[Cite as J&B Fleet Indus. Supply, Inc. v. Miller, 2011-Ohio-3165.]

 STATE OF OHIO, MAHONING COUNTY 

 IN THE COURT OF APPEALS 

 SEVENTH DISTRICT 

J&B FLEET INDUSTRIAL SUPPLY, INC.,) 

 ) CASE NO. 09 MA 173 

 PLAINTIFF-APPELLANT, ) 

 ) 

 - VS - ) OPINION 

 ) 

RICK MILLER, ) 

 ) 

 DEFENDANT-APPELLEE. ) 

CHARACTER OF PROCEEDINGS: Civil Appeal from Common Pleas 

Court, Case No. 08 CV 1591. 

JUDGMENT: Affirmed. 

APPEARANCES: 

For Plaintiff-Appellant: Attorney Kenneth Cardinal 

758 North 15th Street 

P.O. Box 207 

Sebring, OH 44672 

For Defendant-Appellee: Attorney Dennis Haines 

Attorney Charles Oldfield 

Green, Haines, Sgambati, Co., LPA 

16 Wick Avenue, Suite 400 

Youngstown, OH 44501-0849 

JUDGES: 

Hon. Mary DeGenaro 

Hon. Gene Donofrio 

Hon. Joseph J. Vukovich 

Dated: June 16, 2011 
- 2 - 

DeGenaro, J. 

{¶1} Plaintiff-Appellant, J&B Fleet Industrial Supply, Inc. appeals the decision of 

the Mahoning County Court of Common Pleas overruling objections to a magistrate's 

decision and granting summary judgment in favor of Defendant-Appellee, Rick Miller in a 

suit for breach of contract, injunctive relief and fraud. J&B argues the trial court erred by 

concluding that J&B's contract-based claims against Miller were discharged in bankruptcy 

and by improperly limiting discovery. Finally, J&B argues there were genuine issues of 

material fact precluding summary judgment on its fraud claim, and that it pleaded the 

fraud claim with sufficient particularity. For the following reasons, J&B's assignments of 

error are meritless, and accordingly, the judgment of the trial court is affirmed. 

Facts and Procedural History 

{¶2} J&B is a corporation that supplies sundry products to commercial and 

industrial markets. Miller was employed by J&B as a sales agent. Prior to that, Miller 

worked in sales and marketing for J&B's competitors, where he gained expertise in the 

industry. 

{¶3} On March 23, 2003, Miller and J&B entered into an "Independent Sales and 

Marketing Agreement" which had a stated term of twenty years. Among other things, 

Miller agreed to terminate his employment relationship with J&B and instead become an 

independent distributor. J&B agreed to permit Miller to use the J&B logo, signage, 

catalogs, and business accounts for banking purposes. J&B agreed to extend to Miller a 

$10,000.00 line of credit, which was secured by Miller's "funded account," the retainage 

held by J&B from Miller's sales commissions when Miller was employed as a J&B sales 

agent. The Agreement also contained a non-compete clause which purported to limit 

Miller's right to compete with J&B for the duration of the contract and for an additional 20 

years. The non-compete clause allowed J&B to conduct business in 87 out of 88 of 

Ohio's counties. It provided Miller with exclusive rights only to Franklin County, but 

permitted J&B to retain some existing customers. The non-compete clause further 

prohibited Miller from competing with J&B in 56 Ohio counties, including Stark, where 

Miller resides, and counties surrounding Stark. 
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{¶4} On November 18, 2003, Miller filed a Chapter 7 bankruptcy petition, and on 

April 7, 2004, was granted a no-asset discharge. 

{¶5} According to Miller, he informed J&B owner and president Louis W. 

diDonato1

 about his bankruptcy filing. Miller also averred he had discussions with 

diDonato about the bankruptcy, both before he filed, and during the course of the 

bankruptcy proceedings. diDonato admitted that he was aware of Miller's financial 

problems, stating: "Miller did inform me that he was or would be seeking a divorce and he 

had debts. He expressed that he may have to file bankruptcy to rid himself of marital and 

personal debts. I cannot recall if he told me before March or after March, 2003." 

