Key Realty v. Hall
| Citation | 2021 Ohio 26 |
| Decision Date | 08 January 2021 |
| Docket Number | Court of Appeals No. L-19-1237 |
| Parties | Key Realty, Ltd. Appellant v. Michael Hall, et al. Appellees |
| Court | United States Court of Appeals (Ohio) |
DECISION AND JUDGMENT
Gregory H. Wagoner and Nicholas T. Stack, for appellant.
David A. Nacht, for appellee Michael Hall.
Roman Arce, for appellees Heather Hall, Kenton Fairchild, and Red 1 Realty, LLC.
{¶ 1} This is an appeal from a judgment of the Lucas County Court of Common Pleas which granted, in part, and denied, in part, appellees' motions for summary judgment. For the reasons set forth below, this court affirms, in part, and reverses, in part, the judgment of the trial court.
{¶ 2} On January 15, 2019, as amended on March 8, 2019, plaintiff-appellant Key Realty, Ltd. filed a complaint against defendants-appellees Michael Hall; Red 1 Realty, LLC, an Ohio limited liability company; Heather Hall; Kenton Fairchild and Red 1 Realty, LLC, a Florida limited liability company, setting forth claims against Mr. Hall of breach of the non-competition agreement (Count 1) and extortion (Count 11), and claims against all defendants for trade secret misappropriation (Count 2), unfair competition (Count 3), tortious interference with business relations (Count 4), tortious interference with contract (Count 5), breach of fiduciary duty (Count 6), conversion (Count 7), unauthorized use of computer, cable or telecommunication property (Count 8), criminal mischief (Count 9), civil theft (Count 10), spoliation (Count 12), and civil conspiracy (Count 13). Appellant summarized this litigation as follows: "This is an action stemming from the brazen and deceptive actions of [the appellees] to steal [appellant's] information, paralyze [appellant's] operations and then extort [appellant] in an effort to seize [appellant's] business for their own personal benefit."
{¶ 3} Appellees generally denied the allegations and asserted various affirmative defenses. Discovery among the parties ensued. Mr. Hall filed a motion to dismiss on March 22, 2019, which appellant opposed. Mr. Hall and the remaining appellees1 separately filed motions for summary judgment on June 21, 2019, which appellantopposed. At the parties' requests, significant portions of the record were sealed from public access by the trial court. The parties then agreed for the trial court to consolidate its opinion and order on all three pending motions.
{¶ 4} As journalized on October 15, 2019, the trial court stated "there being no just reason for delay" and granted Michael Hall's motion for summary judgment on all counts except Count 1, denied Michael Hall's motion to dismiss as moot, and granted the remaining appellees' motion for summary judgment on all counts applicable to them.
{¶ 5} Appellant filed its notice of appeal setting forth nine assignments of error.
{¶ 6} Appellate review of trial court summary judgment determinations is de novo, employing the same Civ.R. 56 standard as trial courts. Hudson v. Petrosurance, Inc., 127 Ohio St.3d 54, 2010-Ohio-4505, 936 N.E.2d 481, ¶ 29.
{¶ 7} Summary judgment may be granted only:
if the pleadings, depositions, answers to interrogatories, written admissions, affidavits, transcripts of evidence, and written stipulations of fact, if any, timely filed in the action, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. No evidence or stipulation may be considered except as stated in this rule. A summary judgment shall not be rendered unless it appears from the evidence or stipulation, and only from the evidence orstipulation, that reasonable minds can come to but one conclusion and that conclusion is adverse to the party against whom the motion for summary judgment is made, that party being entitled to have the evidence or stipulation construed most strongly in the party's favor.
{¶ 8} When seeking summary judgment, the moving party must identify those portions of the record that affirmatively demonstrate the absence of a genuine issue of material fact regarding an essential element of the non-movant's case and not rely on conclusory assertions the non-movant has no evidence to prove its case. Dresher v. Burt, 75 Ohio St.3d 280, 296, 662 N.E.2d 264 (1996). When a properly supported motion for summary judgment is made, an adverse party may not rest on mere allegations or denials in the pleadings, but must respond with specific facts showing that there is a genuine issue of material fact for trial in accordance with Civ.R. 56(E). Id. at 293. A "material" fact is one which would affect the outcome of the suit under the applicable substantive law. Beckloff v. Amcor Rigid Plastics USA, LLC, 2017-Ohio-4467, 93 N.E.3d 329, ¶ 14 (6th Dist.).
{¶ 9} We will address the assignments of error out of order.
{¶ 10} In support of its second assignment of error, appellant argues the sealed evidence in the record showed how appellees accessed and used appellant's trade secret information to create a similar business model, and that circumstantial evidence of tradesecret misappropriation is sufficient to meet its burden under both common law and the Ohio Uniform Trade Secret Act, R.C. 1331.61, et seq. The sole owner of Key Realty, Ltd., Dennis Degnan, testified at his deposition that the trade secret misappropriated by the appellees is the "concept of Key," which is "pretty much everything." Mr. Degnan's wife, Amy Saylor, who has a membership interest in Key Realty, Ltd., testified at her deposition, "So to elaborate a little bit on what Dennis talked about, there is - the trade secret of Key is that the whole is greater than the sum of its parts."
{¶ 11} In response, appellees collectively argue that appellant's conclusory allegations are insufficient to create genuine issues of material fact. Appellees argue "each and every document and item of information that Appellant claims to be a 'trade secret' was stored or located on publicly available websites." (Emphasis sic.) They also obtained information from industry associations. Appellees further argue that appellant's vague notion of a trade secret, the "'concept of Key' is nothing more than limiting the amount of office space traditionally used and occupied by real estate companies." They argue that substantial parts of appellant's business model, the "concept of Key," were publicly known, used by many businesses, and were not proprietary.
{¶ 12} "In order to prevail on a misappropriation-of-trade-secret claim, a plaintiff must show by a preponderance of the evidence: (1) the existence of a trade secret; (2) the acquisition of a trade secret as a result of a confidential relationship; and (3) the unauthorized use of a trade secret." Heartland Home Fin., Inc. v. Allied Home Mortg.Capital Corp., 258 Fed.Appx. 860, 861 (6th Cir.2008); Tomaydo-Tomahhdo L.L.C. v. Vozary, 8th Dist. Cuyahoga No. 104446, 2017-Ohio-4292, 82 N.E.3d 1180, ¶ 9.
{¶ 13} Misappropriation of a trade secret is also defined by R.C 1331.61(B) as any of the following:
{¶ 14} "The question whether a particular knowledge or process is a trade secret is a question of fact to be determined by the trier of fact upon the greater weight of the evidence." Fred Siegel Co., L.P.A. v. Arter & Hadden, 85 Ohio St.3d 171, 172-83, 181, 707 N.E.2d 853 (1999), paragraph six of the syllabus, affirming and following Valco Cincinnati, Inc. v. N & D Machining Serv., Inc., 24 Ohio St.3d 41, 492 N.E.2d 814 (1986). "A reviewing court should not substitute its judgment for that of the trial court on these factual issues." Valco Cincinnati at 47.
{¶ 15} A "trade secret" is defined by R.C. 1331.61(D) as:
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