Austin v. Mid-Ohio Pipeline Servs., L.L.C.

[Cite as Austin v. Mid-Ohio Pipeline Servs., L.L.C., 2023-Ohio-1958.]
COURT OF APPEALS
RICHLAND COUNTY, OHIO
FIFTH APPELLATE DISTRICT
CHARLES E. AUSTIN, : JUDGES:
: Hon. W. Scott Gwin, P.J.
Plaintiff - Appellee : Hon. Craig R. Baldwin, J.
: Hon. Andrew J. King, J.
-vs- :
:
MID-OHIO PIPELINE SERVICES, LLC, : Case No. 2022 CA 0021
ET AL., : 2022 CA 0041
: 2022 CA 0060
Defendant - Appellants :
: OPINION
CHARACTER OF PROCEEDING: Appeal from the Richland County
Court of Common Pleas, Case No.
18 CV 0915
JUDGMENT: Affirmed
DATE OF JUDGMENT: June 13, 2023
APPEARANCES:
For Plaintiff-Appellee For Defendant-Appellants
JAMES E. ARNOLD PHILIP F. DOWNEY
DAMION M. CLIFFORD Vorys, Sater, Seymour and Pease LLP
GERHARDT A. GOSNELL II 50 S. Main Street, Suite 1200
TIFFANY CARWILE Akron, Ohio 44308
Arnold & Clifford LLC
115 W. Main Street, Fourth Floor JOHN M. KUHL
Columbus, Ohio 43215 EMILY J. TAFT
Vorys, Sater, Seymour and Pease LLP
52 E. Gay Street
Columbus, Ohio 43215
Richland County, Case No. 2022 CA 0021, 0041, 0060 2
Baldwin, J.
{¶1} Appellants Mid-Ohio Pipeline Services LLC and Mid-Ohio Pipeline
Company, Inc. (“Mid-Ohio”) appeal the decisions of the trial court granting partial
summary judgment to the appellee regarding the parties’ contract dispute, denying
appellants’ motion for reconsideration, determining damages, excluding evidence at trial,
denying appellants’ motions for directed verdict, instructing to the jury, and awarding the
appellee pre-judgment interest. Appellee is Charles E. Austin.
STATEMENT OF THE FACTS AND THE CASE
{¶2} The appellee was an executive at appellants Mid-Ohio from 2002 through
December 31, 2015, first as Vice-President and then as President. The appellants
experienced significant growth during the appellee’s tenure at Mid-Ohio. Sometime in or
around 2008 the appellants’ then owner, Brent Yates, and the appellee established an
understanding that the appellee would be treated as a 20% owner upon the sale of the
companies. This arrangement was not a secret, as Mid-Ohio’s CFO, Rob Walters, was
also aware of this understanding between the parties.
{¶3} The parties subsequently entered into a Separation Agreement and
General Release of Claims that, inter alia, memorialized their agreement regarding the
appellee’s 20% interest in the proceeds if the companies were sold. Paragraph 5 of the
Separation Agreement, entitled “Phantom Ownership Plan,” provided a vehicle through
which to effectuate that agreement, and stated that the parties “shall” agree to terms and
conditions of a phantom ownership plan addressing transmittal of the appellee’s 20%
ownership interest in the event of a sale. Paragraph 5 also provided that the appellee’s
non-vested phantom ownership would equal twenty percent of the appellant companies;
Richland County, Case No. 2022 CA 0021, 0041, 0060 3
that the appellee’s phantom ownership would vest upon the occurrence of a “trigger
event”; defined a “trigger event” to be “just prior to the closing date if the Companies would
experience a “change in control”; that a “change in control” was defined as the date when
any person acquired more the 50% of the total fair market value of total voting power of
the equities or assets of the companies; and, that during the period of appellee’s phantom
ownership, appellee would receive 20% of any “non-tax distributions” paid by either of the
companies. The “phantom ownership plan” would address tax issues and otherwise help
in effectuating the transfer to appellee of his 20% interest upon the occurrence of a trigger
event.
{¶4} The appellee executed the Separation Agreement on December 18, 2015.
The Separation Agreement provided at paragraph 7 that the appellee was to execute a
General Release of Claims on or after the date of separation in consideration for, inter
alia, the benefits set forth in Paragraph 5. The Separation Agreement identified December
31, 2015 as the date of separation. The appellee executed the General Release on
December 31, 2015 in compliance with the terms of the Separation Agreement. As such,
the appellee performed as per the terms set forth in the Separation Agreement.
{¶5} Brent Yates, on behalf of the appellants, executed both the Separation
Agreement and the General Release of Claims on February 17, 2016. The phantom
ownership agreement never came to fruition.
