Caruso v. Leneghan

2014 Ohio 1824

• Court: Ohio Court of Appeals
• Decided: May 1, 2014
• Docket: 99582
• Status: Published

Opinion

[Cite as Caruso v. Leneghan, 2014-Ohio-1824.]

Court of Appeals of Ohio EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

JOURNAL ENTRY AND OPINION No. 99582

ANGELA CARUSO PLAINTIFF-APPELLEE/ CROSS-APPELLANT

vs.

DAVID M. LENEGHAN, ET AL. DEFENDANTS-APPELLANTS/ CROSS-APPELLEES

JUDGMENT: AFFIRMED

Civil Appeal from the Cuyahoga County Court of Common Pleas Case Nos. CV-01-448754, CV-02-484716, and CV-05-556678

BEFORE: Celebrezze, J., Boyle, A.J., and E.T. Gallagher, J.

RELEASED AND JOURNALIZED: May 1, 2014 ATTORNEYS FOR APPELLANTS

Patrick P. Leneghan, Jr. Leneghan & Leneghan 9500 Maywood Avenue Cleveland, Ohio 44102

K. Scott Carter 200 Treeworth Boulevard Suite 200 Broadview Heights, Ohio 44147

ATTORNEY FOR APPELLEE

William T. Wuliger The Brownell Building 1340 Sumner Court Cleveland, Ohio 44115 FRANK D. CELEBREZZE, JR., J.:

{¶1} Appellants/cross-appellees, Patrick Leneghan Sr. (“Patrick Sr.”) and

Ballycroy-Mayo International Ltd. (“Ballycroy”), allege 14 assignments of error resulting

from the third portion of a trifurcated trial.1 Appellee/cross-appellant, Angela Caruso

(“Angela”), assigns seven errors from this and other portions of the trial. After a

thorough review of the record and case law, we affirm.

I. Factual and Procedural History

{¶2} In the 1980s, Angela and her then-husband, Michael Caruso, started a coffee

roasting business that would become Berardi’s Fresh Roast, Inc. (“BFR”). This business

grew out of Angela’s home and kitchen goods store. In 2000, as part of their divorce

proceedings, the domestic relations court ordered that Angela buy out Michael’s share of

the company.

{¶3} Angela’s attorney at the time, David Leneghan, brokered a deal between his

father, Patrick Sr., and Angela. The details of this transaction are disputed. Angela

claims that the transaction was a loan to be repaid at 12-percent interest. The documents,

however, indicate a substantial loan and sale of a controlling interest in the company to

Ballycroy, a company owned and controlled by Patrick Sr. As part of this transaction,

Patrick Sr. also became a 100-percent owner of Caruso Properties, L.L.C., a company that

owned the building and land used by BFR. With such a disparity in expectations,

One of these assigned errors relates to the first trial. 1 disputes soon arose that caused Angela to either leave the company or be locked out by

Patrick Sr., depending on whose testimony one believes.

{¶4} In any event, on September 17, 2001, Angela filed the first of four complaints

against her divorce attorney, David Leneghan, and his law firm. In these various

consolidated complaints, she also alleged causes of action against Patrick Sr., Patrick

Leneghan Jr., BFR, Ballycroy, and a number of other corporate defendants. The trial

court initially bifurcated the proceedings.

{¶5} The first trial began in 2005, where Angela’s claims of attorney malpractice

against David Leneghan and his law firm resulted in a $6,400,000 judgment in her favor.

Ultimately, the insurance carrier for the firm settled the claim for an amount less than the

judgment.2

{¶6} The second trial, which began on January 10, 2007, was to consist of claims

of fraud and conspiracy against Patrick Sr., David Leneghan, and others, as well as a

shareholder derivative action, a breach of fiduciary duty claim, and numerous other

claims. However, during trial, the court found that issues integral to the shareholder

action were impermissibly intermingling with claims of fraud. Therefore, the trial court

again bifurcated the case. The shareholder derivative action would be the subject of a

third trial along with claims for spoliation of evidence, breach of fiduciary duty, tortious

The docket in this case indicates the settlement agreement is confidential, but key terms of 2

that agreement were openly discussed by the defendants after the court granted their motion for an in camera view of the settlement agreement. interference,3 and breach of statutory duties. The second trial on issues of fraud and

theft resulted in defense verdicts.

{¶7} On July 24, 2012, a three-week, two-part jury trial began. During the first

phase, evidence was adduced about the failure of Patrick Sr. and other BFR employees

and directors to turn over records to Angela, the minority shareholder. Evidence was

also adduced regarding interested transactions that Patrick Sr. engaged in and the

diversion of company assets and money for the personal benefit of certain family

members and himself, to the detriment of the minority shareholder, that were improperly

recorded in the records of BFR. At the close of evidence, the trial court ordered a

directed verdict in the defense’s favor on the spoliation claim. On August 14, 2012, the

jury found in favor of Angela on the breach of statutory and fiduciary duty claims.4 The

jury also found that Patrick Sr. acted with malice. The jury awarded Angela $987,000 in

compensatory damages.

{¶8} A second phase of this trial commenced so the jury could determine an

appropriate amount of punitive damages. Because malice had already been found, the

evidence was limited to appropriate damages. After the jury heard testimony from

This claim was disposed of by summary judgment in favor of the defendants. 3

The shareholder derivative claim was disposed of prior to judgment. The parties recognized 4

that the nature of the claims were very similar to the breach of fiduciary duty claims and rather than have any damages flow back to Patrick Sr. as controlling member of BFR, any damages would be treated as stemming from the breach of fiduciary duty. Patrick Sr. about his financial status as well as Angela’s financial condition, the jury

awarded one dollar in punitive damages.

{¶9} Another hearing was conducted where Angela presented evidence of

appropriate attorney fees to the judge. The trial court did not award the full amount

sought by Angela, but entered judgment for attorney fees totaling $690,968.80 in her

favor. Angela also sought prejudgment interest, but the trial court denied this motion

after a lengthy hearing. Patrick Sr. filed a motion for judgment notwithstanding the

verdict and for a new trial. These were denied by the trial court, but a motion for

remittitur was granted in part and agreed to by Angela. Ultimately, the judgment in favor

of Angela against Patrick Sr. and Ballycroy totaled $1,681,930.07 and consisted of

$958,776 in compensatory damages plus $27,674.27 in litigation costs, $690,968.80 in

attorney fees, $4,510 in statutory damages, and $1 in punitive damages. Both sides

appealed the case to this court assigning 21 errors between them.

II. Law and Analysis

a. One Satisfaction and Double Recovery

{¶10} In Patrick Sr.’s first two assignments of error, he argues that “[i]t was error

to not dismiss based upon Ohio’s one satisfaction rule,” and “[i]t was error to fail to

dismiss the case based upon Ohio’s double recovery rule.”

{¶11} “[B]ut one satisfaction can be exacted for the same demand.” Tanner v.

Espey, 128 Ohio St. 82, 192 N.E. 229 (Mar. 28, 1934). The Ohio Supreme Court set

forth the nature of the one satisfaction rule in the context of master–servant liability. Natl. Union Fire Ins. Co. v. Wuerth, 122 Ohio St.3d 594, 2009-Ohio-3601, 913 N.E.2d

939. There the court stated:

“For the wrong of a servant acting within the scope of his authority,

the plaintiff has a right of action against either the master or the servant, or

against both, in separate actions, as a judgment against one is no bar to an

action or judgment against the other until one judgment is satisfied.”

[Losito v. Kruse, 136 Ohio St. 183, 187, 24 N.E.2d 705 (1940)], citing

Maple v. Cincinnati, Hamilton & Dayton RR. Co. (1883), 40 Ohio St. 313.

See also State ex rel. Flagg v. Bedford (1966), 7 Ohio St.2d 45, 47-48, 36

O.O.2d 41, 218 N.E.2d 601 (“This court follows the rule that until the

injured party receives full satisfaction, he may sue either the servant, who is

primarily liable, or the master, who is secondarily liable, and a mere

judgment obtained against the former is not a bar to an action or judgment

against the latter”). “The plaintiff, in any event, can have but one

satisfaction of his claim.” Losito, 136 Ohio St. at 187-188, 16 O.O. 185,

24 N.E.2d 705.

Id. at ¶ 21.

{¶12} In the personal injury context, the Ohio Supreme Court set forth the same

principle of allowing only one recovery for a given harm. Seifert v. Burroughs, 38 Ohio

St.3d 108, 110, 526 N.E.2d 813 (1988). “The law of Ohio is well-settled that an injured

party is entitled to only one satisfaction for his injuries, ‘and that receipt of full compensation from one of several persons whose concurrent acts of negligence are the

basis of a suit for damages for personal injuries releases all.’” Id., quoting Royal

Indemn. Co. v. Becker, 122 Ohio St. 582, 589, 173 N.E. 194 (1930). The court also

quoted from the Restatement of the Law 2d, Judgments, Section 50, Comment d (1982),

which states:

“* * * The adjudication of the amount of the loss also has the effect of establishing the limit of the injured party’s entitlement to redress, whoever the obligor may be. This is because the determination of the amount of the loss resulting from actual litigation of the issue of damages results in the injured person’s being precluded from relitigating the damages question. * * * Therefore, when a judgment is based on actual litigation of the measure of a loss, and the judgment is thereafter paid in full, the injured party has no enforceable claim against any other obligor who is responsible for the same loss.”

