IN THE SUPREME COURT OF OHIO

GARY R. GORBY & ASSOCIATES, LLC, : CASE NO. 2011-1435

Plaintiff-Appellee, : On Appeal from the Clark County Court ofAppeals, Second Appellate District

-vs-

DAVID CHARLES McCARTY, etc., et al., . Court of Appeals Case No. 10-CA-0071

Defendants-Appellants.

MEMORANDUM IN OPPOSITION TO JURISDICTIONOF PLAINTIFF-APPELLEE GARY R. GORBY & ASSOCIATES, LLC

Richard F. Heil, Jr. (#0033661) (COUNSEL OF RECORD)Martin, Browne, Hull & Harper, P.L.L.One South Limestone Street, Suite 800

P.O. Box 1488Springfield, Ohio 45501-1488

Telephone (937) 324-5541Fax (937) 325-5432

Email: dick heilkmartinbrowne.com

Counsel for Plaintiff-Appellee,Gary R. Gorby & Associates, LLC

Daniel C. Harkins (#0029750) (COUNSEL OF RECORD)

Mark D. DeCastro (#0079505)Harkins & Associates

333 North Limestone Street, Suite 203P.O. Box 1125

Springfield, Ohio 45501-1125Telephone (937) 324-8482

Fax (937) 324-8011Email: dch@dharkins.com

FRDDSEP 19 2011

CL F,RK (l1IrwOt1R_T_c,OPREME COORT JF 04110

Counsel for Defendants-Appellants David Charles McCarty,Cynthia K. McCarty and ABA of Tampa, Inc.

TABLE OF CONTENTS

Page

EXPLANATION WHY THIS CASE IS NOT A CASE OF PUBLIC ORGREAT GENERAL INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ARGUMENT IN OPPOSITION TO PROPOSITIONS OF LAW . . . . . . . . . . . . . . . . . 5

Proposition of Law No. 1: Courts of Appeals must applythe appropriate standard of review in reviewing a trial court'sentry granting relief from judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Proposition of Law No. 2: A Court of Appeals is bound tofollow its own precedent in rendering its decisions to promotethe consistent development of legal principles, foster relianceon judicial decisions and contribute to the actual and perceivedintegrity of the judicial process . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . 10

CONCLUSION ....................................................... 15

CERTIFICATE OF SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

EXPLANATION WHY THIS CASE IS NOT A CASEOF PUBLIC OR GREAT GENERAL INTEREST

Clearly, the trial court abused its discretion in granting Appellees' Motion for Relief from

Judgment. In GTE Automatic Electric v. ARC Industries (1976), 47 Ohio St.2d 146, this Court

ruled that the trial court abused its discretion, when it incorrectly determined that one of the three

prongs of the test, required to obtain Civ.R. 60(B) relief from judgment had been established. In

this matter, the trial court incorrectly determined that all three of the prongs of the GTE test were

established, so obviously the trial court abused its discretion in vacating the Default Judgment of

Plaintiff-Appellee, Gary R. Gorby & Associates, LLC, ("Gorby"). Since Defendants David

McCarty ("McCarty"), Cynthia McCarty, and ABA of Tampa, Inc. ("ABA") (collectively

"Defendants") did not challenge in their Memorandum in Support of Jurisdiction

("Memorandum") the Court of Appeals' holding that their Motion for Relief from Judgment was

untimely, even if there were any error on the part of the Court of Appeals, it would be harmless

error and would not change the outcome of the Court of Appeals' Opinion and Final Entry

reversing and vacating the trial court's Entry vacating Gorby's Default Judgment.

Contrary to Defendants' Proposition of Law No. 1, the Court of Appeals did apply the

appropriate standard of review in reviewing the trial court's Entry granting relief from judgment.

In fact, Defendants acknowledge at pp. 7 & 8 of their Memorandum that the Court of Appeals'

Opinion recites the appropriate standard of review. Nevertheless, Defendants contend that the

Court of Appeals engaged in a de novo review for no apparent reason other than that the Court of

Appeals reached a different conclusion after reviewing the evidence than the trial court.

Defendants' argument flies in the face of this Court's seminal decision in GTE, wherein this

Court applied the abuse of discretion standard in reviewing the trial court's order setting aside a

default judgment and held that: "the trial court abused its discretion in granting the relief [from

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judgment] sought by appellant, and the Court of Appeals properly reversed." GTE, 47 Ohio

St.2d at 153. In fact, the Court of Appeals in the case at bar relied upon this Court's decision in

GTE in their Opinion at pp. 11-15 & 18.

