Hostetler v. Cent. Farm & Garden, Inc., Case No. 2010 AP 12 0046
| Decision Date | 09 February 2012 |
| Docket Number | Case No. 2010 AP 12 0046 |
| Citation | 2012 Ohio 507 |
| Parties | WILLIAM HOSTETLER Plaintiff-Appellant/Cross-Appellee v. CENTRAL FARM AND GARDEN, INC. Defendant-Appellee/Cross-Appellant |
| Court | Ohio Court of Appeals |
JUDGES:
Hon. W. Scott Gwin, P. J.
OPINION
For Plaintiff-Appellant
DAVID P. BERTSCH
BUCKINGHAM, DOOLITTLE
& BURROUGHS
For Defendant-Appellee
DAVID J. WIGHAM
ANDREW P. LYCANS
CRITCHFIELD, CRITCHFIELD &
JOHNSON
{¶1} Appellant/Cross-Appellee William Hostetler appeals the decision of the Court of Common Pleas, Tuscarawas County, which denied his motion for directed verdict and subsequently denied his motion for judgment notwithstanding the verdict ("JNOV") or a new trial following a jury trial in a suit against Appellee/Cross-Appellant Central Farm and Garden, Inc., claiming breach of a business agreement. The relevant facts leading to this appeal are as follows.
{¶2} Plaintiff-Appellant William Hostetler is a farmer who formerly operated an additional business known as Hostetler Farm Supply, a d/b/a started by his late father. Defendant-Appellee Central Farm and Garden, Inc. is a wholesale distributor of farm and garden supplies, including twine and fodder preservation products. Appellant Hostetler's business competed in part with Appellee Central Farm in selling twine to dealers and other commercial customers. Appellant Hostetler's business also sold twine, in lesser amounts, to some of his neighbors and other retail customers. Appellant at one time had an account with Appellee Central Farm to purchase twine at dealer prices for resale to said neighbors and other retail customers.
{¶3} In the summer of 2004, appellee asked appellant, who generally was able to sell his product at a lower price, whether he would be willing to sell appellee some twine after appellee's supply ran low. Appellant agreed to sell the twine to appellee at his cost.
{¶4} In September 2004, appellee's then co-owners, Joe Franks and Dick Olson, approached appellant about purchasing his business.1 Accordingly, inDecember 2004, the parties executed a purchase agreement prepared by appellee's legal counsel. In the agreement, appellee agreed to acquire appellant's "customer list and price list" for a price of $275,000. This amount was to be paid in installments of $10,000 on December 31, 2004, $17,500 on September 1, 2005, and nine additional payments of $27,500 payable annually on September 1, 2006 through September 1, 2014. See Articles I and II of the agreement.
{¶5} Article V of the agreement provided for appellee to employ appellant as a commissioned sales representative on an annual renewable basis. The agreement does not clearly tie appellee's installment payment obligations to appellant's continued service as a sales representative. However, Section 5.1 states that "[d]uring the term of employment, [appellant] shall not engage in any activity which conflicts or interferes with the performance of duties hereunder or usurps the business interests, existing or potential, of [appellee]." Section 5.3(c) states that appellee would set the price at which appellant was to sell appellee's products, and that appellant could purchase twine at dealer cost.
{¶6} Section 7.3 of the agreement contained a noncompetition provision which prohibited appellant from competing against appellee for the following five years (i.e., until the end of 2009), as well as a provision entitling appellee to injunctive relief upon violation. Section 7.4 provided that appellee could set off its claimed damages under the noncompetition provision against the outstanding balance owed on the purchase price by giving notice to appellant, specifying in reasonable detail the basis for the set-off and depositing the amount of the claimed set-off in an escrow account at its law firm.
{¶7} After the agreement was executed, appellant delivered a list of the names and addresses for his commercial twine accounts to appellee, although it is presently undisputed that any copies thereof have been lost or destroyed by both parties. Appellant also provided appellee the names of his twine suppliers. Appellee in turn paid appellant the first $17,500 installment under the purchase agreement.
{¶8} Appellant continued to purchase twine from appellee at dealer cost under Section 5.3(c) of the agreement, which he resold to some of his neighbors and other retail customers. Appellant maintained at trial that he purchased approximately $175,000 of twine from Central Farm for resale to his neighbors and retail customers at a 5% profit for the three years from 2005 through 2007. See Tr. at 166-167.
