Kelley v. Ferraro

• Decision Date: 17 June 2010
• Docket Number: No. 92446.,92446.
• Citation: 2010 -Ohio- 2771,936 N.E.2d 986
• Parties: KELLEY, Exr., Appellant and Cross-Appellee, v. FERRARO et al., Appellees and Cross-Appellants.
• Court: Ohio Court of Appeals

936 N.E.2d 986 2010 -Ohio- 2771 KELLEY, Exr., Appellant and Cross-Appellee, v. FERRARO et al., Appellees and Cross-Appellants. No. 92446. Court of Appeals of Ohio, Eighth District, Cuyahoga County. Decided June 17, 2010.

William T. Wuliger, Cleveland, for appellant and cross-appellee.

Wilcox & Garofoli Co., L.P.A., John R. Climaco, David M. Cuppage, Scott D. Simpkins, and Climaco, Lefkowitz, Peca, Cleveland, for appellees and cross-appellants.

CHRISTINE T. McMONAGLE, Judge.

*738 {¶ 1} Plaintiff-appellant and cross-appellee, Lynn Arko Kelley, individually and as executor of the estate of Michael Vincent Kelley, appeals from the trial court's judgment, rendered after a jury verdict, awarding her $4.22 million against defendant-appellee and cross-appellant Kelley & Ferraro, L.L.P. ("K & F"), and directing a verdict in favor of defendant-appellee and cross-appellant James Ferraro.

{¶ 2} In eight assignments of error, Kelley asserts that numerous errors occurred before, during, and after trial. In three assignments of error, Ferraro and K & F likewise contend that there were errors before, during, and after trial.

I. Background

{¶ 3} This case arises from the death of Michael Kelley, one of the founding partners of K & F, an Ohio limited-liability law partnership specializing in plaintiffs' asbestos litigation. The firm was formed in 1997 by a written partnership agreement between Michael Kelley and Ferraro, a Florida lawyer who owned and operated his own asbestos law firm. Ferraro's contribution to K & F was to guarantee a $1.5 million line of credit that was serviced entirely by K & F; pursuant to the agreement, he devoted all of his time to his Florida law firm. K & F was extraordinarily successful; from 1997 through 2005, Michael Kelley and Ferraro each received $44 million in compensation from the firm-$11 million each in 2005 alone.

{¶ 4} Michael Kelley died of a heart attack on January 2, 2006. Kelley, Michael's widow and executor of his estate, commenced this litigation in April *739 2006. Her second amended complaint alleged claims, as numbered counts in the complaint, for (1) dissolution according to the agreement, (2) winding up according to the agreement, and (3) an accounting of K & F according to the agreement, (4) Ferraro's breach of the agreement, (5) Ferraro and K & F's breach of an oral contract between Kelley and K & F regarding Kelley's employment with K & F, (6) conversion by Ferraro and K & F of money and assets belonging to the estate, (7) fraud by Ferraro relating to promises he made to Kelley after Michael's death, (8) promissory estoppel relating to the promises, (9) unjust enrichment of Ferraro and K & F based on trademark infringement through K & F's continued use of the name "Kelley" after Michael's death, (10) breach of fiduciary duty by Ferraro and K & F, (11) unjust enrichment arising out of Ferraro's failure to dissolve his Florida law firm after Michael's death and devote all his time to K & F per the agreement, (12) injunctive relief, and (13) a constructive trust.

{¶ 5} Counts 14 through 17 of the second amended complaint alleged claims related to Ferraro's conduct with respect to the Las Vegas Gladiators arena football team, in which Michael Kelley invested $2.8 million before his death. These claims were for (14) violation of R.C. 1707.07, (15) breach of fiduciary duty, (16) breach of contract, and (17) conversion of estate assets through Ferraro's management and control of the team.

{¶ 6} Ferraro and K & F filed an answer asserting numerous affirmative defenses to the second amended complaint; they also filed a counterclaim for declaratory judgment. They contemporaneously filed a motion to dismiss or for summary judgment regarding all of Kelley's claims.

{¶ 7} Kelley filed a motion to dismiss appellees' counterclaim for declaratory judgment and later filed a motion for partial summary judgment, seeking summary judgment regarding Ferraro's liability on her contract claims relating to the agreement and her claims regarding the Gladiators football team. The trial court did not rule on any of these motions.

{¶ 8} A jury trial commenced in March 2008, as to all claims and counterclaims. The trial court subsequently granted appellees' motion for a directed verdict in favor of Ferraro on all counts. The trial court also granted a directed verdict for K & F on all counts except Count 4, which alleged a claim for breach of the agreement against Ferraro. The court convertedthat claim to a quasi-contract/unjust-enrichment claim, and the jury returned a verdict in favor of Kelley and against K & F in the amount of $4.22 million on this claim.

{¶ 9} K & F then filed a motion for judgment notwithstanding the verdict or for remittitur, while Kelley filed a motion for a new trial as well as a motion for costs and prejudgment interest. While these motions were pending, Kelley filed an affidavit of disqualification with the Ohio Supreme Court seeking to disqualify *740 the trial judge from further proceedings on this matter and several other related matters; the trial judge subsequently voluntarily withdrew from the case. The matter was reassigned and thereafter the new judge denied all pending posttrial motions.

