Congratulations is due to Finney Law Firm attorney Matt Okiishi who successfully sued today to force the Hamilton County Health Department to allow our client, Amazon Beauty Supply store in Finneytown, to remain open for business during the COVID-19 crisis.
The store, which sells beauty supplies, also markets soap, shampoo, other essential products and, most importantly, the much-sought-after N95 masks. The Hamilton County Health Department, noting that the store also sells non-essential supplies, had ordered them to be shuttered for the duration of the crisis, which for now extends through the end of May.
The business, an existing client of Finney Law Firm, asked us to sue to force the County to allow them to stay in business. We filed suit within 24 hours of first being contacted, and this afternoon our attorneys reached agreement with the attorneys from the Hamilton County Prosecutor’s office to remain open. The case was assigned to Judge Jody Luebbers who essentially told the parties to work the matter out amicably. The parties did so, which included an agreement on the number of customers that would be permitted in the store at any one time.
Channel 12 carried the story this afternoon, and the video featuring attorney Matt Okiishi is here.
“There’s little more rewarding in the law,” said Finney Law Firm founder Chris Finney, “than standing an errant government official up in front of a Judge and making him account for his behavior. Today attorney Okiishi enjoyed that exercise and achieved the desired end for our client.”
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For help when you need to stare down an over-zealous government actor, contact Matt Okiishi (513.943.6659).
In response to the COVID-19 pandemic crisis gripping the nation, today Ohio Governor Mike DeWine issued an executive order addressing commercial leases and commercial mortgages in Ohio. However, from our perspective, the Order is not intended to have any binding effect, and he would have no authority under Ohio law to issue such a binding order if he so desired.
Here are the components of the order, each of which he labels as a “request,” not an Order at all:
Requesting that landlords suspend commercial lease payments for at least 90 days for “small business commercial tenants in the State of Ohio that are facing financial hardship due to the COVID-19 pandemic.”
Requesting that landlords also provide a moratorium on evictions of small business commercial tenants for a term of at least 90 consecutive days.
Requesting that mortgage lenders of Ohio-based properties forbear on collection or enforcement of such mortgage for a period of at least 90 days.
As with our prior blog on the stay-at-home Order, the Order does not seem to have any direct legal effect, but rather is designed to encourage restraint and cooperation in this difficult time all of the world is encountering.
With the advent of the COVID-19 Crisis, Finney Law Firm and Ivy Pointe Title have quickly stepped to the plate, with technology that allows for the practice of law with appropriate social distancing, with attorneys who focus on practice areas to help their clients, and with cutting edge information on emerging programs to help businesses and individuals in need.
Technology allowing for electronic interaction
Finney Law Firm and Ivy Pointe Title have carefully developed the tools to be prepared for a day such as this:
DocuSign allows for execution of documents from your computer. By federal and state law, e-signed documents are fully enforceable as with “inked” documents. Our team is licensed and trained in DocuSign technology for all documents in which clients will allow an electronic signature.
Electronic notary. Finney Law Firm and Ivy Pointe Title contracted with one of only a handful of licensed e-notaries in Ohio for exclusive provision of e-notary services. Using the platform DocVerify, we have the strongest technology to allow real estate closings and other transactions to proceed. By Ohio law, it is permissible to have documents signed and acknowledged (notarized) without person-to-person interaction via electronic signature and electronic notary.
Electronic payments. We use e-billing and credit card payments (and wire transfers and EFTs) for clients who prefer this method of billing and payment.
Electronic discovery and electronic depositions. Your litigation does not need to stop because of the COVID-19 crisis. Most of the work pre-trial can still move forward using e-mail, Zoom.US or Microsoft Teams for depositions, and motion work that can be electronically filed with almost all Courts.
Work-from-Home. If you do need to visit our offices, you will find that most of our professionals are not at their desks. Rather, they are safely (for you and them) working from home with the latest technology including Microsoft Surface laptops, Microsoft Teams Video Conferencing, Microsoft Office 365 data in the cloud, so we can access your data from anywhere in the planet, but with tremendous Microsoft security technology and backups.
Practice areas to help your business
Our business lawyers are up to date and prepared to help you through the thicket of issues that arise or are heightened with the COVID-19 crisis:
Attorney Isaac T. Heintzis proficient in contract interpretation, including how to enforce or avoid obligations under a lease or other agreement. He has already written purchase agreements with COVID-19 contingencies to extend due diligence periods to the declared end of the crisis. As you might expect, Isaac has also had many clients initiate their estate planning, or finish long-delayed estate planning work.
Attorney Stephen E. Imm heads our employment law group, and is advising clients on a myriad of new COVID-19 legislation and addressing employment law claims under previously existing law and the new enactments.
Attorney Bradley M. Gibson heads our litigation group which is dealing with a multitude of business-to-business disputes, including those arising because of the COVID-19 crisis.
Attorney Richard P. Turner runs Ivy Pointe Title and in that capacity has been using every tool at our disposal to continue to close your transactions “accurately and on time, every time.” These include closings respecting social distancing, and we stand prepared to be one of the first agencies in Ohio to implement fully electronic closings. We also can do drive-by closings where you come to our office and sign documents from your car, or we come to you and you can sign them on our car hood.
