COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 72840 KENNETH J. THOMPSON, TRUSTEE, : ET AL. : : JOURNAL ENTRY PLAINTIFFS-APPELLEES : CROSS-APPELLANTS : AND v. : : OPINION THOGUS PRODUCTS CO. : : DEFENDANT-APPELLANT : CROSS-APPELLEE : DATE OF ANNOUNCEMENT OF DECISION: JUNE 18, 1998 CHARACTER OF PROCEEDING: Civil appeal from Court of Common Pleas, Case No. CV-299977. JUDGMENT: AFFIRMED IN PART, REVERSED AND REMANDED IN PART, JUDGMENT VACATED. DATE OF JOURNALIZATION: APPEARANCES: For Plaintiff-appellee: Joshua R. Cohen, Esq. Ellen Maglicic Kramer, Esq. Kohrman, Jackson & Krantz 1375 East Ninth Street, 20th Floor One Cleveland Center Cleveland, Ohio 44114 For Defendants-appellants: Thomas c. Schrader, Esq. Dan L. Makee, Esq. Douglas B. Schnee, Esq. McDonald, Hopkins, Burke & Haber Co., L.P.A. 2100 Bank One Center 600 Superior Avenue, East Cleveland, Ohio 44114-2653 -2- SWEENEY, JAMES D., J.: Defendant-appellant cross-appellee Thogus Products Company ( Thogus ) appeals from a jury trial verdict against it and the denial of post-judgment motions for new trial and/or judgment notwithstanding the verdict ( JNOV ). Plaintiffs-appellees cross- appellants Kenneth J. Thompson, individually ( KJT ), and as Trustee pursuant to two irrevocable trusts dated, respectively, December 29, 1987 and September 10, 1992, has cross appealed from certain evidentiary rulings, a pre-trial motion for summary judgment ruling, and the failure of the trial court to award plaintiffs costs and attorney fees. For the reasons adduced below, we affirm in part, reverse and remand in part, and vacate the trial judgment. A review of the voluminous record on appeal indicates that the heart of the matter which fostered the lawsuit below was a power struggle over control within a family-owned Ohio closed corporation. That company, Thogus, is a plastic injection molding company formed in the 1950's by defendant John P. Thompson ( JPT ).1Thogus has elected Subchapter S status under the United States Internal Revenue Service Code. Eventually, JPT had two children, Kathleen Hlavin ( Hlavin, age 47 at the time of the trial) and KJT (age 56 at the time of the trial), who were both brought into the company by JPT in 1974. The event which triggered the filing of the lawsuit in the trial court was the decision by 1Mr. John P. Thompson died on July 30, 1997, approximately three weeks after this appeal was filed. -3- the company's board of directors at a meeting conducted on August 28, 1995, where the board, comprised of the holders of the voting res, n mplessha voted to terminate the employment of KJT for eighteeexa Vice President in charge of marketing and sales. See Plaintiffs' Exhibits 8 and 9. There are 169 voting shares of Thogus, identified as Class A stock. The company has, essentially, only three shareholders holding that voting stock: (1) JPT (and now his Estate), (2) Hlavin, and (3) two of three irrevocable trusts established by JPT.2 At the time of trial, JPT, the president of the company, owned 125 of the voting shares. Hlavin personally owned 22 of the voting shares. The remaining 22 shares of voting stock were owned between the two trusts of which KJT was the trustee and beneficiary. At the time of trial, Thogus maintained 16,900 shares of non- voting stock, identified as Class B stock, which was owned as follows: (1) the September 10, 1992 trust ... 5,300 shares; (2) the December 29, 1987 trust ... 2,305 shares; (3) the irrevocable trust of which Hlavin was the Trustee and beneficiary ... 7,605 shares; and, (4) JPT ... 1,690 shares.3 2The Trustee and beneficiary of one of the irrevocable trusts was Hlavin. The Trustee and beneficiary of the other two irrevocable trusts, which owned the 22 shares of voting stock, was KJT. 3Thus, JPT owned 10.6% of the non-voting stock, or equity of the company. The trust controlled by Hlavin owned 44.7% of the non-voting stock, or equity of the company. The two trusts controlled by KJT owned 44.7% of the non-voting stock, or equity of -4- At trial, the plaintiffs offered the testimony of nine witnesses. The first witness for the plaintiffs, by videotape deposition which was reduced to a written transcript for the record, was Mr. Gregory Gordon, who stated the following in pertinent part: (1) he lives in Detroit, Michigan, and was a manufacturer's sales representative for Thogus from 1978 to June 1996, to the Chrysler, General Motors and Ford automobile companies; (2) Thogus's automobile related sales started to decline in 1994 due to quality problems with the parts coming from Thogus; (3) despite mandates from the auto industry that suppliers be compliant with an industry-wide common quality control standard (termed QS-9000"), Thogus took no steps to implement that standard, thereby hampering or terminating their continued status as a vendor; (4) it was his opinion that KJT wanted to implement the