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Wednesday, March 13, 2013

State of Ohio v. Daniel Lalain, Case nos. 2012-0302 and 2012-0408
Eighth District Court of Appeals (Cuyahoga County)

Supportive Solutions Training Academy L.L.C. v. Electronic Classroom of Tomorrow, Case no. 2012-0790
Eighth District Court of Appeals (Cuyahoga County)

State of Ohio v. Scotty R. McDonald, Case no. 2012-1177
Fourth District Court of Appeals (Lawrence County)

State of Ohio v. David Willan, Case no. 2012-0216
Ninth District Court of Appeals (Summit County)

Is Amount of Criminal Restitution For Theft Offense Limited to Maximum Property Value Under Charged Degree of Offense?

Court Also Asked Whether Hearing Required When Defendant Disputes Restitution Amount

State of Ohio v. Daniel Lalain, Case nos. 2012-0302 and 2012-0408
Eighth District Court of Appeals (Cuyahoga County)


BACKGROUND: In July 2008, Daniel Lalain resigned without notice from his position as an engineer with Aero Instruments, a Cleveland company involved in the design and development of sophisticated airplane and aerospace components including air speed sensors.

Aero subsequently determined that prior to resigning, Lalain had duplicated electronic files stored on his work computer, copied documents from his office files, and removed documents from the Aero building.  The company undertook an internal investigation to determine what documents, drawings, equipment prototypes, or other information had been removed or copied, and retained a forensic accounting firm, Meaden and Moore, to place a value on the intellectual property that had been misappropriated.

Aero filed a criminal complaint alleging that Lalain had stolen its intellectual property, and initiated a civil lawsuit against him seeking recovery for potential economic losses resulting from Lalaine’s sale or disclosure of Aero’s trade secrets and proprietary product information.

The Cuyahoga County prosecutor’s office obtained a grand jury indictment charging Lalain with a first degree felony count of theft, alleging that he had stolen property valued at $1 million or more.  Police executed a search warrant for Lalain’s home, from which they recovered all of the documents and other materials he had removed from the Aero facility. After extensive pretrial discovery indicated that Lalain had not sold or otherwise disclosed any of the company’s proprietary information, Aero dismissed its civil suit and the state entered into a plea bargain in which Lalain agreed to plead guilty to a reduced charge of theft of property valued at between $500 and $5,000, a fifth-degree felony.  Prior to accepting his plea to that charge, the trial court notified Lalain of the potential criminal penalties to which he would be subject, including a possible requirement that he make restitution to Aero. There was no discussion at the plea hearing regarding the amount of restitution that could or would be awarded.

Three days prior to the hearing at which Lalain was sentenced, Aero submitted a letter asking the court to order Lalain to pay restitution of $55,456 to cover the time the company’s employees had spent investigating his theft, and an additional $7,665 to cover the costs of the Meaden and Moore forensic audit, for a total restitution award of $63,121.  At the sentencing hearing, Lalain’s attorney disputed the proposed award of criminal restitution to Aero for the costs of the Meaden and Moore audit, arguing that those costs were not an economic loss caused by Lalain’s theft offense but were rather a discretionary cost that Aero had chosen to incur in connection with its abandoned civil lawsuit.  After hearing contrary arguments from the prosecutor, the court sentenced Lalain to a term of community control and ordered him to pay restitution to Aero for the full $63,121 the company had requested.  After sentence was pronounced, Lalain did not reiterate his objection to the amount of the restitution award.

Lalain subsequently appealed the amount of the restitution order to the Eighth District Court of Appeals, which upheld the trial court’s action in a 2-1 decision.  Lalain then sought and was granted Supreme Court review of three propositions of law challenging the restitution award to Aero.

Lalain’s attorneys argue that:
1) Because the theft offense of which Lalain was convicted specifies that the total value of the property he stole was less than $5,000, the maximum “economic loss” Aero could have suffered as a result of that theft cannot exceed $4,999, and under Ohio case law, absent a defendant’s agreement to pay a higher amount as part of a plea bargain, a court may not award restitution in excess of the victim’s actual loss.

2) After Lalain’s attorney disputed at the sentencing hearing whether portions of the total restitution Aero had requested represented “economic loss” caused by Lalain’s theft offense, the trial court should have delayed ruling on the proper amount of restitution until after it conducted an evidentiary hearing at which Aero would be required to demonstrate that its outlays qualified as “losses” subject to recovery through criminal restitution.

