[Cite as Grove v. Gamma Ctr., Inc., 2013-Ohio-1734.]
IN THE COURT OF APPEALS OF OHIO THIRD APPELLATE DISTRICT MARION COUNTY
STACY GROVE,
PLAINTIFF-APPELLEE, CASE NO. 9-12-41 v.
GAMMA CENTER, ET AL.,
DEFENDANTS-THIRD PARTY PLAINTIFFS-APPELLEES, OPINION
[INDI SINGH, THIRD-PARTY DEFENDANT - APPELLANT].
Appeal from Marion County Common Pleas Court Trial Court No. 08-CV-0248
Judgment Reversed and Cause Remanded
Date of Decision: April 29, 2013
APPEARANCES:
John W. Herbert for Appellant
J. C. Ratliff, Jon L. Jensen and Jeff Ratliff for Appellees, Sudesh Reddy, M.D. and Parminder Singh, M.D.
Brian S. Sullivan for Appellees, Dinsmore & Shohl, LLP and Jan E. Hensel Case No. 9-12-41
PRESTON, P.J.
{¶1} Third party defendant-appellant, Indi Singh, appeals the Marion
County Court of Common Pleas’ judgment overruling his motions for attorneys’
fees and sanctions. Singh argues the trial court erred when it dismissed the
motions for attorneys’ fees and sanctions, when it failed to hold the third party
complaint was frivolous, and when it failed to impose sanctions. For the reasons
that follow, we reverse.
{¶2} On March 19, 2008, Stacy Grove filed a complaint against Gamma
Center, Inc., Sudesh Reddy, M.D., and Parminder Singh, M.D. (Doc. No. 1).
Grove alleged that defendants created a hostile work environment that
discriminated against the female employees, that Dr. Reddy and Dr. Singh had
sexually harassed her, that Gamma Center failed to take any disciplinary action
after she reported the doctors’ conduct, and that defendants terminated her
employment in retaliation for her sexual harassment complaint. (Id.).
{¶3} On April 24, 2008, defendants filed their answer. (Doc. No. 6).
Defendants asserted numerous affirmative defenses and denied Grove’s assertion
that she was entitled to punitive damages and attorneys’ fees. (Id.).
{¶4} On July 28, 2008, defendants filed a third party complaint against
Singh, a Gamma Center shareholder. (Doc. No. 11). Defendants alleged that
Singh had failed to inform them that Grove had reported incidents of sexual
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harassment, and that Singh was consequently liable for breach of fiduciary duty
and negligence. (Id.).
{¶5} On September 10, 2008, Singh filed his answer. (Doc. No. 15). Singh
asserted a counterclaim alleging he was entitled to indemnification and an advance
for his expenses pursuant to Gamma Center’s bylaws. (Id.). On October 7, 2008,
defendants filed their answer to Singh’s counterclaim. (Doc. No. 17).
{¶6} On January 20, 2009, Singh amended his answer and counterclaim to
assert that defendants had assumed the risk of their conduct. (Doc. No. 24).
{¶7} On February 24, 2009, defendants filed a third party complaint against
Sanjeev Verma, another Gamma Center shareholder. (Doc. No. 33). Defendants
alleged that Verma also failed to inform them of Grove’s sexual harassment
report, and that Verma was liable for breach of fiduciary duty, negligence, and
breach of contract. (Id.).
{¶8} On March 2, 2009, defendants filed an amended third party complaint
against Singh. (Doc. No. 34). Defendants included an additional count for breach
of contract. (Id.).
{¶9} On March 3, 2009, Verma filed his answer. (Doc. No. 36). Verma
asserted a counterclaim, alleging that he was also entitled to indemnification and
an advance for his expenses pursuant to Gamma Center’s bylaws. (Id.). On
March 11, 2009, the defendants filed their answer to Verma’s counterclaim. (Doc.
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No. 38). On September 30, 2009, Singh and Verma filed motions for summary
judgment. (Doc. Nos. 55, 56).
{¶10} On November 18, 2009, Grove and defendants filed a joint
stipulation of dismissal pursuant to Civ.R. 41(B). (Doc. No. 62). The parties
stated that they had resolved the matter, and Grove dismissed her claims against
defendants. (Id.). The stipulation did not resolve the claims defendants had
asserted against Singh and Verma, or the counterclaims Singh and Verma had
asserted against defendants. (Id.).
