Bergman v. Genoa Banking Co.Bergman v. Genoa Banking Co.
DECISION AND JUDGMENT
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Alan R. McKean and Martin D. Carrigan, for appellee.
Justin D. Harris, for appellants.
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JENSEN, J.
{¶ 1} Appellants in this case are David McGookey, Kathryn Eyster, Lauren McGookey, and McGookey Law Offices, LLC. They are counsel for John and Kathryn
I. Background
A. The Foreclosure Proceedings
{¶ 2} The Bergmans executed a promissory note and mortgage in favor of Genoa Bank on December 21, 2008. They defaulted on their payment obligations and Genoa initiated a foreclosure action against them on January 17, 2012, in the Ottawa County Court of Common Pleas. It was assigned case No. 12-CV-026E.
{¶ 3} Genoa moved for summary judgment on July 18, 2012. The Bergmans filed no opposition. While the summary judgment motion was pending, the parties engaged in settlement discussions. Pursuant to those discussions, the Bergmans were to seek reinstatement assistance from the Ohio Housing Financing Agency (“OHFA“) through a program called Save the Dream Ohio, Ohio‘s Hardest Hit Fund (“HHF“). That program offered funds of up to $25,000 to eligible homeowners facing foreclosure to enable them to become current with their lenders.
{¶ 4} Over the next several months, there was dialogue between the Bergmans, Genoa, and housing counselors from WSOS Community Action, Incorporated, about the
{¶ 5} Upon the motion of the Bergmans, we granted a stay of execution of the sale of their home pending appeal. That stay dissolved on July 12, 2013, when we affirmed the trial court‘s November 15, 2012 judgment. Genoa Banking Co. v. Bergman, 6th Dist. Ottawa No. OT-12-038, 2013-Ohio-3054.
{¶ 6} On July 19, 2013, an order of sale was issued. The Bergmans moved for a stay of sale on August 30, 2013, and on September 5, 2013, they filed a suggestion of bankruptcy. They initiated a Chapter 13 bankruptcy action in the U.S. District Court for the Northern District of Ohio on September 5, 2013, once again staying the case. Genoa obtained relief from the automatic bankruptcy stay and the foreclosure proceedings went forward.
B. The Lawsuit Giving Rise to This Appeal
{¶ 7} On August 12, 2013, while case No. 12-CV-026E remained pending, the Bergmans filed case No. 13CV301, the case underlying this appeal, alleging common law fraud, fraud in the inducement, breach of contract, and estoppel in connection with the failed attempts to resolve the foreclosure action. They sought punitive damages and preliminary and permanent injunctive relief. The Bergmans claimed that Genoa misrepresented its intention to settle the case while inducing them to work “tirelessly” to
{¶ 8} The trial court conducted a hearing on the Bergmans’ motion for preliminary injunction on August 29, 2013. Charlene Watkins, a certified housing counselor specialist with WSOS, testified, as did Mr. Bergman, and Joseph Baun, a collections manager with Genoa. Numerous documents were entered as exhibits.
{¶ 9} According to the testimony and exhibits offered at the hearing, on July 5, 2012, Genoa presented a settlement offer to the Bergmans pursuant to which Genoa would consent to reinstatement of the Bergmans’ loan if the Bergmans obtained funds through the Save the Dream initiative to pay outstanding principal, interest, and escrow of $14,565.76, their negative escrow balance of $3,076.00, and Genoa‘s legal fees. Genoa would waive accrued late charges. The proposal provided for the Bergmans to request reimbursement for legal fees through the HHF program. It also required Mrs. Bergman to make bi-weekly deposits of $910.32 to a Genoa account and for the Bergmans to execute a consent judgment entry to be filed should they default on any of the conditions of settlement. No change would be made to their original variable interest rate of 5.25 percent. The proposal specified that approval under the Save the Dream program would need to be granted and funds received within 90-100 days of Genoa‘s July 5, 2012 letter.
{¶ 10} On July 19, 2012, the Bergmans conveyed a counterproposal expressing that it would apply for funds through the HHF program. They requested, however, that their interest rate be reduced to a fixed rate of 3 percent and inquired whether the deposit required by Mrs. Bergman could be supplemented with funds from Mr. Bergman. They also asked whether the negative escrow balance and late fees could be paid with funds from the HHF program. Further correspondence from the Bergmans indicated concern with structuring the agreement as a reinstatement due to the Bergmans’ income situation. Genoa communicated that it would address the request for the lower interest rate upon approval of Hardest Hit funds.