Attorney Christopher P. Finney heads our public interest practice, and the host of issues addressing government-to-business and government-to-individual interaction arising from the COVID-19 crisis.
CARES Act assistance for your small business
Congress just passed the CoronaVirus Aid, Relief and Economic Security Act, which includes the Paycheck Protection Program that will provide what essentially are grants to businesses with fewer than 500 employees and enhanced Economic Injury Disaster Loans(EIDL).
We are working furiously to meet the needs of our clients in this fast-emerging crisis. Let us know how we can help you or your small business navigate these turbulent waters to come to the other side safely and profitably.
And our hope is that each of you remain healthy throughout this pandemic.
Most Courts have taken a hiatus for an unknown period of time in response to the COVID-19 crisis for most (but not all) trials and live hearings, but nonetheless, litigation work with the team at Finney Law Firm still marches on. (For example, emergency Probate guardianship hearings still are proceeding and criminal proceedings cannot be stayed indefinitely due to Constitutional speedy trial requirements).
Components of litigation
Litigation at the trial level typically consists of four components, (a) the initial pleadings (Complaints, and Motions to Dismiss or an Answer), (b) discovery (consisting of document production, written interrogatories and requests for admission), (c) motion work and then (d) pre-trial and trial work.
Certainly the initial pleading stage and the discovery can be completed without any person-to-person interaction.
Initial pleadings
For the initial pleading stage, we can exchange documents and emails and interview the client over the phone or on a web chat. We then prepare the pleading and can, in most jurisdictions, file it electronically or via fax. If not, it can be mailed in.
Discovery
Typically, the first phase of discovery is written discovery, wherein each side asks the other for relevant documents, paper and electronic, and certain questions in the form of interrogatories and “requests for admissions.” This can all, of course, occur, without any personal meetings. Again, we can gather documents from the client electronically and can interact over the telephone or computer.
Depositions are somewhat trickier, but we have consulted with our Court Reporter, and they assure us that both in-state and out-of-state depositions can be conducted using Skype, Teams or Zoom.Com without any two people being in the same room.
Thus, each component of discovery can be “socially distant” and not endanger any of the litigants, their counsel or the Court reporter.
Motion work
Again, motion work is mostly in writing. In federal Courts, evidence at the motion stage is admitted via a Declaration that does not need to be sworn before a notary public. The attorney does need to maintain an original signature of the Declarant in his files, but that can be mailed between the client and counsel. Audio-visual materials may need to be physically filed with the Court, but again that can be addressed through the mails. State Court evidence is admitted via Affidavit, which means it does need to have a notary public personally witness the signature, but there are notaries still working throughout the COVID-19 crisis.
Certain motions by statute or by Court Rule require evidentiary hearings or in-person argument (Restraining Orders, Rule 11 Motions, and hearings on Motions to Set Aside Settlement). However, other than limited statutory exceptions, litigants do not have a right to have an in-person appearance before a Judge on motions. As a result, the trial Courts could proceed with their work by either eliminating hearings on motions entirely or calling for motion hearings to be held via web or telephone.
Many cases are resolved on motion work, including Default Motions, Motions to Dismiss and Motions for Summary Judgment. If so, the case is “over” or on to the Court of Appeals (see below) without any person-to-person contact.
Thus, all motion work could easily be handled without person-to-person contact or even live court appearances.
Pretrial and trial
Herein lies the rub. Ohio law and the US and Ohio Constitution require that all trials — civil and criminal — be conducted in public and that means in-person attendance. If this crisis progresses, we suspect that our government officials may feel compelled to allow both litigants and observers to appear via web cam. (Surprisingly, that change was just recently more or less unilaterally-declared by the Ohio Attorney General for meetings of public bodies in Ohio.)
But until that change occurs, litigation could well be jammed-up indefinitely at the trial stage. And because it will require Constitutional action, that could take some time and procedural maneuvering as well.
Appellate work
Appeals work at the Ohio and federal Courts of Appeals and Supreme Courts historically is mostly done via paper filings, appellate briefs and occasionally motion work. But by tradition, not by any constitutional or statutory requirement, Appellate Courts have held oral arguments on the merits of an appeal. This is not a right of litigants and therefore the tradition of oral arguments can be waived or modified (such a conference calls or web cams) by the Courts, and if this crisis is protracted, we expect them to do so.
Conclusion
First, most litigation work that does not require the Judge’s involvement (hearings on motions and trials) can proceed in typical fashion with attorneys working from their home or office. We expect that if this crisis extends into summer, the Courts will free up the logjam by modifying rules to allow at least motion hearings via conference call or web-conferencing. If the crisis extends into the fall, the courts may need to consider evidentiary matters coming into the record in ways other than in-person testimony, including Affidavits, video depositions and Skype, Teams or Zoom video conferencing.
For more information on moving forward with your commercial litigation project, please fell free to contact Brad Gibson (513.943-6661), Casey Taylor (513.943.5673), or Christopher P. Finney (513.943.6655.
With the raging COVID-19 crisis and its economic fallout, the question that we are fielding the past few days is:
How can I get out of my contract to do “X”?
Each of the three analyses below hinges on the language of the contract. Thus, “it depends.”
