The Court of Appeals for the Ninth Appellate District released the following opinions on May 20, 2013:
State v. Taylor, 2013-Ohio-2035 reversed a decision from the Oberlin Municipal Court that found lack of physical control to be a lesser included of driving while under the influence. The appellate court found that a person can commit the offense of driving while under the influence in violation of R.C. 4511.19 without being in a motor vehicle, but could not commit the offense of lack of physical control in violation of R.C. 4511.194 unless they were in a motor vehicle. Therefore an R.C. 4511.194 offense is not a lesser included of a R.C. 4511.19 offense.
Kick v. Smithville W. Care Ctr., 2013-Ohio-2034 reversed a decision from the Wayne County Court of Common Pleas that had enforced an arbitration agreement between a nursing home and one of its patients. The trial court had also stayed proceedings. The reason for the reversal and remand was because the trial court had not considered issues raised by the estate of the patient. These issues included whether an arbitration agreement between the nursing home and the patient terminated on the parient's death and whether the arbitration agreement bound the patient's personal representative in a wrongful death case. The trial court was instructed to consider the issues raised by the appellant.
Hadcock Properties, Inc. v. Mesar, 2013-Ohio-2033 reversed and remanded a decision from the Medina County Common Pleas Court that had held that attorney fees shouldn't be awarded pursuant to a lease. The lease had been drafted by Hadcock Properties. The lease was for five years, but wasn't acknowledged by the lessee.
The trial court found that the equitable doctrine of partial performance took the lease out of the Statute of Conveyances, but that since the doctrine of part performance is a equitable doctrine and since the landlord had drafted the lease, it wasn't equitable to enforce the clause regarding payment of attorney fees.
The Court of Appeals disagreed. It held that once the doctrine of part performance was applied, the whole lease was valid and the trial court should have enforced the attorney fees provision. The case was remanded with instructions to award attorney fees as claimed by the landlord.
Showing posts with label attorney fees. Show all posts
Showing posts with label attorney fees. Show all posts
Sunday, May 26, 2013
Tuesday, September 28, 2010
Court Recognizes Common Law 'Self Protection' Exception to Statutory Attorney-Client Privilege
In Litigation Involving Dispute Between Client and Lawyer or Law Firm
Squire, Sanders & Dempsey, L.L.P. v. Givaudan Flavors Corp., Slip Opinion No. 2010-Ohio-4469.
Cuyahoga App. No. 92366, 2009-Ohio-2490. Judgment of the court of appeals reversed, and cause remanded to the trial court.
Pfeifer, Lundberg Stratton, O'Connor, O'Donnell, and Cupp, JJ., concur.
Lanzinger, J., concurs in judgment only.
Brown, C.J., not participating.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2010/2010-Ohio-4469.pdf
(Sept. 28, 2010) The Supreme Court of Ohio held today that Ohio recognizes a common law “self protection” exception to attorney-client privilege that permits an attorney to testify concerning attorney-client communications where such testimony is necessary to establish a claim for legal fees on behalf of the attorney or to allow an attorney to defend against a charge of malpractice or other wrongdoing in litigation between the attorney and a client.
The Court held further that attorney work product including mental impressions, theories and legal conclusions are subject to discovery upon a showing of good cause if the information sought to be discovered is directly at issue in the case, the need for the information is compelling, and the evidence cannot be obtained elsewhere.
The Court’s 6-0 decision, authored by Justice Terrence O’Donnell, reversed a ruling by the 8th District Court of Appeals.
From 2003 to 2007, the Cleveland-based law firm of Squire, Sanders & Dempsey (SSD) represented Givaudan Flavors Corporation in product liability litigation. In 2007, Givaudan severed its relationship with SSD and retained new outside counsel. SSD billed Givaudan for $1.8 million in unpaid legal fees. When Givaudan refused to pay, SSD filed suit. Givaudan filed a counterclaim alleging that SSD had overbilled for services it had performed, had billed Givaudan for services that were never performed, and had engaged in other false, deceptive and unethical business practices during the period of representation.
During the pretrial discovery process, Givaudan refused to produce any of the billing records or other documents relating to the legal services SSD had provided during its representation, or to answer most of the questions posed to company officials by SSD during depositions. Givaudan also asserted that because communications between itself and the law firm during the period of representation were exempt from disclosure under the attorney-client privilege, SSD was barred from disclosing documents in its own files that included communications between the law firm and Givaudan. SSD asked the trial court to order Givaudan to comply with its discovery requests and respond fully during depositions in the case.
