Podor v. Harlow

2018 Ohio 4110

• Court: Ohio Court of Appeals
• Decided: October 11, 2018
• Docket: 106442
• Status: Published

Opinion

[Cite as Podor v. Harlow, 2018-Ohio-4110.]

Court of Appeals of Ohio EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

JOURNAL ENTRY AND OPINION No. 106442

KENNETH C. PODOR PLAINTIFF-APPELLEE

vs.

ALBERT L. HARLOW, ET AL. DEFENDANTS-APPELLANTS

JUDGMENT: AFFIRMED

Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-17-873997

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

RELEASED AND JOURNALIZED: October 11, 2018 [Cite as Podor v. Harlow, 2018-Ohio-4110.] -i-

ATTORNEY FOR APPELLANTS

Robert C. Rosenfeld Robert Charles Rosenfeld Law Offices 16 S. Main Street P.O. Box 23667 Chagrin Falls, Ohio 44023

ATTORNEYS FOR APPELLEE

Daren Niemi The Podor Law Firm, L.L.C. 33565 Solon Road Solon, Ohio 44139 [Cite as Podor v. Harlow, 2018-Ohio-4110.] ANITA LASTER MAYS, J.:

{¶1} Defendants-appellants, Albert L. Harlow, Jr. (“Harlow”), Danette Harlow

(“D. Harlow”), Clickit Connect d.b.a. Clickit Labs Co. (“Clickit Connect”), Click It

Compliance Corp. (“Clickit Compliance”), iNamics Corp. (“iNamics”), attorney

Robert C. Rosenfeld (“Rosenfeld”), and The Robert C. Rosenfeld LL.M. Co. L.P.A.

(“Rosenfeld LL.M.) appeal the trial court’s finding that a conflict of interest prevents

Rosenfeld and Rosenfeld LL.M. from representing their codefendants in the case. We

affirm.

I. Presumptions

{¶2} Appellants’ App.R. 9(C) submission was noncompliant, and the appeal was

converted to an App.R. 9(A) record. In the absence of a transcript or App.R. 9(C)

narrative statement, we have nothing to pass upon and we must presume the regularity of

the trial court’s proceedings. Krawulski v. Blvd. & Neal Terrace Apts. Ltd., 8th Dist.

Cuyahoga No. 93409, 2010-Ohio-3505, ¶ 21, citing Hardy v. Fell, 8th Dist. Cuyahoga

No. 88063, 2007-Ohio-1287, citing Knapp v. Edwards Laboratories, 61 Ohio St.2d 197,

400 N.E.2d 384 (1980), and App. R. 9(B) and (C).

{¶3} “We presume that the trial court considered all the evidence and arguments

raised.” Miranda v. Saratoga Diagnostics, 2012-Ohio-2633, 972 N.E.2d 145, ¶ 26 (8th

Dist.). We accept the factual findings of the trial court as true and limit our review to the

legal conclusions of the trial court. Bailey v. Bailey, 8th Dist. Cuyahoga No. 98173,

2012-Ohio-5073, ¶ 8, citing Snider v. Ohio Dept. of Rehab. & Corr., 10th Dist. Franklim No. 11AP-965, 2012-Ohio-1665, ¶ 8. App.R. 16(A)(6) provides that an “appellant shall

include in its brief * * * [a] statement of facts relevant to the assignments of error

presented for review, with appropriate references to the record.” In this case, the

statement of facts section of appellants’ brief states — “none per court order.” We

construe the “omission to mean that the facts * * * are not dispositive of or necessary to

resolving the assigned error.” State v. Gross, 8th Dist. Cuyahoga No. 104851,

2017-Ohio-2986, ¶ 2.

II. Background

{¶4} On January 5, 2017, plaintiff-appellee Kenneth C. Podor (“Podor”), a

licensed Ohio attorney represented by members of the Podor Law Firm in this case, filed

a complaint against appellants. The caption includes a notation that the case is a

“refiling of Cuyahoga C.P. No. CV-12-796051 (with additional new defendants)

(previously consolidated with Cuyahoga C.P. No. CV-12-782070)”1 (“2012 cases”).

{¶5} Distilled, Podor asserts that Harlow was the president and chief executive

officer of iNamics and that since October 2005, Harlow and iNamics engaged in a

pattern of fraudulent activities and material misrepresentations designed to induce Podor

to provide loans and investment funds to iNamics, resulting in damages to Podor.

{¶6} According to Podor, Harlow, D. Harlow, Rosenfeld, and Rosenfeld LL.M.

collaborated to form Clickit Connect and Clickit Compliance as successor or affiliate

1 On February 11, 2013, Podor v. Harlow, Cuyahoga C.P. No. CV-12-796051 filed November 21, 2012, was consolidated with Matta v Harlow, Cuyahoga C.P. No. CV-12-782070 filed May 7, 2012. companies to iNamics and illegally or improperly transferred iNamics’ assets,

receivables, and business opportunities to Clickit Connect and Clickit Compliance.

