Advance Wire Forming, Inc. v. Stein
| Decision Date | 25 August 2020 |
| Docket Number | Case No. 1:18cv723 |
| Parties | Advance Wire Forming, Inc., et al., Plaintiffs, v. Jeffrey Stein, et al., Defendants |
| Court | U.S. District Court — Northern District of Ohio |
MEMORANDUM OPINION AND ORDER
Currently pending are the following Motions: (1) Defendants Jeffrey Stein and Plastics and Products Marketing, LLC's Motion for Summary Judgment on Plaintiffs' Complaint (Doc. No. 151); (2) Defendants' Motion for Summary Judgment on their Counterclaim (Doc. No. 152); and (3) the Motion of Plaintiffs Advance Wire Forming, Inc., Advanced Industries Group, LLC, and AIG Holdings, LLC for Summary Judgment on the Counterclaim and Partial Summary Judgment as to the Complaint (Doc. No. 153.) Briefs in Opposition were filed on March 2, 2020, and Replies were filed on March 16, 2020. (Doc. Nos. 155, 156, 157, 158, 159, 160.)
For the following reasons, Defendants' Motion for Summary Judgment on the Complaint is GRANTED IN PART and DENIED IN PART. Defendants' Motion for Summary Judgment on the Counterclaim is DENIED. Plaintiffs' Motion for Partial Summary Judgment on the Complaint is DENIED, and their Motion for Summary Judgment on the Counterclaim is DENIED.
Prior to June 2016, Defendant Jeffrey Stein and Plaintiff James Williams were each 50% owners of Defendants Advance Wire Forming, Inc. ("AWF"), Advanced Industries Group, LLC ("Industries"), and AIG Holdings, LLC ("Holdings"). (Deposition of Jeffrey Stein (Doc. No. 133-1) at Tr. 5-6, 8.) AWF, Industries, and Holdings are located at 3636 West 58th Street in Cleveland, Ohio. (April 10, 2019 Deposition of James Williams (Doc. No. 135-1) at Tr. 4.)1
According to Plaintiffs, AWF manufactures wire, tubing, and plastic products, including point-of-purchase ("POP") displays, wire form products, and plastic components and merchandising units. Defendant Stein was the President of AWF. (Stein Depo. at Tr. 7.) He was responsible for sales, marketing, and production, and made all of AWF's operating and financial decisions. (Id. at Tr. 7-8.) See also Williams Aff. (Doc. No. 158-46) at ¶ 4.
Industries is a manufacturer of metal products, POP displays and fixtures, plastic components, and plastic merchandising units. (Williams Aff. at ¶ 4.) See also Williams Depo. (Doc. No. 135-1) at Tr. 10-11. Plaintiff Williams made all the operating and financial decisions for Industries. AIG Holdings owns the real property on which AWF and Industries are located. (Stein Depo. at Tr. 6.)
In June and early July 2015, Stein sent several emails expressing concern regarding AWF's financial condition. (Doc. Nos. 153-5, 153-10.) In one of these emails, however, Stein noted thatAWF had "added plastic fabricating to our capabilities and are starting to get orders from Heinz and International Delight." (Doc. No. 153-5 at PageID# 6565.) He was "not sure how much additional revenue it will generate for the company" but was hopeful that plastic fabrication work "could possibly be our salvation with new sales of around $500,000." (Id.)
In July 2015, however, Stein came into Plaintiff Williams' office and said (Williams Aff. at ¶ 5; James Monroe Aff. (Doc. No. 158-52) at ¶ 3.) According to Williams and James Monroe (Vice President of Sales for AWF and Industries), Stein indicated that AWF had lost a major customer worth $800,00 to $1,000,000 in annual billings and sales. (Williams Aff. at ¶ 7; Monroe Aff. at ¶ 5.) Stein also allegedly told Williams and Monroe that "the stress over the dire financial condition of [AWF] and his cancer was too much for him to handle and that he wanted out of all companies so that he could retire." (Williams Aff. at ¶ 8; Monroe Aff. at ¶ 6.) Williams avers that Stein "looked very pale, weak, sick and stressed out." (Williams Aff. at ¶ 8.)
Williams reviewed the checkbook for AWF and saw a balance of $7,000, and then reviewed payables which totaled over $400,000. (Williams Aff. at ¶ 5.) He subsequently made a bridge loan of $100,000 from Industries to AWF to cover payroll and other payables. (Id. at ¶ 6.) Shortly thereafter, on July 15, 2015, Williams made a written settlement offer to Stein to buy him out of AWF and Industries. (Id. at ¶ 9.) According to Williams, Stein first indicated that "although he wanted out and wanted to retire, he wanted to think about it and consider working for Industries and AWF as a paid employee or consultant." (Id.) Later that day, however, Stein allegedly indicated that he wanted to be bought out so that he could retire and move to Florida. (Id. at ¶ 10.)
