Crutcher v. Oncology/Hematology Care, Inc. , 2022 Ohio 4105 ( 2022 )

[Cite as Crutcher v. Oncology/Hematology Care, Inc., 2022-Ohio-4105.]
IN THE COURT OF APPEALS
FIRST APPELLATE DISTRICT OF OHIO
HAMILTON COUNTY, OHIO
JOHN T. CRUTCHER, : APPEAL NOS. C-220086
C-220106
Plaintiff-Appellant/Cross-Appellee, : TRIAL NO. A-1804358
:
VS.
: O P I N I O N.
ONCOLOGY/HEMATOLOGY CARE, :
INC.,
:
OHC REAL ESTATE, LLC,
and
RANDY BROUN
Defendants-Appellees/Cross-
Appellants.
Civil Appeals From: Hamilton County Court of Common Pleas
Judgment Appealed From Is: Affirmed in Part, Reversed in Part, and Cause
Remanded.
Date of Judgment Entry on Appeal: November 18, 2022
Freking Myers & Reul LLC, Jon B. Allison, Jacobs Kleinman Seibel & McNally LPA,
and Mark J. Byrne, for Plaintiff-Appellant/Cross-Appellee,
Katz, Teller, Brant & Hild, LPA, Robert A. Pitcairn, Jr., and Peter J. O’Shea, for
Defendants-Appellees/Cross-Appellants.
OHIO FIRST DISTRICT COURT OF APPEALS
BERGERON, Presiding Judge.
{¶1} What began as a promising enterprise for plaintiff-appellant/cross-
appellee John T. Crutcher as Chief Executive Officer and Chairman of the Board of
Directors of Oncology/Hematology Care, Inc., (“OHC”) dissolved into bitterness
and his ouster from the corporation. Dismayed by this turn of events, Mr. Crutcher
embarked on a decade-long odyssey of litigation against OHC and its affiliates. In
the midst of this battle, however, Mr. Crutcher accepted 64 months’ worth of
payouts from OHC Real Estate, LLC (“OHCRE”)—the entity OHC created to hold the
real estate that enabled OHC to operate its medical practice—to reimburse him for his
equity stake in OHCRE. After more than five years of pocketing these payments, Mr.
Crutcher suddenly concluded that he was robbed, and commenced another front in
the widening litigation skirmish.
{¶2} In this case, he sued the defendants-appellees/cross-appellants OHC,
OHCRE, and Dr. Randy Broun (collectively “the OHCRE defendants”). Although the
trial court ruled in his favor regarding his entitlement to an equity payout from
OHCRE, Mr. Crutcher now disputes the amount on appeal. But the trial court found
him bound, by virtue of waiver by estoppel, to OHCRE’s calculations based on his
acceptance of those amounts for more than five years. As we explain below, we agree
with that conclusion. In fact, we agree with nearly all of the trial court’s
determinations, and therefore overrule both of OHCRE’s cross-assignments of error,
and the balance of Mr. Crutcher’s assignments of error, save one. We find that the
trial court improperly excluded prejudgment interest from its damage computation.
Therefore, we remand the cause for that interested to be added but otherwise affirm
the trial court’s judgment.
2
OHIO FIRST DISTRICT COURT OF APPEALS
I.
{¶3} After OHC formed OHCRE with Mr. Crutcher as a founding member,
Mr. Crutcher took the reins as one of two managers of OHCRE in 2004, to
“manage and control the business, affairs and properties” of OHCRE in conformity
with its Operating Agreement (“Operating Agreement”). During his extensive
involvement with OHC and OHCRE, Mr. Crutcher made a series of monetary
investments in OHCRE, providing himself with an equity stake in the LLC.
{¶4} Upon the termination of a member of OHC, the Operating Agreement
calls for the remaining members or the company to purchase the departing member’s
interest. As spelled out in the document, a member’s “Financial Interest” is comprised
of various accounts, including an account that accrues 15 percent interest annually.
Mr. Crutcher, at the helm of OHCRE and conversant with the Operating Agreement,
certainly should have understood how all of this worked.
{¶5} OHC terminated Mr. Crutcher in July 2010. Thereafter, OHCRE
determined that his Financial Interest totaled $178,535—predicated on the
investments he contributed into the LLC. Pursuant to section 6.5(c)(2) of the
Operating Agreement, OHCRE elected to pay Mr. Crutcher this amount over ten years
with interest beginning in September 2010. A few months after OHCRE began making
these payments to Mr. Crutcher—payments that he gladly accepted—he launched his
first lawsuit against OHC.
{¶6} As part of that lawsuit, Mr. Crutcher submitted an interrogatory
requesting the valuation of his membership interest in OHCRE, and he received a
schedule illustrating OHCRE’s calculation. When Mr. Crutcher filed two motions to
3
OHIO FIRST DISTRICT COURT OF APPEALS
compel discovery in 2010, he never claimed that OHC withheld information related to
the calculation of his Financial Interest or the investments he made in OHCRE.
{¶7} After our court dismissed an appeal of the 2010 lawsuit, Mr. Crutcher
filed two additional lawsuits against OHC and related parties in 2015. In the first
complaint, Mr. Crutcher alleged that OHC owed him approximately $178,535.49,
representing his shares in OHCRE. In other words, by this point, Mr. Crutcher had (1)
requested and received information concerning the calculation of his Financial
Interest, (2) moved to compel discovery on other issues but not anything pertaining to
the calculation of his Financial Interest, and (3) confirmed OHCRE’s calculation of his
stake in OHCRE.
