Metron Nutraceuticals, L.L.C. v. Thomas
| Docket Number | 110280 |
| Decision Date | 13 January 2022 |
| Citation | 2022 Ohio 79 |
| Parties | METRON NUTRACEUTICALS, L.L.C., Plaintiff-Appellee, v. CLAYTON THOMAS, ET AL., Defendants-Appellants. |
| Court | Ohio Court of Appeals |
Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-16-859345
Lewis Brisbois Bisgaard and Smith, L.L.P., Ryan K. Rubin, Daniel Leister, and Gregory P. Amend, for appellee.
Luftman, Heck & Associates, L.L.P., and Matthew L. Alden for appellants.
JOURNAL ENTRY AND OPINION
{¶ 1} Defendant-appellant Clayton Thomas ("Thomas") appeals from the trial court's judgment that granted the motion of plaintiff-appellee Metron Nutraceuticals, L.L.C. ("Metron") to show cause why Thomas should not be held in contempt and ordered him to pay Metron $222, 360 in damages and $33, 179 for its attorney fees incurred in litigating the motion. Finding no merit to Thomas's appeal, we affirm.
{¶ 2} In 2016, Metron filed suit against Thomas and his company, Personalized Healthcare Solutions, L.L.C. ("PHS"). The complaint arose out of Metron and Thomas's business dealings.
{¶ 3} The complaint alleged that Metron's president, Dr. Nikolaos Tsirikos-Karapanos, had invented a patent-pending process to make water-soluble hydrolyzed clinoptilolite fragments, a hydrolyzed zeolite that can be consumed to help the body eliminate toxins. The complaint further alleged that in 2014, Dr. Tsirikos-Karapanos, Thomas, and other investors founded Metron with the intention of selling the hydrolyzed zeolite under the name CytoDetox. Metron's operating agreement prohibited any member from engaging in other business ventures that utilize zeolites or chemical solutions or formulas containing zeolites. Thomas also signed a nonsolicitation, confidentiality, and noncompete agreement. Nevertheless, in August 2015, without the consent or knowledge of Metron, Thomas formed PHS, a zeolite distribution company, in direct competition with Metron. Then, again without Metron's knowledge or authorization, Thomas contacted Metron's packaging department and ordered it to ship all of Metron's remaining CytoDetox product, or 2, 616 bottles, to Thomas's residence in Tacoma, Washington. Despite demands, Thomas refused to return the CytoDetox to Metron.
{¶ 4} Metron's complaint asserted claims against Thomas and PHS for breach of fiduciary duty, breach of the duties of loyalty and care, breach of contract, conversion and/or civil theft, violation of the Uniform Trade Secrets Act, fraud in the inducement, tortious interference with contract and business relations, and unjust enrichment. The complaint also sought temporary and permanent injunctive relief.
{¶ 6} Subsequently, after a hearing, the trial court granted default judgment to Metron. The trial court's judgment ordered Thomas to forfeit his 15.99 percent share in Metron and pay compensatory damages and ordered permanent injunctive relief against Thomas and PHS.
{¶ 7} Three times thereafter, the trial court found Thomas in civil contempt of court for failing to comply with the trial court's injunction. Each time, the court had ordered various sanctions and purge conditions, none of with which Thomas complied. When Thomas failed to appear at a purge hearing despite an order to do so, the court found him in criminal contempt and issued a warrant for his arrest.
{¶ 8} Thomas and PHS then filed a motion for relief from judgment. At the hearing on the defendants' motion, the court also heard argument regarding Thomas's contempt. The trial court found that Thomas was still in contempt, had made no effort whatsoever to purge himself of contempt, and continued to engage in activities from which he had been enjoined. The court ordered Thomas remanded to the Cuyahoga County Jail to serve three days' imprisonment.
{¶ 9} Subsequently, after the court denied the defendants' motion for relief from judgment, in an effort to bring finality to the matter, the parties filed a joint motion for relief from judgment requesting that the trial court enter an agreed judgment. The trial court granted the motion and entered the agreed judgment, which among other things, ordered that Thomas and PHS were to "immediately" return to Metron all remaining bottles of CytoDetox in Thomas's possession or under his control.
