Westbrook v. Swiatek

[Cite as Westbrook v. Swiatek, 2012-Ohio-2451.]

COURT OF APPEALS
DELAWARE COUNTY, OHIO
FIFTH APPELLATE DISTRICT

WILLIAM WESTBROOK : JUDGES:
:
: Hon. Patricia A. Delaney, P.J.
Plaintiff-Appellee : Hon. William B. Hoffman, J.
: Hon. Sheila G. Farmer, J.
-vs- :
: Case No. 11-CAE-09-0080
VALERIE SWIATEK, ET AL., :
:
:
Defendants-Appellants : OPINION

CHARACTER OF PROCEEDING: Appeal from the Delaware County Court of
Common Pleas, Case No. 06 CV H 08
0683

JUDGMENT: AFFIRMED

DATE OF JUDGMENT ENTRY: May 30, 2012

APPEARANCES:

For Appellants: For Appellee:

QUINTIN F. LINDSMITH O. JUDSON SCHEAF, III
NATALIE T. FURNISS 10 W. Broad St., Suite 700
JAMES P. SCHUCK Columbus, OH 43215
100 S. Third St.
Columbus, OH 43215 ANTHONY M. HEALD
125 N. Sandusky St.
Delaware, OH 43015
Delaney, P.J.

{¶1} Defendants-Appellants Alum Creek, Inc., Rennob, Inc., and Whittington,

Inc. appeal the August 18, 2011 and September 15, 2011 judgment entries of the

Delaware County Court of Common Pleas granting indemnification of fees and

expenses to Plaintiff-Appellee William Westbrook.

FACTS AND PROCEDURAL HISTORY

{¶2} This matter was originally filed on August 1, 2006 by Westbrook as an

action, for among other things, an accounting and dissolution of a “joint

venture/partnership agreement” between himself and Valerie Swiatek, Victoria Bonner,

Deborah Bonner (“Bonner Daughters”), ABL Group, Ltd., Alum Creek, Inc., Cobbleton

Bachman LLC, Cobbleton II LLC, Rennob, Inc., SR 37 at Old State LLC, and

Whittington, Inc. (“Bonner Companies”). Westbrook alleged a written “Memo of

Understanding” (“MOU”) memorialized the joint venture/partnership agreement. The

MOU was between Westbrook and Charles Bonner. The MOU was signed by

Westbrook and Bonner in their individual capacities on June 24, 1999.

{¶3} The general terms of the MOU were such that Mr. Bonner, either

individually or through one of several Bonner Companies (referred to as Bonner

Interests in the MOU), would provide the financing for the purchase of property found by

and to be developed by Westbrook. The pertinent terms of the MOU were as follows:

Pursuant to the “Standard Deal,” wherein Westbrook would receive 30% of the profits,

the Bonner Companies would receive 65% and Michael Suhovecky (Mr. Bonner's

accountant) would receive 5%. A losing transaction would result in zero gain or loss to

Westbrook. On “Sour Deals” where there was money fronted but no deal made, the
Bonner Companies would take 100% of the loss. Mr. Bonner could continue to do deals

on his own, with or without Westbrook. Mr. Bonner provided Westbrook with

administrative support such as office space and accounting services. Westbrook was

considered an employee of one of the Bonner Companies to the extent necessary to

qualify Westbrook under the corporation's health coverage plan. “The remainder of his

status will be an independent contractor, associate, officer and/or partner depending on

the particulars of each deal.” (MOU, Working Relationship.) Westbrook also served as

an officer of various Bonner Companies. Westbrook was the president of Alum Creek,

Inc., vice president of Whittington, Inc., and vice president of Rennob, Inc. (Bonner

Companies Amended Counterclaim, August 8, 2007.)

{¶4} Westbrook and Mr. Bonner operated under the terms of the MOU until Mr.

Bonner's death in September 2003. Before his death, Mr. Bonner reorganized the

Bonner Companies' boards of directors and appointed the Bonner Daughters to the

boards in addition to three outside directors. Westbrook continued working on the

pending real estate projects after Mr. Bonner died. According to the complaint, these

projects include the Cobbleton Property, the Hummel Property, Woods at Cumberland,

McCammon Chase Property, Lithopolis Property, Huntley Property, and Noble Property.

