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Tuesday, April 7, 2009

Michael Hodesh v. Joel Korelitz, M.D., et al., Case no. 2008-1133
1st District Court of Appeals (Hamilton County)

Sisk & Associates, Inc. v. The Committee to Elect Timothy Grendell et al., Case no. 2008-1265
10th District Court of Appeals (Franklin County)

State of Ohio ex rel. Nancy H. Rogers [Richard Cordray], Attorney General of Ohio v. Midway Motor Sales, Inc., et al., Case no. 2008-1451
10th District Court of Appeals (Franklin County)

Disciplinary Counsel v. Todd Austin Brenner, Case no. 2008-2438
Franklin County


In Multi-Defendant Civil Case, Must Jurors Be Informed of Pretrial Contingent Agreement Between Some Parties?

Michael Hodesh v. Joel Korelitz, M.D., et al., Case no. 2008-1133
1st District Court of Appeals (Hamilton County)

ISSUE: In civil lawsuits where a plaintiff and one or more defendants are uncertain about how a jury will decide questions of liability or the amount of damages, the parties sometimes enter into a contingent agreement before the case goes to the jury in order to protect themselves against a possible extreme negative outcome. In some such agreements, known as “high-low” agreements, a defendant promises to pay at least a specified minimum amount to the plaintiff, even if the jury subsequently finds no liability on the part of that defendant or makes a lower damage award. In return, the plaintiff agrees to limit its total recovery from that defendant to a specified maximum amount, even if the jury subsequently returns a damage award against that defendant that is higher than the agreed-upon figure.  

In this case, the Court is asked to determine whether a trial court erred in determining that the jury in a two-defendant medical malpractice case arrived at an unbiased verdict that fairly allocated liability between the co-defendants when the jurors were not informed that the plaintiff had entered into a pretrial contingent verdict agreement with one of the defendants, but not the other.

BACKGROUND: In December 2000, Michael Hodesh underwent abdominal surgery at Jewish Hospital in Cincinnati. The procedure was performed by Dr. Joel Korelitz, who was assisted by nurses employed by the hospital. When the  incision was closed at the conclusion of the surgery, one of several 12 inch by 18 inch surgical towels used during the procedure was inadvertently left inside Hodesh’s abdominal cavity. Hodesh was released from the hospital but readmitted several weeks later complaining of severe abdominal pain, high fever and intestinal complications. Two additional surgeries were ultimately required to remove the towel and deal with a severe infection that it caused. 

In 2002 Hodesh filed a medical malpractice action naming Korelitz, his medical practice group and Jewish Hospital as defendants. During pretrial proceedings, Korelitz and the hospital focused on the issue of liability, with each defendant arguing that the other was responsible for keeping track of the towels used during Hodesh’s surgery and making sure that all such materials were accounted for before his incision was closed. Shortly before the trial date, Hodesh and the hospital entered into a contingent agreement in which the hospital agreed to pay Hodesh a minimum of $175,000 even if the jury found that it was not liable at all or was liable for a smaller amount of damages. In return, Hodesh agreed that if the jury found the hospital liable to him for more than $250,000 in damages, he would not enforce that judgment and would instead accept $250,000 as full payment. Korelitz was not a party to the agreement, and Hodesh and the hospital agreed that the terms of the agreement would be confidential.  

Korelitz’s attorneys became aware of the agreement on the day before the trial was to begin. At their request, the trial judge questioned counsel for Hodesh and the hospital about the nature of their agreement. Citing the Supreme Court of Ohio’s 1993 decision in Ziegler v. Wendel, they told the judge that the agreement was a “high-low” arrangement in which Hodesh continued to allege liability on the part of the hospital and seek recovery from it; and did not fall into the category of a “Mary Carter” agreement in which a plaintiff waives recovery from one defendant in exchange for that defendant’s cooperation in obtaining recovery from another defendant. The trial judge did not examine the agreement itself, but required the parties to provide him with a copy before the end of the trial, and stated that if it were a “Mary Carter” agreement, the judge would disclose its contents to Korelitz.  Korelitz’s attorneys did not move for disclosure of the contents of the agreement during the trial or ask the court to make the jury aware of the existence of the agreement before the case was submitted to the jury.