3) Aero’s letter and the prosecutor’s supporting testimony at the sentencing  hearing made it clear that most of the outlays the company sought to recover from Lalain were costs incurred in preparing the company’s civil suit and/or supporting the state’s prosecution of its criminal case, and these types of expenses do not fall within the definition of “economic loss” that may be assessed against a defendant through a criminal restitution order.

Attorneys for Aero urge the court to affirm the Eighth District’s findings that:
1) A theft victim’s “economic losses” subject to restitution  are not limited to the value of the stolen property itself, but may also include out-of-pocket costs a victim is forced to incur in order to determine the nature and extent of its damages, and to protect itself against additional economic harm with which it is threatened as a result of the defendant’s criminal conduct.

2) Because Lalain’s attorney failed to enter a post-judgment objection to the final sentencing order entered by the trial judge, which included the award of restitution, Lalain waived his right to appeal any alleged defects in the restitution award other than a “plain error” so egregious that it clearly resulted in an outcome that was contrary to law.

3) The state’s plea bargain with Lalain included specific notice that he could be subject to an award of restitution in addition to other penalties, and did not set any dollar limit on such an award but merely promised that he would be subject to a less severe penalty than he would have faced if convicted of the original charge of first-degree felony theft.

Representing the state and Cuyahoga County Prosecutor’s Office: Kristen Sobieski, 216.698.2226

Representing Daniel Lalain: John P. Hildebrand, 440.333.3100

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Is Denial of Leave to Add Immunity Defense to Answer Brief An Order ‘Denying the Benefit of Alleged Immunity?’

Under Law That Allows Immediate Appeal of Orders that Deny Sovereign Immunity

Supportive Solutions Training Academy L.L.C. v. Electronic Classroom of Tomorrow, Case no. 2012-0790
Eighth District Court of Appeals (Cuyahoga County)

ISSUE:  When a political subdivision that is a defendant in a civil lawsuit initially fails to assert in its answer to the plaintiff’s complaint the affirmative defense of “sovereign immunity” from liability under R.C. Chapter 2744, but later seeks leave of the trial court to amend its answer by adding a claim of political subdivision immunity, if the trial court denies leave to amend the answer, is that ruling immediately appealable under R.C. 2744.02(C) as “an order that denies the benefit of an alleged immunity to a political subdivision?”

BACKGROUND:  In 2008, a Cuyahoga County educational services company known as Supportive Solutions Training Academy LLC filed a civil lawsuit in which it asserted multiple claims for money damages totaling more than $400,000 against Electronic Classroom of Tomorrow (ECOT), a non-profit corporation that operates an online or “virtual” school system that provides tuition-free instruction and assistance to K-12 students across Ohio.

When it enacted Chapter 3314 of the Revised Code, which authorizes the creation of community or “charter” schools, the legislature included language conferring on such schools the legal status of a “political subdivision” similar to a public school district within the meaning of the state’s sovereign immunity statute, R.C. Chapter 2744.  The immunity statute generally exempts political subdivisions from civil liability for damages that they or their employees cause to third parties except under certain specified conditions.  In its answer to the civil complaint filed by Supportive Solutions, ECOT did not initially  assert the affirmative defense that it was immune from liability by virtue of its status as a political subdivision.

After extensive pretrial proceedings, ECOT and its directors filed a motion for partial summary judgment dismissing all of Supportive Solutions’ claims except its claim for breach of express contract.  Among its arguments in support of  that motion, ECOT argued that all the plaintiff’s claims other than those for express contract were precluded by ECOT’s immunity from civil liability as a political subdivision. Supportive Solutions moved to strike  ECOT’s summary judgment motion, asserting that  1) ECOT did not fall within the definition of a political subdivision because it was a school but not a school “district” or “system,” and 2)  ECOT had waived the defense of political subdivision immunity by failing to assert that defense in its answer to the original complaint.  ECOT responded to the motion to strike by asking the court  for leave to amend its answer brief to add the defense of statutory immunity.  Supportive Solutions opposed the motion for leave to amend,  arguing that allowing ECOT to belatedly add an immunity defense to its answer after many months of pretrial proceedings in which that defense had not been asserted would be prejudicial to the plaintiff’s case.