Seifert at 110.

{¶13} As the Seifert court recognized, the question centers on the extent of the

recovery and precisely what is included therein: “If for all injuries then the entry of

satisfaction of judgment will have completely compensated him. On the other hand, if

the judgment was for only a part of his injuries, then he was not fully compensated and is

entitled to pursue his appeal.” Id.

{¶14} However, Patrick Sr. was determined to be an intentional tortfeasor in the

third trial. As a result, the collateral source rule, a narrow exception to the one

satisfaction rule, is implicated here.

{¶15} First, “a joint tortfeasor who acted intentionally should be treated differently

as to damages from one who was merely negligent.” Klosterman v. Fussner, 99 Ohio App.3d 534, 539, 651 N.E.2d 64 (2d Dist.1994). Further, where tortfeasors commit

injury jointly,

a plaintiff usually is entitled to only one recovery for actual damages. Under the principles of joint and several liability, a plaintiff can take a judgment for the full amount of her damages against any one or all of the tortfeasors and can collect from any one or all of the tortfeasors up to the highest award of damages, but not more.

Id. at 539.

[T]he purpose of the collateral source rule is to assure that the tortfeasor does not benefit, by way of a reduced damage award, from payments that the plaintiff receives from an independent third party. Similarly, the legislature has provided that an intentional tortfeasor has no right of contribution from other tortfeasors who did not act intentionally. R.C. 2307.31(A) [now R.C. 2307.22]. The public policy reasons for R.C. 2307.31(A) and the collateral source rule are similar.5

Id. at 540. See also Eysoldt v. Proscan Imaging, 1st Dist. Hamilton No. C-110138,

2011-Ohio-6740, ¶ 8.

{¶16} The court goes on further to reason:

Although the [Ohio Supreme] court does not state this consequence explicitly, we conclude from the Jones decision [ Jones v. VIP Dev. Co., 15 Ohio St.3d 90, 98, 472 N.E.2d 1046 (1984)] that the Supreme Court interpreted R.C. 2307.31 as providing a narrow legislative exception to the general rule that among joint tortfeasors the plaintiff is entitled to only one recovery. Under this exception, when a plaintiff recovers from or settles with a negligent tortfeasor and subsequently obtains a judgment against an intentional tortfeasor for the same injury, the plaintiff may recover more than the amount required to make him whole because the intentional tortfeasor is not entitled to any reduction in the award against him, regardless of the amount of the previous judgment or settlement.

R.C. 2307.25(E) also includes breach of fiduciary duty in the class of tortfeasor claims not 5

entitled to a right of contribution, even if the jury did not find that Patrick Sr. acted intentionally. Id. See also DWS Internatl. v. Meixia Arts & Handicrafts Co., S.D.Ohio No.

C-3:09-cv-458, 2013 U.S. Dist. LEXIS 102128 (July 22, 2013). Patrick Sr. claims this

rule only applies where a defendant settles prior to trial. According to him, where there

is a judicial determination and settlement, this rule is not applicable. This is contrary to

the Klosterman court’s holding above. This rule, developed from equity principles,

should not be defined with so arbitrary a line where there is no compelling justification

for drafting it as such.

{¶17} Therefore, even if some damages overlap between the two trials, because

Patrick Sr. was found to be an intentional tortfeasor, the one satisfaction rule does not

apply to this case to prevent a judgment against him.

{¶18} Here, the trial court cut off the litigation in the first trial at the transaction

date that transferred control of BFR to Patrick Sr., with certain damages projected into the

future for loss of a controlling interest in BFR. The matter of punitive damages was also

not litigated in the first trial, and therefore Angela’s claims were not fully litigated. See

Clear Creek Partnership v. LeBeau, 10th Dist. Franklin Nos. 97APE04-568 and

97APE04-569, 1998 Ohio App. LEXIS 1890, *12 (Apr. 28, 1998). In the third trial, the

court limited damages to after the date of the transaction and included punitive damages.

{¶19} The injuries involved in the claims against Patrick Sr. in the breach of

fiduciary duty claim are also inherently different from the malpractice action. The

common law single satisfaction rule “does not apply unless there has been a

determination of the settling defendant’s liability for the same injuries as those caused by the non-settling defendant.” BP Exploration & Oil Co. v. Maintenance Servs., 313 F.3d

936, 942 (6th Cir.2002), citing In re Miamisburg Train Derailment Litigation, 132 Ohio

App.3d 571, 725 N.E.2d 738 (2d Dist.1999).

{¶20} Patrick Sr. relies heavily on Seifert for the proposition that the settlement

barred all further claims after the first trial. However, the first sentence of Seifert

indicates it applies to concurrent tortfeasors responsible for the same damages. Seifert,

38 Ohio St.3d at 110, 526 N.E.2d 813 (1988). Where evidence of additional damages that

were not litigated and covered by the satisfaction are adduced, the rule does not act to bar

further litigation. Kingsmen Ents. v. Kasunic, 8th Dist. Cuyahoga No. 72259, 1998 Ohio

App. LEXIS 3391, *9 (July 23, 1998).

{¶21} The litigation that occurred in the third trial was not spawned as a direct

result of the issues litigated in the first trial and did not cover the same injury. The first

trial focused on the negligent representation of Angela by her divorce attorney, David

Leneghan. The third trial resolved issues of breach of fiduciary duty by Patrick Sr. to the

detriment of a minority shareholder. Apart from the fact that the defendants in the cases

are related, the conduct does not combine to create an injury that stems from a common

source. One does not naturally flow from the other. They are separate wrongs,

committed separately against the same party. These injuries are divisible in both time

and manner.

{¶22} Patrick Sr. also claims that a ruling contrary to his position would mean this

court must overrule Kingsmen. Such a result is not required because Kingsmen is distinguishable from the present case. That case dealt with concurrent tortfeasors

committing the same acts that resulted in the same damages. In fact, that case dealt with

the same torts committed by the same parties for the same damages. Homeowners and a

home improvement contracting company sued each other for breach of contract. The

homeowners also named several individuals who owned or controlled the home

improvement company. Trial was bifurcated with litigation against the company

proceeding first. Individual liability was to be litigated in a second trial. A judgment

was rendered in favor of the company with an offsetting amount in favor of the

homeowners. After the homeowners settled the matter as part of a bankruptcy

proceeding filed by the company, a release was entered in settlement of the first judgment

where the homeowners attempted to preserve their right to proceed against the individual

defendants. Kingsmen at *2-4. The trial court granted the individual defendants’

motion for summary judgment based, in part, on the one satisfaction rule. This court

affirmed, holding, “[o]nce injuries are fully compensated, claims against others for those

injuries are moot.” Id. at *7, citing Seifert. But those injuries stemmed from the same

acts. Here, we have injuries inflicted from separate acts of separate individuals over

separate periods of time.

{¶23} The first trial resulted in a $6.4 million verdict in Angela’s favor. She settled

with the losing defendants in that trial for less than that amount with a reservation to seek

redress from other non-settling defendants to fully satisfy her losses. This further

indicates why recovery from the remaining defendants does not constitute a double recovery, even if Patrick Sr.’s argument is correct, that there were no other damages

offered in the third trial that were not covered in the first trial.

{¶24} R.C. 2307.28 and its predecessor, R.C. 2307.33, effected a change in the

common law to give full effect to reservations of rights in settlement agreements against

non-settling defendants. Williams v. Fath Properties, 1st Dist. Hamilton No. C-020834,

2003-Ohio-3200, ¶ 5 (“[T]he intent of the statute was to repudiate the common-law rule

that a release of one tortfeasor resulted in the release of all claims against all other

tortfeasors”); Marcus v. Hamilton, 8th Dist. Cuyahoga No. 81701, 2003-Ohio-2739.

R.C. 2307.28 provides,

When a release or a covenant not to sue or not to enforce judgment is given in good faith to one of two or more persons for the same injury or loss to person or property or the same wrongful death, both of the following apply:

(A) The release or covenant does not discharge any of the other tortfeasors from liability for the injury, loss, or wrongful death unless its terms otherwise provide, but it reduces the claim against the other tortfeasors to the extent of the greater of any amount stipulated by the release or the covenant or the amount of the consideration paid for it, except that the reduction of the claim against the other tortfeasors shall not apply in any case in which the reduction results in the plaintiff recovering less than the total amount of the plaintiff’s compensatory damages awarded by the trier of fact and except that in any case in which the reduction does not apply the plaintiff shall not recover more than the total amount of the plaintiff’s compensatory damages awarded by the trier of fact.

