[Cite as Hanko v. Nestor, 2019-Ohio-2256.]

IN THE COURT OF APPEALS OF OHIO 

SIXTH APPELLATE DISTRICT 

ERIE COUNTY 

 

Michael Hanko Court of Appeals No. E-18-007 

 Appellee Trial Court No. 2001 CV 0304 

v. 

 

Michael Nestor, et al. 

 

 Appellant 

v. 

Robert Hanko DECISION AND JUDGMENT

 Appellee Decided: June 7, 2019 

 

* * * * * 

 Brent L. English, for appellees. 

 Steven B. Beranek, for appellant. 

* * * * * 

 SINGER, J. 

{¶ 1} This is an appeal from the January 19, 2018 judgment of the Erie County 

Court of Common Pleas denying appellant’s motion for a new trial. Finding no error, we 

affirm the judgment. 
2.

Assignments of Error 

{¶ 2} Appellant sets forth two assignments of error: 

 1. THE TRIAL COURT ERRED WHEN IT GRANTED 

APPELLEE’S ORAL MOTION FOR DIRECTED VERDICT AT THE 

CLOSE OF APPELLANT’S CASE. 

 2. THE TRIAL COURT ERRED WHEN IT FAILED TO GRANT 

APPELLANT’S MOTION FOR NEW TRIAL. 

Background 

{¶ 3} The facts of this case are fully set forth in our decisions in Hanko v. Nestor, 

6th Dist. Erie No. E-11-055, 2012-Ohio-4488 (“Hanko I”), and Hanko v. Nestor, 6th Dist. 

Erie No. E-15-041, 2016-Ohio-2976 (“Hanko II”). 

{¶ 4} In May of 1994, appellant, Michael Nestor, and appellee, Michael Hanko, 

formed H&N Construction, Inc. (“H&N”). Before establishing H&N, appellee and 

appellant worked together for another construction company. 

{¶ 5} H&N had two executive directors, appellant and appellee, and both owned 

50 percent of the company. Appellant was president, appellee was vice-president, and 

appellant’s wife, Betsy Nestor, was secretary. The company also employed labor 

workers, and it used equipment that appellant and appellee either brought to H&N or 

purchased to contribute to H&N’s production. 

{¶ 6} Until around mid-1999, appellant and appellee received equal paychecks and 

profits, and the business was going well. Then appellant and appellee’s relationship 
3.

began to deteriorate, and appellee communicated that he wanted to sell his interest in the 

company. He demanded around $200,000 for his share. Appellant was only willing to 

pay him half of that price. There was no shareholder or operating agreement in place and 

an impasse ensued. 

{¶ 7} Appellant continued to operate the business while appellee was treated as if 

he retired and abandoned his interests. Appellee filed a complaint against appellant in 

November 1999, alleging that appellant had, among other things, breached fiduciary 

duties to appellee and usurped corporate opportunities. Appellant filed counterclaims 

against appellee alleging similar causes of action. The case was voluntarily dismissed 

without prejudice in April 2001. 

{¶ 8} Appellee re-filed the action in June 2001. Appellant again filed 

counterclaims against appellee. The cases were identical other than the addition of 

appellee’s brother, Robert Hanko, and Hanko Farms, Inc. as parties to a third-party 

complaint filed by appellant and his wife. 

{¶ 9} In 2009, appellant filed two separate motions to dismiss appellee’s claims 

for failure to prosecute. On July 2, 2009, the trial court dismissed appellee’s complaint 

with prejudice for failure to prosecute pursuant to Civ.R. 41(B)(1). 

{¶ 10} On September 28, 2012, we affirmed the trial court’s July 2, 2009 

judgment dismissing appellee’s claims. See Hanko I. Appellee then filed an application 

for reconsideration, which we denied. The Supreme Court of Ohio did not accept the 
4.

case for review. See Hanko v. Nestor, 134 Ohio St.3d 1469, 2013-Ohio-553, 983 N.E.2d 

368. 

{¶ 11} On May 12, 2015, appellee filed a motion for relief from the trial court’s 

June 17, 2011 judgment denying appellee’s motion for reconsideration of the July 2, 

2009 order. In the motion, appellee claimed he was entitled to relief pursuant to Civ.R. 

60(A) or Civ.R. 60(B)(5). The trial court held an evidentiary hearing and, on July 24, 

2015, the trial court granted appellee’s motion. Appellant timely appealed to this court. 

{¶ 12} On May 13, 2016, we reversed the trial court’s July 24, 2015 judgment. 

