Southard Supply, Inc. v. Anthem Contrs., Inc.

[Cite as Southard Supply, Inc. v. Anthem Contrs., Inc., 2017-Ohio-7298.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
Southard Supply, Inc., :
Plaintiff-Appellee/ :
Cross-Appellant, No. 16AP-545
: (C.P.C. No. 14CV-4769)
v.
: (REGULAR CALENDAR)
Anthem Contractors, Inc. et al.,
:
Defendant-Appellant/
Cross-Appellee. :
D E C I S I O N
Rendered on August 22, 2017
On brief: Scherner & Sybert LLC, and Dave Lackey, for
plaintiff-appellee. Argued: Dave Lackey.
On brief: Timothy S. Rankin and Ilya L. Polyakov, for
defendant-appellant. Argued: Timothy S. Rankin.
APPEAL from the Franklin County Court of Common Pleas
KLATT, J.
{¶ 1} Defendant-appellant, Anthem Contractors, Inc. ("Anthem"), appeals a
judgment of the Franklin County Court of Common Pleas that sanctioned plaintiff-
appellee, Southard Supply, Inc. ("Southard"), for its frivolous conduct under R.C. 2323.51.
Southard has filed a cross-appeal from the same judgment. For the following reasons, we
affirm the trial court's judgment.
{¶ 2} Southard sells plumbing, heating, and industrial supplies. Anthem is a
construction contractor who has purchased materials from Southard on account.
No. 16AP-545 2
{¶ 3} In early 2012, Anthem began renovating the fitness center at the federal
courthouse in Columbus, Ohio. Anthony McCleery, the president of Anthem, hired Jerry
Ball to perform plumbing work during the courthouse project. In April 2012, McCleery
discovered that Ball had used Anthem's credit account with Southard to purchase
materials for himself. Anthem refused to pay for the materials Ball purchased because it
never authorized Ball to order on credit.
{¶ 4} On May 2, 2014, Southard filed suit against Anthem, asserting claims for
breach of contract and unjust enrichment.1 In its complaint, Southard alleged that
Anthem had authorized Ball to purchase materials using Anthem's credit account.
Southard sought to recover $16,531.93 for the materials that Ball had purchased on credit.
{¶ 5} The parties then conducted discovery, during which Anthem served
interrogatories on Southard. In response to those interrogatories, Southard stated that
Anthem had given Southard verbal approval for Ball to order materials on credit. (Pl.'s
Resp. to Def.'s First Set of Interrogs. and Reqs. for Produc. of Docs. at No. 22.)
{¶ 6} After the completion of discovery, Southard voluntarily dismissed its
complaint. Anthem then moved for sanctions against Southard and its attorney under
R.C. 2323.51. In its motion, Anthem argued that the deposition testimony of Southard's
employees contradicted the factual contention, made in the complaint and in
interrogatory responses, that Anthem had authorized Ball to order materials using
Anthem's credit.
{¶ 7} At a hearing on Anthem's sanctions motion, Anthem introduced the
contract governing Anthem's credit account with Southard. The contract consisted of
Anthem's application for credit, which Southard had approved. The contract included an
"Approved Buyers List" and provided that "[o]nly the names listed below will be approved
to purchase" using the credit account. (Def.'s Ex. 2.) The list contained only two names,
Anthony McCleery and Theresa Smith, and stated, "all others call for approval." Id.
{¶ 8} McCleery testified at the sanctions hearing that Anthem had never
authorized Ball to order materials on Anthem's credit account with Southard. Michael
Lawrence, Southard's credit manager, conceded that Anthem had not provided Southard
1 The complaint also named Ball as a defendant and sought recovery against him under R.C. 2307.60,
which creates a civil cause of action for damages resulting from a criminal act. When Ball failed to answer
the complaint, Southard moved for and was granted a default judgment against him.
No. 16AP-545 3
with either written or verbal approval for Ball to purchase materials using Anthem's
credit. However, Lawrence maintained that Anthem had authorized Ball to purchase on
Anthem's credit because: (1) Ball had previously accompanied McCleery to Southard's
office, where McCleery had placed orders and Ball had assisted McCleery by telling him
what supplies were needed to complete the work on the courthouse project, and
(2) McCleery had allowed Ball to pick up ordered materials and sign invoices to
acknowledge the delivery of the materials, and Anthem had paid invoices that Ball had
signed.
