author: KATHLEEN ANN KEOUGH, J.:

text:
    CITY OF EUCLID, Plaintiff-Appellee v. Derrick J. CANNON, Defendant-Appellant
    No. 105733
    Court of Appeals of Ohio, Eighth District, Cuyahoga County.
    RELEASED AND JOURNALIZED: January 25, 2018
    Mark Stanton, Cuyahoga County Public Defender, By: Frank Cavallo, Assistant Public Defender, 310 Lakeside Avenue, Suite 200, Cleveland, Ohio 44113, ATTORNEYS FOR APPELLANT
    Kelley A. Sweeney, Director of Law, City of Euclid, Mary Riley Casa, 585 E. 222nd Street, Euclid, Ohio 44123, ATTORNEYS FOR APPELLEE
    BEFORE: Keough, J., Kilbane, P.J., and Laster Mays, J.
    JOURNAL ENTRY AND OPINION
   KATHLEEN ANN KEOUGH, J.:

{¶ 1} Defendant-appellant Derrick J. Cannon ("Cannon") was charged with assault in violation of Euclid Codified Ordinance ("Cod. Ord.") 537.02(A) after an altercation between Cannon and his daughter's boyfriend. Euclid Cod. Ord. 537.02(A) provides that "[n]o person shall knowingly cause or attempt to cause physical harm to another * * *," violation of which is a first-degree misdemeanor punishable by up to six months in jail and a fine not to exceed $1,000.

{¶ 2} Cannon appeared before the municipal court and entered a plea of no contest. After confirming that Cannon understood the rights he was waiving by entering his plea, the judge asked him, "what happened on December 1st, sir?" Cannon described the events leading to the incident. He said that his ten-year-old granddaughter is on medication for behavioral issues, and when he went into his daughter's house that day, he saw his daughter's boyfriend standing in front of his granddaughter screaming "hit me, hit me," as if he were getting ready to hit her. Cannon said he stepped in between them, moved his granddaughter away, and told the boyfriend not to do that to his granddaughter. He said the boyfriend still had his hand back as if to hit someone, and Cannon thought the boyfriend then moved at him. Cannon stated that he then "just went to grab him and push him to the wall to try to diffuse. And we struggled a little bit against the wall * * *."

{¶ 3} The judge told Cannon that "[b]ased on what you told me, sir, I'm going to find you guilty." The judge subsequently sentenced Cannon to one year of community control sanctions. This appeal followed.

{¶ 4} Cannon argues that his conviction should be vacated and he should be discharged because the state did not present an explanation of the circumstances as required by R.C. 2937.07.

{¶ 5} R.C. 2937.07, which governs no contest pleas in misdemeanor cases, states:

A plea to a misdemeanor offense of "no contest" or words of similar import shall constitute an admission of the truth of the facts alleged in the complaint and that the judge or magistrate may make a finding of guilty or not guilty from the explanation of the circumstances of the offense.

{¶ 6} Under R.C. 2937.07, when a court finds a defendant guilty after that defendant has entered a no contest plea, the record must provide an "explanation of circumstances" that includes a statement of the facts supporting all of the essential elements of the offense. Broadview Hts. v. Krueger , 8th Dist. Cuyahoga No. 88998, 2007-Ohio-5337, 2007 WL 2875156, ¶ 10. The explanation of circumstances " 'serves as the evidence upon which the trial court is to base its finding of guilty or not guilty.' " State v. Schornak , 2d Dist. Greene No. 2014-CA-59, 2015-Ohio-3383, 41 N.E.3d 168, ¶ 7, quoting State v. Steward , 2d Dist. Montgomery No. 19971, 2004 WL 1352628, *1-2 (June 10, 2004). " Section 2937.07 confers a substantive right on the accused to be discharged by a finding of not guilty where the explanation of circumstances that the statute requires fails to establish all of the elements of the offense, or where no explanation of circumstances is made at all." State v. Osterfeld , 2d Dist. Montgomery No. 20677, 2005-Ohio-3180, 2005 WL 1490452, ¶ 6.

{¶ 7} The explanation of circumstances requirement is not satisfied by a presumption that the court was aware of facts demonstrating the defendant's guilt that can be gleaned from documentary evidence in the court file. Berea v. Moorer , 8th Dist. Cuyahoga No. 103293, 2016-Ohio-3452, 55 N.E.3d 1186, ¶ 9, citing Chagrin Falls v. Katelanos , 54 Ohio App.3d 157, 158, 561 N.E.2d 992 (8th Dist.1988). Rather, an explanation of circumstances necessarily involves, at a minimum, "some positive recitation of facts which, if the court find them to be true, would permit the court to enter a guilty verdict and a judgment of conviction on the charge to which an accused has offered a plea of no contest. Lacking that, the defendant must be found not guilty." State v. Keplinger , 2d Dist. Greene No. 98-CA-24, 1998 WL 864837, *3 (Nov. 13, 1998), citing Cuyahoga Falls v. Bowers , 9 Ohio St.3d 148, 151, 459 N.E.2d 532 (1984).

{¶ 8} Cannon contends that his conviction must be vacated and he must be discharged because the state did not provide the explanation of circumstances at the plea hearing. He relies on State v. Waddell , 71 Ohio St.3d 630, 646 N.E.2d 821 (1995), to support his argument. In Waddell , the Ohio Supreme Court considered whether a court must consider an accused's statement before accepting a no contest plea to a misdemeanor offense, even though the state made an explanation of the circumstances of the offense. The Supreme Court held that the trial court is not required to consider the accused's statement but may make its finding of guilty or not guilty from the explanation of circumstances by the state. Waddell did not address the issue of whether the prosecutor is required to give an explanation of the circumstances before the court may make its finding under R.C. 2937.07, as Cannon asserts, and thus we do not find it dispositive.

{¶ 9} This court and others have held that although the state bears the burden to ensure that an explanation of circumstances appears on the record before a conviction is entered, "it is immaterial who actually states the explanation on the record." Schornak , 2d Dist. Greene No. 2014-CA-59, 2015-Ohio-3383, 41 N.E.3d 168 at ¶ 8, citing Keplinger at *2 (finding the court, an arresting officer, or even the accused may make the necessary explanation); State v. Murphy , 116 Ohio App.3d 41, 45, 686 N.E.2d 553 (9th Dist.1996) ("whether the court or the prosecutor recites the explanation into the record is immaterial"); Krueger , 8th Dist. Cuyahoga No. 88998, 2007-Ohio-5337, 2007 WL 2875156, at ¶ 11 ("[defendant] chose to provide her own explanation of circumstances"). Further, there is no requirement that sworn testimony be taken; the "explanation of circumstances" requirement only contemplates some explanation of the facts surrounding the offense so that the trial court does not make a finding of guilt in a perfunctory manner. Moorer at ¶ 9, citing Bowers at 150, 459 N.E.2d 532.

{¶ 10} In response to the judge's question regarding what happened, Cannon gave an explanation of circumstances that the state contends was sufficient to find him guilty of assault. Although we agree with the state that the explanation of circumstances need not come from the prosecutor, Cannon's explanation was insufficient to allow the court to find him guilty of assault.

{¶ 11} Euclid Cod. Ord. 537.02(A) provides that "[n]o person shall knowingly cause or attempt to cause physical harm to another * * *." Cannon's explanation did not establish these elements. He told the judge, "I just went to grab him and push him to the wall to try to diffuse. And we struggled a little bit against the wall * * *." This explanation did not establish that Cannon knowingly caused or attempted to cause physical harm to his daughter's boyfriend; it established only that Cannon pushed the boyfriend against the wall and they struggled "a little." And as noted earlier, this court cannot presume that the trial court was aware of other facts contained in documentary evidence in the file that may have demonstrated Cannon's guilt.

{¶ 12} Because the explanation of circumstances did not contain facts that if true established the elements of assault, there was insufficient evidence to support Cannon's conviction, and the trial court erred in finding him guilty. Cannon's conviction is therefore reversed, and because a retrial would create a double jeopardy violation, the case is remanded with instructions for the trial court to dismiss the charge. See Elsing , 8th Dist. Cuyhoga No. 105231, 2017-Ohio-6891, 2017 WL 3084816, at ¶ 11.

{¶ 13} Reversed and remanded.

MARY EILEEN KILBANE, P.J., and ANITA LASTER MAYS, J., CONCUR

      A violation of R.C. 2937.07 results in insufficient evidence to support the conviction, and because a double jeopardy violation would occur if the charges were retried, they must be dismissed. Middleburg Hts. v. Elsing , 8th Dist. Cuyahoga No. 105231, 2017-Ohio-6891, 2017 WL 3084816, ¶ 11, citing Moorer at ¶ 22.


source: Caselaw Access Project

author: WELBAUM, P.J. DONOVAN, J., dissenting:

license: Public Domain

text:
    STATE of Ohio, Plaintiff-Appellant v. Deonte L. GAUSE, Defendant-Appellee
    NO. 27527
    Court of Appeals of Ohio, Second District, Montgomery County.
    Rendered January 26, 2018
    ANDREW FRENCH, Atty. Reg. No. 69384, Assistant Prosecuting Attorney, 301 W. Third Street, 5th Floor, Dayton, Ohio 45422, Attorney for Plaintiff-Appellant
    DAVID K. WEHNER, Atty. Reg. No. 16080, Public Defender, 117 S. Main Street, 4th Floor, Dayton, Ohio 45422, Attorney for Defendant-Appellee
   WELBAUM, P.J.

