577 N.E.2d 1170 | Ohio Ct. App. | 1989
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *102
This case is an appeal of the trial court's judgment which overruled the appellants' complaint for a permanent injunction and motion for contempt for violation of a temporary injunction. The issue arose when Christ Zavakos, appellee, filed a shareholder's derivative suit against appellants James Zavakos and Zavakos Enterprises, Inc., the corporation which is the subject of the within appeal. After the initiation of the shareholder's suit, James Zavakos filed a request for an injunction pursuant to R.C.
The trial court issued a temporary injunction, restraining Christ Zavakos "from consummating, performing upon or taking any action in furtherance of the contracts attached as exhibits to the Motion for Temporary Restraining Order." The temporary injunction was filed on December 6, 1988. On December 7, 1988, a stockholder's meeting was called by Christ Zavakos wherein the number of directors was increased from four to five and some new directors were elected.
Thereafter, a hearing was held on the issue of the injunction, which by agreement of the parties was a hearing on the merits of a permanent *103 injunction. See Civ.R. 65(B)(2). The trial court also heard the motion of James Zavakos to hold Christ in contempt of court for calling the December 7, 1988 stockholders meeting, which was claimed to violate the temporary injunction issued December 6, 1988. The trial court overruled the request for a permanent injunction and also overruled the request to find Christ in contempt. From that decision, appellants perfected an appeal.
The appellants present two assignments of error. The first assignment of error is:
"The trial court erred as a matter of law in denying appellants' motion for permanent injunction."
At the outset, we note that the patent objective of the two contracts, and requisite corporate actions to complete their provisions, is that Christ Zavakos seeks to become the majority shareholder of the corporation and gain effective control of the company. Although we recognize the purpose of the contracts, we must determine whether the trial court should have, as a matter of law, granted the injunction as the objective of the contracts alone is not sufficient to warrant injunctive relief and prohibit their consummation.
An injunction may be granted only upon the showing, by clear and convincing evidence, that the movant is entitled to an injunction. See Southern Ohio Bank v. Southern Ohio SavingsAssn. (1976),
According to the Share Purchase Agreement, Christ is the purchaser of Maria's 775 preferred shares and 155 common shares that are destined for purchase by the ESOP, and Christ is to borrow the funds required for the *104 purchase. Christ will then assign his rights and obligations under the Share Purchase Agreement to the ESOP, thereby encumbering the ESOP with debt.
The Share Purchase Agreement allows for the same offer to purchase shares to be made to James and Julia Zavakos or for an offer to spin off part of the corporation through disbursement of some of the corporate assets to James and/or Julia. The spin off could be accomplished through arbitration. Maria was given an option to purchase two properties of the corporation at a stated price (1987 appraisal).
With regard to recapitalization, we note that such act may be accomplished only by a two-thirds vote of the shareholders. R.C.
The appellants claimed that Christ Zavakos breached his fiduciary duty as a stockholder to the other stockholders.Estate of Schroer v. Stamco Supply, Inc. (1984),
We agree with the trial court that the appellants failed to show by clear and convincing evidence that the corporation would suffer great or irreparable injury if Christ Zavakos executed either contract. The only certain outcome of the contracts would be for Christ to become the majority shareholder of the corporation. James could retain the same number of shares in any plan sought to be enjoined. James is not without a remedy if in the future his stock or ownership interest in the corporation is diluted or impaired. A remedy at law by way of a shareholder's derivative suit could be brought if any future actions of any director or shareholder result in damage. We are not prepared to hold that the purchase of one minority shareholder's stock by another minority shareholder alone, without clear and convincing evidence of great or irreparable harm to the party requesting the injunction, is sufficient to warrant judicial interference through injunction of corporate activities before their enactment.
Obviously, James may be personally disadvantaged by the sale of Maria's shares to Christ, and, given the tenor of the pleadings and allegations in the record, may be removed from his position of employment with the corporation. An employment relationship does not necessarily arise out of stock ownership and James, as an employee, would have an adequate remedy at law through an action for wrongful termination if an employment contract were breached. That event, however, or any of the other possible corporate actions which could arise from the execution of the contracts in question, have not been shown to be detrimental to the corporation. A breach of fiduciary duty results when a director or shareholder misuses his power to promote his interest at the expense of corporate interests. The record does not indicate that the interest of Christ Zavakos in participating in the plans to purchase Maria's shares of stock would be a detriment to the corporation or to other shareholders, as shareholders. The first assignment of error is overruled.
Appellants' second assignment of error is:
"The trial court erred as a matter of law in denying relief to the appellant[s] for appellee's contempt of court."
A decision of the trial court in a contempt proceeding is reversible only upon a finding of an abuse of discretion.State, ex rel. Ventrone, v. Birkel (1981),
An abuse of discretion is an unreasonable, arbitrary, or unconscionable attitude on the part of the trial court.Blakemore v. Blakemore (1983),
The second assignment of error is overruled.
In accordance with the above rationale, the decision of the trial court will be affirmed.
Judgment affirmed.
WOLFF, P.J., BROGAN and GRADY, JJ., concur.