[Cite as Universal Real Estate Solutions, Inc. v. Snowden, 2014-Ohio-5813.]
STATE OF OHIO ) IN THE COURT OF APPEALS )ss: NINTH JUDICIAL DISTRICT COUNTY OF SUMMIT )
UNIVERSAL REAL ESTATE C.A. No. 27171 SOLUTIONS, INC.
Appellant/Cross-Appellee APPEAL FROM JUDGMENT v. ENTERED IN THE COURT OF COMMON PLEAS RANDY SNOWDEN, et al. COUNTY OF SUMMIT, OHIO CASE No. CV-2012-02-0743 Appellees/Cross-Appellant
DECISION AND JOURNAL ENTRY
Dated: December 31, 2014
WHITMORE, Judge.
{¶1} Appellant/Cross-Appellee, Universal Real Estate Solutions, Inc., appeals from the
judgment of the Summit County Court of Common Pleas. Appellee/Cross-Appellant, Randy
Snowden, appeals from the same judgment. This Court affirms in part and reverses in part.
I
{¶2} In May 2002, Randy Snowden and William Wendell formed Universal Real
Estate Solutions, Inc. (“Universal”). Snowden and Wendell were the only shareholders in the
corporation and each owned fifty percent of the shares. Universal was in the business of buying,
repairing, and selling real estate. The company also rented properties it owned. According to
the Shareholder’s Agreement, Snowden was responsible for finding properties to buy,
negotiating the purchase price, and maintaining the properties in its inventory. Wendell was
responsible for funding the corporation until it could obtain bank financing. Universal was to 2
pay Wendell interest on any loans he made to the company. Net profits from the sale of any
properties were to be split evenly between Snowden and Wendell.
R & S Deal
{¶3} In April 2005, R & S Land Co., L.L.C. (“R & S”), a company partially owned by
Snowden, purchased properties from Universal for $250,000. Snowden, who was fifty percent
owner of R & S, signed the settlement statement on behalf of Universal. Shortly thereafter, the
properties were sold by R & S to David and Brenda Gregory for $291,000.1 According to
Snowden, R & S only received a portion of the purchase price and structured the balance as an
installment sale, which R & S financed. The Gregorys defaulted on the installment contract and
discharged their debt to R & S in bankruptcy.
Florida Deal
{¶4} In 2005, Universal sought to invest in property in Florida. Snowden testified that
he was able to secure a corporate bank loan, but Wendell refused to supply the necessary
collateral. According to Snowden, he decided to purchase some Florida real estate lots himself
because the value of property was quickly increasing. In February 2006, Snowden paid
$150,000 for five lots.2 In March 2006, Snowden sold the five lots to Universal for $170,000.
Sanders Deal
{¶5} In late 2006, Snowden was approached by Dale Sanders with a real estate
proposal. Sanders was looking to sell 17 houses. According to Snowden, Wendell was not
interested in Universal purchasing the properties because of their condition. Snowden, then,
purchased the properties using Vernon Realty, a company wholly owned by Snowden, for
1 There was conflicting testimony regarding the Gregorys’ purchase price. However, the trial court found the purchase price to be $291,000. This finding has not been challenged on appeal. 2 Snowden, ultimately, only paid $145,000 for the lots because he was given a discount for paying off his loans early through the sale to Universal. 3
$287,000. In August 2007, Vernon Realty sold the same properties to Universal for $399,000.
The purchase contract noted Snowden was a company officer and part owner of both the buying
and selling corporations. Snowden signed the contract as both the buyer and the seller.
{¶6} In 2009, Snowden sold his Universal shares to Wendell for $1.00 and Wendell
assumed all responsibility for Universal’s debt. Prior to the sale, Snowden informed Wendell
that he was issuing a corporate check to Best Value Rentals, a company owned by Snowden, for
reimbursement of two employees’ salaries who had performed work for Universal over the prior
two years.
