[Cite as Clifton Steel Co. v. Trinity Equip. Co., 2018-Ohio-2186.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 105675
CLIFTON STEEL COMPANY
PLAINTIFF-APPELLEE
vs.
TRINITY EQUIPMENT COMPANY
DEFENDANT-APPELLANT
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-16-862464
BEFORE: Boyle, J., E.A. Gallagher, A.J., and Blackmon, J.
RELEASED AND JOURNALIZED: June 7, 2018
ATTORNEYS FOR APPELLANT
Scott J. Robinson
Aanchal Sharma
Gregory Thompson
Schneider Smeltz Spieth Bell, L.L.P.
1375 East Ninth Street, Suite 900
Cleveland, Ohio 44114
ATTORNEY FOR APPELLEE
Richard N. Selby
Dworken & Bernstein Co., L.P.A.
60 South Park Place
Painesville, Ohio 44077
MARY J. BOYLE, J.:
{¶1} Defendant-appellant, Trinity Equipment Company (“Trinity”), appeals the trial
court’s order granting plaintiff-appellee, Clifton Steel Company (“Clifton”), motion for
preliminary injunction. Trinity raises the following assignments of error for our review:
1. The trial court erroneously interpreted the Agreement.
2. The trial court abused its discretion by finding, by clear and convincing
evidence, that a preliminary injunction was warranted, thereby prohibiting Trinity
from selling any product listed on Exhibit B to the Agreement to any entity
identified on Exhibit A to the Agreement for one year after its termination.
3. The trial court erroneously denied Trinity’s Motion to Dismiss Count I of
Appellee’s complaint pursuant to Civ.R. 12(B)(6).
{¶2} Finding no merit to Trinity’s assignments of error, we affirm.
Procedural History and Factual Background
{¶3} Clifton is a steel manufacturer whose products include wear parts for the railroad
industry. Railroad wear parts are replaced on a consistent basis “to protect wear within the
[railroad] car itself.” Trinity sells railroad parts and has acted as Clifton’s sales agent since
1986. No written contract between the companies existed until May 4, 2012, when the parties
entered into a Sales Agent Agreement (“the Agreement”). The Agreement provided that Clifton
retained Trinity as its “authorized sales representative” for Clifton’s railroad wear parts and set
forth the terms of representation, compensation, and termination.
{¶4} Section 2 of the Agreement titled “Products and Customers,” states that Clifton’s
“assigned customer base is defined as all companies listed on Exhibit A – Customer Listing.”
Section 2 defines Clifton’s products as “listed on Exhibit B – Products Sold.” Exhibit A lists
approximately 380 “customers” and Exhibit B lists over 600 “products.” Exhibits A and B are
part of the record, although the parties dispute whether they were attached to the Agreement at
the time of execution.
{¶5} As to termination, Section 5 of the Agreement, titled “Restriction on other
representation during the term of this agreement and from competing on termination” states,
During the term of the agreement, Trinity shall not directly or indirectly engage in
any business or in the sale of any other products that are competitive with Clifton,
unless otherwise agreed upon in writing by Clifton.
***
Trinity agrees that for a period of twelve (12) months immediately following the
termination of their sales representation pursuant to this Agreement, whether such
termination is at the instance of Clifton due to a breach of this Agreement by
Trinity, or on Trinity’s own initiative, or mutually agreed upon by the parties
hereto, Trinity shall not either, either directly or indirectly, as an employee, agent,
officer, director, or shareholder of a corporation, or a member of a partnership,
joint venture or other entity, or in any other capacity, engage in the sale or solicit
the sale of, either on its own account or on the account of another, the products
and services of Clifton Steel Company to Clifton’s customers, businesses, or
users.
{¶6} Put simply, the latter part of Section 5 of the Agreement states that for one year
after termination of the Agreement, Trinity “shall not * * * engage in the sale or solicit the sale of
* * * the products and services of Clifton Steel Company to Clifton’s customers * * * (‘the
Termination Provision’).”
