Bunta v. Mast

163 N.E.3d 1153

Vasile BUNTA, Plaintiff-Appellee

v.Firman D. MAST, Defendant-Appellant

No. 20CA006

Court of Appeals of Ohio, Fifth District, Holmes County.

DATE OF JUDGMENT ENTRY: December 2, 2020

THOMAS D. WHITE, MATTHEW A. KEARNEY, 209 N. Washington St., Millersburg, OH 44654, For Plaintiff-Appellee.

GRANT A. MASON, The Lincoln Building, 88 S. Monroe St., Millersburg, OH 44654, For Defendant-Appellant.

JUDGES: Hon. W. Scott Gwin, P.J., Hon. William B. Hoffman, J., Hon. Patricia A. Delaney, J.

OPINION

Delaney, J. {¶1} Defendant-Appellant Firman D. Mast appeals the February 21, 2020 judgment entry of the Holmes County Court of Common Pleas journalizing the jury verdict in favor of Plaintiff-Appellee Vasile Bunta.

FACTS AND PROCEDURAL HISTORY

Creation of Superior VacuPress, LLC

{¶2} In December 2013, Plaintiff-Appellee Vasile Bunta and Defendant-Appellant Firman D. Mast were introduced during a long car trip to Kansas. Firman Mast owned a successful roofing business located in Holmes County, Ohio. Bunta, an electrical engineer, worked for Mt. Eaton Lumber company and operated his own lumber exporting business named Dim X-Port, LLC. Dim X-Port purchased lumber from companies in Ohio and sold the lumber to foreign markets. During the car ride, Bunta explained to Firman Mast the concept of drying lumber with vacuum kilns. When trees are cut for lumber, they are full of moisture. To prevent the cut lumber from splitting and warping, it is dried. The lumber can be air dried which can take months and can lead to increased splitting and warping. If the cut lumber is placed in a vacuum kiln, the heat and vacuum from the kiln pulls the moisture from the lumber, requiring less drying time and less warping or splitting.

{¶3} In January 2014, Bunta and Firman Mast entered into an oral agreement to purchase a vacuum kiln and start a wood drying business named Superior VacuPress, LLC ("VacuPress"). Bunta did most of the planning, which included the plant layout, electrical design, and business plan. Bunta introduced Firman Mast to Jim Parker, Bunta's contact at Vacutherm, where VacuPress was going to purchase the vacuum kiln. The VacuPress building was going to be built on the property of Defendant Dennis Mast, Firman Mast's father.

{¶4} Firman Mast and Bunta consulted with Commercial and Savings Bank to obtain financing. The bank recommended that Bunta not be a partner in VacuPress due to his credit issues. Bunta was a Romanian immigrant, educated in the United States and a green card holder. As Bunta was working on establishing VacuPress, he did not focus on Dim X-Port. In 2015, Dim X-Port experienced financial difficulties due to foreign market instability in lumber. As a result, Dim X-Port was unable to fully pay its outstanding balances to the lumber companies. One company, DY Lumber, understood the basis for Dim X-Port's outstanding bills was market instability and allowed it make installments on the balance.

{¶5} To secure the bank financing for VacuPress, Dennis Mast co-signed the loans with Firman Mast. Commercial and Savings Bank made five loans totaling $1,433,000 and opened a $200,000 credit line to VacuPress.

{¶6} The original operating agreement for VacuPress was signed in April 2014. The initial members of VacuPress were Firman Mast at 85% interest and Dennis Mast for 15% interest (in exchange for his co-signing the loan and providing the land). Firman Mast was the manager of VacuPress.

{¶7} The vacuum kiln purchased from Vacutherm was installed from June 2014 to November 2014. The kiln went into operation in December 2014. Dennis Mast was hired by VacuPress to load the vacuum kiln. Mervin Mast, Firman's brother, was hired as the bookkeeper and salesperson. Both Dennis and Mervin earned a salary from VacuPress.

{¶8} In January 2015, Firman Mast and Bunta entered into an agreement that for the first six months of operation, he and Bunta would not be paid. At month 12 and if VacuPress was earning money, Firman Mast and Bunta would draw $2000 per month. At month 18, Firman Mast and Bunta would draw $4000 per month.

Operation of Superior VacuPress

{¶9} In February 2015, Bunta and Firman Mast formed the Ohio Vacupress Association, dba, Vacutherm Midwest, LLC ("Vacutherm"), based on their relationship with Jim Parker. Bunta was the 51% owner and Firman Mast was the 49% owner. The purpose of Vacutherm Midwest was to receive commissions from the sales of Vacutherm vacuum kilns.

{¶10} Firman Mast issued a capital call of $109,000 to the members of VacuPress in September 2015. Bunta was included in the capital call even though he was not a member of VacuPress. On October 19, 2015, Bunta used funds from Dim X-Port and paid VacuPress $10,000. On December 8, 2015, Bunta used his interest from Vacutherm to pay $22,175.90 to VacuPress.