{¶5} In mid-2005, the relationship between the parties deteriorated. On June

25, 2005, Westbrook was informed that the Bonner Daughters intended to downsize the

active real estate development operations of the Bonner Companies and the MOU was

terminated with respect to the current projects, except the Cobbleton and Huntley

properties. In September 2006, Westbrook was informed he was no longer authorized

to act in any representative capacity on either the Cobbleton or Huntley properties.
 {¶6} Shortly thereafter, this litigation ensued in the Delaware County Court of

Common Pleas. After the filing of the original complaint, Westbrook sought the

appointment of a receiver. The trial court appointed a receiver in June 2007. However,

the appointment was vacated by this Court on December 10, 2008, in Westbrook v.

Swiatek, 5th Dist. Nos. 07 CAE 09 0046, 07 CAE 11 0058, 2008-Ohio-6477

(“Westbrook I”). The Ohio Supreme Court declined jurisdiction to hear the case on April

22, 2009.

{¶7} In the meantime, the litigation continued between the parties. In 2007, the

Bonner Companies asserted counterclaims against Westbrook. ABL Group, Alum

Creek, Cobbleton I and II, Whittington, and Rennob asserted the following claims: (1)

slander of title for Westbrook’s initiation of the lawsuit claiming an ownership right in the

real estate parcels comprising the Cobbleton property; (2) declaratory judgment that the

Bonner Companies are the owners to the exclusion of Westbrook of the real estate

parcels comprising the Cobbleton property; and (3) negligence of the Westbrook in

performing his task of preparing the real estate parcels comprising the Cobbleton

property for development and/or sale. On July 2, 2007, the trial court granted

Westbrook’s motion to dismiss count one of the Bobber Companies’ counterclaims. On

August 8, 2007, the Bonner Companies filed amended counterclaims asserting the

following claims: (1) declaratory judgment that the corporate defendants are the owners

to the exclusion of Westbrook of the Cobbleton property; (2) breach of fiduciary duty by

Westbrook to the Bonner Companies by concealing his positions; (3) breach of contract

as to sour deals by failing to allow the defendants to treat Cobbleton as a sour deal and

allow the defendants to sell the property to recover expenses; and (4) breach of
fiduciary duty by Westbrook by failing to perform his obligations as project manager to

assure that the contingencies in the Dominion contract would be met.

{¶8} On August 9, 2007, Westbrook filed an amended complaint adding claims

for indemnification and advancement of legal expenses for defense of the

counterclaims. The corporate regulations of Alum Creek, Rennob, and Whittington

provided for indemnification and advancement of attorney’s fees and expenses as

follows:

Section 5.01. Indemnification. The corporation shall indemnify

any officer or director of the corporation who was or is threatened to be

made a party to any threatened, pending or completed action, suit or

proceeding, whether civil, criminal, administrative or investigative

(including, without limitation, any action threatened or instituted by or in

the right of the corporation), by reason of the fact that he is or was a

director, officer, employee, agent or volunteer of the corporation, or is or

was serving at the request of the corporation as a director, trustee,

officer, employee, member, manager, agent or volunteer of another

corporation (domestic or foreign, nonprofit or for profit), limited liability

company, partnership, joint venture, trust or other enterprise, against

expenses (including, without limitation, attorneys’ fees, filing fees, court

reporters’ fees and transcript costs), judgments, fines and amounts paid

in settlement actually and reasonably incurred by him in connection with

such action, suit or proceeding if his act or omission giving rise to any

claim for indemnification under this Section 5.01 was not occasioned by
his intent to cause injury to the corporation or by his reckless disregard

