Determining that the business is insolvent is one piece of the puzzle but isn’t necessarily the only factor to be considered.

Identifying an Insolvent Business

From an economic standpoint, there are two separate tests for business insolvency:

• A business is deemed insolvent if its cash flow is insufficient to pay obligations as they come due
• A business is considered insolvent if its liabilities exceed its assets

Occasionally, one or both conditions may be short-term, and you may have a clear plan for moving the business forward. Few entrepreneurs or experts would suggest that any business that has a shortfall one month should close its doors. Giving up too easily can be as costly as holding on for too long.

However, the financial instability of your business shouldn’t be ignored or treated lightly. If you are operating an insolvent business, it’s time to take a hard, realistic look at your circumstances and prospects and determine whether it’s wise to continue operations.

The “Sunk Costs” Trap

One reason many business owners struggle with closing a business is sunk costs—the money, time, effort, and other resources already invested in getting the business off the ground.

Many business owners look at the investment already made and are reluctant to let go, feeling that all that time and money will be lost if they shut down the business.

The impulse is understandable, but if you’re not careful and realistic a struggling business can become like an old car you keep repairing because you’ve already put so much money into it.

The truth is that if the business is failing, then those previous investments are already lost. Continuing operations beyond the point of viability aren’t likely to be beneficial and may result in the loss of any remaining assets or value in the business.

Unfortunately, the consciousness of those sunk costs often taints the decision-making process.

The Danger of Personal Guarantees

One of the most significant risks owners of struggling businesses take is to personally guarantee loans to or other obligations of the business. While an owner or member of a small LLC or corporation may see little difference between business and personal obligations, the legal ramifications of a personal guarantee are significant.

The decision to close a business is rarely easy but becomes even more complicated when owners or members are aware that dissolving the business could result in legal action against them personally and the attachment of personal assets. Concerns about personal liability can also influence decisions about the business, often in counter-productive ways.

Get Professional Advice About Your Insolvent Business

The business attorneys at Dworken & Bernstein have assisted many businesses at various stages and have the experience necessary to help you determine the best next steps for your business. As both knowledgeable advocates and neutral assessors, we will examine the current state of your business, your options for moving forward, and the ramifications of each for the business and its principals.

Don’t delay getting the advice you need. Contact us today to schedule a consultation.

Rule 37 Sanctions is the Appropriate Remedy for Interference with or Concealment of Evidence, not Spoliation Claim

The Ohio Supreme Court recently ruled that Civil Procedure Rule 37 provides the remedy against attorneys that interfere with or conceal evidence in discovery, rather than a spoliation claim.

Kristen Elliott-Thomas sued the Warren City School District (“School District”), its Board of Education and five Board members alleging wrongful termination and sex discrimination. 

While that case was pending, she filed a separate case against two attorneys representing the School District for spoliation of evidence. Elliott-Thomas alleged the two attorneys “intentionally withheld, hid, altered, and/or destroyed evidence relevant to her wrongful termination case.” 

The trial court granted the attorneys’ motion for summary judgment because Elliott-Thomas was unable to establish that either of them had “physically destroyed evidence.”

However, the Court of Appeals reversed and found that a plaintiff did not need to present evidence of “actual destruction or alteration of physical evidence” in order to prevail on a spoliation claim. 

Rather, it found “the intentional concealment, interference with or misrepresentation of evidence was sufficient for that claim.”

Turns out, the trial court had it right.

The Supreme Court recognized a conflict between the appellate districts on the issue and accepted the case. 

What Constitutes Spoilation of Evidence

The Court found that Ohio is one of the few jurisdictions that recognize an independent tort of intentional spoliation of evidence, and its elements are:

(1) pending or probable litigation involving the plaintiff, 

(2) knowledge on the part of the defendant that litigation exists or is probable, 

(3) willful destruction of evidence by the defendant designed to disrupt the plaintiff’s case, 

(4) disruption of the plaintiff’s case, and 

(5) damages proximately caused by the defendant’s acts.

Intentional Concealment and Interference is not Spoilation

Although Elliott-Thomas argued that the Court had originally intended a broader interpretation of the term willful destruction of evidence that would include “intentional concealment and interference” when it recognized the spoliation claim in Smith v. Howard and Johnson Co, Inc., the Court disagreed. 

