Blog - Finney Law Firm

Ohio Contract Law: Voiding contracts on the basis of fraud

By Casey A. JonesMay 12, 2022 Leave a comment

Properly drafted written contracts are typically enforceable as against the parties thereto, with few exceptions – fraud being one of them. The manner in which written contracts are treated upon the allegation of fraud is highly dependent on the type of fraud alleged. In short, it is a question of whether the party claiming fraud alleges that they were defrauded as to the terms or nature of the contract or as to the facts and representations underlying the contract.

Void and Voidability

One of the most common scenarios in which this question arises is relative to settlement agreements and/or “releases,” where one party gives some consideration (e.g., money) in exchange for the settlement and release of actual or potential legal claims. The type of fraud being alleged determines whether the contract or agreement is automatically void (void ab initio) or merely voidable. “A release obtained by fraud in the factum is void ab initio, while a release obtained by fraud in the inducement is merely voidable upon proof of fraud.” Haller v. Borror Corp., 50 Ohio St. 3d 10, 13 (1990). “Whether a release was procured through fraud of either type is a question for the trier of fact [such as a jury]. Whether the fraud as alleged is in the factum or in the inducement is an issue of law for the court.” Id., at 14-15.

Fraud in the Factum

“A release is obtained by fraud in the factum where an intentional act or misrepresentation of one party precludes a meeting of the minds concerning the nature or character of the purported agreement.” Id. Imagine a grandchild telling her grandmother that she is signing a letter for school when it is really a change to her estate plan. “Where device, trick, or want of capacity produces ‘no knowledge on the part of the releasor of the nature of the instrument, or no intention on his part to sign a release or such a release as the one executed,’ there has been no meeting of the minds.” Id., quoting Picklesimer v. Baltimore & O. R. Co., 151 Ohio St. 1, 5 (1949).

Fraud in the Inducement

As the title would suggest, “[c]ases of fraud in the inducement. . . are those in which the plaintiff, while admitting that he released his claim for damages and received a consideration therefor, asserts that he was induced to do so by the defendant’s fraud or misrepresentation.” Haller, at 14. In Haller, the alleged fraud involved the financial solvency of a defendant company. In essence, a representative of the company allegedly represented to the plaintiffs that the company would soon be closed and, therefore, if Plaintiffs did not accept the offered settlement, they would likely receive nothing with respect to their claim(s). Id., at 11-12. The plaintiffs apparently later learned that this was not true. The Ohio Supreme Court found these allegations consistent with a claim of fraud in the inducement.

Practical Considerations

“A release of liability procured through fraud in the inducement is voidable only, and can be contested only after a return or tender of consideration.” Haller v. Borror Corp., 50 Ohio St. 3d 10, 14 (1990); see also Berry v. Javitch, Block & Rathbone, L.L.P., 127 Ohio St. 3d 480, 483 (2010) (“[A]n action for fraud in the inducement of a settlement of a tort claim is prohibited unless the plaintiff tenders back the consideration received and rescinds the release.”); Manhattan Life Ins. Co. v. Burke, 69 Ohio St. 294 (1903).

While it may seem obvious, one cannot seek to void a contract while retaining the consideration they received for the same. In Haller, the plaintiffs received $50,000 in exchange for a release of their prior claims. The Court, finding their allegations of fraud to be consistent with fraud in the inducement, held that the plaintiffs were required to tender back the $50,000 to the defendants before they could seek to void the settlement agreement and release. Because they had not done so, the release they signed remained valid and enforceable, and their claims (including those released under the settlement agreement and that of fraud in the inducement) were dismissed. This is consistent with the idea that one cannot “cherry-pick” which parts of a contract to enforce; they cannot denounce their obligations under a contract while retaining the benefits thereof.

When it comes to contract negotiations, these cases demonstrate how important it is to (a) start from a properly drafted contract, and (b) do your due diligence in order to mitigate the risk of later disputes and litigation. Our transactional team is uniquely positioned to help in these negotiations, having significant experience in contract drafting, negotiation, and disputes.

For assistance with contractual matters, contact Casey Jones (513.943.5673 )

Judge Wende Cross certifies classes in Cincinnati “Alarms Tax” case

By Christopher P. FinneyApril 26, 2022April 26, 2022 Leave a comment

Hamilton County Common Pleas Court Judge Wende Cross has certified two classes in White v. Cincinnati, litigation in which both the 1851 Center for Constitutional Law and Finney Law Firm represented payors of the illegal and unconstitutional Cincinnati tax on security alarm systems. The two distinct classes certified are (a) residential and (b) non-residential payors of the Cincinnati alarms tax.

