Court Opinion

ID: 4277421
Source: CourtListenerOpinion
Date Created: 2018-05-22 18:44:37.165169+00
Date Added: 2024-06-11T14:34:13.165444
License: Public Domain

[Cite as McCarthy v. Anderson, 2018-Ohio-1993.]

                                      COURT OF APPEALS
                                    LICKING COUNTY, OHIO
                                  FIFTH APPELLATE DISTRICT

JERRY J. McCARTHY, et al.                            JUDGES:
                                                     Hon. John W. Wise, P. J.
        Plaintiffs-Appellants                        Hon. William B. Hoffman, J.
                                                     Hon. Earle E. Wise, Jr., J.
-vs-
                                                     Case No. 17 CA 36
PHILLIP ANDERSON, et al.

        Defendants-Appellees                         OPINION

CHARACTER OF PROCEEDING:                          Civil Appeal from the Court of Common
                                                  Pleas, Case No. 17 CV 189

JUDGMENT:                                         Dismissed

DATE OF JUDGMENT ENTRY:                           May 21, 2018

APPEARANCES:

For Plaintiff-Appellant Legacy                    For Defendants-Appellees

LAREN E. KNOLL                                    MICHAEL HRABCAK
KNOLL LAW FIRM LLC                                BENJAMIN B. NELSON
7240 Muirfield Drive                              HRABCAK & COMPANY, LPA
Suite 320                                         67 East Wilson Bridge Road
Dublin, Ohio 43017                                Worthington, Ohio 43085
Licking County, Case No. 17 CA 36                                                      2

Wise, John, P. J.

        {¶1}   Plaintiff-Appellant Legacy Apparel and Promo, Inc. appeals the decision of

the Court of Common Pleas, Licking County, which ordered a corporate dissolution and

the appointment of a receiver upon motions filed by Defendants-Appellees Philip

Anderson, et al. The relevant facts leading to this appeal are as follows.

        {¶2}   In July 2015, Jerry J. McCarthy (co-plaintiff) and Appellee Anderson

decided to incorporate and operate a new apparel and promotional products company

called Legacy Apparel & Promo, Inc., assuming the titles of directors and officers.

According to McCarthy, he and appellee were to be 50/50 owners of the new company,

and profits were to be split equally. Appellee had previously operated another apparel

and promotions business known as Vision Apparel, but appellee allegedly told McCarthy

that he was no longer operating Vision Apparel, and that the company had been shut

down.

        {¶3}   Due to his concerns with Legacy Apparel's finances and certain

expenditures, McCarthy met with appellee in the fall of 2016, seeking an accounting and

to direct operations in a profitable manner. McCarthy allegedly informed appellee that he

would be taking a more active role in the management of the business. According to

appellant, in late 2016 and early 2017, appellee repeatedly locked out appellant from the

company computer systems and denied access to programs and systems utilized by

Legacy Apparel.

        {¶4}   On February 10, 2017, Appellant Legacy and McCarthy filed a civil

complaint in the Licking County Court of Common Pleas against Appellee Anderson,

Appellee Vision Apparel, and other “John Doe” defendants, alleging counts of fraud,
Licking County, Case No. 17 CA 36                                                          3

breach of fiduciary duty, breach of duties of loyalty and care, tortious interference with

business relations and contract, conversion, unfair competition and uniform trade secrets

violations, and unjust enrichment. Appellant and McCarthy also therein requested inter

alia a temporary restraining order and a preliminary injunction.

       {¶5}   Appellees filed their answer to the complaint on March 6, 2017.

Furthermore, on April 3 and 4, 2017, Appellee Anderson filed motions seeking judicial

dissolution and the appointment of a receiver.

       {¶6}   In the meantime, on April 25, 2017, the trial court issued a judgment entry,

stating inter alia that a receiver would be appointed in the near future and that the parties

had agreed to “restrain from altering, deleting, or modifying any data or electronically

stored information concerning the operation of either company.” Judgment Entry, April

25, 2017, at 1.