The jury returned a verdict finding Korelitz fully responsible for Hodesh’s injuries and no liability on the part of the hospital. Damages were set at $775,000. Korelitz filed several motions asking the trial court to set aside the verdict and order a new trial. These included a claim that the contingent agreement between Hodesh and the hospital was in fact a “Mary Carter” agreement and that the trial judge should have disclosed its contents to the jurors during the trial so they could determine whether the hospital’s trial tactics and presentation of evidence reflected improper collusion with Hodesh to maximize Korelitz’s liability and minimize the liability of the hospital.  The trial judge reviewed the agreement and conducted a hearing on the “Mary Carter” issue. He denied the motion for a new trial, concluding that the agreement was a “high-low” agreement that did not dismiss Hodesh’s claims against the hospital and that there was no evidence from the conduct of the trial that there had been improper collusion.

Korelitz appealed. On review, the 1st District Court of Appeals reversed and remanded the case to the trial court for further proceedings. The appellate panel found that the agreement between Hodesh and the hospital did fall under the definition of a Mary Carter agreement, and that the trial judge therefore committed reversible error by first failing to examine the text of the agreement himself before the trial began, and erred again by not requiring that its contents be made known to the jury before it decided liability and damages. Hodesh and the hospital sought and were granted Supreme Court review of the 1st District’s ruling.

Attorneys for Hodesh and Jewish Hospital argue that the 1st District’s ruling in this case did not follow the Supreme Court’s decisions in Ziegler and Vogel v. Wells (1991), which held that pretrial contingency agreements between the plaintiff and one defendant in a multi-defendant civil action are not subject to disclosure during the trial if there is no evidence of collusion between the parties to the agreement and no change in their adversary status or the legal positions they advanced in the case prior to entering into the challenged agreement. In this case, they say, the hospital never changed its original position that Korelitz alone was liable for Hodesh’s damages, and Hodesh never stopped urging the jury to hold that both Korelitz and the hospital were liable for his injuries.

Even if the Court agrees with the 1st District’s analysis that agreements like the one in this case qualify as “Mary Carter” agreements that must be disclosed to a jury during trial, they say that interpretation of the law was not in effect when the trial judge in this case made his ruling. They urge the Court to apply the new standard enunciated by the 1st District in this case only prospectively, rather than using it as a basis to retroactively vacate a 2002 jury verdict that was consistent with then-existing legal precedent.

Attorneys for Korelitz urge the Court to affirm the decision of the 1st District remanding Hodesh’s claims against the doctor for a new trial.  They argue that an undisclosed agreement between a plaintiff and one of several defendants but not the others is intrinsically collusive because the defendant who is party to the agreement no longer is motivated to pursue the litigation aggressively or to forcefully deny liability because it has, in effect, already “admitted” liability in order to minimize its own potential share of joint damages at the expense of its co-defendants.

Contacts
Bruce Whitman, 513.321.3940, for Michael Hodesh.

Jeffrey M. Hines, 513.381.9200, for Cincinnati Jewish Hospital.

Irene Keyse-Walker, 216.592.5000, for Dr. Joel Korelitz and Cincinnati General Surgeons, Inc.

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Does ‘Double Dismissal Rule’ Apply When Second Dismissal Is Based on Failure to Serve Complaint on Defendant?

Sisk & Associates, Inc. v. The Committee to Elect Timothy Grendell et al., Case no. 2008-1265
10th District Court of Appeals (Franklin County)

ISSUE: Under the “double dismissal” provision of Ohio Civil Rule 41(A)(1), when the plaintiff in a civil lawsuit has already voluntarily dismissed his complaint once and then refiled it, does the plaintiff’s subsequent failure to serve the refiled complaint on the defendant within one year of the date of refilling require the court to dismiss the plaintiff’s case “with prejudice?”

