State ex rel. Ohio Co. v. Maschari

553 N.E.2d 1356, 51 Ohio St. 3d 18, 1990 Ohio LEXIS 203
CourtOhio Supreme Court
DecidedMay 9, 1990
DocketNo. 89-167
StatusPublished
Cited by10 cases

This text of 553 N.E.2d 1356 (State ex rel. Ohio Co. v. Maschari) is published on Counsel Stack Legal Research, covering Ohio Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State ex rel. Ohio Co. v. Maschari, 553 N.E.2d 1356, 51 Ohio St. 3d 18, 1990 Ohio LEXIS 203 (Ohio 1990).

Opinions

Per Curiam.

This is an action in prohibition challenging the jurisdiction of respondent, Judge Ann B. Maschari of the Court of Common Pleas of Erie County, to proceed with a jury trial on certain claims arising out of the management-led leveraged buyout of Fun-time, Inc., formerly a publicly traded Ohio corporation. The cause before Judge Maschari, Maureen Gergely et al. v. Dale Van Voorhis et al., Erie C.P. No. 87-CV-469 (the “Gergely action”), is a class action brought against Funtime, Inc., Dale W. Van Voorhis, Gaspar C. Lococo, The Ohio Company, Donald C. Fanta, O. Allan Gulker, Daniel A. Fronk, and Dain Bosworth, Inc., the relators in this case. The class consists of:

“[A]ll former shareholders of Fun-time, Inc., who owned shares on September 14, 1987 [the day of Fun-time management’s tender offer], and who continued to own stock at the close of business on December 30,1987 [the day before the merger that effected the buyout], excepting only those shares owned directly or indirectly by defendants VanVoorhis [sic], Lococo, Fanta, Gulker, Fronk, The Ohio Company, and Dain Bosworth[.]”

Van Voorhis and Lococo are the Funtime, Inc. officers and directors who led the group that offered to acquire all of Funtime’s stock. The Ohio Company was Funtime’s largest stockholder before the buyout. Fanta, Gulker, and Fronk are or were officers or directors of The Ohio Company, and were also the nonmanagement Fun-time directors who evaluated the Van Voorhis Group’s offer as a special committee. Dain Bosworth, Inc. is the investment banking firm that assessed [19]*19the buyout transaction for financial fairness.

The Gergely action is purported to be a suit for damages resulting from fraudulent acts and breaches of fiduciary duties committed in connection with the entire transaction through which Funtime “went private.” However, in support of, a writ prohibiting Judge Maschari from proceeding, relators argue that the Gergely action actually attacks the adequacy of the price paid for shares of Funtime stock, and seeks an increase of that price. In Armstrong v. Marathon Oil Co. (1987), 32 Ohio St. 3d 397, 421-422, 513 N.E. 2d 776, 798, we held that the sole means for determining the price to be paid for shares held by a dissenting shareholder was the special trial court appraisal proceeding authorized by R.C. 1701.85. Thus, relying on Armstrong and cases like Steinberg v. Amplica, Inc. (1986), 42 Cal. 3d 1198, 233 Cal. Rptr. 249, 729 P. 2d 683, and Walter J. Schloss Associates v. Chesapeake & Ohio Ry. Co. (1988), 73 Md. App. 727, 536 A. 2d 147, relators maintain that Judge Maschari has no jurisdiction to circumvent this exclusive remedy by conducting a jury trial in the Gergely action.

Relators’ argument was raised in the Gergely action in a motion for summary judgment. Judge Maschari denied the motion without explanation, but her ruling implies a preliminary finding that genuine fraud and breach of fiduciary claims are asserted in the Gergely action. In Armstrong, we declared the statutory appraisal remedy exclusive, but also said that:

“* * * [T]his is not to say that causes of action which seek compensation other than the value of a dissenter’s shares of stock are not maintainable. Provable injury under whatever theory utilized is compensable so long as it does not seek to overturn or modify the fair cash value determined. Such theory may not, however, be joined to the R.C. 1701.85 proceeding, but is a separate cause of action subject to the applicable statute of limitations and res judicata. See Radol v. Thomas (C.A. 6, 1985), 772 F. 2d 244, certiorari denied (1986), 477 U.S. [903] * * *.” (Emphasis added.) Armstrong, supra, at 422, 513 N.E. 2d at 798.

