October 2001 |
||||
In This Issue
Kegler Brown Attorneys in the NewsKegler Brown attorneys represented the victim in a civil action against Daniel Wiant, the perpetrator of a notorious embezzlement case. Kegler Brown obtained a judgment against Wiant for $1.5 million, including $500,000 for punitive damages. Steve Chappelear was named president of the Metropolitan Bar Caucus, representing over 350,000 attorneys in 82 cities. Rob Cohen will speak at a seminar for lawyers on "Understanding Antitrust Laws and How to Analyze and Apply Them." Nicole Flynn, a recent graduate of The Ohio State University College of Law, has joined Kegler Brown as an associate. John Lowe was recognized for his efforts in training high school students for a mock trial as a part of the Columbus Bar Association's Student Leadership Intern Program. Larry McClatchey was quoted in newspaper articles in "Business First" and in the "Zanesville Times Recorder" about bankruptcy reform efforts. Tony White was selected as one of "Business First's" "40 Under 40" which honors 40 outstanding Columbus business people who are under 40 years of age, and was saluted at a luncheon on September 19. Turning Judgments Into DollarsBy Stephen D. Estelle Unfortunately, a judgment does not equal payment. And sometimes when the defendant — now a judgment debtor — is intent upon leaving the judgment unsatisfied, collection could mean another difficult legal effort. The law provides many tools, however, that an attorney can use to collect a judgment. The first and most effective tool is not written in the law at all: simply have the judgment debtor hand over the monies owed voluntarily. The courtesy will generally occur where there has been some agreement reached between the plaintiff and the defendant — the defendant has confessed judgment perhaps in exchange for a reduction in the amount owed. The defendant's incentive for paying voluntarily is usually the threat of an increase in the amount he or she will owe in the event payment is not made or, in the case of installment payments, payments become delinquent. In addition to the motivation provided by the threat of unsavory consequences, the defendant is also more likely to pay as statistics show that persons are much more willing to comply with terms to which they have agreed and in which they have played some meaningful part in negotiating. In the absence of an agreement with the defendant the law provides other tools counsel may use to force payment. Wage garnishments are an effective means of securing payment in the case where the judgment debtor is a person. New garnishment laws in Ohio have made wage garnishments easier and less expensive to pursue. Wage garnishments have the benefit of ensuring a consistent flow of money as long as the defendant maintains employment with the same company. Assuming the defendant's employment is not terminated, the wage garnishment will last six months. Wage garnishments are unlikely to satisfy a judgment quickly, however, as only 25% of the defendant's gross income may be taken per paycheck. In addition, wage garnishments obviously become more difficult if you do not have current employment information. Also, certain wages, such as social security, cannot be garnished. Bank garnishments are another tool used by lawyers to collect judgments. Bank garnishments require knowledge of where the judgment debtor maintains his, her, or its accounts. Bank garnishments, unlike wages garnishments, are not continuing and will hopefully bring in a large sum of money in one effort. Garnishing a bank account twice is unlikely to be successful the second time around because the judgment debtor usually figures out that once placed in the account the money is vulnerable. When garnishments fail, counsel can resort to a creditor's bill, which is most often used in the case where a third party owes money to the judgment debtor. For example, a judgment debtor might have a pending lawsuit against a third party. Counsel can have the court order that any proceeds from the lawsuit that are payable to the judgment debtor be paid instead to the client. Another common creditor's bill situation is where the judgment debtor is an independent contractor and is owed money for work performed. A creditor's bill can also be used in situations where the judgment debtor is using the corporate form to hide assets. For example, a judgment debtor might be a parent company that incurs all liabilities, and has its two subsidiaries hold all of the assets. A creditor's bill can be filed requesting the court to disregard the corporate entity and have the stock of the two subsidiaries delivered to the client for sale at public auction. Counsel can also file a certificate of judgment if the judgment debtor owns real property. The filing of a certificate of judgment will provide the creditor with a lien upon the judgment debtor's real property. This lien will run with the land until the debt is satisfied and is not dischargeable in a bankruptcy. Counsel