[Cite as St. Vincent Charity v. Paluscsak, 2023-Ohio-4641.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA
ST. VINCENT CHARITY, :
Plaintiff-Appellee, : No. 111932 v. :
MICHAEL PALUSCSAK, ET AL., :
Defendants-Appellants. :
JOURNAL ENTRY AND OPINION
JUDGMENT: AFFIRMED RELEASED AND JOURNALIZED: December 21, 2023
Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-18-898214
Appearances:
Davis & Young, Matthew P. Baringer, and Thomas W. Wright, for appellee St. Vincent Charity.
Porter Wright Morris & Arthur, L.L.P., Tracey L. Turnbull, and Jared M. Klaus, for appellee United Collection Bureau, Inc.
The Law Office of Boyd W. Gentry, Boyd W. Gentry, and Zachary P. Elliott, for appellees George Gusses Co., L.P.A., George Gusses, Robin A. Worline, and Joseph T. Szyperski.
Robert S. Belovich, L.L.C., and Robert S. Belovich; The Misra Law Firm, L.L.C., and Anand N. Misra, for appellant. ANITA LASTER MAYS, A.J.:
{¶1} Defendant-appellant Michael Paluscsak (“Paluscsak”) appeals the trial
court’s decision granting summary judgment to the plaintiffs-appellees St. Vincent
Charity Medical Center (“SVCMC”); United Collection Bureau, Inc. (“UCB”); and
attorneys George Gusses, Robin Worline, and Joseph Szperski and their law firm,
George Gusses Co. LPA, collectively known as “the Gusses.” We affirm the trial
court’s decision.
I. Facts and Procedural History
{¶2} In September 2015, Paluscsak had an MRI performed on his knee at
SVCMC. He was billed $1,175.40 for the procedure, but he did not pay it. After the
bill went unpaid for 18 months, SVCMC referred the account to UCB for
collections. On June 2, 2017, UCB sent a collections letter to Paluscsak and also
hired the Gusses to file a debt collection action against Paluscsak. On July 11, 2019,
the Gusses filed a lawsuit.
{¶3} On August 14, 2017, Paluscsak filed an answer to the Gusses’ complaint
and also filed counterclaims on behalf of a putative class based on the Fair Debt
Collection Practices Act (“FDCPA”) and the Ohio Consumer Sales Practices Act
(“OCSPA”). Paluscsak claimed that the appellees committed fraud and abuses of
process because the debt collection was initiated in the name of “St. Vincent
Charity” and not the formal name “St. Vincent Charity Medical Center.” Paluscsak
argued in his counterclaim that the letters from UCB and the Gusses falsely stated that he owed money to St. Vincent Charity when the entity does not exist. Further,
Paluscsak contended that the Gusses signed a complaint on behalf of St. Vincent
Charity, omitting the words “Medical Center” in an effort to cheat unsuspecting
and unsophisticated consumers.
{¶4} Although Paluscsak did not file an objection, he claims that the Gusses
violated the FDCPA because they filed the complaint in Cleveland Municipal Court
instead of Garfield Heights Municipal Court, where he resides. However, the
matter proceeded in the Cleveland Municipal Court.
{¶5} After the filing of the complaint and counterclaim, a number of
motions were filed and ruled upon. SVCMC dismissed its complaint against
Paluscsak in the municipal court, leaving Paluscsak’s counterclaim as the sole
issue. UCM filed a motion to certify the case to the Cuyahoga County Common
Pleas Court (“trial court”). The municipal court granted the motion because the
amount sought in Paluscsak’s counterclaim exceeded the jurisdictional monetary
limit of the municipal court. On May 22, 2018, the case was transferred to the trial
court.
{¶6} On June 19, 2018, Paluscsak moved for default judgment against the
appellees. SVCMC filed a motion for leave to file an answer to the counterclaim.
The trial court granted SVCMC’s motion, but denied Paluscsak’s motion for default
judgment. On July 10, 2018, the trial court also dismissed Paluscsak’s claims for
fraud and abuse of process. On August 14, 2018, the trial court dismissed Paluscsak’s counterclaim against the appellees for fraud and abuse of process and
denied the motion with respect to the FDCPA and OCSPA claims.
