Patel v. Zervas et al

Filing 11

ORDER denying 6 Motion to Dismiss for Lack of Jurisdiction. Signed by Judge James L Graham on 12/10/2013. (ds)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Pritika Patel, individually,
and as Special Administrator
of the Estate of Rumanbhaim
Patel, aka Raman Patel aka
Rayman Patel, deceased,
Plaintiffs,
v.

Case No. 2:13-cv-499

John A. Zervas, et al.,
Defendants.
OPINION AND ORDER
This

is

an

action

brought

by

plaintiff

Pritika

Patel

(“Patel”), individually and as special administrator of the estate
of Rumanbhaim Patel, against defendants John A. Zervas and John A.
Zervas Co., L.P.A.

Patel is a resident of Merrillville, Indiana,

and defendants have their principal place of business in Columbus,
Ohio.

Plaintiffs

assert

claims

under

Ohio

law

for

legal

malpractice for failure to prosecute a claim and for negligent
handling of a legal matter.
Plaintiffs allege that on December 2, 2011, Patel engaged
defendants to pursue an action against Thomas Lambrecht, Thomas
Lambrecht Financial Services, and other defendants to recover
damages for breach of contract and fiduciary duties arising out of
the sale of a Scottish Inn in Bloomington, Indiana.

Complaint, ¶

9. Defendants, as counsel, filed the action in the Court of Common
Pleas of Athens County, Ohio.

Complaint, ¶ 10.

defendants attorney fees in the amount of $19,000.
11.

Patel paid
Complaint, ¶

Plaintiffs allege that defendants failed to prosecute the

action, which was dismissed without prejudice on October 25, 2012.

Complaint, ¶ 12. Plaintiffs further contend that defendants failed
to respond to motions to dismiss filed in that action, that
defendants were given a show cause order by the Athens County court
for failure to proceed, that defendants failed to appear at a
hearing on a motion to dismiss and a status conference on October
15, 2012, and that defendants have taken no further action to
protect

the

plaintiffs’

claims.

Complaint,

¶¶

13-15,

17.

Plaintiffs further allege that Patel has suffered a loss of $50,000
as a result of defendants’ failure to prosecute her claims.
Complaint, ¶ 16.

Plaintiffs allege that defendants negligently

failed to prosecute their claims, to respond to the motion to
dismiss, or to present evidence sufficient to set aside the
judgment of the trial court under Ohio R. Civ. P. 60(b), thereby
failing to conform to the standard of care required by law.
Plaintiffs allege that defendants’ negligence caused plaintiffs
irreparable harm, and that there was a causal relationship between
defendants’ negligent conduct and plaintiffs’ failure to recover
their damages in the state court action.

Complaint, ¶¶ 19-27.

This matter is before the court on defendants’ motion to
dismiss pursuant to Fed. R. Civ. P. 12(b)(1) for failure to meet
the

$75,000

amount-in-controversy

requirement

for

diversity

jurisdiction, and pursuant to Fed. R. Civ. P. 12(b)(6) for failure
to state a claim for relief.
I. Motion to Dismiss Based on Lack of Diversity Jurisdiction
Defendants have filed a motion to dismiss for lack of subject
matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1), contending
that the complaint fails to allege damages in an amount sufficient
to

satisfy

the

$75,000

amount-in-controversy

2

requirement

for

diversity

jurisdiction.

See

28

U.S.C.

§

1332(a).

Where

a

defendant raises the issue of lack of subject matter jurisdiction
under Rule 12(b)(1), the plaintiff has the burden of proving
jurisdiction in order to survive the motion to dismiss.

DXL, Inc.

v. Kentucky, 381 F.3d 511, 516 (6th Cir. 2004).
“To defeat diversity jurisdiction, ‘[i]t must appear to a
legal

certainty

that

the

jurisdictional amount.’”

claim

is

really

for

less

than

the

Charvat v. GVN Michigan, Inc., 561 F.3d

623, 628 (6th Cir. 2009)(quoting St. Paul Mercury Indem. Co. v. Red
Cab Co., 303 U.S. 283, 289 (1938)); see also Saglioccolo v. Eagle
Ins. Co., 112 F.3d 226, 232 (6th Cir. 1997).

“Generally, the

amount claimed by the plaintiff in the complaint rules, as long as
claimed in good faith[.]”

Charvat, 561 F.3d at 628; Jones v. Knox

Exploration Corp., 2 F.3d 181, 182 (6th Cir. 1993).

Dismissal is

proper if the amount alleged in the complaint was never recoverable
in the first instance, such as where applicable law bars the type
of damages sought by plaintiff.

Id.; see also Kovacs v. Chesley,

406 F.3d 393, 396 (6th Cir. 2005)(noting that most courts have
found a legal certainty that more than the jurisdictional amount
could not be recovered only where the applicable state law barred
the type of damages sought by plaintiff).
the

amount-in-controversy

requirement

In determining whether

has

been

met,

punitive

damages must be considered unless it is apparent to a legal
certainty that punitive damages cannot be recovered.

