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1 IN THE SUPREME COURT OF OHIO ^^ James A. Lucido, 3 " - ^^^ Appellant,. On Appeal from the Stark County Court vs.. of Appeals, Fifth Judicial District Utterback Dental Group, Inc., Court of Appeals Appellee.. Case No CA 285 MEMORANDUM IN SUPPORT OF JURISDICTION OF APPELLANT JAMES A. LUCIDO Tracey A. Laslo ( ) (COUNSEL OF RECORD) 325 E. Main Street Alliance, OH Tele: (330) Fax: (330) COUNSEL FOR APPELLANT, JAMES A. LUCIDO Jack B. Cooper ( ) Day Ketterer LTD. Millennium Center - Suite Market Avenue North P.O. Box Tele: (330) Fax: (330) COUNSEL FOR APPELLEE, UTTERBACK DENTAL GROUP, INC. 6^ai, 5,..k3 4 i,' CLERK OF COURT SUPREME COURT OF OHIO

2 TABLE OF CONTENTS Page EXPLANATION OF WHY THIS CASE INVOLVES A SUBSTANTIAL CONSTITUTIONAL QUESTION... STATEMENT OF THE CASE AND FACTS... ARGUMENT IN SUPPORT OF PROPOSITIONS OF LAW... Proposition of Law No. I: The Constitutional guarantee of due process demands that notice consistent with the requirements of Ohio Civil Rule 55(A) be given before default judgment can be entered against a party as a discovery sanction... CONCLUSION... CERTIFICATE OF SERVICE APPENDIX Appx. Page Opinion of the Stark County Court of Appeals (January 14, 2013) Judgment Entry of the Mahoning County Court of Appeals (January 14, 2013)... 7 i

3 EXPLANATION OF WHY THIS CASE INVOLES A SUBSTANTIAL CONSITTUTIONAL QUESTION This case presents a substantial question regarding the due process protections guaranteed by the United States Constitution and Ohio law. Specifically, this case presents the question of whether the notice and hearing requirements of Ohio Civil Rule 55(A) apply to situations in which default judgment is entered as a discovery sanction. The United States Supreme Court has held that: "An elementary and fundamental requirement of due process in any proceeding is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." Mullane v. Central Hanover Bank & Trust Co. (1950), 339 U.S. 306, 314, 70 S.Ct. 652, 657, 94 L.Ed: 865. Both the Fourteenth Amendment to the United States Constitution and Section 16, Article I of the Ohio Constitution guarantee due process of law, and thus guarantee "a reasonable opportunity to be heard after a reasonable notice of such hearing." State, ex rel. Allstate Ins. Co., v. Bowen (1936), 130 Ohio St. 347, 199 N.E. 355, 4 O.O. 427, paragraph five of the syllabus. "[F]ailure to give reasonable notice renders Section 16, Article I of the Ohio Constitution meaningless." Moldovan v. Cuyahoga Cty. Welfare Dept. (1986), 25 Ohio St.3d 293, 296, at fn. 4, 496 N.E.2d 466. As Ohio Courts have repeatedly held: "The granting of default judgment [...] requires the same due process guarantee of prior notice as dismissal." Malaco Constr., Inc. v. Jones (Aug. 24, 1995), 10th Dist. No. 94AP-1466, supra. See also Dayton Modulars, Inc. v. Dayton View Community Dev. Corp., 2d Dist. No ,

4 Ohio-6257, 9, quoting Haddad v. English (2001), 145 Ohio.App.3d 598, 603 ("`[T]he granting of a default judgment requires the due process guarantee of prior notice,' including those entered for failure to comply with discovery orders."). This is thus a question of paramount importance for courts in this state: Exactly what are the notice requirements that must be followed in order to comport with the due processes requirements of the United States and Ohio Constitutions? In the case of default judgment entered as a discovery sanction, Ohio's Appellate Districts have come to varying conclusions on this issue, resulting in inconsistent enforcement of the fundamental due process rights of the citizens of the State of Ohio. Four of Ohio's Appellate Districts have held that the notice requirements of Civil Rule 55(A) apply in cases where default judgment is sought as a discovery sanction. Three others have disregarded this argument, instead evaluating notice of potential default judgment as a discovery sanction purely under the rubric of Civ.R. 41(B)(1). This conflict regarding the notice necessary to satisfy the due process requirements of the Constitution cannot be allowed to continue. Appellant respectfully requests that this Honorable Court hear this matter and provide clarification for the Appellate Districts so that a single standard can govern due process notice requirements throughout the State of Ohio. STATEMENT OF THE CASE AND FACTS On December 10, 2010, Appellee Utterback Dental Group filed a Complaint against the Appellant, Dr. James Lucido, alleging that Dr. Lucido had increased the draw on his paychecks without authorization and taken additional paychecks during the period he worked with Utterback Dental Group. Attorney Robert Rohrbaugh, Dr. Lucido's previous counsel, filed an Answer and Counterclaim on behalf of Dr. Lucido 2

