Miller v. Miller
942 N.E.2d 438
Ohio Ct. App.2010Background
- Trumbull Industries is owned by two cousin groups: Murray and Sam H. as one set, and Sam M. and Ken Miller as the other.
- Murray and Sam H., as shareholders/directors/officers, filed suit Feb. 24, 2003 against Sam M. and Umbs seeking injunctive relief and damages.
- Sam M. is a Trumbull employee and was involved in a business opportunity called the 'Brand Company'—private-brand plumbing sourced from various suppliers.
- Umbs, former Briggs Plumbing president, negotiated contracts with Jacuzzi, including a more favorable private-label arrangement that allegedly benefited Umbs and Sam M.
- Sam M.’s involvement with Umbs and the Brand Company was allegedly not disclosed to all shareholders until Dec. 4, 2002.
- The trial court later held Trumbull in contempt for failing to reimburse Sam M.’s attorney fees incurred during the litigation; the May 29, 2009 contempt order is the subject of this appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court properly ordered advancement of attorney fees | Miller argues Sam M.’s conduct triggered advancement under RC 1701.13(E)(5)(a). | Trumbull contends RC 1701.13(E)(5)(a) does not apply because Sam M. was not sued for acts on Trumbull’s behalf. | RC 1701.13(E)(5)(a) does not apply; fees cannot be advanced against Trumbull. |
| Whether the director's indemnification/advancement was barred by the Articles of Incorporation | Articles do not expressly preclude advancement; corporate duty to advance exists under statute. | Articles lack explicit advancement provision; advancement was not mandated by the articles. | Articles do not preclude advancement; statutory advancement applies only when applicable. |
Key Cases Cited
- Stepak v. Schey, 51 Ohio St.3d 8 (1990) (describes fiduciary duties and business judgment in director actions)
- Gries Sports Ents., Inc. v. Cleveland Browns Football Co., Inc., 26 Ohio St.3d 15 (1986) (business-judgment rule protection for directors)
- MD Acquisition, L.L.C. v. Myers, 173 Ohio App.3d 247 (2007-Ohio-3521) (Ohio appellate interpretation of indemnification under RC 1701.13)