Court Opinion

ID: 4562806
Source: CourtListenerOpinion
Date Created: 2020-09-03 19:10:35.22044+00
Date Added: 2024-06-11T12:12:16.436246
License: Public Domain

[Cite as Xtreme Limo, L.L.C. v. Antill, 2020-Ohio-4314.]

                              IN THE COURT OF APPEALS OF OHIO

                                   TENTH APPELLATE DISTRICT

Xtreme Limo, LLC, et al.,                            :

                 Plaintiffs-Appellees,               :
                                                                   No. 19AP-799
v.                                                   :         (C.P.C. No. 16CV-11502)

Shawn M. Antill,                                     :        (REGULAR CALENDAR)

                 Defendant-Appellant.                :

                                            D E C I S I O N

                                   Rendered on September 3, 2020

                 On brief: The Law Office of Anthony Greco, LPA,
                 Anthony W. Greco, and Hari K. Sathappan, for appellees.

                 On brief: The Knoll Law Firm, LLC, and Laren E. Knoll, for
                 appellant; The Caudill Firm, LLC, and Danny L. Caudill, for
                 appellant.

                  APPEAL from the Franklin County Court of Common Pleas

NELSON, J.

        {¶ 1} Shawn Antill was an employee of US Tank Alliance, Inc., where he managed
one of the company's affiliates, Xtreme Limo, LLC, and was given the title of "President of
Xtreme Limo." Appellant's Brief at 2-3, citing March 10, 2017 Second Amended Complaint
("SAC") at ¶ 35, 52. In October of 2016, he left that employment after acquiring an interest
in an alleged Xtreme Limo competitor, Classic Limousines. Appellant's Brief at 3; SAC at
¶ 71-72, 77. Just over a month later (and simplifying the procedural posture here a bit,
much as the parties do in their briefing to us), US Tank Alliance, Inc., Xtreme Limo, and
another affiliated entity sued Mr. Antill (and others) on claims including (variously for
different plaintiffs) breach of fiduciary duty, breach of contract, and unjust enrichment, see
Appellant's Brief at 2, as well as for tortious interference with business relationships,
conversion, and misappropriation of trade secrets, see SAC.
No. 19AP-799                                                                                2

       {¶ 2} By motion of May 28, 2019, Mr. Antill asked the trial court to require US Tank
Alliance, Inc. to front his litigation expenses. The trial court having declined to do so, see
November 5, 2019 Order and Entry, Mr. Antill brings this interlocutory appeal from that
denial. Compare Miller v. Miller, 132 Ohio St.3d 424, 2012-Ohio-2928, ¶ 38
(" 'Postponement of determination [of] whether [right to advancement] exists would
render the right meaningless' ") (citation omitted). Because the law does not require US
Tank to advance Mr. Antill's litigation expenses, we affirm the ruling of the trial court and
send the matter back so that the case may proceed on that basis.
       {¶ 3} The parties agree that the issue before us is governed by Ohio law,
notwithstanding that US Tank is a Massachusetts corporation, and the trial court analyzed
the matter accordingly. November 5, 2019 Order and Entry at 3, fn. 1; May 28, 2019 Motion
for Advancement at 2, fn. 3. Concluding that Mr. Antill had been "an employee, as opposed
to [a] director, of US Tank," the trial court correctly ruled that he has no "entitlement to
mandatory advancement of litigation expenses pursuant to R.C. 1701.13(E)(5)(a)(1)"
(requiring corporations to advance legal fees to directors in many circumstances). Order
and Entry at 4. And because "there is no equivalent provision in R.C. Chapter 1705
[governing LLCs] requiring mandatory advancement of litigation expenses to a director or
officer of a limited liability company," the trial court found that Mr. Antill's title with
Xtreme Limo did "not afford him the relief he requests." Id.
       {¶ 4} Mr. Antill makes two assignments of error:
              1. The trial court erred in its exclusive reliance on R.C.
              1701.13(E)(5)(a)(1) to deny Appellant's motion for
              advancement of litigation expenses.

