Ettayem v. Land of Ararat Invest. Group, Inc.
100 N.E.3d 1056
| Ohio Ct. App. | 2017Background
- Plaintiff Ashraf Ettayem was a 20% minority shareholder in Land of Ararat Investment Group, Inc.; his wholly-owned EMA Group Corp. operated a Shop N Save at the Southfield Center.
- In January 2010 Ettayem sold his 20% interest to majority owner Tigran Safaryan for $95,000; contemporaneously EMA signed a five-year lease with Land of Ararat for the storefront and Ettayem personally guaranteed six months' rent.
- Shop N Save reopened briefly, then closed; disputes followed over premises condition and removal of store fixtures.
- Ettayem (pro se) sued alleging: breach of lease (EMA claim), conversion of store equipment, breach of fiduciary duty by Safaryan (as majority shareholder), fraud in the stock sale, and punitive damages; the case is a refiled complaint after earlier voluntary dismissals.
- The trial court granted judgment for defendants, dismissing the lease and conversion claims for standing/time reasons and granting summary judgment for defendants on fiduciary-duty and fraud claims; the appellate court affirmed in part, reversed in part, and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to bring lease breach (EMA claim) | Ettayem claims as EMA president, guarantor, and shareholder he may pursue lease claim | Only EMA (a corporation) can sue on the lease; an officer/shareholder cannot represent a corporation pro se | Dismissed: Ettayem lacked standing to prosecute EMA’s lease claim pro se (affirmed) |
| Statute of limitations / savings statute on lease claim | Refiled complaint was timely under R.C. 2305.19 or original limitations | Refile was more than one year after dismissal and therefore untimely | Refiled claim was within eight-year contract limitations so timely, but dismissed for standing (court erred on timeliness but dismissal upheld on standing) |
| Conversion of store equipment | Ettayem alleges defendants wrongfully retained/ disposed of his personal property | Defendants argue equipment belonged to EMA, not Ettayem personally; standing lacking | Summary judgment for defendants: Ettayem’s own deposition showed EMA (not him) owned the equipment, so no standing (affirmed) |
| Breach of fiduciary duty / fraud in sale of shares | Safaryan failed to disclose material facts (e.g., impending cell-tower lease generating $700/month), causing undervaluation of shares | Defendants argued plaintiff had no evidence to prove concealment/diversion and moved for summary judgment | Reversed in part: genuine issue of material fact exists re: non-disclosure of the cell-tower lease (favors Ettayem); related fraud claim likewise survives; punitive-damages claim reversed as to surviving claims |
Key Cases Cited
- Perrysburg Twp. v. Rossford, 103 Ohio St.3d 79 (review standard for Civ.R. 12(B)(6) de novo)
- Union Savs. Assn. v. Home Owners Aid, Inc., 23 Ohio St.2d 60 (corporations cannot appear pro se through officers)
- Blon v. Bank One, Akron, N.A., 35 Ohio St.3d 98 (duty to disclose material facts in fiduciary relationships)
- Crosby v. Beam, 47 Ohio St.3d 105 (heightened fiduciary duty of majority to minority shareholders in close corporations)
- Dresher v. Burt, 75 Ohio St.3d 280 (summary-judgment burden to point to lack of evidence on each element)
- Burr v. Bd. of Cty. Commrs., 23 Ohio St.3d 69 (elements of common-law fraud)