can also resort to attachment of personal property, such as equipment or inventory. In this situation, counsel requests the court to order the sheriff of the county in which the property sits to take possession of the property and deliver it to the client. Counsel will then have the property sold. Before taking this action, however, counsel will obviously want to check to see if any other creditors hold a superior lien upon the property. The above tools all require knowledge of some sort — knowledge of the debtor's employment, where the defendant keeps his or her bank accounts, and who if anyone owes them money. Often, obtaining this information is not easy. One way to obtain this information is via a motion for debtor's examination filed with the court. In this situation, the debtor is compelled to answer questions under oath relating to his or her assets, employment, etc. If the judgment debtor fails to attend the debtor's exam, in certain situations counsel can request that the court issue a warrant for the defendant's arrest. Upon arrest counsel will be given the opportunity to depose the defendant. This is an extreme measure and should be used only as a last resort as other means of obtaining information exist. There are various web-sites that provide information about people and companies and their assets. For example, www.pac-info.com provides links to web-sites regarding corporate status, ownership of real property, and license verification. Some web-sites require the user to become a paying member, such as www.merlindata.com. Credit reports provide information useful to profile a judgment debtor. This information is useful to determine whether an effort to collect the judgment should even be made. A credit report will show employment history, age, projection as to when one can expect to be paid, and a debt to income ratio. It will also show you the other debts of the judgment debtor, and with that information one can determine how difficult collection will be. For example, a judgment debtor with a multitude of medical debts is usually not a good candidate for collection. Neither are students. Relatives, neighbors, and especially ex-spouses are good sources of information. The foregoing was but a brief description of the tools an attorney can use to collect a judgment. Often, these means prove difficult to use due to a lack of information or a crafty defendant. By using these tools, however, a creative, diligent, and resourceful attorney can turn a judgment into money. Deposition Testimony 101By Stephen E. Chappelear Not long ago, two guys named Bill demonstrated the wrong way for a witness to behave during a deposition. Bill Gates testified in the antitrust case filed by the government against Microsoft. The founder and architect of the company's aggressive strategy appeared at various times to be coy, combative, evasive and forgetful. The press described Gates in unflattering terms: "argumentative", "petulant", "pedantic", "forgetful", "uninformed", "surly", "edgy", "combative", "sinister", "belligerent", "double-tongued", "scowling", "appalling", "awful", "squirming", "evasive", "testy", "dour", "obtuse", "dense", "disconnected", "passive". The government's attorney used Gates' deposition demeanor to great advantage during the trial, showing portions of the videotape as often as possible. Bill Clinton testified in the Paula Jones sexual harassment claim, and quibbled over the meaning of the word "is". He then faced perjury charges and was pilloried in the press. A billionaire and the leader of the free world both testified in depositions, and both made grave blunders. What went wrong? The critical importance of deposition testimony cannot be underestimated. It can make or break a case. At a minimum, it gives the opponent an opportunity to secure valuable admissions, to trap the unwary, and to evaluate the potential effectiveness of the witness with a judge or jury. Adequate preparation for deposition testimony is very important. The deposition should be scheduled when you are as free from distractions as possible. You will want to study key documents ahead of time that your attorney anticipates you will see as deposition exhibits. Your attorney will review with you the key issues in the case and the expected lines of inquiry. The time you will want to spend thinking about facts from two or three years earlier should be spent ahead of the deposition, not while a question is pending and the court reporter sits with her fingers poised over the stenotype machine and the opposing attorney patiently waits for your answer. During your deposition preparation session, you will learn how to recognize and deal with unclear, tricky or compound questions, and how to assure that you give accurate, truthful testimony. A deposition is unlike any other situation in business life, and requires appropriate time and attention. Proper attention to Deposition Testimony 101 will give you and your company an "A" in trial preparation. Litigate or Arbitrate: Which to Choose?By Michael F. Copley Ask most company executives whether they would rather litigate or arbitrate and they will invariably say "neither." They know that these methods of dispute resolution require investments of both time and money. Moreover, neither method guarantees a favorable result. Yet, when faced with the option of forfeiting amounts in dispute, most will add, "but which do you recommend?" Is there an arbitration clause?The first factor to consider in making this decision is whether there is even a choice. Some contracts specifically address the parties' intent to litigate or arbitrate their disputes. Give careful attention to that clause before signing the contract or you may be stuck with a method that is not favorable to you. For example, a construction project owner, such as a school district, would almost always prefer going to court rather than face an arbitration panel. To the contrary, contractors prefer arbitration. Why? The answer is simple. In court, the "decision makers" consist of jury members that will likely be taxpayers. They may view the contractors to be "experts" who hold advantage over the owner who merely wants what is best for the taxpayers. In arbitration, the decision makers are experienced architects, engineers, contractors and construction attorneys, all of whom will focus upon whether fault for the overrun can be properly apportioned amongst the parties. Is the clause fair?Courts favor arbitration because it reduces crowded court dockets. Therefore, courts will not let a party pursue a lawsuit if it signed an arbitration clause, except in limited circumstances. Those limited circumstances require the party seeking to have the clause thrown out to prove that its terms are "unconscionable." Examples of arbitration clauses that have been held to be unconscionable in Ohio include clauses that pick an association to arbitrate the dispute when that association has no arbitration rules published as of the date of the claim. Another example made it difficult for a consumer to obtain a hearing during the arbitration process. One way to eliminate this problem is to adopt the arbitration selection process and rules of the American Arbitration Association ("AAA"). Therefore, one must be careful in determining by whom they want to be judged before signing a litigation or arbitration clause. Moreover, if the clause selects arbitration, it is a good idea to ensure that the rules for arbitration are published and are fair. Cost advantagesArbitration and litigation have potential cost advantages depending upon your circumstances. To file a $100,000 lawsuit will cost approximately $250 in fees and attorneys' fees will typically range from $500 to $3,000 depending upon the complexity and volume of the issues and the number of parties involved. The initial cost of filing an arbitration demand on a $100,000 case with the American Arbitration Association ("AAA") is $1,250 and the attorneys' fees should be considerably less than filing suit. AAA posts its rules and fees on line at www.adr.com. It also posts the forms necessary to file for arbitration. Arbitrators will generally bill between $100 to $300 per hour to resolve the case. Having the case tried in court only costs about $12.00 per juror per day. So, you pay to arbitrate while you rely upon your tax dollars to fund the court system. The savings should be in attorneys fees. Arbitrators will understand complex factual issues by having them presented in a summary format. It takes longer to explain a complex case to a jury. Therefore, although the filing fees are not as high as they are in arbitration, the savings should be appreciated in attorneys fees. Time advantagesOne can generally expect an arbitration to take less time than the Court process. A case in Franklin County will take a year to reach its first scheduled trial date. When that date arrives, it is not unusual for the Court's criminal docket to take precedence over a civil case. The likely result is that most civil cases will not be tried within the first year of being filed. When the arbitration demand is filed with the AAA, a hearing can be scheduled to begin in about six to nine months depending upon the participants' expected level of preparation and availability. Arbitration generally allows for limited discovery and motions. There are several articles posted on the AAA website at www.aaa.org that explain the rules for filing discovery and motions. Both are widely availableArbitration is available and may make sense in almost every type of industry and dispute. AAA publishes guides for resolving financial planning disputes, general business disputes, employment, disputes with accountants, insurance claims, and commercial finance disputes. Do you want a jury verdict?When the allegations are particularly egregious, such as fraud or civil conspiracy, litigation may hold an advantage over arbitration. The advantage is that jurors are probably less forgiving to the offender than an