Hicks v. Cadle Co.

150 N.E.3d 381

2019 Ohio 5049

Kerry R. HICKS, Plaintiff-Appellee,

v.The CADLE COMPANY, et al., Defendants-Appellants,The Home Savings and Loan Company of Youngstown, Ohio, Intervening Defendant.

NOS. 2018-T-0048

2019-T-0023

Court of Appeals of Ohio, Eleventh District, Trumbull County.

Decided December 9, 2019

John T. Dellick, Harrington, Hoppe & Mitchell, Ltd., 26 Market Street, Suite 1200, P.O. Box 6077, Youngstown, OH 44501; Kris J. Kostolansky, Lewis Roca Rothgerber Christie LLP, One Tabor Center, Suite 3000, 1200 Seventeenth Street, Denver, CO 80202; Christopher S. Williams and Ronald M. McMillan, Calfee, Halter & Griswold, LLP, 1405 East Sixth Street, Cleveland, OH 44114 (For Plaintiff-Appellee).

F. Dean Armstrong, Armstrong Law Firm, 23353 S. 88th Avenue, Frankfort, IL 60423 and Victor O. Buente, Jr., Cadle Company, 100 North Center Street, Newton Falls, OH 44444 (For Defendants-Appellants).

TIMOTHY P. CANNON, J.

{¶1} Before this court are two consolidated appeals brought by three appellants: Daniel C. Cadle ("Mr. Cadle"), The Cadle Company, and United Joint Venture Limited Partnership (jointly referred to as "the Cadle parties"). The Cadle parties challenge an April 19, 2018 judgment of the Trumbull County Court of Common Pleas, which granted summary judgment in favor of appellee, Kerry R. Hicks ("Mr. Hicks"), on the Cadle parties' amended counterclaim. The Cadle parties had set forth three causes of action, alleging Mr. Hicks (1) violated Ohio's Pattern of Corrupt Activity Act, (2) intentionally inflicted emotional distress upon Mr. Cadle, and (3) tortiously interfered with their business relations with The Home Savings and Loan Company of Youngstown, Ohio ("Home Savings"). The Cadle parties further challenge the trial court's March 21, 2019 decision to grant Mr. Hicks' motion for attorney fees, costs, and expenses against the Cadle parties, jointly and severally. For the reasons that follow, the judgment is affirmed.

{¶2} The Cadle parties raise the following two assignments of error for our review:¹

[1.] The Trial Court committed prejudicial error in granting Counter-Defendant/Appellee's Converted Motion for Summary Judgment where (a) Hicks did not make a sufficient summary judgment challenge to each of the claims asserted in Counter-Plaintiffs/Appellants' Amended Counterclaims; and (b) disputed issues of material fact precluded entry of summary judgment on each of the claims asserted in the Amended Counterclaim.

[2.] The Trial Court committed prejudicial error in granting Counter-Defendant/Appellee Hicks' Motion for Sanctions against the Cadle Parties where (a) the Counter-Plaintiffs/Appellants had a good faith basis for the assertion of the claims set forth in their Amended Counterclaims; and (b) Hicks failed in his burden to prove the amount of fair, reasonable and necessary legal fees and expenses that he incurred in defending against the Amended Counterclaims.

I. Substantive and Procedural Overview

{¶3} Mr. Cadle is the owner and director of The Cadle Company, which is an investment/debt collection company in Ohio. The Cadle Company is the only general partner and registered agent of United Joint Venture Limited Partnership ("United Joint Venture"), which is also a debt collection company in Ohio. Buckeye Retirement Co., LLC ("Buckeye Retirement") apparently exists as an "alter ego" of the Cadle parties and is another Ohio debt collection company.

{¶4} Mr. Hicks, at all times relevant, was the controlling stockholder/president of Health Grades, Inc. ("Health Grades"). Health Grades is a publicly traded corporation that provides rating and consulting services for hospitals and physicians throughout the United States. At some point during the parties' litigious interaction, Mr. Cadle became a registered stockholder of Health Grades.

{¶5} Mr. Hicks and Patrick Jaeckle ("Mr. Jaeckle") obtained a loan from Bank of America on or about December 31, 1999, in the amount of $3,550,000.00. Mr. Hicks was a signator on the original promissory note. In 2002, Buckeye Retirement purchased the balance that remained on the note from Bank of America.

{¶6} In September 2003, Buckeye Retirement attempted to collect what it claimed was the outstanding balance due on the note by filing suit against Mr. Hicks in a Tennessee federal district court. Mr. Hicks contested his personal liability for the balance that remained on the note. Mr. Hicks' position was that, pursuant to an agreement with Bank of America, he was individually liable for $2 million; Mr. Jaeckle, another signator, was individually liable for $1 million; Mr. Hicks and Mr. Jaeckle were jointly liable for $350,000.00; and two other individuals were each individually liable for $100,000.00. Mr. Hicks claimed that the balance owed on the note was Mr. Jaeckle's individual obligation. The note was eventually repurchased by Bank of America, and the Tennessee lawsuit was dismissed.

