case number twelve dash for one nine three in the case of lampson and sessions company versus william h peters at all arguments not to exceed fifteen minutes per side mr a for the appellate may proceed may please the court my name is david cuticle i'm here on behalf of the lamps and in session's company i respectfully request three minutes time for rebuttal in two thousand and two in two thousand and three y s d in was a company in trouble it had gone from having profits of three point five million dollars to having losses of four million dollars it was insolvent as of june of two thousand and two and as of that time the company's principals started talking about layoffs and cutbacks and at the same time through march of two thousand and three the principals of the company peters took over four million or approximately four million dollars from the company and put them into their wife's trusts in april of two thousand and three why is the said it could not pay its retiree health benefits and therefore lampson became liable and lampson then sought recovery cases in section seven point eight of that agreement it says why is the shall be primarily liable for the retiree's health benefits it also says that young stem at that there was a loss mo that's incorrect we did show there was a loss because we showed it was under budget that we paid for the retiree benefits as of two thousand and three that automatically kicks in our right to indemnity the only argument that that they make really is that somehow lampson waive that argument but a review of the briefing shows otherwise they say that your theory of you preserve the that theory if it's not planted in the complaint because we were we were we were pleading a breach of the agreement and recovery under the agreement are we believed our gree transcript correct that's what we did but you did not argue it in your brief though did you well let's review the briefing with respect to their summary judgment because that that's where it came up they first argued that we had no injury under this number one of the settlement agreement we said yes we did we pay the liabilities and by the way we have a right of indemnity under the sun under the purchase agreement they say well the purchase agreement has nothing to do with the settlement agreement that was the first time and that we had no right of recovery under the settlement agreement in terms of deming they raise that argument in their reply it was the first time they raised it so the first time we had as an opportunity to respond to that was the oral argument and we set that out very clearly as we  agreement to lampson as young as the successor to youngstown the court below said that we hadn't shown that lampson was the successor but that wasn't a disputed issue in response to the our motion for summary judgment wonder and peters said that youngstown had been absorbed into lamps and it was on page five of their opposition so that was an issue that we had to prove it was already admitted and with respect to the purchase agreement the purchase agreement has all kinds of provisions that say that y s d is responsible for the retiring health benefits section three point three says it's an assumed liability there's a whole article article nine which talks about why a steep picking up these liabilities and most importantly in section three point one in the contract says because why is t is going to pick up these retiree health benefits youngstown is going to reduce the purchase price by five point four million dollars now the argument is well because the retiring health benefits were discussed in the settlement agreement and because the settlement agreement arose in the gentilly an axle can some cases because the axle tin in gentility cases are in the exclusive liability provisions that takes away any liability they have for retiree health benefits the reason that wrong is it bunce up it butts up against another argument that money repeaters make they say the purchase agreement is not modified by the settlement agreement we agreed the settlement agreed the purchase agreement specifically set out liabilities that yet the wiest be had with respect to the retiree health benefits those didn't go away all the all the parties contemplated is that if there were some new liabilities that were going to be picked up as part of the settlement of the gentilly an accident cases those liabilities would be excluded and in fact that happened in the settlement agreement we youngstown agreed to pick up prien one thousand nine hundred four premiums those are excluded but accounts the accounts would have you ignore the fact that this is the district court denied monday gary peters motion for summary judgment on the trail on the fraudulent transfer claim in doing that the district court found their issues a fact as to when what were the transfers when the company was insolvent and whether the company concealed the transfers from their auditors the bankers or their creditors and that's relevant to the torso interference claim in a couple of ways first with respect to the issue of timeliness we have a disagreement as to when the statute limitations begins to run but even taking their theory which is when a tortious act occurs as opposed to when the completed tort it happens when there's an interference with the contract there were tortious acts in two thousand and three the triax transaction wasn't complete in our view wasn't done until march of two thousand and three the henderson and covington time records show that the authorizations weren't done till march of two thousand and three and the shareholder certificates were completed until april of two thousand and three during that time home quest y s d's lawyer is asking dennis in the accountant gee can we do this then s and says yes that was in march of two thousand or says i'm going to pull the plug on the retiree benefits that's also in march two thousand and three a week after dennison knows that there was back dating going on and the triax transaction is still incomplete and he doesn't pull the he doesn't give it the red light at that point time those are tortious actually occurring in two thousand and three there is also the issue with respect to causation the court said when home quist asked dennison about the transaction home quist is doing