{¶7} The Agreement states that the Termination Provision “[s]hall not apply if Trinity
terminates this Agreement due to a default by Clifton or if Clifton terminates this Agreement
without cause.”
{¶8} It is undisputed that on October 20, 2015, Trinity terminated the Agreement;
however, the parties dispute whether Trinity terminated it for cause. Before one year had
passed after the Agreement’s termination, Trinity did business with 13 of Clifton’s customers.
As a result, on April 27, 2016, Clifton filed a complaint alleging two counts of breach of
contract. Count 1 alleged that Trinity’s business dealings with Clifton’s customers violated the
Agreement’s noncompete clause. Count 2 alleged that Trinity breached the Agreement by failing
to pay invoices. Trinity moved to dismiss Count 1 of Clifton’s complaint under Civ.R. 12(B)(6)
arguing that the Termination Provision did not prohibit it from selling competitive products to
Clifton’s customers. The trial court denied Trinity’s motion.
{¶9} Clifton also filed a motion for preliminary injunction. In its motion in
opposition to Clifton’s request for a preliminary injunction, Trinity argued that (1) the Agreement
did not contain a noncompete clause, (2) even if the Termination Provision constituted a
noncompete clause, it was not effective because Clifton defaulted by failing to perform its
obligations under the Agreement, (3) the scope of the noncompete clause did not extend to all of
the products and companies listed on Exhibits A and B because those exhibits were not attached
to the Agreement at the time of execution, and (4) preliminary injunction was not warranted after
an examination of the relevant factors. As to the language contained in the Termination
Provision, Trinity argued that it is only prohibited from “becoming a secondary reseller of
[Clifton’s] products” for one year after the Agreement ended.
{¶10} In response, Clifton argued that the Termination Provision constitutes a
noncompete clause and prohibits Trinity from selling “competitive products” for one year after
the Agreement ended.
{¶11} On March 15, 2017, the court held a hearing on Clifton’s motion for preliminary
injunction. On March 22, 2017, the court issued an order granting Clifton’s motion. In its
order, the court stated,
This Court finds that [Clifton] has proven all of the elements necessary for a
preliminary injunction by clear and convincing evidence. * * * [T]his Court
determined that the non-compete provisions of the Sales Agent Agreement
between the parties should be interpreted so as to prohibit Defendant Trinity
Equipment * * * from selling to or soliciting any of Plaintiff’s customers
identified in Exhibit “A” to the Sales Agent Agreement with respect to any of the
railroad wear parts identified in Exhibit “B” to the Sales Agent Agreement for a
period of twelve (12) months following the termination of the Sales Agent
Agreement.
***
This Court further finds that [Trinity’s] contention that it should be excused from
these non-compete obligations because of some default on behalf of [Clifton] with
respect to the Sales Agent Agreement is not well taken. This Court further finds
by clear and convincing evidence that [Clifton] has demonstrated that it will suffer
irreparable injury if the injunctive relief is not granted.
***
This Court further finds that [Trinity] has not demonstrated that it will suffer any
undue hardship as a result of the enforcement of this Agreement, and the public
interest weighs in favor of enforcing contractual obligations between the parties.
{¶12} It is from this order that Trinity appeals.1
Law and Analysis
A. Interpretation and Scope of the Agreement’s
Termination Provision
{¶13} In its first assignment of error, Trinity argues that the trial court erroneously
interpreted the Agreement’s Termination Provision as prohibiting it from selling competitive
products, listed in Exhibit B, to Clifton’s customers, listed in Exhibit A. Trinity also argues that
the trial court erred when it rejected its argument that, because Clifton failed to perform its
obligations under the Agreement, the Termination Provision does not apply.
{¶14} The parties agree that, according to the terms of the Agreement, Trinity was
prohibited from selling “competitive products” while the Agreement was in force. The issue
before us, however, concerns the language used in the Termination Provision, which prohibits
1
The trial court granted Trinity’s motion for stay of execution pending appeal. See journal entry dated April 28,
2017.