{¶ 10} In July 2020, Metron filed a motion for Thomas to show cause as to why he should not be held in contempt for failing to comply with the agreed judgment. The trial court conducted an evidentiary hearing, after which both parties filed post-hearing briefs. In its post-hearing brief, Metron requested its attorney fees incurred in litigating the motion.
{¶ 11} In its journal entry granting Metron's motion to show cause (which the trial court concluded was "essentially a motion to enforce a settlement agreement"), the trial court found that although it had ordered Thomas and PHS three times to return the 2, 616 bottles of CytoDetox to Metron (i.e., in the preliminary injunction, the permanent injunction, and the agreed judgment entry), "none (zero) of the 2, 616 bottles were returned." The court found that "because Mr. Thomas failed to return any of the CytoDetox bottles, in violation of the court's orders and his own agreement," Metron was entitled to $222, 360 in damages, which the court determined was the fair market value of the unreturned bottles. The court also found that Thomas and PHS had violated the agreed judgment in other ways, but that Metron had not proved any damages regarding those violations.
{¶ 12} With respect to attorney fees, the court found that Metron's request for $31, 609 in attorney fees and $1, 570 for litigation support incurred "due to Mr. Thomas's violation of the settlement agreement" was "reasonable based on the experience of counsel and on the rate charged within this area of law in Cleveland, Ohio." Accordingly, it awarded Metron $33, 179 in attorney fees. This appeal followed.
{¶ 13} In his first assignment of error, Thomas contends that the trial court abused its discretion in awarding $222, 360 to Metron for his failure to comply with paragraph 9 of the agreed judgment entry, which ordered him to "immediately" return the 2, 616 bottles of CytoDetox to Metron. Thomas contends that the trial court's award of $222, 360 was unreasonable and against the manifest weight of the evidence because the evidence at the hearing about whether the bottles had been returned and the value of the bottles was disputed.
{¶ 14} In arguing this assignment of error, both parties refer us to the law regarding a trial court's authority to hold a litigant in contempt. It is apparent, however, that the trial court considered Metron's motion to show cause as a motion to enforce a settlement agreement. The trial court's judgment entry stated that Metron's motion to show cause was "essentially a motion to enforce a settlement agreement." The court found that Thomas's failure to return the bottles was a violation of both "the court's orders and his own agreement." With respect to Metron's other claims regarding Thomas's violation of the agreement, the court found that although Thomas had "violate[d] the agreement," Metron had failed to show any damages as a result of the violation; damages are an element of a claim for breach of a settlement agreement. Finally, the trial court awarded attorney fees to Metron incurred in prosecuting the action because of "Mr. Thomas's violation of the settlement agreement." Thus, the court clearly considered Metron's motion to show cause as a motion to enforce a settlement agreement[1]
{¶ 15} A trial court has the authority to enforce a settlement agreement voluntarily entered into by the parties to a lawsuit because such an agreement constitutes a binding contract. Infinite Sec. Solutions, L.L.C. v. Karam Properties, II, Ltd., 143 Ohio St.3d 346, 2015-Ohio-1101, 37 N.E.3d 1211, ¶ 16.
{¶ 16} The party alleging the breach of a settlement agreement must establish by a preponderance of the evidence: (1) the existence of the agreement; (2) performance by the nonbreaching party; (3) breach by the other party; and (4) resulting damages or loss to the nonbreaching party. Raymond J. Schaefer, Inc. v. Pytlik, 6th Dist. Ottawa No. OT-09-026, 2010-Ohio-4714, ¶ 24.
{¶ 17} The parties do not dispute that they entered into a valid settlement agreement. Nor is there any dispute regarding Metron's performance under the agreement. By asserting that the evidence regarding whether the bottles were returned and the value of the bottles was disputed, Thomas is essentially arguing that the trial court erred in concluding that he breached the agreement and in calculating the resulting damages. "When parties dispute whether their respective actions were sufficient to...
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