{¶8} With the parties embroiled in litigation, in December 2015, OHC and
OHCRE went into forbearance with their senior lender, U.S. Bank. Based on this turn
of events, Dr. Broun and OHC demanded that Mr. Crutcher sign a subordination
agreement, as requested by U.S. Bank. Section 6.5(c)(2) of the Operating Agreement,
a provision concerning a former member’s payout of their Financial Interest, provides
“as a precondition to receiving any payment from the Company * * * [Mr. Crutcher]
shall execute any subordination agreement requested by any lenders or other credit
providers to the Company or any of its subsidiaries.” After fits and starts of
negotiation over the subordination agreement, Mr. Crutcher never signed it, and
OHCRE’s monthly payments to him ceased. By this point, OHCRE had made 64
monthly payments to Mr. Crutcher, but it still owed him $91,968.57.
{¶9} As the litigation dragged on, the parties started discussing settlement.
In December 2016, Mr. Crutcher and OHC entered into a settlement agreement (the
“Settlement Agreement”). Although the settlement included a broad release against
4
OHIO FIRST DISTRICT COURT OF APPEALS
OHC and its affiliates, the agreement included a carveout, allowing Mr. Crutcher to
pursue “any sums that Crutcher is owed, or claims to be owed, from OHC Real Estate,
LLC.” In other words, this settlement did not resolve the dispute over the Financial
Interest payouts that lies at the heart of the present litigation.
{¶10} Meanwhile, business conditions changed for OHCRE, and its board
ultimately decided to liquidate its assets, setting in motion a process that would lead
to the dissolution of OHCRE. That meant that assets would be sold, and debts
(including Mr. Crutcher’s) would need to be paid. Happily, OHCRE fetched more for
the assets than it had in debt, and thus it began carving up the proceeds. OHCRE
eventually determined that Mr. Crutcher’s pro-rata share of the liquidation proceeds
based off his remaining debt was $149,139. This calculation inured to his benefit
because his Financial Interest (i.e., the debt owed to him) at that time totaled only
$91,968.57.
{¶11} Nevertheless, that prompted the next salvo in the parties’ battle. Mr.
Crutcher insisted that the OHCRE defendants were hiding information from him
about the relevant calculations, whereas they countered that they had divulged
everything that was pertinent. With everyone at an impasse, Mr. Crutcher filed this
suit in 2018 against the OHCRE defendants asserting 11 claims, including a breach of
contract claim and a failure to pay liquidation proceeds claim. The OHCRE defendants
responded with three counterclaims, asserting two separate breach of settlement
agreements claims.
{¶12} Although Mr. Crutcher had previously calculated his Financial Interest
in litigation as $178,535.49—and accepted five years of monthly payments based off
that amount—he declared in the present complaint that he is owed a total “of
5
OHIO FIRST DISTRICT COURT OF APPEALS
$3,422,000 to $5,658,000.” Later in the litigation, after the trial court asked him to
calculate his damages, he pivoted, alleging that “the amount owed Crutcher as of June
1, 2021 with prejudgment interest is $659,639.”
{¶13} After both parties filed cross-motions for summary judgment and after
the trial court asked the parties to submit calculations for damages, the court issued a
series of rulings germane to this appeal: (1) it granted summary judgment for Mr.
Crutcher for his breach of contract and liquidation proceeds claims, awarded him
$149,573.09, and granted judgment in his favor for the OHCRE defendants’ non-
disparagement claim; (2) it granted summary judgment in favor of the OHCRE
defendants for the remaining claims brought by Mr. Crutcher, and for their breach of
settlement counterclaim, awarding them $70,000; and (3) it concluded that Mr.
Crutcher was not a member of OHCRE after July 1, 2010. Those rulings triggered an
appeal (by Mr. Crutcher) with six assignments of error, and a cross-appeal (by the
OHCRE defendants) with two assignments of error.
II.
A.
{¶14} In his first assignment of error, Mr. Crutcher asserts that the trial court
erred when it limited his damages to $149,573.09 on his breach of contract and
liquidation proceeds claims. The trial court rejected the higher damage amounts that
Mr. Crutcher advanced and invoked the waiver by estoppel doctrine to limit Mr.
Crutcher’s damages due to his acceptance of payments for over five years, his
representations to the court in earlier litigation of a Financial Interest that comported
with the OHCRE defendants’ calculations, and his failure to contest these amounts
6
OHIO FIRST DISTRICT COURT OF APPEALS
across years of litigation. For the reasons that follow, we agree with the trial court’s
conclusion.
{¶15} “ ‘[W]aiver by estoppel’ exists when the acts and conduct of a party are
inconsistent with an intent to claim a right, and have been such as to mislead the other
party to his prejudice and thereby estop the party having the right from insisting upon
it.” (Emphasis omitted.) Natl. City Bank v. Rini, 162 Ohio App.3d 662, 2005-Ohio-
4041, 834 N.E.2d 836, ¶ 24 (11th Dist.), quoting Mark-It Place Foods, Inc. v. New Plan
Excel Realty Trust, Inc., 156 Ohio App.3d 65, 2004-Ohio-411, 804 N.E.2d 979, ¶ 57
(4th Dist.). Whether a party’s conduct constituted a waiver generally presents a factual
question. Mark-It Place Foods, Inc. at ¶ 58 (“If [plaintiff] knew of the breach * * * but
represented to [defendant] that no breach had occurred * * * this could constitute a
waiver of its rights. Again, this issue is best left for final determination by the trier of
fact.”). And, of course, we review a grant of summary judgment de novo. Milatz v.
