Zell v. Klingelhafer

EILEEN L. ZELL, Plaintiff, v. KATHERINE M. KLINGELHAFER, et al., Defendants.

Case No. 2:13-CV-00458

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO EASTERN DIVISION

December 23, 2014

JUDGE ALGENON L. MARBLEY

Magistrate Judge Abel

OPINION & ORDER

This matter is before the Court on Third Party Defendant Jonathan Zell's Motion for Summary Judgment, (Doc. 50). Third Party Defendant Jonathan Zell ("Mr. Zell") seeks summary judgment on Defendants' Third Party Complaint, (Doc. 7), alleging that the Defendants are entitled to contribution and/or indemnification from Mr. Zell. For the reasons set forth herein, Third Party Defendant Jonathan Zell's Motion is GRANTED.

I. BACKGROUND

A. Factual Background

1. Plaintiff Eileen Zell's Action Against Defendants

This case arises out of a $90,000 promissory note between Plaintiff Zell and her nephew, Michael Mindlin, made in December 2000 (the "underlying action"). (Compl., Doc. 2 at ¶ 13). While planning her strategy to collect on the note, Plaintiff engaged Defendant law firm Frost Brown Todd, LLC ("FBT") to advise her. (Id.at ¶ 14). Before she could bring suit, however, Mindlin filed his own affirmative action for declaratory relief in Franklin County, Ohio. Based on advice from FBT attorneys, Plaintiff consented to the jurisdiction of the Ohio courts and participated in Mindlin's case.

From the pre-lawsuit planning stage, through the result of her nephew's case and subsequent appeals, Plaintiff was represented personally by a succession of FBT attorneys. At first, Plaintiff was represented by Defendant Patricia Laub, a partner at FBT, assisted by Defendants Shannah Morris and Douglas Bozelle, and overseen by Defendant Joseph Dehner. Attorney Laub's personal representation of Plaintiff ended on October 22, 2010, when Attorney Morris assumed primary responsibility. On May 6, 2011, Plaintiff requested that FBT replace Attorney Morris, and Defendant Jeffrey Rupert took over, on May 10. (Id. at ¶¶ 39-40). Attorney Rupert personally represented Plaintiff from May 10, 2011 through March 28, 2012, at which time he moved to Seattle. (Id. at ¶¶ 57). During this time, Defendant Katherine Klingelhafer also worked on Plaintiff's case, drafting at least two research memoranda on July 13 and August 8, 2011, addressing the choice of law issue related to Plaintiff's note. (Id. at ¶¶ 123, 125-26, 135-38, 140, 146). After Attorney Rupert's departure, Attorney Dehner took over personal representation of Plaintiff, including representing Plaintiff on appeal, and provided his opinion on her seeking review by the Ohio Supreme Court. (Id. at ¶¶ 59, 151). Attorney Dehner's last interaction with Plaintiff as her attorney was August 13, 2012, after which he informed her that FBT was withdrawing from her case. (Id. at ¶¶ 59-61).

Plaintiff ultimately lost her case against her nephew. Judge Sheward, of the Franklin County Court of Common Pleas, found that, because she attempted to recover on her note more than six years after its execution, Plaintiff's claim was not timely under Ohio law, and the court thus entered judgment against her. Mindlin v. Zell, No. 10CVH-14965 (Franklin Cnty. C.P. Oct. 12, 2011). On appeal, the Court of Appeals for the Tenth Appellate district agreed, and further rejected Plaintiff's alternative arguments on the basis that they were not raised at the trial level, and thus could not be considered on appeal. Mindlin v. Zell, No. 11AP-983 (Ohio App. Aug. 7,2012). The Tenth District twice denied Plaintiff's requests that it reconsider its decision. Mindlin v. Zell, No. 11AP-983 (Ohio App. Oct. 25, 2012); Mindlin v. Zell, No. 11AP-983 (Ohio App. Dec. 31, 2012). Plaintiff opted not to seek review by the Ohio Supreme Court.

Plaintiff alleges at least two distinct acts of malpractice¹ by the attorneys at FBT related to their representation of her on the promissory note matter. First, she argues that Defendants erroneously advised her that her note would be subject to Missouri's ten-year statute of limitations, rather than Ohio's six-year period, even if her case were adjudicated in Ohio. (Id. at ¶¶ 81-82, 84). Based on these representations, Plaintiff alleges that she rejected an offer to settle the case against her nephew for $63,000. (Id. at ¶¶ 101-02, 104, 106-07). She further agreed to submit to the jurisdiction of the Ohio court and to participate in the declaratory action filed by her nephew, with disastrous results. (Id. at ¶¶ 74-76, 104, 123). As the appellate court explained, "by choosing Ohio as the forum for pursuing her action, [Plaintiff] was subject to Ohio's statute of limitations even if her claim would be timely in Missouri." Decision, Mindlin v. Zell, No. 11AP-983, ¶ 15 (Ohio App. Aug. 7, 2012).

