[Cite as Gary R. Gorby & Assoc., L.L.C. v. McCarty, 2011-Ohio-1983.]
IN THE COURT OF APPEALS FOR CLARK COUNTY, OHIO
GARY R. GORBY & ASSOCIATES, LLC :
Plaintiff-Appellant : C.A. CASE NO. 2010 CA 71
v. : T.C. NO. 07CV1656
DAVID CHARLES McCARTY, etc., et al. : (Civil appeal from Common Pleas Court) Defendant-Appellee :
:
..........
OPINION
Rendered on the 22nd day of April , 2011.
RICHARD F. HEIL, JR., Atty. Reg. No. 0033661, One South Limestone Street, Suite 800, P. O. Box 1488, Springfield, Ohio 45501 Attorney for Plaintiff-Appellant
DANIEL C. HARKINS, Atty. Reg. No. 0029750 and MARK D. DeCASTRO, Atty. Reg. No. 0079505, 333 N. Limestone Street, Suite 203, P. O. Box 1125, Springfield, Ohio 45501 Attorney for Defendant-Appellee
DONOVAN, J.
{¶ 1} This matter is before the Court on the Notice of Appeal of Gary R. Gorby &
Associates, LLC (“Gorby”), filed July 30, 2010.
{¶ 2} On April 8, 2006, Gorby entered into an “Asset Purchase Agreement” 2
(“Agreement”) for the purchase of the ABA Insurance Agency of Springfield, Inc. (“Agency”).
In addition to Gorby, the Agreement was signed by David McCarty (“McCarty”), individually
and as President, and Cynthia McCarty, individually and as Secretary of the Agency. Gorby
asserts that he “also acquired the name ‘ABA Insurance Agency of Springfield,’ which required
Appellees David and Cynthia McCarty to change the name of their corporation from ABA
Insurance Agency of Springfield, Inc., to ABA of Tampa, Inc.”
{¶ 3} The Agreement provides that the aggregate purchase price is $350,000.00, and
that $300,000.00 of that amount is allocated for the assets and book of business, with the
remaining $50,000.00 allocated for a covenant not to compete. The “Non-Competition
Agreement” provides as follows:
{¶ 4} “For a period of five (5) years from the date of closing, Seller, David C. McCarty,
[and] Cynthia K. McCarty * * * shall not:
{¶ 5} “(a) Canvass, solicit, or accept any business for any other insurance agency, from
any present or past clients of the Purchaser’s agency.
{¶ 6} “(b) Give any other person, firm, or corporation the right to canvass, solicit, or
accept any business for any other insurance agency, from any present or past clients of the
Purchaser’s agency.
{¶ 7} “(c) Directly or indirectly request or advise any present or future clients of the
Purchaser’s agency to withdraw, curtail, or cancel business with the Purchaser’s agency.
{¶ 8} “(d) Directly or indirectly disclose to any other person, firm, or corporation the
names of past, present or future clients of the Purchaser’s agency.
{¶ 9} “(e) Directly or indirectly induce, or attempt to influence, any employee of the 3
Purchaser’s agency to terminate employment with the Purchaser’s agency.
{¶ 10} “(f) Directly or indirectly engage in the insurance business in Clark County in the
State of Ohio, either as an employee, proprietor, partner, member or stockholder, except for
Purchaser’s agency.”
{¶ 11} The Agreement also contains an arbitration provision that provides, “All disputes
arising under this Agreement, which are not settled within thirty (30) calendar days after they
arise, shall be settled by arbitration in Springfield, Ohio, conducted by a single arbitrator.”
