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Wednesday, Dec. 2, 2009

In the Matter of the Guardianship of John Spangler, Case no. 2009-0121
11th District Court of Appeals (Geauga County)

City of Cleveland v. Destiny Ventures, LLC, Case no. 2008-2230
8th District Court of Appeals (Cuyahoga County)

City of Cleveland v. Washington Mutual Bank, Case no. 2009-0441
8th District Court of Appeals (Cuyahoga County)

Pennsylvania General Insurance Company v. Park-Ohio Industries, Inc., et al., Case no. 2009-0104
8th District Court of Appeals (Cuyahoga County)

Disciplinary Counsel v. Pippa Lynn Henderson, A.K.A. Carter, Case no. 2005-1948


Does County MRDD Board Have Authority, Standing to Initiate Removal of Client’s Guardian?

In the Matter of the Guardianship of John Spangler, Case no. 2009-0121
11th District Court of Appeals (Geauga County)

ISSUE: When a probate court has appointed a guardian to oversee the affairs of a developmentally disabled adult, and the ward receives ongoing medical and residential support services administered through a county board of Mental Retardation and Developmental Disabilities (MRDD), does the MRDD board have legal standing to file a motion in the probate court seeking removal of the ward’s guardian?

BACKGROUND:  John Spangler of Geauga County is a young adult male who suffers from autism, mitochondrial disease and mild mental retardation. John and his parents, Joseph and Gabriele Spangler, sought and are the ongoing recipients of government assistance in providing care and protective services to meet John’s day-to-day health and safety needs.  Those services are funded by Medicare and administered through the Geauga County MRDD Board.

In June 2006, after several incidents in which John became physically aggressive toward family members and caused property damage to his parents’ home, they obtained an order from the Geauga County Probate Court committing him to the Warrensville Developmental Center for 60-90 days for stabilization and evaluation. Approximately one week later, John’s parents removed him from the Warrensville facility after learning of reports that he had been physically and verbally abused by a roommate there. Joseph and Gabriele Spangler then filed a motion asking the probate court to appoint them as emergency guardians of their son. Staff members of the MRDD board attended the guardianship hearing and testified in support of the Spanglers’ application for guardianship, which was granted in July 2006 with the understanding that John would reside outside his parents’ home in a residence co-occupied by a husband and wife team who were certified caregivers trained to deal with developmentally disabled clients.

In October 2006, the caregiver couple notified the MRDD board that they were resigning as care providers for John because of multiple incidents during the preceding three months in which Gabriele Spangler had come to their home for unscheduled visits after which John became upset and acted out, including a final incident in which the caregivers called police and had Mrs. Spangler arrested after she appeared inside their home late at night in an intoxicated state without announcing her arrival, woke John and caused him to become emotionally disturbed.

Upon receiving that notice, the MRDD board filed a motion in the probate court seeking to have Joseph and Gabriele Spangler removed as John’s guardians. The court granted a temporary order removing the Spanglers and appointing a local protective services agency, APSI, as John’s temporary guardian.  On October 31, when a full hearing was scheduled, the board and the Spanglers submitted to the court a joint agreement that APSI would remain John’s temporary guardian for the following six months, during which the Spanglers would obtain psychiatric and alcohol/drug assessments and submit the results to the court pending a subsequent hearing on their fitness to resume serving as John’s guardians. The court accepted the agreement and continued further action in the case until April 2007.

Before the stipulated six-month period had elapsed, however, the Spanglers entered a new motion asking the probate court to terminate its order appointing APSI as John’s guardian and reinstating them. Among other claims, the Spanglers motion asserted that the probate court had acted without jurisdiction in granting the MRDD board’s emergency motion to remove them as guardians, because the board had no legal authority or standing to initiate such an action. Following several days of hearings, in August 2007 the probate court entered a judgment in which it rejected the Spanglers’ jurisdictional claim, found that their earlier conduct showed that they were not currently fit to serve as their son’s guardians, and indefinitely continued its order appointing APSI as guardian. The Spanglers appealed the probate court’s ruling.

On review, a 2-1 majority of the 11th District  Court of Appeals held that neither the powers conferred on MRDD boards by statute nor any authority established by Ohio case law gave such boards standing to intervene in a guardianship action, because the board was neither the ward’s “next of kin” nor was it a “real party in interest” in the guardianship case.  Accordingly, the court of appeals held that the probate court had acted without jurisdiction in granting the MRDD’s motion to remove the parents as John’s guardians,  and remanded the case for further proceedings. The Geauga County MRDD Board sought and was granted Supreme Court review of the 11th District’s ruling.

