2021-Ohio-2325
Ohio Ct. App. 8th
2021

MUSIAL OFFICES, LTD., Plaintiff-Appellee/ Cross-Appellant, v. CUYAHOGA COUNTY, ET AL., Defendants-Appellants/ Cross-Appellees.

No. 108810

COURT OF APPEALS OF OHIO EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

July 8, 2021

[Cite as Musial Offices, Ltd. v. Cuyahoga Cty., 2021-Ohio-2325.]

JOURNAL ENTRY AND OPINION

JUDGMENT: AFFIRMED

RELEASED AND JOURNALIZED: July 8, 2021

Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-11-746704

Appearances:

Dworken & Bernstein Co., L.P.A., Patrick J. Perotti, Nicole T. Fiorelli, and James S. Timmerberg; The Robenalt Law Firm, Inc., and Thomas D. Robenalt, for appellee.

Michael C. O’Malley, Cuyahoga County Prosecuting Attorney, and David G. Lambert, Brian R. Gutkoski, and Kenneth M. Rock, Assistant Prosecuting Attorneys, for appellants.

SEAN C. GALLAGHER, P.J.:

{¶ 1} Defendant-appellant/cross-appellee County of Cuyahoga (the county) challenges the trial court’s judgment entry awarding attorney fees to plaintiff-appellee/cross-appellant Musial Offices Ltd., individually and on behalf of all others similarly situated (Musial), following a finding that the county had engaged in frivolous conduct by filing an appeal of a motion for reconsideration. Musial cross-appealed, arguing that the award of attorney fees was insufficient. After a thorough review of the law and facts, we affirm the judgment of the trial court.

I. Factual and Procedural History

{¶ 2} This appeal presents the very narrow issue of whether the trial court erred in awarding attorney fees following its determination that a prior appeal filed by the county was frivolous. Because the underlying facts of this matter are not relevant to the resolution of the present appeal, only a short presentation of the procedural history is warranted. For a thorough recitation of the underlying facts, see Musial Offices, Ltd. v. Cty. of Cuyahoga, 2020-Ohio-5426, 163 N.E.3d 84 (8th Dist.).

{¶ 3} Musial commenced this matter by filing a class action complaint alleging claims for, inter alia, unjust enrichment, constitutional violations, injunctive relief, and writ of mandamus against the county, the county fiscal officer, Cuyahoga County Board of Revision, the county executive, and the county treasurer. In its answer, the county did not raise the defense of political subdivision immunity. The county later filed a motion to dismiss or for summary judgment that still did not raise the immunity defense. Musial amended its complaint twice, and each time the county filed a motion to dismiss pursuant to Civ.R. 12 (B) or alternatively for a more definite statement. After trial and appellate proceedings regarding class certification were resolved, the county answered Musial’s second amended complaint and raised the immunity defense. Contemporaneously with its answer, the county moved for judgment on the pleadings asserting immunity.

{¶ 4} The court denied the motion for judgment on the pleadings, explicitly finding that political subdivision immunity did not apply to Musial’s claims, including unjust enrichment. The court noted in its order that immunity under R.C. Chapter 2744 applies to tort actions for damages; however, Musial’s complaint only alleged claims for mandamus, injunctive relief, and equitable damages.

{¶ 5} The county then moved for leave to file a motion for summary judgment based in part on its claimed immunity, which the court denied. The case was then assigned to a different judge and leave to file a motion for summary judgment was again sought and denied.

{¶ 6} Musial’s claims were tried to the court with an advisory jury, which found in favor of Musial and against the county on the unjust enrichment claim. During closing arguments and in their post-trial briefs, the county did not argue the defense of political subdivision immunity. In fact, in its arguments related to the unjust enrichment claim in the county’s post-trial brief, it simply asserted that the doctrine of unjust enrichment does not apply to political subdivisions and that Musial did not meet its burden at trial on this claim.