{¶7} In 2012, Universal filed suit against Snowden alleging breach of contract, breach
of fiduciary duty, conversion, and fraud. After a bench trial, the court found Snowden had
breached his fiduciary duty, but found for Snowden on the remaining claims. The court
calculated Snowden’s profits on the three land transactions at $60,456 and awarded Universal
this amount in damages.
{¶8} Universal now appeals and raises five assignments of error for our review.
Additionally, Snowden cross-appeals and raises two assignments of error.
II
Universal’s Assignment of Error Number One
THE TRIAL COURT ERRED WHEN IT FAILED TO FIND MALICE OR FRAUD AND AWARD PUNITIVE DAMAGES.
{¶9} In its first assignment of error, Universal argues that the greater weight of the
evidence supports a finding that Snowden acted with malice and/or committed fraud. Further,
Universal argues that because there was malice or fraud it is entitled to punitive damages.
{¶10} In a challenge to the weight of the evidence: 4
[t]he [reviewing] court * * * weighs the evidence and all reasonable inferences, considers the credibility of witnesses and determines whether in resolving conflicts in the evidence, the [finder of fact] clearly lost its way and created such a manifest miscarriage of justice that the [judgment] must be reversed and a new trial ordered.
(Alterations sic.) (Internal quotations omitted.) Eastley v. Volkman, 132 Ohio St.3d 328, 2012-
Ohio-2179, ¶ 20. “In weighing the evidence, the court of appeals must always be mindful of the
presumption in favor of the finder of fact.” Id. at ¶ 21. “This presumption arises because the
trial judge had an opportunity ‘to view the witnesses and observe their demeanor, gestures and
voice inflections, and use these observations in weighing the credibility of the proffered
testimony.’” State v. Wilson, 113 Ohio St.3d 382, 2007-Ohio-2202, ¶ 24, quoting Seasons Coal
Co., Inc. v. Cleveland, 10 Ohio St.3d 77, 80 (1984).
{¶11} The trial court’s application of the law, however, raises a question of law. Fuline
v. Green, 9th Dist. Summit No. 26586, 2013-Ohio-2171, ¶ 6. This court reviews questions of
law de novo. Id. “A de novo review requires an independent review of the trial court’s decision
without any deference to the trial court’s determination.” State v. Ross, 9th Dist. Summit No.
26694, 2014-Ohio-2867, ¶ 33, quoting State v. Consilio, 9th Dist. Summit No. 22761, 2006-
Ohio-649, ¶ 4.
Fraud
{¶12} To establish fraud, a plaintiff must prove:
(1) a representation (or concealment of a fact when there is a duty to disclose) (2) that is material to the transaction at hand, (3) made falsely, with knowledge of its falsity or with such utter disregard and recklessness as to whether it is true or false that knowledge may be inferred, and (4) with intent to mislead another into relying upon it, (5) justifiable reliance, and (6) resulting injury proximately caused by the reliance.
Volbers-Klarich v. Middletown Mgt., Inc., 125 Ohio St.3d 494, 2010-Ohio-2057, ¶ 27, citing
Burr v. Stark Cty. Bd. of Commrs., 23 Ohio St.3d 69, 73 (1986). “[O]ne who fails to disclose 5
material information prior to the consummation of a transaction commits fraud only when he is
under a duty to do so. And the duty to disclose arises when one party has information ‘that the
other [party] is entitled to know because of a fiduciary or other similar relation of trust and
confidence between them.’” (Alterations sic and emphasis added.) State v. Warner, 55 Ohio
St.3d 31, 54 (1990), quoting Chiarella v. United States, 445 U.S. 222, 228 (1980). This
affirmative duty to disclose, however, is not without its limitations. Isroff v. Westhall Co., 9th
Dist. Summit No. 14184, 1990 WL 15192, *3 (Feb. 21, 1990).