{¶11} On December 2, 2009, defendants filed their response to Singh and
Verma’s motions for summary judgment. (Doc. Nos. 65, 66). On December 16,
2009, Verma filed his reply to defendants’ response. (Doc. No. 68). On
December 18, 2009, Singh filed his reply to defendants’ response. (Doc. No. 69).
{¶12} On April 16, 2010, the trial court granted Singh and Verma’s
motions for summary judgment. (Doc. No. 72). The trial court instructed Singh
and Verma to provide a detailed and itemized statement regarding the services
their counsel rendered in connection with the third party complaint for the trial
court’s consideration. (Id.).
{¶13} On April 22, 2010, Verma filed an application for attorneys’ fees.
(Doc. No. 73). On May 17, 2010, Verma filed a motion for sanctions against Dr.
Reddy and Dr. Singh. (Doc. No. 74). Verma alleged that the claims were
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frivolous, and the trial court should impose sanctions pursuant to R.C. 2323.51(B).
(Id.). On that same day, Singh filed an application for attorneys’ fees and a
motion requesting sanctions for the allegedly frivolous conduct of Dr. Reddy and
Dr. Singh. (Doc. No. 76).
{¶14} On May 28, 2010, the trial court held a hearing on the applications
for attorneys’ fees and motions for sanctions. (Doc. No. 77). Following the
hearing, the trial court granted defendants permission to file responses to Verma
and Singh’s applications and motions. (Id.). On June 21, 2010, defendants filed
their responses to Verma and Singh’s applications and motions. (Doc. Nos. 80,
81).
{¶15} On July 12, 2010, Verma and Singh filed a motion requesting Civ.R.
11 sanctions against Dinsmore & Shohl and Hensel, individually, relating to their
representation of Gamma Center, Dr. Reddy, and Dr. Singh. (Doc. No. 84).
Verma and Singh argued Hensel had filed a frivolous complaint against them, and
requested that the trial court order her to pay their attorneys’ fees. (Id.). On that
same day, Verma and Singh also filed their reply to the defendants’ responses to
their applications for attorneys’ fees and motions for sanctions. (Doc. No. 85).
{¶16} On September 15, 2010, Dinsmore & Shohl and Hensel filed their
response to Verma and Singh’s motion for Civ.R. 11 sanctions. (Doc. No. 89).
On October 4, 2010, Verma and Singh filed their reply. (Doc. No. 92).
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{¶17} On August 24, 2011, the trial court held a hearing on the pending
motions. (Doc. No. 101). During the hearing, Dinsmore & Shohl, Hensel, Dr.
Reddy, and Dr. Singh made an oral motion to dismiss Verma and Singh’s motion
for sanctions. (Id.). On September 16, 2011, Verma and Singh filed their
response. (Doc. No. 105). Dinsmore & Shohl, Hensel, and the doctors filed their
reply on September 30, 2011. (Doc. No.108).
{¶18} On June 12, 2012, the trial court filed its judgment entry. (Doc. No.
111). The trial court sustained the motion to dismiss Verma and Singh’s
applications for attorneys’ fees and motions for sanctions, determining Verma and
Singh had failed to “produce testimony from a disinterested witness as to the
reasonableness and necessity of the attorneys’ fees incurred as a result of this
alleged frivolous conduct.” (Id.).
{¶19} On July 12, 2012, Singh filed a notice of appeal. (Doc. No. 115).
Singh now raises three assignments of error for our review.
Assignment of Error No. I
The Trial Court erred when it dismissed Appellant’s motions for sanctions pursuant to R.C. §2323.51 and Rule 11, O.R.C.P. because they were not supported by evidence from a disinterested [sic] that the legal services for which he sought compensation were necessary and the fees charged for those services were reasonable.
{¶20} In his first assignment of error, Singh argues the trial court erred
when it dismissed his motions for sanctions because he had failed to support them
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with evidence from a disinterested witness. Singh contends that neither R.C.
2323.51 nor Civ.R. 11 require evidence from a disinterested witness before
imposing sanctions. Singh further argues this Court has not required such
evidence from a disinterested witness and that the trial court misinterpreted this
Court’s decision in Natl. City Bank v. Semco, 3d Dist. No. 9-10-42, 2011-Ohio-
172 (Semco II).
