Hagy et al v. Demers & Adams, LLC et al

Filing 143

OPINION AND ORDER granting 140 motion for leave to file a supplemental complaint filed by Plaintiff James R. Hagy, III, on behalf of himself and Patricia R. Hagy. Signed by Magistrate Judge Terence P Kemp on 03/23/2015. (sr1)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
James R. Hagy, III, et al.,
Plaintiffs,

:
:

v.

:

Case No. 2:11-cv-530

:
Demers & Adams, LLC, et al.,

Magistrate Judge Kemp
:

Defendants.
OPINION AND ORDER
This matter is before the Court on a second motion for leave
to file a supplemental complaint filed by Plaintiff James R.
Hagy, III, on behalf of himself and Patricia R. Hagy1 (“the
Hagys”) (Doc. #140).

For the reasons set forth below, the motion

will be granted.
I. Background
The factual background of this case has been set forth in
previous orders of this Court and will not be repeated in great
detail here.

For purposes of resolving the present motion,

however, the Court notes that this case arises from a foreclosure
action initiated by the Law Firm Defendants on behalf of Green
Tree against the Hagys.

After the foreclosure action was filed,

the Hagys signed a warranty deed in lieu of foreclosure in return
for which it was agreed that there would be no attempt to collect
any deficiency balance.

Thereafter, the foreclosure complaint

was dismissed, but Green Tree began contacting the Hagys by
telephone for the collection of an alleged deficiency.
The Hagys filed this case against the Law Firm Defendants
and Green Tree alleging violations of the Fair Debt Collection

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On February 9, 2012, this Court granted James R. Hagy’s
motion requesting that he be substituted for his wife, Patricia
R. Hagy, following Mrs. Hagy’s death. (Doc. #47).

Practices Act (“FDCPA”), 15 U.S.C. §§1692, et seq., the Ohio
Consumer Sales Practices Act (“OCSPA”), O.R.C. §§1345.01 et seq.,
and common law invasion of privacy.

In an opinion and order

issued on October 22, 2013, the Court entered judgment in favor
of the Hagys and against the Law Firm Defendants in the total
amount of $76,307.67.

The arbitration claims remained pending

and were not resolved by the Court’s opinion and order.
On January 3, 2014, the Hagys filed the motion for leave to
file a supplemental complaint pursuant to Fed. R. Civ. P. 15(d).
In the motion, the Hagys alleged that the proposed supplemental
complaint set forth new facts bearing on the relationship between
the parties, and stated a new claim against ProAssurance Casualty
Company (“ProAssurance”), the company which insures the Law Firm
Defendants.

In an opinion and order issued on February 26, 2014,

the Court found that there was not a final judgment and a lapse
of thirty days since that judgment without payment.
Consequently, the Court denied the Hagys’ motion for leave to
file a supplemental complaint as untimely.
Thereafter, Magistrate Judge Norah McCann King held a
settlement conference with the parties concerning the arbitration
claims.

On October 15, 2014, Magistrate Judge King issued an

order stating that the parties had agreed to terms of settlement
and the language of settlement documents.

Consequently, at the

suggestion of the Hagys and with the agreement of the defendants,
Magistrate Judge King dismissed the action, but indicated that
the Court would retain jurisdiction to effectuate the terms of
the settlement.

(Doc. #135).

On October 16, 2014, Magistrate Judge King issued a nunc pro
tunc order, clarifying that “the parties have agreed to terms of
settlement and the language of settlement documents regarding the
arbitration claims only.”

Thus, Magistrate Judge King ordered

dismissal of the arbitration claims only, and again indicated

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that the Court would retain jurisdiction to effectuate the terms
of settlement.

(Doc. #136).

On December 22, 2014, the parties filed a “stipulation of
settlement of arbitration claims only.”

(Doc. #139).