{¶ 9} In a judgment issued June 23, 2016, the trial court found that Southard had
engaged in frivolous conduct under R.C. 2323.51(A)(2)(a)(iii), which defines "frivolous
conduct" as "conduct consist[ing] of allegations or other factual contentions that have no
evidentiary support or, if specifically so identified, are not likely to have evidentiary
support after a reasonable opportunity for further investigation or discovery."2 The trial
court determined that Southard's allegation that Anthem had authorized Ball to purchase
materials on Anthem's account had no merit from the outset. Additionally, the trial court
found that, if Southard had investigated the matter more thoroughly, it would have
realized that its own actions had created the debt that it sought to collect from Anthem.
The trial court then concluded that sanctions against Southard in the amount of $5,000
were reasonable, and it ordered Southard to pay that amount to Anthem.
{¶ 10} Anthem now appeals the trial court's June 23, 2016 judgment, and it assigns
the following errors:
[1.] The Trial Court Failed to Find that Southard's Claims
were not Warranted Under Existing Law and that Southard
and Lackey had an Obligation not to Pursue such Frivolous
Conduct.
[2.] The Trial Court Failed to Find that Lackey was Jointly
and Severally Liable for Southard's Frivolous Conduct
Involving Allegations and Factual Contentions which had no
Evidentiary Support from the Outset, or at any Time Prior to
Dismissal.
2 Initially, the trial court referred the motion for sanctions to a magistrate for a hearing and decision. The
magistrate conducted the sanctions hearing but, subsequently, became unable to render a decision. To
resolve this problem, the parties consented to the trial judge determining the motion on the then-existing
record.
No. 16AP-545 4
[3.] The Trial Court Abused its Discretion by Failing to Award
all of Appellant's Legal Fees, or in the Alternative, the Trial
Court Misapplied R.C. 2323.51(2)(A) [sic] to Require
Malicious Conduct, which is Inherently Arbitrary and
Unreasonable Per Se.
{¶ 11} Southard cross appeals, and it assigns the following errors:
1. The trial court erred when it granted Anthem Contractor,
Inc.'s ("Anthem") motion for sanctions against the Plaintiff-
Cross-Appellant, Southard.
2. The trial court erred in allowing transcripts from
depositions admitted into evidence in the sanctions hearing.
{¶ 12} We will begin our review with Southard's cross-appeal. By its first
assignment of error, Southard argues that the trial court erred in finding that it engaged
in frivolous conduct. We disagree.
{¶ 13} Pursuant to R.C. 2323.51(B)(1), a court may award court costs, reasonable
attorney fees, and other reasonable expenses to any party to a civil action who is adversely
affected by frivolous conduct. Prior to making such an award, the court must hold a
hearing to determine: (1) whether the conduct at issue was frivolous, (2) if the conduct
was frivolous, whether any party was adversely affected by it, and (3) the amount of the
award, if any. Bennett v. Martin, 10th Dist. No. 13AP-99, 2013-Ohio-5445, ¶ 17.
"Conduct" includes "[t]he filing of a civil action, the assertion of a claim, defense, or other
position in connection with a civil action, the filing of a pleading, motion, or other paper
in a civil action * * * or the taking of any other action in connection with a civil action."
R.C. 2323.51(A)(1). "Frivolous conduct" means the conduct of a party or the party's
attorney that satisfies any of the following:
(i) It obviously serves merely to harass or maliciously injure
another party to the civil action or appeal or is for another
improper purpose, including, but not limited to, causing
unnecessary delay or a needless increase in the cost of
litigation.
(ii) It is not warranted under existing law, cannot be
supported by a good faith argument for an extension,
modification, or reversal of existing law, or cannot be
supported by a good faith argument for the establishment of
new law.
No. 16AP-545 5
(iii) The conduct consists of allegations or other factual
contentions that have no evidentiary support or, if specifically
so identified, are not likely to have evidentiary support after a
reasonable opportunity for further investigation or discovery.
(iv) The conduct consists of denials or factual contentions
that are not warranted by the evidence or, if specifically so
identified, are not reasonably based on a lack of information
or belief.
R.C. 2323.51(A)(2)(a)(i) through (iv).
