Jiang v. Zipkin

[Cite as Jiang v. Zipkin, 2022-Ohio-3816.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
MICHAEL JIANG, ET AL., :
Plaintiffs-Appellees, :
No. 111069
v. :
LEWIS A. ZIPKIN, TRUSTEE, ET AL., :
Defendants-Appellants. :
JOURNAL ENTRY AND OPINION
JUDGMENT: AFFIRMED
RELEASED AND JOURNALIZED: October 27, 2022
Civil Appeal from the Cleveland Heights Municipal Court
Case No. CVF-1900287
Appearances:
Gertsburg Licata Co., LPA, Victor A. Mezacapa, III, and
Cynthia M. Menta, for appellees.
Zipkin Whiting Co. LPA, and Kevin M. Gross, for
appellant.
FRANK DANIEL CELEBREZZE, III, P.J.:
Appellant Lewis A. Zipkin, Trustee (“appellant”), appeals the decision
of the Cleveland Heights Municipal Court denying his motion for sanctions against
appellees Michael Jiang, Imran Nahin, and Dongyan Xu (collectively “appellees”).
After a thorough review of the applicable law and facts, we affirm the judgment of
the trial court.
I. Factual and Procedural History
This matter arises from the claimed wrongful withholding of a security
deposit. Appellees entered into a lease agreement with appellant in May 2016, while
attending medical school at Case Western Reserve University. At the time the lease
agreement was executed, appellees remitted $2,590 for a security deposit.
Appellees later terminated the lease agreement and received only a
partial refund of the security deposit. They maintained that when they vacated the
residence, they left it in a substantially similar condition as when they had moved
in. Appellees repeatedly requested a full refund of their deposit, but appellant
continued to withhold $1,681.40. Appellant asserts that the funds were withheld
due to necessary cleaning of the apartment, a second parking space that appellees
had not paid for, and the painting of dirty, scuffed walls in the apartment.
Appellees, through their attorney, Cynthia Menta (“Menta”), filed a
small-claims suit in the Cleveland Heights Municipal Court against appellant,
alleging breach of contract and failure to return the security deposit in violation of
R.C. 5321.16.
Appellant responded to the complaint and filed a counterclaim against
appellees, alleging claims of abuse of process and defamation. There was significant
preliminary motion practice, including a motion to dismiss the counterclaim, a
motion to transfer to regular docket, a motion to strike, and a motion for sanctions,
along with corresponding briefing.
Requests for leave to amend pleadings were also briefed and opposed.
The parties engaged in discovery, which included interrogatories, requests for
admission, requests for production of documents, and depositions. A motion to
quash subpoena was filed and opposed, along with motions to extend the deadline
for expert reports.
The parties filed cross-motions for summary judgment. The court
denied appellant’s motion for summary judgment, finding that appellees’ claims
should proceed as “[t]here remain[ed] questions of fact as to whether [appellant]
had a substantive right to retain the security deposit.”
The court granted summary judgment on appellant’s counterclaim.
The court determined that appellees were entitled to judgment as a matter of law on
appellant’s claims for abuse of process and defamation. Appellant appealed the trial
court’s dismissal of his counterclaim, which was dismissed by this court sua sponte
because the appeal was untimely.
On remand, additional motion practice took place, including motions
in limine regarding appellees’ expert, which were briefed and opposed. Two days
before trial was scheduled in this matter, appellees moved to transfer the case to the
Cuyahoga County Court of Common Pleas because the amount in controversy had
by then exceeded the jurisdictional maximum due to the attorney fees incurred on
appellees’ behalf.
Although appellees’ motion to transfer venue was pending, the trial
court moved forward with the trial and dismissed appellees’ complaint with
prejudice for want of prosecution when appellees and Menta failed to appear for trial
as scheduled.
Appellant then moved for sanctions against appellees and Menta,
alleging that they engaged in frivolous conduct under R.C. 2323.51(A). The trial
court conducted a hearing on appellant’s motion for sanctions where all parties and
counsel were present.
At the hearing, appellant introduced evidence that he paid $26,325 in
legal fees to defend the matter. Further, he attempted to settle the case for $1,640
before the lawsuit was even filed, which was only $40 less than the amount sought
by appellees. Appellees demanded over $6,118.60 in attorney fees and double
damages in the amount of $3,361.48.
