Clarkwestern Dietrich Bldg. Sys., L.L.C. v. Certified Steel Stud Assn., 2017 Ohio 8129

ClarkDietrich sued the Certified Steel Stud Association (the Association) for deceptive trade practices, unfair competition, defamation, disparagement, and civil conspiracy; after an 11-week trial the jury awarded ClarkDietrich $49.5 million, $43 million against the Association.
The Association admitted it lacked sufficient tangible assets to satisfy the $43 million judgment.
ClarkDietrich sought to pursue a potential breach-of-fiduciary-duty claim against the Association’s officers/directors for their litigation decisions (refusing a stipulated dismissal and opposing a motion to dismiss) as a means to satisfy the judgment.
The trial court appointed a receiver to investigate and, if appropriate, prosecute claims against the Association’s officers, directors, and agents to satisfy the judgment; the Association objected and appealed.
The trial court relied on evidence that (1) the Association opposed dismissal despite low assets, (2) an Association officer filed a Delaware declaratory action denying breach, and (3) no record evidence showed the Association had pursued any internal investigation—raising risk of lost claims/evidence.
The appellate court reviewed for abuse of discretion and affirmed the receivership appointment.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the trial court had statutory authority to appoint a receiver to investigate/prosecute unasserted claims (choses in action) of the Association	Receivership is authorized under R.C. 2735.01(4)/(5) and 2735.04 to carry a judgment into effect and to bring actions in the receiver’s name to satisfy the judgment	Trial court lacked authority to appoint a receiver over unfiled/unasserted claims and effectively let the judgment creditor usurp prosecution of the debtor’s choses in action	Court held the appointment was authorized; receiver may be empowered to prosecute identified potential claims to satisfy judgment and courts may expand/limit receiver powers by discretion
Whether ClarkDietrich met the evidentiary burden (clear and convincing evidence) required to justify the extraordinary remedy of a receivership	ClarkDietrich presented clear and convincing evidence: Association’s refusal to settle/dismiss knowing its insolvency, officer’s Delaware declaratory action, and lack of Association investigation created risk of lost claims/evidence	ClarkDietrich failed to show a viable claim or necessity by clear and convincing evidence; appointment was unnecessary and threatened receiver neutrality	Court held ClarkDietrich met its burden that receivership was appropriate and necessary; concern about receiver neutrality speculative and not supported by record

Bobb v. Marchant, 14 Ohio St.3d 1 (1984) (recognizes receivers may sue officers under statutory authority)
State ex rel. Celebrezze v. Gibbs, 60 Ohio St.3d 69 (1991) (trial court may expand or limit receiver powers under R.C. 2735.04)
Schultze v. Schultze, 5 Ohio App.2d 261 (1964) (appointing receiver solely to secure evidence can be an abuse of discretion)
Hoiles v. Watkins, 117 Ohio St. 165 (1927) (describes receivership as an extraordinary equitable power)
Lakeshore Motor Freight v. Glenway Indus., Inc., 2 Ohio App.3d 8 (1981) (a judgment creditor cannot usurp prosecution of a debtor’s chose in action absent circumstances like faithless debtors)
Park Natl. Bank v. Cattani, Inc., 187 Ohio App.3d 186 (2010) (describes receiver as an officer of the court and standard for receiverships)