Contract Contingencies
First, with respect to contracts to buy companies, real estate or other assets, consider the contingencies in the contract. For example, read here and here for easy “exits” from Cincinnati Area Board of Realtors residential contracts for buyers.
“Force majeure” provisions
But what about leases, long-term supply contracts, employment contracts, construction contracts and other commercial contracts?
Many such contracts contain what is known as a “force majeure” provision that essentially contemplates precisely the situation in which we find ourselves today: Some unexpected exigency such as war, famine, or pandemic.
In its essence, a force majeure clause is a contract provision that excuses a party’s performance under a contract when certain circumstances beyond their control arise, making performance impracticable, impossible or illegal. These clauses are common in complex commercial contracts, such as a commercial lease (and we really don’t expect to actually use them). Yet here we are and they can be a business-saving resource in determining how to proceed.
Can this provision excuse your performance and let you “get out of” a contract? Well, as you might expect your attorney to say: “it depends.” It depends on the language of the contractual provision.
Here is a sample force majeure provision from a commercial contract:
In the event a party shall be delayed or hindered in or prevented from the performance of any obligation (other than a payment obligation) required under this contract by reason of strikes, lockouts, inability to procure labor or materials, failure of power, fire or other casualty, acts of God, disease, restrictive governmental laws or regulations, riots, insurrection, terrorism, war or any other reason not within the reasonable control of such party, then the performance of such obligation shall be excused for a period of such delay, and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay.
Would such a provision allow a tenant to terminate a lease? Would it allow an employer to terminate an employment contract for a term? Would it allow a manufacturer to avoid its obligations under a supply contract?
In this contractual language, we have the specific exceptions of “disease,” “acts of God,” and “restrictive governmental laws.” Since we have a disease that is arguably an “act of God,” and government-imposed shutdowns, it would seem that there are multiple bases upon which to argue for termination. But there could be countervailing arguments as well. For example, payment obligations are not excused in this sample language.
Some courts have applied force majeure clauses very narrowly, meaning that the specific occurrence has to be contemplated by a force majeure provision. Thus, is the word “disease” in your force majeure clause? Well, COVID-19 would seem to fit tightly within that definition, but does it? Hamilton County, for example, as of this writing, has no reported cases, and yet tens of thousands of people have been thrown out of work because of the fear of pandemic.
Mere diminished performance or increased expenses to perform alone likely would not be a sufficient basis to excuse performance and invoke a force majeure clause.
Business Interruption Insurance
Do you have business interruption insurance that would cover the COVID-19 pandemic consequences?
If you were prescient or cautious enough to buy business interruption coverage, that usually covers only a direct physical loss such as a fire, flood or earthquake. Some policies require that a loss be specifically designated, while other policies have no such requirement.
In the case of COVID-19, it may be tough to prove a direct physical loss but what if a workplace is contaminated and unusable due to a COVID-19 outbreak?
Possibly, business interruption coverage could be invoked if a supplier shuts down and can’t supply product or parts due to COVID-19
Additional considerations
Before triggering contingencies, invoking a force majeure provision or making a claim for insurance coverage, consider the following:
Are alternative means to perform your contractual obligations.
Will the other party to the contract consider mitigation of the performance problem, such as a rent reduction or other part-performance?
Could the parties reach a mutual agreement to terminate a contract or delay performance?
Conclusion
Virtually overnight, our firm and our clients have found ourselves in the middle of single worst crisis in perhaps 100 years. The first option should be to work towards accommodation with the other party to the contract. Beyond that, we have the options set forth above to consider for relief in this incredibly challenging environment.
Call one of our skilled and experienced attorneys if you want to explore your legal options or pursue one of these remedies.
Finney Law Firm prevails in “Mansion House case” through Ohio Supreme Court
Attorney Casey A. Taylor
Recently, our firm had a probate decision make its way all the way up to the Ohio Supreme Court as part of joint effort by Attorneys Isaac T. Heintz of our transactional team and Casey A. Taylor of our litigation team.
While the precise legal issues in that case were somewhat idiosyncratic (and certainly underutilized), the underlying situation in that case was not all that unique. That is, our firm has been approached on more than one occasion by an individual whose spouse has passed away and, to their surprise (or perhaps not), had disinherited them before their passing.
Many times, the surviving spouses are left believing they have no recourse and will be left with pennies on the dollar relative to the decedent’s estate. However, that is not always the case.
A Surviving Spouse’s Right to Purchase Assets from Decedent’s Estate
Under Ohio law, a surviving spouse has the right to purchase certain assets from an estate at the appraised value, including “the mansion house.” See R.C. 2106.16 (providing the right to purchase “the mansion house, including the decedent’s title in the parcel of land on which the mansion house is situated and lots or farm land adjacent to the mansion house and used in conjunction with it as the home of the decedent” at its appraised value, provided that it is not specifically devised/bequeathed to someone else).
The “mansion house” is often not an actual mansion, as the name would suggest but, generally speaking, can be thought of as the decedent’s primary residence. See id. (“. . . as the home of the decedent.”) (emphasis added). Additionally, if there is a farm associated with the mansion house, which is used in connection with the home (and not a commercial farming operation), the farm should also be subject to the surviving spouse’s right to purchase.
