60(B) - Fraud adn Misrepresentation

Rettig v. Rettig
2010-Ohio-2122
Sixth Appellate District
Wood County
Rule 60(B) - Fraud and Misrepresentation

Appellant, J. Rettig, and appellee, C. Rettig were married in 1999 and have one minor child. On June 12, 2006, appellant and appellee filed a joint petition for the dissolution of their marriage. According to the separation agreement, appellant earned approximately $160,000 per year as the Chief Operating Officer of Greenline Foods, Inc. (“Greenline”) and appellee earned an actual $11,600 per year plus, $50,000 in spousal support.

On July 17, 2007 appellee filed a Civ. R. 60(B) motion for relief from judgment premised upon newly discovered evidence, fraud, misrepresentation, and other misconduct of appellant. Appellee averred that based upon recently learned facts, it appeared that at the time of the dissolution appellant held and interest, specifically, stock appreciation rights (“SARS”) in Greenline and an interest in the condominium in which he was residing.

The Court fo Appeals held that appellee proved, by a preponderance of the evidence that appellant perpetuated a fraud during the course of the parties’ dissolution in order to deprive appellee of her share of his SARS. The appellee was awarded her undivided one half interest in the SARS which amounted to $2,349,600.

From the opinion:

{¶ 8} Over the next few years, appellant was promoted to the positions of General Manager, Chief Financial Officer, and, finally, Chief Operations Officer. In May 2005, appellant received an additional 47 SARS. A few months later, appellant and appellee separated. Upon learning that appellant was residing in accommodations that he did not consider suitable, Twyman created a limited liability corporation ("LLC") for the sole purpose of purchasing a condominium and leasing it to appellant. Appellant later purchased the condominium from the LLC.

{¶ 9} According to Twyman he terminated the SARS Plan in December 2005 upon the advice of counsel, Victor Ten Brink. While appellant stated that he may have known as early as May 2005 that this plan would be terminated, Ten Brink testified that he first spoke with Twyman in October 2004. Ten Brink asserted that he informed Twyman of the fact that due to newly enacted federal tax laws, several changes would have to be made to Greenline's SARS Plan in order to comply with interim guidelines issued by the Internal Revenue Service. Twyman and Ten Brink then discussed the problem and the development of a new SARS plan over the next several months. In his testimony at trial, Ten Brink stated that appellant's SARS had no value at that point, therefore, terminating the SARS Plan would have no adverse effect. It is undisputed that Greenline was not performing well financially during this period, and Twyman wasseeking a purchaser of the company.

{¶ 10} Richard Ritter, who was hired to head the company in 2000, was the only other executive employee at Greenline. Ritter was also awarded SARS, but had a clause in his separate "Stock Appreciation Rights Grant and Agreement" stating that if the SARS Plan was terminated, that plan would be incorporated into the grant "so as to give effect to the Plan and Grant with respect to Ritter." This document and a second document captioned "Deferred Compensation Agreement" were both generated on March 1, 2000. When Ritter was fired, without cause, by Twyman on March 10, 2006, he was not only granted a promissory note for the amount due from Greenline as deferred compensation, but also provided with a separate "Incentive Fee Agreement." Pursuant to this agreement, Ritter would, upon the sale of Greenline, receive a fee in lieu of the value of his SARS. Ritter signed the fee agreement on June 29, 2006.

{¶ 11} At the hearing on appellee's motion for relief from judgment, Ritter testified that he was aware of the fact that Twyman was in negotiations for the sale of Greenline to
The Riverside Company ("Riverside") and that a company named Apio also expressed an
interest in buying Greenline. After the sale of Greenline to Riverside, Ritter received
over two million dollars pursuant to the terms of that agreement. He also became a consultant for Greenline.

{¶ 12} On May 23, 2006, Twyman, along with appellant, met with representatives of Riverside, a private equity buyer, which subsequently sought to purchase 100 percent of Greenline's issued and outstanding stock. A June 14, 2006 "Letter of Interest" sent to Greenline by Riverside, sets forth the "general terms under which we [Riverside] would acquire the Company [Greenline] from you [Twyman] subject to [Riverside's] due diligence."

{¶ 13} On June 16, 2006, David Gesmondi, a Keybank officer who apparently brokered the sale of Greenline, sent an e-mail to Riverside stating: "I spoke to Jeff Twyman and Jeff Rettig this morning, and we have a deal at cash closing * * *. Jeff is viewing this as a partnership * * * and will be prepared to execute this Monday. * * * He views this as a deal that both of us will work hard to close over the next 75 days. * * * As far as the next steps go, if you guys can get us a due diligence list and a proposed timetable, we will begin work on it immediately." On June 20, 2006, Riverside sent Twyman a "Letter of Interest" stating it would be able to issue a "formal" letter of intent and to close the transaction by August 30, 2006.

{¶ 14} On August 1, 2006, 12 days after the parties' dissolution was final, Twyman reinstated the SARS Plan, awarding appellant 109.3 SARS. One of the provisions in the SARS plan provided that the plan was fully vested upon the change in the control of Greenline. Riverside submitted its letter of intent to purchase 100 percent of the issued and capital stock of Greenline on August 14, 2006. According to Twyman, he did not decide to accept Riverside's offer until the Labor Day weekend. The closing on the actual
purchase occurred on September 21, 2006. On that date, appellant received $6,238,582.04 in exchange for his SARS.

{¶ 15} After the hearing, both parties filed proposed findings of fact and conclusions of law. On October 23, 2008, the magistrate issued a 28 page decision in which she determined that Twyman's and appellant's actions constituted fraud and misrepresentation. Thus, she granted appellee's motion for relief from judgment and determined that the $6,238,582.04 was marital property. She therefore ordered appellant to, among other things, transfer $2,349,600 of those funds to appellee as a division of property.