{¶6} Preparation of the phantom ownership agreement was in the appellants’
exclusive control, and the companies’ chief financial officer was the person to whom
preparation of the phantom ownership agreement was delegated. He was to prepare the
draft and provide it to the appellee for review. The undisputed evidence establishes,
Richland County, Case No. 2022 CA 0021, 0041, 0060 4
however, that the appellants’ CFO did not produce the phantom ownership agreement to
the appellee for review until March 24, 2016, nearly three months after the January 31,
2016 deadline that had been established by the appellants. The phantom ownership
agreement was never completed or executed.
{¶7} A “change in control” occurred when the Mid-Ohio companies were sold to
a third-party, the closing of which took place on January 31, 2018. This sale and resultant
“change in control” constituted a “trigger event” as defined by the Separation Agreement.
The appellee’s 20% interest vested upon the closing of the sale of the companies.
However, the appellee was not treated as a 20% owner, and was not paid proceeds from
the sale.
{¶8} On December 28, 2018, the appellee filed a complaint against the
appellants seeking, inter alia, damages for breach of the Separation Agreement due to
the appellants’ failure to pay him the agreed upon 20% share of proceeds from the sale
of the companies.
{¶9} The parties filed cross-motions for partial summary judgment on the issue
of whether the parties had an enforceable contract regarding the appellee’s 20% interest
in Mid-Ohio. On October 28, 2020, the trial court granted the appellee’s motion for partial
summary judgment and denied the appellants’ motion or partial summary judgment,
finding that the Separation Agreement memorialized the appellants’ promise to treat the
appellee as a 20% owner of the companies if the companies sold within five years of the
execution of the Separation Agreement.
{¶10} The trial court found that the appellee had complied with the terms of the
Separation Agreement by virtue of his execution of the General Release, and that the
Richland County, Case No. 2022 CA 0021, 0041, 0060 5
appellants had failed to do so by virtue of their failure to execute the agreements and
provide the phantom ownership agreement by the January 31, 2016 deadline they had
established. The trial court found further that because the 2018 sale of the companies
occurred within five years of the 2015 agreement, the appellee was entitled to 20% of the
sale proceeds.
{¶11} On November 9, 2020, the appellants filed a motion for reconsideration of
the trial court’s decision granting the appellee partial summary judgment, which was
denied in the trial court’s April 29, 2021 order on pending motions. The April 29, 2021
order also held that the damages in the case shall amount to twenty percent of the sale
price of the companies at the time of the sale, and held further that a jury trial was
necessary to determine said damages.
{¶12} The issue of damages proceeded to jury trial on January 20, 21, and 24,
2022, prior to which the trial court issued an order excluding as irrelevant evidence of
what the parties “might” have intended to be the “proceeds,” and evidence of the parties’
“possible intent” in this regard. The jury heard evidence regarding the amount for which
the Mid-Ohio companies sold from both the appellee’s accounting expert Robert Evans,
and appellants’ accounting expert Ryan Link.
{¶13} The appellants moved for directed verdict at the close of the appellee’s
case, and again at the conclusion of its case, both of which the trial court overruled. The
trial court thereafter heard arguments regarding jury instructions and interrogatories,
during which the appellants submitted that the jury should be instructed to determine the
amount of proceeds the appellee was “entitled to share in” as opposed to “the amount of
the proceeds that the [appellants Mid-Ohio] were sold for.” The trial court noted that it had
Richland County, Case No. 2022 CA 0021, 0041, 0060 6
already determined in its judgment entry granting partial summary judgment to the
appellee that the pertinent issue was the amount for which the businesses sold, from
which the appellee’s twenty percent interest would be calculated. As such, the trial court
instructed the jury to determine the amount of proceeds from the sale of appellants Mid-
Ohio.
{¶14} The jury, after hearing the testimony of the parties’ lay and expert witnesses
and considering all the evidence presented during trial, returned a verdict finding the
proceeds from the sale of appellants Mid-Ohio to be $87,357,249.00, from which it
determined the appellee’s twenty percent vested interest to be $17,471,449.80. The trial
court entered the judgment entry on the jury verdict on January 27, 2022.
{¶15} The appellee filed a motion for prejudgment interest, which was fully briefed
by the parties. The matter of prejudgment interest was scheduled for an evidentiary
hearing, for which the parties filed a stipulation of facts. The evidentiary hearing was
conducted before the magistrate, who determined that the appellee’s interest in the
proceeds from the sale of appellants Mid-Ohio vested upon the finalization of the sale on
January 31, 2018, and that he was entitled to payment on the same payment schedule
as then company owner Brent Yates and his son Jordan Yates. The stipulations
established the dates upon which the Yates received their respective payments and the
amounts of said payments. Based upon the stipulations and the evidence presented, the
magistrate recommended that the trial court award the appellee $2,843,846.43 in
prejudgment interest through January 27, 2022, and that the trial court award the appellee
post-judgment interest at the rate of $1,436.02 per day from January 28, 2022 until the
judgment is fully paid.