Contrary to Defendants' Proposition of Law No. 2, the Court of Appeals did not fail to

follow its own precedent in this matter. More importantly, the Court of Appeals correctly

distinguished its own precedent and did not improperly extend the application of its own

precedent beyond its intended reach. Defendants claim three instances of the Court of Appeals

failing to follow its own precedent, the first being the Court of Appeals' alleged failure to follow

its precedent in Miamisburg Motel v. Huntington National Bank (1993), 88 Ohio App.3d 117,

126, which holds that a party appears in an action for purposes of Civ.R. 55(A), and is thus

entitled to notice of the application for default judgment, when that party "clearly expresses to

the opposing party an intention and purpose to defend the suit, regardless of whether a formal

filing is made." However, the Court of Appeals distinguished the facts in Miamisburg Motel

from those in this matter and correctly found that Defendants failed to appear and did not express

"a clear purpose to defend the suit," such that Defendants' appearance could not be deemed

under Miamisburg Motel, and it was proper for Gorby not to serve Defendants or Pedraza with

Gorby's Motion for Default Judgment.

The second instance where the Defendants allege the Court of Appeals failed to follow its

precedent is in Baker v. Schuler, Clark App. No. 02CA0020, 2002-Ohio-5386, holding that the

right to arbitration is a meritorious defense for purposes of Civ.R. 60(B). However, the Court of

Appeals held that Baker is procedurally distinct from the matter at hand. Unlike fhe d-cfendants

in Baker, the Defendants herein failed to apply to the trial court for a stay pending arbitration, as

required by R.C. 2711.02(B), until after the trial court had properly granted Default Judgment to

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Gorby. Therefore, the Court of Appeals' holding in Baker has no application to Defendants, who

waived their right to arbitration and cannot assert it as a meritorious defense in support of their

Civ.R. 60(13) motion for relief, and the Court of Appeals did not fail to follow its precedent in

Baker as alleged by the Defendants.

The third instance where the Defendants claim that the Court of Appeals failed to follow

its precedent is the precedent alleged at p. 10 of Defendants' Memorandum "that a Trial Court

must refer to arbitration disputes arising under a contract which includes a compulsory

arbitration clause." Defendants do not cite any law for this precedent in their Memorandum,

thereby making no showing that the Court of Appeals failed to follow its precedent in this

regard, and under our facts, the law does not support Defendants' assertion. After Defendants

ignored the cease and desist letters of Gorby's counsel and persisted in operating their competing

insurance agency in violation of the Non-Competition Agreement, Gorby did not have to seek

arbitration, while Defendants were stealing back the clients they recently sold to Gorby for

$350,000.00. Gorby was within his rights to file suit to obtain injunctive relief from the trial

court to promptly cease the operation of Defendants' competing insurance agency. This Court

has recognized and held that: "`Notwithstanding the arbitrability of the parties' dispute, the

Court has the authority to grant preliminary injunctive relief to preserve the status quo ... ."'

State ex rel. CNG Financial Corp. v. Nadel, 111 Ohio St.3d 149, 152, 2006-Ohio-5344, ¶ 17,

quoting Danieli & C. Officine Meccaniche S.p.A. v. Morgan Constr. Co. (D.Mass.2002), 190

F.Supp.2d 148, 154. Moreover, the matter properly proceeded in the trial court through

judgment, as none of the parties moved for arbitration, as required by R.C. 2712.01(T). Ti^inity

Health Sys. v. MDX Corp., 180 Ohio App.3d 815, 2009-Ohio-417, ¶¶ 30-32. Thus, the Court of

Appeals did not fail to follow its precedent or the law in this regard, either.