The trial court granted the motion to compel discovery, holding that a common law exception to the statutory attorney-client privilege set forth in R.C. 2317.02 allows disclosure of otherwise confidential communications when such disclosure is necessary to the fair adjudication of a lawsuit between a lawyer or law firm and a client arising from their business relationship. Givaudan appealed that ruling.
On review, the 8th District Court of Appeals reversed the trial court’s order compelling Givaudan to comply with SSD’s discovery requests. In its opinion, the court of appeals held that the trial court erred in recognizing a self-protection exception to attorney-client privilege, and that communications between SSD and Givaudan during the period of representation were privileged under R.C. 2317.02(A) and were not subject to discovery or disclosure at trial unless SSD could show that Givaudan had waived the privilege either by giving express consent to disclosure or by voluntarily testifying about those communications. SSD sought and was granted Supreme Court review of the 8th District’s decision.
In today’s decision, the Supreme Court reversed the 8th District and reinstated the trial court’s order compelling discovery of communications between Givaudan and SSD during the period of representation. Justice O’Donnell noted that Ohio courts have recognized several exceptions to the attorney-client privilege codified by R.C. 2317.02(A) notwithstanding their absence from the text of the statute. As examples, he pointed to the “crime-fraud” exception that bars use of attorney-client privilege to conceal an attorney’s cooperation with a client’s wrongdoing; the lack-of-good-faith exception that prevents an insurer from using attorney-client privilege to conceal its bad-faith denial of a claim pursuant to state insurance statutes; and the joint-representation exception that prevents one co-litigant from using attorney-client privilege to conceal information from another party represented by the same attorney in the same case.
With regard to the “self-protection” exception at issue in this case, Justice O’Donnell wrote: “The self-protection exception dates back over 150 years to its articulation by Justice Selden in Rochester City Bank v. Suydam, Sage & Co. (N.Y.Sup.Ct.1851) … There, he wrote, ‘[w]here the attorney or counsel has an interest in the facts communicated to him, and when their disclosure becomes necessary to protect his own personal rights, he must of necessity and in reason be exempted from the obligation of secrecy [sic].’ (emphasis added in part.) Since that time, this exception has become firmly rooted in American jurisprudence. The Supreme Court of the United States recognized it in Hunt v. Blackburn (1888) … and courts and commentators have accepted the self-protection exception as black-letter law defining which communications are subject to the attorney-client privilege.”
“Notably, Ohio courts, including this court, have recognized the self-protection exception. In Estate of Butler (1939) the beneficiaries of the estate of Henry V. Butler challenged the administrator’s payment of legal fees to Butler’s attorney, Grover C. Brown. The probate court struck Brown’s testimony regarding the services he rendered to Butler as privileged pursuant to G.C. 11494, the predecessor to R.C. 2317.02(A). The court of appeals reversed, holding that ‘an attorney in matters pertaining to his interest has a right to testify and is not precluded from doing so by virtue of [G.C.] 11494. The rule is very broad which permits testimony of an attorney in support of his claim for fees.’ …We affirmed that decision, explaining that ‘[s]ince the administrator was charged with maladministration in the allowance and payment of Brown’s claim against the estate, the defense of the administrator was dependent upon establishing the correctness of the claim by showing the amount and value of the services which Brown had rendered to Butler. … We noted that ‘the testimony of Brown (should not) have been wholly excluded on the ground that he had been counsel and attorney for Butler.’”
“Further, the self-protection exception to the attorney-client privilege permitting the attorney to testify also applies when the client puts the representation at issue by charging the attorney with a breach of duty or other wrongdoing … (A) client may not rely on attorney-client communications to establish a claim against the attorney while asserting the attorney-client privilege to prevent the attorney from rebutting that claim. Rather, ‘the attorney-client privilege exists to aid in the administration of justice and must yield in circumstances where justice so requires,’ … The same considerations of justice and fairness that undergird the attorney client privilege prevent a client from employing it in litigation against a lawyer to the lawyer’s disadvantage.”