Richland County, Case No. 2022 CA 0021, 0041, 0060 7
{¶16} The appellants filed an objection to the imposition of prejudgment interest.
The appellee filed an objection to the $1,436.02 per day post-judgment interest amount,
arguing that he was entitled to post-judgment interest on the sale proceeds combined
with pre-judgment interest, for a rate of $1,669.75 per day.
{¶17} The trial court issued an order on the objections to the magistrate’s decision
on August 15, 2022, in which it found that the appellee was entitled to pre-judgment
interest from February 2, 2018, when the first payment was made to the Yates following
the sale of appellants Mid-Ohio, until January 27, 2022, when the trial court adopted the
jury’s verdict, in the amount of $2,830,686.97. The trial court found further that the
appellee was entitled to post-judgment interest, which began to accrue on January 28,
2022, on the total amount of $20,302,136.77 (the $17,471,449.80 jury verdict plus
$2,830,686.97 in pre-judgment interest) until the judgment is paid in full.
{¶18} The appellants filed a number of timely appeals which have been
consolidated, and set forth the following eight assignments of error:
{¶19} “I. THE TRIAL COURT ERRED BY NOT GRANTING SUMMARY
JUDGMENT TO MID-OHIO ON COUNT I.”
{¶20} “II. THE TRIAL COURT ERRED BY GRANTING SUMMARY JUDGMENT
TO AUSTIN REGARDING LIABILITY ON COUNT I.”
{¶21} “III. THE TRIAL COURT COMMITTED REVERSIBLE ERROR BY
DENYING MID-OHIO’S MOTION FOR RECONSIDERATION.”
{¶22} “IV. THE TRIAL COURT COMMITTED REVERSIBLE ERROR BY
DECIDING DAMAGES ISSUES THAT ARE WITHIN THE PROVINCE OF THE JURY.”
Richland County, Case No. 2022 CA 0021, 0041, 0060 8
{¶23} “V. THE TRIAL COURT COMMITTED MULTIPLE REVERSIBLE ERROR –
OR CUMULATIVE ERROR – BY EXCLUDING ADMISSIBLE AND RELEVANT
EVIDENCE AT TRIAL.”
{¶24} “VI. THE TRIAL COURT COMMITTED REVERSIBLE ERROR BY NOT
GRANTING MID-OHIO’S MOTIONS FOR DIRECTED VERDICT.”
{¶25} “VII. THE TRIAL COURT COMMITTED REVERSIBLE ERROR IN GIVING
IMPROPERLY AND INCONSISTENT INSTRUCTIONS AND INTERROGATORIES TO
THE JURY.”
{¶26} “VIII. THE TRIAL COURT ERRED IN AWARDING AUSTIN PRE-
JUDGMENT INTEREST.
ASSIGNMENTS OF ERROR NUMBERS I AND II
{¶27} The appellants argue in assignments of error numbers one and two that the
trial court erred in granting partial summary judgment to the appellee and in denying
appellants’ motion for partial summary judgment. We disagree.
STANDARD OF REVIEW
{¶28} Summary judgment proceedings present the appellate court with the unique
opportunity of reviewing the evidence in the same manner as the trial court. Smiddy v.
The Wedding Party, Inc. (1987), 30 Ohio St.3d 35, 36, 506 N.E.2d 212. As such, this
Court reviews a trial court’s award of summary judgment de novo. Grafton v. Ohio Edison
Co. (1996), 77 Ohio St.3d 102, 105, 671 N.E.2d 241.
{¶29} Civ. R. 56(C) states in pertinent part: “Summary Judgment shall be
rendered forthwith if the pleadings, depositions, answers to interrogatories, written
admissions, affidavits, transcripts of evidence, and written stipulations of fact, if any,
Richland County, Case No. 2022 CA 0021, 0041, 0060 9
timely filed in the action, show that there is no genuine issue as to any material fact and
that the moving party is entitled to judgment as a matter of law ... A summary judgment
shall not be rendered unless it appears from such evidence or stipulation, and only from
the evidence or stipulation, 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, that party being entitled to have the evidence or stipulation construed most
strongly in the party's favor." Thus, summary judgment may be granted only after the trial
court determines that: 1) no genuine issues as to any material fact remain to be litigated;
2) the moving party is entitled to judgment as a matter of law; and 3) it appears from the
evidence that reasonable minds can come to but one conclusion and viewing such
evidence most strongly in favor of the party against whom the motion for summary
judgment is made, that conclusion is adverse to that party. Temple v. Wean United, Inc.,
50 Ohio St.2d 317, 364 N.E.2d 267 (1977).
{¶30} As this Court recently stated in Infield v. Westfield Ins. Co., 5th Dist.
