Fabec v. Frederick & Berler, L.L.C.

[Cite as Fabec v. Frederick & Berler, L.L.C., 2022-Ohio-376.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
CHRISTINA FABEC, ET AL., :
Plaintiffs-Appellants, :
No. 110562
v. :
FREDERICK & BERLER, LLC, ET AL., :
Defendants-Appellees. :
JOURNAL ENTRY AND OPINION
JUDGMENT: AFFIRMED
RELEASED AND JOURNALIZED: February 10, 2022
Civil Appeal from the Cuyahoga County Court of Common Pleas
Case No. CV-20-928443
Appearances:
Hoover & Gialluca, LLC, and Dean S. Hoover, for
appellants.
Gallagher Sharp, LLP, Timothy T. Brick, and Lori E.
Brown, for appellees.
MICHELLE J. SHEEHAN, J.:
Appellants Christina Fabec, Brad Fabec, and Capital Management
Holdings, LLC (“Capital Management”) (hereinafter referred to collectively as
“appellants”) appeal the grant of summary judgment in favor of appellees Michael
Fine, Ronald Frederick, and Frederick & Berler, LLC (hereinafter referred to
collectively as “appellees”) in an action brought for legal malpractice. After a
thorough review of the record and law, we affirm.
I. PROCEDURAL HISTORY AND FACTS
Appellants filed a legal malpractice action against appellees
regarding their representation of Christina Fabec in litigation between her and
Capital Management. The prior litigation was based on claims regarding collection
efforts by Capital Management upon a debt incurred by Christina Fabec.
Specifically, in November 2015, Christina Fabec obtained a short-
term loan from a payday lender and eventually stopped making payments. In early
2018, debt collectors began calling Christina Fabec and some of her relatives.
Christina Fabec and her husband, Brad Fabec, contacted Michael Fine to file a
lawsuit against the debt collectors, having retained appellees to bring a similar
action in 2017. Fabec and Fine learned that the owners and collection agents of
the debt were Debt Management Partners, LLC (“Debt Management”) and Capital
Management.
On June 5, 2018, Fine and Frederic filed a class-action lawsuit on
behalf of Christina Fabec against Debt Management and Capital Management in
the Cuyahoga County Court of Common Pleas. In July 2018, Debt Management
caused the case to be removed to the United States District Court for the Northern
District of Ohio, Eastern Division.
On August 20, 2018, during a court telephone conference in the
federal case, Debt Management and Capital Management verbally offered
Frederick and Fine $6,000 to settle the case. This offer was rejected during the
call without consulting Christina Fabec or her husband. On September 10, 2019,
a court-ordered mediation was held and no settlement was reached. After the
mediation, Dan D’Elia, a member of both Debt Management and Capital
Management called the Fabecs directly and made an offer of $10,000 to settle the
litigation. The Fabecs accepted the offer. On September 12, 2019, Brad Fabec sent
an email to Fine discharging appellees from representing him and his wife.
Christina Fabec thereafter cashed the settlement check on September 13, 2019.
On September 16, 2019, a notice of dismissal was filed in the federal
litigation. Fine and Frederick objected to the dismissal and filed a motion for
sanctions. Capital Management filed a motion for sanctions against appellees. The
federal court granted the motion to dismiss and denied the motions for sanctions.
On January 27, 2020, Christina Fabec, Brad Fabec, and Capital
Management filed a legal malpractice complaint against appellees. In the first
count of the complaint, the Fabecs alleged that the lawyers filed a class action in
the federal case without their knowledge, did not inform them of the 2018
settlement offer, and prolonged the federal litigation in order to maximize their
own fees. In the second count of the complaint, Capital Management alleged that
the Fabecs’ attorneys and their firm engaged in malicious conduct and acted with
malice toward Capital Management with the motive of maximizing their fees in
contravention of the interests of their clients.
On November 30, 2020, appellees filed a motion for summary
judgment. As to the first count of the complaint, they argued that because Brad
Fabec was not a party to the federal litigation, he could not incur damages for any
failure to settle a lawsuit to which he was not a party. As to Christina Fabec, they
argued that there is no evidence she suffered any damages as a result of any
malpractice that they may have committed. As to the second count of the
complaint, appellees argued that there is no evidence that they acted with malice
that would sustain Capital Management’s claim of legal malpractice as a third
party.