{¶ 7} The trial court issued a judgment entry of findings of fact and conclusions of law finding in favor of Musial and the class on their claim for unjust enrichment and awarding restitution in the amount of $3,927,385.91. The court further noted in its entry that it was not a final order because there were issues of fact and law that had to be addressed with regard to the class.

{¶ 8} The county then filed a motion for reconsideration. Among the arguments raised in the motion was that it was immune from liability on the unjust enrichment claims. Musial opposed the motion, noting that the immunity argument had been raised in the county’s prior motion for judgment on the pleadings and had been rejected by the court. The trial court denied the motion for reconsideration.

{¶ 9} While there was still no final judgment entry in the case, the county appealed the denial of the motion for reconsideration. The county noted R.C. 2744.02(C) as the authority for its appeal of an interlocutory order. Musial moved to dismiss the appeal for lack of a final appealable order, which was granted by this court. In our dismissal, we noted that the county should have appealed the trial court’s denial of its motion for judgment on the pleadings or its ruling on the bench trial, both times that the county argued the immunity defense was raised. We dismissed the appeal, finding that we lacked jurisdiction due to its untimeliness.

{¶ 10} Musial subsequently moved for attorney fees, arguing that the county’s appeal of a motion for reconsideration was frivolous. We remanded the matter to the trial court for consideration of this motion.

{¶ 11} On remand, the trial court construed the motion under R.C. 2323.51 and conducted an evidentiary hearing. Following the hearing, the court granted Musial’s motion, specifically finding that the record demonstrated that the county was aware at the time it filed its motion for judgment on the pleadings based upon immunity under R.C. Chapter 2744 in 2015 that the denial of said motion was a final appealable order and that the county never appealed the 2015 denial of immunity. The court further found that, because the existing law was known to the county when filing its motion for judgment on the pleadings in 2015, its appeal of the motion for reconsideration in 2019 was not warranted under existing law and the filing of the appeal constituted frivolous conduct. The court awarded Musial attorney fees in the amount of $16,142.50.

{¶ 12} The county filed an appeal of this judgment, raising two assignments of error for our review:

  1. The trial court erred in finding that the filing of an appeal constituted frivolous conduct under R.C. 2323.51.
  2. The trial court erred in awarding excessive sanctions.

{¶ 13} Musial cross-appealed, asserting:

  1. The trial court abused its discretion when it awarded fees less than the uncontroverted amount reflected in Class Counsel’s billing records.

II. Law and Discussion

A. Frivolous Conduct

{¶ 14} We will begin with the county’s appeal. In its first assignment of error, the county argues that the trial court erred in determining that the filing of its appeal constituted frivolous conduct under R.C. 2323.51.

{¶ 15} A motion for sanctions under R.C. 2323.51 requires a trial court to determine whether the challenged conduct constitutes frivolous conduct as defined in the statute and, if so, whether any party has been adversely affected by the frivolous conduct. Riston v. Butler, 149 Ohio App.3d 390, 777 N.E.2d 857, ¶ 17 (1st Dist.2002). R.C. 2323.51 applies an objective standard in determining frivolous conduct, as opposed to a subjective one. Bikkani v. Lee, 8th Dist. Cuyahoga No. 89312, 2008-Ohio-3130, ¶ 22. The finding of frivolous conduct under R.C. 2323.51 is determined without reference to what the individual knew or believed. Ceol v. Zion Indus., Inc., 81 Ohio App.3d 286, 289, 610 N.E.2d 1076 (9th Dist.1992).

{¶ 16} R.C. 2323.51(A)(2)(a)(ii) defines frivolous conduct as conduct that 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.

{¶ 17} R.C. 2323.51 was not intended to punish mere misjudgment or tactical error. Turowski v. Johnson, 70 Ohio App.3d 118, 123, 590 N.E.2d 434 (9th Dist.1991). Instead, the statute was designed to chill egregious, overzealous, unjustifiable, and frivolous action. Turowski v. Johnson, 68 Ohio App.3d 704, 706, 589 N.E.2d 462 (9th Dist.1990). The statute serves to deter abuse of the judicial process by penalizing sanctionable conduct that occurs during litigation. Filonenko v. Smock Constr., L.L.C., 10th Dist. Franklin No. 17AP-854, 2018-Ohio-3283, ¶ 14.

