As part of our continuing mission to “make a difference” in our community, Finney Law Firm attorney Bradley M. Gibson has been named Vice President of the Moeller High School Alumni Association.

We are proud of Brad, and happy for Moeller as his efforts will certainly have a positive impact there as they do for us and our clients!

Read more here.

As a litigator, one of my jobs is to ensure that my clients understand the risks and benefits of pursuing or defending a lawsuit. As the saying goes, knowledge is power. Only when my clients understand the economic realities of their case are they empowered to make the right decision for them.

Frequently, a client will assume that if we prevail in the litigation, the opposing party will have to reimburse my client for his or her attorney fees. But, the reality is that attorney fees are awarded only in special circumstances, and even when those circumstances are present, it is far from guaranteed that a court will award attorney fees to the prevailing party.

Ohio follows the “American rule” for the recovery of attorney fees under which a prevailing party in a civil action generally cannot recover attorney fees as part of the costs of litigation. Attorney fees may be awarded to the prevailing party, however, when: (1) a federal or state statute explicitly provides for an award of attorney fees; (2) the prevailing party demonstrates bad faith or malicious conduct on the part of the unsuccessful litigant; or (3) where the dispute involves an enforceable contract that contains an attorney fee provision.

The Fourth District Court of Appeals recently issued a decision discussing whether a prevailing party in a contract dispute may recover its attorney fees as damages from the opposing party.  In 2-J Supply, Inc. v. Garret & Parker, LLC, the plaintiff was granted default judgment on its claim for goods sold to the defendant under the terms of a credit account application. The defendants had also personally guaranteed their debts. Both the credit account application and the personal guarantees contained a provision that required the defendants to pay the plaintiff’s attorney fees and litigation costs if the defendants defaulted on their obligations under the contracts. Nevertheless, the trial court determined that the plaintiff was not entitled to an award of its attorney fees because no statute authorized the recovery of those fees.

The plaintiff appealed the trial court’s decision denying its request for attorney fees. On appeal, the Fourth District held that the trial court erred in refusing to award attorney fees. In its decision, the appellate court emphasized that parties have a fundamental right to contract, and as a result, agreements to pay another’s attorney fees are normally enforceable and not void as against public policy. The court explained that where the attorney fee provision is unambiguous, is not the product of compulsion or duress, and did not result from the parties having unequal bargaining power, the provision should be enforced by the courts.

Judge Hoover authored a vigorous dissent, however, stating that the Ohio Supreme Court has previously held that contracts for the payment of attorney fees upon default of a debt obligation are void and unenforceable. Judge Hoover reasoned that the Credit Account Application at issue operated as a penalty to the defaulting party and only benefitted the plaintiff/creditor who provided the form agreement. The dissent further opined that contractual attorney fee provisions should only be enforced where the evidence suggests that the provision was freely negotiated by parties with equal bargaining power.

Despite the clear contractual provision at issue in this case, the dissenting opinion highlights that almost nothing is guaranteed when it comes to seeking a recovery of a litigant’s attorney fees. When contracts provide attorney fees for only one party – as opposed to a provision allowing the successful party to recover its fees – they are less likely to be enforced.

It is important that litigants understand the costs of prosecuting or defending a lawsuit. It is my goal to hold these candid conversations with my clients early and often so we can develop the best strategy going forward for each client on each case. What makes sense for one, may not make sense for another. The potential recovery of attorney fees may help shape these decisions, but clients must understand that courts generally disfavor awarding such fees unless special circumstances exist.

This discussion also highlights the importance of contract drafting for our commercial clients. As a litigator, I typically get involved only after a dispute arises. All too often I find myself in the position of having to inform my clients that if a particular contract term had simply been incorporated into a contract, or drafted more appropriately, they would have allowed themselves a remedy far superior to what is presently available.

Our transactional team is well aware of this conundrum, and strives to ensure that our commercial clients are well-protected in their contractual documents to avoid these potential pitfalls before they arise. A well-drafted contractual provision can be the difference between expensive litigation, and a quick, decisive resolution.