The statute, however, is not limited to the “mansion house” but also may apply to household goods and other personal property under certain circumstances. Although it is typically not the focal point of a surviving spouse’s rights, R.C. 2106.16 can provide an opportunity for a surviving spouse to promote a more expeditious resolution of an estate and, if the facts and circumstances are right, benefit monetarily.
As a threshold issue, R.C. 2106.16 only applies to assets that are, “not specifically devised or bequeathed.” A specific devise or bequeath occurs when a Will specifically references a designated asset transferring to a particular party (e.g., I give to John Doe the real estate located on 123 General Street, Anytown, Ohio).
A residual devise/bequest, by contrast, almost never qualifies as a specific devise/bequest (e.g., I give to John Doe the rest, residue and remainder of my estate). As long as the asset in question is not subject to a specific bequest, R.C. 2106.16 may be an option as to the asset in question.
R.C. 2106.16 – the “Mansion House Statute” – Applied in Real Life
Not only can the exercise of this right allow the surviving spouse to purchase and, at his or her election, remain in the home that served as the decedent’s residence (and, perhaps, as the surviving spouse’s residence too, though this is not required – keep reading. . . ), but it can also serve to maximize an otherwise disinherited spouse’s share under the decedent’s estate. For instance (and especially where the mansion house appraises for less than the surviving spouse believes it is worth), a practical, yet largely overlooked strategy available to surviving spouses is to purchase the mansion house (or another undervalued asset contemplated under the statute) and immediately sell it to a third-party purchaser for a higher price. R.C. 2106.16 imposes no requirement that the surviving spouse maintain ownership of the mansion house/asset for any set period of time.
Thus, if the subsequent sale generates excess proceeds, those proceeds would belong to the spouse. In this scenario, even a disinherited surviving spouse who would otherwise take very little under the decedent’s estate may be able to pocket a significant amount by capitalizing on the difference between the appraised value and market value/purchase price of a sale to a subsequent buyer, consistent with his or her rights under R.C. 2106.16.
Further, there may be instances where the purchase of one or more assets by the surviving spouse (or the threat of him/her purchasing) could help facilitate a resolution or settlement of the decedent’s estate. For example, if the asset is desired by the executory/adverse party, he or she may seek a prompt resolution if that asset is in jeopardy, or the surviving spouse could otherwise use his or her right to purchase as a bargaining chip of sorts.
These are just a couple of ways that R.C. 2106.16 could be used to the benefit of a surviving spouse in an otherwise less-than-ideal situation in a practical sense. This is an area where our firm excels – we have a well-rounded team, with experience in diverse areas of the law and real estate, who come together to develop innovative solutions for our clients.
Our Case
In our “Mansion House” case, our client was a surviving spouse asserting her right to purchase the home and farm owned by her husband, which served as his primary residence. The executor of the decedent’s estate challenged our client’s right to purchase the home/farm, arguing primarily that she (the surviving spouse) did not live at the home/farm full time at the time of her husband’s (the decedent) death. In essence, the executor wished to impose a residency requirement on the surviving spouse where the statute only contemplates the residency of the decedent. Though more secondary arguments, the executor also asserted that:
the property was somehow specifically devised by virtue of the residuary clause in the decedent’s will and, thus, excluded from the purview of R.C. 2106.16 (conveniently, the executor was the beneficiary of the residual and desired the home/farm), and that
if the decedent’s home was the “mansion house,” and if our client had a right to purchase it, that right did not extend to the farmlands adjacent to the home because they were a separate parcel.
The trial court rejected all three of the executor’s arguments and found for our client (i.e., that the home/farm at issue was a “mansion house” under that statute and that our client was entitled to purchase it at its appraised value). Specifically, the trial court found that the plain language of the statute does not impose a residency requirementon the surviving spouse – the “mansion house” is the home of the decedent.
Additionally, the residuary clause contained no specific devise of the property at issue. And lastly, the statute (R.C. 2106.16) explicitly contemplates “lots or farm land adjacent to the mansion house” and used in conjunction therewith. On appeal by the executor, the Twelfth District Court of Appeals unanimously upheld the finding in our client’s favor. You can read the full appellate decision HERE (link to 12th Dist. Decision).
In a final effort to thwart our client’s purchase of the property, the executor sought discretionary review from the Ohio Supreme Court, arguing that the question was a great issue of public importance. The High Court, however, declined to exercise its jurisdiction to hear the case, leaving the lower court decisions for our client undisturbed.
Conclusion
This was a very favorable outcome for our client and our firm, and we take pride in our ability to deliver creative solutions to our clients’ unique, and often difficult, legal questions. If you would like to speak someone regarding estate planning or any other legal questions you may have, please don’t hesitate to reach out to us. You may reach Isaac Heintz at 513.943.6654 and Casey Taylor at 513.943.5673.
As discussed in a previous post, courts will only enforce contracts for the sale of real estate if the contract is in writing (and signed by the person against whom you seek enforcement). Click here to read that post.
