Stumpff v. Harris, Unpublished Decision (9-15-2006)

2006 Ohio 4796
CourtOhio Court of Appeals
DecidedSeptember 15, 2006
DocketC.A. No. 21407.
StatusUnpublished
Cited by13 cases

This text of 2006 Ohio 4796 (Stumpff v. Harris, Unpublished Decision (9-15-2006)) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law.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
Stumpff v. Harris, Unpublished Decision (9-15-2006), 2006 Ohio 4796 (Ohio Ct. App. 2006).

Opinion

OPINION
{¶ 1} Plaintiff-appellant Kenneth M. Stumpff (hereinafter "Stumpff") appeals from a decision of the Montgomery County Court of Common Pleas which adopted the decision of the magistrate which found for the defendant-appellee Richard L. Harris (hereinafter "Harris"). Before their personal and professional relationship deteriorated, Stumpff and Harris were each 50% co-owners of an auto salvage business located in Dayton, Ohio. Stumpff initially filed the suit alleging breach of fiduciary duty by Harris as well as numerous instances of self-dealing on the part of Harris contrary to the interests of Stumpff. Along with his answer to Stumpff's complaint, Harris filed a counterclaim requesting judicial dissolution of the business as well as a restraining order barring Stumpff from the business premises.

{¶ 2} Following a bench trial held on April 26, 2004, and ending on May 24, 2004, the magistrate issued a judgment on November 24, 2004, in favor of Harris and ordering Stumpff to pay the costs of the action. Specifically, the magistrate recommended the dismissal of Stumpff's claims against Harris and ordered the judicial dissolution of the corporation and liquidation of its assets.

{¶ 3} Stumpff responded by filing objections to the magistrate's decision on December 8, 2004. On December 6, 2005, the trial court issued a decision overruling Stumpff's objections and adopting the decision of the magistrate. Stumpff filed a notice of appeal with this Court on December 19, 2005.

I
{¶ 4} As previously stated, Harris and Stumpff were 50% co-owners of Mahaffey's Auto Salvage, Inc. (hereinafter "Mahaffey's"). Mahaffey's has been in existence since the 1960's at which time Clara Mahaffey operated the business as a sole proprietorship. After it was closed for a period of time, Clara Mahaffey, with the help of Harris and Stumpff, reopened the business on May 13, 1993.

{¶ 5} Until Clara Mahaffey died on March 10, 2002, she owned the land upon which Mahaffey's was situated and charged the company rent for the use of the property. Initially, she charged the business $600.00 for rent, but eventually raised the price to $1,200.00 a month. Harris, Clara Mahaffey's foster son, inherited the land upon her death and raised the rent to $1,500.00 a month. Harris, who is listed as president of the company in the corporate documents, testified that he is in charge of the day to day operation of the salvage yard and also handles the bookkeeping. In March of 2004, two months prior to the trial before the magistrate, Harris raised the rent on the property to $2,500.00 a month without consulting Stumpff.

{¶ 6} Stumpff, who was nineteen years old when he began working for Clara Mahaffey, testified that he never received a formal education and is, essentially, a functioning illiterate. His main duties at Mahaffey's included operating the wrecker and procuring vehicles for salvage purposes. Stumpff was listed as the treasurer in the corporate documents, and while employed at Mahaffey's, he was responsible for collecting the money received each day and keeping it secure in a floor safe located at his home. Stumpff testified that he would retrieve the money at the request of Harris so that it could be deposited at their bank.

{¶ 7} In May of 2001, Stumpff's wife of twenty-four years passed away, and he began a period of bereavement leave which ultimately lasted two years. During that time, Mahaffey's continued to pay Stumpff $2,500.00 a month as well as provide him health insurance benefits. Although Stumpff asserts otherwise, Harris testified that he asked him to return to work on numerous occasions, but Stumpff refused and allegedly threatened Harris. Consequently, Harris stopped paying a salary to Stumpff and discontinued his health benefits in May of 2003. Additionally, Harris testified that he advised Stumpff that he would call the police if Stumpff attempted to enter the business.

{¶ 8} On July 1, 2003, Stumpff withdrew $16,000.00 from Mahaffey's corporate account using two checks made out to "cash". The withdrawal was made by Stumpff without Harris's consent. Harris testified that these transactions left approximately $113.00 in Mahaffey's account and made it difficult for the business to cover checks it had already written.

{¶ 9} Harris and Stumpff then attempted to enter into negotiations for one of them to buy out the other's interest in the business. It is apparent from the results of these negotiations that they had widely differing opinions as to the value of Mahaffey's. At one point, Harris offered Stumpff approximately $30,000.00 for his interest in Mahaffey's, but Stumpff declined, apparently convinced that the business was worth significantly more.

{¶ 10} At trial, Stumpff offered the testimony of Roger Hall, a salvage yard operator, who testified that Mahaffey's was worth approximately $400,000.00 to $450,000.00. Hall based his testimony on his own knowledge and experience as a salvage yard operator as well as a two-hour visual inspection of the business premises. The magistrate ultimately discounted Hall's opinion regarding the fair market value of Mahaffey's finding that he was neither offered nor accepted as a valuation expert at trial.

{¶ 11} Harris, on the other hand, offered the testimony of an accountant, William Driver, C.P.A., with respect to the value of the business. Based on a review of Mahaffey's financial records and current inventory, Driver testified that Stumpff's share of the business was worth between approximately $17,000.00 and $27,300.00, based upon the business' liquidation value. The trial court correctly noted that although Driver was not accepted as a valuation expert at trial, Stumpff did not object to his opinion concerning the fair market value of the business.

{¶ 12} After buy-out negotiations failed, Stumpff filed suit, claiming that Harris breached his fiduciary duty by: 1) ousting him from his employment position at Mahaffey's and refusing to pay his salary and health benefits; 2) converting business opportunities to his own advantage; and 3) refusing to permit Stumpff to enter the business premises. Harris filed a counterclaim seeking judicial dissolution of the business.

{¶ 13} As aforementioned, the matter was heard before a magistrate who issued judgment in favor of Harris and dismissed Stumpff's claims for breach of fiduciary duty. The magistrate also ordered that Mahaffey's Auto Salvage, Inc. be judicially dissolved pursuant to R.C. § 1701.91(D). The trial court subsequently overruled Stumpff's objections to the magistrate's decision and adopted said decision in an opinion issued on December 6, 2005. It is from this judgment that Stumpff now appeals.

II
{¶ 14} Stumpff's first assignment of error is as follows:

{¶ 15} "THE TRIAL COURT COMMITTED PREJUDICIAL ERROR BY RETROACTIVELY STRIKING THE VALUATION TESTIMONY OF STUMPFF'S EXPERT THUS EFFECTIVELY NEGATING ANY POSSIBILITY OF STUMPFF PROVING HIS `SQUEEZE OUT' CLAIM."

{¶ 16} Pursuant to Civ. R. 53(E)(3), a party who disagrees with a magistrate's proposed decision must file objections to said decision. When reviewing objections to a magistrate's decision, the trial court is not required to follow or accept the findings or recommendations of its magistrate.

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Bluebook (online)
2006 Ohio 4796, Counsel Stack Legal Research, https://law.counselstack.com/opinion/stumpff-v-harris-unpublished-decision-9-15-2006-ohioctapp-2006.