{¶6} Following Miller's bankruptcy discharge, Miller continued to perform his 

obligations under the Agreement. Miller did not notify J&B of the discharge. However, 

Miller never entered into a reaffirmation agreement with J&B. 

{¶7} J&B filed a complaint against Miller for breach of contract and injunctive 

relief. J&B claimed that Miller breached the non-compete clause by conducting business 

in competition with J&B in areas prohibited by the Agreement. J&B requested that Miller 

be enjoined from continuing to breach the non-compete clause and prayed for damages 

for the breach. J&B attached an affidavit from diDonato in support of the request for an 

injunction. 

{¶8} Miller answered and counterclaimed for fraud and breach of contract. 

Specifically, Miller claimed that J&B had committed fraud by failing to disclose all of its 

accounts as provided in the Agreement, and that Miller had relied on J&B's alleged 

misrepresentations and had been damaged therefrom. Miller also alleged that J&B had 

breached the non-compete clause by competing with Miller in Franklin County in 

contravention of the Agreement. Miler also requested an injunction prohibiting J&B from 

breaching the non-compete. 

{¶9} In an August 5, 2008 decision, the magistrate issued a preliminary 

injunction, preventing both parties from breaching the non-compete clause. No 

objections were filed and the trial court adopted the decision. 

 

1

 The record reveals diDonato uses his middle name, William, and also Bill. 
- 4 - 

{¶10} On January 13, 2009, Miller, having retained new counsel, filed a motion for 

leave to amend his answer and stay discovery. Specifically, Miller sought to add the 

affirmative defense of discharge in bankruptcy. Further, Miller moved the court to stay 

discovery as he intended to file a dispositive motion on the basis of the bankruptcy 

discharge defense and was concerned if discovery continued on other matters J&B could 

gain information about Miller's business operations that could give J&B a competitive 

advantage over Miller. 

{¶11} On March 18, 2009, the magistrate issued an order granting both parties 

leave to amend their pleadings. The magistrate set deadlines for filing summary 

judgment motions. Finally, the magistrate ruled that pending a ruling on the motion for 

summary judgment discovery is stayed except relating to: (1) Miller's affirmative defense 

of discharge in bankruptcy; (2) J&B's contention that a contract between the parties 

existed after the bankruptcy; and (3) violations of the court's previous orders. 

{¶12} J&B never moved to set aside this order. Instead, despite the directives of 

that order, on March 20, 2009, J&B filed a motion to compel discovery. As noted in the 

record, this motion was improperly served on Miller's prior counsel. The trial court never 

ruled on the motion to compel. 

{¶13} On March 27, 2009, the magistrate issued an amended magistrate's order, 

which was substantially the same as the March 18 order, except that it corrected 

misidentification of the parties and errors with dates. J&B never moved to set aside this 

order. 

{¶14} On March 26, 2009, Miller filed an amended answer and counterclaim, in 

which he added the affirmative defense of discharge in bankruptcy. On April 10, 2009, 

J&B filed an amended complaint which added claims for fraud and estoppel, in addition to 

the claims for breach of contract and injunctive relief. Miller filed an answer to the 

amended complaint. 

{¶15} Miller filed a motion for summary judgment on April 24, 2009 with regard to 

J&B's claims against him, arguing J&B's claims for breach of contract and injunctive relief 

had been discharged in bankruptcy. Alternatively, Miller argued that the non-compete 
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clause is unreasonable and should not be enforced. Finally, Miller argued there were no 

genuine issues of material fact with regards to J&B's fraud claim. Attached to Miller's 

motion were his affidavit and two exhibits, the Agreement and his discharge order from 

the bankruptcy court. 

