TCF Natl. Bank v. Neos Properties, L.L.C.

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[Cite as TCF Natl. Bank v. Neos Properties, LLC, 2010-Ohio-1150.] COURT OF APPEALS STARK COUNTY, OHIO FIFTH APPELLATE DISTRICT TCF NATIONAL BANK FBO AEON FINANCIAL, LLC Plaintiff-Appellant -vs- JUDGES: Hon. Sheila G. Farmer, P.J. Hon. William B. Hoffman, J. Hon. John W. Wise, J. Case No. 2009 CA 00129 NEOS PROPERTIES, LLC, et al. OPINION Defendants-Appellees CHARACTER OF PROCEEDING: Civil Appeal from the Court of Common Pleas, Case No. 2008 CV 05012 JUDGMENT: Affirmed DATE OF JUDGMENT ENTRY: March 22, 2010 APPEARANCES: For Plaintiff-Appellant MARK A. SCHWARTZ DAVID T. BRADY KIRK W. LIEDERBACH JOHN S. PUCIN PATRICK J. RYLL SCHWARTZ & ASSOCIATES 27 North Wacker Drive, #503 Chicago, Illinois 60606 For Defendants-Appellees Stark County, Case No. 2009 CA 00129 2 Wise, J. {¶1} Plaintiff-Appellant TCF National Bank FBO Aeon Financial, LLC appeals the April 23, 2009 Judgment Entry entered by the Stark County Court of Common Pleas, awarding it attorney fees in an amount less than sought. The relevant facts leading to this appeal are as follows. {¶2} Appellant purchased a tax lien certificate from the Stark County Treasurer on a property located in Stark County, Ohio. Subsequently, Appellant filed a Complaint for Foreclosure, pursuant to R.C. 5721.30 to 5721.46. Appellant's counsel filed a motion for private attorney's fees with a supporting Affidavit attached. The motion requested $2,500.00 in attorney fees, to be taxed as a cost of the private foreclosure action, and requested a hearing. {¶3} The motion for attorney fees was unopposed. Thereafter, the trial court issued an Order and Decree of Foreclosure awarding attorney fees in the amount of $450.00. {¶4} It is from this Judgment Entry Appellant appeals, raising as its sole Assignment of Error: {¶5} "THE TRIAL COURT ERRED AS A MATTER OF LAW IN REDUCING AEON'S STATUTORILY RECOVERABLE ATTORNEY FEES, BELOW THE $2,500 IT INCURRED AND REQUESTED, BECAUSE THE COURT FAILED TO ACCORD AEON THE BENEFIT OF THE STATUTORY PRESUMPTION OF REASONABLENESS CREATED BY THE OHIO LEGISLATURE, IN R.C. SECTION 5721.371, IN FAVOR OF A TAX CERTIFICATE HOLDER FOR ATTORNEY FEES INCURRED IN TAX Stark County, Case No. 2009 CA 00129 3 CERTIFICATE FORECLOSURE CASES WHERE SUCH FEES DO NOT EXCEED $2,500." I {¶6} At the heart of this litigation is the question of whether Ohio law gives a trial court discretion to determine the reasonableness of attorney fees in its judgment of tax certificate foreclosure cases filed pursuant to R.C. 5721.37, et seq. We believe that it does. {¶7} In Alyeska Pipeline Service Co. v. Wilderness Society (1975), 421 U.S. 240, the United States Supreme Court reaffirmed the "American Rule" which provides that each party in a lawsuit ordinarily shall bear its own attorney fees unless there is express statutory authorization to the contrary. Of relevance to the case at bar, the Ohio Legislature has provided for the recovery of attorney fees for prosecuting tax certificate foreclosures. R.C. 5721.39 provides, in pertinent part: {¶8} "(A) In its judgment of foreclosure rendered in actions filed pursuant to section 5721.37 of the Revised Code, the court or board of revision shall enter a finding that includes all of the following with respect to the certificate parcel: {¶9} "*** {¶10} "(5) Fees and costs incurred in the foreclosure proceeding instituted against the parcel, including, without limitation, the fees and costs of the prosecuting attorney represented by the fee paid under division (B)(3) of section 5721.37 of the Revised Code, plus interest as provided in division (D)(2)(d) of this section, or the fees and costs of the private attorney representing the certificate holder, and charges paid or Stark County, Case No. 2009 CA 00129 4 incurred in procuring title searches and abstracting services relative to the subject premises." (Emphasis added.) {¶11} R.C. 5721.371 provides trial courts with guidance in determining the fees counsel may recover in