The Court also rejected Givaudan’s claim that SSD was barred by the privilege conferred on attorney work product from deposing Givaudan’s in-house corporate counsel, Frederick King and Jane Garfinkel, regarding the basis for their judgments that SSD was not providing effective legal representation and had overcharged for its services.
Justice O’Donnell wrote: “When the attorney-client relationship has been put at issue by a claim for legal fees or by a claim that the attorney breached a duty owed to the client, good cause exists for the production of attorney work product to the extent necessary to collect those fees or to defend against the client’s claim. … Thus, attorney work product, including but not limited to mental impressions, theories, and legal conclusions, may be discovered upon a showing of good cause if they are directly at issue in the case, the need for the information is compelling, and the evidence cannot be obtained elsewhere. Here, attorney work product, including information sought from King and Garfinkel regarding the staffing of the butter-flavor litigation, trial strategy, resources committed, and views that the firm provided inadequate representation through counsel lacking sufficient leadership, qualification, and experience, is directly at issue, as the reasonable value of the legal services performed by Squire Sanders and the quality of its legal work are the pivotal issues in this lawsuit, and the need for this evidence is compelling.”
“ … This information is otherwise unavailable to Squire Sanders because it is within the exclusive possession and knowledge of Givaudan, King, and Garfinkel. Accordingly, testimony of King and Garfinkel and documents related to the value and quality of the legal services rendered by Squire Sanders are not protected from discovery in this case by the work-product doctrine.”
Justice O’Donnell’s opinion was joined by Justices Paul E. Pfeifer, Evelyn Lundberg Stratton, Maureen O’Connor and Robert R. Cupp.
Justice Judith Ann Lanzinger entered a separate opinion concurring with the Court’s judgment but disagreeing with the distinction drawn by the majority between exceptions to and waivers of the attorney client privilege. She wrote: “(I)n its attempt to distinguish waiver from exception, the majority uses overly broad language and declares that an exception ‘falls into the category of situations in which the privilege does not attach to the communications in the first instance and is therefore excluded from the operation of [R.C. 2317.02.]’ What the majority fails to recognize is that an exception, like a waiver, arises because of some action taken by the client. It is only when the client puts the attorney’s representation at issue that the privilege no longer applies. The majority, however, would retroactively apply that action and hold that the privilege never existed. Because I believe that common-law exceptions are really no different than common-law waivers, I concur in judgment only.”
Chief Justice Eric Brown did not participate in the court’s deliberations or decision in the case.
Contacts
John M. Newman, 216.586.7207, for Squire, Sanders & Dempsey LLP.
Anthony J. Hartman, 216.781.5515, for Givaudan Flavors Corp.
Please note: Opinion summaries are prepared by the Office of Public Information for the general public and news media. Opinion summaries are not prepared for every opinion released by the Court, but only for those cases considered noteworthy or of great public interest. Opinion summaries are not to be considered as official headnotes or syllabi of Court opinions. The full text of this and other Court opinions from 1992 to the present are available online from the Reporter of Decisions. In the Full Text search box, enter the eight-digit case number at the top of this summary and click "Submit."
Squire, Sanders & Dempsey, L.L.P. v. Givaudan Flavors Corp., Slip Opinion No. 2010-Ohio-4469.
Cuyahoga App. No. 92366, 2009-Ohio-2490. Judgment of the court of appeals reversed, and cause remanded to the trial court.
Pfeifer, Lundberg Stratton, O'Connor, O'Donnell, and Cupp, JJ., concur.
Lanzinger, J., concurs in judgment only.
Brown, C.J., not participating.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2010/2010-Ohio-4469.pdf
(Sept. 28, 2010) The Supreme Court of Ohio held today that Ohio recognizes a common law “self protection” exception to attorney-client privilege that permits an attorney to testify concerning attorney-client communications where such testimony is necessary to establish a claim for legal fees on behalf of the attorney or to allow an attorney to defend against a charge of malpractice or other wrongdoing in litigation between the attorney and a client.
The Court held further that attorney work product including mental impressions, theories and legal conclusions are subject to discovery upon a showing of good cause if the information sought to be discovered is directly at issue in the case, the need for the information is compelling, and the evidence cannot be obtained elsewhere.
The Court’s 6-0 decision, authored by Justice Terrence O’Donnell, reversed a ruling by the 8th District Court of Appeals.