On May 12, 2021, the trial court granted summary judgment. In
deciding the motion, the trial court assumed that appellees committed legal
malpractice by not informing Christina Fabec and her husband of the 2018
settlement offer. Having assumed legal malpractice occurred, the trial court then
determined as to Brad Fabec’s claim, he could not recover damages based on legal
malpractice because he was not a party to the federal litigation.
As to Christina Fabec’s claims, the trial court determined that she
sustained no damages caused by the alleged legal malpractice. It found that by
accepting a $10,000 settlement one year after she could have received a $6,000
settlement, there was no evidence presented that there was a loss of time-value of
money from 2018 to 2019.
As to Christina Fabec’s potential claim that appellees could seek legal
fees, the trial court found that appellees waived any claim to collect those fees by
not filing a compulsory counterclaim in the instant litigation. As to her claim that
she and her husband expended money and time opposing an eviction, the record
showed that the eviction case was dismissed before any lawsuit was filed on
Christina Fabec’s behalf. Regarding her claim that there was a lost opportunity for
a larger settlement and that the underlying debt was not extinguished, the trial
court found that her own actions in settling the case served to sever any causal
connection between the alleged malpractice and damages from her own actions in
settling the case.
In finding summary judgment appropriate as to Capital
Management’s claims, the trial court noted that there is little case law in Ohio to
determine what constitutes malice in the context of third-party legal malpractice
claims, concluding that as a minimum, “malice can’t be proved without something
beyond the friction that arises from the inherently adversarial relationship
between plaintiff’s counsel and a defendant in a lawsuit.” The trial court found
that the rejection of the settlement offer did not amount to malice against Capital
Management where the offer by both Debt Management and Capital Management
was made in a proposed class-action suit before any discovery was conducted. The
trial court concluded that
the objective evidence of record, construed most favorably toward
[Capital Management], does not create a genuine issue of material fact
about whether [appellees] acted with malice, and without malice as a
substitute for the attorney-client relationship or privity they cannot
be liable to [Capital Management] for legal malpractice.
II. LAW AND ARGUMENT
A. Assignment of Error and Standards of Review
Appellants raise one assignment of error, which reads:
The trial court erred in granting summary judgment when the
summary judgment evidence presented genuine issues of material
fact.
Civ.R. 56 (C) provides that summary judgment shall be rendered if
“the pleadings, depositions, answers to interrogatories, written admissions,
affidavits, transcripts of evidence, and written stipulations of fact, if any, timely
filed in the action, show that there is no genuine issue as to any material fact and
that the moving party is entitled to judgment as a matter of law.” Summary
judgment is proper where
(1) there is no genuine issue of material fact; (2) the moving party is
entitled to judgment as a matter of law; and (3) reasonable minds
can come to but one conclusion and that conclusion is adverse to the
nonmoving party, said party being entitled to have the evidence
construed most strongly in his or her favor.
Bohan v. McDonald Hopkins, LLC., 8th Dist. Cuyahoga No. 110060, 2021-Ohio-
4131, ¶ 19, citing Horton v. Harwick Chem. Corp., 73 Ohio St.3d 679, 653 N.E.2d
1196 (1995), paragraph three of the syllabus; Zivich v. Mentor Soccer Club, 82
Ohio St.3d 367, 696 N.E.2d 201 (1998). “The party moving for summary judgment
bears the burden of demonstrating that no material issues of fact exist for trial.”
Edvon v. Morales, 8th Dist. Cuyahoga No. 106448, 2018-Ohio-5171, ¶ 17, citing
Dresher v. Burt, 75 Ohio St.3d 280, 292, 662 N.E.2d 264 (1996). If the movant
satisfies the initial burden, then the nonmoving party has the burden to set forth
specific facts that there remain genuine issues of material fact that would preclude
summary judgment. Id. A trial court’s grant of summary judgment is reviewed de
novo. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996).
