IN THE SUPREME COURT OF OHIO

Transcription

1 IN THE SUPREME COURT OF OHIO RICHARD DIBENEDETTO ) Case No ) Appellant, ) ON APPEAL From the Hamilton County Court Of Appeals, -v- ) First Appellate District ) MARINEMAX OF OHIO, INC., et al, ) Court of Appeals Nos: C , C ) [Charles M. Miller and Keating, Muething,) and Klekamp, PLL, Appellees.] ) ) APPELLEES' MEMORANDUM IN RESPONSE TO MEMORANDUM IN SUPPORT OF JURISDICTION Robert A. Klingler ( ) Robert A. Klingler Co., L.P.A. 525 Vine Street Suite 2320 Cincinnati, Ohio Tel: (513) rak@klingl erlaw. coin James R. Rimedio ( ) P.O. Box Cincinnati, Ohio Tel: (513) rimediolaw@fuse.net Attorney for Appellees I Attorney for Appellant ^_^^RI^,il..^' /\^' vro I h iooti CLERK OF COURT SUPREME COURT OF OHIO

2 I. THIS CASE IS NOT OF PUBLIC OR GREAT GENERAL INTEREST AND DOES NOT INVOLVE A SUBSTANTIAL CONSTITUTIONAL QUESTION The Appellant's claim was dismissed because it failed to state a claim and was clearly filed outside the statute of limitations. Appellant now urges reversal of the long-standing rules on which the court of appeals based its affirmance of the dismissal. Appellant asks the Court to revisit the long-established principle that an attorney confessing judgrnent against a debtor pursuant to a warrant of attorney in a cognovit provision of a promissory note represents only the plaintiff, and is not the attorney for the debtor. There is nothing about this common-sense and statutorily authorized principle, and certainly nothing about the specific facts of this case, that justifies the Court's review. Appellant also asks the Court to decide whether a legal malpractice claim filed more than one year after the underlying cognovit judgment was entered, and more than one year after the plaintiff obtained counsel to represent him in the matter, is not barred by the statute of limitations. There is no reason for the Court to accept jurisdiction to hear either of these arguments. Appellant and his counsel narrowly avoided being sanctioned for filing the claims against Appellees. At oral argument on a motion for sanctions for frivolous conduct, the trial judge said to Appellees' counsel, "I think you're close to being right," and "the motion for sanctions should have been filed." Yet despite this rebuke, Appellant has proven undaunted in his pursuit of this invalid claim. The Court need not spend its resources reviewing this matter. There is no constitutional issue or question of public or great general interest in this case. Jurisdiction should be declined. 1

3 II. STATEMENT OF THE CASE AND FACTS A. Procedural Posture The trial court dismissed Appellant's legal malpractice claim against Appellees. The statute of limitations had expired months prior to Appellant taking action to preserve his claim, and Appellees-who represented the adverse party in the underlying case-were never Appellant's attorneys. After the ill-founded claims were dismissed, Appellees requested sanctions against Appellant and Appellant's counsel because they had no justifiable basis for asserting claims against Appellees, and had in fact misrepresented the date on which Appellant engaged his counsel in an attempt to artificially extend the statute of limitations that clearly precluded Appellant's claim. While implicitly acknowledging that Appellant and his counsel engaged in dubious conduct, the trial court denied the motion for sanctions on the basis of Counsel's distinguished career and history of good faith in other matters. However, the trial court, encouraged Appellees to appeal the denial of sanctions, stating, "I think that, since the case is already being appealed, no matter wliat I do on the motion for sanctions, it should be appealed to let another court review it since it's already going up on appeal." Cross-appeals ensued. Appellant appealed the dismissal. Appellees accepted the trial court's invitation and appealed the denial of sanctions. The First District Court of Appeals affirmed both the dismissal and the subsequent denial of sanctions. The appellate court affirmed the dismissal "[b]ecause there was never a lawyer-client relationship, and because the case was time-barred in any event." B. Factual Background The First District accurately set forth the factual baclcground in this case. Appellees adopt it here. Appellees will take this opportunity to correct Appellant's contentions that the trial 2