for the best interests of the corporation, and in respect of any criminal

action or proceeding, he had no reasonable cause to believe his conduct

was unlawful. It shall be presumed that no act or omission of a person

claiming indemnification under this Section 5.01 that gives rise to such

claim was occasioned by an intent to cause injury to the corporation or

by a reckless disregard for the best interests of the corporation and, in

respect of any criminal matter, that such person had no reasonable

cause to believe his conduct was unlawful; the presumption recited in

this Section 5.01 can be rebutted only by clear and convincing evidence,

and the termination of any action, suit or proceeding by judgment, order,

settlement or conviction, or upon a plea of nolo contendere or its

equivalent, shall not, of itself, rebut such presumption. * * *

Section 5.05. Advances for Expenses. The provisions of Section

1701.13(E)(5)(a) of the Ohio Revised Code do not apply to the

corporation. Expenses (including without limitation, attorneys’ fees, filing

fees, court reporters’ fees and transcript costs) incurred in defending any

action, suit or proceeding referred to in Section 5.01 shall be paid by the

corporation in advance of the final disposition of such action, suit or

proceeding to or on behalf of the officer or director promptly as such

expenses are incurred by him, but only if such officer or director shall first

agree, in writing, to repay all amounts so paid in respect of any claim,

issue or other matter asserted in such action, suit or proceeding in
 defense of which he shall not have been successful on the merits or

otherwise if it is proved by clear and convincing evidence in a court of

competent jurisdiction that, in respect of any such claim, issue or other

matter, his relevant action or failure to act was occasioned by his

deliberate intent to cause injury to the corporation or his reckless

disregard for the best interests of the corporation, unless, and only to the

extent that, the Court of Common Pleas of Delaware County, Ohio or the

court in which such action or suit was brought shall determine upon

application that, despite such determination, and in view of all of the

circumstances, he is fairly and reasonably entitled to all or part of such

indemnification.

{¶9} On August 8, 2007, the Bonner Companies filed a separate suit in

Franklin County Court of Common Pleas against Westbrook and Mr. Suhovecky, in their

role as corporate officers and asserted claims of fraud, breach of contract and breach of

fiduciary duty. Ultimately, that suit was transferred and consolidated with this action in

Delaware County.

{¶10} Westbrook filed a motion on August 28, 2007 requesting a hearing on

the “Interim Award of Legal Fees.” Westbrook argued he was due the advancement of

his attorney’s fees and expenses under the corporate regulations of Alum Creek,

Rennob, and Whittington. On October 2, 2008, the trial court granted Westbrook's

motion. The trial court, citing law from the State of Delaware, noted that the

construction and interpretation of the corporate regulations is a question of law.

Second, the trial court determined that whether a corporate official is entitled to
advancement of legal expenses can be brought before the court by motion. The trial

court proceeded to examine the corporate regulations and Ohio law, specifically R.C.

1701.13(E), which permits an Ohio corporation to establish indemnification and

advancement provisions for its officers and directors. The trial court concluded that

Westbrook was entitled to advancement of attorney fees and expenses from the

corporations.

{¶11} On August 12, 2008, ABL Group, Cobbleton I and II, and Rennob filed a

second amended counterclaim asserting the following claims: (1) declaratory judgment

that the corporate defendants are the owners to the exclusion of Westbrook of the

Cobbleton property and declaratory judgment that Defendant SR 37 at Old State is the

owner of the Huntley property; (2) breach of contract as to sour deals by failing to

allow the defendants to treat Cobbleton as a sour deal and allow the defendants to sell

the property to recover expenses; (3) breach of fiduciary duty by Westbrook to

purported partnership by failing to perform his obligations as project manager; (4)

breach of fiduciary duty by Westbrook by taking action to cause the collapse of the

sale of 63 units of Cobbleton property to Dominion for $637,000 in September 2007;

and (5) tortious interference with contract by taking action to cause the collapse of the

sale of 63 units of the Cobbleton property to Dominion. The August 12, 2008 second

amended counterclaim withdrew the officer-based claim of breach of fiduciary duty.

{¶12} On October 31, 2008, the Bonner Companies voluntarily dismissed

without prejudice the other officer-related counterclaims.

{¶13} The trial court held a hearing on November 5, 2008 to determine the

amount of legal expenses to be advanced by the corporations. By entry filed
December 10, 2008, the trial court awarded $227,975.75 in attorney’s fees and

$12,976.31 in expenses to Westbrook. The Bonner Companies were ordered to pay

these amounts by January 12, 2009. The trial court deferred the final hearing on

indemnification until after the trial occurred in the case.

{¶14} The Bonner Companies appealed the award to this court, which

dismissed the appeal for lack of a final, appealable order. The Ohio Supreme Court

declined jurisdiction to hear the case.

