Hoyt v. National Mutual, Unpublished Decision (12-1-2005)

2005 Ohio 6367
CourtOhio Court of Appeals
DecidedDecember 1, 2005
DocketNo. 04AP-941.
StatusUnpublished
Cited by36 cases

This text of 2005 Ohio 6367 (Hoyt v. National Mutual, Unpublished Decision (12-1-2005)) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law.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
Hoyt v. National Mutual, Unpublished Decision (12-1-2005), 2005 Ohio 6367 (Ohio Ct. App. 2005).

Opinion

OPINION
{¶ 1} Plaintiffs-appellants, Richard H. Hoyt and Pamela Kobell, appeal from the Franklin County Court of Common Pleas grant of summary judgment in favor of defendants-appellees, TALX Corporation and TALX UCM Services, Inc. (collectively referred to as "TALX"). For the following reasons, we affirm that judgment.

{¶ 2} In December 2000, Nationwide Mutual Insurance Company ("Nationwide") decided to sell the unemployment compensation business unit ("UC unit") of its wholly owned subsidiary, Gates, McDonald Company ("Gates"). The UC unit was in the business of administering other companies' unemployment compensation claims and associated tax matters. At that time, Hoyt was a vice president and was in charge of the UC unit operations. He had worked for Gates since 1980. He lived and worked in Ohio. Kobell was the UC unit's National Director for Sales and Service and reported directly to Hoyt. She lived and worked in New Jersey.

{¶ 3} In early January 2001, Gates' President, Danny Fullerton, told Hoyt that Gates intended to sell the UC unit. Hoyt agreed to assist with the sale of the UC unit. Hoyt engaged two of his managerial team members, Kobell and Bill Lee, to help with the sale. Nationwide also hired an outside investment banker to assist Gates with the sale. The investment banker recommended a limited auction, pursuant to which Nationwide would offer the UC unit to a small number of potential buyers who would have some natural interest in the unit. Gates identified ADP, Ceridian, and United Healthcare as potential buyers. However, these entities did not express an interest in purchasing the business.

{¶ 4} Subsequently, Gates identified TALX as another potential buyer. Hoyt already had a working relationship with TALX and its president, Bill Canfield. Because of this existing relationship, Hoyt initiated discussions with Canfield in the spring of 2001 to determine whether TALX would be interested in purchasing the UC unit. Canfield told him that TALX was developing a strategy of expansion and that he wanted to meet with Hoyt and Fullerton to discuss the UC unit. In April or May 2001, Canfield met with Hoyt and Fullerton. Canfield explained his proposed plan to enter the unemployment compensation business by buying existing businesses. He told Hoyt that the UC unit would be a good platform to implement this plan. Canfield also told Hoyt that if TALX successfully implemented the plan, Hoyt and his team would run the new company. Hoyt called Kobell and Lee after this meeting and told them about Canfield's potential interest in buying unemployment compensation businesses, including the UC unit. Hoyt also told them about Canfield's statement that their management team would run the new company. However, TALX ultimately declined to pursue the purchase of the UC unit at that time.

{¶ 5} Thereafter, Hoyt attempted to purchase the UC unit himself. Fullerton gave Hoyt an estimated selling price of $45,000,000. However, Hoyt was only able to raise $35,000,000. Fullerton told Hoyt that Nationwide was not interested in selling the UC unit at that price. In July or August 2001, Hoyt contacted an attorney, Mark Koogler, for assistance in putting together a stronger purchase offer for the UC unit. Koogler told Hoyt about a group of venture capitalists who would be interested in learning more about a potential purchase. However, Hoyt never met with this investor group. Instead, he attempted to obtain additional capital from TALX .

{¶ 6} In pursuit of that goal, Hoyt flew to St. Louis in August 2001 to meet with Canfield. At that meeting, Hoyt asked Canfield to sign a confidentiality agreement pursuant to which Canfield would keep confidential any information Hoyt disclosed to him concerning Hoyt's potential purchase of the UC unit. Canfield signed the confidentiality agreement. Hoyt told Canfield that he already had raised the majority of the money needed to purchase the UC unit but that he needed additional capital to complete the purchase. Although Canfield expressed renewed interest in purchasing the UC unit, he indicated that TALX was not interested in participating as a minority owner. Canfield again stated that if TALX bought the UC unit, Hoyt and his team would run it.

{¶ 7} Based upon his discussions with Canfield, Hoyt believed that TALX now had significant interest in purchasing the UC unit outright. Moreover, Hoyt believed that if TALX bought the UC unit, he and his team would run the new business. Hoyt also recognized that his financial risk was much lower if he supported TALX's attempt to purchase the UC unit rather than trying to purchase the UC unit himself. Therefore, Hoyt abandoned his own attempt to purchase the UC unit. Subsequently, Canfield called Hoyt to check on the status of Hoyt's attempts to raise additional money for the purchase of the UC unit. Hoyt told him that he had abandoned his plans. Within a week of that conversation, Canfield called Hoyt and told him that TALX was ready to pursue the purchase of the UC unit.

{¶ 8} In November 2001, Canfield met with Hoyt, Fullerton, and others and laid out his plan to purchase the UC unit. Canfield described his plan to acquire the UC unit and to use the unit and its management team as a foundation to purchase and consolidate other unemployment compensation companies. Canfield stated that Hoyt and his team would be critical to his strategy and they would have significant responsibilities with the new UC unit. However, Canfield did not identify what specific position Hoyt would have with TALX.

{¶ 9} In February 2002, representatives from Nationwide, Gates, and TALX met in Columbus, Ohio, to discuss organizational and management issues before the sale. Hoyt believed that Canfield still intended to center TALX's acquisition plan around Hoyt's management team and that Hoyt's team would run the new unemployment business. After the meeting, Canfield met personally with Hoyt, Kobell, Lee, and other senior managers to discuss their feelings about TALX's potential purchase of the UC unit. However, no job offers were made at that time.

{¶ 10} TALX acquired the UC unit on March 27, 2002 for a total purchase price of $43,250,000.1 As part of the purchase agreement and an attendant employee services agreement, TALX agreed that all UC unit employees would remain Nationwide employees for 90 days after the sale but their work would benefit TALX. After 90 days, TALX would offer employment to all the employees. Those offers of employment were to include salary and benefits commensurate with their former positions.

{¶ 11} On the same day TALX acquired the UC unit, it also acquired The Frick Company ("Frick"), the UC unit's largest competitor in the unemployment compensation business. With the purchase of the UC unit and Frick, TALX had acquired 60-70 percent of the unemployment compensation business industry. Both Hoyt and Fullerton were surprised by TALX's acquisition of Frick, as neither knew that TALX was also purchasing the UC unit's largest competitor in the unemployment compensation field.

{¶ 12} TALX organized a celebratory deal-closing dinner on the night of March 27, 2002 in Columbus, Ohio. At the dinner, Canfield greeted Kobell with a kiss as they sat down for dinner. Later that same night, Canfield presented Hoyt with employment agreements for Hoyt and Kobell. TALX offered Hoyt and Kobell employment as senior executives for a two-year period. TALX offered Hoyt an annual salary of $165,000 and Kobell an annual salary of $120,000.

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Bluebook (online)
2005 Ohio 6367, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hoyt-v-national-mutual-unpublished-decision-12-1-2005-ohioctapp-2005.