ITS Fin., L.L.C. v. Gebre

2014 Ohio 2205
Ohio Court of Appeals·Decided May 23, 2014·No. 25416, 25492·Published·Cited by 6 cases

Opinion

IN THE COURT OF APPEALS OF OHIO SECOND APPELLATE DISTRICT MONTGOMERY COUNTY

ITS FINANCIAL, LLC :

: Appellate Case Nos. 25416 Plaintiff-Appellee : Appellate Case Nos. 25492 :

v. : Trial Court Case No. 11-CV-8852 :

GIRMAI GEBRE, et al. : (Civil Appeal from : (Common Pleas Court)

Defendants-Appellants :

:

...........

OPINION

Rendered on the 23rd day of May, 2014.

...........

JAMES G. ABERNATHY, Atty. Reg. #0086819, and Todd E. Bryant, Atty. Reg. #0072738, 51 Plum Street, Suite 260, Beavercreek, Ohio 45440 Attorneys for Plaintiff-Appellee, ITS Financial, LLC

THOMAS M. GREEN, Atty. Reg. #0016361, Green & Green, Lawyers, 800 Performance Place, 109 North Main Street, Dayton, Ohio 45402 Attorney for Defendant-Appellant, Girmai Gebre

GREGORY S. PAGE, Atty. Reg. #0065264, Gregory S. Page Co., LPA, 7501 Paragon Road, Dayton, Ohio 45459 Attorney for Defendants-Appellees, Star Tax, LLC and Tedros Gebremedhin

.............

FAIN, J.

{¶ 1} Defendant-appellant Girmai Gebre appeals from an order finding him in contempt and awarding sanctions for his violations of a temporary restraining order and a preliminary injunction. Gebre contends that the trial court erred in entering the TRO and preliminary injunction. He also contends that there is no evidence in the record to support either the finding of contempt or the amount of sanctions.

{¶ 2} We conclude that the trial court did not err in entering either the temporary restraining order or the preliminary injunction. We further conclude that the order finding him in contempt and awarding sanctions is supported by the evidence in the record. Accordingly, the order of the trial court is Affirmed.

I. ITS Obtains Injunctive Relief to Prevent Gebre from Competing in Violation of his Franchise Agreements with ITS

{¶ 3} ITS Financial, LLC is an Ohio company doing business as “Instant Tax Service.” In 2008, Gebre entered into eight franchise agreements with ITS whereby he purchased eight franchise territories located in Memphis, Tennessee for the purpose of operating tax preparation services under the ITS business name of Instant Tax Service. Section 8 of the franchise agreements, which are identical except for location, contains a covenant not to compete, which provides that Gebre will not:

(i) own, maintain, operate, engage in, franchise or license, or have any direct or indirect controlling or non-controlling interest as an owner – whether of record, beneficially, or otherwise – in a Competitive Business (defined below), wherever located or operating * * * (ii) be, or perform services as, a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, wherever located or opening;

(iii) divert or attempt to divert any actual or potential business or customer of the Franchised Office to a Competitive Business; or (iv) engage in any other activity which might injure the good will of the Proprietary Marks and Franchised System.

{¶ 4} The franchise agreements were terminated by ITS in September 2011.

Thereafter, ITS filed a motion for a temporary restraining order and a preliminary injunction to prevent Gebre from engaging in any competitive tax preparation business. A TRO was entered on December 12, 2011, providing as follows:

IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that a Temporary Restraining Order enjoining Defendant and each of his officers, agents, servants, employees, successors or assigns, any person acting on behalf of Defendant, and any person in active concert or participation with Defendant, directly or indirectly, from:

1. Opening or operating an Instant Tax Service office location; or 2. Diverting customers to any competitive tax preparation business;

processing tax returns for retail customers; using signage with the Instant Tax Service name, brand, website, or trademark; identifying or associating with Instant Tax Service in a way that is misleading or deceptive to the public; or otherwise competing against Plaintiff as defined by Section 8 of the Franchise Agreements, including advertising or marketing such competing businesses;

3. Opening or operating any tax preparation business (filing or offering to file a federal or state tax return for a customer in exchange for a fee) in the following geographic areas:

a) Zip codes 38107, 38105, 38127, 38114, 38132, 38131, 38116, 38109, 38106, 38111, 38152, 72301;

b) Within a 10 mile radius of any offices located in the above zip codes;

and c) Within a 5 mile radius of any Instant Tax Service office in existence as of the date of this Order 4. Otherwise utilizing the trademark “Instant Tax Service” in signage, print material, or advertising.