The

stipulation states:
Plaintiff James R. Hagy, III has settled the arbitration
claims against Green Tree Servicing, LLC and Kevin
Winehold that this Court referred to arbitration (Doc.
44).
Accordingly, the arbitration claims only are
dismissed with prejudice. Each party to this settlement
shall pay his/its own attorney fees and costs.
Id.

The stipulation is signed by “Plaintiffs’ Attorney” Edward

A. Icove and “Defendants’ Attorney” Adam J. Bennett.
On February 5, 2015, the Hagys filed the second motion for
leave to file a supplemental complaint.

(Doc. #140).

In the

motion, the Hagys contend that the stipulation, filed pursuant to
Fed. R. Civ. P. 41(a)(1)(A)(ii), was a final appealable order.
The Hagys contend that, because more than thirty days have lapsed
since the parties filed the stipulation, the Court can properly
consider their motion.

The Hagys state that the following “new

facts” are relevant to their motion:
In a November 21, 2013 email, the undersigned
counsel notified Law Firm Defendants that a failure to
move to stay the execution of the judgment would result
in execution proceedings.
See proposed complaint,
Exhibit F.
Neither Law Firm Defendants, nor anyone on their
behalf, has responded to the November 21, 2013 email.
Neither Law Firm Defendants, nor anyone on their behalf,
has filed a motion to post an appeal bond.
Supplemental Defendant [ProAssurance], who insured
Law Firm Defendants, was timely notified by the Hagys
regarding this action so that its rights would not be
prejudiced.
See proposed complaint at 2, ¶¶7, 8.
Defendant Pro Assurance has not contacted the Hagy’s
counsel since acknowledging receipt of notification of
this law suit [sic].
(Doc. #140 at 2).

The Hagys argue that the supplemental

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complaint alleges new facts bearing on the relationship between
the parties, and it states a new claim against ProAssurance under
O.R.C. §3929.06.

Accordingly, the Hagys request leave to file

the supplemental complaint.
In response, defendants argue that no final order exists in
the case, and “[n]othing has changed the status of this Court’s
decision of October 22, 2013 as a non-final order.”
at 1).

(Doc. #141

More specifically, defendants argue that:

[t]he stipulation (Doc. #139) filed by the parties meets
none of the requirements of Rule 54(b). First, it is not
an “order or other decision”, but rather a stipulation.
Second, it was not directed, issued or signed by this
Court. Third, it does not adjudicate anything. Fourth,
it addresses fewer than all the claims or the rights and
liabilities of fewer than all of the parties. Fifth, it
does not expressly determine that there is not [sic] just
cause for delay, and since it is not authored by this
Court but rather the parties to this case, it would be
nonsensical for the stipulation to insert ‘no just cause
for delay’ language.
Id. at 2.

According to defendants, the stipulation merely

“inform[s] the Court of the status of the arbitration claims,”
but it is up to the Court to issue a final appealable order or
certify pursuant to Fed. R. Civ. P. 54(b) that there is no just
cause for delay.

Id. at 2-3.

In reply, the Hagys assert that Fed. R. Civ. P. 54(b)
applies to interlocutory appeals only and is inapplicable here
because “this case was terminated by the December 22, 2014
Stipulation of Settlement of Arbitration Claims Only....”
#142 at 1).

(Doc.

The Hagys claim that the primary issue before this

Court is whether a dismissal under Fed. R. Civ. P.
41(a)(1)(A)(ii), signed by all parties to the action, terminates
the case and constitutes a final appealable order absent any
Court intervention.

Based upon the foregoing, the second motion

for leave to file a supplemental complaint has been briefed
fully, and it is now ripe for decision.
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II. Discussion
As in its prior motion to file a supplemental complaint, the
Hagys seek to bring the supplemental complaint pursuant to O.R.C.
§3929.06 and a complaint for declaratory judgment pursuant to
O.R.C. §§2201-2202.