{¶ 12} According to Gorby, on March 9, 2007, David McCarty purchased a building
located at 1237 North Limestone Street, in Springfield, and the Limestone premises are located
within one mile of the Agency. McCarty leased the premises to Nancy Beth Turnmire, his niece
and Gorby’s former employee, who operated an insurance agency therein known as “Affordable
Insurance Agency.” According to Gorby, “the ‘Agency formation’ printout from the Ohio
Department of Insurance’s Website, attached as Exhibit C to the Verified Complaint, shows that
ABA of Tampa, Inc., aka ABA Insurance Agency of Springfield, Inc., are the registered names of
the competing insurance agency at 1237 North Limestone Street, * * * that Appellee David
Charles McCarty is its President, and that Nancy Beth Turnmire and Tina Ann Turnmire are his
Agents beginning July 19, 2007. In addition, the telephone number listed for the competing
insurance agency with the Ohio Department of Insurance, 937-927-0711, is listed in the name of
Dave McCarty in the 2007 AT&T Telephone Directory for Springfield and vicinity at the 1237
North Limestone Street address.”
{¶ 13} On December 11, 2007, Gorby filed a verified complaint against McCarty,
individually and as President and co-owner of ABA of Tampa, Inc., fka & dba ABA Insurance 4
Agency of Springfield, Inc., dba ABA 1, dba Affordable Insurance “(ABA”); Cynthia K.
McCarty, individually and as Secretary and co-owner of ABA; ABA; Nancy Beth Turnmire and
Tina Ann Turnmire. Gorby alleged, in part, breach of the parties’ non-competition agreement
and fraud, and he demanded, against each defendant, damages in an amount in excess of
$350,000.00, punitive damages in excess of $700,000.00, reasonable attorney fees and costs.
Gorby also filed a Motion for Preliminiary Injunction to “restrain Defendants from violating the
terms of Plaintiff’s Non-Competition Agreement with Defendants McCarty and their corporation
* * * .” Finally, Gorby filed a Motion for Temporary Restraining Order.
{¶ 14} On December 11, 2007, the trial court granted the motion for a temporary
restraining order. On December 13, 2007, Nancy Turnmire and Tina Turnmire filed a “Motion
Requesting that Plaintiff Post Bond Pursuant to Civ.R. 65.” The trial court issued an Entry on
December 27, 2007, overruling the Turnmires’ motion requesting bond.
{¶ 15} On January 17, 2008, an Agreed Permanent Injunction was issued, pursuant to
which the Turnmires were enjoined, until April 12, 2011, from competing with Gorby.
{¶ 16} After multiple unsuccessful attempts, service of the complaint was perfected on
the McCartys on August 27, 2008.
{¶ 17} On January 22, 2010, Gorby filed a Motion for Default Judgment against
McCarty, Cynthia McCarty, and ABA (“Appellees”). According to Gorby, he learned that “over
90% of the clients of Defendants’ competing insurance agency were his former clients that he had
paid Defendants $350,000.00 to acquire.” The trial court granted the motion without analysis,
and the Default Judgment Entry provides that Gorby shall recover judgment from Appellees “for
fraudulent misrepresentation, breach of contract, and pursuant to Defendants’ indemnification 5
agreement, in the amount of $64,896.00 actual damages, $65,000 punitive damages, plus interest
* * *, reasonable attorney fees, which are presently $21,363.79, and costs.” On March 4, 2010,
a Certificate of Judgment was issued and filed. On April 28, 2010, Gorby attempted to garnish
the bank accounts of David McCarty and ABA.
{¶ 18} On June 18, 2010, Appellees filed a Motion for Relief from judgment, pursuant to
Civ.R. 60(B), along with a supporting memorandum. According to Appellees, their right to
arbitration, pursuant to the agreement, is a meritorious defense; their “failure to file an Answer to
the Complaint is the result of excusable neglect,” in that they “reasonably believed” that their
counsel would file an Answer and Counterclaim; and their motion for relief is made within a
reasonable time.
{¶ 19} Appellees asserted that they retained an attorney “to answer the Complaint and
potentially pursue Counterclaims against” Gorby. Appellees asserted that they “tendered two
retainer payments to [counsel], for a total of Two Thousand Dollars.” Appellees averred that
their attorney contacted counsel for Gorby in an attempt to negotiate a settlement, and that
“negotiation failed to result in a settlement.” Appellees asserted that Gorby did not serve a copy
of the motion for default judgment on either them or their counsel.
