COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 70816 L.M. LIGNOS ENTERPRISES, ET AL., : : Plaintiffs-Appellants : : JOURNAL ENTRY vs. : and : OPINION BEACON INSURANCE COMPANY OF : AMERICA, : : Defendant-Appellee : DATE OF ANNOUNCEMENT OF DECISION : FEBRUARY 13, 1997 CHARACTER OF PROCEEDING : Civil appeal from : Common Pleas Court : Case No. 302134 JUDGMENT : AFFIRMED. DATE OF JOURNALIZATION : _______________________ APPEARANCES: For plaintiffs-appellants: Peter J. Krembs Margaret E. Amer HERMANN, KAHN & SCHNEIDER 1301 E. Ninth Street Suite 500 Cleveland, Ohio 44114 For defendant-appellee: Murray K. Lenson Lawrence F. Peskin Michael A. Pohl ULMER & BERNE Bond Court Building 1300 E. Ninth Street No. 900 Cleveland, Ohio 44113 -2- NAHRA, J.: Appellants, L.M. Lignos Enterprises, Louis Lignos & Sons, Inc., and M.L. Lignos, Inc., appeal the dismissal of their complaint for further relief in an action for declaratory judgment pursuant to R.C. 2721.09. In their complaint, appellants asked the court to determine their right to collect attorney fees for their defense of a declaratory judgment action filed and lost by appellee, Beacon Insurance Company of America. This appeal is from the grant of appellee's motion for judgment on the pleadings pursuant to Civ.R. 12 (C), therefore, the record upon appeal consists of the pleadings in the action. In 1992, appellants were sued by the estate of a former employee alleging that they committed an employer intentional tort. In 1993, appellee, appellant's insurer, brought an action for declaratory judgment to determine whether it had a duty to defend appellants. Appellants made several counterclaims for declaratory judgment, one of which asked the court to declare them entitled to reimbursement for the attorney's fees and costs expended in defense of the declaratory judgment action. The trial court declared that appellee had a duty to defend appellants, without ruling on the counterclaim. This court declined jurisdiction to hear the appeal because appellants' counterclaim remained unresolved. Thereafter, appellants voluntarily withdrew their counterclaim pursuant to Civ.R. 41(A). This court then affirmed the trial court's determination that -3- appellee had a duty to defend appellants in Beacon Ins. Co. of America v. Kleoudis (1995), 100 Ohio App.3d 79, 652 N.E.2d 1. Appellants have one assignment of error, which reads: THE TRIAL COURT ERRED IN GRANTING DEFENDANT BEACON INSURANCE COMPANY OF AMERICA'S MOTION FOR JUDGMENT ON THE PLEADINGS. The issue to be decided in this case is one of procedure. Appellee argues that because appellants voluntarily withdrew a compulsory counterclaim, they are precluded from litigating the claim. Civ.R. 13(A) provides in pertinent part that: A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction. *** This rule has been held to require a defendant to assert any counterclaim which he may have arising out of the transaction which is the subject matter of the complaint and that the defendant's failure to do so constitutes res judicata. Rettig Enterprises, Inc. v. Koehler (1994), 68 Ohio St.3d 274, 626 N.E.2d 99; Quintus v. McClure (1987), 41 Ohio App.3d 402, 536 N.E.2d 22. This bar operates even though a party has voluntarily withdrawn a compulsory counterclaim. Stern v. Whitlach (1993), 91 Ohio App.3d 32, 631 N.E.2d 680, jurisdictional motion overruled (1994), 68 Ohio St.3d 1447. -4- A counterclaim is compulsory under Civ.R. 13(A) where the claim exists at the time of the serving the pleading and where the claim arises from the same transaction or occurrence that is the subject matter of the opposing claim. Rettig, 68 Ohio St.3d at 277, 626 N.E.2d at 102, citing Geauga Truck & Implement Co. v. Juskiewicz (1984), 9 Ohio St.3d 12, 14, 457 N.E.2d 827, 829. The logical relation test may be used to determine whether a claim arose out of the same transaction or occurrence. Rettig, supra, syllabus paragraph 2. We find that appellants' counterclaim for the reimbursement of attorneys fees is a claim which "arises out of the transaction or occurrence that is the subject matter of the opposing party's claim" and is therefore a compulsory counterclaim. As noted in Aetna Life Ins. Co. v. Little Rock Basket Co. (1953), 14 F.R.D. 381, 382 "in an action for declaratory judgment of nonliability upon an insurance policy, the insured or beneficiary may, and in certain cases must, counterclaim upon the policy itself and set up what claims he may have thereon, including a claim for penalty and attorney's fee." The claim for fees arose solely out of appellee's bringing of the action for declaratory judgment. We find this to be logically related to the declaratory judgment action as its resolution would avoid duplication of effort and time by both parties as well as the courts. See, Rettig, supra, syllabus paragraph 2. Moreover, in a declaratory judgment action, an award of attorneys fees, if available, is at the discretion of the trial -5- court. Motorists Mut. Ins. Co. v. Brandenburg (1995), 72 Ohio St.3d 157, 648 N.E.2d 488, syllabus. Because we find that appellants' counterclaim was compulsory, the withdrawal of that claim operates as a bar to litigation. See, Stern v. Whitlach, supra. Accordingly, we overrule appellants' assignment of error and affirm the court's ruling on appellee's motion for judgment on the pleadings. -6- It is ordered that appellee recover of appellants its costs herein taxed. The court finds there were reasonable grounds for this appeal. It is ordered that a special mandate issue out of this court directing the Common Pleas Court to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. PORTER, P.J., and SPELLACY, J., CONCUR. JOSEPH J. NAHRA JUDGE N.B. This entry is an announcement of the court's decision. See App.R. 22(B), 22(D) and 26(A); Loc.App.R. 27. This decision will be journalized and will become the judgment and order of the court pursuant to App.R. 22(E) unless a motion for reconsideration with supporting brief, per App.R. 26(A), is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's announcement of decision by the .