Trinity from selling “the products and services of Clifton Steel Company to Clifton’s customers”
for one year after termination of the Agreement.
{¶15} In its journal entry granting the injunction, the trial court found that
the non-compete provisions of the Sales Agent Agreement between the parties
should be interpreted so as to prohibit Defendant Trinity Equipment from selling
to or soliciting any of Plaintiff’s customers identified in Exhibit “A” to the Sales
Agent Agreement with respect to any of the railroad wear parts identified in
Exhibit “B” to the Sales Agent Agreement for a period of twelve (12) months
following the termination of the Sales Agent Agreement.
{¶16} On appeal, Trinity argues that the Termination Provision should be read literally,
holding that upon termination of the Agreement Trinity was prohibited from selling products
manufactured by Clifton. Clifton, on the other hand, argues that if taken literally, the provision
would be meaningless because Trinity would no longer be selling Clifton products after
termination of the Agreement. Clifton argues that the provision should be read broadly “to
include products and services of the same type and nature that Clifton was selling, but that were
manufactured by other companies.” To support this argument, Clifton relies on Exhibits A and
B, which it describes as follows: “Exhibit A defined the universe of customers that Trinity was
attempting to sell to on Clifton’s behalf and Exhibit B defined the types of Clifton Steel products
Trinity was attempting to sell to those customers.”
{¶17} Our standard of review regarding contracts follows:
The construction of a written contract is a matter of law that we review de novo.
Our primary role is to ascertain and give effect to the intent of the parties. We
presume that the intent of the parties to a contract is within the language used in
the written instrument. If we are able to determine the intent of the parties from
the plain language of the agreement, then there is no need to interpret the contract.
(Citations omitted.) Saunders v. Mortensen, 101 Ohio St.3d 86, 2004-Ohio-24, 201 N.E.2d 452,
¶ 9.
{¶18} “Contractual language is considered ambiguous where the meaning of the
language cannot be determined from the four corners of the agreement, or where the language is
susceptible to two or more reasonable interpretations.” Co. Wrench v. Andy’s Empire Constr.,
Inc., 8th Dist. Cuyahoga No. 94959, 2010-Ohio-5790, ¶ 19. When ambiguity is found, courts
interpret the parties’ intent, and thus, the meaning of the contract based on extrinsic evidence.
Kelly v. Med. Life Ins. Co., 31 Ohio St.3d 130, 132, 509 N.E.2d 411 (1987).
{¶19} Generally, in interpreting the parties’ intent, contracts are to be construed against
their drafters. Known as the doctrine of contra proferentum, this rule in construing contract
terms against the drafter, however, “is a secondary rule of contract construction and is not
applicable when a primary rule of contract construction clarifies the meaning of the contract.”
Michael A. Gerard, Inc. v. Haffke, 8th Dist. Cuyahoga No. 98488, 2013-Ohio-168, ¶ 14, citing
Malcuit v. Equity Oil & Gas Funds, Inc., 81 Ohio App.3d 236, 610 N.E.2d 1044 (9th Dist.1992).
In fact, “Ohio courts have generally resolved contract ambiguities against the drafter only where
parties lacked equal bargaining power to select contract language.” Id.; see also T.A.P. on Tap,
Inc. v. Sardis, 8th Dist. Cuyahoga No. 75755, 2000 Ohio App. LEXIS 2740, *13 (June 22, 2000)
(“[T]he doctrine is applied only when the contract is deemed ambiguous and parol evidence has
not revealed the parties’ intent. * * * Where contract terms are ambiguous, contra proferentum is
not preferred as a tool of interpretation although it is most appropriately utilized in situations
where the parties did not have equal bargaining positions.”). Here, the court held a hearing on
Clifton’s motion for preliminary injunction, at which the following evidence was presented
regarding the meaning of the Agreement and, in particular, the terms used in the Termination
Provision.
