Gorsha v. Clark
| Decision Date | 07 March 2019 |
| Docket Number | Case No. 2:18-cv-508 |
| Parties | JOSEPH P. GORSHA, et al., Plaintiffs, v. BERNARD E. CLARK, et al., Defendants. |
| Court | U.S. District Court — Southern District of Ohio |
OPINION AND ORDER
This matter is before the Court on Defendants Jonathan C. Clark and Clark & Clark and Associates, LLC's ("Defendants Clark & Clark") Motion for Judgment on the Pleadings. (ECF No. 32). Defendants Clark & Clark move this Court pursuant to Fed. R. Civ. P. 12(c) for an Order granting Judgment on the Pleadings and dismissing Count Six of Plaintiffs' Complaint asserting legal negligence against them. (Compl. ¶¶ 60-66, ECF No. 1 at 11-12). For the reasons that follow, Defendants Clark & Clark's motion is DENIED.
Plaintiffs Joseph D. Gorsha, Nancy Gorsha, Damon J. Faldowski, Dianne M. Faldowski, Damon J. Faldowski, II, and Mark R. Faldowski (collectively "Plaintiffs") jointly owned real property in Belmont County, Ohio consisting of 37.525 acres located on Sandy Ridge Road, Barnesville, Ohio, bearing parcel number 45.00151.000 (the "Property"). (Id. at ¶ 1, 2). In May 2013, Plaintiffs and Defendants Bernard and Alice Clark (the "Buyers") entered into a contract for the sale, of the surface rights only, of the Property (the "Real Estate Purchase Contract"). (Id. at ¶ 2, 2). The Real Estate Purchase Contract specifically stated, "Seller is [r]eserving mineral [r]ights." (Id. at ¶ 2, 2; Ex. 1, ECF No. 1-2 at ¶ 8). Prior to the sale of the surface rights to the Property to the Buyers, Plaintiffs entered into an Oil & Gas Lease with Rice Drilling D, LLC ("Rice Drilling") (Id., Ex. 2, ECF No. 1-3) for the Property. (Id. at ¶ 3, 3). At the time Plaintiffs sold the surface rights to the Buyers, Rice Drilling had not commenced production or any payment of royalties. (Id. at ¶ 4, 3).
Plaintiffs' real estate agent, Brian Bauer, retained Mid Ohio Title Agency, LLC doing business as Lanco Title Agency ("Lanco"), on Plaintiffs' behalf. (Pls.' Mem. Opp. Defs.' Clark & Clark Mot. J. Pleadings 2, ECF No. 42 at 226). Lanco served as the escrow agent for the sale of the Property. (Compl. ¶ 14, ECF No. 1 at 5). Lanco is owned by attorney Jonathan C. Clark. (Id.).
Mr. Clark prepared the warranty deed (the "Deed") for the Plaintiffs' signatures. (Id., Ex. 4, ECF No. 1-5 at 34). The Deed did not provide for the reservation of mineral rights as agreed to by the parties to the Real Estate Purchase Contract. (Id. at ¶ 30, 7). The Plaintiffs signed the Deed on September 4, 2013. (Id., Ex. 4, ECF No. 1-5). Lanco recorded the Deed with the Belmont County Recorder on October 4, 2013. (Answer ¶ 6, ECF No. 16 at 73).
Plaintiffs did not discover Mr. Clark's error until February 4, 2018 when they inquired with Mr. Bauer about the upcoming expiration of the Oil & Gas Lease. (Compl. ¶ 32; ECF No. 1 at 7). After checking the Ohio Department of Natural Resources' records, Mr. Bauer informed the Plaintiffs that the Property's 37.525 acres were in drilling units and had been drilled by Rice Drilling's subsequent purchaser, Gulfport Energy Corp. ("Gulfport Energy"), during the third quarter of 2016. (Id.). The Plaintiffs further discovered that Gulfport Energy paid the corresponding mineral production royalties to the Buyers. (Id. at ¶ 31, 7).
On May 22, 2018, Plaintiffs commenced this action against the Buyers, Lanco, and Clark & Clark alleging seven causes of action. (Id.). In their sixth cause of action for legal negligence,1Plaintiffs allege that Mr. Clark provided legal services to them and was directly paid for those services out of the escrow funds created by Lanco for the sale of the Property. (Id. at ¶ 61, 12). Plaintiffs further allege that Mr. Clark owed them a duty of care commensurate with that provided by other Ohio attorneys, he breached that duty by failing to reserve the mineral rights in the Property to the Plaintiffs when he prepared the Deed, and that failure harmed the Plaintiffs when the mineral production royalties were paid to the Buyers instead. (Id. at ¶¶ 62-65, 12).
