Vinci v. Ceraolo

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] Appellant, Ross Ceraolo, appeals from the order of the trial court granting judgment in favor of appellees, Rida Vinci and 1540 Columbus Corp., and ordering appellant to pay punitive damages, attorney fees, and costs. For the reasons set forth below, we affirm.

I Appellee Rida Vinci commenced this action for replevin of a 1987 Cadillac on May 23, 1989. This case was designated case No. 170039. On June 14, 1989, appellee 1540 Columbus Corp. filed a complaint against appellant seeking a money judgment, an accounting, a temporary restraining order, a temporary injunction, and a permanent injunction. This case was designated case No. 171308.

On June 20, 1989, appellant filed an answer and extensive counterclaim in case No. 170039, naming 1540 Columbus Corp. as a new-party plaintiff. Appellant's counterclaim alleged that he owned one half of the outstanding shares of 1540 Columbus Corp. and requested an injunction against Vinci, dissolution of the corporation and $100,000 as repayment for alleged loans made to both appellees. On July 7, 1989, appellant filed an answer and general denial in case No. 171308.

Pursuant to motion by appellant and Civ.R. 42, these cases were consolidated before the Honorable Burt W. Griffin.

On April 26, 1990, approximately one month prior to the scheduled trial, appellant moved to disqualify appellees' attorney, Jon R. Burney. The trial court denied that motion and the matter proceeded to bench trial on May 29, 1990.

At trial, appellees presented the testimony of a handwriting expert, Vickie Willard, who testified that Rida Vinci's signature had been forged on certain crucial documents that allegedly created appellant's ownership interest in 1540 Columbus Corp. Appellant presented the testimony of his own expert, Ann Jelson, who testified that these crucial signatures were not forged. Jelson based her testimony on the assumption that certain comparison writings were those of Vinci. This assumption was partially discredited by appellees on cross-examination.

Subsequently, appellant attempted to qualify Francois Aurelius McKanze as a handwriting expert. McKanze's testimony revealed that his only formal training in determining the genuineness of signatures was in the military in 1965. He further testified that he made only preliminary findings for the military, and documents he deemed suspicious were sent to experts to evaluate. McKanze further revealed that his only current certification is in graphoanalysis from the International Society of Question Document Examiners. Finally, McKanze was unable to identify any court proceeding in which he was allowed to testify as an expert. The trial court refused to allow McKanze to testify as an expert on behalf of appellant.

In addition to excluding McKanze's testimony, the trial court excluded that of Hal Pollock, Esq. Pollock represented appellees prior to the commencement of these lawsuits. Appellant called Pollack to the witness stand; however, appellees' objected, stating that Pollack was a surprise witness not disclosed pursuant to discovery requests. The trial court sustained appellees' objection on those grounds.

Because the trial court's findings of fraud and forgery were not assigned as error, the analysis of the facts set forth at trial has been limited to the substantive and procedural errors raised on appeal.

At the close of the case, the trial court granted judgment in favor of appellees on all counts of their complaints and on all counts of appellant's counterclaim. Specifically, the court ordered a replevin in case No. 170039. In case No. 171308, the court found that the documents that demonstrated appellant's ownership interest in 1540 Columbus Corp. were forgeries, there was no evidence indicating that appellees owed appellant any money, an injunction against appellant was proper to enjoin him from claiming an ownership interest in the corporation, and finally that Rida Vinci is the sole owner of the corporation's one hundred shares of stock. Further, the court found that the forgeries were deliberate and malicious, and granted appellees $7,500 in punitive damages. The court then asked both parties to submit briefs on the amount of compensatory damages to be awarded. Appellant filed a timely appeal of this judgment, which has been designated by this court as case No. 60100.

On November 8, 1990, the trial court held a hearing to determine the amount of compensatory damages to be awarded. Appellees presented documentation and expert testimony indicating that they had incurred $38,391.75 in legal fees and $4,221.49 in expenses in both cases. Appellant cross-examined appellees' expert, but put forth no evidence to refute appellees' claims.

Thereafter, the trial court granted appellees damages in the amount of $35,741.75, attorney fees, which amount did not include fees for the replevin action, and $3,921.49 expenses, which amount also did not include expenses in the replevin action. The judgment included interest at the statutory rate from June 6, 1990. Appellant filed a timely appeal of this judgment, which has been designated by this court as case No. 61000.

Case Nos. 60100 and 61000 are consolidated before this court for purposes of briefing, hearing and disposition.

II For his first assignment of error in case No. 60100, appellant contends that:

"The lower court erred in not permitting the appellant's handwriting expert to testify at the trial of this matter."

Appellant called Francois Aurelius McKanze to the stand as an expert to identify whether certain signatures of Rida Vinci were authentic. The trial court, after a preliminary evaluation of McKanze's credentials, ruled that McKanze could not testify as an expert.

