2021 Ohio 817
Ohio Ct. App.2021Background
- In 2012 Richard Deffren purchased the assets of Akro Tool Company from sole owner Kenneth Johnson via an Asset Purchase Agreement signed by Kenneth alone. Deffren hired Kenneth’s children Kathy and Bryan and briefly retained Donna (Kenneth’s wife) to train Kathy.
- Shortly after closing, customers paid about $43,631.61 for pre-closing work; Donna deposited those receipts into Akro’s account, which later flowed to a joint account of Kenneth and Donna after Akro dissolved.
- Deffren sued the Johnson family (Kenneth, Donna, Kathy, Bryan) alleging misappropriation of receivables and overpayments to Bryan; Kenneth died and Deffren’s claims against his estate were dismissed for failure to present under R.C. 2117.06 (not appealed).
- After a bench trial the court rejected most claims but found Donna liable for unjust enrichment with respect to the receivables and found Kathy and Bryan breached implied employment contracts (duty of good faith) for wage overpayments.
- On appeal the First District reversed those holdings: it held Deffren’s unjust-enrichment claim against Donna fails as a matter of law (no benefit conferred to her and contract remedies lie against Kenneth/estate) and that Kathy and Bryan were not shown to have breached any employment duty (handbook disclaimed contractual force; overpayments were inadvertent).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether R.C. 2117.06 time-bar defeats Deffren's claim against Donna | Deffren treated the receivables claim as effectively a claim against Kenneth/estate and thus would be time-barred if not presented | Donna argued the suit is against her personally and R.C. 2117.06 does not bar a direct claim against her | Court: Claim against Donna is not barred by R.C. 2117.06 because it is not a claim against the estate, but the unjust-enrichment claim fails on the merits |
| Whether unjust enrichment is a viable remedy against Donna for the post-closing receivables | Deffren: receivables belonged to him under the Agreement; Donna’s retention is unjust and she should disgorge value | Donna: she was not a party to the Agreement, received no benefit from Deffren, and any remedy lies against Kenneth/estate or via other tort theories which were not proven | Court: Unjust enrichment not cognizable—no benefit was conferred on Donna and one cannot use quasi-contract to reach a third party where the express contract governs |
| Whether Kathy and Bryan were bound by implied employment contracts or breached duty of good faith/loyalty | Deffren: handbook and parties’ practices created implied-in-fact contracts and the overpayments violated duties of good faith and loyalty | Kathy & Bryan: handbook expressly disclaimed contractual obligations and at-will status; overpayments were inadvertent clerical errors | Court: Handbook disclaims enforceability; no implied contract or actionable breach of good-faith/loyalty shown—inadvertent mistakes do not meet the required purposeful misconduct |
| Whether trial court erred on prejudgment interest and Kathy’s damages calculation | Deffren: trial court miscalculated damages and should have awarded prejudgment interest | Johnson family: reversal of liability moots these requests | Court: Because liability reversed, prejudgment interest and damages claims are moot/overruled |
Key Cases Cited
- Kostelnik v. Helper, 770 N.E.2d 58 (2002) (defines essential elements of a contract and mutual assent)
- Mers v. Dispatch Printing Co., 483 N.E.2d 150 (1985) (employee handbooks may create contractual obligations only if intended to be binding)
- Reisenfeld & Co. v. Network Group, Inc., 277 F.3d 856 (2002) (third-party recovery where owner did not pay primary agent)
- Donald Harris Law Firm v. Dwight-Killian, 853 N.E.2d 364 (2006) (unjust enrichment claim barred where express agreement governs absent fraud/illegality)
- MNM & MAK Ent., LLC v. HIIT Fit Club, LLC, 134 N.E.3d 242 (2019) (intentional misappropriation can breach duty of good faith/loyalty)
- Berge v. Columbus Community Cable Access, 736 N.E.2d 517 (1999) (duty of loyalty is breached by employee competition with employer)
- Reasoner v. Bill Woeste Chevrolet, Inc., 730 N.E.2d 992 (1999) (presumption of at-will employment)
- Perlmuter Printing Co. v. Strome, Inc., 436 F.Supp. 409 (1976) (contracts are promises actionable on breach)