Thallman v. Thallman

[Cite as Thallman v. Thallman, 2016-Ohio-992.]
IN THE COURT OF APPEALS OF OHIO
THIRD APPELLATE DISTRICT
SENECA COUNTY
ESTATE OF WAYNE THALLMAN, ET AL.,
PLAINTIFFS-APPELLANTS, CASE NO. 13-15-36
v.
DANIEL H. THALLMAN, ET AL., OPINION
DEFENDANTS-APPELLEES.
Appeal from Seneca County Common Pleas Court
Probate Division
Trial Court No. 20144004A
Judgment Affirmed in Part, Reversed in Part and Cause Remanded
Date of Decision: March 14, 2016
APPEARANCES:
John T. Barga for Appellants
Zachary E. Fowler for Appellees
Case No. 13-15-36
SHAW, P.J.
{¶1} Plaintiffs-appellants Estate of Wayne Thallman, Tiffani Reiter,
Stephani Underwood, and Kimberli Wurts (collectively “appellants”) bring this
appeal from the September 23, 2014 judgment of the Seneca County Common
Pleas Court, Probate Division, denying appellants’ motion to compel discovery
filed against defendants-appellees Daniel Thallman, Martin Thallman, and Janet
Quarrie (collectively “appellees”). In addition, appellants also appeal from the
September 29, 2015 judgment awarding appellees attorney’s fees and expenses
pursuant to Civ.R. 37(A)(4) for appellees’ successful defense of the motion to
compel.
Relevant Facts and Procedural History
{¶2} On June 13, 2014, appellants filed a “Complaint for Accountings [of
the] Claudine A. Thallman Trust [and the] Herval L. Thallman Trust.” (Doc. No.
1). Claudine Thallman and Herval Thallman were married and had five children
together: Martin Thallman, Daniel Thallman, Janet Quarrie, Wayne Thallman and
James Thallman. In 1981, Claudine Thallman executed a “trust agreement.” The
trust agreement indicated that upon Claudine’s death the trust would provide for
Herval during his lifetime, and upon Herval’s death, the trust would terminate and
all properties would be paid over to Claudine and Herval’s five children “and any
afterborn children, share and share alike, per stirpes.” (Id. at Ex. 1). On or about
March 2, 1983, Claudine died and she was survived by Herval.
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{¶3} On February 9, 2004, Herval Thallman created a trust that would
benefit him during his lifetime and upon his death the trust would terminate and all
trust properties would be paid over to Herval’s children. The trust indicated that
four of Herval’s children would each receive a 1/5th share of the trust upon
termination. The fifth child, James Thallman, predeceased Herval, so Herval
indicated that the remaining 1/5th share of Herval’s trust, which would have been
James’s share, would go to three of James’s children, who are three of the
appellants in this case, namely, Stephani Underwood, Kimberli Thallman (nka
Wurts), and Tiffani Thallman (nka Reiter).1
{¶4} The primary asset of the Claudine Thallman and Herval Thallman
trusts was farmland in Bloom Township, Seneca County, Ohio.
{¶5} On or about August 24, 2011, appellees began serving as trustees of
both Herval and Claudine’s trusts and they continued to serve in that capacity as
trustees until Herval died in January of 2014.
{¶6} On June 13, 2014, appellants brought this action against the appellees
seeking an accounting of both the Claudine Thallman and Herval Thallman Trusts.
Amongst the relief sought by the appellants was for the appellees to provide a
1
Thus upon the death of Herval Thallman and the termination of both trusts, appellants Underwood, Wurts,
and Reiter were each entitled to a 1/15th distribution of the Herval Thallman trust assets, and a 1/25th
distribution of the Claudine Thallman trust assets. The difference between the two distributions was that
Claudine Thallman’s trust did not specifically exclude James Thallman’s two children from James’s first
marriage as distributes upon the termination of Claudine’s trust whereas Herval’s trust did specifically
exclude James’s two children from his first marriage, giving Underwood, Wurts, and Reiter a slightly
greater share in the distribution of Herval’s trust. Appellant Wayne Thallman, or his estate rather, is
entitled to a 1/5th share of the distribution of both trusts.
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“[r]eport of the Trust property, liabilities, receipts and disbursements including the
source and amount of the Trustee’s compensation and a listing of the Trust assets
and their respective market values * * * for 2011, 2012, 2013, and 2014[.]” (Doc.
No. 1).
{¶7} On July 10, 2014, appellees filed their answer and asserted a number
of affirmative defenses. (Doc. No. 11).
{¶8} The case then proceeded to discovery. On July 24, 2014, the trial
court held a case management conference concerning, inter alia, discovery. At
that time appellees indicated to the trial court “that a packet of documents
detailing the financial activities of the Trusts, since [Herval’s’] death,” had been
provided to appellants’ attorney. (Doc. No. 16).
