Murman v. Univ. Hosps. Health Sys., Inc.

2017 Ohio 1282

• Court: Ohio Court of Appeals
• Decided: April 6, 2017
• Docket: 104726
• Status: Published

Opinion

[Cite as Murman v. Univ. Hosps. Health Sys., Inc., 2017-Ohio-1282.]

Court of Appeals of Ohio EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

JOURNAL ENTRY AND OPINION No. 104726

MICHAEL E. MURMAN, GUARDIAN OF LEAH APEL, A MINOR, ET AL. PLAINTIFFS

vs.

UNIVERSITY HOSPITALS HEALTH SYSTEMS, INC., ET AL. DEFENDANTS-APPELLEES

[Appeal by Diez-Arguelles & Tejedor, P.A. Plaintiff-Appellant]

JUDGMENT: AFFIRMED

Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-13-818388

BEFORE: Stewart, P.J., Laster Mays, J., and Jones, J.

RELEASED AND JOURNALIZED: April 6, 2017 ATTORNEYS FOR APPELLANT

Maria Tejedor Carlos Diez-Arguelles Diez-Arguelles & Tejedor, P.A. 505 N. Mills Avenue Orlando, FL 32803

Also Listed

Michael E. Murman Murman & Associates 14701 Detroit Avenue, Suite 555 Lakewood, OH 44107

ATTORNEYS FOR APPELLEES

For University Hospitals Health Systems, Inc., et al.

George M. Moscarino Kris H. Treu Mary E. White Susan R. Massey Moscarino & Treu, L.L.P. 1422 Euclid Avenue, Suite 630 Cleveland, OH 44115

For David M. Burkons, M.D.

W. Bradford Longbrake Michael Ockerman Douglas G. Leak Hanna, Campbell & Powell, L.L.P. 3737 Embassy Parkway, Suite 100 Akron, OH 44333 MELODY J. STEWART, P.J.:

{¶1} This is an appeal from an order requiring appellant law firm Diez-Arguelles

& Tejedor, P.A. to pay $20,770 expended by appellee University Hospital (“UH”) to

defend what the court found was a bad faith motion to vacate a settlement agreement.

The law firm maintains that the court erred by awarding sanctions because it did not act in

bad faith by filing the motion to vacate, but under a reasonable belief that the settlement

agreement had been violated. UH requests that we find this appeal to be frivolous and

award it attorney fees for this appeal.

{¶2} The court found sanctions appropriate under both Civ.R. 11 and

R.C. 2323.51.

{¶3} Civ.R. 11 states that “[e]very pleading, motion, or other document of a party

represented by an attorney shall be signed by at least one attorney of record * * *.” An

attorney’s signature “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.” {¶4} R.C. 2323.51(B)(1) applies more broadly than Civ.R. 11 and permits the

court to award attorney fees and costs to any party adversely affected by frivolous

conduct of another party or that party’s attorney, even if that conduct is not relating to a

pleading, motion, or other document. “Frivolous conduct” is defined by R.C.

2323.51(A)(2)(a)(I) as, among other things, conduct that “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[.]”

{¶5} Civ.R. 11 uses a “subjective standard” of “bad faith” that goes beyond mere

bad judgment; it sanctions conduct amounting to “dishonest purpose,” “moral obliquity,”

“a breach of a known duty through some motive of interest or ill will,” or that “partakes

of the nature of fraud * * * with an actual intent to mislead or deceive another.” State ex

rel. Bardwell v. Cuyahoga Cty. Bd. of Commrs., 127 Ohio St.3d 202, 2010-Ohio-5073,

937 N.E.2d 1274, ¶ 8. “Frivolous conduct, as contemplated by R.C. 2323.51(A)(2)(a), is

judged under an objective, rather than a subjective standard * * *.” State ex rel.