arbitrator. Arbitrators do have "jurisdiction" to consider such claims and their decisions will be final. Arbitrators are generally schooled to resolve disputes, not to punish the offending party. Jurors have shown over the years that they may be willing to punish intentional conduct. Facing a jury, a fraudulent party may well settle faster than it would if proceeding in an arbitration. The "hearing"The formality of court rooms, judges, juries and cross-examination can be imposing to a busy company trying to turn a profit. Arbitration is far less formal. It is a business setting. Most good judges try to conduct their courtrooms to reflect that same dignified business atmosphere, but the courts are required to comply with rules of evidence and rules of procedure. If the court allows a party to violate those rules over the objection of the other party, the trial may have to be repeated after the issue is appealed. In an arbitration, you place your full faith in the arbitrators because it is highly unlikely that any appeal will be successful. AppealsWhen a case is arbitrated, it is a common practice to waive having a court reporter to transcribe the proceedings. The risk in doing so is that there is no basis to appeal based upon any testimony offered at the arbitration. Yet, the courts defer to the arbitrator or panel's assessment of credibility of the witnesses. Unless the testimony is totally uncontested, it is not likely that a transcript will help on appeal. Ohio Revised Code § 2711.10 requires the following to be established on appeal before a court can vacate an arbitration award:
These standards on appeal mean that you will get one bite of the apple. Although the narrow review on appeal is a disadvantage that arbitration holds to litigation, it can be a tremendous cost savings. It generally discourages appeals of arbitration awards and focuses those few who do appeal on issues other than the rules of evidence and procedure. Don't Hide the BallAdhering to the Rules Will Help You Avoid Costly ErrorsBy Kim H. Finley Proverbial "smoking gun" documents or missing key witnesses have long been an integral plot device of novelists and screenwriters. In fiction, a case is won or lost by their last-minute discovery. Truth is, few documents or witnesses in a lawsuit become either the cornerstone of victory or the linchpin of defeat. But when faced with discovery requests, parties are often naturally concerned about why the items or witnesses are sought, how the information will be used, and how they should respond. Business representatives need to understand the importance of complying with discovery requests. While it may be tempting to play "hide the ball" with the opposing party, doing so can be a costly error. The rules of civil procedure grant parties broad discretion in the discovery of documents and witnesses. Ohio Civ. R. 26 (B) (1) allows parties to obtain discovery of any matter not privileged or otherwise exempted by the rules as long as it is relevant to the subject matter. The rule even allows for discovery of evidence that may be inadmissible at trial as long as the "information sought appears reasonably calculated to lead to the discovery of admissible evidence." Under the rules of civil procedure, courts can sanction parties in a number of ways for discovery abuses. Besides contempt charges and hefty fines, one of the worst sanctions is having the court bar presentation of a defense as a result of failure to comply with discovery. For example, a Texas state court jury recently awarded a family more than $312 million in Fuqua v. Horizon/CMS Healthcare Corp., a case involving nursing home neglect. The court barred the defendant corporation from presenting its case to the jury as a discovery sanction for repeatedly failing to turn over records to the plaintiffs. Another notable example of what judges have called a "corporate policy of hiding the ball," comes from retailing behemoth Wal-Mart. A February 2001 Texas federal district court decision, Wilson v. Wal-Mart Stores, Inc., recited a long list of cases where Wal-Mart was sanctioned for repeated discovery abuses. The court wrote, "As the seemly coup de gras to this appalling list of arrogance, a Texas State District Court entered a default judgment against Wal-Mart and fined it $18 million dollars because Wal-Mart withheld relevant evidence in a personal injury case. Meissner v. Wal-Mart Stores, Inc., A-159,432 (Tex. Dist. Ct. — Jefferson County 1999)." In Meissner, the judge struck Wal-Mart's answer thereby precluding a defense. By following the civil rules and the advice of counsel, businesses can respond to discovery requests appropriately and avoid the consequences of "hiding the ball." DISCOVERY DOs and DON'Ts
Directory of Trial LawyersYou can contact our trial lawyers via the Litigation Practice Team web page.
|
||||
|
|
|
Member firms of the State Capital Group practice independently and not in a relationship for the joint practice of law. |
© 2008, Kegler, Brown, Hill & Ritter Co., LPA.