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Tuesday, June 2, 2009

State ex rel. Associated Builders & Contractors of Central Ohio v. Franklin County Board of Commissioners et al., Case no. 2008-1478
10th District Court of Appeals (Franklin County)

Gary A. Greenspan v. Third Federal Savings & Loan, Case no. 2008-1568
8th District Court of Appeals (Cuyahoga County)

Diazonia Benton v. Hamilton County Educational Service Center and Administrator, Ohio Bureau of Workers' Compensation, Case nos. 2008-1946 and 2008-1949
1st District Court of Appeals (Hamilton County)

Does State Prevailing Wage Enforcement Scheme Preempt County from Imposing Local Bidder Debarment Policy?

State ex rel. Associated Builders & Contractors of Central Ohio v. Franklin County Board of Commissioners et al., Case no. 2008-1478
10th District Court of Appeals (Franklin County)

ISSUE: Does the comprehensive prevailing wage enforcement scheme set forth in R.C. Chapter 4115 preempt a county board of commissioners from adopting and enforcing its own local policy for debarring (automatically disqualifying) bids submitted by a contractor on local public works projects based on prior settlements of alleged prevailing wage violations?

BACKGROUND: Ohio Revised Code Chapter 4115, referred to as the state’s “Prevailing Wage Law,” requires that workers on government construction projects must be paid at the prevailing wage for local union workers doing similar jobs. The statute establishes procedural guidelines for the Ohio Department of Commerce to receive and process complaints against contractors for allegedly failing to pay prevailing wages on state, county or local public works projects; and authorizes the department to debar (disqualify) a contractor from bidding on government projects anywhere in the state for a specified time period if the company is found to have intentionally violated  prevailing wage requirements.

In this case, the low bid submitted for painting services at Huntington Park, a new county-owned baseball stadium being constructed in downtown Columbus, was ruled ineligible for consideration by the Franklin County Board of Commissioners because the contractor submitting the bid, The Painting Company, had previously entered into settlements with the Department of Commerce to resolve complaints alleging prevailing wage underpayments on government projects. In declining to consider The Painting Company’s bid, the commissioners cited a local resolution specifying that in order to bid on any county-funded construction project, a contractor must certify that it had not been found by the state to have committed three violations of the prevailing wage statute in any two-year period during the preceding 10 years. Interpreting The Painting Company’s settlement agreements with the state as admissions of prevailing wage violations, the county commissioners ruled that the company was barred from receiving the Huntington Park contract, and awarded the contract to another bidder.

The Painting Company appealed the commissioners’ action to the Franklin County Court of Common Pleas and then to the 10th District Court of Appeals. Both courts ruled that the commissioners had authority to set relevant criteria that vendors must meet in order to bid on county projects, and held that the commissioners had not abused their discretion in rejecting The Painting Company’s bid based on the company’s failure to meet the county’s standard regarding prevailing wage compliance. The Painting Company, supported by the Associated Builders & Contractors trade association (ABC), sought and was granted Supreme Court review of the 10th District’s ruling.

Attorneys for ABC and The Painting Company argue that the county commissioners exceeded their authority in adopting a local resolution debarring contractors from county contracts based on alleged prevailing wage violations because R.C. Chapter 4115 establishes a comprehensive statewide scheme for adjudicating prevailing wage complaints. They contend that the statute gives the state commerce director exclusive authority to determine when a contractor has committed a violation of the statute sufficient to support the penalty of debarment.  They point out that the statute specifies that debarment may be imposed only when the commerce director has made a finding that a contractor’s prevailing wage violations were “intentional.” They also note that the statute provides contractors accused of noncompliance with a full range of procedural due process protections including judicial review of the director’s findings before debarment may be imposed, and sets a maximum debarment period of one year for a contactor’s first offense and three years if a vendor is found to have committed a second intentional violation within five years.

They contend that the Franklin County debarment policy invoked against The Painting Company in this case is in direct conflict with R.C. Chapter 4115 and is therefore invalid and unenforceable because it: 1) equates a settlement agreement in which there is no finding by the state or admission of guilt by the contractor with a conviction for an “intentional violation” of the statute; 2) eliminates virtually all of the due process protections provided by the statute; 3) usurps the exclusive authority conferred on the commerce director to impose the sanction of debarment; and 4) imposes a more severe penalty (up to 10 years of debarment) than is permitted by the statute. They also assert that allowing individual counties to draw up and enforce their own local prevailing wage enforcement schemes is contrary to the legislative intent that Ohio have uniform, statewide policies and procedures that balance the need for fair wages with the need for open and competitive bidding on public works projects.

Attorneys for the Franklin County commissioners contend that their inherent powers to conduct county business include the power to set relevant criteria for bidding on local construction projects, including requirements that contractors comply with all applicable legal standards in order to be eligible to bid.  They argue that a bidder’s past history of prevailing wage compliance or noncompliance is just as relevant to its qualifications as its history of financial solvency and its past compliance with equal employment hiring practices and workplace safety and environmental regulations. They urge the Court to affirm the lower courts’ rulings that barring the award of county contracts to employers who have not complied with prevailing wage requirements in the past is a necessary and proper exercise of local government powers that is not barred or preempted by any language in R.C. Chapter 4115, including the language detailing the commerce department’s enforcement scheme.