that on his own but the but home quiz specifically testified that if dennison had said no stop he would have gone back to monitor and peters and told them hey we have to do something else that had dennis and given the correct advice to to home quest had venison given the correct advice to monitor that that both of those both of those actions would have cured the problem would have stopped the tracks transaction and would have kept money in the company to keep lampson out of the obligation of having to pay through tyree benefits and lastly let me talk about the issue of justification the court here what evidence do you have of that and well first there are two concepts one is with respect to intent and that in terms of do you need specific intent i think the answer to that is no or you need is intent if they knew that their actions would be substantially certain to breach the contract and certainly he knew that he said he knew about that he knew about the contract money or specifically talking to him about the pulling the plug and having lampson liable for t yree health benefits with respect to the issue of justification we we point out that there are ethical violations here we it we asked their expert if you have an insolvent company that  closely held and the company and the company then ask can we take money out for the shareholders ecker expert said there's a conflict and there's and what you should do when there's a conflict is tell the clients there is a conflict provide independent tellme go get independent advice and withdraw dennison didn't do that and why do we have that rule we have that rule there because it's it's and it's likely there's a possibility at least that the individual pride in the service is going to want to curry favor with the individuals that he's working with the flows to your client well the duty flows to arc first there is you asked what the intent was the intent was to give advice that would curry favor to the client that was improper he also was was compliant in the backdating and he also lots of stuff happened between zero two and zero three because he acted improperly he acted to interfere with the contract but ok just because he acts improperly doesn't mean that intentionally interferes with the contract and that's what you have to prove i have to prove two things i have to prove that his intent was such that he knew that his conduct was going to interfere with a contract that's never going out just that his conduct was improper but actually at the intent that he knew that the contract that his actions were going to interfere with the contract and that his actions were improper those are the two things that we have to show him among other the cited by the court establishing a twenty three zero five zero nine d starts to run from the date of the of the misconduct the date that the tortious interference would have occurred and since two thousand and two is more than four years from the date the final complaint was filed which i believe was nov sixteenth two thousand and six the claims are relating to two thousand and two or bar with respect to two thousand and three  there's two things that happened in two thousand and three the first was a letter by mr home by attorney home west who represented y s d dated march twenty first two thousand and three which requested some ohio law and the third was impact on on a conditional liability the only evidence that we have is that mr denison responded to the request by saying that under ohio law as of two thout as of the year and financial statements which had just recently been completed there was sufficient retained earnings to support a distribution that was the extent of mr dennis and the inquiry to mr dennison and that was his response to the the court found that there was no evidence dennison's advice was ever communicated to mr munder or mr peters by attorney home quest home quest testified that he was asking for his own edification for his own documentation to document dennison's response there's no indication that it had any impact whatsoever in fact the distributions had already been made and as mr pointed out they were working on the documentation but the documentation provided to mr denison was that been off was an act of two thousand and two there's no evidence that he was aware of any attempt to back date or misstated the date of the transaction when he was asked the advice the court also found  that there was no evidence money money or in peter's ever requested dennison's opinion on that particular aspect of the transaction and there's no evidence that there was any reliance inducement or causation based on dennison's limited advice therefore concluded there was no interference in the contract by that particular it twice that was provided by mr denison i think the record of the factual record and in the case law as to tortious interference support the conclusion the second piece of advice or incident that occurred was a memorandum that was issued by mr munder one of the principal shareholders dated march twenty ninth two thousand and three  under that under that request he was asking for does what mr lampson was seeking mr excuse me mr munder was seeking on behalf of y s d was really was no advice with respect to the distributions so again there was no basis for finding causation or interference caused by mr mr dennison as a result of the the memorandum from mr monitor in regards to the justification the district court was pretty clear that the alleged interference was not improper and that to the extent it occurred this was normal advice by a c p a who is engaged as the outside accountant to a  corporation this is typically the type of request that comes in by the company to the to the c p a as to whether there is sufficient retained earnings this was not something that mr dennison interject himself into that he he proactively got involved with the relationship he was responding to a legitimate request and he provided a legitimate response there's no evidence that mr dennison had an ulterior motive there was no financial incentive for him to misrepresent anything to or to to give improper advice he had no financial gain there was nothing there was no motivation for him to do that and in the advice was offered in the context of his role as a c p a there's simply no evidence