{¶9} On July 25, 2014, appellees executed releases authorizing appellants
to directly contact H&R Block to obtain the tax records of both trusts dating back
to 2011.2 In addition, appellees executed releases authorizing appellants to obtain
“any/all information requested on accounts” owned by the trusts dating back to
2011 from First Merit Corporation, where the trusts’ banking was done.
{¶10} On August 27, 2014, appellees filed a number of notices indicating
that they had served their responses to appellants’ interrogatories and appellants’
request for production of documents. (Doc. Nos. 21-24).
2
The releases were actually attached to documents later filed in the record. However, they were dated July
25, 2014, therefore we put them in their appropriate chronological context here.
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{¶11} On August 29, 2014, appellees filed a “motion to dismiss for failure
to state a claim and, in the alternative, motion for summary judgment.” (Doc. No.
30). In the motion, appellees contended that the appellants made numerous
requests for various documents both formally and informally and that appellees
had provided the documents that they were “required to provide under law.” (Id.)
Appellees asserted that appellants filed their complaint for accounting in June of
2014, but were seeking an accounting of the trusts for the years 2011 through
2014. According to appellees, appellants were not even entitled to information
from 2011-2014 under R.C. 5808.13 because appellants were not “current
beneficiaries” of the trusts during those years. (Id.) The relevant statute referred
to by appellees to support their position, R.C. 5808.13, reads, in pertinent part,
(C) A trustee of a trust that has a fiscal year ending on or after
January 1, 2007, shall send to the current beneficiaries, and to
other beneficiaries who request it, at least annually and at the
termination of the trust, a report of the trust property, liabilities,
receipts, and disbursements, including the source and amount of
the trustee’s compensation, a listing of the trust assets, and, if
feasible, the trust assets' respective market values. * * *
{¶12} Appellees also contended that regardless of whether they were
required to provide information to appellants under statute, they had “provided
voluminous documents to [appellants] to satisfy [R.C. 5808.13]” and that they had
provided releases and authorization for appellants to obtain any other pertinent
documentation. (Doc. No. 52).
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{¶13} On September 8, 2014, another pretrial conference was held. At the
hearing the trial court indicated that it heard from the parties regarding the status
of discovery. (Doc. No. 38). The trial court then filed a judgment entry instituting
a briefing schedule for appellants to file a motion to compel and also for appellants
to file a response to appellees’ “motion to dismiss/motion for summary judgment.”
(Id.)
{¶14} On September 10, 2014, appellants filed a “motion to compel
discovery.” In the motion the appellants sought to compel appellees to provide
more thorough answers to interrogatories and to provide more financial
documentation, particularly as it related to the appellees’ administration of the
trusts from when appellees became trustees in 2011 to the death of Herval
Thallman in 2014. The motion and accompanying memorandum consisted of
approximately 14 pages and it contained 18 exhibits totaling in excess of 130
pages of material ranging from copies of checks, to hand-written notes and email
correspondence. (Doc. No. 37).
{¶15} On September 12, 2014, appellants filed a supplement to their
motion to compel, arguing that R.C. 5808.13 applied not only to current
beneficiaries but also to “other beneficiaries” who request information. (Doc. No.
39). Appellants argued that the statutory definitions of “other beneficiaries”
included them even prior to Herval’s death, and that they were therefore entitled to
more information. (Doc. No. 39).
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{¶16} On September 17, 2014, appellees filed their response to appellants’
motion to compel, seeking for the trial court to deny the motion. Appellants
contended that they had provided all documents in their possession and, in the
alternative, that appellees were not entitled to the documentation regardless. In
addition, appellees requested that the trial court order appellants to pay the
reasonable expenses and attorney’s fees incurred as a result of defending the
motion to compel as provided in Civ.R. 37(A)(4).
{¶17} Also on September 17, 2014, appellees filed a motion to strike
appellants’ motion to compel and the supplement to that motion, pursuant to
Civ.R. 11. Appellees contended that the motion to compel “was not properly
supported on good ground.” (Doc. No. 41). In addition, appellees filed a motion
for a protective order seeking that discovery be limited to the trust property,
activity, and documentation since Herval’s death on January 14, 2014. (Doc. No.
42).
{¶18} On September 19, 2014, appellants filed a brief in opposition to
appellees’ motion to strike and motion for a protective order. (Doc. No. 43).
{¶19} On September 22, 2014, appellants filed a brief in opposition to
appellees’ motion to dismiss and for summary judgment in the alternative. (Doc.
No. 45).
{¶20} On September 23, 2014, the trial court filed its judgment entry
determining appellants’ motion to compel discovery. In the judgment entry, the
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trial court summarized the arguments of the parties and made factual findings,
indicating that appellants
do not contend any failure to respond to Discovery but rather
seek an Order requiring supplementation of prior responses.
The [appellees] have stated that they have provided all the
relevant documents in their possession. [Appellees], without
waving their objections to [appellants] discovery requests,
executed a release and authorization in favor of [appellants] * *
* allowing them to directly contact the bank and investment firm
exclusively used by the Trusts.
(Doc. No. 48).