The Finney Law Firm is positioned to serve your litigation and transactional needs.  On the front end, we work to provide our commercial clients with contractual documents that will best position them should a dispute later arise. With respect to litigation, we make it our goal to fully inform our clients of all aspects of their case – legal and economic – so that we can empower you to make the best decisions necessary to resolve your disputes.

The statute of limitations for a medical malpractice claim is one year. In other words, you will lose your right to seek compensation for medical malpractice if you fail to file your claim within the one-year period. While this is simple enough on its face, the right to recover on a medical malpractice claim often turns on precisely when that one-year statute begins to run. A recent case out of Ohio’s Fifth District Court of Appeals explains how Ohio courts determine this important date.

In Kelly v. Aultman Physician Center, Jaquayla Kelly sued a physician group for medical malpractice claiming that she suffered complications arising from the physicians’ negligent treatment. The physicians had placed a Mirena intrauterine device (“IUD”) in Kelly’s uterus for contraceptive purposes in June of 2008. Over the next 18 months, Kelly intermittently returned to the physicians complaining of abdominal pain. Eventually, in April of 2010, it was discovered that the IUD had pierced Kelly’s uterine cavity. As a result, Kelly underwent a total abdominal hysterectomy, removal of both ovaries and fallopian tubes, bilateral gutter abscess removal, appendectomy, and removal of multiple pelvic abscesses. Kelly then developed septic shock and multi-organ system failures, ultimately requiring her to spend four days on a ventilator in the intensive care unit and another two weeks in the hospital before she recovered.
In September of 2012, Kelly saw a legal advertisement on television advising viewers of complications related to the use of the Mirena IUD device. Kelly sought legal advice based on the commercial and her lawyers were able to obtain medical records documenting the alleged malpractice in early 2013. Kelly then filed her medical malpractice claim in March of 2013.

The trial court dismissed Kelly’s medical malpractice claim, finding that she filed the claim beyond the one-year statute of limitations period under R.C. 2305.113. On appeal, Kelly argued that the one-year statute of limitations did not begin to run until she acquired medical records containing evidence of the malpractice in early 2013. Thus, she claimed that the statute had not elapsed when she filed the claim in March of 2013.

The Fifth District Court of Appeals noted that the one-year period commences to run (a) when the patient discovers, or should have discovered, the injury, or (b) when the physician-patient relationship for that condition terminates, whichever occurs later. The appellate court further noted that the Ohio Supreme Court previously held that under the discovery rule, a “cognizable event” triggers the running of the statutory time. A “cognizable event” is something that should alert a reasonable patient that an improper medical procedure, treatment or diagnosis has taken place. Constructive knowledge of facts, rather than actual knowledge of their significance, is enough to start the statute running. The Fifth District explained that “the statute of limitations in a medical malpractice case will be triggered even if a potential plaintiff has not uncovered all relevant facts to constitute her cause of action to trigger the running of the statute of limitations. Thus, the occurrence of a cognizable event makes it incumbent upon that individual to investigate his or her case completely.”

In applying this analysis to Kelly’s case, the court determined that the discovery of the complications caused by the IUD and the resulting major surgery in April of 2010 was the cognizable event that triggered the statute of limitations. According to the court, the events in April 2010, “should have given Kelly reason to believe or at least investigate her claim that malpractice may have been committed in the placement of the IUD or during her treatment of her complaints with the IUD.” Because Kelly filed her medical malpractice claim in 2013 (after the one-year statute expired in April 2011) the Fifth District affirmed the trial court’s dismissal of Kelly’s medical malpractice claim.

This case highlights the grave consequences that may befall a patient who delays pursuing a medical malpractice claim. A person injured by a physician’s malpractice must commence his or her lawsuit within one year of the date that person discovered, or should have discovered reason to believe that malpractice may have been committed. If you believe you may have suffered an injury as a result of medical malpractice it is imperative that you seek representation immediately. The process of obtaining medical records and an independent review of the records takes time, and generally must be done before a lawsuit can be commenced. Our litigation team can obtain the necessary information to evaluate your case, and will diligently seek compensation from negligent parties. Please do not hesitate to contact us if you have reason to believe you have suffered from medical malpractice.

