McFarland v. Niekamp, Weisensell, Mutersbaugh & Mastrantonio, L.L.P.

[Cite as McFarland v. Niekamp, Weisensell, Mutersbaugh & Mastrantonio, L.L.P., 2017-Ohio-8394.]
STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF SUMMIT )
CATHERINE L. MCFARLAND, et al. C.A. No. 28462
Appellants
v.
NIEKAMP, WEISENSELL, APPEAL FROM JUDGMENT
MUTERSBAUGH & MASTRANTONIO, ENTERED IN THE
LLP, et al. COURT OF COMMON PLEAS
COUNTY OF SUMMIT, OHIO
Appellee CASE No. CV-2014-07-3403
DECISION AND JOURNAL ENTRY
Dated: November 1, 2017
CALLAHAN, Judge.
{¶1} Appellants, Catherine McFarland and Jennifer Folden, (“the Clients”), appeal the
judgment of the Summit County Court of Common Pleas in favor of Appellee, Niekamp,
Weisensell, Mutersbaugh & Mastrantonio, LLP (“Niekamp” or “the Firm”). For the reasons set
forth below, this Court reverses.
I.
{¶2} The Clients retained the law firm of Mannion & Gray to pursue a claim against
their former stockbroker for alleged misconduct. The case was assigned to attorney Rami
Awadallah, an associate at Mannion & Gray. Mr. Awadallah met with the Clients, reviewed
documents, and drafted a complaint, which he claimed to have filed on their behalf.
{¶3} Subsequently, Mr. Awadallah notified the Clients that he was leaving Mannion &
Gray to start his own firm, Awadallah & Hudak. The Clients agreed to continue their
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representation with Mr. Awadallah at his new law firm. Mr. Awadallah later closed his law firm
and joined the law firm of Niekamp, Weisensell, Mutersbaugh & Mastrantonio, LLP.
{¶4} Mr. Awadallah did not notify the Clients of this change in law firms. Instead, the
Clients discovered this information when they began looking for Mr. Awadallah on the internet.
Ms. McFarland called Niekamp and the receptionist confirmed Mr. Awadallah worked there.
{¶5} For eight months, Ms. McFarland communicated by telephone and email with Mr.
Awadallah while he was employed at Niekamp. Ms. McFarland either spoke directly with Mr.
Awadallah or left messages for him. The messages were transmitted by the office personnel to
Mr. Awadallah via Niekamp’s office email. Ms. McFarland spoke with five different office
personnel, including the office manager, who took messages and scheduled an appointment for
Mr. Awadallah. Three of the office personnel initiated calls to Ms. McFarland at Mr.
Awadallah’s direction.
{¶6} According to the Clients, Mr. Awadallah met with them to discuss their case. At
the meeting, Mr. Awadallah gave the Clients his business card which indicated he was affiliated
with Niekamp. The meeting was not held at Niekamp’s offices. Mr. Awadallah later told the
Clients that he had rejected a settlement offer and was considering refiling the complaint in a
different county.
{¶7} Mr. Awadallah contends the scope of the telephone calls to Ms. McFarland while
he was with Niekamp was to explain that he no longer represented them. He denied meeting with
the Clients and giving them his business card. He further denied the conversation about a
settlement offer.
{¶8} Thereafter, Mr. Awadallah’s communication with Ms. McFarland discontinued,
despite her leaving messages at Niekamp for another four months. The Clients filed a grievance
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against Mr. Awadallah. Through the grievance investigation, the Clients learned that Mr.
Awadallah never filed the complaint against their former stockbroker and the time to do so had
expired.
{¶9} The Clients filed a complaint asserting legal malpractice against Mr. Awadallah
and vicarious liability against Niekamp and Mannion & Gray. All of the defendants moved for
summary judgment. The trial court denied Mr. Awadallah’s and Mannion & Gray’s motions, but
granted Niekamp’s motion on the theory of apparent authority. The trial court denied Niekamp’s
motion on the issue of causation expert and declined to address the statute of limitations
argument.