{¶21} The trial court then specified that the primary issue to be determined
for the motion to compel was “whether there is a right to demand records via
Discovery that predate the date the [appellants] became beneficiaries.” (Doc. No.
48). In analyzing the issue, the trial court stated that it was “undisputed” that the
appellants did not become beneficiaries of the trusts until Herval’s death on
January 14, 2014, and that it was undisputed that appellants did not request
information regarding the trusts until after Herval’s death. The trial court stated
that appellants “became ‘current beneficiaries’ of both trusts in January 2014,
when Hervall Thallman died.” (Id.) Based on this determination, the trial court
stated that appellants were seeking “to require [appellees] to provide information
through Interrogatory and Production of Documents outside of the date of
responsibility as Trustees, that being January 14, 2014.” (Id.)
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{¶22} The trial court then continued by stating that there was no showing
that appellees failed to provide supplemental discovery for any acts of the trustees
since January 14, 2014, or that the requested subject matter was relevant to the
litigation. Based on its analysis, the trial court denied appellants’ motion to
compel and granted appellees’ protective order limiting discovery to trust
documentation since January 14, 2014.
{¶23} On October 1, 2014, appellees filed for a motion for award of
attorney’s fees pursuant to Civ.R. 37(A)(4), which provides that the prevailing
party in a motion to compel “shall” receive expenses and attorney’s fees unless the
court finds, after a hearing, that the motion to compel was substantially justified.
(Doc. No. 49); Civ.R. 37(A)(4). Appellees indicated that at the time they filed for
their award of attorney’s fees they had incurred $3,452.50 defending the motion to
compel.
{¶24} Also on October 1, 2014, appellants filed a motion for leave to file an
amended complaint instanter, which alleged, in addition to the original allegations,
that appellees breached their fiduciary duties, that appellees willfully, wantonly,
and/or negligently breached the duties of fairness, loyalty, impartiality, and care
owed to the appellees, and that appellees “maliciously interfered with [appellants’]
expectancies of inheritance by mismanagement and conversion.” (Doc. No. 50).
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{¶25} On October 6, 2014, the trial court filed an entry indicating that it
had held oral arguments on the pending dispositive motions on October 1, 2014.3
The trial court stated that the parties also engaged in settlement discussions and
that an agreement had been reached to stay all pending motions. (Doc. No. 51).
The entry indicated that as part of the agreement, appellees were going to provide
appellants with additional releases so appellants could further investigate
appellees’ actions related to the trusts. (Id.)
{¶26} On October 24, 2014, appellees filed a motion to strike appellants’
motion for leave to file an amended complaint. (Doc. No. 52). Appellees argued
that appellants were “ ‘fishing’ for more information in an attempt to come up
with possible causes of action where none exist.” (Id.)
{¶27} Also on October 24, 2014, appellees filed a document purportedly
summarizing the agreement that had been made on the record at the October 1,
2014 hearing. Appellees indicated that the agreement was that appellants would
utilize the releases that had been provided by the appellees, including new releases
that would be executed related to insurance policies from 2011-2014, to
investigate on their own time, and that if the appellants did not find additional
information indicating misconduct greater than $500 after a review of those
documents, appellants would dismiss their action with prejudice. (Doc. No. 53).
3
No transcript of this hearing was produced.
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{¶28} Also on October 24, 2014, appellees filed a motion for judgment on
the pleadings. (Doc. No. 54).
{¶29} On October 30, 2014, appellants filed an “omnibus” response to
appellees’ motions made on October 24, 2014. Appellants stated that appellees
withdrew the discovery authority they granted to the appellees, that appellees
improperly disclosed confidential discussions between counsel to the court, and
that dismissal of the case was not appropriate. (Doc. No. 60).
{¶30} On October 30, 2014, appellants filed a voluntary “Notice of
Dismissal” pursuant to Civil Rule 41(A)(1), dismissing the action against
appellees in its entirety without prejudice. (Doc. No. 62).
{¶31} On November 3, 2014, the trial court filed a judgment entry
acknowledging appellants’ voluntary dismissal and stating that appellants’ motion
for award of attorney’s fees pursuant to Civ.R. 37(A)(4) was still outstanding as a
collateral matter. However, the trial court stated that appellants’ voluntary
dismissal rendered all other non-collateral matters moot. (Doc. No. 63).
{¶32} On November 13, 2014, appellants filed a response to appellees’
motion for award of attorney’s fees contending, inter alia, that the appellants’
voluntary dismissal rendered the trial court without jurisdiction to consider the
matter of sanctions and attorney’s fees for discovery violations. (Doc. No. 64).
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{¶33} On November 14, 2014, appellants filed a notice of appeal to this
court, indicating that appellants wished to appeal the decision made by the trial
court in the September 23, 2014, judgment entry.4 (Doc. No. 67).
{¶34} On December 9, 2014, this Court dismissed appellants’ first appeal.