From 2003 to 2007, the Cleveland-based law firm of Squire, Sanders & Dempsey (SSD) represented Givaudan Flavors Corporation in product liability litigation. In 2007, Givaudan severed its relationship with SSD and retained new outside counsel. SSD billed Givaudan for $1.8 million in unpaid legal fees. When Givaudan refused to pay, SSD filed suit. Givaudan filed a counterclaim alleging that SSD had overbilled for services it had performed, had billed Givaudan for services that were never performed, and had engaged in other false, deceptive and unethical business practices during the period of representation.
During the pretrial discovery process, Givaudan refused to produce any of the billing records or other documents relating to the legal services SSD had provided during its representation, or to answer most of the questions posed to company officials by SSD during depositions. Givaudan also asserted that because communications between itself and the law firm during the period of representation were exempt from disclosure under the attorney-client privilege, SSD was barred from disclosing documents in its own files that included communications between the law firm and Givaudan. SSD asked the trial court to order Givaudan to comply with its discovery requests and respond fully during depositions in the case.
The trial court granted the motion to compel discovery, holding that a common law exception to the statutory attorney-client privilege set forth in R.C. 2317.02 allows disclosure of otherwise confidential communications when such disclosure is necessary to the fair adjudication of a lawsuit between a lawyer or law firm and a client arising from their business relationship. Givaudan appealed that ruling.
On review, the 8th District Court of Appeals reversed the trial court’s order compelling Givaudan to comply with SSD’s discovery requests. In its opinion, the court of appeals held that the trial court erred in recognizing a self-protection exception to attorney-client privilege, and that communications between SSD and Givaudan during the period of representation were privileged under R.C. 2317.02(A) and were not subject to discovery or disclosure at trial unless SSD could show that Givaudan had waived the privilege either by giving express consent to disclosure or by voluntarily testifying about those communications. SSD sought and was granted Supreme Court review of the 8th District’s decision.
In today’s decision, the Supreme Court reversed the 8th District and reinstated the trial court’s order compelling discovery of communications between Givaudan and SSD during the period of representation. Justice O’Donnell noted that Ohio courts have recognized several exceptions to the attorney-client privilege codified by R.C. 2317.02(A) notwithstanding their absence from the text of the statute. As examples, he pointed to the “crime-fraud” exception that bars use of attorney-client privilege to conceal an attorney’s cooperation with a client’s wrongdoing; the lack-of-good-faith exception that prevents an insurer from using attorney-client privilege to conceal its bad-faith denial of a claim pursuant to state insurance statutes; and the joint-representation exception that prevents one co-litigant from using attorney-client privilege to conceal information from another party represented by the same attorney in the same case.
With regard to the “self-protection” exception at issue in this case, Justice O’Donnell wrote: “The self-protection exception dates back over 150 years to its articulation by Justice Selden in Rochester City Bank v. Suydam, Sage & Co. (N.Y.Sup.Ct.1851) … There, he wrote, ‘[w]here the attorney or counsel has an interest in the facts communicated to him, and when their disclosure becomes necessary to protect his own personal rights, he must of necessity and in reason be exempted from the obligation of secrecy [sic].’ (emphasis added in part.) Since that time, this exception has become firmly rooted in American jurisprudence. The Supreme Court of the United States recognized it in Hunt v. Blackburn (1888) … and courts and commentators have accepted the self-protection exception as black-letter law defining which communications are subject to the attorney-client privilege.”
“Notably, Ohio courts, including this court, have recognized the self-protection exception. In Estate of Butler (1939) the beneficiaries of the estate of Henry V. Butler challenged the administrator’s payment of legal fees to Butler’s attorney, Grover C. Brown. The probate court struck Brown’s testimony regarding the services he rendered to Butler as privileged pursuant to G.C. 11494, the predecessor to R.C. 2317.02(A). The court of appeals reversed, holding that ‘an attorney in matters pertaining to his interest has a right to testify and is not precluded from doing so by virtue of [G.C.] 11494. The rule is very broad which permits testimony of an attorney in support of his claim for fees.’ …We affirmed that decision, explaining that ‘[s]ince the administrator was charged with maladministration in the allowance and payment of Brown’s claim against the estate, the defense of the administrator was dependent upon establishing the correctness of the claim by showing the amount and value of the services which Brown had rendered to Butler. … We noted that ‘the testimony of Brown (should not) have been wholly excluded on the ground that he had been counsel and attorney for Butler.’”