{¶20} John Thomas testified that he is the president of Clifton and has been since 2014.
Thomas was not Clifton’s president when the Agreement was drafted, although he is familiar
with Trinity and the Agreement.
{¶21} Thomas described Exhibit A as “a customer base that Clifton Steel has been selling
[railroad] parts to for a number of years.” Thomas testified that Exhibit A listed approximately
383 business entities that Trinity and Clifton considered “customers” or “prospects.” According
to Thomas, a “prospect” is a “potential customer” or a “customer that you haven’t done business
with in a while.”
{¶22} Thomas described Exhibit B as “a portfolio of products that * * * for the most part
are sold throughout the history of our company into the railroad industry.” According to
Thomas, Clifton has been manufacturing railroad parts for over 45 years, and although Clifton
does not actively sell all the parts on Exhibit B “at any one time, * * * a large portion of those
have been sold over the years by Clifton Steel.”
{¶23} Thomas stated that noncompete clauses are particularly important in the railroad
wear parts industry because “it’s an annuity and it’s based on a relationship that once you have
your foot in the door and they buy your product, they are more than likely to continue to buy your
product.” Thomas testified that “competitive products” means “something manufactured by a
competitor.” Thomas also testified that the words “competitor” or “competitive products” were
not in the Termination Provision; however, according to Thomas, the Termination Provision
meant “that the products listed on Exhibit B could not be sold to a customer in Exhibit A.”
{¶24} Keith Massey testified that he is the president and owner of Trinity and has been
since 2007. In May 2012, Massey signed the Agreement with Clifton, and on October 20, 2015,
he terminated the Agreement. Massey testified that, since October 20, 2015, Trinity sold
railroad wear parts manufactured by companies other than Clifton to 13 customers listed on
Exhibit A. He also testified, however, that Trinity has “not sold one part of Clifton Steel’s”
since termination of the Agreement.
{¶25} According to Massey, when he signed the Agreement, he was not “provided”
Exhibits A and B; rather, the exhibits “showed up at [his] attorney’s [office] a day after
termination of the agreement.” Massey described Exhibit A as “a railroad wish list that
basically includes the entire rail industry.” Massey described Exhibit B as “an extensive list of
wear plates, parts, that Clifton Steel had the potential to manufacture or sell.” Massey testified
that, during the term of the Agreement, Trinity sold “[l]ess than 20” of these products
manufactured by Clifton.
{¶26} Massey’s understanding of the Termination Provision is that “Trinity Equipment
cannot sell the parts or services of Clifton Steel to Clifton’s customers” upon termination of the
Agreement. In his opinion, this is a “wholesale style clause,” that should “prevent [Trinity]
essentially from warehousing [Clifton’s] products.” Put another way, Trinity’s argument is that
the Termination Provision prevented Trinity from being a secondary marketer or warehouser of
Clifton’s products for 12 months after the Agreement was terminated. Asked if he thought that
by signing the Agreement Trinity “would not be allowed to sell * * * products that are
competitive to Clifton’s products after terminating the agreement,” Massey answered,
“Absolutely not. * * * So during the term of the agreement, it was very clear that we could not
sell competitive parts. We agreed to that. We did not do it.”
{¶27} After the preliminary injunction hearing, the court found on the record that the
“issue comes down to that interpretation of” the Termination Provision. “And it’s clear that
there is a differing opinion about what it means, what the intent of that paragraph was. * * * It’s
not clear what it means. The language is not clear.” The court noted that Trinity argued that
the language is plain, and the words “compete” or “competitive” are not there. Clifton, on the
other hand, argued that the provision “has no meaning without the understanding that we believe
the language conveys.” The court found that “the evidence that’s been presented thus far would
tend to support [Clifton’s] interpretation of what that language intended. It doesn’t make sense
any other way.” The court found no evidence indicating that Clifton defaulted on the
Agreement, because “performance issues” would be between Clifton and its buyers, not between
Clifton and its selling agent, Trinity. Ultimately, the trial court found that the Termination
Provision prohibited Trinity from selling parts listed on Exhibit B to customers listed on Exhibit
A and granted the preliminary injunction.