       {¶7}   A hearing was conducted before the trial court on April 28, 2017.

       {¶8}   On May 2, 2017, the trial court issued a judgment entry finding the parties

“deadlocked in management,” granting dissolution of Legacy Apparel and Promo, Inc.,

and naming Attorney Justin Lodge as the receiver. On the same day, the court issued an

order quashing certain subpoenas to Park National Bank, Fifth Third Bank, and Customer

Focus Software.

       {¶9}   On May 30, 2017, Appellant Legacy filed a notice of appeal as to the three

aforesaid judgment entries.1 It herein raises the following five Assignments of Error:

       {¶10} “I. THE TRIAL COURT ERRED WHEN IT FAILED TO RESTRAIN MR.

ANDERSON AND VISION APPAREL.

1   McCarthy has pursued his own appeal under a separate appellate case number.
Licking County, Case No. 17 CA 36                                                            4

       {¶11} “II.   THE TRIAL COURT ERRED WHEN IT FAILED TO GRANT A

PRELIMINARY INJUNCTION AGAINST MR. ANDERSON AND VISION APPAREL.

       {¶12} “III. THE TRIAL COURT ERRED IN APPOINTING A RECEIVER FOR

LEGACY APPAREL & PROMO, INC.

       {¶13} “IV. THE TRIAL COURT ERRED IN DISSOLVING LEGACY APPAREL &

PROMO, INC.

       {¶14} “V. THE TRIAL COURT ERRED WHEN IT FAILED TO COMPEL AND

PERMIT DISCOVERY.”

       {¶15} We will address the aforesaid assigned errors partially out of sequence.

                                              I., II., V.

       {¶16} In its First Assignment of Error, appellant essentially contends the trial court

erred in failing to issue a temporary restraining order against Appellees Anderson and

Vision Apparel. In its Second Assignment of Error, appellant maintains the trial court erred

in failing to issue a preliminary injunction against appellees. In its Fifth Assignment of

Error, appellant argues that the trial court erred in failing to “compel and permit discovery.”

       {¶17} As indicated in our procedural summary of this matter, supra, McCarthy and

appellant commenced the within action in the trial court on February 10, 2017, by filing a

civil complaint against Appellee Anderson, Appellee Vision Apparel, and other “John Doe”

defendants, along with a request for a temporary restraining order and a preliminary

injunction. While the trial court indeed proceeded to rule on appellees’ motions seeking

judicial dissolution and the appointment of a receiver, the bulk of appellants’ February 10,

2017 complaint remains pending. In the court’s own words, it “has held a number of

conferences with counsel in an attempt to manage all of the various issues that have been
Licking County, Case No. 17 CA 36                                                             5

raised pretrial in an attempt to accomplish the objectives of the possibility of settling the

action; simplifying the issues and minimizing the costs to the parties.” Judgment Entry,

April 25, 2017, at 1.

       {¶18} We recognize the general principle that when a trial court fails to rule upon

a pretrial motion, it may be presumed that the court overruled it. Ohio Receivables, L.L.C.

v. Durunner, 5th Dist. Delaware No. 13 CAG 03 0017, 2013-Ohio-5514, ¶ 29, citing State

ex rel. Cassels v. Dayton City School Dist. Bd. of Edn., 69 Ohio St. 3d 217, 223, 631
N.E.2d 150, 1994–Ohio–92. However, under the procedural circumstances presented,

we find it is far too early to invoke the aforesaid presumption.

       {¶19} In addition, as to appellant’s fifth assigned error, as a general rule, trial court

orders dealing with discovery are considered interlocutory and are not immediately

appealable. Novak v. Studebaker, 9th Dist. Summit No. 24615, 2009-Ohio-5337, ¶ 14.

Furthermore, an order granting a motion to quash a subpoena is generally not a final

appealable order. See In re Tracy M., 6th Dist. Huron No. H-04-028, 2004-Ohio-5756, ¶

29; Foor v. Huntington National Bank, 27 Ohio App. 3d 76, 77 (10th Dist. 1986).

