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Ohio Court Rules In Favor Of Client Against Lawyer Who Converted Funds

This case and the opinions it has spawned proves that truth is stranger than fiction. The most recent opinion details the results of two trials and two appeals. The Appellate Court twice reversed trial court judgments that were incredibly lawyer friendly, that allowed the estate of a lawyer to retain funds that never belonged to the lawyer.

In 2006, Catherine Gombach deposited $504,889.29 in the trust account of her lawyer. Gombach was apparently attempting to protect some of her funds from creditor claims.

In 2010, Laurie began spending Gombach’s money and made improper withdrawals from the trust account. Gombach sued Laurie, who passed apparently passed away while the case was pending.

The trial court entered judgment against Gombach. It reasoned that Gombach and Laurie were hiding assets from Gombach’s creditors and that Gombach was subject to the defense of unclean hands. In other words, the lawyer would get  to keep the client’s money.

The Ohio Appellate Court reversed. It found that there was no evidence that Gombach engaged in a plot to defraud creditors. It also rejected an argument that Gombach and Laurie were equally at fault (using Latin words, “in pari delicto”). That opinion is known as Gombach I.

On remand, the trial court again ruled against Gombach, holding that she was entitled to $0. The court held that Gombach would receive a windfall.

The Appellate Court again reversed and ordered the trial court to enter a judgment of at least $341,196.11 in favor of Gombach and against the Laurie Estate. The Appellate Court’s opinion is a sharp rebuke to the trial judge. The opinion states: “The trial court’s “perspective” that this court’s decision in Gombach I does not serve the interest of justice is not relevant to the mandate upon remand that the trial court determine what portion of the $504,889.29 that Gombach deposited into Laurie’s IOLTA account she is entitled to recover.”

In sum, the Appellate Court held that the funds deposited by the client in the lawyer’s trust fund properly belonged to the client and ordered the lawyer’s estate to pay up.

Edward X. Clinton, Jr.

 

Source: GOMBACH v. Laurie, 2016 Ohio 7720 – Ohio: Court of Appeals, 8th Appellate Dist. 2016 – Google Scholar