Payne v. ODW Logistics, Inc.

[Cite as Payne v. ODW Logistics, Inc., 2019-Ohio-3866.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
John Payne, :
Plaintiff-Appellee, :
No. 19AP-163
v. : (C.P.C. No. 17CV-10716)
ODW Logistics, Inc. et al., : (ACCELERATED CALENDAR)
Defendants-Appellants. :
D E C I S I O N
Rendered on September 24, 2019
On brief: Larrimer and Larrimer, and Thomas L. Reitz, for
appellee. Argued: John H. Larrimer.
On brief: Morrow & Meryer, LLC, and Corey V. Crognale,
for appellant ODW Logistics Inc. Argued: Corey V.
Crognale.
APPEAL from the Franklin County Court of Common Pleas
BEATTY BLUNT, J.
{¶ 1} Defendant-appellant, ODW Logistics, Inc. ("ODW"), appeals a decision from
the Franklin County Court of Common Pleas denying the motion of ODW for attorney fees
and costs as sanctions against plaintiff-appellee John Payne for violating R.C. 2323.51 and
Civ.R. 11 (the "motion for sanctions"). Because we find the trial court erred in denying
ODW's motion for sanctions without a hearing, we reverse and remand.
I. FACTS AND PROCEDURAL HISTORY
{¶ 2} This appeal arises from a workers' compensation case. On December 3, 2015,
while he was an employee of ODW, Payne suffered a workplace injury to his left hand.
Payne filed a claim for an industrial injury and/or occupational disease with the Bureau of
Workers' Compensation, which was assigned claim No. 15-860700.
No. 19AP-163 2
{¶ 3} Payne's claim was initially allowed for the conditions of "contusion left hand,
left hand sprain/strain, left wrist sprain/strain" and later was additionally allowed for the
condition of "complex regional pain syndrome/reflex." (Ex. A, attached to Dec. 28, 2017
Petition & Compl.) Payne also was awarded payment of temporary total disability ("TTD")
benefits which began on December 14, 2015. (Appellee's Brief at 4.)
{¶ 4} Subsequently, the claim was additionally allowed to include the condition of
"substantial aggravation of major depressive disorder." In ordering that the claim be
additionally allowed for the foregoing condition, both the district hearing officer ("DHO")
and the staff hearing officer ("SHO") relied upon the reports in the file from Alethea Baker,
Ph.D., dated April 6 and July 11, 2017, as well as Payne's testimony regarding his symptoms.
{¶ 5} On December 4, 2017, pursuant to R.C. 4123.512, ODW filed a notice of
appeal in the Franklin County Court of Common Pleas from the order of the SHO which
ordered the claim be additionally allowed for the condition of "substantial aggravation of
major depressive disorder."
{¶ 6} On December 28, 2017, Payne filed his complaint seeking participation in the
Ohio Workers' Compensation Fund for the condition of "substantial aggravation of major
depressive disorder."
{¶ 7} Thereafter, and while the case in the Franklin County Court of Common Pleas
remained pending, on June 18, 2018, ODW filed with the Industrial Commission of Ohio
Form C-86, seeking to terminate Payne's TTD benefits based on the premise that Payne's
condition had reached maximum medical improvement ("MMI"). A hearing on ODW's
Form C-86 request was held on July 27, 2018 before DHO Elizabeth Strautz.
{¶ 8} At the July 27, 2018 hearing, ODW elicited testimony from Payne that
confirmed prior statements he had made to Dr. Baker which were set forth in her reports
dated April 6 and July 11, 2017, including that he was unable to drive using his left hand
and that he could not lift or hold objects with his left hand. Payne also confirmed that he
had told Dr. Baker that due to his non-functioning left hand, he depended almost entirely
on assistance from his fiancée in order to care for himself.
{¶ 9} ODW also submitted evidence in the form of video surveillance of Payne from
six different days: March 8, 2016, March 22, 2016, November 5, 2017, November 6, 2017,
June 8, 2018, and June 9, 2018. This video surveillance evidence showed Payne using his
No. 19AP-163 3
left hand and arm to perform a myriad of activities, including "holding keys; shutting a car
door; carrying a box and putting it into the trunk of a car; carrying a plastic grocery bag;
using an air hose to put air in four tires of a car; using the left arm to support his body while
leaning into a car; pulling a car door shut; pulling himself up into a truck holding onto a
strap; and stacking and carrying multiple boxes, using both upper extremities." (Ex. B at 1,
attached to Jan. 11, 2019 Def.'s Mot. for Attorneys' Fees & Costs.)
