Meehan v. Mardis
146 N.E.3d 1266
Ohio Ct. App.2019Background
- Meehan and Mardis were 50/50 co-owners of Mardis & Meehan Construction, Inc. (MMCI); Lonnie Horn was associated with Artistic Tile. Meehan alleges Mardis diverted MMCI funds and assets to Horn and related entities via a secret profit-sharing scheme.
- Meehan sued (initial filing 2012; dismissed without prejudice; new complaint filed May 6, 2016). Defendants moved for partial summary judgment that claims arising before November 16, 2008 are time-barred by R.C. 2305.09.
- Key causes at issue: breach of fiduciary duty (including usurpation/conflict/self-dealing), conversion, and civil conspiracy; other listed items (accounting, punitive damages, piercing veil) are treated as remedies.
- Central legal questions: whether breach-of-fiduciary-duty and conversion claims "sound in fraud" so the discovery rule applies; whether fraud was pled with the particularity required by Civ.R. 9(B); and factual disputes about when Meehan knew or should have known of the alleged misconduct.
- The trial court granted partial summary judgment barring pre-November 16, 2008 claims; the court certified that ruling as final under Civ.R. 54(B). On appeal the court found genuine factual disputes about discovery for Mardis but affirmed summary judgment dismissing claims against Horn.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the discovery rule applies to Meehan's breach-of-fiduciary-duty claims (claims "based on fraud") and whether fraud was pled with Civ.R. 9(B) particularity | Meehan: breaches "sound in fraud," discovery rule delays statute of limitations; complaint identifies specific misconduct and actors | Defendants: fraud not pled with particularity; statute of limitations bars pre-2008 claims | Court: Cundall extends discovery rule to fiduciary-duty claims based on fraud; Meehan pleaded fraud with sufficient particularity here, so discovery rule may apply |
| Whether summary judgment correctly barred breach-of-fiduciary-duty claims against Mardis arising before Nov. 16, 2008 | Meehan: he did not discover the fraud until 2009–2017; factual evidence shows concealment and limited access to project records | Mardis: Meehan managed finances, had access and should have discovered earlier; affidavits say Meehan knew of profit-sharing | Court: Genuine issues of material fact exist about when Meehan knew/should have known; trial court erred to grant summary judgment against Mardis on pre-2008 breach claims |
| Whether conversion claims arising before Nov. 16, 2008 are time-barred | Meehan: conversion discovery tied to fiduciary fraud; discovery rule applies | Mardis: conversion governed by same limitations and should have been discovered earlier | Court: Discovery rule applies to conversion; factual disputes preclude summary judgment—reversed as to Mardis |
| Whether civil-conspiracy and related claims survive against Horn and Mardis | Meehan: Horn knowingly accepted diverted funds and conspired with Mardis; acts of co-conspirators imputed to each other | Horn: No fiduciary duty to Meehan; no evidence Horn knew funds were improperly obtained or aided the breach; Mardis: cannot conspire with himself | Court: No evidence Horn knew of or furthered Mardis's wrongdoing—summary judgment for Horn on conspiracy upheld; Mardis cannot be liable for conspiracy with himself—summary judgment for Mardis on conspiracy also upheld |
Key Cases Cited
- Cundall v. U.S. Bank, 122 Ohio St.3d 188, 909 N.E.2d 1244 (Ohio 2009) (extends discovery rule to breach-of-fiduciary-duty claims based on fraud)
- Cohen v. Lamko, Inc., 10 Ohio St.3d 167, 462 N.E.2d 407 (Ohio 1984) (elements of fraud)
- Pelletier v. Campbell, 153 Ohio St.3d 611, 109 N.E.3d 1210 (Ohio 2018) (summary-judgment de novo standard)
- Investors REIT One v. Jacobs, 46 Ohio St.3d 176, 546 N.E.2d 206 (Ohio 1989) (discovery rule applies to conversion)
- Williams v. Aetna Fin. Co., 83 Ohio St.3d 464, 700 N.E.2d 859 (Ohio 1998) (acts of coconspirators attributable to each other)