Kademian v. Marger , 2014 Ohio 4408 ( 2014 )

[Cite as Kademian v. Marger, 2014-Ohio-4408.]
IN THE COURT OF APPEALS FOR MONTGOMERY COUNTY, OHIO
MICHAEL T. KADEMIAN, M.D. :
Plaintiff-Appellant : C.A. CASE NO. 25917
v. : T.C. NO. 02-CV-2576
DONALD MARGER, M.D., et al. : (Civil appeal from
Common Pleas Court)
Defendant-Appellees :
:
..........
OPINION
Rendered on the 3rd day of October , 2014.
..........
JAMES M. HILL, Atty. Reg. #0030633, James M. Hill Co., L.P.A., 2365 Lakeview Drive,
Suite A, Beavercreek, Ohio 45431-3696
Attorney for Plaintiff-Appellant
FELIX J. GORA, Atty. Reg. #0009970, Rendigs, Fry, Kiely & Dennis, 600 Vine Street,
Suite 2650, Cincinnati, Ohio 45202-3688
Attorney for Defendant-Appellees
..........
DONOVAN, J.
{¶ 1} This matter is before the Court on the Notice of Appeal of Michael T.
Kademian, M.D.,filed September 19, 2013. Kademian appeals from the December 20, 2012
Verdict Entry of the trial court, issued following trial at which a unanimous jury found in
2
favor of Appellee Donald Marger, M.D., on Kademian’s claims for breach of fiduciary duty
and conversion. Kademian also appeals from the August 20, 2013 Decision of the trial
court that overruled his motions for judgment notwithstanding the verdict and for a new trial.
We hereby affirm the judgment of the trial court.
{¶ 2} The lengthy factual history herein is set forth in this Court’s March 9, 2012
Opinion reversing the decision of the trial court and remanding the matter on Kademian’s
direct appeal from the trial court’s decision entering summary judgment in favor of Marger
on Kademian’s claims for conversion and tortious interference, and granting Marger’s
motion for a directed verdict, at the close of Kademian’s case, on Kademian’s claim of
breach of fiduciary duty. Kademian, M.D. v. Marger, M.D., 2d Dist. Montgomery No.
24256, 2012-Ohio-962 (“Kademian I”). Therein this Court noted that in ruling on
Kademian’s appeal, it “construed the transcripts of testimony and documents admitted at the
conclusion of Dr. Kademian’s case most strongly in Dr. Kademian’s favor.” Id., ¶ 5. This
Court set forth the following facts:
* * * Donald Marger, a radiation oncologist, formed [Marger and
Associates (“M & A”)] in 1983, for the purpose of practicing medicine. At
the time, Marger was the sole shareholder in M & A. In 1983, Marger also
began an association with Good Samaritan Hospital in Dayton, Ohio, and
continued to practice radiation oncology at Good Samaritan until June 30,
2000.
Michael Kademian was also a radiation oncologist and became
employed by M & A in January 1990. At the time, Marger had been working
3
at St. Elizabeth's Hospital (later known as Franciscan Hospital), and at Good
Samaritan. After Kademian became employed, the two doctors each spent
one-half day at each hospital, switching locations at noon.
The following year, in January 1991, Kademian purchased 49% of the
corporate shares, paying $2,500 as a down payment, and signing a promissory
note for the remainder of the cost. The book value of the shares was derived
by subtracting the assets from the liabilities and multiplying that amount by
0.49. The total price listed in the stock purchase agreement was $10,851.
In April 1992, both Marger and Kademian signed Amended and
Restated Employment Agreements with M & A. The agreements are
essentially identical, and in Paragraph 5, prohibit Marger and Kademian from
engaging “in the practice of medicine, specifically therapeutic radiology,
except as an Employee of the Employer unless otherwise authorized by the
Board of Directors.” * * * .
Paragraph 9 of the agreements also contains a non-competition clause,
which provides that:
9. Non-Competition. Without the express written
consent of the Employer, the Employee shall not directly or
indirectly own, manage, operate, join, control or participate in
the ownership, management, operation or control of or be
connected in any manner with the speciality practice of
therapeutic radiology other than pursuant to the terms of this
4
Agreement.
Upon termination of employment, the Employee
covenants and agrees that except for the prior written consent
of the Employer, the Employee will not engage in the practice
of the speciality of therapeutic radiology, in any way, in St.
Elizabeth's Hospital or Good Samaritan Hospital, both of
Dayton, Ohio, nor with any other venture involving any
hospital or institutions with which the Employer is or shall be
associated, nor with any independent or free-standing facility
within a geographic radius of ten (10) miles of St. Elizabeth or
Good Samaritan Hospital, Dayton, Ohio. Such restrictions
shall continue for a period of two (2) years from and after the
termination of employment or existence of the Corporation or
any successor thereto, including the death or retirement of the
remaining shareholders of Employer, whichever time is
shorter. * * *.
Marger and Kademian continued to practice together for a number of
years, performing radiation oncology services at Good Samaritan and at St.
Elizabeth's Hospital. Good Samaritan was an “open hospital,” which allows
any radiation oncologist to obtain privileges and treat at the facility, because
the hospital does not have an exclusive agreement with any one person or
group. M & A had a strong relationship with Good Samaritan, as evidenced
5
by the fact that Marger was the medical director of radiation oncology at
Good Samaritan at the time of the events giving rise to the current litigation.
Kademian had also been the medical director at Good Samaritan.
Around 1985, Dr. Robert Field was appointed as the medical director
of radiation oncology at Miami Valley Hospital, a third hospital located in
Dayton, Ohio. Field continued as medical director, and his group had an
exclusive contract to practice radiation oncology at Miami Valley, between
1985 and the summer of 2000. This meant that only doctors in Field's group
could treat patients in the radiation oncology department. Other doctors could
be on staff at Miami Valley, but would not be allowed to treat patients in the
department.
In 1995, Premier Health Partners was formed, joining Miami Valley
and Good Samaritan in one holding company. Miami Valley was a 60%
shareholder and Good Samaritan was a 40% shareholder in Premier Health.
In 1997, Miami Valley and Good Samaritan hired consultants to evaluate
their oncology programs. The consultants recommended, in late 1997, that
Good Samaritan and Miami Valley integrate their radiation oncology
programs. Administrators at both Good Samaritan and Miami Valley
encouraged Field's group and M & A to merge. Consequently, in early 1998,
Marger formed a limited liability company with Field's group. This was done
over the objections of Kademian, who was concerned about Field's abilities
as a physician. At least as early as 1994, Miami Valley also had concerns over
6
Field's leadership and clinical practice. In 1994, Miami Valley's chief
operating officer (COO) required Field to prepare a corrective action plan for
the business and clinical practice. Miami Valley did not think much of Field
as a clinician, felt Field had a slipshod approach to medicine, and was
continually attempting to get Field to improve. Kademian was aware of
Field's reputation prior to the merger discussions, and told Marger he did not
believe Field was a good doctor.
Another issue with Field was that in 1997, the Ohio Department of
Health had established a requirement that medical directors of radiation
oncology must be certified by the American Board of Radiology (ABR). Field
was not certified by ABR. Kademian had been board-certified by ABR for
many years, and was appointed medical director of radiation oncology at
Good Samaritan in May 1997. Kademian notified Good Samaritan (which at
that time was part of Premier Health), about Field's lack of appropriate
certification, but Field remained director at Miami Valley. The issue of
Field's lack of board certification resurfaced during the merger discussions.
During 1998, Kademian received courtesy staff privileges at Miami
Valley and began investigating Field's certification status. After Kademian
called the president of Premier Health about Field's lack of ABR certification,
Field was removed as medical director and was replaced by his associate, Dr.
Duncan.
Also in 1998, ill will began to develop between Marger and Kademian
7
as a result of the proposed merger and Marger's sale of Western Ohio stock
that was owned by M & A. Marger received the entire distribution from the
sale, rather than allocating 49% of the proceeds, approximately $60,000, to
Kademian. At one point, Marger stated that he wanted to “get rid” of
Kademian. In addition, Kademian testified that he had learned during
discovery of a prediction Marger had made in July 1998, to M & A's
corporate attorney. The prediction was that Kademian was going to be
removed as medical director at Good Samaritan. This “prediction” came true.
In early September 1998, Kademian was removed as medical director over an
incident involving a hearing aid that a nurse had misplaced at work.
Kademian contended that the matter was trivial and was not grounds for
removal.
Marger was appointed as medical director of radiation oncology at
Good Samaritan about a week after Kademian was removed. Between
October and December 1998, Kademian and Marger discussed the possibility
of Kademian leaving M & A, due to these issues, but nothing ever came of
the discussions.
M & A had previously added Dr. Greg Rasp, another radiation
oncologist, as an employee. Rasp was given a preliminary contract similar to
the contract that Kademian originally had, and was supposed to be considered
for partnership within a few years after his employment. When Rasp was
considered for partnership, Marger wanted to retain his 51% share in M & A
8
and require Kademian to give or sell one-half of his shares to Rasp.
Kademian refused to divest himself of his interest, and this issue was never
resolved prior to the dissolution of M & A.
In January 1999, Rasp entered into a “restated” employment contract
with M & A. This agreement provides that Rasp's employment would
continue until terminated as provided in Section 10 of the agreement. * * *.
Under the agreement, Rasp was to maintain staff privileges at Franciscan
Medical Center-Dayton Campus (formerly known as St. Elizabeth's) and such
other hospitals at which he practiced. * * * The agreement also contains a
restrictive covenant, which provides as follows:
11. Restrictive Covenant. Employee acknowledges (a)
that the Employer has a large investment of time, effort and
money in obtaining its relationship with the hospitals at which
the Employer's employees practice medicine (“Hospitals”),
with each such relationship hereafter referred to as a
“Relationship,” (b) that the Employer's success depends upon
its developing and maintaining such Relationships, (c) that
each Relationship constitutes an asset and property of the
Employer, (d) that the recruitment and orientation of
employees to staff the Employer's needs represents a
substantial investment by Employer, and (e) that Employee's
performing services for the Employer constitutes a position of
9
trust by the Employee which may result in a relationship
whereby Employee could influence future actions of a
Hospital or others relative to a Relationship.
Therefore, if a Relationship is terminated because the
Employee solicited or agreed to perform (directly or indirectly)
in the future similar services as were provided by the
Employer's employees at a Hospital, then the Employer would
be damaged and such interference, solicitation and/or
agreement by the Employee would constitute a breach of trust
and a breach of [sic] and the Employee's fiduciary duty to the
Employer.