{¶16} J&B filed a brief in opposition raising four arguments. First, J&B argued that 

its breach of contract and injunctive relief claims could not be barred by the bankruptcy 

discharge because Miller had waived the use of that defense by counterclaiming for 

breach of contract. Second, its claim for injunctive relief is non-dischargeable as it was a 

separate and distinct remedy under the Agreement which arose post-bankruptcy. Third, 

the non-compete clause was reasonable, and that the law cited by Miller with regard to 

the non-compete was inapplicable because the covenant was not made in an 

employment context. Fourth, there were genuine issues of material fact remaining 

regarding its fraud claim. J&B attached seven exhibits, five of which were pleadings 

contained in the record. The other two were an affidavit from diDonato and a copy of the 

Agreement. 

{¶17} On June 12, 2009, the magistrate issued a two-sentence decision granting 

summary judgment against J&B for all of its claims against Miller. J&B filed a request for 

findings of fact and conclusions of law. Miller filed a motion to strike that request, 

claiming that findings of fact and conclusions of law are inappropriate where litigation has 

been terminated by summary judgment. The magistrate overruled Miller's motion to 

strike and ordered Miller to submit proposed findings of fact and conclusions of law. 

{¶18} On August 11, 2009, the magistrate issued a lengthier decision concluding 

that the bankruptcy discharge barred the claims for breach of contract and injunctive 

relief, and even if the claims were not barred, the non-compete was unreasonable and 

unenforceable. Finally, the magistrate found there were no genuine issues of material 

fact regarding the fraud and estoppel claims. 

{¶19} J&B filed objections to the magistrate's decision which the trial court 

overruled, adopting the magistrate's decision in its entirety, and entering judgment for 

Miller on J&B's amended complaint. 
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Discovery Orders 

{¶20} For ease of analysis, J&B's seven assignments of error will be addressed 

out of order and will be grouped together by subject matter. In its fourth and fifth 

assignments of error, J&B contends: 

{¶21} "The trial court erred in issuing a stay of full discovery which would establish 

the reasonableness of the mutual non-compete clause which each sought to enforce by 

injunctive relief in the respective pleadings." 

{¶22} "The trial court erred by terminating pre-trial discovery regarding 

fundamental issues in the litigation based solely upon an affirmative defense in order to 

expedite the conclusion of the case." 

{¶23} J&B specifically takes issue with two magistrate's orders, one dated March 

18, 2009 and the other March 27, 2009. Substantively, both orders are the same in that 

they granted both parties leave to amend pleadings and file motions for summary 

judgment. Both orders include the following language: 

{¶24} "Pending a decision on the motion for summary judgment, discovery herein 

is stayed, except that discovery relating to the following: 

{¶25} "1.) Defendant's affirmative defense of discharge in bankruptcy. 

{¶26} "2.) Plaintiff's contention that a contract between the parties existed after the 

bankruptcy; 

{¶27} "3.) Violations of this Court's previous Order." 

{¶28} The only changes to the March 27, 2009 order (which was labeled 

"Amended Magistrate's Order") involved correcting typographical errors regarding dates 

and party names (i.e., changing "plaintiff" to "defendant.") 

{¶29} J&B argues these orders prevented further discovery regarding the 

reasonableness of the non-compete clause, and the limited scope contravenes the Civil 

Rules, which provide for liberal discovery on "any matter, not privileged, which is relevant 

to the subject matter involved in the pending action." Civ.R. 26(B)(1). Miller counters that 

J&B waived these arguments by failing to oppose the discovery orders at the proper time 

in the trial court. 
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{¶30} Magistrates have the authority to enter orders without judicial approval "if 

necessary to regulate the proceedings and if not dispositive of a claim or defense of a 

party." Civ.R. 53(D)(2)(a)(i). Orders regulating discovery, such as the ones at issue here, 

clearly fall under the purview of this rule. See, e.g., Crawford v. Hawes, 2d Dist. No. 

23209, 2010-Ohio-952, at ¶25. See, also, Staff Notes to 2006 Amendments to Civ.R. 

53(D). Subpart (2)(b) specifies the procedure for setting aside a magistrate's order: 

{¶31} "Any party may file a motion with the court to set aside a magistrate's order. 