The legal principle that requires certain contracts to be in writing is the Statute of Frauds. In Ohio, the Statute of Frauds is codified in Chapter 1335 of the Ohio Revised Code; and the Statute of Frauds covers more than just real estate contracts (both sales and leases). For example, R.C. 1335.02 requires loan agreements with financial institutions be in a signed writing to be enforced. However, “the use of a credit card results in the person using the card being bound by the card member agreement.” Citibank, N.A. v. Ebbing, 2013 -Ohio- 4761, ¶ 13, 2013 WL 5783722, at *3 (Ohio App. 12 Dist.,2013)
R.C. 1335.05extends the Statute of Frauds to a promise to pay the debts of another person; an executor’s promise to pay the debts of the estate from her own funds; an agreement made in consideration of marriage; and for contracts that are not to be performed within one year.
R.C. 1335.11 further extends the requirements of the Statute of Frauds to sales commissions.
These same subjects are covered by Kentucky’s the Statute of Frauds at K.R.S. 371.010.
Despite the formal language of the statute, we see these in everyday life: a parent cosigning on a child’s student loans for instance. An agreement made in consideration of marriage includes prenuptial agreements (but not the agreement to marry itself).
When faced with oral agreements that are not to be performed within one year, courts will often engage in detailed analysis to determine if it is possible that the contract could have been performed within one year. For instance, in Jones v. Pouch, 41 Ohio St. 146, 1884 WL 84 (Ohio 1884), the Ohio Supreme Court ruled that an oral contract to construct a section of road in 1 year and 20 days was enforceable, because it was possible to have completed the work within one year, the additional twenty days were merely a precaution against contingencies. This case is still good law and was cited in the 2015 edition of Williston on Contracts despite being 131 years old.
Additionally with respect to agreements that are not to be performed within one year, Ohio’s courts have determined that the statute of frauds will not bar recovery where one party has fully performed their obligations under the contract but has not been fully paid. In another 19th century case, Towsley v. Moore, 30 Ohio St. 184, 1876 WL 176 (Ohio 1876) the mother of Olive Towsley, an 11 year old girl arranged for her to work in the home of Mr. Moore until she turned 18, in exchange for room and board, and, when she turned 18, Moore was to pay Olive the value of her services. The Court rejected Moore’s argument that the statute of frauds prevented Olive from recovering the value of her services. Ultimately, Moore was ordered to pay Olive $300.00 for her nearly 7 years of service.
Even where a contract fails to satisfy the requirements of the Statute of Frauds and a breach of contract claim cannot be brought, a claim for unjust enrichment or other equitable claims may allow you to obtain a just result.
Whether you are the borrower or the lender, employer or employee, you can avoid these questions by getting your contract in writing and signed by all parties.
If you have a business or residential property in Hamilton County that experiences flooding that includes sewer effluent, you may have a claim for repairs to damage, and retrofitting your property to prevent future flooding.
Master settlement with US EPA
In 2002, the US EPA, the State of Ohio, and others brought suit against Hamilton County and City of Cincinnati alleging that overflows of MSD’s sanitary sewer system violated the Clean Water Act and related Ohio laws and regulations. They challenged the capacity and pollution problems with MSD’s sewer system, including sewage overflows from MSD’s sanitary sewers, overflows from combined storm water and sanitary sewer lines, deficiencies at wastewater treatment plants, and backups of sewage into homeowners’ basements.
On December 3, 2003, a final settlement was reached with the Board of Commissioners of Hamilton County and City of Cincinnati. The case was pending in the U.S. District Court in the Southern District of Ohio. Under the settlement, Metropolitan Sewer District of Greater Cincinnati (MSD) agreed to bring its aging sewer system into compliance with the Clean Water Act.
Consent Decree creates Sewer Backup Program
In June 2004, the Court approved two consent decrees aimed at eliminating all sanitary sewer overflows. The Consent Decree established a comprehensive framework for the County and City to develop and implement a long-term plan for infrastructure improvements to address the capacity and pollution problems with MSD’s sewer system. The Consent Decree also required the County and City to implement programs to prevent basement backups, clean up backups when they occur, and reimburse residents for property damages for sewer backup events. This probram is referred to as the Sewer Back Up Program (“SBU”), formerly known as the Water in Basement Program, whereby aggrieved homeowners who have experienced backups to their Property emanating from MSD sewers can recover their damages.
Claims process
There are multiple steps in the MSD claims process.
First, a homeowner who has experienced a backup to their Property must report the same within 24 hours, either at (513) 352-4900 (24 hours/7 days a week) or online here.
Second, that homeowner should fully document with photos and videos the backup, as well as all entry points, including sewer drains at the Property.
Next, within 2 years of the date of the backup, a homeowner must complete and submit the Sewer Backup Claim Form available here.
MSD will conduct a technical evaluation and upon determination that MSD is responsible, assign the claim to a claims adjuster. Once the claims adjuster has completed its review, the proposed settlement is sent to MSD for legal review and once approved by MSD legal, a letter containing the settlement offer and release is sent to the Property owner, the Claimant. If the Claimant is in agreement with the settlement offer, he/she signs the release and returns it to MSD. If the claimant is not in agreement with the settlement offer, he or she may further discuss the amount with MSD or pursue the Review Process set forth by the Court, as set forth herein.