This Court stated that appellants had voluntarily dismissed all their claims in this
action. The only outstanding issue was appellees’ motion for attorney’s fees.
Thus this Court determined there was no timely appeal filed from any final
judgment. Appellants subsequently filed for reconsideration of this Court’s
determination, and that reconsideration motion was also denied by this Court.
{¶35} On February 4, 2015, the trial court held a case management
conference following this Court’s dismissal of appellants’ first appeal. At that
conference, the judge presiding over the case indicated that his son and the son of
one of appellees’ attorneys were scheduled “to be playing on a 5th grade AAU
basketball team together in the Spring of 2015 starting in March” and that both the
judge and appellees’ attorney had been asked to help coach the team. (Doc. No.
77). The trial court judge then recused himself due to the “potential future
appearance of impropriety.” (Id.) Common Pleas Court Judge Steven Shuff was
then assigned to preside over the case.
{¶36} On April 16, 2015, the trial court held a hearing on the motion for
attorney’s fees and expenses filed pursuant to Civ.R. 37(A)(4). At the hearing
4
Appellants also attempted to appeal another issue from a prior judgment entry not related to this appeal.
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appellees called attorney James S. Nordholt, Jr., who was classified as an expert in
attorney’s fees in the relative area of Ohio. Nordholt gave testimony as to the fees
incurred by the appellees, their reasonableness, and the reasonableness of the
amount of time spent on what was prepared. Nordholt’s testimony was not
concluded by the end of the hearing so the hearing was continued to a second day,
which was scheduled weeks later.
{¶37} Prior to the second day of the hearing on attorney’s fees, appellees
filed a supplement to their motion for award of attorney’s fees contending that
they had incurred additional fees at the prior hearing, making the total amount of
fees and expenses that the appellees had incurred as a result of the motion to
compel $9,875.75. In addition, appellees also argued for an award of sanctions
against appellants pursuant to Civ.R. 11 and for a determination that appellants
had engaged in frivolous conduct pursuant to R.C. 2323.51. Appellees argued that
the trial court should determine that the case had been wholly frivolous. Appellees
contended that the trial court should award appellees their attorney’s fees in their
entirety for this action, which amounted to over $30,000.
{¶38} On May 6, 2015, the hearing on attorney’s fees resumed and
Nordholt’s testimony was concluded. The trial court allowed each side to present
closing arguments and each side was also permitted to submit closing briefs
related both to Civ.R. 37(A)(4) sanctions and the newly made frivolous conduct
allegations. Both appellants and appellees filed closing briefs.
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{¶39} On September 29, 2015, the trial court filed its final judgment entry
on the matter. In its entry, the trial court determined that appellants did not meet
their burden to establish that their motion to compel was substantially justified.
Therefore the trial court awarded appellees attorney’s fees and expenses in the
amount of $9,875.75 for sanctions against appellants pursuant to Civ.R. 37(A)(4).
The trial court reasoned similar to the original probate judge that appellants “did
not become beneficiaries until the death of Herval Thallman, on January 14,
2014.” (Doc. No. 89). Based on this, the trial court indicated that appellees had
“no duty to provide information related to the trust * * * prior to that date.” (Id.)
The trial court also determined that appellees had readily produced relevant
information and thus the motion to compel was not substantially justified. (Id.)
Finally, the trial court determined that appellees did not timely file their request
for frivolous conduct and Civ.R. 11 sanctions in this matter as they did not file the
request within 30 days of appellants’ voluntary dismissal.5 Therefore appellees’
request for sanctions on that later-filed motion requesting a finding of frivolous
conduct and appellees’ request for attorney’s fees for the entire case on that basis,
was overruled.
5
We note that while R.C. 2323.51(B)(1) explicitly contains a thirty day time limit, Civ.R. 11 “sets forth no
time frame for filing a motion for sanctions.” Bergman v. Genoa Banking Co., 6th Dist. Ottawa No. OT-
14-019, 2015-Ohio-2797, ¶ 22. However, some courts have taken the position that a thirty day time limit
should be “inferred for Civ.R. 11 sanctions[.]” Zunshine v. Cott, 10th Dist. No. 07AP-764, 2008-Ohio-
2298, ¶ 21. Regardless, appellees did not file a cross-appeal on this issue and we will not further address it.
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{¶40} Appellants now bring this appeal from the September 23, 2014
judgment denying their motion to compel, and the September 29, 2015 judgment
awarding appellees attorney’s fees pursuant to Civ.R. 37(A)(4). Appellants assert
the following assignment of error for our review.
ASSIGNMENT OF ERROR 1
THE TRIAL COURT MISINTERPRETED THE FACTS,
MISAPPLIED THE LAW, COMMITTED PLAIN ERROR
AND ABUSED ITS DISCRETION WHEN IT DENIED THE
PLAINTIFFS’ MOTION TO COMPEL DISCOVERY AND
GRANTED DEFENDANTS’ MOTION FOR PROTECTIVE
ORDER.