{¶ 14} In the case at bar, the trial court found Southard's conduct frivolous under
R.C. 2323.51(A)(2)(a)(iii). Whether conduct is frivolous under R.C. 2323.51(A)(2)(a)(iii)
presents a factual question; namely, whether evidence supports a party's allegations or
factual contentions. Carasalina LLC v. Bennett, 10th Dist. No. 14AP-74, 2014-Ohio-5665,
¶ 32. An allegation or factual contention needs only minimal evidentiary support in order
for a party or its attorney to avoid a frivolous conduct finding under R.C.
2323.51(A)(2)(a)(iii). Carasalina at ¶ 36.
{¶ 15} Because a finding of frivolous conduct under R.C. 2323.51(A)(2)(a)(iii)
results from a factual analysis, appellate courts afford such a finding a degree of
deference. Carasalina at ¶ 37. Appellate courts will not reverse a determination that
conduct is frivolous under R.C. 2323.51(A)(2)(a)(iii) unless the record lacks competent,
credible evidence to support the trial court's factual findings. Carasalina at ¶ 37; Groves
v. Groves, 10th Dist. No. 09AP-1107, 2010-Ohio-4515, ¶ 18, overruled in part on other
grounds, Jacobson v. Kaforey, 149 Ohio St. 3d 398, 2016-Ohio-8434.
{¶ 16} Here, we must determine whether Southard had evidentiary support for its
factual contention that Anthem had authorized Ball to purchase materials using Anthem's
credit account with Southard. Conceivably, Ball could have acquired the ability to
purchase materials using Anthem's credit through either express or apparent
authorization. Thus, we will analyze whether the record contains evidence of either type
of authorization.
{¶ 17} Express authority is that authority which a principal directly grants or
confers upon an agent in express terms. Master Consol. Corp. v. BancOhio Natl. Bank, 61
Ohio St. 3d 570, 574 (1991). Here, the "Approved Buyers List" in the parties' contract
explicitly limited which of Anthem's agents had express authority to purchase on credit.
No. 16AP-545 6
For Ball to obtain that authority, Southard had to acquire Anthem's approval. Lawrence,
Southard's credit manager, admitted that Anthem never told Southard, either in writing
or verbally, that Ball had the authority to utilize Anthem's credit account.
{¶ 18} To counteract Lawrence's admission, Southard points to a telephone log
memorializing a conversation between McCleery (Anthem's president) and a Southard
employee wherein McCleery told the Southard employee to take Ball "off of the approved
list of buyers." (Pl.'s Ex. I.) Viewed in isolation, this conversation might suggest that Ball
was on the "Approved Buyers List." That list, however, never contained Ball's name, and
Southard did not receive written or verbal approval to add Ball to that list. The evidence,
therefore, does not establish that Ball possessed the express authority necessary to
purchase materials on Anthem's account.
{¶ 19} Apparent authority arises when a principal has by its words or actions
caused a third party to reasonably believe that the agent had the requisite authority to
bind the principal. Am. Outdoor Advertising Co. v. P&S Hotel Group, Ltd., 10th Dist. No.
09AP-221, 2009-Ohio-4662, ¶ 37. For such authority to exist (1) the principal must hold
the agent out to the public as possessing sufficient authority to embrace the particular act
in question, or knowingly permit the agent to act as having such authority, and (2) the
person dealing with the agent must know of the facts and, acting in good faith, have
reason to believe that the agent possessed the necessary authority. Master Consol. Corp.
at 576. Moreover,
"[t]he apparent power of an agent is to be determined by the
act of the principal and not by the acts of the agent; a principal
is responsible for the acts of an agent within his apparent
authority only where the principal himself by his acts or
conduct has clothed the agent with the appearance of the
authority and not where the agent's own conduct has created
the apparent authority."
Id. at 576-77, quoting Logsdon v. ABCO Constr. Co., 103 Ohio App. 233, 242
(2d.Dist.1956).
{¶ 20} According to Lawrence, Southard assumed that Ball had the necessary
authority to purchase materials on Anthem's credit because Ball had previously visited
Southard's offices with McCleery and assisted McCleery in ordering materials for the
courthouse project. We do not agree that McCleery's and Ball's behavior created the
No. 16AP-545 7
apparent authority to allow Ball to subsequently buy on Anthem's credit. No apparent
authority could arise from this behavior because Southard and Anthem had a contract
that explicitly limited who could order materials using Anthem's credit. This contract
restricted the approved buyers to McCleery and Smith, and required Southard to obtain
telephone approval before allowing anyone else to charge purchases on Anthem's account.