{¶28} Upon review, we find that the language used in the termination provision is
ambiguous, because it “is susceptible to two or more reasonable interpretations.” Thus, we turn
to the parties’ intent. The title or heading of Section 5 of the Agreement is: “Restriction on
other representation during the term of this agreement and from competing on termination.”
(Emphasis added.) Additionally, the parties’ understanding of the scope of this restriction
resulted in two different interpretations. Nonetheless, it is evident from the record that the
parties necessarily contemplated some type of prohibition on competition upon termination of the
Agreement.
{¶29} The trial court concluded that the restriction should be based on Exhibits A and B,
which were referenced in the Agreement, but not specifically in the Termination Provision.
Although Massey testified that Trinity was not “provided” these exhibits when he executed the
Agreement, he was at least aware of their existence because they are referenced in the document
he signed. “A party to a contract is responsible for reading what he signs.” Love v. Crestmont
Cadillac, 8th Dist. Cuyahoga No. 104807, 2017-Ohio-1555, ¶ 15. Further, even if Massey did not
receive the exhibits on the day that the parties executed the Agreement, there is no evidence that
Massey subsequently objected to the exhibits upon receiving them.
{¶30} After review of the evidence, we agree with the trial court’s interpretation of the
Agreement. “The purpose in allowing non-competition agreements is to foster commercial
ethics and to protect the employer’s legitimate interests by preventing unfair competition.”
Cynergies Consulting, Inc. v. Wheeler, 8th Dist. Cuyahoga No. 90225, 2008-Ohio-3362, ¶ 18,
quoting Westco Group, Inc. v. City Mattress, 2d Dist. Montgomery No. 12619, 1991 Ohio App.
LEXIS 3878 (Aug. 15, 1991). “[T]he Supreme Court of Ohio ‘has long recognized the validity
of agreements that restrict competition by an ex-employee if they contain reasonable
geographical and temporal restrictions.’” Id. at ¶ 21, quoting Land Lake Emp. Group of Akron v.
Columber, 101 Ohio St.3d 242, 2004-Ohio-786, 804 N.E.2d 27.
{¶31} The title of Section 5 as well as the reference to both Exhibits A and B in the
Agreement lead us to conclude that the parties intended the Termination Provision to mean that
Trinity could not sell any of the products listed on Exhibit B to any of the companies listed on
Exhibit A for a period of one year following termination of the Agreement, which we find to be
reasonable geographical and temporal restrictions.
{¶32} Accordingly, we overrule Trinity’s first assignment of error.
B. Preliminary Injunction
{¶33} In its second assignment of error, Trinity argues that the trial court abused its
discretion in granting Clifton’s motion for a preliminary injunction.
{¶34} The primary goal of preliminary injunctive relief is to preserve the status quo
pending final determination of the matter. Mears v. Zeppe’s Franchise Dev., 8th Dist. Cuyahoga
No. 90312, 2009-Ohio-27, ¶ 23. We review rulings on motions for preliminary injunctions for
an abuse of discretion. Crestmont Cadillac Corp. v. GMC, 8th Dist. Cuyahoga No. 83000,
2004-Ohio-488, ¶ 26-27. Under this standard, we must defer to the trial court’s factual findings
and may only reverse the trial court’s decision if it is unreasonable, arbitrary, or unconscionable.
“Essentially, ‘abuse of discretion’ describes a judgment neither comporting with the record, nor
reason.” In re S.E., 8th Dist. Cuyahoga No. 96031, 2011-Ohio-2042, ¶ 13, citing In re Wiley,
11th Dist. Lake No. 2007-P-0013, 2007-Ohio-7123.