standard at Thogus, but Hlavin resisted the effort due to cost concerns; (5) on January 18, 1995, he met with Hlavin and Mr. Gary Krupa, Thogus's accountant, in Detroit, at which time he was told to keep the meeting secret, that Hlavin would now be running the company and KJT would be handling sales only, and that he was to report to Hlavin any instances of detrimental conduct by KJT; (6) KJT did not know about this meeting; (7) in the Spring of 1995, at the request of Mr. Krupa, the witness met with Krupa at another confidential meeting, in Krupa's Cleveland office, at which time the need for weekly sales reports was emphasized and it was further reiterated that KJT was to know about only sales matters. the company. -5- The second witness for the plaintiffs was Mr. Krupa, who stated in pertinent part the following (R. 85-226): (1) his certified public accountant firm has been engaged by Thogus for approximately twenty years; (2) JPT became seriously ill in 1990; (3) Hlavin served as Thogus's Vice President in charge of finance and human relations; (4) he attended the director's meeting at which KJT was terminated; (5) the purpose of the confidential meeting in Detroit with Mr. Gordon was over concerns with Mr. Gordon's job performance, and KJT wasn't told of the meeting so as not to show disrespect to KJT's authority for Mr. Gordon; (6) his meeting with Mr. Gordon later that spring in Cleveland was again to discuss concerns with Mr. Gordon's job performance; (7) there were serious disagreements, frustrations and tensions between Hlavin and KJT; (8) JPT and his wife were both concerned over the tensions existing between their children and wanted the witness to keep an eye on the situation for them; (9) he reported to JPT; (10) eventually, in early August of 1995, the concept of a structured buy out of KJT's interest in the company was discussed with KJT at a meeting, who was in favor of exploring the concept in draft form, but that KJT wanted to first attempt to reconcile his differences with his sister before leaving the company; (11) on August 22, 1995, he attended a meeting at KJT's attorney's [attorney Byron Krantz] office to further discuss the general framework of a structured buy out of KJT's interests in the company; (12) attorney Krantz, over the objection of the witness, wanted a third-party team to have access to the company financial records so as to value -6- the company; (13) the witness's objection grew out of his concern over how KJT's parents would view KJT's actions in having a team of outsiders pouring over the family's business records, which might place KJT's potential inheritance of any equity interest in the company at risk; (14) no agreement came out of the August 22 meeting; (15) within several days of the August 22 meeting, JPT's wife summoned the witness to the family home, where JPT informed the witness that KJT was complaining to the father about the witness's allegedly excessive involvement with the company; (16) the conversation at the meeting shifted to KJT's job performance and internal company politics, at which time the witness told the father, after many pointed questions by the father, that his son had been neglecting his job duties and of the tensions existing between the two siblings; (17) by the end of this meeting, JPT had decided that his son had been lying to his parents about the situation concerning the company, causing JPT to be very angry; (18) 1991 gross sales for Thogus was $6,514,080; 1992 gross sales was $6,825,054; 1993 gross sales was $7,603,040; 1994 gross sales was $8,356,446. The third witness for the plaintiffs was Mr. Frank K. Albert, who testified in pertinent part as follows (R. 227-253): (1) he has been employed at Thogus for approximately twenty-one years and is presently a production scheduler; (2) KJT took an interest in attempting to find qualified people to help solve quality control problems at the company in the 1990's; (3) KJT always appeared to the witness to be doing the job duties of the Vice President in -7- charge of sales and marketing, putting in full days at the plant and often on Saturdays, too; (4) Hlavin, to his knowledge, is at the plant only about three days a week, but he does not know if she is doing company business when not at the plant; (5) he does not attend weekly management meetings. The fourth witness for the plaintiffs was KJT, who testified in pertinent part as follows (R. 254-533): (1) he currently resides with his wife and five children in Charlotte, North Carolina; (2) the trusts were set up to assure that the company stayed within the founder's bloodline, depriving stepchildren of KJT any interest in the company; (3) his ownership interest in Thogus is through the trusts; (4) shareholder dividends were not paid as such by the company, but instead were paid as bonuses; (5) his annual salary in 1995 was $75,000, and