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Tuesday, November 5, 2013

CitiMortgage, successor by merger to ABN AMRO Mortgage Group v. James A. Roznowski et al., Case no. 2012-2110
Fifth District Court of Appeals (Stark County)

A.E.M. Electric Services Corporation v. Transtar Electric, Case no. 2013-0148
Sixth District Court of Appeals (Lucas County)

State ex rel. The Cincinnati Enquirer. v. Honorable Robert H. Lyons, Case nos. 2012-1924 and 2013-0300

Arnaldo R. Miranda v. State of Ohio, Case no. 2012-1741
Tenth District Court of Appeals (Franklin County)

Supreme Court Asked to Rule on Foreclosure-Related Judgments

CitiMortgage, successor by merger to ABN AMRO Mortgage Group v. James A. Roznowski et al., Case no. 2012-2110
Fifth District Court of Appeals (Stark County)


Foreclosure proceedings were filed by CitiMortgage in February 2008 against James and Steffanie Roznowski. After the Stark County Court of Common Pleas granted the mortgage company’s summary judgment in April 2011, the Roznowskis appealed to the Fifth District Court of Appeals. That appeal was dismissed on the grounds that there was not a final appealable order because “it did not set forth the balance due on the mortgage.”

In February 2012, the Stark County court awarded judgment in the amount of $126,849.04, interest, and other costs that included inspections, appraisals, property protection, and maintenance. The Roznowskis appealed for a second time to the Fifth District Court of Appeals, which again concluded it was not a final appealable order because the expenses were not included in the judgment.

In its appeal before the Ohio Supreme Court, CitiMortgage claims Ohio law is “well-established” when it comes to the principle that a judgment decree in a foreclosure is a final appealable order even if it does not include specific dollar amounts for all the costs to confirm a foreclosure sale. Among the cases CitiMortgage cites is the Ohio Supreme Court’s 1960 decision in Queen City Sav. & Loan Co. v. Foley: “The Court’s conclusion that a foreclosure judgment is a final and appealable order necessarily recognized that a sale still had to occur and the trial court still had to confirm it in order to preserve the statutory right of redemption,” they argue.

CitiMortgage also states that other Ohio courts have ruled “specifying the total amount due for additional charges is impractical because some of those charges continue to accrue through the date of the sheriff’s sale.”

In their brief to the Supreme Court, the Roznowskis claim CitiMortgage incorrectly uses Queen City, which they state dealt with the priority of liens and not the issue in dispute in their case. They add that CitiMortgage has provided “inconsistent” information about the amounts owed and that there have been “irregularities” in the documents provided to prove title to the note and mortgage. “This case does not present a close call, or reasonable competing interpretations of how particular an entry must be. Instead, this case is about CitiMortgage insisting that it has no obligation to be specific about how much money is owed on a legal judgment, prior to forcing execution on a family’s home,” they argue.

An amicus brief was filed by Terry Smith in support of the Roznowskis’ position.

Copies of the amicus briefs and all other filings in the case can be accessed by going to the following link: http://www.supremecourt.ohio.gov/Clerk/ecms/searchbycasenumber.asp and entering the case number, 2012-2110, in the search box.

Representing CitiMortgage: David Wallace, 614.365.4100

Representing James A. Roznowski: Peter Traska, 216.282.4738

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When a Client Does Not Pay for Construction Services, What Contract Language Is Required to Allow a Contractor to Deny Payment to a Subcontractor on the Project?

A.E.M. Electric Services Corporation v. Transtar Electric, Case no. 2013-0148
Sixth District Court of Appeals (Lucas County)

ISSUE: Does the language in a subcontract agreement include an unambiguous “pay-if-paid” provision requiring that a contractor does not have to pay its subcontractor if the owner does not pay the contractor for services?

A.E.M. Electric Services Corp. was hired as the general contractor for the construction of a swimming pool at a Holiday Inn in Maumee. A.E.M. entered into a subcontract agreement with Transtar Electric for electrical work on that job. The contract between A.E.M. and Transtar stated: “RECEIPT OF PAYMENT BY CONTRACTOR FROM OWNER FOR WORK PERFORMED BY SUBCONTTRACTOR IS A CONDITION PRECEDENT TO PAYMENT BY CONTRACTOR TO SUBCONTRACTOR FOR THAT WORK.”

Transtar invoiced A.E.M. for $186,709, and A.E.M. paid Transtar $142,620.10. The remaining $44,088.90 was not paid. In September 2010, Transtar sued A.E.M. for the unpaid amount on the contract. The trial court granted A.E.M.’s motion for summary judgment, and the Transtar appealed to the Sixth District Court of Appeals.

