Clapp v. Mueller Electric Co.

835 N.E.2d 757, 162 Ohio App. 3d 810, 2005 Ohio 4410
CourtOhio Court of Appeals
DecidedAugust 25, 2005
DocketNo. 85447.
StatusPublished
Cited by5 cases

This text of 835 N.E.2d 757 (Clapp v. Mueller Electric Co.) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Clapp v. Mueller Electric Co., 835 N.E.2d 757, 162 Ohio App. 3d 810, 2005 Ohio 4410 (Ohio Ct. App. 2005).

Opinion

*813 Christine T. McMonagle, Judge.

{¶ 1} Plaintiff-appellee, Harry S. Clapp, is the former chief financial officer (“CFO”) of defendant-appellant, Mueller Electric Company (“Mueller Electric” or “Mueller”). After his employment was terminated, Clapp sued defendants-appellants, Mueller Electric, Brighton Manor Corporation (“Brighton Manor”), and E. Scott Emerson (the owner of both companies), for monies owed him as a result of services he provided to Mueller and Brighton Manor for which he was not paid. Clapp’s complaint asserted claims for breach of contract, unjust enrichment, and promissory estoppel; he subsequently dismissed the promissoryestoppel claim.

{¶ 2} Clapp, a certified public accountant (“CPA”), testified at trial that he was hired as Mueller’s CFO in November 1996 at an annual salary of $65,000. In November 1997, Emerson terminated Mueller’s chief executive officer (“CEO”) and asked Clapp to perform the CEO duties, in addition to his duties as CFO, while Emerson searched for a permanent CEO. Contemporaneous with his appointment as CEO, Clapp received a raise and a bonus. In November 1998, after his annual performance review, Emerson increased Clapp’s salary to $78,000 per year and gave him a 30 percent bonus. In November 1999, Emerson again reviewed Clapp’s performance, increased his salary to $95,000 per year, and gave him a 30 percent bonus. From the time he was hired by Mueller until December 1999, Clapp performed work only for Mueller.

{¶ 3} Sometime in 1997 or 1998, Emerson terminated the controller of Brighton Manor, which owns and operates four hotels in northern Ohio, and hired an accounting firm to oversee the financial operations of the hotels. In late 1999, however, Emerson became aware that the accounting firm had been having difficulty handling the bookkeeping and accounting functions of Brighton Manor. Emerson approached Clapp and asked him to review the books and bookkeeping procedures and advise him of the extent of the problems.

{¶ 4} Over a two-week period in January 2000, Clapp familiarized himself with the operation of Brighton Manor. He learned that no bank reconciliations had been performed in the previous 18 months for any of the four hotels owned and operated by Brighton Manor. He also discovered that the controllers working at the various hotels were not properly trained or experienced and that there were not proper bookkeeping procedures in place at any of the four hotels. In short, according to Clapp, “there was a complete collapse of the accounting system.”

{¶ 5} Clapp reported to Emerson that Brighton Manor’s books were $800,000 out of balance. He further advised Emerson that to bring the books in balance, hundreds of thousands of transactions had to be traced, but the task would be very complicated because all the transactions from the four hotels were intermin *814 gled in one joint bank account. Clapp further advised Emerson that accounting procedures would have to be designed and implemented and the accounting staff at the hotels would need to be trained or replaced.

{¶ 6} Clapp and Emerson then discussed various options for solving the problems. Clapp advised Emerson that he could either hire an outside accounting firm to create a new accounting system and train new personnel at each of the four hotels at a cost of approximately $200,000 or hire an experienced CFO for Brighton Manor, at an approximate salary of $125,000.

{¶ 7} Instead, in February 2000, Emerson approached Clapp and asked him if he would “be interested in taking on this task and coming into this organization and fixing these problems.” Clapp testified that he had told Emerson that taking on the additional duties at Brighton Manor would involve a lot more work and had asked him what he would be compensated for these substantial extra duties. According to Clapp, Emerson told him:

{¶ 8} “Harry, if you get this, if you come in and do what you tell me you can do, if you fix this problem, I will — if you handle the books of Brighton for me and do what you tell me you can do, I will pay you fairly.”

{¶ 9} From February 2000 until he was terminated in May 2001, Clapp continued to perform his CEO and CFO duties at Mueller Electric, and, additionally, he worked as CFO at Brighton Manor. Clapp testified that in addition to his normal hours at Mueller Electric, he spent an average of 30 hours per week in the evenings and on weekends designing and implementing a new accounting and bookkeeping system for Brighton Manor. Further, he hired and trained personnel to operate the new system and supervised the individuals who were working at balancing the books. Clapp initially gave Emerson frequent updates regarding his progress, but after Emerson told him that he was not interested in Clapp’s schedule, he gave Emerson less frequent updates.

{¶ 10} By February 2001, Clapp had completed the task of balancing Brighton Manor’s books and implementing a new bookkeeping system. When he approached Emerson regarding the promised payment, however, Emerson told Clapp that he would pay him only after an outside accounting firm reviewed the procedures that Clapp had put into place and “signed off on it.” After the accounting firm completed its audit and signed off on Clapp’s work, Clapp again approached Emerson regarding payment. This time, Emerson told Clapp that he wanted an outside consultant by the name of Ala Deen to review Clapp’s work.

{IT 11} Although Clapp correctly surmised that Emerson had actually hired Deen to replace him at Brighton Manor, Clapp advised and trained Deen regarding the procedures he had spent the past year implementing.

*815 {¶ 12} On May 1, 2001, after Clapp had completed Deen’s training, Emerson advised Clapp that he was terminated effective immediately. In light of Clapp’s senior position at Mueller, however, Emerson asked Clapp to report on various issues and strategies, including the company’s union, insurance, and vendor contracts, and the company’s decision to move its Cleveland operation to China. Because his employment had been terminated, Clapp informed Emerson that he wanted severance pay in exchange for the reports. Clapp testified:

{¶ 13} “Well, at this point, I had been burned a couple times. I was finally waking up a little bit. And I said: Look it, let’s talk about a severance package first.

{¶ 14} “So we started talking about a severance package. And I very clearly, right up front, I said: Look it, I’m looking for a six-month package. * * * The bottom fine is, I said: Scott, I expect a six-month. Is that what we’re talking about? He nodded his head. That’s where we left it at.”

{¶ 15} Thereafter, Clapp spent several days developing a list of key issues regarding Mueller Electric. He then met with Emerson for several hours regarding the report. At the conclusion of the meeting, Clapp asked Emerson about his severance package. Emerson “hemmed and hawed” and then told Clapp that he had not yet had time for his lawyers to draw up the agreement but that it would be forthcoming.

{¶ 16} Over the next several days, Clapp called Emerson several times. He did not speak with Emerson directly, but left several messages for him on his voicemail.

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Bluebook (online)
835 N.E.2d 757, 162 Ohio App. 3d 810, 2005 Ohio 4410, Counsel Stack Legal Research, https://law.counselstack.com/opinion/clapp-v-mueller-electric-co-ohioctapp-2005.