It held that the Plaintiff must show evidence was physically altered or destroyed in order to prevail on a spoliation claim.  

In so holding, the Court relied on other states, which had found that intentional spoliation is not the appropriate cause of action when evidence is concealed, but not destroyed. 

Civil Rule 37 Sanctions is Sufficient When Evidence is Concealed, but not Destroyed.

It relied on the remedies available under Civil Rule 37, which allow a court broad discretion to impose sanctions upon a party that violates the rule governing the discovery process, as well as the ethical rules, which require an attorney not to abuse the discovery process. 

The Court also found that the damages relating to an expansion of the spoliation tort would be speculative because it would be nearly impossible to determine the actual damages caused by the withholding of that evidence.

The Court also found that if it were to recognize a cause of action for interfering with or concealing evidence, it would not be in the interests of the judicial economy because the dispute would have to be brought twice, which is what Elliott-Thomas did.  

Thus, the Court held that allegations of intentional interference with or concealment of evidence are not actionable under the independent tort of intentional spoliation of evidence. 

Rather, those issues should be addressed with the trial court as part of the underlying case under the remedies afforded in Civil Rule 37 and any ethical violations.

Spoilation Claims in the Future

Given the Court’s reservations about spoliation of evidence claims, I would not be surprised if it rejected spoliation claims altogether when given the opportunity to do so.

Speak to an Expert Attorney

If you have questions about your legal claims or defenses, you should speak to an expert attorney directly.

Call the law firm of Dworken & Bernstein today.  In Lake County, call 440.946.7656 In Cuyahoga County, call 216.861.4211

The information presented in this post is not legal advice and does not form a lawyer/client relationship. Laws and circumstances can differ and change.
Please contact us for a personal review of your situation

Keeping Rural Neighbors and Animals Out

By Erik L Walter – Partner

On September 30, 2008, the Ohio legislature passed changes to the existing laws relating to line fences in unincorporated areas which created new rules for fences constructed on the line between two properties in such unincorporated areas.  

It also established the process for resolving disputes over those fences.

The largest change in the law was altering the rule of “equal shares” for line fences. Specifically, with minor exceptions, under the old law, adjacent landowners were required to share equally in the cost of building and maintaining a line fence.

New Rules of Responsibility

That approach has now been replaced with two different rules of responsibility.

Individual Responsibility

First, a rule of “individual responsibility” now applies to new fences; and a landowner will be individually and solely responsible for building and maintaining the new fence.

Equitable Shares

Secondly, as to previously existing fences, the rule of “equitable shares” applies which requires the responsibility be apportioned between adjoining landowners after consideration of six fairness factors.

This law also changed the process for resolving line fence disputes in that landowners may choose to take a line fence dispute to the Court of Common Pleas in the county where the fence is located or the Board of Township Trustees where it is located. Finally, it contains standards for new line fences that contain livestock and addresses issues such as obstruction of line fence construction and access to adjoining land.  

With this noted, here are some of the highlights of this law.  

Ohio’s Line Fence Law Highlights

1. Applies Only to Unincorporated Areas

First, Ohio’s line fence law–also referred to as the “partition fence law”–establishes rights and obligations for fences that are placed on the division line between properties in Ohio’s unincorporated areas.  Accordingly, it does not apply to all properties—only those in unincorporated areas–and does not apply to the enclosure of lots within municipal corporations, adjoining lots outside of a municipality, property governed by railroad laws, or property governed by a written agreement entered into and recorded by the landowners.  

2. Different Rules of Responsibility

Second, this law creates different rules of responsibility for line fences, depending upon the type of fence at issue:  (1) an “equitable shares” rule applies to line fences that existed before September 30, 2008, (2) a rule of “individual responsibility” applies to “new” fences built after September 30, 2008, and (3) the old “equal shares” rule applies to certain governmental fences. 

3. Liability for Livestock Negligence

Next, an owner who negligently permits his or her livestock to run at large will be liable for all damages resulting from injury, death or loss to person or property caused by the livestock on the premises of another.

4. Shared Responsibilities for Pre-September 30, 2008 Fences

Fourth, for fences existing prior to September 30, 2008, parties must “equitably” or “fairly” share responsibility for building or maintaining the fence unless a written agreement, recorded with the County Recorder, was entered into between the parties addressing responsibility for the fence.