The motion shall state the moving party's reasons with particularity and shall be filed not 

later than ten days after the magistrate's order is filed. The pendency of a motion to set 

aside does not stay the effectiveness of the magistrate's order, though the magistrate or 

the court may by order stay the effectiveness of a magistrate's order." 

{¶32} If a party does not move to set aside a magistrate's order, that party waives 

a challenge to that order on appeal. Nettle v. Nettle, 9th Dist. No. 25001, 2010-Ohio4638, at ¶13, citing Crawford, supra. See, also, Spier v. Spier, 7th Dist. No. 05 MA 26, 

2006-Ohio-1289, at ¶55-57 (discussing a prior version of Civ.R. 53(D)(2)(b)). J&B never 

filed a motion to set aside either of the magistrate's discovery orders, and is precluded 

from raising the issue on appeal. 

{¶33} Moreover, J&B never moved for additional time to complete discovery 

pursuant to Civ.R. 56(F). The remedy for a party who must respond to a summary 

judgment motion before he or she has completed adequate discovery is a motion under 

Civ.R. 56(F). Carbone v. Austintown Surgery Ctr., L.L.C., 7th Dist. No. 09 MA 35, 2010-

Ohio-1314, at ¶30. Importantly, "an appellant who failed to seek relief under Civ.R. 56(F) 

in the trial court has not preserved his rights thereto for purposes of appeal." Petty v. 

Mahoning Women's Centre, Inc. (Feb. 15, 1995), 7th Dist. No. 93 C.A. 32, at *3-4, 

quoting Stegawski v. Cleveland Anesthesia Group, Inc. (1987), 37 Ohio App.3d 78, 523 

N.E.2d 902, at paragraph four of the syllabus. 

{¶34} Civ.R. 56(F) permits "a party the opportunity to request additional time to 

obtain, through discovery, the facts necessary to adequately oppose a motion for 

summary judgment." Morantz v. Ortiz, 10th Dist. No. 07AP-597, 2008-Ohio-1046, at ¶20. 
- 8 - 

"A party seeking a Civ.R. 56(F) continuance has the burden of establishing a factual basis 

and reasons why the party cannot present sufficient documentary evidence without a 

continuance." Shirdon v. Houston, 2d Dist. No. 21529, 2006-Ohio-4521, at ¶10; see, 

also, Beegle v. Amin, 156 Ohio App.3d 533, 2004-Ohio-1579, 806 N.E.2d 1045, at ¶8 

(Seventh District). Pursuant to the language of Civ.R. 56(F), this factual basis must be 

set forth in an affidavit. Civ.R. 56(F). Such affidavits are made by the movant or his or 

her counsel. See, e.g., Reywal Co. Ltd. Partnership v. Dublin, 188 Ohio App.3d 1, 2010-

Ohio-3013, 933 N.E.2d 1164 at ¶58-59, Shirdon at ¶11. The affidavit must explain the 

need for additional discovery and what such discovery would be likely to uncover. Id. 

{¶35} J&B argues that Exhibit F of its Brief in Opposition to Summary Judgment, 

an affidavit from diDonato, was its attempt to comply with Civ.R. 56(F). However, 

diDonato's affidavit failed to mention what additional discovery would have been 

beneficial to the case. Rather, it was offered pursuant to Civ.R. 56(C) as substantive 

evidence in opposition to the summary judgment motion. Accordingly, J&B failed to utilize 

Civ.R. 56(F). 

{¶36} Because J&B failed to move to set aside the magistrate's discovery orders, 

and because it failed to avail itself of the procedures contained in Civ.R. 56(F), J&B is 

precluded from challenging the discovery orders on appeal, or from asserting that the trial 

court prematurely granted summary judgment prior to the completion of full discovery. 

Accordingly, J&B's fourth and fifth assignments of error are meritless. 

Summary Judgment due to Bankruptcy Discharge 

{¶37} J&B's first, second and third assignments of error assert: 

{¶38} "The trial court erred in granting summary judgment based upon Appellee's 

certification of discharge in bankruptcy because there continues to exist a genuine issue 

of fact as to the effectiveness of said discharge to the Appellee/Defendant's indebtedness 

to this Appellant." 