Review of decision by Federal Magistrate Judge
Claimants who are dissatisfied with MSD’s disposition of a claim under the SBU program may request review of the decision by the Magistrate Judge in Federal Court, whose decision is binding and not subject to any further judicial review. In accordance with the Consent Decree, Federal District Court case #C-1-02-107, the Claimant may file a Request for Review with the Federal Court in Cincinnati, Ohio. The Claimant should file that Request within 90 days with the Clerk’s Office of the Federal Court located in the Potter Stewart U.S. Courthouse, Room 103, 100 East 5th Street, Cincinnati, Ohio 45202. The Claimant may also call the court-appointed Ombudsman, the Legal Aid Society, at (513) 362-2801 for further information.
In determining the cause of an SBU, MSD must exercise its good faith reasonable engineering judgment and consider the following non-exclusive factors: amount of precipitation, property SBU history, condition of the sewer system in the neighborhood, results of a visual inspection of the neighborhood to look for signs of overland flooding, neighborhood SBU history, capacity of nearby public sewer lines, and topography. United States v. Bd. of Hamilton County Comm’rs, 2014 U.S. Dist. LEXIS 157434, *17-18 (S.D. Ohio Nov. 6, 2014).
Damages that can be recovered
Damages arising from basement backups for which MSD is responsible are limited to documented real and personal property. Under the Consent Decree, “[d]amages will be paid for losses to real and personal property that can be documented” and “[c]laimants will be asked to submit copies of any documents that they may have that substantiate the existence and/or extent of their damages.” (Doc. 131, Exh. 8 at 2-3). United States v. Bd. of Hamilton County Comm’rs,2014 U.S. Dist. LEXIS 37601, *27 (S.D. Ohio Mar. 20, 2014).
The Claims Process will only reimburse for damages arising from basement backups caused by inadequate capacity in MSD’s Sewer System or that are the result of MSD’s negligent maintenance, destruction, operation or upkeep of the Sewer System. United States v. Bd. of Hamilton County Comm’rs, 2014 U.S. Dist. LEXIS 37601, *22-23 (S.D. Ohio Mar. 20, 2014). Claimants seeking a review of the denial of an SBU claim bear the burden of proof of showing that the backup of water into their property was due to inadequate capacity in MSD’s sewer system (a sewer discharge) and not overland flooding.
Inadequate capacity versus overland flooding
However, Courts have found that there is nothing in the language of the Consent Decree that limits recovery where the evidence shows damages were concurrently caused by a combination of overland flooding emanating from MSD’s Sewer System and overland flooding not emanating from MSD’s Sewer System. The language of the Consent Decree does not require that SBU be the sole or greater cause of the damages sustained, or that damages should be apportioned where damages are caused by both SBU and overland flooding not emanating from MSD’s Sewer System. Under the terms of the Consent Decree, homeowners “who incur damages as a result of the backup of wastewater into buildings due to inadequate capacity in MSD’s Sewer System (both the combined and the sanitary portions) can recover those damages. . . .” United States v. Bd. of Hamilton Cnty. Comm’rs, 2016 U.S. Dist. LEXIS 46858, *10-11 (S.D. Ohio Mar. 29, 2016).
The Court has found that language of Consent Decree excluding overland flooding “not emanating from MSD’s Sewer System” necessarily contemplates circumstances where overland flooding in fact “emanates” from MSD’s Sewer System. Thus, where the public sewer discharges from the cover of the manhole and flows over ground and into a building, the terms of the Consent Decree cover any subsequent claim for damages. Accordingly, the Consent Decreedoes not bar claims for overland flooding which emanates from MSD’s Sewer System. United States v. Bd. of Hamilton County Comm’rs, 2014 U.S. Dist. LEXIS 37601, *23-24 (S.D. Ohio Mar. 20, 2014) The fact that overland flooding may occur and ultimately contribute to the lack of sewer capacity — resulting in a sewer surcharge does not exclude sewer backup as one cause of the damages sustained. The language of the Consent Decree does not require that SBU be the sole or greater cause of the damages sustained, or that damages should be apportioned where they are caused by both SBU and overland flooding not emanating from MSD’s sewer system. United States v. Bd. of Hamilton Cty. Comm’rs, 2017 U.S. Dist. LEXIS 79177, *19-20 (S.D. Ohio May 23, 2017).
Conclusion
If you have experienced a Sewer Back Up and would like assistance with the claims process or review of your claim in federal court, please contact Julie Gugino at 513-943-5669.
While it may seem obvious to some, many do not realize the very harsh consequences that can result from failing to respond to a lawsuit. If you’ve been sued and don’t really understand what the next steps are, you aren’t alone.
When a party files a civil (i.e., not criminal) lawsuit against another, the case is initiated upon the filing of a “Complaint.” The Complaint sets forth the parties, the factual allegations, the causes of action, and the remedy or relief sought.
Okay, so you’ve been served with the Complaint . . . Now what?
Once the defendant is served with the Complaint (thus, putting the defendant on notice of the lawsuit), he or she is required to respond within a certain number of days (28 days in Ohio; 20 days in Kentucky). The response to the Complaint could be an “Answer” (where the party will admit or deny each of the allegations and set forth any defenses it may have) or, alternatively, a defendant can respond with a variety of motions, such as a motion to dismiss.