{¶7} The trial court dismissed Paluscsak’s case because his counsel failed to
appear. Paluscsak filed an appeal in St. Vincent Charity v. Paluscsak, 8th Dist.
Cuyahoga No. 108641, 2020-Ohio-1501 (“Paluscsak I”), where the court reversed
the trial court’s decision, stating: “The trial court abused its discretion in
dismissing appellant’s counterclaim for failure to prosecute based on appellant’s
failure to participate in the May 7, 2019 phone conference.” Id. at ¶ 49.
{¶8} On September 14, 2020, the trial court ordered Paluscsak to appear in
person for a deposition on October 1, 2020. Paluscsak appealed the order to this
court and subsequently to the Supreme Court, and both appeals were dismissed.
On August 26, 2021, Paluscsak filed a motion to compel discovery from the Gusses,
and, on September 20, 2021, filed the same motion against UCB. On December 13,
2021, the trial court denied both motions.
{¶9} On January 10, 2022, UCB and the Gusses filed motions for summary
judgment, with SVCMC filing to join the summary judgment motions. The
motions argued that Paluscsak does not have standing because he admitted that
he had not suffered any injury as a result of UCB’s use of SVCMC’s abbreviated
name of St. Vincent Charity and that the use of the abbreviated name was not false,
deceptive, or misleading. The motions also argued that Paluscsak’s FDCPA and
OCSPA claims fail as a matter of law. {¶10} On August 15, 2022, the trial court granted the appellees’ summary
judgment motions. The trial court reasoned that Paluscsak had no standing
because he was not injured by the use of the nickname or the case being filed in
Cleveland instead of Garfield Heights. The trial court also reasoned that
Paluscsak’s claims under FDCPA and OCSPA fail as a matter of law because he did
not demonstrate he was injured.
{¶11} Paluscsak filed this appeal and assigned six assignments of error for
our review:
1. The trial court committed prejudicial error in holding that Paluscsak lacked standing to bring his counterclaim;
2. The trial court committed prejudicial error in refusing to consider claims on collection actions taken in violation of R.C. 1319.12 and the resulting unauthorized practice of law;
3. The trial court committed prejudicial error in finding that counterclaim defendants did not violate the FDCPA by filing a collection lawsuit in a court district where Paluscsak did not reside or where he did not sign a contract on which the collection claim was based;
4. The trial court committed prejudicial error in finding the counterclaim defendants did not violate the FDCPA by filing a collection lawsuit in the name of an unregistered fictitious name;
5. The trial court committed prejudicial error in concluding that the counterclaim defendants did not violate the OCSPA; and
6. The trial court abused its discretion and prejudicial error in denying Paluscsak’s motion to compel. II. Summary Judgment
A. Standard of Review
{¶12} Under Civ.R. 56(C), summary judgment is appropriate when “(1)
there is no genuine issue of material fact, (2) the moving party is entitled to
judgment as a matter of law, and (3) after construing the evidence most favorably
to the party against whom the motion is made, reasonable minds can only reach a
conclusion that is adverse to the nonmoving party.” Chester/12 Ltd. v. Epiq
Constr. Servs., 8th Dist. Cuyahoga Nos. 111626 and 112198, 2023-Ohio-1886, ¶ 17,
citing Zivich v. Mentor Soccer Club, Inc., 82 Ohio St.3d 367, 369-370, 696 N.E.2d
201 (1998); Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327, 364 N.E.2d 267
(1977).
{¶13} “The moving party has the initial burden of setting forth specific facts
that demonstrate its entitlement to summary judgment.” Id. at ¶ 18, citing Dresher
v. Burt, 75 Ohio St.3d 280, 292-293, 662 N.E.2d 264 (1996). “If the moving party
fails to meet this burden, summary judgment is not appropriate.” Id. “If the
moving party meets this burden, the nonmoving party has a reciprocal burden of
setting forth specific facts using evidence permitted by Civ.R. 56(C) to show that
there is a genuine issue for trial.” Id. “Summary judgment is appropriate if the
nonmoving party fails to meet this burden.” Id.
