Murray & Murray Co. v. Performance Industries, Inc.

701 N.E.2d 475, 93 Ohio Misc. 2d 10, 1998 Ohio Misc. LEXIS 34
CourtCuyahoga County Common Pleas Court
DecidedFebruary 27, 1998
DocketNo. CV-264046
StatusPublished
Cited by2 cases

This text of 701 N.E.2d 475 (Murray & Murray Co. v. Performance Industries, Inc.) is published on Counsel Stack Legal Research, covering Cuyahoga County Common Pleas Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Murray & Murray Co. v. Performance Industries, Inc., 701 N.E.2d 475, 93 Ohio Misc. 2d 10, 1998 Ohio Misc. LEXIS 34 (Ohio Super. Ct. 1998).

Opinion

Jose A. Villanueva, Judge.

I. PROCEDURAL HISTORY

The instant declaratory action was filed by plaintiffs Murray & Murray Co., L.P.A. Profit-Sharing Plan & Trust, and Murray & Murray Co., L.P.A. Pension Plan & Trust against Performance Industries, Inc., Performance Holdings, Inc., Joe Hrudka, Tom Hrudka, and Howard Gardner (hereinafter “individual defen[12]*12dants”). The complaint asserts claims for fraud against the individual defendants. Plaintiffs accused the individual defendants, who were former or present officers of Performance Industries, Inc. at the time in question, of self-dealing in negotiating a sale of Performance corporate assets to another company. The complaint also seeks a determination that Cuyahoga County is the proper location for the conduct of fair cash value appraisal proceedings initiated pursuant to R.C. 1701.85 and a determination that there be no necessity of placing legends on Performance stock certificates owned by plaintiffs during the pendency of any R.C. 1701.85 appraisal proceedings.

At the time of the filing of the instant action, plaintiffs, along with numerous other dissenting shareholders, had already filed and had pending an action titled Performance Industries, Inc., f.k.a. Mr. Gasket Company, Inc., an Ohio Corporation v. Ecco Sales, Inc. Defined Benefit Plan et al., case No. CV 94-00235 in the Superior Court of Arizona in the County of Maricopa. That action, commonly referred to as an appraisal action, was filed pursuant to R.C. 1701.85 on behalf of dissenting shareholders and demanded a determination of the fair cash value of shares incident to the sale of assets to Walker Manufacturing Company by Performance Industries, Inc.

As part of their litigation strategy in the Cuyahoga County case, plaintiffs sought a determination that Cuyahoga County had proper venue and jurisdiction over the Arizona appraisal action so that issues related thereto could instead be litigated in this court. Defendants responded by filing motions to dismiss, asserting that the Arizona court had acquired proper jurisdiction over the appraisal action. Defendants alleged that although the instant action is styled as a declaratory action for fraud and other relief, the essential claims being made by plaintiffs were claims that related to the value of their stock, matters which the Arizona appraisal action could adequately address, Defendants also raised various other substantive and procedural objections to the complaint filed by plaintiffs.

Thereafter, and subsequent to extensive discussion with the parties at pretrial, this court stayed discovery and other proceedings pending further developments in the already pending Arizona appraisal action. Defendants’ motion to dismiss as well as other subsequently filed motions have remained pending. It having recently come to the attention of this court that the Arizona case has not been resolved and that it has apparently been placed on some form of inactive status by the Maricopa County Superior Court, the stay in the instant case is hereby lifted and the court will enter rulings on all pending motions.

Currently pending before the court are the following motions and/or pleadings:

• Defendants Performance Industries, Inc. and Performance Holding, Inc.’s (hereinafter “Performance defendants”) Motion to Dismiss;

[13]*13• Individual defendants Joe Hrudka, Tom Hrudka, and Howard Gardner’s Motion to Dismiss;

• Performance defendants’ Supplemental Memorandum in Support of Motion to Dismiss;

• Plaintiffs’ Motion for Partial Summary Judgment and Memorandum In Support and Consolidated Memorandum in Opposition to Defendants’ Motions to Dismiss and Memorandum in Support of Partial Summary Judgment in Turn of the Plaintiffs;

• Individual defendants Joe and Tom Hrudka and Howard Gardner’s Supplemental Memorandum in Support of Motion to Dismiss;

• Individual defendants Joe and Tom Hrudka and Howard Gardner’s Brief in Opposition to Plaintiffs’ Motion for Partial Summary Judgment;

• Performance defendants’ Brief in Opposition to Plaintiffs’ Motion for Partial Summary Judgment;

• Plaintiffs’ Affidavit of Dennis E. Murray, Sr. in Support of Motion of Plaintiffs for Partial Summary Judgment; and

• Individual defendants Hrudkas and Gardner’s Supplemental Memorandum in Opposition to Plaintiffs’ Motion for Partial Summary Judgment.

For the reasons which are set forth below, the court grants defendant Performance Industries, Inc.’s motion to dismiss, grants the individual defendants Joe Hrudka, Tom Hrudka, and Howard Gardner’s motion to dismiss, and denies plaintiffs’ motion for partial summary judgment.

II. DISCUSSION

In ruling on a motion to dismiss pursuant to Civ.R. 12(B)(6), the court must interpret all material allegations in the complaint as true and taken as admitted. Korodi v. Minot (1987), 40 Ohio App.3d 1, 531 N.E.2d 318. Only where such facts would under no circumstances support recovery can a motion to dismiss be granted. O’Brien v. Univ. Community Tenants Union, Inc. (1975), 42 Ohio St.2d 242, 71 O.O.2d 223, 327 N.E.2d 758.

A. FACTS AND ALLEGATIONS

Defendant Joe Hrudka is Chairman of the Board of Performance and resides in Arizona. Defendant Tom Hrudka-is a former director and officer of Performance. Defendant Howard Gardner is a former director. Gardner is an Ohio resident.

[14]*14A November 8, 1993 “Notice to Shareholders of Meeting” and accompanying “Proxy Statement” sought shareholder approval of two transactions: (1) an asset sale (hereinafter the “Walker transaction”) and (2) a bankruptcy proceeding that occurred previously in 1991 (hereinafter the “Eischlin transaction”). The plaintiffs aver based upon information and belief that the Eischlin transaction is similar to the Walker transaction.

The notice to shareholders of the vote included notification of shareholders’ rights to dissent from the sale and receive fair cash value as provided in R.C. 1701.85. The notice indicated that an action for cash value must be brought in Maricopa County, Arizona, which the defendants claimed as the principal office location for Performance. On January 6, 1994, plaintiffs filed a complaint in Maricopa County requesting determination of fair cash value. R.C. 1701.85 mandates the location of the proceeding as the “court of common pleas in which the principal office of the corporation * * * is located.”

Plaintiffs bring the within Ohio action (a) to prevent alleged breach of fiduciary duties in sales which are subject to shareholder approval, and (b) to prevent sales which are not subject to shareholder approval and which may or may not be addressed in the proxy.

Plaintiffs allege that disclosures regarding the transactions/sales referred to the Proxy Statement are so materially misleading, false, or incomplete as to prohibit shareholders from making a fully informed decision. They allege that the individual defendants breached their fiduciary duties to plaintiffs, including the duty of candor and the duty to provide complete information.

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Bluebook (online)
701 N.E.2d 475, 93 Ohio Misc. 2d 10, 1998 Ohio Misc. LEXIS 34, Counsel Stack Legal Research, https://law.counselstack.com/opinion/murray-murray-co-v-performance-industries-inc-ohctcomplcuyaho-1998.