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Wednesday, May 26, 2010

State of Ohio v. Kiel A. Henry, Case no. 2009-1572
3rd District Court of Appeals (Seneca County)

Mary Jo Hudson, Superintendent of Insurance, State of Ohio, acting in her capacity as Liquidator of The Oil & Gas Insurance Company v. Petrosurance, Incorporated, Mark G. Hardy, Case no. 2009-1816
10th District Court of Appeals (Franklin County)

MB Westchester, L.L.C. v. Butler County Board of Revision and the Butler County Auditor, Case no. 2009-1900
State Board of Tax Appeals

Disciplinary Counsel v. Kenneth Norman Shaw, Case no. 2010-0316
Mahoning County


Court Considers What ‘Force’ Necessary to Support Conviction for Gross Sexual Imposition

In Case Where Defendant Initiated Sexual Contact With Victim Who was Asleep

State of Ohio v. Kiel A. Henry, Case no. 2009-1572
3rd District Court of Appeals (Seneca County)

ISSUE:  In order to establish the element of gross sexual imposition that an offender used force to compel sexual contact, must the state show that the offender “overcame the will” of the victim to resist such contact, or is it sufficient to show that the offender exploited an inequality in the relative positions or strength of the offender and victim to facilitate sexual contact?

BACKGROUND:  The state law that defines the offense of gross sexual imposition, R.C. 2907.05(A)(1), requires the state to prove that an offender had sexual contact with a person not his or her spouse when the offender “purposely compels the other person … to submit by force or threat of force.”

In this case, Kiel Henry of Tiffin was charged with gross sexual imposition based on an incident in which Henry, who was part of a group of male college students who were visiting at a rooming house occupied by female students. Henry, who was intoxicated, fell asleep on a first floor sofa and remained there when the other male guests left.  While momentarily unattended, Henry made his way to a second floor bedroom and climbed into a bed already occupied by a sleeping female student identified as K.C.  Beginning while K.C. was asleep and continuing after she began to awaken, Henry repeatedly touched K.C.’s pubic area under her clothes. In each instance, she pulled his hand and arm away and said “no” and he allowed his hand to be moved. After becoming fully aware of her circumstances, K.C. forcibly pushed Henry out of her bed and ran downstairs to seek help. Henry, who made no effort to restrain K.C. or prevent her from fleeing the room, remained unconscious or asleep on the floor of the bedroom until he was dragged from the bedroom by K.C. and her housemates several minutes later.

Henry was subsequently indicted and tried for gross sexual imposition in the Seneca County Court of Common Pleas.  At the conclusion of the state’s evidence, Henry moved the court to dismiss the gross sexual imposition charge on the basis that the state had not shown the required element that he had compelled K.C. to submit to his sexual touching by force or a threat of force.  The trial court overruled the motion to dismiss and entered a judgment of conviction.  Henry appealed.  On review, the 3rd District Court of Appeals reversed Henry’s conviction and vacated the sentence based on its finding that the state had not made the required showing of force necessary to support a conviction for gross sexual imposition.  The state sought and was granted Supreme Court review of the 3rd District’s ruling.

Attorneys for the Seneca County prosecutor’s office cite prior decisions of this Court and various Ohio court of appeals districts which they say have held that there is no fixed, objective degree of force necessary to support a charge of rape or gross sexual imposition, but that the level of force necessary to be coercive in a particular cases is subjective “depending on the age, size and strength of the parties and their relation to each other. In cases where a victim is assaulted while sleeping or in a uniquely vulnerable situation, they assert, the victim’s inability to comprehend or assert resistance against an attempted attacker should significantly reduce the burden of proof required to show that a defendant used his superior position to force the victim to submit to unwanted sexual contact. In this case, they point out, Kiel Henry was a large man trained as a wrestler who suddenly entered the bed of a very petite woman who was sound asleep and who assaulted her from behind while her body was trapped between his body and a wall and while she could not see him. Under those circumstances, they say, the 3rd District erred in finding that the discrepancy in size between Henry and K.C. and the victim’s highly vulnerable position relative to her attacker were not sufficient to establish the use of force required to support a conviction for gross sexual imposition.

