[Cite as In re Krueger, 2014-Ohio-3718.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 100694
RE SANCTIONS: JEFFREY W. KRUEGER
APPELLANT
In the matter styled:
NANCY LOWRIE & ASSOCIATES, L.L.C., Plaintiffs
vs.
DEBORAH ORNOWSKI, et al., Defendants
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-12-795979
BEFORE: S. Gallagher, P.J., Blackmon, J., and McCormack, J.
RELEASED AND JOURNALIZED: August 28, 2014
FOR APPELLANT
Jeffrey W. Krueger, pro se
J.W. Krueger, L.L.C.
P.O. Box 360135
Cleveland, OH 44136
ATTORNEYS FOR APPELLEES
For Deborah Ornowski
Barton A. Bixenstine
Vorys, Sater, Seymour & Pease, L.L.P.
2100 One Cleveland Center
1375 East Ninth Street
Cleveland, OH 44114
For Bridget A. Lind
Richard J. Stahl
18051 Jefferson Park Road
Suite 102
Middleburg Heights, OH 44130
SEAN C. GALLAGHER, P.J.:
{¶1} Appellant Jeffrey W. Krueger appeals the decision of the Cuyahoga County
Court of Common Pleas that granted two motions for sanctions that were filed against
him by appellees Deborah Ornowski and Bridget A. Lind. Appellee/cross-appellant
Deborah Ornowski has raised a cross-appeal challenging the trial court’s determination of
the sanction imposed. For the reasons stated herein, we affirm the trial court’s rulings in
this matter.
{¶2} We adopt the factual background as set forth in the trial court’s opinion as
follows:
Plaintiff Nancy Lowrie & Associates, LLC filed a verified complaint
and motion for a temporary restraining order on November 21, 2012. The
motion was granted ex parte that same date. The language of the
journalized entry was almost entirely provided by the plaintiff, with minor
changes by the court. In particular, although the plaintiff suggested a $100
bond, a $15,000 bond was ordered instead. The plaintiff never posted a
bond.
The gist of the temporary restraining order against defendant
Deborah Ornowski was to prohibit her from providing counseling services
in competition with the plaintiff inside of 15 miles from the plaintiff’s
office.[fn.1] Additionally, Ornowski and defendants Bridget Lind and
Gabriel Consulting Group, LLC (Ornowski’s company) were enjoined from
using or disclosing the plaintiff’s confidential information. The temporary
restraining order was to last 14 days, until December 5.
[fn. 1] Given that she had opened an office within two miles of the
plaintiff’s, this effectively prohibited Ornowski from running her business.
On December 4, a joint agreement to extend the temporary
restraining order for another 14 days was filed. The stipulation was drafted
by plaintiff’s counsel Jeffrey W. Krueger and signed by all counsel without
changes, then adopted by the court. Besides restating the language of the
original temporary restraining order, the December 4 order also said that
“plaintiff shall continue to post the existing bond in the amount of
$15,000.”
After a hearing, the plaintiff’s motion for a preliminary injunction
was denied January 8, 2013, and the plaintiff voluntarily dismissed the
lawsuit on April 12.
On April 25 Ornowski filed a motion to recover damages on the
bond on the basis that the temporary restraining order was wrongly granted.
Lind filed a similar motion on May 31. The plaintiff has opposed both
motions and they are fully briefed.
With her motion to recover damages on the bond Lind also included
a motion for sanctions pursuant to Rule 11 of the Ohio Rules of Civil
Procedure. The grounds for that request are that the plaintiff and her
counsel knew a bond was never posted as required by the temporary
restraining order yet, as part of the 14-day extension, they represented that a
$15,000 bond would “continue.” Ornowski filed a similar motion on June
14 that also cites section 2323.51 of the Ohio Revised Code as a basis for
sanctions. The plaintiff has opposed both motions and they too are fully
briefed.
A hearing on the pending motions was held on September 4, 2013[.]
{¶3} The trial court issued a decision on October 29, 2013, that granted the
motions for sanctions, but denied the motions to recover damages under Civ.R. 65(C).
The court entered judgment awarding sanctions against Krueger and in favor of Ornowski
in the amount of $3,442.22, and in favor of Lind in the amount of $1,800. The sanction
was limited to the reasonable attorney fees incurred by Ornowski and Lind. Krueger
filed an appeal, and Ornowski raised a cross-appeal.
{¶4} Krueger raises two assignments of error for our review. His first assignment
of error claims the trial court erred in awarding Ornowski sanctions under R.C. 2323.51.
He asserts that the trial court lacked subject matter jurisdiction to consider Ornowski’s
motion under R.C. 2323.51(B)(1) because the motion was filed after the statutory
deadline had passed, and that the trial court erred in awarding sanctions under the statute.