{¶ 1} Plaintiff-appellant, the State of Ohio, appeals from the judgment of the Montgomery County Court of Common Pleas granting defendant-appellee Deonte L. Gause's motion to dismiss the indicted charge of having weapons while under disability. For the reasons outlined below, the judgment of the trial court will be reversed and the matter will be remanded for further proceedings.

Facts and Course of Proceedings

{¶ 2} On January 24, 2017, the Montgomery County Grand Jury returned an indictment charging Gause with single counts of carrying concealed weapons in violation of R.C. 2923.12(A), improperly handling firearms in a motor vehicle in violation of R.C. 2923.16(B), and having weapons while under disability in violation of R.C. 2923.13(A)(2). The charge of having weapons while under disability was predicated on a prior juvenile adjudication for rape that Gause committed in 2009.

{¶ 3} Gause pled not guilty to all the charges and subsequently filed a motion to dismiss the charge of having weapons while under disability. In his motion to dismiss, Gause argued that the statute governing the offense of having weapons while under disability, R.C. 2923.13(A)(2), violates due process to the extent that the statute allows the offense to be predicated on a juvenile adjudication. In support of this argument, Gause cited to the Supreme Court of Ohio's decision in State v. Hand , 149 Ohio St.3d 94, 2016-Ohio-5504, 73 N.E.3d 448, which held that a statute violates the Due Process Clauses of the Ohio and United States Constitutions if it "treat[s] a juvenile adjudication as a previous conviction that enhances either the degree of or the sentence for a subsequent offense committed as an adult." Id. at ¶ 37.

{¶ 4} The trial court agreed with Gause's argument and held that R.C. 2923.13(A)(2) was unconstitutional "to the extent that the statute provides that Gause's juvenile adjudication may serve [as] an essential element of the offense of having weapons under disability, a third degree felony." Decision, Entry and Order Dismissing Count 2 of the Indictment (March 27, 2017), Montgomery County Court of Common Pleas Case No. 2016-CR-3917, Docket No. 24, p. 2. In so holding, the trial court explained that: "If it violates due process to permit a juvenile adjudication to enhance the degree of an offense, or to enhance the punishment for an offense, it follows that it likewise violates due process to permit a juvenile adjudication to establish a third degree felony on the basis of conduct which would otherwise not be a crime." Id. Accordingly, the trial court dismissed Gause's indicted charge of having weapons while under disability.

{¶ 5} The State now appeals from the trial court's dismissal, raising a single assignment of error for review.

Assignment of Error

{¶ 6} The State's assignment of error is as follows:

THE TRIAL COURT MISAPPLIED THE HOLDING IN STATE V. HAND WHEN IT DISMISSED COUNT TWO OF DEONTE GAUSE'S INDICTMENT, WHICH CHARGED HIM
WITH HAVING WEAPONS WHILE UNDER DISABILITY.

{¶ 7} Under its sole assignment of error, the State contends that the trial court's decision granting Gause's motion to dismiss the charge of having weapons while under disability should be reversed because in ruling on the motion, the trial court erroneously relied on Hand , 149 Ohio St.3d 94, 2016-Ohio-5504, 73 N.E.3d 448. We agree.

{¶ 8} In Hand , the Supreme Court of Ohio ruled that it is an unconstitutional violation of due process to use a juvenile adjudication as the equivalent of an adult conviction to enhance a penalty for a later crime, because, unlike an adult conviction, a juvenile adjudication does not involve the right to a trial by jury. Hand at ¶ 37-38. In so holding, the Supreme Court struck down R.C. 2901.08(A), a statute which specifically provided that a prior "adjudication as a delinquent child or as a juvenile traffic offender is a conviction for a violation of the law or ordinance for purposes of determining the offense with which the person should be charged and, if the person is convicted of or pleads guilty to an offense, the sentence to be imposed[.]" Id. at paragraph one of the syllabus and ¶ 9. The Supreme Court held "that R.C. 2901.08(A) violates the Due Process Clauses of Article I, Section 16 of the Ohio Constitution and the Fourteenth Amendment to the United States Constitution because it is fundamentally unfair to treat a juvenile adjudication as a previous conviction that enhances either the degree of or the sentence for a subsequent offense committed as an adult." Id. at ¶ 37. Accordingly, the Supreme Court of Ohio made it clear in Hand that "a juvenile adjudication is not a conviction of a crime and should not be treated as one." Id. at ¶ 38.

{¶ 9} As previously noted, the trial court in this case relied on Hand to dismiss Gause's weapons under disability charge on grounds that the statute governing the offense, R.C. 2923.13(A)(2), unconstitutionally permits a juvenile adjudication to serve as an element of the offense. However, two months after the trial court's decision, we held the following in State v. McComb , 2017-Ohio-4010, 91 N.E.3d 255 (2d Dist.) :

We do not * * * find that the Supreme Court of Ohio's holding in Hand renders the weapons under disability statute McComb was convicted under, R.C. 2923.13(A)(2), unconstitutional on due process grounds. R.C. 2923.13(A)(2) provides, in relevant part, that:
[N]o person shall knowingly acquire, have, carry, or use any firearm or dangerous ordnance, if * * * the person is under indictment for or has been convicted of any felony offense of violence or has been adjudicated a delinquent child for the commission of an offense that, if committed by an adult, would have been a felony offense of violence.
(Emphasis added.)
Pursuant to the statute, a violation of R.C. 2923.13(A)(2) requires an offender to either have a prior conviction or a prior juvenile adjudication. Unlike the statute that was struck down in Hand , the statute at issue, R.C. 2923.13(A)(2), does not treat a prior juvenile adjudication as a conviction. Rather, a prior juvenile adjudication and conviction are treated as alternative elements necessary to establish the offense of having weapons while under disability. Hand does not ban the use of a prior juvenile adjudication as an element of an offense; rather, Hand bans the use of a juvenile adjudication to enhance a penalty by treating the adjudication as an adult conviction. Hand at ¶ 37 (holding "it is fundamentally unfair to treat a juvenile adjudication as a previous conviction that enhances either the degree of or the sentence for a subsequent offense committed as an adult").

McComb at ¶ 25-26.

{¶ 10} In support of our holding in McComb , we relied on cases from Ohio's Seventh and First Appellate Districts that also declined to extend the holding in Hand to R.C. 2923.13(A)(2). See McComb at ¶ 27, citing State v. Hudson , 2017-Ohio-645, 85 N.E.3d 371 (7th Dist.) and State v. Carnes , 2016-Ohio-8019, 75 N.E.3d 774 (1st Dist.). Since our decision in McComb, the Tenth and Eighth Appellate Districts have also concluded that the holding in Hand does not apply to R.C. 2923.13(A)(2). See State v. Brown , 2017-Ohio-7134, 95 N.E.3d 962 (10th Dist.) ; State v. Williams , 2017-Ohio-5598, 93 N.E.3d 449 (10th Dist.) ; State v. Stewart , 8th Dist. Cuyahoga No. 105154, 2017-Ohio-2993, 2017 WL 2291643 ; State v. Parker , 2017-Ohio-7484, 96 N.E.3d 1183 (8th Dist.). We have also continued to follow the holding in McComb in several cases concerning the same issue. See State v. Jackson , 2d Dist. Montgomery No. 27351, 2017-Ohio-4197, 2017 WL 2493624 ; State v. Boyer , 2017-Ohio-4199, 92 N.E.3d 213 (2d Dist.) ; State v. St. Jules , 2d Dist. Montgomery No. 27405, 2017-Ohio-7941, 2017 WL 4340684 ; State v. Herron , 2d Dist. Montgomery No. 27378, 2017-Ohio-8908, 2017 WL 6209664.

{¶ 11} Based on the precedent established in this appellate district and several other appellate districts in the State of Ohio, we conclude that the trial court erred in applying the holding in Hand to dismiss Gause's charge for having weapons while under disability, as Hand does not apply to R.C. 2923.13(A)(2). Therefore, we once again hold that the use of a juvenile adjudication to support a charge of having weapons while under disability does not violate a defendant's constitutional right to due process.

{¶ 12} The State's sole assignment of error is sustained.

Conclusion

{¶ 13} Having sustained the State's sole assignment of error, the judgment of the trial court is reversed and the matter is remanded for further proceedings.

FROELICH, J., concurs.

DONOVAN, J., dissenting:

{¶ 14} Gause's prior adjudication of delinquency which can now be utilized as an element of the offense to establish weapons while under disability, suffers from the same constitutional infirmity as an enhancement. At the heart of the analysis in Hand is the lack of a right to a jury determination of the predicate conduct. In this case, status (disability) creates the offense, in Hand status enhances punishment.

