Ettayem v. Land of Ararat Invest. Group, Inc.
2020 Ohio 3006
Ohio Ct. App.2020Background
- Appellant Ettayem was a 20% minority shareholder in Land of Ararat; Safaryan was the sole majority shareholder. Appellant also owned EMA Group, which operated a Shop N Save store in the shopping center owned by Land of Ararat.
- In late 2009–early 2010 Safaryan negotiated two transactions: (1) he purchased Ettayem’s 20% stock for $95,000, and (2) Land of Ararat leased space to EMA. Around the same time Safaryan executed a land lease with Verizon for a cell‑phone tower at $700/month.
- Appellant later sued, alleging breach of fiduciary duty, fraud, breach of lease, conversion, and punitive damages; claims were voluntarily dismissed and then refiled. The appellate court previously reversed in part and remanded limited to the issue whether Safaryan concealed the potential Verizon tower lease.
- On remand a bench trial before a magistrate focused solely on whether Safaryan failed to disclose the Verizon lease potential. The magistrate found Safaryan more credible and that he had informed Ettayem of the possibility and the $700/month rate; fiduciary‑duty, fraud, and punitive damages claims were denied.
- The trial court adopted the magistrate’s decision and denied Ettayem’s motion to compel additional discovery; Ettayem appealed both rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Safaryan breached fiduciary duty by not disclosing the potential Verizon cell‑tower lease | Ettayem: he was not told about the possibility of the Verizon lease before selling his shares and was harmed by the nondisclosure | Safaryan: he informed Ettayem of the possibility and the $700/month lease before the stock sale; credibility favors Safaryan | Court affirmed: magistrate credited Safaryan’s testimony; no breach proved and no compensatory/punitive relief due |
| Whether the trial court abused its discretion in denying Ettayem’s motion to compel discovery | Ettayem: sought documents and contacts (tax returns, bank records, cancelled checks, Verizon contact, etc.) he claims are relevant and were not produced | Land of Ararat: discovery requests were untimely, duplicative of earlier requests/motions, and appellant failed to follow procedural rules for extending discovery | Court affirmed: denial was not an abuse of discretion given timing, repeated unsuccessful prior requests, and lack of new justification |
Key Cases Cited
- Blon v. Bank One, Akron, N.A., 35 Ohio St.3d 98 (1988) (a party in a fiduciary business relationship must fully disclose material facts known to it but not to the other)
- Crosby v. Beam, 47 Ohio St.3d 105 (1989) (majority shareholders in close corporations owe a heightened fiduciary duty to minority shareholders)
- Burr v. Bd. of Cty. Commrs., 23 Ohio St.3d 69 (1986) (elements required to prove fraud where there is a duty to disclose)
- Seasons Coal Co., Inc. v. Cleveland, 10 Ohio St.3d 77 (1984) (appellate deference to trial court credibility findings)
- Blakemore v. Blakemore, 5 Ohio St.3d 217 (1983) (definition of abuse of discretion standard)
- Donahue v. Rodd Electrotype Co. of New England, Inc., 367 Mass. 578 (1975) (heightened fiduciary duty among shareholders in close corporations analogous to partnership duties)