Blank v. Bluemile, Inc.
174 N.E.3d 859
Ohio Ct. App.2021Background
- Prior to 2005, Todd Blank owned 47.5% of IPOutlet, LLC (IPO); Bourne 47.5% and Ferris 5%.
- In 2005 US Wireless acquired IPO and MJS; Ferris later formed Bluemile to recover IPO/MJS assets.
- On May 5, 2006 Bluemile and others executed a definitive agreement: Bluemile took over MJS and negotiated to buy Blank’s 47.5% IPO interest (offer $400,000); Blank countered $500,000 (rejected). Blank was not a signatory to the definitive agreement.
- Bluemile assumed control and operations of IPO and, on Nov. 30, 2006, executed a settlement transferring outstanding membership interests in IPO to Bluemile; Blank received no payment and never transferred his membership interest in writing.
- Bluemile sold assets (including its interest in IPO) to WOW in Sept. 2013. Blank filed suit in 2013 (voluntarily dismissed) and refiled in May 2014 alleging unjust enrichment and other claims; defendants moved for summary judgment and the trial court granted it, holding Blank lacked standing and his unjust-enrichment claim was time-barred.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing: Can Blank sue individually for unjust enrichment or must he proceed derivatively on behalf of IPO? | Blank: Crosby exception allows a minority member to sue directly when deprived of benefits; his injury was individual. | Defendants: IPO is a separate LLC; injuries to the LLC must be brought by the company or via a derivative action (Civ.R. 23.1); Blank did not plead or verify a derivative claim or allege required pre-suit demand efforts. | Court: Blank lacked standing to assert a direct unjust-enrichment claim; he did not satisfy Civ.R. 23.1/ R.C. 1705.49 for a derivative action; Crosby (a close-corp fiduciary-duty rule) does not apply here. |
| Statute of Limitations: Did Blank’s unjust-enrichment claim accrue later (discovery/continuing harm) or in 2006 when Bluemile took control? | Blank: Accrual was delayed — he relied on promises and did not know defendants wouldn’t pay until 2008 or until the 2013 WOW sale. | Defendants: Claim accrued when Bluemile exercised dominion over IPO assets in 2006; unjust-enrichment claims have a six-year limitations period and are not subject to a discovery rule or equitable tolling in this context. | Court: Claim accrued in 2006 when defendants took control of IPO assets; R.C. 2305.07’s six-year limit bars Blank’s suit filed in 2013/2014. |
Key Cases Cited
- Crosby v. Beam, 47 Ohio St.3d 105 (1989) (close-corporation minority-shareholder exception allowing direct suits where majority breaches fiduciary duties that deprive minority of investment benefits)
- Weston v. Weston Paper & Mfg. Co., 74 Ohio St.3d 377 (1996) (refused to extend Crosby beyond its limited facts; cautions limits of Crosby)
- Liberty Mut. Ins. Co. v. Indus. Comm., 40 Ohio St.3d 109 (1988) (describes unjust enrichment as retention of benefits that in equity belong to another)
- Palm Beach Co. v. Dun & Bradstreet, Inc., 106 Ohio App.3d 167 (1995) (unjust-enrichment claim accrues when money or property is wrongly retained)
- Desai v. Franklin, 177 Ohio App.3d 679 (2008) (in a continuing employment context, accrual may occur at the last conferment of benefit; contrasting accrual analyses)