MRN Ltd. Partnership v. Gamage

[Cite as MRN Ltd. Partnership v. Gamage, 

.]

                                 COURT OF APPEALS OF OHIO

                                EIGHTH APPELLATE DISTRICT
                                   COUNTY OF CUYAHOGA

MRN LIMITED PARTNERSHIP,                              :

                Plaintiff- Appellee,                  :
                                                             No. 112656
                        v.                            :

CHRIS GAMAGE,                                         :

                Defendant-Appellant.                  :


                                  JOURNAL ENTRY AND OPINION

                JUDGMENT: AFFIRMED
                RELEASED AND JOURNALIZED: December 14, 2023


                         Civil Appeal from the Cleveland Municipal Court
                                         Housing Division
                                   Case No. 2021-CVH-009850


                                              Appearances:

                Powers Friedman Linn, PLL, Robert G. Friedman, and
                Thomas P. Owen, for appellee.

                Matt Rolf Attorney LLC and Matthew Rolf, for appellant.


MICHELLE J. SHEEHAN, J.:

                Plaintiff-appellee MRN Limited Partnership (“Plaintiff”) filed the

instant complaint to collect rents and related charges owed by a tenant, defendant-

appellant Chris Gamage (“Gamage”). Attached to the complaint is the subject lease
agreement, which shows the landlord is “Euclid Block Apartments Master Tenant.”

Despite the discrepancy, the parties engaged in litigation for over 15 months. Nine

days before the scheduled trial, Plaintiff filed a “Motion to Substitute Plaintiff” on

the ground that the Plaintiff in this case was incorrectly identified in the complaint.

Gamage opposed the motion and also moved for sanctions. After a hearing, the trial

court dismissed the complaint due to Plaintiff’s lack of standing and it also denied

Gamage’s motion for sanctions. Gamage now appeals from the trial court’s decision

denying sanctions. After a careful review of the record, we conclude that the trial

court did not abuse its discretion in denying Gamage’s motion for sanctions.

Accordingly, we affirm the trial court’s judgment.

Procedural History

             The record reflects rather involved litigation in this rent collection case.

On September 30, 2021, Gamage entered into a lease to rent an apartment located

at 2015 East 4th Street, Cleveland, for a monthly rent of $1,200. The lease was to

begin on September 30, 2020, and end on October 31, 2021. Gamage alleged that it

was his understanding that, as part of a special promotion, his first two months of

occupation would be rent-free and the first-month rent would not be due until

December 2020. After he moved into the apartment, he learned he owed rent for

the month of November 2020, contrary to his understanding. He moved out of the

apartment sometime in November 2020.

               On September 30, 2021, Plaintiff filed a complaint against Gamage

seeking $12,123.17 in rent and related charges from November 2020 to July 2021.
In the lease agreement attached to the complaint, the owner and landlord is listed

as “Euclid Block Apartments Master Tenant.” Also attached to the complaint is a

resident ledger from “MRN” detailing rent charges and payments. MRN was also

listed on a utility bill that was subsequently submitted by Plaintiffs as part of its

damages.

             On April 12, 2022, Gamage filed an answer and counterclaim, pro se.

He alleged he was induced to sign the lease by false advertising promising two

months of free rent. He filed a counterclaim requesting a return of his deposit.

             A month later, on May 26, 2022, Plaintiff filed a motion for summary

judgment on the ground that Gamage failed to answer its request for admissions. A

magistrate held a case-management conference and, on August 12, 2022, issued an

order requiring Plaintiff to re-serve its discovery requests to Gamage at his new

address and set a deadline for Gamage’s response. Gamage failed to respond within

the deadline. On September 9, 2022, Plaintiff again moved for summary judgment

on the ground that defendant failed to respond to its request for admissions.

              On September 29, 2022, Gamage obtained counsel, and on October 6,

2022, counsel filed a notice of appearance. Through his counsel, Gamage filed a

motion requesting a continuance of discovery and dispositive motions and also

moved to amend his answers to Plaintiff’s request for admissions. Counsel alleged

that Gamage did not receive Plaintiff’s request for admissions until after

September 9, 2022, when he received Plaintiff’s second motion for summary

judgment.
              On October 25, 2022, the magistrate issued an order denying

Gamage’s motion for continuance because Gamage failed to file an affidavit

supporting his allegation that he did not receive the discovery requests until after

September 9, 2022. The magistrate found the admissions requested by Plaintiff

were deemed admitted. The magistrate determined that any further delay would be

prejudicial to Plaintiff because this case has been pending for over a year. The

magistrate also set the matter for trial on December 14, 2022.