(B) The release or covenant discharges the person to whom it is given from all liability for contribution to any other tortfeasor.

{¶25} If Patrick Sr.’s argument that the damages from the first and third trials are

the same is taken as true, the statute still abrogates the one satisfaction rule where the

settlement reserves the right to pursue other non-settling defendants for uncompensated amounts not covered by the settlement. Here, the amount of uncompensated damages

from the first trial is not surpassed by the compensatory damages awarded in the third

trial. The settlement agreement specifically reserved Angela’s right to pursue claims

against Patrick Sr. and did not specifically release anyone except David Leneghan and his

employer. The argument raised by Patrick Sr. that this should only apply to pretrial

settlements is contrary to the language of the statute where it specifically mentions

agreements not to enforce judgments.

{¶26} The jury’s verdict was for less than the amount of damages not covered by

the settlement in the first trial. Therefore, there is no double recovery, and the one

satisfaction rule is not applicable.

{¶27} Appellant’s first and second assignments of error are overruled. b. “It was error to not consider [the] stock tendered after Trial 1.”

{¶28} In his third assignment of error, Patrick Sr. asserts that after Angela received

a settlement in the first trial, that should have or constructively did mean that Angela

tendered her stock. The settlement in the first case was between Angela, David

Leneghan, and his employer law firm, and was paid by the insurer of the law firm. There

is no allegation that the settlement agreement called for Angela to tender her shares. In

fact, the settlement agreement preserved Angela’s right to sue other entities involved in

wrongdoing alleged in her complaints and amended complaints. To accept this

argument, this court would be required to sustain the proposition that when a lawyer

commits malfeasance against a client in a business transaction, the lawyer should be

rewarded with the fruits of the transaction to offset the losses sustained in the malpractice

action. This is untenable.

{¶29} Angela’s retention of her shares was presumably part of a bargained-for

exchange. She relinquished her right to a certain amount of her judgment, ostensibly so

that she could keep her shares and pursue remedies against other non-settling defendants

who separately wronged her. If Patrick Sr. wanted her shares tendered, that could have

been included in the settlement agreement. It was not, and there is no reason to hold that

her shares were tendered as a result of the settlement.

{¶30} Appellant’s third assignment of error is overruled. c. Admissibility of Testimony

1. Expert Testimony on Rent

{¶31} Patrick Sr. claims in his fourth assignment of error that “[i]t was error to

allow Plaintiff’s expert’s testimony on improper rent in Trial 3.” During trial, the court

excluded some of the expert’s valuation findings and caused the testimony of the expert

to change as a result. Patrick Sr. claims this was error.

{¶32} It is well established that, pursuant to Evid.R. 104, the introduction of

evidence at trial falls within the sound discretion of the trial court. State v. Heinish, 50

Ohio St.3d 231, 553 N.E.2d 1026 (1990).

{¶33} This assignment of error involves the trial court’s decision to limit or

exclude evidence. The standard for such is well defined in Ohio. “The admission or

exclusion of evidence rests within the sound discretion of the trial court.” State v. Jacks,

63 Ohio App.3d 200, 207, 578 N.E.2d 512 (1989).

{¶34} Further, Evid.R. 702, which controls the admission of expert testimony

during the course of trial, provides that “[i]f scientific, technical, or other specialized

knowledge will assist the trier of fact to understand the evidence or to determine a fact in

issue, a witness qualified as an expert by knowledge, skill, experience, training, or

education, may testify thereto in the form of an opinion or otherwise.” The

determination of whether a witness possesses the qualifications necessary to allow expert

testimony lies within the sound discretion of the trial court. In addition, the qualification

of an expert witness will not be reversed unless there is a clear showing of an abuse of discretion on the part of the trial court. State v. Maupin, 42 Ohio St.2d 473, 330 N.E.2d

708 (1975); State v. Minor, 47 Ohio App.3d 22, 546 N.E.2d 1343 (10th Dist.1988).

{¶35} Here, Patrick Sr. questions the trial court’s decision to allow Heinz Ickert’s

testimony at trial that was not contained in his expert report. This situation arose when it

was learned that Ickert, an expert in business valuation, did his own inquiry into the fair

market value of rent for the building housing BFR. However, Ickert did not have a

demonstrated expertise in real estate matters. He admitted that during a limited voir dire.

His testimony about fair market rent was then excluded by the trial court. As a result,

Angela’s counsel switched gears and had Ickert testify about the improper rents as the

difference between two rental contracts where a later contract for less rent superseded the

earlier one. These leases were in evidence, and a proper foundation was laid for this

testimony. Later, based on the failure of the parties to attach a lease to the April 2000

agreement, Angela’s attorney prompted Ickert to opine that any rent payments were

improper given that there was no explicit requirement for BFR to pay rent.

{¶36} The issue of excessive rents was raised in Ickert’s report. Further, a

foundation was laid during his testimony that allowed him to opine that all the rental

payments were excessive because there was no obligation for BFR to pay rent given that

no lease was attached to the April 2000 documents where one was specifically

contemplated. It was not an abuse of the trial court’s discretion to allow this testimony.

As the trial court stated in overruling the objection, the theory was incredible and may

well cut against Ickert’s assessment of damages in the eyes of the jury, but that was a matter of the weight of the evidence, not its admissibility. In fact, on cross-examination,

Ickert admitted that he did not believe that BFR owed nothing for rent.

{¶37} Therefore, the testimony was admissible. The credibility of the testimony is

not for this court to weigh in terms of determining its admissibility.

{¶38} Appellant’s fourth assignment of error is overruled.

2. Testimony of Financial Vulnerability

{¶39} In Angela’s first cross-assignment of error, she claims that

[t]he trial court committed reversible error in allowing appellants to introduce evidence of appellee’s wealth, in failing to give a limiting instruction regarding the use of that evidence during the punitive damages phase of this litigation and in instructing the jury that the amount of punitive damages must be established with clear and convincing evidence, while neglecting to require appellants to produce necessary financial documents.

{¶40} The degree of reprehensibility is an important factor to be considered when

assessing punitive damages. BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 575, 116 S.Ct.

1589, 134 L.Ed.2d 809 (1996). The Supreme Court has set forth a number of factors that

should be considered in judging the reprehensibility of certain conduct. These include

whether

the harm caused was physical as opposed to economic; the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; the target of the conduct had financial vulnerability; the conduct involved repeated actions or was an isolated incident; and the harm was the result of intentional malice, trickery, or deceit, or mere accident.

(Citations omitted.) State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 419, 123

S.Ct. 1513, 155 L.Ed.2d 585 (2003). {¶41} Here, Angela takes issue with the court’s decision to allow Patrick Sr. to

rebut testimony that Angela was financially vulnerable as a result of his actions. The

court ruled that evidence of financial vulnerability, or lack thereof, was an issue pertinent

to the award of punitive damages based on the holding in Am. Chem. Soc. v. Leadscope,

10th Dist. Franklin No. 08AP-1026, 2010-Ohio-2725. There, the Tenth District

appropriately set forth the factors that should be examined when awarding punitive

damages, including financial vulnerability. Id. at ¶ 75.

{¶42} The financial vulnerability of the victim is an issue that should enhance

damages where it applies. However, punitive damages do not compensate for loss.

They punish. Where the victim happens to be financially secure, this should not reduce

the culpability or the liability of the tortfeasor for engaging in willfully damaging

conduct. Financial vulnerability should be used as an enhancing factor, a sword for the

destitute plaintiff, not a shield for the willful tortfeasor.

{¶43} However, courts have interpreted this factor to allow for the introduction of

evidence regarding the victim’s financial well-being to rebut claims of vulnerability at the

time of alleged intentional conduct. See, e.g., Morgan v. New York Life Ins. Co., 559

F.3d 425, 441-442 (6th Cir.2009).6 There, addressing a somewhat similar argument to

the present one, the Sixth Circuit did not indicate that any problem existed with the

See also State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 434, 123 S.Ct. 1513, 6

155 L.Ed.2d 585 (2003). introduction of the relative wealth of the victim leading up to the wrongful termination of

his employment.

{¶44} Financial vulnerability is one of the main guideposts in determining an

appropriate amount of punitive damages. Therefore, evidence of the absence of

vulnerability can be considered when affirmative evidence of vulnerability is introduced.

{¶45} Here, if the matter focused only on the conduct of the parties in 2002 and

2003, then Angela may well be correct. However, many of the damaging acts she

complained of in the third trial were from 2006 through 2012. She was not financially

vulnerable during this time. She was financially vulnerable prior to receiving a

settlement in 2006, and she presented testimony about this period of her life. She

testified about her loss of income, her dependence on family and others for money,

foreclosures, and her financial ruin.

{¶46} In this case, there is no single, discrete event around which the court may

limit evidence of vulnerability as there is in other cases, such as employment

discrimination. The acts that comprised malicious damaging conduct spanned a decade.

Some of those acts occurred when Angela was financially vulnerable and others did not.

