Sal's Heating & Cooling Inc. v. BERS Acquisition Co.

192 N.E.3d 537

SAL'S HEATING AND COOLING INC., Plaintiff-Appellant,

v.BERS ACQUISITION CO., LLC, et al., Defendants-Appellees.

No. 110685

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

RELEASED AND JOURNALIZED: May 26, 2022

Dan Morell & Associates, L.L.C., Dan A. Morrell, Jr., and Lisa M. Lahrmer, for appellants.

Benesch, Friedlander, Coplan & Aronoff, LLP, Thomas O. Crist, Cleveland, and Richard Hepp, for appellees.

JOURNAL ENTRY AND OPINION

EMANUELLA D. GROVES, J.:

{¶ 1} Plaintiff-appellant, Sal's Heating and Cooling, Inc. ("Sal's"), appeals the trial court's dismissal of Counts 7 and 8 of its complaint for injunctive relief and damages against three corporate defendants and their principals, as well as against 13 of Sal's former employees. For the reasons set forth below, we affirm.

Procedural and Factual History

{¶ 2} Sal's provides heating and air conditioning repair and installation, as well as other contracting services to residential and commercial customers in Northeast Ohio. To protect its valuable and confidential information relating to business operations including, but not limited to, client lists, employee lists, vendor information, pricing, advertising guidelines, and trade secrets, Sal's requires that its employees sign a "Non-Competition Agreement" and/or an "Employee Confidentiality/Security Agreement."

{¶ 3} The Non-Competition Agreement contained three covenants, which provided in part that: (1) for a period of two years after termination of employment, the former employee will not directly or indirectly engage in any business that competes with Sal's; (2) for a period of two years after employee's termination, the former employee shall not directly or indirectly solicit business from, or attempt to sell, license or provide the same or similar products or services as were presently provided to any Sal's client or customer; and (3) for a period of two years after termination, the former employee will not directly or indirectly solicit, induce, or attempt to induce any Sal's employee to terminate his or her employment with Sal's.

{¶ 4} The Employee Confidentiality/Security Agreement contained seven covenants. Paramount among the covenants was the employee's acknowledgment that he or she will develop and be exposed to information that was or will be confidential and proprietary to Sal's. Further, that the employee agreed to use such information only in the performance of his or her duties with Sal's, to maintain such information in confidence, and to disclose the information only with the consent or upon the direction of Sal's.

{¶ 5} In Spring 2020, several Sal's employees went to work for either BERS Acquisition Co., LLC ("BERS"), or HUGE Acquisition Co., LLC ("HUGE"). Sal's employees Nyle LaForce, Robert Sibley, Dean Pieronek, Brandon Tague, Da'Rell Albert, Ediva Johnson, Jack Salem, Bruce LaForce, and Donald Supeck went to work for BERS. While Terry Reitz, James Damm, Matthew Waldren, and William May went to work for HUGE (The individuals named above, who went to work for either BERS or HUGE, are collectively, "former employees"). The former employees went to work for BERS and HUGE in the same capacities as their previous employment with Sal's.

{¶ 6} BERS and HUGE are both engaged in providing the same services as Sal's, operate in the same market, and thus compete with Sal's. BERS and HUGE are owned by JAWS-SDG Holdings, LLC ("JAWS"), a privately held limited liability company that is owned by Jesse A. Warren ("Warren"). Warren, through JAWS, purchased BERS from Bryan E. Rutkosky ("Rutkosky"), and HUGE from Mark W. Huge ("Huge").

{¶ 7} On May 18, 2020, Sal's sent a cease-and-desist letter to BERS, Warren, Rutkosky, and Nyle LaForce ("LaForce") in reference to BERS’ hiring of LaForce in breach of his non-competition and confidentiality agreements. On June 2, 2020, Sal's sent a cease-and-desist letter to HUGE, Warren, Huge, and Terry Reitz ("Reitz") in reference to HUGE's hiring of Reitz in breach of his non-competition and confidentiality agreements.

{¶ 8} On December 16, 2020, Sal's filed suit against BERS, HUGE, JAWS, their principals, and against its former employees, who had left to work for its competitors. The complaint, which was twice amended, brought claims for breach of non-competition agreement, breach of non-solicitation agreement, breach of contractual duty not to disclose confidential and proprietary information, violation of Ohio's Uniform Trade Secrets Act ("OUTSA"), tortious interference, and civil conspiracy.

{¶ 9} In the complaint, Sal's specifically alleged that BERS, HUGE, JAWS, and Warren have jointly conspired to knowingly solicit, hire, and/or retain Sal's customers, vendors, and employees as an improper means to utilize the valuable confidential information that Sal's employees acquired during the scope and course of their employment with Sal's. In addition, that despite being clearly informed that Sal's former employees were subject to Non-Competitive Agreements and/or Employee Confidentiality/Security Agreement or both, these defendants have continued to conspire to solicit, hire and/or retain Sal's trained and valuable employees to both utilize the skills of Sal's employees and its proprietary and confidential information obtained in the course and scope of their employment with Sal's. Further, Sal's alleged that the former employees’ intimate knowledge of its business affairs and operations has given BERS and HUGE an unfair business advantage and has caused and will continue to cause irreparable damage unless the covenants and agreements not to compete are enforced.

