Hoag v. Ent. Holdings , 2021 Ohio 506 ( 2021 )

[Cite as Hoag v. Ent. Holdings, 2021-Ohio-506.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOSEPH M. HOAG, :
Plaintiff-Appellant, :
No. 109461
v. :
ENTERPRISE HOLDINGS, ET AL., :
Defendants-Appellees. :
JOURNAL ENTRY AND OPINION
JUDGMENT: REVERSED IN PART, DISMISSED IN PART
RELEASED AND JOURNALIZED: February 25, 2021
Civil Appeal from the Cuyahoga County Court of Common Pleas
Case No. CV-19-915376
Appearances:
Michael P. Harvey, for appellant.
Seeley, Savidge, Ebert & Gourash Co., L.P.A., Hunter S.
Havens, and Terese M. Fennell, for appellees.
MARY EILEEN KILBANE, J.:
Plaintiff-appellant, Joseph M. Hoag (“Hoag”), appeals the trial court’s
decision granting defendants-appellees’, Enterprise Holdings et al. (“Appellees”),
motion to disqualify Hoag’s attorney. We find that the trial court abused its
discretion in granting the motion to disqualify. Hoag also appeals the decision of
the trial court denying his motion to compel business records. We find that the
denial of a motion to compel is not a final appealable order.
Statement of Facts and Procedural History
On July 19, 2018, defendant Brian L. Grays, Jr. (“Grays”) allegedly
crashed his rented vehicle into Hoag’s car at the intersection of East 49th Street and
Quincy Avenue in Cleveland, Ohio. Hoag filed a complaint on August 6, 2018,
against Grays and Ronnea Shuntay, a passenger in the car. That case, CV-18-
901705, was litigated for well over a year and ultimately resulted in a default
judgment against Grays.
During the course of the litigation, Hoag served Enterprise Holdings,
Inc. (“Enterprise”) with a subpoena on September 18, 2018, requesting certain
documents be produced. That request was forwarded to Abigail Boyer (“Boyer”), a
claims professional for ELCO Administrative Service Company (“ELCO”). ELCO
handles all claims brought against Enterprise Rent-A-Car. Boyer forwarded certain
documents to Hoag; however, Hoag filed a motion to enforce a subpoena against
Enterprise arguing that Enterprise had not forwarded all the relevant
documentation. On December 4, 2018, the trial court denied the motion.
After resolving the underlying case with Grays through a default
judgment on May 15, 2019, Hoag filed a new complaint. Hoag filed a complaint
against Grays, Enterprise, Boyer, ELCO, and other corporate entities associated with
Enterprise. In that complaint, filed in case CV-19-915376, Hoag alleged: 1) violation
of Ohio public policy and Ohio law; 2) declaratory judgment; 3) breach of
settlement; and 4) bad faith.
First, Hoag is alleging that Enterprise is in violation of Ohio law and
public policy for not requiring that Grays, and presumably other customers of
Enterprise, have insurance to protect against accidents with other drivers. Hoag
alleges that Enterprise only requires that renters have insurance that protects
Enterprise’s vehicles. In particular, Hoag is alleging that Enterprise is violating Ohio
law and public policy by not requiring all renters to have personal insurance.
Second, Hoag alleges that Enterprise operated in bad faith by not responding fully
to discovery requests in an attempt to hide their wrongdoing. These issues are not
the focus of this appeal.
This appeal concerns Hoag’s breach of settlement claim against
Enterprise. Hoag alleges that his counsel, Michael P. Harvey (“Harvey”), had
conversations with a representative for Enterprise over the phone and they reached
a settlement agreement. Hoag alleges that Boyer confirmed this settlement offer for
$25,000.00 and that she made the offer on behalf of the Appellees. Hoag included
a letter in his complaint from Hunter S. Havens (“Havens”), an attorney for the
Appellees, dated November 30, 2018, denying that Boyer had made any settlement
offer or had admitted to any culpability on behalf of Enterprise.
On June 13, 2019, the Appellees filed a motion to consolidate CV-18-
901705 and CV-19-915376. On June 14, 2019, the Appellees filed their answer to the
complaint. On June 17, 2019, Hoag filed a notice of dismissal in CV-18-901705, and
the motion to consolidate was denied as moot on June 19, 2019.
On June 19, 2019, the defendants filed a motion to bifurcate Hoag’s
claims for compensatory and punitive damages. The trial court granted that motion
on July 8, 2019. On August 8, 2019, the counsel of record attended a case
management conference. The court ordered that all discovery be completed by
December 31, 2019. On September 12, 2019, Hoag filed a motion to compel business
records, arguing that the discovery he had received thus far was insufficient. The
defendants filed a brief in opposition on September 19, 2019.