ASSIGNMENT OF ERROR 2
THE TRIAL COURT MISINTERPRETED THE FACTS,
MISAPPLIED THE LAW, COMMITTED PLAIN ERROR
AND ABUSED ITS DISCRETION WHEN IT AWARDED
ATTORNEY FEES PURSUANT TO CIVIL RULE 37(A)(4).
First Assignment of Error
{¶41} In appellants’ first assignment of error they contend that the trial
court erred by denying their motion to compel discovery and that it also erred by
granting appellees’ motion for a protective order. We find that appellants’
arguments are rendered moot by their voluntary dismissal of their case.
{¶42} In this case appellants filed suit against the appellees, proceeded
through discovery and eventually filed a motion to compel discovery. Appellants
lost that motion to compel, and ultimately voluntarily dismissed their case against
appellees without prejudice pursuant to Civ.R. 41(A). Appellants now ask this
Court to reverse the decision on the motion to compel made by the trial court
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where the case and issues are no longer pending due to the voluntary dismissal.
Even if we agreed with the appellants—and, to be clear, we are not saying that we
agree with appellants as we are not deciding the merits of the matter—there would
be no remedy this Court could offer to the appellants because of their voluntary
dismissal. Only the collateral matter of sanctions remained pending following
appellants’ voluntary dismissal.6 Thus for these reasons appellants’ first
assignment of error is rendered moot and we will not further address it.7
Second Assignment of Error
{¶43} In appellants’ second assignment of error, they argue that the trial
court erred in awarding the appellees attorney’s fees and expenses pursuant to
Civ.R. 37(A)(4). Specifically, appellants contend that the trial court improperly
relied on the previous judge’s ruling in denying the motion to compel, that the
6
We note that appellants repeatedly argued to the trial court, and they still maintain to this Court, that
Civ.R. 37(A)(4) sanctions are not a collateral matter and thus the trial court should not have addressed the
sanctions after appellants’ voluntary dismissal of the underlying action. First, that is legally inaccurate. An
award of Civ.R. 37(A)(4) attorney’s fees and expenses is described as an award for sanctions. Heimberger
v. Zeal Hotel Group, Ltd., 10th Dist. Franklin No. 15AP-99, 2015-Ohio-3845, ¶ 53; Wilkins v. Sha’ste Inc.,
8th Dist. Cuyahoga No. 99167, 2013-Ohio-3527, ¶ 9. “A proceeding for sanctions is ancillary to the
actions before the trial court.” Blackwell v. Allstate Ins. Co., 8th Dist. Cuyahoga No. 80485, 2003-Ohio-
1823, ¶ 35; see also ABN AMRO Mtge. Group, Inc. v. Evans, 8th Dist. Cuyahoga No. 96120, 2011-Ohio-
5654, ¶ 6 (“While a Civ.R. 41(A)(1) voluntary dismissal generally divests a court of jurisdiction, a court
may still consider collateral issues not related to the merits of the action.”); State ex rel. Ahmed v. Costine,
100 Ohio St.3d 36 (2003) (“[t]rial courts may consider collateral issues like * * * sanctions despite a
dismissal[.]”); In re GTI Capital Holdings, LLC, 399 Fed.Appx. 236 (9th Cir.2010) (finding that
proceedings under the equivalent Federal Rule of Civil Procedure, 37(A)(5), “are collateral because they
aim to deter abuse of the judicial process and have no bearing, and therefore no res judicata effect, on the
case’s underlying merits.”). Second, not only is appellants’ interpretation legally inaccurate, but it would
also lead to troubling results. Under appellants’ interpretation, a litigant could commit any number of
discovery violations but as long as they dismissed their case before a trial court awarded attorney’s fees, the
litigant would escape sanctions.
7
We also note that appellees filed a motion to have appellants’ appeal partially dismissed. That motion,
which was related to appellants’ first assignment of error, is rendered moot by our decision on this matter,
and we will not further address it.
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appellees did not provide sufficient expert testimony to justify the award of fees
and expenses, that appellants were only complying with a court order when they
filed their motion to compel, and that Civ.R. 37(A)(4) does not automatically
entitle the prevailing party to be awarded attorney’s fees.
{¶44} Pursuant to Civ.R. 37, a party may move a trial court to compel an
uncooperative litigant to participate in discovery. Upon ruling on the motion to
compel, the trial court is generally “required” to award reasonable expenses
incurred, including attorney’s fees, to the prevailing party, whichever party that
may be. Stratman v. Sutantio, 10th Dist. Franklin No. 05AP-1260, 2006-Ohio-
4712, ¶ 29. Civil Rule 37(A)(4) establishes that if a motion to compel is denied,
attorney’s fees are granted to the prevailing party unless the moving party
establishes that its motion was substantially justified. The pertinent part of Civ.R.
37(A)(4) that is related to this action reads,
If the motion [to compel] is denied, the court shall, after
opportunity for hearing, require the moving party or the
attorney advising the motion or both of them to pay to the party
or deponent who opposed the motion the reasonable expenses
incurred in opposing the motion, including attorney’s fees,
unless the court finds that the making of the motion was
substantially justified or that other circumstances make an
award of expenses unjust.
