196 Ohio App. 3d 458
Ohio Ct. App.2011Background
- In 1983 Schafer and Soderberg formed a CPA partnership and later 121 Jefferson Realty, with 50/50 interests in both.
- In 2002 the partnership converted to S&S LLC, Brenner joined as a 10% shareholder, with Schafer and Soderberg each holding 45%.
- A buy-sell agreement and a no-competition agreement were executed, governing retirement, sale of interests, and non-compete terms.
- Schafer acted as manager; conflicts with Brenner arose over management and valuation, leading to discussions about retirement terms in 2008.
- Schafer gave a notice of retirement in March 2008; negotiations stalled, lines of credit expired, and by fall 2008 S&S faced cash-flow pressures.
- Schafer filed suit in August 2008 seeking declaratory relief and breach of fiduciary duties; S&S dissolved in 2008 and subsequent entities formed; a jury later awarded Schafer $540,000 for his share.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court erred in granting directed verdict on Schafer's breach claim | Schafer | S&S | No error; verdict affirmed |
| Whether the retirement buy-out provisions are too indefinite to enforce | Schafer | Soderberg, Brenner, S&S | Not well taken; contract not indefinable; jury interpreted scope of no-competition |
| Whether Schafer satisfied the conditions precedent to retirement | Schafer | Soderberg, Brenner, S&S | Trial court correctly held Schafer satisfied age and retirement provisions |
| Whether Schafer repudiated the buy-sell by negotiating new terms | Schafer | Soderberg, Brenner, S&S | Not repudiation; negotiations did not excuse nonpayment |
| Whether the jury could interpret the contract language rather than the court | Schafer | Soderberg, Brenner, S&S | Jurors properly determined terms of no-competition and retirement interpretation |
Key Cases Cited
- Blair v. McDonagh, 177 Ohio App.3d 262 (2008-Ohio-3698) (duty of good faith and honesty in LLC context)
- Oglebay Norton Co. v. Armco, Inc., 52 Ohio St.3d 232 (1990) (contract interpretation and intent questions)
- Kostelnik v. Helper, 96 Ohio St.3d 1 (2002) (contract language and meaning; fill gaps only if reasonable)
- Sunoco, Inc. (R&M) v. Toledo Edison Co., 129 Ohio St.3d 397 (2011-Ohio-2720) (plain-language contract interpretation governs when unambiguous)