{¶11} On January 1, 2016, the members executed an Amended and Restated Operating Agreement for VacuPress that included Bunta as a 30% member. Firman Mast was manager and 45.9% owner, Dennis owned 13.5%, and Mervin owned 10.6%. Based upon Bunta's 30% interest, he was responsible for 30% of the capital call.

{¶12} Bunta paid $3,060 to VacuPress from his interest in Vacutherm on March 2, 2016. Bunta overpaid his portion of the capital call by $1,882.00.

{¶13} Firman Mast called a member's meeting on March 22, 2016. The purpose of the meeting was to discuss the financial difficulties facing VacuPress. Firman Mast, Dennis, and Mervin confronted Bunta about the inability of VacuPress to purchase lumber from local lumber mills. They argued that due to Bunta's outstanding debts to local lumber mills, the mills would not do business with VacuPress. The Masts encouraged Bunta to settle his debts with the lumber mills. Firman Mast and Bunta had not received any compensation from VacuPress. Prior to the meeting, Bunta told Firman Mast that he wanted to be paid for the work he performed in creating VacuPress in 2014 and 2015. Firman Mast told him to provide invoices so Bunta brought invoices from Dim X-Port totaling $26,000 to the meeting. Bunta issued the invoices from Dim X-Port for tax purposes. The members agreed that VacuPress should pay Bunta $6,000. Bunta admitted at the meeting that he wanted to exit VacuPress.

{¶14} After the meeting, Bunta stopped actively working for VacuPress. Firman, Dennis, and Mervin agreed that they needed to move forward with the business without Bunta.

{¶15} In June 2016, Firman Mast made a first attempt to remove Bunta from VacuPress when he sent him a letter demanding payment of Bunta's share of the capital call with a penalty of a 24.9% interest rate.

{¶16} Firman Mast and Bunta dissolved Vacutherm Midwest. Firman Mast created FM, LLC to receive commissions from the sales of Vacutherm vacuum kilns. Firman Mast and his wife were the owners of FM, LLC.

{¶17} In July 2016, Firman Mast offered Bunta $20,000 as a buyout option. Bunta did not accept.

Creation of Superior Lumber

{¶18} On August 15, 2016, Firman Mast sent the members of VacuPress a notice of dissolution. On November 1, 2016, Firman Mast created Defendant Superior Lumber, LLC with Firman Mast owning 51% interest, Dennis 15% interest, and Mervin 34% interest. Firman Mast transferred the assets and debts from VacuPress to Superior Lumber. In December 2016, Firman Mast wrote a letter to the shareholders of VacuPress stating that due to financial difficulties, VacuPress would cease operations. On January 19, 2017, the Ohio Secretary of State received notification that VacuPress had been dissolved. Superior Lumber began operations on January 1, 2017.

{¶19} The 2017 tax return for Superior Lumber showed its gross receipts were $1,735,752.00 and its gross profits were $347,153.

Civil Action

{¶20} On June 15, 2017, Bunta filed a complaint against VacuPress, Firman Mast, Mervin, Dennis, and Superior Lumber ("Mast defendants"). Bunta also named Commercial and Savings Bank ("CSB") as a defendant to the complaint.

{¶21} The thrust of Bunta's argument was that he was not compensated when Firman Mast dissolved VacuPress. Bunta asserted the following counts in his complaint: (1) declaratory judgment against the Mast defendants and Superior Lumber determining the Mast defendants abandoned VacuPress in favor of Superior Lumber with a determination that the parties are no longer bound to the operating agreement of VacuPress; (2) a declaration that VacuPress is dissolved and requiring the Mast defendants to fully account for VacuPress; (3) accounting by VacuPress and the Mast defendants for all monies received and disbursed by them; (4) breach of fiduciary duty by the Mast defendants; (5) civil conspiracy by VacuPress, Superior Lumber, and the Mast defendants to breach the fiduciary duty owed to appellee and/or conversion of appellee's property; (6) conversion by VacuPress, Superior Lumber, and the Mast defendants; and (7) unjust enrichment by VacuPress, Superior Lumber, and the Mast defendants. Bunta requested the following relief: a declaratory judgment that the Mast defendants abandoned VacuPress and the parties are no longer bound by the operating agreement, judicial dissolution, accounting, and winding up of VacuPress, and an award of compensatory damages. Bunta did not name CSB in any of the counts, nor did he request relief from CSB. Rather, Bunta only asserted that CSB "may have an interest in the subject matter of this case."

{¶22} The Mast defendants filed an answer denying the allegations in the complaint and asserting as their first affirmative defense that the Amended and Reinstated Operating Agreement contained a binding arbitration clause. On July 27, 2017, the Mast defendants filed a motion to stay proceedings and refer the matter to arbitration. On November 17, 2017, the trial court issued a judgment entry denying the motion to stay the proceedings and arbitration request. The Mast defendants appealed the matter to this Court in Vasile Bunta v. Superior VacuPress LLC , 2018-Ohio-2823, 117 N.E.3d 51 (5th Dist.). On July 13, 2018, we affir...