Accordingly, the Employee shall not breach the
Employee's fiduciary duty to and position of trust with the
Employer, and the Employee shall not, individually or in
concert with any other person or entity, do anything to
adversely influence or interfere with a Relationship. In
addition, the Employee agrees that for a period of 12 months
after the Employee's termination of employment with the
Employer without cause, or the Employer's termination of the
Employee's employment for cause, the Employee shall not,
directly or indirectly, at a Hospital, whether alone, or as a
shareholder, partner or member, or as an officer, director,
10
manager, employee, contractor or otherwise, perform services
similar to those provided by the Employee during the Term.
Provided, however, if the Employer loses, breaches,
surrenders or terminates its contract at Franciscan Medical
Center-Dayton Campus or in any way curtails, limits or
decreases the services it provides at Franciscan Medical
Center-Dayton Campus, then the provisions of this Section
shall be null and void and the Employee shall not be subject to
the restrictive covenant provisions set forth in this Section.
***
During 1999, merger discussions with Field's group continued, despite
the fact that Kademian wanted to end the discussions. In December 1999,
Marger ended the discussions due to Field's failure to disclose financial
information. At the time, no one knew that Field's group had been sold to U.S.
Oncology, a for-profit cancer treatment national corporation.
During the early part of 2000, M & A was beginning to have more of a
physical presence at Miami Valley, and its doctors had been given limited
privileges to treat patients, despite the fact that Field's group had an exclusive
contract. M & A's ability to practice was due to the issues with Field and the
fact that Field had sold another party a free-standing radiation center that
Miami Valley wanted to buy.
In January 2000, a patient described at trial as Patient X was referred to
11
Kademian for a decision on whether he should have radiation treatment for a
possible reoccurrence of cancer in his prostate gland. Patient X had been
previously treated at Miami Valley by Field.
While taking Patient X's history, Kademian learned that Patient X had
suffered severe radiation burns on his legs in 1999, after being treated by Field
for skin cancer on his legs. Patient X was apprehensive about having more
radiation treatments because he thought he might be overly sensitive to
radiation. After obtaining the records for Patient X, Kademian discovered that
the patient had been exposed to excessive amounts of radiation, and had been
exposed in areas where radiation should not have been given. In addition to
the severe burns that were caused, the treatment created a risk of future
problems, like radiation necrosis or tissue death, which did, in fact, later occur
with Patient X.
In early February 2000, Kademian wrote a letter to Miami Valley's
radiation safety officer, reporting the over-exposure and alleged substandard
treatment, which Kademian contended should have been reported to the Ohio
Department of Health. Kademian asked the hospital to address the issue, so he
would know what to tell Patient X when they discussed radiation treatment for
his prostate cancer. Kademian copied the letter to the chairman of the
radiation safety committee, and to Gary Marshall, who was Premier Health's
vice-president of Oncology Services for both Good Samaritan and Miami
Valley.
[Cite as Kademian v. Marger, 2014-Ohio-4408.]
Kademian did not receive a response to this letter, so he sent another
letter in early March to Marshall, indicating that he would have no choice but
to report the over-radiation if the hospital did not report it. Kademian also
requested a meeting with Marshall and Premier Health's general counsel, Dale
Creech. In addition, Kademian copied Miami Valley's COO with the letter.
Marshall replied, stating that nothing had occurred that needed to be reported,
and that he would arrange a date for a meeting. Marshall also stated that it
would be “unfortunate” if Kademian implicated the hospital in discussions he
had with anyone, particularly since Miami Valley had not completed its
investigation.
***
Kademian and his attorney subsequently met with Premier Health's
general counsel, Creech, to discuss concerns about the radiation oncology
department and the necessity of reporting the mis-administration overdose.
During the meeting, Creech revealed Miami Valley's concerns about Field and
his clinical qualifications. Creech also expressed the opinion that the overdose
was not reportable, but told Kademian to go ahead and report it if he felt he
should. After the meeting, Kademian then met with Rasp, Marger, M & A's
attorney, and his own attorney. Rasp and Marger did not say not to report the
incident. Marger asked Kademian not to report it to the Department of Health
without telling him first, and Kademian agreed. Kademian later decided to go
ahead and report the matter, however, because he was concerned and his
concerns were increased by Creech's comments. * * *
13
During the week of April 10, 2000, Kademian and his attorney met
with representatives of the Ohio Department of Health, Bureau of Radiation
Protection, which administers the radiation safety programs for the
Department of Health. Kademian reported the alleged radiation overexposure
of a Miami Valley patient. As a result of the meeting, an inspector arrived at
Miami Valley on April 18, 2000, for an inspection. This was the first day
Miami Valley would have become aware of the inspection. The inspector
stayed for two days. Prior to the arrival of the inspectors, Miami Valley had
not referred the Patient X matter to an independent consultant for review. In
addition, Kademian had never received any substantive response from
Marshall.
An “absolute coincidence” occurred the first day of the inspection,
according to Marger. On April 18, 2000, Marger told Rasp and Kademian that
he (Marger) was leaving M & A. At trial, Marger testified that when he talked
about leaving M & A, he had no idea that the state had come to investigate
Miami Valley. Conversely, Kademian testified that Marger is the one who told
him that the Department of Health inspection had started on April 18, 2000.
Marger and Kademian discussed whether or not Kademian should have gone
to the Department of Health, and Marger said, “I can't control you. You are
affecting my health, Mike, you are affecting my blood pressure, you're
affecting me emotionally * * * and you're going to be affecting me
financially.” * * * During this discussion, Marger also told Rasp that he would
14
“take care” of him.
Miami Valley hired an independent consultant to peer-review the
incident, but did not do so until after the Department of Health began its
investigation. On May 16, 2000, two more inspectors from the Bureau of
Radiation Protection came to Miami Valley to continue the inspection. Shortly
thereafter, on May 23, 2000, Marshall, the vice-president of Oncology for both
Miami Valley and Good Samaritan, and Bobbie Martin, the director of
Oncology at Good Samaritan, discussed information that could only have
come from Marger or Rasp.[]
Martin's notes about the conversation state “confidential Marger, MK
will get notice this Thursday that corporation will be dissolved by next Friday.
* * *” * * * Martin's notes further indicate that KDD (referring to Doug
Deck, the chief executive officer of Good Samaritan) would sign with the
“new corporation,” and that “MK” would have a period of time so continuity
would not be disrupted. * * * Other notes written by Martin indicate that
“Marger needs to let Greg out of exclusive. Dissolve contract. * * * Give Greg
exclusive contract,” and “Appoint Greg as acting medical director. Have
Marger let him out of the exclusive clause. Dissolve corporation. Award Greg
exclusive contract.” * * *.
On the same day these notes were made, notices were sent out
indicating that a shareholder meeting to dissolve M & A would be held on
June 2, 2000. On June 2, 2000, Marger voted to liquidate M & A, over
15
Kademian's objection. The liquidation was effective June 30, 2000, with M &
A ceasing active operations on that date. Before the dissolution, the corporate
earnings of M & A were approximately $2,000,000 per year.
Prior to the meeting on June 2, 2000, M & A's corporate attorney
prepared Articles of Incorporation for Cancer Consultants of Southwest, Ohio,
Inc., at Marger's request. Marger signed the articles of incorporation and the
appointment of himself as statutory agent for Cancer Consultants on the same
day that he voted to dissolve M & A. The articles of incorporation for Cancer
Consultants were filed with the Ohio Secretary of State, and bear a date-stamp
of June 5, 2000.
Marger admitted having had discussions with Rasp about continuing a
professional association together. When Marger had these discussions, he
knew that Rasp was under a contractual agreement with M & A and would
have to be released from that agreement. Marger acknowledged that he had
also an employment agreement with M & A that contained a covenant not to
compete, and that he knew, based on his discussions with M & A's corporate
attorney, that when a corporation is dissolved, all contracts referable to the
corporation are null and void. Marger further admitted that dissolving M & A
allowed him to form Cancer Consultants, and that he and Rasp had a plan to
continue practicing full-time, as 50/50 owners of Cancer Consultants, at the
same institutions where M & A and its doctors had practiced. At the time,
Kademian was primarily practicing at Good Samaritan; the group as a whole
16
practiced at Franciscan and Good Samaritan, with some limited practice at
Miami Valley. Rasp knew that Marger was forming an entity so that the two
of them could practice radiation oncology.
On June 7, 2000, M & A's corporate attorney sent Marger copies of
employment agreements for both Marger and Rasp with Cancer Consultants,
and two copies of a shareholder's agreement for Cancer Consultants. On the
same date, coincidentally or not, Medical Billing Services for the New
Century (MBI), the billing service for M & A, sent Kademian a letter, refusing
to provide billing services to him. The letter indicated that MBI had made the
decision because of “the potential conflict of providing billing services for
competitors within the same location.” * * * MBI then went on to provide
billing services for Cancer Consultants.
***
In late June 2000, Kademian went on vacation. When he returned, he
received a letter from Rasp dated July 4, 2000, written on Cancer Consultants
letterhead. The letter lists the areas of practice as Good Samaritan, Miami
Valley, and Franciscan. In the letter, Rasp states that: “Don told me on Friday
(6/30/00) that he filed the documents to dissolve Donald Marger, M.D. and
Associates, Inc. Given that, I have formed the above named corporation.” * *
*.
Kademian spoke to Rasp that afternoon, and was told that he should
form his own corporation. Rasp did not, during this conversation, or any other,
17
ask Kademian to join Cancer Consultants, nor did he suggest that Kademian
might be able to join Cancer Consultants. Rasp also never disclosed to
Kademian what had occurred regarding Marger and the formation of Cancer
Consultants. Kademian also discovered that day that all the patients Marger
had been treating, as well as those who were coming up for checkups months
or years after their prior treatment, had been transferred to Rasp. Additionally,
he discovered that Rasp had already had prescription pads printed for Cancer
Consultants.
Furthermore, Kademian called Upper Valley Radiation Center, located
north of Dayton, and learned that Marger was working there full-time, despite
having announced his retirement. At the time of trial, Marger was still
working for the same employer, but worked part-time.
In late July 2000, the Department of Health sent Gary Marshall,
Premier Health Vice President of Oncology Services, a notice of violations
letter and a report of its investigation of the Patient X situation, based on the
findings of three investigators who had worked on the report. The notice
detailed six violations, including lack of documentation to establish that
Miami Valley was following proper procedures for addressing complaints;
deficiencies in Miami Valley's timely submission of data to the Department of
Health, problems with Miami Valley's quality assessment and improvement
program; and a lack of documentation that the radiation oncologist set limits
of doses to critical structures surrounding the treatment area. The report also
18
concluded that the inadequate quality assessment and improvement program
and inadequate complaint handling process all contributed to a radiotherapy
course that resulted in a “disproportionated output of the prescribed radiation
dose across the treatment field.” * * * The Department of Health ordered
Miami Valley to submit various evidence and to develop a corrective action
plan to address the violations within thirty days of receipt of the letter.