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The liability of Defendants for breach of their Non-Competition Agreement with Gorby

is certain, based upon the records from the Ohio Department of Insurance attached as Exhibit C

to Gorby's Verified Complaint, which show that McCarty did not surrender his resident

insurance agency license in Ohio, because it was under his resident agency license that he

registered the competing insurance agency with the Ohio Department of Insurance, naming

himself as president, and registering former Defendants Nancy Beth Turnmire and Tina Ann

Turnmire as his agents beginning July 19, 2007. This clear liability on the part of Defendants is

why on December 11, 2007, on the same day that Gorby filed his Verified Complaint, after a

conference in chambers with the Gorby's counsel and attorney Paul Kavanagh appearing on

behalf of McCarty's insurance agents, then-Defendants Turnmire, and after reviewing the

pleadings, the trial court found by clear and convincing evidence that the Defendants violated

their Non-Competition Agreement and granted Gorby's Motion for a Temporary Restraining

Order. The fact that former Defendants Turnmire, who were not parties to a non-compete

agreement with Gorby and were represented by counsel, agreed to end their involvement with

the competing insurance agency and signed an Agreed Permanent Injunction with terms nearly

identical to the terms of Defendants' Non-Competition Agreement with Gorby, is proof in itself

that McCarty was involved with the competing insurance agency.

Despite Defendants' certain liability, rather than settling with Gorby or allowing him to

collect his Judgment, Defendants' tactic is to engage in a frivolous Motion for Relief from

Judgment and this frivolous appeal to run up Gorby's litigation expense in an effort to deplete his

funds, before he can collect his Judgment. The sad part is that Defendants are using the

$350,000.00 Gorby paid them for their book of business and Non-Competition Agreement to run

up Gorby's litigation expense. Just as sad is the fact that Defendants are abusing the court

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system in this manner. Hopefully, this Court will recognize this appeal as being unworthy of its

attention and decline to accept jurisdiction in this case.

ARGUMENT IN OPPOSITION TO PROPOSITIONS OF LAW

Proposition of Law No. 1: Courts of Appeals must apply the appropriate standardof review in reviewing a trial court's entry granting relief from judgment.

In this case, the Court of Appeals did apply the appropriate standard of review in

reviewing the trial court's entry granting relief from judgment. In fact, Defendants acknowledge

at pp. 7 & 8 of their Memorandum that the Court of Appeals' Opinion recites the appropriate

standard of review. The Court of Appeals at pp. 12 & 13 of their Opinion states that:

"Our review of the trial court's judgment is a narrow one. `It is within thesound discretion of the trial court to decide whether to grant a motion for relieffrom judgment, and in the absence of a clear showing of abuse of discretion, thedecision of the trial court will not be disturbed on appeal." Hanks v. Burt (Dec.

21, 1994), 99 Ohio App.3d 403.

"`Abuse of discretion' has been defined as an attitude that is unreasonable,arbitrary or unconscionable. (Internal citation omitted). It is to be expected thatmost instances of abuse of discretion will result in decisions that are simplyunreasonable, rather than decisions that are unconscionable or arbitrary.

"A decision is unreasonable if there is no sound reasoning process thatwould support that decision. It is not enough that the reviewing court, were itdeciding the issue de novo, would not have found that reasoning process to bepersuasive, perhaps in view of countervailing reasoning processes that would

support a contrary result." AAAA Enterprises, Inc. v. River Place Community

Redevelopment (1990), 50 Ohio St.3d 157, 161.

Having reviewed the record, we conclude that the trial court abused itsdiscretion in granting Appellees' motion for Civ.R. 60(13) relief. ...

With a recitation like this in the Court of Appeals' Opinion, it could not be any more

apparent that the Court of Appeals applied the appropriate standard of review in reviewing the

trial court's Entry sustaining Defendants' Motion for Relief from Judgment.

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Nevertheless, Defendants contend that the Court of Appeals engaged in a de novo review,

which would indicate that the Court of Appeals gave no deference to the trial court's decision.1

The gist of Defendants' argument is that because the Court of Appeals reached a different

conclusion after reviewing the evidence than the trial court, then the Court of Appeals must have

engaged in a de novo review. Defendants' argument flies in the face of this Court's seminal

decision in GTE Automatic Electric v. ARC Industries, supra, wherein this Court applied the

abuse of discretion standard in reviewing the trial court's order setting aside a default judgment

and held that:

[T]he neglect of the attorney is imputed to appellant ARC. Taken together, theirconduct reveals a complete disregard for the judicial system and the rights of theappellee. This is not excusable neglect. It follows that the trial court abused itsdiscretion in granting the relief sought by appellant, and the Court of Appealsproperly reversed.

