Kenneth L. Baiko v. David W. Mays

• Decision Date: 13 April 2000
• Docket Number: 74905,00-LW-1757
• Parties: KENNETH L. BAIKO, Plaintiff-Appellant v. DAVID W. MAYS, et al., Defendants-appellees CASE
• Court: Ohio Court of Appeals

KENNETH L. BAIKO, Plaintiff-Appellant v. DAVID W. MAYS, et al., Defendants-appellees

No. 74905.

00-LW-1757 (8th)

Court of Appeals of Ohio, Eighth District Cuyahoga

April 13, 2000

Civil appeal from Common Pleas Court, Case No. CV-194950.

For Plaintiff-Appellant: CHARLES H. MANNING, ESQ., 30505 Bainbridge Road, Suite 225, Solon, Ohio 44139.

For Defendants-Appellees: TERRY H. GILBERT, ESQ., 1700 Standard Building, 1370 Ontario Street, Cleveland, Ohio 44113.

For Appellant: LOUIS G. HENDERSON, ESQ., Shane, Shane &amp Henderson, 1400 Illuminating Building, Cleveland, Ohio 44113; ROBERT L. TOBIK, ESQ., 4403 St. Clair Avenue, Cleveland, Ohio 44103-1125

For Appellee: Gerald M. Appel JOHN C. CUBAR, ESQ., McNeal, Schick Archibald & Biro, Van Sweringen Arcade, Suite 250, 123 West Prospect Avenue, Cleveland, Ohio 44115.

For Appellees: Dyson, Schmidlin & Foulds ALTON L. STEPHENS, ESQ Raymond J. Schmidlin, TIMOTHY T. BRICK, ESQ., ALAN M. PETROV ESQ.

Gallagher, Sharp, Fulton & Norman, 1501 Euclid Avenue, 7th Floor Bulkley Building, Cleveland, Ohio 44115.

For Appellee: Management for DANIEL J. IGOE, ESQ., Professionals, Inc. 60 East Broad Street, Suite 400, Columbus, Ohio 43215.

OPINION

PATRICIA ANN BLACKMON, J.

In this appeal, the issue is whether a plaintiff in a malpractice action against both his lawyer and accountant is required as a matter of law to produce expert testimony on the standard of care to counter their denial that their action did not fall below the standard of care for their professions. Plaintiff appellant Kenneth L. Baiko argues that his case is different from the usual competency malpractice actions, which require expert testimony. He argues he hired these professionals because of his suspicion that Dr. David Mays' dental practice might not be as lucrative as Dr Mays represented. Thus, he required his lawyer and accountant to obtain the patient dental records and files because of his suspicion. This, he argues, is within the general knowledge and understanding of a lay jury, which negates the requirement of expert testimony.

The trial court noted that defendants-appellees Gerald M. Appel, Gerald M. Appel C.P.A., Inc., Raymond J. Schmidlin and Dyson, Schmidlin & Foulds Co., L.P.D., presented affidavits averring that their conduct did not fall below the standard of care required in their professions. Consequently, the trial court, as a matter of law, granted appellees' summary judgment because appellant failed to produce an expert on this issue.

Appellant assigns the following error for our review:

I.

THE TRIAL COURT ERRED GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT IN PROFESSIONAL MALPRACTICE ACTION BASED ON PLAINTIFF'S FAILURE TO PROVIDE EXPERT TESTIMONY WHERE CLAIMED BREACH OF DUTY WAS WITHIN THE COMMON UNDERSTANDING OF LAYMEN ON THE JURY.

II.

THE TRIAL COURT ERRED IN GRANTING THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANTS RAYMOND J. SCHMIDLIN AND DYSON, SCHMIDLIN & FOULDS CO., L.P.A. WHERE DEFENDANT-APPELLEE SCHMIDLIN, IN DEPOSITION TESTIMONY INCORPORATED INTO PLAINTIFF'S BRIEF IN OPPOSITION, CONTRADICTED HIS EXPERT AFFIDAVIT AS TO THE DUTY OWED A CLIENT IN THE PURCHASE AND SALE OF A DENTAL PRACTICE AND PROVIDED EXPERT TESTIMONY IN SUPPORT OF PLAINTIFF-APPELLANT'S POSITION.

III.

THE TRIAL COURT ERRED IN GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT AND THE ISSUE OF THE DUTY OWED BY A PROFESSIONAL TO HIS CLIENT SHOULD HAVE BEEN SUBMITTED TO THE JURY AT TRIAL WHERE SUFFICIENT ISSUES OF FACT RELATING TO THE CLIENT/PROFESSIONAL RELATIONSHIP BETWEEN PLAINTIFF AND DEFENDANTS WERE RAISED TO PRESENT ISSUES OF PROFESSIONAL DUTY.

IV.

THE TRIAL COURT ERRED IN FAILING TO GRANT PLAINTIFF'S MOTION TO RECONSIDER GRANT OF SUMMARY JUDGMENT IN FAVOR OF DEFENDANTS RAYMOND J. SCHMIDLIN AND DYSON, SCHMIDLIN & FOULDS CO., L.P.A. WHERE PLAINTIFF SUBMITTED AN EXPERT AFFIDAVIT IN SUPPORT OF HIS MOTION.

