[Cite as Moreland v. E. Warther & Sons, Inc., 2016-Ohio-831.]
COURT OF APPEALS
TUSCARAWAS COUNTY, OHIO
FIFTH APPELLATE DISTRICT
CAROL ANN MORELAND, et al. JUDGES:
Hon. Sheila G. Farmer, P. J.
Plaintiffs-Appellants Hon. W. Scott Gwin, J.
Hon. John W. Wise, J.
-vs-
Case No. 2015 AP 07 0036
E. WARTHER & SONS, INC., et al.
Defendants-Appellees OPINION
CHARACTER OF PROCEEDING: Civil Appeal from the Court of Common
Pleas, Case No. 2014 CV 09 0563
JUDGMENT: Reversed and Remanded
DATE OF JUDGMENT ENTRY: March 2, 2016
APPEARANCES:
For Plaintiffs-Appellants For Defendants-Appellees
JAMES J. COLLUM SUSAN C. RODGERS
MICHAEL A. THOMPSON JUSTIN S. GREENFELDER
CRESCENT POINTE BUILDING NEIL BHAGAT
4774 Munson Street N.W. BUCKINGHAM, DOOLITTLE &
Suite 400 BURROUGHS, LLC
Canton, Ohio 44718-3634 4518 Fulton Drive, NW, Suite 200
Canton, Ohio 44735
Tuscarawas County, Case No. 2015 AP 07 0036 2
Wise, J.
{¶1} Plaintiffs-Appellants, Carol Moreland and Joanne Warther, appeal the
decision of the Tuscarawas County Court of Common Pleas granting summary judgment
in favor of Defendants-Appellees Mark Warther, David Warther II, and Lisa Warther White
in an action for breach of fiduciary duty and civil conspiracy. The relevant facts leading to
this appeal are as follows:
{¶2} E. Warther & Sons, Inc. engages in business in Dover, Ohio, as a cutlery
company and operator of a gift shop. Appellants Carol Moreland and Joanne Warther, at
the times pertinent to this case, were shareholders in E. Warther & Sons, Inc., owning,
respectively, nine (9) and eleven (11) shares of the forty-nine (49) outstanding shares of
the company. The three-person board of directors of the company during the times in
question consisted of Steven Cunningham (President), Bryan Carlisle (Vice-President)
and Appellant Carol Moreland.1
{¶3} According to the allegations, Appellant Joanne, who is now in her eighties,
has been a shareholder in the company since the 1950s and started as an employee in
1955, while Appellant Carol began working at the company on a part-time basis in 1973
and on a full-time basis in 1981. However, both individuals were terminated from
employment in August 2014, following what they allege to be a series of demotions and
restrictions of job duties.
1 Some of the persons connected to this dispute are related by blood or marriage. For
example, Carol Moreland is the daughter of Joanne Warther. Steven Cunningham is the
son-in-law of Appellee Mark Warther, who is the son of Joanne Warther and the brother
of Carol Moreland.
Tuscarawas County, Case No. 2015 AP 07 0036 3
{¶4} On September 18, 2014, Appellants Carol Moreland and Joanne Warther
(“Carol” and “Joanne”) filed an action in the Tuscarawas County Court of Common Pleas
against Appellees Mark Warther, David Warther II, Lisa Warther White and E. Warther &
Sons, Inc., as well as five John Doe defendants, alleging breach of fiduciary duty against
all defendants and civil conspiracy against the individual defendants. In essence,
appellants asserted that they were terminated without a legitimate business purpose and
that said termination was accomplished by Steven Cunningham and Bryan Carlisle under
the direction of the individual appellees. Appellants also sought a temporary restraining
order and/or preliminary injunction reinstating appellants to their employment with E.
Warther & Sons, Inc.
{¶5} On October 21, 2014, E. Warther & Sons, Inc. (the corporate defendant)
filed a motion to dismiss. This motion was granted by the trial court on November 14,
2014, and this ruling is apparently not an issue in the present appeal.
{¶6} On December 22, 2014, appellants withdrew their motion for a preliminary
injunction.
{¶7} On February 27, 2015, appellees filed a motion for summary judgment, and
on March 26, 2015, the trial court ordered appellants to respond to said motion for
summary judgment on or before April 3, 2015.
{¶8} On April 3, 2015, appellants filed a request for a continuance under Civ.R.
56(F), seeking a hearing on appellees’ motion for summary judgment and more time to
conduct discovery in the case.
{¶9} On May 1, 2015, the trial court overruled appellants’ Civ.R. 56(F) motion,
thus denying appellants more time to conduct discovery and further ordering appellants
Tuscarawas County, Case No. 2015 AP 07 0036 4
to respond to the summary judgment motion on or before May 20, 2015. The court also
ordered an oral hearing on the motion for summary judgment. Said hearing took place on
June 8, 2015.
{¶10} On July 1, 2015, the trial court issued a twelve-page decision granting
summary judgment in favor of appellees. The case was thereby dismissed, with prejudice.