that dennison's advice or lack of advice was not justified and there's no evidence that the advice or lack of advice is relating to the march twenty ninth exchange had any impact on the transaction around on  up and went counsel for the appellant argued through didn't really talk about the alter ego theory of liability because even if there were a breach of contract he has to show and there's no evidence of this in this case at all bet the control of the company by mr money or mr peters was used to commit a fraud were illegal act now there's nothing even presented in this case it up for fraud there's no false representation or concealment of a material fact with so for fourteen years monday year and peters did everything they could in this company to pay these retiree benefits so their theory is they raided the company for their own personal gain and they took millions of dollars out of the company and put it in their pocket and they're there after the company goes bankrupt and isn't that does not satisfy the alter ego theory under ohio it wouldn't satisfy the breach of contract that was the case here on what it would do is it would give the company a cause of action which the trustee retains in the bankruptcy it would give the company a cause of action against these directors that's what it would give if it occurred but certainly this is the statutes in ohio revised code seventeen zero one thirty three provides that dividends in distributions can be paid out of surplus the evidence in this case is that these gentlemen receive the advice of their profession their factual issues i mean this is decided on summary judgment right oh and as a matter that there are genuine issues of material fact as to these things or it has said that that that company is the it's a wholly owned subsidiary of lampson well the parent company is only a shareholder in a wholly owned subsidiary the parent company can't simply come in and say as the parent company we can now assert rights of of our subsidiary and beyond that lampson would certainly be no factual aspects anything that would be a tribal issue a fact with respect to lampson here what lampson bases its claims upon is this actually throughout this entire matter into the summary judgment lampson based upon the purchase agreement well the complaint also alleges breach of the settlement agreement doesn't the original complaint it references the settlement agreement but in summary judgment ok no if it has a claim of breach of the sutton agreement in the complaint that's my understanding and i would be said settlement agreement was in there yes sure however and then then at the summary disposition argument i recognise their brief in opposition doesn't reference the settlement agreement but page eleven of the tr the transcript they do lands and secondarily but importantly has a right on its own under the supplement agreement and then it references ohio supreme court case mutual finance that they argue establish the right implied right of and then that when a secondary goal or has to pay because the primary obligation does not pay and they say there is a breach of contract  there is an implied right of and demi in those circumstances so i think that the tell me why i'm incorrect that the issue of settlement agreement implied dempsey is presented to the district judge prior to his rul it certainly it came up afterward during ever you know it's raised before the rule it's raised in at the hearing on the motion and i won't argue that your honor all addressed the agreements if i may ok are you going to  back off from your waiver argument i mean your brief you say implied indemnity was waived by the plaintiff because they didn't raise that in their brief in opposition to summary judgment  i mean are you backing off on the waiver and i maintain that it was waived in fact in their motion for summary judgment they specifically said that they should receive summary judgment on the basis that there was a breach of the purchase agreement there and what we're reviewing here is the grant the primary obligation can and does not fill their obligations but the appellant is arguing an implied duty that flies in the face of an express contractual provision if there's anything there if there's an implied duty the implied duty of y s d would be set off against the expressed duty of young stam steel door of youngstown the wholly owned subsidiary to pay their way abilities with respect to the actual sin and gentile cases because they were excluded liabilities under the purchase agreement which was never ame specifically provided that it could only be an amended in writing in executed by each of the parties that refers to the purchase agreement so the purchase agreement would have to be completely ignored in order to enforce the settlement agreement the actual sin and gentile cases which are excluded liabilities of y s t so if you took both agreements you would say well what y s d did for fourteen years was pay the actual sin and gentile liabilities which were excluded and were not assume specifically by contract and a purchase agreement i have a kind of a maybe nitpicky practical question here which is as i reviewed the settlement agreements why is d c said it was going to pay these benefits for fifteen years what happens after the fifteen years why is do you no longer has a liability to pay them so what are we really arguing about here how long did they actually pay them for over fourteen years so we're talking about less than a year's worth of of lampson stepping up to to pay under the guarantee that that would essentially be it based upon this this contract and the other aspect of bisher honor is that the liabilities that it paid which were youngstown's liabilities would be the obligation of youngstown to pay y s d paid them in youngstown would have implied duty under the settlement agreement to reimburse why s d because of the purchase agreement and the fact that actual s and gentile were specifically excluded from that agreement and which not provided is any evidence reference to any evidence that there was any document that referenced this purchase agreement and referenced this specific exclusion of these liabilities and said they aren't they're excluded because of some consideration that's been passed between the two so there would be at the very