M.J. DiCorpo, Inc. v. Sweeney, 93-186

Citation69 Ohio St.3d 497,634 N.E.2d 203
Decision Date29 June 1994
Docket NumberNo. 93-186,93-186
CourtUnited States State Supreme Court of Ohio
PartiesM.J. DiCORPO, INC., d.b.a. Gupta, DiCorpo & Dykman, et al., Appellees and Cross-Appellants, v. SWEENEY et al., Appellants and Cross-Appellees.

SYLLABUS BY THE COURT

An affidavit, statement or other information provided to a prosecuting attorney, reporting the actual or possible commission of a crime, is part of a judicial proceeding. The informant is entitled to an absolute privilege against civil liability for statements made which bear some reasonable relation to the activity reported.

Attorney Robert E. Sweeney, appellant and cross-appellee, is the sole shareholder of appellant and cross-appellee Robert E. Sweeney & Associates Co., L.P.A. ("RESCO"), an Ohio legal professional association. Michael J. DiCorpo, appellee and cross-appellant, is the sole owner of appellee and cross-appellant M.J. DiCorpo, Inc., d.b.a. Gupta, DiCorpo & Dykman ("Gupta-DiCorpo"), a professional consulting firm. In January 1988, RESCO hired Gupta-DiCorpo to serve as consultant to the law firm. From January 1988 to November 1989, Gupta-DiCorpo and Michael J. DiCorpo performed services for RESCO at agreed-upon hourly rates. Gupta-DiCorpo submitted monthly invoices to RESCO for the services performed by the consulting firm. All services were billed at the applicable hourly rate. It appears RESCO paid the monthly billing invoices through September 1989.

During the summer of 1989, RESCO and another Cleveland-area law firm, Climaco, Climaco, Seminatore, Lefkowitz & Garofoli Co., L.P.A. ("CCSL & G"), jointly retained Gupta-DiCorpo to negotiate and arrange a merger of RESCO and CCSL & G. In October 1989, Michael J. DiCorpo, acting on behalf of Gupta-DiCorpo, prepared a one and one-half page "letter of intent" (and, later, a one page addendum) setting forth some of the basic terms and conditions of the proposed merger. On or before November 1, 1989, the letter of intent and addendum thereto (with a few minor modifications) were signed and approved by Robert E. Sweeney and Michael L. Climaco on behalf of RESCO and CCSL & G, respectively. The letter of intent was dated November 1, 1989, and read, in part:

"This is a basic letter of intent to merge the practice of Robert E. Sweeney & Associates Co., L.P.A. (RESCO) into the practice of Climaco, Climaco, Seminatore, Lefkowitz & Garafoli [sic Garofoli] (CCSL & G). The following items are the basic terms and conditions:

"1) All necessary employees as determined by Robert E. Sweeney (RES), John R. Climaco (JRC) and Michael J. DiCorpo will be given a six month employment contract with CCSL & G.

"2) RES will be given a five year employment contract at $250,000.00 per year plus expenses. RES can retire any time after three years and forego the remainder of the contract. This contract can be renewed by mutual agreement of the parties.

"3) [RES] will sell his practice and cases to CCSL & G for $13,000,000.00 payable at $2,000,000.00 per year for the first five years and $1,000,000.00 per year for the next three years. * * *

"4) * * * The firms will look into the possible combination of the pension plans.

" * * *

"7) If net fees collected fall below $5,500,000.00 during either of the first 2 years, or below $5,000,000.00 during either of the second 2 years, or below $4,000,000.00 during the fifth year, or below $3,000,000.00 during any of the last 3 years, then the buyout in item 3) above will be reduced by the percentage which the net fees are below the stated numbers in this item 7).

"8) This deal must be completed by 11/1/89 with a contemplated move to the Halle building on or before 2/1/90. CCSL & G will pay all relocation costs.

"This letter is meant as an agreement to principles and will be followed by a definitive agreement within 15 days of signing." 1 (Emphasis added.)

Beneath the signatures in the letter of intent is a paragraph that reads: "The consulting firm of Gupta, Dicorpo [sic DiCorpo] & Dykman will receive a fee of 2% upon completion of this deal, one-half payable by each firm." (Emphasis added.)

Apparently, within fifteen days of the signing of the letter of intent, a "definitive agreement" to combine the law practices was submitted by CCSL & G to Robert E. Sweeney for his approval and acceptance. However, the proposed definitive agreement differed dramatically from the letter of intent. The definitive agreement exceeded forty pages in length, addressed numerous matters not contemplated in the letter of intent, sought to impose significant burdens and obligations upon Robert E. Sweeney, and sought to limit Sweeney's power and control in the proposed combined law practice. The definitive agreement, like the letter of intent, contemplated a five-year employment contract for Robert E. Sweeney at $250,000 per year, and contained an eight-year schedule of "target net fee amounts" to be used in determining the compensation (if any) Sweeney was to be paid in connection with the merger. Sweeney refused to sign the definitive agreement and, consequently, RESCO and CCSL & G never merged.