While Evid.R. 702 permits expert testimony, a threshold determination must first be made under Evid.R. 104(A) concerning the qualification of an individual to testify as an expert witness. Kitchens v. McKay (1987), 38 Ohio App. 3d 165, 168-169, 528 N.E.2d 603, 605-607. On appeal, the trial court's ruling with respect to a witness's qualifications as an expert will not ordinarily be reversed unless there is a clear showing that the court abused its discretion. Id. at 169, 528 N.E.2d at 606; Fulton v. Aszman (1982), 4 Ohio App. 3d 64, 4 OBR 114, 446 N.E.2d 803. The term "abuse of discretion," however, connotes more than an error of law or judgment; it implies an unreasonable, arbitrary or unconscionable attitude on the part of the trial court.Blakemore v. Blakemore (1983), 5 Ohio St. 3d 217, 5 OBR 481,450 N.E.2d 1140; Steiner v. Custer (1940), 137 Ohio St. 448, 19 Ohio Op. 148, 31 N.E.2d 855.

We find that sufficient facts were demonstrated on the record to prove that the ruling of the trial court in excluding the testimony of McKanze was not unreasonable, arbitrary or unconscionable. The record plainly demonstrates that while McKanze received some training in preliminary document analysis and graphoanalysis, he has little, if any, formal training in examining forged signatures. In fact, when questioned by the trial judge, McKanze admitted that graphoanalysis does not involve determining whether a person's signature is genuine or not. Further, his only professional certification does not indicate an expertise in this field. Finally, McKanze was unable to identify any legal proceeding in which he has been permitted to testify as an expert.

Based upon the foregoing, we find that appellant's first assignment of error is not well taken.

III For his second assignment of error in case No. 60100, appellant contends that:

"The lower court erred in not permitting attorney Hal Pollock to testify on behalf of the appellant at the trial of this matter."

Appellant attempted to call Hal Pollock to the stand on direct examination. Pollock represented appellees as private counsel prior to the inception of this litigation. Pollock's name was not on a list of witnesses furnished by appellant pursuant to appellees' discovery request. The trial court refused to allow Pollock's testimony on the basis of the discovery violation.

The trial court has broad discretion in guiding discovery, and absent an abuse of that discretion, an appellate court should not overturn the court's rulings on discovery matters. See Doe v. Univ. of Cincinnati (1988), 42 Ohio App. 3d 227,538 N.E.2d 419.

Civ.R. 26(E) provides that parties must supplement discovery with the names of expert witnesses when they become available. Civ.R. 26(E)(3) provides that a duty to supplement all responses may be imposed by order of the court or through requests for supplementation by the parties. More specifically, however, as to non-expert trial witnesses, Loc.R. 21.1(II) of the Court of Common Pleas of Cuyahoga County, General Division, provides that:

"All parties are required to submit a trial witness list, including the full name and address of all witnesses expected to testify at the trial on their behalf, no later than seven (7) days prior to the final pretrial date. Thereafter, upon a showing of good cause, the opposing party may take the discovery deposition of any witness contained on the opposing trial witness list who has not been previously deposed during the normal discovery period. This extension of discovery cutoff is specifically restricted to depositions not previously taken of individuals listed on the opponent's trial witness list."

Based upon the foregoing rules of court, we find that appellant was under a duty to disclose the name of Pollock as a potential witness, and his failure to do so was a discovery violation sanctionable by the exclusion of that witness's testimony. Therefore, we find that the trial court did not abuse its discretion in this matter and appellant's second assignment of error is not well taken.

IV For his third assignment of error in case No. 60100, appellant contends that:

"The lower court erred in denying the appellant's motion to disqualify attorney Jon R. Burney as counsel for appellees."

In reviewing a motion to disqualify counsel, a court must balance the "doctrine of protecting the confidentiality of the attorney-client relationship versus interfering with an individual's freedom to retain counsel of his choice." Worth v.Huntington Bancshares, Inc. (Nov. 25, 1987), Cuyahoga App. No. 52861, unreported, at 57-58, 1987 WL 25694, affirmed in part and reversed in part on other grounds (1989), 43 Ohio St. 3d 192,540 N.E.2d 249.

The standard for disqualification of counsel is as follows:

"[A]n attorney may not represent a client in litigation against a former client if the former and current representations are both ``adverse' and ``substantially related.'

"In re Dayco Corporation (S.D.Ohio 1984), 102 Fed.R.Dec. 624, 628; see, also, White Mtr. Corp. [v. White Consol. Indus., Inc. (1978)], supra [60 Ohio App. 2d 82 at 86, 14 O.O.3d 64] at 67 [395 N.E.2d 1340 at 1344]; Phillips v. Investors Diversified (S.D.N.Y.1976), 426 F. Supp. 208, 211. The foregoing test ``fulfills the purpose of enforcing the lawyer's duty of absolute fidelity and guarding against the danger of inadvertent use of confidential information.' Phillips, supra, at 211." Worth,supra, at 59.

