Meinert Plumbing v. Warner Industries, Inc. ( 2017 )

[Cite as Meinert Plumbing v. Warner Industries, Inc., 2017-Ohio-8863.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 104817
MEINERT PLUMBING, ET AL.
PLAINTIFFS-APPELLANTS
vs.
WARNER INDUSTRIES, INC., ET AL.
DEFENDANTS-APPELLEES
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case Nos. CV-10-733355, CV-11-750011, CV-11-751467, CV-11-752926,
CV-12-787434, and CV-13-802261
BEFORE: Laster Mays, J., E.A. Gallagher, P.J., and E.T. Gallagher, J.
RELEASED AND JOURNALIZED: December 7, 2017
-i-
ATTORNEYS FOR APPELLANTS
Steven W. Albert
The Albert Law Firm
29425 Chagrin Boulevard, Suite 216
Pepper Pike, Ohio 44122
John C. Kealy
123 West Prospect Avenue, Suite 250
Van Sweringen Arcade
Cleveland, Ohio 44115
ATTORNEYS FOR APPELLEES
K. James Sullivan
Mitchell G. Blair
Lindsey E. Sacher
Anthony F. Stringer
Calfee, Halter & Griswold, L.L.P.
1405 East Sixth Street
Cleveland, Ohio 44114
ANITA LASTER MAYS, J.:
{¶1} Plaintiffs-appellants1 appeal the trial court’s grant of summary judgment in
favor of defendants-appellees Rust-Oleum Service Company (“ROSC”), RPM
International, Inc. (“RPM”), and Rust-Oleum Corporation (“Rust-Oleum”) on appellants’
claims under Ohio’s Business Opportunity Plans Act (“BOPA”),2 breach of contract, and
related theories of liability. We affirm the trial court’s findings.
I. Summary
{¶2} RPM is a multinational holding company whose numerous subsidiaries
include manufacturers of sealants, coatings, building materials, and specialty chemicals.
Rust-Oleum is a direct subsidiary of nonparty RPM Consumer Holding Company, a direct
subsidiary of RPM. Rust-Oleum manufactures specialty floor coating products, including
the EpoxyShield floor coating products (“Products”) involved in this case. ROSC was
formed in 2005 as a direct subsidiary of nonparty Rust-Oleum International, L.L.C.,
which is a subsidiary of Rust-Oleum.
1 The plaintiffs-appellants are as follows: Charles Brown, Jerry Garcia, Edward Grzeszczak,
For Your Garage, L.L.C., Russell Heider, Russell’s Painting Inc., David Klein, Old Town Painting,
James Meinert, Meinert Plumbing, Scott Ouren, Roy Phaup, William Pfeiffer, Joan Pfeiffer, Qualified
Interiors, Inc., Denis Schauner, Woodridge Maintenance, Inc., James Sheehy, Alpha-Triad Garage &
Home Improvements, Ed Stribling, Alamo Improvement Services, L.L.C., Richard Thein, Adam
Ward, S&B Wallcovering, Kurt Wolter, and Garage Pros.
2 R.C. 1334.01, et seq.
{¶3} In 2004, The Home Depot (“Home Depot”) and Rust-Oleum developed a
pilot program for Home Depot’s At Home Service Program (“HD Program”). ROSC
was formed in 2005 to provide the Products and installation services for the HD Program.
The parties later formalized the arrangement in a 2008 contract.
{¶4} Warner Industries, Inc. d.b.a. Stone-To-Foam (“Warner/STF”) was
incorporated in Ohio in 1996 to sell and install flooring and foam insulation to a national
market. Warner/STF outsourced its product installation services to third-party
independent contractors such as appellants. In 2008, due to fiscal difficulties, ROSC
contracted with Warner/STF to provide installation of the Products for the HD Program.
Shortly thereafter, Home Depot contracted directly with Warner/STF for installation of
the Products.3
{¶5} The 15 appellants, small business owners, had dealer agreements with
Warner/STF to sell, promote, and provide installation services for the Warner/STF’s
products. Thirteen of the 15 appellants entered into additional agreements with
Warner/STF to perform installation services for the HD Program Products.