In assessing the fairness, six factors are considered in determining each landowner’s share of responsibility:

(a) the topography of the properties,

(b) presence of waterways

(c) presence of trees,

(d) risk of trespassers,

(e) importance of marking the division line and

(d) presence of livestock.

5. Determination of Equitable Shares

Fifth, a formal determination of a landowner’s equitable share can be accomplished by either landowner filing a line fence “complaint” with the Board of Township Trustees or the Court of Common Pleas where the fence is located. However, landowners can agree to establish their equitable shares themselves or continue to maintain the line fence as they did before the law changed in 2008.

6. Rules for New Line Fences

Next, as to new line fences—placing a line fence where one was not in existence—the responsibility for such a fence is solely on the landowner who wants or plans to use the fence.  However, if an adjoining neighbor uses a new line fence, the party constructing it may have a right to seek reimbursement for the fence from the neighbor if he or she filed Affidavits establishing the costs of the fence.

This is important because the right to seek reimbursement exists if the neighbor uses it anytime within 30 years of its construction.

Consult with an Expert Zoning Attorney

In conclusion, this article is intended to provide broad, general information about Ohio’s line fence law.  It is not intended to be legal advice. Should you have any specific questions or have a legal problem regarding this topic, please contact the offices of Dworken & Bernstein for assistance.

The information presented in this post is not legal advice and does not form a lawyer/client relationship. Laws and circumstances can differ and change.
Please contact us for a personal review of your situation

Fraud is not a Viable Claim for Breach of Contract Unless Separate Tort Claim Exists

Lucarell v. Nationwide Mutual Ins. Co.

In a recent case, the Ohio Supreme Court resolved the law relating to the recovery of punitive damages for breach of contract and clarified other defenses.

Lucarell v. Nationwide Mutual Ins. Co. provides insight into a situation involving multiple contracts in which the parties attempted to renegotiate the terms to salvage their relationship.

The Facts of the Case

In 2005, Plaintiff Lucarell entered the Agency Executive Program (the “Program”) designed by Nationwide Mutual Insurance Company to recruit new agents.

Based on a business plan presented to her, Lucarell anticipated revenues of $200,000 per year, but nonetheless, Nationwide disclaimed any guarantee of revenue in its agreements with Lucarell.

As part of the Program, Nationwide financed a loan for Lucarell to start her agency.  Lucarell was also required to sign a performance agreement, which had minimum production requirements and with which she had to comply in order to waive repayment of that loan.

Eventually when agents, including Lucarell, were unable to meet the minimum production requirements, Nationwide offered opportunities for them to exit the Program without any further liability.  However, Lucarell entered a memorandum of understanding in which she received more funding from Nationwide in consideration for a complete release of all claims against it.

Lucarell testified that she had no choice but to sign the memorandum of understanding because, if she did not, she would have been terminated and her loan would have become due in full.

Subsequently, she entered into another modified agreement with Nationwide in which she acknowledged she had been given the opportunity to exit the Program, but declined and was under no economic duress and entered into the agreement voluntarily.  The agreement also contained a release.

Nationwide increased Lucarell’s monthly disbursements but also increased her minimum production requirements.  Eventually, Lucarell failed to meet those requirements and resigned.

An Award for Lost Profits and Punitive Damages

The trial court awarded Lucarell over $2 million in lost profits and over $10 million in punitive damages, despite the fact that her fraudulent misrepresentation claim had been resolved by a directed verdict in Nationwide’s favor.

The Court of Appeals reduced the amount of punitive damages and remanded the case for a new trial on the fraud to include punitive damages.

Nationwide’s Appeal to the Supreme Court

Nationwide appealed to the Supreme Court arguing that punitive damages are not recoverable in a breach of contract claim.  The Court explained that “punitive damages may not be awarded for breach of contract, no matter how willful the breach.”  Further, it denounced the exception created by several appellate courts that allowed punitive damages if a breach of contract is accompanied by a connected, but independent tort.

A Harm Separate from a Breach of Contract

The Court explained “although we have noted that the conduct constituting a breach of contract can also constitute a tort, we have made clear that punitive damages are available only when the claimant ‘suffered a harm distinct from the breach of contract action and attributable solely to the alleged tortious conduct.’”

