Tuesday, May 7, 2019
State ex rel. Speedway LLC et al. v. Jerry Wray, director, Ohio Department of Transportation et al., Case no. 2017-0813
Writ of Mandamus
Kisling, Nestico & Redick LLC v. Progressive Max Insurance Company et al., Case no. 2018-0682
Eighth District Court of Appeals (Cuyahoga County)
In re Adoption of A.C.B., Case no. 2018-1300
Sixth District Court of Appeals (Lucas County)
Disciplinary Counsel v. Hon. Timothy S. Horton, Case no. 2018-1746
Franklin County
Does Cutting Off Highway Access Entitle Restaurant Owner to State Compensation?
State ex rel. Speedway LLC et al. v. Jerry Wray, director, Ohio Department of Transportation et al., Case no. 2017-0813
Writ of Mandamus
ISSUES:
- When the state uses a highway easement in a way that wasn’t foreseeable from the original plans in place when it acquired the easement, and that change of plan damages the market value of a property, does the action constitute a second taking for which the state must compensate the owner?
- Does a closure of a highway’s point of access to a local property constitute a taking of the property?
BACKGROUND:
In the 1960s, the Ohio Department of Transportation (ODOT) began the construction of State Route 16 through Licking County. As part of the plan, it acquired land, including property near the intersection of Cherry Valley Road and the new highway in Granville. Part of the acquisition included highway easements over two parcels that would become the northwest corner of the intersection between Cherry Valley Road and the new S.R. 16. The plan called for an intersection that granted travelers on Cherry Valley Road a “point of access” to the new highway. This made the property at the intersection highly valued for businesses that would cater to highway travelers.
In the 1990s, a franchiser of Wendy’s restaurants bought the land and built a restaurant. The company was merged into New Wen Inc., a franchiser who owns six Wendy’s restaurants in central Ohio. With the access to S.R. 16, the Wendy’s thrived, had the most sales of the six New Wen properties, and was one of the top 100 best performing Wendy’s in central Ohio.
With traffic increasing on S.R. 16, ODOT permanently closed the intersection of the highway and Cherry Valley Road in 2016, and built a nearby interchange. The move cut off the highway travelers’ direct access to Wendy’s and sales plummeted by 50 percent. The company estimates it lost $1 million in sales alone in the first year after the closure. The construction also cut off highway access to a Speedway service station and Bob Evans Restaurant to the south of S.R. 16.
New Wen argued to the department that the easement granted by its original property owner was based on the premise that it would have a point of access to the highway. New Wen claims it wasn’t foreseeable to the property owners that ODOT would one day shut off access. Because the closure wasn’t in ODOT’s plans, even at the time New Wen took control of the Wendy’s in 2003, then it was unforeseeable to the owners that the road could close. New Wen informed ODOT that when it closed the road, the action constituted a “taking” of its property and the company was entitled to damages. ODOT denied the request.
Service Providers Sue ODOT
New Wen, Speedway, and Bob Evans filed a writ of mandamus with the Ohio Supreme Court in 2017 directing ODOT to conduct proceedings that would determine how much damage it did to the property owners near the closed intersection and compensate them. ODOT asked the Supreme Court for a judgment in its favor based on the pleadings presented to the Court. The Court ruled that Speedway and Bob Evans weren’t entitled to compensation. However, the Court agreed to hear New Wen’s arguments.
Changes of Highway Plans Can Lead to Damage, Franchiser Argues
New Wen cites the Ohio Supreme Court’s 1972 Masheter v. Blaisdell decision, which explained that an easement acquired by ODOT must be limited to the intended “highway purpose” as shown in the agency’s plans and specifications. The property owner granting the easement is entitled to compensation only based on the “present intended use of the land taken” as revealed in the plan. New Wen argues that the prior property owner was compensated for easements based on the premise that a highway would be constructed on the southern boundary of the property and that a point of access to the highway would be granted.
The disputed easements granted to ODOT covered two parcels of land. On one parcel abutting the highway, ODOT didn’t grant direct access to the highway, meaning the property owner couldn’t build an entrance that connected directly to S.R. 16. On the second parcel, New Wen could build a Wendy’s entrance to Cherry Valley Road. That entrance was a few feet away from the Cherry Valley Road “point of access” to S.R. 16.