Under the Fourth Amendment to the United States Constitution, individuals are protected from “unreasonable searches and seizures” performed by government entities. Generally, this means that a police officer cannot search an individual without a warrant unless the officer has “probable cause” to believe a crime has been committed. If the officer lacks probable cause, the search is “unreasonable” under the Fourth Amendment.

In 1985, the Supreme Court held in New Jersey v. T.L.O. that the Fourth Amendment’s prohibition against unreasonable searches and seizures applies to students in public schools. However, the Fourth Amendment rights guaranteed to public school students is balanced with the school’s duty to maintain order and discipline within the school. Students have a decreased expectation of privacy in their person and belongings in the school setting because the school administrators stand in loco parentis – in the place of the parent – with respect to the students.

As a result, the courts have applied a more relaxed “reasonableness” standard when evaluation the permissibility of school searches. Instead of “probable cause,” school administrators must have “reasonable cause” or “reasonable suspicion” to conduct a search. In applying this reasonableness standard, the courts have determined that a school administrator’s search of a student complies with the Fourth Amendment if: (1) the search is justified at its inception, and (2) if the scope of the search is reasonably related to the circumstances necessitating the search.

One area that is a hot bed of Fourth Amendment litigation in both the criminal and school context is the permissibility of cell phone searches. Earlier this year, the Supreme Court issued its decision in Riley v. California, in which the Court held that police officers generally may not search the contents of a cell phone seized from a criminal defendant without a warrant. The Court recognized that modern cell phones may contain an immense amount of personal data in which a person has a high expectation of privacy.

As more and more students bring cell phones to school, school administrators must determine whether they may properly search a student’s cell phone when the student is suspected of violating school disciplinary codes. In light of Riley, it appears that courts will be more likely to side with students, notwithstanding their reduced expectation of privacy, if the suspected violation has nothing to do with a cell phone. It is reasonable to anticipate that future litigation will further define the scope of permissible cell phone searches, and clarify how Riley impacts the scope of student searches. In any event, school administrators are still bound by the standard annunciated in New Jersey v. T.L.O., which requires that any search of a student be justified at its inception and be reasonably related to the circumstances necessitating the search in the first instance.

 

 

House Bill 343, which addresses a number of education issues, is currently  pending in the House Education Committee. On November 13, 2014, a provision was addedto the Bill to eliminate the minimum teacher salary schedule from state law. Under the current law, the minimum salary schedule provides a framework for paying teachers commensurate with their experience. Critics of the minimum salary schedule have long pushed for a merit-based salary system under which teachers would receive salary increases based on performance rather than experience. Proponents of the salary schedule argue that it aids low-income districts in attracting teachers, and helps prevent discrimination. Teacher pay remains a divisive issue and there is sure to be opposition from democrats and teacher unions as the Bill moves through the General Assembly. The Bill must pass through the House and Senate before it can become law, and will likely be amended a number of times before it reaches the Governor’s desk. We will be following House Bill 343 as it makes its way through the legislature.

Most lease agreements require the tenant to pay rent on the first of the month to secure her right to occupy the property for the remainder of that month. This is referred to as a future rent payment. Nonpayment of rent is the most common cause for a landlord’s decision to file an eviction proceeding. By the time a landlord decides to pursue an eviction, it is quite often the case that the tenant is three or more months behind on payments. During the course of the litigation, the tenant typically falls further behind on payments. The tenant then owes past due rent, for liability already incurred, in addition to the normal future rent payments. Sometimes the tenant offers to bring his past due delinquency current, and resume making future rent payments to the landlord. The question that then confronts landlords is whether they may accept payments from the tenant and lawfully continue forward with the eviction proceeding at the same time.

Recently, in Urban Partnership Bank v. Mosezit Academy, Inc., the Eighth District Court of Appeals of Ohio highlighted the important distinction between a landlord’s acceptance of past due rent and future rent payments during an eviction proceeding. In this case, there was no dispute that the tenant breached the lease by failing to make the monthly payments. The trial court terminated the lease and ordered the tenant to vacate the property.