The trial court denied appellant’s motion for sanctions, finding that
appellees’ and Menta’s conduct during the proceedings was not frivolous.
Appellant then filed the instant appeal, raising two assignments of
error for our review:
1. The trial court erred when it determined that appellees and their
attorney Cynthia Menta did not engage in frivolous conduct under R.C.
2323.51(A), et seq.
2. The trial court erred when it did not award costs and attorney’s fees
to appellant under R.C. 2323. 51(B), et seq.
II. Law and Analysis
In appellant’s first assignment of error, he argues that the trial court
erred in denying his motion for sanctions and failing to find that appellees and
Menta engaged in frivolous conduct. He contends that Menta knew or should have
known that there was no evidentiary basis for the claims prior to filing the lawsuit
yet continued to prosecute appellees’ claims for over two years. Appellant argues
that no objective, reasonable attorney would have brought the claims.
A motion for sanctions under R.C. 2323.51 requires a trial court to
determine whether the challenged conduct constitutes frivolous conduct as defined
in the statute and, if so, whether any party has been adversely affected by the
frivolous conduct. Riston v. Butler, 149 Ohio App.3d 390, 2002-Ohio-2308, 777
N.E.2d 857, ¶ 17 (1st Dist.).
R.C. 2323.51(A)(2)(a)(ii) defines “frivolous conduct” as conduct that
“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.” R.C. 2323.51 applies an
objective standard in determining frivolous conduct, as opposed to a subjective one.
Bikkani v. Lee, 8th Dist. Cuyahoga No. 89312, 2008-Ohio-3130, ¶ 22. The finding
of frivolous conduct under the statute is determined without reference to what an
individual knew or believed. Ceol v. Zion Industries, Inc., 81 Ohio App.3d 286, 289,
610 N.E.2d 1076 (9th Dist.1992).
R.C. 2323.51 was not intended to punish mere misjudgment or tactical
error. Turowski v. Johnson, 70 Ohio App.3d 118, 123, 590 N.E.2d 434 (9th
Dist.1991). Instead, the statute was designed to chill egregious, overzealous,
unjustifiable, and frivolous action. Turowski v. Johnson, 68 Ohio App.3d 704, 706,
589 N.E.2d 462 (9th Dist.1990). The statute serves to deter abuse of the judicial
process by penalizing sanctionable conduct that occurs during litigation. Filonenko
v. Smock Constr., L.L.C., 10th Dist. Franklin No. 17AP-854, 2018-Ohio-3283, ¶ 14.
A determination to impose sanctions under R.C. 2323.51 involves a
mixed question of law and fact. Resources for Healthy Living, Inc. v. Haslinger,
6th Dist. Wood No. WD-10-073, 2011-Ohio-1978, ¶ 26. We review purely legal
questions de novo. Riston, 149 Ohio App.3d 390, 2002-Ohio-2308, 777 N.E.2d 857,
at ¶ 22. On factual issues, however, “we give deference to the trial court’s factual
determinations because the trial judge, of course, will have had the benefit of
observing the entire course of proceedings and will be most familiar with the parties
and attorneys involved.” In re Estate of O’Toole, 8th Dist. Cuyahoga No. 108122,
2019-Ohio-4165, ¶ 30, citing Riston at ¶ 25. The ultimate decision as to whether to
grant sanctions under R.C. 2323.51 rests within the sound discretion of the trial
court. State ex rel. Striker v. Cline, 130 Ohio St.3d 214, 2011-Ohio-5350, 957 N.E.2d
19, ¶ 11.
Frivolous conduct implicated by R.C. 2323.51(A)(2)(a)(ii) involves
proceeding on a legal theory that is wholly unwarranted in law. “In determining
whether a claim is frivolous under R.C. 2323.51(A)(2)(a)(ii), the test is objective —
whether no reasonable lawyer would have brought the action in light of the existing
law.” Internatl. Union of Operating Engineers, Local 18 v. Laborers’ Internatl.
Union of N. Am., Local 310, 8th Dist. Cuyahoga No. 104774, 2017-Ohio-1055, ¶ 15,
citing Orbit Elecs., Inc. v. Helm Instrument Co., 167 Ohio App.3d 301, 2006-Ohio-
2317, 855 N.E.2d 91, ¶ 49 (8th Dist.). A claim is therefore frivolous “‘if it is absolutely
clear under the existing law that no reasonable lawyer could argue the claim.’” Orbit
at id., quoting Hickman v. Murray, 2d Dist. Montgomery No. CA 15030, 1996 Ohio
App. LEXIS 1028, 14 (Mar. 22, 1996).
