J&g Industries, Inc. v. Norman A. Abood

Citation2002 Ohio 5912
Decision Date25 October 2002
Docket NumberL-02-1062,02-LW-4427
PartiesJ&G Industries, Inc., Appellant v. Norman A. Abood, Appellee Court of Appeals
CourtUnited States Court of Appeals (Ohio)

Thomas A. Yoder, for appellant.

Mark P Seitzinger, Shannon J. George, and John F. Potts, for appellee.

OPINION

RESNICK M.L., J.

{¶1} This case is before the court on appeal from a judgment of the Lucas County Court of Common Pleas, which granted appellee's motion for partial summary judgment on all but two of appellant's seven claims for relief. For the following reasons, we affirm the judgment of the trial court.

{¶2} Appellant, J&G Industries, Inc., is an Ohio Corporation engaged primarily in the business of the purchasing and selling used metal working machinery and industrial plants. John F. Yoder and his wife, Geraldine Yoder, are the sole shareholders in the corporation. In 1997, John Yoder turned the day-to-day operations of the business over to his son John Scott Yoder, who, during the relevant period was titled as the President of J&G Industries.

{¶3} In September 1997, John Scott Yoder hired appellee, Norman A Abood, an attorney, to work for J&G Industries as its in-house counsel and Chief Operating Officer. Appellee received a salary, as well as bonuses for bringing new business to the corporation. Over the next year, John Scott Yoder and appellee engaged in a number of business transactions; all were allegedly on behalf of J&G Industries.

{¶4} One of these transactions, a contract with Newport News Drydock and Shipbuilding Company ("Newport News") for the purchase and re-sale of commercial ship building parts ("ship sets"), resulted in a judgment of over $6 million against J&G Industries. In addition, appellant forfeited a $1.2 million deposit provided to Newport News on October 27, 1998, the day the contract was executed.

{¶5} There were several other business dealings engaged in by John Scott Yoder and appellee during their tenures as officers of J&G Industries. According to John F. Yoder, these transactions occurred without his knowledge or sanction. John F. Yoder terminated appellee's employment as Chief Operating Officer of J&G Industries in September 1999, and as in-house counsel in December 1999.

{¶6} On September 15, 2000, appellant filed a complaint against appellee and, then, an amended complaint. In the first count of its amended complaint, appellant asserted that appellee breached his fiduciary duty and committed legal malpractice when he approved the $6.2 million contract between J&G Industries and Newport News Drydock and Shipbuilding Company. Appellant maintained that it lost the $1.2 million deposit as the result of the transaction.

{¶7} In its second cause of action, appellant asserted that appellee breached his fiduciary duty when he caused J&G Industries to invest $30,000 in Euro Industries. The third count of the complaint alleged that appellee, as well as John Scott Yoder, facilitated a loan to R&J Rigging, Inc. and Richard and Judie Albrecht from J&G Industries' line of credit at National City Bank, with J&G Industries as the corporate guarantor. According to the complaint, appellee received $250,000 in shares in R&J Rigging, Inc. in consideration of the loan. Appellant claimed that this transaction was ultra vires and violated R.C. Chapter 1701, Ohio Corporation Law. Appellant therefore maintained that appellee breached his fiduciary duty with regard to this business transaction.

{¶8} The fourth count of the amended complaint set forth a claim similar to that asserted in the third count, but involved a different business entity named Induco Services. Appellant again alleged that appellee breached his fiduciary duty. The fifth cause of action raised a criminal claim of theft, in violation of R.C. 2913.02(A)(2).

{¶9} The sixth count was based on alleged violations of the Code of Professional Responsibility. Finally, the seventh cause of action was predicated on the fact that appellee's acts in the named transactions were intentional, thereby entitling appellant to punitive damages.

{¶10} Appellee answered the complaint and subsequently filed a motion for summary judgment on all of appellant's causes of action. Appellant filed a combined motion for summary judgment and response to appellee's motion for summary judgment. After realizing that trial was already scheduled in this matter, appellant subsequently filed a motion for leave to file its motion for summary judgment. The trial judge denied the motion for leave and ordered that appellant's motion for summary judgment be stricken.