See Hanko II. We determined the trial court improperly proceeded under Civ.R. 60. Our 

judgment affirmed that appellee could not bring forth his claims as held in the July 2, 

2009 trial court order. This court found, however, that appellant’s 2001 counterclaims 

were preserved and the case was remanded to the trial court. 

{¶ 13} The matter proceeded to trial on appellant’s breach of fiduciary duty claim 

on September 25, 2017. At the close of appellant’s evidence, appellee moved for a 

directed verdict. The trial court granted the motion. The judgment was journalized on 

October 25, 2017. Appellant then moved the court for a new trial, and the court denied 

the motion on January 19, 2018. Appellant timely appeals. 

Legal Analysis 

{¶ 14} Although not asserted in an assignment of error, the parties initially place 

in dispute to what extent this court should address appellant’s counterclaims considering 

he brought forth the claims in a direct, as opposed to a derivative action. This issue is 
5.

one of law and shall be reviewed de novo. See Heaton v. Rohl, 193 Ohio App.3d 770, 

2011-Ohio-2090, 954 N.E.2d 165, ¶ 53 (11th Dist.). 

{¶ 15} Appellant asserts a derivative action is not necessary because Ohio law 

allows business partners and shareholders to bring forth direct, as opposed to derivative 

claims against other partners or shareholders for a breach of fiduciary duty. 

{¶ 16} Appellee contends appellant’s counterclaims should be denied because 

appellant must, but did not, proceed with a derivative action. 

{¶ 17} Initially, we note H&N was a close corporation because it only had two 

shareholders and H&N’s shares were not traded on a securities market. See Crosby v. 

Beam, 47 Ohio St.3d 105, 548 N.E.2d 217 (1989), paragraph one of syllabus. 

{¶ 18} Directors and shareholders of a closely held corporation owe the 

shareholders fiduciary duties to act in good faith and to refrain from self-dealing. See id. 

at 107-108; Heaton, 193 Ohio App.3d 770, 2011-Ohio-2090, 954 N.E.2d 165, at ¶ 47. 

{¶ 19} Generally, “actions for breach of fiduciary duties are to be brought in 

derivative suits.” Grand Council v. Owens, 86 Ohio App.3d 215, 220, 620 N.E.2d 234 

(10th Dist.1993), citing Cole v. Ford Motor Co., 566 F.Supp. 558, 568-569 

(W.D.Pa.1983). One nuanced exception is where the case involves “claims by 

shareholders in a close corporation.” See, e.g., Terry v. Carney, 6th Dist. Ottawa No. 

OT-94-054, 1995 Ohio App. LEXIS 5754, *17 (Dec. 29, 1995). 

{¶ 20} Appellant argues he was not required to bring forth his counterclaims as a 

derivative action because his claims involved a close corporation. For support he 
6.

specifically points to Crosby, where the Supreme Court of Ohio held that “claims of a 

breach of fiduciary duty alleged by minority shareholders against shareholders who 

control a majority of shares in a close corporation, and use their control to deprive 

minority shareholders of the benefits of their investment, may be brought as individual or 

direct actions and are not subject to the provisions of Civ. R. 23.1.” Crosby at 109-110. 

{¶ 21} In this case, we cannot say the facts fit squarely within the explicit 

framework of Crosby because the parties were both equal owners of H&N, and thus there 

was no majority or minority shareholder. 

{¶ 22} We look to Crosby’s progeny, and note that this court has not applied the 

rule articulated in Crosby to a case where there has been no minority shareholder. See

Frick v. Frick, 6th Dist. Wood No. WD-03-075, 2004-Ohio-6898; Mulchin v. ZZZ 

Anesthesia, Inc., 6th Dist. Erie No. E-05-045, 2006-Ohio-5773; Binsack v. Hipp, 6th Dist. 

Huron No. H-97-029, 1998 Ohio App. LEXIS 2370 (June 5, 1998); Terry v. Carney, 6th 

Dist. Ottawa No. OT-94-054, 1995 Ohio App. LEXIS 5754 (Dec. 29, 1995); Crosby v. 

Beam, 83 Ohio App.3d 501, 615 N.E.2d 294 (6th Dist.1992); Hall v. Edmonds, 6th Dist. 

Lucas No. L-91-219, 1992 Ohio App. LEXIS 4349 (Aug. 28, 1992). 

{¶ 23} We first point to Citizens Fed. Bank v. Chateau Constr. Co., 2d Dist. 

Montgomery No. 13902, 1994 Ohio App. LEXIS 167 (Jan. 19, 1994), where a direct 

action was allowed. 

