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Vossman v. Airnet Systems, Inc.

Court of Appeals of Ohio, Tenth District

May 17, 2018

Dan W. Vossman, Plaintiff-Appellant,
v.
AirNet Systems, Inc. et al., Defendants-Appellees. Russell A. Kelm et al., Appellants,

          APPEAL from the Franklin County Court of Common Pleas (C.P.C. No. 11CV-7360)

         On brief:

          Law Offices of Russell A. Kelm, and Russell A. Kelm, for appellants.

         Argued:

          Russell A. Kelm.

         On brief:

          Elfvin, Klingshirn, Royer & Torch, LLC, and Neil E. Klingshirn, for Amicus Curiae Ohio Employment Lawyers Association.

         On brief:

          Vorys, Sater, Seymour and Pease LLP, David A. Campbell, and Gregory C. Schneiderer, for appellees.

         Argued:

          David A. Campbell

          DECISION

          DORRIAN, J.

         {¶ 1} Plaintiff-appellant, Dan W. Vossman ("Vossman"), along with his attorneys, Russell A. Kelm and Joanne Detrick (collectively "appellants"), appeal the November 7, 2016 judgment entry of the Franklin County Court of Common Pleas which made final and appealable the court's: (1) February 12, 2015 decision and entry finding defendants-appellees, AirNet Systems, Inc. ("AirNet"), Thomas Schaner, and Quinn Hamon (collectively "appellees"), are entitled to recover attorney fees from appellants, pursuant to R.C. 2323.51(A)(2)(a)(ii), for the time period April 26 through December 10, 2012, and (2) October 19, 2016 decision and entry finding the amount of attorney fees owed to be $45, 714.53. For the following reasons, we reverse.

         I. Procedural History

         A.Merit Determination

         {¶ 2} The facts of this case are summarized in Vossman v. AirNet Sys., Inc., 10th Dist. No. 12AP-971, 2013-Ohio-4675, and will only be repeated herein as relevant to the analysis of the assignments of error. On June 15, 2011, Vossman filed suit against appellees asserting a single cause of action for age discrimination under R.C. 4112.14. On July 12, 2011, appellees filed a motion to dismiss, pursuant to Civ.R. 12(B)(6), asserting Vossman failed to state a claim upon which relief could be granted. On September 22, 2011, the trial court denied appellees' motion to dismiss.

         {¶ 3} On October 19, 2012, upon appellees' motion, the trial court entered a decision granting summary judgment in favor of appellees. The trial court reasoned that: (1) there was no evidence age discrimination was the basis for Vossman's termination, and (2) Vossman admitted he does not believe age discrimination was the cause of the allegations and investigations into his conduct. Vossman appealed. On October 22, 2013, this court affirmed the trial court's granting of summary judgment in favor of appellees. Vossman. Vossman appealed to the Supreme Court of Ohio. On March 26, 2014, the Supreme Court declined to accept jurisdiction of the appeal. Vossman v. AirNet Sys., Inc., 03/26/2014 Case Announcements, 2014-Ohio-1182.

         B. Motion for Attorney Fees

         {¶ 4} On November 7, 2012, appellees moved for an award of attorney fees against appellants in the trial court, alleging Vossman's claim was frivolous and Vossman's counsel vigorously continued to pursue the frivolous claim pursuant to R.C. 2323.51 and Civ.R. 11. In the motion for attorney fees, appellees stated the allegations made by Vossman in his complaint and relied on to overcome appellees' motion to dismiss were ultimately revealed to be untruthful when appellees' counsel deposed Vossman. Appellees argued the following allegations made by Vossman were unsubstantiated: (1) his co-worker's allegations regarding his flying behavior was false and based on his age, (2) the investigation into his behavior revealed his co-worker's allegations were unsubstantiated, (3) he was never directed to keep the investigation confidential, and (4) he was pretextually terminated because of his age. In support of its argument, appellees pointed to Vossman's own admissions in his deposition testimony that: (1) there was truth to his co-worker's allegations of his flying behavior, (2) he was directed to keep the investigation confidential, (3) he violated the confidentiality directive, and (4) he never believed his co-worker's allegations against him were age based. Appellees argued Vossman's own admissions made the initial complaint lack evidentiary support and that his initial filing of the complaint and subsequent pursuit of the case through baseless arguments served only to harass and impose litigation costs on appellees. Appellees argued Vossman's pursuit of the case through baseless and untrue allegations was in violation of Civ.R. 11 and constituted frivolous conduct in violation of R.C. 2323.51. Therefore, appellees argued the case was frivolous as it could not be supported by a good-faith argument.

         1. Entitlement Determination

         {¶ 5} On May 22, 2013, the magistrate conducted a hearing on the motion for attorney fees. On June 3, 2014, the magistrate rendered a decision which granted appellees' motion for an award of attorney fees, in part. The magistrate found, pursuant to R.C. 2323.51(A)(2)(a)(ii), appellees were entitled to recover reasonable attorney fees they incurred from April 26 through December 10, 2012 from appellants. The magistrate reasoned: "It was absolutely clear, under existing age-discrimination law, that no reasonable attorney would have continued to prosecute [Vossman's] age-discrimination cause of action after April 26, 2012, " the date appellees' counsel deposed Vossman. (June 3, 2014 Mag. Decision at 14.)

         {¶ 6} On June 17, 2014, appellants filed objections to the magistrate's decision. Along with the objections, appellants submitted three affidavits, one from Vossman's trial counsel, Kelm, one from attorney Paul Tobias of Cincinnati, and one from attorney Frederick Gittes of Columbus. All the affiants are employment law practitioners in Ohio. Appellees did not file a response.

