Shteiwi v. Shteiwi

[Cite as Shteiwi v. Shteiwi, 2023-Ohio-873.]
IN THE COURT OF APPEALS
TWELFTH APPELLATE DISTRICT OF OHIO
BUTLER COUNTY
BRAHEAM SHTEIWI, EXECUTOR OF :
THE ESTATE OF RAKAN SHTEIWI,
DECEASED, et al., : CASE NO. CA2021-11-143
Appellees, : OPINION
3/20/2023
:
- vs -
:
HAKMON O. SHTEIWI, et al., :
Appellant.
APPEAL FROM BUTLER COUNTY COURT OF COMMON PLEAS
PROBATE DIVISION
Case No. PC19-02-0007
Stagnaro, Saba & Patterson Co., L.P.A., and Jeffrey M. Nye and Paul T. Saba, for
appellees.
Repper-Pagan Law, Ltd., Christopher J. Pagan, for appellant.
BYRNE, J.
{¶1} Plaintiffs-Appellees, Braheam Shteiwi (in his capacity as executor of the
Estate of Rakan Shteiwi) and Shteiwi, Inc., filed a declaratory judgment action in the Butler
County Court of Common Pleas, Probate Division. The probate court issued two decisions
in that case—one concerning attorney disqualification and the other concerning ownership
of shares of Shteiwi, Inc.—from which Defendant-Appellant, Hakmon Shteiwi, appeals. For
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the reasons described below, we affirm the probate court's decisions.
I. Factual and Procedural Background
{¶2} Shteiwi, Inc., is an Ohio corporation that previously operated "The Spinning
Fork," a restaurant in Fairfield, Ohio. Per the probate court's factual findings in the
proceedings below, Shteiwi, Inc. was a business run by the Shteiwi family. The business
was run in an informal manner when it came to certain legal forms and procedures relevant
to this appeal. Rakan Shteiwi was the family "patriarch" and the entrepreneurial force
leading the Shteiwi family's various business interests, which included multiple restaurants
in addition to "The Spinning Fork." Rakan had a son, Braheam Shteiwi, and two brothers,
Hakmon Shteiwi and Hatem Shteiwi.1 Hatem participated in the proceedings below but not
this appeal.
{¶3} Articles of Incorporation for Shteiwi, Inc. were filed with the Ohio Secretary of
State in 1981. However, those Articles were general in nature and failed to provide details
as to offices, powers, duties, etc. The Articles provided that the corporation would issue
750 shares but failed to identify the shareholders or the share allocations. However, the
parties agree that Rakan and Hakmon were shareholders of Shteiwi, Inc. at the time of
Rakan's unexpected death in August 2016.
{¶4} Rakan died testate. In September 2016, Braheam offered Rakan's will to the
Butler County Probate Court and applied for authority to administer Rakan's estate. The
probate court accepted the will and granted Braheam letters of authority.
{¶5} In June 2017, the estate filed an inventory and appraisal. Among the assets
listed as being owned by the estate was "51% of the shares of Shteiwi, Inc."
1. Because all of the parties in this case have the same last name, we will refer to the parties by their first
names for the sake of clarity. See Wiseman v. Wiseman, 12th Dist. Madison No. CA2022-03-004, 2022-Ohio-
3689, ¶ 1, fn.1.
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{¶6} Hatem filed an exception to the inventory, disputing that the estate owned
51% of Shteiwi, Inc. Hatem claimed that he and Rakan had entered into a written
agreement that "gave Hatem Shteiwi 15% of the 51% shares owned by Rakan O. Shteiwi."2
Hatem attached a copy of a document titled "Partnership Agreement," dated January 2011.
In it, Rakan and Hatem memorialized a "partnership" "under the name Shteiwi, Inc., dba
The Spinning Fork." The agreement indicated that the partnership would last for two years.
The agreement further indicated that Hatem would make a capital contribution of "sweat-
equity" and that his "% Share" in the partnership was "15%."
{¶7} Based upon the Partnership Agreement, Hatem asked that the executor
modify the inventory to reflect that Rakan's estate owned 36 percent of the shares of
Shteiwi, Inc.—that is, Rakan's 51 percent share minus Hatem's claimed 15 percent share.
{¶8} In an entry titled "Case Review Notes," the probate court memorialized a
discussion that occurred between the court and parties at a subsequent status hearing.
The court had suggested to the parties at that hearing that the court could decide the issues
raised in Hatem's exception in a declaratory judgment action and that the parties should
include the corporate entity, Shteiwi, Inc., in those proceedings.
{¶9} In February 2019, Braheam, in his capacity as executor of Rakan's estate,
and Shteiwi, Inc. ("the Plaintiffs") filed a complaint in the probate court against Hakmon and
Hatem ("the Defendants"). The complaint contained one count for declaratory judgment.