Further, any punitive damages are subject to the statutory limitations in the Ohio Revised Code.  Thus, a request for punitive damages must be related to a harm suffered that is separate from any harm from breach of contract.

Good Faith & Fair Dealing

The Court also addressed whether a separate claim for failure to enforce or perform a contract in good faith exists.  While the Court acknowledged that every contract imposes an implied duty of good faith and fair dealing in its performance and enforcement, good faith is a duty not to take advantage in a way that had not been contemplated at the time of drafting.

The Court held that a violation of the implied duty only occurs if there is a breach of a specific obligation imposed by the contract.  Thus, there is no independent cause of action for breach of the implied duty of good faith and fair dealing apart from breach of the underlying contract.

Proving Duress

The Court also examined Lucarell’s claims that she was subject to duress when she signed the contracts with Nationwide.  In order to prove duress, specifically economic duress, a person “must show he or she was subjected to ‘* * * a wrongful or unlawful act or threat,* * *’ and that it ‘* * * deprive[d] the victim of his unfettered will.’”

The real question is whether the party had freedom of exercising his/her will.

What Constitutes Fraud

The Court also clarified that fraud cannot be promised “on predictions or projections relating to future performance; rather, we have long recognized that to be actionable, a misrepresentation must involve a matter of fact that relates to the past or present.”

The Court denied Lucarell’s appeal on her fraud claim because she admitted the $200,000 figure was a projection, rather than a promise of income.

In Summation

Under Lucarell, punitive damages are not available for a breach of contract, unless there is a separate tort action.  Further, a court will not find breach of contract for not performing in good faith without an underlying breach of the contract terms.  Whether fraud and duress are viable causes of action/defenses will depend on the facts of each case.

If you have questions about your legal claims or defenses, you should speak to an attorney directly.

The information presented in this post is not legal advice and does not form a lawyer/client relationship. Laws and circumstances can differ and change.
Please contact us for a personal review of your situation

By Joshua J. Strickland 

Associate

The Ohio Notary Public Modernization Act

What You Need to Know

At the end of 2018, Ohio enacted Senate Bill 263, the Ohio Notary Public Modernization Act which authorized online or electronic notarizations and made sweeping changes to the way that Ohio authorizes its notaries and the way notaries undertake their work.  

The electronic notarization will not begin until September 18, 2019, but other changes take effect as early as March 2019.

Until September and until the Ohio Secretary of State licenses specific electronic notaries, electronic or remote notarization of documents is not permitted.

Electronic/Remote Notaries:

SB 263 provides that the Ohio Secretary of State may license a resident of Ohio who is already a duly appointed and commissioned notary public to perform notarizations online using live video links, electronic signatures and electronic notary seals.  

Geographical Restrictions

The new law states that an online notary public may perform online notarizations only if the online notary public (i) is a resident of Ohio and (ii) is located within the geographical boundaries in Ohio at the time of the online notarization.

A/V Technology

Online notarization will require two-way video and audio conference technology allowing each party to see and hear the other.  The Secretary of State will set the standards for this, but it will probably utilize technology already in use by companies in other states where electronic notaries are already allowed such as Nevada.  

Qualifications & Requirements

Ohio electronic notaries will be required to maintain electronic journals with details of all online notarizations.  Those journals must be deposited with the Secretary of State on the expiration of the online notary public’s authorization or their death.  This will require advance planning by the notary. In addition to the notary public’s application to be appointed and commissioned as a notary generally, the electronic notary public must successfully complete an educational course, pass a specific test, pay a fee of not more than $150, and pass a criminal background check.  There may also be a continuing education requirement.

Traditional Notaries:

In order for an individual (who is not an Ohio licensed attorney) to qualify to be appointed and commissioned as a notary public, the individual must:

(i) be at least eighteen (18) years old;

(ii) be a legal resident of Ohio;

(iii) completed an educational program;

(iv) passed a written test;

(v) passed a criminal background check (not more than six months old), and

(vi) paid a fee not to exceed $150.00.  

Ohio attorneys not yet notaries as of the law’s effective date will be required to take the education course and pay a fee but not submit a background check or take a test.

