INTHESUPREMECOURTOFOHIONATIONWIDEMUTUALINSURANCECOMPANY, Appellant, v.CHRISTINELUCARELL,Appellee.

CaseNo.2016‐0585OnAppealFromTheMahoningCountyCourtofAppeals,SeventhAppellateDistrictCourtofAppealsCaseNos.2013MA00074,133

MERITSBRIEFOFAPPELLANTNATIONWIDEMUTUALINSURANCECOMPANY ThomasD.Warren(0077541)CounselOfRecordtwarren@bakerlaw.comG.KarlFanter(0075686)kfanter@bakerlaw.comBAKER&HOSTETLERLLP127PublicSquare,Suite2000Cleveland,OH44114Telephone:(216)861‐7528Facsimile:(216)696‐0740YvetteMcGeeBrown(0030642)ymcgeebrown@jonesday.comJONESDAY325JohnH.McConnellBlvd.,Ste.600Columbus,OH43215Telephone:(614)281‐3867Facsimile:(614)461‐4198CounselforAppellantNationwideMutualInsuranceCompany

PatriciaA.Morris(0043570)patricia@patriciamorrislaw.com841Boardman‐CanfieldRoad,Suite307Boardman,OH44512Telephone:(330)758‐9660RandyJ.Hart(0046793)randyjhart@gmail.com23600CommerceParkRoadBeachwood,OH44122Telephone:(216)978‐9150A.ScottFromson(0037889)scott@fromsonlaw.com32125SolonRoadSolon,OH44139Telephone:(440)394‐1301CounselforAppelleeChristineLucarell

Supreme Court of Ohio Clerk of Court - Filed September 26, 2016 - Case No. 2016-0585

QuintinLindsmith(0018327)qlindsmith@bricker.comBRICKER&ECKLERLLP100SouthThirdStreetColumbus,OH43215Telephone:(614)227‐2300Facsimile:(614)227‐2390CounselforAppellantNationwideMutualInsuranceCompany(continued)ThomasE.Szykowny(0014603)teszkowny@vorys.comRebeccaE.Wilson(0089954)rewilson@vorys.comVORYS,SATER,SEYMOURANDPEASELLP52EastGayStreet,P.O.Box1008Columbus,OH43216‐1008Telephone:(614)464‐5671Facsimile:(614)719‐4990

CounselforAmiciCuriaeOhioInsuranceInstitute,OhioChamberofCommerce,NationalAssociationofMutualInsuranceCompanies,OhioAllianceforCivilJustice,andOhioManufacturers’Association

i

TABLEOFCONTENTS

Page

TABLEOFAUTHORITIES.....................................................................................................................................iii

STATEMENTOFFACTS..........................................................................................................................................1 

A.  LucarellJoinsTheAEProgram........................................................................................................1 

B.  LucarellContinuesInTheAEProgram........................................................................................2 

C.  LucarellLeavesTheAEProgram....................................................................................................4 

D.  TheTrialCourtProceedings.............................................................................................................5 

E.  TheAppeal................................................................................................................................................6 

ARGUMENT.................................................................................................................................................................7 

PropositionOf LawNo. I: Ohio lawdoesnot allow an awardof punitive damages forbreachofcontract,althoughpunitivedamagesmaybeavailableforanyindependenttortclaimsarisingfromrelatedconduct............................................................................................................8 

PropositionOfLawNo.II:Acourtofappealshastheobligationtoreachanassignmentoferrorthatisnotmootedorforfeited...................................................................................................12 

A.  App.R.12requiredtheSeventhDistricttoconsiderNationwide’sassignmentoferror...........................................................................................................................................................13 

B.  NationwidedidnotbreachitscontractswithLucarell.......................................................14 

Proposition Of Law No. III: Prevention of performance is not a defense to theenforcementofaparty’sexecutedreleasesofliability.....................................................................17 

A.  ThetrialcourtgaveaduressinstructionastothereleasesLucarellsignedusingthewrongstandardofproof...........................................................................................................18 

B.  TheSeventhDistrict’sholdingthatthejurycouldhavefoundthatLucarellwaspreventedfromperformingthereleaseiserroneousasamatteroflaw....................20 

Proposition Of LawNo. IV: A plaintiff cannot base a fraudulent inducement claim onrepresentations that are speculative, inconsistentwith awritten agreement, and uponwhichtheplaintiffdidnotrely....................................................................................................................22 

A.  Lucarell’sclaimthatshewastoldthatshecouldearn“approximately$200,000ayear”isnotabasistoallegefraud................................................................................................24 

B.  Lucarell’sallegationthatNationwidealteredherloandocumentsalsodoesnotgiverisetoafraudclaim...................................................................................................................28 

ii

CONCLUSION............................................................................................................................................................30 

APPENDIXCONTENTS

AppellateProceedings

SeventhDist.Opinion(Dec.17,2015),R.303...................................................................................Appx.1

SeventhDist.JudgmentEntry(Dec.17,2015),R.304................................................................Appx.44

SeventhDist.DenialofMot.forReconsideration(Mar.2,2016),R.316............................Appx.46

Nationwide’sNoticeofAppealtotheOhioSupremeCourt(Apr.18,2016),R.317......Appx.53

TrialCourtProceedings

JudgmentEntryonSummaryJudgmentandOtherIssues(Apr.4,2012),R.82.............Appx.58

JudgmentEntryEnteringJudgmentonVerdict(Dec.18,2012),R.175.............................Appx.61

OrderonStatutoryCaps(Jan.31,2013),R.219............................................................................Appx.62

JudgementEntryonNewTrial(Apr.11,2013),R.235..............................................................Appx.65

JudgmentEntryonReconsideration&Non‐EconomicLoss(Apr.11,2013),R.236....Appx.71

JudgmentEntryonMotionforJNOV(Apr.11,2013),R.239...................................................Appx.72

AmendedJudgmentEntry(July29,2013),R.256........................................................................Appx.73

Statutes&Rules

R.C.§2315.21...............................................................................................................................................Appx.76

App.R.12........................................................................................................................................................Appx.80

iii

TABLEOFAUTHORITIES

Page(s)

Cases

Arendtv.Price,8thDist.CuyahogaNo.101710,2015‐Ohio‐528...............................................................10

ArgrovBoxCo.v.IlliniFourCo.,2dDist.MontgomeryNo.CA‐6947,1981WL2827(June15,1981)...........................9

B‐RightTruckingCo.v.InterstatePlazaConsulting,154OhioApp.3d545,2003‐Ohio‐5156,798N.E.2d29(7thDist.)...........................17

Baddourv.Fox,5thDist.LickingNo.03CA‐77,2004‐Ohio‐3059................................................................29

Barret‐O’Neillv.Lalo,LLC,S.D.OhioNo.2:14‐cv‐00194,2016WL1110319(Mar.22,2016)..............................24

Bennettv.DaytonMem.Park&CemetaryAssn.,88OhioApp.98,93N.E.2d712(2dDist.1950)..................................................................29

Bettsv.Betts,3dDist.HancockNo.5‐12‐33,2013‐Ohio‐1938................................................................19

Biscardiv.Biscardi,133OhioApp.3d288,727N.E.2d949(7thDist.1999)..................................................19

Blevinsv.AllstateProperty&Cas.Ins.Co.,S.D.OhioNo.13‐CV‐00440,2015WL631059(Feb.12,2015)....................................10

Boevev.NationwideMut.Ins.Co.,E.D.Mich.No.08‐CV‐12213,2010WL3862720(Sept.28,2010)..............................25

Bucciarelliv.NationwideMut.Ins.Co.,E.D.Mich.No.08‐cv‐14349,OrderGrantingNationwideMot.forSumm.J.,Dkt.No.70(June3,2011).........................................................................................25

Burrv.Bd.ofCty.Commrs.ofStarkCty.,23OhioSt.3d69,491N.E.2d1101(1986)...........................................................................29

Byev.NationwideMut.Ins.Co.,733F.Supp.2d805(E.D.Mich.2010)........................................................................................25

iv

InreC.C.S.v.AdoptionbyGentleCare,10thDist.FranklinNo.15AP‐884,2016‐Ohio‐388...........................................................18

Casserliev.ShellOilCo.,8thDist.CuyahogaNo.88361,2007‐Ohio‐2633...............................................................27

EstateofCowlingv.EstateofCowling,109OhioSt.3d276,2006‐Ohio‐2418,847N.E.2d405...................................................19

Crissv.SpringfieldTwp.,43OhioSt.3d83,538N.E.2d406(1989)..............................................................................13

Crossv.Ledford,161OhioSt.469,120N.E.2d118(1954)..............................................................................19

D&HAutobath,LLCv.PJCSProps.I,Inc.,2012‐Ohio‐5845,983N.E.2d891(12thDist.)....................................................................27

Davisv.Tunison,168OhioSt.471,155N.E.2d904(1959).................................................................................9

Digital&AnalogDesignCorp.v.N.SupplyCo.,44OhioSt.3d36,540N.E.2d1358(1989)..............................................................................9

Dodsonv.Maines,6thDist.SanduskyNo.S‐11‐012,2012‐Ohio‐2548..........................................................10

Doleckiv.NationwideMut.Ins.Co.,5thDist.StarkNo.2004CA00063,2005‐Ohio‐1061........................................................10

Duncanv.Hopkins,9thDist.SummitNo.24065,2008‐Ohio‐3772....................................................................22

EdSchory&Sons,Inc.v.Soc.Natl.Bank,75OhioSt.3d433,662N.E.2d1074(1996)........................................................................16

EdwardsMfg.Co.v.Perry,37OhioC.C.579,1915WL850(1stDist.1915).................................................................19

Evens‐McCarthyv.NationwideMut.Ins.Co.,E.D.Mich.No.08‐CV‐12049‐DT,2008U.S.Dist.LEXIS83702(July24,2008).....................................................................................................................................................26

FabricationGrp.L.L.C.v.WillowickPartnersL.L.C.,11thDist.LakeNo.2011‐L‐1412012‐Ohio‐4460.............................................................20

v

FireAssn.ofPhiladelphiav.Appel,76OhioSt.1,80N.E.952(1907)..............................................................................................20

Frischv.NationwideMut.Ins.Co.,553Fed.Appx.477(6thCir.2014).....................................................................................14,17

Galmishv.Cicchini,90OhioSt.3d22,2000‐Ohio‐7,734N.E.2d782.................................................................27

Goldfarbv.RobbReport,Inc.,101OhioApp.3d134,655N.E.2d211(10thDist.1995).........................................10,11

Halev.EnercoGroup,Inc.,N.D.OhioNo.10CV00867,2011WL49545(Jan.5,2011)...........................................29

Hallerv.BorrorCorp.,50OhioSt.3d10,552N.E.2d207(1990).......................................................................18,21

Havelv.VillaSt.Joseph,131OhioSt.3d235,2012‐Ohio‐552,963N.E.2d1270...................................................11

Hoffmanv.NationwideMut.Ins.Co.,N.D.Ill.No.10‐cv‐3841,2011WL3158708(July26,2011)..........................................25

Hostv.Ursem,8thDist.CuyahogaNo.63109,1993WL266901(July15,1993).................................9

Howickv.LakewoodVillageLtd.Partnership,3dDist.MercerNo.10‐06‐25,2007‐Ohio‐4370.................................................................29

Johnsonv.NationwideMut.Ins.Co.,N.D.Cal.No.C11‐02913,2011WL5180124(Oct.31,2011)........................................26

Kachelmacherv.Laird,92OhioSt.324,110N.E.933(1915)......................................................................................16

Ketchamv.Miller,104OhioSt.372,136N.E.145(1922)..................................................................8,9,10,11

LakotaLocalSchoolDist.Bd.ofEdn.v.Brickner,108OhioApp.3d637,671N.E.2d578(6thDist.1996)..................................................17

LasmerIndustries,Inc.v.AMGen.,LLC,741F.Supp.2d829(S.D.Ohio2010).........................................................................................29

Linv.GatehouseConstr.Co.,84OhioApp.3d96,616N.E.2d519(8thDist.1992)........................................................29

vi

Lisboav.Tramer,8thDist.CuyahogaNo.97526,2012‐Ohio‐1549...............................................................28

Lucarellv.NationwideMut.Ins.Co.,2015‐Ohio‐5286,44N.E.3d319(7thDist.).................................................................passim

Lynchv.MalriteCommunications,8thDist.CuyahogaNo.71144,1997WL428644(July31,1997)..............................18

Mabry‐Wrightv.Zlotnik,165OhioApp.3d1,2005‐Ohio‐5619,844N.E.2d858(3dDist.)................................10

Marbleyv.MetaldyneCo.,9thDist.SummitNo.21377,2003‐Ohio‐2851....................................................................28

MarionProd.CreditAssn.v.Cochran,40OhioSt.3d265,533N.E.2d325(1988)...........................................................................27

Montanariv.Haworth,108OhioSt.8,140N.E.319(1923)..................................................................................19,20

Mosesv.SterlingCommerceAm.,Inc.,10thDist.FranklinNo.02AP‐161,2002‐Ohio‐4327........................................................29

Myersv.EvergreenLandDev.Ltd.,7thDist.MahoningNo.07MA123,2008‐Ohio‐1062......................................................17

NationstarMtg.,L.L.C.v.Ritter,10thDist.FranklinNo.14AP‐1000,2015‐Ohio‐3900.....................................................20

Nemierv.NationwideMut.Ins.Co.,458Fed.Appx.420(6thCir.2012).....................................................................................24,25

Newtonv.DominionMgt.Servs.,N.D.OhioNo.14CV763,2014WL4322691(Aug.29,2014).......................................10

Paasewev.WendyThomas5Ltd.,10thDist.FranklinNo.09AP‐510,2009‐Ohio‐6852........................................................30

Stateexrel.Pallonev.OhioCourtofClaims,143OhioSt.3d493,2015‐Ohio‐2003,39N.E.3d1220...................................................29

Palmerv.DavidR.Pheils,Jr.&Assocs.,6thDist.WoodNo.WD‐96‐001,1997WL543071(Aug.29,1997)..........................10

Inre:Patrick,Bankr.N.D.OhioNo.13‐61661,2014WL7338929(Dec.22,2014).........................17

vii

Pertoria,Inc.v.BowlingGreenStateUniv.,10thDist.FranklinNos.13AP‐1033,14AP‐63,2014‐Ohio‐3793...............................17

R&HTrucking,Inc.v.OccidentalFire&Cas.Co.ofN.Carolina,2OhioApp.3d269,441N.E.2d816(10thDist.1981)........................................................9

Russellv.CityofNorthwood,6thDist.WoodNo.WD‐97‐050,1998WL102137(Feb.27,1998)..........................29

Slaytonv.WellsFargoBank,NA,S.D.OhioNo.2:12‐CV‐00283,2013WL819229(Mar.5,2013)..................................29

Sloanv.Std.Oil,177OhioSt.149,203N.E.2d237(1964)..............................................................................19

Spercelv.SterlingIndustries,Inc.,31OhioSt.2d36,285N.E.2d324(1972)..............................................................................22

Statev.Cooper,170OhioApp.3d418,2007‐Ohio‐1186,867N.E.2d493(4thDist.).........................19

Statev.Ishmail,54OhioSt.2d402,377N.E.2d500(1978)...........................................................................29

Statev.Jennings,69OhioSt.2d389,433N.E.2d157(1982)...........................................................................13

Std.SanitaryMfg.Co.v.George,118OhioSt.564,162N.E.35(1928)......................................................................................18

StoneExcavating,Inc.v.NewmarkHomes,Inc.,2dDist.MontgomeryNo.20307,2004‐Ohio‐4119...........................................................20

Suterv.Farmers’FertilizerCo.,100OhioSt.403,126N.E.304(1919)...................................................................................20

Tibbsv.Natl.HomesConstr.Corp.,52OhioApp.2d281,369N.E.2d1218(1stDist.1977)............................................10,24

VanMeterv.Stebner,9thDist.MedinaNo.2348‐M,1994WL716230(Dec.28,1994)...............................30

Varnadorev.NationwideMut.Ins.Co.,S.D.Ohio2:13‐cv‐827,2014WL2095373(May20,2014)............................................26

Wellsv.Cook,16OhioSt.67(1865)..............................................................................................................28,29

viii

StatutesandRules

App.R.12..............................................................................................................................................13,26

R.C.2315.21...............................................................................................................................................11

Tort‐ReformAct...................................................................................................................................8,11

OtherAuthorities

15OhioJurisprudence3d,Compromise,Accord,andRelease,Section69(2016)...................................................................................................................................................19

18OhioJurisprudence3d,Contracts,Section216(2016)...................................................20

OhioJuryInstructionsSection501.21.............................................................................................21

RestatementoftheLaw2d,Torts,Section537(1977)..........................................................29

RestatementoftheLaw,Torts,Section546(1938)................................................................29

1

STATEMENTOFFACTS

A. LucarellJoinsTheAEProgram.

NationwideMutualInsuranceCompanysellsinsuranceproductsandservices

throughindependentcontractorexclusiveagents,andalsothroughindependentagencies.

Inthefallof2005,afterworkingforseveralyearsforinsuranceagentsinMahoningCounty

andTrumbullCounty,includingaNationwideindependentcontractorexclusiveagent,

ChristineLucarellsignedacontracttojoinNationwide’sAgencyExecutiveProgram(“AE

Program”).(Tr.1219‐1220,1224‐1228,1232‐1233(Vol.6),R.212.)Thethree‐yearAE

ProgramwasdesignedtohelpentrepreneursestablishexclusiveNationwideagenciesas

independentcontractors.

Lucarellreceiveda$265,000loanfromNationwide’saffiliatebank,Nationwide

Bank,tohelpstartherbusiness.Nationwideguaranteedtheloanandmadetheinterest

payments.(OriginalAEAgreement,Pl.Ex.10atArt.4,Supp.2‐4.)UndertheAEProgram,

Lucarellsoldpropertyandcasualtyinsurance,andagreedtomeetcertainminimum

requirementstograduatefromtheprogram.(Id.atArt.2,Supp.1‐2.)Ifshehitcertain

requirements,Nationwideagreedtowaivesomeorallofherloan.(Id.atArt.5,Supp.4‐5.)

LucarellsignedtwoagreementswhenshejoinedtheAEProgram.Thefirstwasa

standardindependentcontractoragreement(the“IndependentContractorAgreement”),

whichgovernedheragencyrelationshipwithNationwide.(Pl.Ex.11,Supp.10.)Underthe

IndependentContractorAgreement,Lucarellformedandownedherownbusiness,hired,

fired,andsupervisedherownemployees,filedcorporatetaxreturns,andwasresponsible

forherownexpenses.(See,e.g.,id.at¶¶1,2,Supp.11‐12;Tr.1439‐1440(Vol.7),

Supp.177‐178;Def.Ex.22(C),Supp.109;LucarellDep.72‐74,79,Supp.122‐125.)Lucarell

2

andNationwideeachhadtherighttocanceltheagreementatanytime.(Pl.Ex.11at¶10,

Supp.12.)Thesecondagreementgovernedtheparties’rightsandobligationsundertheAE

Program(the“OriginalAEAgreement”)andoutlinedLucarell’sminimumproduction

requirements.(Pl.Ex.10,Supp.1.)

B. LucarellContinuesInTheAEProgram.

Lucarellreceivedherloanandopenedheragency.Astimepassed,Lucarellbeganto

complaintoNationwidethattheproductionrequirementstowhichshehadagreedwere

toohigh.Inresponse,Nationwideoffered,onmultipleoccasions,tomodifytheproduction

requirementsandinfuseadditionalcashintoLucarell’sbusinessor,alternatively,giveher

thechancetoexittheAEProgramandhaveNationwidepayoffherloan.Eachtime,

LucarellchosetoacceptthecashandcontinueintheAEProgram.

First,inFebruary2007,LucarellandNationwideenteredintoamemorandumof

understanding(the“MOU”).UndertheMOU,NationwidegaveLucarellanadditional

$50,000,someofwhichwasearmarkedforLucarelltohireaCPAtohelpherdevelopa

proposedbusinessplan.(Pl.Ex.14at¶¶1,4,Supp.17‐18.)NationwideandLucarell

agreedtoenterintodiscussions“todevelopamutuallyacceptableandapprovedbusiness

plan”forheragency.(Id.at¶5,Supp.18.)Inreturn,Lucarellexecutedareleaseofliability,

releasingNationwidefrom“anyandallclaims***whetherknownorunknown,which

wereorcouldhavebeenassertedagainstNationwidefromthebeginningoftimeuntil

[February7,2007].”(Id.at¶1,Supp.17.)

Lucarellcontinuedintheprogramforanother18monthsaftershesignedtheMOU,

butcontinuedtocomplainabouttheproductionrequirements.Inresponse,Nationwide

offeredtomodifyherproductionrequirementsandprovideadditionalcashtosupporther

3

agency.Alternatively,Lucarellwasgiventhechoicetostayintheprogramonitsexisting

terms,orexittheAEProgramandhaveNationwidepayoffherloan.(Pl.Ex.15at¶¶3,7,

8,16,Supp.21,24‐25,29;RefinancingElection,Def.Ex.40,Supp.114;Tr.606‐607(Vol.3),

Supp.128‐129,832,869‐70,872‐73(Vol.4),Supp.136,139‐140,142‐144.)

Lucarellchosethecashandnewproductionrequirements,andenteredintoa

modifiedversionoftheAEAgreement(the“ModifiedAEAgreement”)inSeptember2008.

(Pl.Ex.15,Supp.20.)Inthatagreement,NationwideagreedtogiveLucarellhundredsof

thousandsofdollarsinadditionalcashgrants,notloans,ifshemettheModifiedAE

Agreement’sproductionrequirements.(Id.at¶9,Ex.C,Supp.27‐28,38.)Nationwidealso

gaveLucarellsixyearstomeettheproductionplanrequirements,agreedtowaiveher

obligationtorepayinterestpaymentsthatNationwidehadbeenmakingonherloan,and

gaveheranopportunitytorefinanceherfive‐yearloantoatwenty‐yearterm,with

Nationwideguaranteeingtherefinancedloanasitdidwiththeoriginal.(Id.at¶7,

Supp.24‐25.)

InsigningtheModifiedAEAgreement,Lucarellacknowledgedthatshehad“been

givenachoicebyNationwidethatallowstheAgenttodisengagefromtheAEProgramand

tobereleasedbyNationwidefromtheAEAgreementandtheIndependentContractor

Agreement,wherebyNationwidehasofferedcertainaccommodationstoAgent,including

anoffertopayoffAgent’sLoanfromNationwideBank.”(Id.at¶16,Supp.29.)She

acknowledgedthatsheenteredintotheagreementofher“ownvolition,”and

“represent[ed]andwarrant[ed]toNationwidethat[shehad]madethedecisiontocontinue

intheAEProgramwhileundernoeconomicduressandwithanopportunitytoconsult

4

withcounsel.”(Id.at¶17,Supp.30.)LucarellalsoagreedtoreleaseNationwidefromany

claimsconcerningtheAEProgramuptothatdate.(Id.at¶19,Supp.30.)

InNovember2008,twomonthsafterenteringintotheModifiedAEAgreement,

LucarellwaspresentedwithyetanotheropportunitytoexittheAEprogramwithafull

waiverofherloan.(Tr.1575‐1576(Vol.7),Supp.183‐184;Def.Ex.41,Supp.115.)She

againdeclined.

C. LucarellLeavesTheAEProgram.

NationwidegaveLucarellhundredsofthousandsofdollarincashgrants—not

loans—tosupportheragency.AlthoughtheModifiedAEAgreementrequiredLucarellto

spendthecashinfusionsonherbusiness,therecordshowedthatsheinsteadspentlavishly

onpersonalexpenses,includingasecondhome,newcars,anRV,andahottub.(Tr.1453

(Vol.7),Supp.179;Tr.1613‐1615(Vol.8),Supp.190‐192.)Meanwhile,shestoppedpaying

rentonheroffice,missedeverypaymentonherloan,andceasedpayingfederal

withholdingtaxes.(Tr.1579,1583(Vol.7),Supp.185‐186.)