The jury heard all this evidence. As such, Angela’s argument that it was error to allow

evidence of her lack of financial vulnerability during a portion of this pertinent time is

overruled.

d. Malice {¶47} The jury found that Patrick Sr.’s actions demonstrated malice in dealings

with Angela, the minority shareholder. In his fifth assignment of error, Patrick Sr. claims

that “[i]t was error to not set aside the jury’s finding of malice in Trial 3.” The jury’s

finding is supported in the record.

An award of punitive damages may be appropriate on a claim for breach of fiduciary duty upon a showing of malice. Actual malice, necessary for an award of punitive damages, is (1) that state of mind under which a person’s conduct is characterized by hatred, ill will or a spirit of revenge, or (2) a conscious disregard for the rights and safety of other persons that has a great probability of causing substantial harm.

Blair v. McDonagh, 177 Ohio App.3d 262, 2008-Ohio-3698, 894 N.E.2d 377 (1st Dist.).

See also Burn v. Prudential Secs., Inc., 167 Ohio App.3d 809, 2006-Ohio-3550, 857

N.E.2d 621 (3d Dist.); Schafer v. RMS Realty, 138 Ohio App.3d 244, 741 N.E.2d 155 (2d

Dist.2000); R.C. 2315.21(C)(1). A plaintiff must clearly and convincingly establish that

a defendant acted with malice. R.C. 2315.21(D)(4); Rapport v. Kochovski, 185 Ohio

App.3d 309, 2009-Ohio-6880, 923 N.E.2d 1212, ¶ 45 (5th Dist.).

{¶48} Here, the jury’s finding of malice is the proper conclusion drawn from the

evidence. After filing suit against David Leneghan, there is evidence that Angela was

locked out and excluded from any benefit from the company by Patrick Sr. His

deposition testimony from March 18, 2011, as a representative of BFR, even

demonstrates Patrick Sr.’s belief that he was the only shareholder of the company. 7

Patrick Sr.’s belief was premised on his assumption that Angela should have tendered her 7

shares after receiving a settlement from the first trial, but there was no agreement as such and no judicial determination deciding such. Further evidence demonstrates a systemic pattern of record keeping that would prevent a

minority shareholder from learning the full extent of the benefits enjoyed by the majority

shareholder and his family. Transactions involving family members and benefits

received by Patrick Sr. were intentionally recorded in the financial documents of BFR to

appear to be ordinary business expenses. Angela’s expert, Heinz Ickert, testified that

many of these transactions required affirmative actions to change the electronic records to

reflect a payee different from the actual payee. The incalcitrant lack of disclosure is

another instance that the jury could rely on to find malice. The allegations that Patrick

Sr. and other defendants fabricated evidence, including BFR meeting minutes and notices

to reflect actions and events that did not occur, is another.

{¶49} All of this caused substantial harm to Angela. She was rendered destitute

by the actions of Patrick Sr. and his subordinates and excluded from the company she had

spent two decades building.

{¶50} This evidence all supports a finding of ill will or revenge in interpreting

actions taken by Patrick Sr. and his subordinates. Therefore, this fifth assignment of

error is overruled.

e. Attorney Fees

{¶51} Patrick Sr. next claims in his sixth assignment of error that “it was error to

award an unreasonable amount of attorney fees in Trial 3.”

{¶52} Where punitive damages are awarded, attorney fees may also be warranted.

Sivit v. Village Green of Beachwood, 8th Dist. Cuyahoga No. 98401, 2013-Ohio-103, ¶ 68, citing Zoppo v. Homestead Ins. Co., 71 Ohio St.3d 552, 644 N.E.2d 397 (1994). The

award of such fees are reviewed for an abuse of discretion. Advanced Travel Nurses

L.L.C. v. Watson, 2d Dist. Montgomery No. 24628, 2012-Ohio-3107, ¶ 12. “‘Reasonable

fees’ are to be calculated according to the prevailing market rates in the relevant

community, taking into consideration the experience, skill, and reputation of the

attorney.” Sivit at ¶ 70, citing Blum v. Stenson, 465 U.S. 886, 895, 104 S.Ct. 1541, 79

L.Ed.2d 891 (1984). The burden of proof rests with the party seeking an award of

attorney fees to establish a reasonable amount.

{¶53} At trial, Angela’s attorney testified that, prior to 2010, he was unable to

detail which activities performed on the various trials were solely related to the third trial,

so he only included fees earned from 2010 forward where he could be certain the fees

were earned in the present litigation. He then indicated specific hourly rates for his time

($350 per hour) and that of his various subordinates ($280 per hour for associates and

$160 per hour for paralegals). Angela’s attorney also provided evidence of acceptance

of these hourly rates in other litigation he had engaged in. The attorney calculated a total

cost of $1,198,732. Patrick Sr. was able to establish that Angela was not actually

required to pay her attorney’s claimed hourly rates because the engagement letter outlined

a contingent fee agreement where her attorney would receive as much as 50 percent

should the case go to trial and be appealed. The engagement letter was not produced for

the court to consider. {¶54} The trial court issued a thorough and well-reasoned opinion on this matter.

There, it reduced the hourly rate claimed by Angela’s attorneys to $300 per hour for lead

counsel, $195 per hour for associate attorneys, and $95 per hour for paralegals. It then

closely examined the 30-page itemized billing statement and reduced the reasonable hours

expended by roughly 3500. The court then calculated reasonable attorney fees to be

$690,968.80. The trial court complied with its duty to award reasonable attorney fees in

this case. It calculated a lodestar figure. See Sivit at ¶ 70, quoting Blanchard v.

Bergeron, 489 U.S. 87, 94, 109 S.Ct. 939, 103 L.Ed.2d 67 (1989) (“multiplication of the

‘number of hours reasonably expended on the litigation times a reasonable hourly rate’”).

It then went through the factors outlined in Ohio Rules of Professional Conduct 1.5 to

determine if a deviation from the lodestar figure would be appropriate. It noted that the

litigation did not involve unique issues and that it was spread over numerous years, which

did not prevent Angela’s attorneys from engaging in other business. The court also

noted that the fees were high in this case as a result of significant discovery violations

precipitated by Patrick Sr.

{¶55} Based on this evidence, the trial court did not err in awarding $690,968.80

in attorney fees.

{¶56} Appellant’s sixth assignment of error is overruled.

f. “The conduct of Plaintiff’s counsel and the jury unfairly prejudiced Defendants in Trial 3.”

{¶57} “[T]he determination of whether the bounds of permissible argument have

been exceeded is, in the first instance, a discretionary function to be performed by the trial court. Therefore, the trial court’s determination will not be reversed absent an abuse of

discretion.” (Citations omitted.) Pesek v. Univ. Neurologists Assn., 87 Ohio St.3d 495,

501, 721 N.E.2d 1011 (2000). An abuse of discretion is indicated by a court’s “failure to

exercise sound, reasonable, and legal decision-making.” State v. Beechler, 2d Dist.

Clark No. 09-CA-54, 2010-Ohio-1900, ¶ 62. However, that discretion is not absolute.

Where “gross and abusive conduct occurs, the trial court is bound, sua sponte, to correct

the prejudicial effect of counsel’s misconduct.” (Emphasis sic.) Snyder v. Stanford, 15

Ohio St.2d 31, 37, 238 N.E.2d 563 (1968).

{¶58} After a review of the transcript in this case, it cannot be said that counsel’s

conduct unfairly prejudiced appellants. Counsel did conduct himself, at times, in a

disrespectful manner, but so did attorneys for Patrick Sr. and Ballycroy. The court had to

warn Angela’s attorney, William Wuliger, several times throughout the case to refrain

from comments, eye-rolls, and quips. The only time gross misconduct occurred, Mr.

Wuliger was sanctioned. During closing arguments Mr. Wuliger displayed to the jury

some information on a comprehensive time line that was previously excluded by the trial

court. The court gave an instruction to correct any prejudicial effect, and the improper

information displayed was not so significant to the case that it would unfairly prejudice

Patrick Sr. The jury is presumed to follow the proper instructions of the trial court.

State v. Ahmed, 103 Ohio St.3d 27, 2004-Ohio-4190, 813 N.E.2d 637.

{¶59} If the jury was prejudiced against one side in this case, it was because of the

actions of Patrick Sr. and others in engaging in a take-no-prisoners style of business to the detriment of the opposing side. There is no evidence in the record that the minor

improper actions of Mr. Wuliger prejudiced Patrick Sr. in this extensive trial.

{¶60} Patrick Sr. also complains that the jury was biased against him. Comments

and actions of the jury do not, in any way, demonstrate an ill will toward either side or

demonstrate ill will toward Patrick Sr. After sitting through a lengthy trial where it

seemed almost every other objection caused both sides to plunge headlong into a

dissertation on the vagaries of the trial judge’s decisions in limine, one can hardly blame

members of the jury for making comments that they would rather be doing something,

anything, else.

{¶61} Simply put, this was a personal, emotional trial that culminated over a

decade of acrimony. The attorneys involved, at times, did not conduct themselves with

decorum and respect. However, the trial judge did an admirable job at controlling these

emotions and ensuring a fair trial.