Though we will explain the proceedings further below, we pause to note—for context—that
this appeal arises from the declaratory judgment action.
{¶10} The declaratory judgment complaint asked the probate court to declare that
2The language quoted here is ambiguous. But based on other arguments presented, it is obvious that
Hatem meant that the agreement gave him 15 percent of the shares of Shteiwi, Inc. -- not 15 percent of the
shares owned by Rakan.
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the estate was the owner of 51 percent of the shares of Shteiwi, Inc. The complaint further
asked the court to declare that the Partnership Agreement had no effect on the estate's
percentage ownership of shares. In answering the complaint together, Hakmon and Hatem
asked the court to find that Hakmon was a 49-percent owner, that Hatem was a 15-percent
owner, and that Rakan's estate owned the remaining 36 percent of shares.
{¶11} In November 2019, Hakmon and Hatem moved to disqualify counsel for
Braheam and Shteiwi, Inc. due to a purported conflict of interest. Hakmon and Hatem
argued that Braheam and Shteiwi, Inc. had adverse interests and that the court must
"disqualify a lawyer representing two parties in litigation with an active conflict." Hakmon
and Hatem cited Prof.Cond.R. 1.13(a) and Prof.Cond.R. 1.7 and alleged that counsel for
Braheam and Shteiwi, Inc. was violating these ethical rules in counsel's representation of
the two plaintiffs.
{¶12} In October 2020, the court denied Hakmon and Hatem's motion to disqualify
counsel for Braheam and Shteiwi, Inc. The court found that Hakmon and Hatem lacked
standing to seek disqualification because there was no attorney-client relationship between
them and counsel for Braheam and Shteiwi, Inc. Furthermore, the court found that the
issues before the court in the declaratory judgment action were very narrow and that the
issues that Hakmon and Hatem raised as providing the basis for potential conflicts were
issues for resolution in a separate civil action pending before similar parties in the common
pleas court's general division.3
{¶13} In May 2021, the probate court held a trial in the declaratory judgment action.
The court heard testimony from Rakan's long-time accountant, who performed accounting
3. In October 2019, Hakmon, Hatem, and Shteiwi, Inc. filed a complaint against Braheam and Shteiwi, Inc. in
the general division of the common pleas court, asserting claims of breach of fiduciary duty and declaratory
judgment. The allegations primarily related to Braheam's actions of closing The Spinning Fork and opening
a new restaurant in the same location, following Rakan's death. The docket of that case indicates that the
court stayed that litigation pending resolution of the probate court proceedings.
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for all Rakan's various restaurant businesses and did other accounting work for members
of the Shteiwi family. The court also heard testimony from Hatem, Hakmon, and Braheam.
{¶14} In October 2021, the probate court issued its decision on the declaratory
judgment claim. First, the court found Hatem did not own 15 percent of Shteiwi, Inc. The
court found that no shares were ever conveyed to him in conjunction with the Partnership
Agreement. The court further found that Hatem never took any action to have shares
transferred to him after the two-year period of the partnership expired.
{¶15} Second, the court found that the best evidence of Shteiwi, Inc.'s ownership at
the time of Rakan's death was a federal tax return that showed that Rakan owned 67
percent of the outstanding shares. Nonetheless, the court noted that the estate was only
asking for a declaration that Rakan owed 51 percent of the company (though the court was
not certain how the estate arrived at that figure). The court found that the evidence
supported the estate's request to declare that it owned 51 percent of Shteiwi, Inc. The court
further found that Hakmon owned the remaining 49 percent.
{¶16} Hakmon appealed and raised two assignments of error. We will address
these two assignments of error out of the order presented. Notably, Hakmon did not appeal
the trial court's findings regarding the percentage of shares in Shteiwi, Inc. that were owned
by the estate (51%), Hakmon (49%), and Hatem (none).
II. Law and Analysis
A. Rights of the Parties
{¶17} Hakmon's Assignment of Error No. 2 states:
{¶18} THE PROBATE COURT ERRED BY FAILING TO FULLY DECLARE THE
RIGHTS OF THE PARTIES.
{¶19} Hakmon states that the only issue resolved by the probate court was
ownership of Shteiwi, Inc. He contends that the court failed to address various other issues
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raised in the declaratory judgment action, specifically those concerning control and
management of Shteiwi, Inc. For example, Hakmon argues that the probate court erred by
failing to declare whether Braheam became a president or director of Shteiwi, Inc. by way
of Rakan's death or due to Braheam's appointment as executor of the estate. Hakmon also
contends that the court failed to declare whether Braheam, in his capacity as executor,
required probate court approval to operate Shteiwi, Inc.'s business.