4 court and the court of appeals considered facts outside the record when ruling on the motion to dismiss. First, this issue was not raised below and has been waived. Second, the reason it was not raised below is that it is not true. Appellees' Motion to Dismiss cited directly to the 104 paragraph complaint for each fact cited therein. Appellee did not challenge the factual recitation at the trial court. The trial court granted the motion to dismiss based upon the face of the complaint. Once the claims were disniissed, Appellees introduced additional facts via affidavit in support of the motion for sanctions. There is no rule of law that the allegations of the complaint must be accepted as true for the purpose of sanctions. Appellees delayed filing the motion for sanctions until after the motion to dismiss was decided so that Appellant would have no basis for the argument he is making now. Appellant's attempt to blur the lines between the two motions is unavailing. Appellant states, "The trial court considered facts in ruling on the Civ. R. 12(B)(6) motion that... were not within the four-corners of the coinplaint "(Memo in Support of Jurisd. at 4) This statement is incorrect; no facts outside the complaint were ever offered. Appellant also criticizes the court of appeals for "going so far as to recite facts in its decision from the memorandum that were not directly, or indirectly, in the four-corners of the complaint." (Id at 4-5). This statement is true only if "the memorandum" refers to the memorandum in support of the motion for sanctions. However, the appellate court's decision included those facts because they were pertinent to Appellees' appeal of the sanctions issue. The court did not rely on those facts in connection with its ruling on the motion to dismiss. 3

5 III. ARGUMENT IN SUPPORT OF APPELLEE'S POSITION REGARDING APPELLANT'S PROPOSITIONS OF LAW A. Appellant's Proposition of Law No. I Obtaining a judgment for a creditor on a cognovit note does not create an attorney client relationship between the creditor's attorney and the debtor. There is no question that Appellees Miller and KMK were never Appellant DiBenedetto's attorneys. The United States Supreme Court addressed this issue when it held that an Ohio debtor, in signing a note with a cognovit provision, had "voluntarily, intelligently, and knowingly waived the right it otherwise possessed to prejudgment notice and hearing..." D. H. Overmyer Co, v. Frick Co. (1972), 405 U.S. 174, 92 S. Ct. 775, 783, 31 L. Ed. 2d 124 (upholding the constitutionality of R.C ). The Supreme Court was interpreting the same Ohio Revised Code provision that Appellees employed here. As the Supreme Court recounted the facts of that case, "The lawyer waived the issuance and service of process and confessed the judgment. This attomey was not known to [the debtor], had not been retained by [the debtor], and had not communicated with the [the debtor] prior to the entry of the judgment." Id. at 181. Even the reluctant concurring justice agreed. "Whatever procedural hardship the Ohio confession-of-judgrnent scheme worked upon the [debtor] was voluntarily and understandingly self-inflicted through the arm's-length bargaining." Id. at 189 (Douglas concurring). There is no attomey-client relationship between a creditor's attomey and the debtor against whom a cognovit judgment is obtained. Since the statute's enactment, Ohio courts have consistently held that a"plaintiffls attorney may confess judgment under R.C (A) for plaintiff on behalf of defendants". See N. Ohio Tractor, Inc. v. Richardson (1982), 8 Ohio App. 3d 171, 456 NE2d 824, Syllabus 1("Plaintiff's attorney may confess judginent under R.C (A) for plaintiff on behalf of defendants"). See also, Visconsi v. Vild (1991), 8`h Dist. App. No , 1991 Ohio App. 4