{¶6} In 2009, Home Depot decided to terminate the HD Program. The
termination had a domino effect, as will be detailed later herein, and appellants’ services
were no longer needed. Appellants filed suit against RPM, Rust-Oleum, ROSC,
Warner/STF, and Warner/STF owner Alan C. Warner. Home Depot is not a party to the
3 ROSC was dissolved in 2009.
action. According to the record, several appellants entered into settlement agreements
with Home Depot. The Warner/STF parties were dismissed under Civ.R. 41(A).
II. Facts
A. HD Program Pilot — Home Depot, Rust-Oleum, and ROSC
{¶7} Rust-Oleum and Home Depot entered into an April 22, 2004 agreement to
implement a pilot program to determine the potential viability of the HD Program. Under
the pilot program, Rust-Oleum would supply the Products to Home Depot and provide
installation services to Home Depot’s customers. ROSC was formed in furtherance of
this effort.
{¶8} The term of the agreement was for six months, identified Rust-Oleum as an
independent contractor, and specified that the relationship was not one of
“franchisor-franchisee,” or “partner, joint venture, fiduciary or co-employer.” Each
party disclaimed authority to bind the other. The agreement was executed by Ed
Voorhees, vice-president of sales, and Rust-Oleum Brands Company.
B. Program Agreements
1. October 11, 2007 Home Depot and ROSC Service Provider
Agreement
{¶9} The October 11, 2007 Home Depot Service Provider Agreement
(“HD-ROSC SPA”) formalized the pilot program. The agreement includes a “service
provider classification” that indicates ROSC’s role is to “sell, furnish and install.”
ROSC’s employees, agents and subcontractors are to provide “services, products and/or
materials” to Home Depot’s customers. The term of the agreement is for one year and
automatically renews. The agreement is terminable for convenience by either party at
any time upon 90 days written notice.
{¶10} ROSC is an independent contractor under the agreement. ROSC’s
obligations include compliance with Home Depot’s Service Provider Reference Guide.
William Spaulding (“Spaulding”) signed the agreement as vice-president and general
manager of ROSC. Spaulding was also vice-president of consumer sales for
Rust-Oleum who explained that he was authorized to sign for ROSC and Rust-Oleum.
2. March 1, 20084 ROSC and Warner/STF Agreement
{¶11} On March 1, 2008, ROSC and Warner/STF entered into an agreement that
references the service provider agreement between Home Depot and ROSC. ROSC
agreed to “sell, furnish, and install services for garage floor coatings and installations” for
“the [HD] Program.” Warner/STF, an independent contractor pursuant to the
4The year is not listed in the agreement; however, an April 1, 2008 letter
announcing “a new partnership” between Warner/STF and ROSC and deposition
testimony served to establish the year.
agreement, agreed to provide installation of the Products through its independent
contractors such as appellants. Warner/STF also agreed to be bound by the terms of the
HD Program, attached as exhibits to the agreement. The agreement was terminable
at-will by either party upon 90 days prior written notice. The agreement was also signed
by Spaulding on behalf of ROSC.
a. ROSC and Warner/STF Program Letter
{¶12} An April 1, 2008, a public announcement in the form of a “To Whom It
May Concern” letter was issued by “Paul Kiminski, New Business Development,
Rust-Oleum Service Company”:
Rust-Oleum Service Company has a national contract with The Home
Depot to exclusively install Garage Floor Coatings. Rust-Oleum also
offers two other programs through The Home Depot that will be offered to
Stone to Foam [Warner/STF] through The Home Depot partnership:
water-based concrete stains and garage storage [and] organization.
Rust-Oleum’s goal is to bring best in class products to Stone to Foam’s
dealers, offer training, and support in all areas. Rust-Oleum is looking
forward to an excellent partnership with [Warner/STF].
3. June 1, 2008 Home Depot and Warner/STF Service Provider
Agreement
{¶13} On June 1, 2008, Home Depot and Warner/STF entered into a service
provider agreement for the HD Program (“HD-Warner/STF SPA”). Warner/STF agreed
to provide installation services for the Products under the HD Program. Warner/STF
was required to “source” the Products, arrange for pick up and delivery of the Products
and materials to Home Depot’s customer’s home for installation at the beginning of the
job, and maintain required records.