Contacts
Nick A. Soulas, 614.462.3520, for the Franklin County Board of Commissioners.

Michael F. Copley, 614.853.3790, for the Associated Builders & Contractors of Central Ohio and The Painting Co.

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Prior to 2004 Bill, Did Ohio Recognize ‘Common Law’ Claim to Recover Fees Paid for Unlicensed Legal Services?

Gary A. Greenspan v. Third Federal Savings & Loan, Case no. 2008-1568
8th District Court of Appeals (Cuyahoga County)

ISSUES:  

BACKGROUND: This case involves a class action lawsuit filed on behalf of Gary Greenspan of Cleveland and other plaintiffs. Greenspan sought to recover from Third Federal Savings & Loan a $300 “document preparation fee” that was included in the transaction costs he was charged by Third Federal in 2002 in connection with closing on a residential mortgage. The complaint alleged that, although the drafting of promissory notes, mortgage agreements and similar documents constitutes the practice of law, Third Federal had used non-lawyer clerical employees to draw up the documents for which Greenspan was charged. Based on prior court decisions holding that a non-attorney is not entitled to payment for any service that constitutes the unauthorized practice of law, Greenspan and his co-plaintiffs claimed entitlement to a refund of the $300 they had paid the lender for document preparation services.

Third Federal filed a pretrial motion to dismiss Greenspan’s complaint on the basis that, prior to the legislature’s enactment of R.C. 4705.07 in September 2004, Ohio did not recognize a private cause of action (legal grounds for a civil lawsuit) based on the unauthorized practice of law. The trial court granted judgment in favor of Third Federal, finding that at the time Greenspan was assessed and paid the document preparation fee in 2002, there was no provision of state law that allowed him to sue Third Federal for recovery of the disputed fee.

Greenspan appealed the order dismissing his suit. In November 2007, while Greenspan’s appeal was pending before the 8th District Court of Appeals, that court issued a decision in a virtually identical case, Crawford v. FirstMerit Mortgage Corp. In Crawford, the 8th District held that the plaintiff could not sue to recover document preparation fees paid in 2001 from a mortgage lender based on a claim of unauthorized law practice because there was no private cause of action for unauthorized practice of law in Ohio prior to the 2004 enactment of R.C. 4705.07.  In May 2008, notwithstanding the Crawford decision, a different panel of the 8th District overruled the trial court and reinstated Greenspan’s suit against Third Federal. In a 2-1 majority opinion, the appellate panel held that Greenspan did have a common law right to sue based on pre-2004 court decisions holding that a debtor could overcome a creditor’s claim for professional services if the debtor could show that the person performing the billed services did not have a legally required license to provide them.  The majority concluded that since unauthorized practice was recognized as a valid affirmative defense against debt-collection efforts, it must logically also be recognized as a valid common law cause of action to seek a refund of professional service fees that had already been paid to an unlicensed provider.

Third Federal sought and was granted Supreme Court review of the 8th District’s ruling. Its attorneys argue that the 8th District improperly abandoned its own precedent (the Crawford decision issued six months earlier) when it ruled in this case that there was a private cause of action for unauthorized law practice prior to the enactment of R.C. 4705.07. They contend that the court of appeals erred in denying Third Federal’s motion for an en banc rehearing (session in which all judges of the court jointly reconsider a case to resolve conflicting rulings by different three-judge panels) despite a 2008 Supreme Court decision holding that appellate districts must conduct such sessions when different panels have issued divergent rulings on the same legal issue. 

They contend that there is no basis in precedent for the 8th District’s holding in this case that the existence of an affirmative defense against collection of a kind of debt “inexorably” requires the existence of an equivalent cause of action permitting persons who have already paid that kind of a debt to sue for recovery of the proceeds. They also point out that the Ohio Constitution gives the Supreme Court exclusive jurisdiction over the licensing of attorneys and regulation of the practice of law, and argue that the 8th District’s ruling in this case improperly allows a trial court to adjudicate a lawsuit based on alleged unauthorized law practice without any prior determination by the Supreme Court’s Board on Unauthorized Practice that the conduct of a defendant actually constituted the unlicensed practice of law.

Attorneys for Greenspan argue that the complaint filed in the trial court sought recovery from Third Federal based on claims of unjust enrichment and “money had and received,” which are common law causes of action that were recognized by Ohio courts long before the legislature amended R.C. Chapter 4705 in 2004. They point out that the version of the statute that was in effect in 2002, when Greenspan paid the disputed document preparation fee, unequivocally prohibited unlicensed persons from engaging in the practice of law including the preparation of legal documents, and point to three pre-2004 appellate decisions holding that an unlicensed person has no legal right to be paid for “professional” services he or she has provided in violation of state law.