{¶20} Upon review, we do not find that the probate court erred in failing to address
the various issues raised by Hakmon in this assignment of error. Braheam and Shteiwi,
Inc. filed the declaratory judgment action after the probate court suggested that such a
proceeding could resolve Hatem's exception to the estate's inventory. The declaratory
judgment complaint asked the court to declare that the estate was the owner of 51 percent
of Shteiwi, Inc. and that the Partnership Agreement did not alter or change the estate's
ownership. The court's decision resolved these issues. The declaratory judgment
complaint did not ask for additional declarations concerning control or management of
Shteiwi, Inc. and most certainly did not ask for the specific declarations Hakmon lists in his
appellate brief.
{¶21} Nonetheless, Hakmon, citing paragraph 13 of the declaratory judgment
complaint, argues that "[t]he Estate also requested a declaration of its rights in the
corporation," and suggests that "rights in the corporation" language includes those various
issues relating to control and management of Shteiwi, Inc. which Hakmon now complains
the probate court failed to address. Paragraph 13 of the complaint states:
there is a controversy concerning the Estate[']s ownership of
51% of the shares of the Company, and the validity of the
purported agreement, and the parties' rights, duties, statuses,
and legal relations arising therefrom, and Plaintiffs therefore
seek a declaratory judgment.
(Emphasis added.) Complaint at ¶ 13.
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{¶22} If it was not clear from the broader context of the complaint, the use of
"therefrom" in paragraph 13 indicates that the language concerning "rights, duties, statuses,
and legal relations" refers to the controversy over ownership percentages and the effect of
the Partnership Agreement on those percentages. Hakmon's reference to paragraph 13 to
enlarge the scope of the declaratory judgment complaint is meritless.
{¶23} Furthermore, Hakmon never raised any issues relating to control or
management of Shteiwi, Inc. in his answer. Instead, he limited his response to the issues
raised in the declaratory judgment complaint concerning ownership and asked the court to
declare that he was the owner of 49 percent of the shares, that Hatem was the owner of 15
percent of the shares, and the estate owned the remaining 36 percent of shares.
{¶24} The court did not err in failing to grant declaratory relief that was not requested
in the pleadings.4 We overrule Hakmon's Assignment of Error No. 2.
B. Disqualification of Counsel
{¶25} Hakmon's Assignment of Error No. 1 states:
{¶26} THE PROBATE COURT ERRED BY FAILING TO DISQUALIFY COUNSEL.
{¶27} Hakmon contends that the probate court erred by failing to disqualify counsel
for Braheam and Shteiwi, Inc. He argues that counsel for Braheam and Shteiwi, Inc. had
an "active conflict" when counsel represented both Braheam and Shteiwi, Inc. in the probate
court declaratory judgment action.
1. Standard of Review
{¶28} We review a decision on a motion to disqualify counsel for an abuse of
discretion. Musto v. Lorain Cty. Bd. of Revision, 148 Ohio St.3d 456, 2016-Ohio-8058, ¶
4. According to Braheam and Shteiwi, Inc., the same issues that Hakmon is arguing that the probate court
should have decided are already before the common pleas court's general division in the litigation previously
filed by Hakmon, Hatem, and Shteiwi, Inc.
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52; Sayyah v. Cutrell, 143 Ohio App.3d 102, 107 (12th Dist.2001). An abuse of discretion
implies that the court's attitude is unreasonable, arbitrary, or unconscionable. Goebel v.
Hopkins, 12th Dist. Warren No. CA2022-06-042, 2022-Ohio-4718, ¶ 15.
2. Analysis
{¶29} Hakmon's disqualification argument is based on two of the Rules of
Professional Conduct: Prof.Cond.R. 1.13 and 1.7.
{¶30} Prof.Cond.R.1.13(a) provides in part:
A lawyer employed or retained by an organization represents
the organization acting through its constituents. A lawyer
employed or retained by an organization owes allegiance to the
organization and not to any constituent or other person
connected with the organization. The constituents of an
organization include its owners and its duly authorized officers,
directors, trustees, and employees.
In other words, Prof.Cond.R.1.13(a) establishes that when a lawyer represents a
corporation (like Shteiwi, Inc.) the lawyer represents the corporation alone, and does not
automatically, by that representation, also represent the corporation's constituents,
including its officers and owners (like the estate, Hakmon and, allegedly, Hatem).
{¶31} The implications of this principle are explained in Prof.Cond.R.1.13(b), which
provides that:
If a lawyer for an organization knows or reasonably should know
that its constituent’s action, intended action, or refusal to act (1)
violates a legal obligation to the organization, or (2) is a violation
of law that reasonably might be imputed to the organization and
that is likely to result in substantial injury to the organization,
then the lawyer shall proceed as is necessary in the best interest
of the organization.* * *.
