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Wednesday, June 4, 2008
Genevieve DiCenzo, etc. v. A-Best Products Company, Inc., et al., Case no. 2007-1628
8th District Court of Appeals (Cuyahoga County)
State of Ohio v. Kirk Sessler, Case nos. 2007-2030 and 2007-2426
3rd District Court of Appeals (Crawford County)
Kimberly Dombroski v. WellPoint, Inc., et al., Case no. 2007-2162
7th District Court of Appeals (Belmont County)
State of Ohio v. Donald K. Malone, III, Case no. 2007-2186
3rd District Court of Appeals (Marion County)
Akron Bar Association v. Jeffrey A. Catanzarite, Case no. 2008-0423
Summit County
Does ’77 Court Decision Extending Products Liability to Non-Manufacturers Apply to Pre-1977 Sales?
Genevieve DiCenzo, etc. v. A-Best Products Company, Inc., et al., Case no. 2007-1628
8th District Court of Appeals (Cuyahoga County)
ISSUE: May a rule of law established in a 1977 Supreme Court of Ohio decision be applied retroactively to impose strict liability for damages caused by a defective product on non-manufacturer sellers or distributors of an unsafe product for sales that were completed prior to the Court’s 1977 ruling?
BACKGROUND: In a 1977 decision, Temple v. Wean United, Inc., the Supreme Court of Ohio formally adopted a rule of law set forth in Section 402(A) of the Restatement of Torts 2d (1965) holding that not only manufacturers of a defective product but also sellers and distributors of that product in the stream of commerce may be held strictly liable for damages to consumers caused by product defects. In this case, the Court is asked to rule on whether its holding in Temple should or should not be imposed retroactively to find strict liability on the part of a company that sold asbestos-containing pipe covering material to an Ohio steel plant in the 1950s for asbestos-related illness suffered by a longtime worker at that plant.
Joseph DiCenzo was employed by Wheeling-Pittsburgh Steel Co. at its plant in Yorkville, OH, from 1952 to 1993. During that time he developed asbestos-related health problems that contributed to his death. His wife, Genevieve DiCenzo, filed a product liability lawsuit in the Cuyahoga County Court of Common Pleas seeking recovery for her husband’s injuries and death. In addition to the manufacturer of the asbestos-containing material, Owens-Corning Fiberglas Co., she named more than 80 other defendants including George V. Hamilton, Inc. of McKees Rocks, PA, a company that sold asbestos-containing pipe coverings to Wheeling-Pittsburgh Steel during the 1950s and installed that material on pipes at the Yorkville plant.
Hamilton filed a motion for summary judgment dismissing Mrs. DiCenzo’s strict liability claim against it on the basis that, at the time Hamilton sold and installed the pipe coverings, Ohio law imposed liability for injuries caused by a defective product only against the manufacturer under a theory of implied warranty, and did not recognize claims by consumers against a non-manufacturer seller or distributor of the product. The trial court granted summary judgment in favor of Hamilton. On review, however, the 8th District Court of Appeals reversed and remanded the case for further proceedings. In its decision, the court of appeals cited the Supreme Court’s 1977 holding in Temple that an injured consumer could assert claims against non-manufacturer sellers of a defective product under a theory of strict liability. The 8th District applied a three-part test for the retroactive application of court decisions set forth in the U.S. Supreme Court’s opinion in Chevron Oil v. Huson (1971), and held that under the Chevron test, Temple should be applied retroactively to allow Mrs. DiCenzo to pursue recovery from Hamilton.
Hamilton sought and was granted Supreme Court review of the 8th District’s ruling regarding retroactive application of the Temple decision to Mrs. DiCenzo’s claim.
Attorneys for Hamilton contend that the 8th District misapplied the three-part test from Chevron for determining when a rule of law established in a court decision should be applied only prospectively and not retroactively. They argue that the Supreme Court of Ohio’s ruling in Temple met all three of the Chevron criteria for barring retroactive application because: 1) Temple was a case of first impression not clearly foreshadowed by prior court decisions, which they say had until that time imposed liability for defective products only on manufacturers; 2) retroactive application of Temple would have retarded the operation of the products liability statute if applied to pre-1977 actions by non-manufacturer sellers; and 3) significant hardship and injustice would result from the retroactive application of Temple to companies like Hamilton, which had no legal burden or expectation of civil liability at the time they sold a presumably safe product, but would later be exposed to large unanticipated financial burdens based on the judicial adoption of a new legal theory of liability or cause of action decades after the company sold the offending product.