{¶ 18} A determination to impose sanctions under R.C. 2323.51 involves a mixed question of law and fact. Resources for Healthy Living, Inc. v. Haslinger, 6th Dist. Wood No. WD-10-073, 2011-Ohio-1978, ¶ 26. We review purely legal questions de novo. Riston, 149 Ohio App.3d 390, 2002-Ohio-2308, 777 N.E.2d 857, at ¶ 22. On factual issues, however, we give deference to the trial court’s factual determinations because the trial judge, of course, will have had the benefit of observing the entire course of proceedings and will be most familiar with the parties and attorneys involved. In re Estate of O’Toole, 8th Dist. Cuyahoga No. 108122, 2019-Ohio-4165, ¶ 30, citing Riston at ¶ 25. The ultimate decision as to whether to grant sanctions under R.C. 2323.51 rests within the sound discretion of the trial court. State ex rel. Striker v. Cline, 130 Ohio St.3d 214, 2011-Ohio-5350, 957 N.E.2d 19, ¶ 11.

{¶ 19} Frivolous conduct implicated by R.C. 2323.51(A)(2)(a)(ii) involves proceeding on a legal theory that is wholly unwarranted in law. In determining whether a claim is frivolous under R.C. 2323.51(A)(2)(a)(ii), the test is objective — whether no reasonable lawyer would have brought the action in light of the existing law. Internatl. Union of Operating Engineers, Local 18 v. Laborers’ Internatl. Union of N. Am., Local 310, 8th Dist. Cuyahoga No. 104774, 2017-Ohio-1055, ¶ 15, citing Orbit Elecs., Inc. v. Helm Instrument Co., 167 Ohio App.3d 301, 2006-Ohio-2317, 855 N.E.2d 91, ¶ 49 (8th Dist.). A claim is therefore frivolous if it is absolutely clear under the existing law that no reasonable lawyer could argue the claim. Orbit at id., quoting Hickman v. Murray, 2d Dist. Montgomery No. CA 15030, 1996 Ohio App. LEXIS 1028, 14 (Mar. 22, 1996). Because this is a question of law, we review the trial court’s determination regarding this prong of the statute de novo. Pingue v. Pingue, 5th Dist. Delaware No. 06-CAE-10-0077, 2007-Ohio-4818, ¶ 20.

{¶ 20} In its opinion, the trial court properly recognized that simply advancing a losing argument does not amount to frivolous conduct. Rather, under R.C. 2323.51(A)(2)(a)(ii), frivolous conduct is the assertion of a position that is not warranted under existing law. The trial court found that the filing of the county’s appeal constituted such an assertion.

{¶ 21} In this case, the county filed a motion for reconsideration of the court’s 2018 judgment entry of findings of fact and conclusions of law following the trial in this matter. The trial court summarily denied the motion, and the county appealed the trial court’s denial of the motion. Following our dismissal of the appeal for lack of a final appealable order, the trial court found the county’s conduct in filing the appeal rose to the level of frivolous conduct and imposed sanctions against the county. Recognizing the trial court’s decision to grant sanctions is within its sound discretion and is reviewed only for an abuse of that discretion, we affirm the trial court’s decision for the reasons set forth below.

{¶ 22} R.C. 2744.02(C) provides that an order denying a political subdivision the benefit of an alleged immunity from liability as provided in R.C. Chapter 2744 or any other provision of the law is a final order. See also Hubbell v. Xenia, 115 Ohio St.3d 77, 2007-Ohio-4839, 873 N.E.2d 878, ¶ 27 ([W]hen a trial court denies a motion in which a political subdivision or its employee seeks immunity under R.C. Chapter 2744, that order denies the benefit of an alleged immunity and thus is a final, appealable order pursuant to R.C. 2744.02(C).).