BACKGROUND: Under Ohio Civil Rule 41(A)(1), a plaintiff is permitted to unilaterally dismiss his civil complaint against a defendant “without prejudice” (without impairing his ability to later refile the same complaint) on one occasion by simply filing a notice of dismissal with the trial court. The rule provides, however, that if a voluntarily dismissed complaint is refiled, any subsequent dismissal by the plaintiff without the express consent of the defendant or leave of the court will be a dismissal “with prejudice,” which means that the plaintiff is thereafter barred from initiating any future civil action against the same defendant based on the injuries alleged in the original complaint.

In this case, a political consulting firm, Sisk & Associates, filed a breach of contract suit against the campaign committee of State Senator Timothy Grendell. The complaint alleged that the committee had not made full payment for work Sisk performed during Senator Grendell’s 2004 election campaign.  Sisk’s original complaint, filed in September 2004, was voluntarily dismissed by Sisk in early October 2005. Later that month, Sisk refiled its complaint but then waited  more than a year before requesting that the trial court serve a copy of the complaint on Grendell, his election committee and former committee treasurer John Ralph. 

The defendants filed a motion asking the trial court to dismiss the refiled complaint on the basis that, under Civil Rule 4, a court only has jurisdiction to proceed in a civil case if service of the complaint has been made on all defendants within one year after that complaint was filed. Their motion asked the court to dismiss Sisk’s complaint with prejudice under the double-dismissal rule, asserting that the plaintiff’s failure to perfect service on them within one year of refilling the complaint was the equivalent of a second voluntary dismissal. The trial court granted the motion to dismiss, but held that the dismissal was without prejudice because it was based on the court’s lack of jurisdiction and was not the result of a second “notice dismissal” by the plaintiff.  The defendants appealed. On review, the 10th District Court of Appeals affirmed the ruling of the trial court that its dismissal of the refiled complaint was without prejudice because it did not fall within the provisions of the double-dismissal rule. The defendants then sought and were granted Supreme Court review of the lower court decisions.

Attorneys for Grendell and the campaign committee urge the Court to follow its 1991 ruiling in Goolsby v. Anderson Concrete Corp., in which they say this Court held that a request for a court to serve a complaint more than one year after the filing date was equivalent to a voluntary dismissal and refiling of the complaint by the plaintiff.  Because Sisk had already voluntarily dismissed his complaint once, they argue, under Goolsby the trial court should have treated his untimely request for service of the refiled complaint as a second voluntary dismissal, and therefore a dismissal with prejudice.

Attorneys for Sisk respond that the trial and appellate courts in this case correctly followed a 2007 decision, Olynyk v. Scoles, in which the Supreme Court refined its holding in Goolsby  by stating that, in the context of the double dismissal rule, a second dismissal of a plaintiff’s complaint is only a dismissal with prejudice if both dismissals were unilateral “notice” dismissals initiated by the plaintiff.  In this case, they point out, the trial court’s dismissal of Sisk’s refiled complaint resulted from a motion to dismiss  that was initiated by the defendants, and therefore, under Olynyk, cannot be treated as a second voluntary dismissal by the plaintiff that would invoke the double dismissal rule.

Contacts
Timothy J. Owens, 614.221.3500, for Sisk & Associates, Inc.

John P. Slagter, 216.615.7331, for Timothy J. Grendell and The Committee to Elect Grendell.

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Is Filing an Inaccurate Motor Vehicle Odometer Disclosure Statement a ‘Strict Liability’ Offense?

State of Ohio ex rel. Nancy H. Rogers [Richard Cordray], Attorney General of Ohio v. Midway Motor Sales, Inc., et al., Case no. 2008-1451
10th District Court of Appeals (Franklin County)

ISSUE: Does Ohio’s motor vehicle odometer rollback and disclosure law, R.C. 4549.46, impose “strict liability” on a vehicle owner who, in the course of selling a vehicle, provides the buyer with an affidavit stating that the current odometer reading is accurate “to the best of the seller’s knowledge,” when it is later learned that the vehicle’s odometer had been rolled back by a previous owner without the knowledge or participation of the current seller?