6 LEXIS 2575 (refusing to disqualify creditor's attorney for confessing judgment against debtor); Hadden v. Rumsey Products, Inc. (2d Cir. 1952), 196 F.2d 92, 96 ("To do precisely what the warrants of attorney authorized cannot be a fraud upon the court.")(applying Ohio law). The Northern Ohio Tractor court noted, "While there appears to be a paucity of case law on this point, the few decisions on the issue hold that plainfiffls attorney may confess judgment for plaintiff on behalf of the defendants." Id at 173, citing 46 Am. Jur. 2d. 882, Judgments, Section 726; 154 ALR 501. There simply is no break in the Ohio precedent clearly holding that it is appropriate for a creditors attorney to confess judgment on behalf of the debtor. The purpose of a cognovit provision is to permit a judginent without the presence of the defendant or the tendering of any defense on his behalf. Holzheimer v. Richter (1986), 11'll Dist. App. No , 1986 Ohio App. LEXIS 9686, *4-5, (Nothing above strict compliance with R.C (A) is required to safeguard a debtor's rights). The debtor is not harmed by the confession being entered by the creditor's attorney because: [W]hile the idea of inspection for patent defects has merit, we do not believe that such inspection must necessarily be made by the attorney confessing judgment on behalf of defendants. That portion of the statute requiring production of the warrant before the court permits the court itself to examine the cognovit provision and the underlying contract or note before judgment is entered. Northern Ohio Tractor, 8 Ohio App. 3d, at 173. Those safeguards were present here. The court was given copies of the Note and Security Agreement and was informed that Appellees represented the plaintiff and were obtaining a cognovit judgment against Appellant. The court permitted the judgment. Appellees met their duty to their client and the court. The treatment of cognovit provisions is based upon the simple rule that an attorney is not liable to someone who is not his client. "[A]ttorneys in Ohio are not liable to a third party... unless the third party is in privity with the client for whom the legal services were performed." 5

7 Shoemaker v. Gindlesberger, 118 Ohio St. 3d 226; 2008-Ohio-2012; 887N.E.2d 1167 at 9. The Appellees performed legal services for their client Summer Street, not for Appellant. Appellees did not create an attorney-client relationship with Appellant when Appellees caused judgment to be entered against Appellant. Appellant has failed to cite to any case that even arguably supports its contention that Appellees had an attorney-client relationship with Appellant. Appellant cites one case from 1953, and an article or treatise from 1844-before Ohio had adopted either our present day constitution or the Revised Code. The language Appellant cites from the 1953 case actually undermines Appellant's argument. The Court wrote that a cognovit provision "is only a grant of authority by the maker as principal to such attorney to act as his agent in confessing such a judgment." Alliance First Nat'l. Bank v. Spies (1953), 158 Ohio St. 499, 502, 110 N.E.2d 483. A cognovit is only a grant of authority to act as an agent in a very limited capacity. It is not the creation of an attomeyclient relationship. And the 1844 article cited by Appellant, penned during John Tyler's presidency, has nothing to do with the warrant of attorney and cognovit provisions specifically authorized by Ohio statute.. Appellant has failed to suggest any reason for this Court to revisit the long established principle that an attorney acting to obtain a judgment via a cognovit provision is the attomey of the creditor, not the debtor. The Court should not entertain Appellant's first proposition of law. B. Appellant's Proposition of Law No. II Appellant's Second Proposition of Law Begs the Question It Supposedly Answers. Appellant's second proposition reads, "A timely complaint... is not subject to dismissal for failure to state a claim upon which relief can be granted [on the basis of the statute of limitations.]" Appellees agree with this obvious truism. The statement, however, reflects neither 6