On September 24, 2019, the defendants filed a motion to disqualify
Harvey, Hoag’s attorney, arguing that he was a necessary witness to the breach of
settlement claim.
On October 15, 2019, the trial court denied Hoag’s motion to compel.
On December 17, 2019, the trial court held a hearing on the motion to
disqualify. During the course of the hearing, Harvey admitted that he would appear
as a witness during the trial in order to give testimony regarding the alleged
settlement offer he had received. The trial court noted that because there was no
written agreement, Harvey’s testimony was necessary. The trial court stated that
the motion to disqualify was filed four months after Enterprise was made a party,
and that it was therefore timely.
On January 29, 2020, the trial court granted the motion to disqualify.
This appeal follows. Hoag presents two assignments of error for our review.
Assignments of Error
First Assignment of Error
The trial court abused its discretion in granting the Appellees’ untimely
Motion to Disqualify and ignoring Mr. Hoag’s testimony that he cannot
afford new counsel and will have to proceed pro se.
Second Assignment of Error
The Trial Court abused its discretion in denying the Appellant’s Motion
to Compel for business records by improperly classifying them as
confidential and otherwise refusing to enforce Ohio Civil Rules 26-36.
Motion to Disqualify
We will first examine whether the trial court abused its discretion in
granting the motion to disqualify. The Appellees filed the motion because one of
Hoag’s claims relies on Harvey’s potential testimony and they argue he should not
be both Hoag’s advocate and his witness.
Pursuant to Prof.Cond.R. 3.7:
A lawyer shall not act as an advocate at a trial in which the lawyer is
likely to be a necessary witness unless one or more of the following
applies:
(1) the testimony relates to an uncontested issue;
(2) the testimony relates to the nature and value of legal services
rendered in the case;
(3) the disqualification of the lawyer would work substantial hardship
on the client.
Harvey, Hoag’s attorney, does not dispute that his testimony relates
to a contested issue. He also does not argue that his testimony relates to the “nature
and value of legal services rendered in the case.” Instead, Hoag argues that the trial
court abused its discretion for two reasons: 1) the motion to disqualify is untimely
and therefore waived; and 2) Hoag would face a substantial hardship if his attorney
were disqualified. We agree on both counts and find that the court abused its
discretion.
In reviewing a trial court’s decision to disqualify a party’s counsel, we
apply an abuse of discretion standard. 155 N. High, Ltd. v. Cincinnati Ins. Co., 72
Ohio St.3d 423, 426, 650 N.E.2d 869 (1995), citing Royal Indemn. Co. v. J.C.
Penney Co., 27 Ohio St.3d 31, 501 N.E.2d 617 (1986); Mentor Lagoons, Inc. v.
Rubin, 31 Ohio St.3d 256, 510 N.E.2d 379 (1987). “‘The term “abuse of discretion”
connotes more than an error of law or judgment; it implies that the court’s attitude
is unreasonable, arbitrary or unconscionable.’” (Citations omitted.) Blakemore v.
Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d 1140 (1983), quoting State v. Adams,
62 Ohio St.2d 151, 404 N.E.2d 144 (1980).
We are mindful that “[d]isqualification of an attorney is a drastic
measure, which should not be imposed unless absolutely necessary.” Quiros v.
Morales, 8th Dist. Cuyahoga No. 894274, 2007-Ohio-5442, ¶ 15; Roth v. Roth, 8th
Dist. Cuyahoga No. 89141, 2008-Ohio-927, ¶ 70. Disqualification interferes with a
client’s right to choose counsel. Kala v. Aluminum Smelting & Refining Co., 81 Ohio
St.3d 1, 5-6, 688 N.E.2d 258 (1998), citing Manning v. Waring, Cox, James, Sklar
& Allen, 849 F.2d 222 (6th Cir.1988); A.B.B. Sanitec W., Inc. v. Weinsten, 8th Dist.
Cuyahoga No. 88258, 2007-Ohio-2116.
Moreover, “[w]hile motions to disqualify may be legitimate and
necessary under certain circumstances, they should be viewed with extreme caution
for they can be misused as techniques of harassment.” Cliffs Sales Co. v. Am. S.S.
Co., N.D. Ohio No. 1:07-CV-485, 2007 U.S. Dist. LEXIS 74342, 7 (Oct. 4, 2007),
quoting SST Castings, Inc. v. Amana Appliances, Inc., 250 F.Supp.2d 863, 865-866
(S.D.Ohio 2002), citing Freeman v. Chicago Musical Instrument Co., 689 F.2d 715,
722 (7th Cir.1982). “It is the burden of the party moving for disqualification of an
attorney to demonstrate that * * * disqualification is necessary.” Id., citing Mentor
Lagoons v. Teague, 71 Ohio App.3d 719, 595 N.E.2d 392 (11th Dist.1991).