New Wen maintains that it was not foreseeable that ODOT would close that section of Cherry Valley Road, noting that in 2003, ODOT allowed the city of Granville to upgrade the intersection with new traffic lights and other enhancements. The franchiser argues that under the Blaisdell decision, when ODOT changed the use of S.R. 16 in a way that wasn’t in the plan, it effectively made a second taking of the Wendy’s property. Under the federal and state constitutional requirement that the state must compensate a private property owner when land is taken for public use, New Wen asserts. The company argues that the state must compensate it for the market-value damage to the property. New Wen isn’t asking the Court to determine the damage, but rather to direct ODOT to participate in a proceeding according to state law where a trial is conducted to determine the property’s lost value.
Closing Public Road Not a Taking, Agency Argues
ODOT explains the “point of access” that closed spans across the local road and the highway easement portion of the former property owner’s land. Because New Wen only has ownership of the easement on the local road that leads to the point of access, but isn’t in the point of access, its land isn’t being physically taken. The agency cites the Ohio Supreme Court’s 1996 State ex rel. OTR v. Columbus decision, which found that a physical taking of property requires actual encroachment on the land of another.
ODOT argues that Cherry Valley Road is a public road, and the point of access to the highway was a “public right.” New Wen’s easement that leads to the public road isn’t in the point of access, but rather takes it to the point of access. Because the point of access isn’t on New Wen’s property, the state isn’t obligated to compensate the company for closing the public point of access, the agency argues. ODOT acknowledges the re-routing of the S.R. 16 traffic means potential Wendy’s customers have to take a more circuitous route to get to the property, and the restaurant lost the convenience of its corner lot status. However, re-routing or reducing the flow of traffic isn’t a taking, according to prior case law, the agency argues. Property owners are deemed to take that risk when choosing to operate at a location, ODOT states. The change of traffic patterns doesn’t require that property owners be compensated unless the change took place on their physical property, ODOT concludes.
Friend-of-the-Court Brief
An amicus curiae brief supporting the New Wen’s position has been submitted by the Ohio Council of Retail Merchants.
- Dan Trevas
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing New Wen LLC: Joseph Miller, 614.464.6233
Representing Jerry Wray, director of Ohio Department of Transportation from the Ohio Attorney General’s Office: Benjamin Flowers, 614.466.3036
Was Terminated Law Firm Entitled to Compensation from Auto Accident Settlement?
Kisling, Nestico & Redick LLC v. Progressive Max Insurance Company et al., Case no. 2018-0682
Eighth District Court of Appeals (Cuyahoga County)
ISSUES:
- Does a lawyer’s charging lien give the lawyer the right to be compensated from a settlement resulting from the lawyer’s services and skills provided during pending litigation?
- Does R.C. 3929.06 bar a tort claimant’s former lawyer from suing a third party’s insurer to enforce a charging lien against a settlement paid by an insurer?
BACKGROUND:
Darvale Thomas was injured in a July 2014 automobile accident in Franklin County. The accident was allegedly caused by Todd Thorton, who was insured by Progressive Insurance. Thomas hired law firm Kisling, Nestico & Redick (KNR) to represent him under a contingent-fee agreement, in which the firm would be paid from the proceeds if it won the case.
After KNR worked on the case for about a year, Progressive notified KNR on June 30, 2015, of an offer to settle the claim for $12,500. KNR states that Thomas was unhappy with the offer and ended the firm’s representation, then hired another attorney. On July 9, KNR informed Progressive that the firm no longer was representing Thomas and asserted that it was entitled to its portion of any settlement based on the fee agreement Thomas signed.
The law firm’s fee was one-quarter of the gross amount of any recovery, and the agreement stated: “Attorney shall have a charging lien upon the proceeds of any insurance proceeds, settlement, judgment, verdict award or property obtained on your behalf.”
Progressive responded that KNR’s only recourse was against Thomas. On July 14, Thomas’ new lawyer informed Progressive that Thomas wanted to negotiate the claim himself. That day, Thomas and Progressive agreed to a $13,044 settlement, and payment was made directly to Thomas.