DiFranco v. S. Euclid, 144 Ohio St.3d 571, 2015-Ohio-4915, 45 N.E.3d 987, ¶ 15, citing

State ex rel. Striker v. Cline, 130 Ohio St.3d 214, 2011-Ohio-5350, 957 N.E.2d 19, ¶ 21. {¶6} Under both Civ.R. 11 and R.C. 2323.51, we review a trial court’s decision to

award sanctions for an abuse of discretion. If competent, credible evidence exists to

support an award of sanctions, the award must stand. Striker at ¶ 9; DiFranco at ¶ 13.

In addition, the abuse of discretion standard means that we cannot substitute our judgment

for that of the trial court. Bardwell at ¶ 9, citing State ex rel. Grein v. Ohio State Hwy.

Patrol Retirement Sys., 116 Ohio St.3d 344, 2007-Ohio-6667, 879 N.E.2d 195, ¶ 1.

{¶7} The evidence shows that Leah Apel, through her court-appointed guardian

Michael Murman, brought this medical malpractice action against UH and certain

physicians and nurses involved with her birth. At the time the complaint was filed, Apel

lived in Florida and was represented by Maria D. Tejedor of the law firm of

Diez-Arguelles & Tejedor, P.A. Tejedor appeared in the court of common pleas pro hac

vice by way of local counsel. During the pretrial phase, Murman gave notice of

appearance as additional counsel on behalf of himself as Apel’s guardian. Local counsel

then gave “notice of substitution of counsel” asking the court to take notice that Murman

“replaced” original local counsel and that original local counsel “are no longer counsel on

this case and should be removed from all certificates of services [sic].” {¶8} On the eve of trial, Apel and UH settled — trial would go forward against a

single remaining defendant. The settlement would not, however, be immediately

reduced to judgment. During the 14-day period between reaching the settlement and

filing a stipulation of dismissal, Tejedor and Murman became involved in a fee dispute:

Murman claimed an entitlement to a contingency fee on the settlement proceeds; Tejedor

claimed Murman was to be paid on an hourly basis. Murman had the upper hand in this

dispute: according to Tejedor, Murman, as Apel’s court-appointed guardian, knew that all

settlements had to be approved by the probate court and he allegedly told Tejedor that

they had to “discuss his fee before he would sign the release.”

{¶9} Despite the fee dispute, the parties submitted a stipulation for dismissal

stating that they had an agreement to settle and were dismissing that part of the action

with prejudice. The parties further agreed that the court would retain jurisdiction over

the settlement agreement for enforcement purposes.

{¶10} On April 24, 2016, three days after the court reduced the settlement

agreement to judgment, Tejedor filed a motion asking the court to “set aside” the

settlement agreement under Civ.R. 60(B). Making no mention of the fee dispute with

Murman, the motion claimed that UH cooperated and assisted other non-settling

defendants in violation of the settlement agreement. {¶11} An attorney for UH called Tejedor on April 26, 2016. That conversation

was memorialized in a letter to Tejedor, the contents of which she does not dispute. See

Tr. 18. Counsel for UH informed Tejedor that the motion to set aside the settlement

agreement was completely without merit and that she should withdraw it. Tejedor

agreed with counsel for UH that the court would likely deny her motion to set aside the

settlement agreement. She asked about the status of the settlement proceeds and when

UH would provide a release in order to pay out the proceeds. Counsel for UH responded

by asking her why was she “inquiring about the settlement funds and the Release while at

the same time * * * asking the Court to set aside the settlement.” The phone

conversation ended with counsel for UH asking Tejedor to “make a decision on which

position you were taking, to finalize the settlement or set it aside.”

{¶12} Tejedor called back four minutes later. She said that she was prepared to

withdraw her motion to set aside the settlement agreement upon receipt of the settlement

proceeds. Counsel for UH told Tejedor that he could not forward the settlement

proceeds until he had approval from the probate court — a fact he confirmed in a separate

discussion with Murman. Tejedor objected to counsel speaking with Murman, telling

him that Murman had “no authority” to speak on Apel’s behalf because he was merely the

child’s guardian and not local counsel. Counsel for UH pointed out that Murman had

given notice of appearance as local counsel for Apel. The conversation concluded with

counsel for UH again demanding that Tejedor withdraw the motion to set aside the

settlement agreement or UH would file a brief in opposition and a request for sanctions. {¶13} The next day, April 27, 2016, Tejedor caused a petition for the “appointment

of emergency temporary guardian” for Apel to be filed in the Circuit Court for Seminole

