Tuttle v. Collins
2020 Ohio 4062
Ohio Ct. App.2020Background
- Dunham Tavern Museum (DTM), a nonprofit, acquired and improved 2.28 acres (“Greenspace”) to further its educational/green-space mission.
- In 2018–2019 the Cleveland Foundation sought to buy 1.2 acres; DTM’s board (including Collins and Wagner) conducted votes in Feb., Mar., and May 2019 to authorize the sale.
- Appellants (members/trustees) alleged multiple trustees had conflicts of interest or were ineligible to vote (dues arrears), protested by letters, and demanded compliance with bylaws; the board held a May 14 revote with conflict questionnaires and dues receipts; vote passed 12–6.
- Appellants filed a derivative complaint seeking declaration that the board’s sale authorization was invalid (Counts: conflict-of-interest, voting-bylaw violations, breach of fiduciary duty) and sought rescission plus damages.
- Defendants moved for judgment on the pleadings (Civ.R. 12(C)); the trial court granted dismissal with prejudice; appellants appealed but did not seek a stay; title to the parcel was conveyed during the appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Conflict of interest (bylaws) | Identified trustees had real-estate ties and would benefit from sale, so bylaws required abstention and vote is void | Allegations are speculative; no factual showing trustees personally gained or stood to gain | Dismissed — complaint lacked factual allegations of personal/financial gain; speculative press-release assertions not enough |
| Breach of fiduciary duty (Collins & Wagner) | They failed to disclose/abstain and participated to secure personal/financial benefit | Business-judgment rule presumes proper action; plaintiffs failed to plead facts to rebut it or show self-dealing | Dismissed — no sufficient factual allegations to overcome business-judgment presumption or show conflict/self-dealing |
| Voting-procedure/bylaw violations (dues arrears) | Certain voters’ dues were unpaid so their votes were invalid, making authorization void | Dues receipts (attached to answer) show voting trustees were current; allegations contradicted by record | Dismissed — no viable set of facts to support voting-bylaw claim; even if one vote doubtful, majority still sufficed |
| Opportunity to amend complaint (Civ.R. 15) | If complaint dismissed, should be allowed to amend to cure deficiencies | Plaintiffs failed to amend within 28 days after answer and did not move under Civ.R. 60(B) after final judgment | Denied — plaintiffs had the 28-day window to amend and did not seek relief by Civ.R. 60(B) after dismissal; dismissal with prejudice was final |
Key Cases Cited
- Byrd v. Faber, 57 Ohio St.3d 56 (Ohio 1991) (pleading-stage rules: accept factual allegations and draw inferences for nonmoving party)
- State ex rel. Pirman v. Money, 69 Ohio St.3d 591 (Ohio 1994) (a Civ.R. 12(C) motion is treated as a belated Civ.R. 12(B)(6) motion)
- State ex rel. Seikbert v. Wilkinson, 69 Ohio St.3d 489 (Ohio 1994) (standard for dismissing under Civ.R. 12(B)(6))
- Gries Sports Ent., Inc. v. Cleveland Browns Football Co., 26 Ohio St.3d 15 (Ohio 1986) (articulation of the business-judgment rule presumption)
- Stepak v. Schey, 51 Ohio St.3d 8 (Ohio 1990) (directors occupy fiduciary relationship and may be liable when they benefit at corporation’s expense)
- Radol v. Thomas, 772 F.2d 244 (6th Cir. 1985) (plaintiff must first make a prima facie showing of bad faith or lack of objectivity before directors must prove fairness)
- Allstate Ins. Co. v. Electrolux Home Prods., 197 Ohio App.3d 418 (8th Dist. 2011) (legal conclusions and speculative allegations are insufficient to survive a motion to dismiss)