{¶ 10} In addition to the video surveillance evidence, ODW also submitted the May
22, 2018 supplemental report of James Sardo, M.D., who changed his opinion from his
original March 7, 2018 independent medical examination ("IME") report based upon
"numerous inconsistencies with regard to [Payne's] activities documented on the video
surveillance evidence." (Ex. D at 1, attached to Jan. 11, 2019 Def.'s Mot. for Attorneys' Fees
& Costs.) Dr. Sardo opined in his report that Payne's physical activities documented on the
video surveillance were "inconsistent with previous clinical exam findings and medical
documentation on file." (Ex. D at 1, attached to Jan. 11, 2019 Def.'s Mot. for Attorneys' Fees
& Costs.) Dr. Sardo concluded that Payne had reached MMI.
{¶ 11} After the July 27, 2018 hearing, the DHO issued an order granting ODW's
request that TTD payments be terminated. The DHO indicated her finding was based on
the surveillance video evidence, NovaCare Rehabilitation notes from various dates, office
notes of Dr. Baker, and the report of Dr. Sardo. Subsequently, in an order prepared on
October 1, 2018 and mailed on October 5, 2018, the SHO affirmed the DHO's order.
{¶ 12} Meanwhile, the litigation in the Franklin County Court of Common Pleas was
proceeding. Trial was set for December 11, 2018. On December 10, 2018 at 2:01 p.m.,
counsel for Payne sent an email to the trial court, copying counsel for ODW and stating that
"Mr. Payne has instructed me to dismiss with prejudice his Complaint regarding the
additional allowance of aggravation of major depressive disorder. Such dismissal means
that claim no. 15-860700 will be disallowed for major depressive order" and that the bench
trial could be removed from the trial court's schedule. (Ex. E, attached to Jan. 11, 2019
Def.'s Mot. for Attorneys' Fees & Costs.)
{¶ 13} On December 10, 2018, Payne filed a dismissal entry which dismissed his
complaint with prejudice and stated that "[c]laim no. 15-860700 is disallowed for
No. 19AP-163 4
substantial aggravation of Major Depressive Disorder." Subsequently, on December 19,
2018, an agreed judgment entry was issued by the trial court which specifically found that
"[p]laintiff failed to prove eligibility to participate in the
benefits of the Ohio Workers' Compensation program for the
condition of "major [sic] substantial aggravation of major
depressive disorder, recurrent."
It is, therefore, ORDERED that Plaintiff John Payne is hereby
DENIED the right to participate in the Workers' Compensation
program for the condition of "substantial aggravation of major
depressive disorder, recurrent" under claim number 15-
860700, date of injury December 3, 2015.
(Entry at 1.)
{¶ 14} On January 11, 2019, ODW filed its motion for sanctions. On February 21,
2019, the trial court issued a Decision and Entry denying the motion for sanctions.1 The
trial court did not hold an evidentiary hearing. In denying the motion for sanctions, the
court stated, in pertinent part:
[T]he Court finds that, although Plaintiff's actions may be
considered unprofessional or discourteous, Plaintiff's conduct
is not sanctionable. Ohio Revised Code § 2323.51(A)(2) sets
forth a formidable standard as to what constitutes frivolous
conduct. Here, the Court finds that it is not "obvious" from the
facts of this case, that Plaintiff's conduct served merely to injure
Defendant ODW. Nor does the Court find that this action was
unwarranted under existing law, or completely unsupported by
the facts. Perhaps greater diligence could have been taken to
ensure that Plaintiff could afford to take this action through
judgment, or at the very least Plaintiff could have notified this
Court and opposing counsel of his intent to dismiss in a timelier
fashion. However, the Court does not find this lack of apparent
professionalism to be sanctionable.
Additionally, the Court finds that Defendant ODW is not
entitled to relief under Civ.R. 11. * * * In order to recover under
Civ.R. 11, the moving party must show that opposing counsel's
conduct was in willful violation of the above assertions.
However, the Court finds that willfulness is a high bar to meet,
and mere negligence will not allow recovery under this rule. As
such, the Court finds that because Defendant ODW has failed
to show that Plaintiff's counsel was willfully in violation of any
1In the same entry, the trial court also denied ODW's motion to strike the reply/sur-reply filed by Payne on
January 29, 2019. That portion of the entry is not at issue in the instant appeal.
No. 19AP-163 5
of the above assertions mandated by Civ.R. 11, sanctions are
inappropriate.