{¶62} Appellant’s seventh assignment of error is overruled.

g. “It was error to award judgment in Trial 3 contrary to the articles of incorporation.”

{¶63} In his eighth assignment of error, Patrick Sr. argues that the articles of

incorporation absolve him of liability for interested transactions.

{¶64} As a director and majority shareholder in a close corporation, Patrick Sr.’s

conduct is governed by several important duties, including a duty of good faith, a duty of

loyalty, a duty to refrain from self-dealing, and a duty of disclosure. R.C. 1701.59(B)

and 1701.60(A)(1); Wing Leasing, Inc. v. M & B Aviation, Inc., 44 Ohio App.3d 178, 181-182, 542 N.E.2d 671 (10th Dist.1988). “However, because close corporation

directors are frequently the corporate stockholders as well, courts also tend to impose a

stringent fiduciary standard on such directors.” Id., citing 1 O’Neal & Thompson,

O’Neal’s Close Corp., Section 1.20, at 31-32 (3 Ed.Cum.Supp.1987) (collecting cases).

Those duties may be abrogated somewhat by the articles of incorporation, but not entirely.

Further, the articles must explicitly exclude some duties according to R.C. 1701.59(E):

A director shall be liable in damages for any action that the director takes or fails to take as a director only if it is proved by clear and convincing evidence in a court of competent jurisdiction that the director’s action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the corporation or undertaken with reckless disregard for the best interests of the corporation. Nothing contained in this division affects the liability of directors under section 1701.95 of the Revised Code or limits relief available under section 1701.60 of the Revised Code. This division does not apply if, and only to the extent that, at the time of a director’s act or omission that is the subject of complaint, the articles or the regulations of the corporation state by specific reference to this division that the provisions of this division do not apply to the corporation.

{¶65} In compliance with these principles, BFR’s articles of incorporation include

a provision limiting a director’s liability for disclosed interested transactions, but it does

not reference R.C. 1701.59(E). The articles also allow for ratification of interested

transactions. There is no evidence in the meeting minutes that Patrick Sr. disclosed any

of the interested transactions to the board. Further, one of the board members testified

they never voted on anything or held regular meetings in his roughly 4-year term. There

is no evidence of ratification or disclosure. Therefore, the articles of incorporation do

not protect Patrick Sr. in this case.

{¶66} Appellant’s eighth assignment of error is overruled. h. Piercing the Corporate Veil

{¶67} Patrick Sr., next argues in his ninth assignment of error that “[i]t was error

to find that Ballycroy is [Patrick Sr.’s] alter ego in Trial 3.” During the end of the first

part of the third trial, Angela moved for a directed verdict that Patrick Sr. was the alter

ego of Ballycroy based on admissions made during trial. Because the majority shareholder

of BFR was actually Ballycroy, the case was brought against it with allegations in the

complaint that Patrick Sr. dominated and controlled Ballycroy in such a way that

Ballycroy’s corporate form should be ignored and Patrick Sr. be subjected to individual

liability. The parties eventually reached an agreement where this was admitted, and

Ballycroy was dismissed from the case. However, the judgment was still entered against

Ballycroy jointly and severally, even though it was ostensibly no longer a party to the

case. The nature of the stipulation explains this unusual occurrence.

{¶68} The journal entry documenting this stipulation and resultant dismissal states:

The parties agree that the “veil” of limited liability available to shareholders of a corporation does not apply to tort-based claims such as breach of fiduciary duty. Therefore, [Ballycroy] is dismissed as a party with the understanding that defendant Patrick Leneghan, Sr. is the alter-ego of [Ballycroy].

{¶69} While the trial court dismissed Ballycroy as a party, it allowed its attorney to

still argue before the court to preserve its rights in this case, given the nature of the

stipulation and the fact that the corporate veil had been pierced.

{¶70} Ballycroy’s status as a continuing defendant was cemented in the case when

Angela filed an unopposed motion to hold Ballycroy jointly and severally liable. Neither Ballycroy nor Patrick Sr. objected or opposed this motion.8 Therefore, they have waived

all but plain error. To constitute plain error, the error must be obvious on the record,

palpable, and fundamental, so that it should have been apparent to the trial court without

objection. See State v. Tichon, 102 Ohio App.3d 758, 767, 658 N.E.2d 16 (9th

Dist.1995). Moreover, plain error does not exist unless the appellant establishes that the

outcome of the trial clearly would have been different but for the trial court’s allegedly

improper actions. State v. Waddell, 75 Ohio St.3d 163, 166, 661 N.E.2d 1043 (1996).

Notice of plain error is to be taken with utmost caution, under exceptional circumstances,

and only to prevent a manifest miscarriage of justice. State v. Phillips, 74 Ohio St.3d 72,

83, 656 N.E.2d 643 (1995).

{¶71} The dismissal involved in this error was not a true dismissal even though it

was labeled as such. The parties recognized that Ballycroy and Patrick Sr. were one and

the same as a result of the stipulation. However, the trial court did not truly dismiss

Ballycroy from the case. The court allowed Ballycroy’s attorney to continue to

participate in the proceedings because of the nature of the stipulation. The attorney that

represented Ballycroy continued to address the court, make objections, and file motions

on behalf of Ballycroy. Ballycroy would have no standing to do such things if it were

truly dismissed from the case. While the trial court classified its order as a dismissal of

Ballycroy, it was more in the nature of a directed verdict piercing the corporate veil. As

It must be noted that Ballycroy was still participating in the proceedings at the time this 8

motion was made and received notice of the motion. such, it was not plain error to enter judgment jointly and severally against Ballycroy and

Patrick Sr. The trial court’s order holding Ballycroy jointly and severally liable is not a

manifest injustice in this case.

{¶72} Appellant’s ninth assignment of error is overruled.

i. Manifest Weight

{¶73} Patrick Sr. argues in his tenth assignment of error that “[t]he judgment in

Trial 3 was against the manifest weight of the evidence.” He asserts protection under the

business judgment rule and attacks the evidence of damages adduced at trial.

{¶74} It is well established that when some competent, credible evidence exists to

support the judgment rendered by the jury, an appellate court may not overturn that

decision unless it is against the manifest weight of the evidence. Seasons Coal Co., Inc. v.

Cleveland, 10 Ohio St.3d 77, 80, 461 N.E.2d 1273 (1984). The knowledge a finder of

fact gains through observing the witnesses and the parties in any proceeding (i.e.,

observing their demeanor, gestures, and voice inflections, and using these observations in

weighing the credibility of the proffered testimony) cannot be conveyed to a reviewing

court by a printed record. In re Satterwhite, 8th Dist. Cuyahoga No. 77071, 2001 Ohio

App. LEXIS 3722, *7 (Aug. 23, 2001), citing Trickey v. Trickey, 158 Ohio St. 9, 13, 106

N.E.2d 772 (1952). In this regard, the reviewing court in such proceedings should be

guided by the presumption that the findings were indeed correct. Seasons Coal Co.,

supra. As the Supreme Court of Ohio has stated, “it is for the trial court to resolve disputes of fact and weigh the testimony and credibility of the witnesses.” Bechtol v.

Bechtol, 49 Ohio St.3d 21, 23, 550 N.E.2d 178 (1990).

{¶75} “Minority shareholders have a cause of action against controlling

shareholders for attempting to divert corporate profits to themselves at the expense of the

minority.” Soulas v. Troy Donut Univ., 9 Ohio App.3d 339, 342, 460 N.E.2d 310 (10th

Dist.1983), citing Forbes v. Wilson, 243 F. 264 (N.D.Ohio, 1917).

{¶76} Patrick Sr. first argues that the business judgment rule precludes a verdict in

favor of Angela. The business judgment rule is founded on the proposition that courts

are not in a position to second-guess the uninterested business decisions of directors and

others made in good faith with reasonable care. Stepak v. Schey, 51 Ohio St.3d 8, 12,

553 N.E.2d 1072 (1990), fn. 3; R.C. 1701.59(B). However, even if it applied, “the

business judgment rule is rebutted if there is evidence of disloyalty, including, for

example, ‘the motives of entrenchment, fraud upon the corporation or the board,

abdication of directorial duty or the sale of one’s vote.’” (Citations omitted.) Bomarko,

Inc. v. Internatl. Telecharge, Inc., 794 A.2d 1161, 1178 (Del.Ch.1999), quoting Cede &

Co. v. Technicolor, 634 A.2d 345, 363 (Del.1993).

{¶77} There is sufficient evidence in the present case of such disloyalty,

self-dealing, and abdication of responsibility to no longer presume the validity of Patrick

Sr.’s actions afforded by the rule. Under Patrick Sr.’s tenure as both president and

director, a systemic method of recording transactions in corporate records so as to hide

their true nature from the minority shareholder was documented at trial. This continued after Patrick Sr. spent less time at BFR. “Naturally, the court’s ‘reluctance to assess the

merits of a business decision ends in the face of illicit manipulation of a board’s

deliberative processes by self-interested corporate fiduciaries.’” Id., quoting Mills

Acquisition Co. v. MacMillan, Inc., 559 A.2d 1261, 1279 (Del.1989).