OnApril9,2009,Lucarellwasplacedonathree‐monthprobationfornotmeeting

minimumproductionrequirements.Lucarellacknowledgedinwritingthatifshedidnot

meetthoserequirementsbytheendoftheprobationaryperiod,herparticipationintheAE

Program,andtheIndependentContractorAgreement,mightbeterminated.(Pl.Ex.35at2,

Supp.103.)InJuly2009,afterreceiving$373,000incashgrants,shecanceledthe

IndependentContractorAgreementandlefttheAEProgram.(Tr.876‐882(Vol.4),

Supp.144‐150;Def.Ex.55,Supp.119.)

5

D. TheTrialCourtProceedings.

LucarellsuedNationwideinJuly2010.Inherinitialcomplaint,Lucarellclaimed

breachofcontractastotheAEAgreement,theMOU,andtheIndependentContractor

Agreement,aswellasfraudandinvasionofprivacy.(Compl.,R.1.)(Lucarellclaimedthat

Nationwideinvadedherprivacybecausehernameappearedonfivecomputer‐generated

letterstocustomersaftersheexitedtheAEProgram.)

NationwidefiledananswerandcounterclaimagainstLucarellforbreachofhernote

andcreditagreement.(Answer&Counterclaim,R.5.)Lucarellthenfiledafirstamended

complaint,addingclaimsforretaliationandconstructivedischarge.(R.10¶¶46‐56.)Ina

secondamendedcomplaint,sheaddedabreachofcontractclaimastotheModifiedAE

Agreement.(R.44¶¶37‐38.)

Asamatteroflaw,noneofLucarell’sclaimsshouldhavegonetothejury.She

broughtastand‐aloneclaimofconstructivedischarge,eventhoughitisnotacauseof

actionunderOhiolaw.Shebroughtaretaliationclaim,butdidnotallegethatshewas

discriminatedagainstorthatshewasavictimofretaliatoryconduct.Shebroughtclaims

forbreachofcontract,butasthetrialcourtconcluded,shefailedtoidentifyasinglebreach.

Yetthetrialcourtsenteachoftheseclaimstothejury.1

Basedontheseerrorsoflaw,aMahoningCountyjuryawardedLucarell$42.8

millionindamages,andrejectedNationwide’scounterclaim.(Tr.2102‐2111(Vol.10),

1ThetrialcourtalsoletLucarellestablishlostprofitsthroughawitnesswhowasneitheranaccountantnorafinancialexpert,Thewitnessbasedhertestimonyona25‐yearproforma,atimeperiodoverwhichnoonecouldreasonablyforecast.ShespeculatedthatLucarellwouldsuffermillionsofdollarsinlostprofits,buthadtoconcedethatsheassumedLucarellwouldincreasesalesfrom1.4%to35%ofMahoningCounty,somethingnoagencyhaseveraccomplished.(Tr.1077‐1078,1082‐1084,1086,1168‐1169,1171‐1173(Vol.5),Supp.153‐160,162‐164;Tr.1827‐1828(Vol.9),Supp.205‐206.)

6

Supp.214‐223.)Thejuryawarded$22millionontheconstructivedischargeclaim,$11.5

millionontheretaliationclaim,$5.1millionontheinvasionofprivacyclaim,and$4.2

millioninlostprofitsonthecontractclaims.(Tr.2105‐2111,2135‐2136(Vol.10),

Supp.217‐225.)Thetrialcourtawardedprejudgmentinterest,attorney’sfees,andcosts.

(Apr.11,2013JEat265‐66,R.164,R.165.)

ThetrialcourtdeniedNationwide’sJNOVandnewtrialmotions,butremittedthe

compensatoryandpunitivedamageawards.(Jan.31,2013JE,Appx.62;Apr.11,2013JEat

261,Appx.65,72;July29,2013JE,Appx.73.)Afterthepost‐trialrulings,thefinaljudgment

wasreducedto$14.2million,$10.5millionofwhichwasforpunitivedamages.

ThetrialcourtdidproperlyactasgatekeeperonLucarell’sfraudclaim,granting

Nationwideadirectedverdict.ThecourtfoundthatwhileLucarell’sminimumproduction

requirementsturnedouttobechallenging,LucarellfailedtoprovethatNationwidehad

misrepresentedanythingtoher,andthatNationwide’sexpectationthatLucarellcould

“achievetheperformancemeasuresisnotfraud.”(Tr.1662(Vol.8),Supp.202.)

E. TheAppeal.

NationwideappealedtotheSeventhDistrict.Lucarellcross‐appealedthedirected

verdictonherfraudclaimandthedenialofpunitivedamagesonhernon‐tortclaims.

ThecourtofappealsenteredjudgmentinNationwide’sfavorastoLucarell’salleged

constructivedischargeandretaliationclaims,andreducedthedamagesawardonthe

invasion‐of‐privacyclaimbasedontheTort‐ReformAct’sstatutorycaps.Lucarellv.

NationwideMut.Ins.Co.,2015‐Ohio‐5286,44N.E.3d319,¶¶184,188(7thDist.)(“Op.”),

Appx.41‐42.

7

TheSeventhDistrict,however,declinedtoreviewthemeritsofNationwide’s

assignmentsoferrorrelatingtoLucarell’sfourbreach‐of‐contractclaims.(Op.¶¶71,82,

Appx.17‐18,21.)ThecourtalsoreinstatedLucarell’sfraudclaimandorderedanewtrial

ontheissue.(Id.at¶172,Appx.39.)Thecourtheldthat,“construing[theevidence]most

stronglyinLucarell’sfavor,”ajurycouldfindthatNationwide(a)fraudulentlyinduced

LucarelltojointheAEProgrambyleadinghertobelievethatshecouldearn

$200,000/year,and(b)alteredaloandocument“withtheintenttomislead[Nationwide

Bank]intobelievingLucarell’sfinancialsituationandbusinessplanweredifferentinorder

toimprovethechancesof[thebank]approvingtheloan.”(Id.)Finally,thecourtofappeals

heldthatpunitivedamagescouldbeawardedbasedonLucarell’scompensatoryawardsfor

herbreach‐of‐contractclaims.(Id.at¶178,Appx.40.)

Afteritsmotionforreconsiderationortocertifyaconflictwasdenied,Nationwide

timelyfiledanoticeofappealandmemoranduminsupportofjurisdictiontothisCourt.

(Appx.46,54.)ThisCourtacceptedfourpropositionsoflawforreview.

ARGUMENT

CourtsconsideringfraudandcontractclaimssimilartoLucarell’shaverejected

themasamatteroflaw.Asinthosecases,NationwidegaveLucarellthechoicetostayin

theAEProgramundermodifiedrequirementsandreceivehundredsofthousandsof

dollarsfromNationwidetosupportheragency,orexittheprogramandhaveNationwide

payoffherloans.Eachtimeshewasgiventhechoice,shechosetheformer,releasing

Nationwidefromanyandallpriorclaims.

Thiscaseonlyreachedthejurybecauseofmultipleerrors.WhiletheSeventh

Districtaddressedsomeofthem,itavoideditsdutytoaddressothers.Moreover,its

8

rulingscreatedconflictamongthelowercourtsanduncertaintythroughoutOhioregarding

thelawoffraud,contracts,punitivedamages,andthefinalityofsettlements.

Specifically,theappellatecourt:

Heldthatpunitivedamagescouldbeawardedonacontractclaim,despitethe

plainlanguageoftheTort‐ReformActtothecontrary;

Abdicateditsresponsibilitytoaddressfundamentalerrorswiththejudgment

below,ostensiblybutwronglyrelyingonthe“two‐issuerule”;and

Remandedthecaseforatrialonthefraudclaimbasedonrationalesdirectly

contrarytothedecisionsofotherOhioappellatedistricts.

TheCourtshouldreversetheseholdingsandenterjudgmentforNationwide.

PropositionOfLawNo.I:Ohiolawdoesnotallowanawardofpunitivedamagesforbreachofcontract,althoughpunitivedamagesmaybeavailableforanyindependenttortclaimsarisingfromrelatedconduct.

ThetrialcourtheldthatLucarellcouldnotrecoverpunitivedamagesonherbreach‐

of‐contractclaims.TheSeventhDistrictreversed,holdingthatifLucarellcouldprovefraud

onremand,shecouldobtainpunitivedamagesonhercontractclaims.(Op.¶¶177‐78,

Appx.40.)ThisholdingmisappliesOhiolaw,andthisCourtshouldclarifythatpunitive

damagescannotbeawardedonabreach‐of‐contractclaim.

InKetchamv.Miller,104OhioSt.372,136N.E.145(1922),thisCourtheldthata

partycannotobtainpunitivedamagesonabreach‐of‐contractclaim,evenifthereisa

tortiouscomponenttothatconduct.InKetcham,theplaintiffallegedthatacontractwas

breached“unlawfully,forcibly,willfully,wantonly,maliciously,andwithoutconsent,”and

wasawardedpunitivedamages.Id.at377.TheCourtconsideredwhetherthetortious

aspectsofthedefendant’sconductconstitutingthebreachofcontractjustifiedanawardof

9

punitivedamages,evenifatortclaimwasnotpleaded.Id.“Whilethefactsinthiscase

mightwellhavejustifiedapleadingchargingatort,weareunablefromtheamended

petitionitselftoreachanyotherconclusionthanthatthegravamenofthecomplaintisthe

breachofthecontract,andthatthewords‘willfully,wantonly,maliciously,’addnothing

thereto[.]”Id.Assuch,theCourtheldthatthetrialcourthaderredinallowingexemplary

damagesonthatclaim.Id.at378.“Punitivedamagesarenotrecoverableinanactionfor

breachofcontract.”Id.atparagraphtwoofthesyllabus.

Inotherwords,punitivedamagesmustactuallybebasedonatortclaimseeking

suchdamages.Aplaintiffcannotobtainpunitivedamagesonabreach‐of‐contractclaimby

allegingthatthebreachwasalsoatort.

Overtheyears,thisCourthasreaffirmedtheprinciplethatpunitivedamagescannot

beobtainedincontract.See,e.g.,Digital&AnalogDesignCorp.v.N.SupplyCo.,44Ohio

St.3d36,46,540N.E.2d1358(1989)(“countfourprovidesnobasisforthejurytoaward

punitivedamagessinceitisanexpressclaimforbreachofcontract”);Davisv.Tunison,168

OhioSt.471,474,155N.E.2d904(1959)(“Punitivedamagesmaybeawardedonlyin

referencetoatortandneverinanactionexcontractu.”).

Ketcham,meanwhile,hasbeenfollowedinthevastmajorityoftheintermediate

appellatecourts.“[T]heOhiorulecanbesummarizedasfollows:punitivedamagesare

recoverableforatortcommittedinconnectionwith,butindependentlyof,abreachof

contract,theallowanceofthepunitivedamagesbeingforthetort,andnotforthebreachof

thecontract.”R&HTrucking,Inc.v.OccidentalFire&Cas.Co.ofN.Carolina,2OhioApp.3d

269,271‐72,441N.E.2d816(10thDist.1981);seealsoHostv.Ursem,8thDist.Cuyahoga

No.63109,1993WL266901,*3(July15,1993)(same);ArgrovBoxCo.v.IlliniFourCo.,2d

10

Dist.MontgomeryNo.CA‐6947,1981WL2827,*3‐4(June15,1981)(same);Palmerv.

DavidR.Pheils,Jr.&Assocs.,6thDist.WoodNo.WD‐96‐001,1997WL543071,*6‐7(Aug.

29,1997)(same);Dodsonv.Maines,6thDist.SanduskyNo.S‐11‐012,2012‐Ohio‐2548,

¶¶37‐38(“becausenocompensatoryoractualdamageswereawardedtoappelleeforan

intentionaltort,wefindthatappelleeisnotentitledtopunitivedamages”);Arendtv.Price,

8thDist.CuyahogaNo.101710,2015‐Ohio‐528,¶25(affirmingtrialcourt’s“refusalto

awardpunitivedamages”becauseplaintiff’s“complaintpledabreachofcontractclaimand

notanindependenttortclaim”);Doleckiv.NationwideMut.Ins.Co.,5thDist.StarkNo.

2004CA00063,2005‐Ohio‐1061,¶17(dismissingpunitiveclaimbecauseonlycontract

claimremained);Tibbsv.Natl.HomesConstr.Corp.,52OhioApp.2d281,290‐291,369

N.E.2d1218(1stDist.1977)(nopunitivedamagesforcontractclaim).

Federalcourtsalsosohold.“Punitivedamagesarenotrecoverableinanactionfor

breachofcontractunderOhiolaw.Thesedamagesarerecoverableforcertainintentional

torts,butnotforthebreachofthecontract.”(Citationomitted.)Newtonv.DominionMgt.

Servs.,N.D.OhioNo.14CV763,2014WL4322691,*5(Aug.29,2014);seealsoBlevinsv.

AllstateProperty&Cas.Ins.Co.,S.D.OhioNo.13‐CV‐00440,2015WL631059,*6(Feb.12,

2015)(“punitivedamagesareclearlynotrecoverableonabreachofcontractclaim”

(emphasissic)).

Afewcases,however,havedivergedfromKetcham.InGoldfarbv.RobbReport,Inc.,

101OhioApp.3d134,140‐41,655N.E.2d211(10thDist.1995),theTenthDistrictheldthat

ifabreachofcontractcaseinvolvesa“connected,butindependenttort***the

independenttortneednotbepleadedorthejurybeinstructedastothetort”inorderfora

plaintifftoobtainpunitivedamages.TheThirdDistrictcitedGoldfarbinMabry‐Wrightv.

11

Zlotnik,165OhioApp.3d1,2005‐Ohio‐5619,844N.E.2d858,¶19(3dDist.),whichthe

SeventhDistrictinturnreliedonhere.

TheSeventhDistrict’sembraceofthislineofcasesisnotonlyinconsistentwith

Ketcham,butfloutstheTort‐ReformAct.TheTort‐ReformActwaspassed,inthewordsof

theGeneralAssembly,because“[r]eformtothepunitivedamageslawinOhio[was]

urgentlyneededtorestorebalance,fairness,andpredictabilitytotheciviljusticesystem.”

Havelv.VillaSt.Joseph,131OhioSt.3d235,2012‐Ohio‐552,963N.E.2d1270,¶30,quoting

2004Am.Sub.S.B.No.80,150OhioLaws,PartV,8025.Thatlawprovidesthatpunitive

damagesarerecoverableonlyina“tortaction,”whichexcludesany“civilactionfor

damagesforabreachofcontractoranotheragreementbetweenpersons.”R.C.

2315.21(A)(1).

Thestatuteisclear:apartycanrecoverpunitivedamagesonlyintort.Andifone

couldrecoverpunitivedamagesincontract,therewouldostensiblybenocaponthose

damages,becausetheTort‐ReformAct’scapsonpunitivedamagesapplyonlyto“tort

actions,”whichexplicitlyexcludesbreach‐of‐contractactions.R.C.2315.21(A)(1).It

cannotbethatR.C.2315.21permitsduplicativeandlimitlesspunitivedamageswhenthe

tortiousconductconstitutesabreachofcontract.ThisisnotwhattheGeneralAssembly

intended,norisitconsistentwiththeplainlanguageoftheTort‐ReformAct.

Leftintact,theSeventhDistrict’sopinionwillcontravenetheTort‐ReformActand

thisCourt’sholdings.Itwillalsocreateaclearconflictinthelowercourts.TheCourt

shouldrejecttheGoldfarblineofcases,reaffirmKetchamandtheTort‐ReformAct’splain

language,andholdthatpunitivedamagesarenotavailableoncontractclaims.

12

PropositionOfLawNo.II:Acourtofappealshastheobligationtoreachanassignmentoferrorthatisnotmootedorforfeited.

ThisCourtshouldholdthatacourtofappealshastheobligationtoreachan

assignmentoferrorthatisnotmootedorforfeited,andenteradirectedverdictfor

NationwideonLucarell’scontractclaims.

AlthoughthetrialcourtrecognizedthatLucarellfailedtoprovethatNationwidehad

breachedanyprovisionofanycontract,iterredinallowinghercontractclaimstogotothe

jury.Thetrialcourt’srationalefordoingsowasthatLucarellmightstillbeabletoestablish

abreachoftheimpliedcovenantofgoodfaithandfairdealing.Resolvingthedirected

verdictmotion,thetrialcourtthenheldthat“underthecourt’sanalysis,thejurycouldfind

thatthedefendantactedotherwisethaningoodfaithinthesedealingsiftheallegations

weretobebelieved.Sothisisthereasonthattheplaintiffhassurvivedthemotionin

Counts1,2,and3.”(Emphasisadded.)(Tr.1661(Vol.8),Supp.201.)Insoholding,the

trialcourtmadeclearthattheallegedbreachoftheimplieddutywastheonlyreason

Lucarell’scontractclaimsreachedthejury.

NationwidearguedtotheSeventhDistrictthatthetrialcourtshouldhavegranted

JNOVonthebreachofcontractclaimsbecauseLucarellprovednoexpressbreach(asthe

trialcourtfound),identifiednobreachoftheimpliedcovenant,andcouldnotassertan

impliedcovenantbreachinanyevent,giventhattherewasnoexpressbreachandthat

Nationwidefollowedtheexpresstermsofitscontracts.(NationwideInitialAppealBr.23‐

31,35‐36,R.277.)Nationwideshowedpreciselywhereintherecordtheerroroccurred,

explainedtheissuespresentedforreviewinaseparatesectionrelatingtothatassignment

oferror,summarizedtheargument,andexplainedindetailwhythetrialcourterred.(Id.

at1,2‐4,12‐13,23‐38.)

13

TheSeventhDistrictrefusedtoconsiderNationwide’sassignmentoferroronthe

groundsthattherewasnojuryinterrogatoryidentifyingwhattypeofbreach(expressor

implied)thejuryfoundastoeachofthefourcontracts,soitcouldnotconsiderthe

assignmentoferror.(Op.¶71,Appx.17‐18.)

Nationwide,however,showedtheevidencewasinsufficienttoproveanybreachof

contract,nomatterthebasisforthejury’sverdict.Therewasnoexpressbreach,asthe

trialcourtfound.Lucarelldidnotidentifyanyimpliedbreach,norcouldLucarellhave

identifiedanimpliedbreach,sinceNationwidefollowedtheexpresstermsofitscontracts.

Becauseboththeexpressandimpliedbreachclaimsfailedasamatteroflaw,thefactthat

theappellatecourtdidnotknowwhetherthejuryfoundanexpressorimpliedbreachwas

ofnomoment.

A. App.R.12requiredtheSeventhDistricttoconsiderNationwide’sassignmentoferror.

AppellateRule12(A)(1)(b)and(c)statesthat“acourtofappealsshall***

[d]eterminetheappealonitsmeritsontheassignmentsoferrorsetforthinthebriefs

[and]decideeachassignmentoferrorandgivereasonsinwritingforitsdecision.”App.R.

12(A)(1).

“[I]tisclearthattheCourtofAppealsshouldruleonallerrorsassigned.”Statev.

Jennings,69OhioSt.2d389,390,433N.E.2d157(1982);seealsoCrissv.SpringfieldTwp.,

43OhioSt.3d83,84,538N.E.2d406(1989)(same).Unlessanassignmentoferroris

“mademootbyrulingonanotherassignmentoferror”orisotherwiseforfeited,“acourtof

appealsshall***[d]eterminetheappealonitsmeritsontheassignmentsoferrorsetforth

inthebriefs[and]decideeachassignmentoferrorandgivereasonsinwritingforits

decision.”App.R.12(A)(1).

14

B. NationwidedidnotbreachitscontractswithLucarell.

Attrial,thegravamenofLucarell’scontractclaimswasthatNationwideimproperly

changedthemethodofcalculatingherperformanceaftershesignedtheModifiedAE

Agreement.(Tr.1423,1592‐1594(Vol.7),Supp.175,187‐189.)ButtheModifiedAE

AgreementspecificallyprovidedthatLucarell’sperformancewouldbecalculatedonthat

basis.(Pl.Ex.15at¶5,Supp.22‐23;seealsoid.atEx.A,Supp.36.)

Onappeal,Lucarellabandonedthistheory,insteadassertingagroupofbelatedly

conceivedallegedbreachesofcontractastoherfourcontractswithNationwide,noneof

whichpassedmuster.

(a) TheOriginalAEAgreement.

LucarelldidnotidentifyonappealanyprovisionoftheOriginalAEAgreementthat

Nationwidebreached.Norcouldshe,becausetheagreementwassupersededbythe

ModifiedAEAgreement.(Tr.1423,1592‐1594(Vol.7),Supp.175,187‐189;seealso

CombinedLucarellAppealBr.90,R.282.)TheSixthCircuitrejectedanotheragent’sclaim

ofbreachoftheOriginalAEAgreementforjustthisreason.“Plaintiffcannotsustainaclaim

forbreachoftheunmodifiedAEbecausethemodifiedtermsgoverntheparties’contractual

relationship.”Frischv.NationwideMut.Ins.Co.,553Fed.Appx.477,482(6thCir.2014).

(b) TheIndependentContractorAgreement.

LucarellclaimedthatNationwidebreachedtheIndependentContractorAgreement

when,aftersheterminatedherrelationship,Nationwidesentoutafewcomputer‐

generatedlettersthatwronglyindicatedthatshewasstillaNationwideagent.ButLucarell

acknowledgedintheagreement“thatoccasionalerrormaycause[herinformation]to

continuetobeprinted,”andshecouldidentifyonlyfiveinstancesofhercontact

15

informationbeingusedovera15‐monthperiod.(Pl.Ex.11,¶14,Supp.14;Tr.755‐759

(Vol.4),Supp.131‐135.)

Lucarell,moreover,failedtoallegeorproveanydamagesforthisallegedbreach.

Tellingly,onLucarell’sinvasion‐of‐privacytortclaim,whichwasbasedonthesamefactsas

thisclaim,thejuryawarded$10innominaldamages.(Op.¶188,Appx.42.)

(c) TheMOUAgreement.

LucarellarguedthatNationwidebreachedtheMOUbyrejectingherproposed

businessplanandfailingtonegotiateamutuallyacceptablebusinessplan.(Tr.1321‐1322

(Vol.6),Supp.170‐171;Tr.1654‐1655(Vol.8),Supp.194‐195;Tr.1954‐1955(Vol.9),

Supp.207‐208.)TheMOU,howeverrequiredonlythatthepartiesdiscusstheplan,andthe

recordisrepletewithback‐and‐forthcommunicationsbetweenLucarellandNationwide

aboutit.(Pl.Ex.14,¶¶4‐5,Supp.17‐18;Pl.Exs.26‐29,Supp.94‐101;Def.Exs.25‐26,

Supp.112‐113.)

(d) TheModifiedAEAgreement.

LucarellallegedfourbreachesoftheModifiedAEAgreement.First,shearguedthat

Nationwidefailedtopayherabonusformeetingherproductionrequirementinone

quarter.However,Lucarellfellshortoftheproductionrequirement,andaskedforthe

bonusunderan“exceptionrequest.”Nationwidehadnocontractualobligationtopaythe

bonus.(SeePl.Ex.15,¶5,Supp.22‐23.)Moreover,Nationwideactuallygrantedthe

requestandgaveherthebonus.(Tr.1372(Vol.6),Supp.172;Tr.1572(Vol.7),Supp.182;

May19,2009FryeremailtoLucarell,Def.Ex.50,Supp.117.)

16

Second,Lucarellcontendedthatshenevergotanextendedrepaymentperiodfor

herloan.Yetsheneverappliedfortheextension,somethingtheagreementrequired.(Pl.

Ex.15,¶7,Supp.24‐25;e.g.Apr.1,2009McCannemailtoLucarell,Def.Ex.44,Supp.116.)