Harlow and D. Harlow were owners, managers, and/or employees of the appellant

companies. Rosenfeld and Rosenfeld LL.M. formed the companies and provided legal

representation and counsel. Appellants’ actions purportedly diluted the value of Podor’s

interest in iNamics. Podor’s claims also include failure of iNamics to honor a

promissory note held by Podor as well as civil conspiracy.

{¶7} Further as to Rosenfeld and Rosenfeld LL.M., Podor alleges the

commission of legal malpractice for failing to zealously represent Podor’s interests in the

operation of the business. Podor lists violations by Rosenfeld and Rosenfeld LL.M. of

various professional conduct rules based on their concurrent representation of the

appellants, concurrent representation of appellants and Podor in operating the business,

and representation of certain of the appellants in the 2012 lawsuits initiated against them

by Podor.

{¶8} Appellants argue that the claims in this case regarding Podor’s investment in

iNamics were resolved in the settlement of the 2012 cases. Appellants also request that

this court consider the facts underlying Harlow, Jr. v. Podor, Cuyahoga C.P. No.

CV-17-889287 filed November 11, 2017, appealed to this court on February 28, 2018, 8th

Dist. Cuyahoga No. 106872, dismissed for lack of a final appealable order on March 27,

2018. During oral argument of the instant case, appellants informed this court that an appeal of that case was refiled two days prior to oral argument. That appeal is pending

separately and is not under consideration here.

{¶9} This court’s focus is confined to the single assigned error on appeal arising

from the October 25, 2017 journal entry that disqualified named codefendants Rosenfeld

and Rosenfeld LL.M. as counsel for the appellants:

After consideration of the motion, briefs, and arguments made, the court finds that a conflict of interest does exist for attorney Robert Rosenfeld to represent any other defendant in this suit except Robert C. Rosenfeld and the Robert C. Rosenfeld LL.M. Co., LPA. Therefore, attorney Rosenfeld is prohibited from representing any other defendants but Robert C. Rosenfeld and the Robert C. Rosenfeld LL.M. Co., LPA. * * * The clerk is ordered to remove attorney Robert C. Rosenfeld as attorney of record for defendants Albert Harlow, iNamics Corp., Clickit Compliance Corp., Clickit Labs Co., and Danette Harlow. Robert C. Rosenfeld is ordered to notify these defendants of their or new counsel’s required attendance at the pretrial.

Journal Entry No. 101092994 (Oct. 25, 2017).

III. Discussion

{¶10} An order “‘granting a motion to disqualify opposing counsel is a final

appealable order’” under R.C. 2505.02, Grimes v. Oviatt, 8th Dist. Cuyahoga No. 104491,

2017-Ohio-1174, ¶ 37, quoting Wilhelm-Kissinger v. Kissinger, 129 Ohio St.3d 90,

2011-Ohio-2317, 950 N.E.2d 516, ¶ 10; see also Russell v. Mercy Hosp., 15 Ohio St.3d

37, 39, 472 N.E.2d 695 (1984) . “[A]n order granting disqualification immediately and

definitely affects the party it deprives of chosen counsel * * * [and] it typically imposes a

permanent effect because it is unlikely to be reconsidered as a trial progresses.” (Citations

omitted.) Wilhelm-Kissinger at ¶ 9-10. {¶11} A trial court has broad discretion in determining a motion to disqualify

counsel. Quiros v. Morales, 8th Dist. Cuyahoga No. 89427, 2007-Ohio-5442, ¶ 14, citing

Spivey v. Bender, 77 Ohio App.3d 17, 601 N.E.2d 56 (6th Dist.1991). A trial court also

has wide discretion to exercise its “‘inherent authority to supervise members of the bar

appearing before it’” including an attorney’s inability to “‘comply with the Code of

Professional Responsibility when representing a client.’” Wynveen v. Corsaro, 8th Dist.

Cuyahoga No. 105538, 2017-Ohio-9170, ¶ 14, quoting Fried v. Abraitis, 2016-Ohio-934,

61 N.E.3d 545, ¶ 11 (8th Dist.), citing Royal Indem. Co. v. J.C. Penney Co., 27 Ohio

St.3d 31, 501 N.E.2d 617 (1986), and Mentor Lagoons, Inc. v. Rubin, 31 Ohio St.3d 256,

510 N.E.2d 379 (1987).

{¶12} An unreasonable, unconscionable, and arbitrary decision by a trial court in

granting or denying a motion to disqualify counsel constitutes an abuse of discretion and

will be reversed upon appellate review. Where there is “‘no sound reasoning process

that would support the decision,’” the trial court’s decision is deemed to be unreasonable.

