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Observations and commentary on interesting areas of the law

Law & Litigation Blog

Posts tagged Business Disputes
Abuse of Process: A Lawsuit for Filing a Frivolous Lawsuit? (Part 1 of 3)

Ohio's Fifth District Court of Appeals recently decided the case of Pingue v. Preferred Real Estate Invests II, L.L.C., 5th Dist. Delaware No. 15 CAE 01 0008, 2015-Ohio-475. This case illustrates the legal claim known as "abuse of process." I have heard abuse of process described as "a lawsuit for filing a frivolous lawsuit." This is overly simplistic and technically not 100% correct, but in some ways it is an apt description.

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Read This Case Before You Steal Your Boss's Clients: Cautionary Tales from Definitive Sols. Co. v. Sliper

Ohio's First District Court of Appeals, which covers Cincinnati/Hamilton County, recently decided the case of Definitive Sols. Co. v. Sliper, 1st Dist. Hamilton No. C-150281, 2016-Ohio-533, __ N.E.3d __. This was an interesting case involving an alleged breach of a "non-solicitation agreement" and alleged "tortious interference" by former employees of a company. The opinion, by Judge Pat DeWine, is extremely well-written and demonstrates superior modern legal writing techniques.

There are several lessons to be learned from this case. First, the story of what happened:

A company by the name of Definitive Solutions Company, Inc. (DSC) had a contract with P&G to provide design and technology services. P&G was a major client of DSC. Four DSC employees were assigned to the P&G account. These employees worked closely with P&G employees, were often contacted directly by P&G for work on projects, and sometimes worked on-site at P&G. It appears they built up a rapport with their contacts at P&G. In 2011, these employees began leaving DSC. One of them formed a new company called Creative Elements Group, LLC (CEG), where all four ended up working.

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A $300,000 Appellate Lesson, and a Trial Lesson, from the Eighth District Court of Appeals

Numerous lessons can be gleaned from the rather curious case of MADFAN, Inc. v. Makris, 2017-Ohio-979, which was recently decided by Ohio's Eighth Appellate District Court of Appeals. The Eighth District covers Cuyahoga County/Cleveland.

This was a typical case of investors getting screwed over by an unscrupulous businessman. Investors Fred Cieslik, Andrew Peloza, Alexander Stewart and Michael Allen MADFAN, Inc., all of whom were represented by comedian-turned-attorney Michael Cheselka, sued Dino Makris and Michael Westerhaus for fraud and civil conspiracy. They invested in a restaurant with Makris, though Makris's contribution was made through what appears to be essentially a shell corporation (he had creditors chasing him). Westerhaus, a lawyer who represented himself, provided continuing legal services to the restaurant. It is unclear from the opinion what Westerhaus allegedly did wrong, but the investors got a jury verdict of $300,000 against him. It is also not clear what happened with Makris, but Makris did not appeal. 

Only Westerhaus appealed. He argued that the investors failed to adequately establish damages at trial. The Court of Appeals began by noting that the Appellees (the investors) failed to file an appellate brief. They were listed as having a lawyer, and they obviously had a decent amount of money and could afford representation, so it is odd to me that they didn't file a brief. In accordance with App.R. 18(C), the Court of Appeals accepted Westerhaus’s statements of facts and issues in his brief as correct and reversed the judgment because his brief reasonably appeared to sustain such action based on the trial record. However, the Court expounded on its reasoning for overturning the verdict.

The Court noted that "[a]s much emphasis as the shareholders placed on Westerhaus’s alleged wrongdoing, none of that matters with respect to measuring damages for the alleged wrongful acts of the defendant. This appeal solely hinges on whether the shareholders presented sufficient evidence to sustain the $300,000 judgment entered in their favor."

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