Joseph v. Joseph

1

MARIE JOSEPH, Plaintiff-Appellant, v. RONALD JOSEPH, GREGORY JOSEPH, GEORGE JOSEPH, RICHARD JOSEPH, and RONALD JOSEPH, JR., Defendants-Appellees.

No. 19-4258

United States Court of Appeals, Sixth Circuit

August 18, 2022

NOT RECOMMENDED FOR PUBLICATION

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO

Before: BOGGS, WHITE, and READLER, Circuit Judges.

HELENE N. WHITE, CIRCUIT JUDGE

Plaintiff-Appellant Marie Joseph ("Marie") appeals the grant of summary judgment to her brother Ronald Joseph ("Ron") in this action concerning access to corporate books and records.

In 2016, Marie filed suit against Ron over disputes concerning Columbia Oldsmobile Company ("Columbia"), a closely held Ohio corporation founded in 1938 by their father, George Joseph. Marie alleged that Ron manipulated the affairs of Columbia, oppressed her as a minority shareholder, and violated his fiduciary duties by participating in related-party transactions. The additional claim involved here-that Ron denied her access to Columbia's corporate books and records-was bifurcated from her other claims.

Ron and Marie filed cross-motions for summary judgment on the corporate-records claim. The district court granted Ron's motion and denied Marie's cross-motion. For the reasons that follow, we AFFIRM.

I A.

On October 12, 2015, Marie's prior counsel emailed a request for corporate records pursuant to Ohio Rev. Code §1701.37 to counsel for Ron and Columbia ("2015 Records Request"). Marie's counsel stated in the email that Marie was concerned that Columbia had failed to account for income it had received from its subsidiaries and holdings, and that Ron was breaching his fiduciary duties by failing to pay dividends and usurping corporate opportunities, and was derelict in his duties to minority shareholders. The email continued:

[P]ursuant to Ohio Revised Code §§ 1701.37 and 1701.38, I hereby request on Marie's behalf, copies of the following Columbia books and records:

1. The "complete books and records of account, together with minutes of the proceedings of Columbia's shareholders, directors, and committees of the directors." This request seeks, among other things:

a. Copy of the ground lease for the 5th and Sycamore (6 parcels of land);

b. The financials of Columbia Motors Acceptance Corporation (2005-2015);

c. The financials of Joseph Chevrolet (2005-2015);

d. Financial records (2005-2015) and appraisals of the following lots owned by Columbia: (i) 813 Sycamore St, (ii) 7th and Sycamore (11 parcels); and (iii) 415 Court St.;

e. The financials (2005-2015) for 716 Main St.;

f. The appraisal, if any, of 3449 St. John's Place owned by Columbia;

g. Financial records (2005-2015) of rent received on 9750 and 9678 Montgomery Rd.;

h. The financial records (2005-2015) for Columbia Hyundai;

i. The financial records (2005-2015) for Columbia Acura; and

j. Financial records (2005-2015) regarding finance and insurance ("F&I") monies of all dealerships owned by Columbia.

2. The records of Columbia's shareholders and the number and class of shares issued or transferred of record to or by them since 1992;

3. Any Appraisals of Columbia stock used to reach the valuation of Najla's^[1] shares at $17,885.39 and $16,991.12 per voting share and non-voting share respectively; 4. A copy of the Stock Ledger for Columbia;

5. Financial statements, including balance sheets containing a summary of the assets, liabilities, stated capital, if any, and surplus (showing separately any capital surplus arising from unrealized appreciation of assets, other capital surplus, and earned surplus) for each year from 1992 to the present; and

6. All statements of profit and loss and surplus, including a summary of profits, dividends or distributions paid, and other changes in the surplus accounts, for the period 1992-present.

R.244-2, PID 17873 -74.

In response to the records request, counsel for Ron and Columbia replied:

A substantial amount of the information you requested is either not available or is within the public domain. In particular, I refer to the real estate appraisals and related materials you requested. As to the other information set forth in your emails, I have no authorization to respond or otherwise provide these items.

R.240-2, PID 17720.

After Marie initiated this lawsuit, Ron provided Marie with copies of certain of Columbia's corporate records through discovery. For example, Ron produced copies of: Columbia Automotive Inc.'s general ledger, Columbia Development's general ledger, the financial statements of Columbia Automotive and Columbia Oldsmobile Company, Columbia Oldsmobile Company's tax returns, Columbia Oldsmobile Company's stock registers and shareholders' lists, and Columbia stock certificates.