{¶ 20} Attached to Appellees’ memorandum is the affidavit of McCarty, which provides
in part, “After the Complaint for the above-captioned matter * * * was filed, I retained Miguel A.
Pedraza * * * to represent my interests in the above-captioned matter. * * * [Pedraza’s] most
recent billing statement indicated that Mr. Pedraza on May 29, 2008, was drafting an Answer and
Counterclaim to be filed on my behalf in the above-captioned matter. Copies of the billing
statements have been collectively marked and attached as Exhibit 1. * * * I recently learned that 6
Plaintiff obtained a Default Judgment against me. I was not served a copy of either the Motion
for Default Judgment or the Default Judgment. Upon learning that Default Judgment had been
entered against me, I retained new counsel to represent my interests in this matter. * * * My
efforts to contact Mr. Pedraza about this matter have been unsuccessful. Mr. Pedraza has not
responded to my efforts to ascertain his representation of my interests in this matter. Copies of
my email messages to Mr. Pedraza have been collectively marked and attached as Exhibit B.”
{¶ 21} Attached to the Affidavit as Exhibit I are billing statements from Pedraza to
McCarty, dated March 10, 2008; May 5, 2008; and June 6, 2008. The first entry on the March
statement, dated February 21, 2008, provides, in part, “Telephone and office conferences with
client regarding Gary Gorby suit,” and another entry, dated February 27, 2008, provides in part as
follows: “ * * * draft letter to Attorney Heil regarding Gorby suit.” An entry on the May
statement, dated April 28, 2008, provides, “Telephone call from Attorney Heil regarding his
attempts at service of complaint and regarding David’s potential counterclaim.” An entry on the
June statement, dated May 29, 2008, provides, “Review correspondence received from Attorney
Heil regarding Gorby suit; begin researching and drafting answer and counterclaim.” Attached
as Exhibit B of the affidavit is a copy of the Asset Purchase Agreement. Significantly, there are
no emails from McCarty to Pedraza attached to the affidavit as McCarty asserted.
{¶ 22} Gorby opposed the motion for relief from judgment. According to Gorby, “it is
clear that the defaulting Defendants waived their right to arbitration and the Court is without
authority to order arbitration. Therefore, the defaulting Defendants have no meritorious defense
or claim to present * * *.” Gorby noted that there were no emails attached to McCarty’s
affidavit, and he asserted, “David McCarty’s Affidavit raises more questions than it answers and 7
certainly doesn’t establish excusable neglect.” Finally, Gorby asserted that Appellee’s motion
for relief from judgment was not made within a reasonable time.
{¶ 23} Attached to the “Motion in Opposition” is the Affidavit of Richard Heil, which
provides in part as follows: “Attached hereto as Exhibit D are filed copies of all of my
correspondence to and from attorney Miguel Pedraza in this matter, consisting of attorney
Pedraza’s one and only letter to me, dated, February 28, 2008, in which he invited settlement, my
letter to him of April 2, 2008, presenting Plaintiff’s settlement demand, and my follow-up letter
to him of May 23, 2008, in which I acknowledge receiving no response to my settlement demand
letter or my two follow-up phone calls, and advise him that if I do not receive a response to this
letter, I will assume that David McCarty has no interest in settling this matter and proceed with
my lawsuit. I have not received any further response from attorney Pedraza in this matter. In
attorney Pedraza’s letter to me, he notes that David McCarty has not yet been served with a
summons and complaint. In a telephone conversation I had with Attorney Pedraza, after my
receipt of his letter, I asked him if he would accept service for the McCarty’s and their
Corporation, ABA of Tampa, Inc., but he was unwilling to do so. In the filed copy of my May
23, 2008 letter to attorney Pedraza, my note to Gary Gorby notes my many failed attempts to
serve the McCarty’s and recommends that he hire a professional process server in Tampa,
Florida.”