Muskingum No. CT2022-0055, 2023-Ohio-1199: “It is well established that the party
seeking summary judgment bears the burden of demonstrating no issues of material fact
exist for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 330, 106 S.Ct. 2548, 91 L.Ed.2d 265(1986). The standard for granting summary judgment is delineated in Dresher v. Burt, 75
Ohio St.3d 280 at 293, 662 N.E.2d 264 (1996): “* * * a party seeking summary judgment,
on the ground that the nonmoving party cannot prove its case, bears the initial burden of
informing the trial court of the basis for the motion, and identifying those portions of the
record that demonstrate the absence of a genuine issue of material fact on the essential
element(s) of the nonmoving party's claims. The moving party cannot discharge its initial
Richland County, Case No. 2022 CA 0021, 0041, 0060 10
burden under Civ.R. 56 simply by making a conclusory assertion the nonmoving party
has no evidence to prove its case. Rather, the moving party must be able to specifically
point to some evidence of the type listed in Civ.R. 56(C) which affirmatively demonstrates
the nonmoving party has no evidence to support the nonmoving party's claims. If the
moving party fails to satisfy its initial burden, the motion for summary judgment must be
denied. However, if the moving party has satisfied its initial burden, the nonmoving party
then has a reciprocal burden outlined in Civ.R. 56(E) to set forth specific facts showing
there is a genuine issue for trial and, if the nonmovant does not so respond, summary
judgment, if appropriate, shall be entered against the nonmoving party.” The record on
summary judgment must be viewed in the light most favorable to the opposing party.
Williams v. First United Church of Christ, 37 Ohio St.2d 150, 309 N.E.2d 924 (1974).” Id.
at ¶ 21.
ANALYSIS
{¶31} The appellants argue that the appellee’s claim for breach of contract must
fail because the phantom ownership agreement was never executed. We disagree.
{¶32} “ ‘The elements of a breach of contract claim are “the existence of a
contract, performance by the plaintiff, breach by the defendant, and damage or loss to
the plaintiff.” ’ Becker v. Direct Energy, LP, 2018-Ohio-4134, 112 N.E.3d 978, ¶ 38 (2d
Dist.), quoting Doner v. Snapp, 98 Ohio App.3d 597, 600, 649 N.E.2d 42 (2d Dist.1994).
‘When confronted with an issue of contractual interpretation, the role of a court is to give
effect to the intent of the parties to the agreement.’ Westfield Ins. Co. v. Galatis, 100 Ohio
St.3d 216, 2003-Ohio-5849, 797 N.E.2d 1256, ¶ 11.” Hillier v. Fifth Third Bank, 2020-
Ohio-3679, 154 N.E.3d 1266, ¶24 (2nd Dist.)
Richland County, Case No. 2022 CA 0021, 0041, 0060 11
{¶33} As set forth by this Court in Wallick v Lent, 5th Dist. Tuscarawas No. 2008
AP 05 0034, 2009-Ohio-1399:
Generally, in order to establish a breach of contract, it must be shown
by a preponderance of the evidence that (1) a contract existed, (2) one party
fulfilled his obligations, (3) the other party failed to fulfill his obligations, and
(4) damages resulted from that failure. Spano Bros. Constr. Co., Inc. v.
Adolph Johnson & Son Co., 9th Dist. No. 23405, 2007-Ohio-1427, 2007 WL
912229, ¶ 12, citing Lawrence v. Lorain Cty. Community College (1998),
127 Ohio App.3d 546, 548-549, 713 N.E.2d 478. In cases where the facts
are undisputed, and the only question to be resolved is whether a breach of
contract occurred, a question of law exists for the court to decide. Farmers
Market Drive-In Shopping Ctrs., Inc. v. Magana, 10th Dist. No. 06AP-532,
2007-Ohio-2653, 2007 WL 1560276, ¶ 32.
Id. at ¶61.
{¶34} The parties in this case entered into two agreements: the Separation
Agreement, and the General Release of Claims.
{¶35} The Separation Agreement set forth at Paragraph 5 the terms and
conditions that were to be included in a “Phantom Ownership Plan,” to which the parties
were to agree on or before January 31, 2016. The Separation Agreement set forth further
that one of the terms to be encompassed within the Phantom Ownership Plan was that
the appellee would have a 20% non-vested ownership interest in Mid-Ohio, and was to
contain specifically delineated provisions, including a provision providing that the
appellee’s ownership interest would vest upon the occurrence of a trigger event. A trigger
Richland County, Case No. 2022 CA 0021, 0041, 0060 12
event was defined as just prior to the closing date if appellants Mid-Ohio experience a
change in control, which in turn was defined as the date any one person or group acquired
more than a fifty-percent ownership interest in the companies. Although the phantom
ownership plan was not executed, the Separation Agreement was executed by the
appellee and by the chairman and owner of appellants Mid-Ohio, and it clearly
established, inter alia, that the appellee was to receive a twenty percent ownership
interest in the proceeds of a sale of the company in exchange for his execution of the
General Release of Claims attached to the Separation Agreement at Exhibit A.