Miami Valley's response was sent to the Department of Health on
August 24, 2000. One of the attachments was a final report from Miami
Valley's independent consultant, dated June 16, 2000. Consistent with
Kademian's findings, the report concluded that the quality of care provided to
Patient X fell below accepted standards of care.
In June or July 2000, Kademian learned that Miami Valley was
considering hiring Dr. Ditzel for the position of radiation oncology director.
After meeting Ditzel, Kademian then met with Mary Boosalis, the
vice-president and COO for Miami Valley, during the week of August 7,
2000. At the meeting, Kademian and Boosalis discussed the selection process
for the director's postiion [sic], Ditzel's qualifications, the quality of care in the
radiation oncology department, and the Patient X matter. Kademian expressed
concern over the selection process, because the job had not been advertised,
and it was his understanding that the decision had already been made, with
only one candidate, Ditzel, having been considered. On August 13, 2000,
Kademian wrote a follow-up letter to Boosalis, opposing Ditzel's selection for
19
two reasons. The first reason was that the selection process was flawed, and
the second was that Kademian did not believe Ditzel was the most qualified
candidate that could be found.
Boosalis replied on August 17, 2000, stating that the decision of who
to hire as medical director belonged to Miami Valley. Boosalis also told
Kademian that he could only treat patients at Miami Valley until a new
exclusive contract was signed with Dr. Ditzel's group. According to Miami
Valley representatives, Miami Valley had discussed with Rasp the fact that
Ditzel and a colleague, Dr. Paessun, were going to come to Dayton and
practice with Rasp. The question was whether Kademian should continue to
practice, and the consensus was that they would have a new group with Ditzel,
Rasp, Paessun, and Kademian. However, after Kademian made his displeasure
about Ditzel known, it was the collective decision of Boosalis, Bill Thornton,
Miami Valley CEO, and Marshall, the vice-president of Oncology for both
Good Samaritan and Miami Valley, that Kademian would not be able to
practice.
Kademian contended, however, that no one ever told him that they
wanted him to stay at Miami Valley. In fact, Kademian tried to meet with
administrators and they would not meet with him. He also tried to talk with
Doug Deck, the president at Good Samaritan about staying at Good
Samaritan; Deck refused to meet with him. In addition, Kademian testified
that Rasp never came to him and said anything about working to try to include
20
him in Cancer Consultants, nor did Rasp ever say anything to him after June
30, 2000, about working together. Rasp also never told Kademian that he was
being scrutinized by the hospitals in any way in terms of coming into Cancer
Consultants.
In the fall of 2000, Good Samaritan and Miami Valley signed
exclusive contracts with Cancer Consultants, which meant that Kademian
would not be able to treat patients at either hospital, because he was not
employed by Cancer Consultants. In addition, Franciscan was not an option,
because it had closed by that time.
At trial, Kademian presented evidence indicating that he had lost the
following amounts due to the alleged breach of fiduciary duty and civil
conspiracy: (1) equity and goodwill in the amount of $203,651, based on the
dissolution of M & A; (2) lost earnings, plus interest, of approximately
$6,386,861 through March 31, 2010, and lost retirement contributions, plus
interest[] from 2001 through 2011, of about $350,529. The lost wages were
calculated based on Kademian's 1999 earnings of approximately $456,000.
In late September 2000, Kademian filed suit against Marger, M & A,
Rasp, Cancer Consultants, Good Samaritan, Miami Valley, and Premier
Health. The complaint was dismissed without prejudice and was refiled in
April 2002, against the same parties. The complaint included claims of breach
of fiduciary duty, breach of contract, and conversion against Marger; claims of
breach of duty of loyalty and good faith, and breach of contract against Rasp;
21
and claims of tortious interference with contract, tortious interference with
business expectancy, violation of R.C. 4113.52, and civil conspiracy against
all defendants. After motions to dismiss certain claims were sustained,
Kademian filed an amended complaint in August 2003, adding claims of
breach of a buy-sell agreement and breach of duty of good faith and fair
dealing against Marger; claims of conversion against Rasp; claims of replevin
against Marger, Rasp, and Cancer Consultants; and claims of constructive
trust against Rasp and Cancer Consultants.
In 2006, the hospital defendants were dismissed, with prejudice.
Ultimately, the remaining claims were dismissed, other than the breach of
fiduciary duty and conspiracy claims1, which proceeded to trial, with Marger
and Rasp as the remaining defendants. Kademian settled his claims against
Rasp during trial, leaving Marger as the sole defendant.
At the end of Kademian's case, Marger moved for a directed verdict,
which was granted by the trial court on the theory that Marger did not take
advantage of the alleged breach of fiduciary duty and conspiracy, because he
did not practice further with Good Samaritan and Miami Valley. * * *. Id., ¶
5-51.
{¶ 3} This Court noted as follows:
Marger argues that he had the right to dissolve the corporation. This
1
The claims before the trial court were breach of fiduciary duty,
conversion, and tortious interference.
22
is true. However, we have stressed that even if a particular close corporation
or partnership decision cannot be contested, “the manner in which the
decision is made cannot violate the majority’s fiduciary duty.” Schhafer v.
RMS Realty, 138 Ohio App.3d 244, 274, 741 N.E.2d 155 (2d Dist. 2000). In
Schafer, a majority of partners issued a capital call, which was within their
right to do under the partnership agreement. However, their action was
taken in an attempt to squeeze out a minority partner. On appeal, we affirmed
a jury verdict rendered in favor of the minority partner, noting that while the
minority partner “could not contest the capital call itself, he could bring an
action for breach of fiduciary duty if the defendants acted in bad faith or in a
duplicitous manner by voting for and proceeding with the capital call.” Id.Kademian I, ¶ 69.
{¶ 4} Upon remand, Kademian testified that M & A began to have problems in
late 1997 or early 1998 which “were principally related to the fact that Good Samaritan
Hospital had been taken over by Miami Valley and I would characterize a corporate takeover
with the formation of Premier Health Partners.” Trial Transcript (“T.T.”), pg. 16.
Kademian testified that he was “livid” to learn that Marger formed an LLC with Dr. Field’s
group in 1998, because “Dr. Marger and I had had numerous conversations from the day that
I moved to Dayton about Dr. Field[], numerous. We had those conversations and they
always centered about Dr. Fields (sic) substandardness as a physician.” T.T. pg. 17.
{¶ 5} Regarding Patient X and the formation of Cancer Consultants, the following
exchange occurred:
[Cite as Kademian v. Marger, 2014-Ohio-4408.]
Q. Tell the jury briefly what happened at the meeting with the
Department of Health.
A. Briefly we met, Steve2 and I met with Roger Suppes, who is chief
of the radiation protection division, Maggie Wanchick, who is an
investigator, I think. And there were two or three other people. And I just
presented my concerns about this particular case and my particular concerns
in general about safety matters at Miami Valley Hospital.
Q. And that was on either the 12th or 13th of April, 2000?
A. Yeah, thereabouts. * * *
Q. What happened after that?
A. The next thing was the following week because there was a
weekend between there. So in the following week I didn’t hear anything
until I had a meeting with Drs. Marger and Rasp at St. Elizabeth’s Hospital. *
**
Q. What happened at that meeting?
A. Well, the meeting, we’re sitting there and Dr. Marger said,
“Mike, the Department of Health is investigating Miami Valley Hospital.”
And he was very upset about it.
Q. What happened?
***
A. * * * [The Department of Health] had been at the hospital that day
2
Steve Dankof, counsel for Kademian at the time.
24
that we were having our meeting and he was upset about it because I had
gone to the state to report it. And then he made an announcement, he and
Dr. Rasp.
Q. What was the announcement?
A. Well, he said, “You know, I’ve had it with you. I can’t control
you. You’re affecting me emotionally. You’re affecting me physically.
My blood pressure is going up. And you’re going to be affecting me
financially. You’re getting the hospital in trouble. And because of what
you’ve done, I am leaving [M & A].” And he kind of laughed. He said, “I’m
leaving you [M & A]. You’re going to be [M & A]. Ha ha.” Because the
irony that he was going to be gone and I would have this corporation called
[M & A].
And then he also said to Dr. Rasp, “Don’t worry, Greg. I will take
care of you.” Then he opened it for discussion. Greg and I were sitting next
to each other. He was across from us. And, you know, I explained why I
went to the state. I just said, “I went to the state because I went to the state
because I thought it needed to be done.” And he several times asked if
anybody had anything to say. I gave my explanations as to why I did what I
did and he again two or three times asked, “Does anybody have anything to
say?”
So finally I just said, “I don’t have anything to say,” and I left. I left
Greg and Don and I left. I went home.
25
Q. What happened next?
A. In terms of?
Q. Well, you said that Dr. Marger indicated to you that he was going
to leave you from Marger and Associates. (Sic).
A. He said he was going to leave me the corporation.
Q. Did he do that?
***
A. No. Oh, what happened next is that was the middle of April, so
it’s kind of limbo land because I didn’t know what he was talking about. I
didn’t know what leaving me the corporation really meant. And Steve
Dankof was my attorney at the time and he would sometimes hear things
from the corporate attorney, Rick Carli[]le. I don’t think Don Marger and I
had a conversation about anything other than direct patient care after that
meeting. ***
And then probably sometime in May, and I don’t know the date, I
received a call from my attorney, Steve, who told me that Marger was going
to dissolve Marger and Associates. He had heard this from Rick Carli[]le
that the corporation was going to be dissolved. I didn’t really know what
that meant. And so then subsequently I received I think through Steve a
letter saying we’re going to have a shareholders meeting for the purpose of
dissolving Marger & Associates.
Q. Did you have a meeting?
26
A. Yep.
Q. What happened at the meeting?
A. Well, the meeting was in early June. * * * . Steve and I went.
Carli[]le was there with Dr. Marger. And Dr. Marger made a motion that we
dissolve Marger & Associates. It was open for discussion. Steve spoke on
my behalf. Said, “You know, we don’t want the corporation dissolved. We
see no reason to dissolve the corporation.” After the discussion we took a
vote and I voted 49 percent to not dissolve the corporation. End of meeting.
Q. Why did you vote to not dissolve the corporation?
***
A. Because it was our business entity. It was the place that I - - the
entity through which I earned my livelihood, so there would be no reason for
me to want to dissolve it, to make it go away. T.T. pg. 69-72.
{¶ 6} Kademian identified Exhibit 200, the July 4, 2000 letter from Rasp to
Kademian, as described in the facts above, and the following exchange occurred:
Q. At any time did anyone ever inform you that it was not Dr. Rasp
that had formed Cancer Consultants - -
***
Q. - - and that it was Dr. Marger?
***
A. Never.
Q. Did anyone ever inform you that Dr. Marger had a plan to
27
practice with Dr. Rasp and exclude you from that practice?