In summary, courts must be diligent to ensure that motions to
disqualify are not used to harass. Granting a motion to disqualify is a drastic step,
which is why the initial burden of proving the necessity of disqualification is placed
on the moving party. Similarly, courts must be diligent to ensure that motions to
disqualify are timely.
Waiver
There is no strict time requirement for filing a motion to disqualify,
however, “[t]he time within which to raise an objection is promptly after the onset
of litigation or within a reasonable time once all pertinent facts are known.” Carr v.
Acacia Country Club Co., 8th Dist. Cuyahoga No. 91292, 2009-Ohio-628, ¶ 30,
citing Barberton Rescue Mission v. Hawthorn, 9th Dist. Summit No. 21220, 2003-
Ohio-1135. Therefore, the finding of waiver is “dependent on the circumstances of
each case.” Carr at ¶ 31.
In Carr, the motion to disqualify was based on a conflict of interest
rather than an attorney acting as a necessary witness. We again addressed waiver
as to conflict of interest in Stanley v. Bobeck, 8th Dist. Cuyahoga No. 92630, 2009-
Ohio-5696. Although here we are addressing a motion to disqualify based on
different grounds, we find that the analysis used for a conflict of interest still applies.
We have found that a motion to disqualify should be denied based on
waiver where “there is substantial proof that the movant’s delay has resulted in
serious prejudice to the opposing party, or where litigation has proceeded to the
point where disqualification would create substantial hardship to the opposing
party, or where it is clear that the moving party knowingly delayed the filing of the
motion in order to cause such hardship or prejudice.” Bobeck, citing Sarbey v. Natl.
City Bank, Akron, 66 Ohio App. 3d 18, 28, 583 N.E.2d 392 (9th Dist.1990).
We find that this is an appropriate case to deny the motion to
disqualify based on waiver because of the Appellees’ delay in filing the motion to
disqualify and because litigation has proceeded to the point where disqualifying
Hoag’s attorney would create a substantial hardship.
Delay in filing the Motion to Disqualify
The trial court stated that because the Appellees were not a party to
the original suit, and because they filed the motion to disqualify four months after
service of the complaint, the motion to disqualify was timely. We disagree.
The Appellees were aware of Enterprise’s role in Hoag’s original suit;
Enterprise was served with a subpoena in September 2018. In addition, the
Appellees were aware as early as November 30, 2018, that Harvey was alleging he
had spoken to Boyer and secured a verbal settlement offer and concessions
regarding Enterprise’s allegedly improper policies. On November 30, 2018, counsel
for Appellees sent a letter to Harvey informing him that the conversation he had
with Boyer did not result in either a settlement offer or any concessions. As of the
sending of this letter, and likely before, Appellees knew that Harvey and Boyer were
the only two individuals who participated in this phone call and the only two who
knew what really occurred.
On May 15, 2019, Hoag filed a complaint alleging that Enterprise had
breached their agreement by not honoring the settlement that Boyer allegedly
verbally offered. At that point in time, Appellees would have known for certain that
Harvey was a necessary witness to this complaint. Instead of filing a motion to
disqualify at that time, they delayed.
As we explained earlier, the Appellees filed a bevy of motions before
filing a motion for disqualification.
On June 13, 2019, the Appellees filed a motion to consolidate CV-18-
901705 and CV-19-915376. The motion to consolidate in particular reflects how the
Appellees viewed their role in Hoag’s lawsuit. The Appellees argued that both
lawsuits should be combined because of their shared facts; yet the Appellees claim
that since they were not involved in the original suit, they were unaware of Harvey’s
alleged conversation with Boyer. The motion to consolidate makes clear that the
Appellees were aware of the shared facts and were not caught off guard by the
allegations that Harvey had negotiated a settlement that was not honored.
Appellees’ motion practice continued. On June 14, 2019, the
Appellees filed their answer to the complaint. Despite being aware of Harvey’s role
as a witness, they did not raise the issue with the court at this time.
On June 19, 2019, the Appellees filed a motion to bifurcate Hoag’s
claims for compensatory and punitive damages, which the trial court granted on
July 8, 2019. On August 8, 2019, the counsel of record attended a case management
conference. There is no indication in the record that Appellees’ counsel raised
Harvey’s involvement in the case as an issue at that time. During the case
management conference, the court ordered that all discovery be completed by
December 31, 2019.
Accordingly, on September 12, 2019, Hoag filed a motion to compel
discovery, arguing that the discovery he had received thus far was insufficient. The
defendants filed a brief in opposition on September 19, 2019. Then, having done all
this, and before the court ruled on the motion to compel, the Appellees filed the
motion to disqualify Harvey on September 24, 2019.