{¶14} Warner/STF was listed as an independent contractor and the agreement is
nonexclusive. The agreement was terminable at-will by either party upon 90 days
prior written notice.
4. Warner/STF and Appellants
{¶15} Between 2006 and 2009, appellants entered into dealer contracts with
Warner/STF to sell Warner/STF’s products and provide related services. In 2008 and
2009, 13 appellants also signed service agreements with Warner/STF that are specific to
the HD Program installation services.
{¶16} As exemplars of the standard agreement terms employed by Warner/STF,
we summarize the October 3, 2006 dealer contract between Warner/STF and appellant
GarCo (“GarCo”), and the July 31, 2009 dealer and service contracts for appellant Old
Town Painting.
a. GarCo Dealer Contract
{¶17} The 2006 GarCo agreement established GarCo as a “Dealer” to provide
services and products exclusively on behalf of Warner/STF in a specific market area.
GarCo is required to meet a minimum purchase quota, purchase certain equipment from
Warner/STF, pay fees for training, and pay a dealership fee to Warner/STF exceeding
$60,000. The contract is for a ten-year term. Jerry Garcia testified to providing
services under the dealer agreement for the HD Program, but did not sign a second
agreement specifically relating to the HD Program. Home Depot, the HD Program,
Rust-Oleum, and ROSC are not referenced.
b. Old Town Painting Contracts
(I) Dealer Contract
{¶18} The Old Town Painting (“Old Time”) dealer contract is similar in material
respects to the GarCo contract. It establishes Old Town as a “Dealer” for Warner/STF
to sell and promote Warner/STF’s products and services. The relationship between the
parties is “vendor and vendee.” The contract includes a minimum quota for purchases
of Warner/STF’s products and services, has a ten-year term, includes a two-year
noncompete clause, and references the scope and costs of training requirements,
equipment costs, and payment of a dealership purchase fee of over $30,000. Home
Depot, ROSC, and Rust-Oleum are not referenced.
(ii) Contract for Services
{¶19} The contract for services, entered into the same date as the dealer contract,
also identifies Old Town as a “Dealer.” The contract states that Warner/STF “has
entered into a contract” with Home Depot and Rust-Oleum5 to “furnish some or all of the
Services” listed in the contract. The services are described in Section I as: “sales and
installation [of] products and services, floor coatings, garage cabinetry [and] modular
garage flooring.” Warner/STF “desires to contract such Services to a qualified
Independent Dealer.” The Dealer agrees
to “perform such Services as a Dealer” for Warner/STF.
{¶20} In Section 5 of the contract, the Dealer indemnifies Warner/STF, Home
5 While the contract references “Rust-Oleum,” the March 1, 2008 agreement
Depot, and Rust-Oleum for mechanic’s liens. Section 6 specifies that the Dealer “is an
independent Dealer and not an agent, employee, partner, joint venture, or franchisee of
[Warner/STF].” The termination clause provides that the contract automatically
terminates if the Warner/STF “Agreement with Home Depot is terminated, regardless of
the reason for such termination.”
{¶21} “Workmanship is to be free from defects in accordance with
Rust-Oleum/Home Depot requirements” as well as “the specific instructions of the retail
contract.” The Dealer promises to provide “sales and installation services” for the listed
Home Depot store locations. The remaining contract provisions set forth the Dealer’s
obligations to Warner/STF, to meet Home Depot’s service requirements. The attached
product warranty sheet is issued by ROSC. Home Depot, Rust-Oleum, and ROSC are
not parties to the contract.
C. Program Termination
{¶22} On November 24, 2009, Home Depot issued a termination notice to
Warner/STF, effective February 24, 2010. The termination had the domino effect of
terminating the appellants’ related agreements.
is between ROSC and Warner/STF.