       {¶20} Accordingly, and in conjunction with our conclusions infra, we find the

issues raised in appellant’s First, Second, and Fifth Assignments are not presently ripe

for appeal.

                                                  III.

       {¶21} In its Third Assignment of Error, appellant essentially contends the trial court

erred in appointing a receiver for the corporation.

       {¶22} As an initial matter, we note an appellate court's jurisdiction over trial court

rulings extends only to “judgments or final orders.” Ohio Constitution, Art. IV, Section
Licking County, Case No. 17 CA 36                                                          6

3(B)(2). As a general rule, a judgment that leaves issues unresolved and contemplates

that further action must be taken is not a final appealable order. See Moscarello v.

Moscarello, 5th Dist. Stark No. 2014CA00181, 2015–Ohio–654, ¶ 11, quoting Rice v.

Lewis, 4th Dist. Scioto No. 11CA3451, 2012–Ohio–2588, ¶ 14 (additional citations

omitted).

       {¶23} As a general rule, the court appointment of a receiver is a final, appealable

order. See Mandalaywala v. Zaleski, 124 Ohio App. 3d 321, 329, 706 N.E.2d 344 (10th

Dist.1997) (additional citations omitted). However, where additional claims remain

pending, an order appointing a receiver is a final appealable order only if the trial court

makes an express determination under Civ.R. 54(B) that there is no just reason for delay.

See Koehler Bros. v. Swihart, 3rd Dist. Hancock No. 5-78-16, 1979 WL 207934

(Whiteside, J., concurring). See, also, Regents Mgt. Co. v. Connor, 10th Dist. Franklin

No. 78AP-172, 1978 WL 217266 (indicating no final appealable order exists where the

trial court has failed to include Civ.R. 54(B) language and the receiver has not yet been

finally discharged).

       {¶24} In the case sub judice, most, if not all, of the claims brought by appellant

and McCarthy in their lawsuit remain pending, but the judgment entry at issue granting

appellees’ request for a receiver lacks a Civ.R. 54(B) certification by the trial court.

       {¶25} We therefore will not further address appellant’s Third Assignment of Error

in the present appeal.

                                                 IV.

       {¶26} In its Fourth Assignment of Error, appellant argues the trial court erred in

judicially dissolving the corporation.
Licking County, Case No. 17 CA 36                                                         7

       {¶27} R.C. 1701.91(A)(4) states in pertinent part as follows: “A corporation may

be dissolved judicially and its affairs wound up *** [b]y an order of the court of common

pleas of the county in this state in which the corporation has its principal office, in an

action brought by one-half of the directors when there is an even number of directors ***

when it is established that the corporation has an even number of directors who are

deadlocked in the management of the corporate affairs and the shareholders are unable

to break the deadlock ***.”

       {¶28} In Sapienza v. Material Eng. & Tech. Support Servs. Corp., 5th Dist.

Delaware No. 10CAE110092, 2011-Ohio-3559, this Court concluded that “[b]ecause R.C.

1701.91(A)(4) involves an analysis of the facts presented by the complaining

shareholders and directors, our standard of review is essentially a sufficiency of the

evidence standard.” Id. at ¶ 20.

       {¶29} However, we again must address whether a final appealable order is

presently before this Court. See Ohio Constitution, Article IV, Section 3(B)(2). R.C.

1701.91(E) provides as follows: “A judicial proceeding under this section concerning the

judicial dissolution of a corporation is a special proceeding, and final orders in it may be

vacated, modified, or reversed on appeal pursuant to the Rules of Appellate Procedure

or the Rules of Practice of the Supreme Court, whichever are applicable, and, to the

extent not in conflict with those rules, Chapter 2505. of the Revised Code.” (Emphasis

added). An order which affects a substantial right is one which, if not immediately

appealable, would foreclose appropriate relief in the future. Nozik v. Mentor Lagoons,

Inc., 11th Dist. Lake No. 93-L-057, 1994 WL 188904, citing Bell v. Mt. Sinai Med. Ctr.