Given the terms of this agreement, Southard could not reasonably believe that McCleery's
acceptance of Ball's assistance in ordering materials authorized Ball to subsequently
purchase materials with Anthem's credit. In short, by conditioning the use of Anthem's
credit on verbal approval, the contract precluded the creation of authority through
anything less than express authorization.
{¶ 21} Lawrence also contended that Anthem authorized Ball to purchase
materials on account because it permitted him to accept delivery of ordered items and
sign the invoices to acknowledge the delivery. While the evidence demonstrates that
Anthem permitted Ball to accept and acknowledge deliveries, that conduct is separate and
distinct from ordering materials on credit. Consequently, by permitting Ball to accept and
acknowledge deliveries, Anthem did not hold Ball " 'out to the public as possessing
sufficient authority to embrace the particular act in question.' " Master Consol. Corp. at
576, quoting Logsdon at 241-42. Apparent authority, therefore, did not arise from Ball's
acceptance and acknowledgement of deliveries.
{¶ 22} In addition to relying on Lawrence's testimony, Southard also points to
further evidence that it argues supports its contention that Anthem authorized Ball to
purchase materials on account. First, Southard directs us to a written statement, allegedly
prepared by McCleery, that provided, "Ball [ ] ordered 3/4" and 1" copper pipe and fittings
to complete the rest of the punchout list" for the courthouse project. (Pl.'s Ex. G.)
Initially, we note that when confronted with this statement, McCleery explained that Ball
did not order items directly from Southard, but instead, gave McCleery a written list of
items he needed and McCleery then ordered those items from Southard. However, even if
the statement is evidence that Ball directly ordered the copper pipe and fittings from
Southard, it does not demonstrate apparent authority. Apparent authority arises due to
the acts of the principal, not the agent. Master Consol. Corp. at 576-77. Thus, evidence
No. 16AP-545 8
that Ball placed an order with Southard, without more, falls short of proving apparent
authority.
{¶ 23} Next, Southard asserts that McCleery conceded that Anthem paid for
certain items that Ball purchased on Anthem's credit. In fact, the record contains no
evidence that Anthem paid for any of the materials Ball purchased. At best, the evidence
establishes that McCleery did not dispute charges for a handful of items contained on
three of the approximately 30 invoices that Ball's purchases had generated. However,
McCleery only communicated Anthem's acceptance of responsibility for some charges
after McCleery had demanded that Southard cease allowing Ball to purchase on Anthem's
credit and, consequently, Ball's ordering stopped. Anthem's after-the-fact acceptance of
responsibility is not evidence that, at the time Ball was ordering materials, Anthem either
held Ball out to Southard as having the authority to purchase on credit or knowingly
permitted Ball to purchase items on credit. Thus, Anthem's actions did not endow Ball
with any apparent authority.
{¶ 24} Southard also advances two ratification arguments: (1) Anthem's failure to
dispute certain charges amounted to ratification of all Ball's purchases, and (2) Anthem
ratified Ball's purchases because it delayed informing Southard that the purchases were
unauthorized. A principal ratifies the unauthorized action of an agent if the principal,
with full knowledge of the facts of the transaction, manifests its intention to approve the
agent's earlier, unauthorized act. Bobb Chevrolet v. Calhoun, 10th Dist. No. 03AP-816,
2004-Ohio-1006, ¶ 15. We need not resolve whether Anthem ratified Ball's actions.
Ratification comes into play only if an agent acts beyond the scope of his authority. Penn
Traffic Co. v. AIU Ins. Co., 99 Ohio St. 3d 227, 2003-Ohio-3373, ¶ 16. We are only
concerned with whether evidence supports Southard's contention that Ball acted within
the scope of his authority when he purchased materials using Anthem's credit account.
Ratification, therefore, is irrelevant.
{¶ 25} Having addressed all the evidence bearing on Ball's authority, we conclude
that none of it establishes that Anthem authorized Ball to purchase on Anthem's credit
account. The trial court, therefore, did not err in concluding that Southard engaged in
frivolous conduct under R.C. 2323.51(A)(2)(a)(iii). Accordingly, we overrule Southard's
first assignment of error.