III. The Lawsuit
{¶23} A series of lawsuits was filed by the appellants between 2010 and 2013,
asserting common causes of action:
Sam’s Painting LLC and Samuel Kearse v. Warner/STF Indus., Inc., Allen
C. Warner/STF, and Rust-Oleum Servs. Co., Rust-Oleum Corp. and Paul
Kiminski, Cuyahoga C.P. No. CV-10-733355.
Meinert Plumbing, James Meinert, David Klein Old Town Painting, and Ed
Stribling v. Warner/STF Indus., Inc., Allen C. Warner/STF, Rust-Oleum
Servs. Co., Rust-Oleum Corp., and RPM Internatl., Inc., Cuyahoga C.P.
No. CV-11-750011.
Alamo Plumbing and Edward Stribling v. Warner/STF Indus., Inc., Allen C.
Warner/STF, Rust-Oleum Servs. Co., and Rust-Oleum Corp., Cuyahoga
C.P. No. CV-11-751467.
Alpha-Triad Garage and Home Improvement and James Sheehy v.
Warner/STF Indus., Inc., Allen C. Warner/STF, Rust-Oleum Servs. Co. and
Rust-Oleum Corp., Cuyahoga C.P. No. CV-11-752926.
Dennis Schaumer v. Warner/STF Indus., Inc., RPM Internatl., Inc., and
Rust-Oleum Corp., Cuyahoga C.P. No. CV-12-787434.
Charles Brown III, Qualified Interiors and Roy Phaup v. Warner/STF
Indus., Inc., RPM Internatl., Inc. and Rust-Oleum Corp., Cuyahoga C.P.
No. CV-13-802261.
The cases were transferred to the commercial docket and consolidated under Sam’s
Painting LLC, Cuyahoga C.P. No. CV-10-733355. Appellants assert damages in excess
of $100 million.
{¶24} Appellants contend that:
ROSC acted as agent of the RPM Group and it formed a joint venture
between the RPM Group and Warner/STF. Based on these legal
relationships, the RPM Group is liable under three distinct legal theories[:]
(1) because the Joint Venture breached Dealer Agreements with
Appellants,
(2) because appellants were third-party beneficiaries of the March
2008 Contract, and
(3) because the Joint Venture did not provide appellants with
disclosures required by Ohio’s Business Opportunity Purchasers
Protection Act, R.C. 1334.01, et seq. (“BOPA”).
{¶25} Home Depot is not named as a defendant. Warner/STF and/or Allen C.
Warner have failed to enter an appearance and, on August 5, 2016, appellants dismissed
the action against them under Civ.R. 41(A).
A. RPM and Rust-Oleum Motions for Summary Judgment
{¶26} On February 22, 2016, appellees RPM and Rust-Oleum filed three
motions for summary judgment. Separate motions were filed to simplify management of
the issues for the trial court.
1. Motion One — General Claims for All Appellants
{¶27} The first motion defended claims common to all appellants. Appellees
argued that appellants’ breach of contract claims fails because there were no contracts
between appellees and appellants. Appellees also argued that the claims are barred by
the statute of frauds, and the negligence claims are barred by the economic loss doctrine.
In addition, appellees asserted that appellants could not cite any duties owed by appellees
to appellants that had been breached.
{¶28} Appellees refuted the existence of a joint venture and argued that, because
appellants could not establish that any company served as the alter ego of Rust-Oleum or
RPM, there was no evidence that could be used to pierce the corporate veil. Appellees
denied that appellants could demonstrate privity of contract and refuted appellants’
third-party beneficiary claims.
2. Motion Two — BOPA Claims
{¶29} The second motion focused on BOPA. Appellees asserted appellees did
not meet BOPA’s definition of a seller. Appellees also argued that certain appellants
were excluded by BOPA’s statutory definitions because:
Eleven appellants were engaged in ongoing businesses prior to purchasing
their alleged Warner/STF business opportunity plans, rendering the Act
inapplicable pursuant to an express statutory exception (R.C. 1334.12(J));
Four appellants paid $50,000 or more for their alleged Warner/STF
dealerships, so they do not meet the Act’s definition of “business
opportunity plan” (R.C. 1334.01(D)(2)); and
Appellant Garcia/GarCo acquired his/its alleged Warner/STF dealership in
2006, nearly two years before getting involved in the Home Depot-related
floor installation program at issue in this lawsuit (R.C. 1334.01(A)).