Under his second assignment of error, Krueger claims the trial court erred in awarding
sanctions against him and to the appellees under Civ.R. 11.
{¶5} We review de novo the interpretation of the timing provision of R.C.
2323.51(B)(1). Adams v. Pitorak & Coenen Invests., Ltd., 11th Dist. Geauga No.
2013-G-3129, 2013-Ohio-4102, ¶ 11. R.C. 2323.51 governs frivolous conduct in civil
actions and provides in pertinent part:
[A]t any time not more than thirty days after the entry of final judgment in a
civil action or appeal, any party adversely affected by frivolous conduct
may file a motion for an award of court costs, reasonable attorney’s fees,
and other reasonable expenses incurred in connection with the civil action
or appeal.
R.C. 2323.51(B)(1). The 30-day time period for filing a motion under the statute begins
to run when a “final judgment” is issued. Adams at ¶ 12.
{¶6} In this action, the plaintiff voluntarily dismissed the action without prejudice
on April 12, 2012.1 Ornowski’s motion for sanctions was not filed until June 14, 2012,
more than 30 days later. The trial court found that because the action was later refiled,
the motion could be considered timely. The trial court relied upon Merino v. Salem
1
It has been recognized that trial courts retain jurisdiction to resolve collateral matters, such
as a motion for sanctions pursuant to Civ.R. 11 or R.C. 2323.51, despite a voluntary dismissal. ABN
AMRO Mtge. Group, Inc. v. Evans, 8th Dist. Cuyahoga No. 96120, 2011-Ohio-5654, ¶ 21.
Hunting Club, 7th Dist. Columbiana No. 11 CO 2, 2012-Ohio-4553, which found a
motion for frivolous conduct under R.C. 2323.51 could relate back to an original action
that had been refiled under the savings statute. However, the legislative intent of the
statute suggests otherwise.
{¶7} The Ohio Supreme Court, in interpreting former R.C. 2323.51, recognized
that the General Assembly manifested its intent that there be a cutoff time for the sanction
for frivolous conduct to be imposed and that the statute provides a means for an
immediate judicial determination and a speedy sanctioning of such abuse, but also affords
the aggrieved party the option of waiting until the conclusion of the action to seek
sanctions. Soler v. Evans, St. Clair & Kelsey, 94 Ohio St.3d 432, 435-436,
2002-Ohio-1246, 763 N.E.2d 1169. In order to give effect to the legislative intent
behind the statute, Ohio courts have interpreted a Civ.R. 41(A) voluntary dismissal as the
triggering event for the filing of sanctions. Merino at ¶ 24 (DeGenaro, J., dissenting).
{¶8} Indeed, “the time frame within which a R.C. 2323.51 motion for sanctions is
filed cannot be perpetual.” Baker v. AK Steel Corp., 12th Dist. Butler No.
CA2005-07-188, 2006-Ohio-3895, ¶ 25. As this court has stated, “[i]f we concluded that
the statutory time limit did not apply when a court dismisses a case without prejudice, the
intent of the statute to have a cut-off time for the sanctions would not be adhered to and
would be meaningless.” Edwards v. Lopez, 8th Dist. Cuyahoga No. 95860,
2011-Ohio-5173, ¶ 12.
{¶9} Because Ornowski’s motion for sanctions was not filed within the time limit
set forth in the statute, the trial court erred by considering the motion under R.C. 2323.51.
While Ornowski argues that the doctrine of equitable estoppel should be applied because
Krueger did not disclose that he had never filed a bond until after Ornowski filed a
motion to recover damages under Civ.R. 65(C), the failure to post the bond would have
been apparent from the record. In any event, we find the trial court’s error in considering
the motion under R.C. 2323.51 was harmless because, as discussed below, the trial court
properly granted Ornowski’s request for an award of sanctions under Civ.R. 11.
{¶10} Unlike R.C. 2323.51, Civ.R. 11 does not have a specific time limitation for
seeking sanctions under the rule. A Civ.R. 11 motion must be filed within a “reasonable
time” of the final judgment. See Fast Property Solutions, Inc. v. Jurczenko, 11th Dist.
Lake Nos. 2012-L-015 and 2012-L-016, 2013-Ohio-60, ¶ 66-70.
{¶11} In this case, the trial court found Krueger’s conduct was sanctionable under
Civ.R. 11, which governs the signing of pleadings, motions, and other documents.
Civ.R. 11 provides in pertinent part:
The signature of an attorney or pro se party constitutes a certificate by the
attorney or party that the attorney or party has read the document; that to the
best of the attorney’s or party’s knowledge, information, and belief there is
good ground to support it; and that it is not interposed for delay. If a
document is not signed or is signed with intent to defeat the purpose of this
rule, it may be stricken as sham and false and the action may proceed as
though the document had not been served. For a willful violation of this
rule, an attorney or pro se party, upon motion of a party or upon the court’s
own motion, may be subjected to appropriate action, including an award to
the opposing party of expenses and reasonable attorney fees incurred in
bringing any motion under this rule.