{¶ 23} Underlying this legal principle is the idea that the determination of whether a political subdivision is entitled to immunity is usually pivotal to the ultimate outcome of a lawsuit. Early resolution of the issue may save both the plaintiff and the political subdivision the time, effort, and expense of a trial and appeal. Id. at ¶ 26, citing Burger v. Cleveland Hts., 87 Ohio St.3d 188, 199-200, 718 N.E.2d 912 (1999) (Lundberg Stratton, J., dissenting). In Hubbell, the trial court denied a political subdivision’s motion for summary judgment on the ground that there was a question of fact as to whether the political subdivision was entitled to immunity under R.C. Chapter 2744. The Supreme Court of Ohio explained that, while there was no final determination on the immunity issue, R.C. 2744.02(C) does not require a final denial of immunity before the political subdivision has the right to an interlocutory appeal. Id. at ¶ 12.

{¶ 24} Moreover, we note that the Supreme Court of Ohio subsequently held that R.C. 2744.02(C) permits a political subdivision to appeal a trial court order that denies it the benefit of an alleged immunity from liability under R.C. Chapter 2744, even when the order makes no determination [of no just cause for delay] pursuant to Civ.R. 54(B). (Emphasis added.) Sullivan v. Anderson Twp., 122 Ohio St.3d 83, 2009-Ohio-1971, 909 N.E.2d 88, syllabus. The use of the word permit appears to indicate that a political subdivision is permitted but not required to immediately appeal an interlocutory order which denies the benefit of an alleged immunity.

{¶ 25} Here, the county filed a motion for judgment on the pleadings in 2015 claiming that it was immune from liability pursuant to R.C. Chapter 2744. The trial court denied the motion on the ground that R.C. Chapter 2744 applies to tort actions and therefore did not apply in this matter. The county did not immediately appeal the court’s decision.

{¶ 26} Following the trial, proceeding under the determination that the county was not immune because R.C. Chapter 2744 was inapplicable, the trial court issued a judgment entry of findings of fact and conclusions of law finding Musial’s claim of unjust enrichment meritorious and awarding restitution in the amount of $3,927,385.91. As the issue of immunity regarding Musial’s unjust enrichment claim had already been resolved in the trial court’s prior determination, the court did not address or revisit the immunity issue at this time.

{¶ 27} Nonetheless, the county filed a motion for reconsideration, claiming defendants are immune from any unjust enrichment liability under the common law doctrine of sovereign immunity or alternatively, R.C. 2744, et seq. Despite making a broad claim of immunity, the motion for reconsideration cited no legal authority or otherwise explained why the county was immune from unjust enrichment claims. The county alluded to a “common law doctrine of sovereign immunity,” but its argument regarding immunity was solely based on R.C. Chapter 2744. As the trial court noted in its judgment granting sanctions for the county’s frivolous conduct, the county was merely repeating the same argument made in its motion for judgment on the pleadings, which had already been rejected.1

{¶ 28} Because the 2018 judgment entry of findings of fact and conclusions of law left several issues unresolved and was a non-final order, the county was therefore entitled to move the court to reconsider its decision. Interlocutory orders are subject to motions for reconsideration, whereas judgments and final orders are not. Pitts v. Ohio Dept. of Transp., 67 Ohio St.2d 378, 379, 423 N.E.2d 1105 (1981), fn. 1. While the judgment entry adjudicated the merits of Musial’s claims, the county took advantage of its ability to file a motion for reconsideration of a non-final order and asked the court to revisit the R.C. Chapter 2744 immunity issue — a matter presumed but not specifically considered in the findings of fact and conclusions of law. And when the trial court summarily denied the county’s motion for reconsideration, the county filed an appeal, claiming the order denying the reconsideration was a final appealable order because it deprived the county the benefit of an immunity defense.