{¶78} Patrick Sr. then attacks the damages awarded in this case, beginning with

excessive rent. During trial, Angela’s expert, Ickert, was prepared to testify about the

fair market rental rate of the property. However, after a challenge to the methodology

Ickert used to establish that fair market value was sustained by the trial court, Angela’s

attorney rephrased his damages evidence by introducing two signed lease agreements.

The first called for monthly rent of $12,000, which increased to $13,000 after five years.

The second, dated a few months later, required monthly rent payments of $9,000. Ickert

quickly figured the difference between the two at $444,000, but then corrected that

number after taking into account the $1,000 per month increase after five years, and

arrived at a figure of $574,000. Patrick Sr. contends it was error to rely on this testimony

that was not included in the expert’s report and was not a correct amount of damages.

Ickert then opined that BFR was not required to pay any rent, and the jury should consider

any amount of rent paid excessive.

{¶79} If the jury had awarded the full amount of all rent payments, an argument

could be made that the jury’s finding regarding rent would be against the manifest weight

of the evidence. However, the jury’s decision to use roughly the $444,000 amount (one third of this is $147,000) when it awarded $144,000 in improper rent payments is

supported in the record.

{¶80} Here, the jury determined that the difference in rent from two separate lease

agreements was an appropriate amount of damages. That determination is not against the

manifest weight of the evidence. The lease calling for $12,000 per month in rent was

superseded by a second lease calling for $9,000 per month in rent. These leases were

presented to the jury.

{¶81} Further evidence of damages were similarly established at trial. $338,000 in

“other damages” were awarded by the jury. While the jury interrogatories included line

items for specific improper benefits received by Leneghan family members, the jury

appears to have limited those damages to improper salaries of Leneghan employees when

it awarded $235,000. It is apparent that the jury considered other items that improperly

diverted funds from BFR in the “other damages” category. The jury award of other

damages totaling $338,000 is one-third of the total amount of improper payments

according to the calculation specified by the trial court. Therefore, the actual amount of

improper other payments must be $1,014,000. Evidence exists to support such an

amount.

{¶82} Angela adduced evidence establishing the following improper payments:

$132,889.47 for three vehicles purchased by BFR but titled to individuals; $372,774.25

for gas credit card charges including charges for diesel fuel when none of the BFR

vehicles used diesel; $74,929.54 in cell phone charges; $124,643.36 in company credit card charges for personal purchases; $9,955 for accounting software that was used by

Sean Leneghan in his accounting practice; $104,229 in tuition and related benefits for

private schools; $6,800 in sanctions incurred as a result of discovery violations;

$111,335.16 in health insurance premiums paid to a company owned by Patrick Sr.;

$32,600 for BFR vehicles that were improperly depreciated in tax documents; $46,036

paid to Michael Caruso caused by BFR’s failure to pay a deferred compensation

agreement.

{¶83} Patrick Sr. and other witnesses had explanations for each of these, but the

jury found them incredible. This court agrees with that assessment.

{¶84} The above itemized damages total $1,016,191, one-third of which is

$338,730.59. Therefore, the jury’s award of $338,000 in other damages is supported in

the record.

{¶85} The remitted amount of damages for salaries paid to Leneghan family

members totaling $206,776 is also not against the manifest weight of the evidence.

Angela’s expert testified about reasonable compensation for Leneghan family members

and arrived at the conclusion that $620,326 was improperly paid to these individuals.

Even Patrick Sr.’s expert testified that for certain years, salaries paid to Leneghan family

members were excessive. He also testified that, in the aggregate, these individuals were

actually underpaid. However, the expert’s evaluation was based solely on unsworn

employment surveys filled out by the individuals. In contrast, Angela’s expert’s

evaluation was based on sworn statements and a more thorough evaluation of the facts in this case. Therefore, the award of $206,776 is also not against the manifest weight of the

evidence.

{¶86} Finally, the trial court awarded $4,510 in statutory damages for BFR’s and

Patrick Sr.’s failure to comply with disclosure requirements under R.C. 1701.37(C).

{¶87} This statute provides:

Any shareholder of the corporation, upon written demand stating the specific purpose thereof, shall have the right to examine in person or by agent or attorney at any reasonable time and for any reasonable and proper purpose, the articles of the corporation, its regulations, its books and records of account, minutes, and records of shareholders aforesaid, and voting trust agreements, if any, on file with the corporation, and to make copies or extracts thereof. Any written demand by an acquiring person to examine the records of shareholders for the purpose of communicating with shareholders of the issuing public corporation in connection with a meeting of shareholders called pursuant to section 1701.831 of the Revised Code shall be deemed to have been made by a shareholder of the issuing public corporation for a reasonable and proper purpose.

{¶88} Evidence was adduced that on May 4, 2011, Angela made a written request

for documents, to which Patrick Sr. never fully responded. A partial response was sent

on July 21, 2011. The jury determined that this constituted a breach of statutory duties,

and the trial court used May 4, 2011, through the date of trial, July 23, 2012, to assess

damages according to R.C. 1701.94(A)(6). The trial court found that, after the five-day

waiting period specified in R.C. 1701.37(C) was subtracted, Patrick Sr. was liable for 441

days of noncompliance. Accordingly, the court entered a judgment for $100 plus $10 per

day for 441 days. This judgment is not against the manifest weight of the evidence.

{¶89} Appellant’s tenth assignment of error is overruled.

j. Costs {¶90} In his eleventh assignment of error, Patrick Sr. argues that “[i]t was error to

award expenses, litigation costs, expert costs, and court costs in Trial 3.” The trial court

awarded $27,674.27 in litigation costs to Angela. First, the trial court awarded $9,068.80

for video discovery, court reporter fees, and filing fees. The court also awarded

$18,336.73 in expert witness fees.9

{¶91} Civ.R. 54(D) governs the award of costs and provides, “[e]xcept when

express provision therefore is made either in a statute or in these rules, costs shall be

allowed to the prevailing party unless the court otherwise directs.” A decision to award

or decline to award costs is within the sound discretion of the trial court. Therefore, such

a decision will not be disturbed on appeal absent an abuse of that discretion. Holmes

Cty. Bd. of Commrs. v. McDowell, 169 Ohio App.3d 120, 2006-Ohio-5017, 862 N.E.2d

136, ¶ 43 (5th Dist.).

{¶92} The Ohio Supreme Court has limited what may be considered costs and be

awarded to a successful plaintiff. Centennial Ins. Co. v. Liberty Mut. Ins. Co., 69 Ohio

St.2d 50, 430 N.E.2d 925 (1982). “Costs are generally defined as the statutory fees to

which officers, witnesses, jurors and others are entitled for their services in an action and

which the statutes authorize to be taxed and included in the judgment.” Benda v. Fana,

10 Ohio St.2d 259, 227 N.E.2d 197 (1967), paragraph one of the syllabus. This court has

set forth the appropriate evidentiary standard:

These two figures equal $27,405.53 when added together, not $27,647.27 as determined by 9

the trial court. However, Patrick Sr. does not argue this point, and this court chooses not to sua sponte recognize this as error. [T]he prevailing party has the burden of establishing that the expenses it seeks to have taxed as costs are authorized by applicable law. Once the court determines that an allowable cost is established, the burden rests upon the objecting party to overcome the presumption favoring an award of costs to the prevailing party.

(Citations omitted.) Naples v. Kinczel, 8th Dist. Cuyahoga No. 89138, 2007-Ohio-4851,

¶ 6.

{¶93} The trial court awarded $9,068.80 for video discovery, court reporter fees,

and filing fees. The costs for video deposition and use are specifically addressed in

Sup.R. 13(D). Sup.R. 13(D)(2) provides, “[t]he reasonable expense of recording

testimony on videotape, the expense of playing the videotape recording at trial, and the

expense of playing the videotape recording for the purpose of ruling upon objections shall

be allocated as costs in the proceeding in accordance with Civil Rule 54.” Sup.R.

13(D)(3) further states, “[t]he expense of producing the edited version of the videotape

recording shall be costs in the action, provided that the expense of the videotape, as a

material, shall be borne by the proponent of the testimony.” Based on this rule, the costs

of producing, editing, and playing the video-taped depositions of Patrick Sr. are taxable as

costs to him in conformity with Civ.R. 54(D).

{¶94} Further, the statutes provide another basis to tax certain video deposition

expenses as costs. R.C. 2303.21 provides:

When it is necessary in an appeal, or other civil action to procure a transcript of a judgment or proceeding, or exemplification of a record, as evidence in such action or for any other purpose, the expense of procuring such transcript or exemplification shall be taxed in the bill of costs and recovered as in other cases. The video is an exemplification of a record that may be appropriately taxed as costs.

