Tuesday, Jan. 7, 2020
State of Ohio v. Darren Taylor, Case no. 2018-0797
Second District Court of Appeals (Montgomery County)
Lubrizol Advanced Materials Inc. v. National Union Fire Insurance Company of Pittsburgh, Case no. 2018-1815
U.S. District Court for the Northern District of Ohio, Eastern Division
Columbus Bar Association v. Javier H. Armengau, Case no. 2019-0500
Franklin County
Must Trial Court Consider Ability to Pay When Asked to Waive Court Costs?
State of Ohio v. Darren Taylor, Case No. 2018-0797
Second District Court of Appeals (Montgomery County)
ISSUE: When a post-conviction motion seeks to waive, modify, or suspend court costs imposed at sentencing, must the trial court consider the offender’s present and future ability to pay before deciding the issue?
BACKGROUND:
In 2013, Darren Taylor was found guilty of murder and other charges stemming from his role in an armed robbery at a pawnshop where the store clerk returned fire and killed Taylor’s accomplice. The trial court imposed a 36-years-to-life prison sentence, and ordered Taylor to pay about $6,600 in restitution, a $192 extradition fee, and court costs that would be determined by the county clerk of courts.
Later that year, Taylor asked the trial court to waive his court costs, asserting that he would be in his mid-80s at the earliest when released from prison, had no assets, and earned $19 per month in prison work-related wages. Because his prison account remained under the $25 threshold to garnish wages, his court-costs debt was growing as the unpaid balance accrued interest. The trial court denied his request, stating that Taylor “made choices which led to the accrual of fees at issue, and he must take responsibility for his conduct, as well as the resulting consequences.”
Taylor appealed to the Second District Court of Appeals, which found the trial court abused its discretion because it only based Taylor’s ability to pay on his prison earnings, and did no analysis of his present and future ability to pay. In reversing the trial court’s decision, the Second District stated the court ignored the law that permits garnishment of prison wages, R.C. 2329.66, and even if Taylor’s prison wages were garnished, those wages would also be used to pay the nearly $6,600 in restitution he owed.
The Montgomery County Prosecutor’s Office appealed the decision to the Supreme Court, which agreed to hear the case.
Trial Court Not Obligated to Evaluate Ability to Pay, Prosecutor Maintains
Court costs are assessed to defray the cost of operating the court and are assessed against all convicted criminal defendants, regardless of whether they are indigent, the prosecutor explains. Under R.C. 2947.23, courts have the right to waive, suspend, or modify a defendant’s court costs, and state lawmakers modified the provision in 2012 to allow a trial court to order a change at any time.
While the updated law allows trial courts to consider a request long after the offender was sentenced, the prosecutor notes nothing in the law was added that required a trial court to assess a person’s present or future ability to pay the costs. The prosecutor notes the law doesn’t “impose upon a trial court any mandatory consideration or factual findings that it must make before granting or denying such motions.” The prosecutor contends the Second District added a requirement that isn’t in the law, and imposes duties on courts that lawmakers didn’t require.
The prosecutor also notes the trial courts would be asked to undertake a responsibility to ascertain whether an incarcerated offender has assets or wages that can be garnished, which is the responsibility of the Ohio Department of Rehabilitation and Correction. The department is responsible for the payment of fines and fees owed by inmates. By state rule, it must determine whether inmate wages can be garnished for payments, the prosecutor explains. The Second District overstepped its authority when it required the trial court to take action not required by law and conduct assessments already assigned to other government bodies, the prosecutor concludes.
Assessment of Ability to Pay Implied, Defendant Maintains
Taylor notes the Ohio lawmakers stated purpose for imposing court costs was to reimburse taxpayers for the costs of prosecutions, and not to criminally punish defendants. Fines and other financial sanctions are imposed on offenders as part of their sentences, and that under R.C. 2929.19(B)(5), trial courts are required to consider present and future ability to pay because the financial penalties are factored into the total fairness of the sentence, he explains. In contrast, lawmakers didn’t need to specifically state that ability to pay is required when crafting R.C. 2947.23 because court costs are not penalties that need to be considered when evaluating a sentence’s fairness, he asserts.
The ability to pay must be implied, Taylor maintains, because of the law’s wording. Lawmakers wouldn’t give trial courts the ability to waive, suspend, or modify — three different options — if they didn’t intend for courts to make some sort of analysis of what action to take, he argues. In addition, if a trial court doesn’t have to make any assessment of ability to pay, then the decision is essentially unreviewable by an appeals court, Taylor asserts. If a trial court’s decision denying a motion to alter court costs is evaluated on an “abuse of discretion” standard, how is an appeals court to know whether a trial court abused its discretion if there is no obligation by the trial court explain its decision, Taylor asks. He maintains the structure and logic of the law clearly indicates that trial courts are required to assess the present and future ability of an offender to pay when a request to end or alter court costs is made, which is what the Second District determined. He urges that the appeals court decision be affirmed
Friend-of-the-Court Brief Submitted
An amicus curiae brief supporting the Taylor’s position has been submitted by the NAACP Legal Defense & Educational Fund.