a tax certificate foreclosure case. The statute provides: {¶12} "Private attorney's fees payable with respect to an action under sections 5721.30 to 5721.46 of the Revised Code are subject to the following conditions: {¶13} "(A) The fees must be reasonable. {¶14} "(B) Fees exceeding two thousand five hundred dollars shall be paid only if authorized by a court order. {¶15} "(C) The terms of a sale negotiated under section 5721.33 of the Revised Code may include the amount to be paid in private attorney's fees, subject to division (B) of this section." {¶16} In the case at bar, appellant argues, in essence, because fee applications in the amount of $2,500 or less do not require a court order, thus, in both practice and effect, the Ohio Legislature has determined that attorney fees of up to $2,500 are presumptively reasonable for a tax certificate foreclosure matter; and, absent challenge by an opposing party, are entitled to deference by the court. See, Appellant's Brief at 12-14. However, the requirements in R.C. 5721.39(A) and R.C. 5721.371, when read in pari materia, would seem to indicate a trial court shall make findings on attorney fees, including the consideration of reasonableness, before awarding the fees and costs of the private attorney representing the certificate holder. {¶17} We find nothing within the statutes that set a presumptive amount for recoverable attorney fees, nor anything that obviates a trial court's discretion in making Stark County, Case No. 2009 CA 00129 5 the award. Surely, without an order from the trial court, attorney fees could not be assessed or recovered. {¶18} In Bittner v. Tri-County Toyota, Inc. (1991), 58 Ohio St.3d 143, 146, quoting Brooks v. Hurst Buick-Pontiac-Olds-GMC, Inc. (1985), 23 Ohio App.3d 85, 91, the Supreme Court of Ohio held, " 'It is well settled that where a court is empowered to award attorney fees by statute, the amount of such fees is within the sound discretion of the trial court. Unless the amount of fees determined is so high or so low as to shock the conscience, an appellate court will not interfere.' " "There are over 100 separate statutes providing for the award of attorney's fees; and although these provisions cover a wide variety of contexts and causes of action, the benchmark for the awards under nearly all of these statutes is that the attorney's fee must be 'reasonable.' " Pennsylvania v. Delaware Valley Citizens' Council for Clean Air (1986), 478 U.S. 546, 562. {¶19} "A request for attorney's fees should not result in a second major litigation. Ideally, of course, litigants will settle the amount of a fee. Where settlement is not possible, the fee applicant bears the burden of establishing entitlement to an award and documenting the appropriate hours expended and hourly rates. The applicant should exercise 'billing judgment' with respect to hours worked, see supra, at 1939-1940, and should maintain billing time records in a manner that will enable a reviewing court to identify distinct claims.***" Hensley v. Eckerhart (1983) 461 U.S. 424, 437. (Footnote omitted.) {¶20} "The most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a Stark County, Case No. 2009 CA 00129 6 reasonable hourly rate. This calculation provides an objective basis on which to make an initial estimate of the value of a lawyer's services." Id. at 433; See, also Bittner, at 145. {¶21} To establish the number of hours reasonably expended, the party requesting the award of attorney fees "should submit evidence supporting the hours worked***." Hensley, at 433. The number of hours should be reduced to exclude "hours that are excessive, redundant, or otherwise unnecessary" in order to reflect the number of hours that would properly be billed to the client. Id. at 434. A reasonable hourly rate is defined as " 'the prevailing market rate in the relevant community.' " Blum v. Stenson (1984), 465 U.S. 886, 895. {¶22} The party requesting an award of attorney fees bears the burden "to produce satisfactory evidence-in addition to the attorney's own