They urge the Court to affirm the 8th District’s holdings that these decisions recognized a common law basis for barring an unlicensed practitioner from profiting from his illegal actions, and that there is no logical distinction between absolving one “client” from the obligation to pay a debt for unlicensed services and allowing another “client” who has already paid an unlicensed practitioner to sue for recovery of that payment.

Contacts
John D. Parker, 216.861.7610, for Third Federal Savings & Loan Association.

Mark Schlachet, 216.896.0714, for Gary Greenspan.

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May Employer Appeal Industrial Commission’s Refusal to Reopen Worker’s Approved Claim Based on Alleged Fraud?

Diazonia Benton v. Hamilton County Educational Service Center and Administrator, Ohio Bureau of Workers' Compensation, Case nos. 2008-1946 and 2008-1949
1st District Court of Appeals (Hamilton County)

ISSUE: When an employee’s claim for workers’ compensation benefits has been granted and her employer does not file a timely appeal of the final order approving her right to participate (receive benefits), if the Industrial Commission later denies a motion by the employer to re-open the employee’s case based on a claim of fraud, does the employer have a legal right to appeal the commission’s ruling in common pleas court?

BACKGROUND:  Diazonia Benton was injured in a car crash in the scope of her employment with the Hamilton County Educational Service Center (HCESC). Benton subsequently applied for and in March 2005 was granted state workers’ compensation benefits for medical conditions arising from her accident including neck and lumbar back sprains. HCESC did not appeal the allowance of Benton’s claim. In January 2006, the Industrial Commission granted Benton’s request for expanded benefits based on findings of additional medical conditions including a herniated disc. HCESC again did not timely appeal the final order granting Benton’s participation in the workers’ compensation program for the additional conditions.

In February 2006, HCESC filed a motion requesting that the Industrial Commission exercise continuing jurisdiction (re-open Benton’s case) and order that her benefits be terminated based on allegations of fraud in her original application. Following a hearing before a district hearing officer, the commission refused to re-open Benton’s case. After a staff hearing officer affirmed the district officer’s denial of continuing jurisdiction, and the Industrial Commission declined to review the case further, HCESC attempted to appeal the commission’s ruling in the Hamilton County Court of Common Pleas.  Pursuant to a motion for dismissal filed by Benton, the court ruled that it did not have subject matter jurisdiction to consider the appeal because state workers’ compensation statutes do not empower common pleas courts to review an Industrial Commission ruling declining to re-open a claim that has already been approved.

HCESC appealed the common pleas court’s ruling to the 1st District Court of Appeals. On review, the appellate panel held that the trial court did have subject matter jurisdiction to review the type of Industrial Commission ruling at issue, and remanded the case for further proceedings. The 1st District also certified, however, that its holding with regard to the appealability of the Industrial Commission’s ruling was in conflict with decisions addressing the same legal issue in two other appellate districts. The Supreme Court has agreed to review the case to resolve the conflict among districts.

Attorneys for Benton and the Industrial Commission cite two 1992 decisions of the Supreme Court of Ohio, Afrates v. Lorain and Felty v. AT&T Technologies Inc., which they say established that a common pleas court is authorized to review only an order of the Industrial Commission that finally grants or denies a claimant’s right to participate in the workers’ compensation program. In this case, they argue, the commission’s refusal to re-open Benton’s case did not grant or deny her claim for benefits, and therefore it is not subject to judicial appeal. They note that HCESC could have challenged the commission’s ruling by filing a mandamus action in the 10th District Court of Appeals, but failed to do so.

They also assert that, if affirmed, the 1st District’s ruling in this case would allow employers who fail to file a  timely judicial appeal of an order granting an employee’s workers’ compensation claim, or who file and lose a direct appeal, to come back to court months or years later for a “second bite at the apple” by asking the Industrial Commission to reopen the case based on a claim of fraud, and then appealing the commission’s denial of such a motion in common pleas court. They argue that the statutory scheme established by the legislature and case law developed by state courts set reasonable limits on an employer’s ability to appeal an Industrial Commission ruling granting an employee’s workers’ compensation claim, and say the 1st District’s holding in this case goes beyond those limits.

Attorneys for HCESC contend that their motion seeking continuing jurisdiction over Benton’s case based on alleged fraud, and the Industrial Commission’s denial of that motion, were matters bearing directly on Benton’s right to participate because a ruling in favor of HCESC on that motion would have resulted in the termination of Benton’s award of benefits. They point out that if the commission had granted their motion and terminated Benton’s benefits, Bentonwould clearly have been able to appeal that ruling to a common pleas court because it would have been a final order denying her right to participate. They argue that the legal position argued by Benton and the Industrial Commission denies employers equal protection of the law by allowing a claimant to dispute an unfavorable ruling on a motion in common pleas court, but requiring an employer seeking reversal of an unfavorable ruling on the very same motion to pursue a much more demanding mandamus action in order to vindicate its position.

Contacts
Benjamin C. Mizer, 614.466.8980, for the Ohio Bureau of workers’ Compensation.

Gregory W. Bellman, 513.621.2260, for Diazonia Benton.

David J. Lampe, 513.421.2540, for the Hamilton County Educational Service Center.

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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.