(Emphasis sic.) (Feb. 21, 2019 Decision & Entry at 4.)
{¶ 15} On March 20, 2019, ODW filed the instant appeal.
II. ASSIGNMENT OF ERROR
{¶ 16} ODW asserts one assignment of error for our review:
The Trial Court erred in denying Defendant-Appellant's
Motion For Attorneys' Fees and Costs Against the Plaintiff and
his attorney under R.C. §2323.51 and Civ.R. 11.
III. STANDARD OF REVIEW
{¶ 17} The decision of a trial court to deny a hearing on a motion for sanctions "will
be reviewed to determine whether there exists an arguable basis for sanctions."
Woodworth v. Huntington Natl. Bank, 10th Dist. No. 95APE02-219 (Dec. 7, 1995), citing
Micro Coatings, Inc. v. A-1 Advanced Plumbing, Inc., 10th Dist. No. 94APE01-80 (Aug. 25,
1994) (hearing under R.C. 2323.51); Kemp, Schaeffer & Rowe Co., L.P.A. v. Frecker, 70
Ohio App. 3d 493, 498 (10th Dist.1990) (hearing under Civ.R. 11). "Where there exists an
arguable basis for an award of sanctions, a trial court must hold a hearing on the issue."
Woodworth.
{¶ 18} In the present matter, the trial court denied the motion for sanctions without
holding a hearing. Accordingly, ODW's appeal presents the narrow issue of whether its
motion for sanctions under R.C. 2323.51 and Civ.R. 11 presented an arguable basis for relief
so that the trial court should have held a hearing. For the reasons that follow, we answer in
the affirmative.
IV. LAW AND ANALYSIS
A. Motion to Dismiss and Amended Motion to Dismiss
{¶ 19} As a threshold matter, this court must address Payne's May 1, 2019 motion
to dismiss and Payne's May 1, 2019 amended motion to dismiss. In both the motion and
the amended motion, Payne asserts the trial court lacked subject-matter jurisdiction to
decide ODW's motion for sanctions because it was not filed within 30 days of the entry of
final judgment as required by R.C. 2323.51(B)(1). Therefore, argues Payne, this appeal
must be dismissed.
No. 19AP-163 6
{¶ 20} But ODW's motion for sanctions was filed well within 30 days of the trial
court's December 19, 2018 agreed judgment entry. Incidentally, Payne failed to raise the
issue of timeliness of the motion for sanctions in the trial court.
{¶ 21} Accordingly, both the May 1, 2019 motion to dismiss and the May 1, 2019
amended motion to dismiss filed by Payne are hereby denied, and we proceed to the merits
of this appeal.
B. R.C. 2323.51 and Civ.R. 11
{¶ 22} R.C. 2323.51(B)(1) provides that "any party adversely affected by frivolous
conduct may file a motion for an award of court costs, reasonable attorney's fees, and other
reasonable expenses," and that the court "may assess and make an award to any party to
the civil action or appeal who was adversely affected by frivolous conduct." "Frivolous
conduct" includes "making allegations or other factual contentions that have [either] no
evidentiary support" or "are not warranted by the evidence." R.C. 2323.51(A)(2)(a)(iii) and
(iv).
{¶ 23} Civ.R.11 also permits a court to award attorney fees if a party willfully
contravenes the purposes of the rule. The rule requires attorneys (or pro se parties) to sign
all pleadings, motions, or other documents to certify that "the attorney or party has read
the document; that to the best of the attorney's or party's knowledge, information, and
belief there is good ground to support it; and that it is not interposed for delay." Civ.R. 11.
Thus, if a party or his attorney willfully signs a document which the party knows is not
supported by good ground, a trial court may award expenses and reasonable attorney fees
as a sanction for violating the rule. Civ.R.11; Filonenko v. Smock Constr., LLC, 10th Dist.
No. 17AP-854, 2018-Ohio-3283, ¶ 13.
{¶ 24} "Both R.C. 2323.51 and Civ.R.11 serve to deter abuse of the judicial process
by penalizing sanctionable conduct that occurs during litigation." Filonenko at ¶ 14. While
R.C. 2323.51(B)(2) provides for certain procedural requirements, including a hearing,
which must precede an award of fees and costs as sanctions, R.C. 2323.51 does not mandate
that a trial court conduct a hearing prior to denying a motion for attorney fees. Ohio Dept.
of Admin. Servs. v. Robert P. Madison Internatl., Inc., 138 Ohio App. 3d 388, 399 (10th
Dist.2000), appeal not allowed, 90 Ohio St. 3d 1431, citing Tosi v. Jones, 115 Ohio App. 3d
396, 401, (10th Dist.1996).
