Danziger v. Rieman

2020 Ohio 216, 143 N.E.3d 570

• Court: Ohio Court of Appeals
• Decided: January 24, 2020
• Docket: S-19-021
• Status: Published

Opinion

[Cite as Danziger v. Rieman, 2020-Ohio-216.]

IN THE COURT OF APPEALS OF OHIO SIXTH APPELLATE DISTRICT SANDUSKY COUNTY

Samuel R. Danziger Court of Appeals No. S-19-021

Appellant Trial Court No. 19-CV-128

v.

Kendall Rieman DECISION AND JUDGMENT

Appellee Decided: January 24, 2020

*****

Samuel R. Danziger, pro se.

Joseph R. Miller and Sarah S. Boudouris, for appellee.

PIETRYKOWSKI, J.

{¶ 1} Appellant, Samuel Danziger, appeals two judgments of the Sandusky

County Court of Common Pleas relative to his complaint for a preliminary and

permanent injunction against appellee, Kendall Rieman, President of Croghan

Bancshares, Inc. (“Croghan”). For the reasons that follow, we affirm. I. Facts and Procedural Background

{¶ 2} On February 7, 2019, appellant initiated the present matter by filing a

complaint against Stacy Cox, Corporate Secretary of the Board of Directors of Croghan.

Appellant subsequently amended the complaint to name appellee as the defendant. The

complaint sought a permanent and preliminary injunction to force Croghan to include

appellant’s two proxy proposals in its 2019 Proxy Statement, and to prevent Croghan

from having its annual meeting relative to the 2019 Proxy Statement until the matter was

resolved by the courts.

{¶ 3} On March 18, 2019, appellant moved for a preliminary injunction, seeking

to enjoin appellee from holding the annual meeting and from issuing the 2019 Proxy

Statement without appellant’s proxy proposals. Appellee opposed the motion on

March 29, 2019, arguing that the issue was moot because Croghan did include the proxy

proposals in its 2019 Proxy Statement. Alternatively, appellee argued that the motion

should be denied because appellant had failed to satisfy any of the four factors relevant to

issuing a preliminary injunction: (1) substantial likelihood of success on the merits,

(2) irreparable harm, (3) substantial harm to others, and (4) public interest. On the same

day, appellant filed his memorandum in support of his motion for preliminary injunction.

{¶ 4} On April 3, 2019, the trial court denied appellant’s motion. In its decision,

the trial court examined the four factors, and concluded that appellant failed to satisfy the

standard for issuing a preliminary injunction. Specifically, the trial court first found that

appellant was not likely to succeed on the merits because appellant has no legal right to

2. require Croghan to include his proxy proposals. Second, the court found that appellant

completely failed to demonstrate what harm would occur if the preliminary injunction

was not granted. Third, the court found that issuing a preliminary injunction could be a

burden to Croghan and its shareholders because appellant’s argument would impose

Securities and Exchange Commission (“SEC”) requirements on a non-SEC regulated

corporation. Finally, the court found that appellant presented no evidence to demonstrate

that the public interest would be better served if the injunction was ordered, and thus

declined to analyze that factor.

{¶ 5} Thereafter, on April 5, 2019, appellee moved to dismiss appellant’s

complaint pursuant to Civ.R. 12(B)(6) for failure to state a claim upon which relief could

be granted. Appellee argued that dismissal was appropriate because it was not legally

required to include appellant’s proxy proposals in its 2019 Proxy Statement.

Alternatively, appellee argued that appellant’s claims were moot because it nonetheless

included his proxy proposals in its 2019 Proxy Statement as evidenced by an affidavit

from appellee.

{¶ 6} On a parallel track, on April 11, 2019, appellant moved for the court to

revisit its April 3, 2019 denial of appellant’s motion for a preliminary injunction pursuant

to Civ.R. 60. In his memorandum in support, appellant argued that the matter must be

reexamined because although Croghan included his proxy proposals in its 2019 Proxy

Statement, it did not include them on the 2019 Proxy Cards. The trial court denied

appellant’s Civ.R. 60 motion on April 17, 2019.

3. {¶ 7} On April 22, 2019, the trial court granted appellee’s motion to dismiss “[f]or

the reasons stated in the Decision Denying [Appellant’s] Motion for a Preliminary

Injunction, the reasons and bases set forth in [Appellee’s] Motion to Dismiss, and for

good cause shown.”

{¶ 8} On May 2, 2019, appellant filed an “Omnibus Motion for Reconsideration of

Civ.R. 12(B)(6) Dismissal and Motion to Amend Complaint.” In his motion, appellant

argued that he attempted to amend his complaint on April 24, 2019, but his filing was

rejected by the clerk. The attached amended complaint was changed to reflect the still

outstanding dispute over whether appellant’s proxy proposals must be placed on

Croghan’s 2019 Proxy Cards. The trial court denied appellant’s omnibus motion on

May 16, 2019.