The tenant appealed the trial court’s decision, and argued that the landlord waived its right to eviction by accepting rental payments during the eviction process. On review, the Eighth District Court of Appeals noted that an eviction cannot proceed if the landlord has waived the notice to vacate. It further stated that it is a generally accepted rule in Ohio that a notice to vacate is deemed waived as a matter of law if the landlord accepts future rent payments after serving a notice to vacate. In contrast, if the landlord accepts payment for past due rent, the landlord does not waive the notice to vacate. In this case, there was no evidence that the tenant’s payments to the landlord during the eviction proceeding were for future rent. Accordingly, the appellate court upheld the trial court’s decision that the landlord did not waive its right to eviction by accepting the past due rental payments during the case.

This case should remind landlords that if they accepts future rent payments while pursuing an eviction, the notice to vacate will be deemed waived and the eviction should be dismissed. On the other hand, landlords are permitted to collect past due rent during an eviction case. Landlords must be prepared to argue this point to the judge in the event that the tenant moves for a dismissal of the eviction based on the payment of past due rent.

The Finney Law Firm has extensive experience in both residential and commercial leasing disputes. Please contact our office if you have any questions about current or prospective leasing arrangements.

On August 18, 2014, the Sixth Circuit Court of Appeals rendered a decision in N.W. v. Boone County Board of Education, which denied IDEA reimbursement to the parents of an autistic child. The parents filed the action under the Individuals with Disabilities Education Act (“IDEA”) arguing that the school district had failed to offer a “free appropriate public education” (“FAPE”) to their child, as required by IDEA.

This case involved an autistic student who had been diagnosed with apraxia. Under the student’s Individual Educational Program (“IEP”) the student had been placed at St. Rita’s School for the Deaf. However, the parents became dissatisfied with St. Rita’s program, and unilaterally removed their son and placed him in a private school in Cincinnati without the local school district’s consent.
After unilaterally placing their son in a new private school, the parents sought reimbursement of tuition and transportation costs from the school district. The school district, however, maintained that it could provide the student with FAPE. The parties attempted to mediate the placement issue for three years, without success, and eventually litigation ensued at the administrative level, and then before the federal courts.

The parents filed suit in the District Court offering two main arguments for reimbursement: (1) that the school district’s plan failed to provide a FAPE; and (2) IDEA’s “Stay-Put” provision permitted the student to continue attending the private school and required the school district to reimburse the parents for tuition and transportation expenses at such school until the dispute was resolved.

Despite finding that the parents failed to show that the school district denied their son a FAPE and that the parents unilaterally withdrew their child from the district’s schools, the court ordered the school district to reimburse the parents for the tuition and transportation costs incurred by attending the private school. The school district appealed the decision to the Sixth Circuit, which reversed the decision.

On appeal, the Sixth Circuit held that the IDEA does not permit the courts to order reimbursement absent a finding that a school district failed to offer a FAPE. The Sixth Circuit relied on the district court’s determination that the parents had failed to prove the school district did not offer a FAPE, which the parents did not appeal to the Sixth Circuit.

Moreover, the Sixth Circuit ruled that the IDEA’s “Stay-Put” provision did not apply to the student. The Sixth Circuit stated that in order to qualify for stay-put protection and reimbursement, the school district’s approval is necessary for the student to be “placed” at a school. Thus, the Sixth Circuit determined that the student had not be “placed” at the private school because his parents unilaterally enrolled him at the private school, without the school district’s approval.

Under the IDEA, a FAPE must be provided to all disabled children who are 2 to 21 years of age. A FAPE is to be provided at the public’s expense and in conformity with each disabled child’s IEP. According to the Sixth Circuit, however, a school district will not be forced to reimburse parents for expenses incurred for private schooling when the parents unilaterally enroll their child in private school, without establishing that the school district failed to offer a FAPE to the student.

In construction projects, the question often arises as to when subcontractors are due payment from the general contractor. A disruption in the flow of payment from the owner to the general contractor, and then to the subcontractors is often the cause of litigation in construction disputes. In entering into a contract to provide services to a general contractor, the subcontractor must be aware of the payment clause in its agreement in order to appropriately assess its risk in proceeding with supplying its services for the project.