{¶ 24} In Citizens, the Second District Court of Appeals applied the holding of 

Crosby despite there being no minority shareholder. Id. at *4. There were two business 
7.

partners, Nelson and Ross, who each owned 50 percent of a company they started in 

1987. Evidence demonstrated “that [Nelson] was the controlling shareholder.” Id. at *5. 

As a result of Nelson being the controlling shareholder, breach of his fiduciary duty to 

Ross was actionable. See id. at *4, citing Crosby at 109 (implying “controlling” 

shareholder can be treated as a “majority,” perhaps despite there being no true “minority” 

shareholder). 

{¶ 25} Distinguishable from Citizens is Kable v. Trinity Fin. Corp., S.D.Ohio No. 

07-CV-1131, 2008 U.S. Dist. LEXIS 23974 (Mar. 11, 2008), where a direct claim was 

denied. In Kable, the U.S. District Court for the Southern District of Ohio cited Crosby

and found “the minority-shareholder exception is inapplicable to cases in which there are 

no minority shareholders.” Id. at *15-16. Kable and Andolshek were equal partners in 

their company, and Kable sued Andolshek. Id. at *2. Andolshek was vice-president and, 

in that capacity but for his own personal gain, had wired $125,102.50 of company funds 

to a third party. Kable alleged this transfer was an illegal conversion, and he brought a 

derivative claim on behalf of the company for $125,102.50 and, in the alternative, a direct 

claim for breach of fiduciary duty for $62,551.25 (50 percent of $125,102.50) on behalf 

of himself. Id. 

{¶ 26} The Kable court dismissed the direct claim. Id. at *15-17. In doing so, the 

court first analyzed the factor of control in favor of disallowing the direct claim and 

recognized that as an equal partner and president, Kable “would have as much right and 

opportunity to exercise control over any judgment[.]” Id. at *15. 
8.

{¶ 27} Additionally, the court recognized that the legal authorities on which Kable 

relied were distinguishable in that those “Ohio courts permitted direct claims in lieu of 

derivative actions because the corporation no longer existed.” Id. at *17. Thus the court 

analyzed whether the company was an ongoing concern, and found it favored disallowing 

a direct claim if so. 

{¶ 28} Lastly, the court stated “Kable allege[d] no injury separate and distinct 

from that of [the company,]” id., hence there analyzing who bears the injury or harm, and 

whether the injury or harm directly affected the company and only indirectly affected the 

shareholder, Kable. See also Crosby at 110, citing Adair v. Wozniak, 23 Ohio St.3d 174, 

492 N.E.2d 426 (1986). 

{¶ 29} Consistent with the law of Crosby, Citizens, and Kable, and because we 

found 50/50 co-owners of a close corporation in this appeal, we consider the following in 

determining if a direct claim is proper: (1) is the injury or harm separate and distinct 

from the injury or harm to the company; (2) did defendant have authority and control the 

company in a way that led to harming other shareholders; and (3) is the company an 

ongoing concern. See, e.g., Gensemer v. Hallock, 125 Ohio App.3d 84, 92, 707 N.E.2d 

1156 (9th Dist.1997) (stating “* * * where there is a close corporation with only four 

shareholders, where the corporation has already been dissolved, and where the issues 

involved are not terribly complex, we cannot say the lower court errs in allowing a 

former shareholder to pursue a direct action[.]”). 

 
9.

(1) Separate and Distinct Injury or Harm 

{¶ 30} To illustrate the “separate and distinct” consideration we look to Heaton, 

193 Ohio App.3d 770, 2011-Ohio-2090, 954 N.E.2d 165, where the Eleventh District 

Court of Appeals allowed a direct claim, stating “[a] shareholder * * * may bring a direct 

action against a director or officer for injuries suffered by the corporation where: (1) the 

injury arises out of a special duty * * * or (2) the shareholder suffered damages separate 

and distinct from that suffered by other shareholders.” Id. at ¶ 55. 

{¶ 31} Rohl and Heaton were equal (50/50) shareholders of a close corporation 

named All Aircraft Services, Inc. (“AAS”). Id. at ¶ 57. AAS was an aviation business 

that serviced aircrafts, and Rohl was the sole owner of the company, T&G, which held 

the lease “over the hangar in which AAS conducted its operations[.]” Id. at ¶ 58. 

{¶ 32} The Heaton court found that Rohl and Heaton agreed AAS would provide 

discounted labor to T&G, which was “to offset expenses incurred by AAS, including rent 

and other overhead.” Id. at ¶ 8. AAS operated for 39 months and was profitable and 

self-sustaining financially. After a disagreement about profits, Rohl and Heaton’s 

relationship deteriorated. T&G, through Rohl, requested that AAS pay it $90,000, in 

mostly back rent, for the period from January 2003, through to September 2005. Id. at 

¶ 19-20. 