(1993), 67 Ohio St. 3d 60, 63 (internal quotations omitted).
Licking County, Case No. 17 CA 36                                                        8

       {¶30} Nonetheless, as indicated previously, the judgment entry at issue in the

case sub judice lacks a Civ.R. 54(B) certification by the trial court. The Ohio Supreme

Court has recognized that “[f]or purposes of Civ.R. 54(B) certification, in deciding that

there is no just reason for delay, the trial judge makes what is essentially a factual

determination—whether an interlocutory appeal is consistent with the interests of sound

judicial administration.” Wisintainer v. Elcen Power Strut Co. (1993), 67 Ohio St. 3d 352,

617 N.E.2d 1136, paragraph one of the syllabus. An order of a court is a final appealable

order only if the requirements of both R.C. 2505.02 and, if applicable, Civ.R. 54(B) are

met. McHenry v. McHenry, 5th Dist. Stark No. 2014 CA 00146, 2015-Ohio-2479, ¶ 23,

citing Chef Italiano Corp. v. Kent State Univ. (1989), 44 Ohio St. 3d 86, syllabus.

       {¶31} Accordingly, despite the general legislative preference apparent in R.C.

1701.91(E) to allow immediate appeal of an order of judicial dissolution, due to the

existence in this instance of pending claims stemming from appellant’s lawsuit and the

lack of Civ.R. 54(B) language in the judgment entry under appeal, we find a final

appealable order is lacking. While appellant argues the trial court should have postponed

dissolution “[a]s a matter of judicial economy, fairness and to prevent financial avoidance

by Mr. Anderson ***,” (Appellant’s Brief at 27), we are herein bound by the holding of Chef

Italiano, supra.

       {¶32} We therefore will not reach the merits of appellant’s Fourth Assignment of

Error in the present appeal.
Licking County, Case No. 17 CA 36                                              9

      {¶33} For the foregoing reasons, the appeal of the judgment of the Court of

Common Pleas, Licking County, Ohio, is hereby dismissed.

By: Wise, John, P. J.

Wise, Earle, J., concurs.

Hoffman, J., concurs in part and dissents in part.

JWW/d 0416
Licking County, Case No. 17 CA 36                                                          10

Hoffman, J., concurring in part and dissenting in part

       {¶34} I concur in the majority’s analysis and disposition of Appellant’s first,

second, third and fifth assignments of error.

       {¶35} I respectfully dissent from the majority’s analysis and decision with respect

to Appellant’s fourth assignment of error. Unlike the majority, I find the trial court’s

decision to dissolve the corporation is a final appealable order despite the trial court’s

failure to include Civ.R. 54(B) certification. I find so because corporate dissolution is a

special proceeding under R.C. 2505.02(B)(2), and the trial court’s decision to order the

cooperation dissolved affects substantial rights of all the parties in the lawsuit.

       {¶36} I also believe the order is final under R.C. 2925.02(B)(4) as it “in effect

determines the action with respect to the provisional remedy [corporate dissolution], and

prevents a judgment in the action in favor of the appealing party [Appellant] with respect

to the provisional remedy.” Further, by doing so, Appellant “would not be afforded a

meaningful or effective remedy by way of appeal following final judgment as to all

proceedings, issues, claims, and parties in the action.” Because R.C. 2505.02(B)(4)

specifically recognizes situations where a final appealable order exists despite the

existence of remaining proceedings, issues, claims, and parties and does not condition

exercise of appellate jurisdiction upon Civ.R. 54(B) certification, I find it is a final order

also thereunder.

       {¶37} Furthermore, the statute creating the procedure for corporation dissolution,

R.C. 1701.91(E), specifically states final orders made in it are appealable to the extent

not in conflict with the appellate rules or Chapter 2505. of the Revised Code. Because

the trial court’s order is specifically an order in a special proceeding affecting substantial
Licking County, Case No. 17 CA 36                                                    11

rights and determined a provisional remedy under R.C. 2505.02(B)(4), I find it is not in

conflict with the appellate rules or Chapter 2505.