{¶36} “A cause of action for breach of contract accrues when the breach occurs
or when the complaining party suffers actual damages. Thompson v. Ohio Dept. of
Transp. (Nov. 26, 1996), Franklin App. No. 96API04-497, citing Midwest Specialties, Inc.
v. Firestone Tire & Rubber Co. (1988), 42 Ohio App.3d 6, 9.” Bell v. Ohio State Bd. of
Trustees, 10th Dist. Franklin No. 06AP-1174, 2007-Ohio-2790, ¶ 27.
{¶37} The court in McKinney v. LaMalfa Party Ctr., 2022-Ohio-4333, ¶ 40, 203
N.E.3d 57, 64–65, appeal not allowed, 2023-Ohio-1149, ¶ 40, 169 Ohio St. 3d 1490, 206
N.E.3d 745, stated:
“ ‘A material breach occurs when a party violates a term essential to the
purpose of the agreement.’ ” Troy Oaks Homes & Residential Club, Inc. v.
Sokolowski, 11th Dist., 2016-Ohio-8427, 78 N.E.3d 365, ¶ 28, quoting Ohio
Educ. Ass'n v. Lopez, 10th Dist. Franklin No. 09AP-1165, 2010-Ohio-5079,
2010 WL 4102948, ¶ 12. “ ‘Mere nominal, trifling, or technical departures
will not result in a breach of contract; slight departures, omissions, and
Richland County, Case No. 2022 CA 0021, 0041, 0060 13
inadvertencies should be disregarded.” Id., quoting Tucker v. Young, 4th
Dist. Highland No. 04CA10, 2006-Ohio-1126, 2006 WL 574309, ¶ 25.
“Where there has been a material breach of contract by one party, the other
party may treat the contract as terminated and rescind it or may sue for
damages.” McDonagh v. Cortland Sav. & Banking Co., 11th Dist. Trumbull
No. 2002-T-0138, 2004-Ohio-1146, 2004 WL 451014, ¶ 38.
Id. at ¶ 40.
{¶38} In this case, there is no genuine issue of material fact regarding the parties’
intent that the appellee was to be treated as a 20 percent owner of the companies in the
event of their sale. Further, there is no genuine issue of material fact regarding the
preparation of the agreements by the appellants’ CFO, Rob Walters, and his insertion of
the January 31, 2016 deadline in the Separation Agreement as the date by which the
phantom agreement was to be executed. Nor is there a genuine issue of material fact
regarding the appellants’ sole control of the preparation of the phantom ownership
agreement. The purpose of the phantom ownership agreement was not to establish the
appellee’s twenty percent interest; rather, it was to provide a vehicle for the transfer of the
appellee’s vested ownership interest, an interest to which the appellants had already
agreed.
{¶39} The appellants’ failure to provide the appellee with the “phantom ownership
plan” agreement on or before the January 31, 2016 deadline, which it had established,
was a material breach of the Separation Agreement. Accordingly, partial summary
judgment in favor of the appellee was proper, and the appellants’ assignment of error
numbers I and II are without merit and therefore overruled.
Richland County, Case No. 2022 CA 0021, 0041, 0060 14
ASSIGNMENT OF ERROR NUMBER III
{¶40} The appellants argue in assignment of error number three that the trial court
committed reversible error by denying Mid-Ohio’s motion for reconsideration. We
disagree.
STANDARD OF REVIEW
“ ‘An appellate court reviewing a trial court's decision on a motion for
reconsideration of a grant or denial of summary judgment applies a de novo
standard of review.’ Crown Chrysler Jeep, Inc. v. Boulware, 10th Dist. No.
15AP-162, 2015-Ohio-5084, 2015 WL 8196082, ¶ 28, citing Hogrefe v.
Mercy St. Vincent Med. Ctr., 6th Dist. No. L-13-1265, 2014-Ohio-2687, 2014
WL 2854186, ¶ 38 (further citations omitted). ‘ “Thus, we ‘afford no
deference to the trial court's decision and independently review the record
in the light most favorable to the nonmovant to determine whether summary
judgment is appropriate.’ ” ’ Id., quoting Hogrefe, quoting Dunn v. N. Star
Resources, Inc., 8th Dist. No. 79455, 2002-Ohio-4570, 2002 WL 2027283,
¶ 10.”
Kemba Fin. Credit Union v. Jackson on High Condo. Ass'n, 2022-Ohio-3247, 199 N.E.3d
19, ¶ 18 (10th Dist.). See, also, Thrower v. Bolden, 8th Dist. Cuyahoga No. 97831, 2012-
Ohio-3956, ¶ 26.”
{¶41} Based upon our analysis of the summary judgment issues above, we find
that the trial court did not err when it denied the appellants’ motion for reconsideration.
Appellants’ assignment of error number three is without merit, and is therefore overruled.
