Osborn v. Griffin

Citation50 F.Supp.3d 772
Decision Date29 September 2014
Docket NumberCivil Action Nos. 2011–89 WOB–CJS,2013–32 WOB–CJS.
PartiesElizabeth A. OSBORN, Plaintiff v. John M. GRIFFIN, et al., Defendants and Linda G. Holt, et al., Plaintiffs v. Dennis B. Griffin, et al., Defendants.
CourtU.S. District Court — Eastern District of Kentucky

Benjamin Joel Lewis, Janet P. Jakubowicz, Natalie Donahue Montell, Bingham Greenebaum Doll LLP, Louisville, KY, Anthony J. Bickel, Christopher B. Markus, J. Kent Wicker, Dressman Benzinger Lavelle P.S.C., Crestview Hills, KY, Eva Christine Trout, Trout Law Office, PLLC, Lexington, KY, for Plaintiff.

Caitlin E. Murphy, Steven C. Coffaro, Joseph M. Callow, Jr., Thomas F. Hankinson, Keating, Muething & Klekamp, PLLC, George D. Jonson, Montgomery, Rennie & Johnson, Cincinnati, OH, John E. Floyd, Bondurant, Mixson & Elmore LLP, Atlanta, GA, for Defendant.

MEMORANDUM OPINION AND ORDER

WILLIAM O. BERTELSMAN, District Judge.

These cases are before the Court on numerous motions for summary judgment (Docs. 422, 423, 424, 427, 432, 433, 434, 435, 436), a motion to dismiss a counterclaim (Doc. 400), a motion to disregard the deposition testimony of Dennis B. Griffin (Doc. 541), plaintiffs' joint motion for leave to file a surreply (Doc. 553), and objections to three orders of the United States Magistrate Judge (Docs. 556, 559, 563).

The Court previously heard oral argument on these motions, after which it took them under advisement. (Doc. 565) (Minute Entry). After further study, the Court now issues the following Memorandum Opinion and Order.

TABLE OF CONTENTS I.Factual and Procedural Background II.Analysis A.Discovery/Evidentiary Matters  1.The Court overrules all objections to the orders of the Magistrate Judge. 792  2.The Court denies Defendants' motion to disregard Dennis Griffin's deposition testimony.793 B.Breach of Fiduciary Duty and Related Tort Claims  1.The Court denies Defendants' motion for summary judgment to the extent that it alleges Plaintiffs' claims for breach of fiduciary duty are barred by the statute of limitations.795  2.The Court holds that Dennis and Griffy breached their fiduciary duties to the Holt plaintiffs as a matter of law with respect to the claims arising out of the 1985–86 stock transactions.796   a.The Court holds that a triable issue of fact exists as to Defendants' argument that the Holt plaintiffs would have no interest in Griffin Industries' stock absent the 1985 plan.797   b.The Court holds as a matter of law that the affirmative defense of res judicata does not bar the Holt plaintiffs' claims arising out of the 1985–86 stock transactions.798   c.The Court holds that a triable issue of fact exists with respect to the equitable defense of acquiescence to the Holt plaintiffs' claims arising out of the 1985–86 stock transactions.799   d.The Court holds that a triable issue of fact exists with respect to the affirmative defense of laches to the Holt plaintiffs' claims arising out of the 1985–86 stock transactions.799  3.The Court holds as a matter of law that Defendants are entitled to summary judgment on all claims arising out of the ownership of the Cold Spring property.800  4.The Court holds that Dennis and Griffy breached their fiduciary duties to Plaintiffs as a matter of law with respect to the transfer of the Craig Protein stock and the sales of land to Martom Properties. Triable issues of fact remain, however, with respect to the equitable defense of acquiescence, the affirmative defense of laches, and the defense that Plaintiffs accepted the benefits of the transactions.801 C.Professional Negligence Claims  1.The Court holds as a matter of law that the Holt plaintiffs' claims for professional negligence against Keating, Meuthing & Klekamp are barred by the statute of limitations.803 D.RICO Claims  1.The Court holds as a matter of law that the Holt plaintiffs cannot invoke the doctrine of equitable tolling and their claims are thus barred by the statute of limitations.806  2.The Court holds as a matter of law that Betsy cannot invoke the doctrine of equitable tolling and her claims are thus barred by the statute of limitations.807 E.Counterclaim Against Betsy  1.The Court holds as a matter of law that Defendants' counterclaim against Betsy fails to state a claim upon which relief can be granted.808
Factual and Procedural Background
A. Introduction

These cases arise out of a dispute among the children of John L. Griffin (Father), founder of Griffin Industries, Inc. (“the Company”), and his wife, Rosellen Griffin (Mother). The Griffins had twelve children, eleven of whom were living at the times relevant to this lawsuit, six boys and five girls.