Attorneys for Mrs. DiCenzo argue that the language of the Temple decision does not limit its application to future cases, and that normal common law practice requires courts to apply a new decision to cases that are not fully resolved prior to the date of that decision. They assert that the Court’s holding in Temple did not create a new cause of action for products liability, but merely allowed claims for an existing cause of action to be asserted against sellers as well as manufacturers. They also argue that the public policy of the state supports requiring not only manufacturers but also those who supply and sell defective products to consumers to bear legal responsibility for injuries caused by those products.
Contacts
Ruth A. Antinone, 412.366.3333, for George V. Hamilton, Inc.
Joseph J. Cirilano, 412.471.3980, for Genevieve DiCenzo and the estate of Joseph DiCenzo.
Must Jury Form Include Specific Finding Supporting Conviction for More Serious Form of Offense?
State of Ohio v. Kirk Sessler, Case nos. 2007-2030 and 2007-2426
3rd District Court of Appeals (Crawford County)
ISSUE: When a defendant is charged under a criminal statute that sets forth a more serious and less serious form of an offense in different subsections, and both the indictment and jury instructions at trial specified that the defendant was charged with the more serious form of the offense on the basis that he used “force or an unlawful threat of harm,” does the fact that the verdict form on which the jury returned a guilty verdict did not include a specific mention of “force or unlawful threat of harm” or list the specific subsection of the statute defining the more serious form of the crime require that the defendant be convicted and sentenced only for the least serious form of that offense?
BACKGROUND: In 2007, the Supreme Court of Ohio held in State v. Pelfrey that because the verdict form signed by jurors in a criminal case involving falsification of documents did not include a specific finding that the defendant had falsified “government” documents, the trial court erred in imposing a more severe sentence applicable to offenses that involve government documents, and must resentence the defendant for the lowest level of the falsification offense that was supported by the jury’s guilty verdict.
In this case, Kirk Sessler of Crawford County was indicted and convicted in a jury trial on two counts of intimidating a victim or witness in a criminal case. The state law defining and prohibiting witness intimidation, R.C. 2921.04, includes separate subsections defining two different versions of the offense. Subsection (A) of the statute, which is punishable as a first degree misdemeanor, prohibits attempting to “intimidate or hinder” a crime victim from filing or prosecuting criminal charges. Subsection (B), which is punishable as a third-degree felony, prohibits attempts to influence, intimidate or hinder a victim, witness or attorney in a criminal case “by force or by unlawful threat of harm.”
Both the indictment filed in the Crawford County Court of Common Pleas and the judge’s instructions to jurors at trial identified the charged offenses as felony violations of R.C. 2921.04(B), and included reference to the “use of force or unlawful threat of harm” as an element that the state must prove to secure a conviction. The jury returned guilty verdicts on both counts, on a preprinted form provided by the court, which stated that the jurors found the defendant “guilty of the offense of intimidation in manner and form as he stands charged in the indictment.” Applying the statutory sentencing guidelines applicable to third degree felonies, the trial court sentenced Sessler to five years imprisonment on each count, with the terms to be served consecutively.
Sessler appealed his convictions and sentence to the 3rd District Court of Appeals. Among other claims of error, Sessler argued that because the verdict form returned by the jury did not include a reference to R.C. 2921.04(B) or state a specific finding that he had used “force or unlawful threat of harm,” the trial court was required under the Supreme Court’s ruling in Pelfrey to find him guilty only of the misdemeanor form of intimidation and sentence him under misdemeanor sentencing guidelines. The 3rd District agreed that the facts of the case fell within the requirements of Pelfrey and remanded the case to the trial court for resentencing. The state sought and was granted Supreme Court review of the 3rd District’s ruling.
The Crawford County prosecutor’s office, representing the state, argues that the 3rd District was wrong to apply the Pelfrey decision to Sessler’s case. They assert that the falsification law at issue in Pelfrey is a “general charging statute” that outlines a single prohibited form of conduct and then enhances the penalty based on the degree or extent of the conduct. As an example, they cite the state law that defines the general offense of theft, and assigns successively harsher penalties on offenders depending on the amount of money or property a particular defendant is found to have stolen. They contrast the falsification law with R.C. 2921.04, which they say is a “specific charging statute” that defines non-violent intimidation as one offense and intimidation involving force or threat of harm as a different offense with different statutory elements.
