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Ayers v. City of Cleveland

Court of Appeals of Ohio, Eighth District, Cuyahoga

November 16, 2017

DAVID AYERS PLAINTIFF-APPELLEE/ CROSS-APPELLANT
v.
CITY OF CLEVELAND, ET AL. DEFENDANTS-APPELLANTS/ CROSS-APPELLEES

         Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-15-846683

          ATTORNEYS FOR APPELLANTS Robert M. Wolff Mark V. Webber Littler Mendelson P.C.

          ATTORNEYS FOR APPELLEE Michele L. Berry The Law Office of Michele L. Berry Ruth Z. Brown Michael Kanovitz Loevy & Loevy

          For David Leneghan David M. Leneghan

          BEFORE: E.T. Gallagher, J., Kilbane, P.J., and Celebrezze, J.

          JOURNAL ENTRY AND OPINION

          EILEEN T. GALLAGHER, J.

         {¶1} Defendant-appellant/cross-appellee, city of Cleveland ("the City"), appeals from the judgment of the common pleas court granting summary judgment in favor of plaintiff-appellee/cross-appellant, David Ayers ("Ayers"), on his claim for indemnification pursuant to R.C. 2744.07(A)(2). The City raises the following assignment of error for review:

1. The trial court erred as a matter of law when it granted Plaintiffs motion for summary judgment and denied Defendant's motion for summary judgment seeking dismissal of Plaintiff s claim for indemnification under R.C. 2744.07(A)(2) which limits standing to assert such claims to employees of political subdivisions. The court further erred in failing to grant summary judgment to Defendant because the underlying debts of the police officers to Plaintiff had been extinguished and there was no debt for the City to indemnify.

         {¶2} In his cross-appeal, Ayers raises the following assignments of error:

1. The trial court erroneously omitted the $390, 000 award of attorney fees and costs in the underlying civil rights case.
2. Plaintiff is entitled to statutory interest on the Ayers judgment.

         {¶3} After careful review of the record and relevant case law, we reverse the trial court's judgment granting summary judgment in favor of Ayers and remand for proceedings consistent with this opinion. We further find Ayers's cross-appeal to be moot based on our resolution of the City's appeal.

         I. Procedural History

         A. Underlying Criminal Case

         {¶4} In December 2000, Ayers was convicted of aggravated murder, aggravated burglary, and aggravated robbery. The convictions stemmed from the murder and robbery of seventy-six year old victim, Dorothy Brown.[1] Ayers was sentenced to a term of 20 years to life on the aggravated murder count, ten years on the aggravated burglary count, and ten years on the aggravated robbery count. Each term was ordered to be served consecutively.

         {¶5} On September 12, 2002, this court affirmed Ayers's convictions but reversed his sentence and remanded for resentencing. State v. Ayers, 8th Dist. Cuyahoga No. 79134, 2002-Ohio-4773. On remand, Ayers was again sentenced to life in prison. The Ohio Supreme Court denied leave to appeal with one justice dissenting. State v. Ayers, 98 Ohio St.3d 1424, 2003-Ohio-259, 782 N.E.2d 78 (Pfeiffer, J., dissenting).

         {¶6} In January 2004, Ayers filed a petition for a writ of habeas corpus pursuant to 28 U.S.C. 2254 with the United States District Court for the Northern District of Ohio, Eastern Division. The petition raised the following grounds for relief (1) the prosecutor willfully withheld exculpatory evidence from the defense; (2) the prosecutor engaged in misconduct by withholding incriminating evidence, making improper remarks in his closing argument, and extracting a jailhouse confession from Ayers on the eve of trial; (3) Ayers's Sixth Amendment right to counsel was violated when the jailhouse informant, acting as a state agent, obtained the confession; and (4) the evidence was insufficient to sustain the convictions. On September 27, 2007, the district court denied Ayers's petition. Ayers v. Bradshaw, N.D.Ohio No. 1:04CV0133, 2007 U.S. Dist. LEXIS 71946 (Sept. 27, 2007).

         {¶7} On appeal, the United States Court of Appeals for the Sixth Circuit reversed the decision of the district court and remanded the case with instructions for the district court to grant a conditional writ of habeas corpus, giving the state of Ohio 180 days within which to provide Ayers a new trial or, failing that, to release him. The Sixth Circuit stated, in pertinent part:

Because the State "intentionally creat[ed] a situation likely to induce [Ayers] to make incriminating statements without the assistance of counsel, " * * * we hold that Ayers's Sixth Amendment right to counsel was violated, and that the Ohio Court of Appeals unreasonably ruled to the contrary.