his bonus that year was $163,485.80; (6) his annual salary in 1994 was $75,000, and his bonus that year was $613,000.12; (7) his father missed work approximately half of 1990 due to brain surgery and resulting therapy and rehabilitation, but never fully recovered; (8) his father can be a stubborn man with a violent temper, and the witness and the father had, at times, a rocky relationship; (9) he either was fired by his father or quit the company, only to return a short time later, approximately five times prior to his termination in 1995; (10) he did not have access to the company's wage and sales financial reports; (11) in his duties, he would make periodic interstate sales trips in addition to making telephone contact with his customer base and doing research on identifying competitors; (12) he was bad at making -8- weekly management meetings (R. 299) because he felt he had no input role; (13) he was frustrated over the company's rejection of anything he tried to do outside of sales, particularly where he believed that he and his sister were to be treated as equals in terms of authority; (14) he felt that the accountant, Mr. Krupa, was trying to run the company, and resented it despite being informed by Hlavin that their father wanted the accountant in that oversight role; (15) he was the black sheep of the family (R. 328); (16) he was not happy working at the company (R. 333); (17) after trying unsuccessfully to work things out with his sister following the early August meeting, he contacted attorney Krantz on August 17, 1995; (18) at the meeting at his parents' house on August 23, 1995, where the witness informed the father of his frustrations and that he was leaving the company unless the situation with his sister was resolved by that Monday, August 28, 1995; the father was angry and told the son that if he was not happy with things as they were, to do what he had to do and don't let the door hit you (R. 345); (19) on Friday, August 25, 1995, he received the written notice of the board of directors' meeting scheduled for August 28, 1995, where his termination would be the subject of the meeting; (20) eighteen charges were leveled at him at the board meeting justifying his termination (see Plaintiffs' Exhibit No. 9); (21) he agrees that eighteen reasons were provided, but he contends that he could not do his job adequately because he was thwarted and had no input (R. 375-376); (22) at one time, he may have told someone that he wanted to put Thogus out of business; -9- (23) his claims are against his father and the company only; (24) he does not personally own any stock in the company, instead, the trusts own the stock for his benefit (R. 389-390); (25) he has never asked for his job back since being terminated in 1995; (26) he knew his compensation would end when he left the company; (27) believing it to be a waste of time to do so, he made no explanatory or exculpatory responses concerning the eighteen reasons at the board meeting; (28) he did very little cold calling to drum up new customers; (29) if he would attend at all, he did little or no preparation for the weekly management meetings despite being requested by others to participate more; (30) he did tell his father, the company President, on August 23, 1995, that he would not attend any more weekly management meetings; (31) he did discuss with one of the company's major distributors the confidential company matter that there were difficulties between he and his sister in the management of the company; (32) he went to three plastics industry seminars during the years 1991 through 1995 and read a few industry magazines to demonstrate his attempt to improve his sales skills; (33) in 1994 and 1995 he may have told people at the company that he did not know how to sell; (34) he did not follow his father's advice to get more sales representatives for the company; (35) he told his own mother, sister, other officers and people associated with the company that he had not been doing his job at the company (R. 494), but disputed the inference that he hadn't been doing the job for the past five years; (36) he admits to writing the letter which forms the basis for the eighteenth -10- charge for termination; (37) he did not think his termination would preclude his rights associated with his stock interests in the company. The fifth witness for plaintiffs, on cross-examination, was Hlavin, who stated the following in pertinent part (R. 534-693): (1) she did not recommend to her father that KJT's employment be terminated, instead she agreed with the father's decision to terminate the son; (2) she did not plot for almost a year to drive her brother out of the company; (3) Mr. Krupa is the company's accountant and, pursuant to the wishes of her parents, a business adviser to the company who reported to her father; (4) since KJT had not taken any action to get