Articles Posted in Business Law

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The Supreme Court granted a peremptory writ of prohibition to halt an action for an assignment for the benefit of a disbarred attorney’s creditors (the ABC action) pending before a Hamilton County probate judge. In 2004, nineteen judgment creditors filed a lawsuit alleging that the attorney at issue had stolen millions of dollars in settlement funds while representing them. A Kentucky trial court ruled that the attorney was jointly and severally liable for $42 million. The court of appeals affirmed. In 2013, the Kentucky Supreme Court permanently disbarred the attorney for his conduct in the underlying representation. In 2015, a Boone County circuit court judge ordered the attorney to transfer his beneficial interest in a company, which were held in trust for the purpose of winding up operations, to the creditors. The attorney did not transfer the shares to the creditors, and the shares were later transferred. The Supreme Court granted the creditors’ motion for a peremptory writ of prohibition barring further proceedings in the ABC action, holding that the necessary elements for a writ of prohibition to issue were all present in this case. View "State ex rel. McGirr v. Winkler" on Justia Law

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Appellants and Grady Reed were shareholders in a closely held corporation. In a 2010 complaint, Reed alleged that Appellants had breached the shareholders’ agreement and demanded relief in the form of money damages. After a jury trial, Judge Richard Ferenc granted Reed’s motion for a directed verdict and awarded him money damages, apportioning the liability among Appellants in proportion to their shares in the corporation. The court of appeals reversed, concluding that the trial court erred by treating the complaint as an action for money damages when the only available remedy was specific performance. On remand, Judge Ferenc concluded that Appellants had no right to a jury trial because Reed’s predominant claim for relief was equitable in nature. Appellants sought a writ of prohibition arguing that Judge Ferenc’s exercise of judicial power was unauthorized by law and that they did not have an adequate remedy by way of appeal from his adverse rulings. The court of appeals granted Judge Ferenc’s motion to dismiss the complaint. The Supreme Court affirmed, holding that Appellants failed to establish their entitlement to a writ of prohibition. View "State ex rel. Samarghandi v. Ferenc" on Justia Law

Posted in: Business Law, Contracts

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WTS Acquisition Corporation purchased Ameritemps, Inc. and then transferred the assets to its wholly owned subsidiary, RFFG, LLC. RFFG continued operating the business under the Ameritemps name. The Ohio Bureau of Workers’ Compensation notified RFFG that it had determined that RFFG was a successor employer for workers’ compensation purposes and that it intended to calculate RFFG’s workers’ compensation premium rate based on Ameritemps’ experience rating. RFFG filed a complaint for a writ of mandamus alleging that the Bureau had abused its discretion when it determined RFFG to be the successor in interest to Ameritemps. The court of appeals denied the writ. The Supreme Court affirmed, holding that the court of appeals did not err in concluding that the decision of the Bureau was supported by the evidence and was not an abuse of discretion. View "State ex rel. RFFG, LLC v. Ohio Bureau of Workers' Comp." on Justia Law

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Appellants, private individuals, filed this case in quo warranto in the Tenth District Court of Appeals to oust certain individuals from the board of directors of the Omar Ibn El Khattab Mosque, Inc. The members of the board filed a motion for summary judgment arguing that Appellants lacked standing to bring such an action against the officers of a not-for-profit corporation. The court of appeals agreed and dismissed the complaint. The Supreme Court affirmed, holding that the court of appeals correctly denied the petition because private persons have no standing to institute an action in quo warranto to oust officers of a private, not-for-profit corporation. View "State ex rel. Salim v. Ayed" on Justia Law

Posted in: Business Law

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A manufacturer or alcoholic beverages (InBev) sold all of its rights relating to a particular brand of alcoholic beverage to a successor manufacturer (Labatt Operating). Under the Ohio Alcoholic Beverages Franchise Act, when there is a transfer of ownership, the successor manufacturer may terminate any distributor's franchise without just cause by giving the distributor notice of termination within ninety days of the acquisition and compensating the terminated franchisee. Appellant in this case was the exclusive distributor of Labatt brand products in a ten-county area of Ohio under a franchise agreement with InBev. After the sale, Labatt Operating notified Appellant that it intended to terminate Appellant's franchise to distribute Labatt brand products and that it intended to compensate Appellant. Appellant sued. The trial court granted summary judgment for Appellant and ordered Labatt Operating to continue to distribute its Labatt products through Appellant. The court of appeals reversed. The Supreme Court affirmed, holding that Labatt's termination of Appellant's franchise met the statutory requirements of the Act, and therefore, the court of appeals erred in granting summary judgment to Appellant. View "Esber Beverage Co. v. Labatt USA Operating Co., LLC" on Justia Law