{¶ 33} AAS could not pay the back rent and ceased operations. Id. Rohl 

continued operating the same type of business, from the same facility, using the same 

employees, and assisting the same customers, as AAS. Id. Heaton sued Rohl for, among 
10. 

others, breach of fiduciary duty. The Heaton court held that Rohl indeed breached his 

duties to act in good faith and refrain from self-dealing. Id. at ¶ 59. 

{¶ 34} The Heaton court further held Rohl caused Heaton injury which was 

separate and distinct from that which the company suffered. Id. More specifically, the 

court recognized that “Rohl’s actions deprived Heaton, the sole remaining shareholder, of 

both his equal share in the company and his employment.” Id. The court then stated that 

“Rohl, on the other hand, was able to continue operating a business engaged in the same 

operations as AAS, in the same location, with the same employees, assisting the same 

customers[,]” and that Rohl was undamaged by his own actions and profited at Heaton’s 

expense. Id. 

{¶ 35} Here, appellant asserts the injury or harm he suffered as a result of 

appellee’s acts was separate and distinct from the company because appellee, the 

wrongful actor, was the only shareholder to otherwise suffer or profit from his wrongful 

acts. Appellant cites to Medina v. Perumbeti, 8th Dist. Cuyahoga No. 66732, 1994 Ohio 

App. LEXIS 5809 (Dec. 22, 1994), referring to it as “remarkably instructive with regard 

to * * * whether the injury caused to H&N Construction by Hanko’s breach of fiduciary 

duties in effect constitutes injury to Nestor personally.” Appellant otherwise concedes 

the injury or harm the company suffered was the same harm he suffered. 

{¶ 36} Appellee contends that because H&N was a separate legal entity from its 

shareholders, appellant improperly asserted a direct claim below because appellant’s 
11. 

claims, “even if proved, were for injuries to H&N and clearly not to Nestor personally.” 

Appellee thus asserts a derivative claim and compliance with Civ.R. 23.1 were necessary. 

{¶ 37} We particularly find appellant’s allegations, if proven and well-taken by the 

trier-of-fact, would demonstrate appellee sought to compete, disrupted business 

operations by terminating employees, used and converted equipment, and usurped and 

withheld business opportunities, all in an effort to deliberately seek to harm H&N, which 

was appellant’s sole means of income. Appellee was the only other shareholder of H&N, 

and like Rohl in Heaton, was allegedly undamaged by his own actions and actually 

profited at appellant’s expense. See Heaton at ¶ 59. 

{¶ 38} Accordingly, we find this first consideration weighs in favor of allowing a 

direct claim by appellant. 

(2) Company Control 

{¶ 39} We next consider whether appellee controlled H&N, with exclusive 

authority, in a way that led to harming other shareholders. We again reference Citizens, 

2d Dist. Montgomery No. 13902, 1994 Ohio App. LEXIS 167, where the Second District 

Court of Appeals relied on this consideration to allow a claim against the controlling 

partner. 

{¶ 40} In Citizens, supra, Nelson was a “controlling shareholder” who breached 

his fiduciary duty to Ross. Nelson was considered “controlling” because he was the 

president, treasurer and manager, and he and his wife handled the books, records, and 
12. 

bank account, paid the subcontractors, suppliers, and creditors, and negotiated contracts 

and actively participated in the day-to-day operation of the company. Id. at *5. 

{¶ 41} Moreover, throughout the company’s existence, Ross, Nelson, and 

Nelson’s wife all loaned it money in his or her individual capacity. In 1991, the company 

went out of business and only Ross was left owed debt because Nelson, as treasurer, paid 

back money he and his wife were owed from H&N’s remaining funds. Ross then 

successfully sued Nelson alleging this failure to pay him back to be a breach of fiduciary 

duties. 

{¶ 42} Here, we find appellee was not alleged to be more of a controlling partner 

than appellant. To the contrary, it was appellant and his wife who admittedly ran the dayto-day operations of H&N, and as an equal partner we find appellant had as much right 

and opportunity to exercise control over any judgment exercised by H&N as had 

appellee. 

{¶ 43} However, we look again to Heaton, 193 Ohio App.3d 770, 2011-Ohio2090, 954 N.E.2d 165, for another angle at the issue. Appellee, similarly to Rohl in 

Heaton, was alleged to have operated the same type of business as H&N after leaving the 

company, to have used H&N employees and equipment for the benefit of him and his 

other company, and to have assisted the same potential customers as those of H&N, all 

while maintaining an interest in an undissolved H&N. See Heaton at ¶ 59, supra. 

{¶ 44} Accordingly, we find this second consideration weighs neutral in our 

direct-claim analysis. 
13. 