Ayers v. Hudson, 623 F.3d 301 (6th Cir.2010).

         {¶8} Following the Sixth Circuit's judgment, the state chose not to pursue a new trial against Ayers. Ayers was released from prison on September 12, 2011.

         B. Federal Court Complaint

         {¶9} On March 27, 2012, Ayers filed a complaint in the district court, alleging federal and state law claims against Detectives Michael Cipo ("Cipo"), Denise Kovach ("Kovach"), and the City (collectively "the defendants"). On July 20, 2012, Ayers filed an amended complaint, raising causes of action for violations of due process, malicious prosecution, interference with the right to counsel, failure to intervene, civil conspiracy, intentional misrepresentation, intentional infliction of emotional distress, negligent supervision, respondeat superior, and indemnification under R.C. 2744.07(A)(2). The complaint alleged that Cipo and Kovach violated Ayers's Sixth Amendment right to counsel by using jail informant Donald Hutchinson to unlawfully interrogate Ayers. In addition, Ayers alleged that Cipo and Kovach fabricated evidence and perjured themselves in an effort to convict Ayers.

         {¶10} The defendants moved to dismiss, or in the alternative, for summary judgment. On February 25, 2013, the district court granted summary judgment in favor of the City, dismissing all claims raised against the City. With respect to Ayers's cause of action for indemnification against the City, the district court found that the claim was premature, stating:

The duty to indemnify accrues upon issuance of a judgment against the employee for compensatory damages caused by an act or omission in connection with a governmental function. Should the political subdivision fail to uphold its duty, the statute outlines a mechanism for Ohio courts to consider the employee's claims and to "order the political subdivision to defend the employee in the action." Therefore, the indemnification claim does not survive.

Ayers, N.D.Ohio No. 1:12-CV-753, 2013 U.S. Dist. LEXIS 25992, * 52 (Feb. 25, 2013).

         {¶11} In March 2013, the matter proceeded to a jury trial against Cipo and Kovach on Ayers's remaining claims for violation of due process, malicious prosecution (both federal and state), interference with the right to counsel, conspiracy, and intentional infliction of emotional distress. At the conclusion of trial, a jury returned a verdict in favor of Ayers, and the trial court entered judgment against the detectives in the amount of $13, 210, 000. On May 9, 2013, the judgment was enlarged to include an additional $390, 000 in costs and attorneys fees.[2]

         {¶12} After the civil judgment was entered against Cipo and Kovach, the City's Chief Assistant Director of Law, Joseph Scott ("defendant Scott"), on behalf of the detectives, offered to assign to Ayers any indemnification claims that the detectives might have had against the City in exchange for an agreement by Ayers to forebear collection efforts against them personally. See City's exhibit No. 1, First Set of Admissions, No. 5. In a letter dated March 27, 2013, Ayers, through counsel, rejected the offer. Ayers subsequently rejected a similar offer to assign the detectives' indemnification rights in May 2013.

         C. Ayers Attempts to Reinstate his Indemnification Claim in the District Court

         {¶13} Following the entry of judgment against the detectives, the City did not indemnify Cipo or Kovach pursuant to R.C. 2744.07(A)(2). In addition, neither Cipo or Kovach sought to enforce their right to indemnification under the statute, or filed a grievance against the City pursuant to the procedure set forth in the parties' Collective Bargaining Agreement ("CBA"). See Article XXII of the CBA, pp. 41-44. Instead, the City entered into an agreement with bankruptcy counsel, David M. Leneghan ("defendant Leneghan"), on April 24, 2013, "to assist [Cipo and Kovach] with personal, individual bankruptcy proceedings" in an effort to secure the discharge of their debt.

         {¶14} Cipo passed away on July 9, 2013.[3] On July 29, 2013, Leneghan filed a petition for Chapter 7 bankruptcy on Kovach's behalf. The petition listed Ayers as a creditor and the $13, 210, 000 judgment as a debt. In the course of discovery in this matter, Leneghan admitted "that at some point between March 8, 2013 and July 29, 2013, Joseph Scott communicated to [him] that language in the [CBA] limited Cleveland's obligation to indemnify Kovach for the Ayers Judgment to $1 million." Ayers exhibit No. 33, Leneghan's Response to Plaintiffs Request for Admissions, No. 9. On November 12, 2013, the bankruptcy court discharged Kovach's personal liability for the $13, 210, 000 judgment debt.