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K&D Enterprises, through its manager, Mid-America, contracted to purchase an apartment complex. Prior to the closing, K&D Enterprises created a new company, Euclid-Richmond Gardens, and assigned its rights under the purchase agreement to that new company. Euclid-Richmond Gardens hired K&D Group, Inc., a property-management company, to manage the apartment. K&D Group hired former employees of Mid-America and assumed the operations of the complex. The Bureau of Workers' Compensation later conducted an audit and determined K&D Group was the successor in interest to the business operations of Mid-America, a determination that authorized the Bureau to base K&D Group's experience rating, in part, on Mid-America's past experience, which included a large workers' compensation claim. After K&D Group's administrative appeal was denied, K&D Group unsuccessfully filed a mandamus action in the court of appeals. The Supreme Court reversed the judgment of the court of appeals and issued the writ of mandamus, holding that K&D Group was not a successor in interest for purposes of workers' compensation law, and thus, the Bureau abused its discretion when it transferred part of Mid-America's experience rating to K&D Group. View "State ex rel. K&D Group, Inc. v. Buehrer" on Justia Law

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This matter was before the Supreme Court on a motion for reconsideration filed by Appellant, Acordia of Ohio, LLC (the LLC). The Supreme Court granted the motion. In Acordia I, the Court affirmed the judgment of the court of appeals, concluding that while the noncompete agreements of employees (Appellees), who were originally employed by a contracting employer, transferred by operation of law following merger with the LLC, the language found in those agreements precluded the LLC from enforcing them as if it had stepped into the shoes of the original contracting employer. Upon reconsideration, the Supreme Court reversed the court of appeals, holding (1) the language in Acordia I stating that the LLC could not enforce the employees noncompete agreements as if it had stepped into the original contracting company's shoes was erroneous; and (2) the LLC here may enforce the noncompete agreements as if it had stepped into the shoes of the original contracting companies, provided that the noncompete agreements are reasonable under the circumstances of this case. View "Acordia of Ohio, LLC v. Fishel" on Justia Law

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Appellee Trumbull Industries, Inc. was an Ohio corporation. Appellees Murray Miller and Sam H. Miller (Sam H.) were shareholders of Trumbull. Appellant Sam M. Miller (Sam M.) was also a shareholder of Trumbull. Murray and Sam H. filed a complaint against Sam M. for injunctive relief and damages arising from a business venture. Sam M. subsequently reimbursed himself for his legal expenses pursuant to an "undertaking" executed pursuant to Ohio Rev. Code 1701.13(E)(5)(a) (the statute), which governs the advancement of litigation expenses by a corporation to one of its directors. The trial court held that Sam M. was entitled to the advancement of expenses. The appellate court reversed. The Supreme Court reversed, holding (1) based on the unambiguous language of the statute, Trumbull was required by law to advance expenses to Sam M., as Trumbull's articles of incorporation did not state by specific reference that the statute did not apply to Trumbull; (2) thus, Appellees failed to show that Trumbull opted out of the mandatory advancement requirement; and (3) Trumbull's statutory duty to advance Sam M.'s fees arose upon receipt of Sam M.'s undertaking. View "Miller v. Miller" on Justia Law

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At issue in this appeal was whether a court should enforce several employees' noncompete agreement transfers by operation of law to the surviving company when the company that was the original party to the agreement merged with another company. Here the trial court concluded that the employees did not intend to make the noncompete agreements assignable to successors such as the surviving company. The court of appeals affirmed. The Supreme Court affirmed, holding that in this case, the language the agreement dictated that the surviving company could not enforce the agreement after the merger as if it had stepped into the shoes of the original company. View "Acordia of Ohio, LLC v. Fishel" on Justia Law

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The trial court appointed a receiver for Sager Corporation for the purpose of accepting service of process and marshaling assets consisting of unexhausted liability-insurance policies for asbestos-related claims filed against Sager. Sager was an Illinois corporation that filed for dissolution in 1998 and, pursuant to Illinois law, was no longer amenable to suit after 2003. The appellate court affirmed. The Supreme Court reversed the judgment of the appellate court, holding that, in conformity with the constitutional requirements of due process and the Full Faith and Credit Clause, claims filed against the dissolved Illinois corporation more than five years after dissolution were barred, and therefore, the appointment of the receiver was barred. View "In re Sager Corp." on Justia Law