Katherine's Collection, Inc. v. Kleski

2013 Ohio 1530

• Court: Ohio Court of Appeals
• Decided: April 17, 2013
• Docket: 26477
• Status: Published

Opinion

[Cite as Katherine's Collection, Inc. v. Kleski, 2013-Ohio-1530.]

STATE OF OHIO ) IN THE COURT OF APPEALS )ss: NINTH JUDICIAL DISTRICT COUNTY OF SUMMIT )

KATHERINE'S COLLECTION, INC., et al. C.A. No. 26477

Appellees

v. APPEAL FROM JUDGMENT ENTERED IN THE WAYNE M. KLESKI, et al. COURT OF COMMON PLEAS COUNTY OF SUMMIT, OHIO Appellants CASE No. CV2011-07-4032

DECISION AND JOURNAL ENTRY

Dated: April 17, 2013

MOORE, Presiding Judge.

{¶1} Appellants, Wayne and Katherine Kleski, appeal from an order of the Summit

County Court of Common Pleas that, according to them, incorrectly modified the terms of an

agreed preliminary injunction. Because the Kleskis have appealed from an order that is not final

and appealable, we dismiss the appeal for lack of jurisdiction.

I.

{¶2} Although the parties’ briefs recount an extensive history to this litigation, most of

those facts are not relevant to this appeal. This case involves a struggle for control of

Katherine’s Collection, a company that designs, manufactures, and sells collectible dolls and

other gift items. The Kleskis started the business in the late 1980s operating out of their home.

Over the next 20 years, the business grew substantially and was selling its products throughout

the world. The Kleskis retained sole ownership and control of the company. 2

{¶3} During 2009 and 2010, however, because the company had experienced an

economic downturn, Gary Giller became involved with the company as a financial consultant.

Giller’s role in the company increased during the next year and he eventually became the chief

executive officer. The Kleskis continued to act as the president and chief operating officer and

the sole shareholders of Katherine’s Collection.

{¶4} The working relationship between Giller and the Kleskis later deteriorated. Giller

and the Kleskis ultimately accused the other of self-dealing at the expense of the company and

each side took action to oust the other from the company. Of relevance here, on July 24, 2011,

Giller terminated the Kleskis’ employment and essentially locked them out of the business

including its property, finances, and communications. The next day, Giller and Katherine’s

Collection (collectively “Giller”) filed a complaint against the Kleskis for declaratory judgment

and injunctive relief. Giller alleged that, under the terms of the Kleskis’ shareholder and

employment agreements with the company, Giller remained in control of the company as CEO

and had properly terminated the Kleskis’ employment “for cause.” He sought to enjoin the

Kleskis from entering the business premises of Katherine’s Collection or otherwise interfering

with its business, property, or communications systems. Giller later filed an amended complaint

to add another plaintiff, additional tort claims, and a prayer for money damages.

{¶5} The Kleskis answered the amended complaint and counterclaimed for declaratory

judgment, breach of contract, breach of fiduciary duty, libel and slander, and several other tort

causes of action. In addition to a declaration of their rights under the company’s articles of

incorporation and their shareholder and employment agreements, the Kleskis sought money

damages for the financial harm that Giller had allegedly caused to the company and to them

personally as employees and owners of the company. 3

{¶6} During the litigation, the parties reached an agreement to preserve the status quo

during the pendency of the case. On August 5, 2011, based upon the parties’ agreement, the trial

court issued a preliminary injunction, which gave Giller control of the company as chief

executive officer and chairman of the board. It also stated that Wayne Kleski “shall remain

President” and Katherine Kleski “shall remain Chief Operating Officer,” that they “shall

continue to be compensated by the terms of [their] Employment Agreement[s,]” and that they

would “continue to be bound by the various terms of [those] Agreement[s]” throughout this case.

Aside from receiving their salaries, however, the injunction provided that the Kleskis would have

no employment functions or duties at Katherine’s Collection and enjoined them from interfering

with its business operations. Giller was also prohibited from terminating the Kleskis’

employment without a further order of the court.

{¶7} On May 2, 2012, Giller moved the trial court for an order authorizing him to

terminate the Kleskis’ employment. He asserted that the Kleskis’ employment agreements, by

their explicit terms, ended on April 30, 2012. Because the preliminary injunction provided that

the Kleskis would be bound by the terms of their employment agreements, Giller sought

permission to terminate their employment.