GTE, 47 Ohio St.2d at 153. In fact, the Court of Appeals in the case at bar relied upon this

Court's decision in GTE in their Opinion at pp. 11-15 & 18.

Defendants' specific argument is found at pp. 8 & 9 of Defendants' Memorandum, and

states in pertinent part that:

With his Affidavit, McCarty provided sworn testimony which establishesthat McCarty retained Pedraza to represent his interests in the Trial Court andthat, upon his receipt of billing statements from Pedraza, McCarty reasonablybelieved Pedraza had prepared and would file an Answer and Counterclaim onbehalf of Defendants. McCarty's reliance on Pedraza was appropriate. TheRecord lacks any testimony or evidence to contradict McCarty's Affidavit.McCarty's sworn statement and the evidence submitted to the Trial Court withDefendants' Motion for Relief, in the absence of evidence to the contrary,warranted relief under Civ.R. 60(B). ...

' The only de novo review by the Court of Appeals was requested by Defendants, when they improperly requestedrelief under Civ.R. 60(B)(5) for the first time on appeal. In the interest of addressing the case on the merits, theCourt of Appeals considered the issue and determined that Defendants were not entitled to relief under Civ.R.60(B)(5). See the Court of Appeals' Opinion at pp. 14-16. (Query: If the Defendants thought that the trial court'sdecision was correct, why would they raise a new ground for relief for the first time on appeal?)

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Defendants' argument overlooks the fact that there was substantial evidence in the record

contrary to the assertions in McCarty's Affidavit, as well as a lack of evidence supporting the

assertions in his Affidavit. First off, the Court of Appeals stated on p. 13 of their Opinion that:

"We agree with Gorby that [Defendants] failed to establish excusable neglect based upon the

conduct of Pedraza, whom they voluntarily chose to represent them." There is nothing in

McCarty's Affidavit, or otherwise in the record, that establishes excusable neglect on the part of

Pedraza. This distinguishes Defendants' situation from the cases cited by Defendants for

excusable neglect, as the Court of Appeals noted at p. 14 of their Opinion, wherein they held:

Further, [Defendants'] reliance upon Kay v. Glassman, Inc. (1996), 76Ohio St.3d 18, 1996-Ohio-430, to support a fmding of excusable neglect, ismisplaced. In Kay, counsel for Glassman timely prepared and signed an answer,along with discovery requests which he gave to his secretary for mailing to thecourt and to counsel for Kay. The secretary was in the process of helping to sortout the law firm's bookkeeping system following the retirement of the firm'sbookkeeper, and she mistakenly placed the above documents in the file drawerinstead of mailing them. Attached to the motion for relief were the affidavits ofcounsel for defendant, the secretary, and the law clerk. The Ohio Supreme Courtheld that the attomey's conduct in that case constituted excusable neglect. Here,there is no such evidence of a simple shortcoming of which [Defendants] wereunaware, and the case of Pence v. Smith (Nov. 7, 1994), Madison App. No.CA93-11-031, further relied upon by [Defendants], supports our distinction. In

Pence, the Twelfth District affirmed the trial court's vacation of a defaultjudgment where "Appellee's attorney explained that no answer was timely filedbecause the attorney misplaced his client's file while in the process of moving hisoffice. The attorney also complained that he had recently been assaulted andnoted that he had been forced to begin a`mass filing of continuances' in a numberof courts." In contrast to Kay and Pence, the [Defendants'] inaction herein, in theface of Pedraza's alleged neglect, is not attributable to isolated events withinPedraza's office, and Pedraza's alleged neglect is properly imputed to[Defendants]. To hold otherwise would punish Gorby for Pedraza's conduct.

Thus, following this Court's decision in GTE, the Court of Appeals held that the Defendants

could not establish excusable neglect under Civ.R. 60(B)(1).