better results out of Gordon, despite being advised at a previous management meeting to do so, she and Mr. Krupa went to Michigan to try to impress upon the sales representative that he had to do a better job for the company; (5) she did not tell KJT of the trip to Michigan because she did not want to embarrass him; (6) the company had taken steps to implement a new industry quality control standard (QS-9000) several months prior to her brother's termination, an action which was participated in by her brother; (7) the increased profits reflected by the company came from three custom customers and KJT had nothing to do with bringing these customers to the company; (8) in 1995, due to mounting tensions with her brother, she considered leaving the company to secure harmony within the family; (9) she met with her father on August 24, 1995, at which time she answered his questions concerning KJT's job performance, discussed the buy out -11- demand which had been put forth by KJT's attorney, and informed him of KJT's attorney's veiled threat to sue to protect his client's 44.7% equity rights in the company if the buy out did not occur; (10) she believed her father would never allow a team of people from outside the company to come in and value it for purposes of establishing a buy out of KJT, thereby placing KJT's potential inheritance at risk; (11) her father, visibly upset after learning of the threat by KJT to sue the family, interpreted it as the proverbial last straw and said That's it, he's done. (R. 629); (12) she did not tell her father that KJT was thinking of leaving the company, but she did tell the father that she was thinking of leaving the company; (13) the company paid no dividends on its stock; (14) the trusts of which KJT is a beneficiary has received no dividends on the company stock since KJT was terminated, despite the fact that Thogus's gross profit for 1995 was $2,981,766; (15) Thogus distributes profits to its employees in the form of bonuses, which bonuses are not related to stock ownership in the company; (16) in 1996, her total compensation from the company was $381,442.43, which includes a base salary plus bonuses; (17) her 1995 total compensation from the company was $544,442.43; (18) Thogus paid the father $302,884.86 in 1996 despite his being sick and exercising a decreasing role in the day-to-day running of the company; (19) in 1992, her compensation from the company was $113,974.02; (20) in 1993, her compensation from the company was $749,974.04; (21) the increasing compensation for her and her brother reflected increased responsibilities due to the decreasing -12- role of the father and not the increased ownership of company stock by herself or her brother; (22) her father decided who would get the bonuses and in what amount. The sixth witness for the plaintiffs was Mr. Radd Riebe, a financial expert who rendered an opinion on the valuation of Thogus. (See R. 696-720.) It was his opinion that Thogus used bonuses to increase compensation levels of its shareholders, thus absorbing all S corporation earnings and replacing dividends to the shareholders. According to this witness, the company only paid the bonuses to employees who work at the company, therefore the bonuses would end at the time of an employee's termination and would not have to be paid to a trust which owns the shares since the trust is not employed by the company and the distribution was not a dividend but a bonus linked to employment. (R. 713-714.) The seventh witness for the plaintiffs was Mr. James Tyler, an officer of Jason Incorporated responsible for sales and marketing in the automotive group, who generally testified that education played some role in the field of sales, but is not the sole determinative factor of success. Mr. Tyler also stated that KJT was a very close friend of his who came to him often for advice and assistance to help KJT better perform his duties at Thogus. (R. 727-749.) The eighth witness for the plaintiffs was Miss Kristine Thompson, the daughter of KJT and the granddaughter of JPT. She stated that she worked for about a year-and-a-half in the same building as Thogus, as an accounts representative at a concern -13- named Markers which is also owned by the Thompsons, where she observed the Thogus personnel. The witness stated that she only saw Hlavin in the office about three days a week, but did not know if Hlavin was involved with company business while not at the plant.4 She also recounted that they would hide financial data from JPT when JPT would be at the plant by showing him old financial records, but she did not know if her grandfather had requested to see the old records. She knew that her grandfather had a temper and would become upset when he could not get answers to his questions. (See R. 751-768.) The ninth witness, by videotape deposition over the objection of the defense, was Mr. Scott R. Ritchie,5 who was an associate of Mr. Gordon in Michigan from July of 1995 to April of 1996. Mr. Ritchie corroborated the testimony of Mr. Gordon concerning the increased emphasis within the automotive industry on quality and the standard known as QS-9000. It was his opinion that Thogus had been identified by Chrysler in a late-1995 monthly report as having a quality problem with one of its products sent to Chrysler. Mr. Ritchie also stated that KJT and he would often speak over the telephone about sales and marketing and the need for Thogus to 4According to this witness, Hlavin maintained a computer link with Thogus from Hlavin's home computer. 