City of Cincinnati, 1st Dist. Hamilton No. C-180272, 2019-Ohio-3938, ¶ 6.
{¶16} The trial court determined that while Mr. Crutcher was in active dispute
and litigation with the OHCRE defendants, he accepted 64 monthly payments from
OHCRE between 2010 to 2015, totaling $114,778.24 (based on the aggregate $178,000
figure). Now Mr. Crutcher claims that OHCRE duped him by concealing relevant
financial documents which should liberate him from his prior actions.
{¶17} Yet while allowing the OHCRE defendants to fill his bank account 64
times, he never once protested the value of those deposits. During his deposition, Mr.
Crutcher maintained that the payments ran afoul of the mandates of the Operating
Agreement. However, in response to questioning about OHCRE’s failure to apply a 15
percent compounding interest rate to an account in his Financial Interest, Mr.
7
OHIO FIRST DISTRICT COURT OF APPEALS
Crutcher admits he “had other issues that were more important * * * I’m not supposed
to say this, I guess, but I consulted with my lawyer about whether it was okay to cash
the check * * * this was an issue that would be dealt with later.” In other words, he
specifically knew that (according to him) OHCRE was paying him the wrong amount
of money, but he sounded no alarm.
{¶18} We also must emphasize that Mr. Crutcher was a very sophisticated
party—if anyone could detect aberrant calculations, he could. After all, he developed
the idea to form OHCRE in the first place, he reviewed the iterations of the Operating
Agreement multiple times before its finalization, and he was one of two managers of
OHCRE at its inception—Mr. Crutcher was intimately familiar with the operations of
OHCRE and knew exactly how to calculate his Financial Interest. Moreover, Mr.
Crutcher’s Financial Interest is predicated on his own investments in OHCRE,
investments that he should certainly have knowledge of.
{¶19} And for years prior to this litigation, Mr. Crutcher saw eye to eye with
the OHCRE defendants concerning the value of his Financial Interest. He claimed the
amount to be $178,535.49 in his complaint in 2010, repeated that again in his
complaint in 2015, during a deposition in 2015 declared he was owed “[s]omewhere in
the ballpark of $100,000” (which corresponds to the about $90,000 outstanding at
the time), and in a summary judgment briefing in 2016, he alleged that his debt was
“originally approximately $180,000.00 and is currently approximately $100,000.”
These aren’t accidental slips of the tongue—rather, they represent a consistent position
he took in litigation that stands at odds with his present posture.
{¶20} In light of nearly six years of consistent actions and representations by
Mr. Crutcher, the OHCRE defendants established clear, unequivocal and decisive
8
OHIO FIRST DISTRICT COURT OF APPEALS
actions by him compelling the grant of summary judgment. Pollard v. Elber, 2018-
Ohio-4538, 123 N.E.3d 359, ¶ 35 (6th Dist.) (“A party asserting waiver must prove it
by establishing a clear, unequivocal, decisive act by the other party, demonstrating the
intent to waive.”); Rayl v. East Ohio Gas Co., 46 Ohio App.2d 175, 179, 348 N.E.2d
390 (9th Dist.1975) (“[P]laintiffs accept[ed] quarterly payments from defendant for a
period of fifteen months after this action was originally filed, * * * [and] they did act
in a manner inconsistent with the attempted termination of the agreements. Because
plaintiffs accepted the benefits of their agreement during the pendency of this
litigation, they are estopped from pursuing this action at this time.”); Quadrant
Exploration, Inc v. Greenwood, 4th Dist. Washington No. 82 X 29, 1983 Ohio App.
LEXIS 14550, *7 (Aug. 15, 1983) (“[A]ppellant, by knowingly accepting the delay rental
payments for the years 1978, 1979 and 1980, has ratified the 1973 lease to [appellee]
and is now estopped to deny the validity of such lease.”); Ultimate Salon & Spa, Inc.
v. Legends Constr. Group, 2019-Ohio-2506, 139 N.E.3d 445, ¶ 38 (11th Dist.) (“Here,
it is clear that, due to the length of time that passed while [appellee] accepted the
continuing rent without objection, an implied contract arose, and [appellee] accepted
a new lease term governed by the provisions of the original lease.”).
{¶21} Resisting this result, Mr. Crutcher claims that the Operating
Agreement’s non-waiver provision bars any waiver by estoppel claim, and the lack of
“clean hands” should likewise preclude summary judgment. We consider the non-
waiver provision: “the failure of any party to seek redress for violation of or to insist
upon the strict performance of any covenant or condition of this Operating Agreement
shall not prevent a subsequent act, which would have originally constituted a violation,
from having the effect of an original violation.”
9
OHIO FIRST DISTRICT COURT OF APPEALS
{¶22} As the OHCRE defendants correctly highlight, this provision only
applies to “passive waiver,” or a “failure” to act, and not to the affirmative conduct that
fills the record in this case. State ex rel. Morrison v. Wiener, 2017-Ohio-364, 83
N.E.3d 292, ¶ 30 (9th Dist.) (“[N]onwaiver clauses may not preclude a trial court from
finding a waiver of rights where a party acts in an affirmative manner evincing an
intent to waive contractual provisions.”). Mr. Crutcher’s affirmative acceptance of
payments for 64 months while simultaneously agreeing with that amount in court does
not implicate the non-waiver provision.