5 on January 12, An additional Complaint against Dr. Lucido alleging misappropriation of trade secrets was consolidated with the original case on or about June 11, Appellant did not adequately respond to document requests served on January 18, 2011 and April 29, (Motion for Sanctions, p. 1). Prior counsel for Appellant apparently never objected to these requests, instead simply failing to turn over the requested documentation. (Id. at 2). Eventually, the issue came before the trial court for hearing on August 22, At said hearing, the trial court ordered Appellant to produce various records. (Judgment Entry of August 22, 2011). A mere four days later, Appellee filed a Motion to Compel and for Sanctions. The trial court held a hearing on September 9, 2011, and granted said Motion. (Judgment Entry of September 9, 2011). The trial court ordered production of all records by 4:00pm on September 14, (Id.). Appellant produced additional records, but not enough to satisfy Appellee and the trial judge. Appellee filed its Motion to Strike Answer and Counter-Claim, and for Entry of Default Judgment as to Liability ("Motion for Default Judgment") on September 14, The Court held a hearing on the Motion on September 16, 2011, a mere two days later. At the hearing, the Court granted Appellee's Motion for Default Judgment and set the matter for a damages hearing. On November 30, 2011, the trial court adopted the Magistrate's findings and entered judgment in favor of the Appellee in the amount of $473,000. Appellant timely appealed this decision to the Fifth District Court of Appeals. The Fifth District, citing that Court's previous holding in Quonset Hut, Inc. v. Ford 3

6 Motor Company (1997), 80 Ohio St. 3d 46, 648 N.E. 2d 319, overruled Appellant's assignment of error. This appeal follows. ARGUMENT IN SUPPORT OF PROPOSITIONS OF LAW Proposition of Law No. I: The Constitutional guarantee of due process demands that notice consistent with the requirements of Civil Rule 55(A) be given before default judgment can be entered against a party as a discovery sanction. Civ.R. 55(A) states: When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules, the party entitled to a judgment by default shall apply in writing or orally to the court therefor; but no judgment by default shall be entered against a minor or an incompetent person unless represented in the action by a guardian or other such representative who has appeared therein. If the party against whom judgment by default is sought has appeared in the action, he (or, if appearing by representative, his representative) shall be served with written notice of the application for judgment at least seven days prior to the hearing on isuch application. If, in order to enable the court to enter judgment or to carry it into effect, it is necessary to take an account or to determine the amount of damages or to establish the truth of any averment by evidence or to make an investigation of any other matter, the court may conduct such hearings or order such references as it deems necessary and proper and shall when applicable accord a right of trial by jury to the parties. (Emphasis added.) Civ.R. 55(A). This Honorable Court has previously held that "a defendant who has appeared in the action is entitled to service of an application for default judgment prior to its entry, and where service is required a default judgment without service must be vacated or reversed on appeal." Miamisburg Motel vs. Huntington National Bank (1993), 88 Ohio App.3d 117, 623 N.E.2d 163, citing AMCA Internatl. Corp. v. Carlton ( 1984), 10 Ohio St.3d 88, 10 OBR 417, 461 N.E.2d Seven of Ohio's Appellate Districts have been faced with this issue, and they have come to conflicting conclusions. 4