In its decision, the appellate court explained that “pay-if-paid” provisions, common in construction contracts for decades, change how the risk of owner default on payment is distributed between a contractor and a subcontractor. Such provisions contractually make the contractor’s compensation to the subcontractor contingent on the owner’s payment to the contractor. “Pay-when-paid” provisions, however, create an “unconditional obligation to pay within a reasonable amount of time.”

The court noted that Ohio’s appeals courts, and many other courts, have generally followed the 1962 Sixth U.S. Circuit Court of Appeals case Thos. A. Dyer Co. v. Bishop Internatl. Eng. Co. In that case, the court determined that, if a contract provision is to be construed as a pay-if paid clause, the language must clearly and unambiguously indicate that the intent of the parties was to shift the risk of payment from the general contractor to the subcontractor.

In this case, the Sixth District reversed the trial court’s decision, finding “no language sufficient to clearly and unambiguously indicate that the parties intended to transfer the ultimate risk of nonpayment to the subcontractor. Consequently, the clause at issue must be interpreted as a pay-when-paid provision.”

General contractor A.E.M. appealed to the Supreme Court.

Attorneys for A.E.M. argue that the clause in this subcontract is a “pay-if-paid” provision. The contractual language is unambiguous, they assert, and the intent of the parties is clearly defined. They note that the contract specifically indicates that payment to A.E.M. by the owner is a “condition precedent to payment” by A.E.M. to Transtar – a classic example of a “pay-if-paid” provision. A.E.M. had no obligation to make payment to Transtar until A.E.M. received payment from the owner, they conclude.

Transtar’s attorneys ask the court to affirm the Sixth District’s ruling that that such contract language “cannot operate automatically without review of the parties’ intent and the operative facts leading to non-payment.” They contend that the Sixth District advanced the law by holding that the use of “magic words” is not sufficient to prove the parties’ intent without showing actual proof.

If the true intent is to shift collection to Transtar, they assert, then A.E.M. must make a good-faith effort to help Transtar seek a remedy against the owner. If A.E.M. refuses to aid in seeking the outstanding balance, Transtar is left without a remedy, they contend, because Transtar cannot sue the owner.

An amicus curiae (friend of the court) brief supporting Transtar’s position has been submitted collectively by the American Subcontractors Association, the American Subcontractors Association of Ohio, and the Ohio/Michigan Chapter of the National Electrical Contractors Association.

Copies of the amicus briefs and all other filings in the case can be accessed by going to the following link: http://www.supremecourt.ohio.gov/Clerk/ecms/searchbycasenumber.asp and entering the case number, 2013-0148, in the search box.

Representing A.E.M. Electric Services Corp.: James Silk, 419.252.6210

Representing Transtar Electric: Luther Liggett, 614.229.4423

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Must Records in a Miami University Rape Flier Case Be Opened to the Public if They Were Unlawfully Sealed?

State ex rel. The Cincinnati Enquirer. v. Honorable Robert H. Lyons, Case nos. 2012-1924 and 2013-0300

ISSUE: Does a court’s unlawful sealing of a criminal conviction require the unsealing of that record and the record of the subsequent dismissal of the charges?

The Butler County prosecuting attorney pursued charges related to a flier promoting ways to get away with rape that was found in October 2012 posted in a men’s restroom in a Miami University dormitory. The Cincinnati Enquirer, which was covering the flier story, obtained a copy of a court order related to the case of one of the students charged in the case. That student is referred to as “John Doe.”

Judge Robert Lyons of the Butler County Area 1 Court, who heard the case, understood that Doe’s attorney and the prosecutor had agreed that the student would plead guilty to disorderly conduct and that the record of the conviction would then be sealed. Lyons accepted the agreement and issued an order that Doe had pled guilty and sealing the conviction record.

The Enquirer sought a writ of mandamus in the Ohio Supreme Court (the case being argued here) to force Judge Lyons to unseal the record. The newspaper argued in part that the judge’s order was unlawful because the section of law he cited, R.C. 2953.52, which governs the sealing of records when a defendant is found not guilty or when charges are dismissed, did not give him the authority to seal this conviction record. The judge admitted in filings with the Supreme Court in this case that he relied on the wrong statute to seal this conviction.

While the case was still pending here, the judge held a hearing on December 13, 2012, in which Doe was permitted to withdraw his guilty plea, under Ohio Criminal Rule 32.1 based on “manifest injustice.” Once Doe’s plea was withdrawn, the assistant prosecuting attorney informed the court that the disorderly conduct charge would no longer be pursued by the office. The same day, the judge held a hearing on Doe’s application to have his record of dismissal now sealed pursuant to R.C. 2953.52. The judge approved sealing the record.

Lyons then asked the Supreme Court to dismiss The Enquirer’s action because he said Doe’s withdrawal of his guilty plea and the subsequent sealing of the charge’s dismissal made the matter moot (one in which there is no longer an controversy). The court denied Lyon’s request and scheduled oral argument. The court also agreed to hear a related but separate request for a writ of mandamus and prohibition from The Enquirer. The court consolidated the cases for argument.