As noted in fn.1 above, Defendants improperly requested relief under Civ.R. 60(B)(5) for

the first time on appeal. In the interest of addressing the case on the merits, the Court of Appeals

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considered the issue. To the extent there was a de novo review, if any, it was invited by the

Defendants. The Court of Appeals stated on p. 15 of their Opinion that:

[Defendants] direct our attention to CB Group, Inc. v. Starboard Hospitality,

L.L.C. (Dec. 17, 2009), Cuyahoga App. No. 93387, in which a divided courtdetermined that an "attorney's failure to appear and represent his client is not an`excusable neglect' ground under Civ.R. 60(B)(1)," but rather constitutes conduct"of an extraordinary nature * * * within the purview of Civ.R. 60(B)(5) :" As

Gorby notes in his Reply brief, the majority in CB Group relied upon our decision

in Whitt v. Bennet[t] (1992), 82 Ohio App. 3d 792. In Whitt, the plaintiffsprovided their attorney with answers to interrogatories and medical recordauthorizations, which the attorney failed to forward to defense counsel. Counselfor plaintiff also failed to attend a hearing on defendant's motion to dismiss due tothe failure to respond to discovery, and the plaintiffs' complaint was dismissed.The trial court overruled plaintiffs' motion for relief from judgment. In reversingthe trial court, we determined, "the trial court erred in holding that the conduct ofan attorney must be imputed to his client for purposes of Civ.R. 60(B). That

requirement has been made concerning Civ.R. 60(B)(1). GTE Automatic El[e]c.

[vJ. ARC Industries, ***. The grounds contemplated in that rule are ordinary innature. The requirement has not been extended to the extraordinarycircumstances contemplated in Civ.R. 60(B)(5). Upon a review of the facts andcircumstances the court may find that the client is responsible for some measureof the failures concerned. However, fault should not automatically be imputedwhen an attorney has grossly neglected a diligent client's case and misleads theclient to believe that his interests are being properly handled." (Emphasis added

by the Court).

Therefore, it was the Civ.R. 60(B)(5) relief requested by Defendants for the first time on appeal,

which required the Court of Appeals to examine the record to determine: whether Pedraza

misled Defendants, whether Defendants' reliance on Pedraza was reasonable, and whether

Defendants were themselves diligent in defending this lawsuit. Accordingly, the Court of

Appeals examined the record, including McCarty's Affidavit, and determined at pp. 15 & 16 of

their Opinion that:

It is undisputed that [Defendants] had notice and knowledge of the suitagainst them. Pedraza's billing records do not reflect that he filed an answer.There is no evidence of any contact between [Defendants] and Pedraza after thefinal billing statement in June, 2008, two months before service was perfected. Inother words, there is nothing before us from which we can conclude that

8

[Defendants] acted diligently or that Pedraza mislead them into thinking that heproperly handled their interests, and Civ.R. 60(B)(5) relief is inappropriate.

Moreover, the Court of Appeals determined at p.13 of their Opinion that: "There is no

documentary evidence that Appellees advised Pedraza that they had been properly served so that

an answer could be timely filed. Most significantly, the alleged emails establishing further

communication between Appellees and Pedraza, cited in McCarty's affidavit, are absent from the

record."

Defendants disingenuously complain at p. 9 of their Memorandum that the Court of

Appeals improperly considered the absence of the alleged email communications between

McCarty and Pedraza, which were not attached to McCarty's Affidavit as indicated, because this

was not considered by the trial court in granting Defendants' Motion for Relief from Judgment.

It is impossible to say what was considered by the trial court, because its Entry granting

Defendants' Motion for Relief from Judgment contained no analysis. McCarty asserts in par. 7

of his Affidavit that he made unsuccessful efforts to contact Pedraza about this matter and that

his email messages to Pedraza are attached as Exhibit B. The Court of Appeals correctly

searched the record for these email messages, because they could have provided evidence that

McCarty was diligent in the defense of this lawsuit, depending upon the timing and content of

the emails, and whether they were properly addressed to Pedraza. The fact that there are no

email messages attached, contrary to McCarty's sworn Affidavit, is therefore significant in

addressing the Civ.R. 60(B)(5) relief from judgment sought by Defendants for the first time on

qppeal.

The Court of Appeals went on to hold at p.16 of their opinion that: "[Defendants] failed

to satisfy the second prong of the GTE test, in that they are not entitled to relief pursuant to

Civ.R. 60(B)(1) or (5) ... ." Acknowledging that this was conclusive, as the failure to establish

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any one of the three prongs of the GTE test results in the denial of relief from judgment, the

Court of Appeals nevertheless proceeded to consider the other two prongs of the GTE test and

held that Defendants failed to establish either of them, as Defendants' Motion for Relief from

Judgment was not filed within a reasonable time and Defendants failed to establish that they had

a meritorious defense or claim to present if relief is granted.2 See the Court of Appeals' Opinion

at pp. 16-18.