7 The Fifth District, in Quonset Hut, Inc. v. Ford Motor Company (1997), 80 Ohio St. 3d 46, 648 N.E. 2d 319, found that Civ.R. 37 and Civ.R. 41 apply to dismissals for discovery violations, overruling the Appellant's argument that it had not received proper notice of the dismissal pursuant to Civ.R. 55(A). The Fifth District cited the Quonset Hut holding in overruling Appellant's assignment of error in the matter now before this Court. The Ninth District, in Haddad v. English (9' Dist. 2001), 763 N.E.2d 1199, 145 Ohio App.3d 598, 2001-Ohio-2557, also disregarded arguments relating to Civ.R. 55, instead evaluating the Appellant's objections solely under the notice requirements of Civ.R. 41(B)(1). The Eleventh District, in Fester v. Price (l lth Dist. 1997), 97-LW-5568, 96-G- 2033, also held that the notice and hearing requirements do not apply, though one of the three judges dissented, stating: I would hold that the notice requirements of Civ.R. 55(A) apply to all instances where the court enters default judgment, including as a sanction for violating a discovery order under Civ.R. 37(B)(2)(c). Fester, 97-LW-5568 (Nader, J., dissenting). On the other hand, several Ohio Appellate Districts reviewing this question have held that the requirements of Civil Rule 55(A) do apply. The Third District, in Cunningham v. Garruto (3rd Dist. 1995), 656 N.E.2d 392, 101 Ohio App.3d 656, stated: It is our belief that the Civ.R. 55(A) notice requirement must be complied with even when a default judgment is imposed as a Civ.R. 37 sanction. We therefore hold that the trial court erred in entering a default judgment against defendant without adhering to the seven-day notice requirement of Civ.R. 55(A). (Emphasis added.) 5

8 The Fourth District, in Kingery's Black Run Ranch, Inc. v. Kellough (4th Dist. 2001), 01-LW-5358, 00CA2549, stated: Pursuant to the Ohio Civil Rules of Procedure, default judgment is properly used as a sanction only when a party willingly refuses to comply with a court's order to compel discovery or fails to attend its own deposition. See Civ.R. 37(B)(2)(c) and (D). Neither of these scenarios are at play in the case presently at bar. But it is noteworthy that even in these scenarios, the notice requirements of Civ.R. 55(A) must be met for the default judgment to be valid. (Emphasis added.) The Eighth District, in Rollins v. City of Broadview Hts. (8th Dist. 1987), 87- LW-0473, 51694, reversed a grant of default judgment under similar circumstances, stating: In Nash v. Mulgrew & Assoc. (Dec. 13, 1984), Cuyahoga App. No , unreported, this Court held that the notice provisions of Civ.R. 55(A) must be met when the court chooses to impose a default judgment as a sanction pursuant to Civ.R. 37(B)(2)(c). Civil Rule 55(A) provides that if a party has appeared in the action, the party against whom default judgment is sought must be served "with written notice of the application for judgment at least seven days prior to the hearing on the application." Civ.R. 55(A); see also, Reis Flooring Co. v. Dileno Construction Co. (1977), 53 Ohio App.2d 255, (Emphasis added.) This was a reference to a previous holding of the Eighth District, Kenneth C. Nash v. Mulgrew & Associates, Inc. (8th Dist. 1984), 84-LW-2005, 47922, in which the Court held stated: [W]hether a default judgment is rendered as such pursuant to Civ. R. 55(A) or whether a default judgment is rendered as a sanction, the ultimate effect is still the same, relieving the plaintiff of all burdens of proof. Therefore, due to the severity of such result, the notice provisions of Civ. R. 55(A) must be met. (Emphasis added.) The Sixth District, in Ferback v. Meeker (6th Dist. 1987), 87-LW-3235, E-86-69, also held that the due process rights of the Appellant had been violated due to the

9 trial court's failure to provide the notice required by Civ.R. 55(A) before entering default judgment as a discovery sanction. This question clearly implicates the due process guarantees of the Constitution of the United States of America and the Ohio Constitution. Ohio's Appellate Districts are in conflict as to whether or not the notice requirements of Civil Rule 55(A) apply to the extremely harsh remedy of default judgment as a discovery sanction. Appellant respectfully submits to this Court that clarification is necessary so that these conflicting holdings regarding the due process protections of the United States Constitution and the Ohio Constitution can be rectified. CONCLUSION For the reasons discussed above, this case involves matters of public and great general interest and a substantial constitutional question. The Appellant requests that this court accept jurisdiction in this case so that the important issues presented will be reviewed on the merits. Respectfully submitted, ^ja-l-aslo, Counsel of Record COUNSEL FOR APPELLANT, JAMES A. LUCIDO 7