              2. The trial court erred by denying Antill's motion for
              advancement of litigation expenses.

Appellant's Brief at 1. Because his second assignment subsumes his first, we begin with that
bottom-line issue.
       {¶ 5} Mr. Antill says that he "never claimed that he was a director," and he
acknowledges that he does not have a right to the "mandatory advancement" that often
could be claimed by directors under the statute. Appellant's Brief at 5, 1. Rather, he urges,
he is entitled to "permissive advancement" through operation of US Tank Alliance, Inc.
bylaws in conjunction with R.C. 1701.13(E)(5)(b) (which authorizes a corporation to
No. 19AP-799                                                                                  3

advance litigation expenses to directors, officers, employees, and specified others "as
authorized by the directors in the specific case" upon application with promise to repay if
the person ultimately is found not entitled to indemnification). Id. at 1, 5-6 (further arguing
that "[w]hen a corporation, such as US Tank, chooses to incorporate [litigation expense
advancement] provisions into their rules and regulations, those provisions have the force
of contracts") (citing Westbrook v. Swiatek, 5th Dist. No. 2009 CAE 05 0048, 2010-Ohio-
2868, ¶ 28; see also id. at ¶ 29 [advancement requirement in such circumstances is a matter
of contract]).
          {¶ 6} Although Mr. Antill's appeal emphasizes the distinction between
R.C. 1701.13(E)(5)(a) (as limited to directors) and (b) (allowing discretionary provision for
advancements to directors, officers, employees, and others), see Appellant's Brief at 1, his
briefing to the trial court did not specify the (b) subsection at all; instead, it referred
generically to "R.C. §1701.13," see May 28, 2019 Motion for Advancement at 2, 3, and
claimed a "statutory right to advancement," id. at 2. So the trial court's focus on Mr. Antill's
lack of statutory "entitlement to mandatory advancement of litigation expenses" is quite
understandable. We will proceed, however, to assess the contract claim that Mr. Antill
makes by virtue of US Tank's bylaws (which he did invoke in his arguments to the trial
court).
          {¶ 7} Section 5.04 of those bylaws specifically addresses "Advance Payment of
Expenses." It provides that US Tank shall make advance payment of litigation expenses
"incurred by a director or officer" in defending a lawsuit "upon receipt of an undertaking by
* * * the director to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized" in Article V. That bylaw
entitlement to advance payments therefore is limited to directors or officers, as Section 5.04
further underscores by providing that "other employees and agents may be so paid upon
such terms and conditions, if any, as the Board of Directors deems appropriate."
          {¶ 8} Mr. Antill argues that "[t]here is no doubt that [he] was an officer of US
Tank," and that he therefore is due the advance. Appellant's Brief at 6. But he points us to
nothing, and directed the trial court to nothing, that would have established the trial court's
authority to order such payments on that basis. The fact that he was called "President of
Xtreme Limo" does not make him an officer of US Tank Alliance, Inc. (the incorporated
No. 19AP-799                                                                                 4