The trial court denied ECOT’s motion for leave to amend its answer without stating a legal basis for that ruling.  ECOT filed an immediate appeal of the denial of leave to amend its answer in the Eighth District Court of Appeals, citing  a provision of the immunity statute, R.C. 2744.02(C),  which grants a right of immediate appeal of  “any order that denies a political subdivision … the benefit of an alleged immunity from liability as provided in this chapter.”

While that motion was pending, the trial court partially granted and partially denied ECOT’s motion for summary judgment on grounds other than statutory immunity,  and proceeded to trial on Supportive Solutions’ breach of express contract claim and several other theories of liability from which  ECOT claimed to be immune.  After a trial in which ECOT was not able to assert sovereign immunity as a defense, a jury awarded Supportive Solutions damages totaling more than $1.2 million.
The Eighth District subsequently held that  the trial court order denying  ECOT’s motion to amend its answer was not a final order subject to immediate appellate review.

After extensive intervening litigation, including Supreme Court rulings vacating the trial  court verdicts in favor of Supportive Solutions on all claims other than their breach of express contract claim, the case was again submitted for review by the Eighth District Court of Appeals. In a 2012 opinion, the Eighth District held for a second time that the trial court’s denial of ECOT’s motion to amend its answer was not subject to immediate appellate review.  The appellate panel based its holding on a finding  that ECOT’s motion was procedural rather than  dispositional in nature, and because that order did not “deny” ECOT’s claim of immunity, but merely denied a procedural avenue through which ECOT attempted to assert  an immunity defense,  it was not an order subject to immediate appeal under R.C. 2744.02(C).

ECOT sought and was granted Supreme Court review of the Eighth District’s ruling.

Attorneys for ECOT argue that the Eighth District’s interpretation of  the law  in this case is in conflict with the Supreme Court of Ohio’s seminal holding in Hubbell v. Xenia (2007) that the right of immediate appeal conferred on political subdivisions by R.C. 2744.02(D) applies not only to trial court rulings that definitively or “finally” reject a public entity’s claim of  immunity, but also to any order that has the practical effect of depriving a subdivision of the “benefit” of  “an alleged immunity.”  They point in particular to the court’s declaration in Hubbell that the legislative intent underlying the immediate appeal provision is to ensure that  “the determination of immunity [should] be made prior to investing the time, effort and expense of the courts, attorneys, parties and witnesses” rather than requiring  disputes to be tried to a verdict before a party’s pretrial claim of immunity is adjudicated.

In this case, they assert, ECOT’s motion to amend its answer  was the only practical means for it to assert the affirmative defense of political subdivision immunity after inadvertently omitting that defense from its original pleadings.  Under those circumstances, they argue, the trial court’s denial of ECOT’s motion to amend its answer effectively “denied it the benefit of an alleged immunity,”  and therefore constituted an order subject to immediate appellate review under the immunity statute.

Attorneys for Supportive Solutions did not submit a brief in the case, and therefore under the Supreme Court’s rules of practice and procedure will not participate in oral argument before the justices.

Representing Electronic Classroom of Tomorrow: Paul W. Flowers, 216.344.9393

Representing Supportive Solutions Training Academy LLC: Maureen Connors, 216.640.9860

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Does Omission of Offense Level and ‘Willful’ Mental State from Verdict Form Preclude Conviction for Non-Minimum Offense?

Defendant Argues Jury Findings Support Only Lowest Level of Eluding Officer Offense

State of Ohio v. Scotty R. McDonald, Case no. 2012-1177
Fourth District Court of Appeals (Lawrence County)

ISSUE:  In a criminal case where the  defendant is charged with eluding or fleeing a police officer after receiving a signal to stop under R.C.  2921.331(B), is a jury verdict finding that the defendant caused a substantial risk of injury to others sufficient to support a conviction for the enhanced  third-degree felony form of the offense when the verdict form returned by the jury did not list the revised code section under which the defendant was charged, did not identify the degree of the offense, and did not include a finding by the jury that the defendant acted with a “willful” mental state?

BACKGROUND:  R.C. 2921.331 defines and prohibits two different traffic offenses. Section(A) of the statute prohibits  failure to  comply with any lawful order or direction of a police officer engaged in directing or regulating traffic. A violation of Section A is punishable as a first-degree misdemeanor.