{¶10} The Clients subsequently settled their vicarious liability claim against Mannion &
Gray, leaving only the legal malpractice claim against Mr. Awadallah. The trial court then
amended the summary judgment decision to add the Civ.R. 54(B) certification as to the judgment
in favor of Niekamp.
{¶11} The Clients have timely appealed, raising one assignment of error for this Court’s
review. Niekamp has raised two cross-assignments of error.
{¶12} Prior to the briefing of the assignments of error, Niekamp moved to dismiss the
appeal for lack of jurisdiction. This Court deferred ruling on the motion to dismiss until “the
final disposition of the appeal.” Niekamp asserted the summary judgment decision is not a final,
appealable order and the trial court abused its discretion when it amended the summary judgment
decision by adding the Civ.R. 54(B) certification. Upon consideration, Niekamp’s motion to
dismiss the appeal is denied.
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II.
APPELLANTS’ ASSIGNMENT OF ERROR
THE TRIAL COURT ERRED BY GRANTING SUMMARY JUDGMENT IN
FAVOR OF [] NIEKAMP.
{¶13} The Clients argued the trial court erred in granting summary judgment in favor of
Niekamp as to the vicarious liability claim because there are genuine issues of material fact
regarding whether Niekamp created the appearance of apparent authority. This Court agrees.
{¶14} Appellate courts consider an appeal from summary judgment under a de novo
standard of review. Grafton v. Ohio Edison Co., 77 Ohio St. 3d 102, 105 (1996). This Court uses
the same standard that the trial court applies under Civ.R. 56(C), viewing the facts of the case in
the light most favorable to the non-moving party and resolving any doubt in favor of the non-
moving party. See Viock v. Stowe-Woodward Co., 13 Ohio App. 3d 7, 12 (6th Dist.1983).
Accordingly, this Court stands in the shoes of the trial court and conducts an independent review
of the record.
{¶15} Summary judgment is proper under Civ.R. 56 when: (1) no genuine issue as to
any material fact exists; (2) the party moving for summary judgment is entitled to judgment as a
matter of law; and (3) viewing the evidence most strongly in favor of the non-moving party,
reasonable minds can only reach one conclusion, and that conclusion is adverse to the non-
moving party. Civ.R. 56(C); Temple v. Wean United, Inc., 50 Ohio St. 2d 317, 327 (1977).
{¶16} Summary judgment consists of a burden-shifting framework. The movant bears
the initial burden of demonstrating the absence of genuine issues of material fact concerning the
essential elements of the non-moving party’s case. Dresher v. Burt, 75 Ohio St. 3d 280, 292
(1996). Specifically, the moving party must support the motion by pointing to some evidence in
the record of the type listed in Civ.R. 56(C). Id. at 292-293. Once the moving party satisfies this
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burden, the non-moving party has a reciprocal burden to “set forth specific facts showing that
there is a genuine issue for trial.” Id. at 293. The non-moving party may not rest upon the mere
allegations or denials in his pleadings, but instead must submit evidence as outlined in Civ.R.
56(C). Id. at 293; Civ.R. 56(E).
{¶17} The parties agreed that Mr. Awadallah did not have actual authority to represent
them. Instead, the Clients argued Niekamp was vicariously liable because Mr. Awadallah acted
with apparent authority when representing them.
{¶18} “Apparent authority * * * is sometimes referred to as the ‘holding out’ theory.”
Mason v. Labig, 2d Dist. Greene No. 87-CA-91, 1989 Ohio App. LEXIS 2596, *13 (June 29,
1989), quoting Arthur v. St. Peters Hosp., 405 A.2d 443, 446 (N.J.1979). The Ohio Supreme
Court has explained the type of evidence necessary to establish apparent authority as follows:
In order for a principal to be bound by the acts of his agent under the theory of
apparent agency, evidence must affirmatively show: (1) that the principal held the
agent out to the public as possessing sufficient authority to embrace the particular
act in question, or knowingly permitted him to act as having such authority, and
(2) that the person dealing with the agent knew of the facts and acting in good
faith had reason to believe and did believe that the agent possessed the necessary
authority.