The City charged residential alarm-system-owners $50 per year to register their systems and commercial owners $100 to register their systems. Last fall, the 1st District Court of Appeals unanimously ruled the tax illegal under Ohio law and unconstitutional, overruling a trial Court ruling on the same subject. In March of this year, the Ohio Supreme Court preserved that victory for Cincinnati property owners when it refused to accept discretionary review of the case.

We now proceed to an an Order that will establish the amount and procedures for the restitution of the illegally-collected sums, a fairness hearing, and then distribution of the refunds to payors. We aim for the conclusion of those steps this calendar year. The amount of restitution is expected to be more than $3.6 million.

For questions, contact Chris Finney at 513.943.6655.

You may read the order issued April 22 here.

Governor DeWine signs into law legislation that significantly clips wings of School Districts in tax valuation litigation

By Christopher P. FinneyApril 21, 2022 Leave a comment

Until now, School Districts in Ohio were fully empowered to participate in legal proceedings to oppose the lowering of Auditor’s property tax valuations and to seek increases in property tax valuations. No more.

As we explain here, the Ohio House and Senate in the past few weeks passed legislation that upends the current equilibrium among County Auditors, property owners and school boards, to tilt matters decidedly in favor of property owners. (In fairness, Ohio had granted school boards a far greater role in the process than most other states.)

Today, Governor DeWine signed that bill, Am. Sub. H.B. 126, into law. Read the summary of the legislation here. The Cleveland Plain Dealer covers today’s events here.

For assistance with property tax valuation matters, please contact Chris Finney (513.943.6655) or Casey Jones (513.943.5673).

Tea Party groups move to unseal Lois Lerner and Holly Paz depositions

By Christopher P. FinneyApril 21, 2022 Leave a comment

As we previously wrote about, here, Finney Law Firm was honored to serve as co-counsel to Tea Party groups throughout the nation in what we believe was the only certified class action ever against the Internal Revenue Service for its targeted discrimination against the plaintiffs resulting in protracted delays in processing and granting tax exemption status due to their political viewpoints. The targeting was led by Obama administration IRS official Lois Lerner and her chief deputy at the IRS, Holly Paz.

After years of pitched legal battles, that litigation ended with a dramatic settlement in which the IRS paid damages to Tea Party groups, the IRS paid the Tea Parties’ attorneys fees, and then-US Attorney General Jeff Sessions issued a personal apology on behalf of the United States of America that included this unequivocal statement about the IRS intentional wrongdoing: “this abuse of power will not be tolerated.”

In that litigation, plaintiffs succeeded in obtaining the depositions of Lerner and Paz, but the transcripts of the depositions — finally revealing their own testimony about the origins and implementation of the outrageous policies and practices — have remain sealed under a temporary emergency Order by Judge Michael Barrett. (Even US House and Senate Committees investigating the wrongdoing were stymied in getting that testimony when Lerner and Paz each invoked their 5th Amendment right against self-incrimination.) That Order bottling up the deposition transcripts was never made final, and thus it could not be appealed. Thus, to this day — more than three years later — the deposition transcripts remain hidden from public scrutiny.

As a result, this week, Plaintiff’s counsel filed a Motion for Writ of Mandamus before the 6th Circuit Court of Appeals seeking to have the depositions unsealed. You may read the Motion here.

Ohio legislature sends major changes in Boards of Education/Boards of Revision process to Governor DeWine for signature

By Christopher P. FinneyApril 7, 2022April 7, 2022 Leave a comment

A bill passed this week by the Ohio legislature could make major changes in the current process for Ohio tax valuation challenges before Ohio Boards of Revision as it relates to participation by Boards of Education if Governor DeWine signs it into law.

Unlike the procedures in many other states, in Ohio, Boards of Education (the major recipients of property tax monies) may both initiate complaints to increase the valuation of real property (and thus increase property taxes owed) and may oppose a property owner’s legal attempts to secure a reduction in tax values as well.

