Grogan v. T.W. Grogan Co.

758 N.E.2d 702, 143 Ohio App. 3d 548
CourtOhio Court of Appeals
DecidedMay 21, 2001
DocketNo. 77518.
StatusPublished
Cited by23 cases

This text of 758 N.E.2d 702 (Grogan v. T.W. Grogan 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
Grogan v. T.W. Grogan Co., 758 N.E.2d 702, 143 Ohio App. 3d 548 (Ohio Ct. App. 2001).

Opinion

Michael J. Corrigan, Judge.

This appeal concerns ongoing litigation among members of the Grogan family and their family business, T.W. Grogan Co., Inc. (“the company”). The three consolidated actions filed below arose as a result of differences of opinion in the disposition of company assets and the role certain family members would play in running the company. The primary issues on appeal are whether the court erred by denying the right of certain siblings to intervene as individuals in another sibling’s request that a receiver be appointed to safeguard the company, and whether the three actions were incorrectly consolidated.

The company is a closely held commercial real estate business whose primary assets are two Cleveland office buildings. The shareholders and members of the board of directors (the “board”) were Timothy W. Grogan and his family trust (because their interests are aligned, we will refer to them collectively as “Grogan”), Mark Grogan, Mary Molly Kilfoyle (née Grogan), Ann Gross (née Grogan), and Donald Grogan, the father of the four siblings. We will sometimes refer to Kilfoyle, Gross, and Mark Grogan as “the sibling directors.”

*553 In 1995, Grogan and the company terminated litigation between them by entering into an employment contract whereby the company employed Grogan as president and chairman of the board, with certain restrictions on the board’s ability to terminate his employment.

Grogan and the other members of the board soon began to clash over the management of the company. Although it is always perilous to generalize in complicated litigation like this, we think it fair to summarize the relative positions of the parties as follows: the sibling directors believed that Grogan excluded them from daily operations so he could exercise complete control over the company for his own personal gain, without regard for their best interests as shareholders and without accounting for or justifying his actions; Grogan, on the other hand, believed that the sibling directors were officious intermeddlers who lacked any expertise in the real estate business, used the company as their own personal cash cow, and wished to liquidate the company for personal gain without regard to the true value of the assets held by the company.

Sometime in April 1998, the board agreed to liquidate the company’s holdings. This liquidation would encompass “substantially all” of the company’s assets. Grogan apparently believed that the other directors were willing to accept a price that was $1 million less than could be obtained for the properties, and refused to agree to the sale. The other siblings believed that Grogan was purposely delaying the sale, taking company files and refusing to implement the financial plan the parties had agreed to when settling the previous litigation.

Matters came to a head at a board meeting held on June 1, 1998. The board voted to remove Grogan as president and chairman of the board. It retained him in the company at his same salary but limited his duties.

On June 17, 1998, Grogan filed suit in CV 356842, alleging that the company and his three siblings breached his employment contract by terminating him without complying with the terms of the employment contract. He further alleged that the board breached its fiduciary duties by discharging him in the manner that it did. This case was assigned to Judge Griffin. 1

In August 1999, the company filed suit in CV 388798 seeking an appraisal of the fair value of Grogan’s stock pursuant to R.C. 1701.85. The complaint alleged that in April 1999, the board adopted a resolution to sell the two Cleveland properties, assets that represented “substantially all” of the company’s assets. Grogan filed a counterclaim asking the court to appoint a receiver to oversee the *554 company. The complaint asked the court io determine the value of Grogan’s shares as a dissenting shareholder. This case was assigned to Judge Calabrese.

On September 24, 1999, Grogan filed CV 392378, in which he asked the court to appoint a receiver to oversee the disposition of the company’s assets. The complaint essentially asked for the same relief that had been requested in Grogan’s counterclaim in CV 388798. This case was assigned to Judge Villanueva.

On September 27,1999, Grogan filed motions in all three cases asking that they be consolidated on Judge Calabrese’s docket. Judge Calabrese granted the motion to consolidate on October 19, 1999, and Judges Griffin and Villanueva entered separate orders transferring CV 356842 and CV 392378, respectively, to Judge Calabrese’s docket. Grogan subsequently dismissed his counterclaim in CV 388798 (having asserted the same claim for relief in CV 392378), and the sibling plaintiffs dismissed the remainder of CV 388798. 2

On October 7, 1999, Kilfoyle, Gross, and Mark Grogan filed a motion seeking permission to intervene in CV 392378. They argued that Grogan’s motion for the appointment of a receiver would adversely affect their rights as the company’s majority shareholders, would replace them as directors, and would impair their interest in controlling the company. The motion also asked the court to dismiss Grogan’s complaint for the appointment of a receiver on grounds that Grogan could not satisfy the jurisdictional requirements for the appointment of a receiver under R.C. 1701.89. Judge Calabrese denied both motions and scheduled for hearing Grogan’s request for the appointment of a receiver.

In two separate motions (one by Kilfoyle, the other by Gross and Mark Grogan), the sibling directors asked the court to stay the scheduled hearing on the appointment of a receiver, reverse all post-consolidation orders by Judge Calabrese, transfer the consolidated cases back to Judges Griffin and Villanueva and, finally, asked Judge Calabrese to recuse himself on grounds that the case originally filed with him had been completely dismissed. The motions were denied and the sibling defendants collectively appealed.

I

The first question we must address is whether the omnibus order denying motions to stay proceedings, reverse previous rulings, recuse, and transfer is final and appealable pursuant to R.C. 2505.02. Grogan maintains that none of the individual orders contained in the journal entry is final and appealable. The *555 sibling directors maintain that each subpart of the order in effect determines the action and denies them a meaningful or effective remedy by an appeal.

A

A court of appeals has jurisdiction only over orders that are both final under Civ.R. 54(B) and appealable under R.C. 2505.02. See Chef Italiano Corp. v. Kent State Univ. (1989), 44 Ohio St.3d 86, 541 N.E.2d 64, syllabus.

R.C. 2505.02 provides:

“(B) An order is a final order that may be reviewed, affirmed, 'modified, or reversed, with or without retrial, when it is one of the following:
“(1) An order that affects a substantial right in an action that, in effect determines the action and prevents a judgment;

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Bluebook (online)
758 N.E.2d 702, 143 Ohio App. 3d 548, Counsel Stack Legal Research, https://law.counselstack.com/opinion/grogan-v-tw-grogan-co-ohioctapp-2001.