{¶23} Mr. Crutcher also accuses the OHCRE defendants of lacking “clean
hands” due to their misrepresentations and refusal to provide him with information,
featuring that as a barrier to the assertion of an equitable defense. But we fail to see
where he raised this point below, and thus we find it waived. See HSBC Bank USA,
N.A. v. Banks, 8th Dist. Cuyahoga No. 111241, 2022-Ohio-3044, ¶ 22 (“Appellant did
not file an answer and assert [the doctrine of unclean hands] at the trial-court level. It
is well established that arguments a party fails to raise in the trial-court cannot be
considered for the first time on appeal.”). Regardless, Mr. Crutcher presents this point
in only a paragraph of his appellate brief, devoid of record citations. App.R. 16(A)(7).
To establish the clarity of an unclean hands defense sufficient to defeat the waiver by
estoppel claim, Mr. Crutcher must do more than that: “ ‘[U]nclean hands are not to be
lightly inferred. They must be established by clear, unequivocal and convincing
evidence.’ ” State ex rel. Doran v. Preble Cty. Bd. of Commrs, 2013-Ohio-3579, 995
N.E.2d 239, ¶ 24 (12th Dist.), quoting Hoover Transp. Servs, Inc. v. Frye, 77
Fed.Appx. 776, 784 (6th Cir.2003).
10
OHIO FIRST DISTRICT COURT OF APPEALS
{¶24} And while Mr. Crutcher asserts that waiver by estoppel typically poses a
factual question, necessitating a trial, he fails to identify any material dispute of fact
that would prevent the issuance of summary judgment on the state of this record. We
accordingly agree with the trial court’s decision to apply waiver by estoppel, and we
overrule Mr. Crutcher’s first assignment of error.
B.
{¶25} In his second assignment of error, Mr. Crutcher challenges the trial
court’s decision declaring him no longer a member of OHCRE effective July 2010 and
granting summary judgment in favor of the OHCRE defendants for the other nine
counts of his complaint. This assignment covers broad terrain, and necessarily
implicates the third and sixth assignments of error, so we address Mr. Crutcher’s
second, third, and sixth assignments of error together in this section for analytical
ease.
1.
{¶26} We begin with the court’s resolution of Mr. Crutcher’s membership
status. On this issue, the trial court based its decision on the Operating Agreement’s
recognition of the concept of a “Departing Member.” Under section 6.5(a), “Upon the
termination of a Member’s employment with OHC (the ‘Departing Member’) * * * the
Members other than the Departing Member (the ‘Remaining Members’) or the
Company * * * shall purchase from such Departing Member * * * all of the Departing
Member’s Membership Interest in the Company (the ‘Departing Interest’).” Further,
section 6.7 prohibits a Departing Member from receiving any distributions under
section 9.1, which covers general distributions. The Operating Agreement also enables
11
OHIO FIRST DISTRICT COURT OF APPEALS
the Departing Member’s interest to be paid over time, as OHCRE elected to do with
respect to Mr. Crutcher.
{¶27} Sifting through these provisions, the trial court concluded that by
becoming a “Departing Member,” Mr. Crutcher was “no longer a member” because he
no longer held an ownership interest—OHCRE had purchased that interest and would
pay him over time consistent with the agreement. This maneuver effectively converted
him from an equity holder to a creditor of the LLC. But Mr. Crutcher views his status
as a “Departing Member” differently, claiming that he should still be entitled to
liquidation proceeds under section 13.3(b)(4). The problem with this position is that
the trial court seemed to agree with it.
{¶28} After all, the court granted him summary judgment on the failure to pay
liquidation proceeds claim and denied OHCRE’s cross-motion on this point. More
importantly, the trial court awarded Mr. Crutcher an amount exceeding his Financial
Interest—one that appears consistent with the liquidation proceeds provision under
Article 13. Although section 6.7 confirms that Departing Members have no right to
distributions under section 9.1, section 13.3(b)(4) (involving liquidation) draws no
distinction between Departing Members and Remaining Members. We accordingly
find nothing amiss with the trial court’s decision regarding liquidation proceeds, nor
with its interpretation of the “Departing Member” provisions.
2.
{¶29} Mr. Crutcher also takes issue with the trial court’s grant of summary
judgment on all of his claims against OHC and Dr. Broun based upon section 2 in the
Settlement Agreement (referenced above). As he reads the Settlement Agreement, he
remained free to pursue claims against Dr. Broun in his capacity as OHCRE manager,
12
OHIO FIRST DISTRICT COURT OF APPEALS
as well as against OHC based on actions that occurred after the Settlement
Agreement’s execution. Further, Mr. Crutcher argues that the trial court erroneously
rejected his claim against OHC under the alter ego doctrine.
{¶30} We begin with the Settlement Agreement. Section 2 of the Settlement
Agreement sweeps broadly, releasing OHC and “any * * * employees * * * from any
and all claims * * * which [Mr. Crutcher] has or could have against them arising,
accruing or originating at any time whatsoever.” It is undisputed that Dr. Broun is an
employee of OHC, so the trial court correctly determined that this language in section
2 shielded him. And while section 2 contains a broad release, section 4 provides a
narrow carveout: “the foregoing releases do not extend to any sums that Crutcher is
owed, or claims to be owed, from OHC Real Estate, LLC, an Ohio limited liability
company.”
{¶31} We must effectuate the structure and purpose of the parties’ release.