{¶15} Ultimately, the Bonner Companies refused to pay the advancement and

were found in contempt of court. In their appeal of the contempt order, the Bonner

Companies raised four assignments of error. Relevant to this appeal, the Bonner

Companies argued in their first assignment of error the trial court erred in awarding

fees and expenses because Westbrook presented limited evidence at the

advancement hearing. The third assignment of error stated the trial court erred in

finding the Bonner Companies were in contempt because the advancement order was

erroneously issued. We affirmed the trial court’s decision to find the Bonner

Companies were in contempt in Westbrook v. Swiatek, 5th Dist. No. 2009 CAE 05

0048, 2010-Ohio-2868 (“Westbrook II”). The Ohio Supreme Court declined jurisdiction

to hear the case.

{¶16} Westbrook filed a second amended complaint on February 12, 2008.

Count ten of the complaint requested indemnification and contribution from Valerie

Swiatek only pursuant to common law and statute. In count eleven, Westbrook

requested contractual indemnification against Alum Creek, Rennob, and Whittington

pursuant to the corporate regulation Section 5.01.
 {¶17} The Bonner Daughters and the Bonner Companies filed a motion for

summary judgment as to all claims asserted by Westbrook. The trial court granted

summary judgment in favor of the Bonner Daughters and the Bonner Companies as to

twelve counts of Westbrook’s second amended complaint. The trial court denied

summary judgment as to breach of contract against the Bonner Daughters,

indemnification against Valerie Swiatek, and indemnification against Alum Creek,

Rennob, and Whittington. The indemnification claims were reserved for hearing after

a trial on the merits on the remaining breach of contract cause of action.

{¶18} The claim of breach of contract against the Bonner Daughters proceeded

to a jury trial. The trial court granted the Bonner Daughters’ motion for directed verdict

pursuant to Civ.R. 50(A) and entered judgment in their favor.

{¶19} Westbrook appealed the disposition of his claims against the Bonner

Daughters and the Bonner Companies in Westbrook v. Swiatek, 5th Dist. No. 09 CAE

09 0083, 2011-Ohio-781 (“Westbrook III”). This court affirmed the decisions on

February 14, 2011.

{¶20} On April 28, 2011, the trial court held a hearing on Westbrook’s claim for

indemnification against Alum Creek, Rennob, and Whittington. At the hearing, only

three witnesses testified: John McDonald, Westbrook’s expert; Jud Scheaf,

Westbrook’s attorney; and Anthony Heald, Westbrook’s attorney. The parties filed

pre-hearing and post-hearing briefs.

{¶21} Upon consideration of the evidence presented at the hearing and the

briefs, the trial court issued its decision on August 17, 2011 to award Westbrook

indemnification of litigation expenses in the amount of $453,374.04, plus post-
judgment interest and pre-judgment interest in the amount of $40,514.27. The trial

court previously awarded Westbrook advancement of expenses on December 10,

2008 and February 14, 2011 in the amount of $391,362.31. The trial court ordered

Alum Creek, Rennob, and Whittington to immediately pay Westbrook $102,526.

{¶22} Upon motion of Alum Creek, Rennob, and Whittington, the trial court

amended the August 18, 2011 judgment entry to delete the statement that the parties

were to immediately pay Westbrook. Instead, the trial court granted a judgment for

Westbrook and against Alum Creek, Rennob, and Whittington as to Count 11 of

Westbrook’s complaint in the amount of $102,526.

{¶23} It is from this judgment Alum Creek, Rennob, and Whittington now

appeal.

ASSIGNMENTS OF ERROR

{¶24} Alum Creek, Rennob, and Whittington raise three Assignments of Error:

{¶25} “I. THE TRIAL COURT ERRED IN AWARDING WESTBROOK

INDEMNIFICATION FOR FEES AND EXPENSES HE INCURRED IN RESPONSE TO

CLAIMS BROUGHT BY COMPANIES THAT HAD NO INDEMNIFICATION BYLAWS

AND FOR CLAIMS THAT HAD NOTHING TO DO WITH HIS FORMER POSITION AS

AN OFFICER THEREBY FAILING TO ALLOCATE BETWEEN ‘COVERED’ AND

‘NON-COVERED’ CLAIMS.