{¶ 5} A hearing on the preliminary injunction was set for December 22. Gebre appeared at the hearing without counsel. His request for a continuance was granted, with the proviso that the TRO would remain in effect during the continuance.

II. ITS Claims Gebre Has Violated the TRO, and Later the Preliminary Injunction, and Seeks Relief

{¶ 6} On December 27, 2011, ITS filed a motion to show cause seeking an order holding Gebre in contempt for continuing to operate a tax preparation business in violation of the TRO.

{¶ 7} A hearing on the preliminary injunction was held on January 20, 2012. Gebre did not appear, but his counsel appeared and submitted Gebre’s affidavit, in which Gebre averred that he had not taken any steps to compete with ITS and had not violated the terms of Section 8 of the Franchise Agreements. The trial court entered a preliminary injunction on January 27, 2012. The injunction was identical to the TRO, except that it did not contain the language regarding competition in violation of Section 8 of the Franchise. ITS filed a “replevin” bond in the amount of $100,000 on February 17.

{¶ 8} A hearing on the contempt motion was held on March 30, 2012. Gebre was not present, but his counsel was. By decision and entry dated April 6, the trial court found Gebre in contempt.

{¶ 9} On May 4, 2012, a hearing began on the issue of sanctions for contempt. Due to outstanding discovery that Gebre had not produced, the hearing was continued to August 23. On August 23, Gebre did not personally appear. ITS presented its evidence on sanctions and Gebre’s counsel requested a continuance for the limited purpose of permitting Gebre to testify. The hearing was continued to September 13, 2012.1 Again, only Gebre’s counsel appeared for the continued hearing, and another Gebre affidavit was submitted. In the affidavit, Gebre averred that he “worked as a consultant for bookkeeping for Star Tax Service, LLC (‘Star Tax’) for the 2011 tax season which occurred in January through April of 2012.” He further averred that he was not a “member” of Star Tax, but he was “a signatory on its accounts.”

{¶ 10} The trial court entered its September 13, 2012 order, finding that Gebre owned and operated a competitive company named Star Tax, LLC in violation of the TRO and preliminary injunction. The trial court further found that Star Tax had earned $374,315.07 in profit as a result of violating the restraining order and injunction. The trial court awarded ITS

1

The trial judge noted that she would, reluctantly, cancel her plans to attend a conference, in order to be able to timely reschedule the continued hearing around the conflicts of both attorneys.

the sum of $300,000 in sanctions.

{¶ 11} On September 19, the trial court entered an order of default against Gebre and awarded ITS the sum of $120,990.48 in damages for breach of contract. The September 19 order also entered a permanent injunction against Gebre utilizing the same language as in the preliminary injunction.

{¶ 12} Gebre appealed (CA 25416) from both the September 13 and September 19 orders. He then moved in the trial court for a stay of execution pending appeal, which the trial court overruled. Gebre then appealed (CA 25492) from the order overruling his motion for a stay pending appeal. These two appeals were consolidated by decision and entry dated February 25, 2013.

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

ITS Fin., L.L.C. v. Gebre, 2014 Ohio 2205 (Ohio Ct. App. 2014).

2014 Ohio 2205 (ITS Fin., L.L.C. v. Gebre) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Ricksecker v. Ricksecker
2026 Ohio 716 (Ohio Court of Appeals, 2026)
Goebel v. Colonial Lane Improvement Assn.
2025 Ohio 863 (Ohio Court of Appeals, 2025)
Gimex Properties Corp., Inc. v. Reed
2022 Ohio 4771 (Ohio Court of Appeals, 2022)
MWL Ents., L.L.C. v. Mid-Miami Invest. Co.
2021 Ohio 1742 (Ohio Court of Appeals, 2021)
Miller v. Cloud
2016 Ohio 5063 (Ohio Court of Appeals, 2016)
Connor Group v. Raney
2016 Ohio 2959 (Ohio Court of Appeals, 2016)