3. Motion Three — Lost Profits
{¶30} The third motion addressed lost profits. Appellees asserted that appellants
were barred from recovery due to: (1) the contractual limitation of
liability clause; (2) the speculative nature of the claim; and (3) the unavailability of lost
profits under BOPA.
B. Trial Court’s Findings on Summary Judgment
{¶31} The trial court entertained hearings on the motions for two days, including
the submission of more than 500 exhibits. Appellants decided to withdraw the tort
claims.
{¶32} On April 21, 2016, the trial court entered judgment for RPM and
Rust-Oleum, finding that:
(1) there were no written contracts between appellants and RPM,
Rust-Oleum or ROSC;6
(2) appellants failed to identify what terms were breached;
(3) appellants failed to establish third-party beneficiary status;
(4) the Warner/STF and ROSC contract identified Warner/STF as an
independent contractor, and the terms did not establish an equal right of
control or contain other indicators of a joint venture or agent-principal
arrangement; and
(5) ROSC’s status as a wholly owned subsidiary of Rust-Oleum with
separate assets, payroll, and employees did not support piercing the
corporate veil to impute liability to Rust-Oleum and RPM.
{¶33} Appellants filed the instant appeal.
IV. Assignments of Error
{¶34} Appellant present three assignments of error for review:
I. The trial court erred by granting RPM’s motion for summary
judgment.
II. The trial court erred by granting Rust-Oleum’s motion for summary
judgment.
III. The trial court erred by granting ROSC’s motion for summary
judgment.
6 The order also required that ROSC file a formal motion for summary
judgment. ROSC filed its motion claiming entitlement based on the grant of
summary judgment for RPM and Rust-Oleum on April 21, 2016, and the trial
court’s related analysis. The trial court granted ROSC’s motion as a matter of law
on August 3, 2016.
V. Standard of Review
{¶35} We review a trial court’s entry of summary judgment de novo using the
same standard as the trial court. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105,
671 N.E.2d 241 (1996). Summary judgment may only be granted when the following
are established: (1) that there is no genuine issue as to any material fact; (2) that the
moving party is entitled to judgment as a matter of law; and (3) that reasonable minds can
come to but one conclusion, and that conclusion is adverse to the party against whom the
motion for summary judgment is made, and who is entitled to have the evidence
construed most strongly in its favor. Harless v. Willis Day Warehousing Co., 54 Ohio
St.2d 64, 67, 375 N.E.2d 46 (1978); Civ.R. 56(C).
{¶36} The party moving for summary judgment bears the initial burden of
apprising the trial court of the basis of its motion and identifying those portions of the
record that demonstrate the absence of a genuine issue of fact on an essential element of
the nonmoving party’s claim. Dresher v. Burt, 75 Ohio St.3d 280, 293, 1996-Ohio-107,
662 N.E.2d 264. “Once the moving party meets its burden, the burden shifts to the
nonmoving party to set forth specific facts demonstrating a genuine issue of material fact
exists.” Willow Grove, Ltd. v. Olmsted Twp., 2015-Ohio-2702, 38 N.E.3d 1133, ¶ 14-15
(8th Dist.), citing Dresher. “To satisfy this burden, the nonmoving party must submit
evidentiary materials showing a genuine dispute over material facts.” Willow Grove at ¶
15, citing PNC Bank v. Bhandari, 6th Dist. Lucas No. L-12-1335, 2013-Ohio-2477.
VI. Analysis and Law
A. Positional Summaries
{¶37} As the trial court observed in its journal entry and order, “[i]t is undisputed
that there are no written contracts between” appellants and RPM, Rust-Oleum, or ROSC.
See Journal Entry No. 93811786, dated April 21, 2016, Cuyahoga C.P. No.
CV-10-733355, p. 4. Warner/STF is no longer active. ROSC was dissolved in 2009
due to economic viability issues. Certain appellants have entered into settlement
agreements with Home Depot. As a result of the foregoing, the only possible avenue of
recovery is through the viable RPM entities.
