have concluded that Semco acted in bad faith in challenging
the fees retained by Lazear. In the absence of statutory authority or a finding of
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bad faith on the part of Semco, the trial court had no authority to award attorney’s
fees.
{¶28} Third, even assuming arguendo that the fees were incurred to protect
or preserve the receivership estate or that there was some other authority for the
trial court to award attorney’s fees, the trial court had no evidence before it to
determine whether the time spent was reasonable or whether the hourly rate
charged by each firm was reasonable.
{¶29} Attorney fees in all matters are governed by the Rules of
Professional Conduct, which provides:
(a) A lawyer shall not make an agreement for, charge, or
collect an illegal or clearly excessive fee. A fee is clearly excessive
when, after a review of the facts, a lawyer of ordinary prudence
would be left with a definite and firm conviction that the fee is in
excess of a reasonable fee. The factors to be considered in
determining the reasonableness of a fee include the following:
(1) the time and labor required, the novelty and difficulty of
the questions involved, and the skill requisite to perform the
legal service properly;
(2) the likelihood, if apparent to the client that the acceptance
of the particular employment will preclude other employment by
the lawyer;
(3) the fee customarily charged in the locality for similar legal
services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the
circumstances;
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(6) the nature and length of the professional relationship with
the client;
(7) the experience, reputation, and ability of the lawyer or
lawyers performing the services;
(8) whether the fee is fixed or contingent.
Prof. Cond. R. 1.5.
{¶30} As previously noted, the trial court expressly stated that no
independent evidence from a disinterested attorney was given regarding the
reasonableness of the amount of hours spent and the hourly rate charged. Instead,
the court was “left to its own calculation” and its own experience as to the
prevailing rate. The court then examined the exhibits attached to the application
for fees and determined that the time spent by two of the firms was reasonable but
that approximately 100 hours expended by Bailey Cavalieri, LLC, were not
reasonable. The court also determined that $175 was a reasonable hourly rate. In
so doing, the court made no reference to Prof. Cond. R. 1.5 or to any of the factors
listed therein. Absent any evidence regarding the reasonableness of the hours
expended and the reasonableness of the hourly rate, we find such determinations
were arbitrary.
{¶31} More specifically, regarding the invoices of Bailey Cavalieri, LLC,
no affidavit was provided regarding the reasonableness of any of these hours, no
testimony was provided regarding the reasonableness of any of these hours, and
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counsel’s professional statement did not address the reasonableness of any of these
hours. Her statements were simply that the invoices were kept in the ordinary
course of business and that they were true, correct, and complete. Thus, the trial
court had no evidence before it to properly determine whether the fees that it
awarded were reasonable.
{¶32} In regards to the fees of Bartram & Bartram, the exhibit attached to
the application for fees lists dates and provides a brief description of activity that
was conducted on a particular date. However, there is no indication of the time
expended on a particular activity. The first invoice simply provides a total number
of hours of 9.5 at the end of the itemization of activities, and the second invoice
provides a total number of hours of 2.25. Further, no evidence was presented
regarding the reasonableness of these hours as counsel for Bailey Cavalieri, LLC,
only stated in her professional representation that the exhibit “fairly and accurately
represents the time that he expended on this matter as co-counsel for the receiver
in this case.” (Attorneys’ Fees Hrg., 2/3/10, p. 6.) Therefore, there was no
evidence upon which the trial court could properly determine the amount of fees,
if any, to award this firm.
{¶33} The firm of Baker & Hostetler, LLP, provided an affidavit in support
of its fees that indicated that the invoices reflected the “actual and necessary
work” performed by it in its representation of Lazear. However, there is no
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mention of the reasonableness of these fees or any information as to the relevant
factors of Prof. Cond. R. 1.5. In addition, this affidavit is not of a disinterested
person but is the self-serving affidavit of a person who was not present at the
hearing for cross-examination. Thus, the trial court had no evidence upon which
to award attorney’s fees to this firm.
{¶34} In sum, we find that the services rendered by legal counsel were not
for the protection and preservation of the receivership estate. We further conclude
that there was no separate statutory authority for the award of attorneys’ fees and
there was no evidence before the trial court for it to find that Semco acted in bad
faith, which could support an award of attorneys’ fees. In addition, even if the
fees were incurred for the protection and preservation of the receivership, the trial
court did not have the necessary evidence before it to conclude that the time
expended and the fees assessed were reasonable in accordance with Prof. Cond. R.
1.5. Moreover, given the results of the litigation regarding the remittance of the
fees withheld by Lazear, we find that to have the amount of this remittance nearly
consumed in its entirety by the legal fees of the person against whom Semco had
to litigate in order to recoup its monies, as well as the fact that Semco certainly
had to pay for its own legal counsel, is simply unconscionable. Therefore, we
conclude that the trial court abused its discretion in deducting the amount of
Lazear’s attorneys’ fees from the amount it ordered Lazear to reimburse Semco.
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{¶35} For all of these reasons, the assignments of error are sustained.
{¶36} Having found error prejudicial to the appellant herein in the
particulars assigned and argued, we reverse the judgment of the trial court and
remand for further proceedings consistent with this opinion.
Judgment Reversed and
Cause Remanded
ROGERS, P.J., and WILLAMOWSKI, J., concur.
/jlr
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