{¶21} Generally, we review a trial court’s decision regarding an award of
attorneys’ fee for an abuse of discretion. United Assn. of Journeyman and
Apprentices of the Plumbing and Pipe Fitting Industry v. Jack’s Heating, Air
Condition & Plumbing, Inc., 3d Dist. No. 6-12-06, 2013-Ohio-144, ¶ 15, citing
Bittner v. Tri-Cty. Toyota, Inc., 58 Ohio St.3d 143, 146 (1991). An abuse of
discretion suggests the trial court’s decision is unreasonable, arbitrary, or
unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d 217, 219 (1983).
However, in the present case the dispute involves a question of law, which we
review de novo. Patton v. Ditmyer, 4 Dist. Nos. 05CA12, 05CA21, 05CA22,
2006-Ohio-7107, ¶ 73, citing Burns v. Henne, 115 Ohio App.3d 297 (2d Dist.
1996).
{¶22} Singh contends that he is entitled to attorneys’ fees and sanctions
pursuant to R.C. 2323.51 and Civ.R. 11. R.C. 2323.51(B)(1) provides, “any party
adversely affected by frivolous conduct may file a motion for an award of court
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costs, reasonable attorneys’ fees, and other reasonable expenses incurred in
connection with the civil action or appeal.” R.C. 2323.51(A)(2)(a) defines
conduct as frivolous if:
(i) It obviously serves merely to harass or maliciously injure
another party to the civil action or appeal or is for another improper
purpose, including, but not limited to, causing unnecessary delay or
a needless increase in the cost of litigation.
(ii) It is not warranted under existing law, cannot be supported by a
good faith argument for an extension, modification, or reversal of
existing law, or cannot be supported by a good faith argument for the
establishment of new law.
(iii) The conduct consists of allegations or other factual contentions
that have no evidentiary support or, if specifically so identified, are
not likely to have evidentiary support after a reasonable opportunity
for further investigation or discovery.
(iv) The conduct consists of denials or factual contentions that are
not warranted by the evidence or, if specifically so identified, are not
reasonably based on a lack of information or belief.
“‘Whether a claim is warranted under existing law is an objective consideration.
The test * * * is whether no reasonable lawyer would have brought the action in
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light of the existing law. In other words, a claim is frivolous if it is absolutely
clear under the existing law that no reasonable lawyer could argue the claim.’”
Patton, 2006-Ohio-7107, at ¶ 81, quoting Riston v. Butler, 149 Ohio App.3d 390,
2002-Ohio-2308, ¶ 30 (1st Dist.).
{¶23} Civ.R. 11 also permits a party to recover attorneys’ fees when an
action lacks support. Civ.R. 11 provides:
The signature of an attorney or pro se party constitutes a certificate
by the attorney or party that the attorney or party has read the
document; that to the best of the attorney’s or party’s knowledge,
information, and belief there is good ground to support it; and that it
is not interposed for delay. * * * For a willful violation of this rule,
an attorney or pro se party, upon motion of a party or upon the
court’s own motion, may be subjected to appropriate action,
including an award to the opposing party of expenses and reasonable
attorney fees incurred in bringing any motion under this rule.
{¶24} Attorneys’ fees are governed by the Rules of Professional Conduct.
Semco II, 2011-Ohio-172, at ¶ 29. Prof.Cond.R. 1.5(a) provides the factors the
trial court should consider when determining whether the amount of requested
attorneys’ fees is reasonable:
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(1) the time and labor required, the novelty and difficulty of the
questions involved, and the skill requisite to perform the legal
service properly;
(2) the likelihood, if apparent to the client that the acceptance of the
particular employment will preclude other employment by the
lawyer;
(3) the fee customarily charged in the locality for similar legal
services;
(4) the amount involved and the result obtained;
(5) the time limitations imposed by the client or by the
circumstances;
(6) the nature and length of the professional relationship with the
client;
(7) the experience, reputation, and ability of the lawyer or lawyers
performing the services;
(8) whether the fee is fixed or contingent.
The party requesting the attorneys’ fees has the burden of providing evidence that
the hours worked were necessary to the action and that the amount of the fees is
reasonable. Southeast Land Dev., Ltd. v. Primrose Mgt., L.L.C., 3d Dist. Nos. 5-
10-04, 5-10-11, 2011-Ohio-2341, ¶ 15.
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{¶25} In the present case, the trial court relied on this Court’s decision in
Semco II to find that it did not have adequate evidence on which to base an award
of attorneys’ fees because it did not have independent evidence from a
disinterested attorney regarding the amount of hours spent and the hourly rate
charged. We disagree with this interpretation of our case law.