Attorneys for the board argue that because John is a developmentally disabled person receiving medical and other support services through the MRDD board, the board has standing as an “interested party” to intervene in a court action that involves his health and safety. They point to language in R.C. 5126.14 and supporting administrative rules requiring that, if an MRDD board becomes aware of a potentially dangerous situation involving a client, the board and its staff must take “immediate actions as necessary to maintain the health, safety and welfare of individuals receiving the services.” They also assert that, unlike guidelines that restrict third-party participation in other types of civil lawsuits, Ohio’s probate rules allow anyone with information about a potential health or safety threat to an incompetent  person under the protection of a probate court to bring that information to the attention of the court, and authorize the court to act on its own initiative to modify or vacate a guardianship order for good cause. They contend that, under the 11th District’s narrow reading of the applicable laws, a total stranger to John would have standing to initiate proceedings to remove his guardian, but a local MRDD board with the specific statutory duty to protect his safety and welfare would be barred from taking the same action.

Attorneys for Joseph and Gabriele Spangler urge the Court to affirm the ruling of the 11th District majority, which found that by enacting R.C. 5126.33 the legislature has provided a specific and limited authority for MRDD boards to pursue actions in probate court when there is “a substantial risk of immediate physical harm or death” to person under the board’s care.  Absent clear and convincing evidence of such a risk, they say, MRDD boards do not have  authority or legal standing to intervene in guardianship proceedings involving developmentally disabled adults.

NOTE:  An amicus curiae (friend of the court) brief supporting the position of the Geagua County MRDD Board has been submitted by the Ohio Attorney General’s office.

Contacts
Judith A. Miedema, 440.279.2100, for Geauga County Board of Mental Retardation and Developmental Disabilities.

Pamela W. Makowski, 614.245.0488 for Joseph and Gabriele Spangler.

Derek S. Hamalian, 614.466.7264, for John Spangler.

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Cases Question Whether Corporation May Be Tried ‘In Absentia’ When It Fails to Respond to Summons

City of Cleveland v. Destiny Ventures, LLC, Case no. 2008-2230

City of Cleveland v. Washington Mutual Bank, Case no. 2009-0441
8th District Court of Appeals (Cuyahoga County)

NOTE: The two cases captioned above will be argued separately before the Court. They are summarized together below because they deal with the same underlying issue, and the parties advance similar legal arguments.

ISSUES: In cases where a corporation is served with a summons and copy of an indictment or information charging the company with a criminal offense, and the defendant corporation fails to have an officer of the company or an attorney appear at arraignment and enter a responsive motion or plea to the charged offense(s), R.C. 2941.47 authorizes Ohio courts to schedule a trial and notify the defendant company that it if it fails to appear on that date, the court will proceed with a trial in the absence of the defendant. In this case the Supreme Court is asked to review conflicting rulings in two cases heard by different panels of the 8th District Court of Appeals, and to determine:

BACKGROUND: In both of these cases, corporations that owned residential properties in Cleveland were cited by the city housing inspector for multiple violations of the city building code and ordered to make specific repairs within a specified time period. After the deadline set in the citations had passed, the housing inspector returned to the properties and in both cases found that none of the required repairs had been made. Pursuant to the city’s housing ordinance, the City filed complaints in the Cleveland Municipal Housing Court charging the property owners with misdemeanor criminal offenses for failing to comply with an order of the housing commissioner. The property owner defendants were served with summonses informing them of  the charges and ordering them to appear for arraignment on a specified date. Neither company appeared on the scheduled arraignment date to enter a plea or otherwise respond to the charges. 

The housing court then invoked the authority granted by R.C. 2941.47 to schedule a trial in each case, and notified the defendant corporations that if they failed to send a corporate officer or attorney to appear on the specified trial date, the court clerk would enter a not guilty plea on their behalf and the court would proceed to hear the state’s evidence and decide their cases in their absence.  In each case, the defendant failed to file a motion for a continuance or to send a qualified representative to appear on the scheduled trial date. The court proceeded in each case to hear the city’s uncontested evidence, enter a judgment finding the defendant corporation guilty of the charged code violations, and impose a significant fine on the property owner. Both property owners subsequently appealed the housing court’s judgments against them.

In Cleveland v. Washington Mutual Bank, a three-judge panel of the 8th District Court of Appeals overturned the housing court’s judgment and vacated the fine against the property owner based on its findings that: 1) the ‘in absentia’ trial provision of R.C. 2941.47 refers only to charges brought through “an indictment or bill of information,” and those methods of charging are used only in felony cases whereas the charges against the defendant in this case were misdemeanors brought by the alternative procedure of filing a criminal complaint.  2) The appellate panel also pointed to language in Ohio Criminal Rule 43(A) mandating a defendant’s presence at trial and in R.C. 2938.12 setting a procedure for a defendant to waive his right to be present, and found that the housing court’s proceedings were invalid because they had not complied with those provisions.

