Meadows v. Freedom Banc, Inc., Unpublished Decision (3-29-2005)

2005 Ohio 1446
CourtOhio Court of Appeals
DecidedMarch 29, 2005
DocketNo. 03AP-1145.
StatusUnpublished
Cited by8 cases

This text of 2005 Ohio 1446 (Meadows v. Freedom Banc, Inc., Unpublished Decision (3-29-2005)) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law.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
Meadows v. Freedom Banc, Inc., Unpublished Decision (3-29-2005), 2005 Ohio 1446 (Ohio Ct. App. 2005).

Opinion

OPINION
{¶ 1} Plaintiff-appellant, Wayne Meadows ("appellant"), appeals from the judgment of the Franklin County Court of Common Pleas granting summary judgment in favor of defendants-appellees, Freedom Banc, Inc. ("Freedom Banc"), Xena Investments, Inc. ("Xena"), William Bourjaily ("Bourjaily"), Larry Druggan ("Druggan"), Carol Druggan1 and Christopher McCracken ("McCracken.") For the following reasons, we affirm.

{¶ 2} The facts pertinent to this appeal are as follows. In 1995, appellant incorporated Freedom Banc.2 Freedom Banc was inactive until 1999, when appellant joined with VandeWater, Druggan and McCracken to revitalize and operate Freedom Banc as a mortgage brokerage. According to appellant, each party was to receive stock representing a 23 percent ownership interest in Freedom Banc, with the exception of VandeWater who would receive a 31 percent interest. (Appellant Dep. at 26.) Appellant alleges he was given proxies authorizing him to vote Druggan's, VandeWater's and McCracken's stock.

{¶ 3} Appellant served as President, CEO and Chairman of the Board of Freedom Banc until January 11, 2000, when McCracken, VandeWater and Druggan asked him to step down because of a lack of productivity in the daily operations of Freedom Banc. That same day, appellant voluntarily left and quit working for Freedom Banc. Id. at 20.

{¶ 4} On February 8, 2000, appellant met with VandeWater and Freedom Banc's attorney, Richard Palmer, to resolve issues surrounding his interest in Freedom Banc. During that meeting, a handwritten document entitled "Memorandum of Agreement" was purportedly signed by VandeWater as a representative of Freedom Banc and by appellant in his individual capacity. Appellant claims the agreement provided that Freedom Banc would purchase appellant's 23 percent interest in the company for $20,000. Id. at 68. This transaction never took place.

{¶ 5} On or about July 2000, Xena, a venture capital company, began discussions with Freedom Banc regarding a possible equity investment in the company. Bourjaily, Xena's principal, was the primary representative in the negotiations with Freedom Banc. Xena ultimately decided to make a loan of $250,000 to Freedom Banc. In consideration of the loan to Freedom Banc, Bourjaily was made an officer of Freedom Banc for a limited period of time.3 (Bourjaily Affidavit ¶ 9.)

{¶ 6} Appellant admitted he never saw Freedom Banc turn any kind of profit. Id. at 59. Freedom Banc is currently over $600,000 in debt and is no longer in operation.

{¶ 7} On August 9, 2000, appellant filed a complaint against appellees, seeking the value of his interest in Freedom Banc. In his complaint, appellant alleged causes of action against appellees for breach of contract, fraud, securities fraud, conspiracy to defraud, and interference with contract. Appellant claimed that VandeWater, McCracken, Druggan and Carol Druggan conspired to deprive appellant of his interest in Freedom Banc. Further, appellant alleged Druggan, VandeWater and McCracken held corporate meetings and took corporate actions in 2000 without appellant's attendance or proxy. Finally, appellant alleged that Bourjaily and Xena joined with VandeWater, Druggan and McCracken to continue the alleged conspiracy to take ownership and control of Freedom Banc from appellant.

{¶ 8} After granting appellees' motion for a more definite statement, on February 28, 2001, appellant filed his first amended complaint against appellees, alleging the identical causes of action stated in his original complaint. On March 16, 2001, appellees answered the first amended complaint and filed counterclaims against appellant for breach of fiduciary duty, tortious interference with prospective business relations, conversion and unjust enrichment.

{¶ 9} On January 16, 2002, appellees filed their motion for summary judgment seeking judgment in their favor on appellant's claims. In their motion, appellees contended this lawsuit was based solely upon appellant's unsupported assumption that appellees defrauded him of his stock in Freedom Banc. Further, appellees claimed that Xena and Bourjaily, as creditors of Freedom Banc, cannot be liable under any legal theory for the alleged actions taken by Freedom Banc and its management. Appellees asserted there was no evidence that Bourjaily and Xena owned or controlled Freedom Banc, and that this conclusion may not be reasonably inferred from the evidence. Finally, appellees argued that the memorandum of agreement was not a legally binding contract, and that if it was, appellant could not enforce it because he himself had breached the agreement. Appellees filed a supplemental memorandum in support of their motion for summary judgment, and attached thereto copies of the loan documents related to Xena's loan to Freedom Banc.

{¶ 10} In response, appellant asserted that genuine issues of material fact existed for trial as to all allegations in his complaint. In support of his position, appellant attached to his memorandum contra the following documents: (1) Freedom Banc's application for a line of credit at Huntington National Bank, signed by Robert Sperli ("Sperli"), a corporate officer of Xena; (2) document entitled "Majority Action Taken by Directors Without A Meeting of Freedom Banc, Inc." dated August 8, 2000; (3) document entitled "Majority Action Taken by Directors Without A Meeting of Freedom Banc, Inc." dated July 17, 2000; (4) affidavit of Clay Thrash ("Thrash"), a friend of appellant who had previously loaned Freedom Banc money with attached exhibits; (5) McCracken's trust agreement dated January 27, 1999; (6) cognovit demand note signed by VandeWater, Druggan and McCracken dated March 27, 2001; (7) Freedom Banc's assets and liabilities report dated April 19, 2000 signed by VandeWater; (8) copy of the memorandum agreement; (9) letter to Victor Krupman from Richard Palmer, appellees' previous attorney, dated March 23, 2000; (10) copy of a headline from the New York Times; (11) document dated March 12, 1999 signed by VandeWater; (12) letter to appellant advising him of his removal from his employment pending the shareholder's meeting; (13) three Proxies granting appellant the power to vote McCracken's, Druggan's and VandeWater's stock in Freedom Banc; (14) January 11, 2000 minutes from meeting attended by McCracken, appellant, VandeWater and Druggan; and (15) affidavit of appellant.

{¶ 11} Appellees filed a reply memorandum on March 18, 2002. In support, appellees attached an additional affidavit of Bourjaily with attached exhibits. On March 22, 2002, appellant filed a surreply in response to appellees' reply memorandum, and attached thereto excerpts from VandeWater and Bourjaily's deposition testimony.

{¶ 12} On April 30, 2002, the trial court issued a decision granting appellees' motion for summary judgment on all of appellant's claims. In its decision, the court found appellant's arguments in his memorandum contra largely consisted of factual generalization and speculation, with no legal authority to support his arguments. Further, the court found that the documents attached to appellant's memorandum contra, with the exception of exhibits attached to Thrash's affidavit, were unverified and therefore inadmissible under Civ.R. 56.4

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Bluebook (online)
2005 Ohio 1446, Counsel Stack Legal Research, https://law.counselstack.com/opinion/meadows-v-freedom-banc-inc-unpublished-decision-3-29-2005-ohioctapp-2005.