In This Issue

• Ohio Courts Will Not Tolerate Fraud – Attorney Fees Are Recoverable
• Office Wagering Pools: Harmless Fun or Potential Liability?
• Ohio Supreme Court on Law Enforcement and Legislative Intent

Ohio Courts Will Not Tolerate Fraud – Attorney Fees Are Recoverable

By Rebecca Roderer Price

The general American rule is that attorney fees are only recoverable if there is a statute or a contract that allows them. What if a party to a lawsuit only has attorney fees as a result of the misconduct of another party, and has no other damages? Can these attorney fees be recovered? Ohio case law supports the notion that attorney fees can qualify as compensatory damages. The Ohio Supreme Court first addressed this concept in 1859.

In order for attorney fees to be considered as compensatory damages, the case must involve fraud, malice and/or insult. As an exception to the American Rule, attorney fees and punitive damages are generally available in cases involving fraud, malice, or insult, but only if the damaged party has suffered some compensatory damages. By allowing attorney fees to be compensatory damages, Ohio Courts permit punitive damages against parties committing fraud, even if the fraud did not result in any damages but attorney fees.

For example, in the case of Prokop v. Benefit Plans, Inc., an Ohio Court of Appeals dealt with a situation in which an insured brought an action against the insurer for "arbitrarily, fraudulently, and maliciously" refusing to pay a claim. The insured's damages were the attorney fees incurred in pursuing the claim with the insurer, and therefore the compensatory damages were in the amount of the attorney fees. Additionally, the insured received an additional two thousand five hundred dollars ($2,500), which represented punitive damages against the insurer.

More recently in 2002, the Franklin County Court of Appeals in Shanker v. Columbus Warehouse Ltd. Partnership held that "[l]egal fees may be recovered if the trier of fact determines that the fees are the legal consequence of the original wrongful act." (citations omitted). The Court in Prokop quoted with approval 30 Ohio Jurisprudence 3d 124, Damages, Sec. 113, 114:

It appears to be well settled that where the natural and proximate consequences of a tortious act of defendant has been to involve plaintiff in litigation with a third person, reasonable compensation for attorneys' fees incurred by plaintiff in such action may be recovered as damages against the author of the tortious act. …

Since such fees are a matter of actual expense, they cannot reasonably be allowed under the head of exemplary damages, so that they must necessarily be included as a part of the compensation.

In conclusion, in an effort to eliminate fraud, Ohio courts have adopted a position that is protective of the "victim" of fraud, and seeks to punish the party committing fraud. A party can recover legal fees as a result of fraud, even if the fees are the only damages. This concept also enables the jury and/or judge to assess punitive damages against a party committing fraud, even if the fraudulent acts did not result in any loss of money other than attorney fees.

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Office Wagering Pools: Harmless Fun or Potential Liability?

By Jennifer L. Mackanos

Autumn has arrived, and with it has come those seasonal pastimes so familiar to us all: apple picking, leaf raking, and…. office wagering pools. We all know how they work: typically, one or more certain employees take it upon themselves to draft a wagering pool sheet consisting of many squares. Across the top and down the left side of the sheet will be numbers, often representing scores at the end of quarters by specific football teams. Then, through word of mouth or sometimes via office email, employees are advised that they may participate in the pool by contributing a mere one dollar per square (or five dollars, or ten dollars, depending on the richness of the blood of the participants and how large a pool the organizers wish to generate). After the game, the pool of cash is distributed based upon the essentially random picks and luck of the participants.

The practice seems harmless enough – a brief respite from the work of the day, a way to build camaraderie, and a little added excitement when watching the designated game itself. But could Ohio's employers be exposing themselves to potential liability by allowing or condoning the practice? The answer is "possibly". Essentially, Ohio's gambling statutes are aimed at suppressing the business of gambling for profit. (footnote 1) Generally speaking, so long as none of the employees involved in organizing and administering the office wagering pool is taking any portion of the receipts as "juice", most employers will not be exposing themselves to criminal liability.

There is one caveat, however: public gaming is prohibited regardless of whether any profit is involved. Thus, if the employer in question happens to be operating a hotel, restaurant, tavern, store, arena, hall or any other place of public accommodation, business, amusement or resort, he or she must be more vigilant when it comes to prohibiting gaming activities. This is because it is illegal for anyone to make a bet or play any game of chance in any of these public places. (footnote 2)

Moreover, if such an employer "recklessly permits" its premises to be used in such a manner, the employer has violated the law and can be subject to criminal liability. Thus, no employer who operates such an establishment should allow its employees or its guests to engage in any type of gambling, including engaging in wagering pools. If such an employer does become aware of such activity, he or she should immediately take steps to stop it, and should fully document its efforts in doing so.

