Buckeye Hoya, LLC v. Brown Gibbons Lang & Co.

1

2023-Ohio-2177

BUCKEYE HOYA, LLC, Plaintiff-Appellant, v. BROWN GIBBONS LANG & COMPANY LLC, ET AL., Defendants-Appellees.

No. 111982

Court of Appeals of Ohio, Eighth District, Cuyahoga

June 29, 2023

Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-20-939285

Cooper & Elliot, LLC, Barton R. Keyes, and Jonathan N. Bond, for appellant.

Frantz Ward LLP and James B. Niehaus, for appellees.

JOURNAL ENTRY AND OPINION

KATHLEEN ANN KEOUGH, PRESIDING JUDGE.

{¶ 1} Plaintiff-appellant, Buckeye Hoya, LLC, appeals the trial court's decision entering summary judgment in favor of defendants-appellees, Brown Gibbons Lang & Company, LLC Brown Gibbons Lang & Company, Inc., and Brown Gibbons Lang & Company Securities, Inc. d.b.a. Brown Gibbons Lang & Company (collectively "BGL"), and denying Buckeye Hoya's motion for summary judgment. For the reasons that follow, this court affirms the trial court's judgment.

I. Factual Background

{¶ 2} In September 2010, Joseph Concheck ("Concheck") and Anthony Calabrese ("Calabrese") founded Buckeye Hoya - a transactional advisory business that provided services related to mergers and acquisitions, tax-credit transactions, and other real estate business deals. Concheck and Calabrese each owned 50 percent of the business at the time of its formation.^[1]

{¶ 3} In late 2010, Concheck learned that National Entertainment Network ("NEN") needed an advisor because it was looking to sell part of its business. Calabrese contacted Nico Bolzan ("Bolzan"), a prior associate who now worked for BGL, an independent investment bank and financial advisory firm, which provided services relating to mergers and acquisitions, capital markets, financial restructuring, valuations and opinions, real estate, and other advisory services. Bolzan connected Concheck with BGL's founder, Mike Gibbons ("Gibbons"), to facilitate a potential business relationship. As a result, on December 16, 2010, Buckeye Hoya entered into a Consulting Agreement ("the Agreement") with BGL.

{¶ 4} Calabrese, a licensed attorney at the time, drafted the Agreement on behalf of Buckeye Hoya. The scope of the Agreement provided that "services shall be limited to assisting [BGL] in making introductions to certain entities that may engage [BGL's] services, including, but not limited to, [NEN] and its affiliates." The Agreement provided that in exchange for Buckeye Hoya's performance, "[BGL] shall pay to [Buckeye Hoya] twenty percent (20.0%) of any amounts paid to [BGL] relating to any introduction to any entity that engages [BGL]." Pursuant to its terms, either party could terminate the Agreement "immediately upon written notice to the other Party," but Buckeye Hoya would still "receive any compensation it is owed" calculated in accordance with the Agreement. Gibbons signed the Agreement on behalf of BGL. It is undisputed that Concheck was an authorized member of Buckeye Hoya and thus, signed the Agreement on behalf of Buckeye Hoya. No other member of Buckeye Hoya signed the Agreement.

{¶ 5} After entering into the Agreement, Buckeye Hoya connected BGL to NEN, with NEN retaining BGL to assist with the sale of its business. BGL's managing director, John Tilson, oversaw the NEN transaction and worked closely with Concheck during this time. In fact, it is undisputed that during the course of the deal with NEN, Concheck was the sole contact between the parties and even worked closely with NEN during the transaction.

{¶ 6} On September 5, 2012, Tilson sent an email to Concheck regarding the "Referral Agreement." He expressed BGL's concern, stating that BGL believed "that you would need to be registered as a broker dealer in order to receive payment from BGL Securities for your services on the NEN transaction. We understand that NEN will be paying you for your services on this transaction." Tilson, with the assistance of legal counsel, sent another email hours later to Concheck with the subject line: "National Entertainment Network," reiterating exactly what the prior email stated, with the exception of two additional sentences - "Therefore, we cannot make a payment to your company since you are not a registered broker. * * * Please consider this email as notice that our [Agreement] dated December 16, 2010 between BGL Securities and Buckeye Hoya LLC is null and void." (Emphasis added.)

{¶ 7} Conchek testified at deposition that he interpreted these emails to mean that BGL could not honor the Agreement because it arguably violated FINRA regulations, and that BGL would not pay Buckeye Hoya directly.^[2] Tilson testified at deposition that he meant to convey in his second email that BGL would not pay Buckeye Hoya directly despite the terms of the Agreement. He stated that out of an abundance of caution and upon the advice of legal counsel, it was his intention to have NEN pay Buckeye Hoya directly. (Tilson deposition tr. 56.) Tilson testified further that the email terminating the Agreement or indicating a direct payment by NEN did not absolve BGL of having to pay a finder's fee to Buckeye Hoya - "we were going to still make sure that they received their money. It was going to happen through the funds flow rather than in a wire transfer or check coming from BGL." (Tilson deposition tr. 60-61.)