Third,shearguedthatNationwidewronglyusedcommissionpaymentstopayback

herloan.ButNationwidewascontractuallyauthorizedtoapplycommissionstoherloan

whenshedefaulted.(Pl.Ex.11,¶7,Supp.11‐12;Pl.Ex.10,Art.12,Supp.7;Def.Ex.10at1,

Supp.105.)

Finally,LucarellcontendedthatNationwideconstructivelydischargedher.

Wrongfultermination,however,isnotabreachofthecontract.(Pl.Ex.11,¶10,Supp.12.)

*****

Accordingly,asthetrialcourtfound,Lucarelldidnotestablishanyexpressbreachof

contract.Moreover,Lucarellidentifiednobreachoftheimplieddutyofgoodfaithandfair

dealing.Norcouldshehave,becauseNationwidecouldnotbefoundinbreachofthe

implieddutywhenitfollowedtheexpresstermsofitscontracts.SeeEdSchory&Sons,Inc.

v.Soc.Natl.Bank,75OhioSt.3d433,440‐441,662N.E.2d1074(1996)(affirmingdismissal

ofimplieddutyclaimwheretheplaintiff“didnotallegethat[thedefendant]breachedthe

explicittermsofthewrittenagreements”);id.at444(impliedcovenantlimitedtoissues

“thatcouldnothavebeencontemplatedatthetimeofdrafting”);seealsoKachelmacherv.

Laird,92OhioSt.324,110N.E.933(1915),paragraphoneofthesyllabus(“Therecanbe

noimpliedcovenantsinacontractinrelationtoanymatterthatisspecificallycoveredby

thewrittentermsofthecontractitself.”).2

2Thetrialcourtinstructedthejurythat“tobreachtheimpliedcovenantofgoodfaithandfairdealing,apartymusthavebreachedspecificobligationsimposedbythecontract.”(Tr.

17

Inanearlyidenticalcase,theSixthCircuitrejectedanimpliedcontractclaimagainst

Nationwideforjustthisreason.SeeFrisch,553Fed.Appx.at482.Indeed,courtsapplying

Ohiolawroutinelybarclaimsfortheimpliedcontractualdutyofgoodfaithandfairdealing

insuchsituations.See,e.g.,Myersv.EvergreenLandDev.Ltd.,7thDist.MahoningNo.07MA

123,2008‐Ohio‐1062,¶¶27‐28,37(affirmingrejectionofimplied‐dutyclaim);Pertoria,

Inc.v.BowlingGreenStateUniv.,10thDist.FranklinNos.13AP‐1033,14AP‐63,2014‐Ohio‐

3793(reversingjudgmentforplaintiffonitsimplieddutyofgoodfaithandfairdealing

claim);Inre:Patrick,Bankr.N.D.OhioNo.13‐61661,2014WL7338929(Dec.22,2014)

(grantingsummaryjudgmenttodefendantonbreachofimplieddutyofgoodfaithandfair

dealingclaim);B‐RightTruckingCo.v.InterstatePlazaConsulting,154OhioApp.3d545,

2003‐Ohio‐5156,798N.E.2d29,¶32(7thDist.)(“Ifoneactsinaccordancewiththe

statutoryandcontractualrights,thenthereisnobadfaith.”);LakotaLocalSchoolDist.Bd.

ofEdn.v.Brickner,108OhioApp.3d637,646,671N.E.2d578(6thDist.1996).

Becauseboththeexpressandimpliedbreachclaimsfailasamatteroflaw,thefact

thattheSeventhDistrictdidnotknowwhetherthejuryfoundexpressorimpliedbreach

wasaredherring.Itshouldhaveconsideredthisassignmentoferrorandentered

judgmentinNationwide’sfavoronthecontractclaims.

PropositionOfLawNo.III:Preventionofperformanceisnotadefensetotheenforcementofaparty’sexecutedreleasesofliability.

TheSeventhDistrictheldthatitcouldnotreviewanerrorintheduressjury

instructionbecauseofthe“two‐issuerule.”Thatconclusionwasbasedonthecourt’s

holdingthatapartymayassertpreventionofperformanceasadefensetoarelease.2062(Vol.10),Supp.210;seealsoid.(nobreach“byactingaspermittedbythetermsofthecontract”).)Lucarelldidnotobjecttotheinstruction.

18

However,allowingapartytoescapetheeffectofareleasebyvirtueofpost‐releaseconduct

bytheotherpartywouldradicallyaltertheeffectofreleasesinOhio.ThisCourtshould

holdthattheprevention‐of‐performancedoctrinedoesnotapplytoareleaseofliabilityas

amatteroflaw.

A. ThetrialcourtgaveaduressinstructionastothereleasesLucarellsignedusingthewrongstandardofproof.

Nationwidewasentitledtojudgmentasamatteroflawastotwoofthecontracts,

theOriginalAEAgreementandMOU,becauseLucarellreleasedherclaimsrelatingtothose

contractswhenshesignedtheModifiedAEAgreement.

Lucarellclaimedattrialthatshesignedthereleaseunderduress.Inordertoescape

theeffectofthereleasebyassertingduress,however,Lucarellwouldhavehadtoseek

rescissionofthecontractandtenderbackthe$323,000inconsiderationshereceivedforit,

neitherofwhichshedid.Hallerv.BorrorCorp.,50OhioSt.3d10,15,552N.E.2d207

(1990).(Tr.865‐866(Vol.4),Supp.137‐138;Tr.1538(Vol.7),Supp.181;Pl.Ex.14¶1,

Supp.17;Pl.Ex.15atEx.C,Supp.38.)Instead,Lucarellsuedfordamages,seekingto

enforcetheModifiedAEAgreement,butnotitsreleaseprovision.

Compoundingthiserror,thetrialcourtwronglyinstructedthejurytoapplya

preponderance‐of‐the‐evidencestandardtoLucarell’sduressdefense.Whenapartyseeks

toescapetheeffectsofarelease,itmustdosobyclearandconvincingevidence.SeeStd.

SanitaryMfg.Co.v.George,118OhioSt.564,569,162N.E.35(1928)(applyingclearand

convincingstandardtoclaimofduress);Lynchv.MalriteCommunications,8thDist.

CuyahogaNo.71144,1997WL428644,*3(July31,1997)(“Apartymayalsoavoidthe

termsofareleaseonthebasisofduressifthatpartycanshowbyclearandconvincing

evidencecoercionbytheotherpartytothecontract.”);InreC.C.S.v.AdoptionbyGentle

19

Care,10thDist.FranklinNo.15AP‐884,2016‐Ohio‐388,¶42(applyingclear‐and‐

convincing‐evidencestandardtoproveduress);Bettsv.Betts,3dDist.HancockNo.5‐12‐33,

2013‐Ohio‐1938,¶¶8,16(same);Biscardiv.Biscardi,133OhioApp.3d288,293,727

N.E.2d949(7thDist.1999)(same).3

Nationwideproposedaduressinstructionthatrequiredproofbyclearand

convincingevidence.(SeeNationwideProposedInstr.No.10,Supp.229.)Yetthetrialcourt

refusedtogivetheinstruction,andinsteadgaveaninstruction,towhichNationwide

objected,thatdidnotspecifytheburdenofproof,leavingthejurywiththegeneral

preponderancestandardtoguideitsdetermination.(Tr.2050,2076‐2077,2082(Vol.10),

Supp.209,211‐213.)

Instructingthejurybaseduponthewrongburdenofproofwasreversibleerror.

See,e.g.,Statev.Cooper,170OhioApp.3d418,2007‐Ohio‐1186,867N.E.2d493,¶¶32,35

(4thDist.)(juryinstruction’sfailuretospecifyburdenofproofforaffirmativedefensewas

plainerror;“[t]hefailuretogiveaproperinstructionontheburdenofproofisakinto

structuralerror[]”);EdwardsMfg.Co.v.Perry,37OhioC.C.579,584,1915WL850(1st

Dist.1915)(reversibleerrortogivepreponderanceoftheevidenceinstructionwhenclear

andconvincingstandardapplies);seegenerallyMontanariv.Haworth,108OhioSt.8,14,

140N.E.319(1923)(“itiswellsettledthataninstructionwhichimproperlyplacesthe

burdenofproofisreversibleerroruponcomplaintofthepartyprejudicedthereby”).

3ThisCourthasalsorequiredclearandconvincingevidencetosetasidewrittenagreementsforotherreasons.Sloanv.Std.Oil,177OhioSt.149,203N.E.2d237(1964),paragraphoneofsyllabus(mistake),Crossv.Ledford,161OhioSt.469,120N.E.2d118(1954),paragraphtwoofsyllabus(fraud);EstateofCowlingv.EstateofCowling,109OhioSt.3d276,2006‐Ohio‐2418,847N.E.2d405,¶¶18,23(constructivetrust);15OhioJurisprudence3d,Compromise,Accord,andRelease,Section69(2016)(“Clearandconvincingevidenceisnecessarytodisproveoravoidarelease.”).

20

B. TheSeventhDistrict’sholdingthatthejurycouldhavefoundthatLucarellwaspreventedfromperformingthereleaseiserroneousasamatteroflaw.

TheSeventhDistrictrightlyobservedthattheduressjuryinstruction“mayhave

beeninerror.”(Op.¶80,Appx.20.)However,theSeventhDistrictdeclinedtoaddressthe

duressissue,holdingthatitcouldnotreviewNationwide’sassignmentsoferrorbecauseit

didnotknowonwhatbasisthejuryhadfoundLucarellcouldescapeherreleases.(Op.¶¶

81‐82,Appx.20‐21.)

TheSeventhDistricttermeditsrefusaltoaddressthereversibleerroranapplication

ofthe“two‐issuerule.”Thecourtreasonedthattheerrorintheduressinstructionwas

immaterialbecausethejurymighthavefoundthatLucarellwasnotboundbythereleases

underthedoctrineof“preventionofperformance”—namely,thatNationwideprevented

herfromperformingthereleases.(Id.)

Theprevention‐of‐performancedoctrine,however,doesnotapplytoareleaseasa

matteroflaw.Thedoctrineonlyexcusesaparty’sperformanceofacontractualobligation

iftheotherpartypreventsitfromperformingthatobligation.SeeSuterv.Farmers’

FertilizerCo.,100OhioSt.403,126N.E.304(1919),syllabus;FireAssn.ofPhiladelphiav.

Appel,76OhioSt.1,8,80N.E.952(1907);NationstarMtg.,L.L.C.v.Ritter,10thDist.

FranklinNo.14AP‐1000,2015‐Ohio‐3900,¶24;FabricationGrp.L.L.C.v.WillowickPartners

L.L.C.,11thDist.LakeNo.2011‐L‐1412012‐Ohio‐4460,¶45;StoneExcavating,Inc.v.

NewmarkHomes,Inc.,2dDist.MontgomeryNo.20307,2004‐Ohio‐4119,¶18;18Ohio

Jurisprudence3d,Contracts,Section216(2016).Areleaseis“performed”(totheextentit

isperformedatall),however,atthemomenttheagreementorcontractissigned.Thereis

nofutureperformancetoprevent,andnoOhiocourthasheldotherwise.Theonlywayto

21

invalidateareleaseistoestablishthatitwasvoidable,whichbynecessityrequirespre‐

contractmisconduct,notpreventionofperformanceduringthecontract.SeeHaller,50

OhioSt.3dat11(release“absolutebar”thatisvoidableonlybyshowingfraudinformation

ofcontract).

Lucarellneverclaimedthatshecouldavoidthereleasesbasedontheprevention‐of‐

performancedoctrineuntiltheappeal.Inthetrialcourt,Lucarellassertedthedoctrine

onlyinresponsetoNationwide’scounterclaimthatshebreachedherloanagreement.She

arguedthatNationwidepreventedherfromobtainingtheloanwaiver,therebyexcusing

herbreach.(LucarellProposedInstr.No.23,Supp.226;seealsoOhioJuryInstructions,CV

Section501.21(preventiondoctrineasaffirmativedefense).)Thejuryinstructionswere

explicit:theonlyobligationsthatNationwideallegedlypreventedLucarellfrom

performingwereher“loanrepaymentobligations.”(Tr.2076(Vol.10),Supp.211;seealso

JuryInterrog.No.16,Supp.232(Lucarell“excused[]fromthepaymentobligations”if

Nationwide“preventedherfromperforming”).)

Throughoutthetrialcourtproceedings,Lucarell’ssolebasisforavoiding

enforcementofthereleaseswasduress.(E.g.,Tr.1649,1683(Vol.8),Supp.193,204;

LucarellTrialBr.4,R.165;LucarellProposedJuryInstr.No.24,Supp.227;LucarellOpp.to

Summ.J.4,R.35;LucarellOpp.toJNOV24,R.201.)Asthetrialcourtstated,thereis“no

question”that,intheModifiedAEAgreement,Lucarellreleasedherclaimsforbreachofthe

earlieragreements.(Tr.1649(Vol.8),Supp.193.)“Theissueiswassheunderduress

whenshedidit.”(Id.)

Becausepreventionofperformancedoesnotapplytoreleasesofliability,and

Lucarellnevercontendedthatitappliedtothesereleases,the“two‐issue”ruleis

22

inapplicable.LucarellisthusboundbythereleaseintheModifiedAEAgreementunless

thatcontractisrescinded.Butratherthanseekrescissionandtenderbackthe

considerationshereceived,Lucarellsoughttoenforcethecontractandassertbreach.

Becauseshecannotrescindtheprovisionsshedislikes,enforcetheprovisionsshelikes,

andalsoretaintheconsiderationshereceived,Lucarellisboundbythereleaseshesigned.

Asaresult,NationwidewasentitledtojudgmentasamatteroflawastotheOriginalAE

AgreementandtheMOU.Alternatively,Nationwideis,ataminimum,entitledtoanewtrial

onthoseclaimsbecauseoftheincorrectduressinstruction.

TheSeventhDistrict’sholding—thatapartycanescapetheeffectofareleaseby

virtueofpost‐releaseconductbytheotherparty—wouldradicallyaltertheeffectof

releasesinOhio.Gonewouldbethecertaintyandfinalityarisingfromtheuseofreleases

intheresolutionoflitigationandbusinessdisputes;partiescouldsimplyclaimthatpost‐

settlementconductbytheotherpartypreventedthemfrommeetingtheirrelease

obligations,andlitigationwouldbeginanew.ThiswouldundermineOhio’slong‐

establishedpublicpolicyinfavorof“theresolutionofcontroversiesanduncertainties

throughcompromiseandsettlementratherthanthroughlitigation.”Duncanv.Hopkins,9th

Dist.SummitNo.24065,2008‐Ohio‐3772,¶28,quotingSpercelv.SterlingIndustries,Inc.,

31OhioSt.2d36,38,285N.E.2d324(1972).

PropositionOfLawNo.IV:Aplaintiffcannotbaseafraudulentinducementclaimonrepresentationsthatarespeculative,inconsistentwithawrittenagreement,anduponwhichtheplaintiffdidnotrely.

TheSeventhDistrictreinstatedLucarell’sfraudclaimbasedonalleged

representationsthatarespeculative,inconsistentwithawrittenagreement,andupon

whichtheplaintiffdidnotrely.Itsdecisionconflictswiththedecisionsofeveryother

23

appellatedistrictastoeachoftheseissues.TheCourtshouldresolvethisconflictby

rejectingtheSeventhDistrict’sreasoning.

Inopposingdirectedverdict,Lucarellarguedthatshewasdefraudedintosigning

theModifiedAEAgreementbecauseNationwideknewtherequirementsintheagreement

wouldbetoodifficultforhertoachieve.(Tr.1655‐1660(Vol.8),Supp.195‐200.)Thetrial

courtcorrectlygrantedNationwide’smotionforadirectedverdictonLucarell’sfraud

claim,statingthatLucarellhad“toprovetherewasaknowingmisrepresentationoffact

withtheintentofNationwidetohavethesepeoplerelyonittotheirdetrimentfromthe

outset,”andthattherewas“notafraudallegationhere.”(Tr.1662‐1663(Vol.8),

Supp.202‐203.)

TheSeventhDistrict,however,reinstatedthefraudclaimandorderedanewtrial,

holdingthatajurycouldfindNationwide:(a)“fraudulentlyinducedLucarelltojointheAE

Programbyleadinghertobelieveshewouldearn$200,000ayearwhenitkneworshould

haveknownthatitsAEAgentswerefailing,”and(b)“fraudulentlyalteredLucarell’sloan

documentswiththeintenttomisleadthe[bank’s]loanofficerintobelievingLucarell’s

financialsituationandbusinessplanweredifferentinordertoimprovethechancesof[the

bank]approvingtheloan.”(Op.¶172,Appx.39.)

Theseholdings,however,createconflictswiththedecisionsofotherappellate

districts,arecontrarytowell‐establishedandimportantlimitsonfraudclaimsinOhiothat

haveexistedforoveronehundredyears,andwronglyrequireasecondtrialonissuesthat

havealreadybeenfullylitigated.

24

A. Lucarell’sclaimthatshewastoldthatshecouldearn“approximately$200,000ayear”isnotabasistoallegefraud.

LucarellcontendsthatshewasdefraudedbecauseNationwidesalesmanagerBill

HelfershowedLucarellasampleproforma(notinevidence),“andledmetobelieveI

wouldmakeapproximately$200,000ayear,myagency.Andletmeexplainthat.Because

thatwasn’t$200,000formyself.The$200,000wastopayfortheagencyexpensesand

payroll,myselfincludedinthere,variousthings,notjustmyself.”(Tr.1265‐1266(Vol.6),

Supp.167‐168.)

However,proformasaresimply“aforecast”ofhowanagencyis“supposedto

performfinanciallyinthefuture.”(Tr.422(Vol.2),Supp.127.)Lucarellunderstoodthata

forecastorprojectionwasnotapromise.“Q:Andyouunderstandprojectionsarejust

whatthatwordmeans,projections.A:Yes.Q:Projectionsdoesnotmeanpromiseor

guarantee,right?A:Yes.”(Tr.1485(Vol.7),Supp.180.)Lucarellalsoadmittedthatshe

wasshownnumbersthatshe“couldbeearning.”(Tr.1296(Vol.6),Supp.169.)

Because“[f]raudcannotbepredicateduponpromisesorrepresentationstofuture

actionsorconduct,”Tibbsv.Natl.HomesConstr.Corp.,52OhioApp.2d281,369N.E.2d

1218(8thDist.1977),paragraphthreeofsyllabus,thetrialcourtcorrectlyrejected

Lucarell’sfraudclaim.SeealsoBarret‐O’Neillv.Lalo,LLC,S.D.OhioNo.2:14‐cv‐00194,2016

WL1110319,*15(Mar.22,2016)(same).

Courtsaddressingsimilarclaimshaverejectedfraudclaimsbasedonproformas.

Forexample,theSixthCircuitaffirmedsummaryjudgmentforNationwideonafraudulent

inducementclaimbroughtbyaformeragentbasedonjustsuchaproforma.InNemier,the

plaintiffagentallegedthataNationwideproformapredictedthatshe“wouldhavepositive

cashflowinthreeyears.”Nemierv.NationwideMut.Ins.Co.,458Fed.Appx.420,422‐23

25

(6thCir.2012).Thedistrictcourtproperlyrejectedsuchaclaim,observingthepredictions

constitute“standardfuturepuffery.”Nemierv.NationwideMut.Ins.Co.,Tr.ofMot.for

Summ.J.,E.D.Mich.No.09‐10634,Dkt.No.70,at25(July28,2010),Supp.252.

Similarly,afederaldistrictcourtdismissedanagent’ssimilarfraudulent

inducementclaim,observingthattheproforma’s“forward‐lookingprojectionsofthe

futureareopinions,notstatementsoffact,andcannotconstitutefraud”andwerenot

“intentionallyfalse.”Boevev.NationwideMut.Ins.Co.,E.D.Mich.No.08‐CV‐12213,2010WL

3862720,*5(Sept.28,2010).Inanothercase,thedistrictcourtstatedthat“evenassuming

thatsomeonedidtellPlaintiffthathis5‐yearprojectedproformagoalswereachievable

***thiswouldnotbeanactionablerepresentationbecauseitisapredictionaboutthe

future,notastatementaboutthepast.”Byev.NationwideMut.Ins.Co.,733F.Supp.2d805,

819(E.D.Mich.2010).Thecourtthenwentontoobservethat“[e]venassumingthat”

Nationwidemisrepresentedfactsabouttheproforma,“anyreliancebyPlaintiffonsuch

representationsmadebyNationwidewasunreasonable.”Id.at822.

Likewise,anothercourtrejectedafraudulentinducementclaimbasedon“overly

optimisticprojections”ina“proformaagreement.”Becausetheprojectionswerenoteven

promisesoffutureperformancebyNationwide,the“prognosticationsintheproforma

thereappeartobebeyondthereachofafraudulentinducementclaim.”Bucciarelliv.

NationwideMut.Ins.Co.,E.D.Mich.No.08‐cv‐14349,OrderGrantingNationwideMot.for

Summ.J.,Dkt.No.70,at1,5‐8(June3,2011),Supp.233,237‐240;seealsoHoffmanv.

NationwideMut.Ins.Co.,N.D.Ill.No.10‐cv‐3841,2011WL3158708,*1‐2,7‐8(July26,

2011)(rejectingagent’sfraudulentinducementclaimthatproformas“contained

knowinglyfalseprojectedincomesandexpensesthatpaintedarosierpictureofthe

26

financialviabilityoftheexpansioneffortsthanwasactuallypossible”);Evens‐McCarthyv.

NationwideMut.Ins.Co.,E.D.Mich.No.08‐CV‐12049‐DT,2008U.S.Dist.LEXIS83702,*4‐12

(July24,2008)(rejectingagent’sfraudclaiminvolvingproformabecauseplaintiffdid“not

allegethatdefendantmisrepresenteditsfutureconduct,butratherthatdefendant

misrepresented,inessence,thelikelysuccessofplaintiff'sagency,basedoninaccurate

data,estimatesandassumptions”);seegenerallyVarnadorev.NationwideMut.Ins.Co.,

S.D.Ohio2:13‐cv‐827,2014WL2095373(May20,2014)(dismissingagent’scontract,

fraud,andduressclaimsagainstNationwideatRule12stage);Johnsonv.NationwideMut.

Ins.Co.,N.D.Cal.No.C11‐02913,2011WL5180124,*2(Oct.31,2011)(dismissingagent’s

fraudclaimatRule12stage).

WhiletheSeventhDistrictstatedthattherewasevidencethatNationwideknewor

shouldhaveknownthatsomeofitsAEAgentswerenotmeetingproductionrequirements

atthetimeLucarellwasallegedlyshownaproformapromisingherapproximately

$200,000ayear,therewasnosuchevidenceintherecord.(Op.¶167,Appx.38.)The

alleged“$200,000”statementoccurredin2005,whentheAEProgramwasinitsinfancy.

ThetestimonytowhichtheSeventhDistrictcited,incontrast,relatedtoNationwide’s

modificationoftheAEProgramin2007—sometwoyearslater—asaresultofdifficulties

thatsomeagentswerehavingwithmeetingthoserequirements.(Tr.716(Vol.4),

Supp.130(“When[theMOU]wasdeveloped,therewereanumberofissueswiththeAE

program”);Pl.Ex.14,Supp.17(MOUdatedFeb.7,2007).)Therewasnotestimonyorother

evidencethatatthetimeLucarellsignedtheOriginalAEAgreementin2005,Nationwide

wasawarethattheprogram’sproductionrequirementswouldlaterpresentchallengesto

agents.

27

TheSeventhDistrictalsofailedtoconsiderthatLucarelldevelopedherownpro

formawithNationwideinOctober2005,beforeshesignedtheAEAgreement.Heractual

proformaincludedprojectionsofwhatheragencycouldmakeinthefuture,anddidnot

containanypromisethatshewouldmakeapproximately$200,000peryear.(Oct.2005

ProForma,Pl.Ex.13atP220,Supp.48.)Moreimportantly,Lucarellagreedthatthefigures

werebasedon“assumptions”about“futureplans,”andthat“Nationwidecannotanddoes

notguaranteethatanyoftheprogramsorserviceswillresultinachievingyourdesired

objectives.”(Id.at214,Supp.42.)