II. Assignments of Error

{¶ 9} Appellant has timely appealed the trial court’s April 17 and 22, 2019

judgment entries. Notably, appellant attempted to file an amended notice of appeal to

include the trial court’s May 16, 2019 judgment entry denying his omnibus motion, but

we struck his motion to amend his notice of appeal as untimely. Appellant now asserts

four assignments of error for our review:

I. The trial court erred to the prejudice of the Appellant by showing

an abject disregard toward Pro Se Appellant and Civ.R. 65(B)(2) wherein it

failed/refused to hold a Hearing tantamount to Appellant’s request in

4. Appellant’s Motion for Preliminary Injunction and in Appellant’s Motion

to Revisit.

II. The trial court was misguided on its Denial of Appellant’s

Motion for Preliminary Injunction in that Appellant would prevail on the

merits; the first of four crucial factors to be met for the issuance of a

Preliminary Injunction.

III. The trial court abused its discretion in reviewing evidence

introduced in Appellee’s Opposition to Motion for Preliminary Injunction

and thereafter not rolling over to a Civ.R. 56(B) Judgment which requires

Notice to All Parties, which was not given by the trial court.

IV. The trial court abused its discretion by not granting Appellant’s

Motion to Amend Complaint.

III. Analysis

{¶ 10} In his first and second assignments of error, appellant challenges the trial

court’s denial of his motion for a preliminary injunction. For ease of discussion, we will

begin with appellant’s second assignment of error.

{¶ 11} “The grant or denial of an injunction is solely within the trial court’s

discretion and, therefore, a reviewing court should not disturb the judgment of the trial

court absent a showing of a clear abuse of discretion.” Garono v. State, 37 Ohio St.3d

171, 173, 524 N.E.2d 496 (1988). An abuse of discretion connotes that the trial court’s

5. attitude is unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore, 5 Ohio

St.3d 217, 219, 450 N.E.2d 1140 (1983).

{¶ 12} In his second assignment of error, appellant argues that the trial court erred

in finding that appellant did not establish a likelihood of success on the merits. To be

entitled to a preliminary injunction, a plaintiff must show that “(1) there is a substantial

likelihood that the plaintiff will prevail on the merits, (2) the plaintiff will suffer

irreparable injury if the injunction is not granted, (3) no third parties will be unjustifiably

harmed if the injunction is granted, and (4) the public interest will be served by the

injunction.” Procter & Gamble Co. v. Stoneham, 140 Ohio App.3d 260, 267, 747 N.E.2d

268 (1st Dist.2000); Try Hours, Inc. v. Douville, 2013-Ohio-53, 985 N.E.2d 955, ¶ 20

(6th Dist.).

{¶ 13} The gravamen of appellant’s complaint in the trial court was that appellee

was required to include appellant’s proxy proposals in its 2019 Proxy Statement and

Proxy Cards. Appellant, however, acknowledges in his complaint that there is no Ohio

law requiring the inclusion of his proposals. Further, appellant acknowledges that

Croghan is not regulated by the SEC, and thus is not bound by their rules and regulations

regarding proxy proposals. Consequently, appellant’s claims have no statutory basis.

Instead, appellant nominally asserts principles of equity and common law rights.

{¶ 14} In support of his argument, appellant relies on Carter v. Portland General

Elec. Co., 362 P.2d 766 (Or.1961). In that case, the plaintiffs were a group of

shareholders that sued to require the defendant corporation to include their objections to a

6. dam project in the defendant’s solicitation of proxies. Appellant cites the reasoning of

the Oregon Supreme Court that such inclusion should not be required because the dam

project involved extensive engineering, economic, financial, and political considerations,

and thus it was impossible to abbreviate the data to the point that any communication

with the stockholders could have resulted in any knowing or sensible vote by the

stockholders. The Oregon Supreme Court contrasted that fact with a separate case, Secs.

and Exchange Comm. v. Transamerica Corp., 163 F.2d 511 (3d Cir.1947), which

involved application of SEC regulations, and which pertained to matters to which

stockholders could give reasonably intelligent answers. Carter at 407. Applying this

reasoning, appellant concludes that because the issues in his proposals are simple and

readily understood—gender diversity and term limits applicable to the board of

directors—they must be included in the Proxy Statement and Proxy Cards.

{¶ 15} Importantly, the language cited by appellant in Carter is a secondary

reason why the court denied the plaintiffs’ request. The first reason set forth in Carter—

which the trial court relied on in dismissing appellant’s motion for preliminary

injunction—was that “the imposition of the SEC rules to Oregon corporations not subject

thereto could not be made by a court; even in respect to this particular case.” Id. at 404.