{¶38} Appellants seek to circumvent the lack of contracts by arguing that ROSC
served as the agent of RPM and Rust-Oleum and, through that agency arrangement,
ROSC formed a joint venture with Warner/STF. In turn, the joint venture recruited
appellants and subsequently breached their duties thereto, resulting in economic damages
to the appellants.
B. Discussion
{¶39} We combine the assigned errors for discussion and analysis for purposes
of judicial economy.
{¶40} For the BOPA violations and arguments for breach of contract to survive,
the privity of appellants must be established. Appellants argue that appellees are liable
because “ROSC acted as agent of the RPM Group when it formed a Joint Venture
between the RPM Group and Warner.” Based on these alleged legal relationships,
appellees proffer liability based on theories of: (1) agency; (2) joint venture; and (3)
third-party beneficiary. The BOPA violations were allegedly committed by the joint
venture.
1. Agency and Piercing the Corporate Veil
{¶41} Piercing the corporate veil in Ohio “remains a ‘rare exception,’ to be applied
only ‘in the case of fraud or certain other exceptional circumstances.’” Dombroski v.
Wellpoint, Inc., 119 Ohio St.3d 506, 2008-Ohio-4827, 895 N.E.2d 538, ¶ 17, quoting
Dole Food Co. v. Patrickson, 538 U.S. 468, 475, 123 S.Ct. 1655, 155 L.Ed.2d 643(2003).
In Belvedere [Condominium Unit Owners’ Assn. v. R.E. Roark Cos., 67
Ohio St.3d 274, 617 N.E.2d 1075 (1993)], this court established
three-pronged test for courts to use when deciding whether to pierce the
corporate veil, based on a test developed by the United States Court of
Appeals for the Sixth Circuit in Bucyrus-Erie Co. v. Gen. Prods. Corp., 643
F.2d 413, 418 (6th Cir.1981). Belvedere at 288-289. This test focuses on
the extent of the shareholder’s control of the corporation and whether the
shareholder misused the control so as to commit specific egregious acts that
injured the plaintiff:
“The corporate form may be disregarded and individual shareholders held
liable for wrongs committed by the corporation when (1) control over the
corporation by those to be held liable was so complete that the corporation
has no separate mind, will, or existence of its own, (2) control over the
corporation by those to be held liable was exercised in such a manner as to
commit fraud or an illegal act against the person seeking to disregard the
corporate entity, and (3) injury or unjust loss resulted to the plaintiff from
such control and wrong.” Id. at paragraph three of the syllabus. All three
prongs of the test must be met for piercing to occur.
Dombroski at ¶ 18; State ex rel. Petro v. Pure Tech Sys., 8th Dist. Cuyahoga No. 101447,
2015-Ohio-1638, ¶ 42.
{¶42} Otherwise upholding the Belevedere test, Dombroski prescribed a “limited
expansion” to the second prong of Belvedere:
[W]e hold that to fulfill the second prong of the Belvedere test for piercing
the corporate veil, the plaintiff must demonstrate that the defendant
shareholder exercised control over the corporation in such a manner as to
commit fraud, an illegal act, or a similarly unlawful act. Courts should
apply this limited expansion cautiously toward the goal of piercing the
corporate veil only in instances of extreme shareholder misconduct. The
first and third prongs of the Belvedere test are not affected by this ruling
and must still be met for a piercing claim to succeed.
(Emphasis added.) Id. at ¶ 29.
{¶43} Thus, the current Belvedere test, as amended by Dombrowski, considers
whether:
(1) control over the corporation by those to be held liable was so complete
that the corporation has no separate mind, will, or existence of its own,
(2) control over the corporation by those to be held liable was exercised in
such a manner as to commit fraud, an illegal act, or a similarly unlawful
conduct or an illegal act against the person seeking to disregard the
corporate entity, and
(3) injury or unjust loss resulted to the plaintiff from such control and
wrong.