No. 19AP-163 7
{¶ 25} Likewise, Civ.R. 11 does not require a trial court to conduct a hearing before
denying such a motion. Capps v. Milhem, 10th Dist. No. 03AP-251, 2003-Ohio-5212, ¶ 7.
To the contrary, a trial court "must schedule a hearing only on those motions which
demonstrate arguable merit[,] and[,] where a trial court determines there is no basis for the
imposition of sanctions, it may deny the motion without a hearing." Robert P. Madison
Internatl. at 399, citing Tosi, at 401. See also Justice v. Lutheran Social Serv. of Cent. Ohio,
79 Ohio App. 3d 439, 444 (10th Dist.1992) (stating that if the trial court determines no basis
exists for the imposition of sanctions, it may deny the motion without a hearing, as R.C.
2323.51 does not require the trial court to conduct a hearing before denying a motion for
an award of attorney fees, but necessitates a hearing only on those motions which
demonstrate arguable merit).
{¶ 26} Nevertheless, "[w]here there exists an arguable basis for an award of
sanctions, a trial court must hold a hearing on the issue." Capps, supra, citing Woodworth
(discussing hearing requirement under Civ.R. 11 and R.C. 2323.51). Thus, as previously
noted, a trial court's denial of a hearing on a motion for sanctions will be reviewed to
determine whether there exists an arguable basis for sanctions. Id. The key to this court's
analysis of whether a hearing should have been held "is that the trial court may deny an oral
hearing only to those motions which on their face reveal the lack of a triable issue."
Donaldson v. Todd, 174 Ohio App. 3d 117, 2007-Ohio-6504, ¶ 9 (10th Dist.), citing Cortext
Ltd. v. Pride Media Ltd., 10th Dist. No. 02AP-1284, 2003-Ohio-5760, ¶ 13.
{¶ 27} In the present matter, we find that ODW's motion for sanctions
demonstrated arguable merit. In support of its motion, ODW presented significant
evidence that tended to support ODW's position that Payne had been less than forthright
regarding the extent and severity of his symptoms arising from his previously allowed
conditions relating to the workplace injury to his left hand. This evidence included the
transcript of the July 27, 2018 hearing on ODW's request that TTD payments be terminated
which included the testimony of Payne regarding his self-reported challenges in using his
left hand and arm; the DHO's subsequent order terminating TTD payments which
summarized the video surveillance showing Payne performing various activities and
finding that the activities "are in direct contradiction to the abilities and restrictions the
Injured Worker reported to his medical providers"; and the May 22, 2018 supplemental
No. 19AP-163 8
report of Dr. Sardo wherein he changed his opinion from his original March 7, 2018 IME
report based on "numerous inconsistencies with regard to [Payne's] activities documented
on the video surveillance evidence." Dr. Sardo opined in his report that Payne's physical
activities documented on the video surveillance were "inconsistent with previous clinical
exam findings and medical documentation on file."
{¶ 28} The court finds that the foregoing evidence does call into question whether
Payne had evidentiary support or "good ground" for his complaint seeking participation in
the Ohio Workers' Compensation Fund for the condition of "substantial aggravation of
major depressive disorder." Therefore, ODW's motion for sanctions presented an arguable
basis for an award of fees and costs under R.C. 2323.51 and/or Civ.R. 11, and it was error
for the trial court not to have held a hearing prior to denying it. We hasten to point out that
our conclusion on this point should not be read to suggest that we agree that the evidence
shows that Payne engaged in frivolous conduct as defined by R.C. 2323.51, that he engaged
in willful conduct under Civ.R. 11 or that an award of attorney fees and costs as sanctions is
warranted in this case. Our conclusion does, however, require that we remand this matter
for the trial court to properly consider the evidence presented by ODW in its motion at an
evidentiary hearing. Thus, we sustain in part appellant's assignment of error.
V. CONCLUSION
{¶ 29} For the reasons discussed above, we find that because ODW's motion for
sanctions demonstrated arguable merit, the trial court should have held an evidentiary
hearing pursuant to R.C. 2323.51 and Civ.R. 11 to determine whether the motion for
sanctions had merit. Accordingly, we reverse the February 21, 2019 decision and entry of
the trial court and remand this matter for further proceedings in accordance with this
decision.
Judgment reversed;
cause remanded.
SADLER and NELSON, JJ., concur.