{¶12} In ruling on a Civ.R. 11 motion for sanctions, a trial court “‘must consider
whether the attorney signing the document (1) has read the pleading, (2) harbors good
grounds to support it to the best of his or her knowledge, information, and belief, and (3)
did not file it for purposes of delay.’” Evans, 8th Dist. Cuyahoga No. 96120,
2011-Ohio-5654, at ¶ 17, quoting Ceol v. Zion Industries, Inc., 81 Ohio App.3d 286, 290,
610 N.E.2d 1076 (9th Dist.1992). If the court finds that any of these requirements have
not been met, then the court must determine whether the violation was willful as opposed
to merely negligent. Id. A subjective bad-faith standard is applied to determine whether
an attorney is subject to sanctions for a willful violation of Civ.R. 11. State ex rel.
Bardwell v. Cuyahoga Cty. Bd. of Commrs., 127 Ohio St.3d 202, 2010-Ohio-5073, 937
N.E.2d 1274, ¶ 8, citing State ex rel. Dreamer v. Mason, 115 Ohio St.3d 190,
2007-Ohio-4789, 874 N.E.2d 510, ¶ 19. “Under Civ.R. 11, a court can impose sanctions
only when the attorney or pro se litigant acts willfully and in bad faith by filing a pleading
that he or she believes lacks good grounds or is filed merely for the purpose of delay.”
Id.
{¶13} A trial court’s decision to impose sanctions under Civ.R. 11 is reviewed for
an abuse of discretion. Id. at ¶ 9. As long as some competent, credible evidence exists
to support the lower court’s judgment, no abuse of discretion will be found to have
occurred. Id.
{¶14} Here, the trial court found that Krueger, with knowledge that a bond was
never posted, proposed a stipulated temporary order that contained several
misrepresentations. Krueger included proposed language to “extend the Temporary
Restraining Order currently in place” for “an additional fourteen (14) days.” As noted by
the trial court, “Krueger included in the proposed entry at least seven explicit or implicit
references to extending the order.” However, because a bond was never posted, the
order was never in place and was not one that could be extended. He further proposed
language that the order “shall remain in full force and effect for an additional 14 days”
and included an assurance that the plaintiff “shall continue to post the existing bond in the
amount of $15,000.” As stated by the trial court, the language chosen by Krueger
“convey[ed] that a bond had been posted and not, as the plaintiff argues, that the amount
of the necessary bond wouldn’t be changed.” The trial court found that Krueger
proposed this language despite knowing full well that the temporary restraining order was
never operative.
{¶15} In the absence of a bond, the proposed order cannot simply be said to have
been a bad judgment. There is competent, credible evidence in the record reflecting that
Krueger prepared the proposed entry with knowledge that the plaintiff had never posted
the bond necessary to render the original temporary restraining order effective or “in full
force and effect” and subject to being “extended” for an “additional” period of time. As
the trial court determined, Krueger’s conduct violated Civ.R. 11 because when he signed
the proposed order, he “knew there was no good faith ground to support it.”
{¶16} Krueger attempts to deflect his accountability by claiming a review of the
docket would have revealed that the bond was never posted and that it was a joint entry
that was signed by opposing counsel. He further claims that at worst his conduct was
merely negligent as opposed to a “willful violation” under Civ.R. 11. We are not
persuaded by his arguments. Our review reflects that there was competent, credible
evidence to support the trial court’s determination and that the trial court did not abuse its
discretion in awarding sanctions against Krueger under Civ.R. 11.
{¶17} Next, we consider Ornowski’s cross-appeal, which challenges the trial
court’s decision to limit the award of sanctions to attorney fees. Ornowski argues that
the trial court should have included an award of damages they sustained while honoring
the temporary restraining order. The trial court determined that since a bond was never
posted, Ornowski and Lind were never restrained by an enforceable order of the court and
that their attorneys are deemed to have knowledge of the case docket.
{¶18} Upon a determination of a willful violation of Crim.R. 11, a trial court has
broad discretion in imposing an appropriate sanction. Evans, 8th Dist. Cuyahoga No.
96120, 2011-Ohio-5654, at ¶ 32; Ceol, 81 Ohio App.3d at 290, 610 N.E.2d 1076. We
are unable to find that the trial court abused its discretion under the circumstances of this
case.
{¶19} Judgment affirmed.
It is ordered that appellees recover from appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the common
pleas court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
SEAN C. GALLAGHER, PRESIDING JUDGE
PATRICIA ANN BLACKMON, J., and
TIM McCORMACK, J., CONCUR