(3) On Going Concern 

{¶ 45} Lastly, we consider whether the company is an ongoing concern. See 

Kable at *17, S.D.Ohio No. 07-CV-1131, 2008 U.S. Dist. LEXIS 23974, supra. 

{¶ 46} Here, we find H&N is not. Specifically, the record supports the parties 

ceased working together in late 1999, and that H&N was enjoined from operation in 

2011. We find this third consideration, thus, weighs in favor of allowing a direct claim. 

{¶ 47} Accordingly, under these facts and based on the foregoing considerations, 

we find a direct action against appellee was appropriate. 

Assignment of Error No. 1 

{¶ 48} In his first assignment of error, appellant contends the trial court erred in 

granting appellee’s motion for directed verdict because there was substantial, competent 

evidence in his favor so that reasonable minds might reach a different conclusion. 

Appellee counters, asserting the trial court properly granted the directed verdict. 

{¶ 49} Civ.R. 50(A)(1) provides that a motion for directed verdict “may be made 

on the opening statement of the opponent, at the close of the opponent’s evidence or at 

the close of all the evidence.” Civ.R. 50(A)(4) follows with: 

 When a motion for a directed verdict has been properly made, and 

the trial court, after construing the evidence most strongly in favor of the 

party against whom the motion is directed, finds that upon any 

determinative issue reasonable minds could come to but one conclusion 

upon the evidence submitted and that conclusion is adverse to such party, 
14. 

the court shall sustain the motion and direct a verdict for the moving party 

as to that issue. 

See, e.g., Howell v. Dayton Power & Light Co., 102 Ohio App.3d 6, 13, 656 N.E.2d 957 

(4th Dist.1995). A de novo standard is applied in reviewing a trial court’s ruling on a 

motion for directed verdict under Civ.R. 50. See Kassmakis v. Dasani, 6th Dist. Lucas 

No. L-04-1041, 2004-Ohio-6463, ¶ 9. 

{¶ 50} We first note that appellant’s counterclaims below were for breach of 

fiduciary duty, conversion, and civil conspiracy. On appeal, appellant only challenges 

the trial court’s denial of the claim for breach of fiduciary duty. Consequently, he has 

waived any challenge to the disposition of his counterclaims for conversion and civil 

conspiracy. Thus we proceed, addressing only his claim for breach of fiduciary duty. 

“One asserting a claim of breach of fiduciary duty must establish the existence of a 

fiduciary duty, breach of that duty, and injury proximately caused by the breach.” 

Newcomer v. Natl. City Bank, 2014-Ohio-3619, 19 N.E.3d 492, ¶ 9 (6th Dist.). 

{¶ 51} Here, we find appellee certainly owed appellant a fiduciary duty while he 

was a partner, director, officer and shareholder of H&N. On appeal, appellant explicitly 

highlights appellee’s director and shareholder statuses to establish this duty and breach. 

See, e.g., Frick v. Frick, 6th Dist. Wood No. WD-03-075, 2004-Ohio-6898, ¶ 102; Burns 

v. Burns Iron & Metal Co., 6th Dist. Sandusky No. S-12-024, 2013-Ohio-2024, ¶ 18 (“It 

is well-settled that shareholders in a closely held corporation ‘owe one another a 

fiduciary duty to act in good faith and refrain from self-dealing.’”). 
15. 

{¶ 52} We agree. Moreover, with respect to breach, appellant specifically claims 

that appellee laid off employees to the detriment of H&N, actively competed with H&N, 

and usurped business opportunities available to H&N. 

{¶ 53} Appellee contends the employees were at-will and actually decided to not 

continue working for H&N, and that appellant failed to demonstrate with evidence that 

appellee’s alleged competing or usurping opportunities caused injury or damages. 

{¶ 54} Viewing the record at the close of appellant’s evidence most favorable to 

him, we find appellee breached his fiduciary duties of good faith and to refrain from selfdealing. Appellee nevertheless argues that, despite any breach of fiduciary duties, 

appellant failed to prove with certainty the amount of monetary damages he was entitled 

to as a result of appellee’s acts or omissions. 

{¶ 55} We first analyze whether appellant, before closing of his evidence at trial, 

established that appellee proximately caused injury or monetary damages. “Proximate 

cause ‘is often difficult of exact definition as applied to the facts of a particular case.’” 

Morgan v. Ramby, 12th Dist. Warren Nos. CA2010-10-095, CA2010-10-101, 2012-

Ohio-763, ¶ 25, citing Young v. Hollins, 12th Dist. No. CA89-11-099, 1991 Ohio App. 