“[T]he overriding consideration in interpreting a release is to ascertain the intent of
the parties, which intent is presumed to reside in the language the parties chose to
employ in the agreement.” McBroom v. Safford, 10th Dist. Franklin No. 11AP-885,
2012-Ohio-1919, ¶ 12, citing Whitt v. Hutchison, 43 Ohio St.2d 53, 330 N.E.2d 678(1975). Mr. Crutcher struggles to limit the scope of the release in such a manner as to
permit other claims against Dr. Broun. But section 2 constitutes a broad release.
“Under Ohio law * * * ‘broadly-worded releases are generally construed to include all
prior conduct between the parties, even if the scope of such conduct or its damage is
unknown to the releasor.’ ” State ex rel. Cty. Of Cuyahoga v. Jones Lang LaSalle
Great Lakes Corporate Real Estate Partners, Cuyahoga C.P. No. CV 14 827651, 2016
13
OHIO FIRST DISTRICT COURT OF APPEALS
Ohio Misc. LEXIS 46, *31 (Jan. 26, 2016), quoting Scotts Co. LLC v. Liberty Mut. Ins.
Co., 606 F.Supp.2d 722, 734-735 (S.D.Ohio 2009).
{¶32} “Further Ohio courts will not read exceptions into a release unless the
exclusion of those claims is explicit.” Jones Lang LaSalle at *31, citing Task v. Nat’l
City Bank, 8th Dist. App. No. 65617, 1994 Ohio App. LEXIS 5679, *11 (Dec. 7, 2000).
If Mr. Crutcher wanted to carve any exceptions out of the broad release, he needed to
do so expressly—precisely as he did in section 4. Although he could have sought other
exceptions to pursue individuals like Dr. Broun in different capacities, no such
provision appears in the agreement, and we will not rewrite the agreement after the
fact.
{¶33} Similarly, his effort to insulate post-Settlement Agreement claims is
unavailing. Section 2 protects OHC from claims “arising, accruing or originating at
any time whatsoever.” The crux of the post-agreement claims involves matters that
originated pre-agreement, such as Mr. Crutcher’s investments in OHCRE, the
management of OHCRE’s finances and affairs, and his belief that the OHCRE
defendants mishandled funds owed to him. Given the broad language of the release,
and the connection to pre-Agreement matters, we have no hesitation in deeming these
claims subsumed within the ambit of the Settlement Agreement. To the extent that
any post-agreement fiduciary claims against Dr. Broun fall beyond the scope of the
agreement, however, we find that these claims fail as a matter of law.
{¶34} Such reasoning also spells the demise of Mr. Crutcher’s third
assignment of error. In that respect, Mr. Crutcher challenges the trial court’s grant of
summary judgment in favor of OHC and Dr. Broun on their first counterclaim (for
breach of the Settlement Agreement) because the Settlement Agreement did not
14
OHIO FIRST DISTRICT COURT OF APPEALS
accomplish a global release of claims. As we have already determined, however,
section 2 of the Settlement Agreement contains a broad release that goes well beyond
Mr. Crutcher’s limited reading, so we see no error in the trial court’s conclusion that
he violated that provision by suing OHC and Dr. Broun. When a party releases claims,
but then brings suit on them, he does so at his own peril.
{¶35} Mr. Crutcher insists that the Settlement Agreement preserves his right
to pursue OHCRE for his Financial Interest. We agree with him on that point, but that
was not the basis for the trial court’s ruling. To the contrary, the court focused on his
violation of section 2, rather than the permissible claims allowed by section 4 (that he
pursued and prevailed upon). We accordingly overrule Mr. Crutcher’s third
assignment of error.
3.
{¶36} Mr. Crutcher further pursues an alter ego theory—positing that OHC
disregarded OHCRE’s separate legal entity and wielded its assets as if they were OHC’s
to meet its obligations to the detriment of OHCRE’s Departing Members. This
argument fails for two reasons: Ohio Supreme Court precedent prevents this claim
from departing the starting gate, and as discussed above, the Settlement Agreement
shields OHC from claims of this ilk.
{¶37} The basics of an alter ego claim are well-settled: “[w]hen a shareholder
exercises such control over a corporation that the corporation becomes the
shareholder’s alter ego * * * it is unjust to allow the shareholder to use the corporate
form as a shield to escape the consequences of those wrongful acts.” Minno v. Pro-
Fab, Inc., 121 Ohio St.3d 464, 2009-Ohio-1247, 905 N.E.2d 613, ¶ 11, citing Belvedere
Condominium Unit Owners’ Assn. v. R.E. Roark Cos., 67 Ohio St.3d 274, 287, 617
15
OHIO FIRST DISTRICT COURT OF APPEALS
N.E.2d 1075 (1993). But these claims typically involve one corporate entity (or person)
with ownership over the second. Such a situation does not describe OHC and OHCRE
as neither has an ownership interest in the other. Confronted with that scenario in
Minno, the Supreme Court held that one cannot pierce the corporate veil of one
corporation despite sharing common shareholders with the other corporation without
overlapping ownership: “sister corporations are separate corporations and are unable
to exercise control over each other in the manner that a controlling shareholder can.”
Id. at ¶ 13.
{¶38} The situation at hand is no different: Mr. Crutcher alleges that OHC’s
control over OHCRE through “common ownership and management” allowed OHC to
perpetrate its misdeeds against him. But “the common shareholder ownership of
sister corporations does not provide one sister corporation with the inherent ability to
exercise control over the other. Any wrongful act committed by one sister corporation
might have been instigated by the corporation’s owners, but it could not have been
instigated by the corporation’s sister.” Id. at ¶ 12. Mr. Crutcher cannot circumvent
the holding in Minno since neither OHC nor OHCRE has an ownership interest in the
other, and as a testament to that point, he declines to cite or discuss Minno in his
briefing before our court. Thus, the alter ego doctrine simply does not apply.