              A new round of litigation ensued. On November 8, 2022, Gamage

objected to the magistrate’s order denying his motion for continuance.          On

November 14, 2022, Plaintiff filed an opposition to Gamage’s objection and

maintained that the magistrate properly denied an extension of time for discovery

sought by Gamage, arguing that an extension would further delay the resolution of

the case.

            Thereafter, Gamage filed a brief opposing Plaintiff’s motion for

summary judgement, which was solely grounded on Gamage’s failure to answer

Plaintiff’s request for admissions. Plaintiff filed a reply, contending that it was

entitled to summary judgment based on the magistrate’s October 25, 2022 order,

which denied the defendant’s request to amend his answers.          The trial court

overruled Gamage’s objection to the magistrate’s order.

              On December 6, 2022, Plaintiff filed a trial brief. The next day,

Gamage filed his trial statement and requested a continuance of trial. The trial was

rescheduled to January 18, 2023.
                On January 9, 2023, Plaintiff’s counsel filed a “Motion to Substitute

Plaintiff.” Counsel acknowledged that the plaintiff was incorrectly identified in the

complaint as MRN Limited Partnership and requested an order from the court

substituting the real party in interest, Euclid Block Apartments Master Tenant, as

the plaintiff in this case.

                Gamage filed an “Objection and Motion to Dismiss and for

Sanctions.” He argued the case should be dismissed because the substitution of a

party may not be used to correct the error of initiating a lawsuit in the name of a

party who lacked standing when the complaint was filed.

                Gamage also moved for sanctions. He claimed the circumstances in

this case warranted sanctions, alleging that Plaintiff litigated this matter with the

knowledge that it was not the real party in interest. He noted that Plaintiff filed the

“Motion to Substitute Plaintiff” a year and a half after the case was filed and only

days before the matter was scheduled for trial; he also noted that Plaintiff spent the

last four months opposing his request for further discovery and his attempt to

amend his answers to requests for admissions.

                Gamage claimed Plaintiff engaged in protracted litigation while it

knew or should have known it was not the real party in interest and Plaintiff’s

conduct had needlessly extended the litigation and caused him to incur $5,400 in

legal fees to defend himself against a complaint improperly brought. Plaintiff filed a

brief in opposition. It argued Gamage’s claim that the misidentification of the

plaintiff was purposeful was a baseless argument because Plaintiff had no reason to
jeopardize its own case; Gamage never asserted a defense based on Plaintiff’s lack of

standing; and Gamage was not adversely affected by the misidentification because

it ultimately resulted in a dismissal of the case.

               On January 18, 2023, the magistrate held a hearing on Plaintiff’s

“Motion to Substitute Party” and Gamage’s opposition to the motion and his motion

for sanctions. Plaintiff’s counsel stated at the hearing that the name of “MRN” was

only used as a “marketing or design tool” and acknowledged that the lease

agreement is between Gamage and Euclid Block Apartments Master Tenant.

Gamage’s counsel argued that Civ.R. 25, which governs the substitution of a party,

would not allow the substitution of the plaintiff in this case and, therefore, the

instant complaint should be dismissed. Regarding Gamage’s motion for sanctions,

while Gamage made arguments for sanctions in his brief, our review of the transcript

indicates that the magistrate specifically afforded Gamage an opportunity to argue

the motion, but Gamage did not submit any evidence to support his claim that

Plaintiff’s conduct should be deemed frivolous and warrant an imposition of

sanctions.

               After the hearing, the magistrate issued an order denying the “Motion

to Substitute Plaintiff” because Civ.R. 25 only allows the substitution of a party in

the cases of death, incompetency, transfer of interest, or death or separation of office

of a public officer. The magistrate found the identification of “MRN Limited

Partnership” as Plaintiff to be the result of mistake or oversight, but agreed with

Gamage that the complaint should be dismissed pursuant to Fed. Home Loan Mtge.
Corp. v. Schwartzwald, 

, 

, 

, which

held that the substitution of a party may not be used to correct the error of initiating

a lawsuit in the name of a party that did not have standing to sue when the complaint

was filed. The magistrate dismissed the complaint without prejudice and denied

Gamage’s motion for sanctions.