1  See R.C. 2915.02.
2  See R.C. 2915.04.

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Ohio Supreme Court on Law Enforcement and Legislative Intent

By Stuart W. Harris

"Prompt and efficient investigation of crime and possible crime is the strongest known deterrent to the commission of other offenses and is in the clear public interest." (footnote 1) Recently, the Ohio Supreme Court underscored the importance of this proposition in Colbert v. Cleveland (footnote 2), in which the Court revisited Ohio's liability exemption for cities for law enforcement officers involved in an accident while answering a call to duty. In reaching this resolution, the Court also provided an illustration of how to invoke statutory interpretation principles in order to discern the legislative intent of the Ohio General Assembly.

The Court considered the following facts—"[w]hile on patrol in the early morning hours…[two law enforcement officers] observed two white males in a car make an apparent exchange for money with another male on foot in a … high-drug, high-crime area." Because the "officers believed that they had just witnessed a drug deal…the officers started out in their patrol car, intending to pursue the suspects' car on a parallel route, but they did not activate their emergency lights or siren or call for backup." Approaching an intersection, the police officers "stopped the vehicle and looked both ways," but "the patrol car was struck broadside" by another motorist's vehicle—the plaintiff in this action.

The issue is whether the City of Cleveland is immune from tort liability based on R.C. Section 2744. Specifically, the citizen-motorist sued the city, arguing that the immunity statute did not apply in his case because the officers who injured him were not responding to an emergency call as that term is defined in the law.

Both the trial court and the Court of Appeals held that the City of Cleveland was immune from tort liability and damages based on the statutory language immunizing safety personnel against liability when they are responding to an emergency call.

Ohio law holds that all political subdivisions in Ohio are provided immunity from civil liability "for injury, death, or loss to persons or property allegedly caused by any act or omission of the political subdivision or an employee of the political subdivision in connection with a governmental or proprietary function." R.C. 2744.02(B)(1) provides an exception to that immunity "for injury, death, or loss to persons or property caused by the negligent operation of any motor vehicle by their employees upon the public roads, highways, or streets when the employees are engaged within the scope of their employment and authority." Here, R.C. 2744.02(B)(1)(a) provides an exception to the exception when the driver is a police officer operating a motor vehicle "while responding to an emergency call and the operation of the vehicle did not constitute willful or wanton misconduct." "Emergency call" is defined in R.C. 2744.01(A) as meaning "a call to duty including, but not limited to, communications from citizens, police dispatches, and personal observations by peace officers of inherently dangerous situations that demand an immediate response on the part of a peace officer."

The Court, speaking through Justice Stratton, explained that "a call to duty involves a situation to which a response by a peace officer is required by the officer's professional obligation." The Court focused on the term call to duty followed by the phrase "including, but not limited to, communications from citizens, police dispatches and personal observations by peace officers of inherently dangerous situations that demand an immediate response on the part of a peace officer." In reviewing the statute, Justice Stratton indicated that the three examples are non-exhaustive and "only the third example … refers to a dangerous situation, thereby, indicating that the other listed examples need not involve an inherently dangerous situation." Therefore, the Court found that the General Assembly did not intend to limit a call to duty to only inherently dangerous situations such as emergency calls.

In a dissenting opinion, Justice Pfeifer diverged from the majority opinion based on the statutory definition of emergency call. While agreeing that the reference to inherently dangerous situations is non-exhaustive, Justice Pfeifer indicated that the General Assembly "was attempting to distinguish emergency calls to duty from ordinary calls to duty." Therefore, according to Justice Pfeifer, the majority opinion "renders this significant limitation meaningless," and "[because the]… officers were [not] on an emergency call…—the city of Cleveland is [not] entitled to immunity from liability."

In interpreting legislative intent, certain canons of construction are important. Expressio unius exclusio alterius est or just Expressio means "the mention of one thing implies the exclusion of other things." A "general clause" followed by a list of specific examples is the set-up for Expressio. Ejusdem generis means "of the same kind" and arises where there is a list of specific items followed by a general clause. Essentially, the opposite of Expressio. In following a narrow construction cannon, Justice Pfeifer held that the general meaning of the statute is limited by the characteristics of the specified items. Here, however, the language that counteracts this canon is "including, but not limited to." This language clears up any statutory construction problems. Accordingly, the majority of the Court captured the intent of the General Assembly for purposes of this vital law enforcement statute.

The words of the Ohio Supreme Court capture the sentiments of the U.S. Supreme Court. In County of Sacramento v. Lewis (footnote 3), the U.S. Supreme Court explained: "the police on an occasion calling for fast action have obligations that tend to tug against each other. Their duty is to restore and maintain lawful order, while not exacerbating disorder more than necessary to do their jobs. They are supposed to act decisively and to show restraint at the same moment and their decisions have to be made in haste, under pressure, and frequently without the luxury of a second chance."

1  Moore v. City of Columbus (1994), 98 Ohio App.3d 701, 649 N.E.2d 850.
2  Colbert v. City of Cleveland (2003), 790 N.E.2d 781.
3  County of Sacramento v. Lewis, 118 S.Ct. 1708 (1998).

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