{¶35} The party seeking a preliminary injunction must show, by clear and convincing
evidence, the following:
A substantial likelihood of success on the merits of the underlying claim;
Irreparable harm will be suffered if the injunction is not granted;
Issuing the injunction will not harm third parties; and
The public interest would be served by issuing the injunction.
KLN Logistics Corp. v. Norton, 174 Ohio App.3d 712, 2008-Ohio-212, 884 N.E.2d 631, ¶ 12
(8th Dist.).
{¶36} In finding that Clifton “has demonstrated that it is likely to succeed on the merits of
its claims,” the court construed the Termination Provision to prohibit Trinity from selling any
product on Exhibit B to any customer on Exhibit A. The trial court then found, by clear and
convincing evidence, “that since terminating the Agreement on October 20, 2015, [Trinity] has
improperly done business with” various Clifton customers.
{¶37} The court also found that, “by clear and convincing evidence [Clifton] has
demonstrated that it will suffer irreparable injury if the injunctive relief is not granted.” As to
the final two prongs of the preliminary injunction test, the court found that Trinity “has not
demonstrated that it will suffer any undue hardship as a result of the enforcement of this
Agreement, and the public interest weighs in favor of enforcing contractual obligations between
the parties.”
{¶38} After reviewing the record and the above-listed factors, we find that the court did
not abuse its discretion in granting Clifton’s motion for preliminary injunction.
{¶39} The record supports the trial court’s finding related to the first factor considered for
purposes of preliminary injunction, which is whether Clifton is likely to succeed on the merits.
Here, Trinity terminated the Agreement and then immediately began doing business with at least
13 of the customers listed on Exhibit A in violation of the noncompete clause found in the
Termination Provision. As such, we find the record shows that Clifton was likely to succeed on
its breach of contract claim for Trinity’s alleged violation of the noncompete clause.
{¶40} As to the second factor, the record supports the trial court’s finding that Clifton
“demonstrated that it will suffer irreparable injury if the injunctive relief[,] [which requests the
enforcement of the noncompete clause encompassing the companies listed in Exhibit A,] is not
granted.” Clifton has a legitimate interest in protecting the long-standing relationships it had
with its customers as well as those companies it tried to build relationships with through Trinity.
See Mielcusny, Loosening the Rust Belt: Why Ohio Should Re-Examine Its Current Standard
for Determining the Enforceability of Covenants Not to Compete Contained in Employment
Agreements, 63 Cleve.St.L.Rev. 707, 714 (2015) (“The unfair competition that an employer
seeks to avoid through the use of a non-compete could also stem from a failure to protect
particular assets, such as customer bases[.]”). Trinity was the sole and exclusive seller of
Clifton’s products for almost 30 years, had direct contact with all of Clifton’s customers, and was
essentially the “face” of Clifton’s products. As Clifton contends, enforcing the noncompete
clause would give Clifton time to assemble its own sales work force, introduce that work force to
its customers, create a new “face” for its products, build more direct relationships with its
customers, and take over all of the operations that Trinity performed for it. Further, Clifton
established that it already suffered irreparable harm that could be contributed to Trinity’s
violation of the Agreement. Clifton’s president testified that since the termination of the
Agreement between Clifton and Trinity, Clifton’s railroad wear parts business has decreased
“over 50 percent,” including significant decreases for Clifton’s two biggest customers, and
estimated that those lost sales cost Clifton “hundreds of thousands of dollars.”
{¶41} The record also supports the trial court’s finding that enforcing the noncompete
clause as to all of the companies on Exhibit A — including those that were not customers of
Clifton — is also necessary to protect Clifton’s interests. The record supports a finding that
Trinity signed the Agreement, which prohibited it from selling to all of the companies listed on
Exhibit A, regardless of whether they were current customers of Clifton. As a result, any sales
Trinity made to any of those companies would violate the Agreement’s terms, and the record
supports the trial court’s finding that Trinity did violate the Agreement’s terms.