{¶95} The trial court’s award of $9,068.80 for video discovery, court reporter fees,

and filing fees taxable as costs herein is appropriate because these costs were necessary

for litigation and taxable as costs based on statute. Angela additionally sought court

reporter fees for depositions and various other proceedings totaling $27,533.25. The trial

court did not award those fees.

{¶96} The trial court set forth the costs Angela sought in addition to those above:

“Plaintiff also submitted invoices seeking reimbursement for other expenses incurred in

the litigation, which are not statutorily taxable as costs. These costs are: expert fees

$75,421.91; miscellaneous itemized expenses $27.39; copying costs $10,623.28; postage

$1,368.83; and delivery charges $789.06.”

{¶97} The trial court awarded $18,336.73 in expert witness fees. An expert

witness fee is not properly charged as costs according to prior holdings of this court as

well as the Ohio Supreme Court. Naples, 8th Dist. Cuyahoga No. 89138,

2007-Ohio-4851, ¶ 11; Moore v. Gen. Motors Corp., Terex Div., 18 Ohio St.3d 259,

260, 480 N.E.2d 1101 (1985). However, the trial court awarded a portion of the expert

witness fee as costs because,

[t]he Court finds that a portion of the expense for Mr. Ickert’s time is appropriately taxed as costs given the conduct of Defendants in attempting to frustrate Plaintiff’s expert’s review of the financial records of Berardi’s. After considering the testimony at trial, the Court finds that approximately twenty-five percent (25%) of Mr. Ickert’s time was spent dealing with Defendants’ attempts at obfuscation during discovery. The court then calculated that amount to be $18,336.73. The trial court may have stated

it was awarding this amount as costs, but the context makes clear that it is more akin to a

discovery sanction based on the improper conduct of Patrick Sr. and his subordinates,

which inflated the expert’s costs to Angela.

{¶98} Many times throughout discovery, Patrick Sr. and other BFR employees

denied the existence of electronic business records of BFR, even though such records

existed. Civ.R. 37 provides a basis for awarding those increased costs to Angela. These

additional costs were only awarded after they were tallied, billing statements were

presented, and testimony affirmatively demonstrated that improper actions by Patrick Sr.

caused Angela to incur extra costs as a result of the obstructive tactics of the defendants.

These additional expenses may also be properly included in an attorney fee award.

Faieta v. World Harvest Church, 147 Ohio Misc.2d 51, 2008-Ohio-3140, 891 N.E.2d

370, ¶ 156 (C.P.). It was not an abuse of discretion to make Patrick Sr. pay a portion of

the expert witness fees that resulted from his discovery abuses.

{¶99} In assessing items to be awarded as costs, the trial court relied on this

court’s analysis in Jones v. Pierson, 2 Ohio App.3d 447, 449, 442 N.E.2d 791 (8th

Dist.1981). However, this court has since rejected that analysis. Naples at ¶ 8, fn. 2.10

The Naples court, in light of Vance v. Roedersheimer, 64 Ohio St.3d 552, 597 N.E.2d 153

This court and other appellate courts still appear to rely on this holding. See Sadowski v. 01

Sadowski, 8th Dist. Cuyahoga No. 88929, 2007-Ohio-5061, ¶ 70; Kinn v. HCR ManorCare, 6th Dist. Lucas No. L-13-1016, 2013-Ohio-4085, ¶ 15; Shoenfelt v. Shoenfelt, 3d Dist. Shelby No. 17-12-08, 2013-Ohio-1500, ¶ 31. (1992), determined that an item awarded as costs must have a statutory basis for

inclusion. Id. at ¶ 8.

{¶100} However, the trial court’s reliance on Jones was not prejudicial because it

declined to award as costs the remainder of the items sought by Angela. The court did

not award fees for copying, postage, or any of the items sought by Angela that were not

grounded in a statutory basis.

{¶101} The trial court also correctly awarded court costs to Angela. She is the

prevailing party, and Civ.R. 54(D) specifically contemplates that court costs typically be

awarded to the prevailing party absent a determination by the trial court that such an

award is unwarranted. There is a statutory basis for the award of court costs as well.

See R.C. 2303.20, 2303.21, 2335.19, and 2335 et seq. Patrick Sr.’s eleventh assignment

of error argument that this constitutes double billing or was inappropriate is overruled.

k. “It was error to allow litigation of issues that occurred after filing the complaint.”

{¶102} Civ.R. 15(B) allows for amendment of the pleading to conform to the

evidence adduced at trial. It states:

When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment. Failure to amend as provided herein does not affect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so freely when the presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the admission of such evidence would prejudice him in maintaining his action or defense upon the merits. The court may grant a continuance to enable the objecting party to meet such evidence.

{¶103} This court reviews a trial court’s decision regarding such amendments for

an abuse of discretion. Aztec Internatl. Foods, Inc. v. Duenas, 12th Dist. Clermont No.

CA2012-01-002, 2013-Ohio-450, ¶ 25. It is at the discretion of the trial court to

determine when a party has impliedly agreed to try an issue. However,

“[a]n implied amendment of the pleadings under Civ. R. 15(B) will not be permitted where it results in substantial prejudice to a party. Various factors to be considered in determining whether the parties impliedly consented to litigate an issue include: whether they recognized that an unpleaded issue entered the case; whether the opposing party had a fair opportunity to address the tendered issue or would offer additional evidence if the case were to be tried on a different theory; and, whether the witnesses were subjected to extensive cross-examination on the issue.

State (Bainbridge) ex rel. Evans v. Bainbridge Twp. Trustees, 5 Ohio St.3d 41, 448

N.E.2d 1159 (1983), paragraph one of the syllabus.

{¶104} Patrick Sr. attempts a bit of revisionist history in this twelfth assignment of

error. He casts claims that were discovered and added to issues at trial only after

disclosure of some transactions and other financial information as if Angela should have

known about them from the start. Much of the financial disclosures occurred just before

trial and required significant additional work to be presented. Patrick Sr.’s untimely

disclosure of evidence resulted in most, if not all, of the complained-of claims. As such,

he should not be allowed to benefit from his discovery abuses. There can be no surprise

on his part as a result. {¶105} Further, Patrick Sr. does not point to any specific instance where claims

were incorporated to which he had no prior notice, understanding, or a chance to defend.

Angela’s complaint indicates the actions of Patrick Sr. were ongoing and causing

continuing injury. Patrick Sr. filed an unsuccessful motion in limine to exclude actions

that occurred after the amended complaint was filed. The trial court denied the motion on

June 5, 2012. The amended complaint sufficiently alleged that harms were continuing.

{¶106} Patrick Sr. also claims that the statute of limitations had run out by the time

the trial court allowed Angela to amend her complaint to conform to the evidence.

However, such an amendment, by Civ.R. 15(C)’s terms, relates back to the original filing

of the complaint. “Whenever the claim or defense asserted in the amended pleading

arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth

in the original pleading, the amendment relates back to the date of the original pleading.”

Id. The claims made at trial fit within this rule. Any harm that befell Patrick Sr. was the

product of his own making.

{¶107} This twelfth assigned error is overruled.

l. “It was error to deny the motions for JNOV, new trial, and directed verdict after Trial 3.”

{¶108} Patrick Sr. does not separately argue his thirteenth assignment of error.

App.R. 16(A)(7) instructs a party to include in an appellate brief “[a]n argument

containing the contentions of the appellant with respect to each assignment of error

presented for review and the reasons in support of the contentions, with citations to the

authorities, statutes, and parts of the record on which appellant relies.” (Emphasis added.) Patrick Sr.’s one paragraph argument under this assigned error does none of

these emphasized things. App.R. 12(A)(2) gives this court discretion to disregard or

overrule an assigned error that fails to comply with App.R. 16(A). Therefore, this

assignment of error is overruled.

m. Remittitur

{¶109} Patrick Sr. asserts in his fourteenth assignment of error that “[i]t was error

to deny motion for remittitur and motion for new trial in Trial 1.”

{¶110} Patrick Sr. takes issue with decisions related to the first trial. Arguments

related to this trial are moot as a result of a voluntary settlement. Sturgill v. JP Morgan

Chase & Co., 4th Dist. Hocking No. 12CA8, 2013-Ohio-688, ¶ 10. Therefore, this

assigned error will not be addressed and is overruled.

{¶111} Angela also assigns an error related to remittitur based on the trial court’s

decision to remit the judgment in the third trial. In her fourth cross-assignment of error,

she claims that “[t]he trial court committed reversible error in issuing its remittitur order,

where evidence supported the jury’s damages finding and where the verdict, there, cannot

be deemed excessive.”

{¶112} Angela agreed to accept a lower amount of judgment. Generally, an

affirmative assent to trial court actions waives errors related to those decisions as invited

error. However, this is not the case with remittitur. As the Ohio Supreme Court

reasoned,

[w]hen plaintiff is forced to undergo an appeal by the action of an opposing party, after plaintiff has accepted judgment for such reduced damages, it seems unfair to prevent his having a review of the trial court’s determination leading to the reduction in damages, especially if the plaintiff has accepted same only to avoid the delay and expense attending an appeal.