{¶ 15} I agree with Judge Cunningham's dissent in Carnes , it is illogical to conclude enhancement of punishment is unconstitutional, but prosecution where otherwise there would be no indictment is not. In all other scenarios, the status of disability is conduct which occurs as an adult. The juvenile vs. adult conduct distinction is critical to the constitutional analysis, particularly under the Ohio Constitution as noted in Hand .


text:
    Kelly NICHOLSON, Plaintiff-Appellee v. LOANMAX, LLC, et al., Defendants-Appellants
    NO. 16 BE 0057
    Court of Appeals of Ohio, Seventh District, Belmont County.
    Dated: January 26, 2018
    Attorney Eric Chaffin, Attorney Patrick Booth, 615 Iron City Drive, Pittsburgh, Pennsylvania 15205, For Plaintiff-Appellee
    Attorney James Lyons, Jr., Attorney Kenneth Calderone, 3737 Embassy Parkway, Suite 100, Akron, Ohio 44333, For Defendants-Appellants
   JUDGES: Hon. Mary DeGenaro, Hon. Gene Donofrio, Hon. Carol Ann Robb

OPINION

DeGENARO, J.

{¶ 1} Defendants-Appellants, Judith Steele and Bellaire Board of Education, appeal the decision of the Belmont County Court of Common Pleas denying their motion for summary judgment. On appeal, Bellaire Board of Education and Steele argue there were no genuine issues of fact regarding their statutory immunity and were entitled to judgment in their favor as a matter of law. As they are immune from liability, the judgment of the trial court is reversed, and judgment is entered in their favor.

Facts and Procedural History

{¶ 2} Plaintiff-Appellee, Kelly Nicholson, filed a complaint against Loanmax, LLC, Drummond Financial Services, LLC, Select Management Resources LLC, and the Bellaire Board of Education. Nicholson alleged that on September 17, 2014, she was exiting a school bus owned by BOE and was injured when she stepped off the bus and into a pothole in a parking lot owned and maintained by all named defendants.

{¶ 3} BOE answered Nicholson's complaint, denied the allegations and asserted various affirmative defenses, including statutory immunity. Drummond Financial Services, LLC, dba Loanmax and Select Management Resources, LLC, filed an answer. Nicholson later filed an amended complaint naming the bus driver Judith Steele, and TERA, II, LLC as additional defendants.

{¶ 4} BOE and Steele moved for summary judgment on the basis of statutory immunity pursuant to R.C. § 2744.01. The remaining defendants moved for summary judgment on the basis of the "open and obvious doctrine." Nicholson responded in opposition on September 16, 2016. All motions were overruled, and the concept of open and notorious remained a factual determination for the jury.

Summary Judgment

{¶ 5} In their sole assignment of error, Steele and BOE assert:

The trial court erred by not granting Appellant's Motion for Summary Judgment on the Basis of Immunity.

{¶ 6} An appellate court reviews a trial court's summary judgment decision de novo. Ohio Govt. Risk Mgt. Plan v. Harrison , 115 Ohio St.3d 241, 2007-Ohio-4948, 874 N.E.2d 1155, ¶ 5. A motion is properly granted if the court, viewing the evidence in a light most favorable to the party against whom the motion is made, determines that: 1) there are no genuine issues as to any material facts; 2) the movant is entitled to judgment as a matter of law; and 3) the evidence is such that reasonable minds can come to but one conclusion, which is adverse to the opposing party. Civ.R. 56(C) ; Byrd v. Smith , 110 Ohio St.3d 24, 2006-Ohio-3455, 850 N.E.2d 47, ¶ 10.

{¶ 7} An order denying a motion for summary judgment is generally not a final, appealable order. State ex rel. Overmeyer v. Walinski , 8 Ohio St.2d 23, 222 N.E.2d 312. However, R.C. 2744.02(C) provides "[a]n order that denies a political subdivision or an employee of a political subdivision the benefit of an alleged immunity from liability as provided in this chapter or any other provision of the law is a final order." "Thus, R.C. 2744.02(C) grants appellate courts jurisdiction to review the denial of a motion for summary judgment based upon immunity." Gates v. Leonbruno , 2016-Ohio-5627, 70 N.E.3d 1110, ¶ 29 (8th Dist.)

{¶ 8} Political subdivisions are generally not liable in damages for injury, death or loss to person or property by any act or omission. R.C. 2744.02(A)(1)"The Political Subdivision Tort Liability Act, as codified in R.C. Chapter 2744, requires a three-tiered analysis to determine whether a political subdivision should be allocated immunity from civil liability." Hubbard v. Canton City Bd. of Edn. , 97 Ohio St.3d 451, 2002-Ohio-6718, 780 N.E.2d 543, ¶ 10, citing Cater v. Cleveland , 83 Ohio St.3d 24, 28, 1998-Ohio-421, 697 N.E.2d 610.

{¶ 9} A three-tiered analysis is used when evaluating immunity:

Under the first tier, R.C. 2744.02(A)(1) sets out the general rule that political subdivisions are not liable in damages. [ Greene Cty. Agricultural Soc. v. Liming , 89 Ohio St.3d 551, 556-57, 733 N.E.2d 1141 (2000) ] Under the second tier, the court must determine whether any of the exceptions to immunity set out in R.C. 2744.02(B) apply. Id. at 557, 733 N.E.2d 1141. Finally, under the third tier, if the court finds that any of R.C. 2744.02(B)'s exceptions apply, it must consider R.C. 2744.03, which provides defenses and immunities to liability. Id.

Roberts v. Switzerland of Ohio Local School Dist. , 2014-Ohio-78, 7 N.E.3d 526, ¶ 17 (7th Dist.).

{¶ 10} "Immunity is a doctrine that provides a complete defense to a tort action. By asserting an immunity defense, the defendant does not allege that there was no negligence. The defendant is asserting that it is protected from liability for negligence by reason of R.C. Chapter 2744." Rondy v. Richland Newhope Industries, Inc. , 2016-Ohio-118, 57 N.E.3d 369, ¶ 27 (5th Dist). In the present matter, both parties agree that the first tier is met. As such, BOE and Steele are presumptively immune from liability under R.C. 2744.02(A)(1) and are entitled to immunity unless one of the exceptions in R.C. 2744.02(B) applies.

{¶ 11} BOE and Steele argue none of the exceptions apply. Nicholson contends that three apply to reinstate liability. Each will be discussed in turn.

Negligent Operation of Motor Vehicle

{¶ 12} R.C. 2744.02(B)(1) provides:

Subject to sections 2744.03 and 2744.05 of the Revised Code, a political subdivision is liable in damages in a civil action for injury, death, or loss to person or property allegedly caused by an act or omission of the political subdivision or of any of its employees in connection with a governmental or proprietary function, as follows:
(1) Except as otherwise provided in this division, political subdivisions are liable for injury, death, or loss to person or property caused by the negligent operation of any motor vehicle by their employees when the employees are engaged within the scope of their employment and authority.

{¶ 13} Nicholson argues that R.C. 2744.02(B)(1) reinstates BOE and Steele's liability as Steele failed to adhere to the applicable Ohio "safety regulations, school policies and local rules." The parties agree that the bus was fully stopped at the time of the incident. In Miller v. Van Wert Cty. Bd. of Mental Retardation & Dev. Disabilities , 3d. Dist. No. 15-08-11, 2009-Ohio-5082, 2009 WL 3068807, ¶ 18, the Third District stated:

"Analyzing the meaning of "operation" under R.C. 2744.02(B)(1), the Ohio Supreme Court noted that the General Assembly's definition of "operate" found in R.C. 4511.01(HHH)"sheds light on the meaning of 'operation' in R.C. 2744.02(B)(1)." [ Doe v. Marlington Local School Bd. of Edn. , 122 Ohio St.3d 12, 2009-Ohio-1360, 907 N.E.2d 706, ¶ 24.] The Court also noted that the definition of "operate" found in R.C. 4511.01(HHH) was "generally consistent with the interpretation courts have given to "operation" under R.C. 2744.02(B)(1)." Id. at ¶ 25, 907 N.E.2d 706. The Court went on to state: "[w]e conclude that the exception to immunity in R.C. 2744.02(B)(1) for the negligent operation of a motor vehicle pertains only to negligence in driving or otherwise causing the motor vehicle to be moved." Id. at ¶ 26, 907 N.E.2d 706.

{¶ 14} Here, the school bus was parked and at a full and complete stop at the time Nicholson exited and stepped down into the pothole. Nicholson attempts to distinguish Marlington, as relied upon in Miller, by citing to Swain v. Cleveland Metro. School Dist. 8th Dist. No. 94553, 2010-Ohio-4498, 2010 WL 3722280, which held that the negligent operation exception reinstated municipal liability. However, the Swain Court noted the inapplicability of Marlington to the facts contained in that case:

Marlington is easily distinguishable from the case at bar. Marlington involved the sexual assault between different students. The case at bar involves the negligent operation of a motor vehicle in driving or otherwise causing the vehicle to be moved in relation to the conduct of the bus driver and her duties.
In contrast to the sexual assault between a special needs student in Marlington , the conduct in the case at bar involves an entirely different situation. The bus driver in the case at bar, while sitting in the driver's seat and while the engine was running, declined to inspect the bus and then drove the bus away from the proper bus stop .