entity the bylaws of which Mr. Antill invokes). Nor does the deposition response of "[y]es"
by US Tank's owner to this compound question: "And [Mr. Antill's] title, if he had to have
a title, at US Tank Alliance, Incorporated is still president of Xtreme Limo, LLC. He's an
employee, he's this officer-level employee assigned to be the president of Xtreme Limo,
LLC, correct?" April 4, 2019 Crosa Deposition at 67 (filed June 6, 2019). That response
relating to Mr. Antill's title for Xtreme Limo does not designate him as an officer of US
Tank. Compare US Tank Bylaws Section 3.02 ("Unless otherwise determined by the Board
of Directors, the officers of the Corporation shall be elected by the Board of Directors at the
annual meeting of the Board of Directors"); April 4, 2019 Crosa Deposition at 65, 68 (Mr.
Antill was "hired as an employee of US Tank Alliance assigned to manage Xtreme Limo and
was promoted to president of Xtreme Limo in August of 2014"; Xtreme Limo and US Tank
are "separate companies," with US Tank providing financial and "administrative support"
to Xtreme Limo).
       {¶ 9} Similarly, US Tank's allegation that Mr. Antill breached a fiduciary duty to it
does not mark him as having been an "officer" of that corporation. Just as the fact that all
rabbits are animals does not mean that all animals are rabbits, that "[c]orporate officers
* * * are fiduciaries," see Appellant's Brief at 8, does not mean that all fiduciaries are
corporate officers. See, e.g., Miller Medical Sales, Inc. v. Worstell, 10th Dist. No. 91AP-
610, 1992 Ohio App. Lexis 779, *17-18 (salesman's fiduciary or trust relationship with
company can require an accounting if salesman breaches non-compete agreement).
       {¶ 10} Mr. Antill broadens his argument to include the notion that US Tank is
obliged by its bylaws to advance his litigation expenses because its lawsuit arises from his
former status as an "employee." Appellant's Brief at 6, 7. In doing so, he relies on Section
5.01 of the bylaws (captioned "Nature of Indemnity"). Id. at 7. But he is wrong to conflate
"indemnity" with "advance payment," as indeed the distinctions between bylaw Sections
5.01 and 5.04 show. Unlike Section 5.04 (specifically dealing with "Advance Payment" and
limiting required advances to "a director or officer" of US Tank), Section 5.01 requires that
US Tank "shall indemnify any person who was or is a party * * * to any * * * action * * * by
reason of the fact that he is or was * * * a director or officer of the Corporation [US Tank],
or is or was serving * * * at the request of the Corporation a director or officer, of another
corporation * * * except that in the case of an action or suit by or in the right of the
No. 19AP-799                                                                               5

Corporation * * * no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable to the corporation." Bylaws
Section 5.01 (emphasis added). Mr. Antill does not advert to the italicized words, which
make clear that the potential "indemnification" contemplated by this language relates to
indemnification that "shall be made" after resolution of the claims and dependent upon
their outcome.     Correspondingly, Bylaw Section 5.02 underscores that a qualifying
employee is to be "indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him." Section 5.04 then discusses the more limited possibility for
"Advance Payment of Expenses" (to directors and officers, and to others only with special
leave of the Board), and Section 5.05 (emphasis added) highlights the distinction between
indemnification and advances in the context of directors and officers (by referring to "[a]ny
indemnification of a director or officer of the Corporation under Sections 5.01 and 5.02, or
advance of costs, charges and expenses to a director or officer under Section 5.04 of this
Article," and by then again speaking of "indemnity or advancement of expenses."
       {¶ 11} Section 5.01 of the bylaws may, in theory, at some point help Mr. Antill
recover indemnification if he succeeds in his defense, but it does not entitle him to an
advance of litigation expenses under Section 5.04. As Mr. Antill concedes in a different
section of his briefing, "advancement is a distinct remedy from indemnification. MD
Acquisition, LLC v. Myers, 173 Ohio App.3d 247, 2007-Ohio-3521 at ¶ 6, [(10th Dist.)]."
Appellant's Brief at 9.
       {¶ 12} Mr. Antill's final argument on appeal is that the "purpose of advancement" as
contemplated by Ohio statute advances "policies" that require us to reverse the trial court's
determination. Appellant's Brief at 9. The legislature, of course, adopts statutes, not
perceived purposes, and policy arguments do not trump or alter statutory text. In any
event, Mr. Antill's argument is confounding because his briefing on appeal proclaims that
he is not seeking "mandatory advancement" under statutory requirements, but rather
claims a "contractual right" under US Tank's bylaws. Id. at 1 (emphasis added). (As we
have seen, US Tank's bylaws do not promise him advancement.)
       {¶ 13} The trial court did not err in denying Mr. Antill's motion for advancement of
litigation expenses from US Tank. We thus overrule Mr. Antill's second assignment of error
No. 19AP-799                                                                            6

and thereby render his first assignment of error moot. This cause is remanded to the trial
court for further proceedings in the case.
                           Judgment affirmed; cause remanded for further proceedings.
                        SADLER, P.J. and BRUNNER, J., concur.