{¶42} Turning to the third factor, the record supports the trial court’s order finding that
Trinity did not “demonstrate[] that it will suffer any undue hardship as a result of the
enforcement of this Agreement [including Exhibit A].” The record shows that neither Trinity nor
others would suffer undue hardship because the company sold products other than railroad wear
parts and that Trinity would only have to lay off an employee or two if the trial court granted the
injunction. Further, as the trial court aptly noted at the hearing, Trinity was aware of this
potential harm when it “hedged” offers with outside companies and decided to terminate the
Agreement with Clifton.
{¶43} Finally, as to the fourth factor, the record supports the trial court’s finding that “the
public interest weighs in favor of enforcing contractual obligations between the parties.”
“[P]ersons have a fundamental right to contract freely with the expectation that the terms of the
contract will be enforced.” Nottingdale Homeowners’ Assn. v. Darby, 33 Ohio St.3d 32, 36,
514 N.E.2d 702 (1987). Further, “preserving the sanctity of contractual relations and
preventing unfair competition have traditionally been in the public interest.” Century Business
Servs., Inc. v. Urban, 179 Ohio App.3d 111, 2008-Ohio-5744, 900 N.E.2d 1048, ¶ 17 (8th Dist.),
citing UZ Engineered Prods. Co. v. Midwest Motor Supply Co., Inc., 147 Ohio App.3d 382, 770
N.E.2d 1068 (10th Dist.2001).
{¶44} Here, the parties voluntarily entered into the written Agreement on May 4, 2012.
The parties had been operating without a written Agreement from 1986 to 2012. The parties
agreed that Trinity would not sell products from Exhibit B to customers listed on Exhibit A for
the 12-month period following the termination of the Agreement. After Trinity voluntarily
terminated the Agreement on October 20, 2015, it immediately began selling competitive
products to Clifton customers despite the noncompete clause in the Agreement. Therefore,
contrary to Trinity’s argument, enforcing the Agreement between the parties would actually serve
public interest.
{¶45} In conclusion, the record shows that the trial court’s order granting the preliminary
injunction and finding that the noncompete clause’s scope encompasses all of the companies
listed in Exhibit A is reasonable and is not an abuse of discretion. Accordingly, we overrule
Trinity’s second assignment of error.
C. Motion to Dismiss
{¶46} In its third assignment of error, Trinity argues that the trial court erred in denying
its motion to dismiss Count 1 of Clifton’s complaint for breach of contract.
{¶47} Trinity filed a motion to dismiss Count 1 for breach of contract under Civ.R.
12(B)(6) for failure to state a claim upon which relief can be granted. Trinity’s argument in
support of dismissing this claim is the same argument it raises on appeal — that Trinity did not
breach the plain reading of the Termination Provision. The court denied Trinity’s motion to
dismiss.
{¶48} “In general, a decision denying a motion to dismiss is not a final appealable order.”
Shane v. Tracy, 8th Dist. Cuyahoga No. 77025, 2000 Ohio App. LEXIS 3844 (Aug. 24, 2000).
See also R.C. 2505.02. This court lacks subject matter jurisdiction to consider arguments
relating to Trinity’s third assigned error. Ohio Constitution, Article IV, Section 3(B)(2).
Accordingly, we overrule Trinity’s third assignment of error.
{¶49} Judgment affirmed.
It is ordered that appellee recover from appellant the costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the common pleas
court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the
Rules of Appellate Procedure.
MARY J. BOYLE, JUDGE
EILEEN A. GALLAGHER, A.J., CONCURS;
PATRICIA ANN BLACKMON, J., CONCURS IN PART AND
DISSENTS IN PART (WITH SEPARATE OPINION).