Master Consol. Corp. v. BancOhio Natl. Bank, 61 Ohio St. 3d 570 (1991), syllabus. In
determining whether an agent is acting with apparent authority, the court must examine the
principal’s acts, and not the agent’s acts. Id. at 576. When the principal’s acts have clothed the
agent with the appearance of authority, the principal is liable for the agent’s acts. Id. at 576-577.
“An agent acts within the scope of their employment when they act with actual authority or
apparent authority.” Barnes v. Village of Cadiz, 7th Dist. Harrison No. 01 531 CA, 2002 Ohio
App. LEXIS 7290, * 15 (Mar. 19, 2002), citing Master Consol. Corp. at 576.
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{¶19} In its summary judgment motion, Niekamp argued that, based on a presumption
that Mr. Awadallah was representing the Clients, such legal representation was outside the scope
of his employment because he failed to comply with Niekamp’s policies relative to bringing a
new client to the Firm. Niekamp asserted Mr. Awadallah was “‘moonlighting’” in his
representation of the Clients and, thus, acted outside the scope of his employment and there was
no actual or apparent authority. The trial court found that Mr. Awadallah exceeded his actual
authority when he failed to follow the Firm’s policies regarding new clients. The Clients do not
dispute the finding as to actual authority.
{¶20} The trial court went on to find that all of the conduct relative to representing the
Clients was undertaken by Mr. Awadallah, and not by Niekamp. Additionally, the trial court
found the Clients did not authorize the transfer of their file to Niekamp. Based on the Clients’
prior dealings with Mr. Awadallah, the trial court held that they knew or should have known that
it was necessary to transfer their file to Niekamp in order to continue representation. Based on
the lack of a genuine issue of material fact as to these two elements, the trial court found there
was no apparent authority.
{¶21} The Clients challenged the trial court’s finding that there was “no evidence to
suggest Niekamp did anything to make [the Clients] believe that they were clients of the [F]irm
or that [Mr.] Awadallah had authority to represent them.” The Clients asserted six different
instances of Niekamp’s conduct that established they were clients of the Firm or that Mr.
Awadallah had the authority to represent them and why their belief was reasonable.
Apparent Authority: holding out the agent to the public
{¶22} There is no dispute that Mr. Awadallah was working as an attorney at Niekamp.
The role of an attorney in a law firm is to represent the interests of clients. To confer apparent
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authority, Niekamp needed to act in a way that appeared to give Mr. Awadallah the authority to
do those things that attorneys in law firms normally do. In this case, Niekamp had a website
advertising its legal services and listing the names and pictures of the attorneys employed by the
Firm. Mr. Awadallah was held out to the public by Niekamp on its website as an attorney
employed by the Firm and with the authority to represent clients on the Firm’s behalf. Similarly,
Mr. Awadallah had business cards that included the Firm’s name and emblem as well as his
name. Again, Niekamp held Mr. Awadallah out to any recipient of the business card as being an
attorney employed by the Firm and having the authority to represent clients on the Firm’s behalf.
Who gave the business card to the Clients is irrelevant in the apparent authority analysis.
Instead, the fact that Mr. Awadallah had business cards, such as those described above, vested
Mr. Awadallah with the authority to represent clients on behalf of the Firm.
{¶23} In further support of their apparent authority position, the Clients relied on
conduct by the Niekamp receptionist, secretaries, and office manager. In its brief, Niekamp
adamantly argued that the conduct of the secretaries “cannot form an attorney-client
relationship” and that “‘[t]he legal responsibilities of counsel cannot be assigned or transferred to
a secretary.’” While Niekamp is correct as to these points, neither is relevant to this analysis.
The inquiry is whether Niekamp, through its staff, held Mr. Awadallah out as its agent to
represent clients on its behalf.