Hayes v.

Equitable Energy Resources Co., 266 F.3d 560, 572 (6th Cir. 2001).
In a diversity case, this court must apply the substantive law
of the forum state; in this case, the substantive law of Ohio
governs.

Lutz v. Chesapeake Appalachia, L.L.C., 717 F.3d 459, 464

3

(6th Cir. 2013); Armisted v. State Farm Mut. Automobile Ins. Co.,
675 F.3d 989, 995 (6th Cir. 2012).

The Federal Rules of Civil

Procedure control pleading in diversity cases.

Lutz, 717 F.3d at

475.
The complaint in the instant case states that the “amount in
controversy exceeds the jurisdictional threshold for a proceeding
in

a

federal

district

Complaint, ¶ 4.

court

being

greater

than

$75,000.”

Plaintiffs allege that Patel paid defendants

$19,000 in attorney fees for services that were not rendered, and
that Patel suffered a loss of $50,000 when defendants failed to
prosecute

her

aggregate

to

claim.
a

claim

Complaint,
for

¶¶

$69,000

in

11,

16.

These

compensatory

Plaintiffs also pray for an award of punitive damages.

amounts

damages.
Complaint,

Prayer ¶ C. While no amount of punitive damages is specified, Ohio
law permits the entry of a judgment for punitive damages not to
exceed two times the amount of compensatory damages awarded to the
plaintiff

from

any

§2315.21(D)(2)(a).

one

defendant.

Under

this

See

provision,

Ohio

Rev.

Code

plaintiff

could

conceivably be awarded up to $138,000 in punitive damages.

These

amounts, when aggregated, satisfy the jurisdictional requirement.
Defendants argue that plaintiffs have failed to adequately
plead malice, a prerequisite for recovering punitive damages under
Ohio law.

Ohio Rev. Code §2315.21(C) provides that punitive

damages are not recoverable unless (1) the actions or omissions of
the defendant demonstrate malice or aggravated or egregious fraud,
and (2) the trier of fact has returned a verdict or made a
determination

that

compensatory

plaintiff from the defendant.

damages

are

recoverable

by

Ohio Rev. Code §2315.21(C)(1) and

4

(2).

Actual malice exists when the facts demonstrate either (1) a

state of mind under which a person’s conduct is characterized by
hatred, ill will or a spirit of revenge, or (2) a conscious
disregard for the rights and safety of others that has a great
probability of causing substantial harm.

Calmes v. Goodyear Tire

Rubber Co., 61 Ohio St.3d 470, 473, 575 N.E.2d 416 (1991).

In a

case of conscious disregard, the court must review the evidence to
determine

if

reasonable

minds

can

differ

as

to

whether

the

defendant was aware that his act had a great probability of causing
substantial harm, and if sufficient evidence was presented that the
defendant consciously disregarded “the injured party’s rights or
safety.” Preston v. Murty, 32 Ohio St.3d 334, 336, 512 N.E.2d 1174
(1987); see also Magical Farms, Inc. v. Land O’Lakes, Inc., 356
Fed.Appx. 795, 798 (6th Cir. 2009)(noting that under Ohio law, a
conscious disregard for another person’s property rights alone is
sufficient to establish malice).
Defendants note that the plaintiffs have asserted only legal
malpractice claims based on negligence. Although Ohio law requires
an award of punitive damages to be based on something more than
mere negligent conduct, see Preston, 32 Ohio St.3d at 335, “a claim
based on negligence can provide the basis for an award of punitive
damages if there is an adequate showing of actual malice.”

Burns

v. Prudential Securities, Inc., 167 Ohio App.3d 809, 843, 857
N.E.2d 621 (2006); see also Moskovitz v. Mt. Sinai Medical Center,
69 Ohio St.3d 638, 650, 635 N.E.2d 331 (1994)(noting that award of
compensatory damages for medical malpractice claim “formed the
necessary

foundation

for

the

award

of

punitive

damages”).

Therefore, even though plaintiffs’ underlying legal malpractice

5

claims are pleaded as negligence claims, recovery of compensatory
damages on these claims could provide a basis for an award of
punitive damages if the evidence establishes that defendants acted
with malice.
Punitive damages need not be specially pleaded or claimed.
Lambert v. Shearer, 84 Ohio App.3d 266, 273, 616 N.E.2d 965 (1992).
However, plaintiff must allege facts in the complaint from which
the essential element of actual malice may be inferred.

Id., 84

Ohio App.3d at 274; Flex Homes, Inc. v. Ritz-Craft Corp. of
Michigan, Inc., 721 F.Supp.2d 663, 675 no. 10 (N.D.Ohio 2010)(under
Ohio law, plaintiff must allege in the complaint facts sufficient
to raise an inference of actual malice in order to present a claim
for punitive damages); see also Charvat, 630 F.3d at 462-63 (noting
that

“Charvat’s

pleadings

leave

it

unclear

whether

he

has

‘plausibl[y]’ made sufficient allegations to satisfy [the Ohio law
requirements for punitive damages] with respect to his common law
... claims”).
The complaint in the instant case alleges that defendants
failed to prosecute plaintiffs’ claim in the Athens County Common
Pleas Court for more than one year, that defendants failed to
respond to motions to dismiss, that defendants were given a show
cause order for failure to appear, that defendants failed to appear
at a hearing on a motion to dismiss or a status conference on
October 15, 2012, and that the plaintiffs’ complaint was dismissed
without prejudice on October 25, 2012.