Lawyers for the newspaper ask the court to unseal the record of both Doe’s conviction and the later dismissal in the case. They argue that The Enquirer has a clear legal right to inspect the court records associated with Doe’s prosecution for disorderly conduct, which were improperly sealed, and Lyons has a duty to produce them.

The attorneys assert that the judge determined a manifest injustice took place because the lawyers making the plea agreement told him sealing the conviction record was part of the agreement. The Enquirer’s lawyers argue that a prosecutor and a defendant cannot decide to deprive the public of its right of access to a court record just as they cannot expect to hold a court to a particular sentence. Only a court can decide to seal a record, they say. And they contend that Doe cannot claim manifest injustice when the lawyers on both sides agree to seal a record, but the court does not order the sealing and the defendant is disappointed.

The newspaper’s attorneys also assert that Doe originally pled guilty to avoid publicity. However, they argue, that mistaken belief does not amount to a manifest injustice allowing him to withdraw his guilty plea after sentencing occurred.

Because the judge improperly sealed the first record of the conviction, they contend that the judge’s second order withdrawing the guilty plea and again sealing the record was void. They argue that the judge was not permitted by statute to hold the hearing to expunge Doe’s record right after the plea withdrawal. Instead, they assert, the judge was required to set a future date for the hearing. By not adhering to the statute’s requirements, Lyons prevented The Enquirer and other interested members of the public from observing the hearing that determined the record should again be sealed.

Attorneys for Judge Lyons counter that it would have been a manifest injustice to Doe to unseal the record of his conviction once the judge realized he had cited the incorrect statute in sealing the record. They argue unsealing the record would have violated the terms of the original plea agreement. While that agreement may have been faulty, they contend, Doe relied on that agreement in pleading guilty. If he could no longer rely on it and its terms could not be met, then not allowing him to withdraw his plea would clearly have been a manifest injustice, they state.

Lyons’ attorneys also assert that the case was between Doe and the prosecutor, and The Enquirer has no standing to interfere with these judicial and prosecutorial functions. The newspaper was not a party to the case, and Doe’s rights had to be considered, they argue.

Regarding the judge’s order to seal the record of the subsequent dismissal, they also contend that there is no requirement that the court hold that hearing at some future date so that the press can be notified. The claim that the court must schedule a later hearing date so that evidence and briefs can be submitted does not apply in this case, they argue. They note that Doe’s attorney was ready to proceed with the expungement hearing after the plea withdrawal, and the prosecutor had no objection. They assert that this case is still moot and ask the court to dismiss it.

In the second case, attorneys for the newspaper note that Judge Lyons stated in his deposition that he has used a template form, incorrectly citing R.C. 2953.52 as its statutory authority,  to seal the court records of many defendants who pleaded guilty to minor misdemeanors. The Enquirer requested copies of all expungement orders issued by the judge using this form. Lyons’ attorney denied the request.

The Enquirer asks the Supreme Court for a writ of mandamus compelling Lyons to produce all records sealed using this form for the last five years. It also seeks a writ of prohibition to prevent the judge from enforcing those incorrect orders, which is precluding public access to the documents.

Lyons’ attorneys assert that, under R.C. 149.43, the conviction records and the orders sealing them are not public records. Citing SER Cincinnati Enquirer v. Winkler (2004), they argue that once records are sealed pursuant to R.C. 2953.52, they are no longer public records even if they were unlawfully sealed. There was a statute allowing the judge to seal these records (R.C. 2953.32), so they contend that he had the authority to seal them even if the form cited the incorrect section of law. They add that the Rules of Superintendence also require the judge to restrict access to these records.

Representing The Cincinnati Enquirer: John Greiner, 513.629.2734

Representing Robert Lyons in Case No. 2012-1924: Danny Ferguson, 513.887.3943

Representing Robert Lyons in Case No. 2013-0300: George Jonson, 513.241.4722

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How Should Ohio’s RICO Law Be Treated Under the Allied Offenses Statute?

Arnaldo R. Miranda v. State of Ohio, Case no. 2012-1741
Tenth District Court of Appeals (Franklin County)

ISSUE: Are Ohio courts required to apply the standard announced in the Ohio Supreme Court case State v. Johnson (2010) when deciding whether the imposition of multiple convictions and sentences for engaging in a pattern of corrupt activity and one or more of its predicate felonies violates R.C. 2941.25 (the allied offenses statute) and a defendant’s rights under the double jeopardy clauses of the federal and state constitutions?

In December 2010, members of a drug task force conducted surveillance of several Columbus addresses to track down a person identified as a marijuana supplier. The task force stopped Arnaldo Miranda as he was leaving one of the addresses. The suitcases he and a woman were carrying at the time held nearly $1 million. After searching a van, two residences, and a warehouse, the task force seized a combined amount of almost 4,000 pounds of marijuana.