The court identified the plaintiffs’ position as asking the court to “adopt the spirit of the

SEC regulations and hold that the matter plaintiffs wanted to submit to the stockholders’

meeting was a ‘proper’ matter for stockholders’ consideration; and that we should

judicially compel the defendant officers to permit the stockholders to vote on the issue.”

7. Id. at 405. The court noted that the plaintiffs were relying on Transamerica Corp., but

found that case to be distinguishable because it pertained to the violation and

enforcement of SEC regulations. Carter at 406. The court then expounded upon why it

would not apply SEC regulations to corporations not subject to SEC supervision:

Here, if we adopt the rule it would be without limitation. It would apply to

any stockholder of any corporation. Nor does there exist any administrative

body to make any preliminary determination that a stockholder’s proposal

is a “proper” one. In simple reality we would be acting in a void. We do

not nor is there any means by which we could know the ultimate

repercussions of such a rule. We know that it could be invoked for

harassing purposes that could only be avoided by extensive litigation. We

must be aware that to judicially impose the suggested rules in these

circumstances might well impair rather than benefit the orderly

development of this important area of the law of corporations.

Id. at 406-407.

{¶ 16} Appellant makes no attempt to argue against the persuasive reasoning that

formed the basis of the Oregon Supreme Court’s decision in Carter, regarding why SEC

regulations should not be applied to non-SEC regulated corporations. Nor did appellant

cite any additional support for his contention that there existed a common law right in

favor of shareholders to require a corporation to include the shareholders’ proposals in

the corporation’s proxy statement. Therefore, we hold that the trial court did not abuse

8. its discretion in determining that appellant did not demonstrate a substantial likelihood of

success on the merits, and consequently did not abuse its discretion in denying

appellant’s motion for a preliminary injunction.

{¶ 17} Accordingly, appellant’s second assignment of error is not well-taken.

{¶ 18} In his first assignment of error, appellant argues that the trial court erred

when it denied his motion for a preliminary injunction without a hearing. In particular,

appellant argues that Civ.R. 65(B)(2) “speaks” to a hearing. Civ.R. 65(B)(2) states, in

relevant part, “Before or after the commencement of the hearing of an application for a

preliminary injunction, the court may order the trial of the action on the merits to be

advanced and consolidated with the hearing of the application.”

{¶ 19} Ohio courts have recognized that, except where a temporary restraining

order has been issued, Civ.R. 65 does not expressly require a hearing on a motion for a

preliminary injunction. See, e.g., Executive Mgt. Servs., Inc., v. Cincinnati State

Technical & Community College, 10th Dist. Franklin No. 11AP-600, 2011-Ohio-6767,

¶ 10 (“Civ.R. 65 specifically requires a hearing only if a temporary restraining order has

been granted.” (Emphasis sic.)). Nonetheless, Ohio courts have held that such a hearing

is required before the trial court grants a motion, based upon due process considerations

for the defendant. For example, in Sea Lakes, Inc. v. Sea Lakes Camping, Inc., 78 Ohio

App.3d 472, 476-477, 605 N.E.2d 422 (11th Dist.1992), the court, in holding that it was

error for the trial court to grant a preliminary injunction without a hearing, reasoned,

“[s]ince the opposing party will be enjoined from performing certain acts for a period

9. usually much longer than that associated with a temporary restraining order, that party

must be accorded a legitimate opportunity to oppose the injunction.” Here, however, the

motion was denied. Thus, the question is whether those same due process considerations

apply for the plaintiff, such that a hearing is required. We conclude that, in this case,

they do not.

{¶ 20} In so concluding, we agree with the reasoning of the Tenth District that

“[i]n determining whether a hearing is appropriate to any motion for preliminary

injunction, the trial court must exercise its discretion, assess the nature of the allegations

and circumstances, and determine whether a hearing is warranted for that particular

motion for preliminary injunction.” Executive Mgt. Servs. at ¶ 12. We hold that where,

as here, the party seeking the preliminary injunction has not demonstrated a substantial

likelihood of success on the merits upon the facts alleged, the trial court does not abuse

its discretion in denying the motion without a hearing. See Johnson v. Morris, 108 Ohio

App.3d 343, 352-353, 670 N.E.2d 1023 (4th Dist.1995) (denial of plaintiff’s motion for

preliminary injunction without a hearing did not affect plaintiff’s substantial right

“because he was never entitled to a preliminary injunction”); Ridenour v. Wilkinson, 10th

Dist. Franklin No. 07AP-200, 2007-Ohio-5965, ¶ 50 (trial court did not err in denying

motion for temporary restraining order and preliminary injunction without a hearing

where a hearing was not required under Civ.R. 65 and plaintiffs could not demonstrate a

substantial likelihood of success on the merits).