They urge the Court to hold that Pelfrey is applicable only to cases involving general charging statutes in which a jury finds the general elements of a charged crime have been proven, but fails to make a necessary finding regarding the extent of the offense, which properly limits the trial court to sentencing the offender for the lowest level of the charged crime. They argue that Pelfrey should not be applied in cases like this one, involving specific charging statutes, because both the indictment and jury instructions made it clear that the jury could only enter a guilty verdict if it found that the specific element of force or threat of harm had been proved. Thus, they say, the felony sentence imposed by the trial court in Sessler’s case was fully supported by the guilty verdict returned by the jury, without the need for any additional findings.
Attorneys for Sessler respond that nothing in Pelfrey limits the Supreme Court’s ruling regarding jury verdict forms to one or another type of criminal offense. Just as the defective jury form in Pelfrey barred an enhanced sentence because it failed to show a finding that “government” forms were falsified, they argue, the defective jury form in this case requires that Sessler be sentenced only for the lowest level of intimidation because the verdict failed either to indicate that the jury found violations of the felony section of the statute or to include a specific finding that the defendant used force or threats.
Contacts
Clifford J. Murphy, 419.468.7766, for the state and Crawford County prosecutor’s office.
John L. Spiegel, 419.562.6624, for Kirk Sessler.
When May Tort Plaintiff ‘Pierce Corporate Veil’ to Pursue Recovery from a ‘Parent’ Corporation?
Kimberly Dombroski v. WellPoint, Inc., et al., Case no. 2007-2162
7th District Court of Appeals (Belmont County)
ISSUE: In order to have standing to sue a “parent” company with whom a plaintiff has no direct contractual relationship for a breach of contract by a subsidiary corporation controlled by the parent, must a plaintiff prove that the parent used its control over the subsidiary to “commit fraud or an illegal act,” or is the requirement for piercing the corporate veil also met by proof that the parent company used its control over the subsidiary to commit “unjust or inequitable acts” that did not rise to the level of fraud or an illegal act?
BACKGROUND: Under the law of Ohio and other states, a business entity that is organized as a corporation is regarded as a separate legal “person” that is responsible for its own financial obligations and actions, with the result that the owners (individual stockholders or a “parent” company) of a corporation have very limited liability for the corporation’s debts, including court judgments entered against it. In a 1993 decision, Belvedere Condo. Unit Owners’ Assn. v. R.E. Roark Cos. Inc., the Supreme Court of Ohio established a three-pronged test that a civil plaintiff must meet in order to “pierce the corporate veil,” (i.e., pursue a claim for damages that bypasses the separate legal identity of a corporation and seeks recovery for corporate actions directly from the company’s individual owners or parent company).
The Belvedere decision held that: “The corporate form may be disregarded and individual shareholders held liable for corporate misdeeds when (1) control over the corporation by those to be held liable was so complete that the corporation had no separate mind, will or existence of its own, (2) control over the corporation by those to be held liable was exercised in such a manner as to commit fraud or an illegal act against the person seeking to disregard the corporate entity, and (3) injury or unjust loss resulted to the plaintiff from such control and wrong.”
In this case, Kimberly Dombroski was covered by a health insurance policy issued by Community Insurance Company (CIC), which used a separate company, Anthem UM Services Inc. (AUMSI), to administer its policies and process claims. Coverages under Dombroski’s CIC policy were defined and limited by policies set by another company, Anthem Insurance Companies, Inc (AICI). All of the stock of CIC, AUMSI and AICI was owned either directly or indirectly by the same “parent” company: WellPoint, Inc.
In 2000 Dombroski was diagnosed with a profound hearing loss in both ears. In 2005, after she had received a cochlear inmplant in her left side, Dombroski’s treating physician certified that it was medically necessary and appropriate for her to be implanted with a similar device on the right side as well. When Dombroski sought approval from AUMSI to initiate that procedure, she was informed that her claim was not covered because a medical policy established by AICI classified bilateral cochlear transplantation as an “experimental” procedure, and her CIC policy excluded coverage for experimental treatments. When her appeals to CIC were unsuccessful, Dombroski filed suit claiming bad-faith denial of her claim for coverage not only against CIC and AUMSI, but also against AICI and the parent company, WellPoint.
AICI and WellPoint filed motions seeking dismissal of the claims against them on the basis that Dombroski’s insurance contract was with CIC, and that her complaint had not identified any legal ground that would allow her to bypass that corporate entity and assert claims against CIC’s stockholders.