HavingagreedtoherownproformabeforesheenteredintotheAEAgreement,and

havingagreedthattheproformawasonlybasedonassumptions,notguarantees,Lucarell

couldnotlookbackwardintimetobaseafraudclaimonapriorproformathatisnotin

evidence.Apartymaynotclaimfraudulentinducementbasedonanalleged“promise,the

termsofwhicharedirectlycontradictedbythesignedwriting.”Galmishv.Cicchini,90Ohio

St.3d22,29,2000‐Ohio‐7,734N.E.2d782,quotingMarionProd.CreditAssn.v.Cochran,40

OhioSt.3d265,533N.E.2d325(1988),paragraphthreeofsyllabus;seealsoD&HAutobath,

LLCv.PJCSProps.I,Inc.,2012‐Ohio‐5845,983N.E.2d891,¶26(12thDist.)(affirming

summaryjudgmentonfraudclaimbasedonpriorstatementsaboutthevalueofbusiness,

becausestatementswerecontradictedbysubsequentcontract’slanguagethattherewere

nowarrantiesorrepresentationsaboutthebusiness’svalue);Casserliev.ShellOilCo.,8th

Dist.CuyahogaNo.88361,2007‐Ohio‐2633,¶50(affirmingdismissaloffraudulent

inducementclaim).

Accordingly,Lucarell’sclaimoffraudbasedonwhatshewas“ledtobelieve”about

howmuchshewould“approximately”makebythesampleproformashewasallegedly

28

shownpriortopreparingherownproformabeforesigningthecontractwasnotcolorable

underOhiolawasithasexistedpriortothedecisionbelow.

B. Lucarell’sallegationthatNationwidealteredherloandocumentsalsodoesnotgiverisetoafraudclaim.

TheSeventhDistrictalsojustifiedreversingthedirectedverdictonthefraudclaim

because,Lucarellalleged,Nationwidehadalteredherloandocumentstodeceive

NationwideBankintoapprovingLucarell’sloan.(Op.¶172,Appx.39.)Asaninitialmatter,

thisallegationsufferedfromalackofevidence(andlogic).Forinstance,Lucarellclaimed

onappealthatitwas“utterlyinaccurate”thathercreditcardpaymentswere$960per

month,butshetestifiedthat“[t]hetotalcreditpaymentsof$960,that’smyhandwriting.”

(CompareLucarellCombinedAppealBr.87,R.282,withTr.1242(Vol.6),Supp.166.)

Assumingforthesakeofargumentthattherewasanyevidencetosupportthis

claim,Lucarelldidnotclaimthatsheknewoforreliedupontheallegedalterations.She

admittedthatsheonlylearnedoftheminadepositionyearslater.(Tr.1240(Vol.6),

Supp.165.)Shecannotmakeoutafraudclaimwithoutshowingpersonalreliance.InWells

v.Cook,16OhioSt.67(1865),thisCourtheldthatfalsestatementscouldnotformthebasis

ofafraudclaimifthestatementsweremadetoathirdparty,nottheplaintiff.Id.at67‐68,

70.UnderWells,Ohiocourtsholdthat“apartyisunabletomaintainanactionforfraud

wherethefraudulentrepresentationswerenotmadedirectlytohimtoinducehimtoact

onthem.”Marbleyv.MetaldyneCo.,9thDist.SummitNo.21377,2003‐Ohio‐2851,¶26

(collectingcases).Here,becausetheallegedmisrepresentationsweremadetothebank,

notLucarell,andthebankalonereliedonthem,Lucarell’sfraudclaimisbarred.

Thepanel’sholdingtothecontraryconflictswithcountlessstateandfederalcourts

applyingOhiolawsinceWells.E.g.,Lisboav.Tramer,8thDist.CuyahogaNo.97526,2012‐

29

Ohio‐1549,¶32;Howickv.LakewoodVillageLtd.Partnership,3dDist.MercerNo.10‐06‐25,

2007‐Ohio‐4370,¶61;Baddourv.Fox,5thDist.LickingNo.03CA‐77,2004‐Ohio‐3059,

¶41;Mosesv.SterlingCommerceAm.,Inc.,10thDist.FranklinNo.02AP‐161,2002‐Ohio‐

4327,¶21;Russellv.CityofNorthwood,6thDist.WoodNo.WD‐97‐050,1998WL102137,

*4(Feb.27,1998);Linv.GatehouseConstr.Co.,84OhioApp.3d96,103,616N.E.2d519

(8thDist.1992);Halev.EnercoGroup,Inc.,N.D.OhioNo.10CV00867,2011WL49545,*4

(Jan.5,2011);LasmerIndustries,Inc.v.AMGen.,LLC,741F.Supp.2d829,839‐840(S.D.Ohio

2010);Slaytonv.WellsFargoBank,NA,S.D.OhioNo.2:12‐CV‐00283,2013WL819229,*7

(Mar.5,2013);seealsoRestatementoftheLaw2d,Torts,Section537(1977)(recipientof

fraudulentmisrepresentationmustjustifiablyrelyonitto“recoveragainstitsmaker”);

RestatementoftheLaw,Torts,Section546(1938)(“Themakerofafraudulent

misrepresentationinabusinesstransactionisliableforpecuniarylosscausedtoits

recipientbyhisrelianceuponthetruthofthemattermisrepresented.”)(Emphasisadded).

ThisCourtalsoquotedWellswithapprovalasrecentlyas1986.Burrv.Bd.ofCty.Commrs.

ofStarkCty.,23OhioSt.3d69,74‐75,491N.E.2d1101(1986).

Moreover,theSeventhDistrict’sreinstatementofthefraudclaimreliedalmost

entirelyonthetestimonyofarebuttalwitnessofferedafterthetrialcourthadgranted

directedverdict.(Op.¶168,Appx.38‐39.)“Inplainterms,thecourtofappealscannot

considerevidencethatthetrialcourtdidnothavewhenitmadeitsdecision.”Stateexrel.

Pallonev.OhioCourtofClaims,143OhioSt.3d493,2015‐Ohio‐2003,39N.E.3d1220,¶11.

“’Itisaxiomaticthatinanappealonquestionsoflawthereviewingcourtmayconsider

onlythatwhichwasconsideredbythetrialcourtandnothingmore.’”Statev.Ishmail,54

OhioSt.2d402,405,377N.E.2d500(1978),quotingBennettv.DaytonMem.Park&

30

CemetaryAssn.,88OhioApp.98,99,93N.E.2d712(2dDist.1950).“Appellatereviewis

limitedtotherecordasitexistedatthetimethetrialcourtrenderedjudgment.”Paasewev.

WendyThomas5Ltd.,10thDist.FranklinNo.09AP‐510,2009‐Ohio‐6852,¶15;VanMeter

v.Stebner,9thDist.MedinaNo.2348‐M,1994WL716230,*2(Dec.28,1994)(same).

*****

TheSeventhDistrict’sholdingsonLucarell’sfraudclaimconflictwithother

intermediatecourtsastobasiclimitsoncommon‐lawfraudclaimsthathaveexistedfor

overacentury.Thetrialcourt’sdirectedverdictshouldbereinstated.

CONCLUSION

TheCourtshouldaffirmthepropositionsoflaw,holdthatpunitivedamagesarenot

recoverableincontract,reinstatethedirectedverdictonLucarell’sfraudclaim,andenter

judgmentforNationwideonthebreach‐of‐contractclaims.

Respectfullysubmitted,

/s/ThomasD.Warren ThomasD.Warren(0077541)twarren@bakerlaw.comG.KarlFanter(0075686)kfanter@bakerlaw.comBAKER&HOSTETLERLLP127PublicSquare,Suite2000Cleveland,OH44114Telephone:(216)861‐7528Facsimile:(216)696‐0740YvetteMcGeeBrown(0030642)ymcgeebrown@jonesday.comJONESDAY325JohnH.McConnellBlvd.,Ste.600Columbus,OH43215Telephone:(614)281‐3867Facsimile:(614)461‐4198

31

QuintinLindsmith(0018327)qlindsmith@bricker.comBRICKER&ECKLERLLP100SouthThirdStreetColumbus,OH43215Telephone:(614)227‐2300Facsimile:(614)227‐2390CounselforAppellantNationwideMutualInsuranceCompany

32

PROOFOFSERVICE

Icertifythatacopyoftheforegoingbriefandtheattachedappendixweresentby

emailtothefollowingcounselonthis26thdayofSeptember,2016:

PatriciaA.Morris(0043570)patricia@patriciamorrislaw.com841Boardman‐CanfieldRoad,Suite307Boardman,OH44512Telephone:(330)758‐9660RandyJ.Hart(0046793)randyjhart@gmail.com23600CommerceParkRoadBeachwood,OH44122Telephone:(216)978‐9150A.ScottFromson(0037889)scott@fromsonlaw.com32125SolonRoadSolon,OH44139Telephone:(440)394‐1301ThomasE.Szykowny(0014603)teszkowny@vorys.comRebeccaE.Wilson(0089954)rewilson@vorys.com52EastGayStreet,P.O.Box1008Columbus,OH43216‐1008Telephone:(614)464‐5671

/s/ThomasD.Warren CounselforAppellantNationwideMutualInsuranceCompany

APPENDIX TO APPELLANT’S MERITS BRIEF

Table of Contents

Appellate Proceedings

Seventh Dist. Opinion (Dec. 17, 2015), R.303 ...................................................................................Appx.1

Seventh Dist. Judgment Entry (Dec. 17, 2015), R.304 ................................................................ Appx.44

Seventh Dist. Denial of Mot. for Reconsideration (Mar. 2, 2016), R.316 ............................ Appx.46

Nationwide’s Notice of Appeal to the Ohio Supreme Court (Apr. 18, 2016), R.317 ...... Appx.53

Trial Court Proceedings

Judgment Entry on Summary Judgment and Other Issues (Apr. 4, 2012), R.82 ............. Appx.58

Judgment Entry Entering Judgment on Verdict (Dec. 18, 2012), R.175 ............................. Appx.61

Order on Statutory Caps (Jan. 31, 2013), R.219 ............................................................................ Appx.62

Judgement Entry on New Trial (Apr. 11, 2013), R.235 .............................................................. Appx.65

Judgment Entry on Reconsideration & Non-Economic Loss (Apr. 11, 2013), R.236 .... Appx.71

Judgment Entry on Motion for JNOV (Apr. 11, 2013), R.239 ................................................... Appx.72

Amended Judgment Entry (July 29, 2013), R.256 ........................................................................ Appx.73

Statutes & Rules

R.C. § 2315.21 ............................................................................................................................................... Appx.76

App.R. 12 ........................................................................................................................................................ Appx.80

[Cite as Lucarell v. Nationwide, 2015-Ohio-5286.] STATE OF OHIO, MAHONING COUNTY

IN THE COURT OF APPEALS

SEVENTH DISTRICT

CHRISTINE LUCARELL,

PLAINTIFF-APPELLEE CROSS-APPELLANT,

V.

NATIONWIDE MUTUAL INSURANCE COMPANY,

DEFENDANT-APPELLANT CROSS-APPELLEE.

CHRISTINE LUCARELL,

PLAINTIFF-APPELLEE,

V.

NATIONWIDE MUTUAL INSURANCE CO., et al.,

DEFENDANTS-APPELLANT.

) ) ) ) ) ) ) ) ) ) ) )

) ) ) ) ) ) ) ) ) )

CASE NO. 13 MA 74

CASE NO. 13 MA 133

OPINION

CHARACTER OF PROCEEDINGS: Civil Appeal from Court of Common Pleas of Mahoning County, Ohio Case No. 2010CV1417

JUDGMENT: Affirmed in part Reversed in part Remanded

JUDGES:

Hon. Gene Donofrio Hon. Cheryl L. Waite Hon. Carol Ann Robb

Appx.1

- 2 -

APPEARANCES: Dated: December 17, 2015

For Plaintiff-Appellee Cross Appellant

Attorney Caryn Groedel Attorney Melisa Mazanec-Fisco Attorney Chastity Christy 31340 Solon Road, Suite 27 Cleveland, Ohio 44139

For Defendant-Appellant Cross Appellee

Attorney Thomas Warren Attorney Stephen Sutton Attorney G. Karl Fanter PNC Center 1900 East Ninth Street, Suite 3200 Cleveland, Ohio 44114-3485

Attorney Quintin Lindsmith Attorney Sommer Sheely Attorney Victoria Flinn 100 South Third Street Columbus, Ohio 43215-4291

Appx.2

[Cite as Lucarell v. Nationwide, 2015-Ohio-5286.] DONOFRIO, P.J.

{¶1} Defendant-appellant/cross-appellee, Nationwide Mutual Insurance

Company, appeals from a Mahoning County Common Pleas Court judgment in favor

of plaintiff-appellee/cross-appellant, Christine Lucarell, on Lucarell’s claims for

constructive discharge, retaliation, invasion of privacy, and breach of contract,

following a jury trial resulting in a compensatory-damage award of $3,667,010 and a

punitive-damage award of $10.5 million. Nationwide also appeals from the trial

court’s judgment overruling its Civ.R. 60(B) motion for reconsideration of the court’s

prejudgment interest ruling.

Statement of the Facts and Case {¶2} In 2005, Nationwide contracted with Lucarell to enter into its Agency

Executive Program (AE Program). Under the terms of the AE Program Lucarell was

an exclusive insurance sales agent for Nationwide. She opened a “scratch” agency,

a brand new agency, pursuant to the program. Under the AE Program, Lucarell sold

property and casualty insurance and agreed to meet certain sales goals in order to

graduate from the 36-month program.

{¶3} As a condition of entering into the AE Program, Lucarell signed an AE

Program Performance Agreement (the Performance Agreement) with Nationwide on

November 4, 2005. The Performance Agreement provided that Nationwide could

terminate Lucarell from the AE Program if she did not meet certain monthly sales

goals and certain total sales by the end of the 36-month period. Lucarell asserts that

her copy of the Performance Agreement did not contain Exhibit A, which set out her

monthly sales requirements. The Performance Agreement also set out Lucarell’s

commission and bonus compensation plans, her training requirements, her loan

disbursement schedule, Nationwide’s exclusive ownership right in the policies, and

business plans and pro formas prepared by Nationwide for Lucarell’s agency.

{¶4} At the same time, Lucarell also entered into an Independent Contractor

Agent’s Agreement (the Agent’s Agreement). The Agent’s Agreement required

Lucarell to work exclusively for Nationwide selling only Nationwide products. It also

provided that Nationwide had the exclusive right to control all of the policies sold by

Appx.3

- 2 -

Lucarell and the right to service her customers. And it provided that Nationwide

controlled the pricing of insurance products and what products were available.

{¶5} According to Lucarell, Nationwide enticed her to enter the AE Program

by promising her yearly commissions in excess of $200,000. Lucarell claimed that

Nationwide showed her an inaccurate business plan and pro forma on which she

relied in deciding to enter the AE Program. Lucarell alleged that Nationwide failed to

provide her with the necessary training and support that were needed to maintain a

successful Nationwide agency.

{¶6} In starting up her business under the AE Program, Lucarell rented and

furnished office space. Nationwide required her to take out a loan from Nationwide

Federal Credit Union (NFCU) in the amount of $290,000 to start up her business.

Lucarell claimed Nationwide insisted that she enter into a lease agreement to rent

office space in the Boardman Plaza, which space her sales manager selected, and

required her to spend over $40,000 to furnish and equip that office space. She also

claimed Nationwide required her to spend $5,000 on a grand opening party for the

agency. And Lucarell stated Nationwide required her to hire two employees before

she even started earning any income.

{¶7} According to Lucarell, the business plan for her agency was to be

mutually agreed upon by her and Nationwide. But Nationwide unilaterally prepared

the business plan without her input. Additionally, Lucarell asserted that after she had

been in the AE Program for approximately one year, she asked to review her

business plan and found that it had been altered.

{¶8} Lucarell opened her agency in January 2006. Nationwide began

measuring her performance on February 1, 2006. During her first year of operation,

Lucarell produced approximately $400,000 in direct written premium (DWP). These

earnings earned her several Nationwide sales awards.

{¶9} According to Lucarell, on February 7, 2007, Nationwide’s sales

manager came to her home and informed her that if she did not sign the

Memorandum of Understanding (MOU) that he brought with him, Lucarell would not

Appx.4

- 3 -

receive the money Nationwide had promised her, her participation in the AE Program

would terminate, and the balance due on her NFCU loan would be due immediately.

Nationwide asserted the MOU made it easier for agents to meet their production

goals.

{¶10} Lucarell signed the MOU. She claimed that at the time she signed it,

she had just undergone major surgery and was heavily medicated. She also claimed

her economic situation offered her no alternative but to sign the MOU. Under the

terms of the MOU, Nationwide gave Lucarell $50,000, some of which was earmarked

to hire an accountant to prepare a revised business plan for her agency. She did

this. Nationwide, however, hired its own accountant, who modified the plan, and then

charged Lucarell for this service. Lucarell claimed that the modified business plan

was unrealistic and inadequate to sustain her agency. Additionally, the MOU

provided that Lucarell released Nationwide from any claims she had against

Nationwide up to that point in time.

{¶11} Lucarell continued with the AE Program.

{¶12} In September 2008, Lucarell entered into a Modified AE Agreement (the

Modified AE Agreement) with Nationwide. In signing the Modified AE Agreement,

Lucarell acknowledged that Nationwide had given her a chance to exit the AE

Program with Nationwide paying off her loan. Lucarell claimed that she signed the

Modified AE Agreement only after Nationwide promised to allow her to merge her

agency with two other agencies that were terminating and permit her to use the

revenue generated by those two agencies toward her production goals. Lucarell

further claimed that Nationwide’s state sales officer told her that if she did not sign

the Modified AE Agreement, Nationwide would not give her the quarterly

disbursements to run her agency. Lucarell then asserted that she never received the

promised mergers but her DWP requirements were based on the income she was to

receive from the mergers.

{¶13} Lucarell claimed that Nationwide used the Modified AE Agreement to

ensure that she and other AE agents did not successfully complete the AE Program.

Appx.5

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She points out the Modified AE Agreement changed the method of calculating the

minimum production plan from a cumulative basis to a rolling basis, increased the

New Business percentage requirements by 96 percent, and required the AE agents

to make monthly loan payments during the production period rather than at the end

of the production period as previously set forth. The Modified AE Agreement also

contained a waiver of all claims against Nationwide.

{¶14} Lucarell also asserted that starting in September 2008, Nationwide

began misreporting to her that she was not meeting her production requirements.

She claims that she was actually surpassing those requirements.

{¶15} On April 1, 2009, Lucarell was to receive her quarterly disbursement of

$24,457 from Nationwide. Nationwide informed her it would not pay her

disbursement because she missed a monthly minimum production plan requirement

by four percent. Lucarell filed for an exception under the Modified AE Agreement

because she had achieved at least 95 percent of her minimum production plan

requirement. In her request for an exception, Lucarell noted that $11,766 of

insurance was not included in her total when it should have been and she had

$11,600 in insurance pending, which was not included in her totals. Nationwide

denied Lucarell’s requested exception.

{¶16} On April 9, 2009, Nationwide placed Lucarell on a three-month

probationary period for not meeting minimum production goals.

{¶17} On May 29, 2009, Nationwide informed Lucarell that for the next 120

months, instead of being paid the commissions she earned, Nationwide would be

applying those commissions to the $274,285.22 due on her NFCU loan. This cut off

Lucarell’s revenue stream.

{¶18} On July 7, 2009, Lucarell resigned from the AE Program.

{¶19} On April 12, 2010, Lucarell filed a complaint against Nationwide raising

claims for breach of the AE Program Performance Agreement, breach of the MOU,

fraudulent misrepresentation, breach of the Agent’s Agreement, and invasion of

privacy for misappropriation of her name.

Appx.6

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{¶20} Nationwide filed a counterclaim. It asserted that NFCU assigned its

right to collect on Lucarell’s loan to it and that Lucarell had defaulted on the loan.

Therefore, Nationwide raised a claim for breach of the note and asserted it was

entitled to judgment on the note in the amount of $291,296.53. It also raised a claim

for equitable indemnification.

{¶21} Lucarell then amended her complaint to add claims for retaliation,

constructive discharge, and breach of the Modified AE Agreement. She also later

amended her complaint to include factual allegations that Nationwide’s intent in

recruiting approximately 400 AE agents was to fail the AE agents and terminate their

agencies once the agents had generated a profitable book of business for

Nationwide.

{¶22} The matter proceeded to a jury trial. The trial court granted

Nationwide’s motion for a directed verdict on Lucarell’s fraudulent misrepresentation

claim. All other claims were submitted to the jury. The jury found in Lucarell’s favor

on all claims and counterclaims. The jury awarded Lucarell damages as follows:

{¶23} Breach of Contract:

Breach of independent contractor agent’s agreement: $600,000

Breach of AE Program Performance Agreement: $600,000

Breach of MOU: $1,000,000

Breach of First Modification of AE Program Performance

Agreement: $2,000,000

Total for Breach of Contract: $4,200,000

Misappropriation of Name:

Nominal damages: $10

Emotional damages: $100,000

Total for Misappropriation: $100,010

Damages for Retaliation:

Costs to defend against counterclaim: $100,000

Emotional damages: $400,000

Appx.7

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Total for Retaliation: $500,000

Damages for Constructive Discharge:

Lost Profits: $1,500,000

Emotional damages: $500,000

Total for Constructive Discharge: $2,000,000

{¶24} The jury also found that Lucarell was entitled to punitive damages in the

amounts of $5 million on the misappropriation claim, $11 million on the retaliation

claim, and $20 million on the constructive discharge claim. And it found Lucarell was

entitled to recover attorneys’ fees and costs, with the amount to be determined by the

trial court.

{¶25} Nationwide filed several post-trial motions including a motion requesting

the trial court reduce the verdict to conform to the statutory caps on punitive and non-

economic damages. The trial court found this motion to have merit as to the

retaliation claim but not as to the misappropriation and constructive discharge claims.

{¶26} Therefore, the court reduced the non-economic damages awarded on

the retaliation claim from $400,000 to $250,000 and reduced the punitive damages

awarded on the retaliation claim from $11 million to $800,000. It also found that the

$5.7 million in lost profits damages was excessive and reduced this amount to $2.817

million, which was the amount testified to by Lucarell’s expert witness. It also

remitted the other punitive damages awards to result in a total punitive damages

award of $10.8 million. Per stipulation of the parties, the court further reduced the

punitive damages award to $10.5 million.

{¶27} After the reductions and remittiturs, Lucarell’s final award was

$3,667,010 in compensatory damages and $10.5 million in punitive damages for a

total award of $14,167,010.

{¶28} The trial court then awarded $187,546.50 in attorney fees and

$21,557.64 in costs. It also awarded prejudgment interest.

{¶29} Nationwide filed a motion for judgment notwithstanding the verdict

(JNOV) on all counts and a motion for a new trial. The trial court overruled these

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motions.

{¶30} Nationwide filed a timely notice of appeal on May 10, 2013. Lucarell

filed a timely notice of cross appeal on May 20, 2013.

{¶31} Nationwide also filed a Civ.R. 60(B) motion for reconsideration in the

trial court requesting that the court reconsider its ruling on the issue of prejudgment

interest. This court issued a limited remand to the trial court so that it could rule on

that motion. The trial court overruled Nationwide’s motion. Nationwide then filed a

second notice of appeal. This court consolidated the two appeals.

Nationwide’s Appeal {¶32} Nationwide now raises eleven assignments of error for our review, the

first of which states:

THE TRIAL COURT ERRED BY NOT GRANTING JNOV ON

LUCARELL’S CONSTRUCTIVE DISCHARGE CLAIM.