5Mr. Ritchie was scheduled to appear at the trial as a witness, but when the trial date was rescheduled at the last minute, the rescheduled date created a conflict with his schedule. Unable to physically attend the new trial date, he was hastily noticed for deposition by the plaintiffs. It was this hasty notice which caused the objection by the defense. The videotape deposition was reduced to a written transcript. See Ritchie Depo. at 4-6. -14- implement the QS-9000 standard. The witness also knew that Hlavin and others at Thogus were taking steps to implement QS-9000 in early to mid-1995. He has no formal training in QS-9000 and Chrysler still utilizes Thogus components. (See, generally, Ritchie Depo. at 1-77.) At this point, the plaintiffs rested subject to the admission of exhibits. (R. 791.) The defense then moved for a directed verdict, putting its reasons for same in oral argument to the court, but the court reserved ruling on the motion until all the evidence had been presented by the parties. (R. 796-806.) The defense then put on its case-in-chief, offering the testimony of seven witnesses. The first witness for the defense was Hlavin, who reiterated her prior testimony, adding in pertinent part the following (R. 808-965): (1) she often does company business through her home computer link with the company office; (2) the company has over 650 customers at present, and sells internationally; (3) her father fired KJT because her father thought KJT wasn't doing his job; (4) her father is presently 78 years old and in failing health recently; (5) her brother's lawsuit against the family devastated her father; (6) her brother, if he did attend the weekly management meetings, was often unprepared or had little to nothing to add to the meetings; (7) many people tried repeatedly to advise KJT to improve his performance, but he showed no indication of acting on the advice; (8) KJT would go outside his realm of responsibility, sales and marketing, and tell people in the administrative office or the production plant not to implement -15- a particular management decision because he thought it to be a waste of time, thereby undercutting another vice-president's area of authority; (9) KJT was repeatedly advised to restrict his efforts to sales and marketing; (10) KJT told her and others that he knew he wasn't doing his job, but he promised to try to do better; (11) it was suggested to KJT at a meeting that he go to Michigan to speak with Mr. Gordon, but he would not go, so she and Mr. Krupa took it upon themselves to make the trip to impress upon the representative the need for better job performance; (12) her parents telephoned her on the evening of the day when KJT had come to the parents to tell them of his plans to leave, at which time the parents, who were very upset, told her what had occurred at that meeting and asked for her version of events concerning KJT's accusations; (13) her father came to the plant the next morning to further question other vice-presidents and personnel about KJT's accusations; (14) when informed that KJT had obtained legal counsel to explore a buy out, her father was very upset and made the decision that KJT's involvement with the company was through, and ordered her to call a board of directors' meeting for that Monday to resolve the termination of KJT as an employee and officer; (15) she, as corporate Secretary, prepared the notice and had it delivered to KJT; (16) at the board of directors' meeting, KJT did not object or question any of the eighteen reasons set forth for his removal; (17) in October of 1995, the company received notice that KJT had filed a claim for unemployment benefits, a claim which was initially allowed, but was ultimately disallowed after appeal -16- when the agency concluded that KJT had not performed his job duties and found that he had been terminated for just cause; (18) the company does not give its shareholders dividends, instead the company profits are distributed to employees as bonuses which are reported as earnings to the employee on their federal W-2 tax forms; (19) KJT's company earnings for 1995, through August, was $238,480.85; (20) after KJT had been terminated, she learned of the