Some major features of the legislation, Am. Sub. H.B. 126, follow:

School districts may not initiate a complaint to increase valuation unless the challenge meets all of three requirements (a) the challenge is based upon an actual arm’s length sale of the subject property before the tax lien date in question (this would then, it seems, also rule out challenges at all of “entity transfer” sales and sales after the tax lien date in question), (b) the sale is at least 10% above the then-established Auditor’s valuation and (c) such sale price exceeds the Auditor’s valuation by at least $500,000 (that amount is then annually subject to a CPI adjustment).
Boards of Education would have to carefully undertake extensive and detailed procedures to specifically authorize by resolution such challenges, on a property-by-property basis, with at least seven days’ advance certified mail notice to each affected property owner. The level of detail of these procedures appears to be nothing more than a series of procedural traps for Boards of Education to discourage their involvement in the tax valuation process.
The involvement of Boards of Education stop at the Board of Revision. While property owners or the Auditor may pursue an appeal of a Board of Revision decision, Boards of Education will have no authority to appeal (or participate in a property owner appeal) of a Board of Revision decision.
Presently, property owners may enter into private settlements with school districts to avoid or end their opposition to a valuation reduction or its attempts to seek valuation increases. H.B. 126 will outlaw the practice of entering into these “side deals.”

More minor changes include:

Boards of Education may file counterclaims to property owner complaints to reduce valuations only if the initial Complaint seeks a reduction of at least $17,500 (Boards of Education rarely if ever file counterclaims below this level at present).
Boards of Revision lose jurisdiction to increase valuations of claims by Boards of Education are not acted upon within one year of the date of the filing of the Complaint (in our experience, this delay only happens in a few large urban counties in the year following a triennial revaluation, so this type of prolonged delay is quite uncommon).

There is no language in the bill about its effective date, upon our initial review, and thus it would seem its effective date would be 91 days after it becomes law (under the Ohio Constitution). Thus, some of these provisions (pursuit of appeals, for example) could have an impact on valuation complaints and school board counterclaims filed in calendar year 2022.

We will promptly update this blog when Governor DeWine either vetoes or signs the legislation into law. He has 10 days to act, or the bill automatically becomes law.

Chris Finney talks to 700 WLW’s Bill Cunningham about unanimous jury verdict against the Ohio Civil Rights Commission Commission (outrageous)

By Christopher P. FinneyApril 2, 2022April 3, 2022 Leave a comment

Listen in as Chris Finney discusses his 8-0 unanimous victory against the Ohio Civil Rights Commission as they attempted to extract money for a tenant in an entirely frivolous case. The conduct of the Ohio Attorney General’s office and the Ohio Civil Rights Commission was shameful and outrageous in this case.

Team Finney notches big unanimous victory in jury trial versus Ohio Civil Rights Commission

By Christopher P. FinneyMarch 29, 2022March 30, 2022 Leave a comment

Truth can be stranger than fiction. And the last few weeks at the Finney Law Firm that has been the case.

Yesterday, Chris Finney, Jessica Gibson and Julie Gugino racked up a unanimous jury verdict (8-0) to defeat a case of claimed retaliation in response to a tenant’s claimed request for a disability accommodation that was met with a non-renewal of a residential lease. The case was styled Ohio Civil Rights Commission v. Abundant Life Faith Fellowship in front of Judge Christian Jenkins in Hamilton County Common Pleas Court. The Civil Rights Commission was also suing the Church’s pastor who had served for 41 years. In candor, the Civil Rights Commission did a terrible job of vetting its own case with a terrible, dishonest plaintiff and a very sympathetic defendant. Its attorneys at trial also were not exactly prepared or stellar.

The Civil Rights Commission case was full of demonstrable untruths about a kind-hearted 74-year-old African American minister who had suffered two strokes. By the testimony of two of her fellow tenants in the building, the complaining tenant had plotted starting fewer than two weeks into her tenancy to drum up a fictitious lawsuit against the landlord as a way to extract money from him — she told this to her fellow tenants. And for a year, she made his life a living hell, with incessant complaints about inadequate heat and fabrication about needing more light for a vision disability (in fact, her complaints about lighting had been adequately addressed early in her tenancy). Dozens of complaints were addressed by visits by with servicemen, engineers, and repairmen to cater to her many whims and incessant gripes. The Cincinnati Health Department came out and confirmed the unit in every room was heated to a comfortable 72°F to 73°F (the tenant lied to the jury — never a good idea — and said the readings were 62°F, 64°F and 66°F).

In the funniest part of the trial, the tenant at first denied and then admitted sending a bizarre text message to the landlord in the depth of winter, after he noticed that the windows of every unit in the building were open, including those of the tenant who constantly complained it was too cold! Here is the text message, grammatical errors and misspellings included:

Yes, her crazy assertion to the landlord was that he must maintain the heat in the unit at 70°F even if the windows of the unit are left open!