{¶33} Nationwide argues the trial court should have granted a JNOV on

Lucarell’s claim for constructive discharge because Lucarell never alleged that she

had been subject to any type of discrimination by Nationwide. It asserts a claim for

constructive discharge cannot stand alone but is a way for a person to bring a claim

in the context of harassment or discrimination when the person quits. Nationwide

cites to several federal cases for this proposition. Because Lucarell did not raise a

claim for discrimination, Nationwide contends, she could not bring a claim simply for

constructive discharge. Under Ohio’s employment-at-will status, Nationwide urges,

the law does not recognize a cause of action for termination unless the termination is

based on improper, discriminatory or retaliatory reasons. Nationwide argues the trial

court here expanded Ohio law by providing a stand-alone claim for constructive

discharge.

{¶34} An appellate court reviews a trial court's rulings on motions for directed

verdict and for JNOV de novo because they present questions of law. Carter v. R &

B Pizza Co., 7th Dist. No. 09 JE 34, 2010-Ohio-5937, ¶15.

Appx.9

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{¶35} Initially, we must note that Lucarell asserts Nationwide failed to

preserve this issue for appeal. On the contrary, however, Nationwide did not waive

this issue for review. Nationwide raised this issue as early as its Answer to Lucarell’s

First Amended Complaint, arguing the constructive discharge claim was barred

because it was not a proper claim for relief but instead was an element of a

discrimination claim. (Answer to First Amended Complaint, ¶71). Nationwide again

raised the issue in its Pre-Trial Statement (p. 3) and Proposed Jury Instructions (p.

22). Next, it “implore[d] the court to throw out the constructive discharge claim” when

arguing for a directed verdict stating it was not a recognized cause of action. (Tr.

1645). Finally, Nationwide objected to the entire jury instruction on constructive

discharge. (Tr. 2082-2083).

{¶36} Thus, Nationwide has argued throughout the course of these

proceedings that constructive discharge is not an independent claim for relief. As

such, it has not waived this issue on appeal.

{¶37} In determining whether Lucarell’s cause of action for constructive

discharge can exist, we must examine Ohio’s stance on employment law.

{¶38} Ohio is an employment at-will state. Dohme v. Eurand Am., Inc., 130

Ohio St. 3d 168, 2011-Ohio-4609, 956 N.E.2d 825, ¶11. Either party to an

employment-at-will agreement may terminate the employment relationship for any

reason that is not contrary to law. Mers v. Dispatch Printing Co., 19 Ohio St.3d 100,

483 N.E.2d 150 (1985). Stated another way, an employee can be terminated for

good cause, bad cause, or no cause at all. Phung v. Waste Mgt., Inc., 23 Ohio St.3d

100, 491 N.E.2d 1114 (1986). The act of terminating an at-will employee's

relationship with an employer generally does not give rise to an action for damages.

Dohme, at ¶11.

{¶39} Exceptions do exist to the employment at-will relationship.

{¶40} The Ohio Supreme Court recognizes exceptions when (1) the existence

of an implied or express contract alters the terms of discharge or when (2)

representations of continued employment were made to an employee constituting

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promissory estoppel. Sims v. Village of Midvale, 5th Dist. No. 2012 AP 03 0021,

2012-Ohio-6081, ¶17, citing Mers, at 104.

{¶41} Additionally, there is an exception for wrongful discharge in violation of

public policy. Sutton v. Tomco Machining, Inc., 129 Ohio St. 3d 153, 2011-Ohio-2723,

950 N.E.2d 938, ¶8, citing Greeley v. Miami Valley Maintenance Contractors., Inc.,

49 Ohio St.3d 228, 551 N.E.2d 981 (1990), paragraph one of the syllabus. This

claim requires the discharged employee to prove: (1) a clear public policy that is

manifested in a state or federal constitution, in statute or administrative regulation, or

in the common law; (2) dismissing employees under circumstances like those

involved in the plaintiff's dismissal would jeopardize the public policy; (3) the plaintiff's

dismissal was motivated by conduct related to the public policy; and (4) the employer

lacked an overriding legitimate business justification for the dismissal. Sutton, at ¶9,

citing Collins v. Rizkana, 73 Ohio St.3d 65, 69-70, 652 N.E.2d 653 (1995).

{¶42} Finally, there is an exception for discrimination cases. R.C. 4112.02(A)

makes it an unlawful discriminatory practice for any employer to discharge an

employee without just cause based on the employee’s “race, color, religion, sex,

military status, national origin, disability, age, or ancestry.”

{¶43} Notably, in all of these exceptions to the employment at-will doctrine,

there is no cause of action for constructive discharge.

{¶44} “[C]onstructive discharge is a legal principle frequently applied to

employment discrimination cases.” Fleming v. Kent State Univ., 10th Dist. No. 13AP-

942, 2014-Ohio-3471, ¶21, quoting Mustafa v. St. Vincent Family Ctrs., Inc., 10th

Dist. No. 12AP–305, 2012-Ohio-5775, ¶17.

{¶45} The comments to the Ohio Jury Instructions instruct that a constructive

discharge claim cannot stand alone:

1. GENERAL. The employee (resigned) (left his/her job) and

claims that he/she was constructively discharged by the employer. The

employer claims that the employee voluntarily (resigned) (left the job). If

you find by the greater weight of the evidence that the employer,

Appx.11

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regardless of his/her/its intent, made the employee's working conditions

so difficult and unpleasant that a reasonably (cautious) (careful)

(prudent) person under the same or similar circumstances would feel

compelled to resign or leave employment, then you must find that the

employee was constructively discharged.

OJI CV Section 533.23.

{¶46} The comment to this instruction states: “This instruction applies in

discrimination cases where the employee also claims that he/she was forced to

resign or leave due, in whole or in part, to discriminatory employment practices.

‘Constructive discharge’ is not an independent claim for relief.” (Emphasis added.)

Although the Ohio Jury Instructions are not binding, they are nonetheless helpful as

an example of generally accepted interpretations of the law. State v. Gardner, 118

Ohio St. 3d 420, 2008-Ohio-2787, 889 N.E.2d 995, ¶97.

{¶47} Moreover, the Sixth Circuit has found: “Constructive discharge from

employment is not itself a cause of action. First there must exist an underlying cause

of action for employment discrimination.” Starks v. New Par, 181 F.3d 103 (6th

Cir.1999). “Federal case law interpreting Title VII of the Civil Rights Act of 1964,

Section 2000e et seq., Title 42, U.S.Code, is generally applicable to cases involving

alleged violations of R.C. Chapter 4112.” Plumbers & Steamfitters Joint

Apprenticeship Comm. v. Ohio Civil Rights Comm'n, 66 Ohio St. 2d 192, 196, 421

N.E.2d 128 (1981). Thus, federal case law holds that a constructive discharge claim

cannot stand alone.

{¶48} Under Ohio law, there is no independent claim for constructive

discharge. Constructive discharge occurs when an employee is forced by his or her

employer to resign. Constructive discharge is a substitute for being fired.

{¶49} Looking at Lucarell’s claim, if Nationwide had fired Lucarell, she would

not have had a cause of action simply for being fired. That is not to say she could not

pursue other claims such as breach of contract or fraud. But she would not have a

cause of action in tort just because her employer terminated her employment. Here,

Appx.12

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Lucarell’s claim for constructive discharge is equivalent to a claim for being fired,

which is not a cause of action absent some type of alleged discrimination or violation

of public policy.

{¶50} Ohio is an at-will employment state where Nationwide was free to fire

Lucarell for good reason, bad reason, or no reason at all. Under Ohio law, a

constructive discharge claim is not an independent cause of action. Therefore, the

trial court erred allowing a judgment on Lucarell’s constructive discharge claim.

{¶51} Accordingly, Nationwide’s first assignment of error has merit.

{¶52} Nationwide’s second assignment of error states:

THE TRIAL COURT ERRED BY NOT GRANTING JNOV ON

LUCARELL’S RETALIATION CLAIM.

{¶53} Nationwide’s argument here is similar to that in its first assignment of

error. Nationwide argues the trial court should have granted a JNOV on Lucarell’s

retaliation claim because Lucarell never alleged any discrimination by Nationwide. It

points out that Lucarell alleged Nationwide’s filing of a compulsory counterclaim in

response to her complaint constituted unlawful retaliation. Nationwide notes that to

bring a retaliation claim, the plaintiff must have engaged in a protected activity under

the applicable statute. But Nationwide asserts Lucarell never claimed to have

engaged in a protected activity. Additionally, Nationwide states a retaliation claim

cannot be based on the filing of a counterclaim unless the counterclaim is objectively

baseless. Nationwide asserts its counterclaim was objectively reasonable because it

sought to collect on a loan that Lucarell admitted she defaulted on.

{¶54} Lucarell once again asserts that Nationwide waived this issue for review

by failing to preserve it at trial. But as was the case with the constructive discharge

claim, Nationwide repeatedly raised objections to Lucarell’s retaliation claim. It first

did so in its Opposition to Lucarell’s Motion for Leave to File First Amended

Complaint, where it argued Lucarell did not engage in a protected activity as required

to raise a retaliation claim. Nationwide again raised this argument in its Motion for

Appx.13

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Summary Judgment, Pre-Trial Statement, and Proposed Jury Instructions. And

Nationwide raised the issue during trial when arguing for a directed verdict. (Tr.

1673). Thus, Nationwide did not waive this issue on appeal.

{¶55} Pursuant to R.C. 4112.02(I), which deals with retaliation claims, it is an

unlawful discriminatory practice for any person to discriminate in any manner against

any other person because that person has opposed any unlawful discriminatory

practice or because that person has made a charge, testified, assisted, or

participated in any manner in any investigation, proceeding, or hearing under

sections R.C. 4112.01 to R.C. 4112.07 (all dealing with discrimination).

{¶56} To establish a prima facie case of retaliation pursuant to R.C.

4112.02(I), the plaintiff must demonstrate that: (1) she engaged in a protected

activity; (2) the employer knew she engaged in the protected activity; (3) the

employer subjected the plaintiff to an adverse employment action; and (4) a causal

link existed between the protected activity and the adverse action. Dautartas v.

Abbott Labs., 10th Dist. No. 11AP-706, 2012-Ohio-1709, ¶49.

{¶57} Lucarell argues that she engaged in a protected activity here by

retaining counsel and filing suit. She relies on this court’s decision in Jenkins v.

Parkview Counseling Ctr., Inc., 7th Dist. No. 99 CA 60, 2001-Ohio-3151, for support.

{¶58} In Jenkins, Jenkins filed a lawsuit against his employer alleging his

employer changed his job classification in violation of a settlement agreement. The

matter went to a jury trial and the jury found in favor of Jenkins. Two years later,

Jenkins was laid off and never recalled to work. He then filed a lawsuit against his

former employer asserting claims for age discrimination, breach of contract, malice,

and wrongful discharge in violation of public policy. The trial court granted summary

judgment in favor of the employer and Jenkins appealed.

{¶59} In his claim for wrongful discharge against public policy, Jenkins alleged

he was discharged in retaliation for his successful lawsuit against his employer. On

appeal, this court stated that “when an employer discharges an employee for

consulting an attorney regarding an issue that affects the employer's business

Appx.14

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interests, the employer has violated clear public policy in Ohio.” Id., citing Chapman

v. Adia Services, Inc., 116 Ohio App.3d 534, 542, 688 N.E.2d 604 (1997). We found

the public policy was clearly stated in Article I, Section 16 of the Ohio Constitution,

which provides that all courts shall be open to every person to redress his injuries.

Id. Therefore, we determined that the trial court erred in granting summary judgment

to the employer on Jenkins’ wrongful discharge claim.

{¶60} This case, however, is distinguishable from Jenkins. Jenkins asserted

a claim for wrongful discharge in violation of public policy. Lucarell did not. Instead,

she raised a claim for “retaliation in violation of public policy.” But no such claim

exits. Moreover, Lucarell has never claimed that she was discriminated against by

Nationwide. And Nationwide did not fire Lucarell in retaliation for her filing suit

against it. Lucarell had not been Nationwide’s employee for almost a year when she

filed the instant lawsuit.

{¶61} In this case, there was no adverse employment action. Lucarell’s

employment with Nationwide terminated on July 7, 2009. She filed her complaint on

April 12, 2010. Nationwide filed its counterclaim on June 15, 2010, almost an entire

year after Lucarell’s employment ended. Thus, Nationwide did not subject Lucarell to

an adverse employment action.

{¶62} Lucarell’s retaliation claim fails for two reasons. First, Lucarell was not

an employee at the time of the alleged retaliation. Therefore, there was not an

adverse employment action. Second, Lucarell failed to assert any type of

discrimination. The retaliation statute itself presupposes some type of discrimination:

“it is an unlawful discriminatory practice for any person to discriminate in any manner

against any other person because that person has opposed any unlawful

discriminatory practice or because that person has made a charge, testified, assisted,

or participated in any manner in any investigation, proceeding, or hearing under

sections R.C. 4112.01 to R.C. 4112.07 [all dealing with discrimination].” (Emphasis

added.) Throughout these proceedings, Lucarell has never suggested any type of

discrimination.

Appx.15

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{¶63} Lucarell’s claim did not meet the elements of retaliation. Therefore, the

trial court erred in allowing a judgment on Lucarell’s retaliation claim.

{¶64} Accordingly, Nationwide’s second assignment of error has merit.

{¶65} Nationwide’s third assignment of error states:

{¶66} THE TRIAL COURT ERRED BY NOT GRANTING JNOV OR A NEW

TRIAL ON LUCARELL’S BREACH-OF-CONTRACT CLAIMS.

{¶67} Lucarell raised breach of contract claims asserting Nationwide

breached the AE Agreement, the Modified AE Agreement, the MOU, and the Agent

Agreement. Nationwide moved for a directed verdict on these claims. The trial court

found:

And I’m indicating here specifically, while the court has listened

to arguments of the defense with respect to the position of the defense,

that there’s a failure of precise proof of breach. I would remind the

parties as far as this case is concerned, that in every contract there is a

presumption that the parties will act in good faith. And the allegations

that have been made by the plaintiff under the court’s analysis, the jury

could find that the defendant acted otherwise than in good faith in these

dealings if the allegations were to be believed. So this is the reason

that the plaintiff has survived the motion in Counts 1, 2, and 3 [the

breach of contract claims].

(Tr. 1661).

{¶68} Nationwide argues that the trial court found there was no express

breach of contract and that without an express breach of a contract, there can be no

claim for breach of the duty of good faith and fair dealing. Therefore, it asserts, the

trial court erred in sending these claims to the jury after finding there was no express

breach by Nationwide. Because there was no express breach, Nationwide asserts,

the claims for breach of the duties of good faith and fair dealing necessarily failed.

Appx.16

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{¶69} There is an implied duty of good faith and fair dealing in every contract.

Littlejohn v. Parrish, 163 Ohio App. 3d 456, 2005-Ohio-4850, 839 N.E.2d 49, ¶27.

“‘Good faith’ is a compact reference to an implied undertaking not to take

opportunistic advantage in a way that could not have been contemplated at the time

of drafting, and which therefore was not resolved explicitly by the parties.” Ed Schory

& Sons, Inc. v. Soc. Natl. Bank, 75 Ohio St. 3d 433, 443-444, 662 N.E.2d 1074,

quoting Kham & Nate's Shoes No. 2, Inc. v. First Bank of Whiting, 908 F.2d 1351,

1357-1358 (C.A.7, 1990). A claim for breach of the duty of good faith and fair dealing

exists as part of a breach of contract claim. Krukrubo v. Fifth Third Bank, 10th Dist.

No. 07AP-270, 2007-Ohio-7007, ¶19. In other words, a party cannot assert a claim

for breach of the duty of good faith without asserting a claim for breach of contract.

Gilchrist v. Saxon Mtge. Servs., 10th Dist. No. 12AP-556, 2013-Ohio-949, ¶26.

{¶70} The trial court’s comment may suggest it did not find that Lucarell

presented evidence to prove an actual breach of contract. Nonetheless, the trial

court instructed the jury:

A party cannot breach the implied duty of good faith by acting as

permitted by the terms of the contract. Rather, to breach the implied

covenant of good faith and fair dealing, a party must have breached

specific obligations imposed by the contract.

For you to find for Ms. Lucarell on this claim, you must find by a

preponderance of the evidence that the obligations allegedly breached

were part of the performance agreement and modification; (2) that

Nationwide materially breached these obligations[.]

(Tr. 2062-2063).

{¶71} The jury interrogatories reveal that the jury found Nationwide breached

the AE Agreement, the Modified AE Agreement, the MOU, and the Agent Agreement.

(Jury Interrogatories 3, 4, 5, 6). They do not specify whether the breach was based

upon a breach of specific terms of the contracts, a breach of the duty of good faith

Appx.17

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and fair dealing that accompanies a contract, or both. The parties did not submit

interrogatories as to why the jurors found breaches of the contracts. Thus, there is

no way to know on what basis the jury found the breaches. Therefore, we cannot

review this claim of error.

{¶72} Nationwide also argues that any alleged breach of the MOU was

released when Lucarell signed the Modified AE Agreement in the fall of 2008. The

Modified AE Agreement contained a release of all claims against Nationwide up until

that point in time. (Pt. Ex. 15, ¶19). Lucarell claimed Nationwide breached the MOU

in May 2007, by failing to accept her business plan. (Tr. 1321-1323, 1654-1655,

1944-1945).

{¶73} Whether a release actually releases all claims is a question of fact.

See, Pakulski v. Garber, 6 Ohio St.3d 252, 256, 452 N.E.2d 1300 (1983); Sloan v.

Std. Oil Co., 117 Ohio St. 149, 152, 203 N.E.2d 236 (1964). In this case, the jury

was presented with two interrogatories relating to the release at Nationwide’s

request.

{¶74} Jury Interrogatories No. 1 and 2 asked:

Do you find that Nationwide has proven by a preponderance of

the evidence that Christine Lucarell released Nationwide from all claims

pursuant to the Memorandum of Understanding prior to the execution of

the Memorandum of Understanding?

Do you find that Nationwide has proven by a preponderance of

the evidence that Christine Lucarell released Nationwide from all claims

pursuant to the First Modification of the Agency Executive Program

Performance Agreement prior to the execution of the First Modification

of the Agency Executive Program Performance Agreement?

The jury answered “No” to both interrogatories, which were both proposed by

Nationwide. (Nationwide Proposed Jury Interrogatories 1 and 2). Thus, the parties

agreed to submit the issue to the jury. And the jury found the releases did not

Appx.18

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actually release all claims.

{¶75} Finally, Nationwide argues the trial court should have granted its motion

for a new trial on the breach of contract claims due to the court’s instruction on

duress.

{¶76} Over Nationwide’s objection, the trial court instructed the jury that

Lucarell was “excused from performing the contract” if she entered into the MOU or

the Modified AE Agreement under duress. (Tr. 2076-2077).

{¶77} Nationwide asserts the duress instruction allowed the jury to find duress

by a preponderance of the evidence. However, it argues, duress must be proven by

clear and convincing evidence. Nationwide points out that the trial court refused to

give its proposed duress instruction, which instructed on proof by clear and

convincing evidence. (Nationwide Proposed Instr. No. 10). Nationwide urges that the

failure to instruct on the correct burden of proof is reversible error. It asserts that the

jury may have found for Lucarell on her breach of contract claims only after excusing

her failure of performance under those contracts.

{¶78} The trial court instructed the jury on two defenses for Lucarell that

would have excused her from performing under the contracts. First, it instructed the

jury on prevention of performance:

Now, Ms. Lucarell claims that she is excused from performing

under the contracts for her agency because Nationwide prevented her

from performing, fulfilling, and/or completing a condition that would

have excused her from loan repayment obligations. If all the

requirements of prevention of performance are proved, then Ms.

Lucarell is excused from performing under the contracts.

Prevention of performance occurs if, (A) Nationwide prevented

Ms. Lucarell from performing under the contracts at issue; and (B), Ms.

Lucarell would have been able to perform under the contracts, but for

Nationwide’s actions. All right?

Appx.19

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(Tr. 2075-2076). The trial court then instructed the jury on duress. (Tr. 2076). It did

not include an instruction that duress must be proved by clear and convincing

evidence.

{¶79} There are different views in Ohio on the proper burden of proof to prove

duress. For example, the Ninth District required that a party claiming duress prove its

existence by a preponderance of the evidence. ComDoc v. Advance Print Copy Ship

Ctr., 9th Dist. No. 24212, 2009-Ohio-2998, ¶22. But several other districts have

required proof by clear and convincing evidence. Betts v. Betts, 3d Dist. No. 5-12-33,

2013-Ohio-1938, ¶13 (finding that while the Ohio Supreme Court has not clearly

weighed in on the appropriate burden of proof for a showing of duress, it hinted in

Standard Sanitary Mfg. Co. v. George, 118 Ohio St. 564 (1928), that it requires a

party to prove duress by clear and convincing evidence); Beery v. Beery, No. 82AP-

474, 1983 WL 3321, *1 (Jan. 20, 1983); Thiery v. Thiery, 8th Dist. No. 52077, 1987

WL 6117, *1 (Feb. 5, 1987).

{¶80} The trial court in this case did not instruct on clear and convincing

evidence to prove duress. This may have been in error.

{¶81} But there were no jury interrogatories as to why the jury found that

Lucarell was excused from performing under the contracts. Hence, we cannot know

whether the jury actually found that Lucarell acted under duress or whether it found

she was excused based on prevention of performance. In cases such as this, we

apply the two-issue rule. The two-issue rule holds that,

where there are two causes of action, or two defenses, thereby raising

separate and distinct issues, and a general verdict has been returned,

and the mental processes of the jury have not been tested by special

interrogatories to indicate which of the issues was resolved in favor of

the successful party, it will be presumed that all issues were so

determined; and that, where a single determinative issue has been tried

free from error, error in presenting another issue will be disregarded.

Appx.20

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M & M Winfield, L.L.C. v. Huntington Mtge. Co., 5th Dist. No. 2014 AP 07 0027,

2015-Ohio-583, ¶20,quoting H.E. Culbertson Co. v. Warden, 123 Ohio St. 297, 303

(1931).

{¶82} There was no error in the prevention of performance instruction and the

jury may have based its decision on that instruction. Therefore, based on the two-

issue rule, we cannot find error because there was an alternate ground on which the

jury could properly base its conclusion. Consequently, any error the trial court may

have made in leaving out the clear and convincing burden of proof for duress was

harmless. Thus, this was not a basis for a new trial on the breach of contract claims.

{¶83} Accordingly, Nationwide’s third assignment of error is without merit.

{¶84} Nationwide’s fourth assignment of error states:

THE TRIAL COURT ERRED BY NOT GRANTING JNOV ON

LUCARELL’S CLAIM FOR INVASION OF PRIVACY.

{¶85} In her invasion of privacy claim, Lucarell asserted that Nationwide

misappropriated her name by continuing to print her name on notices that it sent to

her former customers, which misrepresented that she was still a Nationwide agent.

{¶86} In this assignment of error, Nationwide asserts that Lucarell could not

bring an invasion of privacy claim based on the same underlying conduct as her

breach of contract claim. Because Lucarell’s invasion of privacy claim was based on

the same conduct as her breach of the Agent Agreement claim, Nationwide asserts

the trial court should have granted a JNOV on the invasion of privacy claim.

Nationwide points out that its duties concerning the use of Lucarell’s name were

governed by the Agent Agreement. (Pl. Ex. 11).

{¶87} Generally, when a contract action exists against a defendant, the

plaintiff cannot maintain a tort claim based upon the same underlying actions as the

breach of contract claim unless the defendant also breached a duty owed

independent of the contract. Evans Landscaping, Inc. v. Stenger, 1st Dist. No. C-

110104, 2011-Ohio-6033, ¶16. A tort claim based upon the same actions as those

Appx.21

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upon which a breach of contract claim is based will exist independently of the

contract action if the breaching party also breaches a duty owed separately from that

created by the contract. Textron Fin. Corp. v. Nationwide Mut. Ins. Co., 115 Ohio

App. 3d 137, 151, 684 N.E.2d 1261 (1996). In other words, the tort claim must be

based on a duty that would be owed even if no contract existed. Id.