II. Kelley's Appeal

A. Claims Relating to the Agreement

{¶ 10} Kelley's motion for partial summary judgment sought summary judgment regarding Ferraro's liability on her claims relating to the agreement and the Gladiators football team. The trial court did not rule on her motion; hence we presume it was denied. Temple v. Fence One, Inc., Cuyahoga App. No. 85703, 2005-Ohio-6628, 2005 WL 3436354, ¶ 27.

{¶ 11} In her first assignment of error, Kelley contends that the trial court erred in not granting summary judgment or a directed verdict in her favor on her claims relating to the agreement.

{¶ 12} Civ.R. 56(C) provides that summary judgment is appropriate when (1) there is no genuine issue of material fact, (2) the moving party is entitled to judgment as a matter of law, and (3) after construing the evidence most favorably for the party against whom the motion is made, reasonable minds can reach only a conclusion that is adverse to the nonmoving party. Zivich v. Mentor Soccer Club, Inc. (1998), 82 Ohio St.3d 367, 369-370, 696 N.E.2d 201; Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327, 4 O.O.3d 466, 364 N.E.2d 267. We review the trial court's judgment de novo, using the same standard that the trial court applies under Civ.R. 56(C). Grafton v. Ohio Edison Co. (1996), 77 Ohio St.3d 102, 105, 671 N.E.2d 241.

{¶ 13} In her motion for partial summary judgment, Kelley argued that Michael Kelley's death statutorily dissolved the partnership and triggered Ferraro's duty to wind up K & F's affairs under former R.C. 1775.30(D), ¹ which provided that the death of a partner dissolved a partnership. Ferraro and K & F responded that dissolution of K & F was not statutorily required, because partners may waive those requirements, which they claimed the agreement did.

{¶ 14} The agreement did not waive the requirements of R.C. 1775.30(D), however. As discussed below, the plain language of the agreement required Ferraro to treat Michael Kelley's death as an event triggering the dissolution and winding up of the K & F partnership. Thus, Ferraro was statutorily and contractually required to dissolve K & F, wind up its affairs, and provide Kelley with an accounting and settlement of the estate's interest.

*741 {¶ 15} The interpretation of a written contract is a matter of law for the court. Alexander v. Buckeye Pipe Line Co. (1978), 53 Ohio St.2d 241, 7 O.O.3d 403, 374 N.E.2d 146, paragraph one of the syllabus. The purpose of construing contracts is to effectuate the intent of the parties.Kelly v. Med. Life Ins. Co. (1987), 31 Ohio St.3d 130, 132, 31 OBR 289, 509 N.E.2d 411. Courts presume that the parties expressed their intentions in the language they chose to employ in the contract. Id.; Shifrin v. Forest City Ent., Inc. (1992), 64 Ohio St.3d 635, 638, 597 N.E.2d 499. Common words appearing in a written instrument will be given their ordinary meaning unless manifest absurdity results, or unless some other meaning is clearly evidenced from the face or overall contents of the instrument. Alexander, at paragraph two of the syllabus.

{¶ 16} Where contract terms are clear and unambiguous, the court cannot, in effect, create a new contract by finding an intent not expressed in the clear language employed by the parties. Brandon/Wiant Co. v. Teamor (1998), 125 Ohio App.3d 442, 447, 708 N.E.2d 1024. "A court will resort to extrinsic evidence in its effort to give effect to the parties' intentions only where the language is unclear or ambiguous, or where the circumstances surrounding the agreement invest the language of the contract with a special meaning." Kelly, 31 Ohio St.3d at 132, 31 OBR 289, 509 N.E.2d 411. A contract does not become ambiguous because its operation may work a hardship upon one party. Fultz & Thatcher v. Burrows Group Corp., 12th Dist. No. CA2005-11-126, 2006-Ohio-7041, 2006 WL 3833971, ¶ 29, citing Ohio Crane Co. v. Hicks (1924), 110 Ohio St. 168, 172, 143 N.E. 388. If a contract is clear and unambiguous, then its interpretation is a matter of law and there is no issue of fact to be determined. Inland Refuse Transfer Co. v. Browning-Ferris Ind. of Ohio, Inc. (1984), 15 Ohio St.3d 321, 322, 15 OBR 448, 474 N.E.2d 271.

{¶ 17} Sections 1 and 11 of the agreement addressed issues governing the dissolution and winding up of the K & F law firm. In particular, the agreement provided:

{¶ 18} "1.5 Term. The term of the Partnership shall commence on the Effective Date hereof and shall continue until the winding up and dissolution of the Partnership is completed.

{¶ 19} " * * *

{¶ 20} "11.1 Liquidating Events. The Partnership shall commence winding up and dissolution upon the first to occur of any of the following ('Liquidating Events'):

{¶ 21} "(a) The Bankruptcy of a Partner;

{¶ 22}...