Burney's clients, Rida Vinci and 1540 Columbus Corp., are plaintiffs in the actions before us. Appellant contends that he is also Burney's client because of his alleged shares in 1540 Columbus Corp. This fact was not established prior to the court's ruling on the motion to disqualify. Therefore, there was no basis to exclude Burney from the case on that ground.

In its ruling on May 16, 1990, the court held that:

"Inasmuch as it has been represented by plaintiff's counsel that he will not be a witness for his clients in the present case, the motion to disqualify is denied."

DR 5-102 of the Code of Professional Responsibility provides:

"(A) If, after undertaking employment in contemplated or pending litigation, a lawyer learns or it is obvious that he or a lawyer in his firm ought to be called as a witness on behalfof his client, he shall withdraw from the conduct of the trial and his firm, if any, shall not continue representation in the trial, except that he may continue the representation and he or a lawyer in his firm may testify in the circumstances enumerated in DR 5-101(B)(1) through (4).

"(B) If, after undertaking employment in contemplated or pending litigation, a lawyer learns or it is obvious that he or a lawyer in his firm may be called as a witness other than onbehalf of his client, he may continue the representation untilit is apparent that his testimony is or may be prejudicial tohis client." (Emphasis added.)

Subsection (A) is not applicable to this action because Burney informed the court that he would not testify on behalf of the appellants.

Under subsection (B), nothing has been presented in the record that indicates that Burney's testimony would be prejudicial to his clients. On the contrary, he could only bolster their case. Merely by acting as counsel for appellees and asserting their cause, Burney implicitly denies that appellant was a shareholder of 1540 Columbus Corp. The only way that appellant could be Burney's client in this case is as a shareholder of that corporation. Therefore, Burney could not have prejudiced appellant within the purview of the Code of Professional Responsibility.

Appellant's third assignment of error is not well taken.

V Appellant's fourth and fifth assignments of error in case No. 60100 share a common basis in law and fact and will be dealt with simultaneously. For these assignments of error appellant contends that:

"The lower court erred in granting the appellees a judgment for punitive damages against the appellant."

"The lower court erred in granting the appellees a judgment for attorney's fees against the appellant."

Appellant argues that the award of attorney fees was erroneous because such damages were not pled, and are only appropriate in cases where punitive damages are appropriate. Appellant further argues that punitive damages are not appropriate because such damages were not pled, and are not proper in the absence of an award for actual damages.

Our review of these matters is limited to a determination of whether the trial court abused its discretion in making such awards. We find that appellees properly prayed for both compensatory and punitive damages. We further find that the trial court awarded attorney fees as compensatory damages.

Attorney fees are not recoverable by the prevailing party absent a statute providing for such an award. See Sorin v. Bd.of Edn. (1976), 46 Ohio St. 2d 177, 75 O.O.2d 224,347 N.E.2d 527. See, also, Shimman v. Internatl. Union of OperatingEngineers (C.A. 6, 1984), 744 F.2d 1226. "* * * As a general rule, the costs and expenses of litigation, other than the usual court costs, are not recoverable in actions for damages, and ordinarily no attorney fees are allowed. * * *" Gustafson v.Cotco Enter. (1974), 42 Ohio App. 2d 45, 52, 71 O.O.2d 264, 269,328 N.E.2d 409, 414. This rule is often called the "American rule" and is followed in Ohio. See Sorin, supra,46 Ohio St.2d at 179, 75 O.O.2d at 225, 347 N.E.2d at 529.

The exception to this rule arises when the opposing party has acted in bad faith. See Shimman, supra, 744 F.2d at 1229. If bad faith is found, attorney fees may be awarded. See Gates v.Toledo (1897), 57 Ohio St. 105, 48 N.E. 500. When there is bad faith or malicious misconduct, "* * * the jury may, in their estimate of compensatory damages, take into consideration and include reasonable fees of counsel employed by the plaintiff in the prosecution of his action." Roberts v. Mason (1859), 10 Ohio St. 277. Attorney fees are recoverable as compensatory damages by a plaintiff in an action in which punitive damages are proper. Kapcsos v. Hammond (1983), 13 Ohio App. 3d 140, 13 OBR 173, 468 N.E.2d 325; Langhorst v. Riethmiller (1977), 52 Ohio App. 2d 137, 6 O.O.3d 101, 368 N.E.2d 328.