In Cleveland v. Destiny Ventures LLC, a different three-judge panel of the 8th District upheld the housing court’s application of R.C. 2941.47 to conduct a trial in the absence of the defendant and affirmed the trial court’s judgment and the fine imposed.  The appellate panel in Destiny Ventures rejected constitutional arguments advanced by the property owner, finding that the procedure set forth in the statute and followed by the trial court had provided notice that a trial would go forward on the scheduled date and an opportunity for the defendant to appear or seek a continuance, and that by failing to do either, Destiny Ventures had waived its right to confront the state’s evidence against it.

The non-prevailing parties in the two cases sought and have been granted Supreme Court review of the 8th District’s conflicting rulings.

Attorneys for the City of Cleveland, supported by an amicus curiae (friend of the court) brief submitted by the Ohio Attorney General’s Office, argue that the legislative intent underlying R.C. 2941.47 was to stop corporations from precisely the type of conduct at issue in this case. They assert that Cleveland and other cities face a growing public safety crisis in dealing with the widespread neglect and abandonment of properties by corporate owners who evade their legal obligation to comply with housing codes and maintain property in a safe condition by simply failing to respond to summonses or to show up for court proceedings. Unlike an individual defendant who ignores a summons, they point out, corporate defendants know that a court cannot issue an arrest warrant to compel it to appear and to face criminal charges, and such owners will continue to flout the law with impunity unless courts are able to enforce their authority by invoking R.C. 2941.47.  They argue that the panel in Washington Mutual erred by interpreting broad, general language in Crim.R.43(A) and R.C. 2938.12 applicable to individual criminal defendants as grounds to overrule the clear and specific language in R.C. 2941.47 authorizing  in absentia trials of “no-show” corporate defendants.

Attorneys for the defendant property owners urge the Court to affirm the Washington Mutual panel’s holding that the plain language of R.C. 2941.47 allows in absentia trials only where a corporation has been charged in “an indictment or bill of information,” language which they say excludes such proceedings where a misdemeanor offense has been charged in a criminal complaint. They also argue that, as the statute was applied in the Destiny Ventures case, allowing the housing court to consider the city’s criminal complaint, issue a judgment  and impose large fines against the property owner while it was not present in court violates a long line of state and federal cases holding that a criminal defendant has a fundamental right to be present and confront its accusers before judgment can be entered against it.

Contacts
Karyn J. Lynn, 216.664.4504, for the City of Cleveland.

Vladimir P. Belo, 614.227.2300, for Washington Mutual Bank.

Michael A. Poklar, 440.951.4660, for Destiny Ventures LLC.

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May One Insurer Demand Contribution from Others Who Did Not Receive Notice, Consent to Settlement?

Pennsylvania General Insurance Company v. Park-Ohio Industries, Inc., et al., Case no. 2009-0104
8th District Court of Appeals (Cuyahoga County)

ISSUE: Under this Court’s 2002 decision in Goodyear Tire & Rubber v. Aetna Casualty & Surety Co.,when an insured party has coverage for the same risk under policies issued by more than one insurance company, the insured may elect to seek full recovery of its losses under only one policy, subject to the selected insurer’s policy limits, and the selected insurer may seek to recover equitable shares of its outlays on behalf of the insured via contributions from the other, non-selected insurers to the extent such recovery is possible.  In this case, the Court is asked whether Goodyear allows a “selected” insurer to recover proportional shares of its outlays from non-selected insurance companies despite the policyholder’s failure to comply with provisions of the other companies’ policies requiring immediate notice of any pending claims and requiring the insurer’s prior consent to any settlement of a claim?

BACKGROUND:  In 2002, George DiStefano, a former employee of Park-Ohio Industries sued the company for asbestos-related health problems he allegedly developed over a multi-year period during which Park was covered by liability insurance issued by several different companies including Penn General, Nationwide and Continental Casualty.  Park’s attorneys notified only Penn General of the pending lawsuit and invoked only its coverage under Penn General’s policy in defending the suit and covering any damages payable to DiStefano. In October 2002 Park and DiStefano agreed to a lump sum settlement of $1 million. Penn General initially claimed that its policy limits did not cover the full amount of the settlement. Park filed suit claiming bad faith denial of coverage and breach of contract. In November 2005, Penn General settled that dispute by reimbursing Park for the remainder of the $1 million employee settlement plus $112,000 in legal costs.

