Brakefire, Inc. v. Overbeck

Decision Date13 August 2007
Docket NumberNo. 2007 CVH 01087.,2007 CVH 01087.
Citation2007 Ohio 6464,878 N.E.2d 84,144 Ohio Misc.2d 35
PartiesBRAKEFIRE, INC., d.b.a. Silco Fire Protection Services, Plaintiff, v. OVERBECK et al., Defendants.
CourtOhio Court of Common Pleas

Dinsmore & Shohl, David A. Nenni, and Michael S. Glassman, Cincinnati, for plaintiff.

Patrick Kasson and Gregory D. Brunton, Columbus, for defendants.

HADDAD, Judge.

{¶ 1} This matter came before the court on July 13, 2007, pursuant to a motion for a preliminary injunction filed by the plaintiff, Brakefire, Inc., d.b.a. Silco Fire Protection Services ("Silco"). The court took the matter under advisement, and upon consideration of the motion, the record of the proceedings, the oral and written arguments of counsel, the evidence presented, and the applicable law, the court now renders the following decision.

FINDINGS OF FACT

{¶ 2} The defendant Sean Overbeck was employed by Silco in September 1993 and signed an employment agreement with Silco on September 8, 1993. The agreement reads as follows:

NOW, THEREFORE, in consideration of the covenants and agreements herein contained, the Employer and Employee agree as follows:

1. Employment

Employer and Employee hereby agree that Employee shall be employed in such capacity and at such salary and other compensation may be from time mutually agreed upon between them, all of which shall be confirmed by letter from Employer upon written request of Employee.

* * *

4. Covenant To Compete

Employee expressly agrees that he will not, for a period of twenty-four (24) months after the expiration or termination of this Agreement, or any renewal thereof, directly or indirectly, either as principal, agent, employee, employer or in any other individual or representative capacity whatever, engage in the occupational activity of selling, soliciting or promoting the sale of, or servicing after sale, or supervising others in selling, soliciting or promoting the sale of, those products and services which such Employee promoted, sold, delivered, provided or supervised while in the employ of Employer, including, without limitation, fire extinguishers, fire hoses, fire extinguisher cabinets, dry chemical CO2 or Halon fire extinguishing systems and smoke detection systems, as hereabove described.

This covenant not to compete shall apply within those areas of Ohio, Kentucky and Indiana or any other state(s) where the Employee was engaged for Employer in any of the businesses referred to in this Agreement during the term of his employment hereunder.

5. Covenant Not to Disclose Confidential Information Employee agrees that his employment by Employer will acquaint him with certain confidential information concerning the conduct of Employer's business including, but not limited to, route lists, cards and other memoranda of customers' names and addresses, prices, costs of doing business and other financial information, as it may exist from time to time, is a valuable, special and unique asset of Employer's business. Employee will not, during or for a period of thirty-six (36) months after the term of his employment disclose said information or list of Employer's customers or any part thereof to any person, firm, corporation, association, or other entity for any reason or purpose whatsoever.

{¶ 3} Overbeck was employed by Silco from September 1993 until February 2007. At the time he left Silco, Overbeck was the systems manager for suppression systems in Silco's Cincinnati office. Upon leaving Silco, Overbeck went to work for a Silco competitor known as Tomco. James Fraser, Silco's president, expressly permitted Overbeck to work for Tomco and made no effort to enforce the covenant not to compete.

{¶ 4} The defendant Robert Callihan was employed by Silco in June 1995 and signed an employment agreement with Silco on June 12, 1995. His employment agreement was similar to that of Overbeck's, with the following exception:

Employment

Employer and Employee hereby agree that Employee shall be employed in such capacity and at such salary and other compensation as (emphasis added) may be from time mutually agreed upon between them, all of which shall be confirmed by letter from Employer upon written request of Employee.

{¶ 5} Callihan was employed by Silco from June 1995 until March 2007. At the time he left Silco, he was the systems manager for suppression systems in Silco's Columbus office.

{¶ 6} The defendant Rod Bishop was employed by Silco in October 1988 and signed an employment agreement with Silco on October 11, 1988. The pertinent parts of Bishop's agreement were identical to those found in Callihan's agreement. Bishop was employed by Silco from October 1988 until April 2007. At the time he left Silco, he was the general manager for Silco's Columbus office.