Law Firm Seeks Payment for Work from Insurance Company
KNR filed a lawsuit in Cuyahoga County Common Pleas Court against Progressive Max Insurance Company, Progressive Southeastern Insurance Company, and Progressive John Doe Companies – headquartered in Mayfield Village – as well as Thomas and Thorton. KNR’s former client – Thomas – didn’t appear or answer the firm’s complaint, and the court entered a default judgment against him for $3,411.48, which he hasn’t paid. In March 2016, Progressive and KNR agreed to dismiss Thorton as a party in the case.
The trial court granted summary judgment to KNR, determining Progressive was notified before the settlement of KNR’s fee agreement with Thomas, yet distributed the settlement proceeds to Thomas without making an effort to protect KNR’s interest.
Progressive appealed to the Eighth District Court of Appeals, which upheld the trial court’s ruling. The insurance company’s appeal to the Ohio Supreme Court was accepted for oral argument.
Insurer Contends It Wasn’t Responsible for Paying Former Law Firm
Progressive argues that a lawyer cannot use a charging lien that is in a contract with a client as a vehicle for separate litigation against a wrongdoer’s liability insurer to recover attorney fees not paid by the lawyer’s former client. Progressive maintains that the Eighth District is the first court in Ohio to make this holding, which the insurer believes is erroneous.
Progressive describes a “charging lien” as an “equitable rule of priority” against any other person or entity claiming a right to part of a “fund” that resulted from the lawyer’s services. Yet, in the insurer’s view, a settlement doesn’t exist until the payment is made in exchange for the claim’s release – and, in this case, the money at that point was with Thomas, not the insurance company. In these circumstances, a law firm can’t recover fees from an insurer, Progressive states.
In addition, Ohio courts have concluded that a charging lien can’t exist in the absence of a court-controlled fund, Progressive argues, but Thomas’ claim resulted in an out-of-court settlement. The insurer contends that the Eighth District was wrong to conclude that the notice KNR made to Progressive of the firm’s lien was all that was needed to allow KNR to pursue its lawsuit against the insurance company. But, Progressive counters, notice alone doesn’t allow enforcement of a charging lien, particularly before a settlement is paid.
The insurer also asserts that R.C. 3929.06 prevents an assignee of possible settlement proceeds, such as a law firm, from suing a third-party insurer in the absence of a final judgment against the insured. Progressive maintains that instead of shifting business risks to a third party, KNR could pursue other methods for resolving fee disputes without litigation or use another type of fee agreement.
Law Firm Maintains Insurer Had Duty to Pay Firm
KNR counters that the Eighth District’s decision isn’t the first in Ohio to recognize an attorney’s right to recover fees in such a manner, and the law firm points back as far as an 1898 Ohio Supreme Court decision (Pittsburgh, Cincinnati, Chicago & St. Louis Ry. Co. v. Volkert). The majority view nationally is that a discharged attorney may recover unpaid legal fees from a wrongdoer, including an insurance company acting on behalf of the wrongdoer, KNR maintains. Having acknowledged the need to protect attorneys from clients that deprive their attorneys from compensation, the Ohio Supreme Court has concluded that attorneys providing legal services and paying their own legal expenses before a client can pay “creates an equitable interest in the client’s property,” the law firm’s brief states.
KNR argues that charging liens are “an active, enforceable right” against one possessing the property – such as an insurance company issuing a settlement – and the possessor has a duty to hold the property and ensure that it is given to the true owner.
In addition, charging liens are enforceable not only against court judgments but also against settlements, KNR states, citing to multiple Ohio and federal court rulings. The law firm also disputes Progressive’s position that it couldn’t pay KNR its portion because the money was already with Thomas. The law firm contends that once a settlement is agreed on, the client’s recovery no longer is in question, and there is a window between the time the settlement is accepted and the time it is paid. If the Supreme Court rules otherwise, KNR stresses that contingent-fee agreements would be undermined because attorneys would have no recourse for obtaining compensation. Given that Progressive knew KNR was entitled to a portion of any settlement when Thomas accepted the settlement, the insurance company was obligated to ensure payment was made to the firm, KNR argues.