LEXIS 178, 1991 WL 6361, * 4 (Jan. 22, 1991). “Nevertheless, while oftentimes 

difficult to define, the proximate cause of an event is generally thought of as ‘that which 

in a natural and continuous sequence, unbroken by any new, independent cause, produces 

that event and without which that event would not have occurred.’” Id., citing Wilson v. 
16. 

AC & S, Inc., 169 Ohio App.3d 720, 2006-Ohio-6704, 864 N.E.2d 682, ¶ 106 (12th 

Dist.). 

{¶ 56} We look to Morgan where the Twelfth District Court of Appeals held that 

no damages were proximately caused despite a shareholder/director/officer breaching his 

fiduciary duties by leaving his company without winding up its affairs and by failing to 

participate or assist in defending lawsuits brought against the company. Id. at ¶ 26. 

{¶ 57} Morgan and Ramby were each 50 percent shareholders of a homeconstruction business. Id. at ¶ 2. Their relationship eroded and Ramby separated from 

the business, which at that time left Morgan to deal with several disgruntled clients, 

unpaid invoices, mechanics liens, and lawsuits. Id. at ¶ 5. Morgan filed claims against 

Ramby for, among others, breach of fiduciary duties. Id. at ¶ 6. The trial court found 

Ramby could be liable for breaching fiduciary duties owed to both Morgan and the 

company for failing to formally resign and refusing to cooperate in defense of the 

litigation. Id. at ¶ 10. Despite this breach element being met, however, the trial court 

held that Morgan only proved the breach proximately resulted in $42,972.70 damages, 

which was for incurred legal fees. Id. at ¶ 26. 

{¶ 58} The Morgan appellate court affirmed that Ramby’s acts were “unbecoming 

of an otherwise prudent businessman,” and reflected “a reckless disregard for [the 

business’s] corporate interests.” Id. The appellate court specifically found, “[t]o simply 

walk away from the situation, as Ramby did, demonstrates a lack of good faith and 

violates the fiduciary duty owed to [the business] and Morgan.” Id. The court then 
17. 

turned “to the question of whether Morgan and [the business] have been damaged as a 

proximate result of Ramby’s conduct,” and answered it in the negative. Id. at ¶ 27. The 

court stated, “while Ramby’s assistance in defending against the lawsuits may have 

proved beneficial, it simply cannot be said that his departure proximately caused” 

$42,972.70 in attorney fees. Id. The court also affirmed that Morgan failed to show 

Ramby’s acts resulted in other damages. 

{¶ 59} Likewise, in this case we cannot say appellant has shown a causal link 

between appellee’s acts and resulting injury or damages. We find as a matter of law 

pursuant to Civ.R. 50(A)(4), insufficient evidence and reasonable minds could only come 

to the conclusion that appellee did not cause damages to appellant. The damages 

appellant requested in his counterclaims were for compensatory damages for a 

“disgorgement of all profits derived,” for punitive damages “in an amount to be 

determined at trial,” and for “interest, costs, attorney’s fees and such other legal and 

equitable relief as this Court deems proper.” 

{¶ 60} Based on our review of the evidence below, we cannot agree appellee 

proximately caused, in a natural and continuous sequence, unbroken by any new, 

independent cause, any monetary damages appellant may have suffered. Even viewing 

the evidence most favorably to appellant, we find his actions were new, independent 

causes of the claimed damages to H&N and himself. Specifically, and based on his own 

testimony, we find appellant essentially terminated appellee and forced his resignation, 

locked appellee out of H&N’s affairs and records, terminated appellee’s company credit 
18. 

card and access to H&N’s bank account, turned off appellee’s company phone and pager, 

blocked appellee from H&N jobs and profits, all while increasing appellant and his wife’s 

salaries and bonuses and completely taking dominion over the company and its profits 

without sharing. 

{¶ 61} All this was done without winding up the affairs of the company or buying 

out appellee, even after the two partners had discussed not continuing in the business 

together. We find that had appellant wound up the affairs or purchased appellee’s shares 

in H&N before the breaches of fiduciary duties began, he and H&N would not have 

suffered damages as a result. Both parties could have continued on freely without 

breaching any duty owed to the other partner. 

{¶ 62} Therefore, we first hold that even viewing the record in a light most 

favorable to appellant does not result in this court concluding there is sufficient evidence 

to support that appellee caused harm in a natural and continuous sequence, unbroken by 

any new, independent cause, especially not to the degree necessary to warrant punitive 

damages. 

{¶ 63} Furthermore and with respect to the other prayed-for damages, again, we 

find appellant’s own testimony supports that he was an independent, intervening, and 

contributing cause of the lost opportunity and profits. We find appellant failed to show 

that without appellee’s acts his damages would not have occurred. 