Wynveen at ¶15, quoting Fried at ¶ 11, and citing Centimark Corp. v. Browning

Sprinkler Serv., Inc., 85 Ohio App.3d 485, 620 N.E.2d 134 (8th Dist.1993).

{¶13} The party moving for disqualification bears the burden of demonstrating the

necessity for removal. WFG Natl. Title Ins. Co. v. Meehan, 8th Dist. Cuyahoga No.

105677, 2018-Ohio-491, ¶ 24, citing Mentor Lagoons, Inc. v. Teague, 71 Ohio App.3d

719, 724, 595 N.E.2d 392 (11th Dist.1991). {¶14} Count 10 of the complaint sets forth specific allegations of ethical

violations and professional misconduct by Rosenfeld and Rosenfeld LL.M. Rosenfeld and

Rosenfeld LL.M. represented the remaining appellants, the corporate entities and owners,

officers, employees, or directors thereof, in the operation and management of the

appellant companies. Rosenfeld and Rosenfeld LL.M. also represented the other

appellants in the 2012 litigation, the litigation involved in the separate pending appeal,

and now in the current case.

{¶15} Podor argues that the continuing and concurrent representation of

appellants by Rosenfeld and Rosenfeld LL.M. implicates Ohio

Prof.ConductR. 1.7(a)(1)(2) regarding conflicts of interest of current clients:

(a) A lawyer’s acceptance or continuation of representation of a client creates a conflict of interest if either of the following applies:

(1) the representation of that client will be directly adverse to another current client;

(2) there is a substantial risk that the lawyer’s ability to “‘consider, recommend, or carry out an appropriate course of action for that client will be materially limited by the lawyer’s responsibilities to another client, a former client, or a third person or by the lawyer’s own personal interests.’”

See also Lytle v. Mathew, 2017-Ohio-1447, 89 N.E.3d 199, ¶ 23 (8th Dist.), quoting

Akron v. Carter, 190 Ohio App.3d 420, 2010-Ohio-5462, 942 N.E.2d 409 (9th Dist.)

(Prof.Cond.R. 1.7 violated where an attorney’s ability to “‘consider, recommend, or carry

out an appropriate course of action for that client will be materially limited by the

lawyer’s * * * own personal interests.’”) {¶16} While Ohio Prof.Cond.R. 1.7(B) allows a client to waive a conflict of

interest if other conditions are met, the client may not consent where “the representation

would involve the assertion of a claim by one client against another client represented by

the lawyer in the same proceeding.” Ohio.Prof.Cond.R. 1.7(c)(2).

{¶17} Podor also contends that Rosenfeld and Rosenfeld LL.M. were instrumental

in conducting and/or conspiring to conduct the allegedly illegal activities underlying the

other causes of action in the case. Ohio Prof.Cond.R. 8.4(c) prohibits a lawyer from

“engag[ing] in conduct involving dishonesty, fraud, deceit or misrepresentation.” The

cited conduct also violates Ohio Prof.Cond.R. 1.2(d)(1) prohibiting counseling a client to

engage in conduct that the lawyer knows is illegal or fraudulent.

{¶18} Rosenfeld and Rosenfeld LL.M. are also named codefendants in this case

and would likely be witnesses in this case. This implicates Prof.Cond.R. 1.7 as well as

Ohio Prof.Cond.R. 3.7(a), which provides:

(a) A lawyer shall not act as an advocate at a trial in which the lawyer is likely to be a necessary witness unless one or more of the following applies:

(1) the testimony relates to an uncontested issue;

(2) the testimony relates to the nature and value of legal services rendered in the case;

(3) the disqualification of the lawyer would work substantial hardship on the client.

{¶19} Also relevant here, the attorney-client privilege does not extend to

conversations with a client that relates to engaging in fraudulent or illegal activities. Lytle, 2017-Ohio-1447, 89 N.E.3d 199, at ¶ 20, citing Squire, Sanders & Dempsey, L.L.P.

v. Givaudan Flavors Corp., 127 Ohio St.3d 161, 2010-Ohio-4469, 937 N.E.2d 533, ¶ 27,

and Moskovitz v. Mt. Sinai Med. Ctr., 69 Ohio St.3d 638, 661, 635 N.E.2d 331 (1994). It

would follow that the privilege would not extend to counsel’s alleged conspiracy or

misconduct with appellants in this case.

{¶20} Podor also offers as a further indication of professional misconduct and

conflict of interest that Rosenfeld and Rosenfeld LL.M. are violating Ohio Prof.Cond.R.

