[Cite as Gullotta v. McKinzie,

.]

COURT OF APPEALS STARK COUNTY, OHIO FIFTH APPELLATE DISTRICT

GIUSEPPE GULLOTTA JUDGES: Hon. William B. Hoffman, P.J. Plaintiff-Appellant Hon. Patricia A. Delaney, J. Hon. Craig R. Baldwin, J. -vs- Case No. 2014CA00045 TIMOTHY D. MCKINZIE, ET AL.

Defendants-Appellees OPINION

CHARACTER OF PROCEEDING: Appeal from the Stark County Common Pleas Court, Case No. 2013CV01619

JUDGMENT: Affirmed

DATE OF JUDGMENT ENTRY: December 22, 2014

APPEARANCES:

For Plaintiff-Appellant For Defendant-Appellee

JAMES J. COLLUM TIMOTHY D. MCKINZIE Crescent Pointe Building McKinzie and Associates 4774 Munson Street, NW, Suite 400 529 White Pond Drive Canton, Ohio 44718 Akron, Ohio 44320 Stark County, Case No. 2014CA00045 2

Hoffman, P.J.

{¶1} Plaintiff-appellant Giuseppe Gullotta appeals the February 28, 2014 Order

entered by the Stark County Court of Common Pleas, which approved and adopted the

magistrate’s December 19, 2013 Decision with amendments and modifications.

Defendant-appellee is Timothy McKinzie.

STATEMENT OF THE FACTS AND CASE

{¶2} Appellee is an attorney licensed to practice in the state of Ohio. In

October, 2004, Appellant retained Appellee to represent him in a foreclosure action

("the Action"). The Action was the second foreclosure action filed against Appellant, but

Appellee was not involved in the first matter. The parties knew each other socially prior

to Appellant’s retaining Appellee in his professional capacity. Appellee’s firm also had

represented Appellant in other matters.

{¶3} The Action against Appellant was essentially indefensible due to

Appellant's default on a promissory note secured by a mortgage. Appellant’s primary

goal was to obtain a loan modification which would lower his monthly mortgage

payments. Appellant had, at one point in his career, worked as a real estate broker. He

was familiar with real estate contracts and negotiating contract terms.

{¶4} The parties agreed Appellant would pay Appellee $175/hour for his

professional services. Prior to signing the fee agreement, Appellant advised Appellee

he would not be able to pay the legal fees until his financial affairs were in order.

Appellee agreed to allow Appellant to pay at a future time. Appellant executed the fee

agreement. Stark County, Case No. 2014CA00045 3

{¶5} Over the course of his representation of Appellant during the Action,

Appellee never sent Appellant a monthly bill. Appellant assumed he did not owe

Appellee attorney fees in connection with the foreclosure matter. The bank in the

foreclosure action filed a voluntary dismissal in March, 2005. Following the dismissal,

Appellee did not send Appellant an invoice for his services.

{¶6} In October, 2005, the bank filed a third foreclosure action ("the Third

Foreclosure") against Appellant. Again, Appellee represented Appellant. Appellee

believed the double dismissal rule provided a potential defense to the Third

Foreclosure. Appellee took leave to plead on behalf of Appellant. Appellee made

numerous phone calls to Appellant, informing him an answer to the complaint would be

due soon and the two needed to meet. Appellant did not meet with Appellee until

January 2, 2006. At that meeting, Appellee discussed a potential new defense, but

explained asserting the defense would increase the complexity of the case. Appellee

advised Appellant he believed it was the best course of action. Appellee also indicated

pursuing the defense would require a great deal of work. Appellant expressed concerns

about his ability to pay the attorney fees. Appellee did not send Appellant a new

retention letter for his representation of Appellant in the Third Foreclosure.

{¶7} Following oral arguments before this Court on January 18, 2007, Appellee

informed Appellant he did not believe they would prevail at the appellate level, but noted

he felt confident they could get into the Ohio Supreme Court on a conflict. Appellee

advised Appellant, if the case went before the Ohio Supreme Court, his fees could

“skyrocket”. Appellant suggested revising the fee agreement to a contingent fee Stark County, Case No. 2014CA00045 4

agreement if the Ohio Supreme Court accepted the case. The Ohio Supreme Court

certified a conflict in August, 2007.

{¶8} The parties met on September 6, 2007, and discussed modifying the fee

agreement to a flat fee, contingent upon Appellant’s prevailing in the Supreme Court.

Appellant suggested $35,000, and proposed other terms for a contingent fee

agreement. Appellee stated he wanted to think about this proposal. Appellee revised

the proposed terms of the contingent fee agreement on September 22, 2007, and faxed

it to Appellant. On September 27, 2007, the parties executed documents finalizing and

memorializing the contingent fee agreement. The contingent fee agreement provided, if

Appellant prevailed in the Supreme Court and the bank’s interest in his property was

extinguished, Appellant would pay Appellee a flat fee of $30,000, for attorney fees, as

well as pay expenses and costs.

{¶9} Appellant signed a promissory note for $30,000, with an annual interest

rate of 6%. Installments on the promissory note were $497.33/month for 72 months,

with payments commencing October, 2008. Appellant signed a mortgage securing the

$30,000 promissory note.

{¶10} The Ohio Supreme Court ruled in Appellant’s favor in December, 2008.

As a result of the ultimate disposition of the various foreclosure proceedings, the equity

in Appellant’s home increased by approximately $100,000.