It is well established that punitive damages are awardable in cases of fraud which involve malicious and intentional conduct.Locafrance United States Corp. v. Interstate Distrib. Serv.,Inc. (1983), 6 Ohio St. 3d 198, 6 OBR 252, 451 N.E.2d 1222. "Since punitive damages are assessed for punishment and not compensation, a positive element of conscious wrongdoing is always required. This element has been termed conscious, deliberate or intentional." Preston v. Murty (1987), 32 Ohio St. 3d 334,335, 512 N.E.2d 1174, 1176.

In the case sub judice, appellees presented ample evidence that the documents which purported to give appellant an ownership interest in 1540 Columbus Corp. were deliberate forgeries. The trial court properly found this action on the part of appellant to be malicious. The court also granted replevin and an injunction in favor of appellees. This being the case, it was entirely proper for the trial court to award punitive damages. Further, sufficient evidence was presented to demonstrate bad faith on the part of appellant in pursuance of this action. Therefore, based upon the foregoing, an award of reasonable attorney fees as compensatory damages is appropriate and the trial court did not abuse its discretion in so ruling.

Appellant's fourth and fifth assignments of error are not well taken.

VI For this first assignment of error in case No. 61000, appellant contends that:

"The lower court abused its discretion in the amount of attorney fees awarded the appellee because there was insufficient evidence to support such award."

Appellees' supported their claim for attorney fees with detailed documentation of each hour spent on this case, and with expert testimony. Appellees' expert testified that the fees represented by the hourly statement were reasonable both as to the hourly rate and amount of time spent on each item. Appellant's cross-examination of this witness failed to refute his testimony. Appellant did not present expert testimony in support of his case.

We find that sufficient evidence was presented to the trial court upon which a proper determination of attorney fees could be made. In addition, the transcript of the November 8, 1990 hearing reveals that the trial court followed the guidelines set forth in DR 2-106(B) of the Code of Professional Responsibility for determining the reasonableness of attorney fees.

Appellant's first assignment of error is not well taken.

VII For his second assignment of error in case No. 61000, appellant contends that:

"The lower court erred in awarding the appellee[s] litigation costs other than attorney's fees."

The trial court awarded appellees $3,921.49 in costs for court reporters, depositions and expert witness fees. Appellant specifically argues that the cost of taking and transcribing depositions, and expert witness fees are not recoverable.

Civ.R. 54(D) provides:

"(D) Costs. Except when express provision therefor is made either in a statute or in these rules, costs shall be allowed to the prevailing party unless the court otherwise directs."

Pursuant to this rule, the trial court had discretion as to how the cost of an action shall be assessed. State ex rel. Fantv. Regional Transit Auth. (1990), 48 Ohio St. 3d 39,548 N.E.2d 240.

In Jones v. Pierson (1981), 2 Ohio App. 3d 447, 2 OBR 542,442 N.E.2d 791, and more recently in Guardado v. Newton BuyingCorp. (Dec. 13, 1990), Cuyahoga App. No. 57798, unreported, 1990 WL 204110, we set forth a two-step analysis for determining whether an expense is allowed as a taxable cost pursuant to Civ.R. 54(D).

First, the court must determine whether an expense is a taxable litigation expense or a personal expense. "Personal expenses" are those expenses accrued by a party in preparing the case for trial, whereas necessary expenses are those funds expended which are necessary and vital to the litigation.Id.

Second, the court must decide whether a proper litigation expense should be taxed as a cost. The court should not tax litigation expenses against a nonprevailing party when it would be inequitable to do so because of the conduct of the prevailing party.

With regard to appellees' deposition costs, we cannot, upon our review, state that they were not vital and necessary to appellees' case. The record reveals that each deponent appeared as a witness at trial and was vigorously cross-examined. In fact, through cross-examination, appellees' counsel completely discredited McKanze as an expert witness in this case. Furthermore, there is no showing that it would be inequitable, in light of any conduct on appellees' part, to assess such expenses as costs.

With regard to the expert witness fees, appellant relies onGold v. Orr Felt Co. (1985), 21 Ohio App. 3d 214, 21 OBR 228,487 N.E.2d 347, for the proposition that such fees are not taxable as costs. The Gold case concerns only the cost of presenting a videotaped expert witness at trial pursuant to C.P.Sup.R. 12(D), and is therefore not authoritative on the issues sub judice. Our analysis, therefore, is limited to a determination of whether the trial court abused its discretion in taxing those fees as costs. Jones, supra. We find that the cost of employing a handwriting expert in the case sub judice was necessary and vital to the litigation, and the fee amount was reasonable in all regards.

For these reasons, we find that the trial court did not abuse its discretion in awarding appellees $3,921.49 in costs.

Appellant's second assignment of error is not well taken.

Judgment affirmed.

MATIA, C.J., concurs.

KRUPANSKY, J., concurs in part and dissents in part.