County, Florida.1 The petition alleged that there was an “imminent danger” that Apel’s

property would be wasted, misappropriated, or lost unless immediate action was taken

because “there is a pending partial settlement of a pending medical

malpractice/negligence action that is currently in trial which necessitates the appointment

of an emergency temporary guardian in order to do all things necessary to successfully

conclude the pending partial settlement.” The petition for the appointment of an

emergency temporary guardian did not mention that Apel had a court-appointed guardian

with respect to the action involving the settlement.

{¶14} UH filed a brief in opposition to the motion to set aside the settlement

agreement and a request for sanctions. The day after UH filed its brief in opposition,

Tejedor withdrew the motion to set aside the settlement agreement and filed a motion to

enforce the settlement agreement. UH then filed a “renewed” motion for sanctions.

{¶15} In its judgment entry granting the motion for sanctions, the court stated:

Although Tejedor did not sign the petition for the appointment of an emergency temporary 1

guardian, she has not denied that the petition was filed at her direction. The Court finds that plaintiffs’ counsel filed the motion to set aside

settlement in bad faith in order to obtain the settlement funds before they

came due. The Court makes this finding based on representations made by

plaintiffs’ counsel to defense counsel and the fact that plaintiffs’ [sic]

contemporaneously filed conflicting pleadings in a Florida court. Pursuant

to R.C. 2323.51 and Civ.R. 11, this Court orders sanctions and reasonable

attorney fees to be paid by plaintiffs’ counsel.

{¶16} Beginning first with Civ.R. 11, we find that the court did not abuse its

discretion by granting the motion for sanctions. Although the terms of the settlement

remain confidential, the parties apparently set forth some conditions of the settlement in a

memorandum of settlement. In addition, the parties gave the court continuing

jurisdiction to enforce the settlement. A settlement agreement is a binding contract.

Infinite Sec. Solutions, L.L.C. v. Karam Properties II, 143 Ohio St.3d 346,

2015-Ohio-1101, 37 N.E.3d 1211, ¶ 16. As with any other kind of contract, the courts

presume that the intent of the contracting parties resides in the language they choose to

employ in the agreement. Shifrin v. Forest City Ent., Inc., 64 Ohio St.3d 635, 638, 597

N.E.2d 499 (1992). {¶17} The motion to set aside the settlement agreement was premised on UH’s

alleged violation of an agreement not to cooperate with the remaining defendant in the

case. Although Tejedor claimed that this term was discussed and was a “subject of the

settlement,” Tr. 16, she conceded that “there was nothing in writing.” Tr. 21. An

agreement to cooperate may have been discussed by the parties prior to finalizing the

terms of the settlement agreement, but the court’s retention of jurisdiction to enforce the

settlement agreement extended only to those terms specifically contained in the

agreement. The absence of any written term barring UH from actively cooperating with

the remaining defendant means that Tejedor subjectively knew that she was asking the

court to vacate the settlement agreement based on the violation of a term that did not exist

in that agreement.

{¶18} Tejedor’s bad faith in filing the motion to set aside the settlement was

further demonstrated by her attempt to have a court in Florida contemporaneously enforce

the same settlement that she was seeking to set aside in Ohio. There was competent,

credible evidence to support a finding that Tejedor willfully filed the motion to set aside

the settlement in an attempt to coerce UH into paying the settlement proceeds directly to

her in order to bypass Murman with whom she had an attorney fee dispute. At the same

time that Tejedor was conditioning her withdrawal of the motion to set aside the

settlement on UH signing a release of the settlement funds, she was asking a Florida

judge to appoint an emergency guardian who would order the funds released. {¶19} Having obtained the emergency appointment of a temporary guardian in

Florida, Tejedor withdrew the motion to set aside the settlement and, in a complete

about-face, filed a motion to enforce the settlement. She did so without any mention of

her prior motion to set aside the settlement agreement. These actions constituted

competent, credible evidence to establish that Tejedor used the motion to set aside the

settlement for the sole purpose of coercing UH into releasing the settlement proceeds

without going through the probate court.