{¶ 24} On July 19, 2010, the trial court issued an Entry, without a hearing or any analysis,
sustaining the motion for relief and vacating the default judgment. The Entry provides,
“defendants are granted leave to file an answer and/or counterclaim within the next twenty-eight
days. No bond is required and an award for fees and costs is denied. The pending controversy is 8
referred to arbitration pursuant to the terms of the agreement.”
{¶ 25} Gorby voluntarily dismissed the Turnmires on July 28, 2010, and filed a “Motion
for a Partial Stay Pending Appeal; Motion in Opposition to Motion for Release of Certificate of
Judgment; and Memorandum Approving Motions for Release from Garnishments,” on July 30,
2010. The Appellees filed a Motion for Stay Pending Arbitration on July 30, 2010, which the
trial court granted. The court also issued an “Order for Partial Stay Pending Appeal, Denying
Motion for Release of Certificate of Judgment and Granting Motions for Release from
Garnishments,” which “DISMISSES Garnishment Case Nos. 10-GR-0047 and 10-GR-0048 [and]
ORDERS a partial stay pending appeal, preserving Plaintiff’s Certificate of Judgment, while
Plaintiff’s appeal is pending, and * * * DENIES Defendant’s Motion for Release of Certificate of
Judgment. * * * .”
{¶ 26} On August 11, 2010, Appellees filed an Answer. They also filed a Motion for
Reconsideration of the trial court’s entry ordering a partial stay, and preserving the Certificate of
Judgment pending appeal, and denying their motion for release of certificate of judgment.
According to Appellees, “the Certificate of Judgment was rendered a nullity when the Court
provided relief from the previous Default Judgment. Accordingly, the Certificate of Judgment
may not be preserved.”
{¶ 27} Gorby asserts one assignment of error with subparts as follows:
{¶ 28} “THE TRIAL COURT COMMITTED REVERSIBLE ERROR PREJUDICIAL
TO PLAINTIFF-APPELLANT BY SUSTAINING THE CIV.R. 60(B) MOTION FOR RELIEF
FROM JUDGMENT OF DEFENDANT-APPELLEES AND VACATING APPELLANT’S
DEFAULT JUDGMENT AGAINST APPELLEES. 9
{¶ 29} “I. THE APPELLEES ARE NOT ENTITLED TO RELIEF FROM JUDGMENT
DUE TO EXCUSABLE NEGLECT, UNDER CIV.R.60(B)(1).
{¶ 30} “II. THE APPELLEES ARE NOT ENTITLED TO RELIEF FROM
JUDGMENT UNDER CIV.R. 60(B), AS THEIR MOTION WAS NOT FILED WITHIN A
{¶ 31} “III. THE APPELLEES ARE NOT ENTITLED TO RELIEF FROM
JUDGMENT UNDER CIV.R.60(B), AS THEY CANNOT ASSERT A MERITORIOUS
DEFENSE OR CLAIM IF RELIEF IS GRANTED.”
{¶ 32} Appellees respond that, in addition to relief pursuant to Civ.R.60(B)(1), an
“attorney’s failure to appear and represent his client may be considered extraordinary in nature
and fall under the purview of Civ.R. 60(B)(5).” They further assert that their motion was made
within a reasonable time, and that their right to arbitration is a meritorious defense.
{¶ 33} Regarding the default judgment issued by the trial court, Civ.R. 55(A) provides,
“When a party against whom a judgment for affirmative relief is sought has failed to plead or
otherwise defend as provided by these rules, the party entitled to a judgment by default shall
apply in writing or orally to the court therefor; * * * If the party against whom judgment by
default is sought has appeared in the action, he * * * shall be served with written notice of the
application for judgment at least seven days prior to the hearing on such application.” “The
purpose of Civ.R. 55(A) is to prevent a defendant from employing inaction or delay as a litigation
strategy in order to avoid or defeat a plaintiff’s claim for relief.” Med-Care Convalescent
Supply, Inc. v. Grafton Associates (March 31, 1995), Montgomery App. Nos. 14587, 14648.