{¶11} Appellant paid Appellee $4,670 toward attorney fees, which included nine

(9) $500 payments and a credit of $170 from money paid for a filing fee which was

never needed. At the time of trial, 62 of the 72 monthly installments on the promissory Stark County, Case No. 2014CA00045 5

note had become due, with arrears totaling $26,164.46. The remaining ten (10)

installments were due between December, 2013, and September, 2014.

{¶12} Appellee filed the instant action against Appellant on June 14, 2013.

Appellant filed an answer and counterclaim. Following discovery and an unsuccessful

attempt at mediation, the matter proceeded to trial before the magistrate on November

18 and 19, 2013. The magistrate issued a decision on December 19, 2013. The parties

filed respective objections to the decision.

{¶13} Via Order dated February 28, 2014, the trial court adopted the

magistrate’s decision with amendments and modifications. Therein, the trial court

overruled Appellant’s objections, sustained Appellee’s objections, and awarded

Appellee prejudgment interest.

{¶14} It is from this order Appellant appeals, assigning as error:

{¶15} "I. THE TRIAL COURT ERRED GRANTING A JUDGMENT TO THE

APPELLEE, TIMOTHY D. MCKINZIE, ON THE SEPTEMBER 27, 2007

CONTINGENCY FEE AGREEMENT THAT WAS SECURED BY A $30,000

PROMISSORY NOTE AND MORTGAGE WHICH ARE ILLEGAL CONTRACTS

UNDER THE OHIO RULES OF PROFESSIONAL CONDUCT §1.5, OHIO PUBLIC

POLICY AS WELL AS DUE TO UNDUE INFLUENCE."

I

{¶16} Appellant maintains the trial court erred in granting judgment in favor of

Appellee based upon the September 27, 2007 contingency fee agreement as the

contract was illegal under Ohio Rule of Professional Conduct 1.5, and was the result of

undue influence. Specifically, Appellant claims the agreement violated Ohio Rule of Stark County, Case No. 2014CA00045 6

Professional Conduct 1.5 because Appellee failed to provide Appellant with a closing

statement; failed to obtain Appellant’s written consent for another attorney’s work; and

violated the considerations set forth in Comment 5 to the Rule.

{¶17} In his Brief to this Court, Appellant neither cites nor appends Ohio Rule of

Professional Conduct 1.5. Appellant also does not specify which subsections Appellee

allegedly violated. Appellant merely asserts Appellee violated the Rule; therefore, the

fee agreement should not be enforced.

{¶18} Upon review of Appellant’s arguments, it appears Appellant is asserting

violations of subsections (c)(2) and (e), which read:

(c) A fee may be contingent on the outcome of the matter for which

the service is rendered, except in a matter in which a contingent fee is

prohibited by division (d) of this rule or other law.* * *

(2) If the lawyer becomes entitled to compensation under the

contingent fee agreement and the lawyer will be disbursing funds, the

lawyer shall prepare a closing statement and shall provide the client with

that statement at the time of or prior to the receipt of compensation under

the agreement. The closing statement shall specify the manner in which

the compensation was determined under the agreement, any costs and

expenses deducted by the lawyer from the judgment or settlement

involved, and, if applicable, the actual division of the lawyer's fees with a

lawyer not in the same firm, as required in division (e)(3) of this rule. The

closing statement shall be signed by the client and lawyer.

*** Stark County, Case No. 2014CA00045 7

(e) Lawyers who are not in the same firm may divide fees only if all

of the following apply:

(1) the division of fees is in proportion to the services performed by

each lawyer or each lawyer assumes joint responsibility for the

representation and agrees to be available for consultation with the client;

(2) the client has given written consent after full disclosure of the

identity of each lawyer, that the fees will be divided, and that the division

of fees will be in proportion to the services to be performed by each lawyer

or that each lawyer will assume joint responsibility for the representation;

(3) except where court approval of the fee division is obtained, the

written closing statement in a case involving a contingent fee shall be

signed by the client and each lawyer and shall comply with the terms of

division (c)(2) of this rule;

(4) the total fee is reasonable.

{¶19} We find the trial court fully considered and analyzed the Rule, and

correctly found it to be inapplicable to the situation.

{¶20} Appellant further maintains the trial court failed to consider Comment 5 to

Rule 1.5, which reads:

An agreement may not be made whose terms might induce the

lawyer to improperly curtail services for the client or perform them in a way

contrary to the client’s interest. For example, a lawyer should not enter

into an agreement whereby services are to be provided only up to a stated

amount when it is foreseeable that more extensive services probably will Stark County, Case No. 2014CA00045 8

be required, unless the situation is adequately explained to the client.

Otherwise, the client might have to bargain for further assistance in the

midst of a proceeding or transaction. However, it is proper to define the

extent of services in light of the client’s ability to pay. A lawyer should not

exploit a fee arrangement based primarily on hourly charges by using

wasteful procedures.

{¶21} We find Comment 5 is not relevant to the fee agreement at issue herein

nor is it binding on this Court. In fact, the Preamble to the Ohio Rules of Professional

Conduct definitively states, “Comments do not add obligations to the rules but provide

guidance for practicing in compliance with the rules.”

{¶22} Assuming, arguendo, the fee agreement violated Rule 1.5, we find any

violation does not necessarily render the agreement unenforceable. The Preamble also

expressly provides, “Violation of a rule should not itself give rise to a cause of action

against a lawyer nor should it create a presumption in such case that a legal duty has

been breached…They are not designed to be a basis for civil liability.”

{¶23} Based upon the foregoing, Appellant’s sole assignment of error is

overruled. Stark County, Case No. 2014CA00045 9

{¶24} The judgment of the Stark County Court of Common Pleas is affirmed.

By: Hoffman, P.J.

Delaney, J. and

Baldwin, J. concur