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Global Pacific LLC v. Kirkpatrick

Court of Appeals of Ohio, Twelfth District, Butler

April 10, 2017

GLOBAL PACIFIC, LLC, et al., Plaintiffs,
v.
LARRY T. KIRKPATRICK, et al., Defendants/Third-Party Plaintiffs-Appellees,
v.
BLUELINE RENTAL, LLC, Third-Party Defendant-Appellant.

         CIVIL APPEAL FROM BUTLER COUNTY COURT OF COMMON PLEAS Case No. CV2015-09-2095

          Kegler, Brown, Hill & Ritter Co., Larry T. McClatchey, Jason Beehler, Jane K. Gleaves, for appellees Larry Kirkpatrick, KZB Properties, LLC, KZB Holdings, LLC and R&K Machinery, LLC

          Frost Brown Todd, LLC, Thomas B. Allen, Charles B. Galvin, for appellant

          Womble Carlyle Sandridge & Rice, LLP, Louis J. Rouleau, for appellant

          OPINION

          PIPER, J.

         {¶ 1} Third-party defendant-appellant, BlueLine Rental, LLC, appeals a decision of the Butler County Court of Common Pleas ordering it to participate in mediation with plaintiffs, Global Pacific, LLC, et al., and defendants-appellees/third-party plaintiffs, Larry Kirkpatrick, et al.

         {¶ 2} The Reale Group (comprised of Global Pacific, LLC and Christopher Reale) and the Kirkpatrick Group (comprised of Larry Kirkpatrick, KZB Holdings, LLC, R&K Machinery, LLC, and KZB Properties, LLC) were business partners. In 2006, the two groups executed an operating agreement for R&K Machinery, LLC (the 2006 R&K Operating Agreement). The groups formed R&K Machinery to operate a BlueLine franchise in Hamilton, Ohio (the Franchise). BlueLine is a rental construction equipment company with franchises throughout the country. The Reale Group and the Kirkpatrick Group also formed KZB Properties, LLC, which was a limited liability corporation to hold real estate for the Franchise and run it.

         {¶ 3} Within the 2006 R&K Operating Agreement, the Reale Group and the Kirkpatrick Group agreed to mediate any disputes that arose between them, and to arbitrate any disputes if mediation proved unsuccessful. The only two parties to the 2006 R&K Operating Agreement were the Reale Group and the Kirkpatrick Group.

         {¶ 4} Christopher Reale, who is the sole member and owner of Global Pacific, LLC, also owned and operated three other BlueLine franchises in Hawaii through various companies he set up for that purpose. In 2008, Reale started suffering economic hardship and began defaulting on obligations to his franchises' creditors. In 2010, Reale entered an agreement (the 2010 Agreement) with BlueLine wherein BlueLine wrote off significant amounts of Reale's debts in exchange for Reale surrendering his interest in his three Hawaii franchises, as well as the Franchise he operated with the Kirkpatrick Group in Ohio. In Section Eight of the 2010 Agreement, the Reale Group agreed to transfer all its interests in the Franchise to the Kirkpatrick Group, and BlueLine agreed to prepare the "assignments of membership interest."

         {¶ 5} Also within the 2010 Agreement, BlueLine and the Reale Group agreed that any disputes arising out of their agreement would be submitted for binding arbitration in Honolulu, Hawaii. The parties also agreed that Hawaii law would control any disputes between them.

         {¶ 6} In 2011, the Kirkpatrick Group entered an agreement with BlueLine to sell certain assets once belonging to R&K Machinery. Within that Asset Purchase Agreement, the Kirkpatrick Group asserted its sole ownership of the Franchise. At the same time, the Kirkpatrick Group and BlueLine entered a Termination Agreement as a corollary agreement to the Asset Purchase Agreement. Within that agreement, the Kirkpatrick Group released BlueLine "from any and all claims, demands, actions, causes of action, suits, costs, damages, attorney's fees, expenses and liabilities of every kind, character and description, whether known or unknown, suspected or unsuspected, either direct or consequential, at law or in equity, which it or they may have now, may have had at any time heretofore, or may have had at any time hereafter, arising from, or in any manner incidental to, the Franchise agreements, the Franchised Business or any matter, thing or event whatever occurring or failing to occur at any time in the past * * *." Also within the agreement, the Kirkpatrick Group promised that they had not, "and will not, file, commence, institute, prosecute or join in any charge, claim, suit, action or other proceeding" against BlueLine regarding the Franchise.

         {¶ 7} In 2014, the Reale Group and BlueLine also entered a Release Agreement, which contained a "full and complete" mutual release of "all duties and performance obligations" contained in the 2010 Agreement.

         {¶ 8} In 2015, the Reale Group sued the Kirkpatrick Group in the Butler County Court of Common Pleas, claiming that its interest in the Franchise was never actually transferred. The Reale Group sought unallocated profits, distributions, and damages for the deprivation of ownership rights it claimed to still possess in the Franchise.

         {¶ 9} In 2016, the Kirkpatrick Group moved the trial court to stay the proceedings and compel arbitration based on the 2006 R&K Operating Agreement. The day after moving the trial court to compel arbitration, the Kirkpatrick Group filed a third-party complaint against BlueLine, claiming that if it was liable to the Reale Group, BlueLine would have to indemnify it. Soon thereafter, the trial court granted the Kirkpatrick Group's motion to stay the proceedings pending arbitration. However, the trial court ordered the parties to complete discovery before proceeding to ...


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