Sanctions Against Lawyer for Filing Unfounded Libel Lawsuit

From Payson v. Spiveydecided Friday by the Ohio Court of Appeals (Judge Jeffrey Welbaum, joined by Judges Chris Epley and Ronald Lewis):

Frank Payson[] appeals from a judgment granting RC 2323.51 [“frivolous conduct in filing civil claims” -EV] sanctions against him…. In his sole assignment of error, Payson contends that the trial court erred in granting sanctions and in the amount of awards awarded. For the reasons discussed below, we conclude that the assignment of error is without merit. Accordingly, the judgment of the trial court will be affirmed….

This action arose from an attorney-client relationship between Payson and Spivey that began in July 2017 and ended in March 2018. After Spivey filed a disciplinary complaint regarding Payson with the Dayton Bar Association (“DBA”), a fee-dispute arbitration occurred on June 26, 2019. The arbitrators ordered Payson to give Spivey a refund of either $1,273.12 or $1,472.02, depending whether a prior check issued to Spivey in the amount of $198.09 was still negotiable.

On August 9, 2019 (a month after the award), Payson filed a complaint against Spivey, alleging that she had committed defamation, defamation per se, and reckless and malicious conduct. No specifics about the alleged defamatory circumstances or statements were included. In the complaint, Payson alleged compensatory damages in excess of $25,000 for each common law claim, for a minimum of $275,000, compensatory damages in excess of $25,000 for each tort claim, for a minimum of $275,000, and punitive and/or liquidated damages in an amount in excess of $25,000 on his tort claims, for a minimum of $275,000. He also asked for attorney fees and costs. [Further procedural details omitted. -EV] …

On February 10, 2021, the trial court granted summary judgment in Spivey’s favor …. The basis of the court’s summary judgment decision was qualified [privilege] as to the defense claims. The court observed that when Spivey filled her summary judgment motion on May 21, 2020, Payson still had not identified any defamatory statements, nor had he identified anyone to whom Spivey had made such statements. The only admissible evidence that Payson presented, after nearly two years, was that Spivey had told her father that Payson had given her “bad information” about running an ad in a newspaper. The court noted that the statement did not injure Payson in his profession because Spivey’s father stated that this would have nothing to do with his decision on whether to hire Payson in the future.

The court further found a qualified privilege for statements made to family members and noted that Payson “had not identified any clear and convincing evidence to show a triable issue of actual malice, which would defeat the privilege.” …

The court held a hearing on Spivey’s request for sanctions on September 10, 2021…. [T]he court awarded Spivey $27,633.45 of the $35,012.25 in fees requested, and other expenses of $1,509, for a total award of $29,142.45….

The trial court’s decision awarding sanctions against Payson was very detailed. After reviewing the record, the court found that Payson had filed the defamation action against Spivey in retaliation for her DBA ethics complaint and that Payson’s conduct during the litigation had increased Spivey’s litigation costs. The court also said it did not find Payson’s testimony credible.

In addition, the court described Payson’s attempts to impede discovery throughout the case, which caused Spivey to file a motion to compel, delayed discovery, and involved Payson’s refusal to accept email and his claim that he did not communicate by email (despite evidence that he did).

The court further found that Payson’s defamation claim was unsupported by law. In this regard, the court noted that when Payson filed the defamation complaint, he did not have any facts to support a claim that Spivey had made a false statement; Instead, Payson relied on speculation and conjecture. The court concluded that Payson’s conduct, as a lawyer who had practiced for 30 years, failed to satisfy a reasonableness standard, which tests “‘whether no reasonable lawyer would have brought the action in light of the existing law.””

We have reviewed the entire record, including the pleadings, transcripts of the evidentiary hearing and status conferences, and exhibits presented to the trial court. Our review reveals that the trial court did not abuse its discretion in awarding fees to Spivey and that the court’s decision was supported by competent, credible evidence. Moreover, the court correctly concluded that no reasonable lawyer would have asserted claims for defamation against Spivey in light of existing law….

Our review of the record reveals, without doubt, that when the complaint was filed, Payson lacked any facts to support his claim that Spivey had made false statements about him and had injured his reputation. The complaint itself was extremely vague, stating only that Spivey had made untrue, defamatory statements about Payson. Almost immediately after answering the complaint, Spivey submitted discovery requests to Payson, seeking information about the content of the alleged defamatory statements. Rather than responding, Payson embarked on a course of unfounded motions and attempts to evade discovery, as noted in the Statement of Facts in this opinion….

As Spivey’s expert witness noted at the sanctions hearing, there were “39 procedural motions and another seven discovery type motions…. This required a lot of paperwork…. The vast majority of the initial filings of that were made by pro se Plaintiff’s attorney [Payson].” It is also apparent that very late in the litigation, Payson was still searching for facts supporting his claim (which he never found). Accordingly, the trial court did not err in finding that no reasonable lawyer would have filed the defamation claim.

Payson argues that he brought the defamation action because he had a “good faith belief that Spivey would make materially false statements to others with the intent of damaging his professional reputation.” The trial court found otherwise, stating that:

Presumably, Payson, after practicing for thirty years would have brought a claim for defamation only upon some evidence of a defamatory statement. Here, as Payson testified to, the complaint was brought because he “knew” Spivey “would” say something about him to her family and friends. This testimony does not satisfy the reasonable standard required….

Based on the preceding discussion, the trial court did not err in awarding penalties against Payson, nor did it award an excessive amount….

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