If a defendant fails to respond to the Complaint within the time frame allotted, the plaintiff may move for “default judgment” against the defendant. This is, essentially, what it sounds like – the moving party wins by “default.” Under Ohio law, “default judgment is proper against an unresponsive defendant ‘as liability has been admitted or confessed by the omission of statements refuting the plaintiff’s claims.’” Ohio Valley Radiology Assoc., Inc. v. Ohio Valley Hosp. Ass’n., 28 Ohio St. 3d 118, 121, 502 N.E.2d 599 (1986). In other words, if you do not refute the plaintiff’s allegations, you are deemed to have admitted them. The onus is on the defendant.
If you do not respond to the Complaint and, therefore, admit the allegations, the other side’s claims have, more or less, been proven in most instances. For example, if someone sues you for breach of contract and claims damages of $70,000.00, and you fail to respond to the Complaint (thus, admitting that you breached the contract and owe the sought damages), the Court can enter judgment against you for the full $70,000.00. The plaintiff can then begin to pursue collection efforts against you, including garnishing wages and/or bank accounts, foreclosing on property, etc.
Additionally, default judgments can be very difficult to have overturned. In order to get relief from the judgment, a defaulting defendant must demonstrate that he or she has a meritorious defense to the lawsuit, that one of the provisions of Civ.R. 60(B) applies, and that the motion for relief was filed within a reasonable time after the judgment was entered. GTE Automatic Electric, Inc. v. ARC Industries, Inc., 47 Ohio St. 2d 146, 150-51 (1976). This is not always an easy task.
In the case of Ben. Ohio, Inc. v. Poston, 5th Dist. Fairfield No. 03-CA-07, 2003-Ohio-4577, the court held that defendants were not entitled to relief from judgment where their daughter signed for service of the Complaint and did not inform them. In Fouts v. Weiss-Carson, 77 Ohio App. 3d 563 (11th Dist. 1991), the defendant was not entitled to relief from judgment where she claimed she was distraught from her divorce and seeking psychiatric treatment when her response was due, absent a showing that defendant’s condition rendered her incompetent). And in Universal Bank N.A. v. Thornton, 8th Dist. Cuyahoga No. 72553, 1997 Ohio App. LEXIS 5694, at *7 (Dec. 18, 1997), the court held “[a] party who willfully and deliberately chooses to ignore a complaint and has stated no other reason for failing to appear or answer a complaint has not stated adequate grounds for relief from default judgment.”
The Answer: Answer the Complaint (and Make a Plan), and We Can Help You
Even if you believe the claims against you are entirely meritless, it is still important to respond to any claims filed against you so that you can refute the plaintiff’s claims and assert your defenses. You may even have a viable counterclaim against plaintiff (which often incentivizes an early settlement and/or dismissal). While no one wants to spend a ton of money defending a lawsuit (especially a meritless one), it is necessary to follow the proper steps and maybe even formulate an “exit strategy.” Otherwise, the result could be devastating. The litigation team at the Finney Law Firm understands that the legal process can be confusing (and, sometimes, even unforgiving) to those who, like most, don’t litigate often. We would be happy to speak with you about your rights and obligations as a party in litigation, as well as strategies to help minimize your exposure.
Our firm prides itself on being full-service. That is, we create value for our clients in matters ranging from routine contract drafting to complex litigation. However, our representation of clients in litigation isn’t just limited to the trial level – we also handle appeals (click here for more on our trips to the Supreme Court of the United Statesand Ohio Supreme Court). After all, if judges always got it right, the rate of overturned decisions would be zero.
Appellate practice is procedurally complex
Appealing a judgment requires adherence to an entirely new set of rules, separate from those involved in lower-court litigation. These rules often involve strict deadlines and harsh penalties for non-compliance. One common though rarely-discussed aspect of the appellate process is the post-judgment bond. Ohio Civ.R. 62 gives courts discretion to impose a bond on a non-prevailing party in litigation pending appeal. That is, if you are a party to litigation and you lose, you may be required to secure a bond in the full amount of the judgment (or more) to prevent the other side from seizing your assets while you pursue an appeal.
One case requiring a post-judgement bond to stay collections pending appeal
Although a rather extreme illustration, one such example of the post-judgment bond scenario is the Gibson’s Bakery v. Oberlin College case. There, Gibson’s Bakery sued Oberlin College alleging that Oberlin officials supported the narrative that the Bakery had a long history of racism and discrimination after a shoplifting incident involving an Oberlin student and, ultimately, suspended their long-standing business relationship. The loss of this business was paralyzing to the Bakery, and a jury returned a verdict in favor of the Bakery for more than $30 million, including compensatory and punitive damages, as well as attorneys’ fees. Oberlin sought a stay of execution of the judgment amount under Civ.R. 62 (so as to prevent Gibson’s Bakery from seizing their bank accounts, equipment, etc. in satisfaction of the judgment) while they pursued an appeal. The court ultimately granted Oberlin’s motion, but conditioned the stay on Oberlin obtaining a bond in excess of $36 million, the full amount of the judgment plus three years’ interest.
Why are post-judgment bonds required?