Swain , ¶ 11-12.

{¶ 15} Nicholson further cites to Doe v. Dayton City School Board of Education , 137 Ohio App.3d 166, 738 N.E.2d 390 (2d.Dist.1999), and Groves v. Dayton Public Schools , 132 Ohio App.3d 566, 725 N.E.2d 734 (2d. Dist.1999). However, we find Doe and Groves unpersuasive and distinguishable as in both cases the vehicle was not being operated at the time of the plaintiff's injuries. The rationale in Marlington, Miller and Swain is more persuasive.

{¶ 16} As there was no actual operation of the school bus in the present matter, R.C. 2744.02(B)(1) does not reinstate BOE and Steele's liability.

Failure to Repair Public Roads

{¶ 17} R.C. 2744.02(B)(3) provides:

Subject to sections 2744.03 and 2744.05 of the Revised Code, a political subdivision is liable in damages in a civil action for injury, death, or loss to person or property allegedly caused by an act or omission of the political subdivision or of any of its employees in connection with a governmental or proprietary function, as follows:
(3) Except as otherwise provided in section 3746.24 of the Revised Code, political subdivisions are liable for injury, death, or loss to person or property caused by their negligent failure to keep public roads in repair and other negligent failure to remove obstructions from public roads, except that it is a full defense to that liability, when a bridge within a municipal corporation is involved, that the municipal corporation does not have the responsibility for maintaining or inspecting the bridge.

{¶ 18} Nicholson was injured in a parking lot owned by TERA II and leased to Drummond Financial who was responsible for maintaining the premises pursuant to the terms of the lease. Loan Max is a dba for Drummond. BOE had a legal easement since 1982 for use of the parking lot. Nicholson argues that the easement required BOE to maintain the parking lot in a reasonably safe condition. This is a distinction without a difference. A parking lot is not a public road.

The General Assembly defined what areas constitute a public road and what areas do not: "Public roads means public roads, highways, streets, avenues, alleys, and bridges within a political subdivision. 'Public roads' does not include berms, shoulders, rights-of-way, or traffic control devices unless the traffic control devices are mandated by the Ohio manual of uniform traffic control devices." R.C. 2744.01(H).
The Ninth District held that in the context of an ongoing repair or maintenance project, a public road is "the area under the control of the political subdivision, subject to the ongoing repair work, and open to travel by the public."
2014-Ohio-3529, 17 N.E.3d 639, at ¶ 11. The court did so without consideration of the areas the General Assembly statutorily excluded from the definition of public road. The result was an expansion of the definition to include "area[s] under the control of the political subdivision"-in direct contravention of the General Assembly. See Montgomery Cty. Bd. of Commrs. , 28 Ohio St.3d at 175, 503 N.E.2d 167.
Because a definition was provided by the General Assembly, R.C. 2744.01(H) is the exclusive definition of public road for purposes of determining sovereign immunity from all claims that allege a negligent failure to maintain.

Baker v. Wayne County , et al., 147 Ohio St.3d 51, 2016-Ohio-1566, 60 N.E.3d 1214, ¶ 16-18.

{¶ 19} As parking lots were not included within the statutory definition of public roads, R.C. 2744.02(B)(3) does not reinstate BOE and Steele's liability.

Physical Defect

{¶ 20} R.C. 2744.02(B)(4) provides:

Subject to sections 2744.03 and 2744.05 of the Revised Code, a political subdivision is liable in damages in a civil action for injury, death, or loss to person or property allegedly caused by an act or omission of the political subdivision or of any of its employees in connection with a governmental or proprietary function, as follows:
Except as otherwise provided in section 3746.24 of the Revised Code, political subdivisions are liable for injury, death, or loss to person or property that is caused by the negligence of their employees and that occurs within or on the grounds of, and is due to physical defects within or on the grounds of, buildings that are used in connection with the performance of a governmental function, including, but not limited to, office buildings and courthouses, but not including jails, places of juvenile detention, workhouses, or any other detention facility, as defined in section 2921.01 of the Revised Code.

{¶ 21} Regarding R.C. 2744.02 :

R.C. 2744.02(B) was amended on April 9, 2003. The 2003 amendment to R.C. 2744.02(B)(4) added the language "and is due to physical defects within or on the grounds of" after "that is caused by the negligence of their employees and that occurs within or on the grounds of." Other than this addition, the statute remained the same. The statute was changed to limit liability for negligence that is due to physical defects within or on the grounds that are used in connection with a governmental function. Aratari v. Leetonia Exempt Village School Dist. , 7th Dist. No. 06-CO-11, 2007-Ohio-1567, 2007 WL 969402, ¶ 30.

Roberts v. Switzerland of Ohio Local School Dist. , 2014-Ohio-78, 7 N.E.3d 526, ¶ 20 (7th Dist).

{¶ 22} R.C. 2744.02(B)(4) requires proof of two elements for the exception to apply: a negligent act and a physical defect within or on the grounds of the political subdivision. DeMartino v. Poland Loc. School Dist. , 7th Dist. No. 10 MA 19, 2011-Ohio-1466, 2011 WL 1118480, ¶ 34. " R.C. 2744.02(B)(4) requires the injuries at issue to be caused both by a political-subdivision employee's negligence and a physical defect on the grounds." Parmertor v. Chardon Local Schools , 2016-Ohio-761, 47 N.E.3d 942, ¶ 16 (11th Dist.).

{¶ 23} The phrase physical defect is not statutorily defined. The Sixth District defined physical defect as "a perceivable imperfection that diminishes the worth or utility of the object at issue."

Hamrick v. Bryan City School Dist. , 6th Dist. No. WM-10-014, 2011-Ohio-2572, 2011 WL 2090038, ¶ 28. Here Nicholson alleges the physical defect that caused or contributed to her injury was the pothole. Bellaire responds that the easement operated as it was intended to do.

{¶ 24} Nicholson vacillates between what constitutes the negligent act: the board's failure to repair the pothole pursuant to the terms of the easement or Steele's operation of the bus itself, which is not an action as the bus was fully stopped and parked.

{¶ 25} Construed in a light most favorable to the Nicholson as the non-moving party, the exceptions to sovereign immunity Nicholson asserts reinstates liability do not. As Steele and BOE are entitled to statutory immunity, the trial court erred in denying their motion for summary judgment. Accordingly, the judgment of the trial court is reversed and summary judgment is granted in favor of Steele and BOE.

Donofrio, J., dissents in part, concurs in part; see dissenting in part, concurring in part opinion.

Robb, P.J., concurs.

DONOFRIO, J., dissenting in part, concurring in part.

{¶ 26} I respectfully dissent from that part of the majority opinion that determines that the exception to immunity set out in R.C. 2744.02(B)(1) does not apply to the Board of Education (BOE). Instead, I would find that the R.C. 2744.02(B)(1) exception does apply to reinstate liability as to the BOE. I also respectfully concur in judgment only with that part of the majority opinion that determines that Steele is entitled to immunity. I too would find that Steele is entitled to immunity, but for the reason that R.C. 2744.03(A)(6) establishes her immunity.

{¶ 27} Whether a political subdivision is entitled to immunity is analyzed using a three-tiered process. Greene Cty. Agricultural Soc. v. Liming , 89 Ohio St.3d 551, 556, 733 N.E.2d 1141 (2000). Under the first tier, R.C. 2744.02(A)(1) sets out the general rule that political subdivisions are not liable in damages. Id. at 556-557, 733 N.E.2d 1141. Under the second tier, the court must determine whether any of the exceptions to immunity set out in R.C. 2744.02(B) apply. Id. at 557, 733 N.E.2d 1141. Finally, under the third tier, if the court finds that any of R.C. 2744.02(B)'s exceptions apply, it must consider R.C. 2744.03, which provides defenses and immunities to liability. Id.

{¶ 28} Under the first tier, the BOE has immunity and is not liable for damages.

{¶ 29} Under the second tier, we must examine whether any exceptions to immunity apply. R.C. 2744.02(B) sets out five specific exceptions to immunity. I would find that R.C. 2744.02(B)(1) applies to the BOE. It provides:

(B) Subject to sections 2744.03 and 2744.05 of the Revised Code, a political subdivision is liable in damages in a civil action for injury, death, or loss to person or property allegedly caused by an act or omission of the political subdivision or of any of its employees in connection with a governmental or proprietary function, as follows:
(1) Except as otherwise provided in this division, political subdivisions are liable for injury, death, or loss to person or property caused by the negligent operation of any motor vehicle by their employees when the employees are engaged within the scope of their employment and authority.

R.C. 2744.02(B)(1).

{¶ 30} In this case, Steele was operating the school bus within the scope of her employment when she drove the bus on top of the pothole. The phrase "operation of any motor vehicle" is not defined in R.C. Chapter 2744. The Second District found that phrase "capable of encompassing more than the mere act of driving the vehicle involved." Groves v. Dayton Pub. Schools , 132 Ohio App.3d 566, 569, 725 N.E.2d 734 (2d Dist.1999).