{¶14} “We review the trial court’s judgment de novo, using the same
standard that the trial court applies under Civ.R. 56(C).” Id. at ¶ 19, citing Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). “Accordingly,
we stand in the shoes of the trial court and conduct an independent review of the
record.” Id.
B. Standing
{¶15} In Paluscsak’s first assignment of error, he argues that the trial court
committed prejudicial error holding that he lacked standing to bring his
counterclaim. “‘Standing’ is defined as ‘[a] party’s right to make a legal claim or
seek judicial enforcement of a duty or right.’” Torrance v. Rom, 2020-Ohio-3971,
157 N.E.3d 172, ¶ 23 (8th Dist.), quoting Ohio Pyro, Inc. v. Ohio Dept. of
Commerce, 115 Ohio St.3d 375, 2007-Ohio-5024, 875 N.E.2d 550, ¶ 27, citing
Black’s Law Dictionary 1442 (8th Ed.2004). “A party must establish standing to
sue before a court can consider the merits of a legal claim.” Id., citing Ohio Contrs.
Assn. v. Bicking, 71 Ohio St.3d 318, 320, 643 N.E.2d 1088 (1994). “‘To have
standing, a party must have a personal stake in the outcome of a legal controversy
with an adversary.’” Id., quoting Kincaid v. Erie Ins. Co., 128 Ohio St.3d 322,
2010-Ohio-6036, 944 N.E.2d 207, ¶ 9, citing Ohio Pyro, Inc. at ¶ 27. “The lack of
standing may require a court to dismiss an action.” Id., citing Thies v. Wheelock,
2017-Ohio-8605, 100 N.E.3d 903, ¶ 10 (2d Dist.).
{¶16} “In order for [Paluscsak] to establish standing, he must show he
suffered ‘(1) an injury that is (2) fairly traceable to the appellees’ allegedly unlawful
conduct, and (3) likely to be redressed by the requested relief.’” Id. at ¶ 24, quoting Moore v. Middletown, 133 Ohio St.3d 55, 2012-Ohio-3897, 975 N.E.2d 977, ¶ 22,
citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-561, 112 S.Ct. 2130, 119
L.Ed.2d 351 (1992). “These three factors comprise the constitutional minimum for
standing.” Id., citing Lujan at 560. “Finally, ‘[i]t is well settled that standing does
not depend on the merits of the plaintiff’s contention that particular conduct is
illegal or unconstitutional. Rather, standing turns on the nature and source of the
claim asserted by the plaintiff.’” Id., citing Moore at ¶ 23, citing Warth v. Seldin,
422 U.S. 490, 500, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975).
{¶17} Paluscsak asserts that he has suffered injury from paying his attorney
fees and his usage of vacation time to fight this case. Paluscsak’s injuries “‘must be
concrete and not simply abstract or suspected’ to be compensable.” Cronin v.
Governor of Ohio, 2022-Ohio-829, 186 N.E.3d 851, ¶ 17 (8th Dist.), quoting Ohio
Contrs. Assn. at 320. “Further, an injury that is borne by the population in general,
and which does not affect the plaintiff in particular, is not sufficient to confer
standing.” Id., citing State ex rel. Walgate v. Kasich, 2013-Ohio-946, 989 N.E.2d
140, ¶ 11 (10th Dist.), rev’d on other grounds, 147 Ohio St.3d 1, 2016-Ohio-1176,
59 N.E. 3d 1240. “To show standing, a private litigant
‘must generally show that he or she has suffered or is threatened with direct and concrete injury in a manner or degree different from that suffered by the public in general, that the law in question has caused the injury, and that the relief requested will redress the injury.’” Id. at ¶ 17, quoting Bowers v. Ohio State Dental Bd., 142 Ohio App.3d 376, 380,
755 N.E.2d 948 (10th Dist.2001), quoting State ex rel. Ohio Academy of Trial
Lawyers v. Sheward, 86 Ohio St.3d 451, 469-470, 715 N.E.2d 1062 (1999).