{¶ 8} In anticipation of the NEN transaction closing, on September 17, 2012, Tilson emailed Concheck requesting that he submit an invoice to NEN for $230,581 for "consulting services" and not "finder's fee." On that same day, Concheck sent NEN an invoice for "Advisory fee/Consulting Services" in the amount of $230,581, and provided wiring instructions, including his name, account number, and bank routing number. Concheck admitted that this information was his personal banking information, not Buckeye Hoya's account information.^[3]

{¶ 9} On September 24, 2012, NEN sold most of its business to Monitor Clipper Partners for approximately $57 million. As result of the sale, BGL requested payment from NEN for its services in the amount of $1,152,907. Pursuant to the Agreement, BGL was required to pay Buckeye Hoya 20 percent of this amount, or approximately $230,581.

{¶ 10} On September 26, 2012, the NEN transaction closed, and NEN paid BGL by wire transfer from the closing escrow funds 80 percent or $922,326 of the invoice amount. Additionally, NEN paid Concheck by virtue of a wire transfer out of the same closing escrow funds flow the invoiced amount of $230,581. The NEN closing documentation breaks down these payments under "Sellers Transaction Expenses." It lists "BGL and Consulting Fee" and then itemizes the expenses as "BGL" in the amount of $922,326, and "Joe Concheck (Consulting Fee)" in the amount of $230,581, for a "Total" of $1,152,907.

{¶ 11} It is undisputed that Concheck accepted and received $230,581 from NEN. Concheck testified at deposition that he deposited an unknown portion of the funds he received from the NEN transaction into Buckeye Hoya's Huntington Bank account. (Concheck deposition tr. 105-106.)

{¶ 12} In November 2012, Calabrese and North Hill Holdings, L.L.C.^[4] learned that BGL had not paid Buckeye Hoya for the NEN transaction and expressed their concern to Paul Garofolo, a friend of Calabrese and Gibbons. Tilson learned of the concern and emailed Gibbons and Garofolo that BGL terminated the Agreement because Buckeye Hoya was not a registered broker-dealer, but that BGL honored the Agreement when Concheck accepted the contracted-for payment directly from NEN. In the email, Tilson explained the situation and stated that at the time of the Agreement, "we had no idea that [Concheck] had partners in [Buckeye Hoya]."^[5](Tilson deposition tr. 72; July 10, 2013 email.). Tilson further explained his hope that if Calabrese understood that Concheck was paid the full amount by NEN, Calabrese would not pursue legal action. Id.

{¶ 13} In 2014, North Hill filed a lawsuit against Concheck and Buckeye Hoya, contending that it was a 50 percent member of Buckeye Hoya, and thus, was entitled to a portion of the money Concheck and/or Buckeye Hoya received in connection with NEN Transaction. North Hill, 8th Dist. Cuyahoga No. 108168, 2019-Ohio-5119, at ¶ 1-4. In 2016, relating to that litigation, Calabrese provided deposition testimony during which he acknowledged that NEN paid Concheck the fee that BGL owed Buckeye Hoya under the Agreement. (Calabrese deposition, June 9, 2016, tr. 285-286.) In fact, he stated that Concheck, not BGL, owed the money to Buckeye Hoya. Id. at tr. 286-287.^[6] ("Joe Concheck owes the money to Buckeye Hoya, not [BGL].")

{¶ 14} In July 2020, the Calabreses and Concheck entered into a Confidential Settlement Agreement ("Settlement Agreement"). Among the terms of the Settlement Agreement, Concheck assigned his 50 percent membership interest in Buckeye Hoya to North Hill and the Calabreses.

II. Procedural History

{¶ 15} On November 2, 2020, Buckeye Hoya filed an amended complaint against BGL asserting causes of action for (1) breach of contract; (2) promissory estoppel; (3) unjust enrichment; and (4) accounting. The complaint alleged that pursuant to the Agreement, BGL owed Buckeye Hoya approximately $184,400, which purportedly represented 20 percent of the monies paid to BGL by NEN for services rendered in connection with NEN transaction.

{¶ 16} BGL filed its answer denying the allegation but averring that it paid Buckeye Hoya its "commission in full compliance and satisfaction of its obligations" pursuant to the Agreement. According to BGL, payment was directed and received by Buckeye Hoya, upon the instructions of its member and agent, Concheck, who had the authority to directly act on behalf of Buckeye Hoya. Specific to Buckeye Hoya's cause of action for breach of contract, BGL...