Burdick v. Burd Brothers, Inc.

2019 Ohio 1593

• Court: Ohio Court of Appeals
• Decided: April 29, 2019
• Docket: CA2018-07-054
• Status: Published

Opinion

[Cite as Burdick v. Burd Brothers, Inc., 2019-Ohio-1593.]

IN THE COURT OF APPEALS

TWELFTH APPELLATE DISTRICT OF OHIO

CLERMONT COUNTY

R. SHAUN BURDICK, et al., :

Appellants, : CASE NO. CA2018-07-054

: OPINION - vs - 04/29/2019 :

BURD BROTHERS, INC., et al, :

Appellees. :

CIVIL APPEAL FROM CLERMONT COUNTY COURT OF COMMON PLEAS Case No. 2016-CVH-1082

Becker & Cade, Howard D. Cade, III, 526-A Wards Corner Road, Loveland, Ohio 45140, for appellants

Keating Muething & Klekamp, Louis F. Gilligan, One East Fourth Street, Suite 1400, Cincinnati, Ohio 45202, for appellees

RINGLAND, P.J.

{¶ 1} Plaintiffs, Shaun and Sheri Burdick (collectively, "the Burdicks"), appeal the

decision of the Clermont County Court of Common Pleas, which dismissed their claims

against Burd Brothers, Inc. and other defendants. For the reasons described below, this

court affirms the decision of the lower court. Clermont CA2018-07-054

{¶ 2} Burd Brothers, Inc. is a family-owned regional trucking business.1 Shaun

Burdick and his brother, Tyler Burdick, founded the company in 1993. However, Shaun left

the business and relinquished his ownership interest within a few months of the founding.

Later, Shaun and Tyler's father, Richard Burdick, joined the business. Richard eventually

became the company's chief executive officer and received an ownership interest.

{¶ 3} Shaun returned to work at Burd Brothers in 2000. He managed the company's

finances and eventually became vice president and chief financial officer. The company

awarded Shaun stock in 2009. The company also awarded stock to other members of the

Burdick family, including Sheri, who is Shaun's wife, Tyler and Richard's respective wives,

and Richard's daughter, Erin. Of the seven shareholders, only Shaun, Tyler, and Richard

were ever employed by the company. At some point, the company began paying for

personal vehicles, vehicle insurance, and some ancillary vehicle expenses, for Shaun, Tyler,

Richard, each of their wives, and Erin ("the vehicle benefits").

{¶ 4} In November 2014, the company terminated Shaun's employment. The

company instructed Shaun to return "all keys, cell phones, vehicles, and corporate records * *

*." In December 2014, Shaun wrote to the company, stating: "[m]y employment included my

wife's vehicle as part of the employment compensation package and my vehicle was to be

transferred to me personally at the end of the lease * * *. Please transfer the title of the

vehicles [to] me personally and mail the titles to my home address that you have on file."

{¶ 5} In May 2015, Shaun's attorney wrote to the company. Counsel advised that

Shaun was (1) requesting an opportunity to view the company's books and conduct an

accounting, (2) inquiring whether the company had defaulted on debt obligations of which

1. Burd Brothers, Inc. is one of several companies involved in the family business. Burd Brothers, Inc. manages the business operations. The other companies – which are all managed and owned by members of the Burdick family – control different aspects of the business, e.g., one company exclusively manages freight brokering and another leases vehicles. -2- Clermont CA2018-07-054

Shaun may be personally liable, and (3) investigating a claim for wrongful termination "as well

as for the monies and benefits made available to other shareholders and members of the

Burd Brothers companies."

{¶ 6} The company responded through counsel within a few weeks. Regarding the

request for an accounting, counsel wrote that Shaun had been the chief financial officer and

therefore "was fully informed about the financial books and records as well as tax returns."

Counsel stated that Shaun had been provided with tax returns "as well as receiving his K-1s."

Counsel further stated that the company was not delinquent on its debt obligations. Counsel

responded to the potential wrongful termination claim by asserting that the company had

properly terminated Shaun for failure to perform job duties and acts of insubordination.

Counsel ended the letter by stating "[i]f you have any further questions or need any additional

information, please feel free to contact me."

{¶ 7} No further communications took place. 14 months later, in August 2016, the

Burdicks filed suit against Burd Brothers, Inc., two of the related limited liability companies,

Richard and Tyler and their respective wives, and Erin.

{¶ 8} The Burdicks asserted a claim for wrongful termination. They also demanded

an accounting of the company pursuant to their rights as shareholders under R.C.

1701.37(C) and for attorney fees and costs related to obtaining the accounting. Other claims

asserted included breach of fiduciary duty and minority shareholder oppression. The

defendants answered and counterclaimed, alleging that Shaun had converted company

assets and had tortuously interfered with the company's business interests after his

termination.

{¶ 9} Prior to trial, the Burdicks agreed to dismiss some of their claims and the

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defendants agreed to dismiss their counterclaims.2 Following this partial dismissal of claims,

the issues at trial were narrowed to whether the Burdicks were entitled to (1) attorney fees

and costs incurred in seeking the accounting and, (2) monetary damages representing the

value of alleged shareholder benefits, i.e., the vehicle benefits, which were denied to the

Burdicks after Shaun's termination.

