Kademian v. Marger
2012 Ohio 962
Ohio Ct. App.2012Background
- Marger, a majority shareholder, and Kademian, a 49% shareholder, operated Donald Marger, M.D. & Associates, Inc. (M&A), a close corporation in which Marger controlled decisions.
- M&A dissolved in June 2000 after Marger formed Cancer Consultants of Southwest Ohio with Greg Rasp and planned to practice together, potentially sidelining Kademian.
- Prior to dissolution, Marger and Kademian had ongoing disputes, including concerns about Field’s qualifications and a merger with Field’s group.
- A non-compete and related restrictive covenants bound Marger and Kademian, but dissolution voided covenants in the eyes of Kademian, while Marger sought to form a competing entity.
- Kademian reported medical incidents at Miami Valley involving overexposure to radiation (Patient X), which heightened tensions with hospital administrators and Premier Health, and preceded dissolution.
- After dissolution, Kademian contended he lost equity, goodwill, and the opportunity to practice at major hospitals, while Marger and Rasp allegedly formed a competing practice and obtained exclusive contracts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the trial court err in granting a directed verdict for breach of fiduciary duty? | Kademian argues reasonable minds could differ on whether Marger breached his fiduciary duty by dissolving M&A. | Marger asserts he had the right to dissolve the corporation and that post-dissolution effects do not establish breach. | No; the court held there were genuine issues of material fact on Marger’s duty and injury. |
| Did the trial court err in granting summary judgment on conversion? | Kademian contends dissolution of M&A and transfer of assets harmed his 49% interest in a lucrative entity. | Marger maintains dissolution was proper and no conversion occurred. | No; issues of fact remained regarding wrongful purpose and whether conversion occurred. |
| Did the trial court err in granting summary judgment on tortious interference? | Kademian argues Marger and Rasp interfered with contracts and business relationships to exclude him. | Marger claims no viable contract existed or was interfered with; dissolution nullified claims. | No; genuine issues of material fact on interference with contracts and business relationships. |
Key Cases Cited
- Crosby v. Beam, 47 Ohio St.3d 105 (1989) (majority fiduciary duty to minority shareholders in a close corporation)
- Schafer v. RMS Realty, 138 Ohio App.3d 244 (2000) (squeeze-out scenario; fiduciary duty despite rights to decision)
- Health Alliance of Greater Cincinnati v. Christ Hosp., 2008-Ohio-4981 (1st Dist. Hamilton No. C-070426) (fiduciary duties and fair dealing in hospital alliance context)
- DiPasquale v. Costas, 186 Ohio App.3d 121 (2010) (fiduciary duty; corporate/association ownership duties)
- Zacchini v. Scripps-Howard Broadcasting Co., 47 Ohio St.2d 224 () (conversion elements defining wrongful dominion over property)