{¶ 31} The majority relies on the reasoning set out in Doe v. Marlington Local School Dist. Bd. of Edn. , 122 Ohio St.3d 12, 2009-Ohio-1360, 907 N.E.2d 706, and Miller v. Van Wert Cty. Bd. of Mental Retardation & Dev. Disabilities , 3d Dist. No. 15-08-11, 2009-Ohio-5082, 2009 WL 3068807. Neither of these cases, however, define "operation of a motor vehicle" to not include the action of driving a vehicle over a hazard and parking it there. Instead, both of those cases stand for the proposition that the supervision of students on a bus is not included in the definition of "operation of a motor vehicle."

{¶ 32} In Marlington , 2009-Ohio-1360, 122 Ohio St.3d 12, 907 N.E.2d 706, the Ohio Supreme Court was specifically faced with "whether a school bus driver's supervision of the conduct of children passengers on a school bus amounts to operation of a motor vehicle within the statutory exception to political subdivision immunity under R.C. 2744.02(B)(1)" when a student was allegedly sexually assaulted while on the school bus. Id. at ¶ 9. The Court concluded:

the exception to immunity in R.C. 2744.02(B)(1) for the negligent operation of a motor vehicle pertains only to negligence in driving or otherwise causing the vehicle to be moved. The language of R.C. 2744.02(B)(1) is not so expansive that it includes supervising the conduct of student passengers, as alleged in this case.

Id. at 26.

{¶ 33} In Miller , 2009-Ohio-5082, 2009 WL 3068807, the claim alleged the bus driver detained an incompetent student on the bus for five hours. The Third District relied on the Ohio Supreme Court's decision in Marlington , in finding that "negligent supervision of passengers is not 'negligent operation of any motor vehicle' under R.C. 2744.02(B)(1)." Id. at ¶ 19.

{¶ 34} In both Marlington and Miller , the issue was whether the bus driver's supervision of the students on the bus was contained within the definition of "operation of a motor vehicle." This is not the issue in the case at bar. Thus, I would find these cases inapplicable.

{¶ 35} The majority also relies on Swain v. Cleveland Metro. School Dist. , 8th Dist. No. 94553, 2010-Ohio-4498, 2010 WL 3722280. In Swain , a mother sought to hold the school district liable for the actions of a bus driver who failed to discover that her five-year-old child had fallen asleep on the bus on the way home from school and failed to drop her off at her bus stop. The Eighth District distinguished the case from Marlington finding:

[i]n contrast to the sexual assault between a special needs student in Marlington , the conduct in the case at bar involves an entirely different situation. The bus driver in the case at bar, while sitting in the driver's seat and while the engine was running, declined to inspect the bus and then drove the bus away from the proper bus stop .

(Emphasis sic.); Id. at ¶ 12. Thus, if anything, Swain supports a finding that Steele's action of driving over a pothole and parking the bus on top of pothole fall within the definition of "operation of a motor vehicle."

{¶ 36} I would find that the injury here occurred due to Steele's alleged negligent operation of the school bus, i.e., the action of driving the bus over a large pothole and parking it there. Thus, I would find that the R.C. 2744.02(B)(1) exception to immunity applies to the BOE.

{¶ 37} In finding that an exception to immunity applies, I would then move on to the third tier of the immunity analysis, which is to consider whether there exists a defense or immunity to liability under R.C. 2744.03.

{¶ 38} R.C. 2744.03(A) lists five particular defenses or immunities that a political subdivision may assert to establish non-liability: (1) the employee involved was engaged in the performance of a judicial, quasi-judicial, prosecutorial, legislative, or quasi-legislative function; (2) the employee's conduct, other than negligent conduct, was required by law or authorized by law; (3) the action or failure to act by the employee that gave rise to the claim of liability was within the employee's discretion with respect to policy-making, planning, or enforcement powers; (4) the action or failure to act by the political subdivision or employee resulted in injury to a person who had been convicted of or pleaded guilty to a criminal offense and who was serving any portion of the person's sentence by performing community service work for or in the political subdivision; and (5) the injury resulted from the exercise of judgment or discretion in determining whether to acquire, or how to use, equipment, supplies, materials, personnel, facilities, and other resources. None of these defenses apply here.

{¶ 39} Thus, I would find that the BOE was not entitled to immunity.

{¶ 40} While I would find that the BOE is not entitled to immunity based on the alleged negligence by Steele, I would still find that Steele is entitled to immunity. The reason for the difference being that under the third tier of the immunity analysis, R.C. 2744.03(A)(6) provides for broader immunity for employees:

(6) In addition to any immunity or defense referred to in division (A)(7) of this section and in circumstances not covered by that division or sections 3314.07 and 3746.24 of the Revised Code, the employee is immune from liability unless one of the following applies:
(a) The employee's acts or omissions were manifestly outside the scope of the employee's employment or official responsibilities;
(b) The employee's acts or omissions were with malicious purpose, in bad faith, or in a wanton or reckless manner;
(c) Civil liability is expressly imposed upon the employee by a section of the Revised Code. * * *.

{¶ 41} In this case, there is no allegation that Steele was acting outside of the scope of her employment as a bus driver. Moreover, Steele's actions of driving over, and ultimately parking on top of, a large pothole may constitute negligence. But these actions were not undertaken with malice, bad faith, or in a wanton and reckless manner. Finally, there is no allegation that the Revised Code expressly imposes civil liability on Steele.

{¶ 42} In conclusion, for the reasons stated above, I would find that the R.C. 2744.02(B)(1) exception to immunity applies to reinstate liability as to the BOE and that no defenses to immunity apply to the BOE. Therefore, I respectfully dissent from that part of the majority opinion holding that the R.C. 2744.02(B)(1) exception to immunity does not apply to the BOE and that the BOE is entitled to immunity. Moreover, I would find that Steele is entitled to immunity based on R.C. 2744.03(A)(6), which the majority does not discuss. Therefore, I concur in judgment only with that part of the majority opinion that determines that Steele is entitled to immunity.


author: JUDGES: Hon. Mary DeGenero, Hon. Gene Donofrio, Hon. Cheryl L. Waite Donofrio, J., concurring in part and dissenting in part.

text:
    R. KASHMIRY AND ASSOCIATES, INC., Plaintiff-Appellant/Cross-Appellee, v. Michael A. ELLIS, et al., Defendants-Appellees/Cross-Appellants.
    NO. 16 MA 0126
    Court of Appeals of Ohio, Seventh District, Mahoning County.
    Dated: January 26, 2018
    Attorney Stuart A. Strasfeld, Attorney David S. Barbee, 100 East Federal St., Suite 600, Youngstown, Ohio 44503-1893, For Plaintiff-Appellant.
    Attorney Scott C. Essad, 721 Boardman-Poland Rd., Suite 201, Youngstown, Ohio 44512, For Defendants-Appellees.
   JUDGES: Hon. Mary DeGenero, Hon. Gene Donofrio, Hon. Cheryl L. Waite

OPINION

DeGenaro, J.

{¶ 1} Plaintiff-appellant/cross-appellee, R. Kashmiry & Associates, Inc. (RKA) appeals the trial court's judgment awarding defendants-appellees/cross-appellants, Michael A. Ellis (Ellis) and Ellis Insurance Agency (EIA), $65,160.00 in damages. Ellis and EIA filed a cross-appeal challenging that the trial court's decision on damages was too low, challenging the decision to grant an injunction against appellees, and to allow RKA's expert to testify at trial.

{¶ 2} For the following reasons, the trial court's judgment regarding the underlying appeal and the valuation of the stock is reversed. As the court's decision on damages is reversed, the cross-appeal's first and second assignment of error are moot. The remainder of the judgment on cross-appeal is affirmed. The case is remanded to the trial court to review the trial record and issue a new valuation decision regarding the stock.

Facts and Procedural History

{¶ 3} RKA is an Ohio corporation that markets and sells various types of medical insurance plans. Plaintiff Ray Kashmiry is RKA's majority shareholder and chief officer. Ellis was also in the business of marketing and selling various insurance plans through his business, EIA. Eventually, Ellis and Kashmiry decided to combine their businesses by having Ellis become a minority shareholder and an employee of RKA.

{¶ 4} This business merger was memorialized in three contracts: an Employment Agreement, a Stock Purchase Agreement, and a Shareholders' Agreement.

{¶ 5} The Employment Agreement made Ellis an employee of RKA beginning on April 1, 2009. In exchange, Ellis was to receive a base salary as well as commission from all sales. After the two-year period ended, Kashmiry or Ellis could elect to terminate Ellis' employment upon 60 days of prior written notice. The employment agreement also contained a non-compete clause in the event Ellis' employment with RKA was terminated. The non-compete clause provided that Ellis was to keep RKA's customer information confidential and, for two years after Ellis' employment was terminated, not solicit RKA's clients or service RKA's customers. However, Ellis was allowed to continue to work from his original book of business if he elected to return seven shares of RKA stock after his employment was terminated.