A. No, I only learned of that from discovery.
Q. Did anyone ever suggest to you that you would be able to join
Cancer Consultants?
A. Never. T.T. pg. 77-78.
Kademian testified that when he returned from vacation, “all of the patients that Dr. Marger
had been treating - - we were all treating patients at Good Sam. All of his patients had been
transferred to Dr. Rasp.” Pg. 79.
{¶ 7} The following exchange occurred on cross-examination:
Q. Are you aware of any fact whereby Dr. Marger received any
compensation, or anything of value from either the hospital, Premier, Miami
Valley, or Good Sam by reason of his decision to dissolve [M & A]?
A. No.
Q. Did Dr. Marger after June 30th, 2000, ever see (sic) or work at
Miami Valley Hospital?
A. To my knowledge, no.
Q. Good Samaritan Hospital?
A. To my knowledge, no.
Q. Franciscan Hospital?
A. To my knowledge, no.
Q. Was Dr. Marger after June 30th, 2000, every (sic) employed by or
provide any services to any premiere hospital that you know of?
28
A. No. T.T. pg. 94.
***
Q. * * * During the period of June 2000, did you have discussions
with Dr. Rasp about working together?
A. We probably had some discussions during June. Yeah.
Q. * * * did Dr. Rasp say anything to you about working together?
A. We talked about the future, and we talked about the possibility
that that might happen. * * *
Q. Did you ever tell Dr. Rasp after the meeting in June, “You’re free
white and 21.”?
A. Yes, I used that term.
Q. What’d you mean by that?
A. I meant he was free. I meant he was white, not in a disparaging
way, and that he was 21. That he was an adult and that free will (sic). He
had free will.
***
A. * * * I was completely in the dark about Cancer Consultants, so I
was operating in a vacuum. So anything that I was saying at that time was
based on not knowing what was happening. T.T. pg. 100-01.
{¶ 8} Kademian admitted that he had “ill will” toward Marger “because he, you
know, announced at the meeting on April 18th, because I went to the State of Ohio he was
going to do something.” T.T. pg. 103. Kademian testified that in 1999, he and Marger
29
“had a very collegial relationship.” T.T. pg. 103. Kademian denied having ill will toward
Marger since 1998. Kademian further acknowledged that, since M & A did not have any
contracts with the hospitals where it provided services, that it was important for M & A to
maintain a good rapport with the hospitals, the technicians, the therapists and the nurses
there. Kademian stated that M & A was “not dissolved for any legitimate business reason.”
T.T. pg. 124. Regarding the Western Ohio stock, Kademian stated that the issue arose in
1998, and that it was about the “fact that our corporation owned Western Ohio stock and it
was sold and Dr. Marger received all the proceeds.” T.T. pg. 126. Kademian denied that
the issue persisted into 2000, and he stated that he and Marger “agreed to disagree” in 1998
about the stock. T.T. pg. 127.
{¶ 9} Kademian identified, as Exhibit 114, correspondence dated June 12, 2000
from him to Marger which was copied to the CEOs of Good Samaritan and Premier. When
asked if the letter suggested that Marger committed malpractice, Kademian responded, “I say
that his treatment was sub-optimal and incorrect. * * * I consider it a representation of fact.
It’s not intended to disparage. It’s intended to describe fact; sub-optimal and incorrect.”
T.T. pg. 151. Kademian also identified, as Exhibit 116, correspondence dated June 13,
2000 from him to Marger, which was also copied to the CEOs of Good Samaritan and
Premier. The following exchange occurred:
Q. Did you send this letter to disparage Mr. Marger’s treatment of
this patient?
A. No. The intent of the letter was to inform the CEOs that peer
review was being abandoned at our hospital, per the order of Dr. Marger.
30
Q. And so your effort to talk about peer review was to send CEOs
letters about your opinions on Dr. Marger’s care of patients?
A. No. No. No. No. * * * My concern was that Dr. Marger
abandoned peer review. T.T. pg. 153.
Kademian acknowledged that he sent both letters “while I was an employee and co-owner of
[M & A].” T.T. pg. 154.
{¶ 10} Bobbie Martin, the director for Oncology at Good Samaritan, testified
regarding her notes as set forth in the facts in Kademian I, above, and she acknowledged that
they indicate that Marger would have to let Rasp out of his exclusive contract. On
cross-examination, she indicated that she received “multiple” complaints regarding
Kademian from her staff from 1998 to 2000. When asked what the complaints were about,
she responded, “Behavior. Yelling at staff. The nurses would complain that they were not
allowed to ask him a question directly. They needed to write it on a piece of paper and put
it in his office, as long as he was not in his office. So they had to kind of jockey to see
when they could leave a note to get a question answered. That’s an example.” T.T. pg.
271.
{¶ 11} Marger testified that the issue regarding his sale of the Western Ohio stock,
after Kademian became a partner, was a contentious issue throughout the parties’ entire
working relationship. He further testified that Kademian was “very, very against”
associating with the Field group, and that “that issue plus the Western Ohio issue, those were
just basically very big contentious issues pretty much until the end of the corporation.” T.T.
pg. 573. Regarding Kademian’s interactions with hospital staff, Marger stated that he “saw
31
several instances where Dr. Kademian was indeed being quite aggressive with the staff and
yeah, that couldn’t help but somehow affect our relationship with the hospital
administrations.” T.T. pg. 574. Marger stated that peer review “is a process by which a
physician’s work is evaluated by his peers.” T.T. pg. 589. He stated that M & A began
practicing at Miami Valley in early 2000, and that he “kind of like[d] the way they do their
peer review. It was different than the way we were doing it.” T.T. pg. 589. Marger stated
that he instituted Miami Valley’s peer review process at Good Samaritan, and that Kademian
“became so mad at me. He wouldn’t talk to me at all and he refused to even be in the same
room with me.” T.T. pg. 590. Marger stated that through April, 2000 his relationship with
Kademian “was continuing to deteriorate. * * * this Western Ohio business kept getting
raised. And Dr. Kademian and I were coming (sic) more and more distanced over a variety
of issues, like the peer review.” T.T. pg. 590. When asked about his health in 2000,
Marger stated, “Early 2000, it was okay. But after a few more months, you know, when we
were getting like into the spring, I was having a lot of medical problems. I really was. I
mean, this was affecting my health. Our relationship.” T.T. pg. 591.
{¶ 12} When asked about Patient X, Marger stated that he and Drs. Rasp and
Kademian had a meeting “where when we were talking about his reporting this, Dr. Rasp
and I had requested of him that he at least let us know what he’s going to do, because this
obviously was affecting the administration or would have an effect on the hospital
administration.” T.T. pg. 592. Marger stated that he did not “want to be blindsided
someday in the hall by an administrator saying, ‘Oh, did you know Dr. Kademian did this,
that and the other.’” T.T. pg. 592-93. Marger testified, “I think basically, when I heard
32
that Dr. Kademian had reported it or was going to report it to the State, just a few days after
we had asked Dr. Kademian to at least tell us what he was going to do, and he went ahead
and did it anyway without letting us know, that was the straw that broke the camel’s back.”
T.T. pg. 594. At that time, Marger stated, “My health is at risk and I just - - I need to
divorce Dr. Kademian. I think we had a very, very bad marriage.” T.T. pg. 594.
{¶ 13} Marger stated that he and Rasp and Kademian had a meeting in April, 2000,
and Marger stated, “I don’t remember my exact words. I think I said I’m leaving Marger
and Associates. * * * I said I’m leaving.” T.T. pg. 594. Marger stated that he called the
subsequent shareholders meeting because he thought that was “the cleanest way to
disassociate myself from Dr. Kademian.” T.T. pg. 595. The following exchange occurred
regarding the June 30, 2000 dissolution of M & A:
Q. Now, in June, what was your idea about what you were going to
do on July 1? And this is early June?
A. Emotionally and physically, I was in a good bit of turmoil right
about that period of time. But after I had announced that I was * * * leaving
[M & A], or whatever it was that I actually said - - I mean, that was the effect
of it though. I started to think about what I wanted to do. And I wasn’t
absolutely sure what I wanted to do, but I knew I still wanted to possibly be
able to practice, if that’s what I chose to do.
Q. Okay. So did you have any discussions then with Dr. Rasp about
maybe practicing with you on July 1 or August or September?
A. Eventually I did. Not when I made that decision.
33
***
Q. What did you do next in terms of what your future was going to
hold?
A. Well, if I wanted the potential to continue to practice, I was going
to have to set up some sort of practice vehicle, you know. And that’s
actually the - - that was actually the genesis of Cancer Consultants of
Southwest Ohio.
Q. So what was the purpose of Cancer Consultants of Southwest
Ohio?
A. Well initially, it was, as I said, a - - how was I going to continue
to practice, if that’s what I decided to do?
Q. Did you ever fund to Cancer Consultants? Put any money it?
(Sic)
A. Only money was whatever fees were required by the State to file
the paperwork.
Q. Did you ever receive any income from Cancer Consultants?
A. No.
Q. Did you ever work for Cancer Consultants?
A. No.
Q. Did you talk to Dr. Rasp about potentially becoming a partner of
yours after Marger and Associates ceased doing business?
A. Yes, I did. I - - I had Cancer Consultants. And at some point, I
34
asked Dr. Rasp if he would have any interest in working with me.
Q. * * * were there preliminary contracts drawn up, if you remember?
A. Yeah. He - - you know, he said, you know basically, yes, he
would consider it. So asked Mr. Carli[]le to go ahead and draw up some
basic contracts for our review.
Q. To your knowledge, was anything ever signed?
A. No. Nothing was signed, to my knowledge.
***
Q. * * * Now, after you talked to Dr. Rasp - - by the way, did you
have any discussions with Dr. Kademian in this - - in the period of time of
June about what you were going to do after June 30th or what he was going to
do after June 30th?
A. No.
Q. Why not?
A. Well, among other reasons, Dr. Kademian was not talking to me
at the time. But you know, I - - with the dissolution of the corporation, you
know - - and everybody can do whatever they wanted. So I figured we’re all
big boys and we can go off and practice however we think is appropriate.
Q. But was it your understanding or belief that Dr. Kademian would
continue to practice at the same hospitals after - -
***
Q. June 30th?
35
A. - - I absolutely was convinced that Dr. Kademian was going to
continue to practice. I just had no doubts about that.
Q. But not with you.
A. Correct. I had, you know, no problem with him continuing to
practice. Just we couldn’t be partners anymore.
Q. To your knowledge, after June 30th, were all the accounts
receivable and other assets of [M & A] distributed pursuant to the contracts,
to your knowledge?
A. Absolutely.
Q. Was Dr. Rasp involved in the incorporation of Cancer
Consultants?