“Further, the self-protection exception to the attorney-client privilege permitting the attorney to testify also applies when the client puts the representation at issue by charging the attorney with a breach of duty or other wrongdoing … (A) client may not rely on attorney-client communications to establish a claim against the attorney while asserting the attorney-client privilege to prevent the attorney from rebutting that claim. Rather, ‘the attorney-client privilege exists to aid in the administration of justice and must yield in circumstances where justice so requires,’ … The same considerations of justice and fairness that undergird the attorney client privilege prevent a client from employing it in litigation against a lawyer to the lawyer’s disadvantage.”
The Court also rejected Givaudan’s claim that SSD was barred by the privilege conferred on attorney work product from deposing Givaudan’s in-house corporate counsel, Frederick King and Jane Garfinkel, regarding the basis for their judgments that SSD was not providing effective legal representation and had overcharged for its services.
Justice O’Donnell wrote: “When the attorney-client relationship has been put at issue by a claim for legal fees or by a claim that the attorney breached a duty owed to the client, good cause exists for the production of attorney work product to the extent necessary to collect those fees or to defend against the client’s claim. … Thus, attorney work product, including but not limited to mental impressions, theories, and legal conclusions, may be discovered upon a showing of good cause if they are directly at issue in the case, the need for the information is compelling, and the evidence cannot be obtained elsewhere. Here, attorney work product, including information sought from King and Garfinkel regarding the staffing of the butter-flavor litigation, trial strategy, resources committed, and views that the firm provided inadequate representation through counsel lacking sufficient leadership, qualification, and experience, is directly at issue, as the reasonable value of the legal services performed by Squire Sanders and the quality of its legal work are the pivotal issues in this lawsuit, and the need for this evidence is compelling.”
“ … This information is otherwise unavailable to Squire Sanders because it is within the exclusive possession and knowledge of Givaudan, King, and Garfinkel. Accordingly, testimony of King and Garfinkel and documents related to the value and quality of the legal services rendered by Squire Sanders are not protected from discovery in this case by the work-product doctrine.”
Justice O’Donnell’s opinion was joined by Justices Paul E. Pfeifer, Evelyn Lundberg Stratton, Maureen O’Connor and Robert R. Cupp.
Justice Judith Ann Lanzinger entered a separate opinion concurring with the Court’s judgment but disagreeing with the distinction drawn by the majority between exceptions to and waivers of the attorney client privilege. She wrote: “(I)n its attempt to distinguish waiver from exception, the majority uses overly broad language and declares that an exception ‘falls into the category of situations in which the privilege does not attach to the communications in the first instance and is therefore excluded from the operation of [R.C. 2317.02.]’ What the majority fails to recognize is that an exception, like a waiver, arises because of some action taken by the client. It is only when the client puts the attorney’s representation at issue that the privilege no longer applies. The majority, however, would retroactively apply that action and hold that the privilege never existed. Because I believe that common-law exceptions are really no different than common-law waivers, I concur in judgment only.”
Chief Justice Eric Brown did not participate in the court’s deliberations or decision in the case.
Contacts
John M. Newman, 216.586.7207, for Squire, Sanders & Dempsey LLP.
Anthony J. Hartman, 216.781.5515, for Givaudan Flavors Corp.
Please note: Opinion summaries are prepared by the Office of Public Information for the general public and news media. Opinion summaries are not prepared for every opinion released by the Court, but only for those cases considered noteworthy or of great public interest. Opinion summaries are not to be considered as official headnotes or syllabi of Court opinions. The full text of this and other Court opinions from 1992 to the present are available online from the Reporter of Decisions. In the Full Text search box, enter the eight-digit case number at the top of this summary and click "Submit."
Tuesday, May 04, 2010
Public Policy Does Not Bar Defendant’s Insurance Policy from Covering Plaintiff’s Attorney Fees
When Fees Awarded by Jury as a Result of Punitive Damages Award
2009-0325. Neal-Pettit v. Lahman, Slip Opinion No. 2010-Ohio-1829.
Cuyahoga App. No. 91551, 2008-Ohio-6653. Judgment of the court of appeals affirmed.
Pfeifer, O'Connor, Lanzinger, and Cupp, JJ., concur.