Section B prohibits the operation of a motor vehicle “so as to willfully elude or flee a police officer after having received a visible or audible signal from the officer to bring the operator’s vehicle to a stop.” A violation of Section B is punishable as a first-degree misdemeanor except when a judge or jury finds  the aggravating circumstance that in fleeing an officer the defendant either  caused serious physical injury to persons or property or caused a substantial risk of serious physical harm to persons or property, in which cases the underlying offense is elevated to a third-degree felony.

Scotty McDonald was arrested and charged with a felony count of fleeing or eluding an officer after leading  a Coal Grove police sergeant on a 100-plus mile per hour chase after the officer had turned on his flashing lights and siren signaling McDonald to stop his car. At the conclusion of  McDonald’s trial, the jury was given two verdict forms.  One indicated a finding that the state had proved only that McDonald failed to comply with the officer’s signal to stop.  The second indicated that the jurors had found both  “Failure to Comply with Order or Signal of Police Officer and Caused A Substantial Risk of Serious Physical Harm to Persons or Property.” Neither verdict form identified the Revised Code Section or the degree of the offense with which McDonald was charged, and neither required the jurors to affirm that they found  McDonald had acted with the culpable mental state of “willfully” (as opposed to negligently or recklessly).

The jury completed and signed the verdict form that included a finding that McDonald’s conduct had  caused a threat of serious physical harm.  Based on that verdict, the court found McDonald guilty of a third-degree felony violation of R.C. 2921.331 and sentenced him to four years in prison.

McDonald appealed, asserting that the verdict returned by the jury was insufficient to support his conviction for a felony count under the “willfully eluding or fleeing” language of R.C. 2921.331(B).  The Fourth District Court of Appeals affirmed the sufficiency of the jury’s verdict and upheld McDonald’s felony conviction.  The court of appeals certified, however, that its ruling on the sufficiency of the jury verdict was in conflict with a 2009 decision of the Third District in a virtually identical case, State v. Schwable.  The Supreme Court agreed to review the Fourth District’s decision in order to resolve the conflict between appellate districts.

Attorneys for McDonald argue that under R.C. 2945.75(A)(2), as interpreted by this court’s 2007 decision in State v. Pelfrey, a verdict form signed by a jury supports only the least serious form of the charged offense unless that form includes either a statement of the degree of the offense of conviction or specific findings by the jury confirming  the presence of all statutory factors necessary to justify a conviction for a higher degree offense.

In this case, they assert, the verdict form signed by the jury indicated neither the subsection of the statute under which McDonald was charged nor the degree of the charged offense, and despite the jury’s finding that McDonald caused a risk of harm, its verdict still supported only a conviction for a misdemeanor violation under Section (A) of the statute because the jurors did not find the required element  for a felony conviction under Section (B) that McDonald “willfully eluded or fled from an officer.”

Attorneys for the state urge the court to affirm the Fourth District’s ruling that the only “aggravating factor” the jury was required to find in order to support a felony conviction in this case was its finding that McDonald caused a “risk of serious physical harm to persons or property” in the course of disobeying the officer’s directive to stop his car.  They note than in his  instructions to the jury the trial judge clearly indicated that McDonald was charged with the enhanced Section B version of the charged offense, and specifically told jurors that in order to return a conviction they must find that he both caused a threat of serious harm and operated a vehicle “so as to willfully elude or flee a police officer.”  They argue that, even if the court should find that the verdict forms provided to the jury were incomplete, the judge’s instructions, which are part of the trial record, were sufficient to correct any defects and render the jury’s guilty verdict valid and enforceable.

Representing Scotty McDonald: Todd A. Long, 614.454.5010

Representing the state and Lawrence County Prosecutor’s Office: Brigham M. Anderson, 740.533.4360

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State Challenges Appeals Court Interpretation of Law Imposing Mandatory 10-Year Sentence for ‘Corrupt Activity’ Conviction

When Pattern of Corrupt Activity Includes First-Degree Felony Offense

State of Ohio v. David Willan, Case no. 2012-0216
Ninth District Court of Appeals (Summit County)

ISSUE:  Did the Ninth District Court of Appeals commit reversible error by finding that the language of a criminal sentencing statute is ambiguous, and interpreting the statute in a way that precluded the imposition of a mandatory ten-year prison term on a person who was convicted of engaging in a pattern of corrupt activity based on the commission of one or more first degree felony offenses?