Richland County, Case No. 2022 CA 0021, 0041, 0060 15
ASSIGNMENT OF ERROR NUMBER IV
{¶42} The appellants argue in assignment of error number four that the trial court
committed reversible error by determining that the appellee was entitled to twenty percent
of the proceeds from the sale of Mid-Ohio because damages issues are within the
province of the jury. Based upon or analysis above, we disagree.
{¶43} The terms of the Separation Agreement established that the parties had
agreed that the appellee would be treated as a twenty percent owner upon the sale of
Mid-Ohio. Once the 2018 sale of Mid-Ohio closed, the appellee’s interest was vested and
he was entitled to receive his twenty percent share of the proceeds. The trial court
determined that the value of the proceeds from the sale of Mid-Ohio should be determined
by a jury, and a jury thereafter made that determination. Appellants’ assignment of error
number four is without merit, and is therefore overruled.
ASSIGNMENT OF ERROR NUMBER V
{¶44} The appellants argue in assignment of error number five that the trial court
committed multiple reversible errors – or cumulative error – by excluding admissible and
relevant evidence at trial. We disagree.
STANDARD OF REVIEW
{¶45} “Any error in the admission of evidence must be analyzed under an abuse
of discretion standard of review. “The term ‘abuse of discretion’ connotes more than an
error of law or judgment; it implies that the court's attitude is unreasonable, arbitrary or
unconscionable.” State v. Adams (1980), 62 Ohio St.2d 151, 157, 16 O.O.3d 169, 404
N.E.2d 144.” State v. Evege, 5th Dist. Ashland No. 99-COA-01287, 2000 WL 93640, *3
(Jan. 21, 1999). See, also, State ex rel. DeWine v. 333 Joseph, L.L.C., 2014-Ohio-5090,
Richland County, Case No. 2022 CA 0021, 0041, 0060 16
21 N.E.3d 1142, ¶ 24 (3rd Dist.) (“[p]resuming that the trial court is in a better position to
evaluate the evidence and assess its credibility, we will not reverse the trial court's
evidentiary ruling unless it was “contrary to law, unreasonable, not supported by the
evidence, or grossly unsound”).
{¶46} The appellants submit that the trial court abused its discretion when it
excluded evidence regarding the Separation Agreement and references to the phantom
ownership agreement contained therein. The trial court reasoned that because the issue
regarding breach of the Separation Agreement had been determined through summary
judgment, any such evidence was irrelevant, and would only serve to confuse the jury.
The trial court’s reasoning is not contrary to law, unreasonable, unsupported by the
evidence, or grossly unsound, and therefore not an abuse of discretion.
{¶47} The appellants also argue that the trial court abused its discretion when it
refused to allow the jury to see the appellee’s complaint, and in particular the formula the
appellee set forth in his complaint as a basis to determine damages. This, too, was not
an abuse of discretion. The appellee’s complaint was not an admission, nor was it
evidence for the jury to consider, particularly since the trial court determined that the
proper measure of the appellee’s damages was twenty percent of the proceeds from the
sale of Mid-Ohio. The trial court did not abuse its discretion in disallowing admission of
the complaint into evidence.
{¶48} The appellants next argue that the trial court committed reversible error by
excluding the draft phantom ownership plan agreement. However, the phantom
ownership agreement was never executed and was therefore not binding on the parties.
The trial court determined that the appellants’ breach of contract occurred when it failed
Richland County, Case No. 2022 CA 0021, 0041, 0060 17
to execute the Separation Agreement until after the January 31, 2016 deadline it had
imposed for execution of the phantom ownership agreement, and failed to provide the
draft of the phantom ownership agreement prior to the January 31, 2016 deadline. The
trial court did not abuse its discretion when it excluded the phantom ownership
agreement.
{¶49} The appellants argue further that the trial court erred in excluding the Lorenz
Agreement, an agreement between Mid-Ohio and a different former employee that
contained different terms and different language, and did not provide for an “ownership
interest” in the companies. For these reasons, the trial court found that it was irrelevant,
and would only serve to confuse the jury. The trial court did not abuse its discretion when
it excluded the Lorenz Agreement.
{¶50} The appellants also argue that the trial court erred in excluding the
calculations set forth in the Strike Deal. The “Strike Deal” was a proposed deal between
Mid-Ohio and another company that never came to fruition, and was not relevant to the
issue before the jury. Further, the Separation Agreement executed by the parties
contained an integration clause at paragraph 14 providing that it replaced any prior
agreements or promises. The trial court did not abuse its discretion when it ruled that the
“Strike Deal” was irrelevant and therefore inadmissible.
{¶51} Next, the appellants argue that the trial court erred in prohibiting them from
presenting evidence as to why the appellee was not discussed during its 2018 sale of the
companies. However, the only issue before the jury was the amount of proceeds from the
sale of the companies, from which the appellee’s twenty percent would be then be
calculated. We cannot say the trial court abused its discretion when it found that evidence
Richland County, Case No. 2022 CA 0021, 0041, 0060 18
regarding the lack of discussion about the appellee with the entity that ultimately
purchased the companies is relevant to this singular issue.