{¶26} The case at issue was before this Court twice, first in Natl. City Bank
v. Semco, Inc., 183 Ohio App.3d 229, 2009-Ohio-3319 (Semco I), and again in
Semco II. In Semco I, the trial court had filed an order appointing a receiver and
establishing his rate of pay at $300 per hour. Semco I at ¶ 11 . The trial court
subsequently issued a judgment entry finding that the fees the receiver and his
associates had charged at $300 per hour were unreasonable. Id. The trial court
reduced the receiver’s compensation to $150 per hour and his associates’
compensation to $75 per hour. Id. at ¶ 9. The trial court ordered the receiver to
return $75,110.81 of the fees he had collected. Id. at ¶ 5. The receiver appealed
the trial court’s order, and this Court held that the trial court abused its discretion
when it set the receiver’s compensation at $300 per hour and then later reduced it
to $150 per hour. Id. However, this Court affirmed the trial court’s decision to
reduce the hourly rate of the receiver’s associates from $300 to $75 per hour,
because the trial court had not previously issued an order setting the associates’
rate. Id. at ¶ 12-16. This Court remanded the case to the trial court to recalculate
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the amount of compensation based upon an hourly rate for the receiver’s services
at $300 per hour. Id.
{¶27} On remand, the trial court held a hearing regarding the receiver’s
application for fees and expenses of his counsel. Semco II, 2011-Ohio-172, at ¶
10-11. The trial court determined that the receiver’s attorneys were owed
$65,926.87. Id. at ¶ 14. On appeal in Semco II, Semco argued the fees were not
incurred for the benefit of preserving or protecting the receivership estate but were
incurred for the personal interest of the receiver and that the receiver failed to
present any evidence regarding the reasonableness or necessity of the requested
fees. Id. at ¶ 16.
{¶28} This Court agreed, finding that the receiver did not engage the
services of counsel until Semco filed a motion to remit the receiver’s fees and to
pursue damages and an accounting from the receiver. Id. at ¶ 19. Thus, the
receiver did not present any evidence that he obtained legal counsel to assist him
in preserving and protecting the receivership estate. Id. Rather, allegations of
possible wrongdoing were against the receiver personally and had nothing to do
with protecting and preserving the receivership estate. Id. at ¶ 21. This Court
found that the attorneys failed to specify what time was spent on the issue of the
amount of the receiver’s fees versus the issue of the receiver’s wrongdoing and
that the trial court did not make a distinction between these issues in its award of
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attorneys’ fees. Id. at ¶ 22. This Court noted that many of the invoices failed to
provide the name of the client for whom the services were rendered, did not
specify the amount of time expended on each item of activity, and also did not
distinguish between the issue of receiver’s fees and the allegations of wrongdoing.
Id. at ¶ 24. This Court also determined that the receiver failed to establish any bad
faith on Semco’s part which would require Semco to pay the receiver’s attorneys’
fees for litigating the issue of his alleged wrongdoing. Id. at ¶ 27.
{¶29} This Court found that even if the fees were incurred to protect or
preserve the receivership estate, the trial court did not have the necessary evidence
to determine whether the time spent was reasonable or whether the hourly rate
charged by each firm was reasonable. Id. at ¶ 28. This Court stated:
As previously noted, the trial court expressly stated that no
independent evidence from a disinterested attorney was given
regarding the reasonableness of the amount of hours spent and the
hourly rate charged. Instead, the court was ‘left to its own
calculation’ and its own experience as to the prevailing rate. The
court then examined the exhibits attached to the application for fees
and determined that the time spent by two of the firms was
reasonable but that approximately 100 hours expended by Bailey
Cavalieri, LLC, were not reasonable. The court also determined that
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$175 was a reasonable hourly rate. In so doing, the court made no
reference to Prof. Cond. R. 1.4 or any of the factors listed therein.
Absent any evidence regarding the reasonableness of the hours
expended and the reasonableness of the hourly rate, we find such
determinations were arbitrary.
Id. at ¶ 30. This Court further stated, “regarding the invoices of Baily Cavalieri,
LLC, no affidavit was provided regarding the reasonableness of any of these
hours, no testimony was provided regarding the reasonableness of these hours, and
counsel’s professional statement did not address the reasonableness of any of these
hours.” Id. at ¶ 31. This Court noted that while Baker & Hostetler, LLP, provided
an affidavit in support of its fees that indicated the invoices reflected the “actual
and necessary work” performed, “there is no mention of the reasonableness of
these fees or any information as to the relevant factors of Prof. Cond. R. 1.5. In
addition, this affidavit is not of a disinterested person but is the self-serving
affidavit of a person who was not present at the hearing for cross-examination.”