{¶ 34} “A party appears in an action for purposes of Civ.R. 55(A) when that party 10
‘clearly expresses to the opposing party an intention and purpose to defend the suit, regardless of
whether a formal filing is made.’ Miamisburg Motel v. Huntington National Bank (1993), 88
Ohio App.3d 117, 126, * * * ; Dayton Modulars, Inc. v. Dayton View Community Dev. Corp.,
Montgomery App. No. 20894, 2005-Ohio-6257, ¶ 15. Relying upon AMCA Internat’l Corp. v.
Carlton (1984), 10 Ohio St.3d 88, * * * , we have stated that ‘A party, or his counsel, who is
aware of a communication by the opposing party in which that party has expressed a clear
purpose to defend the suit has a duty to inform the trial court of this fact when seeking a default
judgment against that party, and has an obligation under Civ.R. 55(A) to inform that party that
application for a default judgment has been made.’ Miamisburg Motel, 88 Ohio App.3d at 127.”
Allstate Insurance Co. v. Hunt, Montgomery App. No. 20991, 2006-Ohio-238, ¶ 13.
{¶ 35} In Miamisburg Motel, we affirmed the trial court’s denial of Huntington National
Bank’s untimely motion for relief from default judgment, but we concluded that the trial court
made an error of law when it found that the bank had not made an appearance within the meaning
of Civ.R. 55(A). While the bank had made no formal filings, counsel for the bank phoned
counsel for Miamisburg Motel and expressed an intent to defend the suit and also requested an
extension of time to file an answer to the complaint. “The rule of Miamisburg Motel focuses on
the fact of the litigation and the defendant’s expressed intention to defend his rights in that
proceeding, which at least accords with the notion of an ‘appearance.’” Allstate Insurance Co.,
Grady, P.J., dissenting.
{¶ 36} Civ.R. 55(B) provides, “If a judgment by default has been entered, the court may
set it aside in accordance with Rule 60(B).”
{¶ 37} Civ.R. 60(B) provides in relevant part: “On motion and upon such terms as are 11
just, the court may relieve a party or his legal representative from a final judgment, order or
proceeding for the following reasons: (1) mistake, inadvertence, surprise or excusable neglect; *
* * (5) any other reason justifying relief from the judgment. The motion shall be made within a
reasonable time, and for reason[] * * * (1) * * * , not more than one year after the judgment,
order or proceeding was entered or taken. * * * .”
{¶ 38} To prevail on a motion pursuant to Civ. R. 60(B), a movant must establish that:
(1) he has a meritorious defense or claim to present if relief is granted; (2) he is entitled to relief
pursuant to 60(B)(1) - (5); and (3) the motion was made within a reasonable time, and, where the
grounds of relief are Civ.R. (60)(B)(1), (2) or (3), not more than one year after the judgment or
proceeding was entered or taken. GTE Automatic Elec. v. Arc Industries, Inc. (1976), 47 Ohio
St.2d 146, 150-51. All three requirements must be met. Id., at 151.
{¶ 39} “[W]here timely relief is sought from a default judgment and the movant has a
meritorious defense, doubt, if any, should be resolved in favor of the motion to set aside the
judgment so that cases may be decided on their merits.” Id.
{¶ 40} In GTE, the trial court granted relief on the single ground that appellant’s neglect
was excusable. Quoting Link v. Wabash R.R. Co. (1962), 370 U.S. 626, 633-34, 82 S.Ct. 1386,
8 L.Ed.2d 734, the Supreme Court of Ohio addressed the issue as follows: “‘There is certainly no
merit to the contention that dismissal of petitioner’s claim because of his counsel’s unexcused
conduct imposes an unjust penalty on the client. Petitioner voluntarily chose this attorney as his
representative in the action, and he cannot now avoid the consequences of the acts or omissions
of this freely selected agent. Any other notion would be wholly inconsistent with our system of
representative litigation, in which each party is deemed bound by the acts of his lawyeragent and 12
is considered to have “notice of all facts, notice of which can be charged upon the attorney.”’