{¶44} In Ohio, “proving a mere agency relationship between the parent and its
subsidiary was insufficient” to pierce the corporate veil absent a showing of fraud or
illegal activity. Belvedere at 274, citing N. v. Higbee Co., 131 Ohio St. 507, 3 N.E.2d
391 (1936). Thus, we reject appellant’s bare assertion that ROSC was formed by the
RPM and Rust-Oleum to serve as their agent for purposes of piercing the veil.
{¶45} To meet the first prong of Belvedere,7 appellants argue that RPM and
Rust-Oleum, whom appellants label the “RPM Group,” exerted total control over ROSC,
by placing RPM Group executives to serve as officers and board members for ROSC’s
board. Appellants assert that Rust-Oleum and ROSC shared office space, the ROSC
board of directors included officers of RPM and Rust-Oleum, and Rust-Oleum executives
provided input into the HD Program operations.
{¶46} Evidence of total control “must be of a nature and a degree that
renders the two corporations “‘fundamentally indistinguishable.’” Clinical Components
v. Leffler Indus., 9th Dist. Wayne No. 95CA0085, 1997 Ohio App. LEXIS 199, at *8
(Jan. 22, 1997), quoting Belvedere, supra, at 288.
{¶47} Sharing of management, directors, or employees alone is not sufficient
justification for piercing the corporate veil under Belevedere. “Ohio law permits one
corporation to own all of the stock of another corporation and employ common officers
and directors, as well as other personnel, without risking shareholder liability.”
Bacoccini v. Ice Indus., 6th Dist. Lucas No. L-08-1401, 2009-Ohio-3800, ¶ 23, citing
Clinical Components at * 8-9, Fifth Third Bank v. Senvisky, 8th Dist. Cuyahoga Nos.
100030 and 100571, 2014-Ohio-1233, ¶ 26.
{¶48} We do not find that the cited interactions of RPM, Rust-Oleum, and ROSC
are sufficient to establish that ROSC had “no separate mind, will, or existence of its
7“The first element is a concise statement of the alter ego doctrine; to
succeed a plaintiff must show that the individual and the corporation are
fundamentally indistinguishable.” Belvedere at 288.
own.” Belvedere at 289. We agree with the trial court that the evidence demonstrates
that ROSC “was a separate company, with its own assets, payroll and employees.”
Journal Entry No. 93811786, dated April 21, 2016, Cuyahoga C.P. No. CV-10-733355, p.
4.
{¶49} We also note that appellants’ attempt to pierce the rather intricate corporate
veil ignores the intermediate corporate entities. Appellants’ suit does not include RPM
Consumer Holding Company of which Rust-Oleum is a direct subsidiary or Rust-Oleum
International, L.L.C. of which ROSC is a direct subsidiary. The structure reinforces
appellees’ position that they are separate legal entities. Thus, appellants seek to leapfrog
integral entities to make its case. See Estate of Thomson v. Toyota Motor Corp.
Worldwide, 545 F.3d 357, 363 (6th Cir.2008) (lack of direct ownership of stock a factor
in determining alter ego).
2. Joint Venture
{¶50} This court has considered the elements required to demonstrate the
presence of a joint venture:
“A joint business adventure necessitates a joint contract, express or implied,
between the joint adventurers to engage in a specific business enterprise,
which contract does not, however, create the formal relationship of
partnership. Fitzhugh v. Thode, 221 Iowa 533, 265 N. W. 893 [1936];
Soulek v. Omaha, 140 Neb. 151, 299 N.W. 368 (1941). Ford v. McCue, 163
Ohio St. 498, 502, 127 N.E.2d 209 (1955).”
Meadows v. Air Craft Wheels, LLC, 8th Dist. Cuyahoga No. 96782, 2012-Ohio-269, ¶ 22.
{¶51} To constitute a joint venture, the parties must express the “intent” that
“each coadventurer shall stand in the relation of principal, as well as agent, as to each of
the other coadventurers, with an equal right of control of the means employed to carry out
the common purpose of the adventure.” Meadows at ¶ 22, quoting Ford v. McCue, 163
Ohio St. 498, 504, 127 N.E.2d 209 (1955).