affidavits-that the requested rates are in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation." Id. at 895, fn. 11. {¶23} Once the trial court calculates this "lodestar figure," it could modify the calculation by applying the factors listed in DR 2-106(B), now Ohio Rules of Professional Conduct 1.5. Landmark Disposal Ltd. v. Byler Flea Market, Stark App. No. 2005CA00294, 2006-Ohio-3935, ¶14, citing Bittner, at 145. {¶24} To enable an appellate court to conduct a meaningful review, "the trial court must state the basis for the fee determination." Bittner, at 146. In this case, the trial court did not award appellants the full amount of attorney fees requested and did not state what factors it took into consideration. Nevertheless, we do not find a need for any further hearing. The thrust of appellant's argument is that the $2,500.00 statutory Stark County, Case No. 2009 CA 00129 7 attorney fees are automatic and a hearing on reasonableness is only necessary if the fees exceed said amount: {¶25} "Pursuant to R.C. Section 5721.371, the trial court's review of attorney fees under the Ohio tax foreclosure statutes is limited to only two situations: 1) where reasonableness is at issue, or 2) where the fees sought exceed $2,500. Under the statute, a court order is required only when the payment of fees sought exceeds $2,500. Fee applications in the amount of $2,500 or less do not require a court order. Thus, in both practice and effect, the Ohio Legislature has determined that attorney fees of up to $2,500 are presumptively reasonable for a tax certificate foreclosure matter; and, absent challenge by an opposing party, are entitled to deference by the court. {¶26} "The practical effect of such a presumption under the statute is this: when the fees sought are $2,500 or less, and no opposing party contests them as unreasonable (or otherwise attempts to rebut the statutory presumption), a trial court has no discretion to limit or reduce the payment of such fees, because the presumption of reasonableness stands unrebutted." Appellant's Brief at 5-6. {¶27} In fact, appellant's only request is for the fees awarded by the trial court to be reversed and an award of $2,500.00 in fees to be entered: {¶28} "This court must reverse the decision of the trial court on the issue of attorney fees and order that the $2,500 Aeon incurred be taxed as costs from the proceeds of Sheriff's Sale, plus the costs of this appeal." Appellant's Brief at 27. {¶29} The assignment neither requests a hearing nor does it argue that a hearing on attorney fees is necessary for a $2,500.00 attorney fees claim. Stark County, Case No. 2009 CA 00129 8 {¶30} The sole Assignment of Error is overruled. {¶31} For the foregoing reasons, the judgment of the Court of Common Pleas of Stark County, Ohio is hereby affirmed. By: Wise, J. Farmer, P. J., concurs. Hoffman, J., dissents. /S/ JOHN W. WISE__________________ /S/ SHEILA G. FARMER______________ __________________________________ JUDGES JWW/d 0317 Stark County, Case No. 2009 CA 00129 9 Hoffman, J., dissenting {¶32} While I agree with the majority R.C. 5721.37, et seq. do not set a presumptive amount for recoverable attorney fees, I, nevertheless, would reverse the trial court s decision and remand the matter to the trial court to set forth the basis for its fee determination in accordance with Bittner. /S/ WILLIAM B. HOFFMAN_______________ HON. WILLIAM B. HOFFMAN Stark County, Case No. 2009 CA 00129 10 IN THE COURT OF APPEALS FOR STARK COUNTY, OHIO FIFTH APPELLATE DISTRICT TCF NATIONAL BANK FBO AEON FINANCIAL, LLC Plaintiff-Appellant -vsNEOS PROPERTIES, LLC, et al. Defendants-Appellees : : : : : : : : : : JUDGMENT ENTRY Case No. 2009 CA 00129 For the reasons stated in our accompanying Memorandum-Opinion, the judgment of the Court of Common Pleas of Stark County, Ohio, is affirmed. Costs assessed to appellant. /S/ JOHN W. WISE__________________ /S/ SHEILA G. FARMER______________ ___________________________________ JUDGES

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