{¶ 41} “* * *
{¶ 42} “‘* * * Surely if a criminal defendant may be convicted because he did not have
the presence of mind to repudiate his attorney’s conduct in the course of a trial, a civil
(defendant) may be deprived of his (defense) if he failed to see to it that his lawyer acted with
dispatch in the prosecution of his lawsuit. And if an attorney’s conduct falls substantially below
what is reasonable under the circumstances, the client’s remedy is against the attorney in a suit
for malpractice. But keeping this suit alive merely because * * * (defendant) should not be
penalized for the omissions of his own attorney would be visiting the sins of * * * (defendant’s)
lawyer upon the * * * (plaintiff).’” Id. at 152.
{¶ 43} The GTE Court then defined excusable neglect in the negative, determining that
the inaction of a defendant is not excusable neglect if the attorney’s conduct “reveals a complete
disregard for the judicial system and the rights of the [plaintiff].” Id., at 153.
{¶ 44} “Our review of the trial court’s judgment is a narrow one. ‘It is within the sound
discretion of the trial court to decide whether to grant a motion for relief from judgment, and in
the absence of a clear showing of abuse of discretion, the decision of the trial court will not be
disturbed on appeal.’” Hanks v. Burt (Dec. 21, 1994), 99 Ohio App.3d 403.
{¶ 45} “‘Abuse of discretion’ has been defined as an attitude that is unreasonable,
arbitrary or unconscionable. (Internal citation omitted). It is to be expected that most instances
of abuse of discretion will result in decisions that are simply unreasonable, rather than decisions
that are unconscionable or arbitrary.
{¶ 46} “A decision is unreasonable if there is no sound reasoning process that would 13
support that decision. It is not enough that the reviewing court, were it deciding the issue de
novo, would not have found that reasoning process to be persuasive, perhaps in view of
countervailing reasoning processes that would support a contrary result.” AAAA Enterprises,
Inc. v. River Place Community Redevelopment (1990), 50 Ohio St.3d 157, 161.
{¶ 47} Having reviewed the record, we conclude that the trial court abused its discretion
in granting Appellees’ motion for Civ.R. 60(B) relief. We agree with Gorby that Appellees
failed to establish excusable neglect based upon the conduct of Pedraza, whom they voluntarily
chose to represent them. We initially note that Appellees’ conduct is distinguishable from that
of the bank in Miamisburg Motel, in that Appellees failed to appear and did not express “a clear
purpose to defend the suit.” Accordingly, notice of the motion for default was not required and
entry of the default judgment was not improper. While the billing statements attached to
McCarty’s affidavit indicate that Pedraza began researching and drafting an answer at the end of
May, 2008, there is nothing to indicate that Pedraza entered an appearance or filed an answer.
The final billing statement attached to McCarty’s affidavit is dated two months before Appellees
were properly served, and there is no evidence in the record of further contact between Appellees
and Pedraza after service was perfected. There is no documentary evidence that Appellees
advised Pedraza that they had been properly served so that an answer could be timely filed.
Most significantly, the alleged emails establishing further communication between Appellees and
Pedraza, cited in McCarty’s affidavit, are absent from the record. Also, Pedraza was
unresponsive to Heil. In other words, there is nothing before us from which to conclude that
Appellees’ inaction, in reliance upon Pedraza, was excusable.