{¶52} Finally, the appellants argue that even if none of the aforementioned
evidentiary errors alone warrant reversal, the cumulative error doctrine compels reversal.
We disagree. As set forth by this Court in Brahm v. DHSC, LLC, 2019-Ohio-766, 132
N.E.3d 266:
Pursuant to the cumulative error doctrine, which is usually
presented in criminal cases, a conviction will be reversed where the
cumulative effect of errors in a trial deprives the defendant of the
constitutional right to a fair trial even though each individual error by itself
does not constitute cause for reversal. State v. Garner, 74 Ohio St.3d 49,
656 N.E.2d 623 (1995). Ohio courts have found “the extension of the
cumulative error doctrine to civil cases is warranted where the court is
confronted with several errors, which either are harmless individually or
have marginally prejudicial effects, but combine to require a new trial.”
Edge v. Fairview Hospital, 8th Dist. Cuyahoga No. 95215, 2011-Ohio-
2148, 2011 WL 1744279.
Id. at ¶ 61.
{¶53} We do not find any error in the evidentiary determinations made by the trial
court. Consequently, the cumulative error doctrine is inapplicable in this case, as there
have not been multiple errors. Accordingly, appellants’ assignment of error number five
is without merit, and is therefore overruled.
Richland County, Case No. 2022 CA 0021, 0041, 0060 19
ASSIGNMENT OF ERROR NUMBER VI
{¶54} The appellants argue in assignment of error number six that the trial court
committed reversible error by not granting their motions for directed verdict. We disagree.
STANDARD OF REVIEW
{¶55} “The standard of review for the grant or denial of a motion for directed
verdict is: whether there is probative evidence which, if believed, would permit reasonable
minds to come to different conclusions as to the essential elements of the case,
construing the evidence most strongly in favor of the non-movant. Sanek v. Duracote
Corp. (1989), 43 Ohio St.3d 169, 172, 539 N.E.2d 1114.” Stark Cty. Bd. of Commrs. v.
Eslich Wrecking Co., 5th Dist. Stark No. 2001CA00344, 2002-Ohio-2562, ¶ 10.
{¶56} The appellants argue that the trial court erred when it denied their motions
for directed verdict because the jury is not permitted to speculate on damages. The
pertinent issue, however, is whether there is probative evidence regarding damages. In
this case, the jury was presented with evidence regarding the sale of Mid-Ohio and
distribution of the proceeds therefrom, including the testimony of two accounting experts,
which enabled them to make conclusions regarding the amount of proceeds from the sale
of the businesses. This evidence is to be construed most strongly in the appellee’s favor,
and as such it was not error for the trial court to allow the jury to consider it in order to
determine the “proceeds” from which the appellee’s twenty-percent interest was to be
calculated. The appellants’ assignment of error number six is without merit, and is
therefore overruled.
Richland County, Case No. 2022 CA 0021, 0041, 0060 20
ASSIGNMENT OF ERROR NUMBER VII
{¶57} The appellants argue in assignment of error number seven that the trial
court committed reversible error by giving improper and inconsistent jury instructions and
interrogatories. We disagree.
STANDARD OF REVIEW
The determination whether to give a jury instruction is a matter left to
the sound discretion of the trial court. Telle v. Pasley, 5th Dist. Delaware
No. 12CAE080048, 2013–Ohio–2407, at ¶ 42 (Citation omitted). A trial court
is obligated to provide jury instructions which correctly and completely state
the law. Cromer v. Children's Hosp. Med. Ctr. of Akron, 142 Ohio St.3d 257,
2015–Ohio–229, 29 N.E.3d 921, ¶ 22 (Citation omitted.) The jury
instructions must also be warranted by the evidence presented in a case.
Estate of Hall v. Akron Gen. Med. Ctr., 125 Ohio St.3d 300, 2010–Ohio–
1041, 927 N.E.2d 1112, ¶ 26. The question of whether a jury instruction is
legally correct and factually warranted is subject to de novo review. Id. An
inadequate instruction which misleads the jury constitutes reversible error.
Marshall v. Gibson, 19 Ohio St.3d 10, 12, 482 N.E.2d 583 (1985).
Our standard of review when it is claimed improper jury instructions
were given is to consider the jury charge as a whole and determine whether
the charge misled the jury in a manner affecting the complaining party's
substantial rights.
Lowder v. Domingo, 5th Dist. Stark No. 2016CA00043, 2017-Ohio-1241, ¶39-40.