The trial court ruled that Dombroski had not met either the second or third prongs of the Belvedere test for piercing the corporate veil of CIC, and dismissed her claims against AICI and WellPoint. On review, however, the 7th District Court of Appeals reversed the trial court’s ruling and reinstated her claims against the parent companies. In its opinion, the court of appeals held that Dombroski’s claim met all three prongs of the Belvedere test for piercing the corporate veil because it alleged a bad-faith breach of an insurance contract based on a medical policy that was dictated by a parent company to a wholly-owned and controlled subsidiary that directly resulted in injury or unjust loss to Dombroski.
AICI and WellPoint now ask the Supreme Court to overrule the 7th District and reinstate the trial court’s ruling that Dombroski failed to meet the second prong of the Belvedere test. They argue that the 7th District followed a line of appellate cases decided since Belvedere that have strayed from the unequivocal requirement in Belvedere that the limited liability of corporation stockholders must be honored unless it is shown that an owner abused the corporate form of the business for the specific purpose of committing a fraud or other criminal act that injured a plaintiff. They assert that this case and rulings in other appellate districts have erred by allowing the corporate veil to be pierced based on corporate actions that allegedly resulted in an “unjust or inequitable” outcome, and argue that this lowered standard ignores the high threshold set by the Belvedere decision and is contrary to the strong public policy encouraging business investment in Ohio by limiting the liability of individual stockholders for the actions of a corporate entity.
Attorneys for Dombroski respond that the line of decisions followed by the 7th District in this case have properly read the Supreme Court’s ruling in Belvedere to allow piercing of the corporate veil where parent companies have hidden behind the “legal fiction” of subsidiary corporations to avoid debts, regulatory fines and liability for civil damages that were a direct result of subsidiary actions that were completely controlled by the parent. They also cite legal dictionary definitions of “illegal” actions that go beyond fraud or other plainly criminal conduct and include civil wrongs, such as the tort claim for bad-faith breach of an insurance contract asserted by Dombroski in this case.
Contacts
Suzanne K. Richards, 614.464.6458, for WellPoint, Inc.
Robert G. Palmer, 614.484.1200, for Kimberly Dombroski.
Can a Defendant Commit ‘Witness Intimidation’ Before a Crime Is Reported to Police?
State of Ohio v. Donald K. Malone, III, Case no. 2007-2186
3rd District Court of Appeals (Marion County)
ISSUE: Can a defendant be found guilty of intimidation of a witness in violation of Ohio Revised Code Section 2921.04(B) when the unlawful threat of harm was made to the witness before the underlying crime was reported to law enforcement?
BACKGROUND: R.C. 2921.04(B) provides that “no person, knowingly and by force or by unlawful threat of harm to any person or property, shall attempt to influence, intimidate, or hinder the victim of a crime in the filing or prosecution of criminal charges or an attorney or witness involved in a criminal action or proceeding in the discharge of the duties of the attorney or witness.”
In 2006, Donald Malone raped L.K., a friend of a couple he was staying with, Brad and Brittany Brown, in the Browns’ Marion apartment. Malone confronted Brittany while holding a large knife and told her that he was going to have sex with L.K. and that he would kill her if she interfered or told anyone. The victim submitted to Malone’s demands for sex after he brandished a knife and told her that if she didn’t he would kill her. Following the assault, Malone again brandished the knife before L.K. and Brittany, and threatened to kill both of them if either gave information to the police. Malone also threatened to kill the victim’s mother.
After waiting two days, L.K. reported the assault. Malone was subsequently charged and convicted in the Marion County Court of Common Pleas on two counts of rape, two counts of intimidation, one count of tampering with evidence and one count of possessing criminal tools. Malone pleaded guilty to a sexually violent predator specification for each rape count, and was sentenced to 25 years to life in prison.
Malone appealed to the 3rd District Court of Appeals, alleging that his convictions were against the weight of the evidence. By a 2-1 vote, the court of appeals affirmed Malone’s other convictions but vacated the intimidation of a witness conviction based on his threats addressed to Brittany. The appeals court determined sua sponte (on its own initiative) that as a matter of law, the evidence was insufficient to support the conviction involving intimidation of Brittany as a witness because the intimidation took place prior to any police investigation or prosecution of a criminal case. In its decision, the 3rd District held that: “While we do not establish a bright-line test for when a criminal action or proceeding begins, at the least, threats made prior to any involvement by law enforcement are insufficient to constitute intimidation of a witness pursuant to the clear and unambiguous language of the statute. Since Malone threatened Brittany prior to any police investigation or prosecution in this case, at the time of threat, Brittany was merely a witness to a criminal act and not a witness involved in a criminal action or proceeding under R.C. 2921.04(B).”