–Dan Trevas
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing the State of Ohio from the Montgomery County Prosecutor’s Office: Andrew French, 937.225.4117
Representing Darren Taylor from the Ohio Office of the Public Defender: Patrick Clark, 614.466.5394
Can Insurance Policy with “Those Sums” Clause Be Used to Cover All Damages from Multi-Year Claim?
Lubrizol Advanced Materials Inc. v. National Union Fire Insurance Company of Pittsburgh, Case No. 2018-1815
U.S. District Court for the Northern District of Ohio, Eastern Division
ISSUE: When an insured business’ product causes property damage over multiple insurance policy periods, can the business seek full indemnity from the insurance company under a single policy covering “those sums” the business is obligated to pay because of property damage taking place during a single policy period?
OVERVIEW:
This case has drawn statewide and national interest from chemical manufacturers and insurance companies, which participated through the filing of amicus curiae briefs. The opposing sides all point to the Ohio Supreme Court’s 2002 Goodyear Tire & Rubber Co. v. Aetna Cas. & Sur. Co. decision interpreting an “all sums” clause in an insurance policy and its use to cover the damages covered by environmental pollution. The language in the policy at issue in this case is a “those sums” clause. The U.S. District Court for the Northern District of Ohio is presiding over a breach-of-contract lawsuit regarding insurance coverage for a defective product made from a faulty chemical and has asked the Ohio Supreme Court how the state interprets a “those sums” clause in the chemical maker’s insurance policy.
BACKGROUND:
Lubrizol Advanced Materials, based in Brecksville, manufacturers specialty chemicals, and in 2001, purchased a polyethylene resin business from AT Plastics. From 2001 to 2008, Lubrizol sold the resin to IPEX Inc., which used it in its Kitec piping system. Kitec piping was used regularly for residential and commercial water piping throughout the United States and Canada.
The pipes experienced widespread failure related to a problem with the resin supplied by Lubrizol. Multiple class-action lawsuits were initiated against IPEX, which set up a $125 million settlement fund to pay claims of class-action members. IPEX in turn filed a lawsuit against Lubrizol to recover the $130 million it paid to settle all its legal issues. Lubrizol settled with IPEX in February 2017.
Throughout the time the resin was sold, Lubrizol maintained insurance coverage through general liability and umbrella liability policies issued by several companies, including American Home Assurance Company and National Union Fire Insurance Company, which both became subsidiaries of AIG. Lubrizol also used self-insurance and other coverages during that time to protect itself. Lubrizol’s interpretation of Ohio law allowed it to pick and choose from any of its insurance policies triggered by the product defect to seek indemnity for the amount it owed to IPEX and to have the insurance company defend the company in the lawsuit. The company selected a National Union policy issued for the policy period of February 2001 to February 2002 as the one from which to seek coverage. The policy, which was an umbrella insurance policy, had a $50 million limit.
National Union refused to honor the claim and stated the policy only covers a “pro rata” portion of the damage. The insurance company argues that Lubrizol must first determine what damage occurred during each policy period from 2001 to 2008, exhaust the coverage provided by each of its policies for each time period, and pay its share of the damages required under those policies before the National Union umbrella policy can be used. Lubrizol maintains the net effect of National Union’s interpretation would completely relieve the insurance company from paying any part of the claim or defending the company in court. Lubrizol filed a breach-of-contract lawsuit against National Union that is now in the U.S. district court in Cleveland.
Negotiations between the two sides failed after the parties disputed the “those sums” clause of the policy and the federal court determined the issue required an interpretation of Ohio law. The district court certified a question of state law to the Ohio Supreme Court, asking how it should interpret a “those sums’ clause, and the Court agreed to answer the question.
National Union Policy Best Suited for ‘Long-Tail’ Claims, Lubrizol Argues
The certified question addresses how to allocate among insurance companies and the business, the costs the business is responsible for paying to victims of “long-tail” claims, which are injuries that develop and continue over many years, Lubrizol explains. Nationally, states are divided over which of two methods should apply – an “all sums” approach or a “pro rata” method. Under an all sums approach, each policy that is triggered by the damage claims is obligated to pay the full costs of the policyholder’s liability, up to the policy’s limits. The policyholder is free to pick and choose among all its triggered policies to choose the order in which they will pay.