{¶88} In this case, Lucarell’s invasion of privacy claim (tort claim) exists

independently from her breach of contract claim.

{¶89} Lucarell’s breach of contract claim arose from her allegation that

Nationwide breached the Agent Agreement. The Agent Agreement provided in

relevant part:

Your name may be printed for your benefit on billings and materials

received by our policyholders. If this Agreement is canceled, your

name will be removed as soon as practical, but you acknowledge that

occasional error may cause it to continue to be printed.

(Pt. Ex. 11). Lucarell’s breach of contract claim was based on her allegation that

Nationwide breached its contractual duty to remove her name from its

communications to its policyholders.

{¶90} Lucarell’s invasion of privacy claim, while based on the same conduct

by Nationwide, arose from a common law duty not to misappropriate her name. Ohio

recognizes several different tort claims for invasion of privacy. Kalbfell v. Marc

Glassman, Inc., 7th Dist. No. 02 CO 5, 2003-Ohio-3489, ¶34, citing Housh v. Peth,

165 Ohio St. 35, 133 N.E.2d 340 (1956). The invasion of privacy claim raised by

Lucarell was for misappropriation of a name or likeness. Id. Even if no contract

existed between Lucarell and Nationwide, Lucarell could still maintain this invasion of

privacy claim against Nationwide for failing to remove her name from its

communications to its policyholders. In the same way, even if her invasion of privacy

claim did not exist, Lucarell could still maintain her breach of contract claim against

Nationwide for breaching its contractual duty to remove her name from its

Appx.22

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communications to policyholders. Thus, the trial court did not err in refusing to grant

a JNOV on Lucarell’s invasion of privacy claim.

{¶91} Accordingly, Nationwide’s fourth assignment of error is without merit.

{¶92} Nationwide’s fifth assignment of error states:

THE TRIAL COURT ERRED BY ADMITTING SPECULATIVE

LOST-PROFITS TESTIMONY ON LUCARELL’S BREACH-OF-

CONTRACT AND CONSTRUCTIVE DISCHARGE CLAIMS AND BY

NOT GRANTING JNOV GIVEN HER FAILURE TO PROVE LOST

PROFITS TO A REASONABLE CERTAINTY.

{¶93} Nationwide states here that Lucarell’s only evidence of lost profits was

the testimony of Shelley Aaserud. Nationwide finds fault with Aaserud’s testimony

because she was not a financial expert or an accountant but was instead a former

Nationwide employee with an “axe to grind” against Nationwide. (Tr. 1077-1078,

1082-1084, 1086). Nationwide claims Aaserud’s testimony was insufficient to prove

lost profits to a reasonable degree of certainty, therefore, the trial court should not

have permitted it. And because damages are an element of a contract claim and

Aaserud’s testimony was Lucarell’s only evidence of contract damages, Nationwide

argues, the trial court should have granted a JNOV on the contract claims.

{¶94} More specifically, Nationwide argues that Aaserud’s testimony failed to

meet Evid.R. 702’s requirements for expert witness testimony. A witness may testify

as an expert, pursuant to Evid.R. 702, if:

(A) The witness' testimony either relates to matters beyond the

knowledge or experience possessed by lay persons or dispels a

misconception common among lay persons;

(B) The witness is qualified as an expert by specialized knowledge,

skill, experience, training, or education regarding the subject matter of

the testimony;

Appx.23

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(C) The witness’ testimony is based on reliable scientific, technical, or

other specialized information. * * *

Nationwide argues that Aaserud’s testimony failed to meet Evid.R. 702(B) and (C).

{¶95} Aaserud prepared a 25-year pro forma business plan for Lucarell’s

agency and testified that Lucarell was entitled to $2,817,096.44 in lost profits based

on that pro forma. (Pt. Ex. 88, p. 13). Nationwide argues this business plan lacked

reliability because (1) Aaserud did not use industry standards to create it; (2) a

business plan could not project lost profits 25 years into the future; (3) the business

plan assumed losses of $1 million in the first ten years and Aaserud could not say

where Lucarell would come up with $1 million to stay afloat; (4) businesses must

have a historic record of profitability before a plaintiff can recover lost profits, which

Lucarell did not have; (5) Aaserud forgot to offset the income Lucarell would earn if

she was not a Nationwide agent; and (6) Lucarell’s contracts with Nationwide were

cancellable at-will by either party, thus a 25-year projection was unreasonable.

{¶96} A trial court's determination of whether an individual qualifies as an

expert will only be overturned by an appellate court for an abuse of discretion. State

v. Hartman, 93 Ohio St.3d 274, 285, 2001-Ohio-1580, 754 N.E.2d 1150; State v.

Baston, 85 Ohio St.3d 418, 423, 709 N.E.2d 128 (1999). Abuse of discretion

connotes more than an error of law or judgment; it implies the trial court acted

unreasonably, arbitrarily, or unconscionably. Blakemore v. Blakemore, 5 Ohio St.3d

217, 219, 450 N.E.2d 1140 (1983).

{¶97} Under Evid.R. 702(B), the individual offered as an expert need not have

complete knowledge of the field in question, or for that matter, be the best witness on

the subject. Hartman, 93 Ohio St.3d at 287; Baston, 85 Ohio St.3d at 423. The test

is whether the witness offered as an expert possesses knowledge that will aid the

trier of fact in performing its fact-finding function. Hartman, 93 Ohio St.3d at 287.

{¶98} Aaserud testified that she was employed by Nationwide as an “agency

business consultant” from 2000 until June 2008. (Tr. 972). As an agency business

consultant Aaserud’s duties included meeting with Nationwide agents, looking at their

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reports, and making recommendations for improvement. (Tr. 972-973). She also

prepared pro formas and business plans for many of the agents. (Tr. 973). Aaserud

explained that a pro forma is an analysis of the revenues that are being produced

within an agency, either currently or historically, which are then used to project into

the future. (Tr. 974-975). In coming up with a pro forma, Aaserud explained that

certain assumptions are used including the retention of prior business, the average

premiums, and the new business production expectations. (Tr. 975-976). She stated

that during her time at Nationwide, she prepared hundreds of pro formas. (Tr. 976).

She also stated that she worked with hundreds of agents, including scratch agents

who started their business “from nothing, one policy at a time.” (Tr. 977). Aaserud

testified that she used Nationwide’s template for pro formas and then input

information specific to a particular agency to come up with its pro forma. (Tr. 980-

981). She stated that in preparing her pro forma for her expert report in this case she

used this same template approved by Nationwide. (Tr. 981).

{¶99} Aaserud’s explanation of her qualifications and experience demonstrate

that she possessed knowledge that could aid the jury in its fact-finding function. She

worked for eight-and-a-half years preparing pro formas for Nationwide. She used the

same template in preparing the pro forma that was the basis of her testimony in this

case. Her testimony was based on specialized knowledge gained during her years of

experience in the insurance business. Moreover, any evidence of Aaserud’s

potential bias against Nationwide would go to the weight and credibility of her

testimony, not its admissibility. Likewise, any evidence that Lucarell’s future profits

would be offset by her future earnings would also go to the weight of Aaserud’s

testimony. Thus, the trial court did not err in allowing Aaserud to offer expert

testimony as to Lucarell’s lost profits.

{¶100} Nationwide also argues here that Lucarell failed to offer any evidence

of damages for her breach of the Agent Agreement claim. The jury awarded Lucarell

$600,000 in lost profits for breach of the Agent Agreement. Nationwide argues,

however, that Lucarell’s theory of lost profits had nothing to do with the alleged

Appx.25

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breach of the Agent Agreement. It asserts Lucarell’s sole theory of breach of the

Agent Agreement was that Nationwide improperly used her name on correspondence

after she left Nationwide. This claimed breach, Nationwide argues, had nothing to do

with the lost profit calculation. Therefore, because Lucarell failed to put forth any

evidence of damages as to her breach of the Agent Agreement, Nationwide contends

the trial court should have granted a JNOV on this claim.

{¶101} Lost profits can be recovered in a breach of contract action if (1) the

profits were within the parties’ contemplation at the time they entered the contract, (2)

the loss of profits is the probable result of the breach of contract, and (3) the profits

are not remote and speculative and may be shown with reasonable certainty. Charles

R. Combs Trucking, Inc. v. Internatl. Harvester Co., 12 Ohio St.3d 241, 466 N.E.2d

883 (1984), paragraph two of the syllabus.

{¶102} In this case, Aaserud presented the expert testimony of Lucarell’s lost

profits. According to Aaserud’s 25-year pro forma and calculations, Lucarell’s lost

profits were $2.817 million. (Tr. 1043-1045). In forming this opinion, Aaserud relied

in part on the pro forma that she prepared, the AE Performance Agreement, the

Modified AE Agreement, and a results tracker sent to AE agents by Nationwide. (Tr.

1046-1051). She testified that in preparing her expert report, she reviewed all of the

respective contracts and performance agreements with respect to Lucarell’s agency.

(Tr. 1013-1014).

{¶103} Aaserud did not break down her lost profits opinion into certain

amounts that would correspond with each of Lucarell’s four breach of contract claims.

In other words, she did not testify that a certain amount of lost profits was attributable

to Nationwide’s breach of the AE Performance Agreement, a certain amount of lost

profits was attributable to Nationwide’s breach of the MOU, etc.

{¶104} The jury was presented with four breach of contract claims. It found in

Lucarell’s favor on each of the claims and awarded damages on each of the claims.

The total damage award from the jury on the breach of contract claims was $4.2

million. The trial court reduced this award to $2.817 million, which included the

Appx.26

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compensatory damage awards for all breach of contract claims plus the

compensatory damage award for constructive discharge.

{¶105} Aaserud specifically stated that in calculating Lucarell’s damages, she

reviewed all of the contracts and performance agreements for Lucarell’s agency.

Thus, Aaserud necessarily reviewed the Agent Agreement and considered it in

arriving at her total figure of Lucarell’s damages. Thus, we cannot find error with

Aaserud’s testimony here.

{¶106} Accordingly, Nationwide’s fifth assignment of error is without merit.

{¶107} Nationwide’s sixth assignment of error states:

THE TRIAL COURT ERRED IN FAILING TO APPORTION THE

COMPENSATORY DAMAGE AWARD AND IN ITS CALCULATION OF

THAT AWARD.

{¶108} The jury awarded Lucarell $5.7 million in compensatory damages.

The trial court reduced that award to $2.817 million.

{¶109} Nationwide argues that while the trial court was correct in reducing the

compensatory damage award, it was wrong to use the $2.817 million figure, which

was Aaserud’s lost-profits figure. It again asserts that Aaserud’s testimony was

unreliable. It further asserts that Aaserud failed to subtract the income that Lucarell

would actually earn over the next 25 years. Nationwide points to Lucarell’s counsel’s

statement to the jury that: “we can make a reasonably substantial estimation that she

[Lucarell] will earn $800,000 over those 25 years. So if you deduct the 800,000 from

the 2.8 million that Shelley Aaserud said she would have earned, she gets $2

million.” (Tr. 1969). Thus, Nationwide asserts, the trial court’s award exceeds that

which the plaintiff’s counsel believed the evidence supported.

{¶110} We review a trial court’s remittitur of damages for abuse of discretion.

Brady v. Miller, 2d Dist. No. 19723, 2003-Ohio-4582, ¶5.

{¶111} The trial court found that the jury’s compensatory award was

excessive and exceeded “the maximum amount that a jury could reasonably find to

Appx.27

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be compensatory.” Therefore, the court remitted the compensatory damages to

$2.817 million, finding this was the maximum a jury could reasonably find to be

compensatory per Aaserud’s testimony. The court stated this amount represented

the sums collectively awardable on the claims for breach of the Agent Agreement, the

AE Agreement, the MOU, and the Modified AE Agreement, as well as the claim for

constructive discharge.

{¶112} The trial court did not abuse its discretion in remitting the jury’s

compensatory award from $5.7 million to $2.817 million. There was no evidence to

support a compensatory award of $5.7 million. The largest amount of compensatory

damages the evidence supported was $2.817 million. Aaserud testified that the

present-day value of Lucarell’s lost profits was $2.817 million. (Tr. 1045-1046). The

trial court simply took the large jury award and reduced it to the highest amount that

was supported by the evidence.

{¶113} Additionally, Nationwide argues the trial court failed to apportion the

compensatory damages among the five claims.

{¶114} The jury apportioned the compensatory damages among the five

claims. The trial court reduced the total amount to $2.817 million without

apportioning the award among the claims.

{¶115} Nationwide claims prejudice from the trial court’s failure to apportion

the award among the claims. It contends that if this court upholds some, but not all,

of the awards on appeal, it will be unclear what the damages are.

{¶116} We have already determined that the constructive discharge verdict is

to be reversed. We have also determined that the verdicts on the four breach of

contract claims are to be upheld. Thus, we must uphold the damages on the breach

of contract claims and reverse the damages on the constructive discharge claim.

{¶117} The trial court did not apportion the $2.817 million in compensatory

damages among the five claims. But the jury did apportion its award among the

claims. Therefore, it is reasonable to apportion the court’s $2.817 million in the same

percentages that the jury did.

Appx.28

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{¶118} On the breach of the AE Agreement, the jury awarded $600,000 in

compensatory damages. This was 10.526% of the $5.7 million award. That same

percentage of the trial court’s $2.817 million award is $296,517.42.

{¶119} On the breach of the Modified AE Agreement, the jury awarded $2

million. This was 35.088% of the total award. That same percentage of the trial

court’s total award is $988,428.96.

{¶120} On the breach of the Agent Agreement, the jury awarded $600,000.

This was 10.526% of the total award. That same percentage of the trial court’s

award is $296,517.42.

{¶121} On the breach of the MOU, the jury awarded $1 million. This was

17.544% of the total award. That same percentage of the trial court’s award is

$494,214.48.

{¶122} And on the constructive discharge claim, the jury awarded $1.5

million. This was 26.316% of the total award. That same percentage of the trial

court’s award is $741,321.72.

{¶123} Therefore, in order to arrive at Lucarell’s total compensatory damage

award now that we have determined that the judgment on the constructive discharge

claim is to be reversed, we simply subtract the $741,321.72 for the constructive

discharge claim (or 23.316% of the total amount, which the jury originally awarded)

from the court’s $2.817 million award. We then leave intact the remainder of the

award, which is: $296,517.42 on the breach of the AE Agreement (10.526% of the

total amount); $988,428.96 on the breach of the Modified AE Agreement (35.088% of

the total amount); $296,517.42 on the breach of the Agent Agreement (10.526% of

the total amount); and $494,214.48 on the breach of the MOU (17.544% of the total

amount). By applying this formula, we preserve the jury’s apportionment of the

damages. This leaves Lucarell with a total compensatory damage award of

$2,075,678.28 on the four breach of contract claims.

{¶124} Accordingly, Nationwide’s sixth assignment of error is without merit.

{¶125} Nationwide’s seventh assignment of error states:

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THE TRIAL COURT ERRED BY NOT GRANTING JNOV ON

THE PUNITIVE DAMAGE AWARD ON LUCARELL’S CLAIM FOR

INVASION OF PRIVACY.

{¶126} On the invasion of privacy claim, the court entered judgment in favor

of Lucarell for $10 in nominal damages, $100,000 in emotional distress damages,

and $2 million in punitive damages (which the court remitted from the $5 million

awarded by the jury).

{¶127} In this assignment of error, Nationwide claims that the $2 million in

punitive damages cannot be sustained because Lucarell failed to prove actual

malice. It argues that one cannot infer actual malice from the fact that Lucarell’s

name appeared on five computer-generated letters in the months after Lucarell left

Nationwide. And it notes that the Agent Agreement even contemplated that such an

error was possible. (Pl. Ex. 11, ¶14).

{¶128} A jury may award punitive damages only upon a finding of actual

malice. Calmes v. Goodyear Tire & Rubber Co., 61 Ohio St.3d 470, 473, 575 N.E.2d

416 (1991). “Actual malice” has been defined as “‘(1) that 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 other persons that has a great

probability of causing substantial harm. (Emphasis sic.)’” Id., quoting Preston v.

Murty, 32 Ohio St.3d 334, 512 N.E.2d 1174 (1987), syllabus.

{¶129} Lucarell presented evidence that Nationwide failed to remove her

name from some of its communications with policyholders for almost a year. She

specifically submitted correspondence from Nationwide to various clients dated

November 2, 2009; February 14, 2010; March 15, 2010; September 4, 2009; and

March 22, 2010, listing Lucarell as the agent involved and providing her agent

number and phone number. (Pl. Ex. 39, 40, 41, 42, 43). Nationwide Licensing

Process Consultant, Daniel Baker, agreed this was a potential benefit to Nationwide

because the policyholders who liked Lucarell would still believe she was their agent.

(Tr. 752). Baker also testified that Lucarell’s name could have been removed from

Appx.30

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Nationwide’s correspondence much sooner than it was. (Tr. 764).

{¶130} In addition to the specific evidence of how the invasion of privacy

claim occurred, Lucarell presented evidence throughout the trial as to Nationwide’s

malicious actions towards her. For example, Lucarell testified that Nationwide had

promised that she could merge her agency with two other agencies in order to help

meet her productions goals. (Tr. 1325-1326). But, she testified, that Nationwide did

not allow the mergers even though her pro forma and business plan counted on

them. (Tr. 1326, 1330). Additionally, Lucarell provided evidence that Nationwide

accelerated the repayment of her loan and took all of her commissions, cutting off her

cash flow. (Pl. Ex. 38; Tr. 910). And Lucarell provided testimony that Nationwide

claimed she signed new loan documents, even though she never did. (Tr. 1355).

Lucarell also testified that Nationwide failed to include her in conversations and plans

dealing with her own agency. (Tr. 1348).

{¶131} Standing alone, Nationwide’s failure to remove Lucarell’s name and

contact information from its correspondence may not demonstrate that Nationwide’s

conduct was characterized by hatred, ill will, or a spirit of revenge. But when it is

considered along with the rest of the evidence in this case, there was sufficient

evidence from which the jury could conclude that Nationwide acted with actual malice

in misappropriating Lucarell’s name.

{¶132} Accordingly, Nationwide’s seventh assignment of error is without

merit.

{¶133} Nationwide’s eighth assignment of error states:

THE TRIAL COURT LACKED JURISDICTION TO AWARD

EMOTIONAL DISTRESS AND PUNITIVE DAMAGES THAT

EXCEEDED STATUTORY CAPS IN THE TORT-REFORM ACT.

{¶134} The jury awarded $1 million in emotional distress damages: $100,000

for invasion of privacy, $400,000 for retaliation, and $500,000 for constructive

discharge. The trial court reduced the emotional distress damages on the retaliation

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claim to $250,000. It left the other two awards in place. Thus, the total emotional

distress damages award was $850,000.

{¶135} First, Nationwide asserts that pursuant to the tort-reform statutes, the

maximum possible award for noneconomic loss in this case is $350,000. It takes

issue with the trial court’s determination that the constructive discharge and invasion

of privacy claims were not covered by the tort reform act and, therefore, not subject

to the cap.

{¶136} We have already determined that the trial court should not have

allowed Lucarell’s claims for constructive discharge and retaliation. Necessarily then,

the emotional distress damages on these claims cannot stand. This leaves only the

emotional distress damages of $100,000 on the invasion of privacy claim at issue in

this assignment of error.

{¶137} R.C. 2315.18(B)(2) provides that, except in certain limited situations,

the amount of compensatory damages for noneconomic loss in a tort action shall not

exceed the greater of (1) $250,000, or (2) an amount that is equal to three times the

economic loss, as determined by the trier of fact, to a maximum of $350,000 for each

plaintiff or a maximum of $500,000 for each occurrence that is the basis the action.

An “occurrence” is defined as “all claims resulting from or arising out of any one

person's bodily injury.” R.C. 2315.18(A)(5). The trial court does not have jurisdiction

to enter an award for noneconomic loss that exceeds the limits set forth in the

statute. R.C. 2315.18(F)(1).

{¶138} Because the emotional distress awards on the constructive discharge

and retaliation claims cannot stand, that leaves only the $100,000 emotional distress

award on the invasion of privacy claim. This award is below the $250,000 limit set

out in R.C. 2315.18(B)(2). Thus, it complies with the statutory cap.

{¶139} Second, Nationwide argues the trial court lacked jurisdiction to enter a

punitive damage award of more than twice the compensatory damage award.

{¶140} The trial court reduced the jury’s $36 million punitive damages award

to $10.5 million. It awarded $8 million for constructive discharge, $500,000 for

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retaliation, and $2 million for invasion of privacy. The total compensatory damage

award was $3,667,010.00.

{¶141} Regarding punitive damages in a tort action, R.C. 2315.21(D)(2)(a)

provides that “[t]he court shall not enter judgment for punitive or exemplary damages

in excess of two times the amount of the compensatory damages awarded to the

plaintiff from that defendant, as determined pursuant to division (B)(2) or (3) of this

section.”

{¶142} Now we are left only to examine the punitive damages as to the

invasion of privacy claim. The total compensatory damage award on the invasion of

privacy claim was $100,010 ($100,000 in emotional distress damages plus $10 in

nominal damages). The punitive damage award on the invasion of privacy claim was

$2 million. Two times the compensatory damages is $200,020. Therefore, it was

error for the trial court to award punitive damages on the invasion of privacy claim

that exceeded the $200,020 statutory cap.

{¶143} Accordingly, Nationwide’s eighth assignment of error has merit in part.

{¶144} Nationwide’s ninth assignment of error states:

THE TRIAL COURT ERRED BY NOT FURTHER REDUCING

THE CONSTITUTIONALLY EXCESSIVE PUNITIVE DAMAGE

AWARDS.

{¶145} Nationwide’s argument here focuses on the constructive discharge

punitive damage award. It points out that the jury awarded $1.5 million in lost profits

on this claim. It asserts the trial court unconstitutionally increased this award to

$2.817 million. Additionally, Nationwide argues, any punitive damages award greater

than a 1:1 ratio to compensatory damages violates due process because the

compensatory damage award is so substantial.

{¶146} Because Lucarell’s constructive discharge judgment cannot stand, this

assignment of error is moot.

{¶147} Nationwide’s tenth assignment of error states:

Appx.33

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THE TRIAL COURT ERRED BY NOT GRANTING A DIRECTED

VERDICT OR A NEW TRIAL FOR NATIONWIDE ON ITS

COUNTERCLAIM.

{¶148} Nationwide raised a counterclaim for breach of contract asserting

Lucarell failed to pay the NFCU note.

{¶149} Nationwide states that the evidence was uncontroverted that it paid

Lucarell’s debt to the bank and was assigned the note. (Tr. 879-882). And it states

that Lucarell did not dispute that she owed $291,296.53 on the note. Because her

debt was undisputed, Nationwide contends it was entitled to a judgment as a matter

of law or, at the least, to a new trial on its counterclaim.

{¶150} Nationwide employee John Mincy testified that Nationwide was

assigned Lucarell’s Note. (Tr. 880-881). He stated that the balance on the Note is

$274,285.22. (Tr. 882). There was no evidence to the contrary on this point.

{¶151} But Lucarell presented evidence throughout the course of the trial that

convinced the jury that even though she technically may have defaulted on her loan,

she should not be obligated to pay the balance due on the Note due to Nationwide’s

actions, which prevented her from successfully completing the AE Program.

{¶152} Jury Interrogatory No. 15 asked:

Do you find that Nationwide has proven by a preponderance of the

evidence that

1. Nationwide and Christine Lucarell entered into the Credit Agreement

and Promissory Note

2. Nationwide performed its obligations under the Credit Agreement and

Promissory Note

3. Christine Lucarell failed to satisfy her payment obligations under the

Credit Agreement and Promissory Note, and

Appx.34

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4. Nationwide suffered damages as a result of Christine Lucarell’s failure

to satisfy her payment obligations under the Credit Agreement and

Promissory Note?

The jury answered “No.”