{¶24} Niekamp also stated that “[c]lients hire law firms; not receptionists or office
managers.” (Emphasis deleted.) While this is true, Niekamp ignores the fact that law firms hire
receptionists, secretaries, and officer managers, and these staff members work for the attorneys
and the firm. Taking messages from clients and calling clients to schedule a meeting or to relay
other messages is within the scope of employment for a receptionist, secretary, and office
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manager. See In re Estate of Mercurio, 7th Dist. Mahoning No. 00 CA 108, 2003-Ohio-1437, ¶
30 (“A secretary making calls to a client concerning a hearing involving the client’s case is a
matter within the scope of the agency or employment.”); In re Estate of Williams, 7th Dist.
Mahoning No. 00 CA 109, 2003-Ohio-1436, ¶ 46.
{¶25} In this case, there was deposition testimony, email messages, and notes kept by
Ms. McFarland regarding the telephone contact between Ms. McFarland, Mr. Awadallah, and the
Firm. Niekamp attempted to minimize the importance of the telephone calls by saying there
were only “a few administrative phone calls with office staff” and labeling the calls as
“ministerial duties” and “administrative functionary.” Over the period of a year, there was
evidence of at least 25 messages taken by the Niekamp office staff for Mr. Awadallah from Ms.
McFarland. The phone messages were taken by the receptionist (19 messages), the office
manager (1 message), the secretary to attorney Weisensell, a named principal of the Firm (3
messages), the secretary to attorney Niekamp, a named principal of the Firm (1 message), and
the secretary to attorney Mastrantonio, a named principal of the Firm (1 message). The majority
of the email messages only listed Ms. McFarland’s name, her phone number, and the date and
time of her call. However, one of the messages from the receptionist included an additional
statement that Ms. McFarland “[n]ever received [a] copy of [the] letter.” Further, there were two
messages taken by attorney Weisensell’s secretary which contained additional comments. The
first message indicated Ms. McFarland “wanted a status update” and the second message
indicated Mr. Awadallah “would know what it is regarding.”
{¶26} Additionally, the Niekamp office staff initiated three phone calls to Ms.
McFarland. The first phone call was made by the office manager and the purpose of the call was
to schedule a meeting between the Clients and Mr. Awadallah. In the email confirming the
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meeting, the office manager indicated that Ms. McFarland asked for Mr. Awadallah to “bring a
copy of the letter [he] sent to Smith Barney on [their] behalf.” The second phone call was
initiated by attorney Mastrantonio’s secretary to Ms. McFarland. The purpose of the phone call
was to inform Ms. McFarland that Mr. Awadallah and his wife had recently had a baby and that
he would call back once he returned to the office. The third phone call was initiated by attorney
Weisensell’s secretary to Ms. McFarland. This phone call was to advise Ms. McFarland that Mr.
Awadallah would call her back on the following day.
{¶27} The receptionist, office manager, and three secretaries who took the messages
and/or made calls to Ms. McFarland were all employees of Niekamp. Three of these employees
worked for named principals of the Firm. The knowledge of a secretary in relaying messages is
imputable to the attorneys/principals for whom they work. See Wyrick v. Meridian Mut. Ins. Co.,
2d Dist. Montgomery No. 16468, 1998 Ohio App. LEXIS 3, *4 (Jan. 9, 1998). The volume of
messages, combined with the extra statements regarding the status of the case, copies of a letter,
and scheduling a meeting, is evidence of knowledge by the office staff regarding the Clients that
is imputable to the attorneys/principals for which they worked. Ms. McFarland testified that
while no one ever called her a “client” the “secretaries and the assistants * * * knew who [she]
was when [she] called * * * because [she] had been calling [Mr. Awadallah].” Thus, the
incoming phone messages, outgoing calls, and scheduling of a meeting, all handled by
Niekamp’s office staff, were “indicia of firm involvement or representation of the [Clients’]
interests.” Accordingly, the Clients presented evidence of Niekamp holding Mr. Awadallah out
to the Clients as having apparent authority to represent the Clients on behalf of Niekamp.