The trial court stated that because the Appellees filed the motion to
disqualify only four months after the second complaint was filed, the motion was
timely. The trial court also stated that the Appellees were not involved in the original
case and therefore could not have known about Harvey’s allegations. We find that
the trial court abused its discretion because the record reflects that the Appellees
were involved in the original proceeding and were aware of Harvey’s allegations well
before the second complaint was filed. The Appellees went so far as to move for
consolidation of both cases. The Appellees had ample opportunity to file the motion
to disqualify but instead chose to delay.
It is also clear that this delay creates a substantial hardship for Hoag.
Substantial Hardship
When examining whether a motion to disqualify an attorney will
create “substantial hardship” we look to the Ohio Supreme Court’s decision in 155
N. High v. Cincinnati Ins. Co., 72 Ohio St.3d 423, 650 N.E.2d 869 (1995). There,
reviewing the code of professional conduct that predated the current version, the
court determined that in order to show substantial hardship, counsel must show
“distinctive value.” That value can be shown by “proof of specialized expertise.” Id.
at 874.
Here, Harvey did not demonstrate “proof of specialized expertise.”
However, we still find that substantial hardship occurred. The Ohio Supreme Court
in making its decision in 155 N. High focused on the rules of professional conduct as
they then existed and the purposes behind the rules. The Ohio Supreme Court
reasoned that there are three distinct interests served by an attorney acting as both
an advocate and a witness: those of the client, those of the adverse party, and the
institutional integrity of the legal system as a whole. Id. at 872, citing 6 Wigmore,
Evidence, Section 19 (Chadbourn Rev.1976); United States v. Johnston, 690 F.2d
638, 643 (7th Cir.1982). In considering those same interests, we believe that Harvey
can protect all three interests while serving as both an advocate and a witness.
More critically, it is highly unlikely that another attorney will take this
case and that will cause Hoag a substantial hardship. The original accident occurred
in July 2018. The original complaint has already concluded with a default judgment.
There is discovery from the original complaint relevant to this current complaint,
and more discovery for this complaint. This is a very involved case with a lengthy
history and, given the demanded compensatory damages, it is highly unlikely Hoag
can find someone to take the case at this late stage. If Hoag cannot find another
attorney, he will be forced to proceed pro se or dismiss the complaint. Those are not
just outcomes, especially when Harvey can discharge his duty as an advocate while
acting as a witness. Harvey’s forced withdrawal would create a substantial hardship.
Further, Harvey agreed during the hearing to disqualify that he would
be willing to bifurcate the trial, splitting the punitive and compensatory damage
portions of the trial. His intention is to continue representing his client as best he
can, as he has since 2018, and remain as his advocate without acting as a witness for
at least a portion of the trial. This highlights Harvey’s good faith; removing counsel
is a drastic measure. It is not required in this case.
We find that the trial court abused its discretion and find that Hoag’s
first assignment of error is well-taken.
We will next address Hoag’s second assignment of error.
Second Assignment of Error
The Trial Court abused its discretion in denying the Appellant’s Motion
to Compel for business records by improperly classifying them as
confidential and otherwise refusing to enforce Ohio Civil Rules 26-36.
We do not find that this issue is properly before this court because
Hoag’s motion to compel business records is not a final appealable order.
R.C. 2505.02 defines a final appealable order as, in relevant part:
(B) An order is a final order that may be reviewed, affirmed, modified,
or reversed, with or without retrial, when it is one of the following:
(1) An order that affects a substantial right in an action that in effect
determines the action and prevents a judgment;
(2) An order that affects a substantial right made in a special
proceeding or upon a summary application in an action after judgment;
(3) An order that vacates or sets aside a judgment or grants a new trial;
(4) An order that grants or denies a provisional remedy and to which
both of the following apply:
(a) The order in effect determines the action with respect to the
provisional remedy and prevents a judgment in the action in favor of
the appealing party with respect to the provisional remedy.
(b) The appealing party would not be afforded a meaningful or effective
remedy by an appeal following final judgment as to all proceedings,
issues, claims, and parties in the action.
The trial court’s September 26, 2019 order denying Hoag’s motion to
compel is not a final appealable order. See generally Burnham v. Cleveland Clinic,
151 Ohio St. 3d 356, 2016-Ohio-8000, 89 N.E.3d 536, ¶ 22.
Hoag’s second assignment of error is not well-taken.
Conclusion
We find that the trial court abused its discretion in granting the
Appellee’s motion to disqualify. We find that the trial court’s decision denying
Hoag’s motion to compel is not a final appealable order. Judgment is reversed in
part and dismissed in part.
It is ordered that appellees recover from appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this judgment
into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27
of the Rules of Appellate Procedure.
MARY EILEEN KILBANE, JUDGE
MARY J. BOYLE, A.J., and
ANITA LASTER MAYS, J., CONCUR