{¶39} "Plaintiff/Appellant's claims for relief are not barred by Appellee's 2003 

bankruptcy discharge since Appellee counterclaimed for breach and injunctive relief 

thereby waiving the effectiveness of this affirmative defense." 
- 9 - 

{¶40} "The trial court erred in that J&B's claim for injunctive relief is equitable and 

thus a separate and distinct remedy under the contract which is not barred by the 

Appellee's 2003 bankruptcy even if shown to be effective." 

{¶41} An appellate court reviews a trial court's summary judgment decision de 

novo, applying the same standard used by the trial court. Ohio Govt. Risk Mgt. Plan v. 

Harrison, 115 Ohio St.3d 241, 2007-Ohio-4948, 874 N.E.2d 1155, at ¶5. A motion for 

summary judgment is properly granted if the court, viewing the evidence in a light most 

favorable to the party against whom the motion is made, determines that: (1) there are no 

genuine issues as to any material facts; (2) the movant is entitled to a judgment as a 

matter of law; and (3) the evidence is such that reasonable minds can come to but one 

conclusion and that conclusion is adverse to the opposing party. Civ.R. 56(C); Byrd v. 

Smith, 110 Ohio St.3d 24, 2006-Ohio-3455, 850 N.E.2d 47, at ¶10. Only the substantive 

law applicable to a case will identify what constitutes a material issue, and only the 

disagreements "over facts that might affect the outcome of the suit under the governing 

law" will prevent summary judgment. Byrd at ¶12, citing Anderson v. Liberty Lobby, Inc. 

(1986), 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202. "[T]he moving for summary 

judgment, "the moving party bears the initial responsibility of informing the trial court of 

the basis for the motion, and identifying those portions of the record which demonstrate 

the absence of a genuine issue of fact on a material element of the nonmoving party's 

claim." Dresher v. Burt (1996), 75 Ohio St.3d 280, 296, 662 N.E.2d 264. The nonmoving 

party has the reciprocal burden of specificity and cannot rest on the mere allegations or 

denials in the pleadings. Id. at 293. 

Effectiveness of Bankruptcy Discharge 

{¶42} J&B argues that summary judgment was improper because there is a 

genuine issue of material fact regarding the effectiveness of the bankruptcy discharge 

with respect to J&B's contract-based claims. Specifically, J&B argues that Miller's debts 

are excepted from the bankruptcy discharge because they were fraudulently incurred. 

Miller counters that this argument has been waived because J&B failed to raise it in its 

brief in opposition to Miller's motion for summary judgment. 
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{¶43} J&B never argued that Miller's debts were excepted from the bankruptcy 

discharge due to Miller's alleged fraud. However, as Miller concedes, J&B did argue, both 

in its brief in opposition to summary judgment and its objections to the magistrate's 

decision, that there were genuine issues of material fact remaining regarding J&B's 

separate fraud claim against Miller. These issues, whether the debts are excepted from 

bankruptcy due to fraud, and whether there are genuine issue of material fact regarding 

J&B's fraud claim, are similar and turn on the same set of facts; whether the fact that 

Miller failed to tell J&B about the bankruptcy and continued to comply with the contract 

post-discharge constitutes fraud. Thus, this issue was not waived. 

{¶44} The Bankruptcy Code, defines a debt as a "liability on a claim." Section 

101(12), Title 11, U.S.Code. The term "claim" is defined broadly under section 101(5) as: 

{¶45} "(A) right to payment, whether or not such right is reduced to judgment, 

liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, 

legal, equitable, secured, or unsecured; or 

{¶46} "(B) right to an equitable remedy for breach of performance if such breach 

gives rise to a right to payment, whether or not such right to an equitable remedy is 

reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, 

secured, or unsecured." Section 101(5), Title 11, U.S.Code. 