{¶ 29} The decision that deprived the county the benefit of the immunity defense was actually the trial court’s 2015 decision, which held that R.C. Chapter 2744 immunity did not apply in this case, not the trial court’s denial of the motion for reconsideration of the 2018 judgment entry, because the 2018 judgment entry did not address the immunity issue or change its prior ruling. Although the county was not required to immediately appeal the adverse immunity ruling in 2015, its position that the court’s summary refusal to reconsider the immunity issue entitles the county to appeal such issue at this procedural juncture is not warranted under the existing law. Rather, the county attempted to recreate a final appealable order from the issues resolved in the 2015 decision.

{¶ 30} Admittedly, “there is a fine line between zealous and overzealous advocacy that attorneys should not cross.” Cleveland Indus. Square, Inc. v. Dzina, 8th Dist. Cuyahoga Nos. 85336, 85337, 85422, 85423, and 85441, 2006-Ohio-1095, ¶ 55. However, “because a trial court has the benefit of observing the entire course of proceedings and will be most familiar with the parties and attorneys involved, a finding as to the commission of frivolous conduct is entitled to substantial deference upon review.” Id.

{¶ 31} The county was not required to immediately appeal the trial court’s 2015 decision finding R.C. Chapter 2744 inapplicable, and simply regurgitating an argument previously rejected by the trial court is not necessarily frivolous conduct. However, under the particular procedural posture of this case, we find the trial court did not abuse its discretion in determining the county’s conduct in appealing the court’s summary denial of its motion for reconsideration was frivolous and warranted the imposition of sanctions. The county’s first assignment of error is overruled.

B. Award of Attorney Fees

{¶ 32} The county’s second assignment of error and Musial’s sole assignment of error both relate to the award of attorney fees. Unsurprisingly, the county argues that the award of attorney fees was excessive, while Musial contends that the award was insufficient.

{¶ 33} The county acknowledges that the trial court reduced the attorney fees sought by Musial, but argues that the award of over $16,000 was still excessive. In support of this, the county points to the 28 hours expended by class counsel on the five-page motion to dismiss filed in this court. The county asserts that the subject of the motion was a basic question and did not require the exorbitant amount of legal resources expended by Musial’s counsel.

{¶ 34} In contrast, Musial argues that the trial court abused its discretion by reducing the requested amount of fees by 75 percent. Musial contends that the county failed to present any evidence that the amount of time expended was not reasonable.

{¶ 35} Pursuant to R.C. 2323.51(B)(1), “any party adversely affected by frivolous conduct may file a motion for an award of court costs, reasonable attorney’s fees, and other reasonable expenses incurred in connection with the civil action or appeal.” If the representation is not on a contingent fee basis, the amount of reasonable attorney fees that may be awarded for frivolous conduct “shall not exceed, and may be equal to or less than * * * the attorney’s fees that were reasonably incurred by a party.” R.C. 2323.51(B)(3)(b).

{¶ 36} R.C. 2323.51 does not mandate an award of attorney fees for frivolous conduct. Rather, the decision whether to award attorney fees under R.C. 2323.51(B)(1) rests within the sound discretion of the trial court. Internatl. Union of Operating Engineers, 8th Dist. Cuyahoga No. 104774, 2017-Ohio-1055, at ¶ 10 ([E]ven in instances where frivolous conduct exists, a trial court may, in its considerable discretion, deny [a request for] attorney fees.), citing Scott v. Nameth, 10th Dist. Franklin No. 16AP-64, 2016-Ohio-5532, ¶ 32; Hardin v. Naughton, 8th Dist. Cuyahoga No. 99182, 2013-Ohio-2913, ¶ 21 (R.C. 2323.51 does not mandate the award of sanctions if a trial court finds frivolous conduct as defined under the statute — instead, the statute bestows the trial court with discretion to impose sanctions.). Thus, an appellate court will not disturb a trial court’s decision to grant or deny a motion for attorney fees under R.C. 2323.51(B)(1) absent an abuse of discretion. State ex rel. DiFranco v. S. Euclid, 144 Ohio St.3d 571, 2015-Ohio-4915, 45 N.E.3d 987, ¶ 13; Cline, 130 Ohio St.3d 214, 2011-Ohio-5350, 957 N.E.2d 19, at ¶ 11; Internatl. Union of Operating Engineers at ¶ 11.

