Meinert Plumbing v. Warner Industries, Inc.
2017 Ohio 8863
Ohio Ct. App. 9th2017Background
- RPM is a multinational holding company; Rust‑Oleum is a subsidiary; Rust‑Oleum Service Company (ROSC) was formed as a Rust‑Oleum subsidiary to provide floor‑coating products and installation services for a Home Depot pilot (the “HD Program”).
- Home Depot, Rust‑Oleum/ROSC, and later Warner Industries d.b.a. Stone‑To‑Foam (Warner/STF) executed a chain of service‑provider agreements allocating installation work; Warner/STF contracted with independent dealers/contractors (the 15 appellants) to perform installations.
- Home Depot terminated the HD Program in late 2009, which effectively ended the appellants’ work and led them to sue ROSC, Rust‑Oleum, RPM, Warner/STF and its owner for >$100M, alleging breach of contract, BOPA violations, and related theories based on agency, joint venture, and third‑party beneficiary status.
- Trial court granted summary judgment for RPM, Rust‑Oleum, and (later) ROSC, finding no written contracts with appellees, no evidence to pierce the corporate veil or establish agency/joint venture, and that appellants were only incidental beneficiaries of the contracts.
- Appellants appealed; the Eighth District affirmed, holding appellants failed to show privity, joint venture/agency, or statutory BOPA coverage as to appellees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether appellees are contractually liable to appellants | ROSC/Rust‑Oleum/RPM formed/participated in a venture that created contractual duties to appellants | No written contracts between appellants and appellees; Warner/STF agreements were independent contracts | No — no privity; appellants failed to identify breached contract terms or show direct contracts with appellees |
| Whether appellees are liable under agency / alter‑ego / veil‑piercing theories | ROSC acted as agent or mere instrumentality of Rust‑Oleum/RPM such that liability should attach | Corporate separateness, distinct assets/payroll/employees; no fraud or extreme misconduct to justify piercing | No — veil‑piercing requires complete control plus fraud/illegal act and resulting injury; appellants failed to satisfy Belvedere/Dombroski factors |
| Whether a joint venture existed (making appellees liable) | ROSC and Warner/STF formed a joint venture that recruited appellants and breached duties | Agreement language and course of dealing designate independent contractors, disclaim joint venture; no equal right of control | No — parties intended arm’s‑length independent contractor relationships; no equal right of control or joint‑venture intent |
| Whether BOPA (Ohio Business Opportunity Purchasers Protection Act) applies | Appellants purchased business opportunity plans and were entitled to statutory disclosures and remedies | Appellants were not purchasers from appellees; many plaintiffs fall within BOPA exceptions; no seller‑purchaser relationship between appellants and appellees | No — appellants were at best incidental beneficiaries and lacked the necessary privity/seller‑purchaser relationship for BOPA relief |
Key Cases Cited
- Dombroski v. Wellpoint, Inc., 119 Ohio St.3d 506 (2008) (clarifies that veil‑piercing requires proof of control plus fraud/illegal or similarly unlawful conduct)
- Belvedere Condominium Unit Owners’ Assn. v. R.E. Roark Cos., 67 Ohio St.3d 274 (1993) (sets three‑part test for piercing the corporate veil: complete control, misuse of control by fraud/illegal act, and resulting injury)
- Dole Food Co. v. Patrickson, 538 U.S. 468 (2003) (piercing the corporate veil is a rare exception requiring exceptional circumstances)
- Bucyrus‑Erie Co. v. General Products Corp., 643 F.2d 413 (6th Cir. 1981) (source of the veil‑piercing factors adopted in Belvedere)
- Ford v. McCue, 163 Ohio St. 498 (1955) (defines elements of a joint venture, emphasizing intent and equal right of control)
- Hill v. Sonitrol of Southwestern Ohio Inc., 36 Ohio St.3d 36 (1988) (distinguishes intended third‑party beneficiaries from incidental beneficiaries)