In December 1989, Gupta-DiCorpo and Michael J. DiCorpo (collectively "appellees") filed a complaint in the Court of Common Pleas of Cuyahoga County against RESCO and Robert E. Sweeney (collectively "appellants"), RESCO's business manager and three members of the RESCO law firm. In the complaint, appellees alleged that on August 23, 1989, Gupta-DiCorpo entered into an oral "Compensation Agreement" with RESCO and CCSL & G. Specifically, appellees alleged that RESCO, CCSL & G and Gupta-DiCorpo had verbally agreed that compensation for Gupta-DiCorpo's services in connection with the proposed merger would amount to two percent of the "agreed upon merger price," with each firm (RESCO and CCSL & G) obligated to pay one-half of the commission. Appellees further alleged that the November 1, 1989 letter of intent "confirmed, documented, and set forth the Compensation Agreement" between Gupta-DiCorpo, RESCO and CCSL & G. Appellees claimed that the letter of intent constituted a binding and enforceable "[C]ontract of Merger," that Sweeney had reneged on the merger, and that, therefore, appellants were obligated to pay appellees two percent of the amount Sweeney would have been entitled to receive had the merger occurred.

In the complaint, appellees sought recovery against appellants in the amount of $285,000 for breach of the alleged oral "Compensation Agreement"-- i.e., two percent of the proposed $14.25 million Sweeney was to receive for the merger under items 2 and 3 of the letter of intent. Appellees also sought recovery against appellants in the amount of $285,000 for unjust enrichment. All remaining claims in the complaint were directed against other named defendants and are not at issue in this appeal.

Michael J. DiCorpo was deposed on July 24, 1990. In his deposition, DiCorpo testified concerning the terms of the oral "Compensation Agreement":

"Q On August 23, [1989,] you came back and met with Mr. Sweeney?

"A Yes.

"Q Was that alone?

"A Yes.

"Q What transpired on August 23?

"A I explained to him [Sweeney] we [Gupta-DiCorpo] would be doing the deal on a two-percent basis, two percent of whatever I got for him on the deal against our hourly fees, and that I had discussed that with * * * [John R. Climaco of CCSL & G], and he had agreed to that.

" * * *

"Q You have used the phrase, two percent against our hourly rate, and it would be based upon, I believe you said, 'whatever I got for him.'

"A Yes.

"Q Was there any further discussion as to what was meant by 'whatever I got for him'?

"A No.

"Q What was your understanding as to what was meant by your comment, 'whatever I got for him'?

"A That was a purchase deal. So, it was whatever Mr. Sweeney was going to get paid to purchase his practice, because he was the sole owner.

"Q Did you explain that to Mr. Sweeney at that time?

"A Yes.

"Q What did you explain to him?

"A I explained to him the same thing that I just told you I explained to Mr. Climaco: That, because we were currently working for both clients, when and if the merger did go through, we would be losing one of our clients, and we would like to do it on two percent of what we get for you, against our hourly rate.

"Q Well, that is what I am asking you. When you say 'two percent of whatever I get for you,' was the phrase, 'whatever I get for you,' defined in terms of an employment contract or in terms of lump sum payments, or how this would be calculated over time?

"A No. I had no idea at that time of what the deal was going to be.

"Q So, as far as you can recall, you left it with: 'Whatever I can get for you'?

"A That is correct." (Emphasis added.)

DiCorpo testified further that he had billed RESCO and CCSL & G at his customary hourly rate for all services performed in connection with the proposed merger to secure payment for his services in the event that negotiations between RESCO and CCSL & G did not result in a merger.

During the pendency of the case, the trial court granted a motion by appellees for permission to file a supplemental complaint against appellants. The events which gave rise to the filing of the supplemental complaint concerned an affidavit that was sent by Robert E. Sweeney to the Cuyahoga County Prosecutor in February 1990. In the affidavit, Sweeney accused Michael V. Kelley, a former associate of RESCO, of embezzling funds from a joint account maintained by RESCO and CCSL & G (the "Climaco-Sweeney Trust Account"). Sweeney averred that between January 1, 1989 and November 15, 1989, Kelley, "abetted and aided by one Michael DiCorpo," had "carried on a very close and vigorous effort" to persuade Sweeney to merge RESCO with CCSL & G, "as it was obvious to Mr. Kelley that the only way he [Kelley] could fold in the taking of the money from the Climaco-Sweeney Trust Account was to accomplish a merger between the respective...

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