Ohio Revised Code §3929.06 provides, in

relevant part, that
(A)(1) If a court in a civil action enters a final
judgment that awards damages to a plaintiff for injury,
death, or loss to the person or property of the plaintiff
or another person for whom the plaintiff is a legal
representative and if, at the same time that the cause of
action accrued against the judgment debtor, the judgment
debtor was insured against liability for that injury,
death, or loss, the plaintiff or the plaintiff’s
successor in interest is entitled as judgment creditor to
have an amount up to the remaining limit of liability
coverage provided in the judgment debtor’s policy of
liability insurance applied to the satisfaction of the
final judgment.
(2) If, within thirty days after the entry of the final
judgment referred to in division (A)(1) of this section,
the insurer that issued the policy of liability insurance
has not paid the judgment creditor an amount equal to the
remaining limit of liability coverage provided in that
policy, the judgment creditor may file in the court that
issued the final judgment a supplemental complaint
against the insurer seeking the entry of a judgment
ordering the insurer to pay the judgment creditor the
requisite amount.
Subject to division (C) of this
section, the civil action based on the supplemental
complaint shall proceed against the insurer in the same
manner as the original civil action against the judgment
debtor.
(B) Division (A)(2) of this section does not authorize
the commencement of a civil action against an insurer
until a court enters the final judgment described in
division (A)(1) of this section in the distinct civil
action for damages between the plaintiff and an insured
tortfeasor and until the expiration of the thirty-day
period referred to in division (A)(2) of this section.
The statute, therefore, “creates a subrogation action, wherein
the injured party stands in the shoes of the insured against his
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or her insurer, and the statute may only be used to bring
insurers into an action.”

Elkins v. American Int’l Special Lines

Ins. Co., 611 F. Supp. 2d 752, 758 (S.D. Ohio 2009).

The statute

creates two conditions precedent to the filing of a supplemental
complaint.

Specifically, there must be (1) a final judgment and

(2) a lapse of thirty days since that judgment without payment of
the judgment in order for a judgment creditor to properly file a
supplemental complaint.

See Martin v. Turner & Son Building

Contractor, No. 2010-L-137, 2010 WL 5296143, at *3 (Ohio App. 11
Dist. Dec. 20, 2010)(citing O.R.C. §3929.06(B)).
In the February 26, 2014 opinion and order, this Court
addressed whether its October 22, 2013 judgment constituted a
final appealable order under Rule 54(b).

The Court noted that,

although there were no remaining claims against the Law Firm
Defendants, there were remaining claims against the Green Tree
Defendants which had been stayed pending arbitration.

Further,

despite entering judgment in favor of the Hagys and against the
Law Firm Defendants in the amount of $76,307.67, the Court had
not certified pursuant to Fed. R. Civ. P. 54(b) that there was no
just cause for delay.

Consequently, the Court found that a final

order had not been issued in this case.
The procedural posture of this case has changed since the
Court issued the February 26, 2014 opinion and order.

Most

significantly, the remaining arbitration claims have been
settled, and the parties filed a stipulation on December 22, 2014
memorializing that settlement.

Thus, there are no claims pending

before this Court for resolution.
Although O.R.C. §3929.06 uses the term “final judgment,” it
does not mandate a final judgment under Rule 54(b).

Because the

terms “final judgment” and “final appealable order” are often
used interchangeably, the relevant inquiry is whether there
exists a final appealable order in the case.

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See, e.g., Northern

v. U.S., 300 F.2d 131, 132 (6th Cir. 1962) (noting that “only
those decisions which are final may be appealed to the Court of
Appeals”).

Thus, the sole issue before the Court is whether the

December 22, 2014 stipulation constitutes a final appealable
order.

While the Hagys argue that the stipulation under Fed. R.

Civ. P. 41(a)(1)(ii) created a final appealable order, defendants
maintain there is no final appealable order until the Court
issues a final judgment under Fed. R. Civ. P. 54(b).

The Court

first examines the language of those rules and then discusses
applicable case law.
Fed. R. Civ. P. 41(a) addresses the voluntary dismissal of
actions.