{¶ 64} Accordingly, we find that appellant’s first assignment of error is not-well 

taken and is denied. 
19. 

Assignment of Error No. 2 

{¶ 65} In the second assignment of error, appellant argues the trial court erred in 

failing to grant his motion for a new trial where the issued judgment was contrary to law. 

Appellee contends the court correctly denied the motion for a new trial. 

{¶ 66} Civ.R. 59(A)(7) states that “[a] new trial may be granted to all or any of the 

parties and on all or part of the issues upon” showing that “[t]he judgment is contrary to 

law.” 

{¶ 67} We review the denial of a motion for a new trial brought under Civ.R. 

59(A)(7) de novo. See Moore v. Moore, 6th Dist. Erie No. E-17-011, 2018-Ohio-1545, 

¶ 14. 

{¶ 68} Here, appellant argues he is entitled to a new trial for essentially the same 

reasons he claims to be entitled to withstand the directed verdict. He therefore argues 

that the October 25, 2017 judgment memorializing the court’s grant of directed verdict 

was contrary to law. We disagree for the reasons stated above. 

{¶ 69} Accordingly, we find no merit in appellant’s second assignment of error. 

Conclusion 

{¶ 70} The January 19, 2018 judgment of the Erie County Court of Common Pleas 

is affirmed. The costs of this appeal are assessed to appellant pursuant to App.R. 24. 

Judgment affirmed. 

 
20. 

 Hanko v. Nestor 

 C.A. No. E-18-007 

A certified copy of this entry shall constitute the mandate pursuant to App.R. 27. 

See also 6th Dist.Loc.App.R. 4. 

Arlene Singer, J. _______________________________ 

JUDGE 

Christine E. Mayle, P.J. _______________________________ 

CONCURS AND WRITES JUDGE 

SEPARATELY. 

 

Gene A. Zmuda, J. ________________________________ 

CONCURS IN DECISION ONLY JUDGE 

AND WRITES SEPARATELY. 

MAYLE, P.J. 

{¶ 71} I concur with the majority decision. I write separately to emphasize my 

view that appellant was entitled to bring a direct claim against appellee―even though 

appellant did not establish that appellee was the sole “controlling” shareholder―because 

it would have been “a considerable waste of judicial resources” to require appellant to 
21. 

pursue a derivative claim on behalf of a close corporation that is no longer in operation. 

Gensemer v. Hallock, 125 Ohio App.3d 84, 92, 707 N.E.2d 1156 (9th Dist.1997). 

{¶ 72} The Ninth District’s opinion in Gensemer is particularly instructive. In that 

case, the court concluded that the trial court properly allowed a direct fiduciary-duty 

claim by Richard and Paula Gensemer (who owned 50 percent of a close corporation) 

against Macy and Clare Hallock (who owned the other 50 percent) even though the 

Gensemers did not establish that they suffered separate and distinct injury, or that the 

Hallocks were the “controlling” shareholders. Id. at 91. The court stated: 

 To require the Gensemers now to pursue a derivative action for 

[damage incurred during] the years preceding dissolution would seem a 

considerable waste of judicial resources. The issues in either case would be 

identical. In a situation such as this, then, where there is a close 

corporation with only four shareholders, where the corporation has already 

been dissolved, and where the issues involved are not terribly complex, we 

cannot say the lower court errs in allowing a former shareholder to pursue a 

direct action against another former shareholder. Id. at 92. 

{¶ 73} I believe that the Ninth District’s reasoning in Gensemer applies with equal 

force in this case.1

 Moreover, Gensemer is in line with other Ohio courts that have 

 

1

 In truth, the reasoning of Gensemer arguably applies with even more force here given 

that―as the majority concludes―the appellant did allege a “separate and distinct” injury 

in this case. 
22. 

considered the relevant issue here―i.e., the propriety of a direct fiduciary-duty claim by 

a 50 percent coequal shareholder against the other 50 percent coequal shareholder of a 

close corporation―although, in most of those cases, the impact of the corporation’s 

ongoing status (or lack thereof) appears to have been an implicit, rather than explicit, 

consideration. 

{¶ 74} In DeHoff v. Veterinary Hosp. Operations of Cent. Ohio, Inc., 10th Dist. 

Franklin No. 02AP-454, 2003-Ohio-3334, ¶ 83, the court found that the trial court did not 

err by allowing appellee, a 50 percent coequal shareholder, to assert a claim against the 

other shareholder for “breach[ing] a fiduciary duty owed directly to him by failing to 

assist with the dissolution and winding up the affairs of the corporations * * * [because] 

the usual concerns that generally preclude a shareholder from bringing an individual 

action are not present * * *.” 