Appellant argues that appellees and Menta engaged in frivolous
conduct by prosecuting a security deposit and breach-of-contract claim that had no
evidentiary support. Appellant asserts that during appellee Jiang’s deposition, he
was questioned as to what specifically he could point to that was wrongfully
withheld, and he stated that he did not know. Appellant surmises that appellees did
not show up for trial because they lacked evidentiary support for their claims.
The trial court stated in its judgment entry denying the motion for
sanctions that appellees provided sufficient evidence to survive summary judgment
and stated that questions of fact existed regarding the withholding of portions of the
security deposit for the alleged breach and damage beyond ordinary wear and tear.
As noted by the trial court, surviving a summary judgment motion demonstrates
some evidentiary support for a party’s claims. See Merino v. Salem Hunting Club,
7th Dist. Columbiana No. 11 CO 2, 2012-Ohio-4553, ¶ 17; Wrinch v. Miller, 183 Ohio
App.3d 445, 2009-Ohio-3862, 917 N.E.2d 348, ¶ 55 (9th Dist.).
Appellant argues that Menta had a litigation budget for this matter of
$88,945.99 and six other lawyers billed time on this dispute. He contends that this
is evidence that Menta brought the case for an improper purpose — to rack up and
earn a windfall of legal fees. This argument lacks merit.
R.C. 5321.16 is a remedial statute intended to ensure that a tenant
incurs no expense when seeking a refund of a wrongfully withheld security deposit.
Alcorso v. Correll, 8th Dist. Cuyahoga No. 110218, 2021-Ohio-3351, ¶ 49. Consistent
with the purpose of the statute, if successful, appellees would have been entitled to
recover the reasonable attorney fees that appellant’s actions forced them to incur to
enforce their statutory rights. Merely because the attorney fees incurred in this case
were greatly disproportionate to the damages sought on appellees’ security-deposit
claim does not render them unreasonable. See, e.g., id., (affirming award of $26,825
on recovery of $446.19 in damages on security-deposit claim); Christen v.
Continental Ents., 2020-Ohio-3665, 154 N.E.3d 1192, ¶ 45, 52 (8th Dist.) (affirming
award of $23,500 in attorney fees on recovery of $850 security deposit under R.C.
5321.16(C)); Schultz v. Wurdlow, 10th Dist. Franklin No. 11AP-62, 2012-Ohio-3163,
¶ 1, 25-26 (trial court did not abuse its discretion in awarding $14,782.50 in attorney
fees for recovery of $700 in damages on security-deposit claim); see also Miller v.
Grimsley, 197 Ohio App.3d 167, 2011-Ohio-6049, 966 N.E.2d 932, ¶ 16 (10th Dist.)
(“Proportionality is not synonymous with reasonableness. ‘A “reasonable” fee must
be related to the work reasonably expended on the case and not merely to the
amount of the judgment awarded.’”), quoting Stonehenge Land Co. v. Beazer
Homes Invests., LLC, 177 Ohio App.3d 7, 2008-Ohio-148, 893 N.E.2d 855, ¶ 45
(10th Dist.).
This matter was pending in the trial court for over two-and-one-half
years and was vigorously litigated, including extensive motion practice by both
parties. It is unsurprising that significant attorney fees were incurred. As evidenced
by the cases above, the fact that the amount of attorney fees sought was greatly
disproportionate to the amount claimed to have been wrongfully withheld does not
render the amount sought unreasonable,1 and does not, on its own, demonstrate
frivolous conduct.