Lundberg Stratton and O'Donnell, JJ., dissent.
Brown, C.J., not participating.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2010/2010-Ohio-1829.pdf
(May 4, 2010) The Supreme Court of Ohio ruled today that an award of attorney fees in a civil lawsuit is distinct from an award of punitive damages, and the public policy of the state does not prevent an insurance policy from providing coverage for attorney fees when they are awarded solely as a result of an award for punitive damages.
Applying that analysis to a Cuyahoga County personal injury case, the Court found that an auto insurance policy issued to Linda Lahman provided coverage for a jury’s award of attorney fees to another motorist, Kimberly Neal-Pettit, who was injured in an auto accident caused by Lahman. The court’s 4-2 majority decision was authored by Justice Judith Ann Lanzinger.
Neal-Pettit was injured in 2003 when her vehicle was hit by Lahman, who was driving while intoxicated and fleeing the scene of an earlier collision. Neal-Pettit sued Lahman for damages arising from her injuries.
A jury awarded Neal-Pettit compensatory damages of $113,800 and an additional $75,000 in punitive damages. Based on a finding that Lahman had acted “with malice” in causing Neal Pettit’s injuries, the jury also awarded Neal-Pettit attorney fees that the court later set at $46,825 along with an additional sum for litigation expenses. Lahman’s insurance company, Allstate, paid Neal-Pettit the amounts awarded as compensatory damages, interest and expenses, but denied any coverage under its policy for either the punitive damages or attorney fees awarded by the jury.
Neal-Pettit filed suit against Allstate in the Cuyahoga County Court of Common Pleas seeking payment for the attorney fee portion of the jury verdict. The trial court granted summary judgment in favor of Neal-Pettit. Allstate appealed, arguing that it had not contracted to pay attorney fees and that an attorney-fee award is an element of punitive damages, which public policy prevents an insurer from covering. The 8th District Court of Appeals affirmed the trial court’s decision, holding that attorney fees are “conceptually distinct” from punitive damages and that attorney fees were not expressly excluded from coverage by the language of the Allstate policy issued to Lahman. Allstate sought and was granted Supreme Court review of the 8th District’s decision.
In today’s decision affirming the 8th District, Justice Lanzinger rejected Allstate’s argument that the attorney fee award is an element of the jury’s award of punitive damages because both types of relief are based on a finding that the defendant acted “with malice.” Quoting from the Supreme Court of Ohio’s 1859 decision in Roberts v. Mason, she wrote: “(T)he fact that the awards have similar bases is irrelevant. We have recognized that attorney-fee awards and punitive-damages awards are distinct: ‘In an action to recover damages for a tort which involves the ingredients of fraud, malice, or insult, a jury may go beyond the rule of mere compensation to the party aggrieved, and award exemplary or punitive damages ... In such a case, the jury may, in their estimate of compensatory damages, take into consideration and include reasonable fees of counsel employed by the plaintiff in the prosecution of his action.’”
With regard to an exclusion of coverage in Lahman’s policy for “punitive or exemplary damages, fines or penalties,” Justice Lanzinger wrote: “(T)he exclusion does not refer in any way to attorney fees or litigation expenses. It specifically mentions only punitive or exemplary damages, which, as we have discussed, are conceptually distinct from attorney fees. Therefore, the term ‘punitive or exemplary damages’ does not clearly and unambiguously encompass an award of attorney fees. We decline to read such language into the contract. We instead construe the policy strictly against the insurer. ... Allstate, as the drafter, is responsible for ensuring that the policy states clearly what it does and does not cover.”
Finally, the Court disagreed with Allstate’s claim that it would be against public policy for an insurer to pay attorney fees on behalf of a policyholder when those fees are awarded solely as a result of a punitive damages award.
Justice Lanzinger wrote: “It is true that public policy prevents insurance contracts from insuring against claims for punitive damages based upon an insured’s malicious conduct. … In addition, R.C. 3937.182(B) prohibits insurance coverage of punitive damages: ‘No policy of automobile or motor vehicle insurance ... shall provide coverage for judgments or claims against an insured for punitive or exemplary damages.’ But R.C. 3937.182(B) mentions only punitive and exemplary damages, not attorney fees. The General Assembly chose not to mention attorney fees when it drafted the statute, and we decline to add them. ... Our holding will not encourage wrongful behavior merely because it permits insurers to cover attorney fees for which tortfeasors become liable. The tortfeasors remain liable for punitive damages awarded for their malicious actions, and these punitive damages remain uninsurable. Payment by the insurer of an attorney-fee award violates neither public policy nor R.C. 3937.182(B).”
