Pipino v. Norman

• Decision Date: 12 December 2017
• Docket Number: NO. 16 MA 0153,16 MA 0153
• Parties: Samuel D. PIPINO et al., Plaintiffs–Appellees/Cross–Appellants, v. Forrest NORMAN et al., Defendants–Appellants/Cross–Appellees.
• Court: Ohio Court of Appeals

101 N.E.3d 597

2017 Ohio 9048

Samuel D. PIPINO et al., Plaintiffs–Appellees/Cross–Appellants,

v.Forrest NORMAN et al., Defendants–Appellants/Cross–Appellees.

NO. 16 MA 0153

Court of Appeals of Ohio, Seventh District, Mahoning County.

Dated: December 12, 2017

Atty. Mark A. Hanni, Atty. Jason Small, 829 Southwestern Run, Youngstown, Ohio 44514, For Plaintiffs–Appellees/Cross Appellants

Atty. Stephen E. Walters, Atty. James O'Connor, Atty. Brian D. Sullivan, Reminger Co., L.P.A., 101 West Prospect Avenue, Suite 1400, Cleveland, Ohio 44115, Atty. Thomas E. Dover, Atty.Melanie R. Irvin, Atty. Colleen Mountcastle, Gallagher Sharp, LLP, 1501 Euclid Avenue, Bulkley Building, Sixth Floor, Cleveland, Ohio 44115, For Defendants–Appellants/Cross Appellees

JUDGES: Hon. Carol Ann Robb, Hon. Gene Donofrio, Hon. Cheryl L. Waite

OPINION

ROBB, P.J.

{¶ 1} This case presents an appeal and a purported cross-appeal. Gallagher Sharp (the law firm) appeals the decision of the Mahoning County Common Pleas Court granting summary judgment to Samuel D. Pipino et al. (the clients) on the law firm's quantum meruit counterclaim. The trial court held the quantum meruit claim was not sustainable as the parties' agreement set forth the fees. The law firm points to a Supreme Court precedent stating termination of the attorney-client relationship and the accompanying contingency agreement does not preclude the attorney from recovering the reasonable value of services rendered prior to discharge, whether the termination was with or without just cause. The law firm states the claim for recovery of fees is not on the prior contract and the terms of a "stipulation" allegedly attached to the contract were in dispute. We conclude the clients were not entitled to judgment as a matter of law on the quantum meruit counterclaim. Accordingly, the entry of summary judgment for the clients on the law firm's counterclaim is reversed, and the counterclaim is remanded for further proceedings.

{¶ 2} The clients appeal the trial court's grant of summary judgment to the law firm and Attorney Forrest A. Norman on the clients' legal malpractice claim. The trial court held the clients' settlement in the underlying case after termination of the attorney-client relationship was fatal to the malpractice claim. The court also found a waiver principle applicable due to the settlement. The clients contend the attorney's negligence diminished the value of their underlying case or at least caused damages from loss of use of the money during the delay. The issue is whether there was any evidence the attorney's negligence proximately caused damages after taking into consideration a settlement was entered in the underlying case after the attorney was terminated. For the reasons explained infra, we hereby uphold the grant of summary judgment entered against the clients on their legal malpractice claim.

STATEMENT OF THE CASE

{¶ 3} The clients filed a complaint alleging legal malpractice against Attorney Norman and the law firm where he was employed. A counterclaim was filed seeking recovery of attorneys' fees under the doctrine of quantum meruit. The underlying case involved the clients' dissatisfaction with investments made by First Merit Bank in the clients' trust portfolios from 2007 through 2009. The clients instructed the bank to make safe and conservative investments. The bank suggested exchange-traded funds (ETFs); the clients consented while reiterating their instructions as to safe and conservative investments. The bank invested in ETFs; at least one of the ETFs was comprised of derivatives (was leveraged) rather than merely stocks. When the $2 million beginning balance incurred $1.29 million in losses, the clients instructed the bank to sell the investments.

{¶ 4} In 2010, the clients hired Attorney Norman of Gallagher Sharp to represent them in a breach of fiduciary duty suit against the bank and certain bank employees. Attorney Apelis, a partner at Gallagher Sharp, assisted Attorney Norman. The agreed compensation was a one-third contingency fee plus expenses. Attorney Norman filed a complaint on behalf of the clients against the bank and the bank's employees, resulting in Pipino v. Onuska , Mah. Cty. C.P. No. 10CV3548. The case was voluntarily dismissed on April 4, 2012, after the trial court refused to extend a previously-extended discovery deadline. Private mediation with the bank proceeded in November 2012, after which the bank filed a declaratory judgment action against the clients in Cuyahoga County. The clients filed a counterclaim. The clients also attempted to refile the Mahoning County lawsuit against the bank, but the court dismissed this action due to the pending Cuyahoga County case.

