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Category Archives: Business & Civil Litigation

Ohio corporate law: First District Court of Appeals: Fifty percent owners of closely held corporations may owe heightened duty to co-owners

Author By Finney Law FirmPosted on
Hamilton County Common Pleas Judge Steven E. Martin

In a case expected to be appealed to Ohio’s Supreme Court, Hamilton County’s First District Court of Appeals upheld the ruling of Common Pleas Judge Steven Martin in Vontz v. Miller, et al., 2016-Ohio-8477, that the fifty percent owner of a closely held corporation owes her co-owner a heightened fiduciary duty of “utmost good faith.”

Two siblings share ownership of a beer and wine distributorship – both owning fifty percent of the shares of the company. Thus, argued Miller, neither has a controlling ownership. However, in this instance, the company’s board consisted of Vontz, Miller, and Miller’s husband and two children. Thus, while Vontz is a fifty percent shareholder, the board is dominated by Miller.

Vontz, in an effort to balance control of the company, had sought to call a shareholder meeting to elect a new board. Miller refused. Vontz then brought suit against his sister and her family.

Judge Martin issued an injunction to force a shareholder meeting. Miller and her family appealed. Arguing, in part that Miller, as a fifty percent owner (i.e. less than a majority owner) did not owe a fiduciary duty to her brother who also owned exactly fifty percent of the company. Absent a fiduciary duty to her brother, Miller should not be required to attend or otherwise acquiesce to a shareholder meeting.

The court found that where, as here, one owner dominated the board and refused to adhere to corporate formalities (e.g. holding shareholder meetings where that owner’s family could be removed from the board), then the heightened fiduciary does attach – despite the semantic arguments over whether there can ever be a “controlling shareholder” where two owners each hold fifty percent ownership:

Because Miller so dominated the corporation that she was in control to the exclusion of Vontz, the unusual facts of this case demonstrated that Miller was the controlling shareholder, even though she owned only 50 percent of the voting shares.

…

Under her heightened duty of good faith and loyalty, she had an obligation of fairness to Vontz. Her duty required her to act for his benefit by protecting his right to vote for the election of new directors. She breached that duty because, as Vontz clearly demonstrated, he was unable to exercise his voting power due to a freeze-out by Miller.

The Court of Appeals, while ordering modifications to some of the particulars of Judge Martin’s ruling, upheld the substance of Martin’s ruling.

Closely held corporations bring with them unique challenges, particularly when the owners are family as well as business partners. Finney Law Firm, can help you avoid these pitfalls ahead of time and navigate through them if a challenge has already arisen.

Ohio contract law: Parties can contract out of liability for negligence – One more reason to read the contract!

Author By Finney Law FirmPosted on
Preble County Common Pleas Court Judge David Abruzzo

It is a common maxim that you are always liable for your own torts. Meaning, if someone is injured as the result of your own negligence, you will be liable, even when acting through a corporation or limited liability company.

A recent 12th District Court of Appeals case out of Preble County (Whitson v. One Stop Rental Tool and Party, et al. CA 2016-03-004) illustrates one major caveat to the maxim: parties to a contract can agree to hold the other party harmless for negligence, nonetheless, “contract clauses that relieve a party from its own negligence, while generally upheld, are not favored by the law and are to be strictly construed.”

Richard rented a bounce house from One Stop Rental Tool and Party. While Richard was unloading the bounce house from his pickup truck, the strap he was pulling broke and Richard fell out of the truck, onto the ground, suffering serious injuries.

Richard and his wife sued One Stop alleging negligence, loss of consortium, and malicious conduct (alleging that One Stop disregarded the probability that Richard would be injured in such a manner).

The rental agreement included a Release that read in relevant portion:

I understand and acknowledge that the activity to be engaged in through my rental of an inflatable, interactive amusement device, brings with it both known and unanticipated risks to guests, my invitees, and myself. Those risks include, but are not limited to fallings, slipping, crashing, and colliding and could result in injury, illness, disease, emotional distress, death and/or property damage to myself or my guests and invitees. I voluntarily release, indemnify, hold harmless and discharge One Stop Tool Rental, Inc. from any and all liability claims, demands, actions or rights of actions, whether personal to me or to a third party which are related to[,] arise out of or are in any way connected with my rental of the unit, including those allegedly attribute[d] to negligent acts or omissions. I agree to reimburse any reasonable attorney’s fees and costs which may be incurred by One Stop Rental Tool Rental, Inc. in the defense of any such liability claim, demand, action or right of action.

