Kirila v. Kirila Contrs., Inc.
2016 Ohio 5469
| Ohio Ct. App. | 2016Background
- Thomas (Jerry) Kirila, a minority owner/partner in several Kirila entities, sued alleging breach of fiduciary duty, conversion, and unjust enrichment after he stopped being employed in 2007 and was excluded from certain employee-only compensation (bonuses and 401(k) contributions).
- Defendants include Ronald Kirila Sr. and multiple Kirila companies (corporations and partnerships); defendants counterclaimed and filed a third-party complaint, later dismissed.
- Plaintiff amended pleadings; he later narrowed claims to those relating to denial of compensation tied to employee-only bonuses and 401(k) contributions.
- Defendants moved for summary judgment; plaintiff opposed but conceded many claims; depositions were filed by defendants after plaintiff’s opposition; trial court granted summary judgment and later denied plaintiff’s motion construed as reconsideration.
- The trial court held conversion claims were derivative and not properly pled; breach of fiduciary duty claims were time-barred in part and, on the merits, plaintiff failed to produce evidence of a controlling shareholder or of wrongful, unjustified compensation practices.
- The Court of Appeals affirmed summary judgment for defendants, finding no genuine issues of material fact and that plaintiff failed to meet his reciprocal burden on key elements (fiduciary breach, proximate cause, timely suit).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether trial court reviewed entire record (including post-opposition depositions) | Kirila: court failed to consider depositions filed after his opposition which undercut defendants’ motion | Defs: depositions were part of the record; court had time to review before ruling | Court: no evidence it failed to consider depositions; trial court expressly stated it reviewed pleadings and depositions — no error |
| Conversion claim viability | Kirila: excessive bonuses to owners/others deprived him of property | Defs: corporate earnings belong to corporations; plaintiff has no individual claim | Court: conversion claim is derivative because alleged harm was to corporation; plaintiff did not pursue derivative relief — summary judgment proper |
| Statute of limitations on fiduciary claims | Kirila: limitations tolled by defendants’ nondisclosure of financial information until 2013 | Defs: breach-of-fiduciary tort governed by 4-year statute; discovery rule in R.C. 2305.09 doesn't apply to fiduciary-tort claims | Court: discovery rule in statute doesn't apply; claims before four years of filing are barred (plaintiff’s breach claims before Mar 2, 2011 barred) |
| Breach of fiduciary duty (controlling shareholder, improper compensation, minority status) | Kirila: Ronald Sr. exercised control (not just by share count) and paid employee-only compensation/bonuses unfairly to freeze out minority owner | Defs: bonuses and 401(k) contributions were legitimate employee compensation; wages had been kept low and later adjusted; no evidence of a freeze-out or bad faith | Court: defendants met initial burden; plaintiff failed to present admissible evidence to show breach, causal harm, or controlling shareholder status — summary judgment affirmed |
Key Cases Cited
- Temple v. Wean United, Inc., 50 Ohio St.2d 317 (trial court summary judgment standard)
- Grafton v. Ohio Edison Co., 77 Ohio St.3d 102 (de novo appellate review of summary judgment)
- Dresher v. Burt, 75 Ohio St.3d 280 (summary judgment burden-shifting framework)
- Crosby v. Beam, 47 Ohio St.3d 105 (heightened fiduciary duty in closely held corporations; remedy for misuse of control)
- Investors REIT One v. Jacobs, 46 Ohio St.3d 176 (limitations/discovery rule scope)
- Lamb v. Lehmann, 110 Ohio St. 59 (corporate earnings belong to corporation)
- Pitts v. Ohio Dept. of Transp., 67 Ohio St.2d 378 (procedural rule on motions to reconsider final judgments)