During this same general time period, Stein was working with a plastics broker named Joseph Winiarski2 to produce a large order of fabricated plastic racks for a customer called International Delight. (Deposition of Joseph Winiarski (Doc. No. 132-1) at Tr. 28-34.) Winiarski testified that he designed this product, and that AWF was supposed to manufacture it and deliver it to International Delight. (Id. at Tr. 31-32.) On July 15, 2015, Stein sent an email to Joseph Winiarski, requesting that he submit a purchase order for this project. (Doc. No. 153-12.) See also Winiarski Depo. at Tr. 28-34. According to Williams and Monroe, AWF's ability to successfully fill this order was heavily dependent on Stein's knowledge of the manufacturing process for this specific product. See Williams Depo. (Doc. No. 135-1) at Tr. 26-28.
The following day, however, Stein did not come to work. On July 17, 2015, Stein executed a Power of Attorney, authorizing his son, Michael Stein, to make decisions for him concerning his real and personal property. (Doc. No. 153-13.) On July 18, 2015, Defendant Stein presented to the emergency room with complaints of depression, anxiety, difficulty concentrating, feelings of hopelessness, and suicidal ideation. (Doc. No. 153-16.) He was subsequently admitted to the psychiatric division of Lutheran Hospital and treated with counseling and medication. (Doc. Nos. 153-16, 153-18.) Stein was discharged on July 24, 2015 with diagnoses of generalized anxietydisorder, mood disorder, and major depressive disorder, single episode, severe without psychotic symptoms. (Doc. No. 151-8.)
While Defendant Stein was in the hospital, Michael Stein came to the offices of AWF to check his father's email and make sure "nothing was slipping through the cracks." (Deposition of Michael Stein (Doc. No. 131-1) at Tr. 17-19.) Michael spoke with Williams and Monroe and advised them that Defendant Stein was "sick and in the hospital." (Id. at Tr. 21.) Sometime later, Michael returned to AWF and took possession of a prototype for a cooler that his father had been developing for AWF. (Id. at Tr. 87.) See also Monroe Aff. at ¶ 13. When asked why he did this, Michael explained: (M. Stein Depo. at Tr. 87.)
Stein never returned to work at AWF, Industries, or Holdings. Williams and Monroe testified that, due in part to Stein's absence,3 the large plastics order for International Delight was a complete failure. Williams explained that he "had no experience in manufacturing the product" and, although they tried to fill the order, they "failed miserably."4 (Id. at Tr. 26-27.) Monroe also testified that, in August 2015, they lost an "absolute[ly]massive opportunity" to sell to United Dairy Farmer and Speedway because Stein was not available to assist in responding to a pricing request. (April 17, 2019 Deposition of James Monroe (Doc. No. 140-1) at Tr. 109.)
Williams or Monroe did not see or speak directly with Defendant Stein until March 2016, when the parties engaged in formal mediation proceedings. (Williams Aff. at ¶ 11; Monroe Aff. at ¶ 8.) Rather, between the date Stein left AWF in July 2015 and March 2016, Williams' and Monroe's communications regarding AWF and a potential buy-out of Defendant Stein's interests were with Stein's son, Michael. (Williams Aff. at ¶ 12; Monroe Aff. at ¶ 9.) Specifically, Williams avers that he and Monroe had numerous contacts with Michael in July and August 2015 "via telephone, text, and in person regarding Jeff Stein's exit plan." (Williams Aff. at ¶ 12.) Both Williams and Monroe state that, during these communications, Michael represented that his father "was stressed out, suicidal, was suffering from a nervous breakdown." (Williams Aff. at ¶ 15; Monroe Aff. at ¶ 10.) Michael also allegedly told them that Defendant Stein wanted to retire and move to Florida, and that "his father was too concerned about his physical and mental well-being and was in no shape to ever work again." (Williams Aff. at ¶ 15, 18.) See also Monroe Aff. at ¶ 15.
In October 2015, however, Stein "started feeling better" and began to explore other business opportunities. (Stein Depo. at Tr. 126.) Specifically, Stein began evaluating a number of different types of companies to possibly purchase, including pharmacies, food service equipment companies, and online retailers. (Doc. No. 151-11.) Notably, Winiarski testified that, in November 2015, Stein called him "out of the blue" and said (Winiarski Depo. at Tr. 37, 92, 93.) Winiarski stated that Stein told him (Id. at Tr. 92.) When asked why he left AWF so suddenly,Stein allegedly said that "he was getting f***ed by his partners and he needed to get the hell out." (Id. at Tr. 93.) In deposition, Stein denied that this conversation occurred, insisting that he "was not capable of doing anything in November of 2015." (Stein Depo. at Tr. 89-90, 126.)
After this alleged conversation, Winiarski immediately contacted Williams and Monroe and told them what Stein allegedly...
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