Courts have often found no affirmative duty to disclose in situations where the complainant was intimately involved with the operation of the corporation, or where he had ready access to all relevant information or failed to make reasonable attempts to discover such information, or where the complainant’s reliance on his fiduciaries was negated through resort to informed independent advisers, or where the complainant was responsible for speeding up the sale before fully evaluating the transaction.
Id.
{¶13} The trial court found that Snowden owed a fiduciary duty to Universal and
therefore had “a duty to disclose the material facts of each transaction.” The trial court further
found that Snowden was not guilty of fraud because he had not concealed his self-dealing in the
transactions. According to the trial court, the “information was contained in the documents and
materials associated with the transactions, which were available to make such a determination
upon inspection.” However, because the documents associated with the Sanders Deal were not
provided to Wendell prior to the sale, we do not agree that those documents fulfilled an
affirmative duty to disclose.3 See Warner at 54.
{¶14} The documents related to the Sanders Deal include a real estate purchase contract
and a HUD-1 settlement statement. There is no evidence that the HUD-1 settlement statement
3 At trial, Universal explained that its claim of fraud is “limited to the Sanders [D]eal” because the other transactions were barred by the statute of limitations. We limit our review accordingly. 6
was available to Snowden or Wendell prior to closing. This leaves only the purchase contract.
While the purchase contract noted that Snowden was part owner of both the buying and selling
companies, Snowden testified that he did not give the contract to Wendell until after the sale.
Snowden specified that Wendell would have seen the purchase contract after the sale when either
he or the title company sent it to Wendell. Snowden had a fiduciary duty to disclose all material
facts prior to the commission of the transaction. See Warner at 54.
{¶15} Yet, as discussed above, an affirmative duty to disclose may be limited under
certain circumstances, e.g., complainant failed to make reasonable attempts to discover
information. It does not appear, however, that the trial court considered these limitations.
Because the documents involved in the Sanders Deal did not fulfill Snowden’s affirmative duty
to disclose, we reverse and remand the case for the court to consider whether Snowden’s duty
was limited under the circumstances and, if necessary, the remaining elements of fraud.
Malice & Punitive Damages
{¶16} Universal further argues that the trial court erred finding that Snowden did not act
with malice.
{¶17} Punitive damages may be awarded upon a finding of fraud or actual malice.
Preston v. Murty, 32 Ohio St.3d 334, 334 (1987). “‘Actual malice’ for these purposes is ‘(1)
that state of mind under which a person’s conduct is characterized by hatred, ill will or a spirit of
revenge, or (2) a conscious disregard for the rights and safety of other persons that has a great
probability of causing substantial harm.’” (Emphasis sic.) Calmes v. Goodyear Tire & Rubber
Co., 61 Ohio St.3d 470, 473 (1991), quoting Preston at syllabus.
{¶18} Because the issue of malice is inextricably intertwined with the issue of punitive
damages, we conclude that Universal’s argument is not ripe for review at this time. We have 7
previously determined the case must be remanded to the trial court for it to consider the issue of
fraud. Once the trial court decides the issue of fraud, it must consider whether punitive damages
are available and, if so, whether they are appropriate.
{¶19} Universal’s first assignment of error, as it relates to its claim of fraud, is
sustained. Its first assignment of error, as it relates to malice and punitive damages, is not ripe
for review.
Universal’s Assignment of Error Number Two
THE TRIAL COURT ERRED WHEN IT FAILED TO AWARD DAMAGES FOR BREACH OF FIDUCIARY DUTY FOR THE NEGATIVE VALUE OF UNIVERSAL.
{¶20} In its second assignment of error, Universal argues that “Snowden, as the person
responsible for the real estate transactions on behalf of the corporation, should bear the liability
of the [negative valuation of the corporation] where fraud and/or breach of fiduciary duty is
found.” Universal, however, has waived this argument on appeal.