               Thereafter, Gamage filed a motion to set aside the portion of the

magistrate’s order that denied his motion for sanctions, arguing that Plaintiff

engaged in frivolous conduct pursuant to Civ.R. 11 and R.C. 2323.51 in bringing the

complaint and then engaged in extensive litigation while it knew or should have

known the complaint was improperly brought.             While Plaintiff’s motion for

summary judgment was based on Gamage’s failure to timely respond to the

discovery requests and therefore would not have required an affidavit, Gamage

alleged Plaintiff’s counsel knew its client lacked standing when counsel filed that

motion without an affidavit. Gamage alleged Plaintiff chose to continue to litigate

for several more months despite its awareness of the deficiency of the complaint. He

argued he was entitled to an award of sanctions for having to defend against an

improperly brought lawsuit for 15 months. Plaintiff filed an opposition to the

motion, arguing that its conduct was not frivolous because it had taken corrective

action to substitute the property party after becoming aware that the plaintiff was

misidentified in the complaint.

               The trial court denied the motion for sanctions on the ground that the

misnaming of the plaintiff was a result of mistake and oversight rather than
egregious or frivolous conduct.      Gamage now appeals from the trial court’s

judgment. He raises the following three assignments of error for our review:

       I.     The trial court erred in failing to find plaintiff’s conduct in
              bringing an action as a party not in interest was frivolous.

       II.    The trial court erred in failing to consider conduct of plaintiff
              subsequent to the filing of the complaint in determining
              whether plaintiff’s conduct was frivolous.

       III.   The trial court erred in failing to hold a hearing on reasonable
              attorney fees and other sanctions to be awarded to defendant.

               The only issue presented on appeal is the trial court’s denial of the

motion for sanctions. As the assignments of error are related, we address them

jointly.

Standard of Review and Applicable Law

               Gamage argues the trial court abused its discretion in not finding

Plaintiff’s conduct in this case frivolous under Civ.R. 11 and R.C. 2323.51. A decision

to grant or deny sanctions under R.C. 2323.51 and Civ.R. 11 rests within the sound

discretion of the trial court. Walters v. Carter, 8th Dist. Cuyahoga No. 108555,

, ¶ 17; Bikkani v. Lee, 8th Dist. Cuyahoga No. 89312, 2008-Ohio-

3130, ¶ 30.

               Civ.R. 11 governs the signing of pleadings and it states:

       The signature of an attorney or pro se party constitutes a certificate by
       the attorney or party that the attorney or party has read the document;
       that to the best of the attorney's or party’s knowledge, information,
       and belief there is good ground to support it; and that it is not
       interposed for delay. ***. For a willful violation of this rule, an
       attorney or pro se party, upon motion of a party or upon the court’s
       own motion, may be subjected to appropriate action, including an
       award to the opposing party of expenses and reasonable attorney fees
       incurred in bringing any motion under this rule.

When deciding whether a violation is willful, the trial court applies a subjective bad-

faith standard. Grimes v. Oviatt, 8th Dist. Cuyahoga No. 104491, 

,

¶ 24, citing Riston v. Butler, 

, 

, 

 (1st Dist.).

                Pursuant to R.C. 2323.51(A)(2)(a)(i)-(iii), “frivolous conduct” means

the conduct of a party or the party’s counsel that satisfies any of the following:

       (i) It obviously serves merely to harass or maliciously injure another
       party to the civil action or appeal or is for another improper purpose,
       including, but not limited to, causing unnecessary delay or a needless
       increase in the cost of litigation.

       (ii) It is not warranted under existing law, cannot be supported by a
       good faith argument for an extension, modification, or reversal of
       existing law, or cannot be supported by a good faith argument for the
       establishment of new law.

       (iii) The conduct consists of allegations or other factual contentions
       that have no evidentiary support or, if specifically so identified, are
       not likely to have evidentiary support after a reasonable opportunity
       for further investigation or discovery.

When determining whether a conduct is frivolous pursuant to R.C. 2323.51, we

apply an objective standard. Grimes, supra, at ¶ 25; Bikkani at ¶ 22.

                Pursuant to R.C. 2323.51(A)(1)(a), “conduct” encompasses “[t]he

filing of a civil action, the assertion of a claim, defense, or other position in

connection with a civil action, the filing of a pleading, motion, or other paper in a

civil action, * * * or the taking of any other action in connection with a civil action.”
               Frivolous conduct, as contemplated by R.C. 2323.51(A)(2)(a), is

judged under an objective standard and “must involve egregious conduct.” State ex

rel. DiFranco v. Euclid, 

, 

, 

.

