Joseph v. Joseph

1

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

No. 19-3350

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NOT RECOMMENDED FOR PUBLICATION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

OPINION

HELENE N. WHITE, CIRCUIT JUDGE

Plaintiff-Appellant Marie Joseph appeals the grant of Defendants-Appellees' motions for summary judgment and motion in limine and the denial of her partial motion for summary judgment and motion for new trial. She also challenges the district court's jury instructions and interrogatories. We AFFIRM.

I. A.

Columbia Oldsmobile Company ("Columbia") is a closely held Ohio corporation that was founded in 1938 by George J. Joseph, the father of Plaintiff Marie Joseph ("Marie") and Defendant Ronald Joseph ("Ron"), as Columbia Motor Sales Co. It has two subsidiaries: Columbia Development Corporation and Columbia Automotive, Inc. The former sells real estate, including numerous parcels of real estate in downtown Cincinnati and Montgomery, Ohio, and the latter sells new Acuras, Hyundais, and used cars. According to Marie, an "extensive dealership group" known as the Joseph Auto Group grew out of Columbia Oldsmobile Company to include not just Columbia Development and Columbia Automotive, but other dealerships and businesses as well. Appellant Br. at 2-3.

Both Marie and Ron are Columbia shareholders, as are Ron and Marie's five other siblings. Ron owned 68.31% of Columbia's voting shares and is Columbia's largest shareholder, and Marie is a minority shareholder, owning 4.05% of Columbia's voting shares. Ron's sons, Gregory G. Joseph, George R. Joseph, Richard S. Joseph, and Ronald Joseph, Jr. ("Ron's Sons") each own less than one percent of Columbia's voting shares and are minority shareholders of Columbia.^[1]Since George J. Joseph's death, Ron has served as Columbia's Chief Executive Officer. Marie was a director of Columbia for more than thirty-eight years, from at least 1976 through 2013. Ron's Sons were appointed as directors of Columbia from December 17, 2012 until May 10, 2013.

Marie alleges that Najla Joseph, Ron and Marie's mother, intended to disinherit Ron from her interest in Columbia^[2] and instead divide that interest equally among her six other children, including Marie, and that, knowing that he had been disinherited, Ron created a plan to usurp corporate opportunities from Columbia and create a "financial crisis" for Najla's future estate in order to acquire her shares in Columbia. R.1, PID 3. As part of this plan, Ron allegedly appropriated all opportunities for Columbia to acquire new dealerships and real estate and other income-producing property without appropriate disclosure to Marie and without providing her an opportunity to participate in the acquisitions. Marie also alleges that Ron threatened her in an effort to dissuade her from seeking information about Columbia and rebuffed her requests for more information about the company, although he assured her that "the family business assets were still in Columbia, that Columbia was now simply using the name Joseph Auto Group and that Ron was taking care of everything." R.27, PID 248. Marie also contends that Ron otherwise oppressed her as a minority shareholder and that he refused to permit her access to Columbia's books and records of account as required by Ohio law.

According to Marie, Ron's Sons worked in concert with Ron to oppress her as a minority shareholder and manipulate Columbia's affairs to acquire money or other things of value that belonged to her or were not otherwise available to her. For example, she claims that Ron and Ron's Sons entered into various financial relationships and transactions between Columbia and its subsidiaries on the one hand, and companies that Ron and Ron's Sons owned or controlled on the other. Marie alleges numerous other breaches of fiduciary duty on the part of Ron and Ron's Sons.

In 2008, Marie filed an action to be appointed the legal guardian of her mother and her brother Michael (the "Guardianship Litigation"). The Guardianship Litigation was opposed by Ron. As part of the Guardianship Litigation, Ron sat for a deposition on May 13, 2009, which Marie attended. During this deposition, Ron made several statements concerning the ownership of certain dealerships, including some at issue in this litigation. Those statements suggested that the dealerships were owned by him and not Columbia.

B.