Civ.R. 37(A)(4).
{¶45} “The mandatory sanctions of Civ.R. 37(A)(4) [thus] grant a
substantial right to the party against whom the discovery process has been
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abused.” MaCarthy v. Dunfee, 19 Ohio App.3d 68, 70, (9th Dist.1984). Notably,
Civ.R. 37(A)(4) also places the burden on the party who lost the motion to compel
to show that the motion was “substantially justified.”
{¶46} When a trial court elects to impose financial sanctions, including
those under Civ.R. 37(A)(4), we review the trial court’s decision under an abuse of
discretion standard. An abuse of discretion implies the trial court's decision was
unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d
217, 219 (1983).
{¶47} We will separately discuss below the trial court’s decision
determining that appellants’ motion to compel was not substantially justified for
purposes of Civ.R. 37(A)(4), and the trial court’s specific determination of the fees
and expenses awarded in this case.
I. Whether the trial court abused its discretion in determining
that appellants’ motion to compel was not substantially
justified for purposes of Civ.R. 37(A)(4).
{¶48} In this case it was appellants’ burden at the hearing on Civ.R.
37(A)(4) sanctions to demonstrate that their motion to compel was “substantially
justified.” The trial court determined that the appellants did not meet that burden.
In its judgment entry on the matter, the trial court cited multiple reasons for
determining that appellants’ motion was not substantially justified. The trial court
conducted the following analysis in reaching that conclusion after citing the
relevant legal authority.
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Plaintiffs did not become beneficiaries [of the trusts] until the
death of Herval Thallman, on January 14, 2014.
Further, Rule 26 of the Ohio Rules of Civil Procedure only
allows discovery of relevant information. The Court has already
found that it is undisputed that Plaintiffs did not make a request
for information regarding the trusts at issue until after the death
of Herval Thallman.
Under the plain letter of the law, Defendants had no duty to
provide information related to the trust to Plaintiffs prior to that
date. Defendants had already properly responded to discovery.
The motion to compel did not allege that Defendants had not
properly responded to discovery, but rather, sought even more
information. Plaintiffs’ motion to compel sought supplements to
that discovery, ultimately requesting an order to compel
information to which they were not entitled, and which was not
relevant to the facts at issue before the Court.
(Doc. No. 89).
{¶49} The trial court thus set forth its primary reasons for finding that the
appellants’ motion was not substantially justified: appellants were simply not
entitled to the supplemental information requested; notwithstanding whether
appellees had any duty to provide the supplemental information, appellees had
already properly responded to discovery; and the requested information was not
relevant to the specific issue before the court.
{¶50} In reviewing the trial court’s decision, we do not find that appellants
have demonstrated through either factual or legal arguments that the trial court
abused its discretion in this case. This action began with appellants filing a
“Complaint for Accountings” of the Claudine Thallman and the Herval Thallman
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trusts. The record indicates that appellees provided the appellants with copious
amounts of information to establish a current accounting of the trusts after the
death of Herval Thallman in January of 2014 when appellants were entitled to a
distribution of the trust assets. In addition, the record indicates that the appellees
provided the appellants with access to tax returns from the years 2011-2014 and
access to the bank records from the institution that handled the trusts’ banking and
investing.
{¶51} Appellants contend that based on R.C. 5808.13(C), they were entitled
to more information to satisfy the accounting, including information as to what
had been in the trust in the years prior to Herval’s death. Revised Code
5808.13(C) requires trustees to
send to the current beneficiaries, and to other beneficiaries who
request it, at least annually and at the termination of the trust, a
report of the trust property, liabilities, receipts, and
disbursements, including the source and amount of the trustee’s
compensation, a listing of the trust assets, and, if feasible, the
trust assets’ respective market values.
Notably R.C. 5808.13 does not specify what is required for a “report” of the trust
property. However, the “official comment” R.C. 5808.13 sheds light on what is
required for a “report” or an “accounting” by a trustee. It specifically indicates
that
[the code] employs the term “report” instead of “accounting” in
order to negate any inference that the report must be prepared
in any particular format or with a high degree of formality. The
reporting requirement might even be satisfied by providing the
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beneficiaries with copies of the trust’s income tax returns and
monthly brokerage account statements if the information on
those returns and statements is complete and sufficiently clear.
Official Comment to R.C. 5808.13.8 Based on what was required for a report,
what was delivered in discovery, and the releases granted to the appellants, we
cannot find that the trial court erred in determining that appellees had already
complied with discovery and that additional information was irrelevant to a
current report or “accounting” of the trusts.