{¶ 48} Further, Appellees’ reliance upon Kay v. Glassman, Inc. (1996), 76 Ohio St.3d 18, 14
1996-Ohio-430, to support a finding of excusable neglect, is misplaced. In Kay, counsel for
Glassman timely prepared and signed an answer, along with discovery requests which he gave to
his secretary for mailing to the court and to counsel for Kay. The secretary was
{¶ 49} in the process of helping to sort out the law firm’s bookkeeping system following
the retirement of the firm’s bookkeeper, and she mistakenly placed the above documents in the
file drawer instead of mailing them. Attached to the motion for relief were the affidavits of
counsel for defendant, the secretary, and the law clerk. The Ohio Supreme Court held that the
attorney’s conduct in that case constituted excusable neglect. Here, there is no such evidence of
a simple shortcoming of which Appellees were unaware, and the case of Pence v. Smith (Nov. 7,
1994), Madison App. No. CA93-11-031, further relied upon by Appellees, supports our
distinction. In Pence, the Twelfth District affirmed the trial court’s vacation of a default
judgment where “Appellee’s attorney explained that no answer was timely filed because the
attorney misplaced his client’s file while in the process of moving his office. The attorney also
complained that he had recently been assaulted and noted that he had been forced to begin a
‘mass filing of continuances’ in a number of courts.” In contrast to Kay and Pence, the
Appellees’ inaction herein, in the face of Pedraza’s alleged neglect, is not attributable to isolated
events within Pedraza’s office, and Pedraza’s alleged neglect is properly imputed to Appellees.
To hold otherwise would punish Gorby for Pedraza’s conduct.
{¶ 50} Regarding Appellees’ claim for relief pursuant to Civ.R. 60(B)(5), we initially
note that Appellees did not make this argument below, and to be entitled to consideration thereof,
Appellees should have advanced this basis for relief in the trial court. However, in the interest
of addressing the case on the merits, we will briefly discuss this issue. Appellees direct our 15
attention to CB Group, Inc. v. Starboard Hospitality, L.L.C. (Dec. 17, 2009), Cuyahoga App. No.
93387, in which a divided court determined that an “attorney’s failure to appear and represent
his client is not an ‘excusable neglect’ ground under Civ.R. 60(B)(1),” but rather constitutes
conduct “of an extraordinary nature * * * within the purview of Civ.R. 60(B)(5).” As Gorby
notes in his Reply brief, the majority in CB Group relied upon our decision in Whitt v. Bennet
(1992), 82 Ohio App. 3d 792. In Whitt, the plaintiffs provided their attorney with answers to
interrogatories and medical record authorizations, which the attorney failed to forward to defense
counsel. Counsel for plaintiff also failed to attend a hearing on defendant’s motion to dismiss
due to the failure to respond to discovery, and the plaintiffs’ complaint was dismissed. The trial
court overruled plaintiffs’ motion for relief from judgment. In reversing the trial court , we
determined, “the trial court erred in holding that the conduct of an attorney must be imputed to
his client for purposes of Civ.R. 60(B). That requirement has been made concerning Civ.R.
60(B)(1). GTE Automatic Elc. V. ARC Industries, * * * . The grounds contemplated in that
rule are ordinary in nature. The requirement has not been extended to the extraordinary
circumstances contemplated in Civ.R. 60(B)(5). Upon a review of the facts and circumstances
the court may find that the client is responsible for some measure of the failures concerned.
However, fault should not automatically be imputed when an attorney has grossly neglected a
diligent client’s case and misleads the client to believe that his interests are being properly
handled.” (Emphasis added).
{¶ 51} It is undisputed that Appellees had notice and knowledge of the suit against them.
Pedraza’s billing records do not reflect that he filed an answer. There is no evidence of any
contact between Appellees and Pedraza after the final billing statement in June, 2008, two 16
months before service was perfected. In other words, there is nothing before us from which we
can conclude that Appellees acted diligently or that Pedraza mislead them into thinking that he
properly handled their interests, and Civ.R. 60(B)(5) relief is inappropriate.
{¶ 52} Having found that Appellees failed to satisfy the second prong of the GTE test, in
that they are not entitled to relief pursuant to Civ.R. 60(B)(1) or (5), we need not address the
remaining prongs of the test. In the interest of completeness, however, we proceed to note that
the record is clear that Appellees failed to file their motion for relief from judgment within a
reasonable time. Appellees did nothing to assert or protect their rights for 28 months, from the
date of February 21, 2008, when McCarty first consulted with Pedraza, as the March billing
statement indicates, until they filed their motion for relief from judgment on June 18, 2010.