10 Certificate of Service I certify that a copy of this Notice of Appeal was sent by ordinary U.S. mail to Counsel for Appellee, Jack B. Cooper, Day Ketterer LTD., Millennium Centre-Suite 300, 200 Market Avenue North, P.O. Box 24213, on 21^ ^ '^) acey A. Laslo, Counsel of Record COUNSEL FOR APPELLANT JAMES A. LUCIDO s

11 IN THE COURT OF APPEALS FOR STARK COUNTY, OHIO t,; 3 ^.,,... t^._.^ FIFTH APPELLATE DISTRICT UTTERBACK DENTAL GROUP, INC. Plaintiff-Appellee cs^ -vs- JAMES A. LUCIDO JUDGMENT ENTRY s Defendant-Appellant CASE NO CA-285 For the reasons stated in our accompanying Memorandum-Opinion, the judgment of the Court of Common Pleas of Stark County, Ohio, is affirmed. Costs to appellant HON. W. SCOTT GWIN HON: PATRICIA A. DELANEY ^hion. JOHN W. WISE

12 COURT OF APPEALS STARK COUNTY, OHIO FIFTH APPELLATE DISTRICT JUDGES: UTTERBACK DENTAL GROUP, INC. : Hon. Patricia A. Delaney, P.J Hon. W. Scott Gwin, J. Plaintiff-Appellee : Hon. John W. Wise, J. L i ^ 6^C^^ ^.3 Q'' ^ -vs- JAMES A. LUCIDO Defendant-Appellant Case No CA OPINION CHARACTER OF PROCEEDING: Civil appeal from the Stark County Court of Common Pleas, Case No. 201,0-CV JUDGMENT: DATE OF JUDGMENT ENTRY: APPEARANCES: For Plaintiff-Appellee JACK COOPER KRISTEN MOORE Day Ketterer LTD Millennium Centre-Suite Market Avenue North Canton, OH Affirmed ";f/aitaut tbpy TEO^: NANCY S. REINBOLD, CLERK. By For Defendant-Appellant ROBERT ROHRBAUGH II. TRACEY A. LASLO 325 East Main Street Alliance, OH Deput} Date.^frl.y i...r... ^e. 5

13 Stark County, Case No CA Gwin, J., { 1} Defendant James A. Lucido appeals a judgment of the Court of Common Pleas of Stark County, Ohio, entered in favor of plaintiff Utterback Dental Group, Inc. Appellant assigns one error to the trial court: {12} "I. THE TRIAL COURT'S GRANT OF DEFAULT JUDGMENT CONSTITUTED ABUSE OF DISCRETION AS DEFENDANT WAS NOT SERVED WITH WRITTEN NOTICE OF THE APPLICATION FOR JUDGMENT AT LEAST SEVEN DAYS PRIOR TO THE GRANT OF DEFAULT JUDGMENT AS IS EXPLICITLY REQUIRED BY CIV. R. 55 (A)." {1[3} The record indicates appellee filed a complaint against appellant on December 10, Appellant filed an answer and counterclaim on January 12, On January 18, 2011 and April 29, 2011, appellee served appellant with discovery requests for documents. Appellant did not produce the documents, but did not file an objection or otherwise seek court review of the requests. {14} At a pre-trial conference on August 22, 2011, the parties brought this matter to the court's attention. The court responded with an order filed the same day directing appellant to provide certain specified documents within five days of the order. On August 25, 2011, appellee filed a motion for sanctions, to which appellant replied on August 26, representing he had fully complied with court's order. {15} On September 8, 2011, the court entered an order setting the matter for oral hearing on September 9. The court directed appellant to personally appear for potential questioning by the court or by counsel concerning the motion. The court cautioned that' any failure of the defendant to so comply may result in further sanctions