The 3rd District certified that its holding regarding the intimidation count was in conflict with rulings by the 5th and 8th district courts of appeals, and the Supreme Court agreed to hear arguments to resolve the conflict among appellate districts.
Attorneys for the state urge the Supreme Court to reverse the 3rd District’s ruling and reinstate Malone’s conviction for intimidation of a witness. They assert that no other Ohio court has made a distinction between intimidating a victim and intimidating a witness, or concluded that the intimidation of a witness must occur after the crime has been reported to police to constitute a violation of the statute. They argue that the clear legislative intent underlying the law is to protect both crime victims and witnesses from threats of violence by an offender, and note that in crimes such as rape it is precisely before police have been called, evidence has been preserved and charges have been filed that an attacker has the most to gain by threatening the victim and witnesses into silence.
Attorneys for Malone respond that the intimidation statute differentiates between threatening a victim and threatening a witness, pointing to language in R.C. 2921.04(B) that specifically prohibits a person from intimidating a victim “in the filing or prosecution of criminal charges,” but only prohibits a person from intimidating a witness who is “involved in a criminal action or proceeding.” They argue that the unambiguous wording of the statute requires “(a)t a minimum, ... some level of formal, government involvement. Where no crime has been reported and no investigation or prosecution has been initiated, a witness has no involvement in a criminal action or proceeding.”
Contacts
Jim Slagle, 740.222.4290, for the state and Marion County prosecutor’s office.
Kevin P. Collins, 740.223.1470, for Donald Malone.
Attorney Discipline
Akron Bar Association v. Jeffrey A. Catanzarite, Case no. 2008-0423
Summit County
The Board of Commissioners on Grievances & Discipline has recommended that the license of Akron attorney Jeffrey A. Catanzarite be suspended for one year, with six months stayed on conditions, and that he serve one year of probation, for charging a clearly excessive fee, harassment of prospective clients and failure to cooperate with disciplinary authorities during the investigation of his misconduct.
The disciplinary violations arose from Catanzarite’s dealings with recruiting firm partners David Hirsch and Robert Joyce, who were interviewing potential attorneys to help them deal with problems they were having with a third partner. Catanzarite agreed to an initial meeting for which the partners wouldn’t be charged, but indicated that he would require a retainer if it was agreed that he would take the case. At the initial meeting, Catanzarite recommended that the two partners try to contact the third partner to set up a meeting to work out their differences, which they had attempted to do previously and did again without success. Joyce called Catanzarite to tell him that the third partner refused to meet. During this second conversation, there was no mention about fees or retaining Catanzarite. Subsequently, Catanzarite faxed Joyce referencing their “agreement” that the partners would pay Catanzarite $5,000 for implementing his advice. Catanzarite continued to contact Joyce and Hirsch demanding payment, eventually suggesting a reduced fee of $1,000 then $300. He subsequently filed suit against Joyce and Hirsch in Akron Municipal Court. They settled the case for $300 in April 2006.
Hirsch and Joyce filed a grievance with the Akron Bar Association, alleging that Catanzarite had violated state attorney discipline rules in attempting to charge them $5,000 for what they considered to be non-existent “legal advice,” and in attempting to intimidate them into paying that excessive fee by means of repeated threatening and abusive phone calls, faxes and filing suit against them. The bar association and Board of Commissioners found probable cause of rule violations, and the board conducted a hearing and issued findings dismissing some of the alleged rule violations, but concluding that he had charged an excessive fee and attempted to intimidate the partners into paying it. Catanzarite was initially uncooperative and hostile in his dealings with the bar association’s ethics committee, but ultimately responded to the complaint and appeared at his hearing before the board.
Catanzarite has filed objections to the disciplinary board’s findings of fact and conclusions of law, and to its recommended sanction as too severe. He asserts that the partners did agree to his representation at a set fee, that the partners benefited from his advice and that he never used obscene language in his communications with them as they alleged. He argues that the board’s finding that he charged an excessive fee is not supported by the evidence, noting that the only fee he received from the complainants was the $300 he obtained as a settlement, which was fair compensation for the two hours he spent on the phone and in his initial meeting with them.
Contacts
Alfred E. Schrader, 330.762.0765, for the Akron Bar Association.
Jeffrey A. Catanzarite, pro se: 330.867.4901.
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.