A. No.
Q. What happened in the first week - - or let’s say the second week
or the third week in June? Did you change your mind in terms of continuing
to practice in Dayton?
A. Yeah, so right along about the middle of June - - well, you
referred to this epiphany and that’s actually the word I used. I realized that if I
continued to practice in Dayton, you know, by myself, with whoever,
anybody else, I would still have to be dealing with Dr. Kademian or
interacting with him frequently. We would be going to the same tumor
board meetings. We would be going to cancer committee meetings. We
would be going to radiation safety meetings.
36
I would probably be seeing him still several times a week. And I said
my health just isn’t worth this. And I said, you know, the heck with it. I do
not need to practice anymore full time in Dayton, Ohio. And that was the
end of it.
Q. Did you ever use the term, “I’m going to retire?”
A. I might have. I might have.
Q. Did you mean from the practice of medicine?
A. No, I never really planned on retiring from the practice of
medicine. I certainly planned on retiring from [M & A].
Q. Did you ever have any discussions in May or June of 2000 with
the hospitals about entering in exclusive contracts just with you?
A. Absolutely not. I never had any contact with anyone in any
hospital regarding exclusive contracts.
Q. Now, we’re back to this epiphany. Do you
remember when in June that
was?
A. I think it was right almost exactly around the middle of June.
Q. So what happened next in terms of Cancer Consultants?
A. I think it was Dr. Rasp’s attorney who contacted Mr. Carli[]le and
basically asked him, “What am I going to do with Cancer Consultants?” You
know, and I had nothing to do with it. I wasn’t going to use it. I wasn’t
going to practice.
37
And I think it was his attorney who suggested to Mr. Carli[]le, if Dr.
Rasp would pay the fees associated with its incorporation, could he just go
ahead and use it? Because I, you know, I had basically laid the business
groundwork, like an - - you know, like a tax ID number, things like that.
Q. And did you have any further affiliation starting on July 1 with
Cancer Consultants in any way?
A. You know, since June 30th of 2000, I have never even set foot in
Good Samaritan or Miami Valley again, literally. No. The answer is no.
T.T. pg. 598-603.
{¶ 14} Marger also testified that in the middle of June, 2000, Kademian expressed
an interest in buying the shares of M & A, and that he told Carlile to “pursue it.” According
to Marger, “we just never heard back from Dr. Kademian. Nothing was ever signed. But I
- - you know, again, with certain considerations, I was willing to sell him the shares of
stock.” T.T. pg. 605. The following exchange occurred on cross-examination:
Q. Your decision to dissolve [M & A] came at a time when you had
a plan to continue in the practice with its employee, Dr. Rasp and without Dr.
Kademian.
A. That’s absolutely not true. My decision to dissolve it came
before I knew what I was going to do, before I had any thought of continuing
or not continuing. The decision was based solely on my need to divorce
myself from Dr. Kademian.
Q. When was Cancer Consultants formed?
38
***
A. I think the official paperwork was June 2nd of 2000.
Q. Same day that you voted to dissolve [M & A], correct?
A. Yes.
Q. You used [M&A] attorneys to create this competing corporation,
correct?
A. They were never - - there was no competition. They were never
in competition. They never existed in terms of providing services. There
was no way for them to compete.
Q. Do you recall watching your video when you said that Cancer
Consultants was going to do exactly the same thing that [M & A] had done in
exactly the same places?
A. Provided radiation oncology services. (Sic)
Q. At the same hospitals.
A. That’s what I intended, yes.
Q. The only thing that would be missing would be Dr. Kademian,
correct?
A. No. I absolutely expected Dr. Kademian to be there also.
Q. The only thing that would be different as between Cancer
Consultants and [M & A] * * * was that Cancer Consultants would not
involve Dr. Kademian, correct?
A. Correct. Cancer Consultants would not involve Dr.
39
Kademian.
Q. Dr. Rasp knew that you were going to form Cancer Consultants,
correct?
A. Yes.
Q. And he learned that from you: is that correct?
A. That’s correct.
Q. And you didn’t involve Dr. Kademian in those discussions, did
you?
***
A. - - no, no, no.
***
Q. You said at some point in time, there was discussions after you
voted to dissolve [M & A] about you selling the entity to Dr. Kademian,
correct?
A. That’s correct.
Q. Do you recall one of the terms of that sale being that Dr. Rasp
could be released from any sort of covenant?
A. That’s correct.
Q. * * * And you weren’t going to be with the company, correct?
A. Correct.
Q. And he had to change the name of the company; is that correct?
A. Yes, after a certain length of time, because in all honesty, I did
40
not know what Dr. Kademian was up to and I honestly did not want my name
associated with him - - with his activities anymore. T.T. pg. 616-19.
{¶ 15} On redirect examination, the following exchange occurred:
Q. Dr. Marger, some mention was made of Rick Carli[]le. Is Rick
Carli[]le also your personal counsel?
A. Yes.
Q. Was the formation for Cancer Consultants, did it have anything to
do with [M & A] in terms of Mr. [Carli[]le being the counsel for [M & A]?
Well, let me rephrase the question. * * * Was Mr. Carli[]le’s work for you
relative to Cancer Consultants personally for you?
A. Personally for me?
Q. Right. As your counsel.
A. Yes. T.T. pg. 650.
{¶ 16} Rasp testified as follows regarding the dissolution of M & A:
Q. Now did there come to be a time in early 2000 when Dr. Marger
informed you of his future or what he was going to do?
A. In April we had one of our regular meetings, the three of us that
we would have - - I think they were on Tuesdays. * * * But and at this
meeting he suddenly announced that he was leaving. That things were
ending. And he wasn’t very clear on what was going on. I think Mike and I
were - - well I don’t want to speak for Mike, but I was stunned.
***
41
Q. Now in that earlier meeting, the one you mentioned in April, do
you recall Dr. Marger ever telling you or did you ever hear that he would take
care of you?
A. Oh, no.
Q. Did you ever hear Dr. Marger say I’m leaving the company to Dr.
Kademian?
A. No.
***
Q. But it did come to your attention that [M & A] was ending
business as of June 30th?
A. Yes.
Q. How did you receive that information?
A. I believe Mike, Dr. Kademian called me at home and gave me
that information.
Q. What do you recall - - first of all, do you remember when that
phone conversation took place?
A. It was in June of 2000. So it would have been very early in June
2000. Maybe June 2nd, 3rd, 4th, somewhere right in that time period.
Q. What do you recall of that conversation and what Dr. Kademian
told you?
A. He told me that they had voted to I think he used the word
dissolve the company. That it was going to end June 30th. You know, I
42
asked him what that meant and he said, you know, that he was going to form
his own company. And I asked him what it meant for me and he said that, you
know, you’re free, white and 21. You can do what you want. T.T. pg.
507-509.
{¶ 17} At the conclusion of the evidence, counsel for Kademian moved for a
directed verdict "on three aspects of its claim for fiduciary duty." He asserted that "Dr.
Marger's conversations with Dr. Rasp, while a majority shareholder in Marger and
Associates, was a breach of fiduciary duty," that the "use of Marger and Associates attorneys
to form Cancer Consultants was a breach of Dr. Marger's fiduciary duties," and that "the plan
that Dr. Marger admitted to was a breach of Dr. Marger's fiduciary duties. These are all
undisputed facts. And reasonable minds can only conclude that this would be a breach of
fiduciary duty."
{¶ 18} In its August 20, 2013 decision overruling Kademian’s motion for
judgment notwithstanding the verdict and a new trial, the trial court determined in part as
follows:
The court has thoroughly reviewed the entire video transcript of the
trial herein, and has considered the arguments of counsel contained within
their Memoranda. Contrary to Plaintiff’s assertions, the evidence at trial was
not undisputed. While there was evidence before the jury that Marger’s
conduct could have constituted a breach of his fiduciary duties to Kademian,
the evidence did not require a conclusion that Marger had breached those
duties, nor does the inquiry stop there. The jury was permitted to consider
43
Marger’s motives in dissolving the corporation, as well as whether he had
acted in good faith and for a legitimate business purpose. Additionally, the
jury was permitted to consider whether a schism existed between the
shareholders such that it was no longer practicable to carry on the business of
the corporation. There was ample evidence produced at trial that Dr. Marger
and Dr. Kademian did not enjoy a productive or positive relationship and that
Dr. Kademian’s behavior toward Dr. Marger, hospital staff and patients was
such that, if believed by or given weight by the jury, provided ample evidence
in support of Dr. Marger’s conduct and could lead to the conclusion that Dr.
Marger’s conduct in dissolving the business was the result of his good faith
and was exercised for a legitimate business purpose. Still further, the
evidence at trial was such that Dr. Kademian’s behavior to those around him
could be characterized as demeaning, dismissive, and unprofessional such
that the jury could have concluded that such a serious schism had developed
between the two physicians that it was no longer possible for them to carry on
business together and that the schism resulted from Dr. Kademian’s behavior,
and not that of Dr. Marger.
When considering the Motion for Judgment notwithstanding the
Verdict, and after construing the evidence adduced at trial and the facts
established by any admissions in the pleadings most strongly in favor of the
non-moving party, Defendant herein, and without engaging in any weighing
of the evidence, the court finds that there is substantial, competent evidence
44
upon which reasonable minds may reach different conclusions. As stated
above, while the evidence revealed that Dr. Marger no longer wanted to do
business with Dr. Kademian and dissolved the corporation seemingly to do
business with Dr. Rasp and without Dr. Kademian, there was ample evidence
to support the conclusion that it was Dr. Kademian’s behavior that caused the
schism between the shareholders and, still further, that given Dr. Kademian’s
behavior, Dr. Marger’s decision to dissolve the corporation was for a
legitimate business purpose and was not lacking in good faith and,
additionally, that no conversion of Plaintiff’s property resulted. Therefore,
Plaintiff’s Motion for Judgment notwithstanding the Verdict must be
overruled.
In considering Plaintiff’s Motion for New Trial, and particularly any
claim based upon manifest weight of the evidence, and, after weighing the
evidence, the court finds that there was competent, substantial and credible
evidence to support the verdicts of the jury and that the judgment is not
contrary to law. For the reasons stated above relating the Plaintiff’s Motion
for Judgment Notwithstanding the Verdict, the court finds that Plaintiff’s
Motion for New Trial must also be overruled.
{¶ 19} Kademian asserts six assignments of error herein. We will consider his first
three assigned errors together for ease of analysis. They are as follows:
“THE TRIAL COURT ERRED IN FAILING TO DIRECT A VERDICT IN FAVOR
OF DR. KADEMIAN ON HIS BREACH OF FIDUCIARY DUTY CLAIMS.”
45
And,
“THE TRIAL COURT ERRED IN FAILING TO INSTRUCT THE JURY THAT
DR. MARGER BREACHED HIS FIDUCIARY DUTIES TO DR. KADEMIAN.”