{¶21} In its written memorandum to the trial court after trial, Universal argued that it
was “due as damages its lost profits, which are calculated by deciding what Universal would
have received, but for Snowden’s wrongful acts, plus interest.” It proceeded to detail the lost
profits: $117,000 from the Sanders Deal, $45,000 from the Florida Deal, $70,000 from the R & S
Deal, $35,000 for reimbursement of salaries, and $60,000 in interest. Universal never argued to
the trial court that Snowden should be liable for the negative corporate valuation of $285,000.
Because Universal did not seek damages for the negative value of the company, this issue may
not be raised on appeal. See Hoskinson v. Lambert, 5th Dist. Licking No. 11-CA-18, 2011-Ohio-
4616, ¶ 27 (“Appellant cannot assign as error an issue not raised before the trial court.”).
{¶22} Universal’s second assignment of error is overruled. 8
Universal’s Assignment of Error Number Three
THE TRIAL COURT ERRED WHEN IT DETERMINED THAT UNIVERSAL WAS NOT DUE FUNDS PAID TO AN UNDISCLOSED THIRD PARTY.
{¶23} In its third assignment of error, Universal argues that the court erred when it
failed to order Snowden to reimburse Universal for $35,610 paid to Snowden’s employees.
Specifically, Universal argues that the plain language of the contract requires a finding that
Snowden, and not Universal, is responsible for the $35,610. We disagree.
{¶24} “The interpretation of written contracts, including any assessment as to whether a
contract is ambiguous, is a question of law subject to de novo review on appeal.” (Internal
quotations and citations omitted.) Skidmore v. Natl. Bronze & Metal of Ohio, 9th Dist. Lorain
No. 12CA010328, 2014-Ohio-4423, ¶ 28. “‘The purpose of contract construction is to effectuate
the intent of the parties,’ and that intent ‘is presumed to reside in the language they chose to
employ in the agreement.’” State ex rel. Petro v. R.J. Reynolds Tobacco Co., 104 Ohio St.3d
559, 2004-Ohio-7102, ¶ 23, quoting Kelly v. Med. Life Ins. Co., 31 Ohio St.3d 130, 132 (1987).
“When the language of a written contract is clear, a court may look no further than the writing
itself to find the intent of the parties.” Retreat at Lake Medina Assn., Inc. v. Haller, 9th Dist.
Medina No. 13CA0092-M, 2014-Ohio-4266, ¶ 8, quoting Transtar Elec., Inc. v. A.E.M. Elec.
Servs. Corp., 140 Ohio St.3d 193, 2014-Ohio-3095, ¶ 9. “Only when the language of a contract
is unclear or ambiguous, or when the circumstances surrounding the agreement invest the
language of the contract with a special meaning will extrinsic evidence be considered in an effort
to give effect to the parties’ intentions.” St. Croix, Ltd. v. Damitz, 9th Dist. Summit Nos. 26565
& 26566, 2014-Ohio-1926, ¶ 9, quoting Shifrin v. Forest City Enterprises, Inc., 64 Ohio St.3d
635 (1992), syllabus.
{¶25} The Shareholder’s Agreement states, in relevant part, that 9
Mr. Snowden is also responsible for acquiring insurance for the properties and hiring personnel to protect the properties from damage in the winter time, maintain the properties, and make property improvements through paint, carpet, electric, plumbing, drywall, and other up-grades as Mr. Snowden may specify.
***
Mr. Snowden and Mr. Wendell are to be reimbursed for out-of-pocket expenses that include gasoline, hotel, seminar expenses, software purchases, and any other reasonable purchases that are made for the benefit of the corporation.
{¶26} Christine Hanlon testified that she is an employee of Best Value Rentals, a
company owned by Snowden. Hanlon stated that 90% of her work was for Universal during the
time Snowden was a shareholder. According to Hanlon, she collected rent for Universal
properties, handled maintenance work orders, and performed other administrative tasks. Hanlon
further testified that Justin English, another Best Value Rentals employee, primarily performed
maintenance tasks for Universal. Hanlon’s salary was paid by Best Value Rentals.
