Hostetler v. Cent. Farm & Garden, Inc.

2012 Ohio 507
CourtOhio Court of Appeals
DecidedFebruary 9, 2012
Docket2010 AP 12 0046
StatusPublished
Cited by2 cases

This text of 2012 Ohio 507 (Hostetler v. Cent. Farm & Garden, Inc.) 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
Hostetler v. Cent. Farm & Garden, Inc., 2012 Ohio 507 (Ohio Ct. App. 2012).

Opinion

[Cite as Hostetler v. Cent. Farm and Garden, Inc., 2012-Ohio-507.]

COURT OF APPEALS TUSCARAWAS COUNTY, OHIO FIFTH APPELLATE DISTRICT

WILLIAM HOSTETLER JUDGES: Hon. W. Scott Gwin, P. J. Plaintiff-Appellant/Cross-Appellee Hon. John W. Wise, J. Hon. Julie A. Edwards, J. -vs- Case No. 2010 AP 12 0046 CENTRAL FARM AND GARDEN, INC.

Defendant-Appellee/Cross-Appellant OPINION

CHARACTER OF PROCEEDING: Civil Appeal from the Court of Common Pleas, Case No. 2009 CV 07 0629

JUDGMENT: Affirmed

DATE OF JUDGMENT ENTRY: February 9, 2012

APPEARANCES:

For Plaintiff-Appellant For Defendant-Appellee

DAVID P. BERTSCH DAVID J. WIGHAM BUCKINGHAM, DOOLITTLE ANDREW P. LYCANS & BURROUGHS CRITCHFIELD, CRITCHFIELD & 3800 Embasy Parkway JOHNSON Suite 300 225 North Market Street, P. O. Box 599 Akron, Ohio 44333 Wooster, Ohio 44691 Tuscarawas County, Case No. 2010 AP 12 0046 2

Wise, J.

{¶1} Appellant/Cross-Appellee William Hostetler appeals the decision of the

Court of Common Pleas, Tuscarawas County, which denied his motion for directed

verdict and subsequently denied his motion for judgment notwithstanding the verdict

(“JNOV”) or a new trial following a jury trial in a suit against Appellee/Cross-Appellant

Central Farm and Garden, Inc., claiming breach of a business agreement. The relevant

facts leading to this appeal are as follows.

{¶2} Plaintiff-Appellant William Hostetler is a farmer who formerly operated an

additional business known as Hostetler Farm Supply, a d/b/a started by his late father.

Defendant-Appellee Central Farm and Garden, Inc. is a wholesale distributor of farm

and garden supplies, including twine and fodder preservation products. Appellant

Hostetler’s business competed in part with Appellee Central Farm in selling twine to

dealers and other commercial customers. Appellant Hostetler's business also sold

twine, in lesser amounts, to some of his neighbors and other retail customers.

Appellant at one time had an account with Appellee Central Farm to purchase twine at

dealer prices for resale to said neighbors and other retail customers.

{¶3} In the summer of 2004, appellee asked appellant, who generally was able

to sell his product at a lower price, whether he would be willing to sell appellee some

twine after appellee’s supply ran low. Appellant agreed to sell the twine to appellee at

his cost.

{¶4} In September 2004, appellee’s then co-owners, Joe Franks and Dick

Olson, approached appellant about purchasing his business.1 Accordingly, in

1 Olson later became the sole owner of Appellee Central Farm. Tuscarawas County, Case No. 2010 AP 12 0046 3

December 2004, the parties executed a purchase agreement prepared by appellee’s

legal counsel. In the agreement, appellee agreed to acquire appellant’s “customer list

and price list” for a price of $275,000. This amount was to be paid in installments of

$10,000 on December 31, 2004, $17,500 on September 1, 2005, and nine additional

payments of $27,500 payable annually on September 1, 2006 through September 1,

2014. See Articles I and II of the agreement.

{¶5} Article V of the agreement provided for appellee to employ appellant as a

commissioned sales representative on an annual renewable basis. The agreement

does not clearly tie appellee’s installment payment obligations to appellant’s continued

service as a sales representative. However, Section 5.1 states that “[d]uring the term of

employment, [appellant] shall not engage in any activity which conflicts or interferes

with the performance of duties hereunder or usurps the business interests, existing or

potential, of [appellee].” Section 5.3(c) states that appellee would set the price at which

appellant was to sell appellee’s products, and that appellant could purchase twine at

dealer cost.

{¶6} Section 7.3 of the agreement contained a noncompetition provision which

prohibited appellant from competing against appellee for the following five years (i.e.,

until the end of 2009), as well as a provision entitling appellee to injunctive relief upon

violation. Section 7.4 provided that appellee could set off its claimed damages under

the noncompetition provision against the outstanding balance owed on the purchase

price by giving notice to appellant, specifying in reasonable detail the basis for the set-

off and depositing the amount of the claimed set-off in an escrow account at its law

firm. Tuscarawas County, Case No. 2010 AP 12 0046 4

{¶7} After the agreement was executed, appellant delivered a list of the names

and addresses for his commercial twine accounts to appellee, although it is presently

undisputed that any copies thereof have been lost or destroyed by both parties.

Appellant also provided appellee the names of his twine suppliers. Appellee in turn

paid appellant the first $17,500 installment under the purchase agreement.

{¶8} Appellant continued to purchase twine from appellee at dealer cost under

Section 5.3(c) of the agreement, which he resold to some of his neighbors and other

retail customers. Appellant maintained at trial that he purchased approximately

$175,000 of twine from Central Farm for resale to his neighbors and retail customers at

a 5% profit for the three years from 2005 through 2007. See Tr. at 166-167.

{¶9} In July 2005, Appellee Central Farm made appellant a salaried employee

at a rate of $40,000 per year plus the commission payments under the 2004

agreement, plus benefits. This additional agreement was for a term of one year

automatically renewable in July of each successive year unless either party gave

notice of discontinuation at least sixty days prior to the annual anniversary date.

{¶10} Appellant received the $17,500 purchase price installment payment in the

autumn of 2005 and the $27,500 purchase price installment payment in the autumn of

2006.

{¶11} In September 2007, a dispute arose between Central Farm's co-owners

Franks and Olson over a bank audit and inventory issues. Olson decided to remove

Franks as president and appoint Corey Sheely, the company’s marketing manager, as

the new president. Sheely thereupon conducted a review of Central Farm's finances

and the 2004 purchase agreement. Despite the terms of the additional 2005 Tuscarawas County, Case No. 2010 AP 12 0046 5

agreement, on October 24, 2007, Sheely met with appellant and told him he was being

taken off salary and returned to his original position as a commissioned salesman

effective November 1, 2007. Sheely also told appellant in the meeting that Appellee

Central Farm was discontinuing twine sales until at least the following spring. This was

problematic for appellant, because most of his twine sales for appellee were made in

the autumn and winter. Sheely allegedly did not give appellant any sales territory of his

own when he put him back on commission.

{¶12} In the late autumn of 2007, Sheely told his sales staff that appellant would

no longer be working for Central Farm. Sheely also instructed the sales representatives

to see if appellant had been contacting any Central Farm customers.

{¶13} Appellee Central Farm did pay Hostetler the September 1, 2007

installment of $27,500 at the end of October. However, appellee’s vice-president,

David Guster, told appellant not to attend any further sales meetings since there was

no twine to sell. Appellant subsequently told Guster he had taken a job as a long-

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