{¶20} Finally, in a motion for reconsideration of the preliminary order granting the

motion for sanctions,2 Tejedor stated that she “never indicated that [she] intended to call

up [her] motion for hearing.” Plaintiff’s motion for reconsideration of the court’s May

10 order granting defendant’s motion for sanctions and attorney fees, at 2. Not only did

Tejedor not intend to seek a hearing on the motion, she appeared vexed that UH even

responded to the motion. She characterized UH’s brief in opposition to the motion to set

aside the settlement as “excessive” and that UH did not “mitigate their damages.” Id.

In addition, she claimed that “[t]he issue at hand could have likely been resolved absent

Defendant’s completely unnecessary filing and similarly, without intervention of the

Court.” Id. In essence, Tejedor’s argument shows that her motion was not seriously

made and that she had no intention of enforcing it. We cannot find that the court abused

its discretion by concluding that Tejedor acted in bad faith by filing the motion to set

aside the settlement.

The court issued a judgment entry granting the motion for sanctions but reserved ruling on 2 {¶21} Compared to the subjective standard applied under Civ.R. 11, sanctions

under R.C. 2323.51 can be imposed under the less restrictive “objective” standard to view

the conduct of the sanctioned person — rather than focus on what the person subject to

sanctions actually thought, an objective standard is essentially one that looks to what the

reasonable person would have thought. Harris v. Rossi, 11th Dist. Trumbull No.

2016-T-0014, 2016-Ohio-7163, ¶ 19. We conclude that the court did not abuse its

discretion by imposing sanctions because no reasonable attorney would have filed the

motion to set aside the settlement without knowing that its purpose was to cause a

needless delay and would unnecessarily increase the cost of litigation.

{¶22} Our discussion of the facts for purposes of Civ.R. 11 applies with equal

force to the imposition of sanctions under R.C. 2323.51. In addition, other facts

objectively showed that Tejedor knew there was no basis for her motion to set aside the

settlement agreement.

the amount of sanctions for a later date. {¶23} With Tejedor being less than forthright in the Florida court when seeking

the appointment of an emergency temporary guardian — she was seeking to enforce a

settlement she was concurrently trying to vacate and she failed to tell the Florida court

that Apel already had a guardian — she filed the motion to enforce the settlement as soon

as the Florida court appointed a temporary guardian. That motion made no mention of

her prior claim that UH violated the terms of the settlement agreement. It stated only that

the Florida court entered an order approving the settlement. The trial judge in this case

was well aware that despite a Florida guardian being appointed, Murman had yet to be

removed as guardian by the probate court. The trial judge likewise understood that the

probate court had prior jurisdiction over the matter and was the only court that could

remove Murman as guardian.

{¶24} At that point, Tejedor resorted to outlandish arguments to support her

actions. For example, she told the court that Murman had no right to a contingency fee

because he was not local counsel. While it is true that Murman initially filed a notice of

appearance as “additional counsel in this action on behalf of himself, Michael E.

Murman, Guardian of Leah Apel,” the parties acted as though he was serving as local

counsel for Tejedor. This conclusion is compelled for two reasons. {¶25} First, Tejedor could not consistently argue that Murman was not acting as

local counsel when she admitted that she was paying him an hourly fee for his services.

See Plaintiff’s supplemental motion to enforce settlement and response to hospital’s

motion for sanctions, at 4. In addition, Tejedor contested whether he did any work that

would justify a contingency fee — she claimed that Murman “did not attend a single

hearing, deposition or assist in any discovery.” If Murman was nothing more than the

attorney for the guardian, the ward’s estate would have been responsible for his attorney

fee, not Tejedor, and his contribution to the prosecution of the medical malpractice claims

would have been irrelevant. {¶26} Second, Tejedor’s admission to practice pro hac vice required the

association of an active Ohio attorney in good standing. See Gov.Bar.R. XII, Section

2(A)(7). When the complaint was filed, another attorney was acting as local counsel.