In this case, the trial court granted summary judgment on claims of
legal malpractice. In such an action, a plaintiff must show (1) an attorney-client
relationship giving rise to a duty, (2) a breach of that duty, and (3) damages
proximately caused by the breach. Montali v. Day, 8th Dist. Cuyahoga No. 80327,
2002-Ohio-2715, ¶ 37, citing Krahn v. Kinney, 43 Ohio St.3d 103, 105, 538 N.E.2d
1058 (1989). Summary judgment in a legal malpractice action is appropriate
where a “‘plaintiff fails to establish a genuine issue of material fact as to any of the
elements.’” New Destiny Treatment Ctr., Inc. v. Wheeler, 129 Ohio St.3d 39, 2011-
Ohio-2266, 950 N.E.2d 157, ¶ 25, quoting Shoemaker v. Gindlesberger, 118 Ohio
St.3d 226, 2008-Ohio-2012, 887 N.E.2d 1167, ¶ 8.
B. The Trial Court Properly Granted Summary Judgment as to Brad
and Christina Fabec’s Claims
In resolving the motion for summary judgment, the trial court
presumed appellees committed malpractice by failing to present the settlement
offer to the Fabecs. In evaluating claims in a legal malpractice claim, a plaintiff is
required to “provide some evidence of the merits of the underlying claim” in which
the alleged legal malpractice occurred but may not be required to prove full success
in the underlying litigation. Vahila v. Hall, 77 Ohio St.3d 421, 428, 674 N.E.2d
1164 (1997). In a case where a plaintiff claims she would have been better off but
for the alleged legal malpractice, the plaintiff must show that “but for appellant’s
conduct, they would have received a more favorable outcome in the underlying
matter.” Environmental Network Corp. v. Goodman Weiss Miller, L.L.P., 119
Ohio St.3d 209, 2008-Ohio-3833, 893 N.E.2d 173, ¶ 19. Further, there must be a
showing of damages to maintain a legal malpractice action. Montali at ¶ 37;
Huffman v. Huntington Bancshares, Inc., 10th Dist. Franklin No. 18AP-667, 2019-
Ohio-2531, ¶ 33.
In this case, the trial court granted summary judgment in favor of
appellees against Brad Fabec because he was not a party to the litigation in which
the alleged malpractice occurred, finding he could not have incurred damages.
Brad Fabec argues that he does have standing to bring a claim because he was in
an attorney-client relationship with appellees and that he sustained damages
because his attorneys “lied” to him about the settlement offers. But because Brad
Fabec was not entitled to any settlement in the federal litigation, any damages
resulting from malpractice in that litigation would be damages available to the
plaintiff, Christina Fabec, not to him. The trial court correctly determined Brad
Fabec could not claim damages from malpractice occurring in litigation to which
he was not a party and in granting summary judgment for appellees as to Brad
Fabec’s claims.
Christina Fabec claimed appellees caused the following damages as
a result of their legal malpractice, 1) the loss of use of the settlement proceeds, 2) a
loss of time and expense contesting an eviction, 3) exposure to a claim by the
defendants for their legal fees incurred in the federal litigation, 4) the loss of a
larger possible settlement with Capital Management, and 5) continuing liability for
the underlying consumer debt. The trial court found that these claims of damage
are either unsupported by the evidence in the record or unrecoverable as a matter
of law. We agree.
The litigation in federal court in which the alleged malpractice
occurred was settled. Appellees argued that because Christina Fabec settled the
case on her own and collected more than the prior settlement offer, she cannot
show that she was entitled to any damages, even were they found to have
committed malpractice. In order to show there is a genuine issue of material fact
as to damages, the record thus must contain some evidence that Christina Fabec
sustained damages caused by appellees’ alleged malpractice and that she “would
have received a more favorable outcome in the underlying matter.” Environmental
Network Corp., 119 Ohio St.3d 209, 2008-Ohio-3833, 893 N.E.2d 173, at ¶ 19.
Christina Fabec produced no evidence that showed the receipt of a
$6,000 settlement offer in 2018 produced actual economic damages as to any
time-value calculation where she received a $10,000 settlement offer a year later.
There was no evidence that would support the conclusion that $6,000 received in
2018 was greater in value than the $10,000 she received in 2019, especially
considering that had the original settlement offer been accepted, attorney fees and
costs would have been deducted.
Christina Fabec paid appellees no fees from the $10,000 settlement
and will not be liable for any fees that may have been due appellees because the
trial court found appellees waived collection of those fees by not filing a
compulsory counter claim in the lawsuit as required by Civ.R. 13(A).1 As to the
claim she suffered damages because she could have used the money to contest an
eviction action, that eviction action was dismissed prior to the initial offer of
settlement.
