2020 Ohio 4369
Ohio Ct. App.2020Background
- Buyer-plaintiff Daniel Shertok negotiated to purchase Wallace Group; several unsigned, nonbinding letters of intent circulated in 2016 and no written contract was executed.
- Wallace (a nonlawyer) filed a pro se motion to dismiss on behalf of Wallace Group; the trial court later struck that filing as not filed by an attorney.
- In Jan. 2018 Shertok moved for leave to amend his complaint to add an unauthorized-practice-of-law (UPL) claim under R.C. 4705.07 against Wallace based on her pro se filing; the trial court denied the motion and later found that attempt frivolous.
- The defendants moved for R.C. 2323.51 sanctions; the trial court awarded $2,200 against Shertok and his counsel for the UPL-amendment attempt but denied most of defendants’ request for $48,585.75 in fees for defending the other claims.
- On appeal, the court affirmed: the UPL-amendment attempt was frivolous because R.C. 4705.07 requires a prior Ohio Supreme Court determination; the remaining contract, promissory estoppel, and negligent-misrepresentation claims were not legally groundless.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether adding a UPL claim without a Supreme Court finding was frivolous | Shertok/counsel say they were unaware the Supreme Court finding was a prerequisite; it was a mistake | R.C. 4705.07 requires a prior Supreme Court determination; filing was unwarranted under existing law | Adding the UPL claim was frivolous under R.C. 2323.51(A)(2)(a)(ii); sanction affirmed |
| Whether all other claims (breach, good-faith breach, negligent misrep, promissory estoppel) were frivolous | Claims were viable based on alleged oral agreement and reliance | Claims were legally groundless and defendants entitled to full fees | Court held those claims were not legally groundless; defendants’ broader fee request denied |
| Whether the fee award was improperly calculated (lodestar and amount) | Trial court failed to use lodestar or justify amount | Defendants presented uncontroverted itemized invoices and testimony | Trial court adequately supported its award; lodestar basis implicit from invoices; amount not an abuse of discretion |
| Procedural objections: inadequate notice and improper mediation testimony | Counsel lacked sufficient notice of a hearing; mediation statements were privileged | Counsel had notice; no timely objection at hearing; any mediation remark was harmless | Notice was adequate; no contemporaneous objection to mediation testimony; no prejudice shown |
Key Cases Cited
- Ron Scheiderer & Assoc. v. London, 81 Ohio St.3d 94 (1998) (counsel must make reasonable inquiry; ignorance of law not objectively reasonable)
- Greenspan v. Third Fed. S. & L. Assn., 122 Ohio St.3d 455 (2009) (R.C. 4705.07 requires Supreme Court finding before civil action for UPL damages)
- Riston v. Butler, 149 Ohio App.3d 390 (2002) (framework for R.C. 2323.51 analysis; frivolous-conduct determination)
- Olympic Holding Co., L.L.C. v. ACE Ltd., 122 Ohio St.3d 89 (2009) (elements of promissory estoppel; reliance and remedy for oral promises)
- Calypso Asset Mgt., LLC v. 180 Indus., LLC, 127 N.E.3d 507 (10th Dist. 2019) (R.C. 2323.51 objective inquiry; attorney diligence standard)
- Blakemore v. Blakemore, 5 Ohio St.3d 217 (1983) (abuse-of-discretion standard for appellate review)