Chornyak Assoc., Ltd. v. Nadler, 08ap-380 (12-18-2008)

2008 Ohio 6681
CourtOhio Court of Appeals
DecidedDecember 18, 2008
DocketNo. 08AP-380.
StatusPublished

This text of 2008 Ohio 6681 (Chornyak Assoc., Ltd. v. Nadler, 08ap-380 (12-18-2008)) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Chornyak Assoc., Ltd. v. Nadler, 08ap-380 (12-18-2008), 2008 Ohio 6681 (Ohio Ct. App. 2008).

Opinion

OPINION
{¶ 1} Plaintiff-appellant, Chornyak Associates, Ltd. ("appellant"), appeals from the April 23, 2008 judgment of the Franklin County Court of Common Pleas in favor of defendants-appellees, Richard D. Nadler ("Nadler") and Everhart Financial Group ("EFG") (collectively "appellees"), in this case involving alleged violations of the Uniform Trade Secrets Act, codified at R.C. 1333.61 et seq. *Page 2

{¶ 2} Appellant is a financial planning firm and Nadler is a certified public accountant, a certified financial planner, and a licensed securities broker. Appellant employed Nadler from 1999 until August 2005, at which time the two parties parted ways when Nadler refused to sign a non-competition agreement. While he was employed with appellant, all of his clients' accounts were maintained in the custody of a third-party licensed securities broker-dealer, Royal Alliance Associates, Inc. ("Royal Alliance"), which paid commissions for transactions associated with those accounts. It paid all commissions associated with Nadler's clients directly to Joseph Chornyak, appellant's sole owner. Chornyak is also a licensed securities broker. The commissions were not paid to appellant because appellant is not a licensed securities broker or broker-dealer.

{¶ 3} Within ten days of his termination, Nadler began work as a certified financial planner with EFG and later became licensed as a registered representative (securities broker) with third-party broker-dealer Cambridge Investment Research. Some of Nadler's clients followed him to EFG. At the time of Nadler's termination from appellant's employ, he had approximately ten floppy disks at his home, which contained documents and information related to his employment with appellant. He uploaded some of that information to EFG's computer server. Nadler subsequently destroyed the floppy disks. Particularly relevant to this case, the disks contained one Microsoft Word document ("the Word document"), which the parties and the court termed "the recommendations document" because it contained a list of recommendations to clients; and two Microsoft Excel spreadsheet templates ("the Excel templates").

{¶ 4} On October 28, 2005, appellant filed the within action against appellees, alleging that they had misappropriated appellant's trade secrets, and requesting damages *Page 3 and injunctive relief. Specifically, appellant alleged that Nadler had taken appellant's trade secrets contained on the numerous floppy disks and on Nadler's home personal computer at the time he left appellant's employ. Appellant also brought a claim for breach of an employment agreement, but later voluntarily dismissed that claim.

{¶ 5} On November 9, 2005, the parties entered into an agreed permanent injunction that permanently restrained appellees, "directly or indirectly, from disclosing, using, transferring or destroying any Chornyak Associates, Ltd. trade secret(s) as that term is defined in R.C. § 1333.61 in any form whatsoever including originals, copies, other reproductions, derivatives, or computerized information, in any form whatsoever." Appellant later sought leave to amend its complaint on two separate occasions, in order to add claims for conversion, breach of fiduciary duty, civil conspiracy, tortious interference with contract, and R.C. 2913.04 (anti-hacking) violations. The court permitted appellant to amend its complaint to assert claims for conversion and anti-hacking.

{¶ 6} In November 2005, appellees filed a motion to join a necessary party, to wit: Royal Alliance, arguing that it was a necessary party because Royal Alliance — not appellant — was the real party in interest with respect to any commissions that appellant claimed it had lost as a result of Nadler's alleged misappropriation of trade secrets. Appellees also filed a motion to compel arbitration before the National Association of Securities Dealers ("NASD"). The trial court denied the motion, ruling that appellant could seek to protect its own trade secrets without joining Royal Alliance as a party. The court further ruled that arbitration was not required because appellant is not a member of the NASD. *Page 4