best for young stone i set off in specifically for youngstown not lampson there's no evidence that lampson is youngstown the only thing that lampson has ever said it was complaint is that the young son is its wholly owned subsidiary there's no evidence that youngstown paid and in fact the way that it worked was if y is didn't pay youngstown was supposed to pay if youngstown didn't pay lampson was supposed to pay why is the paid for over fourteen years and then there's no evidence that young senator paid if there were any implied duty of indemnification it would run from this purchase agreement was amended there's no evidence whatsoever that that's why there was no tribal issue back and there's also no evidence that these gentlemen did something that with respect to williamson that misled lampson in  any way they paid for fourteen years and and there's certainly no evidence that they did anything illegal because there are statutes it's pacifically provided in ohio that they can pay a dividend in those shoots also provided they can rely upon the advice of their accountants their lawyers in doing so that's what made whether they disagree whether lampson whether the appellant disagrees or not there was a legal payment of these dividends whether they think they should have been paid or not is certainly not the analysis that should be performed here the trustee is somewhat different in that the trustee represents the creditors of the estate in total and takes on the claims that the shareholders of the company would have therefore breached the contract of y s d and lambs for y is deed pay the benefits and therefore y as d was unable to perform under that contract first of all be there the directors of the company and they are acting for the company and so you know they're acting personally aren't they were if it means of dollars in their own pockets that's the allegation your honor however if they think they're acting for the company isn't about a tortious interference only where the breaching party indicates by his breach a motive to interfere with the adverse parties business relations rather than an interference with business resulting is a mere consequence of such breach zero evidence here that there was any intent by these individuals by these directors to do anything with respect to lampson the appellant here to do anything in order to induce a breach of a contract nothing the well this is the line we know that the company no longer has millions of dollars of assets to pay the pension benefits if they have given the money to themselves your honor gleason who is the who is the expert chosen by the helen here stated that the if in if you take tri x out of all of this which is something that the that he put in to the september thirtieth numbers that this company was still balance sheet solvent as of september thirtieth two thousand and two after just about all of this money all of it had been distributed this is painting with so much with the broad brush it's a roller it in  only thing you'd be looking at is the amount over which over the surplus that's the only amount you'd ever be looking at they're trying to reverse everything they're painting with a broad brush they're ignoring their own expert who said even after june thirtieth even after september thirtieth after september thirtieth if you take the triax transaction out there was still almost eight hundred thousand dollars they are complaining about the triax transaction and therefore none  of this there in their own evidence their expert own evidence is that this company was still solvent they're merely saying they're making statements such as looting the company those types of things these gentlemen after fourteen years of paying these obligations would say this company wasn't even obligated to pay took it took a dividend after money came in that was that was not money from operations it was anthem they had to be mutual lived in they got all this money and they said what can we do so they went to their experts as  starting with mr wood koski his remarks i certainly and lampson certainly doesn't concede stache limitations issues with respect to the proper analysis that should be applied we believe that the to isn't complete until a contract is breach that was in april of zero three if that's true then anything that leads to that breach including acts that occurred in two thousand and two are relevant and certainly are act he also said that there was no evidence that mr dennison saw that the information was going to be back to that's wrong home quest in march of two thousand and three sends dennison a blank or a draft of a written consent for director action which bears a date of october of two thousand and three and he refers to are two thousand and two and he refers to this is something that we want to do to have the tracks transaction to be completed so he denison knew that there was back dating going on going to mr thomas mr thomas said that we had proved that there was fraud we don't have to prove that there was fraud or we have to prove that there was only illegal cause conduct and as i indicated the court found that there were issues of fact with respect to fraudulent transfer and all of the and there were issues of fact up with respect to all the elements with respect to the badges of fraud with respect to that that's unlawful conduct also there was back to eating here that's illegal conduct under ok so they were acting unlawfully with respect to tri x and what they did with respect to the tor sued ference claim we cited the miller vs weikel manufacturing case which which i think is is what you refer to when they are acting in their personal capacities for their personal benefit but the rule that directors can't be liable for torts interference goes out the window they're acting for their personal benefit torsos interference applies and when you and the last thing i'll mention is he said  expert says that there is eight hundred thousand dollars in excess value in september of two thousand and two well the company was losing three hundred thousand dollars a month so they and they knew that before the creditors came after them they were going to take the money out that's what this case is about and we should have the opportunity to make our case to a trier of fact thank you thank you counsel the case