{¶ 6} The Stock Purchase Agreement required Ellis to turn over his book of business to RKA. In exchange, Ellis was to receive seven shares of RKA stock. Ellis also acquired another 14.4 shares of stock by signing a promissory note to Kashmiry in the amount of $107,838.14, or approximately $7,500.00 per share. The $7,500.00 figure was a number both Ellis and Kashmiry agreed to. Altogether, at the time Ellis' employment with RKA ended, Ellis owned approximately 20% of all of RKA stock. The only other shareholder of RKA was Kashmiry.

{¶ 7} The Shareholders' Agreement contained two relevant provisions. First, it provided that if a "triggering event" occurred, which included Ellis' termination of employment with RKA, Ellis would be deemed to have offered all of his stock to Kashmiry and Kashmiry would have 30 days to purchase the stock. If Kashmiry did not personally purchase the stock within the 30 days, Ellis was obligated to offer the stock back to RKA and RKA was obligated to purchase Ellis' stock based on an "agreement price." The second relevant provision in the Shareholders' Agreement concerned how the agreement price was to be calculated.

{¶ 8} There were two methods for calculating the agreement price. First, all stockholders would convene and unanimously agree and evaluate the fair market value of each outstanding share of RKA stock and issue a certificate of valuation that was valid for twelve months. If this was not done, then the second method was to be used.

{¶ 9} The second method provided that upon a triggering event, which again included Ellis' termination of employment with RKA, RKA's board of directors would appoint a qualified appraiser who would determine the agreement price. This provision outlined exactly what factors the qualified appraiser was to use when determining the agreement price. Those factors included, but were not limited to: standards referenced in the Internal Revenue Service's Guide for Valuation, Revenue Ruling 59-60, and other factors deemed appropriate by the qualified appraiser. The appraiser was required by the Shareholder's Agreement to evaluate the agreement price within 90 days of a triggering event. Additionally, this method required "giving great weight to any prior valuations of the shares of stock which have been agreed upon by the stockholders."

{¶ 10} On August 15, 2014, after approximately five years of Ellis' employment by RKA, Kashmiry terminated Ellis' employment. Ellis claims his employment was terminated because he refused to take a 40% reduction in compensation despite the fact that Kashmiry was continually increasing his pay and despite the fact that RKA was significantly more profitable since Ellis became an employee. Per the Stock Purchase Agreement, Ellis elected to reclaim his original book of business and therefore returned seven shares of RKA stock. With regard to the remaining 14.4 shares of stock Ellis owned, Kashmiry elected not to purchase them personally and there was no certificate of valuation issued. Therefore, RKA was to purchase the 14.4 shares of stock at the agreement price as determined by a qualified appraiser. While RKA did hire a qualified appraiser, Kelly Bianco (Bianco), she did not complete her valuation of RKA's stock within the 90 day period specified in the Shareholder's Agreement.

{¶ 11} Before Bianco finished her valuation, RKA filed this action against Ellis and EIA seeking injunctive relief and damages for breach of contract. The basis for RKA's claims were that Ellis was soliciting or servicing RKA's clients in violation of the non-compete agreement and that Ellis was required to sell all RKA stock to RKA. Ellis and EIA filed a counterclaim against RKA and Kashmiry, individually, alleging numerous counts. Relevant to this appeal, Ellis raised a breach of fiduciary duty claim against Kashmiry for firing Ellis without just cause. Eventually, RKA filed for a temporary restraining order to enforce the non-compete agreement which the trial court granted.

{¶ 12} After litigation was initiated and approximately seven months after Ellis' employment with RKA had been terminated, Bianco completed her valuation of RKA stock. Bianco valued all RKA stock at $405,000.00. Then, Bianco factored in Ellis' 14.4 shares and that he was only a minority shareholder and valued his stock at $28,300.00, approximately $1,968.00 per share, at the time Ellis' employment with RKA ended.

{¶ 13} In response to Bianco's report, Ellis and EIA moved to exclude Bianco's report and testimony at trial on the ground that it violated the Shareholders' Agreement because it was completed beyond the 90 days required by the agreement. The trial court denied this motion and the matter proceeded to a bench trial.

{¶ 14} Following bench trial, the court disposed of all claims as follows: Ellis and EIA's claims were all dismissed, the trial court valued the stock at $7,500.00 per share which was the price at which Ellis purchased the shares, and RKA was required to pay Ellis $107,838.00 for his shares of stock minus $42,676.00 for commissions Ellis received in violation of the non-compete agreement. As a result, RKA owed Ellis and EIA $65,160.00. The trial court memorialized its rulings in a journal entry dated August 3, 2016.

{¶ 15} Kashmiry did not individually file a notice of appeal. RKA asserts two assignments of error and Ellis and EIA raise five assignments of error in the cross-appeal, all of which we will address in turn.

Valuation of Shares

{¶ 16} As RKA's two assignments of error are interrelated we will discuss them together, and they respectively assert:

The trial court erred in failing to uphold the provision of the Shareholders' Agreement that stated the "Agreement Price" determined by the "Qualified Appraiser" would be binding upon the parties.
The trial court erred when it interpreted the parties' original purchase price as a "prior valuation" of fair market value.

{¶ 17} RKA argues that, pursuant to the Shareholders' Agreement, if the parties' fail to unanimously decide the value of the shares on an annual basis, the value was to be determined by a qualified evaluator appointed by RKA's board of directors: in this case, Bianco. They further argue that the trial court's decision to view the prior purchase price of RKA stock as a "valuation" was error because doing so distorts the context of Sections 9(A) and 9(B) of the Shareholders' Agreement and renders them almost meaningless.

{¶ 18} In a contract case, the primary role of the court is to ascertain and give effect to the intent of the parties. Saunders v. Mortensen , 101 Ohio St.3d 86, 2004-Ohio-24, 801 N.E.2d 452 ¶ 9. The construction of written contracts presents a question of law which is reviewed de novo. Steubenville Firefighters Union Local no. 228 v. City of Steubenville , 7th Dist. No. 00 JE 5, 2001-Ohio-3318, 2001 WL 1199880 citing Long Beach Assn., Inc. v. Jones , 82 Ohio St.3d 574, 697 N.E.2d 208 (1998).

{¶ 19} The Shareholders' Agreement defines "valuation" in Section 9(A):

At least annually, within ninety (90) days following the end of each fiscal year of the Corporation, the Stockholders shall unanimously evaluate, agree upon, and establish the fair market value of each outstanding share of Stock in the Corporation. Said valuation shall be effective for a period of twelve (12) months and a Certificate of Valuation shall be included in the corporate minutes of the Corporation.

{¶ 20} In the event the process outlined above was not followed, Section 9(B) of the Shareholders' Agreement sets forth the process to determine valuation when a triggering event occurs, such as the termination of Ellis' employment:

* * * at the time of such Triggering Event, the Board of Directors of the Corporation shall appoint a Qualified Appraiser to determine the Agreement Price of the Offered Stock, considering all of the relevant business valuation standards and related factors including, but not limited to, those referenced in the Internal Revenue Services Guide for Valuation, Revenue Ruling 59-60, and other factors deemed appropriate by the Qualified Appraiser, and giving great weight to any prior valuations of the shares of the Stock which have been agreed upon by the Stockholders. * * * The Agreement Price shall be determined within ninety (90) days after the Triggering Event, and shall be binding upon the Corporation, the Stockholders, and their Personal Representatives.

{¶ 21} During Ellis' five years of employment with RKA, no certificates of valuation were issued pursuant to Section 9(A) and no binding valuation by a qualified appraiser had been issued pursuant to Section 9(B). When Ellis originally purchased RKA shares, he and Kashmiry mutually agreed on a price that Ellis would pay. While this was clearly the agreed valuation of the stock at the time of its purchase, it did not represent the final valuation of the stock at the time of the sale back to RKA pursuant to the agreement. Thus, the $7,500 figure relied upon by the trial court should not have been the sole means of setting the stock price, as it reflected the parties' valuation at the time of purchase, but was not solely representative of the value several years later.

{¶ 22} It was incumbent upon the trial court to look to the plain, unambiguous meaning of the terms in Section 9(B) to determine the value of Ellis' shares at the time his employment ended. In other words, to value the shares, the court should have applied the methodology agreed to by the parties when evaluating Bianco and Dixon's testimony.

{¶ 23} Bianco testified that she prepared a detailed valuation report that took into account many factors including the company background and history, general economic and industry conditions, financial performance of the company. Adjustments were also made for factors such as lack of control and lack of marketability. Based on these considerations, Bianco valued the stock at $1,980.00 per share. Bianco stated that she gave Ellis' purchase price of $7,500.00 per share little to no weight.

{¶ 24} Frank Dixon is a licensed accountant who performed tax compliance and consulting work for RKA for several years, and testified on behalf of Ellis and EIA. He explained how the parties arrived at the $7,500.00 per share purchase price in 2009. Since, pursuant to the Stock Purchase Agreement, Ellis was to receive five percent of the issued and outstanding stock shares of RKA in exchange for his book of business, they had to determine the relative values of EIA and RKA. This was accomplished by applying a multiplier of 1.25 to the 2007 gross revenue commissions for both companies. Dixon stated he did not know how a multiplier of 1.25 was reached; however, using the figures from that calculation yielded a price of $7,500.00 per share.

