What is New on the Commercial Docket?

Kegler Brown Litigation Newsletter

The Franklin County Commercial Docket has been in operation since January of this year (see the October 2008 issue of The Advocate for more information.) The following is a summary of the cases recently decided by the Court:

Buckingham, Doolittle & Burroughs, LLP, et al. v. Bonasera, et al. (May 4, 2009), Case No. 09CVH-01-553 (By Judge Frye). A law firm brought this action against former employees and shareholders in its Columbus office who left and joined another law firm. The former employees and shareholders filed a third-party complaint against the managers of BDB. The managers moved the Court to dismiss the third-party complaint on three grounds: (1) the former employees and shareholders failed to state a prayer for relief; (2) the claims involved against the managers were independent claims and were not permitted to be asserted in a third-party complaint; and (3) the fraud claim was not stated with particularity as required by the Civil Rules of Procedure. The Court denied the motion based on the first two arguments, but granted the motion with respect to the fraud claim. In Ohio, "the circumstances constituting fraud 'shall be stated with particularity.'" The Court found that the claim was deficient as pled, and thereby dismissed it.

In re: Dissolution of Walls-Carroll, Inc. (May 21, 2009), Case No. 09CVH-05-6712 (By Judge Frye). Walls-Carroll, Inc. initiated the action to dissolve the corporation. The corporation requested that the Court appoint a receiver to wind up its corporate affairs. The Court noted that the law disfavored the appointment of a receiver for a failing corporation when the corporation made its own application for the same. The Court expressed a concern that the costs involved with receivership may unnecessarily deplete corporate assets, which could otherwise be used to pay creditors.

Fifth Third Bank, et al. v. Michael Welch (June 12, 2009), Case No. 09CVH-05-7343 (By Judge Frye). Fifth Third sought to enforce post-employment contractual restrictions upon Welch, a financial advisor. Welch was a dual agent for Fifth Third Bank and Fifth Third Securities (FTS), which was also a party to this action. Welch resigned from the bank and FTS and began employment with Wachovia Securities, which is now known as Wells Fargo Advisors. The bank sought a preliminary injunction prohibiting Welch from soliciting business or interfering with bank's relationships with any client. FTS and Welch had an agreement to arbitrate disputes between them, which this Court held was not enforceable as to the bank. However, the Court stayed the case with respect to FTS pending arbitration, and dealt only with the bank's claim for preliminary injunction.

Welch had signed numerous agreements with the bank and FTS containing three types of restrictions: (1) defendant was not to solicit customers of the bank and FTS; (2) he agreed not to use or disclose confidential business information; and (3) he was not to disparage the bank and FTS to customers. Welch called several of his clients prior to his departure from bank and FTS. He also admitted to taking several client lists prior to his resignation, and used one of those lists to contact customers. He left a voicemail at his office number with a message informing the caller that he could be contacted on his mobile phone.

The Court recognized that Welch violated at least some of the restrictive covenants at issue, but the Court was not convinced that Fifth Third Bank would suffer irreparable harm as a result of Welch's violation of those covenants. However, the Court held that the bank demonstrated by clear and convincing evidence that the defendant gained an unfair advantage by using its customer lists and other business records, and therefore the bank was entitled to some injunctive relief. In light of potential harm to the customers involved and other equitable concerns, the Court determined that a reasonable restriction would be that defendant was not permitted to solicit the bank's customers for 90 days from the date of the TRO. Additionally, the Court ordered the defendant to permanently erase or purge all of the bank's records to which he still had access, and further ordered that Welch could not use any of the bank's records for any commercial purpose whatsoever.

Glic Real Estate Holding, LLC v. 2014 Baltimore-Reynoldsburg Road, LLC., Case No. 09CVH-03-3901 (By Judge Frye). Defendant filed a 60(B) motion for relief of judgment entered pursuant to a cognovit note. The judgment was entered by a Franklin County Common Pleas Court assigned as the "Duty Judge." Defendant argued that as a matter of law, the Court did not have jurisdiction to issue a decision because the case was not on the commercial docket. The Court rejected this argument finding that the Temporary Rules of Superintendence, which establish the commercial docket, have no jurisdictional significance.