2020 Ohio 4917
Ohio Ct. App.2020Background
- Gallagher loaned Barker Products over $400,000 (with interest totaling about $511,850 by 2014) while working there; he later advanced $10,000 to prevent an electricity shutoff.
- In Sept. 2014, accountant Brian Mackert introduced investor Edward Cochran to Barker staff; Gallagher alleges Cochran (or Mackert as Cochran’s agent) promised Gallagher employment and an equity stake to repay his loans.
- Cochran denies making binding promises; he ultimately purchased Barker’s assets with Kevin Crawford and formed Cleveland Plating in early 2015.
- Gallagher sued, asserting five claims against Cochran/Cleveland Plating: (1) breach of agreement to repay via employment/equity; (2) unjust enrichment; (3) fraudulent misrepresentation; (4) successor liability; (5) civil conspiracy.
- The trial court granted Cochran summary judgment on all claims; the court of appeals affirmed in part, reversed in part, and remanded—holding claims 1 and 4 survive summary judgment while claims 2, 3, and 5 fail.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract (promised employment/equity) | Gallagher: Cochran (or Mackert as his agent) promised employment and equity to repay loans. | Cochran: no binding agreement/acceptance; Gallagher or Barker team made proposals; statute-of-frauds and lack of acceptance. | Genuine issues of material fact remain; claim survives summary judgment. |
| Unjust enrichment (loans & $10,000) | Gallagher: he conferred benefits on Cochran/Cleveland Plating via loans and the $10,000 payment. | Cochran: loans predate Cochran’s involvement and $10,000 benefitted Barker (not Cochran); no benefit to Cochran to retain. | No genuine issue; summary judgment for defendant. |
| Fraudulent misrepresentation (promises induced reliance) | Gallagher: Cochran/Mackert knowingly made false promises inducing reliance and damages. | Cochran: loans occurred before promises; no causal link between promises and the $10,000 payment or loans. | No genuine issue; summary judgment for defendant. |
| Successor liability (Cleveland Plating liable for Barker’s debts) | Gallagher: Cochran’s conduct and Mackert’s role show implied assumption/continuation, making Cleveland Plating successor. | Cochran: purchaser of assets is not generally liable; no written assumption of liabilities. | Genuine issues of material fact remain (agency/apparent authority and conduct); claim survives. |
| Civil conspiracy | Gallagher: Cochran and Cleveland Plating conspired to deprive him of his loans. | Cochran: failure to plead separate conspirators; a corporation cannot conspire with its own agents/employees. | No genuine issue; summary judgment for defendant. |
Key Cases Cited
- Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 671 N.E.2d 241 (1996) (de novo standard for appellate review of summary judgment)
- Horton v. Harwick Chem. Corp., 73 Ohio St.3d 679, 653 N.E.2d 1196 (1995) (summary judgment Civ.R. 56 standards)
- Dresher v. Burt, 75 Ohio St.3d 280, 662 N.E.2d 264 (1996) (burden-shifting framework for summary judgment)
- Miller v. Wick Bldg. Co., 154 Ohio St. 93, 93 N.E.2d 467 (1950) (doctrine of apparent authority)
- Welco Indus., Inc. v. Applied Cos., 67 Ohio St.3d 344, 617 N.E.2d 1129 (1993) (general rule that asset purchaser is not liable for seller’s debts)
- Flaugher v. Cone Automatic Machine Co., 30 Ohio St.3d 60, 507 N.E.2d 331 (1987) (exceptions to purchaser-nonliability: express/implied assumption, de facto merger, continuation, fraud)
- Burr v. Bd. of Cty. Commrs., 23 Ohio St.3d 69, 491 N.E.2d 1101 (1986) (elements of fraudulent misrepresentation)
- Johnson v. Microsoft Corp., 106 Ohio St.3d 278, 834 N.E.2d 791 (2005) (elements and remedy of unjust enrichment)
- Williams v. Aetna Fin. Co., 83 Ohio St.3d 464, 700 N.E.2d 859 (1998) (civil-conspiracy principles)