Huffman v. Groff

2013 Ohio 222
Ohio Court of Appeals·Decided January 23, 2013·No. 10CA54·Published·Cited by 2 cases

Opinion

IN THE COURT OF APPEALS OF OHIO FOURTH APPELLATE DISTRICT ATHENS COUNTY

Ray Huffman, et al, :

:

Plaintiffs-Appellants/ : Case No. 10CA54 Cross-Appellees, :

: DECISION AND

v. : JUDGMENT ENTRY :

Roxanne Groff, et al , :

:

Defendants-Appellees/ :

Filed: January 23, 2013

Cross-Appellants.

APPEARANCES:

John P. Lavelle and Robert R. Rittenhouse, Lavelle and Associates, Athens, Ohio, for Appellants/Cross-Appellees.

Robert J. Shostak, Shostak & Hollingsworth, Athens, Ohio, for Appellee/Cross-Appellant Roxanne Groff.

Michael M. Hollingsworth, Shostak & Hollingsworth, Athens, Ohio, for Appellees/Cross- Appellants Stephen W. Groff and Aileen McCormack.

Kline, J.:

{¶1} Ray Huffman (hereinafter “Ray”) appeals the judgment of the Athens County Court of Common Pleas. Ray appeals both individually and derivatively on behalf of the Hollar Inc. (hereinafter the “Hollar”). The trial court granted summary judgment in favor of Roxanne Groff (hereinafter “Roxanne”), Stephen Groff (hereinafter “Stephen”), and Aileen McCormack (hereinafter “Aileen”). (Hereinafter, we will refer to Roxanne, Stephen, and Aileen collectively as the “Defendants.”) Ray contends that the trial court erred by granting summary judgment on all the individual and derivative

claims in his complaint. Because there are no genuine issues of material fact regarding any of the claims in Ray’s complaint, we disagree.

{¶2} Additionally, the Defendants cross-appeal the judgment of the Athens County Court of Common Pleas. Most of the Defendants’ assignments of error are not proper in the context of a cross-appeal. Therefore, we will not address the Defendants’ improperly raised assignments. And because summary judgment was appropriate on all of the claims in the complaint, the properly raised issues in Defendants’ cross-appeal are moot.

{¶3} Accordingly, we affirm the judgment of the trial court.

I.

{¶4} This case involves a dispute among shareholders of the Hollar regarding the May 2007 sale of Aileen’s stock in the corporation. Prior to the sale, the shareholders were Ray, Roxanne, and Aileen. Ray and Roxanne each owned a 37.5% interest in the Hollar, and Aileen owned a 25% interest. (Aileen owned 1.5 shares of Hollar stock, and Roxanne and Ray each owned 2.25 shares.) Roxanne served as president of the Hollar, and Ray served as the Secretary-Treasurer.

{¶5} The Hollar was incorporated in 1973. The corporation’s only asset is approximately 80 acres of real property in Athens County that apparently has sentimental value to the shareholders. The Hollar does not generate a profit. It does, however, pay property taxes. Typically, when the Hollar’s taxes are due, Roxanne notifies the shareholders, and the shareholders pay their respective share of the tax liability.

{¶6} Shortly after incorporating, the original shareholders of the Hollar executed a shareholders’ agreement (hereinafter the “Agreement”). Aileen was not an original shareholder, and she did not sign the Agreement.

{¶7} Under the terms of the Agreement, the shareholders agreed to provide the Hollar with a right of first refusal should a shareholder seek to sell his or her Hollar stock. Specifically, the Agreement states, in relevant part, as follows:

We, the undersigned shareholders in The Hollar, Inc., do hereby, in consideration of the mutual promises herein, and for ourselves, assigns, heirs, executors and administrators agree as follows:

1. That in the event each or any of us desires to sell his share in The Hollar, Inc., he shall notify the corporation of his intent to sell and the price which he desires for said share. Within 30 days of said notification, the corporation shall have the right to purchase said share at that price.

2. That in the event each of any of us receives a bona fide offer to buy his share at any price, he shall notify the corporation, and the corporation shall have the right to purchase the said share at that price within 30 days of notification. In the event that the corporation does not purchase at that price, within 30 days, each

or any of us may sell said share to the bona fide offeree. Agreement at 1.

{¶8} In early 2007, Aileen expressed a desire to sell her interest in the Hollar.

Ray and Roxanne then met to discuss of the possibility of purchasing Aileen’s Hollar stock. Ray testified that he informed Roxanne that he valued Aileen’s stock at $6,000 to $12,000. Ray and Roxanne agreed, however, to make a below-value offer to Aileen for her stock. Following the meeting, Roxanne contacted Aileen. Aileen testified at deposition that “Roxanne said that Ray had offered $5,000, and I said, well, no I’m not interested.” Aileen Dep. Tr. at 16.

{¶9} Shortly thereafter, Roxanne informed Aileen that Roxanne’s brother, Stephen, was willing to purchase Aileen’s Hollar stock. Eventually, Stephen formally offered to purchase Aileen’s stock for $10,000. At that point, Aileen attempted to provide the Hollar with the 30-day time period to exercise its right of first refusal. During this time, Ray cancelled two shareholders’ meetings that were scheduled to vote on Aileen’s proposed stock sale. Additionally, Ray did not call any shareholders’ meetings, though he could have done so. Ray also contacted Aileen on multiple occasions to convince her to sell her stock to either the Hollar or to Ray individually.

{¶10} In late March or early April 2007, Stephen offered $10,250 for Aileen’s stock.1 The apparent purpose of this offer was to start a new 30-day time period for the Hollar to exercise its right of first refusal. Aileen’s sale to Stephen closed on May 1, 2007. According to Ray, the Hollar did not have a full 30 days to vote on the $10,250 offer.

1 Aileen testified at deposition that she sold her stock to Stephen for $10,200. Apparently, the discrepancy is the result of differing memories of the final sale price.

{¶11} Following the sale of Aileen’s stock to Stephen, Ray filed suit individually and derivatively on behalf of the Hollar against Roxanne, Aileen, and Stephen. The complaint alleges claims for breach of the Agreement, breach of fiduciary duty, unjust enrichment, tortious interference with business relationships, and civil conspiracy. On November 3, 2010, the trial court granted the Defendants’ motion for summary judgment based on a finding that the Hollar’s right of first refusal was unenforceable. Then, on November 10, 2010, the trial court entered its final judgment dismissing all of the claims in Ray’s complaint.

{¶12} Ray appeals and asserts the following assignments of error: I. “The Trial Court erred as a matter of law when it granted the Defendants’ Motion for Summary Judgment on all of the Plaintiffs’ claims because there were contested genuine issues of material fact on all eight causes of action.” II. “The Trial Court erred as a matter of law when it granted summary judgment on the issue of the enforceability of the restrictive shareholders’ agreement, as the parties had actual knowledge of the agreement and it was enforceable pursuant to Ohio Revised Code Section 1308.11.” And III. “The Trial Court erred as a matter of law when it dismissed the Plaintiffs’ claim for breach of contract when it failed to consider whether Roxanne Groff had breached the Hollar Agreement.”

{¶13} The Defendants cross-appeal and assert twelve assignments of error: I.

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