{¶ 10} The matter proceeded to a bench trial. The Burdicks testified and called

Richard and Tyler to testify. Following the Burdicks' case-in-chief, the defendants moved for

dismissal.

{¶ 11} The court granted the defendants' motion. Regarding the claim for attorney

fees and costs, the court found that the Burdicks had no statutory right to attorney fees. The

court found that the Burdicks were not otherwise entitled to attorney fees because the

company had not acted in bad faith. The court noted that Shaun chose not to respond to the

company's invitation to engage in further communications concerning his request for an

accounting and found it reasonable for the company's counsel to believe the issue had been

resolved. The court also found that Shaun's letter demanding the accounting was deficient

under R.C. 1701.37(C) for failing to state a specific purpose for the request.

{¶ 12} With respect to the vehicle benefits, the court found that the Burdicks had not

proven, by a preponderance of the evidence, that the vehicle benefits were shareholder

benefits. The court determined that the evidence more reasonably supported the finding that

the vehicle benefits were part of an employee compensation package provided by the

company to Shaun, Tyler, and Richard. The court specifically referred to Shaun's letter in

which he described his and Sheri's vehicles as part of his employment compensation

2. The defendants provided the Burdicks with the requested corporate records during discovery, which effectively mooted the claim for an accounting. Shaun obtained a higher paying job, which diminished the value of his wrongful termination claim. -4- Clermont CA2018-07-054

package.

{¶ 13} The Burdicks assign one error for our review:

{¶ 14} THE TRIAL COURT ERRED IN GRANTING APPELLANT'S MOTION TO

DISMISS.

{¶ 15} The Burdicks contend that the court erred in dismissing their claim for attorney

fees and costs and in finding that they failed to prove that the vehicle benefits were

shareholder benefits. In ruling on a motion for dismissal following the plaintiff's case in a

bench trial, the trial judge, as the trier of fact, weighs the evidence and determines whether

the plaintiff has proven the necessary facts by the appropriate evidentiary standard. Civ.R.

41(B)(2); Ohio Valley Associated Builders & Contrs. v. Rapier Elec., Inc., 12th Dist. Butler

Nos. CA2013-07-110 and CA2013-07-121, 2014-Ohio-1477, ¶ 23. If the court finds that the

plaintiff failed to meet its burden of proof, then the trial court may enter judgment in the

defendant's favor. Ohio Valley at id. A trial court's ruling on a Civ.R. 41(B)(2) motion may

not be disturbed on appeal unless such judgment is "erroneous as a matter of law or against

the manifest weight of the evidence." Johnson v. Keith, 12th Dist. Clermont No. CA2012-04-

032, 2013-Ohio-451, ¶ 18.

{¶ 16} In a manifest weight analysis, the appellate court weighs the evidence and all

reasonable inferences, considers the credibility of witnesses and determines whether, in

resolving conflicts in the evidence, the finder of fact clearly lost its way and created such a

manifest miscarriage of justice that the judgment must be reversed and a new trial ordered.

Ohio Valley at ¶ 32. In general, this court must defer to the factfinder with respect to

credibility determinations. Id.

Attorney Fees and Costs

{¶ 17} The Burdicks argue that the court erred in dismissing their claim for attorney

fees and costs on the basis that Shaun failed to properly request an accounting pursuant to -5- Clermont CA2018-07-054

the language set forth in R.C. 1701.37(C).3 However, the company did not reject Shaun's

request for records on this basis and therefore whether Shaun included the proper statutory

language in his letter is irrelevant to the issue of whether the Burdicks would be entitled to

attorney fees and costs.

{¶ 18} Ohio follows the "American Rule," under which a prevailing party generally may

not recover their attorney fees and costs from the opposing party. State ex rel. Gmoser v.

Village at Beckett Ridge Condominium Owners' Assn., 12th Dist. Butler No. CA2016-02-035,

2016-Ohio-8451, ¶ 44. However, attorney fees may be awarded when a statute or an

enforceable contract specifically provides for the award of attorney fees, or when the

prevailing party demonstrates the other party has acted in bad faith. Id.

{¶ 19} R.C. 1701.37(C) contains no attorney fee-shifting provision. The Burdicks did

not claim that they were entitled to attorney fees by virtue of a contract with the company.

Thus, the Burdicks would necessarily need to demonstrate that the company acted in bad

faith. In general, "bad faith" has been defined as "'that which imports a dishonest purpose

and implies wrongdoing or some motive of self-interest.'" Master Chem. Corp. v. Inkrott, 55

Ohio St. 3d 23, 28 (1990), quoting Smith v. Halverson, 273 N.W. 2d 146, 150-151 (S.D.

1978).