{¶9} In July 2005, Appellee Central Farm made appellant a salaried employee at a rate of $40,000 per year plus the commission payments under the 2004 agreement, plus benefits. This additional agreement was for a term of one year automatically renewable in July of each successive year unless either party gave notice of discontinuation at least sixty days prior to the annual anniversary date.
{¶10} Appellant received the $17,500 purchase price installment payment in the autumn of 2005 and the $27,500 purchase price installment payment in the autumn of 2006.
{¶11} In September 2007, a dispute arose between Central Farm's co-owners Franks and Olson over a bank audit and inventory issues. Olson decided to remove Franks as president and appoint Corey Sheely, the company's marketing manager, as the new president. Sheely thereupon conducted a review of Central Farm's finances and the 2004 purchase agreement. Despite the terms of the additional 2005agreement, on October 24, 2007, Sheely met with appellant and told him he was being taken off salary and returned to his original position as a commissioned salesman effective November 1, 2007. Sheely also told appellant in the meeting that Appellee Central Farm was discontinuing twine sales until at least the following spring. This was problematic for appellant, because most of his twine sales for appellee were made in the autumn and winter. Sheely allegedly did not give appellant any sales territory of his own when he put him back on commission.
{¶12} In the late autumn of 2007, Sheely told his sales staff that appellant would no longer be working for Central Farm. Sheely also instructed the sales representatives to see if appellant had been contacting any Central Farm customers.
{¶13} Appellee Central Farm did pay Hostetler the September 1, 2007 installment of $27,500 at the end of October. However, appellee's vice-president, David Guster, told appellant not to attend any further sales meetings since there was no twine to sell. Appellant subsequently told Guster he had taken a job as a longdistance truck driver and asked Guster to notify him upon appellee's resumption of twine sales.
{¶14} In December 2007, Appellee Central Farm's former president Franks, along with his wife, went into the twine business, operating under the name JBF. Sheely suspected appellant had gone into this business with Franks and personally began asking some of appellee's customers if appellant was selling them twine.
{¶15} Appellee Central Farm ultimately resumed twine sales the following spring, but Guster never contacted appellant to let him know or invite him to any subsequent sales meetings.
{¶16} Appellant has maintained that he never went into the twine business with Franks, never provided any services to Franks, and never solicited any customer on behalf of Franks or JBF.
{¶17} Appellant has also maintained that after he began work as a long-distance trucker in late October 2007, he also discontinued selling twine to his neighbors and other retail customers. In February 2008, Hostetler received his last monthly account statement from Central Farm, which showed he was still owed $16,739.23 in credits. In April 2008, Hostetler sent a letter to Central Farm requesting that it close his account and send him a check for the $16,739.23 account balance. Appellant's attorney sent a follow-up letter in May 2008 again requesting that appellee send the outstanding balance of credits claimed on the account. Appellee never responded to either letter.
{¶18} Appellee Central Farm then failed to make the $27,500 payment on the purchase price that was due and payable on September 1, 2008. Appellant asserts that appellee never gave the requisite notice to him under Section 7.4 of the agreement that it was withholding this payment as a set-off for claimed damages attributable to any alleged breach of the agreement by appellant.
{¶19} On July 9, 2009, Appellant Hostetler filed a civil complaint for breach of the purchase agreement, breach of contract, breach of account, and a demand for account stated. On September 8, 2009, appellee filed an answer and counterclaim.
{¶20} The matter proceeded to a jury trial for nearly four days in late October 2010. Appellant moved for a directed verdict at the close of evidence on appellee's counterclaim, asserting there was no competent evidence that appellant hadcommitted any material breach of the agreement and no evidence that appellee had sustained any damages. The motion for directed verdict was denied.
{¶21} Appellant submitted a proposed set of interrogatories asking the jury to make a finding as to whether and in what manner appellant had breached the agreement and the amount of any resulting damages. The trial court declined to submit the proposed jury interrogatories. See Tr. at 491.
{¶22} After hearing the evidence, the jury returned a verdict awarding appellant $25,240 on his account claim, which was subsequently reduced by way of a stipulated remittitur to the $16,739.23 outstanding account balance. The jury also returned a verdict in favor of appellant on appellee's counterclaim for breach of agreement, but...
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