{¶39} Beyond the effect of Minno, Mr. Crutcher lacks an answer to the
Settlement Agreement and why it would not bar any alter ego claim. The Settlement
Agreement releases OHC, and this alter ego claim seems to fall squarely within the
scope of the broad release. In summary, we conclude that the trial court did not err in
its interpretation and application of the Settlement Agreement.
4.
16
OHIO FIRST DISTRICT COURT OF APPEALS
{¶40} Finally, Mr. Crutcher insists that the OHCRE defendants committed
bad faith breach of contract, by ceasing to pay him sums owed to him under the
Operating Agreement and trying to force him into a settlement agreement to avoid
paying him more money. Along these lines, he also protests that the OHCRE
defendants failed to provide him with his financial documents to appropriately
calculate his Financial Interest. However, the record does not support these
conjectures.
{¶41} OHCRE stopped sending Mr. Crutcher payments based on his refusal to
sign a subordination agreement required by U.S. Bank. As the reader will recall, the
Operating Agreement specifically obligated him to sign a subordination agreement in
these circumstances. And it was not unreasonable, nor in bad faith, for OHCRE to
insist on compliance with that provision. After OHCRE elected to liquidate its assets,
it then took measures to satisfy Mr. Crutcher’s debt obligation.
{¶42} Likewise, OHCRE did not wield a prospective settlement to his
detriment, any more so than any party in civil litigation tries to exert pressure to
encourage settlement. The OHCRE defendants likely hoped to put an end to a decade’s
worth of litigation between the parties. “The purpose of a settlement agreement is ‘to
terminate a claim by preventing or ending litigation and * * * such agreements are
valid and enforceable by either party.’ ” Brilla v. Mulhearn, 168 Ohio App.3d 223,
2006-Ohio-3816, 859 N.E.2d 578, ¶ 15, quoting Brown v. Dillinger, 9th Dist. Medina
No. 05CA0040-M, 2006-Ohio-1307, ¶ 10. “Settlement agreements are highly favored
by the law.” Brilla at ¶ 15. We simply see no evidence of bad faith in the available
record.
17
OHIO FIRST DISTRICT COURT OF APPEALS
{¶43} That leaves the question of whether the OHCRE defendants provided
Mr. Crutcher with adequate financial information, which overlaps with his sixth
assignment of error (related to the denial of his motion to compel discovery), so we
will consider these issues together.
{¶44} The fundamental problem with both arguments is that Mr. Crutcher
fails to identify what information, exactly, he lacked. Simply contending that he needs
more financial information is difficult for us to evaluate, given the volume of financial
records that the OHCRE defendants produced in the litigation (including annual
balance sheets for OHCRE, documents related to OHCRE’s liquidation, spreadsheets
showing the distributions of OHCRE assets, and calculations of various Financial
Interests, etc.). And, as we alluded to earlier, Mr. Crutcher—based on his intimate
familiarity with OHCRE—should be able to pinpoint exactly what documents or
categories of information the defendants were hiding. His failure to lend precision to
this claim speaks volumes.
{¶45} In its denial of Mr. Crutcher’s motion to compel, the trial court held that
the OHCRE defendants had appropriately responded to Mr. Crutcher’s discovery
requests, and “simply because the documents do not reflect what Crutcher believes
they should reflect does not mean that [the OHCRE defendants have] not provided the
requested documents.” We agree. We see nothing in the record to substantiate the
improper withholding of financial data to which Mr. Crutcher should have been
entitled. This establishes that the trial court did not abuse its discretion in denying
the motion to compel (sixth assignment of error), nor did it err in the pertinent
summary judgment rulings (second assignment of error) related to this point.
18
OHIO FIRST DISTRICT COURT OF APPEALS
{¶46} For all of the aforementioned reasons, we overrule Mr. Crutcher’s
second, third, and sixth assignments of error.
C.
{¶47} In Mr. Crutcher’s fourth assignment of error, he protests the trial court’s
failure to award pre and postjudgment interest as to his breach of contract claims,
pointing to R.C. 1343.03. Although the OHCRE defendants insist that he waived this
claim, when asked to calculate his damages before the trial court, Mr. Crutcher
provided a calculation that included prejudgment interest. We find this measure
sufficient for preservation’s sake.
{¶48} First, we consider the postjudgment claim, governed by R.C.
1343.03(B): “interest on a judgment, decree, or order for the payment of money
rendered in a civil action based on tortious conduct * * * shall be computed from the
date the judgment, decree or ordered is rendered.” Postjudgment interest is simply
operative by statute, and nothing in the record indicates that the trial court denied Mr.
Crutcher postjudgment interest. See Non-Employees of Chateau Estate Resident
Assn. v. Chateau Estates, Ltd., 2d Dist. Clark Nos. 2005-CA-75, 2005-CA-90, 2005-
CA-91, 2005-CA-101, and 2005-CA-116, 2007-Ohio-319, ¶ 72 (“[B]ecause nothing in
the record indicates that the trial court has denied post-judgment interest or that it
will do so in the future, we overrule the * * * assignment of error.”). Moreover, because
postjudgment interest is necessarily added on top of the judgment amount, the trial
court could not include a calculation for this in the judgment (because it does not know
when the defendant will pay). Therefore, we see no error in the trial court’s failure to
include postjudgment interest in the damage award.