The company explains the all sums approach is best suited for long-tail injuries where it is difficult, if not impossible, to determine which damages occurred during each policy period. The policyholder can choose one policy to cover all the damages, and the insurance company that issued the policy then can seek contributions from the other insurance companies whose polices could be triggered to pay, but weren’t initially selected by the policyholder. Lubrizol selected the National Union umbrella policy with the $50 million limit, arguing the “those sums” language in the policy was similar to an “all sums” clause that is commonly used in other policies. Lubrizol cites the Ohio Supreme Court’s Goodyear decision in finding that an “all sums” policy for one policy period can be applied to long-tail damages that occurred over many years. The company notes that in other cases, courts have ruled that the words “all sums” don’t have to appear in the policy for the policy to be an “all sums” policy, which obligates the insurer to pay.
In contrast to an all sums policy, the pro rata allocation is suited to cover damages that take place within a policy period, Lubrizol argues. When the damage can be determined during the policy period, the insurance companies can use a formula to divide the damages among the triggered policies and pay each portion of the claim. Under the pro rata method, the insurance companies have no right of contribution from the other insurers because no insurer would be liable for paying any other insurer’s share of the damages, the company states.
Policy Is a Contract, and Ambiguous Terms Must Favor Insured, Company Maintains
Lubrizol argues that its National Union policy is a contract and Ohio courts have long held that any ambiguous terms must be interpreted in favor of the insured. The company notes a policy is to be viewed from the perspective of an ordinary business person, and if there is any limit or restriction of a coverage it must be expressly stated in terms an ordinary business person would understand.
The language at issue in the National Union policy is a provision that states the insurer “will pay on behalf of the insured those sums…that the insured becomes legally obligated to pay by reason of liability imposed by law…because of bodily injury, property damage, personal injury or advertising injury that takes place during the policy period and is caused by an occurrence.”
Lubrizol argues that language is nearly identical to the policy in Goodyear, except for the term “those sums” rather than “all sums.” The policy doesn’t clearly state it is restricted or pays a pro rata share of the damages, and should be interpreted as an all sums policy, the company argues. Lubrizol notes in other parts of the National Union policy, it does state clearly when the insurance company will pay only a pro rata share of costs. Because the language doesn’t exclude it from being triggered, and Ohio has adopted the all sums rule for long-tail damage claims, National Union must provide coverage, Lubrizol concludes.
Policy Language Clearly Limits Responsibility, Insurance Company Asserts
National Union maintains that a “those sums” clause in its umbrella insurance policy isn’t the same as an “all sums” policy in a general liability policy, which was at issue n Goodyear. The company notes that unlike the environmental damages caused by a chemical leak in Goodyear, Lubrizol’s damages can be ascertained by the time period in which faulty pipe was purchased by IPEX customers. Those customers filing claims can state the dates when pipe was purchased, and each policy covering the period when the pipe was purchased can be determined. National Union argues the term “those sums” relates to the property damage injuries “that take place during the policy period.” A plain reading of the clause would mandate that a company is responsible only for damages during the year it was in effect and the insurer would pay only for actual damages or a pro rata amount of damages during that policy period, National Union argues.
While Lubrizol argues it wouldn’t achieve the full recovery from its insurance policies that it’s entitled to, National Union counters that the company designed its insurance liability coverage from 2001 to 2008 to assume a substantial portion of its risk and reduce its costs for insurance coverage. The company now is asking its insurer to cover damages the company must bear because of its selections of coverage options, and doing so would be unfair to the insurers, National Union asserts. Lubrizol “consciously accepted” the responsibility for losses it might face when it designed its liability coverage and can’t “retroactively shift the risk and transfer its losses” to its insurers by seeking a change in the meaning of the National Union policy, the insurer concludes.
Other Insurer Unable to Participate in Case
In addition to National Union, Royal Insurance Company of America, also known as Arrowood Indemnity Company, was named in Lubrizol’s complaint. Because Arrowood didn’t file a merit brief in the case, it isn’t allowed to participate in oral argument.
Friend-of-the-Court Briefs Filed
An amicus brief supporting the Lubrizol’s position has been submitted jointly by the Ohio Chemistry Council and 11 Ohio chemical manufacturers. The Ohio Insurance Institute filed an amicus brief supporting National Union as did the Complex Insurance Claims Litigation Association.
–Dan Trevas
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing Lubrizol Advanced Materials Inc.: Julie Harris, 440.347.2302
Representing National Union Fire Insurance Company of Pittsburgh: Thomas Mannion, 216.344.9422
Attorney’s Multiple Convictions Lead to Recommended Disbarment
Columbus Bar Association v. Javier H. Armengau, Case No. 2019-0500
Franklin County
Javier Armengau objects to the disbarment proposed by the Ohio Board of Professional Conduct based on his criminal convictions. In July 2014, a Franklin County jury found Armengau guilty of rape, kidnapping, public indecency, two counts of gross sexual battery, and four counts of sexual imposition.