Signing ContractSubcontractor agreements often contain either a “pay-if-paid” clause or a “pay-when-paid” clause. A “pay-when-paid” clause requires the general contractor to pay the subcontractor regardless of whether the general contractor receives payment from the owner. Conversely, a “pay-if-paid” clause requires the general contractor to pay the subcontractor only if the owner pays the general contractor.

The Ohio Supreme Court recently clarified the distinction between these payment clauses in Transtar Elec, Inc. v. AEM Elec. Servs. Corp., Slip Opinion No. 2014-Ohio-3095. In Transtar, the subcontractor filed suit seeking payment of over $44,000 that was never paid by the general contractor or the owner. The general contractor only paid a portion of the work completed by the subcontractor because the general contractor had not received full payment from the owner.

The subcontract at issue contained the following language:

The Contractor shall pay to the Subcontractor the amount due under subparagraph (a) above only upon the satisfaction of all four of the following conditions: (i) the Subcontractor has completed all of the Work covered by the payment in a timely and workmanlike manner, …(ii) the Owner has approved the Work, …(iii) the Subcontractor proves to the Contractor’s sole satisfaction that the Project is free and clear from all liens….and (iv) the Contractor has received payment from the Owner for the Work performed by Subcontractor. RECEIPT OF PAYMENT BY CONTRACTOR FROM OWNER FOR WORK PERFORMED BY SUBCONTRACTOR IS A CONDITION PRECEDENT TO PAYMENT BY CONTRACTOR TO SUBCONTRACTOR FOR THAT WORK.

The general contractor relied on the provision that payment from the owner was a “condition precedent” to payment by the contractor, to support its decision not to pay the subcontractor for all of its work. The subcontractor argued that the payment clause was actually a “pay-when-paid” provision, which required the general contractor to pay regardless of whether it received full payment from the owner.

The Sixth District sided with the subcontractor, finding that the payment provision did not contain adequate language to create a “pay-if-paid” clause. The Sixth District reasoned that in order to shift the risk of owner nonpayment to the subcontractor, the payment provision must clearly and unambiguously demonstrate the parties’ intent to do so.

The general contractor appealed the decision to the Ohio Supreme Court, which reversed the Sixth District’s decision. The Ohio Supreme Court found that by using the language “condition precedent” in the payment clause, the parties intended that the risk of the owner’s nonpayment shift to the subcontractor rather than remain with the general contractor. In other words, by making payment from the owner to the general contractor a “condition precedent” to payment from the general contractor to the subcontractor, the parties had agreed to a “pay-if-paid” clause. As a result, the subcontractor could not force the general contractor to pay the balance due under the contract.

The Transtar decision highlights the importance of fully understanding the terms of a construction contract in order to properly plan for the risks that may confront a general contractor or a subcontractor in undertaking a construction project. A party to a construction contract must be able to identify whether the contract contains a “pay-if-paid” clause, or a “pay-when-paid” clause, and must fully understand how each clause shifts the risk of nonpayment.

In addition to understanding the payment terms in its contract, subcontractors should also remember to preserve their mechanic’s lien rights to further protect their ability to receive payment for their work. Under Ohio Revised Code 41113.62(E), a subcontractor does not waive its mechanic’s lien rights by entering into a “pay-if-paid” contract. Thus, when choosing to provide services subject to a “pay-if-paid” clause, a subcontractor should comply with Ohio’s Mechanics Lien law in order to provide the best possible chance of receiving full payment for its services.

The Finney Law Firm has represented owners, general contractors, and subcontractors in construction projects. Our attorneys are experienced in negotiating contracts and in litigating construction disputes. Please contact us if we can assist you with your legal needs.

 

Litigation is expensive; however, the cost of failing to retain experienced counsel may be devastating to your case. The 8th District Court of Appeals in Cuyahoga County recently issued a decision that provides a cautionary tale for litigants who proceed with inexperienced counsel or decide to represent their own interests.