1.13(A). The rule provides that a lawyer who is “employed or retained by an

organization” represents the organization and not the individual “officers, directors,

trustees, and employees.” Id. Rosenfeld and Rosenfeld LL.M. have allegedly served as

general counsel to the business entities and actually served as counsel to the appellant

businesses and individuals in the past and current lawsuits.

{¶21} The conflict posed by Prof.Cond.R. 1.7 is unwaivable, and the conflict is

imputed to the firm under Prof.Cond.R. 1.10. Lytle at ¶ 23. Allegiance is owed to the

appellant companies and not to the appellant officers, directors, employees, or managers

pursuant to Prof.Cond.R.1.13(A), which supports the presence of a conflict under

Prof.Cond.R. 1.7.

{¶22} As codefendants, the interests of Rosenfeld and Rosenfeld LL.M. versus the

remaining appellants are also divergent because there is a substantial risk that Rosenfeld

and Rosenfeld LL.M. will be witnesses in the action or that the defense strategy for their

clients will be impacted due to adverse interests. See State v. Rivera, 9th Dist. Lorain Nos. 16CA011057, 16CA011059, 16CA011060, 16CA011061, 16CA011063,

16CA011073, and 16CA011075, 2017-Ohio-8514, ¶ 13, (affirming disqualification due

to “a substantial risk of the attorneys’ ability to consider, recommend, or carry out an

appropriate course of action for all clients”).

{¶23} Based on the record before us, the arguments proffered by Podor in

support of the trial court’s decision are well-taken.

{¶24} The trial court considered the “motion, briefs, and arguments made” in

finding that a conflict exists. Journal Entry No. 101092994 (Oct. 25, 2017). Based on

our review of the record, the presumption of regularity afforded to the trial court’s

determination, the trial court’s wide discretion to exercise its inherent power to disqualify

counsel to insure ethical compliance and the integrity of the proceedings, and where the

record reflects that the trial court exercised a sound reasonable process supporting the

decision, we do not find that the trial court abused its discretion in determining that

counsel will not be able to comply with the Code of Professional Responsibility in

representing the appellants in this case. (Citations omitted.) Wynveen, 8th Dist.

Cuyahoga No. 105538, 2017-Ohio-9170, at ¶ 14.

{¶25} Appellants argue that the test set forth in Dana Corp. v. Blue Cross & Blue

Shield Mut., 900 F.2d 882 (6th Cir.1990), applies to this case. The three-part Dana test

is employed where a former client of counsel for the opposing party pursues

disqualification of that counsel due to a conflict of interest. Wynveen at ¶ 18, citing

Stanley v. Bobeck, 8th Dist. Cuyahoga No. 92630, 2009-Ohio-5696, ¶ 13. See also Cleveland v. Cleveland Elec. Illum. Co., 440 F.Supp. 193 (N.D.Ohio 1976) (the source of

the Dana test which was created to address “[i]ssues of disqualification of counsel for

conflicts arising as a result of former representation * * *.” Id. at 195.)

{¶26} It is true that Podor also alleges that a conflict of interest exists due to

Rosenfeld and Rosenfeld LL.M.’s representation of Podor’s interest in iNamics.

However, based on our determination that the trial court’s decision to grant

disqualification is not an abuse of discretion based on the previously cited factors, we

need not apply the Dana test to analyze this issue.

{¶27} To that end, we do note that “[s]ubsequent to its Dana decision, the Sixth

Circuit directed courts to ‘look to the codified Rules of Professional Conduct for

guidance’ in resolving questions of attorney disqualification.” Khan v. Cellco

Partnership, S.D.Ohio No. 1:10-CV-118, 2011 U.S. Dist. LEXIS 122894, 15 (Sep. 8,

2011), citing Natl. Union Fire Ins. Co. v. Alticor, Inc., 466 F.3d 456, 457 (6th Cir.2006),

vacated in part on other grounds, 472 F.3d 436 (6th Cir.2007). “‘Applying the Rules of

Professional Conduct in determining the propriety of counsel disqualification lead[s] to

greater uniformity and predictability.’” Weldon v. Presley, N.D.Ohio No. 1:10 CV

01077, 2011 U.S. Dist. LEXIS 160043 (Dec. 2, 2011), quoting Natl. Union at 457.

IV. Conclusion

{¶28} The trial court’s judgment is affirmed.

It is ordered that appellee recover of said appellants 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 Cuyahoga

County Court of Common Pleas to carry this judgment into execution. [Cite as Podor v. Harlow, 2018-Ohio-4110.] A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of

the Rules of Appellate Procedure.

_________________________________________ ANITA LASTER MAYS, JUDGE

MELODY J. STEWART, P.J., and KATHLEEN ANN KEOUGH, J., CONCUR