{¶47} The United States Supreme Court held a "right to payment" means "nothing 

more nor less than an enforceable obligation * * *." FCC v. NextWave Personal 

Communications, Inc. (2003), 537 U.S. 293, 303, 123 S.Ct. 832, 154 L.Ed.2d 863 

{¶48} A creditor is defined as, inter alia, an "entity that has a claim against the 

debtor that arose at the time of or before the order for relief concerning the debtor[.]" 

Section 101(10)(A), Title 11, U.S.Code. 

{¶49} A discharge in bankruptcy under Section 727(a), Title 11, U.S.Code 

"discharges the debtor from all debts that arose before the date of the order of relief." 

Section 727(b), Title 11, U.S.Code. When dealing with a contract-based claim, the claim 

"arises on the day the agreement is signed by the parties." In re May

(Bankr.Ct.S.D.Ohio.1992), 141 B.R. 940, 944. Thus, the "right to payment, although 
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contingent as to a future breach, arises when the parties enter into the [ ] contract." Id. 

{¶50} There are statutory exceptions to discharge listed in Section 523, Title 11, 

U.S.Code. At issue is the fraud exception found in section 523(a)(2)(A), which provides in 

pertinent part: 

{¶51} "(a) A discharge under section 727, * * * of this title does not discharge an 

individual debtor from any debt-- 

{¶52} "(2) for money, property, services, or an extension, renewal, or refinancing 

of credit, to the extent obtained by-- 

{¶53} "(A) false pretenses, a false representation, or actual fraud, other than a 

statement respecting the debtor's or an insider's financial condition[.]" 

{¶54} To establish a prima facie case under Section 523(a)(2)(A), the creditor 

must demonstrate that: "(1) the debtor obtained money through a material 

misrepresentation that, at the time, the debtor knew was false or made with gross 

recklessness as to its truth; (2) the debtor intended to deceive the creditor; (3) the creditor 

justifiably relied on the false representation; and (4) its reliance was the proximate cause 

of loss." (Internal footnote omitted) In re Salupo (Bankr.Ct.N.D.Ohio.2008), 386 B.R. 

659, 665. 

{¶55} There is nothing in the record demonstrating that Miller made a material 

misrepresentation to J&B, either prior to or after entering into, the Agreement. To the 

contrary, Miller averred that he told J&B's owner about his divorce, resulting financial 

downturn and that he planned to file bankruptcy. J&B's president diDonato admitted: 

"Miller did inform me that he was or would be seeking a divorce and that he had debts. 

He expressed that he may have to file bankruptcy to rid himself of marital and personal 

debts." Thus, the uncontroverted evidence establishes that J&B had full knowledge of 

Miller's shaky financial circumstances. 

{¶56} J&B cites to Ohio Finance Co. v. Greathouse (1947), 64 Ohio Law Abs. 1, 

110 N.E.2d 805, which is factually distinguishable. In Ohio Finance, the creditor 

presented evidence that the debtor submitted a written credit application that contained 

materially false information about the debtor's financial condition, which was relied upon 
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by the creditor in lending money to the debtor. This court concluded the creditor had thus 

proven the debt was fraudulently incurred, thereby rebutting the debtor's assertion of the 

bankruptcy discharge defense. Id. at 808. By contrast, J&B has failed to rebut the 

presumption of an effective discharge as it has presented no evidence that Miller made 

misrepresentations to J&B prior to entering into the Agreement. 

{¶57} That Miller failed to list J&B as a creditor in his bankruptcy does not 

constitute fraud either. The failure to list a debt in a no-asset Chapter 7 bankruptcy 

petition does not affect its dischargeability. In re Madaj (C.A.6, 1998), 149 F.3d 467, 469-

470 (holding that unscheduled debt owed by Chapter 7 debtors was discharged in noasset case, even though creditors did not learn of case until after entry of discharge order 

and noting that the law in this area is "counter-intuitive.") Moreover, "a debt is either 

fraudulent or not depending on the debtor's actions and intent in incurring the debt in the 

first instance. An otherwise innocently incurred debt * * * does not suddenly become a 

fraudulently incurred debt when the debtor fails to list it." Id. at 471 (parenthetical 

example omitted). 