{¶28} The trial court set forth a number of facts to find that “there [was] no genuine
issue of material fact that Niekamp did not create the appearance of apparent authority.” These
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facts all addressed what Niekamp did not do relative to holding Mr. Awadallah out as its agent to
the Clients. These facts standing alone could have supported the trial court’s finding. However,
as addressed above, the record contained additional evidence of what Niekamp did do to hold
Mr. Awadallah out as it agent to the Clients. When considering all of the evidence presented, the
Clients have met their Dresher burden of establishing the existence of a genuine issue of material
fact regarding the first prong of apparent authority.
{¶29} Niekamp presented to this Court the following arguments to further support the
trial court’s summary judgment ruling on apparent authority. First, Niekamp reasserted its
arguments relative to Mr. Awadallah’s failure to comply with the Firm’s policies to argue that he
“did not have authority to represent [the Clients] as an employee of Niekamp.” The trial court
only applied these facts to its finding on actual authority, thus Niekamp’s argument is moot as
applied to apparent authority.
{¶30} Next, Niekamp presented a new argument applying Estate of Barney v. Manning,
8th Dist. Cuyahoga No. 94979, 2011-Ohio-480, to the apparent authority analysis. Niekamp
asserted Mr. Awadallah’s conduct in lying to the Clients and being deceptive was consistent with
the type of intentional conduct found in Barney and, thus, Mr. Awadallah was outside the scope
of his employment. While Niekamp relied upon Barney in its summary judgment motion, it did
not assert this particular argument to the trial court nor did the trial court make such a finding.
“Arguments that were not raised in the trial court cannot be raised for the first time on appeal.”
JPMorgan Chase Bank, Natl. Assn. v. Burden, 9th Dist. Summit No. 27104, 2014-Ohio-2746, ¶
12. Accordingly, Niekamp has waived this argument.
{¶31} Lastly, Niekamp presented an alternative argument on appeal that Mr. Awadallah
never represented the Clients while employed at Niekamp and, thus, there was no attorney-client
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relationship with the Firm. Niekamp asserted this argument in its summary judgment motion.
However, the trial court did not make a finding on this issue. This Court has repeatedly held that
issues raised in summary judgment motions, but not considered by the trial court will not be
decided by this Court in the first instance. See Skidmore v. Natl. Bronze & Metals (Ohio), Inc.,
9th Dist. Lorain No. 12CA010328, 2014-Ohio-4423, ¶ 16; Neura v. Goodwill Indus., 9th Dist.
Medina No. 11CA0052-M, 2012-Ohio-2351, ¶ 19; Guappone v. Enviro-Cote, Inc., 9th Dist.
Summit No. 24718, 2009-Ohio-5540, ¶ 13.
Apparent Authority: reasonable belief that the agent had authority
{¶32} As to the second prong of the apparent authority analysis, the Clients argued that
they had acted in good faith to believe that Mr. Awadallah possessed the necessary authority to
represent them as clients of Niekamp. In light of this Court’s analysis as to the first prong of
apparent authority, the Clients’ arguments as to the second prong are moot. See App.R.
12(A)(1)(c).
{¶33} After considering the foregoing arguments, the trial court erred by granting
summary judgment in favor of Niekamp as against the Clients. The Clients’ assignment of error
is sustained.
APPELLEE’S CROSS-ASSIGNMENTS OF ERROR
SUMMARY JUDGMENT WAS WARRANTED BECAUSE [THE CLIENTS]
FAILED TO ESTABLISH PROXIMATE CAUSATION WITH REQUIRED
EXPERT TESTIMONY[.]
SUMMARY JUDGMENT WAS WARRANTED BECAUSE THE
UNDERLYING CLAIMS WERE BARRED BY THE SIX YEAR
“ELIGIBILITY” RULE GOVERNING MANDATORY FINRA
ARBITRATIONS BEFORE [MR.] AWADALLAH BECAME EMPLOYED BY
NIEKAMP[.]