And,
“THE TRIAL COURT ERRED IN FAILING TO GRANT DR. KADEMIAN’S
MOTION FOR A JUDGMENT NOTWITHSTANDING THE VERDICT AND MOTION
FOR A NEW TRIAL.”
{¶ 20} Kademian asserts that the “evidence is undisputed that Dr. Marger and Dr.
Rasp secretly entered into an agreement prior to the dissolution of [M & A] such that they
would continue the practice in another entity without Dr. Kademian. * * * This was clearly
a breach of the fiduciary duties owed by Dr. Marger to Dr. Kademian.” Kademian asserts
that the Court “made it abundantly clear in its Opinion that it is not the reason or the nature
of the actions that are controlling, it is ‘the manner in which the decision is made [that]
cannot violate the majority’s fiduciary duty.’”
{¶ 21} In addition to the trial testimony above, Kademian directs our attention to
the following exchange in Marger’s November 17, 2006 deposition that was played for the
jury at trial:
Q. When you suggested to Dr. Rasp that you might want to continue
with him in a professional association, what was his response?
A. It was in the affirmative because I know that that was our plan.
Q. That was whose plan?
A. Our plan was to continue a professional association * * * as
46
Cancer Consultants.
Q. So for some period of time you and Dr. Greg Rasp planned to
continue your professional association as Cancer Consultants?
A. Correct.
Q. But you don’t know what that time frame was?
A. No.
{¶ 22} As this Court has noted:
* * * In Ruta v. Breckenridge-Remy Co. (1982), 69 Ohio St.2d 66, 23
O.O.3d 115, 430 N.E.2d 935, the Supreme Court of Ohio discussed the
following analysis a trial court is to adhere to when ruling on a motion for
directed verdict:
“When a motion for directed verdict is entered, what is
being tested is a question of law; that is, the legal sufficiency
of the evidence to take the case to jury. This does not involve
weighing the evidence or trying the credibility of the
witnesses; it is in the nature of a demurrer to the evidence and
assumes the truth of the evidence supporting the facts essential
to the claim of the party against whom the motion is directed,
and gives to that party the benefit of all reasonable inferences
from that evidence. The evidence is granted its most favorable
interpretation and is considered as establishing every material
fact it tends to prove. The ‘reasonable minds' test * * * calls
47
upon the court only to determine whether there exists any
evidence of substantial probative value in support of that
party's claims. See Hamden Lodge v. Ohio Fuel Gas Co.
(1934), 127 Ohio St. 469, 189 N.E. 246. Weighing evidence
connotes finding facts from the evidence submitted; no such
role is undertaken by the court in considering a motion for a
directed verdict. A motion for directed verdict raises a
question of law because it examines the materiality of the
evidence, as opposed to the conclusions to be drawn from the
evidence. To hold that in considering a motion for directed
verdict a court may weigh the evidence, would be to hold that
a judge may usurp the function of the jury. Section 5, Article I
of the Ohio Constitution.” Id. at 68-69, 23 O.O.3d 115, 430
N.E.2d 935.567
An appellate court reviews a trial court's ruling on a
motion for directed verdict de novo, as it presents the court
with a question of law. Schafer v. R.M.S. Realty (2000), 138
Ohio App.3d 244, 257, 741 N.E.2d 155. De novo review
means that this court uses the same standard that the trial court
should have used, and we examine the evidence to determine
whether as a matter of law no genuine issues exist for trial.
Dupler v. Mansfield Journal Co., Inc. (1980), 64 Ohio St.2d
48116, 119-120, 18 O.O.3d 354, 413 N.E.2d 1187. Thus, the trial
court's decision is not granted any deference by the reviewing
court. Brown v. Scioto Cty. Bd. of Commissioners (1993), 87
Ohio App.3d 704, 711, 622 N.E.2d 1153.
Lasley v. Nguyen, 172 Ohio App.3d 741, 2007-Ohio-4086, 876 N.E.2d 1274, ¶ 16-18 (2d
Dist.).
{¶ 23} “The standard for granting a directed verdict set out in Civ.R. 50 also applies
to a motion for JNOV. * * *.” Randall v. Mihm, 84 Ohio App.3d 402, 406, 616 N.E.2d
1171 (2d Dist.1992). Finally, Civ.R. 59 governs motions for a new trial, and as the trial
court indicated, while Kademian’s “motion does not specifically delineate the grounds upon
which he seeks a new trial, it appears he [relied] upon Civ.R. 59(A)(6) and (7), which
provide for a new trial” because “(6) the judgment is not sustained by the weight of the
evidence” and “(7) the judgment is contrary to law.” “A trial court's denial of a motion for
a new trial is reviewed for an abuse of discretion. Yungwirth v. McAvoy (1972), 32 Ohio
St.2d 285, 286, 61 O.O.2d 504, 291 N.E.2d 739.” Zerkle v. Kendall, 172 Ohio App.3d 468,
2007-Ohio-3432, 875 N.E.2d 652, ¶ 10 (2d Dist.) “Abuse of discretion” has been defined
as an attitude that is unreasonable, arbitrary, or unconscionable. Huffman v. Hair Surgeons,
Inc., 19 Ohio St.3d 83, 482 N.E.2d 1248 (1985). A decision is unreasonable if there is no
sound reasoning process that would support that decision. AAAA Enterprises, Inc. v. River
Place Community Urban Redevelopment Corp., 50 Ohio St.3d 157, 553 N.E.2d 597 (1990);
Feldmiller v. Feldmiller, 2d Dist. Montgomery No. 24989, 2012-Ohio-4621, ¶ 7.
{¶ 24} As this Court noted in Kademian I, “Claims for breach of fiduciary duty
49
require proof of the following elements: ‘(1) the existence of a duty arising from a fiduciary
relationship; (2) a failure to observe the duty; and (3) an injury resulting proximately
therefrom.’ * * * .” Id., ¶ 57.
{¶ 25} As this Court has previously noted:
A fiduciary duty is generally defined as “ ‘[a] duty of utmost good
faith, trust, confidence, and candor owed by a fiduciary * * * to the
beneficiary * * *; a duty to act with the highest degree of honesty and loyalty
toward another person and in the best interests of the other person.’” In re
Trust of Bernard, Summit App. No. 24025, 2008-Ohio-4338, 2008 WL
3918058, at ¶ 20, quoting from Black's Law Dictionary (8th Ed.Rev.2004)
545. * * * .
For example, “[p]artners in Ohio owe a fiduciary duty to one another.”
Dunn v. Zimmerman (1994), 69 Ohio St.3d 304, 306, 631 N.E.2d 1040.
Controlling shareholders in close corporations also owe fiduciary duties to
minority shareholders. In Busch v. Premier Integrated Med. Assoc., Ltd.,
Montgomery App. No. 19364, 2003-Ohio-4709, 2003 WL 22060392, we
noted:
“[L]ike partners, controlling shareholders of a close
corporation owe a fiduciary duty to minority shareholders, a
duty which is violated when the majority takes action it is
authorized to take which nevertheless operates to the
disadvantage of the minority and was not undertaken in good
50
faith and for a legitimate business purpose. Id. at ¶ 79, citing
Schafer v. RMS Realty (2000), 138 Ohio App.3d 244, 741
N.E.2d 155.
***
Good faith is “defined generally as ‘honesty in fact in the conduct or
transaction concerned.’” Casserlie v. Shell Oil Co., 121 Ohio St.3d 55, 57,
2009-Ohio-3, 902 N.E.2d 1, at ¶ 10, quoting R.C. 1301.01(S). The Supreme
Court of Ohio has also defined the term as follows:
“‘A lack of good faith is the equivalent of bad faith,
and bad faith, although not susceptible of concrete definition,
embraces more than bad judgment or negligence. It imports a
dishonest purpose, moral obliquity, conscious wrongdoing,
breach of a known duty through some ulterior motive or ill
will partaking of the nature of fraud. It also embraces actual
intent to mislead or deceive another.’” Hoskins v. Aetna Life
Ins. Co. (1983), 6 Ohio St.3d 272, 276, 6 OBR 337, 452
N.E.2d 1315, quoting Slater v. Motorists Mut. Ins. Co. (1962),
174 Ohio St. 148, 21 O.O.2d 420, 187 N.E.2d 45, paragraph
two of the syllabus.
DiPasquale v. Costas, 186 Ohio App.3d 121, 2010-Ohio-832, 926 N.E.2d 682, ¶ 122-24,
126-27 (2d Dist.).
{¶ 26} Finally, we note that “[c]ourts in sister states and Ohio appellate courts have
51
found a heightened fiduciary duty between majority and minority shareholders in a close
corporation.” Crosby v. Beam, 47 Ohio St.3d 105, 108, 548 N.E.2d 217 (1989). As this
Court previously noted:
A drawback to the nature of a close corporation is that majority
shareholders can easily abuse their corporate control to the disadvantage of
the minority shareholders. Minority shareholders are particularly vulnerable
because they are small in number and cannot easily protect their financial
interests because there is usually no readily available market for their stock.
Because of the close relationship between majority shareholders and the
actual operation of a close corporation:
“* * * the form is peculiarly susceptible to a particular
form of misuse or abuse by the majority or controlling
shareholders. Commonly known as a ‘squeeze-out’ or
‘freeze-out,’ it refers to manipulative use of corporate control
to eliminate minority shareholders * * * or otherwise unfairly
deprive them of advantages or opportunities to which they are
entitled.” Estate of Schroer, supra, [19 Ohio App.3d] at
37-38, 19 OBR at 103-104, 482 N.E.2d at 978-979, citing
O'Neal, “Squeeze-outs” of Minority Shareholders: Expulsion
or Oppression of Business Associates (1975).
In response to this problem, numerous courts have “borrowed” a rule
from partnership law, and have held that majority shareholders have a
52
heightened fiduciary duty, one of the utmost good faith and loyalty, to the
minority shareholders. Estate of Schroer, supra at 37-38, 19 OBR at 103-104,
482 N.E.2d at 978-979. Thus, a majority shareholder's fiduciary duty
prohibits him from using his power to promote his personal interests at the
expense of corporate interests. Crosby, supra, quoting United States v. Byrum
(1972), 408 U.S. 125, 137, 92 S.Ct. 2382, 2390, 33 L.Ed.2d 238, 247. In
Crosby, the Ohio Supreme Court held that:
“Where majority or controlling shareholders in a close
corporation breach their heightened fiduciary duty to minority
shareholders by utilizing their majority control of the
corporation to their own advantage, without providing
minority shareholders with an equal opportunity to benefit,
such breach, absent a legitimate business purpose, is
actionable. (Emphasis added.) Crosby, 47 Ohio St.3d at 109,
548 N.E.2d at 220.
Gigax v. Repka, 83 Ohio App.3d 615, 620-21, 615 N.E.2d 644, 648 (2d Dist.1992).