{¶ 10} On March 1, 2021, the defendants filed a motion to dismiss Counts 2, 3, 4, 7, and 8 of the second amended complaint and to provide a more definite statement.

{¶ 11} On June 24, 2021, the trial court denied defendant's motion to dismiss Counts 2, 3, and 4. The trial court granted defendant's motion to dismiss Counts 7 and 8, and for a more definite statement.

{¶ 12} Sal's now appeals and assigns the following errors for review:

Assignment of Error No. 1

The trial court erred as a matter of law in dismissing count seven of appellant's complaint in finding that appellant failed to plead an underlying tort that would be actionable as an independent cause of action to make out a civil conspiracy claim against appellees Rutkosky and Mark Huge.

Assignment of Error No. 2

The trial court erred in dismissing count eight of appellant's complaint in finding that count eight is preempted by the Ohio Uniform Trade Secret Act.

Law and Analysis

{¶ 13} In the first assignment of error, Sal's argues the trial court erred in dismissing Count 7, civil conspiracy, on the basis that it failed to plead an underlying tort.

{¶ 14} Preliminarily, the trial court dismissed the respective counts pursuant to Civ.R. 12(B)(6). "A Civ.R. 12(B)(6) motion to dismiss for failure to state a claim on which relief can be granted " ‘is procedural and tests the sufficiency of the complaint.’ " " Harper v. Weltman, Weinberg & Reis Co. , L.P.A. , 8th Dist. Cuyahoga No. 107439, 2019-Ohio-3093, 2019 WL 3494002, ¶ 11, quoting State ex rel. Hanson v. Guernsey Cty. Bd. of Commrs. , 65 Ohio St.3d 545, 548, 605 N.E.2d 378 (1992), citing Assn. for Defense of Washington Local School Dist. v. Kiger , 42 Ohio St.3d 116, 117, 537 N.E.2d 1292 (1989).

{¶ 15} "A trial court's review of a Civ.R. 12(B)(6) motion to dismiss is limited to the four corners of the complaint along with any documents properly attached to, or incorporated within, the complaint." Lakeside Produce Distrib., Inc. v. Wirtz , 8th Dist. Cuyahoga No. 109460, 2021-Ohio-505, 2021 WL 736091, ¶ 11, citing Glazer v. Chase Home Fin. L.L.C. , 8th Dist. Cuyahoga Nos. 99875 and 99736, 2013-Ohio-5589, 2013 WL 7869273, ¶ 38. "Within those confines, a court accepts as true all material allegations of the complaint and makes all reasonable inferences in favor of the nonmoving party." Srokowski v. Shay , 8th Dist. Cuyahoga No. 100739, 2014-Ohio-3145, 2014 WL 3537870, ¶ 10, citing Fahnbulleh v. Strahan , 73 Ohio St.3d 666, 667, 653 N.E.2d 1186 (1995).

{¶ 16} "It is a long-standing principle that a plaintiff is not required to prove his or her case within the complaint at the pleading stage." Dean v. Cuyahoga Cty. Fiscal Office , 8th Dist. Cuyahoga No. 107824, 2019-Ohio-5115, 2019 WL 6769705, ¶ 16, citing York v. Ohio State Hwy. Patrol , 60 Ohio St.3d 143, 144-145, 573 N.E.2d 1063 (1991). " ‘Consequently, as long as there is a set of facts, consistent with the plaintiff's complaint, which would allow the plaintiff to recover, the court may not grant a defendant's motion to dismiss.’ " Id. , quoting York at 145, 573 N.E.2d 1063.

{¶ 17} An appellate court reviews de novo a trial court's decision granting a motion to dismiss under Civ.R. 12(B)(6). Figgie v. Figgie , 8th Dist., 2021-Ohio-1812, 173 N.E.3d 122, ¶ 7, citing Naiman Family Partners, L.P. v. Saylor , 2020-Ohio-4987, 161 N.E.3d 83, ¶ 11 (8th Dist.), citing Perrysburg Twp. v. Rossford , 103 Ohio St.3d 79, 2004-Ohio-4362, 814 N.E.2d 44, ¶ 5, "In applying the de novo standard of review, this court independently reviews the record without affording deference to the trial court's judgment." Id. , citing Penniman v. Univ. Hosps. Health Sys., Inc. , 2019-Ohio-1673, 130 N.E.3d 333, ¶ 7 (8th Dist.), citing Bandy v. Cuyahoga Cty. , 8th Dist. Cuyahoga No. 106635, 2018-Ohio-3679, 2018 WL 4377970, ¶ 10, citing Herakovic v. Catholic Diocese of Cleveland , 8th Dist. Cuyahoga No. 85467, 2005-Ohio-5985, 2005 WL 3007145, ¶ 13.

Civil Conspiracy

{¶ 18} "To establish a civil conspiracy claim, the plaintiff must prove: ‘(1) a malicious combination of two or more persons, (2) causing injury to another person or property, and (3) the existence of an unlawful act independent from the conspiracy itself.’ " Goree v. Northland Auto Ent. Inc. , 8th Dist. Cuyahoga No. 108881, 2020-Ohio-3457, 2020 WL 3455857, ¶ 78, citing Bentkowski v. Trafis , 2015-Ohio-5139, 56 N.E.3d...