Christina Fabec also claimed damages due to a lost opportunity for
a larger settlement and because the eventual settlement did not discharge her
original debt. However, a plaintiff seeking damages in a legal malpractice case
must show that the alleged malpractice caused the damages. Montali, 8th Dist.
Cuyahoga No. 80327, 2002-Ohio-2715, at ¶ 37. A plaintiff’s actions after the
alleged legal malpractice may sever any finding of causation. Modesty v. Michael
H. Peterson & Assocs., 8th Dist. Cuyahoga No. 85653, 2005-Ohio-6022, ¶ 12-13.
In this case, the trial court found, and we agree, that because
Christina Fabec voluntarily settled the case with D’Elia, she prevented “[appellees]
from getting any settlement from [Capital Management], much less one for more
1Appellees do not contest that they are precluded from attempting to collect any fees from
Christina Fabec in the future, stating in their brief to this court, “[T]he trial court properly
found there was no evidence that the [appellees] sought payment or that Mrs. Fabec was
contractually obligated to pay the fees.”
than $10,000.” (Emphasis sic.) Further, the trial court found that by negotiating
the terms of the settlement on her own, appellees could not be liable for any
unfavorable terms in that settlement.
Christina and Brad Fabec also argue that they suffered non-
economic damages that preclude summary judgment. In their complaint, the
Fabecs sought general damages for the alleged malpractice. In defense of
appellees’ motion for summary judgment, the Fabecs point to their own affidavits
filed in the case that they suffered “emotional distress and outrage.” Those
statements alone do not provide evidence that they are entitled to damages for
emotional distress or anguish, which requires some evidence that the emotional
injury was severe and debilitating. Cunningham v. Hildebrand, 142 Ohio App.3d
218, 228, 755 N.E.2d 384 (8th Dist.2001); Paugh v. Hanks, 6 Ohio St.3d 72, 451
N.E.2d 759 (1983), paragraph 3a of the syllabus; see also C.R. Withem Ents. v.
Maley, 5th Dist. Fairfield No. 01 CA 54, 2002-Ohio-5056, ¶ 50. Because there is
no evidence of severe or debilitating emotional injury in the record, the trial court
did not err by granting summary judgment as to those claims.
Finally, Christina and Brad Fabec both claim that the possibility of
nominal damages prevents the grant of summary judgment. In the case of legal
malpractice, nominal damages are not available to a plaintiff where the plaintiff
cannot prove actual damages. See Oblak v. Lawrence, 8th Dist. Cuyahoga No.
54473, 1988 Ohio App. LEXIS 4141 (Oct. 13, 1988) (It would be error to award
nominal damages where no damages were proven in legal malpractice case.).2 In
this case, there was no evidence that the alleged legal malpractice was shown to
result in damages; accordingly, nominal damages would not be recoverable and
the trial court did not error by granting summary judgment as to the Fabecs’
claims.
C. The Trial Court Properly Granted Summary Judgment as to Capital
Management’s Claims
Capital Management argues that appellees’ alleged malpractice by
not informing Christina Fabec of the settlement offer was performed with the
intent of harming it by prolonging the litigation. “‘[A]n attorney is immune from
liability to third persons arising from his performance as an attorney in good faith
on behalf of, and with the knowledge of his client, unless such third person is in
privity with the client or the attorney acts maliciously.’” Scholler v. Scholler, 10
Ohio St.3d 98, 103, 462 N.E.2d 158 (1984), quoting Petrey v. Simon, 4 Ohio St.3d
154, 157, 158-159, 447 N.E.2d 1285 (1983). Capital Management thus can only
maintain a claim of legal malpractice if it is able to show evidence that appellees
acted with malice.
2 The bar to recovering nominal damages in a malpractice action was first noted in Craig
v. Chambers, 17 Ohio St. 253, 253 (1867), in which the court held, “[In] an action against
the surgeon for malpractice, the plaintiff, if he shows no injury resulting from negligence,
or want of due skill in the defendant, will not be entitled to recover nominal damages.” In
contrast, in a case involving an intentional tort, nominal damages could be recoverable
without a showing of actual damages. See Lacey v. Laird, 166 Ohio St. 12, 139 N.E.2d 25(1956).