{¶52} Moreover, the trial court’s ruling that the additional information was
irrelevant seems particularly true in light of the fact that appellants did not allege
any type of fraud on behalf of the appellees in their complaint. The closest
appellants came in their complaint to alleging any type of fraud was to allege that
appellees did not act in good faith by failing to respond promptly to requests for
information regarding the trusts.9 Thus under these circumstances we cannot find
that the trial court abused its discretion in finding that the relevant documents were
provided and that additional documents—if they existed—were irrelevant to this
action. For these reasons alone we find that the trial court did not abuse its
discretion.
8
We note that “[o]fficial comments are not enacted by the state legislature and do not have the effect of
law, but they do provide courts with ‘interpretive assistance.’ ” In re Fields, 351 B.R. 887, 892 (Bankr.
S.D. Ohio 2006), quoting, AGF, Inc. v. Great Lakes Heat Treating Co., 51 Ohio St.3d 177 (1990).
9
While a review of the complaint makes clear that the appellants did not allege fraud, we would note that
to any extent any of the allegations appellants did make could be liberally construed as touching on fraud,
“fraud must be pled with particularity.” Messina v. Clawges, 8th Dist. Cuyahoga No. 93323, 2010-Ohio-
3311, ¶ 8. See also Civ.R. 9(B).
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{¶53} We note that the trial court found another reason to deny appellants’
motion to compel, which was that appellants were not entitled to the trusts’
financial documents for years prior to 2014 because they were not “beneficiaries”
at that time. The trial court specifically found that appellants “did not become
beneficiaries until the death of Herval Thallman, on January 14, 2014.” (Doc. No.
89). Appellants contend that pursuant to R.C. 5808.13(C) both “current
beneficiaries” and “other beneficiaries” who request a report are entitled to them.
Appellants argue that they fell into the category of “other beneficiaries” contrary
to the trial court’s conclusions.
{¶54} In analyzing the statutory definitions for “beneficiary,” “current
beneficiary,” and “qualified beneficiary” under R.C. 5801.01, there appears to be a
legitimate question as to just what status the appellants had prior to Herval
Thallman’s death. However, we do not need to reach a decision on this matter as
even if we assumed that appellants met the statutory definition for “other
beneficiaries” under R.C. 5808.13(C), the trial court’s decision denying
appellants’ motion to compel was supported on other grounds as previously stated.
{¶55} Next, Appellants argue that the original trial court judge actually
ordered them to file a motion to compel so the second trial court judge could not
have found that the motion to compel was not substantially justified. Appellants
contend they were merely complying with a court order in filing the motion to
compel. Despite appellants’ arguments, it appears from the record that the trial
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court merely set a schedule following a case-management conference for the
appellants to file a motion to compel if they chose to do so. The original trial
judge explicitly stated as much in his judgment entry denying the motion to
compel, stating that it had “issued a briefing schedule” related to the motion.
(Doc. No. 48). Giving the appellants a deadline to file a motion to compel is
vastly different than explicitly ordering the appellants to file a motion to compel.
Thus appellants’ argument is not well-taken.
{¶56} Appellants also contend that the second trial judge had “no personal
knowledge of the matter” when he was assigned to the case upon the first trial
judge’s recusal and that the second judge merely reiterated the first judge’s
findings. However, the second trial judge’s judgment entry on the matter
affirmatively indicated that he reviewed the “record, exhibits, and arguments of
counsel” and he also presided over both of the hearings on Civ.R. 37(A)(4)
sanctions. Therefore appellants’ argument on this issue is similarly not well-
taken.
{¶57} For all of these reasons we find that appellants’ arguments that the
trial court erred in determining that their motion was not substantially justified are
not well-taken.
II. Whether the trial court’s award of attorney’s fees and expenses
pursuant to Civ.R. 37(A)(4) was supported by the record
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{¶58} Appellants contend that even if the trial court properly found that
their motion to compel was not substantially justified, the award for attorney’s
fees was improper. Appellants specifically contend that the attorney called by the
appellees to establish the reasonableness of the fees did not adequately establish
that the fees were reasonable, that he was not an “expert” in trust law, and that the
trial court improperly limited appellants’ cross examination of appellees’ expert.
{¶59} At the April 16, 2015, and May 6, 2015, hearings, the appellees
called a disinterested attorney, James S. Nordholdt, Jr., to testify as to attorney’s
fees in this case. Nordholdt testified that he had been an attorney for 41 years, that
he was a general practitioner, and that he had also been a prosecutor and a public
defender during his career. Nordholdt testified that he had been involved in
probate proceedings in the past. After providing his qualifications and allowing
appellants to cross-examine Nordholt regarding those qualifications, Nordholt was
then recognized as an expert under Evid.R. 702(B) for purposes of attorney’s fees
in the locality. Notably, appellants did not object when the trial court recognized
Nordholt as an expert, and contrary to appellants’ arguments, Nordholt was not
recognized as an expert in trust law.
{¶60} Nordholt went on to testify that he spent “approximately two hours
with the court’s file,” and that he had “reviewed copies of motions.” (Apr. 16,
2015, Tr. at 60). Nordholt testified that he “did not read the content of every
motion” but he reviewed them “to get a sense of what was filed and what was
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pertinent to litigation in this matter.” (Id.) After reviewing the record, Nordholt
testified that he was “satisfied” that he had “a general understanding of the
litigation in this particular case.” (Id.)