{¶8} Although the Kleskis argued that Giller’s construction of the preliminary

injunction was incorrect and that the August 5 order had extended the terms of their employment

agreements throughout this litigation, the trial court disagreed. The court concluded that the

preliminary injunction had explicitly incorporated all of the terms of the employment agreements

and, because the Kleskis’ employment agreements had expired by their own terms, it granted

Giller authority to terminate their employment. The Kleskis appeal from that order and raise one

assignment of error. 4

II.

{¶9} Before reaching the merits of the Kleskis’ appeal, this Court must raise the issue

of its jurisdiction, which is limited to appeals from final orders or judgments. Whitaker-Merrell

Co. v. Geupel Const. Co., Inc., 29 Ohio St.2d 184, 186 (1972); Article IV, Section 3(B)(2), Ohio

Constitution; R.C. 2501.02. In the absence of a final, appealable order, this Court must dismiss

the appeal for lack of subject matter jurisdiction.

{¶10} Because the trial court order from which the Kleskis appeal did not resolve the

ultimate controversy between the parties, the order is interlocutory. Several matters may be

appealed on an interlocutory basis pursuant to R.C. 2505.02(B), however. The parties agree that

the only subsection of relevance here pertains to appeals from orders that grant or deny a

provisional remedy. R.C. 2505.02(B)(4) provides that an order that grants or denies a

provisional remedy is a final, appealable order only if it is one to which both of the following

apply:

The order in effect determines the action with respect to the provisional remedy and prevents a judgment in the action in favor of the appealing party with respect to the provisional remedy.

The appealing party would not be afforded a meaningful or effective remedy by an appeal following final judgment as to all proceedings, issues, claims, and parties in the action.

R.C. 2505.02(B)(4).

{¶11} The trial court’s August 5, 2011, preliminary injunction qualified as an order

granting a provisional remedy because a “provisional remedy” is defined in R.C. 2505.02(A)(3)

to include a proceeding for a preliminary injunction. The parties dispute, however, whether the

May 21, 2012 order at issue here was also one that determined a provisional remedy. The

Kleskis assert that the trial court’s May 21 order modified the terms of the August 5 preliminary 5

injunction. According to them, the preliminary injunction prohibited Giller from terminating

their employment while this litigation remained pending. Giller, on the other hand, argues that

the trial court’s May 21 order merely enforced the existing terms of the preliminary injunction.

{¶12} This Court cannot determine whether the May 21 order modified or simply

enforced the preliminary injunction without deciding the merits of the appeal, for the Kleskis’

argument on appeal is that the trial court misconstrued the terms of the preliminary injunction

that pertained to their continued employment. To decide whether the May 21 order is final and

appealable under R.C. 2505.02(B)(4), however, this Court should not delve into the merits of the

appeal. See Bennett v. Martin, 186 Ohio App. 3d 412, 2009-Ohio-6195, ¶ 5 (10th Dist). Instead,

we examine whether the appellant has raised at least a “colorable claim” that the trial court’s

order satisfied the first prong of R.C. 2505.02(B)(4). See Callahan v. Akron Gen. Med. Ctr., 9th

Dist. No. 22387, 2005-Ohio-5103, ¶ 29. Because the Kleskis assert a colorable argument that the

trial court modified the terms of the preliminary injunction, we will presume, for purposes of

determining whether the May 21 order is appealable under R.C. 2505.02(B)(4), that the May 5

order satisfies the first prong of the test.

{¶13} Of greater concern here is the second prong of R.C. 2505.02(B)(4), which

requires the Kleskis to demonstrate that they would be deprived of “a meaningful or effective

remedy” if they cannot appeal the May 21 order now. See R.C. 2505.02(B)(4)(b). The Kleskis

assert that waiting until after final judgment to appeal this alleged error will cause them to incur

additional inconvenience and financial hardship. A delay in obtaining monetary relief is the

necessary consequence of most civil litigation and that delay does not render the ultimate remedy

ineffective or unmeaningful under R.C. 2505.02(B)(4)(b). See State ex rel. Kingsley v. State

Emp. Relations Bd., 130 Ohio St.3d 333, 2011-Ohio-5519, ¶ 20 (emphasizing, within the 6

analogous context of a mandamus action, that the delay and expense necessitated by an

administrative appeal did not render that remedy inadequate).