greater extent of her brother's poor job performance efforts; (21) a number of company customers, including Chrysler, rate the company very highly in terms of quality and service; (22) as early as April of 1995 the company was taking steps to implement QS-9000; (23) in 1990, the year of the father's brain surgeries when he spent much of that year away from his responsibilities at the company, he reported compensation from the company of $1,650,100; (24) there was no plot by anyone to get rid of KJT. The second witness for the defense was Ms. Jean F. Bear, who testified in pertinent part as follows (R. 966-979): (1) she has worked at Thogus since January of 1994 and worked with KJT in general office duties, and has been the office manager since March of 1995; (2) whether he was in the office or not, KJT instructed her to take any business calls for him, that he only wanted personal calls passed through to him; (3) very few business calls came for KJT, while many personal calls came in for him; (4) she never hid financial information from JPT. The third witness for the defense was Ms. Beverly Willis, who testified in pertinent part as follows (R. 980-1009): (1) she has -17- worked at Thogus for the past fourteen years in the administration; (2) she was given the duties of helping to implement QS-9000 at the company starting in March of 1995; (3) the company was being assessed for QS-9000 compliance in July of 1995; (4) she never hid financial information from JPT; (5) KJT fell asleep at an industry seminar they attended; (6) KJT did make suggestions on areas of operation which were outside his authority, at times subverting the implementation of activities outside his sphere of control; (7) KJT repeatedly expressed a desire to retire when he was age 55; (8) she has never seen a sales report prepared by KJT. The fourth witness for the defense was Mr. Jeffrey Westfall, who testified in pertinent part as follows (R. 1010-1067): (1) he started working at Thogus in November of 1995 as the director of marketing and sales, and was working as an outside sales representative for Thogus products, and others, prior to that since 1981; (2) JPT's mother and the witness's grandmother were sisters, so he is related to the Thompsons; (3) in June of 1995, KJT invited the witness out to lunch to get his advice on performing sales duties and hunting for additional outside sales representatives; (4) when he took over for KJT at Thogus, the witness found the sales records, what there were of them, to be very incomplete ... it was like starting from scratch; (5) the witness detailed the numerous efforts he generated to jump-start the sales department of the company; (6) JPT made the major decisions around the company. The fifth witness for the defense was Mr. Krupa, who generally reiterated his previous testimony and corroborated the testimony of -18- other witnesses relative to KJT's job performance and the decision to terminate his employment, adding in pertinent part the following (R. 1067-1132): (1) in 1990, the company's federal tax return reflected a net loss of $37,181; (2) in 1991, the company's federal tax return reflected a net loss of $45,523; (3) in 1992, the company's federal tax return reflected a net loss of $28,540; (4) in 1993, the company's federal tax return reflected a net loss of $25,982; (5) in 1994, the company's federal tax return reflected a net loss of $16,259; (6) in 1995, the company's federal tax return reflected a net profit of $2,147. The sixth witness for the defense, by videotape deposition,6 was JPT's wife, Mrs. Helen A. Thompson, who detailed JPT's medical history and added the following in pertinent part (see Thompson Depo. at 3-67): (1) in mid-December of 1995, JPT wrote a letter to KJT demanding repayment of a promissory note in the amount of $200,000, an amount which represented a loan from the father to the son to help the son purchase a home in 1990; (2) the demand letter was prepared and sent because JPT was very upset that his son had sued the family; (3) KJT admitted to her that he had not been doing his job for five years; (4) she attended some weekly management meetings and witnessed first-hand KJT's unpreparedness and lack of attention. The seventh, and final, witness for the defense was Mr. Walter R. Gus, who corroborated the other witness's testimony relative to KJT's job performance, adding in pertinent part the following (R. 6A copy of the transcript of the deposition is in the record. -19- 1134-1226): (1) he has been employed by Thogus since 1972 and is presently the Vice-president in charge of manufacturing; (2) KJT had a distinct lack of interest in the company; (3) KJT told him that he wanted to retire at age 55; (4) about two weeks before KJT's termination, KJT informed the witness that he was quitting and that he was going to retain an attorney to file a lawsuit; (5) the