{¶18} Paluscsak’s arguments are misplaced and do not demonstrate the
proper definition of an injury. In order to have standing, Paluscsak must
demonstrate that he was injured by the appellees’ usage of the name St. Vincent
Charity versus St. Vincent Charity Medical Center. Instead, Paluscsak argued that
he was injured from having to pursue this lawsuit. Paluscsak has not demonstrated
he suffered an injury as a result of the use of the hospital’s nickname. The facts are
Paluscsak received an MRI and subsequently did not render payment for the
service. The bill was turned over to a collection agency, who filed a complaint
against Paluscsak for payment. There was no showing of a direct or concrete injury
that Paluscsak suffered from omitting “Medical Center” from the complaint.
{¶19} Therefore, Paluscsak’s first assignment of error is overruled.
C. R.C. 1319.12 and Unauthorized Practice of Law
{¶20} In Paluscsak’s second assignment of error, he argues that the trial
court erred by refusing to consider claims based on collection actions taken in
violation of R.C. 1319.12 and the unauthorized practice of law. Specifically,
Paluscsak contends that there is no direct attorney-client relationship between
SVCMC and the Gusses because UCB selected the attorney and has the sole right to receive the proceeds of collection. As a result, Paluscsak claims that SVCMC is
misrepresenting its interest and the relationship between the appellees.
{¶21} “‘When a collection agency engages in the unauthorized practice of
law, it constitutes an “action that cannot legally be taken” within the meaning of
the FDCPA.’” Capital One Bank (USA), NA v. Reese, 11th Dist. Portage No. 2014-
P-0034, 2015-Ohio-4023, ¶ 90, quoting Foster v. D.B.S. Collection Agency, 463 F.
Supp. 2d 783, 804 (S.D.Ohio 2006). See, e.g., Poirier v. Alco Collections, Inc., 107
F.3d 347 (5th Cir. 1997) (holding that collections agency violated 15 U.S.C.
1692e(5) when it engaged in the unauthorized practice of law by instituting a
lawsuit against a debtor since the debt had not been properly assigned).
{¶22} Paluscsak’s argument is misplaced because he fails to demonstrate
how UCB, as a collection agency, did not adhere to R.C. 1319.12(B) and (C), which
state:
(B) A collection agency with a place of business in this state may take assignment of another person’s accounts, bills, or other evidences of indebtedness in its own name for the purpose of billing, collecting, or filing suit in its own name as the real party in interest.
(C) No collection agency shall commence litigation for the collection of an assigned account, bill, or other evidence of indebtedness unless it has taken the assignment in accordance with all of the following requirements:
(1) The assignment was voluntary, properly executed, and acknowledged by the person transferring title to the collection agency. (2) The collection agency did not require the assignment as a condition to listing the account, bill, or other evidence of indebtedness with the collection agency for collection.
(3) The assignment was manifested by a written agreement separate from and in addition to any document intended for the purpose of listing the account, bill, or other evidence of indebtedness with the collection agency. The written agreement shall state the effective date of the assignment and the consideration paid or given, if any, for the assignment and shall expressly authorize the collection agency to refer the assigned account, bill, or other evidence of indebtedness to an attorney admitted to the practice of law in this state for the commencement of litigation. The written agreement also shall disclose that the collection agency may consolidate, for purposes of filing an action, the assigned account, bill, or other evidence of indebtedness with those of other creditors against an individual debtor or co-debtors.
(4) Upon the effective date of the assignment to the collection agency, the creditor’s account maintained by the collection agency in connection with the assigned account, bill, or other evidence of indebtedness was canceled.
{¶23} Paluscsak also fails to demonstrate how the Gusses engaged in the
unauthorized practice of law. He simply states that the “Gusses knowingly enabled
the unauthorized practice of law by UCB,” and that “there is no direct attorney
client relationship between the alleged real party in interest (SVCMC) and the
lawyer (Gusses) prosecuting the lawsuit.” We find that Paluscsak’s arguments are
misplaced because SVCMC voluntarily dismissed its action against him and UCB
complied with R.C. 1319.12 by filing suit in its own name as the real party in
interest. Additionally, the Gusses did not engage in the unauthorized practice of
law because they filed suit on behalf of UCB, not SVCMC. Attorneys and law firms do not engage in the unauthorized practice of law by instituting a legal action to
collect on a debt against the debtor, because they file the action on behalf of the
creditor rather than for themselves. See Reese at ¶ 91.