For those current non-attorney notaries whose existing commission expires after March 18, 2019, those notaries will not be renewed unless the notary submits a criminal background check required of a new notary, a renewal application, and a fee not to exceed $60.00.  A non-attorney notary public may apply to renew his or her commission beginning three (3) months prior to the expiration date of his or her notary commission.

Procedures:

Over the next six (6) months or so the Secretary of State will be adopting forms for the notary applications, education requirements, tests, and rules for traditional and online notaries.  

In many places around Ohio, the notary education course and testing will be done by the same groups that do them currently, bar associations in many places. All online notarizations, including the educational course, testing requirements, and approval process will be handled directly by the Secretary of State.  

Other Changes:

The new notary law also makes a number of changes to existing law.  

• First, the notary fee is increasing for the first time in years to $5.00 per notarized document (not per signature).  
• Second, it standardizes the acknowledgment/jurat language that must be on notarized documents.
• Third, it provides more flexibility on the size of notary seals and pre-printed stamps.  
• Fourth, it defines in clear terms the situations where a notary cannot notarize a document.
• Finally, all notaries will be registered with the Secretary of State and searchable in an online database rather than registered at the County level as currently done.  

The information presented in this post is not legal advice and does not form a lawyer/client relationship. Laws and circumstances can differ and change.
Please contact us for a personal review of your situation

The Non-Criminal Approach to Bounced Checks

By Erik L. Walter – Partner

Nothing is worse than having a customer make a payment for goods or services only to find out that the check issued has insufficient funds and “bounces.”  

While there can be criminal consequences for an NSF check, criminal charges do not make a business whole. Neither do the “NSF fees” often charged by businesses for returning an NSF check to its issuer.  

Even so, there is hope.  

Taking Bounced Check Legal Action in Ohio

The hope mentioned above is a little known and seldom used statute for making a business whole when a “bad check” is issued—ORC § 2307.60.  This statute was enacted to hold persons accountable for passing insufficient funds checks where it hurts–the pocketbook.  

In particular, ORC 2307.60 allows the recovery of three times the amount of the issued check, administrative costs and attorney fees.

However, certain prerequisites must be followed to obtain these benefits.  

Specifically, before a lawsuit is filed, the recipient of the NSF check must give written notice to the offender via certified mail at least 30 days before a lawsuit is filed. This notice must contain specific information or the remedies contained in the statute—recovery of three times the amount of the check, attorney fees and costs–may be lost.

You should have a lawyer help you draft this letter to make sure it is in compliance with the requirements of the statute.

Once this correspondence is sent and you have waited 30 days, you are free to file suit and seek the remedies discussed herein.  

3 Tips to Remember When Receiving Checks For Your Business

However, before filing suit, take these tips to heart when dealing with checks being tendered to you:

1. Try not to use funds from a check too quickly. While a bank may make funds from a check immediately available, remember that the check still must be sent to the issuer’s bank and may still be dishonored after your bank makes the funds available to you. If this happens, your bank will recall the money it forwarded to you and if you have already used that money, it can lead to fees being charged to you.

2. If you receive a check that is dishonored, contact the issuer, in writing, to determine why it bounced.  This simple contact may avoid a long legal battle. However, if the issuer fails to respond, you likely have someone who has to be sued to recoup your loss or you may have to let the matter go depending on the amount involved.

3. Retain all paperwork and the dishonored check notice you send as it is critical to have a good paper trail in case you have to sue over the check.

Get The Best Advice Regarding Bad Check Laws

If you follow these simple tips, you will be in a better place to recoup the losses stemming from the issuance of an NSF check.  This is especially true if the same offender is writing bad checks to others.

However, you must ultimately be mindful of whether or not the offender is collectible because, even if you obtain a judgment for your loss, if the offender is not collectible, the judgment is worthless.

Accordingly, the best advice is to call a lawyer to advise you of the pros and cons of this statutory scheme.

The information presented in this post is not legal advice and does not form a lawyer/client relationship. Laws and circumstances can differ and change.
Please contact us for a personal review of your situation

By Jodi Littman Tomaszewski
Partner

“. . . And This One Belongs to the Reds.”

While the Cincinnati Reds may not have won many games on the field this year, they did hit a home run with the Supreme Court of Ohio in a recent tax case involving the team’s bobblehead giveaways.