19
OHIO FIRST DISTRICT COURT OF APPEALS
{¶49} With respect to prejudgment interest, Ohio law requires imposition of
prejudgment interest on contract claims. R.C. 1343.03(A) (“[W]hen money becomes
due and payable upon * * * all judgment, 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 * * *.”); see Cantwell Mach. Co. v.
Chicago Mach. Co., 184 Ohio App.3d 287, 2009-Ohio-4548, 920 N.E.2d 994, ¶ 30
(10th Dist.) (“1343.03(A) requires an award of prejudgment interest on contract
claims. Once a plaintiff receives judgment on a contract claim and requests
prejudgment interest, the trial court must award prejudgment interest under
R.C.1343.03(A).”).
{¶50} Although a party can certainly waive prejudgment interest by failing to
request it (as the OHCRE defendants claim occurred here), in the relevant damage
calculation, Mr. Crutcher specifically sought prejudgment interest, calculated based
on the statutory interest rate. The trial court never specifically rejected this claim, and
it might simply have been an oversight. Regardless, we cannot calculate the
appropriate amount of prejudgment interest because the trial court will need to
determine the appropriate starting date for interest to run. We accordingly sustain
the fourth assignment of error in part, insofar as the court declined to award
prejudgment interest, and we remand for the limited purpose of determining the date
on which prejudgment interest began to run and the appropriate amount of interest,
consistent with the statute.
D.
20
OHIO FIRST DISTRICT COURT OF APPEALS
{¶51} In Mr. Crutcher’s fifth assignment of error, he claims the trial court
erred by excluding his expert’s testimony for failure to provide an expert report.
Specifically, he asserts that the relevant scheduling order instructed that “Plaintiff’s
experts and all affirmative experts to be identified and reports, if any” be submitted by
December 13, 2019. Therefore, because the order did not require reports, so his
reasoning goes, he should not be faulted for failing to provide one. The only problem
is that Mr. Crutcher misquotes the scheduling order in question, which tellingly did
not include the “if any” caveat. The order thus required the production of expert
reports, and Mr. Crutcher fails to offer any explanation for his erroneous quotation.
{¶52} The scheduling order’s directive also comports with the relevant local
rules, which require that a party submit the “opinions” of experts prior to trial. See
Loc.R. 15(A) of the Court of Common Pleas of Hamilton County (“At the conclusion of
the case management conference, a case management order shall be prepared and
entered. The order shall include * * * the identification of any expert witness and their
opinions.”); Loc.R. 15(B)(2)(f) of the Court of Common Pleas of Hamilton County (If
a judge elects to have a pretrial conference before trial, “all trial attorneys shall file
with the judge * * * copies of available opinions of all persons who may be called as
expert witnesses.”). About ten days after Mr. Crutcher failed to comply with this
deadline, the OHCRE defendants moved to exclude his expert witnesses and expert
testimony. Pursuant to Civ.R. 37(B)(1), a court may “issue further just orders” when a
party “fails to obey an order to provide or permit discovery.”
21
OHIO FIRST DISTRICT COURT OF APPEALS
{¶53} In late March 2020 (i.e., three months after the deadline),1 the trial
court considered the matter, but did not immediately strike the expert testimony.
Instead, it provided Mr. Crutcher five additional business days to produce an expert
report, bending over backwards to give him another chance. Five days came and went
without any expert report, but the court did not actually strike the expert testimony
until the end of June 2020. Against this backdrop, Mr. Crutcher fails to explain why
he could not have complied—at some point—with the requirement in the scheduling
order and the local rules to submit an expert report. Nor can we evaluate any
prejudicial impact by the exclusion of this expert testimony since we see no proffer or
similar evidence in the record that would have elaborated on the nature of this expert
testimony. Regardless, we see no abuse of discretion based upon the record at hand.
III.
{¶54} Turning to the OHCRE defendants’ cross-appeal, they assert the trial
court erred in granting summary judgment for Mr. Crutcher for his breach of contract
and liquidation proceeds claims, and in finding that he had not breached the
Settlement Agreement’s non-disparagement provision.
A.
{¶55} In the OHCRE defendants’ first assignment of error, they maintain that
the trial court erred by granting judgment in favor of Mr. Crutcher for his breach of
contract and liquidation proceeds claims. They base their claim on his failure to
execute the subordination agreement requested by U.S. Bank as required under
1Needless to say, this deadline fell at the outset of the Covid-19 pandemic, but the Supreme Court’s
tolling order provides that specific court orders supersede the tolling provisions. In re Tolling of
Time Requirements Imposed by Rules Promulgated by the Supreme Court & Use of Tech., 158
Ohio St.3d 1447, 1448, 2020-Ohio-1166, 141 N.E.3d 974. Also, we see no argument advanced by
Mr. Crutcher that he simply needed some reasonable additional time to procure the report.
22
OHIO FIRST DISTRICT COURT OF APPEALS
section 6.5(c)(2) of the Operating Agreement, essentially arguing that his breach of
that provision of the Operating Agreement excused further performance by them. We
review this question of law de novo. Goodyear Tire & Rubber Co. v. Aetna Cas. & Sur.
Co., 95 Ohio St.3d 512, 2002-Ohio-2842, 769 N.E.2d 835, ¶ 4.
{¶56} To restate the sequence of events, in September of 2010, OHCRE began
making monthly payments to Mr. Crutcher as part of his Financial Interest owed as a
Departing Member. But those payments came to a halt in December 2015 when OHC
and OHCRE went into forbearance with U.S. Bank, and Mr. Crutcher elected to not
sign a subordination agreement. The Operating Agreement, in pertinent part,
provides, “as a precondition to receiving any payment from the Company * * * [Mr.