{¶24} Therefore, Paluscsak’s second assignment of error is overruled.
D. Incorrect Location for Filing of Claim
{¶25} In Paluscsak’s third assignment of error, he argues that the trial court
committed prejudicial error in finding that the appellees did not violate the FDCPA
by filing a collection lawsuit in a court district where he did not reside. The initial
action filed by the appellees was filed in Cleveland Municipal Court and Paluscsak
resides in Garfield Heights. He argues that the failure to file in Garfield Heights
Municipal Court violates 15 U.S.C. 1692i, which states:
Any debt collector who brings any legal action on a debt against any consumer shall —
(1) in the case of an action to enforce an interest in real property securing the consumer’s obligation, bring such action only in a judicial district or similar legal entity in which such real property is located; or
(2) in the case of an action not described in paragraph (1), bring such action only in the judicial district or similar legal entity —
(A) in which such consumer signed the contract sued upon; or
(B) in which such consumer resides at the commencement of the action. {¶26} The case was moved to the common pleas court in Cuyahoga County, the
county in which Garfield Heights is located, in accordance with R.C. 1319.12(D),
which states:
A collection agency shall commence litigation for the collection of an assigned account, bill, or other evidence of indebtedness in a court of competent jurisdiction located in the county in which the debtor resides, or in the case of co-debtors, a county in which at least one of the co-debtors resides.
{¶27} Further, Paluscsak did not object to the case being filed in Cleveland
Municipal Court, but rather filed counterclaims. Because Paluscsak did not object
to the action being initiated in Cleveland in his response and counterclaims, we
will review for plain error. “Crim.R. 52 affords appellate courts ‘limited power’ to
correct plain errors that occurred during the trial court proceeding.” State v. Pugh,
8th Dist. Cuyahoga No. 111099, 2022-Ohio-3038, ¶ 18, citing State v. Perry, 101
Ohio St.3d 118, 2004-Ohio-297, 802 N.E.2d 643, ¶ 9.
{¶28} Crim.R. 52(B) provides that “[p]lain errors or defects affecting
substantial rights may be noticed although they were not brought to the attention
of the court.” Under the plain-error standard, “the defendant bears the burden of
‘showing that but for a plain or obvious error, the outcome of the proceeding would
have been otherwise, and reversal must be necessary to correct a manifest
miscarriage of justice.’” State v. West, 168 Ohio St.3d 605, 2022-Ohio-1556, 200
N.E.3d 1048, ¶ 22, quoting State v. Quarterman, 140 Ohio St.3d 464, 2014-Ohio-
4034, 19 N.E.3d 900, ¶ 16. {¶29} The case was moved to the common pleas court, which has the
jurisdiction to hear the case because he resides in Cuyahoga County. Additionally,
SVCMC voluntarily dropped their complaint from the municipal court; thus, the
county court had the proper jurisdiction.
{¶30} Therefore, Paluscsak’s third assignment of error is overruled.
E. FDCPA and OCSPA Violations
{¶31} In Paluscsak’s fourth and fifth assignments of error, he argues that
the trial court erred when it failed to find that the appellees violated the FDCPA
and OCSPA by filing a lawsuit under St. Vincent Charity rather than St. Vincent
Charity Medical Center. Paluscsak further claims that the filing constituted a false,
deceptive, or misleading representation on the part of the appellees, in violation of
15 U.S.C. 1692e(5), which states:
A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:
***
(5) The threat to take any action that cannot legally be taken or that is not intended to be taken.
{¶32} Paluscsak does not demonstrate that the appellees used any false,
deceptive, or misleading representations in order to get him to pay the outstanding
bill. See Stout v. Columbia Gas of Ohio, Inc., 2d Dist. Clark No. 2020-CA-42, 2021-
Ohio-609, where Stout filed a verified complaint against defendants, alleging abuse of process, defamation, violations of the Fair Debt Collection Practices Act
and the Consumer Sales Practices Act. The Stout Court held “an attorney can only
be held liable if he acts maliciously and has an ulterior purpose which is completely
separate from his client’s interest.” Id. at ¶ 72. “[T]he ulterior motive
contemplated by an abuse of process claim generally involves an attempt to gain
an advantage outside the proceeding, using the process itself as the threat.” Id. at
¶ 76, quoting Sivinsky v. Kelley, 8th Dist. Cuyahoga No. 94296, 2011-Ohio-2145,
¶ 36. Paluscsak has failed to establish an ulterior motive outside the process itself
to obtain payment on the account. Id. at ¶ 78.