{¶61} Nordholt also testified that he reviewed appellees’ attorney’s fees
related to the motion to compel. Nordholt testified that he “reviewed the invoices”
along with appellees’ attorney and actually deleted items on the bills that
“pertain[ed] to general trust administration rather than litigation.” (Apr. 16, 2015,
Tr. at 61).
{¶62} Nordholt then testified as to the rates listed on the bills, indicating
that they were reasonable and customary for the area, and that “[t]he work
described appeared to be reasonable.” (Id. at 88). During Nordholt’s testimony,
appellants actually stipulated that the hourly rates were reasonable. (Id. at 93).
{¶63} Nordholt testified that he did not specifically review the content of
the motion to compel, but rather “was looking at there was a Motion to compel
filed” and “whether or not the time spent to make that response and the action in
responding was reasonable.” (Id. at 90-91). Nordholt later specifically clarified
that he thought that the number of hours expended was reasonable, but he was not
offering any opinions as to the merits of the motion to compel or the response to it.
(Id. at 95).
{¶64} Nordholt’s testimony continued into the second day of the hearing on
attorney’s fees, which was held weeks later. At the second hearing, Nordholt gave
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testimony regarding attorney’s fees incurred from the first hearing on fees, and he
testified that “the time spent on the described items appeared reasonable” and that
“the hourly rates * * * [were] reasonable.” (May 6, 2015, Tr. at 23). However,
Nordholt testified that he specifically did not examine the $1,275 in expenses
claimed by appellees so he had “no opinion regarding whether the expenses that
[we]re listed there were reasonable or necessary.” (Id. at 25). Exhibits detailing
the hours worked and the fees charged were introduced into evidence. The
exhibits indicated that the $1,275 in expenses was for travel and accommodation
for one of the trustees flying to one of the hearings related to the motion to
compel.
{¶65} After analyzing the matter in its judgment entry, the trial court
ultimately awarded $8,600.75 in attorney’s fees and expenses related to the motion
to compel and $1,275.00 as “travel expenses as a result of the motion to compel”
for a total award of $9,875.75. (Doc. No. 89).
{¶66} On appeal appellants contend that Nordholt’s testimony was
insufficient to establish the award of attorney’s fees in this case. We disagree.
Nordholt gave clear testimony as to what his role was, his review of the
documents, and his opinion that the attorney’s fees presented were reasonable, that
the work was reasonable, and that the amount of time spent doing the work was
reasonable. Based on this testimony the trial court had ample evidence before it to
make the determination that the fees were reasonable and necessary. Therefore we
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cannot find that the trial court abused its discretion related to the fees actually
testified to by Nordholt.
{¶67} However, notwithstanding his testimony related to attorney’s fees
and expenses, Nordholt did not offer any testimony as to the reasonableness of the
travel expenses asserted by the appellees, and, in fact, he specifically testified that
he did not review the expenses and had no opinion regarding them. Thus while we
cannot find that the trial court abused its discretion in finding that Nordholt’s
testimony was sufficient to support an award of the fees alleged, his testimony
could not support an award for the $1,275 in travel expenses. As appellees
provided no other testimony related to the travel expenses, we find that the trial
court’s award of travel expenses was error in this case.
{¶68} We note that appellants also contend that the trial court erred in
limiting their cross-examination of Nordholt during his voir dire and during the
cross-examination related to alleged frivolous conduct. However, appellants
attempted to question Nordholt about things unrelated to his qualifications during
his voir dire, so we cannot find that the trial court erred in excluding questions
irrelevant to that issue at that time. As to limiting Nordholt’s cross-examination
related to alleged frivolous conduct, the trial court overruled appellees’ motion for
Civ.R. 11 sanctions and for frivolous conduct, denying appellees’ request for over
$30,000 in attorney’s fees for the entire litigation. Any limitations placed upon
the cross-examination related to this issue would not be relevant to this appeal as
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frivolous conduct is no longer an issue. Therefore we cannot find that the trial
court erred on this matter.
{¶69} In sum, appellants have not met their burden to establish that the trial
court abused its discretion in determining that appellants’ motion to compel was
not substantially justified. We also find that the trial court’s award for attorney’s
fees was not an abuse of discretion; however, the award of $1,275 for travel
expenses was not supported by the record as there was absolutely no testimony
related to the travel expenses. Therefore appellants’ second assignment of error is
overruled in part and sustained in part.
{¶70} For the foregoing reasons appellants’ first assignment of error is
deemed moot, their second assignment of error is overruled in part, and sustained
in part to the limited extent that the award for travel expenses is not supported by
the record.
Judgment Affirmed in Part,
Reversed in Part and
Cause Remanded
PRESTON and WILLAMOSKI, J.J., concur.
/jlr
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