witness tried, without success, to get KJT to change his mind about quitting and suing the company and his family. The defense then rested subject to the admission of evidence. The defense renewed its motion for a directed verdict, but the trial court put off the ruling. (R. 1233.) After breaking for lunch, the trial court entertained closing arguments. (R. 1235- 1277 [plaintiffs' closing], 1278-1317 [defense closing], 1319-1327 [plaintiffs' rebuttal].) After recessing overnight, the plaintiff moved for a directed verdict on the counterclaim for breach of fiduciary duty by KJT. The court then instructed the jury on the applicable law. (See, generally, R. 1334-1384.) After instructing the jury, the trial court asked counsel if there were any problems with the instructions as given. One of the defense's objections was the court's charge on the theory of wrongful termination of employment. (R. 1373.) Defense argued to the court that the theory of the case was instead breach of fiduciary duty between majority and minority shareholders as provided in the second amended complaint. The court sent only count one of the second amended complaint, which the court interpreted as a claim for wrongful termination by KJT individually as an employee against -20- Thogus, and the counterclaim to the jury. The court specifically instructed the jury that JPT was no longer a defendant in the case. (See R. 1332-1333.) The second and third counts of the second amended complaint, which were pled against Thogus, the corporate entity, were disposed of by directed verdict in favor of the defense. The jury returned a verdict in the amount of $750,000 on count one of the second amended complaint, and also found for KJT on the counterclaim. (R. 1386-1387.) Subsequent to the verdict, the defense filed motions for new trial, or in the alternative, judgment notwithstanding the verdict ( JNOV ). These post-judgment motions were, after oral argument, denied. This appeal presents five assignments of error by Thogus, and three cross-assignments of error by KJT, individually, and the two trusts controlled by KJT. Thogus's appeal will be discussed first. The first assignment presented by Thogus provides: THE TRIAL COURT COMMITTED REVERSIBLE ERROR BY SUBMITTING INSTRUCTIONS TO THE JURY WHICH ARE CONTRARY TO LAW AND WHICH WERE BASED UPON CLAIMS WHICH WERE NEVER PLED BY PLAINTIFFS OR TRIED TO THE JURY. This assignment places at issue the substance of count one of the January 9, 1997, second amended complaint, the resolution of which went to the jury. This count states the following: COUNT ONE (BREACH OF FIDUCIARY DUTY) 16. The Plaintiffs repeat and reallege Paragraphs 1 through 15 above as if fully set forth herein. -21- 17. At all relevant times herein, John P. Thompson controlled the voting shares of Thogus. 18. The controlling shareholders of Thogus owe a fiduciary duty to Kenneth Thompson, trustee, as a minority shareholder of Thogus. 19. The fiduciary duty owed to Kenneth Thompson, trustee, by John P. Thompson was breached by the removal of Ken Thompson as an officer of Thogus and by the termination of Ken Thompson's employment with Thogus without a legitimate business reason. 20. The conduct of John P. Thompson in removing Ken Thompson as an officer and terminating Ken's employment above was intentional and malicious. Second Amended Complaint, at 3-4. The claim alleged in count one above is brought pursuant to Crosby v. Beam (1989), 47 Ohio St.3d 105, 548 N.E.2d 217, which recognized that majority shareholders owe a heightened fiduciary duty toward minority shareholders in a closed corporation, the breach of which permits the minority shareholder to bring the action against the offending majority shareholder. Further, the count under review was properly brought as a direct action, as opposed to a shareholder's derivative action in the name of the corporation pursuant to Civ.R. 23.1, by the minority shareholder against the majority shareholder. Id. The harm to KJT, the shareholder, inherent in the breach of the fiduciary duty is the majority shareholder's use of his control over the corporation to deprive KJT, the minority shareholder, of the benefits (in the form of a proportionate share of the company profits distributed as bonuses instead of stock dividends) of the minority shareholder's -22- investment. See, also, Gigax v. Repka (Montgomery, 1992), 83 Ohio App.3d 615, 615 N.E.2d 644, and B & W Custom Cabinets, Inc. v. Worthington (April 23, 1992), Cuyahoga App. Nos. 59801 and 60709, unreported, 1992 WL 83821 (relying on Crosby v. Beam, supra, the courts determined that the majority shareholder's removal of an employee/minority shareholder in a closed corporation must be based on legitimate business reasons). Quite clearly, count one above was brought by KJT, trustee, a minority shareholder, against JPT, the controlling shareholder, alleging