{¶ 21} Accordingly, appellant’s first assignment of error is not well-taken.

10. {¶ 22} In his third assignment of error, appellant argues that appellee’s motion to

dismiss appellant’s complaint contained an affidavit and exhibit. Thus, appellant

contends that the motion to dismiss converted to a motion for summary judgment, and

thereby required notice and an opportunity to present evidence pursuant to Civ.R. 56. To

that end, Civ.R. 12(B)(6) provides, in relevant part, “When a motion to dismiss for failure

to state a claim upon which relief can be granted presents matters outside the pleading

and such matters are not excluded by the court, the motion shall be treated as a motion for

summary judgment and disposed of as provided in Rule 56.”

{¶ 23} Here, although the trial court did not expressly exclude the affidavit

attached to appellee’s motion to dismiss, it also did not expressly rely on it either.

Rather, the trial court granted the motion to dismiss for the reasons set forth in its

decision denying appellant’s motion for a preliminary injunction. As discussed above,

those reasons were limited exclusively to appellant’s failure to satisfy the four factors

required for a preliminary injunction, in particular that appellant failed to demonstrate a

substantial likelihood of success on the merits because he did not show that Croghan had

any legal obligation to include his proposals in its 2019 Proxy Statement. In addition, the

trial court relied on the reasons set forth in appellee’s motion to dismiss, which included

both the argument that appellant’s claims were unfounded in the law, as well as the

argument that the issue was moot by virtue of Croghan’s voluntary inclusion of the

proposals in its 2019 Proxy Statement.

11. {¶ 24} To the extent that the trial court erred in failing to convert appellee’s

motion to dismiss into a motion for summary judgment, we find the error to be harmless

pursuant to Civ.R. 61, which provides:

No error in either the admission or the exclusion of evidence and no

error or defect in any ruling or order or in anything done or omitted by the

court or by any of the parties is ground for granting a new trial or setting

aside a verdict or for vacating, modifying or otherwise disturbing a

judgment or order, unless refusal to take such action appears to the court

inconsistent with substantial justice. The court at every stage of the

proceeding must disregard any error or defect in the proceeding which does

not affect the substantial rights of the parties.

{¶ 25} In this case, the trial court’s granting of appellee’s motion to dismiss is

entirely consistent with the standard for dismissal under Civ.R. 12(B)(6).

A motion to dismiss for failure to state a claim upon which relief can be

granted is procedural and tests the sufficiency of the complaint. All of the

complaint’s factual allegations must be considered to be true, and all

reasonable inferences must be drawn in favor of the plaintiff. A Civ.R.

12(B)(6) motion to dismiss should be granted only when a plaintiff can

prove no set of facts that would entitle her to relief. (Internal quotations

omitted).

12. Moffitt v. Auberle, 167 Ohio App.3d 120, 2006-Ohio-3064, 854 N.E.2d 222, ¶ 7 (6th

Dist.). Put simply, appellant has not articulated a legal basis, statutory or otherwise, that

requires Croghan to include his proposals in its 2019 Proxy Statements or Proxy Cards.

Therefore, his action seeking to compel Croghan to so include his proposals is entirely

without merit, as he can prove no set of facts that would entitle him to relief. This

remains true even where Croghan nevertheless voluntarily included appellant’s proposals

in its 2019 Proxy Statement.

{¶ 26} Because appellant has no right to relief, we hold that any purported error of

the trial court to fail to notify him that it was converting the motion to dismiss into a

motion for summary judgment does not affect his substantial rights, and is therefore

harmless.

{¶ 27} Accordingly, appellant’s third assignment of error is not well-taken.

{¶ 28} Finally, in his fourth assignment of error, appellant argues that the trial

court erred in denying him the right to amend his complaint. We note that the May 16,

2019 judgment to which appellant is assigning error was not timely appealed by him, and

is thus not properly before the court.

{¶ 29} Accordingly, we find his fourth assignment of error not well-taken.

13. IV. Conclusion

{¶ 30} For the foregoing reasons, we find that substantial justice has been done the

party complaining, and the judgment of the Sandusky County Court of Common Pleas is

affirmed. Appellant is ordered to pay the costs of this appeal pursuant to App.R. 24.

Judgment affirmed.

A certified copy of this entry shall constitute the mandate pursuant to App.R. 27. See also 6th Dist.Loc.App.R. 4.

Mark L. Pietrykowski, J. _______________________________ JUDGE Arlene Singer, J. _______________________________ Thomas J. Osowik, J. JUDGE CONCUR. _______________________________ JUDGE

This decision is subject to further editing by the Supreme Court of Ohio’s Reporter of Decisions. Parties interested in viewing the final reported version are advised to visit the Ohio Supreme Court’s web site at: http://www.supremecourt.ohio.gov/ROD/docs/.

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