Marie initiated this action by filing a three-count complaint on April 12, 2016, against Ron, asserting claims of breach of fiduciary duties, access to corporate records, and for an accounting. Marie then filed an amended complaint on January 10, 2017, asserting an additional claim for fraud and concealment against Ron, a claim for fraudulent breach of fiduciary duties against Ron and Ron's Sons, and a faithless-servant claim against Ron's Sons. In support of these additional claims, Marie alleged that she discovered in September 2016 that Ron owned various dealerships and parcels of real estate that were not part of Columbia. She asserted that Ron concealed his separate ownership of these entities from her, and that the discovery rule for fraud-based claims should apply and toll the statute of limitations for her claims. Marie also alleged that Ron's Sons breached their fiduciary duties to her by receiving money and other things of value that were diverted from Columbia to them by Ron, and by benefiting from their previously undisclosed ownership or control of many of the dealerships in the Joseph Auto Group. Marie asserted that as a minority shareholder of Columbia, she was entitled to benefit from Columbia's direct or indirect ownership of those dealerships.

Ron filed a motion for partial summary judgment based on the four-year statute of limitations contained in Ohio Rev. Code § 2305.09. He sought dismissal of the fraud-based claims in their entirety on the ground that, even if the discovery rule for fraud-based claims applied, the statute of limitations began to run in 2009 and expired in 2013, three years before Marie filed her lawsuit. In this regard, he argued that Marie knew or should have known that his statements regarding Columbia's ownership of other dealerships were potentially fraudulent as early as 2009, when he testified at his deposition, which Marie attended, that he separately owned the dealerships in question. Ron also sought to limit Marie's breach-of-fiduciary-duties claim and demand for accounting to events that transpired after April 12, 2012, or the four-year period before Marie filed her original complaint.

The day after Ron filed his motion for partial summary judgment, Ron's Sons filed a motion for summary judgment seeking the dismissal of all claims asserted against them. Like Ron, they argued that the fraud-based claims were untimely because Marie was put on notice in 2009 of the possibility that Ron's statements concerning Columbia's ownership of the other dealerships were potentially false. They also argued that Marie's breach-of-fiduciary-duties claim failed as a matter of law because Marie failed to allege any actions by Ron's Sons that caused her injury and because they did not owe her any fiduciary duties as minority shareholders.

The district court granted Ron's motion for summary judgment on Marie's claims for breach of fiduciary duties and accounting to the extent they were premised on acts or omissions that occurred before April 12, 2012; it also granted Ron's motion as to Marie's fraud-based claims. In dismissing Marie's claims for fraud and fraudulent breach of fiduciary duties in their entirety, the district court held that Marie was on notice of Ron's allegedly fraudulent statements regarding Columbia's ownership of other dealerships by 2009, when she attended his deposition in the Guardianship Litigation. The district court also rejected Marie's argument that her fraud-based claims should not be dismissed to the extent they were predicated on events that occurred within the four-year statutory limitations period or after Ron's 2009 deposition testimony, finding that the only instances of fraud alleged in the amended complaint related to Ron's statements regarding Columbia, which claim was time-barred.

The district court granted in part and denied in part Ron's Sons' motion for summary judgment. It granted the motion as to Marie's claim for breach of fiduciary duties to the extent the claim was premised on acts or omissions that occurred before January 10, 2013-four years before Marie filed her amended complaint-and to the extent the usurpation-of-corporate-assets claim was premised on acts taken before or after Ron's Sons served as directors and officers of Columbia. The district court granted summary judgment to Ron's Sons on Marie's faithless-servant claim but denied their motion on the issue whether Ron's Sons owed fiduciary duties to Marie. The district court held that the faithless-servant claim failed as a matter of law because Ron's Sons were not servants of Marie, a minority shareholder of Columbia; it reasoned that "if [they] were servants of anyone, it was Columbia." R.100, PID 6231. However, the district court rejected Ron's Sons' argument that they did not owe fiduciary duties to Marie. It observed that, although under Ohio law, minority shareholders of a closely held corporation may owe heightened fiduciary duties if they control a corporation, this does not mean "that minority shareholders who do not control the corporation," like Ron's Sons, "owe no fiduciary duties at all. To the contrary, . . . [they] still...