BACKGROUND:  In this case, a Youngstown auto dealership, Midway Motors, purchased vehicles from General Motors for sale or lease through its dealership and subsequently leased a large number of those vehicles to Modern Builders Supply. The terms of those leases specified a maximum mileage allowance of 30,000 miles. Pursuant to a dealer agreement with General Motors, Midway subsequently assigned ownership of the lease agreements and titles to the leased vehicles to General Motors Acceptance Corporation (GMAC), but Midway continued to administer the leases.  Unbeknownst to GMAC, Midway entered into sub-agreements with Modern that permitted the leased vehicles to be driven thousands of miles beyond the stated 30,000 mile allowance. When Modern turned in the vehicles to Midway at the end of the lease period, Midway illegally rolled back the odometers so that they indicated the vehicles had been driven only 30,000 miles.

Without ever taking physical possession of the vehicles, and without knowledge of the rollbacks, GMAC arranged for their sale through a dealers-only auction. In transferring title to the purchaser of each vehicle sold at auction, GMAC provided the buyer with a legally required affidavit stating that, “to the best of its knowledge,” the mileage indicated on the odometer was the true and accurate mileage the vehicle had been driven. Some time later, GMAC discovered that Midway had rolled back the odometer readings on 85 of the vehicles GMAC had sold through the dealer auction. GMAC notified the Ohio Attorney General’s office that Midway had tampered with the odometers and that, as a result of the unknown rollbacks, GMAC had inadvertently provided the buyers of those vehicles with affidavits attesting to the accuracy of odometer readings that it now knew were inaccurate. GMAC located and contacted the buyer of each the vehicles that had been tampered with, and either bought the vehicle back at the purchase price or, at the buyer’s option, refunded a pro-rated portion of the purchase price commensurate with the extra miles that vehicle had been driven. The total cost of the remediation effort was approximately $1.2 million.

The attorney general’s office subsequently filed suit against both Midway and GMAC in the Franklin County Court of Common Pleas, seeking civil penalties for violations of the odometer rollback and disclosure statute. GMAC moved for dismissal of the claims against it, on the basis that the odometer statements it had signed were true and accurate “to the best of its knowledge” at the time it sold the vehicles that had been tampered with, and therefore GMAC was not guilty of failing to provide the buyers with a “true” affidavit. The state moved for summary judgment in its favor. The trial court granted summary judgment in favor of the state, citing multiple previous court decisions holding that the odometer rollback and disclosure statute imposes “strict liability” on any vehicle seller who provides a buyer with an inaccurate odometer statement regardless of the knowledge or intent of the seller. The trial judge imposed a civil penalty of $1,000 for each of the 85 vehicles that had been tampered with, but then suspended those penalties in light of GMAC’s aggressive and costly efforts to disclose and remedy the inaccurate affidavits.

GMAC appealed the trial court’s finding that it was guilty of violating the rollback statute. On review, the 10th District Court of Appeals affirmed the judgment of the trial court that R.C. 4549.46 is a “strict liability” statute, and that despite the “to the best of my knowledge” language in the official disclosure statement  prescribed by the Registrar of Motor Vehicles, the state is not required to show that the seller knew about odometer tampering at the time it signed a mileage affidavit in order to prove that the seller “failed to provide a true and accurate statement” of the vehicle’s actual mileage.  GMAC sought and was granted Supreme Court review of the 10th District’s decision.

Attorneys for GMAC argue that:

   1) R.C. 4549.46 specifically requires that sellers provide a mileage disclosure statement using a form prescribed by the Registrar of Motor Vehicles. Because the one and only form prescribed by the Registrar requires a seller to affirm the accuracy of a vehicle’s odometer reading “to the best of my knowledge,” they assert, a seller cannot be found guilty of violating the disclosure statute unless the state shows that the seller had knowledge that the vehicle’s current odometer reading was inaccurate at the time he or she signed the disclosure statement.

   2) The trial and appellate court rulings ignore language in the disclosure statute that expressly exempts a vehicle seller from responsibility for an inaccurate odometer statement if it is shown that the tampering was done by “a previous owner.” In this case, they point out, Midway Motors was undisputedly a “previous owner” of the vehicles in question, and Midway undisputedly was the party that tampered with the mileage readings. Therefore, they contend, the lower courts erred in finding GMAC guilty of violations.