BACKGROUND:  David Willan of Akron was convicted in 2009 of multiple felony offenses for his role in the sale to the public of unlicensed securities that were used to finance a failed home rehabilitation and resale business known as Evergreen Homes.  In addition to convictions on first-degree felony violations of state securities laws and falsification of documents, a jury also found Willan guilty of engaging in a pattern of corrupt activities under Ohio’s anti-racketeering statute, R. C. 2923.32.

He was sentenced to a total of 16 years in prison. That sentence included a mandatory ten-year prison term imposed pursuant to R.C. 2929.14(D)(3)(a), a provision of the state’s criminal sentencing statute that mandates a ten-year minimum sentence under a number of specified circumstances, including  “if the court imposing sentence for a felony finds the offender is guilty of corrupt activity with the most serious offense in the pattern of corrupt activity being a felony of the first degree.”

Willan appealed, challenging the sufficiency of the evidence on which his securities law convictions was based and also asserting that the trial court erred in applying the ten-year mandatory prison term requirement of  R.C. 2929.14(D)(3)(a) to his corrupt activity conviction.

On review, the Ninth District Court of Appeals reversed several of Willan’s  convictions on evidentiary grounds, but affirmed his convictions on three first-degree felony counts of making false representations in the registration of securities, and also affirmed his first degree felony conviction under the corrupt activity statute. 

With regard to the sentencing issue, the court of appeals held that because the text of R.C. 2929.14(D)(3)(a) made a general reference to “corrupt activity,” but did not include a specific reference to a violation of R.C. 2923.32 as grounds for a mandatory ten-year sentence, the plain language of the sentencing statute was ambiguous regarding the applicability of the mandatory sentence to Willan’s convictions.  The three-judge appellate panel then engaged in analysis of the sentencing statute by examining the statutory language that preceded and followed the passage addressing corrupt activities, and other  provisions of the sentencing law, and concluded that in drafting the disputed provision the legislature intended to mandate a ten-year minimum sentence only in cases where a defendant’s corrupt activity conviction was based on major drug offenses, sexual crimes, or kidnapping, all of which are referenced in the sentencing statute by the inclusion of specific Revised Code section numbers.

Based on that interpretation, the Ninth District held that the trial court had erred by imposing a mandatory ten-year prison term as part of Willan’s sentence, and remanded the case for resentencing without application of  R.C. 2929.14(D)(3)(a). The state sought and was granted Supreme Court review of the Ninth District’s ruling.

Attorneys for the state argue that the plain language of the sentencing statute addressing corrupt activities convictions clearly and unambiguously requires that “if the court imposing sentence ...  finds the offender is guilty of corrupt activity with the most serious offense in the pattern of corrupt activity being a felony of the first degree, the court shall impose on the offender ... a ten-year prison term that cannot be reduced.”

They assert that the Ninth District violated a cardinal rule of judicial review by failing to apply that unambiguous statutory language to Willan’s case, and instead engaged in improper analysis and interpretation to reach a conclusion about “legislative intent”  that contradicts the plain language actually adopted by the legislature. They argue that the only section of state law that defines and criminalizes “corrupt activities” is R.C. 2923.32, and point to several other areas of the Revised Code that unambiguously refer to “corrupt activities” without also listing the corresponding code section number.

Attorneys for Willan urge the court to affirm the Ninth District’s conclusion that if the legislature had intended to impose a mandatory ten-year prison term for any violation of the corrupt activities statute predicated on any first-degree felony it could and would have made that intention clear by specifically listing R.C. 2923.32 along with the multiple drug trafficking, sex offense and murder statutes that are enumerated in the text of the code section setting forth the mandatory ten-year sentencing requirement.  By failing to make such an intention clear, they argue, the statutory language addressing corrupt activities convictions is rendered ambiguous, and under the “rule of lenity,” ambiguities in a criminal sentencing statute must be construed in favor of defendants and against the state.

Representing the State of Ohio as special prosecutor: Brad L. Tammaro, 614.277.1010

Representing David Willan: Andrea Whitaker, 330.762.0287

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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.