Thus, Judge Maschari argues here that she has authority to conduct a jury trial in the Gergely action because actions for fraud and breach of fiduciary duty are permitted outside the statutory appraisal proceeding.

Judge Maschari also relies on the rule stated in State, ex rel. Smith, v. Court of Common Pleas (1982), 70 Ohio St. 2d 213, 24 O.O. 3d 320, 436 N.E. 2d 1005, paragraph one of the syllabus, which is:

“A court having general jurisdiction of the subject matter of an action has authority to determine its own jurisdiction on the issue raised, and a party challenging its jurisdiction has a remedy at law in an appeal from an adverse holding of the court that it has jurisdiction, and may not maintain a proceeding in prohibition to prevent the prosecution of such action. (State, ex rel. Miller, v. Court, 151 Ohio St. 397, paragraph three of the syllabus, approved and followed.)”

Judge Maschari argues that relators have such an adequate remedy since they will be able to appeal in the event a decision is ultimately rendered against them. As this ordinarily defeats a claim for the writ because prohibition is not to be used as a substitute for appeal, State, ex. rel. Gilla, v. Fellerhoff (1975), 44 Ohio St. 2d 86, 73 O.O. 2d 328, 338 N.E. 2d 522, or to prevent or correct an erroneous judicial decision, State, ex rel. Winnefeld, v. Court of Common Pleas of Butler Cty. (1953), 159 Ohio St. 225, 50 O.O. 263, 112 N.E. 2d 27, Judge [20]*20Maschari maintains that relators are not entitled to a writ of prohibition.

Relators do not dispute the adequacy of the appeal that will eventually be available. Instead, they urge us to apply another rule, which is also mentioned in Smith:

“* * * [W]here there is a ‘total and complete want of jurisdiction’ on the part of the inferior court, * * * such a writ [will] be allowed despite the presence of a remedy by way of appeal.” Smith, supra, at 215, 24 O.O. 3d at 321, 436 N.E. 2d at 1007, citing State, ex rel Adams, v. Gusweiler (1972), 30 Ohio St. 2d 326, 329, 59 O.O. 2d 387, 388, 285 N.E. 2d 22, 24. Accord State, ex rel. Johnson, v. Perry County Court (1986), 25 Ohio St. 3d 53, 58, 25 OBR 77, 81, 495 N.E. 2d 16, 21.

From this, relators argue that the availability of an appeal is immaterial because Judge Maschari is completely and totally without jurisdiction to proceed with a jury trial in the Gergely action under R.C. 1701.85.

We disagree for two reasons. First, to conclude that Judge Maschari is “total[ly] and completely],” (Gusweiler, supra, at 329, 59 O.O. 2d at 389, 285 N.E. 2d at 24) without any jurisdiction “whatsoever” (Johnson, supra, at 58, 25 OBR at 81, 495 N.E. 2d at 21), we would have to find that a statute “patently and unambiguously” (Smith, supra, at 215-216, 24 O.O. 3d at 321, 436 N.E. 2d at 1007-1008, citing State, ex rel. Safeco Ins. Co., v. Kornowski [1974], 40 Ohio St. 2d 20, 69 O.O. 2d 90, 317 N.E. 2d 920) prevents her from exercising the general original jurisdiction bestowed on common pleas courts by R.C. 2305.01. However, as we said in Armstrong, R.C. 1701.85 does not make its appraisal proceeding the exclusive remedy for actions that seek damages other than for the value of a dissenting shareholder’s stock. Judge Maschari has determined, as an initial matter, that the Gergely action seeks relief for genuine fraud and breach of fiduciary duty claims, not for the value of a dissenter’s shares. Thus, R.C.

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Bluebook (online)
553 N.E.2d 1356, 51 Ohio St. 3d 18, 1990 Ohio LEXIS 203, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-ohio-co-v-maschari-ohio-1990.