Attorneys for Henry respond that the line of cases cited by the state addressing a “discrepancy in position” between a defendant and victim did not involve differences in size or strength between the parties but rather involved sexual assaults by a parent or other person of authority against a child or other person who was dependent upon or subservient to the attacker. They contend that in this case the 3rd District properly applied prior court decisions holding that, even where a victim of improper sexual contact was asleep prior to being touched, there is no showing of force or coercion if the defendant made no spoken or implied threat to injure the victim if she resisted, and made no effort to restrain the victim from immediately ending the contact by leaving the scene. In this case, they say, Henry did not say or do anything threatening toward K.C., allowed his hand to be pushed away from her pubic area without resistance and made no effort to constrain or prevent her from leaving the bedroom after pushing him out of bed. Under that set of facts, they argue, the relative body sizes of the victim and defendant and other “inequalities in position” are irrelevant to a determination that Henry did not use force or the threat of force to compel K.C. to submit to sexual contact.

Contacts
James A. Davey, 419.448.4444, for the state and the Seneca County Prosecutor’s Office.

Javier H. Armengau, 614.443.0516, for Kiel Henry.

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Does Insurance Liquidation Statute Authorize Interest Payments to Creditors Before Recovery by Shareholders?

Mary Jo Hudson, Superintendent of Insurance, State of Ohio, acting in her capacity as Liquidator of The Oil & Gas Insurance Company v. Petrosurance, Incorporated, Mark G. Hardy, Case no. 2009-1816
10th District Court of Appeals (Franklin County)

ISSUE:  Under the state law that regulates the liquidation of assets of an insolvent insurance company, are general creditors who have already recovered the principal amounts they were owed by the insolvent company entitled to also recover interest on those amounts before the shareholders of the insurance company may make any recovery from the proceeds of the liquidation?

BACKGROUND:  In 1990, the Ohio-based Oil & Gas Insurance Company (OGICO) was declared insolvent. Pursuant to R.C. Chapter 3903, the state’s Superintendent of Insurance exercised her authority to assemble and liquidate the company’s assets and distribute the proceeds according to a schedule of priorities set forth in the statute.  That schedule assigned top priority for recovery to the insolvent insurance company’s policyholders, intermediate priorities to various classes of creditors including state and local government taxing entities, and lowest (ninth) priority to the insurance company’s shareholders. The sole shareholder of OGICO was a separate business entity, Petrosurance, Inc.

After extended federal and state proceedings and negotiations with various groups of claimants, the Superintendent/Liquidator certified in 2007 that she had paid and obtained releases for all approved claims that had been asserted against OGICO by the first eight categories of creditors, and was in possession of approximately $13 million in excess funds obtained through the liquidation of OGICO’s assets. 

In April 2007, the Superintendent filed a complaint in the Franklin County Court of Common Pleas seeking a declaratory judgment that Petrosurance had no claim to the assets remaining in her possession, and that those asserts should be distributed on a pro-rata basis to general creditors who had received delayed payment for the principal amounts they were owed by OGICO but had made no recovery for the loss of use of those funds for up to 17 years. Petrosurance filed a counterclaim asking the trial court to award the assets remaining in the Superintendent’s possession to it as the sole shareholder in OGICO, and therefore the sole Class Nine claimant under the liquidation statute. The trial court granted summary judgment in favor of the Superintendent, holding that the shareholder claim asserted by Petrosurance had not been filed in a timely or procedurally correct manner, and finding that language in R.C. Chapter 3903 and the public policy underlying the liquidation statute authorized the Superintendent to award interest to higher-priority creditors before making any distribution of an insolvent insurer’s assets to its shareholders.

Petrosurance appealed.  On review, the 10th District Court of Appeals reversed the trial court’s grant of summary judgment in favor of the Superintendent, held that the liquidation scheme set forth in R.C. Chapter 3903 does not authorize the payment of interest to creditors of an insolvent insurer, and ordered the trial court to undertake new proceedings to determine whether Petrosurance in entitled to recover the funds remaining in the Superintendent’s possession under the provisions of the insurance liquidation statute.  The Superintendent sought and was granted Supreme Court review of the 10th District’s ruling.