That attorney, in response to Murman’s notice of appearance, filed a “notice of

substitution of counsel” asking the court to take notice that Murman “replaced” original

local counsel and that original local counsel “are no longer counsel on this case and

should be removed from all certificates of services [sic].” When the originally retained

local counsel left the case, it meant that Murman had to step into that role, lest Tejedor

would be in violation of the Ohio Supreme Court rules governing appearances pro hac

vice. Without the services of local counsel, Tejedor’s pro hac vice status would have

been revoked and she could have been accused of the unauthorized practice of law.

Tejedor made no objection to original local counsel’s notice of substitution of counsel nor

did she take steps to disabuse the court of the belief that Murman was acting as local

counsel. {¶27} Tejedor also argued that Murman had been improperly appointed guardian.

This argument was without any basis. The complaint, a document that listed Tejedor as

one of the attorneys for Apel (even though she had not sought admission to practice pro

hac vice at that point), specifically alleged that Murman was appointed guardian.

Attached as an exhibit to the complaint were the letters of guardianship issued by the

probate court. At no point throughout the lengthy pretrial proceedings did Tejedor raise

any objection to Murman’s status as Apel’s guardian. It was only when the fee dispute

with Murman became intractable that Tejedor filed the motion to set aside the settlement

agreement and questioned Murman’s status as the child’s guardian. The timing of

Tejedor’s objection to Murman as guardian for Apel suggested the opportunistic nature of

her argument — during the hearing on UH’s motion for sanctions, Tejedor complained

that what UH’s attorneys “want to do in this case now is hand the check over to a

guardian who is wrongfully appointed * * *.”

{¶28} Tejedor wanted UH to bypass the probate court approval process entirely

(and her fee dispute with Murman) to have the settlement proceeds paid directly to her.

UH repeatedly told Tejedor that it could not bypass probate court’s approval of the

settlement. And apart from the legal restrictions on UH paying the settlement without

prior probate court approval, there was the practical consideration that if it was found to

have improperly paid settlement proceeds, it might be open to liability for that error. {¶29} The attack on the validity of the guardianship went so far as Tejedor’s

asking the court to “quash the guardianship.” Plaintiff’s supplemental motion to enforce

settlement and response to hospital’s motion for sanctions at 2. That same motion,

however, stated that “[t]he Probate Court is the court who has justification [sic] on

appointing guardians and settling the accounts of wards. The trial court does not have

jurisdiction over said matters.” Id. at 7. Having conceded that the probate court had

jurisdiction over the guardianship, it is unclear why the motion asked the trial court to

quash the guardianship.

{¶30} There was more than enough competent, credible evidence to show

objectively that Tejedor engaged in frivolous conduct for purposes of R.C. 2323.51. The

court did not abuse its discretion by awarding sanctions under the statute.

{¶31} Finally, we address UH’s motion for sanctions under App.R. 23.

{¶32} App.R. 23 states: “If a court of appeals shall determine that an appeal is

frivolous, it may require the appellant to pay reasonable expenses of the appellee

including attorney fees and costs.” An appeal is frivolous when it presents “no

reasonable question for review.” Talbott v. Fountas, 16 Ohio App.3d 226, 475 N.E.2d

187 (10th Dist.1984). {¶33} The appeal in this case is not premised on established questions of law for

which the appellant fails to make a good faith argument suggesting why the law should be

changed; it maintains that the court abused its discretion by finding violations of Civ.R.

11 and R.C. 2323.51. Unlike clear issues of law, claims of an abuse of discretion are

open to enough interpretation that it is difficult to conclude that the appeal in this case is

frivolous. Appellee’s motion for sanctions is denied.

{¶34} Judgment affirmed.

It is ordered that appellee recover of appellant costs herein taxed.

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate issue out of this court directing 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.

______________________________________________ MELODY J. STEWART, PRESIDING JUDGE

ANITA LASTER MAYS, J. and LARRY A. JONES, SR., J., CONCUR