And a Hold Harmless Clause:

HOLD HARMLESS AGREEMENT. Customer agrees to assume the risks of, and hold Dealer harmless for, property damage and personal injuries, including death and dismemberment, caused by the equipment and/or arising out of Dealer’s negligence.

Preble County Common Pleas Judge David NAbruzzo, a no nonsense judge whom we have had the pleasure of appearing before, granted summary judgment against Richard, finding that the release and hold harmless clauses barred his claims, but allowing the wife’s loss of consortium claim to proceed.

The Court of Appeals noted that, “Richard did not read either document before signing them.”

Business owners should take this opportunity to review your contracts to determine if a hold harmless clause or mutual release clause are necessary; and make sure that such clauses will survive being “strictly construed” by the court. For consumers, this should serve as a reminder to read and understand the contract before signing.

Ohio Supreme Court to hear oral argument in two sale and leaseback cases

Author By Finney Law FirmPosted on

The Ohio Supreme Court has ordered oral argument in two cases involving the valuation of real property sold as part of a sale and leaseback transaction. The cases, Terraza 8, LLC v. Franklin County Board of Revision, 2015-2063; and Board of Education of the Columbus City Schools v. Franklin County Board of Revision, 2015-2105 (State Farm) have been fully briefed (including an amicus brief filed by the Institute for Professionals in Taxation supporting the property owner).

As discussed here, Ohio’s legislature has amended the law to reflect the changes in commercial finance involved in sale and leaseback transactions. Simply put, a sale and leaseback involves the sale of commercial real estate at a higher than market value with the seller then leasing back that property at an above market rate lease commensurate with the sale price. The excess of the sale price is used to finance the purchase of the business who originally owned the real estate.

Consider this hypothetical: ABC Restaurant Co. is being purchased by XYZ private equity firm, XYZ arranges to sell ABC’s real estate to 123 Financing company for approximately three times its actual value and use the difference to purchase all of the shares of ABC Restaurant Co. stock, XYZ (now the sole shareholder of ABC) then enters into a 20 year lease for that same real estate back with 123 for an annual rent that is 7% of the sale price (with scheduled increases over the life of the lease).

The pricing of the real estate is based on the income the restaurant operations throws off, it has no relation to the actual value of the property as real estate. At the end of the lease, 123 Financing Co. still owns the real estate and has collected roughly 150% of its purchase price in lease payments.

Under the prior law, the county auditor would automatically adopt that inflated sale price as the “true value” and the property taxes on the restaurant would triple or more.

Under the new law, the auditor should disregard the sale price and determine the “true value” of the property “as if unencumbered” that is as if it was not subject to the non-market based lease. The result should be that the properties’ values remain roughly the same as they were before the sale and leaseback transaction.

Some County Auditors and Boards of Revision, and the Ohio Board of Tax Appeals itself, have thus far been unwilling to appreciate the magnitude of the change in the law and continue to value sale and leaseback properties using the old method. The Ohio Supreme Court has an opportunity to clarify the law for Ohio’s businesses and tax officials.

Oral argument will be held in the Terraza 8 case on April 5, 2017 and in the State Farm case on May 3, 2017. Finney Law Firm will continue to provide updates on these important cases.

Experienced litigator Steve Imm deepens and broadens our service to clients

Author By Christopher P. FinneyPosted on

Today, we announced the addition of experienced attorney Steve Imm to our firm.  Steve is a litigator with 30+ years of experience, and a deep focus on labor and employment law.

You may read more about Steve’s qualifications here.

We are thrilled to have Steve join our firm, and with the depth of experience he brings to “Make a Difference” for our clients.

Americans with Disabilities Act: Win! Our West Chester lawsuit for psychiatric facility results in settlement #MakingADifference

Author By Christopher P. FinneyPosted on

Today’s Journal-News features the settlement that resulted from this law firm’s suit under the Americans with Disabilities Act on behalf of an in-patient psychiatric facility seeking to locate into West Chester Township.

For more than six months following the client’s application for zoning approval, the Township stonewalled Dr. Mohammed Aziz from locating his facility into a former nursing home property, despite the clear language of the Americans with Disabilities Act requiring parity in the treatment of psychiatric patients with those with purely physical ailments.  It is simply illegal to treat the facilities differently.

The reason for the law is obvious: Just as occurred in West Chester Township, psychiatric providers and patients nationwide routinely suffer repeated invidious discrimination as compared to other health care providers.  In West Chester Township the township administration and some of the Trustees worked the citizenry into a frenzy with assorted falsehoods and canards. Then they imposed a moratorium on zoning approvals, targeting the new facility and preventing a zoning certificate from being issued to allow it to open.