14 Stark County, Case No CA including striking of the defendant's answer and other sanctions as may be deemed appropriate by the court." There is no transcript of the hearing on September 9. {16} On September 13, 2011, the court entered an order directing appellee to make immediately available all its books, records and other matters necessary for a defense expert to provide an opinion. The court also sustained appellee's motion to compel, and directed appellant to provide the records as requested fully and completely on -or before September 14, 2011, at 4:00 p.m. The court ordered appellant to pay the legal fees appellee incurred in the attempt to obtain discovery on or before September 14. The court cautioned "Should defendant fail to comply with this order, the court will consider striking the defendant's answer in the within proceedings." {17} On September 14, 2011, appellee filed a motion to strike the answer and counterclaim and for entryof default judgment as to the liability. On September 16, 2011, the court conducted an oral hearing on the motion, a transcript of which has been provided to us. At the hearing, the court stated it had warned appellant if he failed to comply with the discovery orders, the court would consider further sanctions, including striking the answer and granting default. Transcript of Proceedings, page 5. {18} On September 16, 2011, the court entered judgment striking appellant's answer and dismissing his counterclaim with prejudice. The court granted default judgment on the issue of liability, and set a damage hearing for September 20, { 9} In Toney v. Berkemer, 6 Ohio St. 3d 455, 453 N.E. 2d 700 (1983), the Ohio Supreme Court held: "It is an abuse of discretion for a trial court to grant a defau!t judgment for failing to respond to discovery requests when the record does not show willfulness or bad faith on the part of the responding party." Syllabus by the court.

15 Stark County, Case No. 2011=CA {110} In Toney, the Supreme Court cited Civ. R. 37 (A) and (B) as vesting broad discretion for the trial court to impose sanctions for failure to comply with discovery orders. The court noted the United States Supreme Court has held the harsh remedy of dismissal or default should only be used where the failure to comply is due to willfulness, bad faith, or fault of the party. Toney, at page 548, citing Societe Internationale v. Rogers, 357 U.S. 197, 212, 78 S. Ct (1958). The Toney court further held that a trial court's imposition of the sanction of dismissal cannot be disturbed unless it was an abuse of the trial court's discretion. Id., citation deleted. {111} In Toney, the court found the appellant had complied with the discovery order to the extent necessary so as not to prejudice the appellee's case for trial. The court found the trial court had stated no reason for an unreasonably short period of time for response. The Supreme Court further found appellant gave valid health reasons for what the court characterized as a brief delay, and he offered to provide additional information or authorization for additional information if requested. The Supreme Court concluded the record contained mitigating factors for the brief delay, and did not show appellant acted willingly or in bad faith by failing to answer the essential interrogatories and requests. The court added that if the appellant had failed to submit documentation on damages, the appropriate sanction would be preclusion of evidence on that issue rather than the harsh remedy of default judgment. {112} Here, the trial court had imposed the sanction of attorney fees and warned the appellant of the consequences of further delay. The delay here, unlike that ir, Toney, could not be characterized as brief; the requests were made on January 18 and April 29, and the court's judgment siriking the answer and counterclaim was not entered

16 Stark County, Case No CA until September 16. Further, appellant never brought the matter to the court's attention to limit or prohibit discovery of the various records appellee requested. It appears appellant's response to the requests fell far short of the court's order. The trial court found appellant's failure to comply was a flagrant abuse of the discovery process. {113} Appellant argues he did not receive sufficient notice of the hearing pursuant to Civ. R. 55. However, in the Toney case and the subsequent case of Quonset Hut, Inc. v. Ford Motor Company, 80 Ohio St. 3d 46, 648 N.E. 2d 319 (1997), the court found Civ. R. 37 and Civ. R. 41 apply to dismissals for discovery violations. In Quonset Hut, the court found "* ** the very purpose of notice is to provide a party with an opportunity to explain its default and/or to correct it." The court found the trial court had previously issued an order to compel and, when Quonset Hut failed to comply, found it in contempt. The. Supreme Court concluded on these facts Quonset Hut had ample notice of the possible harsher sanctions. {114} Our review of the records leads us to conclude appellant had sufficient notice of the court's intention to impose sanctions, including striking his answer and counterclaim, and was given the opportunity in two separate hearings to explain why he failed to respond to the discovery requests. The trial court did not abuse its discretion in finding appellant's conduct constituted a flagrant abuse of discovery, and it did not abuse its discretion in striking appellant's answer and counterclaim, and entering default judgment on behalf of appellee as to liability. {115} The assignment of error is overruled.

17 Stark County, Case No CA {116} For the foregoing reasons, the judgment of the Court of Common Pleas of Stark County, Ohio, is affirmed. By Gwin, J., Delaney, P.J., and Wise, J., concur HON. W. SCOTT GWIN r--^. ^ ON. PATt^ICJA A. DELANEY,,.- :,,.. s. WSG:clw 1206

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