“The purpose of a stay pending appeal is to preserve the status quo.” Monarch Constr. Co. v. Ohio Sch. Facilities Comm’n, Franklin C.P. No. 02CVH04-4222, 2002-Ohio-2957, ¶14. The idea is that, if the losing party pursues an appeal, they at least believe that the court made an error and that they should not be held responsible for the full amount of the judgment or at all. Accordingly, they would be prejudiced if, for instance, the prevailing party was permitted to execute the judgment against them and then the decision was ultimately overturned (i.e., the appellate court, for whatever reason, finds that the prevailing party was not entitled to the judgment in the first place).
But what about the prevailing party, who would otherwise be forced to wait (potentially, several years) to collect on a judgment that will likely be upheld, at which time the losing party may no longer have assets to cover the amount of the judgment? Enter Civ.R. 62(B)”
When an appeal is taken the appellant may obtain a stay of execution of a judgment or any proceedings to enforce a judgment by giving an adequate supersedeas bond. The bond may be given at or after the time of filing the notice of appeal. The stay is effective when the supersedeas bond is approved by the court.
Furthermore,
. . . an appeal does not operate as a stay of execution until a stay of execution has been obtained pursuant to the Rules of Appellate Procedure or in another applicable manner, and a supersedeas bond is executed by the appellant to the appellee, with sufficient sureties and in a sum that is not less than, if applicable, the cumulative total for all claims covered by the final order, judgment, or decree and interest[.]
Exceptions to the rule
The requirement of a post-judgment bond (or “supersedeas” bond) should not be taken for granted. Courts have found that, in some cases, no bond is required at all if there is adequate security for the prevailing party. See, e.g., Irvine v. Akron Beacon Journal, 147 Ohio App. 3d 428, 451-52 (9th Dist. 2002) (upholding the trial court’s finding that “the Plaintiffs are adequately secured by the Defendant’s solvency and well-established ties to Akron, Ohio and that, therefore, the Defendants are not required to post a bond at this time.”); Lomas & Nettleton Co. v. Warren, 11th Dist. No. 89-G-1519, 1990 Ohio App. LEXIS 2720 (June 29, 1990) (holding that “the posting of a supersedeas bond is not mandatory to stay an execution in all cases”); Whitlatch & Co. v. Stern, 9th Dist. No. 15345, 1992 Ohio App. LEXIS 4218, at *25 (Aug. 19, 1992) (“[U]nder appropriate circumstances, the trial court may exercise its discretion and stay the execution of judgment without requiring the appellant to post a supersedeas bond.”).
Additionally, the government is never required to post a bond. Civ.R. 62(C) (“When an appeal is taken by this state or political subdivision, or administrative agency of either, or by any officer thereof acting in his representative capacity and the operation or enforcement of the judgment is stayed, no bond, obligation or other security shall be required from the appellant.”).
Finally, no bond may be required where the appeal arises out of an administrative decision wherein no money damages are at issue (for instance, a zoning appeal). Trademark Homes v. Avon Lake Bd. of Zoning Appeals, 92 Ohio App. 3d 214, 634 N.E.2d 685, 1993 Ohio App. LEXIS 6239 (Ohio Ct. App., Lorain County 1993) (finding that a supersedeas bond under R.C. 2505.06 is required only where a judgment was rendered for money damages), dismissed, 69 Ohio St. 3d 1449, (1994).
What if the losing party does not or cannot post the bond?
Unfortunately, indigence is often not an excuse recognized by courts. Instead, “R.C. 2505.11 provides a mechanism for substituting the supersedeas bond requirement in connection with an appeal.”GPI Distribs. v. Northeast Ohio Reg’l Sewer Dist., 8th Dist. Cuyahoga No. 106806, 2018-Ohio-4871, ¶ 27 (rejecting appellant’s argument that it could not post bond because it was indigent). That is, “[a] conveyance of property may be ordered by a court instead of a supersedeas bond in connection with an appeal” (i.e., in lieu of money). R.C. 2505.11.
If the movant/appellant fails to post a bond, when required, no stay of execution is perfected and the trial court retains jurisdiction, thus, rendering dismissal of the appeal appropriate.See generallyDennisonv. Talmage, 29 Ohio St. 433 (1876) (dismissing appeal for failure to pay bond); Collins v. Millen, 57 Ohio St. 289 (dismissing appeal for failure to pay bond). See alsoHoward v. Howard, 2d Dist., 1989 Ohio App. LEXIS 3643, *5-6 (Sept. 19, 1989), citing State ex rel. Klein v. Chorpening, 6 Ohio St. 3d 3 (1983) (“Until and unless a supersedeas bond is posted the trial court retains jurisdiction over its judgment as well as proceedings in aid of the same.”).
Let us help in your appellate matter
We are proud of our appellate success in Ohio, Kentucky and Federal Courts, including important against-the-odds victories at:
the United States Supreme Court (we had lost the issue three times in the trial courts of Southern Ohio and twice in the 6th Circuit Court of Appeals, and yet won 9-0 at the Supreme Court on an important First Amendment issue) and
Ohio Supreme Court (we lost at the trial court and then lost 3-0 in the appeals court, but won 7-0 at the Ohio Supreme Court on an open meetings issue).
The above authorities provide just a glimpse of how the appellate process can be tricky.
If you’d like to discuss your rights and responsibilities on appeal, please don’t hesitate to contact Casey Taylor ((513) 943-5673 ) or Brad Gibson ((513) 943-6661).