In the case of Cincinnati Reds LLC v. Testa; Slip Opinion No. 2018-Ohio-4669; BTA No. 2015-1707, the Ohio Supreme Court had to decide whether the Reds were required to pay use tax in connection with the purchase of certain promotional items – such as bobbleheads – which were given away to fans at certain home games.

How ‘use tax’ works under Ohio law

In order to understand the Court’s decision, it is important to know how ‘use tax’ works under Ohio law.  

The Ohio use tax applies to certain retail sales in the State of Ohio. Specifically, the tax applies in situations where sales tax was due but was not collected by the seller. In these situations, a use tax of equal amount is imposed on the customer.

The “sale-for-resale exemption”

The crux of the case turned on whether the Reds purchased the promotional items with the intent to give them away for free or with the intent to resell them. 

This distinction is important due to a caveat in Ohio use tax law known as the “sale-for-resale exemption.”  

ORC §5739.012(E) The sale-for-resale exemption provides that no use tax is due when an item is purchased with the intent of resale.  

It was undisputed in this case that the price of the promotional items was not separately listed from the ticket prices, and it was also undisputed that price of game tickets are not increased for the games involving promotional giveaways.

Consequently, the Court had to determine whether such swag was included in the price of the ticket and thus “resold” to the fans, or if it was simply a free giveaway without payment from the attendees who received the items.  

If the Court found that the swag was included in the ticket price, then no use tax would be due. If, on the other hand, the Court found these promotional items to be a free giveaway, then the Reds would be liable for the payment of use tax.

Siding with the Reds

In a 5-2 decision, the Ohio Supreme Court sided with the Reds.  

The Court based their decision primarily on the hearing testimony of the Reds’ chief financial officer who testified that fans did, in fact, pay for the promotional items.  

The CFO testified that while the Reds may not separately state the price of the promotional items on the tickets, the cost of such items are taken into consideration by the Reds when ticket prices are set prior to the start of the season.  

He also testified that these promotional items are offered at games where attendance is expected to be low. Thus, instead of discounting ticket prices to these low attendance games, the Reds include a promotional item with the expectation that such a giveaway will increase ticket sales.  

Based on this testimony, the Court reasoned that “…by including the cost of the promotional item in the ticket price, one portion of the ticket price accounts for the right to attend the less desirable game and a separate portion of the ticket price accounts for the right to receive the promotional item.”  Cincinnati Reds LLC v. Testa at ¶ 22

The Court further explained:   

“Because the specific evidence in the record establishes that fans who purchase tickets to Reds games at which unique promotional items will be distributed do so with the expectation that they will receive those promotional items, we conclude that consideration is given in exchange for the Reds’ agreement to supply fans with those promotional items. The transfer of promotional items to fans thus constitutes a “sale” pursuant to R.C. 5739.01(B)(1), and the promotional items are subject to the sale-for-resale exemption of R.C. 5739.01(E).  We accordingly conclude that the Reds are not liable for use tax on the promotional items pursuant to R.C. 5741.02.”

Cincinnati Reds LLC v. Testa at ¶ 36

“…This One Belongs to the Reds.”

To cap off its thoroughly entertaining opinion filled with baseball jargon and Ohio baseball history, the Court borrowed the words of longtime Reds’ radio announcer Marty Brennaman concluding, “this one belongs to the Reds”.  

Now let’s just hope that the Reds are as successful on the field this year as their attorneys were in the Courtroom.

The information presented in this post is not legal advice and does not form a lawyer/client relationship. Laws and circumstances can differ and change.
Please contact us for a personal review of your situation

Obtaining a Judgment for Attorneys’ Fees for Prosecuting Claims and Defending Counterclaims

By Jo A. Tatarko, Esq.

Under ‘The American Rule’, litigants in most civil cases cannot recover their attorneys’ fees.

However, there are exceptions.

A party can seek to recover its attorneys’ fees under certain statutes, when there is a finding of fraud and/or punitive damages against the other party, and when there is a fee-shifting provision under the contract involved in the underlying dispute.  

For example, if Party A sues Party B for breach of contract and the court finds for Party A, then Party A can seek attorneys’ fees if there is a provision in the contract that allows it to do so.

This article will examine what happens when Party A also seeks to recover attorneys’ fees relating to defending counterclaims brought against it by Party B.