Having reviewed the parties' argument and the record, we reverse and remand this case for trial. The apposite facts follow.

Appellant, on the advice of appellee-lawyer and appellee-accountant, purchased Dr. David Mays' dental practice. Subsequently, the Ohio State Auditor at the request of the County Commissioners, conducted a special audit of the dental practice. The audit revealed that the practice, which appellant bought for $450,000, consisted of a dental practice enveloped in welfare fraud. The dental practice did not have the number of patients represented in the purchase agreement. In fact, the patients did not exist, and the county had been billed for work not performed. From January 1, 1987 to July 31, 990, Dr. Mays had billed the county for services to 7,159 patients. Appellant learned after the audit that 406 files existed with 93 patients actually receiving services.

To facilitate the purchase of Dr. Mays' practice, appellant hired appellee-lawyer and appellee-accountant. Appellant sued both in connection with the sale because neither had obtained or reviewed the patient files and financial books. Appellees moved for summary judgment and set out specific affidavits setting forth their duties and responsibilities to the appellant.

Appellee-lawyer's affidavit averred that his role was to prepare documents for the purchase and aid in the negotiation. Appellee-lawyer stated the following:

"It is not the custom, practice, or standard for an attorney representing the purchaser of a dental practice to review financial or dental records for fraudulent irregularities or otherwise conduct due diligence with respect to the purchase. This is particularly true when the client has retained an accountant to assist with the transaction."

"Pursuant to the terms of the April 19, 1990 purchase agreement, the purchase of the dental practice was to close on an agreed upon future date. The parties set to conclude the transaction on May 2, 1990 in the office of Gerald Appel. I was involved in this meeting, and at its conclusion, it was my understanding that the transaction had been satisfactorily concluded. I subsequently learned that plaintiff subsequently negotiated significant changes to the original April 19, 1990 agreement directly with Dr. Mays' attorney, Timothy Bender. A letter dated May 2, 1990 from plaintiff to Mr. Bender sets forth a number of substantive changes to the original agreement required by plaintiff's lender. These changes were incorporated into a new contract identified as the "final purchase sales agreement" which is dated May 2, 1990."

"I did not prepare or review the `final purchase sales agreement' prior to its execution, and was not present when it was signed. I did not learn of plaintiff's direct dealings with Mr. Bender or the existence of the new contract until after the fact. I was not asked and did not offer any advice to plaintiff with respect to the new contract or his direct dealings with Mr. Bender."

Affidavit, Sept. 30, 1996 Exhibit A

Appellee-accountant had averred in his affidavit that "it was the practice and custom of certified public accountants to rely upon the financial statements and tax returns prepared by outside accountants and it was not accepted practice to review the actual accounting records of a dental practice." Exhibit A, April 18, 1996. Furthermore, he averred the following:

"My agreement with Kenneth L. Baiko, D.D.S. to perform services consisted of the following:

(a) Assist Kenneth L. Baiko, D.D.S. in preparing loan applications.

(b) Prepare the compiled proforma statements.

(c) Advise Kenneth L. Baiko, D.D.S. on tax matters of contract and operations after purchase.

(d) Make application on behalf of Kenneth L. Baiko, D.D.S. for corporate tax numbers.

(e) Be the accountant for Kenneth L. Baiko, D.D.S. after the dental practice was purchased from David W. Mays, D.D.S.

(f) Assist in setting up the accounting records and accounting systems after the purchase of the dental practice."

"At no time did Kenneth L. Baiko, D.D.S. retain me to investigate and perform audit of the dental records of the dental practice of David W. Mays, D.D.S., Inc. As a certified public accountant, I do not have the expertise that would be necessary to do an audit of the dental records, coupled with the fact that even if the audit process was undertaken, it would take months to complete."

"My last contact with Kenneth L. Baiko, D.D.S. occurred on May 8, 1990, when I telephoned him in order to make arrangements to review his accounting records, make necessary adjustments to accounting practices, along with offering accounting suggestions to Kenneth L. Baiko, D.D.S. During this conversation, Kenneth L. Baiko, D.D.S. advised me the dental practice was going well, the volume of patients was in fact present, and that the purchase of the dental practice of David W. Mays D.D.S., Inc. looked like a good deal."

Appellant averred that he expected even in the f ace of Dr. Mays' road blocks for appellees to obtain and have access to the patients records to ascertain the viability of the dental practice. Appellant avers that he and appellees were suspicious of Dr. Mays because he wanted to sell such a lucrative dental practice at such a young age.

Appellant made the following representation in his affidavit:

"Prior to my signing the purchase agreement, I met with Attorney Schmidlin and Gerald Appel and was informed by Gerald Appel that he had not gotten in to the office of Dr David W. Mays, D.D.S. to look at his patient records or patient folders. I informed Gerald Appel that the basis for his recommendation of signing the purchase agreement, the mere inspection of financial statements, was wholly inadequate justification for proceeding with the purchase. I insisted that a thorough inspection of the patient records in combination with the financial statements was the only acceptable

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