LINDA J. STRAHM, ET AL., PLAINTIFFS-APPELLANTS,
LEE ANN KAGY, ET AL., DEFENDANTS-APPELLEES.
from Allen County Common Pleas Court Trial Court No. CV 2016
P. Kemp and James F. Blair for Appellants
W. Goellner for Appellees, Lee Ann Kagy and Leslie M. Barnes
Matthew C. Huffman for Appellee, A to Z Control Meats, Inc.
Although originally placed on our accelerated calendar, we
have elected pursuant to Loc.R. 12(5) to issue a full opinion
in lieu of a summary judgment entry. Plaintiffs-appellants
Linda J. Strahm ("Strahm") and Lois J. Bender
("Bender") appeal the judgment of the Allen County
Court of Common Pleas for granting the motion to dismiss of
the defendants-appellees, Lee Ann Kagy ("Kagy") and
Leslie M. Barnes ("Barnes"). For the reasons set
forth below, the judgment of the lower court is affirmed.
and Procedural History
Ownership of A to Z Portion Control Meats, Inc. ("A to
Z") is equally divided among four shareholders: Strahm,
Bender, Kagy, and Barnes. Doc. 1, 12. Thus, each of these
shareholders owns one-fourth of A to Z's stock.
Id. The board of directors of this corporation is
composed of three people who are elected to serve one-year
terms. Doc. 1. The officers of A to Z are presently Kagy, who
serves as president and treasurer, and Barnes, who serves as
secretary. Id. Currently, three people-Kagy, Barnes,
and Terry Strahm, who is Strahm's husband-serve on the
board of directors. These board members were elected by the
shareholders on January 8, 2015, to commence their one-year
terms. Id. Bender and Strahm received their
ownership interest in A to Z on May 26, 2015, and were, thus,
not shareholders at the time that the current board of
directors was elected. Id.
On July 21, 2015, the shareholders held a special meeting
during which Strahm and Bender moved to expand the positions
on the board of directors from three to five. Id.
Bender and Strahm voted in favor of this motion while Kagy
and Barnes voted against this motion. Id. Thus, this
motion failed to receive a majority vote of the shareholders
and was defeated. Id. On January 4, 2016, the
shareholders convened for their annual meeting during which
elections were held for the board of directors. Id.
At this meeting, the names of Strahm, Terry Strahm, Bender,
Barnes, and Kagy were placed into nomination for positions on
the board of directors. Id. When the time came to
vote, Terry Strahm, Bender, Barnes, and Kagy each received
one vote. Id. Kagy, as president of the company,
announced that the vote was deadlocked and that the current
board of directors, which had been elected the previous
January, would remain in office pursuant to the company's
code of regulations. Id.
Since that time, the shareholders have remained deadlocked on
the issue of who should be on the board of directors and have
not been able to come to an agreement, leaving the board of
directors elected on January 8, 2015 in their positions after
their one-year term expired. Id. On December 15,
2016, appellants Strahm and Bender filed a verified complaint
for judicial dissolution of A to Z pursuant to R.C. 1701.91.
Id. In the complaint, appellants allege that
various controversies and differences have existed, and still
exist, among them, which are of such a dramatic and competing
nature, kind, and character, as to impede the efficient and
effective business plan, management of A to Z, and the
relationship between the shareholders has been irretrievably
Id. On December 20, 2016, the appellees submitted a
Civ.R. 12(B)(6) motion to dismiss. Id. In this
motion, appellees argued that the trial court should dismiss
this action because the appellants did not represent the
required level of shareholder ownership to bring an action
for judicial dissolution under R.C. 1701.91 and, therefore,
lacked standing to bring this claim. Id.
On January 27, 2017, the trial court held a hearing on
appellees' motion and dismissed this action. Doc. 26 at
40. On February 27, 2017, appellants filed a joint notice of
appeal. In this appeal, appellants raise the following
assignment of error:
The trial court erred in granting appellee's motion to
dismiss based on a flawed interpretation of Ohio ...