{¶ 7} Both appellant and appellees filed motions for summary judgment on January 29, 2007. The court denied appellant's motion for summary judgment. The court granted summary judgment to EFG as to appellant's trade secrets, conversion and anti-hacking claims, and granted summary judgment to Nadler as to appellant's conversion and anti-hacking claims. Thus, the only claim remaining for adjudication was appellant's trade secrets claim against Nadler. In its decision, the court stated that because Chornyak is the party with the direct contractual right to commissions from Royal Alliance and because any interest appellant has in the commissions flows through Chornyak, Chornyak is a necessary party to the litigation if appellant is seeking damages based on alleged lost commissions. The court granted appellant leave to amend its complaint to add Chornyak as a plaintiff. The court stated that failure to do so "will result in the court prohibiting [appellant] from introducing evidence of the lost commissions at trial to establish actual monetary damages."1 Nonetheless, appellant did not amend its complaint to add Chornyak as a plaintiff.

{¶ 8} On April 6, 2007, appellant filed a motion for an order to show cause and a finding of contempt. Specifically, appellant alleged that its April 24, 2006 forensic analysis revealed that appellees had violated the terms of the permanent injunction when, after November 9, 2005, they electronically retrieved and used the Word document and the Excel templates allegedly containing its trade secrets. Appellees filed a memorandum in opposition, and appellant filed a reply memorandum. *Page 5

{¶ 9} On May 25, 2007, the court journalized an "Entry Scheduling Show Cause Hearing Simultaneously With the Trial on the Merits." Therein, the court stated:

Because many of the issues relevant to plaintiff's contempt motion, particularly the issue of whether items allegedly used by defendants constitute plaintiff's trade secrets, are identical to the issues to be determined at trial, the court finds that the evidentiary hearing on plaintiff's contempt motion shall be held by the court simultaneously with the trial on the merits on July 16, 2007 in order to promote judicial economy and to preserve party resources.

To the extent that evidence relevant only to the contempt motion must be presented, the court will hear that evidence outside the presence of the jury. The court will rule upon plaintiff's contempt motion based on the evidence presented at trial and based upon any additional evidence presented outside the presence of the jury.

{¶ 10} On June 6, 2007, the parties came before the court for a status conference. In an entry journalized June 8, 2007, the court made certain orders based on its discussions with the parties during the status conference.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Kewanee Oil Co. v. Bicron Corp.
416 U.S. 470 (Supreme Court, 1974)
Perkins v. Ohio Department of Transportation
584 N.E.2d 794 (Ohio Court of Appeals, 1989)
Broadstone v. Quillen
834 N.E.2d 424 (Ohio Court of Appeals, 2005)
Pyromatics, Inc. v. Petruziello
454 N.E.2d 588 (Ohio Court of Appeals, 1983)
Levine v. Beckman
548 N.E.2d 267 (Ohio Court of Appeals, 1988)
Patterson v. Patterson, Unpublished Decision (5-9-2005)
2005 Ohio 2254 (Ohio Court of Appeals, 2005)
Seasons Coal Co. v. City of Cleveland
461 N.E.2d 1273 (Ohio Supreme Court, 1984)
Jones v. Murphy
465 N.E.2d 444 (Ohio Supreme Court, 1984)
Water Management, Inc. v. Stayanchi
472 N.E.2d 715 (Ohio Supreme Court, 1984)
Huffman v. Hair Surgeon, Inc.
482 N.E.2d 1248 (Ohio Supreme Court, 1985)
Valco Cincinnati, Inc. v. N & D Machining Service, Inc.
492 N.E.2d 814 (Ohio Supreme Court, 1986)
Shumaker v. Oliver B. Cannon & Sons, Inc.
504 N.E.2d 44 (Ohio Supreme Court, 1986)
State ex rel. Plain Dealer v. Ohio Dept. of Insurance
687 N.E.2d 661 (Ohio Supreme Court, 1997)
Fred Siegel Co., L.P.A. v. Arter & Hadden
707 N.E.2d 853 (Ohio Supreme Court, 1999)
State ex rel. The Plain Dealer v. Ohio Dept. of Ins.
1997 Ohio 75 (Ohio Supreme Court, 1997)
Fred Siegel Co., L.P.A. v. Arter & Hadden
1999 Ohio 260 (Ohio Supreme Court, 1999)

Cite This Page — Counsel Stack

Bluebook (online)
2008 Ohio 6681, Counsel Stack Legal Research, https://law.counselstack.com/opinion/chornyak-assoc-ltd-v-nadler-08ap-380-12-18-2008-ohioctapp-2008.