Proposition of Law No. 2: A Court of Appeals is bound to follow its own precedentin rendering its decisions to promote the consistent development of legal principles,foster reliance on judicial decisions and contribute to the actual and perceivedintegrity of the judicial process.

The Court of Appeals did not fail to follow its own precedent in this matter. More

importantly, the Court of Appeals correctly distinguished its own precedent and did not

improperly extend the application of its own precedent beyond its intended reach. Defendants

claim three instances of the Court of Appeals failing to follow its own precedent.

First, Defendants claim that the Court of Appeals failed to follow its precedent in

Miamisburg Motel v. Huntington National Bank (1993), 88 Ohio App.3d 117.3 This case holds

that: "`A party appears in an action for purposes of Civ.R. 55(A) [and is thus entitled to notice

of the application for default judgment] when that party clearly expresses to the opposing party

an intention and purpose to defend the suit, regardless of whether a formal filing is made."' See

Opinion at p. 10, quoting Dayton Modulars, Inc. v. Dayton View Community Dev. Corp.,

Montgomery APP. No. 20894, 2005-Ohio-6257, at ¶ 15, quoting Miamisburg Motel, supra, at p.

126. Defendants incorrectly assert on p. 12 of their Memorandum that the failure to provide

2 Defendants' Memorandum addresses only two of the three prongs necessary for obtaining relief from judgmentunder Civ.R. 60(B), applying the GTE test. This overlooks the fact that the Court of Appeals determined that theevidence in the record does not entitle Defendants to relief on the basis of any of the three prongs.' It was the Court of Appeals, which first directed the parties' attention to its decision in Miamisburg Motel, prior to

oral argument.

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Defendants with notice of the Motion for Default Judgment renders Gorby's Default Judgment

void. As our Court of Appeals held in National City Mortgage Co. v. Johnson & Assocs. Fin.

Servs., Inc., Montgomery App. No. 21164, 2006-Ohio-2364, at ¶ 16:

Assuming, for the sake of argument, that [defendant] had made an appearanceentitling it to notice, its failure to receive such notice of the hearing on the motionfor default judgment made the judgment voidable, but not void. See Miamisburg

Motel, 88-0hio App.3d 117 at 118 (affirming the trial court's refusal to vacatejudgment because the motion to vacate was untimely, notwithstanding the lack ofnotice of the application for default judgment).

Therefore, even if the Court of Appeals did fail to follow its precedent in Miamisburg Motel, any

error was harmless error, since Defendants' motion to vacate was untimely and they have not

challenged that decision by the Court of Appeals in their Memorandum.

However, the Court of Appeals did not fail to follow its precedent in Miamisburg Motel,

since the facts in that case are clearly distinguishable from those in this matter. As the Court of

Appeals noted on p. 10 of their Opinion: "While the bank had made no formal filings, counsel

for the bank phoned counsel for Miamisburg Motel and expressed an intent to defend the suit and

also requested an extension of time to file an answer to the complaint." Moreover, plaintiff

Miamisburg Motel's counsel agreed to the extension of time to respond to the complaint and

even wrote a letter to defendant bank's counsel mentioning it, but just nine days after mailing the

letter, plaintiff's counsel moved for default judgment, without serving defendant bank or its

counsel. Miamisburg Motel at pp. 120 & 121.

Contrast those facts to this matter, wherein the Court of Appeals noted at p. 7 of their

Opinion that:

Attached to the "Motion in Opposition" is the Affidavit of Richard Heil, whichprovides in part as follows: "Attached hereto as Exhibit D are filed copies of allof my correspondence to and from attorney Miguel Pedraza in this matter,consisting of attorney Pedraza's one and only letter to me, dated February 28,2008, in which he invited settlement, my letter to him of April 2, 2008, presenting

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Plaintiffs settlement demand, and my follow-up letter to him of May 23, 2008, inwhich I acknowledge receiving no response to my settlement demand letter or mytwo follow-up phone calls, and advise him that if I do not receive a response tothis letter, I will assume that David McCarty has no interest in settling this matterand proceed with my lawsuit. I have not received any further response fromattorney Pedraza in this matter. In attorney Pedraza's letter to me, he notes thatDavid McCarty has not yet been served with a summons and complaint. In atelephone conversation I had with Attorney Pedraza, after my receipt of his letter,I asked him if he would accept service for the McCarty's and their Corporation,ABA of Tampa, Inc., but he was unwilling to do so. In the filed copy of my May23, 2008 letter to attorney Pedraza, my note to Gary Gorby notes my many failedattempts to serve the McCarty's and recommends that he hire a professionalprocess server in Tampa, Florida."