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{¶34} In the event the trial court’s grant of summary judgment based on the theory of
apparent authority were to be reversed, Niekamp asserted two cross-assignments of error. The
cross-assignments argue that the trial court’s summary judgment decision in favor of Niekamp
on the claim of vicarious liability should be affirmed on two alternative bases: 1) the Clients
failed to present evidence that they would have prevailed in the mandatory arbitration and,
thereby, failed to establish there was a genuine issue of material fact as to the issue of proximate
cause; and 2) “[a]s a matter of law, a principal cannot be held vicariously liable for a failure to
pursue time-barred and unsustainable claims.” This Court declines to address both cross-
assignments, but for different reasons.
Cross-assignment regarding causation
{¶35} The trial court granted summary judgment in favor of Niekamp on the vicarious
liability claim based upon apparent authority. The trial court certified only that as being final
and appealable pursuant to Civ.R. 54(B). Therefore, the trial court’s finding that there was no
just reason for delay did not make appealable other portions of the order that were otherwise
non-appealable. See Allen v. Johnson, 9th Dist. Wayne Nos. 01CA0046, 01CA0047, 2002-Ohio-
3404, ¶ 9, aff’d in part and rev’d in part, 100 Ohio St. 3d 276, 2003-Ohio-5889, citing Chef
Italiano Corp. v. Kent State Univ., 44 Ohio St. 3d 86, 88-89 (1989); see Noble v. Colwell, 44
Ohio St. 3d 92, 96 (1989).
{¶36} Generally, the denial of summary judgment is a non-final order in accordance
with R.C. 2505.02, because it does not determine the action and prevent a judgment. Celebreeze
v. Netzley, 51 Ohio St. 3d 89, 90 (1990). Instead, the “denial of a motion for summary judgment
is reviewable on appeal by the movant from a subsequent adverse final judgment.” Balson v.
Dodds, 62 Ohio St. 2d 287 (1980), paragraph one of the syllabus. Unless an exception to this
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general rule exists, such as an order made in a special proceeding, the denial of summary
judgment is not final and appealable. See Celebreeze at 90. No such exception applies in this
case. Therefore, the aspect of the trial court’s order denying Niekamp summary judgment is not
final and appealable. See Allen at ¶ 11.
Cross-assignment regarding statute of limitations
{¶37} Based on the trial court’s grant of summary judgment on apparent authority, it
specifically indicated that it was not ruling on the alternative statute of limitations argument.
Thus, the trial court did not review the evidence and decide whether the statute of limitations
barred the legal malpractice claim and, thereby, precluded the vicarious liability claim as a
matter of law. See Hicks v. Cadle Co., 11th Dist. Trumbull No. 2014-T-0103, 2016-Ohio-4728, ¶
36 (declining to consider the cross-assignment of error because the trial court had not yet
reviewed the factual allegations and legal arguments of the statute of limitations issue); Fullum v.
Columbiana Cty. Coroner, 7th Dist. Columbiana No. 12 CO 51, 2014-Ohio-5512, ¶ 44.
{¶38} As stated above, this Court will not decide in the first instance issues raised in
summary judgment motions, but not considered by the trial court. See Skidmore, 2014-Ohio-
4423, at ¶ 16; Neura, 2012-Ohio-2351, at ¶ 19; Guappone, 2009-Ohio-5540, at ¶ 13. To
consider summary judgment arguments in the first instance on appeal “effectively depriv[es] the
non-prevailing party of appellate review.” Guappone at ¶ 13.
III.
{¶39} Ms. McFarland’s and Ms. Folden’s assignment of error is sustained. The
judgment of the Summit County Court of Common Pleas is reversed and the cause is remanded
for proceedings consistent with this opinion.
Judgment reversed
and cause remanded.
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There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy
of this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is
instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
mailing in the docket, pursuant to App.R. 30.
Costs taxed to Appellee.
LYNNE S. CALLAHAN
FOR THE COURT
CARR, P. J.
TEODOSIO, J.
CONCUR.
APPEARANCES:
DAVID P. MEYER, JOHN C. CAMILLUS, and COURTNEY M. WERNING, Attorneys at
Law, for Appellants.
RUDOLPH A. PECKINPAUGH, JR. and JARED J. LEFEVRE, Attorneys at Law, for Appellee.