"After the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). The standard applied to motions for judgment on the pleadings is the same standard applicable to motions to dismiss under Rule 12(b)(6). See Hindel v. Husted, 875 F.3d 344, 346 (6th Cir. 2017). "For purposes of a motion for judgment on the pleadings, all well-pleaded material allegations of the pleadings of the opposing party must be taken as true, and the motion may be granted only if the moving party is nevertheless clearly entitled to judgment." JPMorgan Chase Bank, N.A. v. Winget, 510 F.3d 577, 582 (6th Cir. 2007) (internal citation and quotation marks omitted). But legal conclusions or unwarranted factual inferences are not accepted as true. Id. at 581-82 (citing Mixon v. Ohio, 193 F.3d 389, 400 (6th Cir. 1999)). When considering a motion for judgment on the pleadings, a court reviews not only the complaint, but "matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint." Barany-Snyder v. Weiner, 539 F.3d 327, 332 (6th Cir. 2008).
To withstand a motion for judgment on the pleadings, "a complaint must contain direct or inferential allegations respecting all the material elements under some viable legal theory." Commercial Money Ctr., Inc. v. Illinois Union Ins. Co., 508 F.3d 327, 336 (6th Cir. 2007). "Thefactual allegations in the complaint need to be sufficient to give notice to the defendant as to what claims are alleged, and the plaintiff must plead 'sufficient factual matter' to render the legal claim plausible, i.e., more than merely possible." Fritz v. Charter Township of Comstock, 592 F.3d 718, 722 (6th Cir. 2010) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678.
Defendants Clark & Clark seek judgment in their favor on Plaintiffs' claim of legal negligence and advance two primary arguments as to why they believe they are entitled to judgment on the pleadings regarding this claim. First, Defendants Clark & Clark insist no attorney-client relationship existed between the parties. (ECF No. 32 at 158). They next aver that even if such a relationship had existed, Plaintiffs' malpractice claimed is barred by the one-year statute of limitations under Ohio Rev. Code § 2305.11(A). (Id.).
To establish a legal malpractice claim in Ohio,2 a plaintiff must show that: (1) the attorney owed a duty or obligation to the plaintiff, (2) there was a breach of that duty or obligation and that the attorney failed to conform to the standard required by law, and (3) there is a causal connection between the conduct complained of and the resulting damage or loss. Vahila v. Hall, 77 Ohio St. 3d 421, 421-22, 674 N.E.2d 1164, 1167 (1997). Defendants Clark & Clark argue that absent an attorney-client relationship no corresponding duty or obligation can exist. (ECF No. 32 at 162). Defendants Clark & Clark contend that, "[A]n attorney-client relationship exists when an attorney advises others as to their legal rights, a method to be pursued, the forum to be selected, and thepractice to be followed for the enforcement of their rights." (Id.) (quoting Toliver v. Duwel, 2012-Ohio-846, ¶ 55 (Ct. App.)). They emphasize to the Court that the ultimate concern is "whether the putative client reasonably believed that the relationship existed and that the attorney would therefore advance the interests of the putative client." Id. (quoting Davis v. Montenery, 173 Ohio App. 3d 740, 746, 880 N.E.2d 488, 492 (2007)).
Plaintiffs point out that Defendants Clark & Clark have the same address as Lanco, and that Mr. Clark serves as an agent to both the title agency and his firm. (ECF No. 42 at 229). They further stress that Lanco advertises that it is owned by attorney Jonathan C. Clark. (Id.). Plaintiffs claim that this public representation led them to believe that by engaging the services of Lanco, they were also engaging the legal services of Defendants Clark & Clark. (Id.).
Plaintiffs further claim they expected the Deed to be prepared by an attorney and not Lanco, as preparation of a deed falls within the practice of law in Ohio. (ECF No. 42 at 234). To support this contention, Plaintiffs highlight the Supreme Court of Ohio's decision in Disciplinary Counsel v. Jones where the court declared, 138 Ohio St. 3d 330, 331-32, 6 N.E.3d 1159, 1160-61 (2014) (quoting Disciplinary Counsel v. Doan, 77 Ohio St. 3d 236, 237, 673 N.E.2d 1272 (1997). Plaintiffs further aver that to avoid engaging in the unauthorized practice of law, Lanco had to retain an attorney on their behalf to prepare the Deed. (ECF No. 42 at 234-35). Plaintiffs point to the portion of the Deed bearing Defendant Clark & Clark's names next to "This instrument prepared by:" as confirmation of this belief. (Id. at 229; ECF No. 1-5 at 34). Plaintiffs emphasize that despite the Settlement Statement (HUD-1) notation of their document preparation payment to "Lanco Title Agency" (Answer, Ex. A, ¶ 1113, ECF No. 16 at 85), Lanco could not keep such afee for a document it could not legally prepare and was instead obligated to give that payment to Defendants Clark & Clark as the actual preparers of the Deed. (ECF No. 42 at 235). Plaintiffs insist that as the owner and agent of the title agency, Mr. Clark served multiple roles during the real estate transaction, and that they contracted with Defendants Clark & Clark for the...
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