No. 16AP-545 9
{¶ 26} By Southard's second assignment of error, it argues that the trial court erred
in admitting into evidence the depositions of four Southard employees. While we find
that the alleged error occurred, we conclude that the error does not justify reversal of the
trial court's judgment because it did not materially prejudice Southard.
{¶ 27} The decision to admit or exclude evidence rests within the broad discretion
of the trial court. Banford v. Aldrich Chem. Co., 126 Ohio St. 3d 210, 2010-Ohio-2470,
¶ 38; Beard v. Meridia Huron Hosp., 106 Ohio St. 3d 237, 2005-Ohio-4787, ¶ 20.
Appellate courts will uphold evidentiary rulings absent an abuse of discretion. Banford at
¶ 38; Beard at ¶ 20. Moreover, even in the event of an abuse of discretion, an appellate
court will affirm the trial court's evidentiary ruling unless the abuse materially prejudiced
a party. Banford at ¶ 38; Beard at ¶ 20.
{¶ 28} Generally, deposition testimony is inadmissible at trial or a hearing because
it constitutes hearsay. Whitmer v. Zochowski, 10th Dist. No. 15AP-52, 2016-Ohio-4764,
¶ 69. " 'Hearsay' is a statement, other than one made by the declarant while testifying at
the trial or hearing, offered in evidence to prove the truth of the matter asserted." Evid.R.
801(C). In this case, the trial court determined that the deposition testimony was not
hearsay because it was offered for a purpose other than proving the truth of the matters
asserted. Specifically, the trial court admitted the depositions for the limited purpose of
showing what Southard's attorney knew about the state of the evidence when he signed
and filed documents containing the factual contentions at issue.
{¶ 29} An attorney's knowledge, however, is not relevant to whether frivolous
conduct has occurred. R.C. 2323.51 employs an objective standard in determining
whether a party or its attorney has engaged in frivolous conduct. State ex rel. Striker v.
Cline, 130 Ohio St. 3d 214, 2011-Ohio-5350, ¶ 21. Thus, a court does not look to what the
party or its attorney knew or believed in deciding whether the conduct at issue is
frivolous. Judd v. Meszaros, 10th Dist. No. 10AP-1189, 2011-Ohio-4983, ¶ 22; Stafford v.
Columbus Bonding Ctr., 177 Ohio App. 3d 799, 2008-Ohio-3948, ¶ 8 (10th Dist.). The
plain language of R.C. 2323.51(A)(2)(a)(iii) requires a court to consider whether evidence
existed to support the allegations or factual contentions in question, not whether the party
or attorney knew of that evidence.
No. 16AP-545 10
{¶ 30} Given the objective nature of an inquiry into whether frivolous conduct has
occurred, the trial court erred in admitting the deposition testimony for the purpose of
divining the extent of Southard's attorney's knowledge. Anthem sought to admit that
testimony to demonstrate that the evidence contradicted, rather than supported, the
contention that Ball had authority to order materials using Anthem's credit account. The
depositions, therefore, were offered for the truth of the matters asserted therein and, thus,
constituted hearsay.
{¶ 31} Nevertheless, despite the error in admitting the depositions into evidence,
our review is not over. As we stated above, error in the admission of evidence only
warrants reversal if the error materially prejudiced the appealing party. Banford, 126
Ohio St. 3d 210, 2010-Ohio-2470, at ¶ 38; Beard, 106 Ohio St. 3d 237, 2005-Ohio-4787, at
¶ 20. An appealing party does not suffer material prejudice when the erroneously
admitted evidence is cumulative to other evidence in the record. Whitmer, 10th Dist. No.
15AP-52, 2016-Ohio-4764, at ¶ 76.
{¶ 32} Here, on the question of Bell's authority, the testimony adduced in the
depositions mirrored Lawrence's testimony at the hearing. The deponents offered the
same reasons as Lawrence for believing that Ball possessed the authority to order on
credit. Also, like Lawrence, the deponents acknowledged that Anthem had not provided
Southard with verbal or written authority to allow Ball to purchase materials using
Anthem's credit. Accordingly, we find that admission of the depositions did not
materially prejudice Southard, and we overrule Southard's second assignment of error.