a breach of fiduciary duty in depriving the minority shareholder of his financial share of company profits contrary to a legitimate business purpose. The claim was not brought by KJT, the individual, against Thogus, the corporate entity. Yet, the trial court instructed the jury that the claim was presented by KJT, the individual, against Thogus, the corporate entity. (See R. 1340-1351.) The problem with this instruction is evident. As to this claim, the corporate entity owed no fiduciary duty, heightened or otherwise, to KJT in his individual capacity or shareholder capacity because the corporation was not the offending party; the majority shareholder, who was, in fact, the only party pled as a defendant in count one, was the arguably offending party who owed the fiduciary duty to the minority shareholder/employee. Crosby v. Beam, supra; Gigax v. Repka, supra; B & W Custom Cabinets, Inc. v. Worthington, supra. Since the only claims against the corporate entity had been directed out by the trial court, and count one pled no cause of action against the corporate entity, the trial court's -23- instruction relative to the liability of the corporate entity, and T Having affirmed Thogus's first assignment of error, which necessarily reverses the final judgment, the remainder of Thogus's 7affirmed.assignments are 12(A)(1)(c).fundamentally flawed. 2 COURT COMMITTED REVERSIBLE ERRORa finding of liability BY FAILING TO DIRECT A VERDICT IN FAVOR OF7Thogus's four remaining THOGUS PRODUCTS CO. AT THE CLOSE OF PLAINTIFFS' CASE BASED ON PLAINTIFFS' COMPLETE FAILURE TO PRESENT ANY EVIDENCE OF DAMAGES ON ANY OF THE COUNTS SET FORTH IN THE SECOND AMENDED COMPLAINT. 3. THE TRIAL COURT COMMITTED REVERSIBLE ERROR BY FAILING TO ENTER JUDGMENT NOTWITHSTANDING THE VERDICT AND/OR GRANT A NEW TRIAL TO THOGUS PRODUCTS ON THE BASIS THAT THE JURY'S VERDICT WAS EXCESSIVE, BASED UPON PASSION, PREJUDICE AND SPECULATION, AND NOT BASED UPON ANY EVIDENCE IN THE RECORD. 4. THE TRIAL COURT COMMITTED REVERSIBLE ERROR BY GIVING EXTREMELY REPETITIVE DAMAGE INSTRUCTIONS TO THE JURY WHICH CLEARLY INFLUENCED ITS VERDICT. 5. THE TRIAL COURT ERRED BY FAILING TO GRANT DEFENDANTS' MOTIONS FOR PROTECTIVE ORDER TO PROHIBIT THE VIDEOTAPING OF THE TESTIMONY OF GREG GORDON AND SCOTT RITCHIE AND BY PERMITTING THE VIDEOTAPE TESTIMONY TO BE PLAYED AT TRIAL. -24- We now turn our attention to the four cross-assignments of error presented in the cross-appeal filed by plaintiffs. The first, third and fourth cross-assignments of error state: 1. THE TRIAL COURT ERRONEOUSLY BARRED THE PLAINTIFFS FROM CALLING BERNARD L. KARR AS A WITNESS AT TRIAL. 3. THE TRIAL COURT ERRONEOUSLY DENIED THE PLAINTIFFS' MOTION FOR ATTORNEYS FEES. 4. THE TRIAL COURT ERRONEOUSLY DENIED THE PLAINTIFFS' MOTION TO RECOUP THE COST OF PROCURING THE VIDEOTAPED DEPOSITIONS PRESENTED AT TRIAL. These cross-assignments are rendered moot by virtue of reversing and vacating the verdict. The remaining second cross-assignment of error states: 2. THE TRIAL COURT ERRONEOUSLY GRANTED SUMMARY JUDGMENT TO DEFENDANT KATHLEEN HLAVIN ON THE PLAINTIFFS' CLAIM FOR BREACH OF FIDUCIARY DUTY. The trial court, at a pretrial conference conducted on January 8, 1997, advised counsel of the impending summary judgment rulings. The record reflects that the second amended complaint was filed on January 9, 1997, but the breach of fiduciary duty claim, count one, was not directed against Hlavin. The trial court journalized its granting of summary judgment to Hlavin on January 14, 1997, on all claims raised against her in the first amended complaint. The failure by plaintiffs to name Hlavin in count one of the second amended complaint constituted an abandonment of that claim previously raised in the first amended complaint against Hlavin, Wrinkle v. Trabert (1963), 174 Ohio St. 233, 238, rendering -25- any error in the summary judgment in her favor relative to the first amended complaint irrelevant. The second cross-assignment of error is overruled. Judgment affirmed in part, reversed and remanded in part, judgment vacated. -26- This cause is affirmed in part, reversed and remanded in part, judgment vacated. It is, therefore, considered that said appellant recover of said appellees its costs herein. It is ordered that a special mandate be sent to said court to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. Exceptions. PATRICIA A. BLACKMON, A.J., and TIMOTHY E. McMONAGLE, J., CONCUR. ______________________________ JAMES D. SWEENEY JUDGE N.B. This entry is an announcement of the court's decision. See App.R. 22(B), 22(D) and 26(A); Loc.App.R. 27. This decision will be journalized and will become the judgment and order of the court pursuant to App.R. 22(E) unless a motion for reconsideration with supporting brief, per App.R. 26(A), is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's announcement of decision by the .