State ex rel. Ford v. Ruehlman

• Decision Date: 21 June 2016
• Docket Number: No. 2015–1470.,2015–1470.
• Citation: 2016 Ohio 3529,73 N.E.3d 396,149 Ohio St.3d 34
• Parties: The STATE ex rel. FORD v. RUEHLMAN, Judge.
• Court: Ohio Supreme Court

149 Ohio St.3d 34

73 N.E.3d 396

2016 Ohio 3529

The STATE ex rel. FORD

v.RUEHLMAN, Judge.

No. 2015–1470.

Supreme Court of Ohio.

Submitted March 8, 2016.

Decided June 21, 2016.

Dinsmore & Shohl, L.L.P., Brian S. Sullivan, and Christen M. Steimle, Cincinnati, for relator.

Joseph T. Deters, Hamilton County Prosecuting Attorney, and James W. Harper and Michael J. Friedmann, Assistant Prosecuting Attorneys, for respondent.

Cohen, Todd, Kite & Stanford, L.L.C., and Donald J. Rafferty, Cincinnati; and Zeiger, Tigges & Little, L.L.P., John W. Zeiger, and Marion H. Little Jr., Columbus, for intervenor Waite, Schneider, Bayless & Chesley Co., L.P.A.

Frost Brown Todd, L.L.C., and Vincent E. Mauer, Cincinnati, for intervenor Stanley M. Chesley.

PER CURIAM.

{¶ 1} The Boone County, Kentucky, Circuit Court has entered a multimillion-dollar judgment against former attorney Stanley M. Chesley. Denied relief from the judgment by the Kentucky courts, Chesley has turned to the courts of Ohio to thwart collection of the judgment and relitigate the case. And Chesley has found a receptive audience in the respondent, Hamilton County Common Pleas Court Judge Robert Ruehlman. In Chesley v. Ford, Hamilton C.P. No. A1500067, Judge Ruehlman has repeatedly acted to shield Chesley and his assets from creditors, despite a patent lack of jurisdiction.

{¶ 2} Relator, Angela M. Ford, seeks a writ of prohibition to preclude Judge Ruehlman from continuing to exercise jurisdiction over the Hamilton County case.

Chesley and his former law firm, as intervenors, oppose this request on the merits and also based on a claim of mootness. We grant a peremptory writ of prohibition and order Judge Ruehlman to vacate his orders. We deny Ford's request for a writ of mandamus.

Background

The Kentucky proceedings

{¶ 3} In 1998, attorneys William Gallion, Shirley Cunningham, and Melbourne Mills filed a class-action lawsuit in Boone County, Kentucky, captioned Guard v. A.H. Robins Company, on behalf of approximately 431 persons who claimed to have been injured by the use of the diet drug "fen-phen."¹ Chesley was counsel in a separate fen-phen suit in Boone County, which he succeeded in consolidating with the Guard class action. Chesley, Gallion, Cunningham, Mills, and another attorney then entered into fee-sharing agreements that were not disclosed to the clients.

{¶ 4} The parties reached a settlement agreement. American Home Products, the manufacturer of fen-phen, agreed to pay $200 million in settlement of the claims brought by the 431 named plaintiffs in return for dismissal of their claims with prejudice. The class would be voluntarily decertified, and the class-member claims dismissed without prejudice. The clients were not informed of these facts before the agreement was executed and the claims dismissed. American Home ultimately disbursed $200,450,000 to the client trust accounts of Chesley and Cunningham. The clients received $46,000,000 (approximately 23 percent). Chesley personally retained $20,497,121.87.

{¶ 5} In 2005, several of the Guard clients filed suit against Chesley, Gallion, Cunningham, Mills, and the Kentucky Fund for Healthy Living in the Circuit Court of Boone County, Kentucky, alleging misconduct and misappropriation of the settlement funds.² The case was styled Abbott v. Chesley (the "Abbott case"), case No. 05–CI–436. Angela Ford, relator in the instant action, is an attorney licensed to practice in the Commonwealth of Kentucky, and she represented the plaintiffs in the Abbott litigation.

{¶ 6} On March 8, 2006, the Boone County court found Cunningham, Gallion, and Mills liable for breach of fiduciary duty. In a later order, dated August 1, 2007, the court awarded damages in the amount of $42,000,000.

{¶ 7} The question of Chesley's liability remained unresolved for seven years. In the interim, the Kentucky Supreme Court permanently disbarred Chesley for his conduct in the Guard litigation. Kentucky Bar Assn. v. Chesley, 393 S.W.3d 584 (Ky.2013). He is registered in Ohio as "permanently retired."

{¶ 8} On April 15, 2013, shortly after his Kentucky disbarment, Chesley executed a wind-up agreement for his law practice, Waite, Schneider, Bayless & Chesley Co., L.P.A. ("WSBC"), of which he was the sole shareholder. Pursuant to the agreement, Chesley transferred his shares in WSBC to Thomas F. Rehme, who would hold the shares in trust for the purpose of winding up the corporation's affairs. Chesley was entitled to receive any proceeds remaining from the liquidation of the firm's assets after the creditors were paid. In addition, the agreement preserved Chesley's right to share in legal fees relating to services performed before the date of the transfer.