{¶ 37} When applying an abuse of discretion standard, we cannot substitute our judgment for that of the trial court. A trial court abuses its discretion only if its decision is unreasonable, arbitrary or unconscionable. DiFranco at ¶ 13; Blakemore v. Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d 1140 (1983). A decision is unreasonable if there is no sound reasoning process that would support that decision. Ockunzzi v. Smith, 8th Dist. Cuyahoga No. 102347, 2015-Ohio-2708, ¶ 9, quoting AAAA Ents., Inc. v. River Place Community Urban Redevelopment Corp., 50 Ohio St.3d 157, 161, 553 N.E.2d 597 (1990). An abuse of discretion may also be found where the trial court applies the wrong legal standard, misapplies the correct legal standard, or relies on clearly erroneous findings of fact. Ockunzzi at ¶ 9, quoting Thomas v. Cleveland, 176 Ohio App.3d 401, 2008-Ohio-1720, 892 N.E.2d 454, ¶ 15 (8th Dist.).

{¶ 38} Under R.C. 2323.51(B)(3), the trial court may award an amount “equal to or less than” the fees that were “reasonably incurred.” Thus, a trial court has the discretion to award reasonable attorney fees that are less than the total amount of fees reasonably incurred. Southard Supply, Inc. v. Anthem Contrs., Inc., 10th Dist. Franklin No. 16AP-545, 2017-Ohio-7298, ¶ 45, citing Scott at ¶ 30-32 (holding that R.C. 2323.51 affords trial courts the discretion to reduce awards of reasonable attorney fees all the way down to zero).

{¶ 39} In the instant matter, the trial court clearly examined the billing records submitted by Musial and noted that six attorneys spent 129.6 hours defending the appeal and prosecuting the motion for sanctions. The court compared the fees incurred with the uncomplicated nature of the issues on appeal, finding that “a dismissal of the appeal could have been reached with less effort and more efficiency,” and found that a reasonable amount of attorney fees to achieve the same outcome was $16,785.63, which equated to 25 percent of the attorney fees sought by Musial.

{¶ 40} We cannot say that the trial court abused its discretion in reducing the amount of attorney fees awarded nor do we believe that the amount awarded by the trial court was excessive. Pursuant to R.C. 2323.51(B)(3), the trial court was permitted to award attorney fees in an amount equal to or less than the fees reasonably incurred. The 75 percent reduction in fees was reasonable given the relative simplicity of the issues, and the final figure arrived at by the court was a sufficient award. Accordingly, the county’s second assignment of error and Musial’s sole assignment of error are both overruled.

III. Conclusion

{¶ 41} The trial court did not err in finding that the county’s filing of an untimely appeal constituted frivolous conduct and awarding attorney fees. The amount of attorney fees awarded was neither excessive nor insufficient. The judgment of the trial court is affirmed.

{¶ 42} Judgment affirmed.

It is ordered that costs shall be evenly split between the parties.

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate be sent to said 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.

SEAN C. GALLAGHER, PRESIDING JUDGE

MICHELLE J. SHEEHAN, J., and LISA B. FORBES, J., CONCUR

Notes

1
The county also claimed the trial court’s characterization of “damages” in its 2018 judgment implicated the immunity issue. While the trial court commented in passing in its 2018 judgment that “this case has more in common with a fraud or promissory estoppel action insofar as the class members relied on the auditor’s promise to ‘reflect’ the lower value in the ‘next tax bill,’ thereby inducing the class members not to contest their inflated 2009 tax year values * * *,” the trial court made it clear that it decided this case under a theory of unjust enrichment and awarded equitable relief accordingly.