{¶11} Appellants filed a notice of appeal on July 16, 2015. They herein raise the
following two Assignments of Error:
{¶12} “I. THE TRIAL COURT ERRED AND ABUSED ITS DISCRETION IN
DENYING PLAINTIFFS/APPELLANTS' CIV.R. 56(F) MOTION AND FAILING TO
PERMIT PLAINTIFFS/APPELLANTS ADDITIONAL TIME FOR DISCOVERY
RELEVANT TO THE MOTION FOR SUMMARY JUDGMENT FILED BY APPELLEES IN
THE TRIAL COURT.
{¶13} “II. THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT
IN FAVOR OF THE APPELLEES IN THAT THERE WERE GENUINE DISPUTES OF
MATERIAL FACT INCLUDING, BUT NOT LIMITED TO, WHETHER THE APPELLEES
BREACHED THEIR FIDUCIARY DUTY TO THE PLAINTIFFS/APPELLANTS, AND IN
ADDITION AND AS A RESULT, ENGAGED IN A CIVIL CONSPIRACY, AND THUS,
COULD BE FOUND LIABLE BY A JURY.”
I.
{¶14} In their First Assignment of Error, appellants contend the trial court abused
its discretion in denying their motion under Civ.R. 56(F), thus denying them additional
time for discovery regarding summary judgment. We agree.
Tuscarawas County, Case No. 2015 AP 07 0036 5
{¶15} Civ.R. 56(F) states as follows: “Should it appear from the affidavits of a party
opposing the motion for summary judgment that the party cannot for sufficient reasons
stated present by affidavit facts essential to justify the party's opposition, the court may
refuse the application for judgment or may order a continuance to permit affidavits to be
obtained or discovery to be had or may make such other order as is just.”
{¶16} As a general rule, a trial court has the inherent authority to manage its own
proceedings and control its own docket. See Love Properties, Inc. v. Kyles, 5th Dist. Stark
App.No. 2006CA00101, 2007–Ohio–1966, ¶ 37, citing State ex rel. Nat. City Bank v.
Maloney, 7th Dist. Mahoning No. 03 MA 139, 2003–Ohio–7010, ¶ 5. However, pursuant
to Civ.R. 56(F), supra, a party opposing summary judgment may seek a continuance to
pursue further discovery in order to develop its opposition to the motion. Polaris Ventures
IV, Ltd. v. Silverman, 5th Dist. Delaware No. 2005 CAE 11 0080, 2006-Ohio-4138, ¶ 14,
citing Vilardo v. Sheets, Twelfth Dist. Clermont No. CA2005-09-091, 2005-Ohio-3473, ¶
29. The decision of whether to grant or deny a Civ.R. 56(F) continuance is within the
sound discretion of the trial court. Bank of America, N.A. v. Moore, 5th Dist. Knox No.
13CA1, 2013-Ohio-3370, ¶ 17. In order to find an abuse of discretion, we must determine
the trial court's decision was unreasonable, arbitrary or unconscionable and not merely
an error of law or judgment. Blakemore v. Blakemore, 5 Ohio St.3d 217 (1983).
{¶17} Civ.R. 56(F) requires a party opposing summary judgment to submit
affidavits with sufficient reasons stating why he or she cannot present by affidavit facts
sufficient to justify its opposition. Van Wert v. Akron Metro. Regional Transit Authority, 5th
Dist. Stark No. 2014CA00201, 2015-Ohio-3243, ¶ 22. Thus, “[t]here must be a factual
basis stated and the reasons given why [the party seeking deferral under Civ.R. 56(F)]
Tuscarawas County, Case No. 2015 AP 07 0036 6
cannot present facts essential to its opposition of the motion.” McCord v. Ron Laymon
Trucking Co., 5th Dist. Knox No. 04CA000033, 2005–Ohio–4399, ¶ 15 (additional
citations omitted).
{¶18} In their Civ.R. 56(F) motion in the case sub judice, appellants alleged three
main categories of information needed in order to generate their rebuttal evidence: (1) An
identifiable number of depositions listed by the individual to be deposed, (2) electronic
discovery (which included cellular phone records and electronic mail to and from the
individual defendants), and (3) subpoenaed electronic discovery (which included cellular
phone records and electronic mail to and from Steven Cunningham and Bryan Carlisle).
Appellants also attached individual affidavits to their Civ. R. 56(F) motion setting forth the
allegations that appellants sought to prove in the action. For example, Appellant Carol
Moreland's affidavit states in part as follows:
9. "I believe that Steven Cunningham and Bryan Carlisle, President
and Vice President of E. Warther & Sons, Inc., respectively, act solely on
behalf of the individual Defendants to this case and not on behalf of E.
Warther & Sons, Inc., which has led to adverse action taken against me in
reference to my former employment as well as my economic interest as a
shareholder of E. Warther & Sons, Inc.
10. I believe acquiring electronic discovery from E. Warther & Sons,
Inc. and the individual Defendants, as set forth in the Plaintiffs' Civ.R. 56(F)
motion, will provide the information supporting allegations set forth in the
Plaintiffs’ Complaint.