The Court of Appeals also noted that after multiple unsuccessful attempts, the Defendants were

finally served on August 27, 2008, and one year and five months later, on January 22, 2010,

Gorby filed his Motion for Default Judgment against Defendants [Opinion at p. 4]. Under these

facts, the Court of Appeals concluded that "Pedraza was unresponsive to Heil" [Opinion at p.

131. Accordingly, the Court of Appeals correctly found that Defendants failed to appear and did

notexpress "a clear purpose to defend the suit," such that Defendants' appearance could not be

deemed under Miamisburg Motel, and it was proper for Gorby not to serve Defendants or

Pedraza with Gorby's Motion for Default Judgment.

Clearly, the Court of Appeals would not want to extend the application of its decision in

Miamisburg Motel to these facts. This is particularly so, when you consider that Miamisburg

Motel was a split decision, with Judge Grady stating in his concurring opinion that he would hold

that: "A party has appeared for purposes of Civ.R.55(A) if the party has responded to the

assertion of a claim against it by submitting itself to the jurisdiction of the court in which the

claim has been filed." Miamisburg Motel at p. 130. Judge Young, in his concurring opinion,

held that: "... I believe we should limit the doctrine of appearance by communication between

counsel without an actual filing in court to cases where the aggrieved party, or its counsel, have

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been misled, unfairly or by accident, into a default situation by the counsel for the plaintiff."

Miamisburg Motel at p. 133. In the case at bar, Defendants were certainly not misled into a

default situation, where the undersigned counsel's letter of May 23, 2008 to Pedraza advised him

that if I do not receive a response, I will assume that McCarty has no interest in settling this

matter and proceed with my lawsuit, and Defendants were not served until two months thereafter

and Gorby's Motion for Default Judgment was not filed until one year and five months after that.

In addition, the Court of Appeals held that p. 9 of their Opinion that: "`The purpose of Civ.R.

55(A) is to prevent a defendant from employing inaction or delay as a litigation strategy in order

to avoid or defeat a plaintift's claim for relief,"' quoting Med-Care Convalescent Supply, Inc. v.

Grafton Associates (March 31, 1995), Montgomery App. Nos. 14587, 14648, unreported.

Therefore, the Court of Appeals would not want to endorse the Defendants' litigation strategy of

inaction and delay in this matter by extending the application of its decision in Miamisburg

Motel to these Defendants.

Second, Defendants claim that the Court of Appeals failed to follow its precedent in

Baker v. Schuler, Clark App. No. 02CA0020, 2002-Ohio-5386, holding that the right to

arbitration is a meritorious defense for purposes of Civ.R. 60(B). The Court of Appeals on p. 17

of their Opinion reviewed the pertinent facts in Baker as follows:

... In Baker, the plaintiffs moved for default judgment against WashingtonSquare, one of four defendants, 52 days after filing their complaint, and defaultjudgment was entered seven days later. Counsel for the remaining defendants,with whom plaintiff had entered into a stipulation agreeing to extend the date bywhich responsive pleadings were due, presented evidence that the stipulatedextension of time applied to all four defendants. Counsel had moved to enforcethe arbitration agreement between tTie p arntit'f an3 allTour-defe-ndants prior to- fheexpiration of the extension of time. The trial court vacated the default judgment.In affirming the trial court's decision and overruling Appellant's first assignederror, namely that the court erred in setting aside the default judgment, we noted,"Washington Square demonstrated that its counsel represented it as well as theother defendants in the joint stipulation, and that counsel for the Bakers was

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aware of that fact. Omission of Washington Square from the `defendants' whowere identified in the stipulation was clearly a mistake on its counsel's part. Hemoved to vacate the default judgment promptly upon learning of it. And,Washington Square's right of arbitration was a meritorious defense in law to theBakers' claims for relief." [Baker, at] ¶ 23.