{¶27} Snowden testified that prior to selling his shares to Wendell, he told Wendell that
he was issuing a check to reimburse Best Value Rentals for the salaries of Hanlon and English.
Snowden stated that he faxed Wendell copies of the payroll records and issued a check for
$35,610.
{¶28} Universal argues that, based on the plain language of the Shareholder’s
Agreement, Snowden may not reimburse Best Value Rentals for salaries of its employees who
performed work for Universal. We disagree. First, the Shareholder’s Agreement is silent on the
manner, method, and expense of collecting rents from property owned by Universal. Further, the
agreement does not detail whose responsibility it is to ensure the rents are collected. In that
respect, the agreement is unclear. We, therefore, consider extrinsic evidence to determine the
parties’ intent. See St. Croix, Ltd., 2014-Ohio-1926, at ¶ 9. 10
{¶29} Wendell testified that he had agreed to allow Snowden to hire maintenance and
support staff. Specifically, Wendell stated that he and Snowden had “agreed that [Snowden]
could hire Clarence or Salaway and * * * All City Property Management [for] some management
and repairs and so on. [Additionally, Snowden] had Don Thomas collecting rents.” Wendell
further testified that he knew a female worked in Snowden’s Warren office collecting rents for
Universal. Wendell explained that he believed the Shareholder Agreement required Snowden to
pay the cost of managing the properties, but acknowledged that the corporation paid for
maintenance staff, and would pay for a plumber and an attorney to evict a tenant, if needed.
{¶30} Universal does not contest the assertion that Hanlon and English performed work
for the corporation, only that Snowden should personally be responsible for paying for that work.
However, the Shareholder Agreement is unclear how those costs should be covered and
Wendell’s testimony indicates that the parties agreed to have the corporation pay for certain
business expenses, including maintenance staff and persons to help collect rent. We conclude
that the court did not err in finding that Universal was not entitled to reimbursement of these
funds.
{¶31} Universal’s third assignment of error is overruled.
Universal’s Assignment of Error Number Four
THE TRIAL COURT ERRED WHEN IT DETERMINED THAT UNIVERSAL WAS NOT DUE THE PROFITS ON THE R & S LAND DEAL.
{¶32} In its fourth assignment of error, Universal argues that the court erred when it
failed to award damages related to the R & S Deal.
{¶33} “Absent an abuse of discretion, this Court will not disturb a trial court’s
determination regarding damages.” Columbia Gas of Ohio, Inc. v. Perram Elec., Inc., 9th Dist.
Lorain No. 04CA008569, 2005-Ohio-3795, ¶ 7, citing Roberts v. United States Fid. & Guar. 11
Co., 75 Ohio St.3d 630, 634 (1996). An abuse of discretion indicates that the trial court’s
attitude was unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d
217, 219 (1983).
{¶34} Universal sold property to R & S for $250,000. R & S then sold the property to
David and Brenda Gregory for $291,000. Snowden testified that while the Gregorys’ purchase
price appears to reflect a profit to Snowden, the Gregorys only paid half and entered into an
installment contract for the balance. R & S financed the installment contract. According to
Snowden, the terms of the installment contract were that the Gregorys were to make interest only
payments of $900 a month to R & S for five years, at which time a balloon payment would be
due. The Gregorys defaulted on their payments and ultimately discharged their debt to R & S in
bankruptcy.
{¶35} The trial court found that Universal was due in damages its lost profits on the
three transactions: R & S Deal, Florida Deal, and Sanders Deal. However, the court found that
because R & S did not realize a profit on the sale to the Gregorys, there were no lost profits to
award Universal. One remedy available to an “aggrieved shareholder who brings an action for
breach of fiduciary duties is the disgorgement of any profits resulting from the breach.” Stepak
v. Schey, 51 Ohio St.3d 8, 15 (1990) (Holmes, J., concurring).