Wightman v. CONRAIL, 86 Ohio St.3d 431, 444, 715 N.E.2d 546 (1999). Therefore,

Angela’s arguments in this assignment of error are not precluded by her assent to

remittitur.

A court has the inherent authority to remit an excessive award, assuming it is not tainted with passion or prejudice, to an amount supported by the weight of the evidence. In Chester Park v. Schulte (1929), 120 Ohio St. 273, 166 N.E. 186, paragraph three of the syllabus, this court set forth the specific criteria that must be met before a court may grant a remittitur: (1) unliquidated damages are assessed by a jury, (2) the verdict is not influenced by passion or prejudice, (3) the award is excessive, and (4) the plaintiff agrees to the reduction in damages.

Id.

{¶113} In the present case, the jury awarded unliquidated damages. The damages

awarded in this case are not so large or disproportionate that the influence of passion or

prejudice can be inferred. See Chester Park Co. v. Schulte, 120 Ohio St. 273, 279-280,

166 N.E. 186 (1929). The roughly $28,000 difference between the jury’s award and the

remitted amount is not indicative of the type of unsupported award influenced by passion

or prejudice. However, based on the jury’s award of “other damages” and its limiting

benefits received by other Leneghan family members to improper compensation, the court

correctly found that the award of $235,000 was excessive given the evidence adduced at

trial.

{¶114} In ruling on the motion, the trial court stated: The court finds that the jury’s award of $235,000 for improper benefits received by “other Leneghan family members” must be reduced to $206,776. Plaintiff’s expert testified at trial that the total excess compensation paid to “other Leneghan family members” was $620,326. One-third of this amount, representing plaintiff’s ownership interest in [BFR], equals $206,775.

The court finds that the jury’s verdict as to improper rent payments and “other damages” are supported by competent, credible evidence and therefore, are not subject to remission.

{¶115} Angela’s expert, Heinz Ickert, testified that the total amount of improper

compensation to other Leneghan family members totaled $620,328. Angela is only

entitled to one-third of this amount, or $206,776. Yet, the jury awarded her $235,000.

In light of the damages received under “other damages,” the trial court appropriately

reduced the amount of benefits received by other Leneghan family members to reflect the

evidence adduced at trial.

{¶116} Further, in her appellee’s brief responding to Patrick Sr.’s arguments about

remittitur, Angela asserts that “the trial court neither abused its discretion nor committed

any reversible error of law in granting appellants’ own motion for remittitur with certain

modifications of the relief requested therein.” Angela appears to make inconsistent

arguments to this court regarding remittitur. While this does not outright preclude the

argument, it does cut against it.

{¶117} Therefore, the trial court’s remittitur order conformed the verdict to the

evidence of damages adduced by Angela’s expert. This modest reduction was in

conformity with the evidence and is not error.

{¶118} This cross-assignment of error is overruled. n. Prejudgment Interest

{¶119} In her second cross-assignment of error, Angela claims,

[t]he trial court committed reversible error in failing to award appellee prejudgment interest based on its conclusion that appellants did not violate their good faith settlement obligations, despite uncontroverted evidence and the trial court’s own express finding that the appellants “failed to cooperate in the discovery process throughout much of this case.”

{¶120} R.C. 1343.03 allows for the award of prejudgment interest under certain

circumstances. R.C. 1343.03(C) provides:

If, upon motion of any party to a civil action that is based on tortious conduct, that has not been settled by agreement of the parties, and in which the court has rendered a judgment, decree, or order for the payment of money, the court determines at a hearing held subsequent to the verdict or decision in the action that the party required to pay the money failed to make a good faith effort to settle the case and that the party to whom the money is to be paid did not fail to make a good faith effort to settle the case[.]

{¶121} This court reviews the trial court’s determination for an abuse of

discretion. Pruszynski v. Reeves, 117 Ohio St.3d 92, 2008-Ohio-510, 881 N.E.2d 1230, ¶

11. The Ohio Supreme Court further held that

* * * the court may rely in part on its own participation during the pretrial and trial proceedings to aid in its ruling on the motion, Galmish v. Cicchini [], 90 Ohio St.3d 22, 34, 2000-Ohio-7, 734 N.E.2d 782, the parties have the right to a date certain for an evidentiary hearing. The trial court, however, has the discretion to determine the nature of the evidentiary hearing to be held, as it is in the best position to select the kind of evidence necessary to make the findings required by R.C. 1343.03(C) and determine whether an award of prejudgment interest is proper.

Id. at ¶ 12. {¶122} The trial court determined that Patrick Sr. and Ballycroy participated in

settlement negotiations and made a good-faith effort to resolve the case. The court stated

that it could not find that

defendants failed to make a good faith offer to settle the case. Although the court finds that defendants failed to cooperate in the discovery process throughout much of this case, this lack of cooperation was addressed through discovery sanctions. Defendants otherwise participated in settlement negotiations during both the pretrial and trial phases and tendered reasonable offers of settlement. The court finds that defendants’ offers to settle were rationally based on defendant’s evaluation of the case, which took into account plaintiff’s interest in [BFR] as well as her prior recovery of $6.4 million in damages during the first trial of this consolidated case.

{¶123} Angela claims there were no good-faith settlement negotiations engaged in

by Patrick Sr., but she cites mainly to evidence of a failure to cooperate in discovery. In

contrast, the evidence adduced at the hearing on prejudgment interest contained lengthy

discussions of negotiations that occurred throughout these cases. The fact that Patrick

Sr.’s last offer can generously be classified as insulting (made during the middle of trial

and offering $260,000 with $10,000 deducted for each day of trial) does not change the

nature of the prior discussions. While the offers did not stray too far from Patrick Sr.’s

expert’s opinion of the value of Angela’s stock, this does not demonstrate a lack of

settlement efforts.

{¶124} The majority of the evidence offered by Angela related to discovery abuses

and obstinate refusals from the defendants to turn over records. However, R.C.

1343.03(C) does not direct the court to weigh a party’s conduct related to discovery. It

directs the court to consider a party’s conduct during settlement negotiations. The court itself took an active roll in the negotiations and held several conferences attended by

Patrick Sr. or a representative. Offers were exchanged and significant movement toward

settlement by both parties was noted according to the trial court. The trial court was in

the best position to determine if the parties put forth a good-faith effort and, based on the

testimony during the hearing, the court did not abuse its discretion.

{¶125} This cross-assignment of error is overruled.

o. Contingent assignments of error

{¶126} Angela also assigned a number of errors that contingently requested relief

if this court reversed and remanded on any of Patrick Sr.’s assigned errors. Angela

advised,

[i]n the event that this Court rejects those assignments of error and affirms the judgment of the trial court, the only relief requested by the cross-appellant on her appeal is a reversal of the orders regarding punitive damages, prejudgment interest and remittitur, along with a remand for entry of prejudgment interest order and for a retrial on punitive damages. If, on the other hand, this Court vacates the judgment for compensatory damages and remands for a new trial, cross-appellant requests [additional] relief [as outlined in the remaining assignments of error] * * *.

Because this court affirms the outcome of the trial, the following cross-assignments of

error will not be addressed:

III. In the event that this court is inclined to interpret the limited satisfaction of judgment entry related to David Leneghan and the Wegman Firm as grounds for granting appellant any relief herein, said entry should be vacated as being contrary to law, to the governing settlement agreement, to public policy and in order to prevent an unjust and unintended forfeiture.

V. The trial court committed reversible error in entering a directed verdict against cross-appellant on her spoliation of evidence claim and in refusing to instruct the jury that, in determining both compensatory and punitive damages, the jury was entitled to make certain adverse inferences resulting from cross-appellees’ destruction, concealment, withholding and/or falsification of discoverable materials and information.

VI. The trial court committed reversible error in dismissing cross-appellant’s claim for securities law violations based on its erroneous conclusion that the applicable security was a cognovit note payable to Patrick Leneghan, Sr. and that cross-appellant was not entitled to the protections of the securities laws because she was not a purchaser and had not purchased anything.

VII. The trial court abused its discretion and committed reversible error in making evidentiary, substantive and procedural ruling in the second trial that were of such magnitude and pervasive and so erroneously anti-plaintiff and pro-defense as to deny cross-appellant a fair trial, such that cross-appellant should be granted a new trial with respect to trial number two.

III. Conclusion

{¶127} Patrick Sr.’s decisions to improperly usurp benefits from BFR to the

detriment of its minority shareholder ultimately led to the vindication of those minority

shareholder rights. The resultant award of damages from the third trial is not precluded

by the one satisfaction rule and does not constitute a double recovery. The judgment

awarded in this trial is just and will not be disturbed on appeal.

{¶128} Judgment affirmed.

It is ordered that appellee recover from appellants costs herein taxed.

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate be sent to 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.

FRANK D. CELEBREZZE, JR., JUDGE

MARY J. BOYLE, A.J., and EILEEN T. GALLAGHER, J., CONCUR