{¶ 9} On August 1, 2014, Boone County Circuit Court Judge James R. Schrand granted a motion for partial summary judgment in the Abbott case and held Chesley liable, jointly and severally with Cunningham, Gallion, and Mills, for the $42,000,000 judgment.

{¶ 10} On August 11, 2014, Chesley petitioned the Boone County court to reconsider and vacate the partial-summary-judgment order. Judge Schrand denied the motions on September 19, 2014.

{¶ 11} Chesley responded with a motion for clarification, on October 20, 2014, seeking an order to compel the Abbott plaintiffs to identify by name each party-plaintiff, the capacity in which each was suing (individual or representative), and the amount of the judgment attributable to each individual. Judge Schrand denied that motion as well.

{¶ 12} On October 22, 2014, Judge Schrand issued a second amended judgment against Chesley, which added language designating the order as final and appealable. Chesley filed a motion to vacate the second amended judgment, which was also denied.

The Ohio proceedings

{¶ 13} On January 6, 2015, Chesley filed suit in the Common Pleas Court of Hamilton County against attorney Ford and "possibly over 400 John Doe or Jane Doe" respondents. These so-called "Unknown Respondents" were the Abbott case judgment creditors. At the time Chesley filed his lawsuit, Ford and the Abbott plaintiffs had taken no steps to domesticate or enforce their judgment in Ohio.

{¶ 14} In his complaint, Chesley requested five specific orders:

1. A declaration that before respondents could take any action in Ohio to enforce the Abbott judgment, Chesley is entitled to know, and Ford must immediately disclose to Chesley and the court, the name and address and the amount owed to each judgment creditor and the exact current total amount owed on the judgment.

2. A declaration that Chesley is entitled to know, and Ford must immediately disclose to Chesley, the amount of money and value of assets recovered pursuant to the 2007 judgment against Gallion, Mills, and Cunningham, the date on which payments were made or assets forfeited or seized, the total amount distributed to the judgment creditors, the amount collected and not distributed, and the total amount distributed to the Unknown Respondents pursuant to the settlement agreement and in the Abbott case, after reduction for Ford's fees and expenses.

3. An injunction to prevent Ford, the Unknown Respondents, or anyone acting on their behalf from taking any action in the state of Ohio to collect the Abbott judgment until 90 days after Chesley receives the information.

4. An injunction to prevent Ford, the Unknown Respondents, or anyone acting on their behalf from registering or domesticating the judgment against Chesley in Ohio, or issuing subpoenas or other discovery to parties in Ohio, until 90 days after Chesley receives the information.

5. An injunction to prevent the destruction of documents relevant to the issues in Chesley's pleadings.

{¶ 15} The case was assigned to Judge Ruehlman.

{¶ 16} The next day, January 7, 2015, Judge Ruehlman entered an ex parte temporary restraining order. Under the terms of the order, for the next 14 days:

1. Ford, any co-counsel, and any Ohio lawyer representing the Unknown Respondents were enjoined from taking any action in Ohio to enforce the Abbott judgment against Chesley or serve any Chesley-asset-related discovery on any Ohio resident, citizen, or domiciliary, except Chesley himself.

2. Ford, any co-counsel, and any Ohio lawyer representing the Unknown Respondents were enjoined "from making any filing in any Ohio court that would be or could be part of an effort to domesticate or register" the Abbott judgment in Ohio.

3. Ford, the Unknown Respondents, and any person acting on their behalf were enjoined from taking any action to collect the Abbott judgment in Ohio from any Ohio resident, citizen, or domiciled entity, other than Chesley.

4. Ford, the Unknown Respondents, and any person acting on their behalf were enjoined from issuing any subpoena seeking documents or testimony to any Ohio resident, citizen, or domiciled entity, other than Chesley, if the purpose of the requested documents or testimony was to obtain information related to efforts to enforce the Abbott judgment.

5. Ford, the Unknown Respondents, and any person acting on their behalf were enjoined from destroying, damaging, or secreting any documents or electronically stored information relating to a host of topics.³

{¶ 17} One week later, Judge Ruehlman entered an order extending the injunction to keep the restrictions of the TRO in force until further order of the court. Judge Ruehlman modified the TRO in one respect: whereas the first order permitted Ford to serve discovery on Chesley, the extended order clarified that such discovery could occur only in a non-Ohio jurisdiction. The order expressly stated that Chesley was not required to post any security.

{¶ 18} In February 2015, Ford removed the case to federal court, based on diversity jurisdiction. She then filed motions to dissolve the restraining order and to dismiss the complaint. The motion to dismiss argued that Ohio had no personal jurisdiction over Ford, that the complaint identified no justiciable case or controversy, and that the complaint constituted an impermissible collateral...