{¶26} “II. THE TRIAL COURT ERRED IN MAKING A FACTUAL FINDING

‘THAT ALL OF THE COUNTERCLAIMS AROSE ‘BY REASON OF THE FACT’ THAT

THE PLAINTIFF SERVED AS A DIRECTOR, OFFICER…OF THE CORPORATION”
WHERE THE PLAINTIFF PRESENTED NO SUCH EVIDENCE AND COUNSEL’S

TESTIMONY ESTABLISHED THE OPPOSITE.

{¶27} “III. THE TRIAL COURT ERRED IN THE CALCULATION OF PRE-

JUDGMENT AND POST-JUDGMENT INTEREST WHICH WAS BASED UPON AN

UNDERLYING FEE AWARD THAT WAS EXCESSIVE.”

ANALYSIS

I., II.

{¶28} For ease of discussion, we consider the first and second Assignments of

Error together. Alum Creek, Rennob, and Whittington argue in their first Assignment

of Error the trial court erred in failing to allocate between covered and non-covered

counterclaims when it granted Westbrook indemnification for attorney’s fees and

expenses based his defense against all the counterclaims raised by the Bonner

Companies. The parties contend in their second Assignment of Error, that Westbrook

failed to establish the counterclaims arose by reason of the fact he was an officer or

director of Alum Creek, Rennob, and Whittington. For the reasons that follow, we

disagree.

{¶29} Westbrook is a former officer of Alum Creek, Rennob, and Whittington.

Alum Creek, Rennob, and Whittington are governed by corporate bylaws providing for

advancement and indemnification of attorney’s fees and expenses if the officer or

director is a party to a civil action by reason of the fact that he is or was a director,

officer, employee, agent, or volunteer of the corporation.

{¶30} In this case, ABL Group, Alum Creek, Cobbleton I and II, Whittington,

and Rennob brought counterclaims against Westbrook. The trial court found in its
August 18, 2011 judgment entry granting indemnification that the parties agreed

Westbrook was entitled to indemnification for his fees and expenses incurred in

defending the following counterclaims: (1) negligence claim asserted by Rennob; (2)

breach of fiduciary duty claim in August 8, 2007 amended counterclaim; (3) fraud

claim by Whittington; and (4) breach of fiduciary duty by Whittington. The remaining

counterclaims were slander of title, contingent claim for breach of fiduciary duty to

purported partnership, breach of fiduciary duty regarding Dominion sale, and tortious

interference with contract regarding Dominion sale. The trial court held that all of the

counterclaims arose “by reason of the fact” Westbrook was a director, officer,

employee, agent, or volunteer of the corporation and were part of one action, suit, or

proceeding. The trial court further determined the corporate regulations, authored by

the corporate defendants, did not require the officer or director to separate the

counterclaims. (Judgment Entry, Aug. 18, 2011.)

{¶31} Alum Creek, Rennob, and Whittington cite to the “law of allocation” to

argue Westbrook was required to allocate his litigation expenses for his defense of the

counterclaims between those brought by the companies not covered by the corporate

bylaws and those brought by the companies with corporate bylaws providing for

indemnification. Alum Creek, Rennob, and Whittington state the party seeking

recovery of attorney fees must allocate between the covered and non-covered claims

and a failure to meet this burden will result in a denial of an award of attorney’s fees in

its entirety. See Abel v. Keybank, U.S.A., N.A., N.D.Ohio No. 03 CV 524, 2005 WL

2216938 (Sept. 12, 2005); Inserra v. J.E.M. Bldg. Corp., 9th Dist. No. 2973-M, 2000

WL 1729480 (Nov. 22, 2000).
 {¶32} This court reviewed the parties’ “law of allocation” argument in

Westbrook II. As stated in the facts above, Westbrook sought an advancement of the

legal fees for his defense of the counterclaims of the Bonner Companies. Westbrook

based his motion for advancement on Sec. 5.05 of the corporate bylaws. The trial

court awarded Westbrook attorney’s fees and expenses to be paid by January 12,

2009, but deferred the final hearing on indemnification until after the trial occurred in

the case. The judgment was not paid and Westbrook filed a motion to show cause.

The trial court sustained Westbrook’s show cause motion.