Attorneys for the Superintendent argue that the insurance company liquidation scheme set forth in R.C. Chapter 2903 and case law interpreting similar statutes show legislative intent that all parties to whom an insolvent company is indebted should be “made whole” before the owners of the company may make any recovery from its assets. While all of OGICO’s policyholders, claimants against its insurance policies and general creditors were eventually able to recover the principal amounts that they were owed as of 1990, they assert, those parties were not “made whole” because they were not compensated for the loss of use of those funds, in some cases for as long as 16 or 17 years. While there is no specific language in the Ohio liquidation statute authorizing the payment of interest to creditors, they urge the Court to follow the practice of multiple other states in allowing surplus assets remaining after debt principal has been repayed to be allocated to creditors rather than disbursed to the owners whose default on their debts triggered the liquidation process.

Attorneys for Petrosurance urge the Court to affirm the 10th District’s finding that R.C. Chapter 2903 makes absolutely no provision for the payment of interest to any category of an insolvent insurer’s creditors, and clearly entitles the company’s shareholders to recover for their lost investments from any portion of  the company’s assets that remain after the eight higher-priority classes of claimants have made full recovery for the amounts they were owed.  In this case, they say, the Superintendent and the trial court ignored the plain language of the statute by determining that, after all other approved claims against OGICO had been resolved, the $13 million in remaining assets should not be distributed to the shareholders as mandated by law, but instead declared those funds to be a “surplus” to be distributed among creditors whose claims had already been certified as paid in full.

Contacts
Benjamin C. Mizer, 614.446.8980, for Mary Jo Hudson, Superintendent of Insurance and Liquidator of OGICO.

Peter L. Cassady, 513.621.2100, for Petrosurance, Inc.

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Is Tax Appeals Board Order Void If Notice of Appeal Not Served on Local School District That Initiated Complaint?

MB Westchester, L.L.C. v. Butler County Board of Revision and the Butler County Auditor, Case no. 2009-1900
State Board of Tax Appeals

ISSUE: When a local board of education initiates a complaint with a county Board of Revision (BOR) seeking an increase in the tax valuation of property within the school district, the BOR issues a decision increasing the valuation of that property, the property owner files a notice of  appeal of the revaluation that does not identify the school district as an appellee and the BOR fails to serve the school board with notice of the appeal until after it has been granted by the state board of tax appeals (BTA), is the BTA order granting the property owner’s appeal void ab initio (a legal nullity from the time it is issued) because of the BOR’s failure to serve the school board with notice of the appeal?

BACKGROUND:  In this case, the Board of Education of the Lakota Local School District filed a complaint with the Butler County BOR in March 2008 seeking an increase in the tax valuation of three parcels of real property within the district to reflect the recent purchase price of $64.8 million for those parcels by MB Westchester LLC. In January 2009, the BOR issued a decision increasing the value of the parcels to reflect the recent sale price. In February 2009, the BOR received a notice of appeal filed by MB Westchester.  The notice of appeal did not name the Lakota school district as an appellee in the case, and the BOR failed to serve notice on the school district informing it that the property owner had challenged the valuation of its property approved by the BOR in its January 2009 ruling. 

On June 23, 2009, the BTA adopted an order that accepted a stipulation of value between MB Westchester and the Butler County Auditor setting the value of the three parcels at $51,628,210 – a reduction of more than $13.1 million from the valuation set by the BOR.  The board of education did not receive notice of the BTA’s order accepting the stipulated value until Aug. 7, two weeks after the 30-day deadline for filing an appeal of the BTA’s June 23 decision had expired.  On Sept. 4, 2009, the board of education filed a motion seeking to intervene in the BTA proceeding considering the stipulated valuation and asking the BTA to vacate its June 23 order based on the BOR’s failure to serve the school board with notice of the property owner’s appeal.  On Sept. 22, 2009, the BTA denied the board of education’s motion to intervene, indicating that it was without jurisdiction to consider the school board’s motion because that motion had not been filed within the 30-day appeal period after entry of the June 23 order that the school board sought to have vacated.  The school district has exercised its right to appeal the BTA’s decision to the Supreme Court.