8 the facts of this case nor the legal issues decided below. Nor, of course, would such a truism be a useful issue for this Court to consider. A claiin of legal malpractice must be commenced "within one year after the cause of action accrued." Oliio Rev. Code Ami (A). The limitations period begins to run when a cognizable event occurs. [U]nder R.C (A), an action for legal malpractice accrues and the statute of limitations begins to run when there is a cognizable event whereby the client discovers or should have discovered that his injury was related to his attomey's act or non-act and the client is put on notice of a need to pursue his possible remedies against the attorney or when the attorney-client relationship for that particular transaction or undertaking terminates, whichever occurs later. Zimmie v. Calfee, Halter and Griswold (1989), 43 Ohio St.3d 54, 58, 538 N.E.2d 398, 401. Here, Appellees obtained the judgment against Appellant on November 9, The trial court and the appellate court held that the entry of judgment was the cognizable event that started the clock. Because Appellant did not file his claim until April 2007, the limitations period had expired and the suit was properly dismissed. An adverse judgment against the "client" is a cognizable event that triggers the statute of limitations. In Zimmie, this Court held that the cognizable event occurred on the date that the trial court invalidated the antenuptial agreement, drafted by Zimmie's attorney, that was at the heart of the dispute. Id. at 58. This Court reasoned, "[a]t that time, Zimmie should have realized that the property he brought into his marriage would not be protected from his wife Kathryn in the divorce proceeding." Id. The invalidation of the agreement effectively put the client on notice that he might need to pursue further remedies against his attorney, who had drafted the agreement, and was the cognizable event that triggered the running of the statute of limitations. Every Ohio case on this issue has concluded that the entry of a judgment is a cognizable event. See, e.g., North Shore Auto Sales, Inc. v. Weston, Hurd, Fallon, Paisley & Howley,

9 Ohio 456 (Ohio Ct. App. 2006) (date upon which court denied client's motion was cognizable event for statute of limitations purposes); and Senffv. Moran, 2005 Ohio 4113 (Ohio Ct. App. 2005) (affirming trial court's determination that cognizable event occurred when bankruptcy court held it would not discharge client's debts); Smith v. Conley (2006), 846 N.E.2d 509 (conviction constitutes a cognizable event); Taylor v. Lloyd, 2007 Ohio 1565 (date judgment rendered by trial court was the cognizable event.). Appellant ignores the substantive law and attempts to convert the issue into a procedural one by questioning whether the motion to dismiss should have been converted into a motion for summary judgment. However, Appellant did not argue that point below, and he has waived the arguinent. More importantly, when it is patent from the face of the complaint that the statute of limitations has expired, dismissal is appropriate. Grover v. Bartsch, 170 Ohio App. 3d 188, 2006 Ohio 6115, 866 N.E.2d 547 (upholding dismissal when expiration of statute of limitations is patent from face of complaint); Lightbody v. Rust, 2003 Ohio 3937 (same); Leichliter v. Natl. City Bank of Columbus (1999), 134 Ohio App. 3d 26, 729 N.E.2d 1285 (same); Kotyk v. Rebovich (1993), 87 Ohio App. 3d 116, 621 N.E.2d 897 (same); Steiner v. Steiner (1993), 85 Ohio App. 3d 513, 620 N.E.2d 152 (same). Here, it was obvious froin the face of the complaint that suit was not filed until over a year after Appellees obtained a judgment against Appellant. It was also obvious that suit was not filed within one year of the date Appellant alleged to have hired Rimedio as his counsel to attempt to set aside the judgnient (even though that date was a fabrication). Under any conceivable formulation of the law, Appellant's claims-which were never substantively viable-expired prior to him filing the complaint that nearly resulted in he and his attorney being sanctioned. Appellant's time barred claims were dismissed based upon sound 8

10 legal principles. Appellant has presented no reason for this Court to consider his second proposition of law. 1V. CONCLUSION The claims asserted against Appellces were properly laid to rest. They should not be resurrected. Appellees respectfully request that the Court decline to exercise jurisdiction over this matter. Respectfully submitted, UI-Ae G Robert A. HIingler ( Robert A. Klingler Co., L.P.A. 525 Vine Street Suite 2320 Cincinnati, Ohio Tel: (513) rak@klinglerlaw.com Attorney for Appellees 9

11 CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing was served by electh-onic transmission this 19th day of February 2009 upon the following: James R. Rimedio P.O. Box Cincinnati, Ohio Tel: (513) Attorney for Appellant Kobert A. Khngler