To further support his claim that appellees and Menta engaged in
frivolous conduct, appellant asserts that appellees refused to settle the case when
appellant would not pay for their attorney fees. After the case had been pending for
a year, appellees demanded $37,168.82 to settle the suit. Appellant asserts that he
had to retain two experts on the subject of reasonable attorney fees and one expert
opined that the litigation budget should not have exceeded $1,500 for the entire
1While we note that an award of attorney fees under R.C. 5321.16(C) “must relate solely
to the fees attributable to the tenant’s security deposit claim under R.C. 5321.16, and not
to any additional claims,” Smith v. Padgett, 32 Ohio St.3d 344, 349, 513 N.E.2d 737(1987), it is well established that ‘“[a] tenant may recover reasonable attorney fees under
R.C. 5321.16(C) attributable to both the security deposit claim and to defending against
the landlord’s claim for alleged damages,’” where ‘“the two claims are virtually
indivisible.’” Alcoroso v. Correll, 2020-Ohio-4752, 159 N.E.3d 924, ¶ 39 (8th Dist.), fn. 3,
quoting Whitestone Co. v. Stittsworth, 10th Dist. Franklin No. 06AP-371, 2007-Ohio-233,
¶ 56. In this instance, it does not appear that the claims raised in appellant’s counterclaim
were virtually indivisible from appellees’ security-deposit claim, and thus the fees
incurred defending the counterclaim may not have been recoverable. However, such a
determination would have been made by the court had the matter proceeded to trial and
need not be determined for purposes of this appeal.
case. Appellant further contends that in the weeks prior to trial, appellees sought to
settle the case for $7,500, which he claims demonstrates that their prior demands
were “outrageous.”
As the trial court noted, there is no requirement that a party engage in
settlement discussions. As stated by this court, “while settlements are generally
encouraged in the litigation arena, we can find no case law requiring a [party] to
engage in settlement discussions at all.” Wheeler v. Best Emp. Fed. Credit Union,
8th Dist. Cuyahoga No. 92159, 2009-Ohio-2139, ¶ 45. In the instant matter,
appellant acknowledges that appellees did engage in settlement discussions; he
simply believes that their demands were unreasonable. The trial court held that
the settlement offers and demands of Plaintiffs were warranted under
existing law, were not for an improper purpose, and did not themselves
cause an unnecessary delay or a needless increase in the cost of
litigation, other than causing the litigation to proceed forward as it
must when no settlement is reached.
We find that the trial court properly determined that the conduct of
appellees and Menta concerning settlement discussions was not frivolous under
R.C. 2323.51(A)(2)(a).
Finally, appellant characterizes appellees’ and Menta’s failure to
appear for trial as frivolous conduct, surmising that they did not appear because they
lacked evidentiary support for their claims. In analyzing this argument, the trial
court found that failing to appear at trial did not rise to the level of frivolous conduct
because there was no evidence that appellees had not intended to go forward until
that day. The trial court further noted that appellees
could have voluntarily dismissed the action, which would have, at a
minimum, left open the option of refiling the case. Furthermore, even
if the failure to appear was found to be frivolous, no award of costs, fees,
or expenses would be appropriate, as Defendant did not suffer as such.
On the contrary, as noted, had Plaintiffs voluntarily dismissed, as they
had a right to do, Plaintiffs’ claim could have been refiled. Had the
matter instead proceeded to trial, Defendant would have expended
additional time and attorney’s fees, with a best-case scenario at or near
where they stand today. Nonetheless, there is no evidence before the
Court that Plaintiffs never had any intention of going forward with a
trial, and the failure to appear at trial alone was frivolous under R.C.
2323.51(A)(2)(a).
We agree with the trial court and find that appellant has not
demonstrated that by simply failing to appear for trial, appellees knew their claims
lacked evidentiary support. The trial court did not abuse its discretion in denying
appellant’s motion for sanctions, and appellant’s first assignment of error is
overruled.
Appellant argues in his second assignment of error that the trial court
erred in declining to award costs and attorney fees to appellant. Appellant contends
that he incurred over $28,000 in legal fees and over $5,000 in costs in defending
the suit.
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 incurred in connection with the civil
action or appeal.” Because we determined that the trial court did not err in finding
that appellees and Menta did not engage in frivolous conduct and properly denied
appellant’s motion for sanctions, appellant was not entitled to an award of attorney
fees or costs. Appellant’s second assignment of error is overruled.
III. Conclusion
The trial court did not err in denying appellant’s motion for sanctions,
and appellant was not entitled to an award of attorney fees. Both of appellant’s
assignments of error are overruled.
Judgment affirmed.
It is ordered that appellees recover from appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this judgment
into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27
of the Rules of Appellate Procedure.
_________________________________________
FRANK DANIEL CELEBREZZE, III, PRESIDING JUDGE
MICHELLE J. SHEEHAN, J., and
LISA B. FORBES, J., CONCUR