   3) They also argue that the entire line of cases cited by the trial and appellate courts holding that the odometer disclosure law is a “strict liability” statute is contrary to Supreme Court decisions holding that the mere absence of a required guilty mental state in one part of a statute is not sufficient to establish legislative intent that strict liability be imposed. They point to several cases in which the Court has held that, in order for strict liability to be imputed, there must be clear statutory language indicating legislative intent to impose strict liability, and assert that no such language appears in the odometer tampering statute. 

Attorneys for the state urge the Court to follow established precedent and affirm that R.C. 4549.46 is a “strict liability” statute that imposes responsibility on GMAC for the inaccurate odometer statements it provided to the buyers of its vehicles. They point out that the statute authorizing the Registrar of Motor Vehicles to “prescribe a form” for odometer statements does not authorize the Registrar to add conditions, such as a “knowledge” requirement, that are not set forth in the odometer disclosure statute itself. They also argue that the “previous owner” exception cited by GMAC is not applicable in this case because the tampering took place not while Midway was the owner of the vehicles, but after ownership had been transferred to GMAC. Because GMAC was the owner at the time the odometer readings were changed, they assert, GMAC cannot escape responsibility for the inaccurate disclosure statements it provided to buyers of those vehicles whether or not it knew about the tampering.

Contacts
Michael H. Carpenter, 614.365.4100, for General Motors Acceptance Corp. LLC.

Benjamin C. Mizer, 614.466.8980, for the Attorney General of Ohio.

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Attorney Discipline

Disciplinary Counsel v. Todd Austin Brenner, Case no. 2008-2438
Franklin County

ISSUE: The Board of Commissioners on Grievances & Discipline has recommended that the license of Dublin attorney Todd A. Brenner be suspended for two years, with the second year of that term stayed on conditions, for engaging in a pattern of professional misconduct by making inappropriate and fraudulent use of funds belonging to clients and to his law firm to pay his own personal expenses.

The board found that, after receiving checks related to clients’ cases and depositing those funds in his law firm’s accounts, on eight separate occasions Brenner directed administrative staff at the law firm to prepare and send checks to various medical service providers and other parties and to list those payments as expenses on behalf of the client when the payments were actually directed to Brenner’s own personal creditors.

Brenner has filed objections to some of the disciplinary board’s findings and to its recommended sanction. He argues that the board erred in finding that he engaged in a pattern of misconduct because his actions involved only two client cases and were widely separated in time. He also disputes the finding that he engaged in conduct prejudicial to the administration of justice, noting that his improper handling of funds in his law firm’s accounts did not affect the outcome of any judicial or administrative proceeding.  He also asserts that the board failed to take several mitigating factors into account in setting the recommended sanction for his misconduct, including the fact that he provided more than 40 letters attesting to his good character and made full restitution to the clients affected by his actions.  He urges the Court to impose the less severe sanction recommended by the hearing panel in his case, an 18 month suspension with 12 months stayed.

The Office of Disciplinary Counsel, which prosecuted the complaint against Brenner, has also filed objections to the board’s findings. Disciplinary Counsel argues that the hearing panel erred in dismissing additional charges that were brought against Brenner alleging that he charged an excessive fee and accepted legal employment under circumstances in which his personal financial interests were in conflict with the interests of a client.

Contacts
Jonathan Coughlan, 614.461.0256, for the Office of Disciplinary Counsel.

Dianna M. Anelli, 614.228.7710, for Todd Brenner.

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These informal previews are prepared by the Supreme Court's Office of Public Information to provide the news media and other interested persons with a brief overview of the legal issues and arguments advanced by the parties in upcoming cases scheduled for oral argument. The previews are not part of the case record, and are not considered by the Court during its deliberations.

Parties interested in receiving additional information are encouraged to review the case file available in the Supreme Court Clerk's Office (614.387.9530), or to contact counsel of record.