{¶153} The jury also found that Nationwide was not entitled to payment on the

Note because Nationwide prevented Lucarell from performing, fulfilling, and/or

completing a condition that would have excused her from performance. (Jury

Interrogatory No. 16).

{¶154} The jury’s findings were that Nationwide’s actions prevented Lucarell

from being able to perform successfully in her agency and to pay off the Note.

Therefore, it concluded Nationwide was not entitled to payment on the Note. This

was not a simple case where one party defaulted on a note, so the other party was

entitled to payment. Instead, it was within the jury’s province to find that because

Nationwide prevented Lucarell from successfully completing the AE Program,

Nationwide prevented her from being able to repay the Note and, therefore,

Nationwide was not entitled to payment. In any event, this was a damage allocation,

akin to a set-off.

{¶155} Accordingly, Nationwide’s tenth assignment of error is without merit.

{¶156} Nationwide’s eleventh assignment of error states:

THE TRIAL COURT ERRED BY AWARDING ATTORNEY’S

FEES AND PREJUDGMENT INTEREST.

{¶157} The trial court awarded Lucarell $187,546.50 in attorneys’ fees and

$21,557.64 in expenses. (April 11, 2013 Judgment Entry). Additionally, the trial

court awarded Lucarell prejudgment interest upon finding that Nationwide failed to

act in good faith to settle the case. (July 29, 2013 Judgment Entry).

{¶158} In its final assignment of error, Nationwide argues that it is entitled to a

judgment as a matter of law on Lucarell’s tort claims. And because the tort claims

Appx.35

- 34 -

gave rise to these awards, the awards of attorneys’ fees and prejudgment interest

must be reversed.

{¶159} Generally, a party to a civil action may not recover attorney fees as

part of the costs of litigation. Wilborn v. Bank One Corp., 121 Ohio St. 3d 546, 2009-

Ohio-306, 906 N.E.2d 396, ¶7. An exception exists, however, when the prevailing

party demonstrates bad faith on the part of the unsuccessful litigant. Id.

{¶160} R.C. 1343.03(C) provides for prejudgment interest

[i]f, upon motion of any party to a civil action that is based on tortious

conduct, that has not been settled by agreement of the parties, and in

which the court has rendered a judgment, decree, or order for the

payment of money, the court determines at a hearing held subsequent

to the verdict or decision in the action that the party required to pay the

money failed to make a good faith effort to settle the case and that the

party to whom the money is to be paid did not fail to make a good faith

effort to settle the case[.]

{¶161} Even though the trial court should not have allowed Lucarell’s claims

for constructive discharge and retaliation, that still leaves Lucarell’s tort claim for

invasion of privacy. Thus, Lucarell has still prevailed on one tort claim. Therefore,

Nationwide’s argument here fails.

{¶162} Accordingly, Nationwide’s eleventh assignment of error is without

merit.

Lucarell’s Cross Appeal {¶163} Next, we must address Lucarell’s cross-appeal. Lucarell raises three

assignments of error in her cross-appeal, the first of which states:

WHETHER THE TRIAL COURT ERRED IN DISMISSING

LUCARELL’S FRAUD CLAIM ON DIRECTED VERDICT.

{¶164} Lucarell raised a claim for fraud. On Nationwide’s motion, the trial

Appx.36

- 35 -

court granted a direct verdict on that claim. (Tr. 1663). In so doing, the court found:

There may have been poor judgment. There may have been poor

calculations as far as what the expectations were for these agents, and

it may fit into other causes of action that the plaintiff has brought, but

not a fraud allegation here. The plaintiff has to prove there was a

knowing misrepresentation of fact with the intent of Nationwide to have

these people rely upon it to their detriment from the outset. And I think

there came a time pursuant to what the evidence has shown here

where even the defendant has, and the defendant’s employees here

and agents have admitted that perhaps there was a miscalculation and

perhaps there was - - there were unrealistic demands that were put on

these agents, but not a fraud under the court’s analysis here.

(Tr. 1662-1663).

{¶165} When a trial court grants a directed verdict, it must construe the

evidence most strongly in favor of the nonmoving party and find that reasonable

minds could come to but one conclusion based on the evidence submitted and that

conclusion is adverse to the nonmoving party. City of Steubenville v. Schmidt, 7th

Dist. No.01 JE 13, 2002-Ohio-6894, ¶31, citing Civ.R. 50(A)(4). In ruling on a

directed verdict motion, the court must not consider the weight of the evidence or the

credibility of the witnesses. Texler v. D.O. Summers Cleaners & Shirt Laundry Co.,

81 Ohio St. 3d 677, 679, 1998-Ohio-602, 693 N.E.2d 271, quoting Hawkins v. Ivy, 50

Ohio St.2d 114, 115, 363 N.E.2d 367 (1977), Kellerman v. J.S. Durig Co., 176 Ohio

St. 320, 199 N.E.2d 562 (1964).

{¶166} The elements of fraud are: (1) a representation or a concealment of a

fact where there is a duty to disclose; (2) that is material to the transaction at hand;

(3) made falsely, with knowledge of its falsity, or with such utter disregard as to

whether it is true or false that knowledge may be inferred; (4) with the intent of

misleading another into relying upon it; (5) justifiable reliance; and (6) a resulting

Appx.37

- 36 -

injury proximately caused by the reliance. Groob v. KeyBank, 108 Ohio St.3d 348,

2006-Ohio-1189, 843 N.E.2d 1170, ¶47, citing Gaines v. Preterm-Cleveland Inc., 33

Ohio St.3d 54, 55, 514 N.E.2d 709 (1987). It is possible for a party to assert a fraud

claim and breach of contract claim in the same action, if there is a duty owed by the

breaching party that is separate from the breach of contract claim. Strategy Grp. for

Media, Inc. v. Lowden, 5th Dist. 12 CAE 03 0016, 2013-Ohio-1330, ¶25.

{¶167} Lucarell asserts the evidence demonstrated that Nationwide

fraudulently induced her to join the AE Program. She points to her testimony that

sales manager Bill Helfer showed her a pro forma that led her to believe she would

earn $200,000 per year in the AE Program. (Tr. 1265-1266). And she points to

testimony from Nationwide’s vice president of agency development that under the AE

program, agents were having difficulty meeting their performance objectives and

were undercapitalized and running out of money. (Tr. 716). She also points to

testimony that Nationwide’s sales managers’ salary could be negatively affected if

they failed to recruit the required number of new AE agents. (Tr. 562-564).

{¶168} Lucarell further asserts that Nationwide fraudulently altered her loan

application. She points to her own testimony that the information on her loan

application to Nationwide Bank was altered. (Tr. 486-488). And she points to

Nationwide Federal Credit Union senior loan officer Michael Weisenburger’s

testimony. Weisenburger was the underwriter for Lucarell’s loan. (Tr. 1890).

Weisenburger testified that Nationwide’s sales managers would send NFCU certified

business plans and loan applications to him for loan approval. (Tr. 1888).

Approximately a year after Lucarell entered into her loan, Weisenburger testified,

Lucarell contacted him and asked him to look at the original loan documents and

business plan. (Tr. 1891). Weisenburger stated that he and Lucarell compared the

business plan to the one Lucarell had submitted and realized that changes had been

made. (Tr. 1891). Weisenburger testified this “tipped” him and made him “aware - -

that it was fraudulent information that was being sent up to help in order to get the

loan approved.” (Tr. 1892). He stated that the sales agents were under “severe,

Appx.38

- 37 -

severe pressure” to recruit agents. (Tr. 1892). He testified that when he realized

what had happened with Lucarell’s loan documents, he no longer accepted loan

documents that came from Nationwide’s sales managers. (Tr. 1893).

{¶169} As to her damages, Lucarell testified that she is no longer permitted to

own her own insurance agency because she cannot qualify to purchase a business.

(Tr. 1436).

{¶170} Nationwide points to evidence in the record that contradicts Lucarell’s

evidence. But as noted above, the trial court was not to weigh the evidence or judge

the witnesses’ credibility. Texler, 81 Ohio St. 3d at 679. Instead, it was to construe

the evidence most strongly in Lucarell’s favor as the nonmoving party. Schmidt, 7th

Dist. No.01 JE 13, at ¶31.

{¶171} Given the above evidence and construing it in Lucarell’s favor as we

are required to do, we conclude that the trial court erred in granting a directed verdict

on Lucarell’s fraud claim. “If the record contains any competent evidence, when

construed most strongly in favor of the nonmoving party, upon which reasonable

minds could reach different conclusions, the court must deny the motion.” (Emphasis

added.) Oyer v. Adler, 4th Dist. No. 13CA3405, 2015-Ohio-1722, ¶13.

{¶172} From the above cited evidence, construed most strongly in Lucarell’s

favor, reasonable minds could find that Nationwide fraudulently induced Lucarell to

join the AE program by leading her to believe she would earn $200,000 a year when

it knew or should have known that its AE agents were failing. Additionally,

reasonable minds could find that Nationwide fraudulently altered Lucarell’s loan

documents with the intent to mislead the NFCU loan underwriter into believing

Lucarell’s financial situation and business plan were different in order to improve the

chances of NFCU approving the loan. Thus, the trial court should have allowed

Lucarell’s fraud claim to go to the jury.

{¶173} Accordingly, Lucarell’s first assignment of error has merit.

{¶174} Lucarell’s second assignment of error states:

WHETHER THE TRIAL COURT ERRED IN DENYING

Appx.39

- 38 -

PUNITIVE AND EMOTIONAL DAMAGES ON LUCARELL’S BREACH

OF CONTRACT CLAIMS.

{¶175} The trial court determined that Lucarell was not entitled to punitive

damages on her breach of contract claims. (Tr. 2188). Lucarell objected. (Tr. 46-48,

2188).

{¶176} In this assignment of error, Lucarell contends that punitive damages

are recoverable on a breach of contract claim when it is accompanied by a

connected, but independent tort involving fraud. She claims she presented ample

evidence of fraud.

{¶177} Punitive damages are generally not recoverable on a breach of

contract claim, no matter how willful the breach. Digital & Analog Design Corp. v. N.

Supply Co., 44 Ohio St. 3d 36, 46, 540 N.E.2d 1358 (1989), citing Ketcham v. Miller,

104 Ohio St. 372, 136 N.E. 145 (1922), paragraph two of the syllabus; Wilms v. Lo-

Mar Enterprises, Inc., 7th Dist. No. 83-C-39, 1985 WL 10417, at *3 (Apr. 11, 1985).

But punitive damages may be available if the breach of contract is accompanied by a

connected, but independent tort involving fraud, malice, or oppression. Mabry-Wright

v. Zlotnik, 165 Ohio App. 3d 1, 2005-Ohio-5619, 844 N.E.2d 858, ¶19 (3d Dist.),

citing Goldfarb v. Robb Report, Inc., 101 Ohio App.3d 134, 140, 655 N.E.2d 211

(10th Dist.1995); Wilms, supra.

{¶178} As discussed in Lucarell’s first assignment of error, the trial court erred

when it granted a directed verdict on her fraud claim. Had the court allowed the fraud

claim to go to the jury and had the jury returned a verdict in Lucarell’s favor, then the

jury may have also awarded punitive damages on the breach of contract claims

because she would be entitled to present her claim for punitive damages.

{¶179} Accordingly, Lucarell’s second assignment of error has merit.

{¶180} Lucarell’s third assignment of error states:

WHETHER THE TRIAL COURT ERRED IN APPLYING R.C.

2315.21 TO LUCARELL’S RETALIATION CLAIM.

Appx.40

- 39 -

{¶181} The trial court found that R.C. 2315.18 applied to limit non-economic

damages on Lucarell’s retaliation claim to the greater of $250,000 or an amount

equal to three times the economic loss with a cap at $350,000. It also found that

R.C. 2315.21(D)(2)(a) applied to limit the punitive damages on Lucarell’s retaliation

claim to two times the compensatory damages. The trial court applied these

statutory caps to the retaliation claim because it determined that the retaliation claim

was a tort action. Applying these caps, the trial court reduced the non-economic

damages award from $400,000 to $250,000 and reduced the punitive damages

award from $11 million to $500,000. (January 31, 2013 Order Regarding Statutory

Caps; July 29, 2013 Amended Judgment Entry).

{¶182} Lucarell asserts the trial court should have found that her retaliation

claim was contractually-based, as it did with her constructive discharge and invasion

of privacy claims, because it involved Nationwide’s bad faith enforcement of its Credit

Agreement and Promissory Note, which were derived from the other contracts

entered into between the parties.

{¶183} Because we have determined that the trial court should not have

allowed Lucarell’s retaliation claim, this cross-assignment of error is moot.

Conclusion {¶184} Nationwide’s first assignment of error asserting the trial court should

have granted a JNOV on Lucarell’s constructive discharge claim has merit. The court

should not have allowed this claim to go to the jury. Likewise, Nationwide’s second

assignment of error asserting the trial court should have granted a JNOV on

Lucarell’s retaliation claim has merit. The court should not have allowed this claim to

go to the jury either. Additionally, Nationwide’s eighth assignment of error has merit

in part because the trial court should not have allowed a punitive damage award on

the invasion of privacy claim that exceeded the statutory cap. Lucarell’s first cross

assignment of error asserting the trial court erred in dismissing her fraud claim also

has merit. The court should have allowed this claim to go to the jury. Finally,

Lucarell’s second cross assignment of error asserting the trial court erred in denying

Appx.41

- 40 -

punitive damages on her breach of contract claims has merit. Because the trial court

should have allowed Lucarell’s fraud claim to go the jury, it should have also allowed

the jury to determine if punitive damages were warranted on Lucarell’s breach of

contract claims in the event the jury returned a verdict in Lucarell’s favor on her fraud

claim.

{¶185} The trial court’s judgment is affirmed as to the breach of contract

claims, the award of attorney fees, and prejudgment interest. The judgment is

affirmed in part and reversed in part as to the invasion of privacy claim. The

judgment is reversed as to the constructive discharge claim and the retaliation claim.

{¶186} The total compensatory damage award of $2.817 million is hereby

reduced by $741,321.72, or 26.316% of the total compensatory damage award,

which is that amount attributable to the constructive discharge claim. Therefore,

Lucarell’s total compensatory damage award is reduced to $2,075,678.28.

{¶187} The trial court’s award of $10 in nominal damages and $100,000 in

emotional distress damages on the invasion of privacy claim is affirmed.

{¶188} The award of $2 million in punitive damages on the invasion of privacy

claim is reversed and reduced to $200,020 in order to comply with the statutory cap.

{¶189} The awards for non-economic damages, costs to defend against the

counterclaim, and punitive damages on the retaliation claim are reversed and

vacated. Likewise, the awards for punitive damages and non-economic damages on

the constructive discharge claim are reversed and vacated.

{¶190} Lucarell’s total compensatory damage award is $2,175,688.28, plus

attorney fees and prejudgment interest. Lucarell’s total punitive damage award is

$200,020. Therefore, Lucarell’s total award is $2,375,708.28, plus attorney fees and

prejudgment interest.

{¶191} The trial court’s judgment directing a verdict dismissing Lucarell’s

fraud claim is hereby reversed. This matter is remanded solely for the purpose of a

new trial on Lucarell’s fraud claim and punitive damages on her breach of contract

claims, which can be awarded if the jury finds in Lucarell’s favor on the fraud claim.

Appx.42

- 41 -

{¶192} For these reasons, the trial court’s judgment is hereby affirmed in part,

reversed in part, and remanded.

Waite, J., concurs. Robb, J., concurs.

Appx.43

, . .. J

STATE OF OHIO

MAHONING COUNTY

CHRISTINE LUCARELL,

PLAINTIFF-APPELLEE CROSS-APPELLANT,

V.

) ) ) SS:

NATIONWIDE MUTUAL INSURANCE COMPANY,

DEFENDANT-APPELLANT CROSS-APPELLEE.

r- .... ,_.

I CLEF\: M~::J!t

II DEC 1 7 101~ ~ • I ~- ,,IV:

IN THE COURT O~}\Ls:'OFOHIOl

) ) ) ) ) ) ) ) ) ) ) )

SEVENTH DISTRICT

CASE NO. 13 MA 74

JUDGMENT ENTRY

For the reasons stated in the opinion rendered herein, Appellant Nationwide

Mutual Insurance's first and second assignments of error have merit and are sustained.

Appellant's eighth assignment of error has merit in part as to the punitive damage award

on the invasion of privacy claim. Appellant's third, fourth, fifth, sixth, seventh, tenth and

eleventh assignments of error are without merit and are overruled. Appellant's ninth

assignment of error is moot.

Cross Appellant Christine Lucarell's first and second cross assignments of error

have merit and are sustained. Cross Appellant's third cross assignment of error is moot.

The trial court's judgment is affirmed as to the breach of contract claims, the

award of attorney fees, and prejudgment interest. The judgment is affirmed in part and

reversed in part as to the invasion of privacy claim. The judgment is reversed as to the

constructive discharge claim and the retaliation claim.

The total compensatory damage award of $2.817 million is hereby reduced by

$741,321.72, or 26.316% of the total compensatory damage award, which is that

amount attributable to the constructive discharge claim. Therefore, Lucarell's total

compensatory damage award is reduced to $2,075,678.28.

The trial court's award of $10 in nominal damages and $100,000 in emotional

1

11111111111111111111111111111111111111111111111111111111111111111 2013 MA 00074 00047179345 JUDENT

II Appx.44

distress damages on the invasion of privacy claim is affirmed.

The award of $2 million in punitive damages on the invasion of privacy claim is

reversed and reduced to $200,020 in order to comply with the statutory cap.

The awards for non-economic damages, costs to defend against the

counterclaim, and punitive damages on the retaliation claim are reversed and vacated.

Likewise, the awards for punitive damages and non-economic damages on the

constructive discharge claim are reversed and vacated.

Lucarell's total compensatory damage award is $2,175,688.28, plus attorney fees

and prejudgment interest. Lucarell's total punitive damage award is $200,020.

Therefore, Lucarell's total award is $2,375,708.28, plus attorney fees and prejudgment

interest.

The trial court's judgment directing a verdict dismissing Lucarell's fraud claim is

hereby reversed. This matter is remanded solely for the purpose of a new trial on

Lucarell's fraud claim and punitive damages on her breach of contract claims, which can

be awarded if the jury finds in Lucarell's favor on the fraud claim.

For these reasons, the trial court's judgment is hereby affirmed in part, reversed

in part, and remanded.

Costs taxed against both parties equally.

JUDGES.

2

000121 Appx.45

STATE OF OHIO ) IN THE COURT OF APPEALS OF OHIO )

MAHONING COUNTY ) SS: SEVENTH DISTRICT

CHRISTINE LUCARELL,

V.

PLAI NTI FF-APPELLEE CROSS-APPELLANT,

NATIONWIDE MUTUAL INSURANCE COMPANY,

DEFENDANT -APPELLANT CROSS-APPELLEE.

CHRISTINE LUCARELL,

PLAINTIFF-APPELLEE,

V.

NATIONWIDE MUTUAL INSURANCE CO., et aI.,

DEFENDANTS-APPELLANT.

) ) ) ) ) ) ) ) ) ) ) )

) ) ) ) ) ) ) ) ) )

CASE NO. 13 MA 0074

CASE NO. 13 MA 0133

JUDGMENT ENTRY

Defendant-appellantlcross-appellee, Nationwide Mutual Insurance Company, has

filed an application for reconsideration asking this court to reconsider our decision and

judgment entry in which we affirmed in part, reversed in part, and remanded the

judgment of the Mahoning County Common Pleas Court. See Lucarell v. Nationwide,

7th Dist. Nos. 13 MA 74, 13 MA 133, 201S-0hio-S286. In the alternative, Nationwide

has asked that we certify a conflict to the Ohio Supreme Court between this Court's

judgment in Lucarell, and various decisions ofthe First, Second, Fifth, Sixth, Eighth, and

Tenth Districts.

App.R. 26, which provides for the filing of an application for reconsideration in this

1

111111111111111111111111111 1111111111 1111111111111111111111111111 2013 MA 00074 00050406995 JOUENT

)~~-;)-II c I000397

II Appx.46

court, includes no guidelines to be used in the determination of whether a decision is to

be reconsidered and changed. Matthews v. Matthews, 5 Ohio App.3d 140, 143,450

N.E.2d 278 (10th Dist.1981). The test generally applied is whether the motion for

reconsideration calls to the attention of the court an obvious error in its decision or

raises an issue for our consideration that was either not at all or was not fully considered

by us when it should have been. Id. An application for reconsideration is not designed

for use in instances where a party simply disagrees with the conclusions reached and

the logic used by an appellate court. State v. Owens, 112 Ohio App.3d 334, 336, 678

N. E.2d 956 (11 th Dist.1996). Rather, App. R. 26 provides a mechanism by which a party

may prevent miscarriages of justice that could arise when an appellate court makes an

obvious error or renders an unsupportable decision under the law. Id.

Nationwide asserts there are four issues that we should address on

reconsideration.

First, Nationwide alleges we incorrectly concluded that we could not review its

breach of contract assignments of error.

As part of its argument in favor of a new trial on Lucarell's breach of contract

claims, Nationwide argued the trial court erred in sending these claims to the jury after

stating there was no express breach by Nationwide. Lucarell, at 1168. We found,

however, the jury interrogatories revealed that the jury found Nationwide breached the

AE Agreement, the Modified AE Agreement, the MOU, and the Agent Agreement.

Lucarell, at 1171. We observed that the interrogatories did not specify whether the

breach was based upon a breach of specific terms of the contracts, a breach of the duty

of good faith and fair dealing that accompanies a contract, or both. Id. We further

noted that the parties did not submit interrogatories as to why the jurors found breaches

of the contracts. Id. Thus, we concluded there was no way to know on what basis the

jury found the breaches and, therefore, we could not review the claim of error. Id.

Nationwide now makes this same argument. It rehashes the evidence presented

at trial and argues once again that there could be no express breach of any of the

2

000398 Appx.47

contracts. But reconsideration may not be used where a party simply disagrees with the

conclusion reached and the logic used by an appellate court. Victory White Metal Co. v.

N.P. Motel Syst., 7th Dist. No. 04MA245, 2005-0hio-3828, 112; Hampton v. Ahmed, 7th

Dist. No. 02BE66, 2005-0hio-1766, 1116. Here Nationwide simply disagrees with our

conclusion and logic.

Second, Nationwide asserts that we incorrectly applied the "two-issue" rule in its

third assignment of error. It claims this rule was not applicable here. Once again,

however, Nationwide simply disagrees with the conclusion we reached. We noted that

the trial court's instruction to the jury regarding the burden of proof for duress may have

been in error. Lucarell, at 1180. But we pointed out that there were no interrogatories

presented to the jury as to why they found Lucarell was excused from performing under

the contracts. Id. at 1181. Therefore, we stated we could not know whether the jury

actually found that Lucarell acted under duress or whether it found she was excused

based on prevention of performance. Id. And we applied the two-issue rule to find that

because there was an alternate ground on which the jury could properly base its

decision, there was no reversible error. Id. at 1182.

Third, Nationwide asserts we erred in finding that punitive damages are possible

on a breach of contract claim. It argues that under no circumstances are punitive

damages recoverable on a breach of contract claim. Nationwide made this same

argument on appeal. Notably, we did not hold that Lucarell is entitled to punitive

damages on her breach of contract claim. We found only that she may be entitled to

punitive damages on her breach of contract claims if, after a trial on her fraud claim, the

jury finds in her favor on the fraud claim. Id. at 1111178, 191.

Nationwide also claims a case on which we relied, Mabry-Wright v. Zlotnik, 165

Ohio App.3d 1, 2005-0hio-5619, 844 N.E.2d 858 (3d Dist.), rejected our determination.

This is not the case. Mabry-Wright stated that generally, under Ohio law, punitive

damages are not recoverable in an action for breach of contract. Id. at 1118. Mabry­

Wright then went on to discuss an exception to the general rule, stating that punitive

3

000399 Appx.48

damages are available "where the breach of contract is accompanied by a connected,

but independent tort involving fraud, malice or oppression." Id. at,-r19, citing Goldfarb v.