Fed. R. Civ. P. 41(a)(1)(ii) provides that a plaintiff

may dismiss an action “without a court order” by filing “a
stipulation of dismissal signed by all parties who have
appeared.”

Thus, a stipulation filed pursuant to Fed. R. Civ. P.

41(a)(1)(ii) terminates a case without any further action from
the Court.

Stated differently, the Court need not enter a final

judgment to terminate the case because the stipulation is a final
appealable order which terminates the case.
Fed. R. Civ. P. 54(b) addresses a different situation.

That

rule is applicable when the case is terminated as the result of
the Court’s issuance of a final judgment, and not a voluntary
dismissal.

Fed. R. Civ. P. 54(b) sets forth the particular

requirements which are necessary for a Court order to constitute
a final judgment.

Under that rule, a Court order will not

terminate a case unless the Court issues a final appealable order
which enters judgment and finds that there is no just reason for
delay.

There is no need for a final judgment under Fed. R. Civ.

P. 54(b) if a Fed. R. Civ. P. 41(a)(1)(ii) stipulation has been
filed.
In Fassett v. Delta Kappa Epsilon (New York), 807 F.2d 1150,
1155 (3d Cir. 1986), the Third Circuit addressed whether the

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voluntary dismissal of claims remaining in a multi-party
litigation constituted a final appealable order.

In that case,

the District Court Judge entered an order granting summary
judgment in favor of all but one of the defendants.

The Court of

Appeals noted that the order granting summary judgment did not
become final, however, until the claims against the remaining
defendant were voluntarily dismissed.

The Court of Appeals

reached this conclusion because the “dismissal left no
outstanding issues or parties before the district court.”

Id. at

1155.
Other courts have taken a “pragmatic approach” to
determining the finality of the document last filed.

See Matter

of Lytton’s, Henry C. Lytton & Co., 1986 WL 11662, at *5 (N.D.
Ill. Oct. 10, 1986), citing In re Amatex Corp., 755 F.2d 1034 (3d
Cir. 1985).

Such an approach requires the Court to examine the

“practical effect” of the document at issue.

See id.; see also

Wallace ex rel. Wallace v. Oklahoma Dept. of Human Servs., 2004
WL 1875048, at *1 (10th Cir. Aug. 23, 2004)(applying the
“practical effect” test to determine whether order denying motion
to modify consent decree was final and appealable).

Similarly,

the Court of Appeals has noted that functional compliance, rather
than formalistic compliance, is “all that is required” to
establish jurisdiction for a notice of appeal in the Sixth
Circuit.

Isert v. Ford Motor Co., 461 F.3d 756, 759 (6th Cir.

2006).
Applying a “pragmatic approach” to determine the finality of
the stipulation, the Court observes that, although the
stipulation addressed settlement of the arbitration claims only,
it had the practical effect of eliminating any claims remaining
before the Court for resolution.

Stated differently, once the

stipulation was filed, the Court had no claims before it to
resolve.

Thus, the stipulation had the practical effect of

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terminating the case.

Further, as the Hagys point out, the

stipulation was signed by all of the parties to the action
because Mr. Bennett is counsel of record for both the Law Firm
Defendants and the Green Tree Defendants.

Consequently, there

can be no argument that the Law Firm Defendants were unaware of
the stipulation and its practical effect of resolving the
remaining claims in the case.

Based on the foregoing, the Court

finds that the stipulation constitutes a final appealable order
which terminated this case.

Because there has been a lapse of

more than thirty days since that final appealable order without
payment, the Hagys can properly file the supplemental complaint.
Consequently, the Hagys’ second motion for leave to file a
supplemental complaint will be granted.

(Doc. #140).

III. Conclusion
For the reasons set forth above, the Hagys’ second motion
for leave to file a supplemental complaint is granted (Doc.
#140).
/s/ Terence P. Kemp
UNITED STATES MAGISTRATE JUDGE

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