Caruso v. Leneghan

• Decision Date: 01 May 2014
• Docket Number: No. 99582,99582
• Citation: 2014 Ohio 1824
• Parties: ANGELA CARUSO PLAINTIFF-APPELLEE/CROSS-APPELLANT v. DAVID M. LENEGHAN, ET AL. DEFENDANTS-APPELLANTS/CROSS-APPELLEES
• Court: Ohio Court of Appeals

2014 Ohio 1824

ANGELA CARUSO PLAINTIFF-APPELLEE/CROSS-APPELLANT v. DAVID M. LENEGHAN, ET AL. DEFENDANTS-APPELLANTS/CROSS-APPELLEES

No. 99582

Court of Appeals of Ohio EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

RELEASED AND JOURNALIZED: May 1, 2014

JOURNAL ENTRY AND OPINION

JUDGMENT:

AFFIRMED

Civil Appeal from the

Cuyahoga County Court of Common Pleas

Case Nos. CV-01-448754, CV-02-484716, and CV-05-556678

BEFORE: Celebrezze, J., Boyle, A.J., and E.T. Gallagher, J.

ATTORNEYS FOR APPELLANTS

Patrick P. Leneghan, Jr.

Leneghan & Leneghan

K. Scott Carter

ATTORNEY FOR APPELLEE

William T. Wuliger

The Brownell Building

FRANK D. CELEBREZZE, JR., J.:

{¶1} Appellants/cross-appellees, Patrick Leneghan Sr. ("Patrick Sr.") and Ballycroy-Mayo International Ltd. ("Ballycroy"), allege 14 assignments of error resulting from the third portion of a trifurcated trial.¹ Appellee/cross-appellant, Angela Caruso ("Angela"), assigns seven errors from this and other portions of the trial. After a thorough review of the record and case law, we affirm.

I. Factual and Procedural History

{¶2} In the 1980s, Angela and her then-husband, Michael Caruso, started a coffee roasting business that would become Berardi's Fresh Roast, Inc. ("BFR"). This business grew out of Angela's home and kitchen goods store. In 2000, as part of their divorce proceedings, the domestic relations court ordered that Angela buy out Michael's share of the company.

{¶3} Angela's attorney at the time, David Leneghan, brokered a deal between his father, Patrick Sr., and Angela. The details of this transaction are disputed. Angela claims that the transaction was a loan to be repaid at 12-percent interest. The documents, however, indicate a substantial loan and sale of a controlling interest in the company to Ballycroy, a company owned and controlled by Patrick Sr. As part of this transaction, Patrick Sr. also became a 100-percent owner of Caruso Properties, L.L.C., a company that owned the building and land used by BFR. With such a disparity in expectations,disputes soon arose that caused Angela to either leave the company or be locked out by Patrick Sr., depending on whose testimony one believes.

{¶4} In any event, on September 17, 2001, Angela filed the first of four complaints against her divorce attorney, David Leneghan, and his law firm. In these various consolidated complaints, she also alleged causes of action against Patrick Sr., Patrick Leneghan Jr., BFR, Ballycroy, and a number of other corporate defendants. The trial court initially bifurcated the proceedings.

{¶5} The first trial began in 2005, where Angela's claims of attorney malpractice against David Leneghan and his law firm resulted in a $6,400,000 judgment in her favor. Ultimately, the insurance carrier for the firm settled the claim for an amount less than the judgment.²

{¶6} The second trial, which began on January 10, 2007, was to consist of claims of fraud and conspiracy against Patrick Sr., David Leneghan, and others, as well as a shareholder derivative action, a breach of fiduciary duty claim, and numerous other claims. However, during trial, the court found that issues integral to the shareholder action were impermissibly intermingling with claims of fraud. Therefore, the trial court again bifurcated the case. The shareholder derivative action would be the subject of a third trial along with claims for spoliation of evidence, breach of fiduciary duty, tortiousinterference,³ and breach of statutory duties. The second trial on issues of fraud and theft resulted in defense verdicts.

{¶7} On July 24, 2012, a three-week, two-part jury trial began. During the first phase, evidence was adduced about the failure of Patrick Sr. and other BFR employees and directors to turn over records to Angela, the minority shareholder. Evidence was also adduced regarding interested transactions that Patrick Sr. engaged in and the diversion of company assets and money for the personal benefit of certain family members and himself, to the detriment of the minority shareholder, that were improperly recorded in the records of BFR. At the close of evidence, the trial court ordered a directed verdict in the defense's favor on the spoliation claim. On August 14, 2012, the jury found in favor of Angela on the breach of statutory and fiduciary duty claims.⁴ The jury also found that Patrick Sr. acted with malice. The jury awarded Angela $987,000 in compensatory damages.

{¶8} A second phase of this trial commenced so the jury could determine an appropriate amount of punitive damages. Because malice had already been found, the evidence was limited to appropriate damages. After the jury heard testimony fromPatrick Sr. about his financial status as well as Angela's financial condition, the jury awarded one dollar in punitive damages.