Robb Report, Inc., 101 Ohio App.3d 134, 140,655 N.E.2d 211 (10th Dist.1995). The

Mabry-Wright Court then set out the elements necessary to recover punitive damages

pursuant to the exception. Id.

Fourth, Nationwide asserts we failed to address its argument that Lucarell's fraud

claim failed as a matter of law. Nationwide makes various arguments why the fraud

claim must fail. We determined that the trial court erred in granting a directed verdict on

Lucarell's fraud claim. Lucarell, at ,-r171. We did not, however, find that Lucarell would

succeed on her fraud claim. We found only that there was some competent evidence,

when construed most strongly in favor of the nonmoving party, upon which reasonable

minds could reach different conclusions, which prevented a directed verdict. Id. Some

competent evidence is all that is required to overcome a motion for directed verdict.

In sum, Nationwide has not called to our attention an obvious error nor has it

raised an issue for our consideration that was not fully considered when it should have

been. Next, we must consider Nationwide's motion to certify a conflict.

A court of appeals shall certify a conflict when its judgment is in conflict with the

judgment pronounced upon the same question by any other court of appeals in the state

of Ohio. Section 3(8)(4), Article V, Ohio Constitution.

Nationwide asks that we certify the question: "Are punitive damages recoverable

on a breach-of-contract claim?"

Nationwide has not met the test for certification. In order to certify a conflict to

the Ohio Supreme Court, we must find that three conditions are met:

First, the certifying court must find that its judgment is in conflict with the

judgment of a court of appeals of another district and the asserted conflict

must be "upon the same question." Second, the alleged conflict must be

on a rule of law-not facts. Third, the journal entry or opinion of the

4

000400 Appx.49

certifying court must clearly set forth that rule of law which the certifying

court contends is in conflict with the judgment on the same question by

other district courts of appeals.

Whitelock v. Gilbane Bldg. Co., 66 Ohio St.3d 594, 596, 613 N.E.2d 1032 (1993).

(Emphasis sic.)

Nationwide has not met this test. Nationwide asserts this court's judgment is in

conflict with numerous other appellate districts.

Nationwide first cites to R & H Trucking, Inc. v. Occidental Fire & Cas. Co. of N.

Carolina, 2 Ohio App.3d 269, 441 N.E.2d 816 (10th Dist.1981), where the court did state

that punitive damages are not recoverable in an action for breach of contract. But in

that case, the court dismissed the appeal for lack of a final, appealable order. Id. at

272. The court stated, however, that it would "comment" on the appellant's contention

that punitive damages were recoverable for a willful and wanton breach of contract. Id.

at 271. The court noted that the appellant had only filed a breach of contract claim. Id.

There was no claim for fraud. The court went on to comment that punitive damages

could be recovered where the breach of contract was attended by some intentional

wrong or gross negligence that amounted to an independent tort, and was accompanied

by the attendant aggravating circumstances of wanton, reckless, malicious, or

oppressive conduct ordinarily giving rise to punitive damages. Id. at 272. Thus, this

case is not in conflict with our decision.

Next, Nationwide cites to Host v. Ursem, 8th Dist. No. 63109, 1993 WL 266901,

*3 (July 15, 1993), which stated that "generally" punitive damages are not recoverable in

an action for claim of breach of contract. This case is not in conflict with our decision.

Generally punitive damages are not recoverable in a breach of contract case. It is only

in very limited circumstances where the breach of contract is accompanied by a

connected, yet independent tort for which one can recover punitive damages, that

punitive damages are recoverable. See Arendt v. Price, 8th Dist. No. 101710,2015-

5

000401 Appx.50

Ohio-528, ~24.

Nationwide's next alleged conflict case, Argrov Box Co. v. lIIini Four Co., 2d Dist.

No. CA-6947, 1981 WL 2827, *3 (June 15,1981), again stated punitive damages are

not recoverable in an action for breach of contract. This case is not in conflict with our

decision. Although setting out the general rule that punitive damages are not

recoverable for a breach of contract, the court went on to analyze whether a connected

but independent tort might exist along with the breach of contract, which would have

allowed for punitive damages. See Westbrock v. W Ohio Health Care Corp., 137 Ohio

App.3d 304,322,738 N.E.2d 799 (2d Dist.2000).

The next case Nationwide alleges is in conflict is Palmer v. David R. Pheils, Jr. &

Assoc., 6th Dist. No. WD-96-001, 1997 WL 543071, *6 (Aug. 29,1997). This case is

not in conflict with our decision. It stated that while the general rule in Ohio is that

punitive damages may not be recovered in a breach of contract action, if the facts of the

case show an intentional tort committed independently, but in connection with, a breach

of contract and such tort is accompanied by conduct which is wanton, reckless,

malicious or oppressive, then punitive damages may be awarded. Id.

Nationwide's next alleged conflict case, Dolecki v. Nationwide Mut. Ins. Co., 5th

Dist. No. 2004CA00063, 2005-0hio-1 061, does not set out a rule of law regarding

punitive damages on a breach of contract case. Instead, the court affirmed the trial

court's judgment granting a directed verdict on the bad faith claim and consequently

dismissing the claim for punitive damages. Id. at ~17. Thus, this case is not in conflict

with our decision.

Nationwide's final alleged conflict case, Tibbs v. Natl. Homes Const. Corp., 52

Ohio App.2d 281,290,369 N.E.2d 1218 (1st Dist.1977), stated punitive damages are

not recoverable in an action for breach of contract. But the court went on to analyze

whether the breach of contract claim in that case might be accompanied by a tort claim.

Finding that there was no accompanying tort claim, it found punitive damages were not

available. And again, a more recent case from that district has recognized that punitive

6

000402 Appx.51

damages may result from a bad faith breach of contract. William Hammann, Inc. v.

Continental Cas. Co., 1st Dist. No. A-8204094, 1987 WL 18121, *4 (Oct. 7,1987).

Thus, no conflict exists on a rule of law between this court's decision in Lucarell

and the cases cited by Nationwide.

For these reasons, Nationwide's motion for reconsideration is hereby denied.

Likewise, Nationwide's motion to certify a conflict is hereby denied.

Judge Gene Donofrio

Judge C L. aite

Judge Carol Ann Robb

7

000403 Appx.52

INTHESUPREMECOURTOFOHIONATIONWIDEMUTUALINSURANCECOMPANY, Appellant, v.CHRISTINELUCARELL,Appellee.

CaseNo.

OnAppealFromTheMahoningCountyCourtofAppeals,SeventhAppellateDistrict

CourtofAppeals

CaseNos.2013MA00074,133

NOTICEOFAPPEALOFNATIONWIDEMUTUALINSURANCECOMPANY ThomasD.Warren(0077541)CounselOfRecordtwarren@bakerlaw.comG.KarlFanter(0075686)kfanter@bakerlaw.comBAKER&HOSTETLERLLP127PublicSquare,Suite2000Cleveland,OH44114Telephone:(216)861‐7528Facsimile:(216)696‐0740YvetteMcGeeBrown(0030642)ymcgeebrown@jonesday.comJONESDAY325JohnH.McConnellBlvd.,Ste.600Columbus,OH43215Telephone:(614)281‐3867Facsimile:(614)461‐4198CounselforAppellantNationwideMutualInsuranceCompany

PatriciaA.Morris(0043570)patricia@patriciamorrislaw.com841Boardman‐CanfieldRoad,Suite307Boardman,OH44512Telephone:(330)758‐9660RandyJ.Hart(0046793)randyjhart@gmail.com23600CommerceParkRoadBeachwood,OH44122Telephone:(216)978‐9150A.ScottFromson(0037889)scott@fromsonlaw.com32125SolonRoadSolon,OH44139Telephone:(440)394‐1301CounselforAppelleeChristineLucarell

Supreme Court of Ohio Clerk of Court - Filed April 18, 2016 - Case No. 2016-0585

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QuintinLindsmith(0018327)qlindsmith@bricker.comBRICKER&ECKLERLLP100SouthThirdStreetColumbus,OH43215Telephone:(614)227‐2300Facsimile:(614)227‐2390CounselforAppellantNationwideMutualInsuranceCompany(continued)

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1

NOTICEOFAPPEALOFAPPELLANT,NATIONWIDEMUTUALINSURANCECOMPANY

Appellant,NationwideMutualInsuranceCompany,herebygivesnoticeofappealto

theOhioSupremeCourtfromthedecisionandjudgmentoftheMahoningCountyCourtof

Appeals,SeventhAppellateDistrict,C.A.CaseNos.2013MA00074,133,decidedand

journalizedonDecember17,2015,andfromthesubsequentdecisionandjudgmententry

oftheSeventhDistrictdenyingNationwideMutualInsuranceCompany’sDecember28,

2015applicationforreconsiderationofthatdecision,whichwasdecidedandjournalized

onMarch2,2016.Date‐stampedcopiesoftheopinionandjudgmententriesbeing

appealedareattached.

Thecaseisofpublicorgreatgeneralinterest.

Respectfullysubmitted,

/s/ThomasD.WarrenThomasD.Warren(0077541)twarren@bakerlaw.comG.KarlFanter(0075686)kfanter@bakerlaw.comBAKER&HOSTETLERLLP127PublicSquare,Suite2000Cleveland,OH44114Telephone:(216)861‐7528Facsimile:(216)696‐0740

YvetteMcGeeBrown(0030642)ymcgeebrown@jonesday.comJONESDAY325JohnH.McConnellBlvd.,Ste.600Columbus,OH43215Telephone:(614)281‐3867Facsimile:(614)461‐4198

QuintinLindsmith(0018327)qlindsmith@bricker.comBRICKER&ECKLERLLP100SouthThirdStreet

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2

Columbus,OH43215Telephone:(614)227‐2300Facsimile:(614)227‐2390CounselforAppellantNationwideMutualInsuranceCompany

Appx.56

3

PROOFOFSERVICE IcertifythatacopyoftheforegoingwassentbyordinaryU.S.mailtothefollowing

counselonthis18thdayofApril,2016:

PatriciaA.Morris(0043570)patricia@patriciamorrislaw.com841Boardman‐CanfieldRoad,Suite307Boardman,OH44512Telephone:(330)758‐9660RandyJ.Hart(0046793)randyjhart@gmail.com23600CommerceParkRoadBeachwood,OH44122Telephone:(216)978‐9150A.ScottFromson(0037889)scott@fromsonlaw.com32125SolonRoadSolon,OH44139Telephone:(440)394‐1301

/s/ThomasD.Warren

CounselforAppellantNationwideMutualInsuranceCompany

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2315.21 Recovery of compensatory, punitive, or exemplary..., OH ST § 2315.21

© 2016 Thomson Reuters. No claim to original U.S. Government Works. 1

Baldwin's Ohio Revised Code AnnotatedTitle XXIII. Courts--Common Pleas (Refs & Annos)

Chapter 2315. Trial Procedure (Refs & Annos)Determination of Amount of Recovery; Contributory Negligence and Assumption of Risk; Damages

R.C. § 2315.21

2315.21 Recovery of compensatory, punitive, or exemplarydamages in tort action; bifurcated trial; burden of proof

Currentness

(A) As used in this section:

(1) “Tort action” means a civil action for damages for injury or loss to person or property. “Tort action” includes aproduct liability claim for damages for injury or loss to person or property that is subject to sections 2307.71 to 2307.80of the Revised Code, but does not include a civil action for damages for a breach of contract or another agreementbetween persons.

(2) “Trier of fact” means the jury or, in a nonjury action, the court.

(3) “Home” has the same meaning as in section 3721.10 of the Revised Code.

(4) “Employer” includes, but is not limited to, a parent, subsidiary, affiliate, division, or department of the employer. Ifthe employer is an individual, the individual shall be considered an employer under this section only if the subject of thetort action is related to the individual's capacity as an employer.

(5) “Small employer” means an employer who employs not more than one hundred persons on a full-time permanentbasis, or, if the employer is classified as being in the manufacturing sector by the North American industrial classificationsystem, “small employer” means an employer who employs not more than five hundred persons on a full-time permanentbasis.

(B)(1) In a tort action that is tried to a jury and in which a plaintiff makes a claim for compensatory damages and aclaim for punitive or exemplary damages, upon the motion of any party, the trial of the tort action shall be bifurcatedas follows:

(a) The initial stage of the trial shall relate only to the presentation of evidence, and a determination by the jury, withrespect to whether the plaintiff is entitled to recover compensatory damages for the injury or loss to person or propertyfrom the defendant. During this stage, no party to the tort action shall present, and the court shall not permit a partyto present, evidence that relates solely to the issue of whether the plaintiff is entitled to recover punitive or exemplarydamages for the injury or loss to person or property from the defendant.

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(b) If the jury determines in the initial stage of the trial that the plaintiff is entitled to recover compensatory damages forthe injury or loss to person or property from the defendant, evidence may be presented in the second stage of the trial,and a determination by that jury shall be made, with respect to whether the plaintiff additionally is entitled to recoverpunitive or exemplary damages for the injury or loss to person or property from the defendant.

(2) In a tort action that is tried to a jury and in which a plaintiff makes a claim for both compensatory damages andpunitive or exemplary damages, the court shall instruct the jury to return, and the jury shall return, a general verdictand, if that verdict is in favor of the plaintiff, answers to an interrogatory that specifies the total compensatory damagesrecoverable by the plaintiff from each defendant.

(3) In a tort action that is tried to a court and in which a plaintiff makes a claim for both compensatory damages andpunitive or exemplary damages, the court shall make its determination with respect to whether the plaintiff is entitled torecover compensatory damages for the injury or loss to person or property from the defendant and, if that determinationis in favor of the plaintiff, shall make findings of fact that specify the total compensatory damages recoverable by theplaintiff from the defendant.

(C) Subject to division (E) of this section, punitive or exemplary damages are not recoverable from a defendant in questionin a tort action unless both of the following apply:

(1) The actions or omissions of that defendant demonstrate malice or aggravated or egregious fraud, or that defendantas principal or master knowingly authorized, participated in, or ratified actions or omissions of an agent or servant thatso demonstrate.

(2) The trier of fact has returned a verdict or has made a determination pursuant to division (B)(2) or (3) of this sectionof the total compensatory damages recoverable by the plaintiff from that defendant.

(D)(1) In a tort action, the trier of fact shall determine the liability of any defendant for punitive or exemplary damagesand the amount of those damages.

(2) Except as provided in division (D)(6) of this section, all of the following apply regarding any award of punitive orexemplary damages in a tort action:

(a) The court shall not enter judgment for punitive or exemplary damages in excess of two times the amount of thecompensatory damages awarded to the plaintiff from that defendant, as determined pursuant to division (B)(2) or (3)of this section.

(b) If the defendant is a small employer or individual, the court shall not enter judgment for punitive or exemplarydamages in excess of the lesser of two times the amount of the compensatory damages awarded to the plaintiff from thedefendant or ten percent of the employer's or individual's net worth when the tort was committed up to a maximum ofthree hundred fifty thousand dollars, as determined pursuant to division (B)(2) or (3) of this section.

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2315.21 Recovery of compensatory, punitive, or exemplary..., OH ST § 2315.21

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(c) Any attorneys fees awarded as a result of a claim for punitive or exemplary damages shall not be considered forpurposes of determining the cap on punitive damages.

(3) No award of prejudgment interest under division (C)(1) of section 1343.03 of the Revised Code shall include anyprejudgment interest on punitive or exemplary damages found by the trier of fact.

(4) In a tort action, the burden of proof shall be upon a plaintiff in question, by clear and convincing evidence, to establishthat the plaintiff is entitled to recover punitive or exemplary damages.

(5)(a) In any tort action, except as provided in division (D)(5)(b) or (6) of this section, punitive or exemplary damagesshall not be awarded against a defendant if that defendant files with the court a certified judgment, judgment entries, orother evidence showing that punitive or exemplary damages have already been awarded and have been collected, in anystate or federal court, against that defendant based on the same act or course of conduct that is alleged to have causedthe injury or loss to person or property for which the plaintiff seeks compensatory damages and that the aggregate ofthose previous punitive or exemplary damage awards exceeds the maximum amount of punitive or exemplary damagesthat may be awarded under division (D)(2) of this section against that defendant in the tort action.

(b) Notwithstanding division (D)(5)(a) of this section and except as provided in division (D)(6) of this section, punitiveor exemplary damages may be awarded against a defendant in either of the following types of tort actions:

(i) In subsequent tort actions involving the same act or course of conduct for which punitive or exemplary damageshave already been awarded, if the court determines by clear and convincing evidence that the plaintiff will offer new andsubstantial evidence of previously undiscovered, additional behavior of a type described in division (C) of this sectionon the part of that defendant, other than the injury or loss for which the plaintiff seeks compensatory damages. In thatcase, the court shall make specific findings of fact in the record to support its conclusion. The court shall reduce theamount of any punitive or exemplary damages otherwise awardable pursuant to this section by the sum of the punitiveor exemplary damages awards previously rendered against that defendant in any state or federal court. The court shallnot inform the jury about the court's determination and action under division (D)(5)(b)(i) of this section.

(ii) In subsequent tort actions involving the same act or course of conduct for which punitive or exemplary damages havealready been awarded, if the court determines by clear and convincing evidence that the total amount of prior punitiveor exemplary damages awards was totally insufficient to punish that defendant's behavior of a type described in division(C) of this section and to deter that defendant and others from similar behavior in the future. In that case, the courtshall make specific findings of fact in the record to support its conclusion. The court shall reduce the amount of anypunitive or exemplary damages otherwise awardable pursuant to this section by the sum of the punitive or exemplarydamages awards previously rendered against that defendant in any state or federal court. The court shall not inform thejury about the court's determination and action under division (D)(5)(b)(ii) of this section.

(6) Division (D)(2) of this section does not apply to a tort action where the alleged injury, death, or loss to person orproperty resulted from the defendant acting with one or more of the culpable mental states of purposely and knowinglyas described in section 2901.22 of the Revised Code and when the defendant has been convicted of or pleaded guilty toa criminal offense that is a felony, that had as an element of the offense one or more of the culpable mental states ofpurposely and knowingly as described in that section, and that is the basis of the tort action.

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(E) This section does not apply to tort actions against the state in the court of claims, including, but not limited to, tortactions against a state university or college that are subject to division (B)(1) of section 3345.40 of the Revised Code, totort actions against political subdivisions of this state that are commenced under or are subject to Chapter 2744. of theRevised Code, or to the extent that another section of the Revised Code expressly provides any of the following:

(1) Punitive or exemplary damages are recoverable from a defendant in question in a tort action on a basis other thanthat the actions or omissions of that defendant demonstrate malice or aggravated or egregious fraud or on a basis otherthan that the defendant in question as principal or master knowingly authorized, participated in, or ratified actions oromissions of an agent or servant that so demonstrate.

(2) Punitive or exemplary damages are recoverable from a defendant in question in a tort action irrespective of whetherthe plaintiff in question has adduced proof of actual damages.

(3) The burden of proof upon a plaintiff in question to recover punitive or exemplary damages from a defendant inquestion in a tort action is one other than clear and convincing evidence.

(4) Punitive or exemplary damages are not recoverable from a defendant in question in a tort action.

(F) If the trier of fact is a jury, the court shall not instruct the jury with respect to the limits on punitive or exemplarydamages pursuant to division (D) of this section, and neither counsel for any party or a witness shall inform the juryor potential jurors of those limits.

(G) When determining the amount of an award of punitive or exemplary damages against either a home or a residentialfacility licensed under section 5123.19 of the Revised Code, the trier of fact shall consider all of the following:

(1) The ability of the home or residential facility to pay the award of punitive or exemplary damages based on the home'sor residential facility's assets, income, and net worth;

(2) Whether the amount of punitive or exemplary damages is sufficient to deter future tortious conduct;

(3) The financial ability of the home or residential facility, both currently and in the future, to provide accommodations,personal care services, and skilled nursing care.

CREDIT(S)(2004 S 80, eff. 4-7-05; 2002 H 412, eff. 11-7-02; 2001 S 108, § 2.01, eff. 7-6-01; 2001 S 108, § 2.02, eff. 7-6-01; 1996 H

350, eff. 1-27-97 (State, ex rel. Ohio Academy of Trial Lawyers, v. Sheward (1999)); 1987 H 1, eff. 1-5-88)

R.C. § 2315.21, OH ST § 2315.21Current through File 123 of the 131st General Assembly (2015-2016).

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App R 12 Determination and judgment on appeal, OH ST RAP Rule 12

© 2016 Thomson Reuters. No claim to original U.S. Government Works. 1

Baldwin's Ohio Revised Code AnnotatedRules of Appellate Procedure

Title II. Appeals from Judgments and Orders of Court of Record

Ohio App. R. Rule 12

App R 12 Determination and judgment on appeal

Currentness

(A) Determination.

(1) On an undismissed appeal from a trial court, a court of appeals shall do all of the following:

(a) Review and affirm, modify, or reverse the judgment or final order appealed;

(b) Determine the appeal on its merits on the assignments of error set forth in the briefs under App.R. 16, the recordon appeal under App.R. 9, and, unless waived, the oral argument under App.R. 21;

(c) Unless an assignment of error is made moot by a ruling on another assignment of error, decide each assignmentof error and give reasons in writing for its decision.

(2) The court may disregard an assignment of error presented for review if the party raising it fails to identify in therecord the error on which the assignment of error is based or fails to argue the assignment separately in the brief, asrequired under App.R. 16(A).

(B) Judgment as a Matter of Law. When the court of appeals determines that the trial court committed no error prejudicialto the appellant in any of the particulars assigned and argued in appellant's brief and that the appellee is entitled tohave the judgment or final order of the trial court affirmed as a matter of law, the court of appeals shall enter judgmentaccordingly. When the court of appeals determines that the trial court committed error prejudicial to the appellant andthat the appellant is entitled to have judgment or final order rendered in his favor as a matter of law, the court of appealsshall reverse the judgment or final order of the trial court and render the judgment or final order that the trial courtshould have rendered, or remand the cause to the court with instructions to render such judgment or final order. In allother cases where the court of appeals determines that the judgment or final order of the trial court should be modifiedas a matter of law it shall enter its judgment accordingly.

(C) Judgment in Civil Action or Proceeding When Sole Prejudicial Error Found Is That Judgment of Trial Court Is Againstthe Manifest Weight of the Evidence.

(1) In any civil action or proceeding that was tried to the trial court without the intervention of a jury, and when uponappeal a majority of the judges hearing the appeal find that the judgment or final order rendered by the trial court isagainst the manifest weight of the evidence and have not found any other prejudicial error of the trial court in any of the

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App R 12 Determination and judgment on appeal, OH ST RAP Rule 12

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particulars assigned and argued in the appellant's brief, and have not found that the appellee is entitled to judgment orfinal order as a matter of law, the court of appeals shall reverse the judgment or final order of the trial court and eitherweigh the evidence in the record and render the judgment or final order that the trial court should have rendered on thatevidence or remand the case to the trial court for further proceedings.

(2) In any civil action or proceeding that was tried to a jury, and when upon appeal all three judges hearing the appealfind that the judgment or final order rendered by the trial court on the jury’s verdict is against the manifest weight of theevidence and have not found any other prejudicial error of the trial court in any of the particulars assigned and arguedin the appellant's brief, and have not found that the appellee is entitled to judgment or final order as a matter of law,the court of appeals shall reverse the judgment or final order of the trial court and remand the case to the trial courtfor further proceedings.

(D) All Other Cases. In all other cases where the court of appeals finds error prejudicial to the appellant, the judgment orfinal order of the trial court shall be reversed and the cause shall be remanded to the trial court for further proceedings.

CREDIT(S)(Adopted eff. 7-1-71; amended eff. 7-1-73, 7-1-92, 7-1-15)

Ohio Rules App. Proc., Rule 12, OH ST RAP Rule 12Current with amendments received through August 1, 2016.

End of Document © 2016 Thomson Reuters. No claim to original U.S. Government Works.

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