Desai v. Franklin

895 N.E.2d 875, 177 Ohio App. 3d 679, 2008 Ohio 3957
CourtOhio Court of Appeals
DecidedAugust 6, 2008
DocketNos. 23930 and 23939.
StatusPublished
Cited by36 cases

This text of 895 N.E.2d 875 (Desai v. Franklin) 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
Desai v. Franklin, 895 N.E.2d 875, 177 Ohio App. 3d 679, 2008 Ohio 3957 (Ohio Ct. App. 2008).

Opinions

*686 Whitmore, Judge.

{¶ 1} Appellant and cross-appellee, Aris W. Franklin, M.D., appeals from the decision of the Summit County Court of Common Pleas awarding judgment to appellee and cross-appellant, Ashokkumar J. Desai, M.D. Additionally, Desai cross-appeals from the trial court’s ruling on the issues of punitive damages, attorney fees, and other various issues. This court affirms in part and dismisses in part.

I

{¶ 2} In May 1978, Franklin and Desai entered into an employment agreement whereby Desai would join Franklin’s professional corporation, Diagnostic Imaging. 1 The employment agreement provided that Desai’s compensation “shall be computed as a percentage of the operating net income,” which would be calculated by Diagnostic Imaging’s accountant. The agreement specified that the distribution of “net income” would be divided into two stages. First, Franklin would receive five percent of the net income “before all salaries, bonuses and pension contributions.” Second, Desai would then receive a certain, increasing percentage of the resulting net operating income in the following amounts:

For the year beginning July 1, 1978 30%
For the year beginning July 1,1979 35%
For the year beginning July 1,1980 40%
For the year beginning July 1,1981 50%

The employment agreement also provided that Desai would receive a certain percentage of Diagnostic Imaging’s accounts receivable upon his termination. Desai would be entitled to receive 45 percent of the accounts receivable for any termination occurring after July 1,1981.

{¶ 3} Desai and Franklin signed a buy-sell agreement on the day that they executed their employment agreement. Desai received 15 shares of Diagnostic Imaging on the date of the execution, with Franklin holding the remaining 85 shares. Pursuant to the buy-sell agreement, Desai would purchase an additional 34 shares over the next three years so that he eventually would own 49 shares to Franklin’s 51 shares. The buy-sell agreement restricted the sale of any common stock. Furthermore, the agreement contained a redemption clause whereby Diagnostic Imaging would buy back Desai’s shares upon the termination of his employment. The agreement provided that the value of the shares would be the net worth of Diagnostic Imaging on the last day of the month preceding termination divided by the number of outstanding shares. The accounts receiv *687 able, however, would not be included in the calculation of the corporation’s net worth.

{¶ 4} Desai formally resigned as an employee of Diagnostic on September 1, 2000. After Desai’s resignation, questions arose as to whether or not Franklin had comported with the terms of the employment agreement and the buy-sell agreement. Specifically, Desai and Franklin disagreed over the amount of money that Desai was entitled to for his percentage of the accounts receivable and deferred-compensation payments that he was due under the employment agreement. Desai also alleged that Diagnostic Imaging had failed to redeem his stock as provided for in the buy-sell agreement.

{¶ 5} On January 22, 2002, Desai filed suit against Franklin and Diagnostic Imaging for breach of fiduciary duty, breach of contract as to the employment agreement and the buy-sell agreement, unjust enrichment and self-dealing, punitive damages, and attorney fees. Franklin and Diagnostic Imaging answered on March 13, 2002, and counterclaimed against Desai for breach of contract and unjust enrichment. Subsequently, the parties engaged in a lengthy period of discovery.

{¶ 6} On March 20, 2006, Desai filed an amended complaint to bring an additional claim for fraud against Franklin. According to Desai, Franklin had faded to notify him of shareholder’s meetings, had forged Desai’s signatures on the shareholder’s meeting minutes, and had fraudulently altered the employment agreement to receive a bigger profit. Desai informed the court that he discovered that Franklin had taken these additional actions only after receiving certain evidence in discovery. Consequently, the trial court permitted Desai to bring his fraud claim in addition to his remaining claims. Desai included a request for punitive damages and attorney fees in the prayer for relief of his fraud claim.

{¶ 7} On November 13, 2006, Desai filed a motion for an order compelling Franklin to engage in discovery and sanctioning him for providing incomplete and evasive answers to Desai’s discovery requests. The court eventually denied Desai’s motion, finding that there was no merit to the issues Desai had raised.

{¶ 8} The matter proceeded to a jury trial on June 4, 2007. Before the jurors began deliberating, the trial court (1) directed a verdict in Diagnostic Imaging’s favor on the fraud claim; (2) directed a verdict in Desai’s favor on the liability portion of Desai’s breach-of-contract claim as to Diagnostic Imaging; (3) ordered that Desai’s claim for breach of contract against Franklin be dismissed with prejudice; (4) directed a verdict in Desai’s favor on the liability portion of Desai’s breach-of-fiduciary-duty claim against Franklin; and (5) ordered that Desai’s claim for punitive damages be dismissed with prejudice. Franklin and Diagnostic Imaging also agreed to dismiss their counterclaims against Desai. The jury subsequently awarded judgment to Desai and against Franklin in the following *688 amounts: (1) $50,670.18 for his breach-of-fiduciary-duty claim; (2) $116,248.00 for his fraud claim; and (3) $301,597.34 for his unjust-enrichment claim. The jury determined that Diagnostic Imaging did not owe Desai any compensatory damages pursuant to his breach-of-fiduciary-duty and breach-of-contract claims.

{¶ 9} On June 15, 2007, Desai filed a motion for prejudgment interest in which he argued that Franklin had failed to make a good-faith effort to settle the case in accordance with R.C. 1343.03 and Moskovitz v. Mt. Sinai Med. Ctr. (1994), 69 Ohio St.3d 638, 635 N.E.2d 331. Meanwhile, Franklin filed a motion for judgment notwithstanding the verdict (“JNOV”)- The trial court scheduled a hearing to address both motions. The trial court ultimately denied the JNOV and awarded Desai prejudgment interest in the amount of $573,939.76.

{¶ 10} On October 23, 2007, Franklin filed his notice of appeal in this court. On October 31, 2007, Desai filed a separate notice of appeal. This court consolidated the appeals on December 7, 2007. The appeal, containing three assignments of error and five cross-assignments of error, is now before this court. For ease of analysis, we rearrange and consolidate several of the assignments and cross-assignments of error.

II

Assignment of Error Number One

The trial court erred in denying Dr. Franklin’s motion for judgment notwithstanding the verdict because Dr. Desai recovered damages that were barred by the applicable statute of limitations.

{¶ 11} In his first assignment of error, Franklin argues that the trial court erred in denying his JNOV on Desai’s unjust-enrichment claim. Specifically, Franklin argues that the court failed to apply R.C.

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Bluebook (online)
895 N.E.2d 875, 177 Ohio App. 3d 679, 2008 Ohio 3957, Counsel Stack Legal Research, https://law.counselstack.com/opinion/desai-v-franklin-ohioctapp-2008.