Justice Lanzinger’s opinion was joined by Justices Paul E. Pfeifer, Maureen O’Connor and Robert R. Cupp.
Justice Evelyn Lundberg Stratton entered a dissenting opinion, joined by Justice Terrence O’Donnell, in which she disputed the majority’s conclusion that an award of attorney fees that is based solely on an award of punitive damages is nevertheless separate and distinct from those punitive damages.
Justice Stratton wrote: “The Allstate policy here agrees to pay for damages because of bodily injury and property damage. The policy excludes coverage for ‘punitive or exemplary damages, fines or penalties.’ There is an attorney-fee award in this case only because of the punitive-damages award; thus, the attorney-fee award is a ‘penalty’ designed to punish. The attorney fees are not compensable damages ‘because of bodily injury.’ I believe that the award is punitive in nature and is expressly excluded by the Allstate policy. Because of the punitive nature of an attorney-fee award, I also believe that it is against public policy for an insurer to pay attorney fees on behalf of its insured when the fees are awarded in connection with and as a direct result of a punitive-damages award.”
Chief Justice Eric Brown did not participate in the Court’s deliberations or decision in the case.
Contacts
Thomas M. Coughlin Jr., 216.241.8333, for Allstate Insurance Company.
W. Craig Bashein, 216.771.3239, for Kimberly Neal-Pettit.
Please note: Opinion summaries are prepared by the Office of Public Information for the general public and news media. Opinion summaries are not prepared for every opinion released by the Court, but only for those cases considered noteworthy or of great public interest. Opinion summaries are not to be considered as official headnotes or syllabi of Court opinions. The full text of this and other Court opinions from 1992 to the present are available online from the Reporter of Decisions.
2009-0325. Neal-Pettit v. Lahman, Slip Opinion No. 2010-Ohio-1829.
Cuyahoga App. No. 91551, 2008-Ohio-6653. Judgment of the court of appeals affirmed.
Pfeifer, O'Connor, Lanzinger, and Cupp, JJ., concur.
Lundberg Stratton and O'Donnell, JJ., dissent.
Brown, C.J., not participating.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2010/2010-Ohio-1829.pdf
(May 4, 2010) The Supreme Court of Ohio ruled today that an award of attorney fees in a civil lawsuit is distinct from an award of punitive damages, and the public policy of the state does not prevent an insurance policy from providing coverage for attorney fees when they are awarded solely as a result of an award for punitive damages.
Applying that analysis to a Cuyahoga County personal injury case, the Court found that an auto insurance policy issued to Linda Lahman provided coverage for a jury’s award of attorney fees to another motorist, Kimberly Neal-Pettit, who was injured in an auto accident caused by Lahman. The court’s 4-2 majority decision was authored by Justice Judith Ann Lanzinger.
Neal-Pettit was injured in 2003 when her vehicle was hit by Lahman, who was driving while intoxicated and fleeing the scene of an earlier collision. Neal-Pettit sued Lahman for damages arising from her injuries.
A jury awarded Neal-Pettit compensatory damages of $113,800 and an additional $75,000 in punitive damages. Based on a finding that Lahman had acted “with malice” in causing Neal Pettit’s injuries, the jury also awarded Neal-Pettit attorney fees that the court later set at $46,825 along with an additional sum for litigation expenses. Lahman’s insurance company, Allstate, paid Neal-Pettit the amounts awarded as compensatory damages, interest and expenses, but denied any coverage under its policy for either the punitive damages or attorney fees awarded by the jury.
Neal-Pettit filed suit against Allstate in the Cuyahoga County Court of Common Pleas seeking payment for the attorney fee portion of the jury verdict. The trial court granted summary judgment in favor of Neal-Pettit. Allstate appealed, arguing that it had not contracted to pay attorney fees and that an attorney-fee award is an element of punitive damages, which public policy prevents an insurer from covering. The 8th District Court of Appeals affirmed the trial court’s decision, holding that attorney fees are “conceptually distinct” from punitive damages and that attorney fees were not expressly excluded from coverage by the language of the Allstate policy issued to Lahman. Allstate sought and was granted Supreme Court review of the 8th District’s decision.
