ROSE MARIE JAKUBS, ET AL. v. FRANK J. BORALLY, JR., ET AL.
No. 101756
Court of Appeals of Ohio, EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA
July 2, 2015
[Cite as Jakubs v. Borally, 2015-Ohio-2696.]
BEFORE: S. Gallagher, J., Kilbane, P.J., and Boyle, J.
JOURNAL ENTRY AND OPINION
Civil Appeal from the Cuyahoga County Court of Common Pleas Probate Division Case No. 2011 ADV 168032
RELEASED AND JOURNALIZED: July 2, 2015
Bruce B. Elfvin
Barbara Kaye Besser
Stuart Torch
Elfvin & Besser
4070 Mayfield Road
Cleveland, OH 44121
Frank J. Groh-Wargo
Frank J. Groh-Wargo Co., L.P.A.
2 Berea Commons
Suite 215
Berea, OH 44017-1506
ATTORNEY FOR APPELLEES
Edgar H. Boles
Dinn, Hochman & Potter, L.L.C.
5910 Landerbrook Drive
Suite 200
Cleveland, OH 44124
{¶1} Plaintiff-appellant David Grano, Executor of the Estate of Arlene K. Borally, appeals the judgment of the trial court, claiming the trial court abused its discretion by failing to award appellant attorney fees, costs, and expert witness fees against defendant-appellee, Frank J. Borally, Jr. Upon review, we reverse this aspect of the trial court‘s judgment and remand the matter for the trial court to conduct an evidentiary hearing to determine whether such relief is warranted in the matter.
{¶2} Arlene K. Borally and her sister, Rose Marie Jakubs, filed a complaint for breach of fiduciary duty, accounting, replacement of trustee, and equitable relief. The plaintiffs sought to have appellee, who is their brother, held accountable for breaching his fiduciary duties as trustee of their father‘s trust, “the A-R Trust,” under which the sisters were beneficiaries. Among the relief requested was the award of costs and attorney fees.
{¶3} During the course of proceedings, plaintiff Rose Marie Jakubs voluntarily withdrew her claims. Arlene K. Borally died, resulting in the substitution of David Grano, Executor of the Estate of Arlene Borally, as the plaintiff. Original defendants Georgianne Borally and Linda Laro were dismissed from the case. The trial court found there was no evidence presented at trial against defendants B & G Catering and Banquet Service, Inc., Borally Enterprises Ltd., Partnership, and Borally Enterprises Ltd., L.L.C., which would make them liable to the plaintiff for damages, and dismissed these defendants from the action. Appellant herein was the only remaining plaintiff in the action, and Frank Borally, Jr., was the only remaining defendant.
{¶5} At trial, plaintiff‘s counsel requested attorney fees and costs during opening and closing statements. Although plaintiff‘s counsel did not request a separate evidentiary hearing, it is apparent that counsel anticipated a separate evidentiary hearing would be afforded if judgment were rendered in plaintiff‘s favor.1
{¶6} Following the bench trial, the court issued its judgment entry on July 10, 2014. The trial court found defendant-appellee had committed major breaches of fiduciary duty as trustee to the financial detriment of Arlene Borally. The court awarded appellant $40,368.00 for the damages sustained by Arlene Borally, as a beneficiary of the A-R Trust, as a direct result of appellee‘s breach of fiduciary duties.
{¶7} Rather than making appropriate considerations to determine if an award of attorney fees and costs was warranted, the trial court summarily found appellant had “offered no evidence regarding the amount of attorney fees incurred in the matter, or the
{¶8} Appellant timely filed this appeal. Appellant raises three assignments of error, all of which relate to the trial court‘s failure to award attorney fees, costs, and expert fees to the plaintiff.
{¶9} When considering an award of attorney fees, Ohio follows the “American Rule,” under which a prevailing party in a civil action may not generally recover attorney fees. Wilborn v. Bank One Corp., 121 Ohio St.3d 546, 2009-Ohio-306, 906 N.E.2d 396, ¶ 7. However, attorney fees may be awarded when a statute or an enforceable contract specifically provides for an award of attorney fees, or when the prevailing party demonstrates the losing party acted in bad faith. Id.