{¶ 7} After resigning from Silco, Overbeck, Callihan, and Bishop together formed a company named Elite Fire Services, L.L.C. ("Elite"). At the time the company was formed, Overbeck was working for Tomco, but he left Tomco to open Elite with the other defendants. Elite was registered with the Ohio Secretary of State's Office on April 10, 2007. The purpose of Elite is "to provide services and products for fire protection * * *." Elite's statutory agent is Robert Callihan, and its authorized agents are Rod Bishop and Sean Overbeck.

{¶ 8} On June 20, 2007, Silco filed a verified complaint for temporary, preliminary, and permanent injunctive relief, and other damages. In its complaint, Silco asserts that the individual defendants had had direct access to and had gained knowledge of Silco's confidential information, including route lists, cards, and other memoranda of customers' names and addresses, prices, costs of doing business and other financial information. Silco further states that the defendants had access to Silco's confidential customer list, which contains each customer's name and address, telephone contact person, number of fire extinguishers, and dates of last inspection. Silco also asserts that the defendants received training materials developed and implemented by Silco to assist Silco employees with sales techniques and methods. According to the plaintiff, these materials were not available to the public.

{¶ 9} Silco further argues that Elite is in direct competition with Silco, thus putting the defendants in violation of their covenants not to compete. In support of this argument, Silco points to Elite's website, http://elitefire.org/home, which states, "[W]e test and inspect fire extinguishers, kitchen suppression systems, clean agent suppression systems, dry chemical suppression systems, sprinkler systems, fire alarm systems, fire pumps, backflow devices, exit lighting and kitchen hood cleaning." These are services that are also provided by Silco, with the exception of kitchen-hood cleaning. On June 8, 2007, Silco sent letters to Overbeck, Callihan, and Bishop informing them that by forming and operating Elite, they were in violation of their covenants not to compete.

{¶ 10} The plaintiff's request for a preliminary injunction is based upon three separate causes of action: misappropriation of trade secrets, a violation of R.C. 1333.61 to 1333.69; breach of contract, including breach of the covenant not to compete and breach of the covenant not to disclose confidential information; and tortious interference with contracts and/or business relationships.

{¶ 11} For purposes of this preliminary-injunction hearing, the defendants have stipulated that they are competing with Silco. Further, the defendants admitted at the hearing that they have quoted services for three Silco customers, Hilliard Schools, Worthington Schools, and Ohio State University, and have attempted to obtain the business of another Silco customer, Smurfit-Stone. The defendants argue, however, that they were relieved from their obligations under the agreement with Silco because Silco was in material breach of the agreement. The defendants argue that Silco materially breached Paragraph 1 of the agreement, which provides that the employees shall be employed at a compensation that may be mutually agreed between them, by unilaterally changing their compensation structure in January 2007. It was because of this unilateral change that the defendants left the plaintiff's employ.

{¶ 12} Further, the defendants argue that they did not misappropriate trade secrets. The defendants assert that no route lists, cards, and memoranda of customers' names and addresses, prices, financial information, and training materials were taken when they left Silco.

{¶ 13} A temporary restraining order was filed in this case on June 20, 2007. Pursuant to that order, the defendants were restrained from (1) breaching or encouraging the breach of the covenants not to compete, (2) breaching or encouraging the breach of the covenants not to disclose confidential information, (3) using Silco's confidential information/trade secrets in the operation of the defendants' business, (4) breaching or threatening to breach any other provision of the employment agreement, (5) copying, transferring, destroying, manipulating, disposing of, or in any way altering any property (including data, software, files, programs, or any related or unrelated items, whether or not the defendants claim an ownership interest therein) removed from Silco's premises before, after, or at the time that the defendants left Silco's employ, and (6) transferring manipulating, destroying or disposing of any device or instrument (including photographs, notes, drawings, and the like) on which said property was stored or from which said property was transferred. A hearing on the preliminary injunction was scheduled for June 29, 2007, within 14 days of the granting of the temporary restraining order ("TRO") as required by Civ.R. 65. The parties agreed, however, to continue the hearing and the TRO until July 13, 2007, and an agreed entry to this effect was submitted on July...

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