{¶36} It appears that Universal is arguing that the trial court erred in considering only
realized profits and not considering what R & S’s profits would have been if the buyer had not
declared bankruptcy. Universal cites no law to support its position. Because R & S did not
actually receive any profits from the sale to the Gregorys, there were no profits to disgorge.
Based on the limited argument before us, we cannot conclude that the trial court’s decision was
unreasonable, arbitrary, or unconscionable. 12
{¶37} Universal’s fourth assignment of error is overruled.
Universal’s Assignment of Error Number Five
THE TRIAL COURT ERRED WHEN IT FAILED TO AWARD INTEREST COSTS TO UNIVERSAL.
{¶38} In its fifth assignment of error, Universal argues that the trial court erred when it
found the testimony was insufficient to determine an appropriate award of interest. Specifically,
Universal argues that “the record shows there was an agreed upon amount of 10% interest
between the parties on the loans provided by Wendell.”
{¶39} Universal cites to its counsel’s opening statement as evidence of the parties’
agreement to 10% interest payments. As counsel is well aware, opening statements are not
evidence. See U.S. Aviation Underwriters, Inc. v. B.F. Goodrich Co., 149 Ohio App.3d 569,
2002-Ohio-5429, ¶ 28 (9th Dist.).
{¶40} The Shareholder Agreement provides that Wendell should be paid interest on
loans made to Universal. The agreement, however, does not specify the interest amount to be
paid to Wendell. Wendell did testify that in 2002, 2003, and 2004, the interest rate on his loan
was much higher, “perhaps three points over prime.” Wendell went on to say that he thought the
prime rate at that time was “about seven percent, [ ] so the interest rate that [he] had was about –
or it was ten percent in the beginning.” Wendell further testified that the “[r]ates were much
lower * * * as we got into [20]07” and “may have been around four and a half percent.”
{¶41} Even assuming the parties had agreed to ten percent, this interest is calculated on
the amount of money loaned to the company and not on the amount of profits rightfully due to
Universal. The Sanders Deal occurred in August 2007 and the Florida Deal occurred in 2006.
The testimony does not indicate how these deals were financed nor does the testimony establish
what interest rates were applicable to those deals. Additionally, there was no testimony about 13
whether Universal had made any interest payments to Wendell on these loans. Assuming
without deciding that Universal has standing to sue for interest owed to Wendell, we cannot
conclude that the court erred in finding that “the testimony was insufficient to determine an
appropriate award of interest.”
{¶42} Universal’s fifth assignment of error is overruled.
Snowden’s Assignment of Error Number One
THE TRIAL COURT ERRED WHEN IT FOUND THAT MR. SNOWDEN HAD BREACHED A FIDUCIARY DUTY TO APPELLANT[.]
{¶43} In his first assignment of error, Snowden argues that the court erred in finding that
he breached his fiduciary duty. Specifically, Snowden argues that he did not owe a fiduciary
duty to Universal because it is a duty that exists between shareholders.
{¶44} Snowden’s argument raises a question of law. This Court reviews issues of law
de novo. Swedlow v. Riegler, 9th Dist. Summit No. 26710, 2013-Ohio-5562, ¶ 7. In conducting
a de novo review, an appellate court does not give deference to the trial court’s determination.
Akron v. Frazier, 142 Ohio App.3d 718, 721 (9th Dist.2001).
{¶45} “[A] close corporation is a corporation with a few shareholders and whose
corporate shares are not generally traded on a securities market.” Crosby v. Beam, 47 Ohio St.3d
105 (1989), paragraph one of the syllabus. “Directors of a closely held corporation owe a
fiduciary duty to both the corporation and to its shareholders.” Morgan v. Ramby, 12th Dist.
Warren Nos. CA2010-10-095 & CA2010-10-101, 2012-Ohio-763, ¶ 22, citing Thompson v.