“Where a partner is expelled in order to resolve a partnership schism, there is no violation of
the fiduciary duty.” Leigh v. Crescent Square, Ltd., 80 Ohio App.3d 231, 238, 608 N.E.2d
1166, 1171 (2d Dist.1992).
{¶ 27} As did the trial court, we disagree with Kademian that the evidence at trial
was undisputed, such that he was entitled to a directed verdict or to judgment
notwithstanding the verdict. Kademian testified that in April, 2000, Marger “made an
53
announcement, he and Dr. Rasp.” Kademian stated that Marger told him that he was leaving
M & A to Kademian, and that Marger assured Rasp at that time that he would “take care of
him.” Kademian testified that there was no reason to dissolve M & A, and that he later
learned in the discovery process that Marger had a plan to practice with Rasp to Kademian’s
exclusion. Kademian stated that M & A was “not dissolved for any legitimate business
purpose.” Finally, regarding the Western Ohio stock, Kademian denied that the issue
persisted from 1998 to 2000, and he testified that he and Marger “agreed to disagree.”
{¶ 28} Conversely, Marger testified that the Western Ohio stock conflict, as well as
the issue regarding a possible merger with the Field group, were “very big contentious issues
pretty much until the end of the corporation.” Marger stated that Kademian’s “aggressive”
behavior toward hospital staff “couldn’t help but somehow affect our relationship with the
hospital administrations.” Marger stated that he and Kademian were becoming “more and
more distanced over a variety of issues, like the peer review.” Marger testified that his
relationship with Kademian was affecting his health. Marger stated that Kademian’s
reporting of the treatment of Patient X, after agreeing not to do so without first advising
Marger and Rasp, was “the straw that broke the camel’s back.” Marger testified that he told
Rasp and Kademian in April, 2000 that he was leaving M & A, and that at the time he did
not know what he wanted to do going forward. Marger stated that he called the
shareholders meeting because he thought that was “the cleanest way to disassociate myself
from Dr. Kademian.” Marger stated that he never intended to retire from the practice of
medicine, that he incorporated Cancer Consultants as a “practice vehicle” for himself, and
that Rasp was not involved in the process. He stated that he and Rasp subsequently
54
discussed the possibility of practicing together.
{¶ 29} According to Marger, in mid June, 2000, he realized that if he continued to
practice in Dayton, he would also continue to have frequent interactions with Kademian, and
that he turned Cancer Consultants over to Rasp at Rasp’s request. From July 1, 2000,
Marger stated that he “never even set foot in Good Samaritan or Miami Valley again,
literally.” Finally, Marger stated while Kademian expressed an interest in buying the shares
of M & A, and that Marger told his lawyer to look into it, “we just never heard back from
Dr. Kademian” about the purchase. He testified that one of the conditions of any sale of M
& A to Kademian would be that Kademian would be required to change the name of the
entity, since “ * * * I honestly did not want my name associated with him - - with his
activities anymore.”
{¶ 30} Rasp testified that Marger informed him and Kademian that he was leaving
M & A, and that Rasp was “stunned” at the news. Rasp denied that Marger stated that he
would “take care” of Rasp. Rasp denied that Marger indicated that he was leaving M & A to
Kademian. Rasp stated that Kademian told him that he was going to start his own
company, and that Rasp was free to do whatever he chose to do after the dissolution.
{¶ 31} We find, based upon the above testimony of Kademian, that there was
evidence before the jury that Marger breached his fiduciary duties to Kademian. We further
find, based upon the testimony of Marger and Rasp, that there was evidence before the jury
that Marger dissolved the business in good faith and for a legitimate business purpose due to
the schism that existed between the parties. Accordingly, based upon our thorough de
novo review of the record, and without weighing the evidence, we cannot conclude that as a
55
matter of law, no genuine issues existed for trial. For the foregoing reasons (as well as the
reasons set forth in our analysis of Kademian’s fourth assignment of error below), we further
cannot conclude that the trial court abused its discretion in determining that the judgment is
not sustained by the weight of the evidence, or is contrary to law, such that Kademian was
entitled to a new trial.
{¶ 32} Regarding Kademian’s assertion that the trial court erred in failing to
instruct the jury that Marger breached his fiduciary duties, our determination that the trial
court did not err in overruling Kademian’s motion for a directed verdict renders Kademian’s
second assigned error moot. Kademian’s first three assigned errors are overruled.
{¶ 33} Marger’s fourth assigned error is as follows:
“THE JURY’S DETERMINATION THAT DR. MARGER DID NOT BREACH
HIS FIDUCIARY DUTIES TO DR. KADEMIAN IS AGAINST THE MANIFEST
WEIGHT OF THE EVIDENCE.”
{¶ 34} Kademian again asserts that the evidence before the jury was undisputed
regarding Marger’s breach of his fiduciary duties to him, namely that Marger spoke to Rasp
about joining Cancer Consultants without Kademian’s knowledge or consent; that Marger
had M & A’s attorney prepare documents to create Cancer Consultants without Kademian’s
knowledge or consent; and that, pursuant to a “plan” with Rasp, Marger created the new
corporation, without Kademian, to relieve Rasp and himself of the non-competition
agreements with M & A, without Kademian’s knowledge or consent. According to
Kademian, a “review of the record will not disclose any evidence to the contrary.”
{¶ 35} As this Court recently noted:
[Cite as Kademian v. Marger, 2014-Ohio-4408.]
The standard set forth for manifest-weight-of-the-evidence appellate
review in State v. Thompkins, 78 Ohio St.3d 380, 678 N.E.2d 541 (1997),
applies also in civil cases. Eastley v. Volkman, 132 Ohio St.3d 328,
2012-Ohio-2179, 972 N.E.2d 517, ¶ 17. In applying this standard, the
appellate court, reviewing the entire record, weighs the evidence and all
reasonable inferences, considers the credibility of witnesses and determines
whether in resolving conflicts in the evidence, the factfinder clearly lost its
way and created such a manifest miscarriage of justice that the judgment must
be reversed and a new trial ordered. The discretionary power to grant a new
trial should be exercised only in the exceptional case in which the evidence
weighs heavily against the judgment. State v. Martin, 20 Ohio App.3d 172,
175, 485 N.E.2d 717 (1st Dist.1983), cited approvingly in Thompkins at 387.
Folck v. Redman, 2d Dist. Clark No. 2013-CA-35, 2013-Ohio-3646, ¶ 8.
{¶ 36} As this Court has further noted:
* * * The credibility of the witnesses and the weight to be given to
their testimony are primarily matters for the trier of facts to resolve. State v.
DeHass, 10 Ohio St.2d 230, 231, 227 N.E.2d 212 (1967). “Because the
factfinder * * * has the opportunity to see and hear the witnesses, the cautious
exercise of the discretionary power of a court of appeals to find that a
judgment is against the manifest weight of the evidence requires that
substantial deference be extended to the factfinder's determinations of
credibility. The decision whether, and to what extent, to credit the testimony
of particular witnesses is within the peculiar competence of the factfinder,
57
who has seen and heard the witness.” State v. Lawson, 2d Dist. Montgomery
No. 16288, 1997 WL 476684, *4 (Aug. 22, 1997).
Individual Business Servs. v. Carmack, 2d Dist. Montgomery No. 25286, 2013-Ohio-4819, ¶
20.
{¶ 37} Having reviewed the entire record, weighed the evidence and considered all
reasonable inferences, and deferring to the credibility assessment of the jury, we cannot
conclude that the unanimous verdict of the jury is against the manifest weight of the
evidence. Marger testified, as noted above, that in response to the ongoing dispute
regarding the Western Ohio stock, Kademian’s conduct regarding Dr. Field, his aggressive
behavior toward hospital staff, his conduct regarding peer review, and finally, his reporting
of the treatment of Patient X without first discussing it with Marger, he announced his
departure from M & A and created Cancer Consultants privately, without Rasp’s
involvement, so that if he chose to continue to practice in Dayton, he could do so. Rasp’s
testimony supports Marger’s, as does Martin’s regarding Kademian’s treatment of hospital
staff. The jury was free to credit Marger’s testimony regarding his motives in dissolving M
& A, namely that it was no longer feasible or functional for him and Kademian to continue
as partners, and that, based upon Kademian’s conduct, a schism existed between Marger and
Kademian. If believed, the jury had ample basis to conclude that Marger dissolved the
business in good faith and for a legitimate business purpose, and that he did not breach his
fiduciary duty to Kademian in doing so. Since Kademian’s fourth assignment of error lacks
merit, it is overruled.
{¶ 38} We will consider Kademian’s fifth and sixth assigned errors together. They
58
are as follows:
“THE TRIAL COURT ERRED IN ALLOWING EVIDENCE OF DR.
KADEMIAN’S ALLEGED ALIENATING ACTIONS CONCERNING THE
APPOINTMENT OF DR. DOUG DITZEL AS THE MEDICAL DIRECTOR OF MIAMI
VALLEY HOSPITAL.”
And,
“THE TRIAL COURT ERRED IN NOT INSTRUCTING THE JURY THAT
SUBSEQUENT ACTIONS BY A PLAINTIFF ARE NOT A DEFENSE TO A CLAIM FOR
BREACH OF FIDUCIARY DUTY.”
{¶ 39} Kademian asserts as follows in his brief:
Dr. Kademian filed a motion in limine to exclude any subsequent
actions on December 6, 2012. Counsel for Kademian objected to such
evidence again at trial and was twice granted a continuing objection to such
evidence by the trial court. * * * Nevertheless, the trial court allowed
evidence by Dale Creech, Gregory Rasp, Rebecca Paessun, Doug Ditzel and
Mary Boosalis that Dr. Kademian caused his own demise subsequent to Dr.
Marger’s wrongful dissolution of [M & A]. * * * The trial court allowed this
evidence because “it goes to damages.”
{¶ 40} Kademian further asserts that in “addition to erring by allowing evidence of
actions by Dr. Kademian subsequent to the breaches of fiduciary duty by Dr. Marger, the
trial court also erred by not providing a requested instruction that such subsequent actions by
a plaintiff are not a defense to breach of fiduciary duty.”
59
{¶ 41} We initially note that the “decision whether to admit or exclude evidence is
within the sound discretion of the trial court, and ‘unless the trial court clearly abused its
discretion and a party was materially prejudiced as a result, reviewing courts should be slow
to interfere.’ King v. Niswonger, 2d Dist. Darke No.2013-CA-1, 2014-Ohio-859, ¶ 12,
quoting Waste Mgt. of Ohio, Inc. v. Mid-America Tire, Inc., 113 Ohio App.3d 529, 533, 681
N.E.2d 492 (2d Dist.1996).” Walsh v. Smith, 2d Dist. Montgomery No. 25879,
2014-Ohio-1451, ¶ 16.