In today’s decision affirming the 8th District, Justice Lanzinger rejected Allstate’s argument that the attorney fee award is an element of the jury’s award of punitive damages because both types of relief are based on a finding that the defendant acted “with malice.” Quoting from the Supreme Court of Ohio’s 1859 decision in Roberts v. Mason, she wrote: “(T)he fact that the awards have similar bases is irrelevant. We have recognized that attorney-fee awards and punitive-damages awards are distinct: ‘In an action to recover damages for a tort which involves the ingredients of fraud, malice, or insult, a jury may go beyond the rule of mere compensation to the party aggrieved, and award exemplary or punitive damages ... In such a case, the jury may, in their estimate of compensatory damages, take into consideration and include reasonable fees of counsel employed by the plaintiff in the prosecution of his action.’”
With regard to an exclusion of coverage in Lahman’s policy for “punitive or exemplary damages, fines or penalties,” Justice Lanzinger wrote: “(T)he exclusion does not refer in any way to attorney fees or litigation expenses. It specifically mentions only punitive or exemplary damages, which, as we have discussed, are conceptually distinct from attorney fees. Therefore, the term ‘punitive or exemplary damages’ does not clearly and unambiguously encompass an award of attorney fees. We decline to read such language into the contract. We instead construe the policy strictly against the insurer. ... Allstate, as the drafter, is responsible for ensuring that the policy states clearly what it does and does not cover.”
Finally, the Court disagreed with Allstate’s claim that it would be against public policy for an insurer to pay attorney fees on behalf of a policyholder when those fees are awarded solely as a result of a punitive damages award.
Justice Lanzinger wrote: “It is true that public policy prevents insurance contracts from insuring against claims for punitive damages based upon an insured’s malicious conduct. … In addition, R.C. 3937.182(B) prohibits insurance coverage of punitive damages: ‘No policy of automobile or motor vehicle insurance ... shall provide coverage for judgments or claims against an insured for punitive or exemplary damages.’ But R.C. 3937.182(B) mentions only punitive and exemplary damages, not attorney fees. The General Assembly chose not to mention attorney fees when it drafted the statute, and we decline to add them. ... Our holding will not encourage wrongful behavior merely because it permits insurers to cover attorney fees for which tortfeasors become liable. The tortfeasors remain liable for punitive damages awarded for their malicious actions, and these punitive damages remain uninsurable. Payment by the insurer of an attorney-fee award violates neither public policy nor R.C. 3937.182(B).”
Justice Lanzinger’s opinion was joined by Justices Paul E. Pfeifer, Maureen O’Connor and Robert R. Cupp.
Justice Evelyn Lundberg Stratton entered a dissenting opinion, joined by Justice Terrence O’Donnell, in which she disputed the majority’s conclusion that an award of attorney fees that is based solely on an award of punitive damages is nevertheless separate and distinct from those punitive damages.
Justice Stratton wrote: “The Allstate policy here agrees to pay for damages because of bodily injury and property damage. The policy excludes coverage for ‘punitive or exemplary damages, fines or penalties.’ There is an attorney-fee award in this case only because of the punitive-damages award; thus, the attorney-fee award is a ‘penalty’ designed to punish. The attorney fees are not compensable damages ‘because of bodily injury.’ I believe that the award is punitive in nature and is expressly excluded by the Allstate policy. Because of the punitive nature of an attorney-fee award, I also believe that it is against public policy for an insurer to pay attorney fees on behalf of its insured when the fees are awarded in connection with and as a direct result of a punitive-damages award.”
Chief Justice Eric Brown did not participate in the Court’s deliberations or decision in the case.
Contacts
Thomas M. Coughlin Jr., 216.241.8333, for Allstate Insurance Company.
W. Craig Bashein, 216.771.3239, for Kimberly Neal-Pettit.
Please note: Opinion summaries are prepared by the Office of Public Information for the general public and news media. Opinion summaries are not prepared for every opinion released by the Court, but only for those cases considered noteworthy or of great public interest. Opinion summaries are not to be considered as official headnotes or syllabi of Court opinions. The full text of this and other Court opinions from 1992 to the present are available online from the Reporter of Decisions.
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