{¶ 20} The evidence at trial revealed that Shaun made a written demand for corporate

records to conduct an accounting. In responding, the company's counsel suggested that

there was no need to produce the requested documents because Shaun, as chief financial

officer, would have been privy to the company's financial information. Moreover, counsel

stated that Shaun had been provided with company tax returns and would receive schedule

3. R.C. 1701.37(C) provides, in relevant part: "[a]ny shareholder of the corporation, upon written demand stating the specific purpose thereof, shall have the right to examine in person or by agent or attorney at any reasonable time and for any reasonable and proper purpose, the * * * books and records of account * * *." -6- Clermont CA2018-07-054

K-1s.

{¶ 21} The Burdicks claim that this response was an effective denial. However,

counsel did not state that the company would not provide the documents and expressly

invited additional discussion. Shaun chose not to accept this invitation, apparently because

he did not believe that the company would ever provide the records willingly. The Burdicks

then filed suit, over a year later. Shaun testified that part of this delay was so that he could

set aside enough money to pay for the litigation.

{¶ 22} This court concludes that the lower court did not clearly lose its way in finding

that the Burdicks failed to establish bad faith. The Burdicks' failure to engage in any further

communications following the company's letter would have reasonably indicated to the

company that the matter was resolved. Thus, there was no evidence that the company ever

acted with a dishonest purpose or engaged in any wrongdoing. The court's decision not to

award the Burdicks reimbursement for attorney fees and cost is not legally erroneous and is

supported by the weight of the evidence.

Alleged Shareholder Benefits

{¶ 23} The Burdicks argue that the court erred in its finding that they did not prove that

the vehicle benefits were shareholder benefits. Initially, the Burdicks contend that the court

erred in failing to place the burden on the defendants to prove that the vehicle benefits were

fair and reasonable. However, whether the benefits were fair and reasonable was not an

issue tried in the proceedings below and is irrelevant to the issue of whether the benefits

were employment compensation or a shareholder benefit.

{¶ 24} The court found that the greater weight of the evidence indicated the vehicle

benefits were an employment benefit. Upon review, some competent and credible evidence

supports this finding.

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{¶ 25} Shaun was the company's chief financial officer and should have known how

the company structured compensation to its employees and benefits to its shareholders. In a

letter to the company sent after his termination, Shaun referred to both his vehicle and his

wife's vehicle as part of his employment compensation package: "[m]y employment included

my wife's vehicle as part of the employment compensation package and my vehicle was to

be transferred to me personally at the end of the lease * * *. Please transfer the title of the

vehicles [to] me personally and mail the titles to my home address that you have on file." On

Shaun's cross-examination, the following exchange occurred:

Counsel: So you specifically indicated there that your wife having a car and you having a car was part of your employment compensation package, correct?

Shaun: That's the way it reads.

Counsel: And you meant what you said, didn't you?

Shaun: Normally yes.

Counsel: Okay. All right. And that was the situation with Tyler and his wife, too, as you knew. That was part of his compensation package?

Shaun: No.

Counsel: It wasn't part of his compensation package?

Shaun: Shareholders – if you were a shareholder, you had cars.

Counsel: It wasn't based on being a shareholder. It was based on being an employee, wasn't it?

Shaun: You could say that.

Counsel: Well, why didn't you say that in this letter? This is because you've got a lawsuit now –

Shaun: Yeah.

Counsel: – as a shareholder is why you're saying this, but until you got in this lawsuit and got legal counsel, it was based on a – it was compensation for employment, correct?

-8- Clermont CA2018-07-054

Shaun: Correct.

{¶ 26} Shaun essentially conceded that his view of the nature of the vehicle benefits

had changed since the time he was terminated and filed the lawsuit. In this regard, the court

indicated that it found Shaun's pre-lawsuit letter more credible than his in-court testimony.

This court defers to the lower court with respect to credibility determinations. Ohio Valley at ¶

32. Consequently, this evidence would support the conclusion that the vehicle benefits were

employment benefits and that the respective wives of Shaun, Tyler, and Richard received the

vehicle benefits because their husbands were company employees.

{¶ 27} However, Erin was never an employee of the company and did not have a

spouse who was a company employee. Given the lack of any other explanation, Erin's

receipt of vehicle benefits does suggest a shareholder benefit. Nonetheless, it is conceivable

that the vehicle benefit bestowed upon Erin was the result of Tyler's or Richard's employment

compensation package. This issue was not developed at trial. All that was established was

that Erin received vehicle benefits and had never been formally employed by the company.

{¶ 28} In a manifest weight analysis this court must find that the trial court "clearly lost

its way," and the evidence weighs heavily against the findings of the court. In this case, the

evidence does not weigh heavily towards either conclusion concerning the nature of the

vehicle benefits. This observation is consistent with the trial court's finding that the Burdicks

failed to prove, by a preponderance of the evidence, that the vehicle benefits were a

shareholder benefit.

{¶ 29} Based on the foregoing, this court concludes that the trial court did not err in

dismissing the Burdicks' claim for attorney fees and costs and for damages for the alleged

deprivation of shareholder benefits. This court overrules the Burdicks' sole assignment of

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error.

{¶ 30} Judgment affirmed.

S. POWELL and M. POWELL, JJ., concur.

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