2017 Ohio 4220
Ohio Ct. App.2017Background
- A to Z Portion Control Meats, Inc. has four equal shareholders: Strahm, Bender, Kagy, and Barnes; current board has three directors (Kagy, Barnes, Terry Strahm) elected Jan. 8, 2015.
- Strahm and Bender became shareholders after that election (May 26, 2015) and sought to expand the board from three to five at a July 21, 2015 meeting; the motion failed.
- At the Jan. 4, 2016 annual meeting, nominations included Strahm, Terry Strahm, Bender, Barnes, and Kagy; votes produced a deadlock and Kagy declared the existing board remained in office per company regulations.
- Shareholders remained deadlocked and the board continued past its one-year term; Strahm and Bender filed a verified complaint for judicial dissolution under R.C. 1701.91(A)(4) on Dec. 15, 2016.
- Defendants moved to dismiss under Civ.R. 12(B)(6), arguing appellants lacked statutory standing because they did not hold the requisite shareholder voting power or director support; the trial court granted dismissal and appellants appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether appellants have standing under R.C. 1701.91(A)(4) to seek judicial dissolution | Strahm/Bender argued the corporation is deadlocked and dissolution is authorized; they sought court relief under §1701.91(A)(4) | Kagy/Barnes argued statute limits standing to one-half of directors or shareholders holding two-thirds voting power, which appellants do not have | Court held appellants lack standing because they represent neither one-half of directors nor two-thirds of voting power; dismissal affirmed |
Key Cases Cited
- Arnett v. Precision Strip, Inc., 972 N.E.2d 168 (Ohio Ct. App. 2012) (Civ.R. 12(B)(6) dismissal standard; plaintiff must show any set of facts entitling relief)
- LeRoy v. Allen, Yurasek, & Merklin, 872 N.E.2d 254 (Ohio 2007) (pleading standard for Civ.R. 12(B)(6) reviewed and applied)
- Doe v. Archdiocese of Cincinnati, 849 N.E.2d 268 (Ohio 2006) (rule allowing dismissal under Civ.R. 12(B)(6) when complaint on its face shows failure of legal claim)