{¶10} In the case before us, attorney fees, as well as costs and expenses, are allowed by statute. Specifically,
In a judicial proceeding involving the administration of a trust, including a trust that contains a spendthrift provision, the court, as justice and equity
may require, may award costs, expenses, and reasonable attorney‘s fees to any party, to be paid by another party, from the trust that is the subject of the controversy, or from a party‘s interest in the trust that is the subject of the controversy.
The official comment to
[The statutory section] codifies the court‘s historic authority to award costs and fees, including reasonable attorney‘s fees, in judicial proceedings grounded in equity. * * * Generally, litigation expenses were at common law chargeable against another party only in the case of egregious conduct such as bad faith or fraud. * * * The court may award a beneficiary litigation costs if the litigation is deemed beneficial to the trust. Sometimes, litigation brought by a beneficiary involves an allegation that the trustee has committed a breach of trust.
{¶11} Additionally, attorney fees have been awarded for a breach of fiduciary duty when there is a finding of bad faith. See Cartwright v. Batner, 2014-Ohio-2995, 15 N.E.3d 401, ¶ 104-106 (2d Dist.); Ivancic v. Enos, 2012-Ohio-3639, 978 N.E.2d 927, ¶ 73-75 (11th Dist.); see also Golden v. Waiwood, 8th Dist. Cuyahoga No. 68833, 1996 Ohio App. LEXIS 2358 (June 6, 1996).
{¶12} We review an award under
{¶14} Absent statutory directive, expert witness fees are not recoverable as costs. Moore v. Gen. Motors Corp., Terex Div., 18 Ohio St.3d 259, 260, 480 N.E.2d 1101 (1985); Naples v. Kinczel, 8th Dist. Cuyahoga No. 89138, 2007-Ohio-4851, ¶ 11.
{¶15} The trial court found that appellee had committed significant breaches of fiduciary duty as trustee to the financial detriment of Arlene Borally. After detailing these breaches in its opinion, the court found that appellee failed to “administer the A-R Trust in good faith, in accordance with its terms and purposes, in the best interest of the A-R Trust beneficiary, Arlene Borally, and in accordance with those obligations and requirements set forth in O.R.C. 5808.01 et seq.” More specifically, the court found that “[o]n two (2) critical occasions * * * [appellee] * * * [placed] the best interests of himself and his children, and not the trust beneficiaries, first, unfortunately to the financial detriment of Arlene Borally and in direct violation of his fiduciary obligations under the Ohio Trust Code.”
{¶16} Despite these findings, the trial court summarily denied the plaintiff any attorney fees, upon finding no evidence of the amount of attorney fees, or the
{¶17} We recognize that appellant did not request an evidentiary hearing. However, appellant made requests for attorney fees and costs at trial, and upon this record, the trial court should have engaged in a meaningful review of whether such an award was warranted. Further, under the circumstances herein, the parties should have been permitted to address whether such an award would be “fair and equitable” in the matter.
{¶18} The trial court‘s findings demonstrate that appellee engaged in egregious conduct, acted in bad faith, and breached his fiduciary duties, to the detriment of appellant. Further, it appears the necessity of the court-appointed joint expert arose from appellee‘s breaches of his fiduciary duties and his failure to account and keep adequate records. Under these circumstances, the trial court should have conducted an evidentiary hearing to determine if the requested relief was warranted.
{¶19} Accordingly, we reverse the trial court‘s judgment with respect to the award of attorney fees, costs, and expert witness fees. We remand the matter to the trial court with instructions to conduct an evidentiary hearing to determine if such an award is warranted.
{¶20} Judgment reversed; case remanded.
It is ordered that appellant recover of said appellee 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, probate division, 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.
SEAN C. GALLAGHER, JUDGE
MARY EILEEN KILBANE, P.J., and
MARY J. BOYLE, J., CONCUR