The Court of Appeals went on to hold on pp. 17 & 18 of their Opinion that:

[Defendants] quote Baker for the proposition that "R.C. 2711.02(B) requires acourt to stay a trial pending the outcome of arbitration." Id., at ¶ 27. Baker and

the matter herein, however, are procedurally distinct, in that the defendants in

Baker moved the court to enforce the arbitration agreement between the parties.R.C. 2711.02(B) provides, "If any action is brought upon any issue referable toarbitration under an agreement in writing for arbitration, the court in which theaction is pending, upon being satisfied that the issue involved in the action isreferable to arbitration under an agreement in writing for arbitration, shall on

application of one of the parties stay the trial of the action until the arbitration ofthe issue has been had in accordance with the agreement, provided the applicantfor the stay is not in default in proceeding with arbitration." (Emphasis added bythe Court). By the plain language of the statute, it is a party's application for staythat triggers the relief that R.C. 2711.02(B) authorizes. R.C. 2711.02(B) has noapplication to our analysis herein; Defendants did not apply for a stay pendingarbitration pursuant thereto until after the trial court vacated the default judgment(to which Gorby was entitled).

As held by the Court of Appeals, Baker is procedurally distinct from the matter at hand.

Unlike the defendants in Baker, the defendants herein failed to apply to the trial court for a stay

pending arbitration, as required by R.C. 2711.02(B), until after the trial court had properly

granted Default Judgment to Gorby. Therefore, the Court of Appeals' holding in Baker has no

application to Defendants, who waived their right to arbitration and cannot assert it as a

meritorious defense in support of their Civ.R. 60(B) motion for relief, and the Court of Appeals

did not fail to follow its precedent in Baker as alleged by the Defendants.

Third, and finally, Defendants claim at p.10 of their Memorandum that the Court of

Appeals failed to follow its precedent, asserting "that a Trial Court must refer to arbitration

disputes arising under a contract which includes a compulsory arbitration clause." Defendants

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do not cite any law for this precedent in their Memorandum, thereby making no showing that the

Court of Appeals failed to follow its precedent in this regard.

In fact, under our facts, the law does not support Defendants' assertion "that a Trial Court

must refer to arbitration disputes arising under a contract which includes a compulsory

arbitration clause." After Defendants ignored the cease and desist letters of Gorby's counsel and

persisted in operating their competing insurance agency in violation of the Non-Competition

Agreement, Gorby did not have to seek arbitration, while Defendants were stealing back the

clients they recently sold to Gorby for $350,000.00. Gorby was within his rights to file suit to

obtain injunctive relief from the trial court to promptly cease the operation of Defendants'

competing insurance agency. This Court has recognized and held that: "`Notwithstanding the

arbitrability of the parties' dispute, the Court has the authority to grant preliminary injunctive

relief to preserve the status quo ... ."' State ex rel. CNG Financial Corp. v. Nadel, I 11 Ohio

St.3d 149, 152, 2006-Ohio-5344, ¶ 17, quoting Danieli & C. Officine Meccaniche S.p.A. v.

Morgan Constr. Co. (D.Mass.2002), 190 F.Supp.2d 148, 154. Moreover, the matter properly

proceeded in the trial court through judgment, as none of the parties moved for arbitration, as

required by R.C. 2711.02(B). Trinity Health Sys. v. MDX Corp., 180 Ohio App.3d 815, 2009-

Ohio-417, ¶¶ 30-32. Thus, the Court of Appeals did not fail to follow its precedent or the law in

this regard.

CONCLUSION

For the reasons discussed above, this case does not involve matters of public and great

general interest, and Gorby requests that this Court decline to accept jurisdiction in this case.

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Respectfully submitted,

Martin, Browne, Hull & Harper, P.L.L.Richard F. Heil, Jr. (#0033661)

Counsel for Plaintiff-AppelleeGary R. Gorby & Associates, LLC

CERTIFICATE OF SERVICE

I certify that a copy of this Memorandum in Opposition to Jurisdiction was sent by

ordinary U.S. mail to the following individuals at the address indicated on the 19th day of

September, 2011:

Daniel C. Harkins, Esq.Mark D. DeCastro, Esq.Harkins & Associates333 North Limestone Street, Suite 203Post Office Box 1125Springfield, Ohio 45501-1125

I ti 0C?J^ I. ^Richard F. Heil, Jr. (#0033661)Martin, Browne, Hull & Harper, P.L.L.

Counsel for Plaintiff-AppelleeGary R. Gorby & Associates, LLC

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