Further, Appellees waited four months after the default judgment was entered to seek relief
therefrom. See Adomeit v. Baltimore (1974), 39 Ohio App.2d 97,106 (“Defendants had an
affirmative duty to take some action after being served with the complaint and the amended
complaint or risk having a judgment taken against them. The appellants made no attempt
whatsoever in this case to protect their rights for 11 months after receiving notice of the
complaint. They similarly took no action for 5 months after the default judgment was entered.
Due diligence would have made them aware of these facts. Under all of the facts and
circumstances enumerated above, although the defendants filed their motion for relief from
judgment within one year it was not filed within a ‘reasonable time.’”); Warman v. Dunwoodie
(June 28, 1996), Montgomery App. No. 15581 (“‘The relief offered by Civ.R. 60(B) is equitable
in nature, and to be entitled to it a party must act diligently. Failure to seek that relief for a
substantial period of time after the movant is aware of the grounds for relief demonstrates a lack 17
of due diligence * * * .’”)(citation omitted).
{¶ 53} Finally, Appellees’ assertion that their right to arbitration is a meritorious defense,
in primary reliance upon Baker v. Schuler, Clark App. No. 02CA0020, 2002-Ohio-5386, also
fails. In Baker, the plaintiffs moved for default judgment against Washington Square, one of
four defendants, 52 days after filing their complaint, and default judgment was entered seven
days later. Counsel for the remaining defendants, with whom plaintiff had entered into a
stipulation agreeing to extend the date by which responsive pleadings were due, presented
evidence that the stipulated extension of time applied to all four defendants. Counsel had moved
to enforce the arbitration agreement between the plaintiff and all four defendants prior to the
expiration of the extension of time. The trial court vacated the default judgment. In affirming
the trial court’s decision and overruling Appellant’s first assigned error, namely that the court
erred in setting aside the default judgment, we noted, “Washington Square demonstrated that its
counsel represented it as well as the other defendants in the joint stipulation, and that counsel for
the Bakers was aware of that fact. Omission of Washington Square from the ‘defendants’ who
were identified in the stipulation was clearly a mistake on its counsel’s part. He moved to vacate
the default judgment promptly upon learning of it. And, Washington Square’s right of
arbitration was a meritorious defense in law to the Bakers’ claims for relief.” ¶ 23.
{¶ 54} Appellees quote Baker for the proposition that “R.C. 2711.02(B) requires a court
to stay a trial pending the outcome of arbitration.” Id., at ¶ 27. Baker and the matter herein,
however, are procedurally distinct, in that the defendants in Baker moved the court to enforce the
arbitration agreement between the parties. R.C. 2711.02(B) provides, “If any action is brought
upon any issue referable to arbitration under an agreement in writing for arbitration, the court in 18
which the action is pending, upon being satisfied that the issue involved in the action is referable
to arbitration under an agreement in writing for arbitration, shall on application of one of the
parties stay the trial of the action until the arbitration of the issue has been had in accordance
with the agreement, provided the applicant for the stay is not in default in proceeding with
arbitration.” (emphasis added). By the plain language of the statute, it is a party’s application
for stay that triggers the relief that R.C. 2711.02(B) authorizes. R.C. 2711.02(B) has no
application to our analysis herein; Appellees did not apply for a stay pending arbitration pursuant
thereto until after the trial court vacated the default judgment (to which Gorby was entitled).
{¶ 55} Since Appellees failed to satisfy the test in GTE, Gorby’s sole assigned error is
sustained, and the judgment of the trial court granting Appellees’ motion for relief from judgment
will be reversed and vacated.
GRADY, P.J. and FAIN, J., concur.
Copies mailed to:
Richard F. Heil, Jr. Daniel C. Harkins Mark D. DeCastro Hon. Douglas M. Rastatter