{¶33} Valerie Swiatek, Victoria Bonner, Deborah Boner, Whittington, Alum

Creek, Rennob, and ABL Group appealed the contempt judgment in Westbrook II.

While the parties raised assignments of error as to the law of contempt, the parties

argued in their first and third assignments of error the basis of the trial court’s

contempt finding, the advancement order, was in error.

{¶34} The first assignment of error contended there was no evidence

Westbrook was entitled to the advancement of fees and expenses. In support of the

argument, the parties stated, “[p]laintiff submitted no evidence of allocation between

‘covered’ and ‘non-covered’ claims.” The parties argued that only four counterclaims

were covered by the advancement and indemnification provisions of the corporate

bylaws. When Westbrook requested the advancement of his attorney’s fees and

expenses pursuant to the corporate bylaws, he was required to allocate between the

covered and non-covered counterclaims.
 {¶35} In reviewing the parties’ arguments in Westbrook II, we analyzed

advancement and indemnification provisions as provided by statute and by the

corporate bylaws. We stated:

R.C. 1701.13(E)(2) provides for indemnification of corporate

officers. It states:

A corporation may indemnify or agree to indemnify any person

who was or is party ... to any threatened, pending or completed action or

suit by or in the right of the corporation to procure a judgment in its favor,

by reason of the fact that he is or was a director, officer, employee, or

agent of the corporation ... against expenses, including attorney's fees,

actually and reasonably incurred by him in connection with the defense

or settlement of such action or suit, if he acted in good faith and in a

manner he reasonably believed to be in or not opposed to the best

interests of the corporation ...”

The statute further provides that the corporation may agree to pay

these fees and expenses in such proceedings “in advance of the final

disposition of the action, suit or proceeding, as authorized by the

directors in the specific case, upon receipt of an undertaking by or behalf

of such ... officer ... to repay such amount if it shall ultimately be

determined that he is not entitled to be indemnified by the corporation.”

R.C. 1701.13(E)(5). This right is commonly referred to as

“advancement.”
 Indemnification and advancement statutes were enacted to attract

qualified candidates into corporate service by protecting their personal

assets from depletion by litigation that results from that service and to

develop sound corporate management. William Knepper & Dan Bailey,

Liability of Corporate Officers and Directors, (7th ed.), Volume 2, Section

22.01. Advancement is a corollary remedy to indemnification by

providing immediate funds to officers for ongoing litigation expenses,

which may become significant, prior to the outcome on the merits. The

right to indemnification or recoupment is established after the merits are

determined by a jury or court. Under some circumstances, such as here,

a corporation may be reluctant to advance funds to an officer who is

perceived by the corporation as being unfaithful, or fear the funds will

never be paid back.

Ohio law does not require corporations to provide indemnification

or advancement: it just gives them the power to do so. It is undisputed

that the corporate Appellants opted to do so in this case.

***

The Ohio Supreme Court has held that the rules and regulations

of an Ohio corporation, not in contravention of any statutory provision,

have the force of “contracts” as between the corporation and its

members and as between the members themselves. Knight v. Shutz

(1943) 141 Ohio St. 267, 47 N.E.2d 886, citing with approval State ex.
 Rel. Schwab, Pros. Atty., v. Price (1929) 121 Ohio St. 114, 167 N.E. 366,

syllabus.

Therefore, this is essentially a matter concerning the contractual

interpretation of the indemnification and advancement provisions to be

followed by the parties as set forth in the corporate regulations.

Westbrook II, 5th Dist. No. 2009 CAE 05 0048, 2010-Ohio-2868, ¶21-25, 28-29.

{¶36} Upon our review of the trial court’s fee award and the arguments on

appeal, we affirmed the trial court’s decision to award Westbrook advancement of his

fees and expenses.

{¶37} In the present appeal, Alum Creek, Rennob, and Whittington argue

Westbrook’s claim for indemnification must fail because he did not allocate between

the covered and non-covered counterclaims. Westbrook counters this court should

apply the law of the case doctrine to overrule the parties’ first Assignment of Error

because we have already examined and overruled the law of allocation argument as

applied to Westbrook’s claim for advancement in Westbrook II.