Cent. Ohio Cellular, Inc., 93 Ohio App.3d 530, 540 (8th Dist.1984). “The principles which
govern the fiduciary relationship between a corporation and its directors include a duty of good
faith, a duty of loyalty, a duty to refrain from self-dealing[,] and a duty of disclosure.” Wing
Leasing, Inc. v. M & B Aviation, Inc., 44 Ohio App.3d 178, 181 (10th Dist.1988). 14
{¶46} The Shareholder Agreement between Snowden and Wendell is silent as to their
titles in the corporation. However, the stock purchase agreement, through which Wendell
purchased Snowden’s shares, states that Snowden “resign[s] as an officer and director of
[Universal].” Because a director owes a fiduciary duty to both the corporation and its
shareholders, Snowden’s argument is without merit. See Morgan at ¶ 22. See also Genesis
Respiratory Servs., Inc. v. Hall, 99 Ohio App.3d 23, 28-29 (4th Dist.1994).
{¶47} Snowden’s first assignment of error is overruled.
Snowden’s Assignment of Error Number Two
THE TRIAL COURT ERRED IN AWARDING 100% OF THE DAMAGES TO APPELLANT WHEN AT THE TIME THAT THE DAMAGES WERE INCURRED, APPELLEE SNOWDEN OWNED 50% OF THE APPELLANT.
{¶48} In his second assignment of error, Snowden argues that the court erred in failing
to reduce Universal’s damages by one-half, the percentage of his interest in the corporation at the
time. Specifically, Snowden argues that the court failed to consider that he, as an equal partner
in Universal, shared the losses with Wendell.
{¶49} In support of his argument, Snowden cites McLaughlin v. Beeghly, 84 Ohio
App.3d 502 (10th Dist.1992). The corporation in McLaughlin was a closely held business with
three equal shareholders. Id. at 504-505. After one of the owners died, his estate sued the
corporation and the other shareholders for “monies allegedly due [to] the estate.” Id. at 505. The
trial court found that one of the shareholders had “breached his duty to all shareholders and
assessed” a damage amount. Id. at 508. The trial court, however, awarded the full amount of
damages to the estate. Id. at 505. The Tenth District Court of Appeals reversed, holding that
“[s]ince the unconscionable acts affected all of the shareholders, as well as the corporation itself, 15
the owners may only receive an award equal to their proportionate share of the ownership [in the
corporation].” Id. at 508.
{¶50} We conclude McLaughlin is distinguishable. Here, the corporation, not the
individual shareholder, filed suit. Moreover, Universal sought to recover portions of payments
made by Universal to Snowden and/or his company. These funds are due to Universal, not to
Snowden or Wendell. To conclude that Snowden only has to pay back a percentage of his
profits, relative to the percentage of his ownership in the corporation, would effectively reward
Snowden for his misconduct. We decline to reach such a result. Because the damages being
recovered by Universal are monies due to the corporation and not to the shareholders
individually, we conclude the court did not err in refusing to reduce the damages by the
percentage of Snowden’s ownership in the corporation.
{¶51} Snowden’s second assignment of error is overruled.
III
{¶52} Universal’s first assignment of error, as it relates to its claim of fraud, is
sustained. Its first assignment of error, as it relates to malice and punitive damages, is not ripe
for review. Universal’s remaining assignments of error are overruled. Snowden’s assignments
of error are overruled. The judgment of the Summit County Court of Common Pleas is affirmed
in part, reversed in part, and the cause is remanded for further proceedings consistent with the
foregoing opinion.
Judgment affirmed in part, reversed in part, and cause remanded. 16
There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy
of this journal entry shall constitute the mandate, pursuant to App.R. 27.
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 equally to both parties.
BETH WHITMORE FOR THE COURT
HENSAL, P. J. CARR, J. CONCUR.
APPEARANCES:
WARNER MENDENHALL, Attorney at Law, for Appellant.
THOMAS C. NADER, Attorney at Law, for Appellees.