{¶ 11} While Genoa‘s proposal was dated July 5, 2012, Watkins’ testimony and the correspondence offered at the hearing showed that the Bergmans did not apply for the HHF until August 1, 2012. On August 30, 2012, the Bergmans were advised by WSOS that certain financial documents were needed, but they did not supply the requested information to WSOS until October 2, 2012.
{¶ 12} According to Watkins’ testimony and the exhibits presented at the hearing, Watkins spoke with the Bergmans in November of 2012 about Genoa‘s July 5, 2012 settlement offer, and she observed that the 90-100 day-period set forth in the offer had lapsed. Nevertheless, Watkins communicated with Genoa in an effort to reach a resolution to avoid foreclosure. These communications were memorialized in a November 13, 2012 letter from Genoa to Watkins in which Genoa proposed to settle with the Bergmans through reinstatement of the loan requiring payments of $23,669.36 for
{¶ 13} The trial court denied the Bergmans’ motion for preliminary injunction from the bench and issued an order on September 5, 2013. On November 18, 2013, the Bergmans voluntarily dismissed their complaint.
{¶ 14} Genoa moved for sanctions against appellants on December 6, 2013. It claimed that appellants’ conduct in filing case No. 13CV301 violated
The Trial Court Erred In Finding The Conduct Of Plaintiffs’ Attorneys Was Frivolous Pursuant To
O.R.C. 2323.51 And Civil Rule 11 And Awarding Attorneys’ Fees As Sanctions Against Them.The Trial Court Lacked Jurisdiction Pursuant To The Sixth District Court Of Appeals Decision Of Hanson v. Riccardi To Impose Costs And Attorney Fees As Sanctions Against Appellants After Appellants Voluntarily Dismissed Their Clients’ Claims Without Prejudice.
II. Law and Analysis
{¶ 15} In their first assignment of error, appellants contend that the trial court erred in finding that they violated {¶ 16} * * * [A]t any time not more than thirty days after the entry of final judgment in a civil action or appeal, any party adversely affected by {¶ 17} * * * The signature of an attorney or pro se party 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. If a document is not signed or is signed with intent to defeat the purpose of this rule, it may be stricken as sham and false and the action may proceed as though the document had not been served. For a willful violation of this rule, an attorney or pro se party, upon motion of a party or upon the court‘s own motion, may be subjected to appropriate action, including an award to the opposing party of expenses and reasonable attorney fees incurred in bringing any motion under this rule. Similar action may be taken if scandalous or indecent matter is inserted. {¶ 18} Appellants filed a {¶ 19} While it is true that a Voluntary dismissal does not eliminate the Rule 11 violation. Baseless filing puts the machinery of justice in motion, burdening courts and individuals alike with needless expense and delay. Even if the careless litigant quickly dismisses the action, the harm triggering Rule 11‘s concerns has already occurred. Therefore, a litigant who violates Rule 11 merits sanctions even after a dismissal. Moreover, the imposition of such sanctions on abusive litigants is useful to deter such misconduct. If a litigant could purge his violation of Rule 11 merely by taking a dismissal, he would lose all incentive to “stop, think and investigate more carefully See also Stone v. House of Day Funeral Serv., Inc., 140 Ohio App.3d 713, 722, 748 N.E.2d 1200 (6th Dist.2000) (finding {¶ 20} In ABN AMRO Mtge. Grp., Inc. v. Evans, 8th Dist. Cuyahoga No. 96120, 2011-Ohio-5654, ¶ 6, the Eighth District considered the precise issue posed in appellants’ second assignment of error, and it specifically held that a motion for sanctions under either {¶ 21} Appellants, however, cite our decision in Hanson v. Riccardi. 6th Dist. Erie No. E-08-045, 2009-Ohio-2930, ¶ 9, where, relying on the Eighth District‘s decision in Dyson v. Adrenaline Dreams Adventures, 143 Ohio App.3d 69, 71, 757 N.E.2d 401 (8th Dist.2001) and citing to our own decision in David v. Kaiser, 6th Dist. No. L-03-1315, 2004-Ohio-3149, we held that that the trial court lacked jurisdiction to consider a postdismissal motion for sanctions under Relying on David v. Kaiser, 6th Dist. No. L-03-1315, 2004-Ohio 3149, and Dyson, the Sixth District held that “once appellant dismissed his complaint, the trial court lost jurisdiction to consider [appellant‘s] postdismissal motion for sanctions.” However, its reliance was misplaced, because both David and Dyson involved postdismissal motions for discovery costs under {¶ 22} Evans observed that {¶ 23} We agree with the distinction drawn by the Eighth District and adopt its reasoning.1 We find that the trial court retained jurisdiction to consider Genoa‘s {¶ 24} We now turn to appellants’ first assignment of error. Appellants claim that they were exercising professional judgment and demonstrated, at most, a mere misjudgment or tactical error in filing case No. 13CV301. Genoa urges that appellants acted in bad faith by pleading facts and submitting evidence that had no factual or legal basis whatsoever. {¶ 25} ” {¶ 26} A decision to impose sanctions under {¶ 27} (a) Conduct of [a] party to a civil action * * * or [the] party‘s counsel of record that satisfies any of the following: (i) It obviously serves merely to harass or maliciously injure another party to the civil action * * * or is for another improper purpose, including, but not limited to, causing unnecessary delay or a needless increase in the cost of litigation. (ii) It is not warranted under existing law, cannot be supported by a good faith argument for an extension, modification, or reversal of existing law, or cannot be supported by a good faith argument for the establishment of new law. (iii) The conduct consists of allegations or other factual contentions that have no evidentiary support or, if specifically so identified, are not likely to have evidentiary support after a reasonable opportunity for further investigation or discovery. (iv) The conduct consists of denials or factual contentions that are not warranted by the evidence or, if specifically so identified, are not reasonably based on a lack of information or belief. {¶ 28} Genoa argues that appellants acted frivolously and in violation of {¶ 29} Appellants submit that the goal of {¶ 30} In the Bergmans’ complaint, appellants asserted that Genoa breached a contract with the Bergmans by refusing to accept funds to reinstate their loan. Appellants asserted that the Bergmans had been approved for HHF. In paragraph 40 of the Bergmans’ complaint, they specifically referenced a November 8 email that purported to attach a letter confirming the approval of HHF. No such letter or email is contained anywhere in the file transmitted to this court. At the preliminary injunction hearing, Mr. Bergman could not produce a copy of it, nor could he recall who sent it. Watkins denied sending the letter or that the Bergmans ever obtained approval of the funds. At the hearing, Mr. Bergman was clear that no one from Genoa represented to him that they had reached a reinstatement agreement: Q: Did anyone from Genoa Bank ever tell you, “John, we got a deal on reinstatement“? A: Never. {¶ 31} “To assert a claim that a contract existed, a plaintiff must allege facts showing an offer and an acceptance and a meeting of the minds, which is supported by consideration.” Siemaszko v. FirstEnergy Nuclear Operating Co., 187 Ohio App.3d 437, 2010-Ohio-2121, 932 N.E.2d 414, ¶ 23, citing Kostelnik v. Helper, 96 Ohio St.3d 1, 2002-Ohio-2985, 770 N.E.2d 58, ¶ 16. The correspondence produced at the preliminary injunction hearing—as well as Mr. Bergman‘s own testimony— makes clear that no agreement was ever reached. Following Genoa‘s July 5, 2012 offer, appellants made counterproposals that had not been accepted by Genoa, the Bergmans expressed an {¶ 32} We agree that the claims asserted by appellants were legally groundless and we find that there was competent, credible evidence to support the trial court‘s imposition of sanctions under {¶ 33} The purpose of {¶ 34} We review a trial court‘s judgment granting {¶ 35} Genoa contends that appellants violated {¶ 36} Appellants argue that subjective bad faith and willful misconduct is required to find a violation of {¶ 37} We agree with Genoa and with the trial court‘s conclusion. Appellants must have been aware that no contract existed to justify their pleading of a breach of contract claim. In fact, it is clear from the documents and the testimony at the preliminary injunction hearing that all were aware that the parties had not moved past the point of settlement negotiations. To plead and represent otherwise was a willful violation of {¶ 38} We find appellants’ first assignment of error not well-taken. {¶ 39} We find appellants’ assignments of error not well-taken and affirm the September 2, 2014 judgment of the Ottawa County Court of Common Pleas granting Genoa‘s motion for sanctions. The costs of this appeal are assessed to appellants pursuant to Judgment affirmed. A certified copy of this entry shall constitute the mandate pursuant to Mark L. Pietrykowski, J. JUDGE Stephen A. Yarbrough, P.J. JUDGE James D. Jensen, J. JUDGE CONCUR. This decision is subject to further editing by the Supreme Court of Ohio‘s Reporter of Decisions. Parties interested in viewing the final reported version are advised to visit the Ohio Supreme Court‘s web site at: http://www.sconet.state.oh.us/rod/newpdf/?source=6.A. The Trial Court‘s Jurisdiction
B. The Trial‘s Court‘s Decision to Impose Sanctions
1. R.C. 2323.51
2. Civ.R. 11
III. Conclusion