Cuyahoga Hts. Local School Dist. v. Palazzo
2016 Ohio 5137
| Ohio Ct. App. | 2016Background
- IT director Joseph Palazzo diverted over $4 million in school-district funds into a shell company, Laptops and More, Inc.; the shell paid Palazzo about $660,795.
- Ohio Auditor’s special audit found Laptops and More received district payments for technology that was never delivered; audit attributed $73,600 in payments and about $1,389 in cell-phone equipment to defendant Michelle Protiva.
- The district sued Protiva civilly under R.C. 2307.60/2307.61 (civil recovery for a criminal act), and for fraud, unjust enrichment, and conversion; trial resulted in a $1,389 conversion award but dismissal of the R.C. 2307.60 claim.
- At close of the district’s case the trial court dismissed the R.C. 2307.60 claim on the ground the statute required a prior criminal conviction — a view contrary to R.C. 2307.61(G)(1) and appellate precedent.
- Palazzo previously was deposed in this civil case and repeatedly invoked the Fifth Amendment; by trial he was imprisoned and unavailable. The district sought to read his deposition to the jury; the trial court refused, citing concern that Palazzo’s invocation could prejudice Protiva.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether R.C. 2307.61 requires a criminal conviction before a civil recovery for theft-related criminal acts | The statute does not require a conviction; district may prove theft to the trier of fact | Court below required a conviction as a predicate; Protiva conceded error below but argued district still failed to prove theft | Reversed: R.C. 2307.61(G)(1) does not require a criminal conviction; dismissal was error |
| Whether deposition excerpts showing a nonparty (Palazzo) invoking the Fifth Amendment are admissible against a party (Protiva) | District: deposition admissible under Civ.R. 32(A)(3)(c); nonparty Fifth-invocation may support adverse inference | Protiva: admission would create unfair prejudice and is improperly hearsay/unavailable under Evid.R. 804 | Court of appeals: district court abused discretion by excluding deposition; nonparty invocation can be admissible and adverse inferences may be drawn in civil cases subject to evidentiary balancing |
| Whether a nonparty’s invocation of the Fifth may be used to draw an adverse inference against a party | District: yes — civil adverse inference permitted; privilege is personal to witness and does not bar use against others | Protiva: such use would impose unconstitutional cost or unfair prejudice to her | Held: Nonparty invocation may be admissible; courts should apply multi-factor test (e.g., LiButti) and balance relevance/probative value under Evid.R. 401/403 |
| Whether portions of Palazzo’s deposition were inadmissible hearsay because Palazzo was not shown unavailable under Evid.R. 804(A)(5) | District: Civ.R. 32 permits use of deposition against parties present at deposition; availability requirement addressed by rule | Protiva: Evid.R. 804 requires attempt to procure attendance by process or reasonable means before using deposition | Held: Civ.R. 32 governs and deposition was properly usable against parties who were present at taking; trial court’s blanket exclusion was erroneous |
Key Cases Cited
- Griffin v. California, 380 U.S. 609 (U.S. 1965) (prosecutorial comment on defendant’s silence prohibited in criminal trial)
- Baxter v. Palmigiano, 425 U.S. 308 (U.S. 1976) (adverse inferences from invocation of Fifth permissible in civil cases)
- Nobles v. United States, 422 U.S. 225 (U.S. 1975) (the privilege against self-incrimination is a personal right of the witness)
- Couch v. United States, 409 U.S. 322 (U.S. 1973) (privilege protects witness from compelled testimonial self-incrimination)
- Lefkowitz v. Cunningham, 431 U.S. 801 (U.S. 1977) (limitations on imposing sanctions that effectively penalize assertion of Fifth Amendment)
- LiButti v. United States, 107 F.3d 110 (2d Cir. 1997) (non-exclusive factors for admitting nonparty Fifth invocations and drawing adverse inference)