Lead Opinion
This is an action in prohibition challenging the jurisdiction of respondent, Judge Ann B. Maschari of the Court of Common Pleas of Erie County, to proceed with a jury trial on certain claims arising out of the management-led leveraged buyout of Fun-time, Inc., formerly a publicly traded Ohio corporation. The cause before Judge Maschari, Maureen Gergely et al. v. Dale Van Voorhis et al., Erie C.P. No. 87-CV-469 (the “Gergely action”), is a class action brought against Funtime, Inc., Dale W. Van Voorhis, Gaspar C. Lococo, The Ohio Company, Donald C. Fanta, O. Allan Gulker, Daniel A. Fronk, and Dain Bosworth, Inc., the relators in this case. The class consists of:
“[A]ll former shareholders of Fun-time, Inc., who owned shares on September 14, 1987 [the day of Fun-time management’s tender offer], and who continued to own stock at the close of business on December 30,1987 [the day before the merger that effected the buyout], excepting only those shares owned directly or indirectly by defendants VanVoorhis [sic], Lococo, Fanta, Gulker, Fronk, The Ohio Company, and Dain Bosworth[.]”
Van Voorhis and Lococo are the Funtime, Inc. officers and directors who led the group that offered to acquire all of Funtime’s stock. The Ohio Company was Funtime’s largest stockholder before the buyout. Fanta, Gulker, and Fronk are or were officers or directors of The Ohio Company, and were also the nonmanagement Fun-time directors who evaluated the Van Voorhis Group’s offer as a special committee. Dain Bosworth, Inc. is the investment banking firm that assessed
The Gergely action is purported to be a suit for damages resulting from fraudulent acts and breaches of fiduciary duties committed in connection with the entire transaction through which Funtime “went private.” However, in support of, a writ prohibiting Judge Maschari from proceeding, relators argue that the Gergely action actually attacks the adequacy of the price paid for shares of Funtime stock, and seeks an increase of that price. In Armstrong v. Marathon Oil Co. (1987),
Relators’ argument was raised in the Gergely action in a motion for summary judgment. Judge Maschari denied the motion without explanation, but her ruling implies a preliminary finding that genuine fraud and breach of fiduciary claims are asserted in the Gergely action. In Armstrong, we declared the statutory appraisal remedy exclusive, but also said that:
“* * * [T]his is not to say that causes of action which seek compensation other than the value of a dissenter’s shares of stock are not maintainable. Provable injury under whatever theory utilized is compensable so long as it does not seek to overturn or modify the fair cash value determined. Such theory may not, however, be joined to the R.C. 1701.85 proceeding, but is a separate cause of action subject to the applicable statute of limitations and res judicata. See Radol v. Thomas (C.A. 6, 1985),772 F. 2d 244 , certiorari denied (1986), 477 U.S. [903] * * *.” (Emphasis added.) Armstrong, supra, at 422,513 N.E. 2d at 798 .
Thus, Judge Maschari argues here that she has authority to conduct a jury trial in the Gergely action because actions for fraud and breach of fiduciary duty are permitted outside the statutory appraisal proceeding.
Judge Maschari also relies on the rule stated in State, ex rel. Smith, v. Court of Common Pleas (1982),
“A court having general jurisdiction of the subject matter of an action has authority to determine its own jurisdiction on the issue raised, and a party challenging its jurisdiction has a remedy at law in an appeal from an adverse holding of the court that it has jurisdiction, and may not maintain a proceeding in prohibition to prevent the prosecution of such action. (State, ex rel. Miller, v. Court,151 Ohio St. 397 , paragraph three of the syllabus, approved and followed.)”
Judge Maschari argues that relators have such an adequate remedy since they will be able to appeal in the event a decision is ultimately rendered against them. As this ordinarily defeats a claim for the writ because prohibition is not to be used as a substitute for appeal, State, ex. rel. Gilla, v. Fellerhoff (1975),
Relators do not dispute the adequacy of the appeal that will eventually be available. Instead, they urge us to apply another rule, which is also mentioned in Smith:
“* * * [W]here there is a ‘total and complete want of jurisdiction’ on the part of the inferior court, * * * such a writ [will] be allowed despite the presence of a remedy by way of appeal.” Smith, supra, at 215, 24 O.O. 3d at 321,436 N.E. 2d at 1007 , citing State, ex rel Adams, v. Gusweiler (1972),30 Ohio St. 2d 326 , 329, 59 O.O. 2d 387, 388,285 N.E. 2d 22 , 24. Accord State, ex rel. Johnson, v. Perry County Court (1986),25 Ohio St. 3d 53 , 58, 25 OBR 77, 81,495 N.E. 2d 16 , 21.
From this, relators argue that the availability of an appeal is immaterial because Judge Maschari is completely and totally without jurisdiction to proceed with a jury trial in the Gergely action under R.C. 1701.85.
We disagree for two reasons. First, to conclude that Judge Maschari is “total[ly] and completely],” (Gusweiler, supra, at 329, 59 O.O. 2d at 389,
Second, we find that this case is analogous to Shafer v. Common Pleas Court of Franklin Cty. (1940),
“When this * * * [relator] was sued in the Court of Common Pleas he filed a demurrer and properly asked that tribunal to determine the question of its own jurisdiction. The court did so, but the decision was adverse, and now the * * * [relator] seeks to abandon the usual process of appeal and resort to the extraordinary remedy of prohibition. This is a course the law does not sanction. As stated by Judge Matthias in the case of State, ex rel. Carmody, v. Justice, Judge * * * [(1926),114 Ohio St. 94 , 97,150 N.E. 430 , 431], ‘The question presented, therefore, in every instance where the issuance of a writ of prohibition is prayed, is whether it clearly appears that the court or tribunal whose action is sought to be prohibited has no jurisdiction of the cause which it is at*21 tempting to adjudicate, or is about to exceed its jurisdiction. It is never an appropriate remedy for the correction of errors, and does not lie to prevent an erroneous decision in a case which the court is authorized to adjudicate,’ ” Id. at 430,19 O.O. at 129-130 ,30 N.E. 2d at 812 .
Similarly, the gravamen of relators’ position in this case is that Judge Maschari erred by overruling the motion for summary judgment. To this end, they maintain that the Gergely action is, in reality, an attack on the adequacy of the price paid for dissenting shareholders’ stock. However, by denying the motion, Judge Maschari, like the judge in Shafer, has “indicated a contrary view.” Id. Thus here, as in Shafer, relators are not entitled to relief.
Accordingly, we hold that Judge Maschari had the authority to decide whether she had jurisdiction in the Gergley action and, therefore, that a writ of prohibition must be denied.
Writ denied.
Concurrence Opinion
concurring. I concur in the majority opinion, but as does Justice Wright in his concurrence here, I point to Stepak v. Schey (1990),
Concurrence Opinion
concurring. I reluctantly concur in the majority opinion. I say this because I still hold to the doctrine that a trial court determines its own jurisdiction; however, I think it an exercise in futility and a waste of resources by all parties to proceed with this matter at trial.
We have just made it abundantly clear that R.C. 1701.85, the appraisal statute, preempts any cause of action against past officers or directors of a corporation for breach of fiduciary duty where the remedy sought is to overturn or modify the fair cash value of stock determined in a cash-out merger. Stepak v. Schey (1990),