Calculating & Reviewing the ‘Lodestar’

In order to determine the amount of attorneys’ fees that should be awarded, a trial court must first calculate the “lodestar” amount by multiplying the number of the attorney(s) hours reasonably expended by a reasonable hourly rate.¹

Secondly, the trial court must review the lodestar amount based on the factors listed in Ohio Rules of Professional Conduct 1.5(A) and modify accordingly.²  The factors relate to the nature of the litigation, the skills of the attorney(s) and the workload of the case, including its impact on the attorney’s caseload, the customary fees charged, the amount in controversy and results obtained, and the reputation and ability of the attorney(s) involved.  

Seeking Attorneys’ Fees Defending Against Counterclaims

Oftentimes, the party seeking attorneys’ fees will not only be prosecuting its own claims but also defending itself against counterclaims brought by the opposing party.  

The legal work that is done on the claims and counterclaims may not be easily separated, if at all. This is especially true when a claim for breach of contract meets with counterclaims for fraud or other alleged breaches related to the contract, such as a breach of warranty claim.

Attorneys’ Fees Awards in Ohio

Ohio courts have held that a court must award attorneys’ fees for the amount of time spent pursuing the claim for which the fees may be awarded only when it is possible to separate the time spent on the claims in such a manner.³  

If the claims and counterclaims involve common facts or are based on related legal themes and it is difficult to separate the hours on a claim-by-claim basis, the party seeking attorneys’ fees will not be prejudiced.⁴  Rather, where multiple claims revolve around the “same allegations, facts, discovery, and legal arguments,” attorneys’ fees can be awarded for time spent on all the claims.⁵  

Claims for attorneys’ fees are individual and very fact-specific.  These claims often require expert testimony.

If you have a question about your legal options, you should speak to an attorney directly.

1. Bittner v. Tri-County Toyota, Inc., 58 Ohio St. 3d 143 (1991)
2. id
3. Miller v. Grimsley, 197 Ohio App. 3d 167 (10th App. Dist. 2011).
4. Hustler Cincinnati, Inc. v. Elm 411, LLC, 2014-Ohio-5648 (1st App. Dist. 2014)
5. id

The information presented in this post is not legal advice and does not form a lawyer/client relationship. Laws and circumstances can differ and change.
Please contact us for a personal review of your situation

A divorcing couple who shares a business will have two separate decisions to make: how to keep the business running profitably while the divorce is underway, and how to maintain or dispose of the business post-divorce.

Your best chance of preserving the value of the business and securing your financial stability is to assess the situation objectively and attempt to make the same rational, unemotional type of decisions you would in any other aspect of the business.

Options for a Co-Owned Business in Divorce

In terms of longer-term resolution of the business, the couple must first decide whether they want to continue co-owning the business.

Some divorced couples do continue to successfully share business interests and even work together. But, it’s not for everyone, and requires hard, realistic consideration.

Whether legal changes will be required to do so depends on the type of business entity and how the couple holds the business and/or its assets. And, allocation of interest in the business will have to be considered not just in isolation, but also in the context of the division of assets in the divorce case.

If the couple chooses not to—or is unable to—continue sharing the business, then one or both parties will have to transfer his or her interest in the business.

Allocation of the Business in a Property Settlement

It’s possible that the business will be awarded to one party or the other in the divorce case, or that the couple will reach a resolution that allocates the business to one spouse and balances that out by giving the other a disproportionate share of other assets. Depending on the type of business entity involved and how the business is held, this may or may not require a transfer of interests or even dissolution of a partnership.

Sale of One of Both Parties’ Interests in the Business

One party may, perhaps as a part of the divorce settlement agreement, buy out the other’s interest in the business. However, that’s not the only sale option available.

Other possibilities include one party selling his or her interest to a third party and an outright sale of the business.

Where a third party sale is in play, the parties will typically have to agree on a valuation or present evidence that allows the divorce court to determine fair market value for the sale. If the parties are unable to agree, or simply lack the requisite expertise to agree on the fair value, one or more experts may be necessary to assess the value of the business.

Work with a Law Firm that Understands Divorce and Business

Not every divorce lawyer has the knowledge and experience necessary to manage the disposition of a shared business in a divorce case. If you are divorcing or considering divorce and share a business with your spouse, it is to your advantage to work with a law firm that has the knowledge base and resources to manage all aspects of your case.