In the context of a third-party legal malpractice claim, this court has
noted that malice “is indicative of ‘the state of mind under which a person
intentionally does a wrongful act without a reasonable lawful excuse and with the
intent to inflict injury under circumstances that the law will imply an evil intent.’”
Fourtounis v. Verginis, 2017-Ohio-8577, 101 N.E.3d 101, ¶ 22 (8th Dist.), quoting,
Criss v. Springfield Twp., 56 Ohio St.3d 82, 85, 564 N.E.2d 440 (1990), citing
Black’s Law Dictionary 956 (6th Ed.1990).
The Tenth District Court of Appeals noted that it “defined ‘malice’
in the context of these types of cases to include actions taken by the attorney with
an ulterior motive separate and apart from the good-faith representation of the
client’s interests.” (Citations omitted.) Ryan v. Wright, 10th Dist. Franklin No.
06AP-962, 2007-Ohio-942, ¶ 19. That court further noted that “[m]alice has also
been defined in this context to imply ‘“[a] condition of mind which prompts a
person to do a wrongful act willfully, that is, on purpose, to the injury of another
without justification or excuse.’’’” Id., quoting Moffitt v. Litteral, 2d Dist.,
Montgomery No. 19154, 2002-Ohio-4973, ¶ 82, quoting Black’s Law Dictionary
956 (6th Ed.1990). The Second District Court of Appeals found that
[i]n our opinion, malice, as a substitute for an attorney-client
relationship, cannot be predicated on actions by the attorney that the
attorney is permitted to take, or even negligently may take, as part of
the representation of plaintiffs’ adversarial client. To constitute
malice, the actions of the attorney must include a disregard of rights
that the attorney, not the client, is required to protect and must
include harm beyond that which legal action necessarily may inflict.
In most circumstances, an attorney is not obligated to protect the
rights of an adversary. Undoubtedly, every lawyer who throws a family
out into the cold in the dead of winter by pursuing a forcible-entry-
and-detainer action has a great probability of causing harm. That
scenario does not result in malpractice liability. Therefore, in our
view, to constitute malice as a conscious disregard for the rights of
others causing substantial harm that will suffice to substitute for an
attorney-client relationship, facts must exist that demonstrate extra-
legal activity.
Id. at ¶ 35.
In this case, the trial court found that “malice can’t be proved without
something beyond the friction that arises from the inherently adversarial
relationship between plaintiff’s counsel and a defendant in a lawsuit.” After
reviewing the alleged malpractice, the failure to notify Christina Fabec of the initial
settlement offer, the trial court concluded that appellees’ actions did not constitute
malice. The trial court considered the circumstances in which appellees rejected
the $6,oo0 settlement, noting that appellees were bringing a class-action suit, no
discovery was had, and the settlement offer came from two defendants whose
respective roles in the underlying claims were specifically not known.
In arguing error, Capital Management does not point to any specific
evidence of ill-will on Fine’s or Frederick’s part that would allow a reasonable
inference that the rejection of the offer without consulting Christina Fabec was
done separate and apart from representing the interests of their client and the
potential class they sought to represent. Accordingly, we agree with the trial court
that Capital Management did not present objective evidence of actual malice that
would entitle it to assert standing to maintain its third-party action for legal
malpractice.
Appellants’ assignment of error is overruled.
III. Conclusion
The trial court did not error in granting summary judgment to
appellees where no recoverable damages accrued from the alleged malpractice.
Brad Fabec could not show he suffered damages where he was not a party to the
lawsuit in which the alleged acts of malpractice occurred. The record did not reflect
that Christina Fabec suffered actual monetary damages due to appellees’ alleged
malpractice. Further, where no damages are shown in a legal malpractice case,
nominal damages are not available. Finally, Capital Management failed to allege
facts that demonstrated appellees acted with malice intended to harm Capital
Management.
Judgment affirmed.
It is ordered that appellees recover of appellants costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the
common pleas 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.
_____________________________
MICHELLE J. SHEEHAN, JUDGE
SEAN C. GALLAGHER, A.J., and
MARY J. BOYLE, P.J., CONCUR