{¶7} Mr. Hicks filed a lawsuit in Colorado against Mr. Cadle, The Cadle Company, Buckeye Retirement, and others, alleging vexatious and frivolous litigation, abuse of process, defamation, and intentional infliction of emotional distress ("IIED"). The promissory note contained a provision requiring binding arbitration of any controversy or claim based on or arising from any alleged tort. Thus, it eventually transpired that three separate arbitration proceedings between the parties took place in Colorado. Mr. Hicks was successful in all three phases of arbitration.

{¶8} In 2005, an arbiter awarded Mr. Hicks $400,000.00 in compensatory damages for his claims of abuse of process and IIED, plus $15,578.36 in attorney fees ("Phase I").

{¶9} In 2007, an arbiter awarded Mr. Hicks $950,000.00 in compensatory damages for his claims of defamation and additional IIED, plus $960,000.00 in punitive damages for willful and wanton conduct ("Phase II").

{¶10} While Phases I and II were pending, allegations of tortious and criminal misconduct, including bank fraud and perjury, were lodged against Mr. Hicks. Mr. Cadle, as president of The Cadle Company, sent letters to the attorneys general for Tennessee and Colorado, as well as to Health Grades' board of directors. Mr. Hicks was granted leave to amend his complaint and compel arbitration, in which he asserted the same claims and sought damages for the newly alleged conduct.

{¶11} In 2010, an arbiter awarded Mr. Hicks $1,250,000.00 in compensatory damages for defamation and IIED, plus $1,900,000.00 in punitive damages ("Phase III").

{¶12} The Cadle parties began negotiating with Home Savings to refinance an outstanding debt. Mr. Hicks became concerned that funds from Mr. Cadle's IRA account would be used to pay Home Savings and, as a result, would jeopardize Mr. Cadle's ability to satisfy the Phase III arbitration award. To prevent this, Mr. Hicks registered his arbitration award in the United States District Court for the Northern District of Ohio and obtained writs of execution.

{¶13} Additionally, in May 2011, Mr. Hicks filed an action against the Cadle parties in the Trumbull County Court of Common Pleas. He sought declaratory judgment and injunctive relief to prevent the Cadle parties from transferring Mr. Cadle's assets and to enforce the award. Mr. Hicks was granted a temporary restraining order, but his motion for a preliminary injunction was denied. The Cadle parties then paid the arbitration award, and Mr. Hicks voluntarily dismissed his claims.

{¶14} In the meantime, however, the Cadle parties had filed a counterclaim against Mr. Hicks, which is the subject of this appeal. Mr. Cadle individually alleged violations of Ohio's Pattern of Corrupt Activity Act ( R.C. 2923.31, et seq. ) and intentional infliction of emotional distress. The Cadle parties jointly alleged tortious interference with their business relations with Home Savings.

{¶15} Mr. Hicks attempted to compel arbitration, which was denied by the trial court and affirmed on appeal. Hicks v. Cadle Co. , 11th Dist. Trumbull No. 2013-T-0017, 2014-Ohio-872, 2014 WL 902755. Thereafter, the trial court granted summary judgment on the Cadle parties' counterclaim in favor of Mr. Hicks, which was reversed on procedural grounds. Hicks v. Cadle Co. , 11th Dist. Trumbull, 2016-Ohio-4728, 66 N.E.3d 1255. The matter was remanded to the trial court for further proceedings.

{¶16} On remand, the trial court permitted the parties to conduct reasonable additional discovery and granted the parties time to file any supplemental responses or replies to Mr. Hicks' motion for summary judgment. On April 19, 2018, the trial court granted Mr. Hicks' motion and entered summary judgment in his favor. The trial court found no genuine issues of material fact remained for trial on any of the claims asserted by the Cadle parties, who noticed an appeal from this entry.

{¶17} On May 18, 2018, Mr. Hicks filed with the trial court a Motion to Recover Attorneys' Fees, Costs and Expenses, pursuant to R.C. 2323.51 and Civil Rule 11. He sought over $1,000,000.00 in sanctions from the Cadle parties and their counsel. Mr. Hicks then filed with this court a motion to stay the appeal and to remand the matter to the trial court to rule on his motion, which was granted.

{¶18} On remand, the trial court held an evidentiary hearing and, on March 21, 2019, found the motion well taken. The trial court assessed as sanctions against the Cadle parties, jointly and severally, the sum of $1,130,811.50 in legal fees and $12,278.90 in costs. They were also ordered to pay for the costs of the action in its entirety. The Cadle parties noticed an appeal from this entry. The previous stay was lifted, and the matters were consolidated for appellate review.

II. Motion for Summary Judgment

{¶19} In their first assignment of error, appellants contend the trial court erred in granting Mr. Hicks' motion for summary judgment.

{¶20} " ‘Summary judgment is a procedural device to terminate litigation and to avoid a formal trial when there is nothing to try. It must be awarded...