In 2004, nearly two years after Park had entered into the settlement agreement with DiStefano, Penn General contacted Nationwide and Continental, from whom Park had also purchased liability insurance policies covering some of the years DiStefano was employed by the company. In a letter to the other insurers, Penn General informed them of the Park claim and $1 million settlement with DiStefano, and demanded that they contribute specific “shares” of the settlement  based on the length of time each company had been Park’s prime insurer and the coverage limits in force under their policies. Nationwide and Continental denied any obligation to reimburse Penn General for its payments made on behalf of Park.

Penn General filed suit in the Cuyahoga County Court of Common Pleas, seeking a declaratory judgment that Nationwide and Continental were obligated to contribute equitable shares of the Park claim.  The trial court ruled against Penn General, holding that the other insurers’ policies issued to Park did not impose liability on them for the DiStefano settlement because Park had not met its contractual obligations under those policies to promptly notify the insurer about any pending third-party claim or to obtain the insurer’s prior consent to any settlement with a third party.  Accordingly, the trial court held that no liability coverage was available to Park under the Nationwide and Continental policies, and therefore, under Goodyear, there was no “non-selected company” insurance from which Penn General could claim a right to contribution.

Penn General appealed. On review, the 8th District Court of Appeals reversed the trial court’s decision. The appellate panel held that the prior notice and approval requirements in Park’s Nationwide and Continental insurance policies were not binding on Penn General; and that Penn General’s claim for contribution was not based on Park’s contract rights, but was rather based on its own equitable right to remedy the disproportionate financial burden it had borne by covering the entire DiStefano settlement when there were other insurers from whom Park had also purchased liability coverage during DiStefano’s employment. Nationwide and Continental sought and were granted Supreme Court review of the 8th District’s decision.

Attorneys for Nationwide and Continental urge the Court to reject the 8th District’s holding, which they say entitles a “selected” insurer to demand contributions from other non-selected companies despite having failed to notify those companies before settling legal claims that the other companies weren’t aware of, and had no opportunity to review or evaluate.  They argue that to avoid the unfairness of binding other insurers to damage awards or settlements about which they had no knowledge or control, the Court should limit its holding in Goodyear by ruling that in order to preserve its right to later pursue contribution from other insurers, a “selected” insurer in a multi-policy case must comply with the notice and consultation requirements of the non-selected companies’ policies before entering into a settlement of the insured’s claim. 

Attorneys for Penn General urge the Court to affirm the 8th District’s decision, which held that under Goodyear the claim of a selected insurer to contribution from other non-selected insurers is not conditioned by the terms and conditions of the insured’s insurance policies, but is rather based on the equitable principle that “a party who has been compelled to pay what another should have paid in part is entitled to proportionate reimbursement.”  Even if the terms of Park’s Nationwide and Continental policies were relevant, they add, Park’s breach of those terms would not void the liability coverage in the policies unless it were shown that the breaches caused material prejudice (negative legal consequences) to the insurers. Because neither company made any showing that it could have obtained an outcome more favorable than Park’s settlement with DiStefano, they assert, there was no showing of prejudice and the liability coverage in the non-selected insurers’ policies remains available to satisfy their proportionate shares of the DiStefano settlement.

Contacts
Richard M. Garner, 216.348.1700, for Pennsylvania General Insurance Co.

Timothy J. Fitzgerald, 216.241.5310, for Continental Casualty Co.

John T. McLandrich, 216.248.7906, for Nationwide Insurance Co.

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Attorney Discipline

Disciplinary Counsel v. Pippa Lynn Henderson, A.K.A. Carter, Case no. 2005-1948

The Court has ordered disbarred Cleveland attorney Pippa Lynn Henderson to appear before the Justices and show cause why she should not be held in contempt of the Court’s April 5, 2006 order permanently revoking her law license and prohibiting her from engaging in any further conduct that constitutes the practice of law.

The Court’s order was based on a complaint submitted by the Office of Disciplinary Counsel informing the Court that Henderson violated its disbarment order by entering an appearance and attempting to negotiate a plea bargain on behalf of a client in a case before the Cuyahoga County Court’s Juvenile Division in February 2009.

Contacts
Jonathan E. Coughlan, 614.461.0256, for the Office of Disciplinary Counsel.

Pippa Lynn Henderson, pro se, 216.577.5194.

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These informal previews are prepared by the Supreme Court's Office of Public Information to provide the news media and other interested persons with a brief overview of the legal issues and arguments advanced by the parties in upcoming cases scheduled for oral argument. The previews are not part of the case record, and are not considered by the Court during its deliberations.

Parties interested in receiving additional information are encouraged to review the case file available in the Supreme Court Clerk's Office (614.387.9530), or to contact counsel of record.