{¶ 75} In Stumpff v. Harris, 2d Dist. Montgomery No. 21407, 2006-Ohio-4796, 

¶ 57, a case involving judicial dissolution of a close corporation, the court found that a 50 

percent coequal shareholder “is not barred from bringing a direct cause of action against 

[the other] for breach of fiduciary duty”―albeit without extensive discussion.

{¶ 76} In Citizens Fed. Bank v. Chateau Constr. Co., Inc., 2d Dist. Montgomery 

No. 13902, 1994 Ohio App. LEXIS 167 (Jan. 19, 1994), although the court found that a 

50 percent coequal shareholder could bring a direct claim against the other shareholder 

because there was evidence that the defendant-shareholder was the “controlling 
23. 

shareholder,” id. at 5, it is noteworthy that the lawsuit in that case was filed after “the 

corporation went out of business.” Id. at 3. 

{¶ 77} Similarly, in Heaton v. Rohl, 193 Ohio App.3d 770, 2011-Ohio-2090, 954 

N.E.2d 165 (11th Dist.), although the court found that a 50 percent shareholder of a close 

corporation could sue the other shareholder directly because, in part, the defendantshareholder “possessed unique, supervening control” over the corporation, id. at ¶ 57, the 

court also found that the plaintiff-shareholder arguably suffered “injuries separate and 

distinct” from the other shareholder who was alleged to have “unilaterally caused [the 

corporation] to cease operations.” Id. at ¶ 56, 59. 

{¶ 78} Finally, in Kable v. Trinity Fin. Corp., S.D.Ohio No. 07-CV-1131, 2008 

U.S. Dist. LEXIS 23974, 17 (Mar. 11, 2008), the federal district court reviewed Ohio 

case law and concluded that “Ohio courts permit[] direct claims in lieu of derivative 

actions * * *” where the close corporation “no longer existed.” The federal court then 

refused to allow a direct claim because the plaintiff did not allege separate and distinct 

injury, and because the corporation at issue “remain[ed] a going concern.” Id. 

{¶ 79} In light of the foregoing precedent, I believe that appellant’s direct action 

against appellee was appropriate because their closely-held corporation, H&N, was no 

longer in operation. For me, that is the determinative factor in this case.2

 

2

 I also note that appellant’s “separate and distinct” injury―as alleged―necessarily 

depends upon the corporation’s ultimate collapse. That is, by alleging that appellee took 

illegitimate actions to usurp all of H&N’s business opportunities, which (according to 

appellant’s allegations) caused H&N’s eventual downfall, appellant essentially alleged 
24. 

{¶ 80} And, I agree with the majority that, although the appellant properly alleged

a direct claim against appellee, the trial court correctly granted a directed verdict in 

appellee’s favor on that claim because, under the facts that were admitted into evidence, 

appellant did not prove that appellee’s conduct was the proximate cause of any damage 

that appellant may have suffered. 

ZMUDA, J, concurring in decision only.

{¶ 81} Because I disagree with the majority’s determination regarding the 

propriety of a direct action, but otherwise agree with the conclusion that the trial court 

appropriately granted a directed verdict, I write separately, concurring only with the 

majority’s decision to affirm the trial court’s judgment. 

{¶ 82} In addressing the appropriateness of a direct claim by appellant, the 

majority applied the factors articulated in Crosby v. Beam, 47 Ohio St.3d 105, 548 

N.E.2d 217 (1989). Despite finding no separate and distinct injury suffered by appellant, 

and finding that appellant and his wife, not appellee, controlled the corporation, the 

majority determined a direct claim to be proper. However, analysis regarding direct 

 

that appellee deprived him of “an equal opportunity to benefit” from H&N. See Crosby 

v. Beam, 47 Ohio St.3d 105, 548 N.E.2d 217 (1989).
25. 

versus derivative claims is unnecessary, as the finding regarding damages is dispositive 

of all matters on appeal. 

{¶ 83} The trial court granted appellee’s motion for directed verdict, finding 

insufficient evidence to demonstrate appellee’s conduct proximately caused damages to 

appellant or the corporation. Based upon my review of the evidence in the record, and 

for the reasons articulated by the majority, the trial court properly granted the motion for 

directed verdict. Therefore, I concur in the decision to affirm the judgment of the trial 

court, with any analysis regarding the type of claim asserted of no consequence, based on 

this conclusion. 

This decision is subject to further editing by the Supreme Court of 

Ohio’s Reporter of Decisions. Parties interested in viewing the final reported 

version are advised to visit the Ohio Supreme Court’s web site at: 

http://www.supremecourt.ohio.gov/ROD/docs/.