{¶ 33} We next turn to Anthem's appeal. By its first assignment of error, Anthem
argues that the trial court erred in not finding that Southard and its attorney had engaged
in the type of frivolous conduct defined in R.C. 2323.51(A)(2)(a)(ii). A trial court may
award sanctions under R.C. 2323.51 if it determines that the conduct at issue falls within
any of the four definitions of "frivolous conduct" found in R.C. 2323.51(A)(2)(a). Here,
the trial court concluded that the conduct at issue was frivolous under R.C.
2323.51(A)(2)(a)(iii), and we have found no error in that conclusion. Because a party only
needs a finding of frivolousness under one of the four definitions for an award of attorney
fees under R.C. 2323.51, our ruling renders moot any error in the trial court's failure to
No. 16AP-545 11
find frivolousness under another definition. Accordingly, we find Anthem's first
assignment of error moot.
{¶ 34} By Anthem's second assignment of error, it argues that the trial court erred
in not finding Southard's attorney jointly and severally liable for payment of the attorney
fees awarded. We disagree.
{¶ 35} R.C. 2323.51(B)(4) provides that an award of attorney fees "may be made
against a party, the party's counsel of record, or both." Thus, a trial court may impose
sanctions upon both a party and its attorney, jointly and severally, if the conduct so
warrants. Sain v. Roo, 10th Dist. No. 01AP-360 (Oct. 23, 2001).
{¶ 36} By allowing the imposition of sanctions against the party, attorney, or both,
the statute " 'provides a mechanism for the court to place blame directly where fault lies.' "
Rindfleisch v. AFT, Inc., 8th Dist. No. 84551, 2005-Ohio-191, ¶ 19, quoting Estep v.
Kasparian, 79 Ohio App. 3d 313, 317 (10th Dist.1992); accord Ron Scheiderer Assocs. v.
London, 81 Ohio St. 3d 94, 97 (1998) (by authorizing an award against a party, its counsel,
or both, "[t]he General Assembly gave courts the discretion to hold those engaging in
frivolous conduct responsible for their actions"); Sain ("The objective of the statute is to
impose sanctions on the person actually responsible for the frivolous conduct."). An
appellate court will not reverse the trial court's allocation of the responsibility for the
payment of attorney fees absent an abuse of discretion. Blackburn v. Lauder, 4th Dist.
No. 96CA5 (Nov. 12, 1996).
{¶ 37} Here, although Anthem asked the trial court to hold Southard and its
attorney jointly and severally liable for the attorney fees awarded, the trial court only
sanctioned Southard. Anthem contends that this ruling constituted error because
Southard and its attorney are equally responsible for the frivolous conduct at issue in this
case. We are not persuaded that imposing sanctions on Southard, and not its attorney,
amounts to an abuse of discretion.
{¶ 38} In some cases, it is possible to portion responsibility for the frivolous
conduct between a party and its attorney. Here, however, the record contains no evidence
regarding whether Southard or its attorney was at fault for the unsupported contention
that Ball was authorized to purchase materials using Anthem's credit account.
Conceivably, the blame could lie with Southard, if, for example, its employees supplied
No. 16AP-545 12
Southard's attorney with erroneous information, or instead, the blame could lie with
Southard's attorney, if, for example, the attorney failed to fully investigate the matter.
Without any evidence to base the apportionment of fault, we must conclude that the trial
court did not abuse its discretion in ordering Southard, alone, to pay the attorney fees
award.
{¶ 39} Anthem also argues that Southard's attorney should be jointly and severally
liable because the attorney obtained an inaccurate affidavit from a third party and
provided that affidavit to Anthem's attorney. The record contains neither the affidavit nor
enough evidence for us to adjudge Anthem's allegation that the affidavit was inaccurate.
Moreover, the affidavit is unrelated to the trial court's finding of frivolous conduct.
Accordingly, we cannot find that an abuse of discretion occurred here, and we overrule
Anthem's second assignment of error.
{¶ 40} By its third assignment of error, Anthem argues that the trial court erred in
awarding it only $5,000 in attorney fees. We disagree.
{¶ 41} At the sanctions hearing, Anthem's attorney presented evidence that
Anthem had incurred over $18,000 in attorney fees to defend this case. Anthem's
attorney provided the court with the invoices his law firm had issued to Anthem, which
showed that the law firm billed Anthem on an hourly-rate basis. Anthem's attorney also
testified that all the fees charged were reasonable and necessary.