Next, Plaintiff alleges that Defendants erred when they failed to argue before the trial court any alternative or tolling arguments under Ohio law. (Compl. At ¶¶ 72, 78); see Decision, Mindlin v. Zell, No. 11AP-983, ¶¶ 17-18 ("Appellant did not, however, raise any of these [alternative] arguments [as to why the promissory note was timely under Ohio law] in the trial court."). In its first and second reconsideration decisions, the appellate court explained that those arguments that Defendants did raise in the trial court were defective because they were "devotedto the timeliness of [Plaintiff's] action under Missouri law," not Ohio law, and furthermore because even the estoppel argument that Defendants raised in the trial court was ineffective, since the attorneys made reference to "promissory estoppel" rather than "equitable estoppel." Mem. Decision, Mindlin v. Zell, No. 11AP-983, ¶¶ 8-9 (Ohio App. Oct. 25, 2012); Mem. Decision, Mindlin v. Zell, No. 11AP-983, ¶9 (Ohio App. Dec. 31, 2012). Relatedly, Plaintiff faults Defendants for their overconfidence related to the strength of these "alternative" Ohio-law-based arguments. In an email dated January 4, 2012, before the appellate court had rendered any of its decisions, Attorney Rupert admitted that Missouri law was unlikely to apply to the note, but suggested that she might still prevail on the alternative arguments. (Email dated Jan. 4, 2012, Doc. 48-1 at 18). Based on this advice, Plaintiff alleges, she turned down another settlement offer and proceeded with her appeal. (Compl. at ¶¶ 79, 148).

2. Third Party Defendant Mr. Zell's Involvement in the Underlying Action

Mr. Zell, Plaintiff's son, has served as her "personal attorney" since January 1, 2001. (Aff. of Eileen Zell, Doc. 50-1 at ¶ 4; Aff. of Jonathan R. Zell, Doc. 50-2 at ¶ 5). According to Plaintiff, Mr. Zell's role generally was to oversee the work of outside counsel and advise her about matters as necessary. (Doc. 50-1 at ¶ 4). Plaintiff asserts that Mr. Zell has served as a "conduit" between herself and outside counsel when she has hired outside counsel for matters related to the loan. (Id. at ¶ 7).

Specifically, as related to the $90,000 loan at issue, Mr. Zell assisted Plaintiff by: advising her to seek outside counsel to prepare a refinancing agreement for the $90,000 loan when the statute of limitations was approaching; selecting FBT, the law firm employing the Defendants in this case, as the firm tasked creating a refinancing loan document and representing Plaintiff in the litigation related to the underlying action; assisting Plaintiff in communicatingwith the borrower by "consult[ing]" with FBT and "continu[ing] to give [Plaintiff] extensive advice" regarding the loan; and generally assisting FBT in preparation of Plaintiff's case. (Id. at ¶ 4-9; Doc. 50-2 at ¶ 5-11). Mr. Zell also requested to conduct all settlement negotiations related to the $90,000 loan, and indicated to FBT his mother's approval of his request. (Doc. 64-5). Mr. Zell further states that he suggested trial strategy to the FBT attorneys, drafted documents or portions of documents for filing, and was listed on court filings in Plaintiff's state court case as "of counsel." (Doc. 50-2 at ¶ 5-11; Doc. 64 at 4). Neither Mr. Zell nor Defendants have presented to the Court evidence of a formal agreement memorializing the terms of the relationship between Mr. Zell and the Defendants.

B. Procedural Background

Plaintiff commenced this action on May 10, 2013. (Compl., Doc. 2). Pursuant to Fed. R. Civ. P. 4(m), she had 120 days, until September 9, 2013, to serve Defendants. Due to various complications, Plaintiff chose to employ Kirk Wilhite, a professional process server in Columbus, Ohio, to perfect service. (Pl.'s Mot. for Extension of Time, Doc. 18 at 2-4; Aff. of Jonathan R. Zell, Doc. 18-4 at ¶¶ 13-14, 17-19). Plaintiff alleges that Wilhite was successful in serving process on all Defendants on or before September 9, 2013 except for Defendant Rupert, who was eventually served via certified mail on September 13, 2013. (Doc. 18-4 at ¶¶ 23-26).

Defendants challenge Wilhite's claim that he served them, and take issue with the proofs of service filed by him. Defendants have maintained that failure of service and/or failure of service of process bars the claims against them, and subpoenaed Wilhite to appear and testify as to his effectuation of service. (See Defs.' Mot. for Order to Show Cause, Doc. 23). Accordingly, on December 4, 2013, Plaintiff sought extra time to serve process, in order to re-serve each Defendant. (Doc. 18). The Court granted this request on December 26, 2013, giving Plaintiffuntil March 31, 2014. (Doc. 25). Defendants demanded reconsideration, on the grounds that the Court ruled on the Motion before they had an opportunity to respond (Doc. 26), and on March 10, 2014, after the issue had been fully briefed, the Court denied Defendants' Motion. (Opinion and Order, Doc. 61).

In its Order denying Defendants' Motion, the Court explained that Plaintiff had demonstrated good cause for an extension because she had been reasonably diligent in attempting to perfect service within the allotted period. (Doc. 61 at 5-6). The Court assessed the relevant factors and found no...