Judge Timothy Black quickly addressed these issues once Finney Law Firm attorneys brought suit.

“Nothing is more satisfying, as an attorney, than to stand an over-reaching bureaucrat or elected official before a Federal judge and force him to explain his behavior,” said Chris Finney.  “We are pleased that the law worked as intended in this instance.”

You may read the story here.

This is one more example of how we “make a difference” for our clients: Deep knowledge of the law, commitment to its proficient practice, and tenacity in pursuit of our clients’ objectives.

 

Christopher Finney appears on Business Wise Radio show discussing litigation costs

Author By Christopher P. FinneyPosted on

Cincinnati CPA’s Crystal Faulker and Tom Cooney are great friends and business associates of Finney Law Firm, and have one of the strongest marketing outreaches in town.  They are with MCM CPAs and Advisors. (Their web site is here.)

They have a radio show, BusinessWise, which airs on: WMKV and WLHS, FM 89.3 and 89.9; Mon – Fri at 7:30 am & 6:40 pm.

They featured Christopher Finney on their show on October 17th to discuss the costs and risks of defending and prosecuting civil litigation, especially for business clients.  A link to that show is here.  Scroll to the 10-17-16 show and listen in!

 

Answers to some questions on the Duke Energy Class Action settlement

Author By Christopher P. FinneyPosted on

NOTE: the deadline to file a claim is April 13th.  Please act quickly.

The Duke Energy class action settlement has generated a record amount of traffic on our firm’s web site.  That’s a good thing, because virtually every residential and commercial customer of Duke Energy in southwest Ohio that owned property from January 1, 2005 to December 31, 2008 is entitled to a refund, in some cases a significant one

We have had a few questions from clients about the settlement.  We checked and got you the answers:

  1.  If I owned a property during the relevant time period, but have since sold it, may I still file a claim?  Yes.
  2. If I can’t recall the addresses of all of the properties I owned during the claim period (we have, for example, home builder clients with multiple, rotating model homes), can I file a claim for those?  The class action attorneys are looking into this further for us, but probably not.  The claims process requires the name of the property owner and the identity of the property in question.

If you want to file a claim, log in here and follow the instructions.  It only takes a few minutes.

The deadline to file is fast approaching: April 13th.

Alert: Apply for Duke Class Action settlement payment by April 13

Author By Christopher P. FinneyPosted on

All residential and commercial users of electric generation service from Duke Energy Corp. and/or Cinergy Corp. from January 1, 2005 to December 31, 2008 are eligible for a rebate under a class action effectuated in the case Williams v. Duke Energy.  For residential users, the rebate will range from $40 to $400.  For commercial users the rebate is unlimited in size.

As described to me by one of the attorneys for the Plaintiffs, the settlement — nearly $81 million in all — means “real money,” especially for larger commercial users.  Your business should not miss this opportunity, and it is even worthwhile for residential users to avail themselves of this windfall.

  • However, in order to obtain a refund, consumers must complete and submit a form on-line or on paper by April 13, 2016.

The on-line form is quick and simple.  It should take fewer than five minutes to complete.  We strongly recommend that all of our eligible clients log onto http://dukeclassaction.com and complete the form. I just did it for my own residence, and it was super-quick and super-simple.

 

10 Things An Attorney Can Do For You

Author By Paul S. SianPosted on

infographic of the 10 things Finney Law Firm can do for you

10 Things Finney Law Firm Can Do For You

Often times when people think of attorneys they think of lawsuits or criminal charges and as a result that is why they need an attorney. While attorneys are needed to help you deal with lawsuits and criminal matters that is not the end of the list of what an attorney can help you with. To help you get a better idea of how an attorney can help you I have compiled this list of 10 things that Finney Law Firm can do for you. While this list is by no means an all-inclusive list it is designed to show you areas where Finney Law Firm has the expertise to help you work through a matter and save you money or save you from legal headaches in the future.

1.  Real Estate Matters

In many states in the U.S. (Ohio and Kentucky are no exceptions) attorneys are involved in many of the steps of the real estate buying and selling transaction. Often times attorneys are involved behind the scenes in reviewing contracts, legal documents, preparing title opinions and more. In certain states attorney have more hands on involvement in that any closing involving real estate is done by an attorney or under their direct supervision.