“Frivolous conduct is not proved merely by winning a legal battle or by proving that

a party’s factual assertions were incorrect.” 

 citing Ohio Power Co. v. Ogle, 4th

Dist. Hocking No. 12CA14, 

 (a litigant is not frivolous

merely because a claim is not well-grounded in fact; R.C. 2323.51 is designed to chill

egregious, overzealous, unjustifiable, and frivolous action).

               Finally, R.C. 2323.51(B)(2) requires an evidentiary hearing before

granting an award but does not address whether an evidentiary hearing is required

before denying the award. Russell v. Ryan, 2021 Ohio-2505, 

(10th Dist.). Although a hearing is not explicitly required by R.C. 2323.51, this court

has held that “‘[i]f an arguable basis exists for an award of sanctions, then the trial

court must hold a hearing on the issue.’” D.L.M. v. D.J.M., 8th Dist. Cuyahoga

No. 107992, 

, quoting Fitworks Holdings, L.L.C. v. Pitchford-

El, 8th Dist. Cuyahoga No. 88364, 

. However, a hearing on a

motion for sanctions is not required “where the court has sufficient knowledge of

the circumstances for the denial of the requested relief and the hearing would be

perfunctory, meaningless, or redundant.” Wilson v. Wilson, 8th Dist. Cuyahoga

No. 112105, 

, ¶ 39
Analysis

              Gamage argues sanctions should be imposed, alleging that Plaintiff’s

counsel knew as early as May 26, 2022, that MRN Limited Partnership was not the

proper party when Plaintiff’s counsel filed the motion for summary judgment

without an accompanying affidavit. He claims the delay in the disclosure of the real

party in interest caused him unnecessary expenditures in legal fees.

               The record reflects that the magistrate held a hearing on Plaintiff’s

“Motion to Substitute Party,” Gamage’s opposition to that motion, and his motion

for sanctions. At the hearing, Gamage successfully contested Plaintiff’s standing to

bring the instant complaint, which led to the court’s dismissal of the complaint.

However, he presented no evidence or otherwise argued the merit of his motion for

sanctions. The trial court found the misidentification was a result of mistake or

oversight and denied sanctions accordingly.

              Plaintiff’s counsel filed the instant complaint in the name of “MRN

Limited Partnership” while the lease agreement attached to the complaint identifies

the landlord as “Euclid Block Apartments Master Tenant.” The ledger, also attached

to the complaint, shows the name “MRN” on the top of the document. While the

discrepancy regarding the name of the landlord appears to be evident from a review

of the complaint and the attached exhibits, the parties engaged in protracted

litigation for over 15 months seemingly unaware of it. While Plaintiff did not bring

the apparent discrepancy to the trial court’s attention until it filed a “Motion to

Substitute Party,” Gamage or his counsel never raised the issue of standing while
vigorously defending the complaint. While Gamage alleges Plaintiff knew or should

have known it was not the proper party but continued to litigate the case in bad faith,

he did not present any evidence to support his claim at the January 18, 2023 hearing

when an opportunity was afforded by the magistrate. The record before us indicates

Plaintiff’s belated disclosure is nothing more than a result of oversight, as the trial

court found.

               The circumstances of this case do not appear to reflect sanctionable

conduct under a subjective willfulness standard pursuant to Civ.R. 11 or under an

objective standard of egregious conduct pursuant to R.C. 2323.51. Having reviewed

the record, we decline to disturb the trial court’s decision denying sanctions in the

exercise of its discretion. Gamage had an opportunity at the January 18, 2022

hearing to present evidence to support his allegation of sanctionable conduct but did

not. Furthermore, we note that the same magistrate presided during the entire

course of the proceedings in this case, which included a pretrial conference and the

hearing, and numerous motions filed by the parties. As such, the record indicates

the trial court had sufficient knowledge of the circumstances for the denial of

sanctions. Gamage’s contention that the trial court erred in failing to hold a hearing

on the issue of sanctions is without merit. 

 The first, second, and

third assignments of error lack merit.

               Judgment affirmed.

      It is ordered that appellee recover of appellant costs herein taxed.

      The court finds there were reasonable grounds for this appeal.
      It is ordered that a special mandate issue out of this court directing the

municipal court to carry this judgment into execution.

      A certified copy of this entry shall constitute the mandate pursuant to Rule 27

of the Rules of Appellate Procedure.



_________________________________
MICHELLE J. SHEEHAN, JUDGE

FRANK DANIEL CELEBREZZE, III, P.J., and
EILEEN T. GALLAGHER, J., CONCUR