In Provident Funding Associates, LP v. Turner, 2014-Ohio-2529, homeowners appealed the trial court’s decision of foreclosure in favor of the bank. While the appeal was pending the foreclosed property was sold at a sheriff’s sale, and the court entered a decree of confirmation of the sale. The homeowners then filed a timely notice of appeal of the court’s judgment confirming the sale.

Although the homeowners had two valid appeals pending before the appellate court, they never filed a separate motion to stay the foreclosure proceedings, nor did they file a motion to stay the distribution of the proceeds from the sheriff’s sale. Before their appeal was heard, the property was sold and the proceeds of the sale were disbursed pursuant to court order.

When the appellate court reviewed the homeowners’ appeal, it determined that the case was “moot.” In other words, the appellate court determined that there was no remedy it could provide to the homeowners regardless of whether their appeal had merit, because the property was already sold to a third party and the sale proceeds were disbursed. As a result, the appellate court dismissed the appeal.

At first blush this seems like a harsh result. The homeowners timely appealed the trial court decisions and were set to present arguments to an appellate court in an effort to reverse the decree of foreclosure. Despite complying with the requirements for appealing a decision to the district court, however, the homeowners failed to preserve their potential remedies by failing to file separate motions to stay the foreclosure proceedings and to stay the distribution of the sale proceeds. By failing to file these simple motions, the homeowners rendered their appeal “moot” meaning there was no basis for the appellate court to review the merits of the appeal, regardless of whether the homeowners’ claims were valid.

The world of litigation is complex and detailed. If the homeowners had retained qualified counsel they would have at least had their day in court before the 8th District. The attorneys at the Finney Law Firm are experienced litigators who will guide you through the difficult litigation process. Please do not hesitate to contact our firm if you are in need of legal representation.

Many of our clients have experienced the frustrations of dealing with the local zoning codes and zoning authorities. A recent case out of the Second District Court of Appeals in Montgomery County underscores the complexities of the zoning process and the importance of understanding how your local zoning code restricts the use of your commercial or residential property.

In Dayton Properties, LLC v. Jefferson Twp. Bd. Of Zoning Appeals, 2014-Ohio-2209, a property owner purchased an auto salvage business that had been in operation for over 60 years. At some point during the prior operation of the business, the township had changed the zoning classification of the property to “light industrial,” which did not permit the operation of an auto salvage business under the township’s zoning code. However, the business was permitted to continue as a nonconforming prior use.

When the owner purchased the property and business, he met with the township’s zoning director and disclosed his intent to add a scrap metal line of business to the auto salvage business already established at the property. The zoning officials told the property owner that his proposed line of business would comply with the zoning code based on the continuation of the property’s nonconforming use.

One year later, the property owner received a Legal Notice of Violation for operating the business outside the scope of allowable uses. The property owner appealed the Notice to the Board of Zoning Appeals, the Montgomery County Common Pleas Court, and finally to the Second District Court of Appeals, losing his case at each stop.

In reviewing the appeal, the Second District noted that the right to continue a nonconforming use is based upon the concept that one should not be deprived of a substantial investment which existed prior to the enactment of the zoning ordinance. However, the rights of a nonconforming user are limited, and the clear intent and purpose is to eliminate such uses as rapidly as possible. With respect to the subject property, the Second District found that the original nonconforming use of the property was only for the sale of parts from junked automobiles, and that to extend the nonconforming use to include the purchase of scrap metal is prohibited under the township’s zoning resolutions.

The Second District’s Decision highlights the importance of fully vetting any property you intend to purchase. It is imperative that you understand how the zoning resolutions will limit the use of your property. In the case discussed above, the property owner was found to be in violation of the zoning code despite the fact that the zoning officials advised him that his scrap metal business would be acceptable under the code.

The Finney Law Firm has years of experience advising clients on zoning issues. We represent clients in zoning hearings and we have appealed adverse decisions through the courts.  Our firm has also been successful in defeating zoning provisions on both First and Fifth Amendment grounds. If you need help navigating the complexities of the zoning code or the appeals process, please do not hesitate to contact one of our qualified attorneys.