Crutcher] shall execute any subordination agreement requested by any lenders or
other credit providers to the Company or any of its subsidiaries.”
{¶57} But the OHCRE defendants’ argument falters for two reasons. First, the
OHCRE defendants demonstrate no evidence that Mr. Crutcher’s failure to sign a
subordination agreement prejudiced them in any way. In other words, at least as far
as the record discloses, U.S. Bank took no adverse action against the OHCRE
defendants based on the missing subordination agreement. “[N]ot all breaches are
created equal. A failure to perform a promise that is nominal, trifling, technical, or
slight does not excuse performance under the contract by the nonbreaching party.”
H&H Glass, Inc. v. Empire Bldg. Co., LLC, 1st Dist. Hamilton Nos. C-150059 and C-
150227, 2016-Ohio-3029, ¶ 7. “ ‘[A] breach of a portion of the terms of a contract does
not discharge the obligations of the parties to the contract, unless performance of
those terms is essential to the purpose of the agreement.’ ” Id., quoting Software
23
OHIO FIRST DISTRICT COURT OF APPEALS
Clearing House, Inc. v. Intrak, Inc., 66 Ohio App.3d 163, 170, 583 N.E.2d 1056 (1st
Dist.1990).
{¶58} We, of course, understand the purpose of the subordination agreement
requirement and could certainly envision circumstances when its breach would
constitute a material breach that would excuse further performance. But on this
record, the OHCRE defendants have failed to generate a material dispute of fact on
this point, and the trial court correctly rejected their argument.
{¶59} Second, even if the breach could be considered material, OHCRE was
still required to pay Mr. Crutcher his share of the liquidation proceeds pursuant to
section 13.3(b)(4) of the Operating Agreement, and that provision did not impose any
subordination agreement mandate. As we determined above, Mr. Crutcher was
rightfully awarded liquidation proceeds pursuant the trial court’s decision. Because
the trial court correctly awarded Mr. Crutcher his share of liquidation proceeds, it
essentially moots the subordination agreement debate. We accordingly overrule the
OHCRE defendants’ first cross-assignment of error.
B.
{¶60} In the OHCRE defendants’ second cross-assignment of error, they
maintain that the trial court should not have granted summary judgment on their
breach of non-disparagement provision claim. Section 7 of the Settlement Agreement
prohibits Mr. Crutcher from communicating in any way “that might be reasonably
construed to be derogatory or critical of, or negative toward,” OHC or any of its
employees or representatives.
{¶61} The OHCRE defendants identify a handful of statements that allegedly
run afoul of this provision, but most of these are statements directly made in litigation.
24
OHIO FIRST DISTRICT COURT OF APPEALS
They seize upon various comments from the 2018 complaint, accusing OHC and Dr.
Broun of “seek[ing] to mislead this court” through a series of “misrepresentations,
omissions and false assertions” as well as subsequent pleadings accusing the OHCRE
defendants “and/or their counsel” of “engaging in gamesmanship,
mischaracterizations, selective and out of context quotations, misleading or false
assertions, and unfounded arguments to try to define a false narrative.”
{¶62} The trial court found that statements in this vein fell within the ambit of
the litigation privilege, which “provides absolute immunity from civil suits for
defamatory statements made during and relevant to judicial proceedings * * * * [it] is
designed to protect ‘the integrity of the judicial process’ by affording participants in
litigation with immunity from future lawsuits over relevant statements made during
judicial proceedings.” (Emphasis deleted.) Reister v. Gardner, 164 Ohio St.3d 546,
2020-Ohio-5484, 174 N.E.3d 713, ¶ 10,14, quoting Willitzer v. McCloud, 6 Ohio St.3d
447, 449, 453 N.E.2d 693 (1983). We agree with the trial court’s assessment here—
these challenged statements were all made in pleadings within the litigation, and we
see no reason why the privilege should not apply.
{¶63} In an email to OHC’s counsel and Dr. Broun, Mr. Crutcher accused the
two of making “an affirmative misrepresentation” and “mere posturing” and
speculated about what they were “trying to hide.” The trial court aptly concluded that
“no reasonable minds can find the alleged conduct by [Crutcher] * * * to violate the
non-disparagement clause in the settlement agreement.” Again, we agree, for two
reasons. First, the provision in the Settlement Agreement was designed to protect each
party from statements made to third parties, not statements made to each other.
Second, an email to counsel about matters occurring in litigation strikes us as “relevant
25
OHIO FIRST DISTRICT COURT OF APPEALS
to judicial proceedings.” Reister at ¶ 10. Both reasons support the trial court’s
determination, and we accordingly overrule the OHCRE defendants’ second cross-
assignment of error.
* * *
{¶64} In light of the foregoing analysis, we overrule the two cross-assignments
of error raised by the OHCRE defendants. We sustain Mr. Crutcher’s fourth
assignment of error concerning prejudgment interest, but overrule his remaining
assignments of error. Accordingly, the judgment of the trial court is affirmed in part,
reversed in part, and the cause is remanded to the trial court to determine the amount
of prejudgment interest to be awarded to Mr. Crutcher and to enter judgment for that
amount, and for further proceedings consistent with this opinion.
Judgment affirmed in part and reversed in part and cause remanded.
CROUSE and WINKLER, JJ., concur.
Please note:
The court has recorded its entry on the date of the release of this opinion.
26