{¶52} Determination of intent is pivotal:
“Whether [the] parties have created, as between themselves, the relationship
of joint adventure or some other relationship depends upon their actual
intention, and such relationship arises only when they intend to associate
themselves as joint adventurers. That intention, however, is to be
determined in accordance with the ordinary rules governing the
interpretation and construction of contracts. (Citations omitted).”
Royal Appliance Mfg. Co. v. Fernengel, 8th Dist. Cuyahoga No. 51268, 1987 Ohio App.
LEXIS 8491, at *15 (Aug. 27, 1987), quoting Ford at 502.
{¶53} We again state that there are no direct contracts between appellants and
appellees. Each of the contracts involved in the case clearly disclaims any objective to
engage in a business relationship other than as arms-length, independent contractors,
unequivocally evidencing the intent of the parties that each one is operating as a separate
and distinct entity. Id.
3. Third-Party Beneficiary
{¶54} For a third-party to be an intended beneficiary under a contract in Ohio,
the evidence must demonstrate that the contract was intended to directly benefit that
party. “Generally, the parties’ intention to benefit a third-party will be found in the
language of the agreement.” Huff v. FirstEnergy Corp., 130 Ohio St.3d 196,
2011-Ohio-5083, 957 N.E.2d 3, ¶ 12, Johnson v. U.S. Title Agency, Inc., 8th Dist.
Cuyahoga No. 103665, 2017-Ohio-2852, ¶ 59.
{¶55} There is no evidence in the record that the intent of the parties, and
purpose of the existing contracts, was to benefit appellants. As the trial court astutely
observed, appellants were, at best, incidental beneficiaries:
“The mere conferring of some benefit on the supposed beneficiary by the
performance of a particular promise in a contract [is] insufficient; rather,
the performance of that promise must also satisfy a duty owed by the
promisee to the beneficiary.” Hill v. Sonitrol of Southwester Ohio Inc., 36
Ohio St.3d 36, 521 N.E.2d 780, 785, quoting Norfolk & Western Co. v.
U.S., 641 F.2d 1201, 1208 (6th Cir. 1980).”
Journal Entry No. 93811786, dated April 21, 2016, Cuyahoga C.P. No. CV-10-733355, p.
4. Cincinnati Ins. Co. v. Cleveland, 8th Dist. Cuyahoga No. 92305, 2009-Ohio-4043, ¶
29. “Indeed, the [p]laintiffs have not specifically identified what terms of any alleged
contract were breached by ROSCO, Rust-Oleum, or RPM.” Journal Entry No.
93811786, dated April 21, 2016, Cuyahoga C.P. No. CV-10-733355, p. 4.
4. BOPA
{¶56} Appellants’ BOPA claims also fail. A business opportunity plan is an
“agreement in which a purchaser obtains the right to offer, sell or distribute goods or
services” under the conditions listed in the statute. R.C. 1334.01(D). R.C. 1334.03
sets forth the representations and practices that BOPA prohibits. Saydell v. Geppetto’s
Pizza & Ribs Franchise Sys., 100 Ohio App.3d 111, 127, 652 N.E.2d 218 (8th Dist.1994).
A seller is a “person who sells or leases a business opportunity plan.” R.C. 1334.01(A).
A purchaser is “a person to whom a business opportunity plan is sold or leased.” R.C.
1334.01(B).
{¶57} Appellants do not qualify as sellers, appellees do not qualify as purchasers,
and there is no document between them constituting a business opportunity plan. At best,
the dealer agreements between appellants and Warner/STF constituted business plans
under BOPA, but there is no privity in this case legally linking appellants and appellees to
create a legal duty.
{¶58} We find that the trial court did not err when it determined that, viewed in a
light most favorable to appellants, there are no genuine material issues of disputed fact.
{¶59} The trial court’s order is affirmed.
It is ordered that appellee recover from appellants costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the common
pleas court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
_____________________________________________
ANITA LASTER MAYS, JUDGE
EILEEN A. GALLAGHER, P.J., CONCURS;
EILEEN T. GALLAGHER, J., CONCURS IN JUDGMENT ONLY