Founded by Father in 1943, Griffin Industries is a rendering company that grew into a multi-million dollar business with operations in several states. At all relevant times, the brothers were active in the family business. John M. Griffin (Griffy) and Dennis B. Griffin (Dennis) were board members of Griffin Industries, and Robert was the CEO and President of the Company. Plaintiffs were not involved in the management of the Company.

In the present cases, four of the sisters—Elizabeth (“Betsy”), Linda, Judith (“Judy”), and Cynthia (“Cyndi”)—have sued three of their brothers: Griffy, Dennis, and Robert Griffin (Robert), as well as other defendants. Generally speaking, plaintiffs allege that Griffy and Dennis, who were fiduciaries of their parents' estate plans, breached their duties to plaintiffs, beneficiaries of those estates, by failing to follow the terms of their parents' wills and trusts. Plaintiffs allege that defendants took these wrongful actions as part of their larger scheme to retain control of Griffin Industries and to enrich themselves at their sisters' expense.

B. Real Properties and Stock in Dispute

Between 1964 and 1978, Father and Mother purchased land in various locations: Jackson, Mississippi (“the Jackson Property”); Henderson, Kentucky (“the Henderson property”); several properties in Pendleton County, Kentucky (“the Bradford property,” “the Jay Gee property,” and “the Adams property”); and Scott County, Indiana (“the Scott property”). These properties, which were titled in either Father's name or in both Father and Mother's names, were used by the Company in its operations. Griffin Industries paid all real estate taxes, insurance, and improvements on these properties, and written leases on several of the properties were made between Father and the Company.

On February 8, 1974, property was purchased at the intersection of U.S. 27 and Old Alexandria Pike in Cold Spring, Kentucky (“the Cold Spring property”). The deed for the property was in the name John L. Griffin, Trustee,” although Father was not then the trustee of any known trust. (Doc. 428–5, Deed). The property was thereafter used as Griffin Industries' headquarters.

Griffin Industries Board minutes of meetings conducted prior to this purchase state that the Board “authorized Dennis Griffin to negotiate for an option” on the property. (Doc. 430–5 at 2) (Minutes of 7/12/73).

Dewey McDougal, an accountant who was employed at Griffin Industries at the time, testified that the Company, rather than Father, paid for the purchase of the Cold Spring property with Company funds. (Doc. 430–4, McDougal Decl. ¶¶ 2–3; McDougal Depo. Doc. 409–1 at 23–29).

The check used to purchase the property was drawn on an account of Father's law firm, Paxton & Seasongood, later known as Thompson, Hine & Flory. (Doc. 473–8). The subject line on the letter accompanying this check states: “Griffin Industries, Inc.—Cold Spring, Kentucky Property.” (Id. ).

Correspondence between Father's law firm and the sellers of the Cold Spring property identifies Griffin Industries as the purchaser. (Doc. 430–118 at 14) (“This office represents Griffin Industries, Inc. and Dennis B. Griffin, its Vice President, who, on behalf of Griffin Industries, Inc. executed the September 28, 1973 agreement with you for the purchase of the Ragan estate property at the intersection of U.S. Route 27 and Old Alexandria Pike in Cold Spring, Kentucky.”).

Following the purchase, McDougal placed the property in the Company's “fixed asset register.” (Id. ¶ 4).

Board meeting minutes from after the purchase reflect the Company's plans to use Company funds to remodel and improve the Cold Spring property. (Doc. 430–8). Further, Board minutes from October 18, 1974, state that the Company was taking out a mortgage to finance part of the construction of a new office building on the property:

RESOLVED, FURTHER, that John L. Griffin, as Trustee, be, and he hereby is, authorized to execute, acknowledge and deliver a mortgage to said Falmouth Deposit Bank of Falmouth, Kentucky to secure said note, said mortgage to be on the real estate held of record in the name of John L. Griffin, Trustee, and acquired by the Company from George Ragan and others by deed recorded in Deed Book 143, page 42 of the Campbell County Court records.

(Doc. 430–9 at 3) (emphasis added).

It is undisputed that, at all relevant times, Griffin Industries paid for all taxes, maintenance, improvement, insurance, and other expenses associated with the Cold Spring property.

Father's tax returns from 19821985 show that he did not include the Cold Spring property on the schedules of real property from which he received rental income. (Def. MSJ Exh. 122).

In 1981, Griffin Industries bought a Dublin, Georgia rendering company called Craig Protein, Inc., with Father holding 23.86 percent of its stock and Griffin Industries holding the remaining shares.

C. Father's Stroke, Mother's Death, and Ensuing Changes

Father suffered a massive stroke

on Labor Day in 1983. The parties dispute the extent of his mental impairment following the stroke. At this time, Mother was also gravely ill with Parkinson's Disease.

Shortly thereafter, at defendants' request, Leonard Meranus,1 outside counsel for Griffin Industries, analyzed Father's and Mother's estate plans. In a Memorandum dated September...

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