Id. at ¶ 33.
{¶30} Thus, the receiver’s failure to provide a disinterested witness
regarding the reasonableness of his attorneys’ fees was only one of the reasons
why we sustained Semco’s assignments of error. The attorneys’ fees were also
sought for expenses resulting from the receiver’s personal litigation rather than
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litigation regarding the protection and preservation of the receivership, there was
no evidence that Semco acted in bad faith, the attorneys failed to adequately
designate the time spent on the issue of attorneys’ fees versus the issue of the
receiver’s alleged wrongdoing, and the attorneys’ statements that their fees were
actual and necessary were not subject to cross-examination. Id. at ¶ 33-34.
Consequently, we conclude that Semco II does not stand for the proposition that
testimony from a disinterested witness regarding the reasonableness of attorneys’
fees is required, and that the trial court’s reliance on this case was misplaced.
{¶31} This Court also recently addressed the issue of attorneys’ fees in
Jack’s Heating, 2013-Ohio-144. In that case, we recognized “that merely
submitting an attorney’s itemized bill is insufficient to establish the reasonableness
of the amount of work billed.” Id. at ¶ 24, citing Whitaker v. Kear, 123 Ohio
App.3d 413, 424 (4th Dist.1997). This Court acknowledged that “[o]ften, parties
offer expert testimony to establish that the hours charged was reasonable in light
of the litigation’s particular facts.” Jack’s Heating at ¶ 24, citing Hawkins v.
Miller, 11th Dist. No. 2011-L-036, 2011-Ohio-6005, ¶ 28 and Whitaker at 424-
425. However, we also stated that “in some matters, the requesting party refrains
from offering expert testimony from other individuals to corroborate the attorney’s
self-serving testimony that the fee request is reasonable.” Jack’s Heating at ¶ 24,
citing Koblenz & Koblenz v. Summers, 8th Dist. No. 94806, 2011-Ohio-1064, ¶ 14
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and Shottenstein, Zox & Dunn Co., L.P.A. v. Reineke, 9th Dist. No. 10CA0138-M,
2011-Ohio-6201, ¶ 26-28. Thus, this Court has recognized that testimony from a
disinterested person may be the better practice when establishing the
reasonableness of attorneys’ fees, but we have not gone so far as to hold that this
testimony is a threshold requirement in all circumstances. See Semco II, 2011-
Ohio-172; Jack’s Heating, 2013-Ohio-144.
{¶32} After reviewing the applicable law, this Court disagrees with the trial
court’s conclusion that Singh cannot prevail on his motions for attorneys’ fees
solely because he failed to provide evidence from a disinterested witness regarding
the amount of hours spent and the hourly rate charged. While we agree that
whether Singh provided this evidence may be one part of the analysis, we reverse
and remand this case for the trial court’s consideration of the remaining factors.
{¶33} Singh’s first assignment of error is, therefore, sustained.
Assignment of Error No. II
The Trial Court erred when it failed to hold the third party complaint was frivolous and sanction third party plaintiffs and their counsel for prosecuting it.
Assignment of Error No. III
The Court erred when it failed to hold that third party plaintiffs’ counsel violated Rule 11, O.R.C.P. by prosecuting the third party complaint on behalf of third party plaintiffs.
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{¶34} In his second and third assignments of error, Singh argues the trial
court erred when it failed to find that the third party complaint was frivolous and
sanction appellees. Singh also argued the trial court erred by failing to hold that
Hensel violated Civ.R. 11.
{¶35} The trial court did not reach the issue of whether Hensel’s conduct
was frivolous and violated Civ.R. 11. Since we agree with Singh that the matter
must be reversed for the trial court’s consideration of the factors regarding
attorneys’ fees, including whether Hensel’s conduct was frivolous, we need not
reach these issues and find them moot pursuant to App.R. 12(A)(1)(c).
{¶36} Singh’s second and third assignments of error are moot and,
therefore, will not be discussed.
{¶37} Having found error prejudicial to the appellant herein in the
particulars assigned and argued, we reverse the judgment of the trial court and
remand for further proceedings consistent with this opinion.
ROGERS and SHAW, J.J., concur.
/jlr
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