Progressive also cannot claim protection under R.C. 3929.06 because it agreed to stand in Thorton’s shoes when the insured was dropped from the case. The statute doesn’t bar a lawsuit against the wrongdoer’s insurance company when the claim is based on the insurer’s own misconduct rather than the company’s status as the insurer, KNR maintains.
Associations Take Stances on Each Side
An amicus curiae brief supporting Progressive’s position has been submitted by the Ohio Association of Civil Trial Attorneys. The Ohio Association for Justice has filed an amicus brief supporting KNR.
- Kathleen Maloney
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing Progressive Max Insurance Company et al.: Richard Garner, 614.901.9600
Representing Kisling, Nestico & Redick LLC: Christopher Van Blargan, 330.869.9007
Did Father Pay Enough Child Support to Contest Stepfather’s Adoption of Son?
In re Adoption of A.C.B., Case no. 2018-1300
Sixth District Court of Appeals (Lucas County)
ISSUE: Is the provision of any maintenance and support during the one-year time period in R.C. 3107.07(A) sufficient to preserve a natural parent’s right to object to the child’s adoption?
BACKGROUND:
Individuals identified as B.D. and A.C. were married in July 2010 and had a son the next year. The couple separated in October 2012. As part of the marriage dissolution in Indiana, A.C., the child’s mother, was given sole custody of their child, identified as A.C.B. The child’s father was ordered to pay $85 per week in child support, which amounts to $4,420 per year. The father, a citizen of Kosovo, left the United States, but communicates with his son through online video.
A.C. married J.B. in 2015. As A.C.B.’s stepfather, J.B. filed a petition in Lucas County Probate Court to adopt the child in July 2017. J.B. maintained that B.D.’s consent wasn’t required because he didn’t provide maintenance and support based on the child support order during the year before the adoption filing. A few days before that filing, though, B.D. made a $200 child support payment.
Both parents testified at a February 2018 hearing about whether A.C.B.’s father’s consent was needed for the adoption to go forward. The court determined consent wasn’t needed because the father failed to provide maintenance and support in accordance with the child support order and didn’t show justifiable cause for that failure.
B.D. appealed, and the Sixth District Court of Appeals upheld the probate court’s ruling. The father appealed to the Ohio Supreme Court, which agreed to review the issue.
Father Maintains Any Payment Allows Him to Contest Son’s Adoption
A.C.B.’s father argues that any support given by a biological parent for the child in the one-year period before an adoption filing preserves the biological parent’s right to object to the child’s adoption. The statute, R.C. 3107.07, requires the complete absence of maintenance and support to block a biological parent’s right to contest the adoption of a child, B.D. contends. In his view, he paid $200, which met the law’s requirement.
B.D. maintains that some state appeals courts have found that minimal payments preserve a parent’s right to contest an adoption while others have determined that minimal payments don’t constitute maintenance and support under the statute. However, his brief argues, the courts “must carefully balance the constitutionally protected interests of natural parents.” This right shouldn’t be dependent on which appeals court hears the case, he states. He asks the Supreme Court to reverse the Sixth District’s ruling and clarify the interpretation of “maintenance and support” in the law for his case and for the more than 4,000 adoption matters filed in Ohio each year.
Stepfather Argues Father Must Pay All Child Support for One Year to Block Adoption
J.B. notes that, besides the $200 payment, the child’s father paid none of the rest of his $4,420 child-support obligation for the year leading up to the adoption filing. Yet B.D. is employed and earns nearly $7,000 a month, the stepfather maintains.
He explains that state lawmakers amended the statute, adding “de minimis” in one part to require that a parent must have more than de minimis contact with the child. The legislature didn’t add that qualification to the maintenance and support requirement, but that was unnecessary because maintenance and support of the child is defined by the judicial decree – meaning, the court’s child support order, the stepfather argues. Had B.D. paid child support in the amount set by the court, he would meet the law’s requirement and his consent would be needed for the adoption, J.B. contends. But B.D. didn’t meet his court-ordered support obligation.