         {¶15} Following the bankruptcy proceedings, Ayers filed a motion with the district court to reinstate his state law indemnification claim against the City. On May 6, 2014, the district court granted Ayers's motion to reinstate the claim. However, on July 11, 2014, the district court vacated its May 6, 2014 order and dismissed Ayers's state law indemnification claim for lack of subject matter jurisdiction. In its opinion, the court declined to exercise supplemental jurisdiction, stating:

Plaintiff Ayers's indemnification claim is a state law claim. It does not arise out of any federal statutes and it does not relate to the violation of any federal rights. Further, the parties to this case are not diverse. Thus, the district court does not have original jurisdiction over this claim.
After considering these factors, the Court declines to exercise supplemental jurisdiction. The state courts are best suited to decide whether a plaintiff rather than an employee can bring a direct action for indemnification under claim Ohio Revised Code § 2744.07(A) and whether the City of Cleveland's collective bargaining agreement's $1 million cap on indemnification is compatible with Ohio law.

Ayers v. Cleveland, N.D.Ohio No. 1:12-CV-753, 2014 U.S. Dist. LEXIS 94472, * 3-4 (July 11, 2014).

         {¶16} On November 5, 2014, Ayers moved the bankruptcy court to reopen Kovach's bankruptcy proceeding "for the limited purpose of clarifying the applicability of the discharge injunction in connection with the pursuit of indemnification proceeds against [the City]." The motion was granted on December 10, 2014. On February 19, 2015, the bankruptcy court issued an order, stating, in relevant part:

IT IS HEREBY ORDERED, that it will not be a violation of the discharge injunction if David Ayers pursues a state court action against the Debtor's name only and only against the amount of indemnification, if any, which may be available against Debtor's former employer, the City of Cleveland. The permanent injunction is hereby modified for cause as set forth herein.

         D. Ayers's Indemnification Claim Against the City in the Common Pleas Court

         {¶17} On June 8, 2015, Ayers filed the present action against the City and defendants Scott and Leneghan in the court of common pleas. The complaint asserted various causes of action against the City, including claims for statutory indemnification pursuant to R.C. 2744.07(A)(2), tortious interference, breach of contract, aiding and abetting, abuse of process, unjust enrichment, specific performance, and civil conspiracy. The complaint further alleged causes of action against defendants Scott and Leneghan for tortious interference, aiding and abetting, abuse of process, and civil conspiracy.

         {¶18} On November 5, 2015, the trial court granted defendant Leneghan's motion to dismiss the abuse of process claims levied against him, but denied his request to dismiss the remaining claims of tortious interference, conspiracy, and aiding and abetting.

         {¶19} Following discovery, the parties agreed to address the threshold question of whether Ayers is entitled to seek indemnification from the City pursuant to R.C. 2744.07(A)(2). On August 9, 2016, Ayers filed a motion for partial summary judgment on the limited issue of whether R.C. 2744.07(A)(2) affords Ayers relief. On the same day, the City and defendant Scott filed a joint motion for partial summary judgment, arguing that Ayers lacked standing to bring an indemnification claim against the City under R.C. 2744.07(A)(2).

         {¶20} On October 12, 2016, the trial court granted Ayers's motion for partial summary judgment on the issue of indemnification and denied the City and defendant Scott's motion for summary judgment. The court determined that "the right to indemnification attached upon the final judgment in the federal case and Ayers has the right to proceed directly against [the City] to recover the judgment." Accordingly, the trial court entered judgment against the City in the amount of $13, 210, 000 on the statutory indemnification claim and dismissed all other claims levied against the City and defendants as moot.

         {¶21} The City now appeals from the trial court's judgment granting summary judgment in favor of Ayers. In addition, Ayers cross-appeals the trial court's failure to include an award of attorney fees, costs, and statutory interest in its October 12, 2016 judgment.

         II. Law and Analysis

         {¶22} In its sole assignment of error, the City argues the trial court erred by granting summary judgment in favor of Ayers on his statutory indemnification claim under R.C. 2744.07(A)(2).

         {¶23} We review the grant of summary judgment de novo using the standard set forth in Civ.R. 56. Argabrite v. Neer, Slip Opinion No. 2016-Ohio-8374, ΒΆ 14. Summary judgment is appropriate only when "[1] no genuine issue of material fact remains to be litigated, [2] the moving party is entitled to judgment as a matter of law, and, [3] viewing the evidence most strongly in favor of ...


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