{¶38} In Hopkins v. Dyer, 104 Ohio St.3d 461, 2004-Ohio-6769, 820 N.E.2d

329, the Ohio Supreme Court discussed the law of the case doctrine and stated as

follows:

The law of the case is a longstanding doctrine in Ohio

jurisprudence. “[T]he doctrine provides that the decision of a reviewing

court in a case remains the law of that case on the legal questions

involved for all subsequent proceedings in the case at both the trial and

reviewing levels.” Nolan v. Nolan, 11 Ohio St.3d at 3, 11 OBR 1, 462
 N.E.2d 410. The doctrine is necessary to ensure consistency of results

in a case, to avoid endless litigation by settling the issues, and to

preserve the structure of superior and inferior courts as designed by the

Ohio Constitution. State ex rel. Potain v. Mathews (1979), 59 Ohio St.2d

29, 32, 13 O.O.3d 17, 391 N.E.2d 343.

Hopkins, ¶ 15.

{¶39} We do not find persuasive the argument that the law of the case doctrine

resolves the issue. In Westbrook II, we stated, “[t]he Appellants’ dismissal of the

counterclaims did not convert the trial court’s rulings into a ruling on Westbrook’s claim

for indemnification, which is a separate and distinct legal claim. In addition, the trial

court stated: ‘[t]he Court hereby defers the final hearing on indemnification until after

the trial occurs in this case.’” Westbrook II, 5th Dist. No. 2009 CAE 05 0048, 2010-

Ohio-2868, ¶44.

{¶40} Indemnification is a separate and distinct legal claim from advancement,

barring us from utilizing the law of the case doctrine. However, we find Westbrook II

provides guidance in determining the applicability of the law of allocation to

Westbrook’s claim for indemnification.

{¶41} In this appeal, we have the same parties, the same corporate bylaws,

and most significantly, the same counterclaims as those analyzed in Westbrook II.

The parties in Westbrook II argued Westbrook was not entitled to advancement under

the corporate bylaws because he did not allocate between the covered and non-

covered counterclaims. The parties in the present appeal argue Westbrook is not

entitled to indemnification because he did not allocate between the covered and non-
covered counterclaims. While indemnification is a separate and distinct legal claim, in

this case, indemnification and advancement as provided for in the corporate bylaws

are the opposite sides of the same coin.

{¶42} Based on the authority of Westbrook II, we find the trial court did not err

in finding Westbrook was not required to allocate the counterclaims in order to be

entitled to indemnification of his legal fees and expenses.

{¶43} As to the second Assignment of Error, we find this analysis to be

applicable to the trial court’s finding Westbrook was entitled to indemnification by

reason of the fact he was a director, officer, employee, agent, or volunteer of the

corporation.

{¶44} The first and second Assignments of Error of Alum Creek, Rennob, and

Whittington are overruled.

III.

{¶45} Alum Creek, Rennob, and Whittington argue in their third Assignment of

Error the trial court erred in awarding pre-judgment and post-judgment interest

because the underlying award for indemnification was in error.

{¶46} Based upon our disposition of the first and second Assignments of Error,

we overrule the third Assignment of Error.
 CONCLUSION

{¶47} For the foregoing reasons, we overrule the first, second, and third

Assignments of Error of Defendants-Appellants, Alum Creek, Rennob, and

Whittington.

{¶48} The judgment of the Delaware County Court of Common Pleas is

affirmed.

By: Delaney, P.J.

Hoffman, J. and

Farmer, J. concur.

HON. PATRICIA A. DELANEY

HON. WILLIAM B. HOFFMAN

HON. SHEILA G. FARMER

IN THE COURT OF APPEALS FOR DELAWARE COUNTY, OHIO
FIFTH APPELLATE DISTRICT

:
WILLIAM WESTBROOK :
:
Plaintiff - Appellee : JUDGMENT ENTRY
:
:
-vs- :
: Case No. 11 CAE 09 0080
VALERIE SWIATEK, et al. :
 :
Defendants-Appellants :
:

For the reasons stated in our accompanying Opinion on file, the judgment of the

Delaware County Court of Common Pleas is affirmed. Costs assessed to Appellants.

HON. PATRICIA A. DELANEY

HON. WILLIAM B. HOFFMAN

HON. SHEILA G. FARMER