J.B. adds that biological parents have further opportunities to protect their rights during adoption proceedings. He maintains that parental rights are protected by the law if a parent shows justifiable cause for not providing maintenance and support to a child. And a parent who wants to object to an adoption also can argue that the adoption isn’t in the child’s best interest and can appeal a court’s ruling not in the parent’s favor, J.B. argues. He concludes that the lower courts in this case correctly interpreted the statute.
- Kathleen Maloney
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing the father, B.D.: Robert Salem, 419.530.4236
Representing J.B., the stepfather: James Rogers, 419.517.7377
Former Franklin County Judge Faces Suspension for Sexual Harassment and Campaign Violations
Disciplinary Counsel v. Hon. Timothy S. Horton, Case no. 2018-1746
Franklin County
The Board of Professional Conduct recommends an indefinite suspension for former Judge Timothy S. Horton, who served on both the Franklin County Common Pleas Court and the Tenth District Court of Appeals. His misconduct includes reporting excessive campaign expenses, misusing county resources and staff for campaign activities, and inappropriate sexual conduct toward and sexual harassment of his staff.
The Office of Disciplinary Counsel, which investigated the matter, recommended an indefinite suspension. Although the three-member panel that heard the disciplinary case recommended a two-year suspension with one year stayed, the board elevated the suggested sanction back to an indefinite suspension because of the judge’s “predatory and harmful conduct” and “flagrant abuse of his position of authority” toward women in his office.
Judge Submits Excessive Expenses in Unopposed Race for Appeals Court
Horton was elected to the common pleas court in November 2006. Emily Vincent, hired in May 2012, was his staff attorney. In the summer of 2013, a woman identified as MB worked as a legal intern for Horton. In October 2013, the judge hired Elise Wyant as his secretary.
In 2014, Horton ran for a seat on the Tenth District Court of Appeals. In March, his opponent withdrew from the race, and Horton was unopposed in the election. Although unopposed, he held a campaign fundraiser where only one person not on the campaign was at the event and a private campaign event to celebrate his opponent’s exit from the race. He submitted the restaurant expenses of $1,992 as well as $173 for cigars on his campaign finance reports.
He was charged with criminal offenses for reporting excessive and unreasonable expenses to his campaign treasurer that led to the filing of inaccurate campaign finance reports. He pled guilty to three first-degree misdemeanors in March 2017.
Judge Had Staff Work on Campaign During Court Hours
The professional conduct board also found Horton failed to prohibit his staff from soliciting or receiving campaign contributions and he made his staff work on his campaign for the Tenth District during their work hours at the common pleas court. For example, in preparation for a meeting seeking an endorsement from the then-Columbus mayor, the judge directed Vincent to compile a list of cases in which the judge had ruled in the city’s favor, she testified. Wyant sent campaign-related letters and made phone calls during work hours, and Horton had her pick up campaign checks while on the court’s time, accept checks at the courthouse, and attend multiple golf campaign events with him. He told her she didn’t need to take any leave time while at the daytime outings.
Staff Describe Repeated Sexual Comments, Propositions, and Conduct
MB, a 22-year-old law school student, testified that during her internship the judge, who is married, started out remarking on her appearance, then expressed that he wanted to have sex with her and made other sexual comments. He repeatedly reminded her about the importance of loyalty within the legal community and that he was able to get people jobs because he was a judge. After her internship ended, the judge and MB met occasionally for lunch or happy hour, and they also engaged in sexual activity. MB stated that she consented but didn’t want to. At times, the judge invited his friends to touch her, despite her objections. She described the emotional harm the judge’s conduct caused her.
Wyant and Horton met when she was working as a part-time hostess at a bar and grill. When his secretary position opened, he talked to Wyant about the job, and she accepted it. Wyant, who was 25 when hired, said the judge expected her to be available to him at all times. The judge commented daily to Wyant about her appearance, made inappropriate sexual comments to her at work, sent her inappropriate text messages, and expected her to attend happy hours. She stopped socializing with Horton in June 2014. The judge promoted her to be his bailiff three months later.
In October 2014, Wyant reported Horton’s behavior to the court’s human resources office, and she resigned – leading to an investigation by the court. During the disciplinary hearings, Vincent also recounted similar inappropriate sexual comments. Some witnesses testifying in the case didn’t see instances of Horton’s misconduct, while others did.