{¶14} Instead, under R.C. 2505.02(B)(4), an appellant must demonstrate that effective

relief will not be available after final judgment because the order determining the provisional

remedy will result in something akin to a bell that cannot be unrung or a legal issue that will

become moot by the time of final judgment. For example, this Court has held that an order

requiring an attorney to testify about matters that are arguably protected by the attorney-client

privilege and the work-product doctrine is a final, appealable order. Amer Cunningham Co.,

L.P.A. v. Cardiothoracic & Vascular Surgery of Akron, 9th Dist. No. 20899, 2002-Ohio-3986, ¶

11. This Court has applied the same reasoning to discovery orders that require the disclosure of

trade secrets or require a non-party witness to testify about information that may be confidential.

E.g., Gibson–Myers & Assoc. v. Pearce, 9th Dist. No. 19358, 1999 WL 980562 (Oct. 27, 1999);

Wessell Generations, Inc. v. Bonnifield, 193 Ohio App.3d 1, 2011-Ohio-1294 (9th Dist.). As this

Court emphasized in Gibson-Myers, at *2, a party has no adequate remedy on appeal after the

disclosure of such information because “[t]he proverbial bell cannot be unrung and an appeal

after final judgment on the merits will not rectify the damage.”

{¶15} This Court has also found that an order that an attorney pay sanctions is

immediately appealable. Because the attorney must pay the sanctions immediately, any error in

that order cannot be adequately remedied through an appeal following the final judgment. Dillon

v. Big Trees, Inc., 9th Dist. No. 23831, 2008-Ohio-3264, ¶ 13. “If the order is not appealable

[immediately], the attorney is left in the unenviable position of either satisfying the order,

thereby mooting any appeal, or being held in contempt of court for failure to do so.” Id. 7

{¶16} The order at issue in this appeal does not involve an analogous situation. Even if

the trial court’s May 21 order incorrectly modified the August 5 preliminary injunction, the

impact on the Kleskis was the loss of their ongoing salaries. They have failed to demonstrate

that their loss cannot be effectively remedied by money damages later. Although they argue that

they also lost control of their company, they lost that control prior to the commencement of this

lawsuit and they agreed, nine months before the May 21 order, to preserve the status quo through

the preliminary injunction.

{¶17} Moreover, both the preliminary injunction and the May 21 order went to the heart

of allegations and claims underlying this litigation as to who has the right to control Katherine’s

Collection and whether either party is entitled to relief because of the alleged torts committed by

the other. The Kleskis’ counterclaims specifically sought monetary damages for their financial

losses allegedly caused by Giller, who took over the company and terminated their employment

before this litigation commenced. This Court has held that where, as here, the provisional

remedy affected the type of claims and relief that are at the heart of the underlying litigation, the

order determining the provisional remedy is not immediately appealable. McGuire v. Zarla, 9th

Dist. No. 26058, 2012-Ohio-2976, ¶ 12.

{¶18} The Kleskis have failed to demonstrate that money damages at the end of this

litigation, or an appeal following a final judgment, could not provide them with meaningful and

effective relief. Consequently, the May 21 order from which they appeal fails to satisfy the

requirements of R.C. 2505.02(B)(4)(b). Because the order appealed is not final and appealable,

the appeal is dismissed.

Appeal dismissed. 8

Immediately upon the filing hereof, this document shall constitute the journal entry of

judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the

period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is

instructed to mail a notice of entry of this judgment to the parties and to make a notation of the

mailing in the docket, pursuant to App.R. 30.

Costs taxed to Appellants.

CARLA MOORE FOR THE COURT

WHITMORE, J. CONCURS.

CARR, J. DISSENTING.

{¶19} I cannot agree with the majority that the Kleskis would be afforded a meaningful

or effective remedy by an appeal following final judgment in this litigation. The parties had

reached a collateral agreement, as reflected in the August 5 preliminary injunction, that the

Kleskis would continue to receive their salaries throughout this litigation. The trial court’s May

21 modification of that independent agreement, although part of the underlying litigation, will

not likely be addressed again by the trial court. Because the Kleskis may have forever lost their

right to challenge the alleged breach of the August 5 agreement, I believe that this Court has

jurisdiction to address the merits of their appeal. For that reason, I respectfully dissent. 9

APPEARANCES:

JACK MORRISON, JR. and THOMAS R. HOULIHAN, Attorneys at Law, for Appellants.

RICHARD P. GODDARD, Attorney at Law, for Appellees.

JEFFREY BADDELEY, Attorney at Law, for Appellees.