{¶ 5} The clients say they terminated Attorney Norman on March 26, 2013 and used other attorneys at the law firm; the law firm states other attorneys at the law firm took over the case when Attorney Norman left the firm. The clients terminated the law firm's representation in July 2013 and hired a new attorney. On September 18, 2013, the clients settled the case against the bank, and the Cuyahoga County suit was dismissed.

{¶ 6} In November 2013, the clients filed the within legal malpractice action against Attorney Norman and Gallagher Sharp (for vicarious liability). The complaint claimed Attorney Norman committed legal malpractice by: failing to complete discovery, interview an expert witness, and prepare for trial in the Mahoning County action against the bank, all necessitating voluntary dismissal; disobeying the clients' instruction to immediately refile the suit in Mahoning County, while assuring the clients venue would not be lost; and agreeing to schedule mediation with the bank instead of immediately refiling the suit without first consulting with the clients. Regarding the Cuyahoga County suit, the clients complained Attorney Norman failed to engage in discovery and scheduled their depositions in contravention of their instructions that they not be deposed until the bank provided discovery.

{¶ 7} The quantum meruit counterclaim filed by Attorney Norman and the law firm asked for the reasonable value of legal services and advanced expenses. The counterclaim pointed out: the action against the bank was filed in 2010; the bank's efforts to remove the suit to federal court were successfully opposed; upon remand to state court, there was extensive discovery conducted; interrogatories and requests for production were served on the bank; responses were submitted to the bank's interrogatories, requests for production, and requests for admissions; experts were engaged; numerous court appearances were made; motions to compel discovery were filed and defended; the clients elected to voluntarily dismiss due to an impasse in discovery; and mediation lasted for several hours, after which the clients rejected a settlement offer. After the Cuyahoga County action was filed, the action was defended, a counterclaim was filed, discovery was conducted (with multiple depositions), and a motion to compel discovery was filed on behalf of the clients.

{¶ 8} On April 20, 2015, Attorney Norman and the law firm filed a motion for summary judgment on the clients' legal malpractice claim. They asserted: the alleged discovery omissions in the original action that was voluntarily dismissed did not harm the case against the bank; instead of completing discovery in the second action and taking the case to trial, the clients settled with the bank; the clients waived their malpractice claim by settling the underlying case, citing the Eighth District's Sawchyn v. Westerhaus case; loss of venue in one county is not a basis for malpractice; proximate cause was lacking as there was no showing the alleged negligence caused a loss since nothing prohibited the clients from taking their case against the bank to trial; and the underlying case required expert testimony on the standard of care for a financial professional, but the clients failed to provide an expert report by the deadline in order to prove their "case within a case."

{¶ 9} An affidavit was provided to confirm the clients failed to provide an expert report on the bank's breach of fiduciary duty in the underlying case. In addition, the affidavit of Attorney Apelis attested: extensive discovery was conducted in both cases; a financial expert was retained in both cases; Attorney Norman left the firm on March 26, 2013; the court in Cuyahoga County ordered the clients to submit to deposition over objection after non-party depositions had been taken; and no discovery deadlines were set in the Cuyahoga County case at the time the law firm was terminated. The motion also pointed to Mr. Pipino's deposition testimony where he vaguely stated he lost three years and his case was hurt by not getting discovery.

{¶ 10} On May 5, 2015, the clients responded to the motion for summary judgment as to their legal malpractice claim. A reply in support of the motion for summary judgment was filed on July 1, 2015. The clients then received leave to file a cross-motion for summary judgment on the quantum meruit counterclaim filed against them.

{¶ 11} On August 18, 2015, the clients filed a motion for summary judgment on the counterclaim, arguing the existence of the express contract nullified the quasi-contractual quantum meruit claim. They cited to Mr. Pipino's deposition at page 51, where he said he told Attorney Norman when he hired him that he would not agree to a settlement unless they recovered all of their losses (as he would rather take the case to trial); he said Attorney Norman advised he would have to check with the law firm's partners and called him later to say he received their approval. The clients suggested a quasi-contractual quantum meruit claim would have been nullified by a written agreement, noting an attorney is to have the client sign a written contingency fee agreement pursuant to Rule of Professional Conduct 1.5. The clients alternatively argued the elements...