{¶ 25} Dixon later testified that he determined the value of the RKA shares shortly after Ellis' employment was terminated in 2014 was also $7,500.00 a share; however, Dixon does not explain the rationale for this valuation.

{¶ 26} RKA relies on Shops at Boardman Park, LLC v. Target Corp. , 7th Dist. No. 13 MA 0188, 2016-Ohio-7283, 2016 WL 5930291, which held that individual terms in a contract should not be defined in isolation but rather as a whole within the context of an entire agreement. Thus, RKA argues that the trial court took the phrase "any prior valuation" out of context when examining Sections 9(A) and 9(B) of the Shareholders' Agreement because those sections defined a process by which the shareholders could value RKA stock.

{¶ 27} The trial court's judgment entry notes that the parties' agreement provides that if a triggering event occurs-here, Ellis' termination-and if the parties failed to set an annual unanimous value of the stock pursuant to Section 9(A) of the Shareholders' Agreement, the stock must be valued pursuant to Section 9(B), which provides that the stock be valued by a qualified appraiser. Again, as noted by the trial court, that provision states that the appraisal should consider a number of factors, but also "giv[e] great weight to any prior valuations."

{¶ 28} The trial court declined to rely upon Bianco's expert testimony because she failed to give great weight to the 2009 price of the stock. And while Dixon opined that the stock value at Ellis' termination matched the 2009 value, the trial court does not state it relied upon Dixon's testimony either, instead finding:

When the parties first valued the shares of stock in 2009 an arbitrary multiplier was agreed upon. No discounts were made for minority shareholder, nor corporate control or marketability, et cetera. Therefore, the court finds that the value of said shares of stock as of August 15, 2014, were at the same value as originally agreed upon by the parties, i.e., $7,500 per share.

{¶ 29} Hence, the trial court ignored the plain language of the parties' agreement and, instead of determining that the 2009 agreed-upon valuation was one factor that should have been given more weight by the appraiser, substituted the 2009 purchase price arbitrarily as the 2014 valuation. Based upon the trial court's reasoning, it appears the trial court was attempting to reach an equitable result in this matter. "It is not the responsibility or function of [the] court to rewrite the parties' contract in order to provide for a more equitable result." Foster Wheeler Enviresponse, Inc., v. Franklin Cty. Facilities Auth., 78 Ohio St.3d 353, 362, 678 N.E.2d 519 (1997).

{¶ 30} Here, the parties failed to perform an annual valuation of the stock as provided by the express, unambiguous terms of the Shareholders' Agreement, which notably also provides that the annual valuation would only be valid for 12 months. This demonstrates an expectation that the value of the shares likely would vary on an annual basis. While the original purchase price was an agreed valuation in 2009, it is not the sole determinate factor of valuation pursuant to the parties' contract.

{¶ 31} While the original purchase price may be deemed to be a valuation, it is only one, and five years old at that. Applying the terms of the Shareholders' Agreement, giving great weight to a five year old valuation does not equate to giving it controlling weight. The trial court's decision to give that figure controlling weight, and in fact, sole weight, was erroneous and contrary to the contract terms. Accordingly, RKA's first and second assignments of error are meritorious.

Cross-Appeal

Damages

{¶ 32} We turn now to Ellis and EIA's cross-appeal. Their first two assignments of error are interrelated and we will address them together. They respectively assert:

Ellis was awarded $107,838 in damages, but then the trial court subtracted $42,676 from that amount. That was error because that money was never paid to Ellis, never received by him, or never realized as income or profit.
The trial court did not place a high enough value on Ellis' 20% ownership interest in R. Kashmiry & Associates, Inc. in August 2014, Ellis' shares were worth more than $107,000.

Since, for the reasons outlined above, the trial court's decision on damages is reversed, the cross-appeal's first and second assignment of error are moot, and we decline to address them. See App.R. 12(A)(1)(c).

Injunctive Relief

{¶ 33} Ellis and EIA assert in their third assignment of error:

Granting the injunction was error.

{¶ 34} Ellis and EIA urge this Court to adopt a rule that non-compete agreements are invalid if an employer terminates an employee without just cause. Additionally, they argue that Ellis' employment with RKA was terminated due to failed payment negotiations which invalidates the non-compete clause.

{¶ 35} Pursuant to the various agreements between Kashmiry and Ellis, the non-compete agreement was effective for two years following Ellis' termination from RKA; i.e., it ended on August 15, 2016. The trial court only ordered the injunction to last for the duration of the non-compete agreement which, at the time the final judgment entry was filed, was no longer than eleven days. As the injunction has been expired for over one year, this assignment of error would normally be considered moot. However, if the non-compete agreement was unenforceable as Ellis and EIA argue, then there potentially would be no need for the injunction, and RKA would have no claim against Ellis or EIA for lost commissions due to Ellis soliciting RKA's clients after Ellis' termination.

{¶ 36} The standard of review regarding the granting of an injunction is whether the trial court abused its discretion. Vajarski v. Pearch , 7th Dist. No. 04 MA 235, 2006-Ohio-5268, 2006 WL 2846296, ¶ 9 citing Perkins v. Quaker City , 165 Ohio St. 120, 133 N.E.2d 595 (1956). Abuse of discretion implies that the court acted in an unreasonable, arbitrary, or unconscionable manner. State ex rel. Sartini v. Yost , 96 Ohio St. 3d 37, 2002-Ohio-3317, 770 N.E.2d 584.

{¶ 37} Ellis and EIA do not argue that the non-compete provision of the Employment Agreement was invalid on its face. Rather, they argue that, because Ellis' employment was terminated without just cause and pursuant to failed payment negotiations, the non-compete provision should not be enforced.

{¶ 38} Addressing the termination of Ellis' employment without just cause argument, Ellis and EIA urge this Court to adopt a Pennsylvania appellate court's decision in Insulation Corp. of America v. Brobston , 446 Pa.Super. 520, 667 A.2d 729 (1995) holding that an employer was not entitled to contractual non-compete protections because it terminated the employee's employment for "failure to promote his employer's interests."

{¶ 39} In response, RKA points to this Court's decision in Blakeman's Valley Office Equipment, Inc. v. Bierdeman , 152 Ohio App.3d 86, 2003-Ohio-1074, 786 N.E.2d 914 (7th Dist.). In Bierdeman , defendant-appellee Bierdeman sold his business to Copeco and became a Copeco employee. Id. at ¶ 3. The employment agreement contained a non-compete clause. Id. Eventually, Copeco sold part of its business to plaintiff-appellee Blakeman's Valley Office Equipment, Inc. ("Blakeman's"). Id. at ¶ 10. The original non-compete agreement was also subject to an assignment clause in the employment agreement. Id. On the same day Copeco sold part of its business to Blakeman's, Copeco terminated Bierdeman's employment. Id.

{¶ 40} The Bierdeman case is slightly distinguishable from the case at bar. While this Court noted that Bierdeman appeared to have been fired without just cause, the main issue in Bierdeman was the assignability of the non-compete agreement and not necessarily the enforceability of the non-compete agreement against an employee whose employment was terminated without just cause. Id. at ¶ 27 -28. But the Bierdeman decision still applies because, as this Court pointed out, Bierdeman and Copeco both contemplated the possibility of Bierdeman's employment being terminated without cause and this Court reversed the trial court's decision not to grant an injunction. Id. at ¶ 27, 46.

{¶ 41} Pursuant to the Employment Agreement, Ellis was only guaranteed employment for two years. While the agreement specified reasons for Ellis' employment to be terminated, it also provided that Ellis' employment could be terminated merely upon sixty days of written notice by Kashmiry to Ellis. Hence, the parties did contemplate that Ellis could be terminated from RKA without cause. Accordingly, the non-compete agreement is valid despite the fact that Ellis was terminated without just cause or was terminated due to failed payment negotiations. Accordingly, Ellis and EIA's third assignment of error is meritless.

Breach of Fiduciary Duty

{¶ 42} Ellis and EIA assert in their fourth assignment of error:

It was error for the trial court to dismiss the breach of fiduciary duty claim against Ray Kashmiry. Ohio law states that when a majority shareholder fires a minority shareholder without just cause, that act is a breach of fiduciary duty.

{¶ 43} The trial court dismissed Ellis' claim against Kashmiry for breach of fiduciary duty pursuant to Civ.R. 41(B)(2). When a trial court, during a bench trial, dismisses a plaintiff's claim pursuant to Civ.R. 41(B)(2), the test is whether the plaintiff has proven his case by a preponderance of the evidence. Shunk v. Shunk , 7th Dist. No. 03 BE 62, 2004-Ohio-7060, 2004 WL 2980349, ¶ 20. The trial court's decision to dismiss a plaintiff's claim during a bench trial will be affirmed so long as the decision was not against the manifest weight of the evidence. Id. at ¶ 21.