{¶ 42} The record reflects that on December 6, 2012, Kademian filed a motion
entitled “Plaintiff’s Motion in Limine to Exclude Subsequent Actions of the Plaintiff as an
Intervening, Superceding Cause of Damages.” The motion provides as follows:
* * * while the Defendant has requested an instruction regarding an
intervening, superceding cause pursuant to OJI 405.05, under Ohio law, an
intervening superseding causation only relates to actions by third parties, not
the Plaintiff. Where a Defendant raises the actions of the Plaintiff as a
defense to the Defendant’s wrongdoing, he is raising the issue of comparative
or contributory fault which is not permitted under Ohio law for intentional
torts.
{¶ 43} On December 7, 2012, Marger filed a response which provides in part that
“Defendant agrees to withdraw this requested instruction,” and that Kademian’s motion is
accordingly moot.
{¶ 44} At trial, on December 14, 2012, in the course of the direct examination of
Dale Creech regarding the selection process for the medical director or doctors to replace the
60
Field group, the following exchange occurred:
Q. Do you know in terms of Miami Valley or Premier recruiting for
the medical director for radiation oncology at the Valley how that took place?
A. Not really.
***
A. That was not - - my job would be to do any contracts that resulted
from the recruiting, not to be really involved in the recruiting process itself.
Q. * * * Do you know if Mary Boosalis would be involved however
in the process of the selection of medical director or doctors to fill the
position left by the leaving Field group?
A. Yes, she would have been very involved.
Q. Did you become aware after this period - - you’ve got Rasp,
Kademian, Paessun, Ditzel?
A. Yes.
Q. Did you become aware of a subsequent issue or problem with Dr.
Kademian?
A. Yes. T.T. pg. 357.
{¶ 45} Kademian objected as follows: “* * * This is just a back door way of trying
to introduce an intervening superseding cause. * * * He withdrew his request for instruction
on intervening superseding cause. Then he went before the jury in the opening statement
and said Dr. Kademian cause his own demise. Now that’s where we’re going with this and
it’s not relevant.” T.T. pg. 358. The following exchange occurred:
61
MR. GORA: Your Honor, this goes to damages. And this is the
intent of what the other players with the hospital was going to do (sic), that he
was going to be part of this group that was going to be - - * * *.
THE COURT: Uh-huh.
MR. GORA: It was going to be business as usual and everything was
going to be the same except he’s the one who caused this whole problem. So
he absolutely - -
THE COURT: I agree it goes to damages. Certainly not intervening
superseding, but.
MR HILL: I’m going to request a limiting instruction that it not be
considered an alternative cause.
THE COURT: Well, I will certainly give that instruction, but I do
think it goes to damages. So they’ll be instructed that his behavior is not - -
can’t cause a breach of fiduciary duties. And that’s really clear. * * *
MR. HILL: Okay.
THE COURT: And I’ll instruct them that. They can consider this
testimony only as it relates to damages.
MR. HILL: Thank you.
***
MR. GORA: * * * Your Honor, one of the reasons we received a
directed verdict last time is we didn’t benefit from the dissolution.
Everybody had a level playing field. I think we still have to show that
62
element too in terms of breach of fiduciary duty, that we weren’t involved,
that these contracts had nothing to do with us, how that happened.
THE COURT: But the breach of fiduciary duty was the dissolution of
the corporation, not what happened subsequently in terms of whether he did
or didn’t get this contract. That’s my understanding.
MR. HILL: That’s exactly right. And the Court of Appeals has said
that he didn’t have to benefit from it for it to have to be breach of fiduciary
duty. That was the issue on appeal.
MR. GORA: That’s correct, Your Honor, but except the Court of
Appeals said it’s not just that. It’s other things too. Did he have some ill
will? Was there a reason for this to happen? But I think it’s also important
to reaffirm based on the case law that indeed too why these contracts didn’t or
why Dr. Kademian wasn’t part of these contracts had nothing to do with us
and how that happened.
THE COURT: But that’s only a damage issue. It is not a breach of
fiduciary duty issue. That’s only - - from the Plaintiff’s theory of the case,
the breach of fiduciary duties had already occurred or had occurred in the
dissolution of the corporation. And the - - I’m just going to use your words -
- the plan to set up Cancer Consultants and practice without Plaintiff
involved. So I think this goes to damages only. * * * T.T. pg. 358-61.
Counsel for Kademian then requested and received a continuing objection. T.T. pg. 361.
{¶ 46} Creech then testified as follows regarding Doug Ditzel:
[Cite as Kademian v. Marger, 2014-Ohio-4408.]
* * * As the hospital began to announce that it had recruited Dr.
Ditzel and Dr. Paessun to come practice radiation oncology at the hospital,
and I don’t remember who announced that Dr. Ditzel was going to become
the new medical director of radiation oncology. And Dr. Kademian took
exception to that appointment and entered into kind of a letter writing
campaign to Premier and hospital board members, medical staff, I can’t
remember all who. * * * Where he basically maligned the hospital’s
decision to appoint Dr. Ditzel and attacked Dr. Ditzel’s qualifications to be
medical director.
And that was kind of the last straw. The hospital didn’t take kindly
to that attack and did not want to allow Dr. Kademian to practice. And of
course Dr. Ditzel then didn’t want to have Dr. Kademian in any kind of group
that he was going to be in after having his qualifications assailed. T.T. pg.
362.
{¶ 47} Paessun’s testimony was consistent with that of Creech regarding
Kademian’s conduct toward Ditzel. Ditzel testified that he perceived Kademian’s conduct
“as a threat,” and that he did not want to work with him. T.T. pg. 425, 429. Rasp testified
that in July, 2000, he spoke to Kademian “about putting this four person group together with
him and myself, Dr. Paessun and Dr. Ditzel.” T.T. pg. 528. When asked if he was an
advocate for Kademian being part of the group at that time, Rasp responded, “Absolutely.”
T.T. pg. 528. Rasp stated that after Kademian disparaged Ditzel, “there was no chance” of
Kademian becoming part of the group. T.T. pg. 541. Finally, Boosalis testified that she met
with Kademian after he sent a letter dated August 1, 2000 to Bill Thornton, the CEO of
64
Miami Valley Hospital, that disparaged Ditzel. When asked to describe her meeting with
Kademian, Boosalis replied that it “was very similar to this letter. He was very upset, I
would say, very animated, very accusatory, made, my opinion, quite a few defamatory
remarks - - .” T.T. pg. 452. Boosalis stated, “I asked [Kademian] if he knew Dr. Ditzel or
had worked with him, and he had not which I found rather astounding. He had a very
strong bias that because Dr. Ditzel’s program was not what he considered the caliber of his
program had been, * * * I believe Dr. Ditzel did a D.O. residency and was a D.O. He was
extraordinarily critical of that and thought it disqualified him in essence to be the medical
director.” T.T. p. 452-53.
{¶ 48} We cannot conclude that the trial court abused its discretion in admitting
the evidence at issue, namely Kademian’s conduct following the breach of fiduciary duties
that he alleged Marger committed. As noted above, if a plaintiff establishes that a
defendant breached his fiduciary duty, the plaintiff must then establish that the breach
proximately caused his damages. As this Court noted in Kademian I, "Proximate cause is
ordinarily a question of fact for the jury. Strother v. Hutchinson, 67 Ohio St.2d 282, 288,
423 N.E.2d 467 (1981)." Id., ¶ 70. In Strother, the Supreme Court of Ohio noted when
discussing proximate cause, that “‘it is generally true that, where an original act is wrongful
or negligent and in a natural and continuous sequence produces a result which would not
have taken place without the act, proximate cause is established * * * .’ * * * .
Foss-Schneider Brewing Co. v. Ulland (1918), 97 Ohio St. 210, 119 N.E. 454.” Strother,
287.
{¶ 49} The theory of Kademian’s case, as reflected in his brief, was that Marger
65
breached his fiduciary duties to him in dissolving M & A, proximately “causing Dr.
Kademian to lose his shareholder interest, his employment and effectively preventing him
from practicing medicine in the Dayton, Ohio area.” (Emphasis added). While Kademian
asserted that the testimony of Creech, Rasp, Paessun, Ditzel and Boosalis was irrelevant, the
trial court correctly determined that it was in fact relevant to a determination of damages,
should the jury conclude that a breach of fiduciary duties occurred. Since an abuse of
discretion is not demonstrated, Kademian’s fifth assigned error is overruled.
{¶ 50} As to the trial court’s jury instructions regarding Kademian’s subsequent
actions, we note that at the charging conference the following exchange occurred:
THE COURT: * * *
Plaintiff also requests an instruction as follows. “All of the claims by
Dr. Kademian against Dr. Marger are claims for intentional torts. Any
action by Dr. Kademian subsequent to any breach of fiduciary duty or” * * *
“or [conversion] by Dr. Marger are no defense to such intentional torts.”
Mr. Gora, any objection?
MR GORA: Yes, Your Honor. That again goes toward - - we’ve
already defined what the claims are, what you have to prove for it. Now he
wants another claim about what - - these are intentional torts and that his
actions don’t matter. And they do, in terms of both proximate cause and
damages. We’ve already been through that at least five to ten times.
***
THE COURT: I am not going to include the instruction about
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intentional torts and that Dr. Kademian’s subsequent actions are no defense to
such intentional torts,* * * . I - - as I have said before, I think it goes to
proximate cause.
{¶ 51} The record reflects that the trial court instructed the jury in part as follows:
***
A majority shareholder is also prohibited from using his majority
power to promote his personal interest at the expense of the corporation’s
interest. It does not matter whether Dr. Marger personally benefitted from
any breach of fiduciary duties. Any actions by Dr. Kademian subsequent to
breach of fiduciary duty is no defense to any breach of fiduciary duty.
If you find by a preponderance of the evidence that Defendant, Dr.
Marger, violated any fiduciary duty to Plaintiff, Dr. Kademian, you will
consider whether any such violation of fiduciary duty proximately caused
damage to Plaintiff, Dr. Kademian.
***
{¶ 52} Preliminarily, we note that the trial court correctly set forth the elements of
Kademian’s claims, and contrary to Kademian’s assertion, the trial court, after indicating
that it would not provide the instruction that Kademian’s subsequent actions are not a
defense to a claim of breach of fiduciary duty, did in fact provide an instruction regarding the
subsequent actions of Kademian. Thus, Kademian misstates the record on this issue.
Accordingly, his sixth assigned error lacks merit, and it is overruled. The judgment of the
trial court is affirmed.
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..........
HALL, J., and WELBAUM, J., concur.
Copies mailed to:
James M. Hill
Felix J. Gora
Hon. Mary K. Huffman