{¶9} Another hearing was conducted where Angela presented evidence of appropriate attorney fees to the judge. The trial court did not award the full amount sought by Angela, but entered judgment for attorney fees totaling $690,968.80 in her favor. Angela also sought prejudgment interest, but the trial court denied this motion after a lengthy hearing. Patrick Sr. filed a motion for judgment notwithstanding the verdict and for a new trial. These were denied by the trial court, but a motion for remittitur was granted in part and agreed to by Angela. Ultimately, the judgment in favor of Angela against Patrick Sr. and Ballycroy totaled $1,681,930.07 and consisted of $958,776 in compensatory damages plus $27,674.27 in litigation costs, $690,968.80 in attorney fees, $4,510 in statutory damages, and $1 in punitive damages. Both sides appealed the case to this court assigning 21 errors between them.

II. Law and Analysis

a. One Satisfaction and Double Recovery

{¶10} In Patrick Sr.'s first two assignments of error, he argues that "[i]t was error to not dismiss based upon Ohio's one satisfaction rule," and "[i]t was error to fail to dismiss the case based upon Ohio's double recovery rule."

{¶11} "[B]ut one satisfaction can be exacted for the same demand." Tanner v. Espey, 128 Ohio St. 82, 192 N.E. 229 (Mar. 28, 1934). The Ohio Supreme Court set forth the nature of the one satisfaction rule in the context of master-servant liability.Natl. Union Fire Ins. Co. v. Wuerth, 122 Ohio St.3d 594, 2009-Ohio-3601, 913 N.E.2d 939. There the court stated:

"For the wrong of a servant acting within the scope of his authority, the plaintiff has a right of action against either the master or the servant, or against both, in separate actions, as a judgment against one is no bar to an action or judgment against the other until one judgment is satisfied." [Losito v. Kruse, 136 Ohio St. 183, 187, 24 N.E.2d 705 (1940)], citing Maple v. Cincinnati, Hamilton & Dayton RR. Co. (1883), 40 Ohio St. 313. See also State ex rel. Flagg v. Bedford (1966), 7 Ohio St.2d 45, 47-48, 36 O.O.2d 41, 218 N.E.2d 601 ("This court follows the rule that until the injured party receives full satisfaction, he may sue either the servant, who is primarily liable, or the master, who is secondarily liable, and a mere judgment obtained against the former is not a bar to an action or judgment against the latter"). "The plaintiff, in any event, can have but one satisfaction of his claim." Losito, 136 Ohio St. at 187-188, 16 O.O. 185, 24 N.E.2d 705.

Id. at ¶ 21.

{¶12} In the personal injury context, the Ohio Supreme Court set forth the same principle of allowing only one recovery for a given harm. Seifert v. Burroughs, 38 Ohio St.3d 108, 110, 526 N.E.2d 813 (1988). "The law of Ohio is well-settled that an injured party is entitled to only one satisfaction for his injuries, 'and that receipt of fullcompensation from one of several persons whose concurrent acts of negligence are the basis of a suit for damages for personal injuries releases all.'" Id., quoting Royal Indemn. Co. v. Becker, 122 Ohio St. 582, 589, 173 N.E. 194 (1930). The court also quoted from the Restatement of the Law 2d, Judgments, Section 50, Comment d (1982), which states:

"* * * The adjudication of the amount of the loss also has the effect of establishing the limit of the injured party's entitlement to redress, whoever the obligor may be. This is because the determination of the amount of the loss resulting from actual litigation of the issue of damages results in the injured person's being precluded from relitigating the damages question. * * * Therefore, when a judgment is based on actual litigation of the measure of a loss, and the judgment is thereafter paid in full, the injured party has no enforceable claim against any other obligor who is responsible for the same loss."

Seifert at 110.

{¶13} As the Seifert court recognized, the question centers on the extent of the recovery and precisely what is included therein: "If for all injuries then the entry of satisfaction of judgment will have completely compensated him. On the other hand, if the judgment was for only a part of his injuries, then he was not fully compensated and is entitled to pursue his appeal." Id.

{¶14} However, Patrick Sr. was determined to be an intentional tortfeasor in the third trial. As a result, the collateral source rule, a narrow exception to the one satisfaction rule, is implicated here.

{¶15} First, "a joint tortfeasor who acted intentionally should be treated differently as to damages from one who was merely negligent." Klosterman v. Fussner, 99 OhioApp.3d 534, 539, 651 N.E.2d 64 (2d Dist.1994). Further, where tortfeasors commit injury jointly,

a plaintiff usually is entitled to only one recovery for actual damages. Under the principles of joint and several liability, a plaintiff can take a judgment for the full amount of her damages against any one or all of the tortfeasors and can collect from any one or all of the tortfeasors up to the highest award of damages, but not more.

Id. at 539.

[T]he purpose of the collateral source rule is to assure that the tortfeasor does not benefit, by way of a reduced damage award, from payments that the

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