         {¶ 7} On February 12, 2015, the trial court overruled appellants' objections to the magistrate's decision and found the magistrate properly determined the factual issues and applied the law correctly. The court reasoned "there is no evidence, direct or indirect, that [Vossman's] age actually motivated [appellees] to terminate him or that his age played any role in his termination." (Feb. 12, 2015 Decision at 8.) The court found:

The record indicates that by April 26, 2012, [Vossman] and his counsel knew: (1) [appellees] had a legitimate reason to investigate and suspend [Vossman], (2) [Vossman] was the only employee under suspension, under investigation, and issued a confidentiality directive, and (3) [appellees'] stated reason for terminating [Vossman's] employment was true. Nevertheless, with no proof that age was a factor behind his termination, [Vossman] and his counsel continued to prosecute this action.

(Feb. 12, 2015 Decision at 8-9.) Finally, the trial court held: "Upon review, this Court finds that [Vossman] and his counsel definitively knew by April 26, 2012, that there was no evidence of similarly situated employees being treated more favorably than [Vossman]. [Vossman] and his counsel also knew, by April 26, 2012 at latest, that there was no evidence, circumstantial or direct, indicating that age actually motivated [appellees'] decision to terminate [Vossman's] employment." (Feb. 12, 2015 Decision at 9.) The trial court adopted the magistrate's decision and held appellees were entitled to recover attorney fees from appellants, pursuant to R.C. 2323.51(A)(2)(a)(ii), which were incurred from April 26 through December 10, 2012. The court referred the matter back to the magistrate to determine the reasonable amount of attorney fees due to appellees.

         2. Amount Determination

         {¶ 8} On June 18, 2015, the magistrate conducted an evidentiary hearing to determine the amount of attorney fees owed to appellees. Appellees presented expert testimony as well as several exhibits which were admitted into evidence. (See Deft.'s Ex. A through H.) Appellants presented the testimony of Schaner and Vossman's own trial counsel, Kelm. Appellants presented several exhibits, only some of which were admitted into evidence. (See Pltf.'s Ex. 8 through 15.)[1] The magistrate found appellees incurred reasonable attorney fees in the amount of $45, 714.53 from April 26 through December 10, 2012. The magistrate further found that AirNet is the real party in interest pursuant to the receiver (appointed by the United States District Court for the Northern District of Georgia, Atlanta Division, in case N.D.Ga. No. 1:14-cv-00178-WSD), having authorized AirNet's counsel to prosecute AirNet's claim for attorney fees and conclude this litigation. The court found the receiver confirmed appellees' counsel's authority in an e-mail communication.

         {¶ 9} On August 3, 2015, appellants submitted their objections to the magistrate's decision on grounds that the decision: (1) granted attorney fees for illegal activity by appellees and their counsel, (2) granted attorney fees to AirNet now in receivership, in violation of a federal court ordered stay of proceedings, and (3) granted attorney fees to appellees who are not the real party in interest, since these claims are owned by a federal court receiver. On August 31, 2015, appellees filed a memorandum contra appellants' objections to the magistrate's decision.

         {¶ 10} On October 19, 2016, the trial court overruled appellants' objections and adopted the magistrate's decision in its entirety. The trial court found appellants' objections to be not well-taken. The court found appellees were entitled to recover attorney fees in the amount of $45, 714.53, pursuant to R.C. 2323.51(A)(2)(a)(ii), from appellants.

         C. Final Appealable Order

         {¶ 11} On November 7, 2016, the trial court filed a final judgment entry thereby making final and appealable the court's judgment entries filed February 12, 2015 and October 19, 2016. Appellants filed a notice of appeal to this court.

         II. Assignments of Error

         {¶ 12} Appellants appeal and assign the following three assignments of error for our review:

I. THERE WERE SUFFICIENT FACTS AVAILABLE TO PLAINTIFF AT TRIAL TO MAKE IT ERROR TO AWARD SANCTIONS FOR FRIVILOUS CONDUCT FOR PROCEEDING WITH THE CASE.
II. DEFENDANTS AND COUNSEL ENGAGING IN ILLEGAL CONDUCT SHOULD NOT BE AWARDED SANCTIONS WHICH WOULD REWARD THEIR CONDUCT IN OBTAINING SUMMARY JUDGMENT THROUGH PERJURED TESTIMONY.
III. OWNERSHIP OF A RECEIVERSHIP ASSET CANNOT BE PROVEN BY HEARSAY TESTIMONY AS TO WHAT THE RECEIVER TOLD THEM.

         III. Analysis

         {¶ 13} Before discussing appellants' assignments of error, it is important to consider what was actually appealed and what can be considered on appeal. In simplest terms, this case breaks down to three trial court determinations. First, the trial court determined to grant summary judgment on the complaint in favor of appellees. It made this determination in the October 19, 2012 decision granting appellees' motion for summary judgment. As noted previously, we affirmed this determination in Vossman, and the Supreme Court declined to review this determination. The appeal before us today will not address this first determination as it has already been reviewed and affirmed by this court. We will refer to this determination as the "merits determination."

         {¶ 14} Second, the trial court determined appellees are entitled to recover attorney fees from appellants. The court made this determination in the February 12, 2015 decision overruling appellants' objections to the magistrate's June 3, 2014 decision. We will refer to this determination as the "entitlement determination."

         {¶ 15} Third, the trial court determined the amount of attorney fees to which appellees were entitled from appellants. The court made this determination in the October 19, 2016 decision and entry adopting the magistrate's June 19, 2015 decision and overruling appellants' objections to the magistrate's decision. We will refer to this determination as the "amount determination."

         {¶ 16} On November 7, 2016, the trial court entered a final judgment entry making the entitlement determination and ...


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