Of course Pastor Brown and the Church had to fund the 4-year defense of the Civil Rights Administrative Complaint and the lawsuit, which he did with aplomb, but at great expense. For the benefit of all landlords subject to outrageous prosecutions from obstinate public agencies, he saw this case through to its appropriate and proper end. He refused to be bullied by the Ohio Civil Rights Commission, the office of the Ohio Attorney General and Housing Opportunities Made Equal (H.O.M.E.) (which manufactured evidence and knowingly lied to the Civil Rights Commissions in “building their case”).

For more information or to avoid being bullied by these same agencies: (a) DO NOT TALK TO THEM in an investigation EVER and (b) contact Jessica Gibson (513.943.5677) for assistance with your case.

Another public interest class action win — Cincinnati Alarm Tax

By Christopher P. FinneyMarch 15, 2022 Leave a comment

As we wrote here, in November the Ohio First District Court of Appeals in White v. Cincinnati unanimously ruled in favor of clients of the 1851 Center for Constitutional Law and Finney Law Firm in a challenge to the City of Cincinnati’s alarm tax scheme. The City of Cincinnati asked the Ohio Supreme Court to review that decision, a discretionary call by Court. Historically, Ohio’s top Court accepts only about 5% of such cases for consideration.

Today, the Ohio Supreme Court declined to accept for review the First District decision. Since that was the last stop on the railroad for the City, the inevitable next legal steps are injunction against further collection of the tax, class certification and an order of restitution before Common Pleas Court Judge Wende Cross.

Amazingly, even after the First District ruled that the tax was illegal, through today the City of Cincinnati insisted on continued collection of the tax. So, an injunction by the trial court now will be necessary.

If you are a Cincinnati alarm fee payor, you should be expecting a refund once the amount has been calculated and the procedural hurdles cleared, perhaps later this year. If the City continues to attempt to extract alarm charges from you, respectfully decline and send them this blog entry!

Brad Gibson, Chris Finney named 2022 “Super Lawyers”

By Christopher P. FinneyMarch 15, 2022 Leave a comment

We most value the accolades and appreciation from our clients, but the various legal ratings services are pretty much unanimous that the Finney Law Firm attorneys are superior in their various fields. The latest of these comes from SuperLawyers, a Thompson Reuters rating system.

This year, attorney Bradley M. Gibson was recognized for his skills in the Civil Litigation Category, and Finney Law Firm founder Christopher P. Finney was honored for his work in each of his disciplines of Business Litigation, Land Use/Zoning, Real Estate, Constitutional Law, State, Local & Municipal, and Tax. Each of them are licensed to appear before all Courts in the State of Ohio and the Commonwealth of Kentucky and in the Federal District Court and Appellate Courts in Ohio. Mr. Finney is also licensed before the United States Supreme Court, U.S. Tax Court and in the District of Columbia.

Let us know how we can apply our experience and skill to “Make a Difference” for your legal needs.

Ohio Employment Law: Employment discrimination laws are about more than just firings.

By Stephen E. ImmFebruary 27, 2022 Leave a comment

If you see a headline about a jury verdict in an employment case, it’s likely to be about a case where an employee was fired. Those are the cases where the impact of discrimination can be the most harmful. A wrongful firing can often cause enormous financial and emotional distress to a family, and the jury verdicts in such cases can sometimes be eye-popping.

But people often forget that federal and state employment laws prohibit discrimination at ALL phases of the employment relationship. They apply at the hiring stage as much as at the termination stage. And they also apply at various stages DURING the employment relationship. When employers make decisions about promotions, for instance, they are required to give opportunities without regard to race, sex, age, disability, etc. The same is true for decisions about pay. Employees cannot be denied raises or other benefits based on these characteristics.

Another example is training. And this can be key. If an employee is denied training opportunities, that in turn can lead to being denied opportunities for advancement later on. The Civil Rights Act of 1964, and comparable state laws, provide that employers must not discriminate when making decisions about which employees will be given the chance to learn new skills.

Employers are often mindful of anti-discrimination laws when preparing to terminate employees. They tend to be most fearful of lawsuits when making those kinds of momentous decisions. They sometimes are less careful, however, when making other kinds of employment decisions, and that lack of care can come back to haunt them. Their hiring, promotion, and pay practices and processes are very important as well, and can expose them to significant legal liabilities if they are not even-handed in their application.

Employers are well-advised to have good legal counsel review these process and procedures And employees should be mindful that they have the right to be free from illegal discrimination not just at termination, but at all phases of the employment relationship.

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