In January 2011, Miranda and several other men were arrested in connection with their involvement in the marijuana trafficking enterprise. After his arrest, Miranda told police he was the money person for the enterprise. Miranda was indicted on seven charges and pled guilty to engaging in a pattern of corrupt activity
(at a lesser second-degree felony level) and trafficking in marijuana (a second-degree felony).

Issuing a sentence of six years in prison on the corrupt activity charge and eight years on the trafficking charge, the trial court stated that the sentences were to be served consecutively.

Miranda appealed to the Tenth District Court of Appeals, arguing that the separate convictions and sentences for corrupt activity and trafficking violated the prohibition against double jeopardy. The Tenth District upheld Miranda’s convictions and sentences.

He appealed to the Supreme Court, which agreed to consider only the question of whether Ohio courts must apply the standard in State v. Johnson (2010) when determining whether the multiple convictions and sentences violate the statute governing “allied offenses” (R.C. 2941.25) and Miranda’s constitutional protections against double jeopardy. While double jeopardy is commonly understood to mean a prohibition against being tried more than once for the same crime, the protection also guards against multiple punishments for the same offense.

Attorneys for Miranda contend that the appeals court mistakenly relied on the Supreme Court’s opinion in State v. Schlosser (1997) instead of the court’s 2010 ruling in State v. Johnson (2010). In Schlosser, the court held that a trial court may impose “cumulative punishment” for a corrupt activity count and one or more of its predicate (related) felonies.

In their brief, Miranda’s attorneys ask the court to instead make Johnson the controlling standard for resolving the appropriateness of entering separate convictions and imposing cumulative punishment in all Ohio multiple-count prosecutions, including those brought under the Ohio corrupt activity law, or RICO statute. Quoting Johnson, they argue the court ruled that the sentencing judge should determine “‘whether it is possible to commit one offense and commit the other with the same conduct, not whether it is possible to commit one without committing the other’” and, if both crimes can be committed by the same conduct, the court must next determine whether the offenses were in fact committed by the same conduct. “If the answer to both questions is yes, the offenses are allied offenses of similar import and must be merged,” the Johnson court said.

Miranda’s attorneys then apply the Johnson standard to Miranda’s case: “As to the first prong of Johnson, it is possible to commit the offense of engaging in a pattern of corrupt activity and the predicate offense of trafficking in marijuana through the same conduct. As to the second prong, the indictment expressly incorporated the … trafficking in marijuana offense as a predicate offense of the RICO offense …. The structuring of the indictment in this manner establishes as a matter of law that both offenses were committed by the same conduct. In addition, the State’s statement of facts during Miranda’s guilty plea hearing confirmed the corrupt activity count was based entirely on the marijuana trafficking activity.”

Attorneys for the state argue that, because none of the opinions in Johnson resulted in four votes, no test emerges from that case for determining the issues here. Given the differing opinions in the majority in that case, they contend that when courts decide whether offenses are allied offenses of similar import, lower courts must be guided by legislative intent.

They argue that the trafficking count was not a predicate to the corrupt activity count in this case. Even if it were, they contend, the RICO statute clearly shows the General Assembly’s intent to allow multiple punishments for RICO and its predicate offenses. They assert that the purpose of Ohio’s RICO statute was to establish “new penal prohibitions” and “enhanced sanctions” for organized crime. For example, they note that a “prior conviction” may serve as a RICO predicate offense, and that aspect of the law further confirms the legislature’s intent that a RICO charge be punished separately from its predicate offenses. The General Assembly intended that punishment for corrupt activity be in addition to, not a substitute for, the sentence for the underlying offenses, they conclude.

Because the RICO statute allows multiple punishments, they argue that it is not necessary for the court to determine whether the allied offense statute (R.C. 2941.25) requires that corrupt activity offenses have to merge with their predicates. If the court decides to address this issue, however, the state’s attorneys ask the court to “clarify that trial courts must address whether the multiple offenses are committed by the same conduct is a separate inquiry from whether the offenses are allied offenses of similar import.” They assert that the statute’s plain text mandates trial courts to treat the two inquiries separately. Under any view of the statute, though, the RICO and trafficking counts would not merge, they contend.

An amicus curiae (friend of the court) brief supporting the state’s position has been submitted by Cuyahoga County Prosecutor’s Office.

Copies of the amicus briefs and all other filings in the case can be accessed by going to the following link: http://www.supremecourt.ohio.gov/Clerk/ecms/searchbycasenumber.asp and entering the case number, 2012-1741, in the search box.

Representing Arnaldo Miranda: David Rieser, 614.444.6556

Representing the State of Ohio: Seth Gilbert, 614.525.3555

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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.