PATRICIA ANN BLACKMON, J., CONCURRING IN PART AND DISSENTING IN PART:
{¶50} While I agree with the majority’s opinion that the trial court properly granted
Clifton’s motion for preliminary injunction, I would respectfully find that the majority’s
conclusion regarding the interpretation of the Termination Provision, and thus the scope of the
noncompete clause, is unreasonable. Consequently, I respectfully dissent.
{¶51} To determine whether the trial court’s interpretation of the Termination Provision
is reasonable, we turn to the scope of the noncompete clause. In granting the preliminary
injunction, the court did not consider any factors specific to a noncompete clause, which “is
enforceable only to the extent it (1) is necessary to protect the company’s legitimate interest; (2)
does not impose undue hardship on the employee; and (3) is not adverse to public interest.”
Jacono v. Invacare Corp., 8th Dist. Cuyahoga No. 86605, 2006-Ohio-1596, ¶ 31. In
determining whether restrictions imposed by a noncompete clause are reasonable, courts should
consider the following factors:
the absence or presence of limitations as to time and space * * *[;] [w]hether the
employee represents the sole contact with the customer; whether the employee is
possessed with confidential information or trade secrets; whether the covenant
seeks to eliminate competition which would be unfair to the employer or merely
seeks to eliminate ordinary competition; whether the
covenant seeks to stifle the inherent skill and experience of the employee; whether
the benefit to the employer is disproportional to the detriment to the employee;
whether the covenant operates as a bar to the employee’s sole means of support;
whether the employee’s talent which the employer seeks to suppress was actually
developed during the period of employment; and whether the forbidden
employment is merely incidental to the main employment.
Extine v. Williamson Midwest, Inc., 176 Ohio St. 403, 406, 200 N.E.2d 297 (1964), overruled in
part on other grounds, Raimonde v. Van Vlerah, 42 Ohio St.2d 21, 325 N.E.2d 544 (1975).
{¶52} According to the record, there is evidence of the following.
{¶53} First, the Termination Provision is limited to 12 months, and it appears to be
unlimited geographically within the United States. Second, Trinity was the sole or exclusive
contact with Clifton’s customers. Third, testimony in the record shows that Clifton’s parts were
“standardized” products that did not involve confidential information or trade secrets. Fourth,
the court’s interpretation seeks to eliminate all competition in the railroad wear parts industry.
Fifth, it is unclear from the record whether the Termination Provision “seeks to stifle” Trinity’s
skills, although it appears that Trinity sold products other than railroad wear parts. There is no
evidence in the record as to what extent the remaining four factors apply to the case at hand.
Although the numbers in the record were admittedly not accurate or complete, Thomas testified
that Clifton lost at least $500,000 in sales after Trinity terminated the Agreement. Whether
these lost sales can be attributed to Trinity’s actions and the exact amount of damages, if any, are
facts to be determined at a future time.
{¶54} I would find that the trial court’s interpretation of the Termination Provision’s
restrictions is more encompassing than reasonably necessary to protect Clifton. Furthermore, in
my opinion, the restrictions impose an undue hardship on Trinity who, under the injunction as
granted, is prohibited from selling parts that Clifton has not manufactured in recent history to
companies with which Clifton has never done business. See Mid-West Presort Mailing Servs.,
Inc. v. Clark, 9th Dist. Summit No. 13215, 1988 Ohio App. LEXIS 615 (Feb. 10, 1988)
(“Employers should not receive insulation from all competition * * *; rather, they should only
receive protection from unfair competition”). In other words, I would find that an umbrella
prohibition on all competition within the railroad wear parts industry (i.e., incorporating Exhibits
A and B) is unreasonable. Rather, I would narrow the scope of the noncompete clause to prohibit
Trinity from selling, for a 12-month period, any product it previously sold for Clifton to any
customer to whom it previously sold to on behalf of Clifton during the term of the Agreement.
Clifton Steel Co. v. Trinity Equip. Co.
Court: Ohio Court of Appeals
Date filed: 2018-06-07
Citations: 2018 Ohio 2186, 115 N.E.3d 10
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