Board Recommends Indefinite Suspension
The board noted that Horton showed awareness of his impropriety when he asked MB numerous times whether she was wearing a wire and said his comments could get him in trouble.
“[Horton’s] conduct was predatory when he engaged in inappropriate sexual discussions with his employees and former employees of the court. As an employer and as a judge, he exerted control, power, and influence thus putting him in an advantage when he engaged in such conduct,” the board’s report concludes.
Among the aggravating factors identified, the board’s report notes multiple judicial and attorney conduct rule violations, Horton’s attempt to shift blame to his former employees – including his attorney’s opening statement at the disciplinary hearing that “they gave as good as they got,” and his actions constituting sexual harassment. In mitigation, Horton has no earlier discipline, presented substantial character testimony, and testified about his abuse of alcohol.
The board concluded that an indefinite suspension, contingent on several conditions, is needed to protect the public and promote public confidence in the judiciary. The recommended conditions are continued attendance at Alcoholic Anonymous meetings, evaluation by the Ohio Lawyers Assistance Program and compliance with the organization’s terms, no further contact with the former female employees or interns who testified, and payment of the proceeding’s costs.
In late January 2019, Horton resigned from his position on the Tenth District Court of Appeals.
Horton Disputes Board’s Conclusions, Wants Lesser Sanction
Horton filed objections to the board’s findings and recommended sanction. He maintains that the panel refused to let him introduce evidence at the hearings that his words and deeds weren’t unwelcome when considered in full context. Because of the panel’s decision, Horton states that the Supreme Court is deprived of a complete record of the underlying events, and he asks the Court to remand his case for a new hearing.
He contends that the second count against him, regarding his staff’s campaign activities during the court’s work day, were minimal. The board also confused campaign expenditures, which his employees were handling, with campaign contributions, as mentioned in the rules, Horton states. The facts don’t support this violation, and he asks the Court to dismiss it.
He also doesn’t believe that earlier disciplinary cases support an indefinite suspension for his misconduct. Instead of imposing a sanction that protects the public, the board suggests “an overly punitive sanction untethered from the case law, the record in this case, or the purposes of the disciplinary process,” his objections state. He also stresses his work in battling alcoholism since he stopped drinking in December 2015. In his view, his sanction should be no greater than a fully stayed suspension.
Disciplinary Counsel Answers Horton’s Claims
The disciplinary counsel responds that the panel’s chair curtailed Horton’s presentation of evidence for legitimate reasons. For example, the chair limited the cross-examination of Wyant and MB based on relevance, improper attempts at impeachment, repetition, and improper tone. The chair also blocked questioning of Wyant about her sexual relations with other men. The disciplinary counsel notes that Horton testified about his perspective on the circumstances related to his actions. The board, however, viewed the testimony of Vincent, Wyant, and MB as more credible than Horton’s, the office adds.
The office also states that Horton’s use of staff and county resources for his judicial campaign were regular, rather than minimal, occurrences. “Horton failed to avoid even the appearance of impropriety” when violating the judicial rules against having his staff solicit or receive campaign contributions, the disciplinary counsel’s brief counters. The office adds that Horton’s campaign finance reports list each check in question as a “contribution.” Even if the Supreme Court disagrees on the categorization of that money, the disciplinary counsel argues that Horton’s other activities still show a violation of the relevant rule.
There have been no disciplinary cases in which a judge violated the same rules as Horton, so the board considered campaign finance and sexual harassment cases together to determine a sanction, the office explains. On the issue whether the interactions and sexual activity between Horton and the women were consensual, the disciplinary counsel points out the imbalance of power in those relationships. “Their apparent consent does not mitigate his misconduct,” the disciplinary counsel writes. Also, Horton didn’t establish that his alcoholism caused his misconduct, and he engaged in misconduct at the office when he wasn’t drinking, the disciplinary counsel asserts.
The “egregiousness and cumulative severity” of Horton’s misconduct while a judge combined with the aggravating factors justifies an indefinite suspension, the office concludes.
- Kathleen Maloney
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing Timothy S. Horton: Rick Brunner, 614.241.5550
Representing the Office of Disciplinary Counsel: Scott Drexel, 614.461.0256
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