Finney Law Firm attorneys can assist individual buyers and sellers in the buying and selling process for both residential and commercial properties. As a real estate buyer you can ask an attorney to look over your offer to purchase a home to make sure it represents your best interests. Sellers may also want to hire an attorney to review any purchase offers and explain to them the requirements they will be bound by if they accept that offer. Some land purchases involve more complicated matters like mineral rights, multiple pieces of land being sold in one package, or liens by having an attorney represent picture of seller disclosure statementyou gives you get extra protection by having the legal considerations addressed by someone trained in those matters.

2.  Business Planning

Are you planning on starting a new business, incorporating an existing business, or changing the corporate structure (i.e. going from an S Corporation to a C Corporation) of your current business? Many activities related to business planning should have an attorney involved in order to make sure everything is done properly. Changing your business status from a sole proprietor to a Limited Liability Company or a corporate form without doing the proper paperwork for taxes will leave you at risk with the federal and local tax authorities. While you may have unintentionally not filed some of the proper tax paperwork that will not stop any associated penalties. By working with a Finney Law Firm attorney you can be assured all your paperwork will be properly prepared and you will be fully informed as to what each document means to you in your business.

By working with an attorney to properly prepare your paperwork you have someone who is familiar with your business and will be ready, willing and able to help you should the need arise. While you can go hire an attorney at a moment’s notice to help out with legal issues, that attorney will not be as familiar with your business as one who has been working with you on an ongoing basis. For more information on the LLC form of a business see LLC see the article Why Do You Need An LLC.

3.  Family Planning/Estate Planning

Marriage

Planning on getting married soon? Do you and your spouse have assets you want to keep separate in case of divorce? While the love and bliss of courtship lead you to think the relationship will last forever things and people do change. If you or your significant other own part of a family business, own your own business, have a large sum of assets from inheritance or from earnings then it is advisable to get a pre-nuptial agreement prior to getting married. A pre-nuptial agreement is a document that can protect assets for both of the people about to be married. Unless properly prepared by an picture of fighting couple for divorce and family lawattorney and taking into account all assets a pre-nuptial agreement may not be worth much in the event of divorce. Therefore pre-marital planning should involve an attorney and the couple about to be wed. In many cases it may be best for each person to have their own attorney look over the pre-nuptial agreement to represent each person’s best interests.

Family

Now if you are married and have kids there are other considerations to take into account. Those considerations mostly revolve around making sure your children and/or spouse are taken care of in the event of your passing. This is where sitting down with an estate planning attorney comes into play. An estate planning attorney will sit down with you and review your assets and your goals for your assets in case of death. This could involve setting up trusts for your spouse and/or children, guardianship arrangements for minor children, living wills, health care power of attorneys and more.

Depending on the amount of assets you have to give to your family and how you want to distribute those assets a trust may be a better option for you. A trust not only preserves your assets for your children it can also make sure you children still get their inheritance in the event your spouse later remarries. Inheritance can get quite complicated so it is best to talk with an estate planning attorney to make sure your assets are distributed the way you want them to be. For more information on wills and guardianship see my article How a Will and Trust Factor Into Your Estate Planning.

4.  Legal Document/Contract Review

Have you been suddenly presented with a legal document with request for signature? Do you know what the document is meant to do and how you may be legally bound if you sign the document? If you don’t know what the language is saying or how it will impact if you sign it then by all means you should be speaking with an attorney to have them look over the document and explain to you what exactly is being asked of you. Common examples of legal documents you may be signing throughout your life include documents related to the purchase and sale of real estate, purchase or sale of a business, non-disclosure agreements for work or other purposes, waiver or release of liability paperwork, settlement documents and more.

Signing any legal document without having full understanding of what sort of obligations you may face is asking for trouble. While the language may not talk in dollars and cents terms you could end up owing plenty of money if you signed a legal document and then failed to do what was required of you under the terms of the document. An attorney will be able to review your legal document document for signatureand give you an opinion on what it is asking for and what risks you face in signing the document. Don’t sign just because the person giving it to you says it is ok, get another opinion before it is too late.

5.  Labor and Employment Law

Do you run a business where you are responsible for the hiring and firing of employees? Want to make sure any terminations or hiring are done correctly and there is minimal risk of you being sued for discrimination? Or maybe you are wanting to setup health plans or retirement plans for your employees and unsure of the way to go about setting up those plans?

If you answered yes to any of the above questions then you should be talking with a labor and employment law attorney who can prevent you from taking the wrong moves which end up costing you money and more. Having an effective attorney advocate at your side assures you that you can concentrate on working on your business while any legal issues are promptly dealt with for you.