Tuscarawas County, Case No. 2015 AP 07 0036 7
11. I believe taking the depositions, acquiring the affidavits and
obtaining discovery responses as set forth in the Plaintiffs' Civ.R. 56(F)
motion, will provide the information supporting allegations set forth in the
Plaintiffs' Complaint.
{¶19} An affidavit provided by Appellant Joanne Warther attached to the Civ.R.
56(F) motion provides virtually the same above information as Carol Moreland's affidavit.
{¶20} Appellants urge that at the time appellees sought summary judgment on
February 27, 2015, approximately five months into the court case, only “extremely limited
discovery” had taken place, and such discovery was relative only to the allegations set
forth in the motion for preliminary injunction, which was set for hearing on January 20,
2015, but which was withdrawn prior to that date. Appellants also assert that prior to the
aforesaid date of the summary judgment motion being filed, they never had an opportunity
to fully resolve a discovery dispute regarding a subpoena served upon the corporate
entity, E. Warther & Sons, Inc., nor did they have the opportunity to perform electronic
discovery regarding electronic devices in the possession of the individual appellees, or
Mr. Cunningham (president) and Mr. Carlisle (vice-president).
{¶21} Upon review, we are persuaded that appellants, via their Civ.R. 56(F)
motion and affidavits, were reasonably seeking sufficiently tailored information needed to
develop their case that Mr. Cunningham and Mr. Carlisle had acted under the direction of
the individual appellees as part of a civil conspiracy and/or breach of fiduciary duty. In
regard to appellants’ corresponding contention that they were denied a reasonable
opportunity to obtain discovery and respond to appellees’ motion for summary judgment,
we must first recognize that the Civil Rules allow parties to conduct discovery immediately
Tuscarawas County, Case No. 2015 AP 07 0036 8
“after the commencement of the action.” Fifth Third Mtge. Co. v. Bell, 12th Dist. Madison
No. CA2013–02–003, 2013–Ohio–3678, ¶ 44, citing Civ.R. 33 and 34. However, it is most
noteworthy in the case sub judice that the trial court’s own discovery schedule, as set
forth in its December 17, 2014 judgment entry, set a discovery cut-off of July 10, 2015,
with a scheduled trial date of September 22, 2015. Given the nature of the litigation
presented, we conclude the trial court’s decision of May 1, 2015 refusing to accommodate
appellants’ Civ.R. 56(F) request under the circumstances was unreasonable and
constituted an abuse of discretion.
{¶22} Accordingly, appellants’ First Assignment of Error is sustained.
II.
{¶23} In their Second Assignment of Error, appellants contend the trial court’s
grant of summary judgment, issued subsequent to the court’s decision to overrule
appellants’ Civ.R. 56(F) motion, constituted reversible error. Based on our previous
conclusions herein, we agree.
{¶24} Civ.R. 56(C) provides, in pertinent part: “Summary judgment shall be
rendered forthwith if the pleadings, depositions, answers to interrogatories, written
admissions, affidavits, transcripts of evidence in the pending case and written stipulations
of fact, if any, timely filed in the action, show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as a matter of law. * * * A
summary judgment shall not be rendered unless it appears from the evidence or
stipulation, and only from the evidence or stipulation, that reasonable minds can come to
but one conclusion and that conclusion is adverse to the party against whom the motion
Tuscarawas County, Case No. 2015 AP 07 0036 9
for summary judgment is made, that party being entitled to have the evidence or
stipulation construed most strongly in the party's favor * * *.”
{¶25} As an appellate court reviewing summary judgment motions, we must stand
in the shoes of the trial court and review summary judgments on the same standard and
evidence as the trial court. Smiddy v. The Wedding Party, Inc. (1987), 30 Ohio St.3d 35,
506 N.E.2d 212.
{¶26} In response to the present assigned error, appellees focus much of their
initial argument on the trial court’s determination within the summary judgment ruling that
E. Warther and Sons, Inc. is not a close corporation under Ohio Law. As such, appellees
respond, there can be no finding that appellees owed appellants any type of heightened
fiduciary duty. See Weston v. Weston Paper and Mfg. Co., 2nd Dist. Montgomery No.
13815, 1994 WL 179940 (May 11, 1994). Appellees additionally respond that even if the
company is a close corporation, there is no breach of fiduciary duty under the
circumstances presented. However, in light of our conclusions above, we find these
issues to be presently premature.
{¶27} Appellants’ Second Assignment of Error is sustained.
Tuscarawas County, Case No. 2015 AP 07 0036 10
{¶28} For the reasons stated in the foregoing opinion, the decision of the Court of
Common Pleas, Tuscarawas County, granting summary judgment is hereby reversed,
and the matter is remanded for further proceedings, including the allowance of reasonable
time for discovery pursuant to Civ.R. 56(F).
By: Wise, J.
Farmer, P. J., and
Gwin, J., concur.
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