{¶11} In the judgment appealed to this court, the trial judge granted partial summary judgment to appellant, finding that no question of fact existed on appellant's (1) cause of action based upon the transaction between J&G' Industries and Newport News; (2) cause of action involving Induco Services; (3) count of the amended complaint alleging criminal theft; (4) cause of action founded upon purported violations of the Code of Professional Responsibility; and (5) count alleging intentional conduct and punitive damages. As to this last count, the trial court found that "[n]o evidence has been presented which rises to an inference of intentional misconduct."

{¶12} Despite appellant's request to the contrary, the judge declined to add the Civ.R. 54(B) language that would render her judgment a final, appealable order. Consequently, appellant voluntarily dismissed, without prejudice, its causes of action arising from appellee's business dealings with R&J Rigging, Inc. and Euro Industries.

{¶13} In this ensuing appeal, appellant asserts the following assignments of error:

{¶14} "1. The trial court erred in granting the defendant's motion for summary judgment as it relates to the intentional acts of the defendant in that there was sufficient evidence before the court that the defendant acted intentionally and in bad faith in breaching his fiduciary duty to the appellant."

{¶15} "2. The trial court erred in granting defendant's motion for summary judgment as it relates to the Newport News case in that the final decision to enter into the contract that cost appellant $1.2 million was the defendant's decision."

{¶16} We shall first address the merits of appellant's second assignment of error.

{¶17} In support of this assignment of error, appellant relies, in part, on excerpts of the deposition and trial testimony[1] of John Scott Yoder appended to its appellate brief as Exhibits 2 and 3. These excerpts were originally attached to appellant's combined motion for summary judgment and response to appellee's motion for summary judgement. Because the trial court struck the motion for summary judgment, appellee filed a motion in this court to strike, inter alia, Exhibits 2 and 3, arguing that they were not before the trial court in its determination of appellee's motion for summary judgment. We agreed, and ordered Exhibits 2 and 3 stricken from the record of this case. J&G Industries, Inc. v. Abood (July 30, 2002), 6th Dist. No. L-02-1062. Appellant filed a motion for reconsideration of this decision; said motion is pending before this court.

{¶18} Appellant maintains that the trial court struck only its motion for summary judgment. Therefore, and because the response to appellee's motion for summary judgment remained, the exhibits presented in support of the combined motion/response were considered by the court. We agree. Therefore, appellant's motion for reconsideration is found well-taken. Our decision of July 30, 2002 is vacated, and we shall consider the disputed excerpts in our decision.[2]

{¶19} It is appropriate for a trial court to grant summary judgment pursuant to Civ.R. 56(C) when (1) there is no genuine issue as to any material fact; (2) the moving party is entitled to judgment as a matter of law; and (3) reasonable minds can come to only one conclusion, and that conclusion is adverse to the party against whom the motion for summary judgment is made, who is entitled to have the evidence construed most strongly in his favor. Horton v. Harwick Chem. Corp. (1995), 73 Ohio St.3d 679, paragraph three of the syllabus.

{¶20}

A party seeking summary judgment bears the initial burden of informing the court of the basis for the motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact as to the essential elements of the nonmoving party's claims. Dresher v. Burt (1996), 75 Ohio St.3d 280, 293. If the moving party has satisfied its initial burden, the nonmoving party then has a reciprocal burden to "set forth specific facts showing the existence of a genuine triable issue." State ex rel. Burnes v. Athens Cty. Clerk of Courts (1998), 83 Ohio St.3d 523, 524. An appellate court reviews a trial court's decision to grant summary judgment de novo.

{¶21}Grafton v. Ohio Edison Co. (1996), 77 Ohio St.3d 102, 105.

{¶22} In determining that appellee was entitled to summary judgment on the first count of the complaint, the trial court found that the $6.2 million contract was signed by John Scott Yoder, as President of J&G Industries, and the representative of Newport News before seeking appellee's "approval" and that the contract contained a merger clause. The court therefore held, in essence, that neither a claim of breach of fiduciary duty nor legal malpractice could be grounded on appellee's after-the-fact review of the signed contract.

{¶23} Appellant apparently claims that the trial judge misconstrued the facts because she stated that John Scott Yoder gave appellee a "signed copy" of the contract for his review, but the undisputed facts demonstrate that appellee was provided with "fully executed originals" of the contract....

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