However, Ron has refused to provide Marie with access to the following: Columbia's "source documents," which Marie defined as "document[s] such as . . . receipt[s] and invoice[s] or . . . purchase order[s]" that "support[] or back[] up a given transaction," R.242, PID 17795; access to Columbia's "actual" general ledgers, which Marie defined as Columbia's general ledger "as it is actually maintained in Columbia Automotive, Inc.'s system," R.243-1, PID 17834; and access to Columbia's "original" stock ledgers, stock certificates, and shareholder records, R.250, PID 18421. Although Ron has permitted Marie to inspect the original copies of Columbia's stock certificates, he has conditioned that access on Marie agreeing to various confidentiality restrictions.

During a "meet and confer" conference on November 8, 2018, Marie's counsel told Ron's counsel that Marie sought to review "source documents" for the transactions listed in a spreadsheet that Marie's counsel first sent to Ron's counsel via email on September 5, 2018. R.238, PID 17650-51. In that September 5, 2018, email, Marie's counsel inquired whether Ron's counsel would be willing to agree to various stipulations regarding the transactions listed in the spreadsheet, which she planned to challenge at trial. Marie's counsel again sent the spreadsheet to Ron's counsel on November 20, 2018.

During the pendency of this lawsuit, Marie made three additional records requests to Ron and Columbia; the first on April 14, 2017, the second on January 18, 2018, and the third on April 20, 2018. Marie also filed a motion for equitable relief seeking access to Columbia's books and records in the Court of Common Pleas of Hamilton County, Ohio on July 30, 2019. None of these requests are at issue in this appeal.

B.

Marie filed this action asserting claims for breach of fiduciary duties, access to corporate records, and entitlement to an accounting against Ron. Marie then filed an amended complaint asserting an additional claim for fraud and concealment against Ron, a claim for fraudulent breach of fiduciary duties against Ron and his sons Gregory Joseph, George Joseph, Richard Joseph, and Ronald Joseph, Jr. ("Ron's Sons"), and a faithless-servant claim against Ron's Sons. All claims asserted against Ron's Sons were dismissed on summary judgment. The district court subsequently granted Ron's motion for separate trial, directing that Marie's breach-of-fiduciary- duties claim be tried first, with her corporate-records and accounting claims to be tried at a later date.

After the jury trial on Marie's breach-of-fiduciary-duties claim resulted in a verdict in favor of Ron, the district court issued an order dismissing the accounting claim with prejudice on the ground that it was "merely a potential remedy for [Marie]'s breach of fiduciary duties claim." R.215, PID 16036-37. The district court also ordered Ron and Marie to meet and confer to file a proposal for resolving the corporate-records claim. Ron and Marie subsequently filed a joint proposal for resolving the corporate-records claim.

The district court then directed Ron and Marie to file "pleadings" addressing what documents responsive to Marie's request for corporate records had already been produced in discovery. R.230, PID 17444-46. The court held a status conference at which it determined that Marie's corporate-records claim "shall proceed to a bench trial." Minute Entry and Notation Order dated May 14, 2019. In its order, the court stated that "only those corporate records requests submitted prior to the filing of" the original complaint on April 12, 2016, would be tried. Id. The court set a briefing schedule for the filing of trial briefs.

The district court later held an additional status conference at which it determined that Marie's corporate-records claim implicated "threshold questions of law." Minute Entry and Notation Order dated July 19, 2019. It therefore canceled the trial and granted the parties leave to file cross-motions for summary judgment on the corporate-records claim. The parties filed crossmotions, and the district court granted Ron's motion and denied Marie's cross-motion. Marie timely filed a notice of appeal.

II.

We review a district court's summary judgment determination de novo, Jordan v. Howard, 987 F.3d 537, 542 (6th Cir. 2021), viewing all evidence in the light most favorable to the nonmoving party and drawing all justifiable inferences in that party's favor, Carhartt, Inc. v. Innovative Textiles, Inc., 998 F.3d 739, 742 (6th Cir. 2021). Summary judgment is appropriate only where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). "The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Jordan, 987 F.3d at 542 (quoting Seeger v....