In Northeast Ohio, Dworken & Bernstein Co., L.P.A is that law firm

Call 440-946-7656 or fill out the contact form on this site right now to schedule your consultation.

The information presented in this post is not legal advice and does not form a lawyer/client relationship. Laws and circumstances can differ and change.
Please contact us for a personal review of your situation

By Erik L Walter – Partner

Legal Aspects to Consider Before Cutting Trees

While trees may be the most prized possession on someone’s land, they can also be one of the largest nuisances to others. Issues include falling leaves, falling branches, limbs hanging over property lines and trees falling down on neighboring properties.

With all of this noted, the question truly becomes: “to cut or not to cut?”  

This article attempts to give a homeowner some insight before taking any action that may cause more problems than the action was worth.   

Take the necessary precautions before cutting trees

Under Ohio law, trees that border fence or property lines and hang over can be trimmed back to the property line. However, before doing so, you should take several precautions before taking any action and to maintain civility between you and your neighbor and to make sure you don’t unintentionally violate the law.

Determine your property lines

First, you need to be sure of your property lines before trimming or cutting down a tree. If you cannot locate your property line markers, you should pay for a simple survey and ask your surveyor to place new pins on the property lines. This not only ensures who owns the tree but also clearly delineates your property line from your neighbor’s before any cutting takes place.

Discuss with your neighbor

Second, you should always ask your neighbor before taking any action on a tree.

One of the largest problems in this area of law is that one neighbor unilaterally decides to take action which inevitably leads to a “Hatfield and McCoy’s” type of situation.

While the law may favor one party over the other, the civility and peace between neighbors are more important than a rash decision to take action without informing a neighbor.

This simple, but often disregarded step can save a large amount of money as lawsuits in this area can cost in excess of $25,000 to litigate.

If ownership is shared, both parties must agree

Next, under Ohio law, if a tree borders both properties, meaning that half is on one property and a half on the other, it is presumed to be owned by both landowners. Therefore no action can be taken to cut the tree down unless both parties agree.

If one party disagrees, you may be forced to either leave the tree or seek a determination from a court as to what action can be taken.

However, to the extent than any branches hang over the property line and extend onto your property, those branches can be trimmed.

Even so, any damage or death that ultimately occurs to the tree as a result of that trimming could cause you to be liable for damage to the tree(s).

Specifically, ORC 901.51 provides:

No person, without privilege to do so, shall recklessly cut down, destroy, girdle, or otherwise injure a vine, bush, shrub, sapling, tree, or crop standing or growing on the land of another or upon public land. >

In addition to the penalty provided in section 901.99 of the Revised Code, whoever violates this section is liable in treble damages for the injury caused.

Accordingly, not only does this statute relate to trees, but also covers vines, brush, shrubs, and crops.

Triple Damages

What makes this so perilous is that the statute provides that any action shown to be “without privilege” [permission] and “reckless” entitles the damaged party to treble or triple damages.  This means that if the value of the tree or damage done is $1,000.00 (a hypothetical example) the total damage would be $3,000.00.

Potential criminal charges

Further, ORC 901.99 provides that any person found to be responsible under ORC 901.51 is guilty of a misdemeanor of the fourth degree.  So, not only can one improperly cutting down or damaging trees be responsible for triple damages, but potentially criminal charges.

It must be noted that while the statute does cite to possible criminal charges, there is no prerequisite placed upon a landowner to first file a police report.  However, the filing of a police report, while damaging to neighborly relations, does add a layer of evidence to potential future litigation.

Wrapping up

In conclusion, before cutting any tree that appears to be on or over property lines, certain precautions should be taken. While this article lays out the law regarding this issue, it is always best to approach your neighbor first and try to resolve the matter peacefully.

If that does not work, it is highly recommended that you seek the advice of a lawyer who may be able to resolve the dispute through a simple letter. While the letter may cost you some money, it can save you the heartache, strained relations with your neighbor and thousands of dollars in potential litigation in the end.  If it does not, litigation may be the only option.

The information presented in this post is not legal advice and does not form a lawyer/client relationship. Laws and circumstances can differ and change.
Please contact us for a personal review of your situation