6.  Bankruptcy

Unsure if you can manage paying off your debts? Afraid of losing your house because you are behind on payments? Worried that your debts are impacting your health due to the constant stress? Or maybe health related expenses have hurt you financially. All of the above situations can be resolved through filing for bankruptcy. You will not know if bankruptcy is suitable for your situation until you sit down and discuss your situation with a bankruptcy attorney and learn about what filing for bankruptcy means.

In bankruptcy you are asking a bankruptcy court to set aside your debts under Chapter 7 (not all debts may be discharged) or to reorganize your debts into a more manageable payment plan under Chapter 13. Determining which Chapter will work best for you is a decision to be made in conjunction with a bankruptcy attorney. picture of a wallet in a viceBusinesses as well as individuals are eligible to apply for bankruptcy when they are unable to pay their debts.

7.  Taxes, Taxes and more Taxes

Unaware of what taxes your need to pay for your business? Want to pay less to the Tax Man and let your family inherit more? Own a piece of property that you think you are paying too much taxes for? All of the above are matters that can be addressed by an experienced attorney at Finney Law Firm.

Business planning involves dealing with tax matters and understanding all the tax jurisdictions involved. Not only do you have to consider federal and state taxes but there are also the city, municipality, and possibly county taxes to take into account. Miss any payments to one of these tax collecting entities and your business will be at risk. By sitting down and discussing with an attorney what your business does and where it will be performing its business your attorney can better advise you as to what taxes you need to make sure are paid.

Property tax is another big issue for both residential and commercial land owners. Property tax collectors sometimes base their tax collection rates on the overall health of the real estate market in a region as opposed to your specific piece of land. Maybe you have change in situation that has lowered the value of your property but your property taxes still remain where they were before. An attorney will be able to look at your particular situation and then prepare the proper paperwork to request that your property valuation be looked at in order to get a possible downward adjustment in value thus reducing your property tax payment.

As mentioned in item 3 above a will can help you take care of your family in the event of your passing. Wills along with trusts can also shield your assets from estate taxes that can be charged to your estate. Also known as the “Death Tax”, this tax on your wealth can be minimized depending on the amount of wealth and how you deal with it now. As each individual has their own unique asset situation a consultation with an Estate Planning attorney will help you best decide how much of your assets get caught up in the “Death Tax”.

8.  Litigation

When faced with litigation the last thing you want to do is ignore any requests for information nor do you want to provide answers without the guidance of an attorney in order to save money on legal bills. The answers and the way you answer pre-litigation questions (depositions and/or interrogatories) can make or break a case for you. Therefore it is in your best interest to answer these questions with an attorney present so they can stop you from answering questions you should not be answering. By having an attorney represent you in litigation from the beginning you are bringing along a valuable partner who not only will have knowledge of your case but also have the skills to defend you in a court of law. If an attorney has to be brought in later to a litigation matter it will usually be the case that they will have to spend more time in order to become fully informed of the situation which will cost you more than if you had hired an attorney at the start.

Whether you are being sued for something your business did, something an employee of yours did or you are suing someone who injured you the attorneys at Finney Law Firm have a great depth of picture of gavelbackground and litigation experience to assist you in your litigation matter. Finney Law Firm has successfully litigated cases related to caregiver abuse of children, business transactions, personal injury cases, failure to disclose in residential and commercial real estate matters, contract disputes and more. Finney Law Firm has won a number of cases that have went before the U.S. Supreme Court.

9.  Personal Injury

If you have been injured by someone or someplace where the situation was preventable you may want to discuss your injuries with an attorney. Especially where you have suffered losses due to being unable to go to work, out of pocket medical bills, or other pain and suffering you may be able to be compensated for those losses. A lot of this depends on how the injury occurred and whether or not someone’s negligence leads to your injury. By talking with an attorney you get a better idea of where you stand if you do wish to seek recovery for your injuries.

10.  Criminal Matters

Are you being charged with a crime? Whether that crime is driving while under the influence (DUI), reckless driving, theft or something else having an attorney represent you for the criminal trial is your right. In order to determine the severity of the charges and the amount of jail time or fines you can face you need to speak with an attorney as soon as you are able to. Facing a criminal charge is not picture of prison cellsomething you should try and handle on your own as those who will be prosecuting you are professionally trained. By having a knowledgeable and experienced attorney like those found at Finney Law Firm on your side you can be assured you will be getting the best representation possible.

Do you have any questions about the services above?

Paul Sian is a licensed attorney in the States of Ohio and Michigan.  If you feel you need the services of an attorney or have questions about any of the services named above feel free to contact me at paul@finneylawfirm.isoc.net or via phone at 513-943-5668.  Connect with me on Twitter and Facebook.

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