Attorneys for the school district argue that, under R.C. 5715.19(B), a board of education that was a party in a BOR complaint seeking revaluation of property is automatically an indispensable party in any appeal of the BOR’s decision based on that complaint.  As an indispensable party in an appeal, they assert, the school board must be served with a notice of appeal and have an opportunity to be heard in order for the BTA to exercise valid jurisdiction over that appeal.  In this case, they say, the property owner’s failure to identify the board of education as an appellee in its notice of appeal, and the BOR’s failure to notify the board that the property owner had appealed the January 2009 revaluation of its property deprived the BTA of jurisdiction to consider the property owner’s appeal, and rendered its June 23 order accepting a lower valuation of the property void from the moment it was issued.

Attorneys for MB Westchester argue that their appeal of the January 2009 BOR ruling revaluing the company’s property did not require the participation of the Lakota school board because the appeal  did not challenge the total valuation of the three parcels as determined by the BOR, but rather challenged only the allocation of value among the three parcels. They contend that the notice requirements of R.C. 5715.19 were met because Westchester as the appellant and the BOR as appellee were served with and responded to the notice of appeal, and those parties subsequently entered into an agreed stipulation of value among the three parcels that was properly reviewed and approved by the BTA.  Because the Lakota school board failed to appeal the BTA’s June 23, 2009 order approving the stipulated valuation of the property within the mandatory 30-day appeal period they contend, neither the BTA nor this Court has jurisdiction to reconsider or vacate that order.

Contacts
Lawrence D. Walker, 614.221.2838, for property owner MB Westchester, LLC.

Gary C. Stedronsky: 513.421.2540, for the Lakota Local School District Board of Education.

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Attorney Discipline

Disciplinary Counsel v. Kenneth Norman Shaw, Case no. 2010-0316
Mahoning County

The Board of Commissioners on Grievances and Discipline has recommended that the license of Warren attorney Kenneth Norman Shaw be suspended for two years for violations of state attorney discipline rules in his handling of legal matters entrusted to him by two sets of clients and for failing to promptly cooperate with disciplinary authorities investigating the grievances filed against him.

The board’s recommendation was based on findings that Shaw obtained and then defaulted on a $13,000 personal loan from an elderly client of his law practice, and drew up a trust agreement for the same client that named Shaw’s five children as beneficiaries of the trust in violation of disciplinary rules that bar an attorney from accepting employment or entering into a business transaction with a client in which the lawyer’s and client’s interests may conflict.

The board also found that in a separate case Shaw accepted and deposited checks from two clients for whom he had prepared a guardianship application without first obtaining the approval of the local probate court.  Shaw was subsequently found by the probate court to have engaged in concealment of assets, and ordered to refund $1,200 of the legal fees he had improperly collected from his clients.

Shaw has filed objections to the board’s recommended sanction of a two-year license suspension.  He argues that the recommended sanction is significantly harsher than the penalty proposed by the Office of Disciplinary Counsel and recommended by the hearing panel that considered the evidence in his case, which was a two-year suspension with the second year stayed on conditions. He points to multiple other cases in which attorneys disciplined for similar offenses have received less severe sanctions, and asks the Court to remand the case to the disciplinary board to allow him to present evidence of mitigating circumstances that he mistakenly failed to present while serving as his own attorney during the prior proceedings.

The Office of Disciplinary Counsel has filed a response to Shaw’s objections and request for a remand of his case for further proceedings.  They note that Shaw had from March 2008 to December 2009 to assemble mitigating evidence or to obtain outside counsel to advise him at his hearing but chose to represent himself, and argue that neither past practice nor the rules governing disciplinary proceedings support reopening his case simply because the board exercised its discretion to recommend a more stringent sanction than that proposed by Shaw’s hearing panel.

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

Richard S. Koblentz, 216.621.3012, for Kenneth N. Shaw.

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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.