Richland County, Case No. 2022 CA 0021, 0041, 0060 21
{¶58} The appellants requested the trial court instruct the jury to determine “the
amount of the proceeds that [Mid-Ohio] were sold for and which portion [appellee] is
entitled to share in based on his 20 percent interest in the companies as determined by
the Court.” The trial court, however, had already determined in its judgment entry granting
appellee partial summary judgment that the portion of sale proceeds to which the appellee
was entitled was twenty percent. Accordingly, the only pertinent issue for the jury’s
determination was the amount of proceeds from the sale of the companies, from which
that twenty percent could be calculated. This is precisely the instruction the trial court
gave to the jury. It was not improper, nor was it inconsistent. In fact, it was fully consistent
with the trial court’s decision on partial summary judgment. The trial court did not err in
instructing the jury. The appellants’ assignment of error number seven is without merit,
and is therefore overruled.
ASSIGNMENT OF ERROR NUMBER VIII
{¶59} The appellants argue in assignment of error number eight that the trial court
erred in awarding the appellee prejudgment interest. We disagree.
STANDARD OF REVIEW
An appellate court's review of a trial court's award of prejudgment
interest is governed by an abuse of discretion standard. Landis v. Grange
Mutual Insurance Co., 82 Ohio St.3d 339, 695 N.E.2d 1140 (1998). In order
to find an abuse of discretion, we must determine the trial court's decision
was unreasonable, arbitrary or unconscionable and not merely an error of
law or judgment. Blakemore v. Blakemore, 5 Ohio St.3d 217, 450 N.E.2d
1140 (1983).
Richland County, Case No. 2022 CA 0021, 0041, 0060 22
Columbus v. SSA, Ltd., 2015-Ohio-3995, 42 N.E.3d 359, ¶ 39 (5th Dist.).
ANALYSIS
{¶60} The award of prejudgment interest as to claims arising out of breach of
contract is governed by R.C. 1343.03, which states:
(A) In cases other than those provided for in sections 1343.01 and
1343.02 of the Revised Code, when money becomes due and payable upon
any bond, bill, note, or other instrument of writing, upon any book account,
upon any settlement between parties, upon all verbal contracts entered into,
and upon all judgments, decrees, and orders of any judicial tribunal for the
payment of money arising out of tortious conduct or a contract or other
transaction, the creditor is entitled to interest at the rate per annum
determined pursuant to section 5703.47 of the Revised Code, unless a
written contract provides a different rate of interest in relation to the money
that becomes due and payable, in which case the creditor is entitled to
interest at the rate provided in that contract.
(B) Except as provided in divisions (C) and (D) of this section and
subject to section 2325.18 of the Revised Code, interest on a judgment,
decree, or order for the payment of money rendered in a civil action based
on tortious conduct or a contract or other transaction, including, but not
limited to a civil action based on tortious conduct or a contract or other
transaction that has been settled by agreement of the parties, shall be
computed from the date the judgment, decree, or order is rendered to the
date on which the money is paid and shall be at the rate determined
Richland County, Case No. 2022 CA 0021, 0041, 0060 23
pursuant to section 5703.47 of the Revised Code that is in effect on the date
the judgment, decree, or order is rendered. That rate shall remain in effect
until the judgment, decree, or order is satisfied.
{¶61} The imposition of prejudgment interest in contract cases is based upon the
premise that a party to a contract should not retain the use of money owed under a
contract when that amount is due and payable to the other contracting party. See, Miller
v. Gunckle, 96 Ohio St.3d 359, 775 N.E.2d 475, 2002–Ohio–4932, at ¶ 28; Luft v. Perry
Cty. Lumber & Supply Co., 10th Dist. No. 02AP–559, 2003–Ohio–2305, at ¶ 46.
{¶62} The appellants argue that because the phantom ownership plan was not
executed money was not due and payable, and as such there was nothing upon which to
calculate prejudgment interest. However, we have already determined that the trial court
correctly found that the appellants breached the Separation Agreement, and correctly
found that the appellee was entitled to twenty percent of the proceeds from the sale of
Mid-Ohio. Accordingly, money was due and payable to the appellee, and prejudgment
interest was properly assessed on that sum as it was determined by the jury.
{¶63} Further, while the Separation Agreement did not require payment by a
specific date, it was well within the trial court’s discretion to determine the date upon which
the prejudgment interest began to accrue. In this case, the trial court determined that the
date on which Brent Yates and Jordan Yates received payment from the proceeds of the
sale was the date on which the appellee should have received payment of his twenty
percent ownership interest, and as such prejudgment interest should accrue from that
date. The trial court did not abuse its discretion in this regard. The appellants’ assignment
of error number eight is without merit, and is therefore overruled.
Richland County, Case No. 2022 CA 0021, 0041, 0060 24
CONCLUSION
{¶64} Based upon the foregoing, the appellants’ assignments of error numbers
one through eight are overruled, and the judgment of the Richland County Court of
Common Pleas is hereby affirmed.
By: Baldwin, J.
Gwin, P.J. and
King, J. concur.