{¶ 44} Ellis and EIA argue that because RKA was a close-corporation, Kashmiry as the majority shareholder owed a heightened fiduciary duty to any minority shareholders. The only other shareholder at any relevant time was Ellis.

{¶ 45} Typically, a close-corporation is a corporation with a few shareholders whose corporate shares are not generally traded on the securities market. Crosby v. Beam , 47 Ohio St.3d 105, 548 N.E.2d 217 (1989) at paragraph one of the syllabus. In this case, there is evidence that the only shareholders of RKA stock were Kashmiry and Ellis. Also, there was no evidence that RKA stock was traded on the securities market. Therefore, RKA is a close-corporation.

{¶ 46} The Crosby decision provides some guidance on this assignment of error. The Ohio Supreme Court held that majority shareholders in a close-corporation owe minority shareholders a duty of "utmost good faith and loyalty." Id. at 108, 548 N.E.2d 217 citing Donahue v. Rodd Electrotype Co. of New England, Inc. , 367 Mass. 578, 328 N.E.2d 505 (1975). Furthermore, the Ohio Supreme Court held:

Majority or controlling shareholders breach such fiduciary duty to minority shareholders when control of the close corporation is utilized to prevent the minority from having an equal opportunity in the corporation. Control of stock in a close corporation cannot be used to give the majority benefits which are not shared by the minority.

Id. at 109, 548 N.E.2d 217 ; (internal citations omitted).

{¶ 47} Ellis alleged a breach of fiduciary duty claim against Kashmiry on several grounds including: failure to include Ellis in business decisions, Kashmiry using corporate funds to pay for personal expenses, Kashmiry paying his wife $8,000 to $12,000 a year for no apparent business purpose, terminating Ellis' employment for refusal to take a reduction in compensation, and terminating Ellis without just cause.

{¶ 48} These parties agreed that Ellis would become merely an employee of RKA-not a co-owner or manager. As previously explained, the Employment Agreement only guaranteed Ellis employment for two years. It also provided that Ellis' employment could be terminated upon sixty days of written notice by either party.

Moreover, the two other agreements contemplated the possibility that Ellis' employment could be terminated without just cause. Because Kashmiry complied with the terms of the Employment Agreement, the record does not demonstrate that Kashmiry breached any fiduciary duty to Ellis. Accordingly, Ellis and EIA's fourth assignment of error is meritless.

Expert Testimony and Reports

{¶ 49} Ellis and EIA assert in their fifth and final assignment of error:

The trial court erred in allowing the plaintiff's expert to testify. It was also error to admit her report.

{¶ 50} The admission of evidence is within the discretion of the trial court and the court's decision will only be reversed upon a showing of abuse of discretion. State ex rel. Sartini v. Yost , 96 Ohio St. 3d 37, 2002-Ohio-3317, 770 N.E.2d 584. Abuse of discretion implies that the court acted in an unreasonable, arbitrary, or unconscionable manner. Id. citing State v. Herring , 94 Ohio St. 3d 246, 762 N.E.2d 940.

{¶ 51} Ellis and EIA argue that because the Shareholders' Agreement required Bianco's report to be completed within 90 days of Ellis' employment with RKA being terminated, it should be excluded. However, the fact that the report was late does not preclude if from being offered as evidence at trial, nor does it preclude Bianco's testimony regarding the stock's valuation. The ultimate issue in this case was the value of Ellis' shares of RKA stock at the time his employment was terminated. Bianco's valuation was certainly relevant evidence pursuant to Evid.R. 401. Therefore, the trial court did not abuse its discretion in admitting Bianco's testimony and report. Accordingly, Ellis and EIA's fifth assignment of error is meritless.

{¶ 52} In sum the trial court's judgment regarding the underlying appeal and the valuation of the stock is reversed. As the trial court's decision on damages is reversed, the cross-appeal's first and second assignment of error are moot. The remainder of the judgment on cross-appeal is affirmed. The case is remanded to the trial court to review the trial record and issue a new valuation decision regarding the stock.

Donofrio, J., concurs is part, dissents in part; see concurring in part, dissenting in part opinion.

Waite, J., concurs.

Donofrio, J., concurring in part and dissenting in part.

{¶ 53} I respectfully dissent from the majority's resolution of RKA's appeal and that portion of the majority's resolution of Ellis and EIA's cross-appeal dealing with valuation. I concur with the balance of the majority's resolution of Elis and EIA's cross-appeal. I would affirm the trial court's decision regarding the valuation of the RKA stock.

{¶ 54} In a contract case, the primary role of the court is to ascertain and give effect to the intent of the parties. Saunders v. Mortensen , 101 Ohio St.3d 86, 2004-Ohio-24, 801 N.E.2d 452, ¶ 9.

{¶ 55} Section 9(A) of the Shareholders' Agreement provides that all of the shareholders will come to a unanimous agreement as to the price of all outstanding shares of stock and then issue a certificate of valuation for the stock that is valid for one year. If this has not been done when a triggering event occurs, such as Ellis' termination of employment, Section 9(B) sets forth the process to determine the stock's value. Section 9(B) states in relevant part:

* * * at the time of such Triggering Event, the Board of Directors of the Corporation shall appoint a Qualified Appraiser to determine the Agreement Price of the Offered Stock, considering all of the relevant business valuation standards and related factors including, but not limited to, those referenced in the Internal Revenue Services Guide for Valuation, Revenue Ruling 59-60, and other factors deemed appropriate by the Qualified Appraiser, and giving great weight to any prior valuations of the shares of the Stock which have been agreed upon by the Stockholders. * * * The Agreement Price shall be determined within ninety (90) days after the Triggering Event, and shall be binding upon the Corporation, the Stockholders, and their Personal Representatives.

{¶ 56} The Shareholders' Agreement itself does not specifically define the term "valuation." The closest definition to the term "valuation" can be found in Section 9(A) of the shareholders' agreement. It states in relevant part:

At least annually, within ninety (90) days following the end of each fiscal year of the Corporation, the Stockholders shall unanimously evaluate, agree upon, and establish the fair market value of each outstanding share of Stock in the Corporation. Said valuation shall be effective for a period of twelve (12) months and a Certificate of Valuation shall be included in the corporate minutes of the Corporation.

{¶ 57} When Ellis purchased the RKA stock, he and Kashmiry agreed on a price. Ellis purchased 14.4 shares for $107,838, or approximately $7,500 per share. (Tr. 184). This fits the plain meaning of the word "valuation." Prior to Ellis purchasing the stock, Kashmiry was the sole RKA shareholder. As the president and sole shareholder, Kashmiry valued RKA's stock at $7,500 per share.

{¶ 58} Despite the $7,500 valuation, Kelly Bianco, who RKA hired to appraise the stock after Ellis' termination, testified that she gave Ellis' purchase price of $7,500 per share little to no weight. (Tr. 575-577).

{¶ 59} I would find that Bianco's valuation was not binding on the parties because, per the terms of the Shareholders' Agreement, the valuation was required to be completed within 90 days of Ellis' termination from RKA. Ellis was terminated from RKA on August 14 or 15 of 2014. Bianco's report was not completed until March 19, 2015. Per the Shareholders' Agreement, Bianco's valuation was four months delinquent.

{¶ 60} Moreover, Section 9(B) specifically says "any prior valuation" should be given great weight. Given its plain meaning, the phrase "any prior valuation" would include both the process set forth in Section 9(A) and Kashmiry valuing the stock at $7,500 per share. Bianco admitted that she did not consider the prior purchase price of $7,500 per share in her valuation of RKA stock. (Tr. 575-577). While Bianco testified that she considered the other factors listed in Section 9(B) of the Shareholders' Agreement, her testimony indicates that she gave little to no weight to Ellis' purchase price of $7,500 per share instead of the great weight the Shareholders' Agreement required her to give it. (Tr. 575-577).

{¶ 61} The trier of fact is not bound by the appraisal or valuation methodology used by any expert witness. Conti v. Christoff , 7th Dist. Nos. 99 CA 84, 99 CA 327, 2001-Ohio-3421, 2001 WL 1199056 citing Murray & Co. Marina, Inc. v. Erie Cty. Bd. of Revision , 123 Ohio App.3d 166, 703 N.E.2d 846 (6th Dist. 1997), see also Youngstown Sheet & Tube Co. v. Mahoning County Bd. of Revision , 66 Ohio St.2d 398, 422 N.E.2d 846 (1981).

{¶ 62} With no certificate of valuation issued pursuant to Section 9(A) and no binding valuation issued pursuant to Section 9(B), the trial court looked to the plain meaning of the contract to determine the value of Ellis' stock at the time his employment ended.

{¶ 63} The trial court had undisputed evidence that Kashmiry sold stock to Ellis that was valued at $7,500 per share. Furthermore, Frank Dixon, a licensed accountant who performed tax compliance and consulting work for RKA, testified that the value of RKA stock shortly after Ellis' employment was terminated was approximately $7,500 a share. (Tr. 225-227).

{¶ 64} Based on the above, I would find that the trial court determined the value of the stock within the terms of the contract. Therefore, I would affirm the trial court's judgment in its entirety.