In other words, a lawyer who represents an organization may have a conflict in also
representing a constituent of the organization if the constituent violates his or her obligations
to the organization or takes action that harms the organization in some "substantial" way.
This is the basis for Hakmon's disqualification argument. Hakmon argues that Braheam,
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acting as executor for the estate, violated a duty to Shteiwi, Inc. and caused it substantial
injury when Braheam "harmed the corporation by locking its doors, shuttering the
restaurant, and seizing its assets for Braheam's personal use."
{¶32} But the rules described above do not mean that a lawyer may never
simultaneously represent two clients who have a potential or actual conflict.
Prof.Cond.R.1.7(b)(2) provides that a lawyer may undertake such representation provided
the lawyer takes certain precautions, including but not limited to obtaining "informed
consent, confirmed in writing."
{¶33} Hakmon argues that because there was a conflict of interest between
Braheam and Shteiwi, Inc., and because there was no evidence presented to the probate
court that a conflict waiver was obtained, the probate court erred when it denied Hakmon
and Hatem's motion to disqualify counsel for Braheam and Shteiwi, Inc.
{¶34} Though questions of lawyer discipline are reserved for the Ohio Board of
Professional Conduct and, ultimately, the Ohio Supreme Court, a trial court nevertheless
has the inherent power to regulate the practice before it, protect the integrity of the
proceedings, and see to the ethical conduct of attorneys. Mentor Lagoons Inc. v. Rubin, 31
Ohio St.3d 256, 259 (1987), citing Royal Indemn. Co. v. J.C. Penney Co., 27 Ohio St.3d 31,
33-34 (1986). "This includes the inherent authority of dismissal or disqualification from a
case if an attorney cannot, or will not, comply with [Ohio's rules governing ethics and
professionalism in the practice of law] when representing a client." Id.{¶35} We have held that "[a]n attorney should not be disqualified solely upon an
allegation of a conflict of interest; even where the requested disqualification is based upon
ethical considerations, the moving party still must demonstrate that disqualification is
necessary." (Emphasis sic.) Creggin Group, Ltd. v. Crown Diversified Industries Corp., 113
Ohio App.3d 853, 858 (12th Dist.1996). We further explained that "[e]ven if an attorney's
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continued representation would violate one of the Canons of the Code of Professional
Responsibility, counsel should not be disqualified unless the attorney's conduct poses a
significant risk of tainting the trial." Id. Accord Fifth Third Bank v. Q.W.V. Properties, L.L.C.,
12th Dist. Butler No. CA2010-09-245, 2011-Ohio-4341, ¶ 41-42. While the Rules of
Professional Conduct have replaced the Code of Professional Responsibility, we are aware
of no authority suggesting that the adoption of the Rules of Professional Conduct somehow
eliminates the requirement that a party seeking disqualification of counsel show a significant
risk that the alleged conflict will taint the trial.
{¶36} Hakmon and Hatem failed to convince the probate court that the alleged
conflict between Braheam as executor of the estate and Shteiwi, Inc. posed a significant
risk of tainting the trial. In fact, Hakmon has not persuasively articulated how the alleged
conflict and ethical violation prejudiced him in the declaratory judgment action. Hakmon
asked that the court declare him 49 percent owner of Shteiwi, Inc. and the probate court
granted that request. Nor does Hakmon articulate how the alleged conflict contributed to
any other error in the probate court's decision.
{¶37} Critically, Hakmon on appeal failed to bring any assignment of error with
respect to the probate court's decision concerning the parties' respective percentage
ownership of shares. As a result, Hakmon effectively waived any argument that counsel's
simultaneous representation of Braheam and Shteiwi, Inc. ran the risk of tainting the trial,
or that he suffered prejudice as a result of the probate court's refusal to disqualify counsel
for Braheam and Shteiwi, Inc. In other words, even if we were to find that the probate court
erred in denying disqualification, such a finding would not require reversal of the probate
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court's decision.5
{¶38} We overrule Hakmon's Assignment of Error No. 1.
III. Conclusion
{¶39} We have overruled all of the assignments of error presented.
{¶40} Judgment affirmed.
S. POWELL, P.J., and HENDRICKSON, J., concur.
5. Because Hakmon's failure to assign error with respect to the probate court's decision with regard to the
parties' ownership of shares in Shteiwi, Inc. prevents him from establishing prejudice with respect to the
probate court's denial of his motion for disqualification, we need not consider other arguments discussed in
the parties' briefs, such as whether Hakmon and Hatem had standing to seek disqualification and whether the
three-part test set forth in Dana Corp. v. Blue Cross & Blue Shield Mut., 900 F.2d 882, 889 (6th Cir.1990),
remains good law and should have been applied by the probate court.
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