{¶33} Additionally, we previously determined that Paluscsak lacked
standing to bring an action under FDCPA and OCSPA regarding the use of the
abbreviated name, St. Vincent Charity, because he failed to demonstrate he
suffered an injury as a result.
{¶34} Therefore, Paluscsak’s fourth and fifth assignments of error are
overruled.
III. Motion to Compel
{¶35} “We review a trial court’s decision to grant or deny a motion to compel
for an abuse of discretion.” United States Specialty Sports Assn. v. Majni, 8th
Dist. Cuyahoga No. 110830, 2022-Ohio-3035, ¶ 14, citing Wolnik v. Matthew J.
Messina, DDS, Inc., 8th Dist. Cuyahoga No. 88139, 2007-Ohio-1446, ¶ 15. {¶36} “The Ohio Supreme Court recently explained that an abuse of
discretion ‘involves more than a difference in opinion * * *.’” State v. Price, 8th
Dist. Cuyahoga No. 111921, 2023-Ohio-3790, ¶ 32, quoting State v. Weaver, 171
Ohio St.3d 429, 2022-Ohio-4371, 218 N.E.3d 806, ¶ 24. “That is, a trial court’s
judgment that is ‘profoundly and wholly violative of fact and reason’ constitutes an
abuse of discretion.” Id.
B. Law and Analysis
{¶37} In Paluscsak’s sixth assignment of error, he argues that the trial court
abused its discretion in denying his motions to compel discovery from UCB and
the Gusses regarding their contractual relationships and communications about
actions taken against him. On August 26, 2021, Paluscsak filed a motion to compel
discovery from the Gusses and, on September 20, 2021, filed the same motion
against UCB. On December 13, 2021, the trial court denied both motions. “Courts
have broad discretion over discovery matters.” Huntington Natl. Bank v. Dixon,
8th Dist. Cuyahoga No. 101273, 2015-Ohio-1735, ¶ 19, citing State ex rel. Citizens
for Open, Responsive & Accountable Govt. v. Register, 116 Ohio St.3d 88, 2007-
Ohio-5542, 876 N.E.2d 913, ¶ 18. Paluscsak has not demonstrated how the trial
court abused its discretion in its denial of his motion to compel attorney-client
communications.
{¶38} UCB hired the Gusses to file a debt collection action against
Paluscsak. UCB entered into a written attorney-client agreement and provided that agreement to Paluscsak, who continually argues that there is no agreement
between the parties. Further, Paluscsak has not demonstrated why the
communications between client UCB and attorneys the Gusses are essential to his
case or claims. Additionally, the communications are considered privileged. “‘The
attorney-client privilege is one of the oldest recognized privileges for confidential
communications.’” Total Quality Logistics, LLC v. BBI Logistics LLC, 12th Dist.
Clermont No. CA2021-04-012, 2022-Ohio-1440, ¶ 19, quoting Swidler & Berlin v.
United States, 524 U.S. 399, 403, 118 S.Ct. 2081, 141 L.Ed.2d 379 (1998). “It
‘exempts from the discovery process certain communications between attorneys
and their clients.’” Id., quoting Cargotec, Inc. v. Westchester Fire Ins. Co., 155
Ohio App.3d 653, 2003-Ohio-7257, 802 N.E.2d 732, ¶ 7 (6th Dist.).
{¶39} Therefore, Paluscsak’s sixth assignment of error is overruled.
{¶40} Judgment affirmed.
It is ordered that appellees recover from 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.
______________________________________ ANITA LASTER MAYS, ADMINISTRATIVE JUDGE
MICHELLE J. SHEEHAN, J., and SEAN C. GALLAGHER, J., CONCUR