{¶ 42} In its decision, the trial court acknowledged that Anthem sought
approximately $18,000 in attorney fees. The trial court, nevertheless, only awarded
Anthem $5,000 in attorney fees. The trial court set the attorney fee award at $5,000
because it concluded that Southard had not brought its action in order to harass or
maliciously damage Anthem.
{¶ 43} A trial court exercises discretion in deciding to assess attorney fees as a
sanction for frivolous conduct. Carasalina LLC, 10th Dist. No. 14AP-74, 2014-Ohio-5665,
at ¶ 48. Moreover, a trial court has discretion to determine the amount of attorney fees to
award. Bear v. Troyer, 5th Dist. No. 15 CA 17, 2016-Ohio-3363, ¶ 67; Wrinch v. Miller,
183 Ohio App. 3d 445, 2009-Ohio-3862, ¶ 59 (9th Dist.).
{¶ 44} R.C. 2323.51(B)(3) addresses the amount of attorney fees a trial court may
award to a party adversely affected by frivolous conduct. According to that division,
No. 16AP-545 13
The amount of an award made pursuant to division (B)(1) of
this section that represents attorney's fees shall not exceed,
and may be equal to or less than, whichever of the following is
applicable:
(a) If the party is being represented on a contingent fee basis,
an amount that corresponds to reasonable fees that would
have been charged for legal services had the party been
represented on an hourly fee basis or another basis other than
a contingent fee basis;
(b) In all situations other than that described in division
(B)(3)(a) of this section, the attorney's fees that were
reasonably incurred by a party.
{¶ 45} Pursuant to R.C. 2323.51(B)(3), to assess reasonable attorney fees in a non-
contingent fee case, a trial court must first determine the amount of attorney fees that the
adversely affected party "reasonably incurred." To determine that amount, the trial court
must use the lodestar method of calculating fees set forth in Bittner v. Tri-County Toyota,
Inc., 58 Ohio St. 3d 143 (1991). State ex rel. Bell v. Madison Cty. Bd. of Commrs., 139
Ohio St. 3d 106, 2014-Ohio-1564, ¶ 21 (stating that Bittner supplied "the correct law" for
determining attorney fees under R.C. 2323.51). However, the trial court need not award
the amount of attorney fees it arrives at after applying the lodestar method. R.C.
2323.51(B)(3) allows the trial court to award an amount "equal to or less than" the fees
"reasonably incurred." Thus, a trial court has the discretion to award reasonable attorney
fees that fall short of the total amount of fees reasonably incurred. See Scott v. Namath,
10th Dist. No. 16AP-64, 2016-Ohio-5532, ¶ 30-32 (holding that R.C. 2323.51 affords trial
courts the discretion to reduce awards of reasonable attorney fees all the way down to
zero). In the case at bar, therefore, the trial court did not abuse its discretion in refusing
to award Anthem all the attorney fees that it reasonably incurred.
{¶ 46} Anthem also argues that the trial court erred in relying on the lack of
harassment or malice as the basis on which to award less attorney fees than the amount
reasonably incurred. We find this argument unavailing. R.C. 2323.51 does not delineate
factors or considerations that a trial court may, or must, use when deciding whether to
award attorney fees in an amount less than the amount reasonably incurred. Thus,
nothing precludes a trial court from considering the absence of harassment and malicious
No. 16AP-545 14
intent. Indeed, because the lack of harassing or malicious conduct mitigates a party's
culpability for engaging in frivolous conduct under R.C. 2323.51(A)(2)(a)(iii), it serves as
a reasonable basis to lessen a party's sanction. We, consequently, conclude that the trial
court did not abuse its discretion in using that consideration as a reason to lower the
amount of attorney fees due to Anthem.
{¶ 47} In sum, we reject both of the arguments that Anthem asserts under its third
assignment of error. Accordingly, we overrule that assignment of error.
{¶ 48} For the foregoing reasons, we find Anthem's first assignment of error moot,
and we overrule Anthem's second and third assignments of error. Additionally, we
overrule Southard's two assignments of error. We thus affirm the judgment of the
Franklin County Court of Common Pleas.
Judgment affirmed.
TYACK, P.J., and LUPER SCHUSTER, J., concur.