Attorney Loses Appeal, Sent to Prison
Following Armengau’s convictions, the Columbus Bar Association filed a disciplinary complaint against him in December 2014. The Supreme Court Rules for the Government of the Bar of Ohio mandates that the Board of Professional Conduct defer pending disciplinary hearings based on criminal convictions until all direct appeals have concluded.
In June 2017, the Tenth District Court of Appeals issued a decision in Armengau’s appeal. The court affirmed in part, reversed in part, and sent the case back to the trial court for resentencing. The Ohio Supreme Court declined to review Armengau’s appeal of the ruling.
At resentencing, Armengau received a 13-year prison sentence, was designated a Tier 1 sex offender, and will be subject to five years of postrelease control when released from prison.
Disciplinary Process Moves Forward
In July 2018, the board returned Armengau’s disciplinary case to the docket because his direct appeal of his conviction was done. In August, the board agreed to hold a hearing for Count 1 and a separate hearing on Counts 2 through 14. This case is based on Count 1, which involves Armengau’s convictions for eight felonies and one misdemeanor. (The other counts allege professional misconduct not directly related to the convictions.)
The board’s report notes that criminal convictions upheld on direct appeal are conclusive proof in a disciplinary proceeding. Armengau wanted to assert in the disciplinary proceedings that he is innocent, but the board states that it doesn’t have the authority or jurisdiction to address factual and legal issues resolved by his direct appeal.
The board found that, based on his convictions, Armengau violated the attorney conduct rule prohibiting an illegal act that reflects on the lawyer’s honesty or trustworthiness. The board also found two violations of the rule against conduct that adversely reflects on the lawyer’s fitness to practice law.
Board Reviews Aggravating and Mitigating Factors
The bar association pointed out to the board that Armengau’s victims were employees, clients, and client family members. Describing the record as “uniquely sparse,” the board panel that heard the disciplinary case turned to the Tenth District’s decision for additional facts to understand the nature of Armengau’s relationships with each of his victims. In one situation, Armengau was convicted of the rape and kidnapping of a woman who first had been a client, then an employee.
The board identified several aggravating circumstances, including the vulnerability of and harm to two victims who were Armengau’s clients. The board panel declined to accept as aggravating two factors the bar association suggested – that Armengau has refused to acknowledge the wrongful nature of his conduct and that he made false statements. The board report stated that it “decline[d] to strip [Armengau] of his belief in his innocence and his right to stand on that belief in this proceeding without adverse impact.”
As mitigating factors, the board noted four “credible and sincere” witnesses who testified positively about Armengau’s character, diligence, and dedication; Armengau’s actions toward making restitution to certain former clients; and the 13-year prison sentence he is serving as a penalty for his actions. However, the board stated it must “hold supreme” the established convictions.
The board recommends that the Court disbar Armengau from the practice of law in Ohio.
Attorney Cites Other Pending Appeals, Insists on His Innocence
Armengau maintains that he was convicted of crimes he didn’t commit and crimes for which he wasn’t indicted, based on claims about which county the crimes took place. He argues that his disciplinary hearing should’ve been delayed while his other appeals are pending. The board panel had the authority to do so to ensure a fair result, he asserts. He also believes that one of his pending appeals is a direct appeal, which required a stay of his disciplinary hearing.
He contests the panel’s decision to bar him from presenting evidence at the hearing about the nature and character of the offenses for which he was convicted – which is an aspect of one of the rule violations. Yet the board relied on the Tenth District’s opinion for specific facts, he notes. He argues doing so denied him a fair hearing because the court’s opinion isn’t proper evidence.
On the recommended sanction, the lawyer’s brief states: “[D]isbarment, if accepted, will forever preclude Mr. Armengau from reobtaining his law license should this Court or another court conclude that he was innocent of the charges. Because the future is unknown, an indefinite suspension would be a more appropriate sanction. This would allow Mr. Armengau the opportunity to request reinstatement of his law license in the event his convictions are overturned.”
Columbus Bar Rejects Procedural Claims
The bar association maintains that Armengau’s ongoing appeals aren’t direct appeals, which would mandate a stay of the disciplinary case. The association also stresses that the panel had the discretion, but wasn’t required, to grant a continuance of the hearing and was permitted to move forward with the proceedings once the direct appeals were exhausted.
It was clear that Armengau wanted to introduce evidence that he was wrongly convicted, but Supreme Court rules and precedent prohibit lawyers from attacking their convictions in a disciplinary hearing, the bar association states. It notes that the Tenth District’s decision is public record and that it’s not unusual for the Court to rely on court decisions about a lawyer’s convictions for information.
Given the “heinous” nature of Armengau’s crimes – rape, kidnapping, and sexual battery – Armengau shouldn’t be permitted to practice law in Ohio any longer, the bar association 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 Javier H. Armengau: John Gonzales, 614.643.5050
Representing the Columbus Bar Association: Kent Markus, 614.340.2053
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