Complaint, ¶¶ 12-15.

Plaintiffs further allege that defendants had the opportunity
following

the

dismissal

of

the

action

to

present

evidence

sufficient to warrant setting aside the judgment of the trial court

6

under Ohio Rule 60(b), but failed to take any further action to
protect

plaintiffs’

claims.

Complaint,

¶¶

17,

25.

These

allegations are sufficient to allege that defendants acted with a
conscious

disregard

for

plaintiffs’

legal

rights,

and

that

defendants were aware that their failure to pursue plaintiffs’
legal claims had a great probability of causing substantial harm to
plaintiffs’ rights. See
Ohio St.3d at

336.

Calmes, 61 Ohio St.3d at 473; Preston, 32

The complaint contains allegations sufficient

to raise an inference of actual malice as a basis for an award of
punitive damages.
II. Motion to Dismiss for Failure to State a Claim
Defendants also argue that plaintiffs’ complaint fails to
state a claim for legal malpractice under Ohio law.

In ruling on

a motion to dismiss under Rule 12(b)(6), the court must construe
the complaint in a light most favorable to the plaintiff, accept
all

well-pleaded

allegations

in

the

complaint

as

true,

and

determine whether plaintiff undoubtedly can prove no set of facts
in support of those allegations that would entitle him to relief.
Erickson v. Pardus, 551 U.S. 89, 94 (2007); Bishop v. Lucent
Technologies, Inc., 520 F.3d 516, 519 (6th Cir. 2008); Harbin-Bey
v. Rutter, 420 F.3d 571, 575 (6th Cir. 2005).
to

dismiss,

the

“complaint

must

contain

To survive a motion
either

direct

or

inferential allegations with respect to all material elements
necessary to sustain a recovery under some viable legal theory.”
Mezibov v. Allen, 411 F.3d 712, 716 (6th Cir. 2005).
In order to recover on a claim for legal malpractice under
Ohio law, plaintiff must show: (1) that the attorney owed a duty or
obligation to the plaintiff, (2) that there was a breach of that

7

duty or obligation and that the attorney failed to conform to the
standard required by law, and (3) that there is a causal connection
between the conduct complained of and the resulting damage or loss.
Vahila v. Hall, 77 Ohio St.3d 421, 427, 674 N.E.2d 1164 (1997).
Although the plaintiff may be required at some point to provide
some evidence of the merits of the underlying claim, plaintiff is
not required to prove that he or she would have been successful in
the underlying matter.

Id., 77 Ohio St.3d at 428.

Defendants argue that plaintiffs have failed to show a causal
connection between defendants’ failure to act to prevent the
dismissal of plaintiffs’ state court action without prejudice and
the damages plaintiffs’ allegedly sustained as a result of that
dismissal because plaintiffs could have refiled their action within
a year of the dismissal under the provisions of Ohio Revised Code
§2305.19, the Ohio savings statute.

Section 2305.19(A) provides

that an action may be refiled “within one year after the date of
... plaintiff’s failure otherwise than upon the merits or within
the period of the original applicable statute of limitations,
whichever occurs later.”
In this case, plaintiffs have alleged that they were not
compensated for their losses as a direct cause of defendants’
negligence in not prosecuting the case, and that there was a causal
relationship between defendants’ negligent conduct and plaintiffs’
failure to recover their damages.

Complaint, ¶¶ 21-22.

It is not

clear what effect the savings provision would have on plaintiffs’
Athens County case.

The one-year period expired on October 25,

2013, and it is unknown whether the original applicable statute of
limitations has expired as well. At this stage of the proceedings,

8

defendants cannot avoid liability for legal malpractice on a silent
record simply by arguing that their clients may have been able to
independently refile their claims. While defendants may ultimately
prevail on the issue of causation, the argument defendants now make
is in the nature of a defense which is better suited to being
raised in summary judgment proceedings.

See Kovacs, 406 F.3d at

397 (noting that arguments that the defendant will prevail on the
merits in a legal malpractice action under Ohio law “are more
appropriately made in support of a motion for summary judgment”).
III. Conclusion
In conclusion, the court cannot say that it appears to a legal
certainty that plaintiffs’ claims are really for less than the
jurisdictional amount.

The allegations in the complaint are

sufficient to satisfy the amount-in-controversy requirement for
diversity jurisdiction. In addition, defendants’ invocation of the
Ohio savings statute as a defense does not warrant dismissal of
plaintiffs’ legal malpractice claims at this stage of the case.
Defendants’ motion to dismiss (Doc. 6) is denied.

Date: December 10, 2013

s/James L. Graham
James L. Graham
United States District Judge

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