{¶58} Finally, Miller's failure to notify J&B after-the-fact about the discharge and its 

legal effect on the parties' contract does not constitute fraud. A party may voluntarily 

comply with an obligation after a bankruptcy discharge. Section 524(f), Title 11, 

U.S.Code. Absent a reaffirmation agreement that complies with the requirements of 

Section 524(c), Title 11, U.S.Code, such voluntary compliance does not create a new 

enforceable obligation. In re Whitmer, (Bankr.Ct.S.D.Ohio.1992), 142 B.R. 811, 815. 

See, also, Rogers v. Huntington Natl. Bank, 12th Dist. No. CA2004-03-005, 2004-Ohio7045, at ¶21, citing In re Turner (C.A.7, 1998), 156 F.3d 713, 718 ("A reaffirmation 

agreement is the only means by which a debtor's dischargeable personal liability on a 

debt may survive a Chapter 7 discharge.") There is no reaffirmation agreement between 

the parties in the record. 

{¶59} A Chapter 7 no-asset debtor does not have the duty to notify his creditors of 

a discharge and its legal ramifications. In re Madaj, supra. Further, J&B was, at the very 

least, on notice that Miller might file bankruptcy and could have consulted counsel as to 
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the legal effect of a bankruptcy discharge, and therefore J&B cannot prove justifiable 

reliance. Accordingly, J&B's first assignment of error is meritless. 

Waiver of Bankruptcy Discharge Defense 

{¶60} First, J&B argues Miller waived his bankruptcy discharge defense by 

counterclaiming for breach of contract and injunctive relief. In other words, Miller cannot 

assert that J&B's claims for breach of the Agreement and injunctive relief were 

discharged in bankruptcy while at the same time claiming J&B breached the Agreement. 

Miller counters that this argument has been waived on appeal for failure to raise it in 

J&B's objections to the magistrate's decision. 

{¶61} Civ.R. 53(D)(3)(b) provides in pertinent part: 

{¶62} "(ii) Specificity of objection. An objection to a magistrate's decision shall be 

specific and state with particularity all grounds for objection. * * * 

{¶63} (iv) Waiver of right to assign adoption by court as error on appeal. Except 

for a claim of plain error, a party shall not assign as error on appeal the court's adoption 

of any factual finding or legal conclusion, whether or not specifically designated as a 

finding of fact or conclusion of law under Civ.R. 53(D)(3)(a)(ii), unless the party has 

objected to that finding or conclusion as required by Civ.R. 53(D)(3)(b)." 

{¶64} A careful reading of the objections reveals that J&B did not argue that Miller 

waived the bankruptcy discharge defense vis-a-vis his counterclaim for breach and 

injunctive relief. 

{¶65} Thus, J&B waives review of this argument on appeal absent a showing of 

plain error. Civ.R. 53(D)(3)(b)(iv); Chalker v. Steiner, 7th Dist. No. 08 MA 137, 2009-

Ohio-6533, at ¶39-40. The civil plain error standard is stringent and rarely utilized, 

reserved for the "extremely rare case involving exceptional circumstances where error, to 

which no objection was made at the trial court, seriously affects the basic fairness, 

integrity, or public reputation of the judicial process, thereby challenging the legitimacy of 

the underlying judicial process itself." Gable v. Gates Mills, 103 Ohio St.3d 449, 2004-

Ohio-5719, at 816 N.E.2d 1049, at ¶43, quoting Goldfuss v. Davidson (1997), 79 Ohio 

St.3d 116, 679 N.E.2d 1099, at syllabus. 
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{¶66} The trial court did not err, let alone commit plain error. Miller did not waive 

the bankruptcy discharge defense vis-a-vis his counterclaim for breach of contract and 

injunctive relief because Civ.R. 8 allows for pleading in the alternative: 

{¶67} "A party may set forth two or more statements of a claim or defense 

alternately or hypothetically, either in one count or defense or in separate counts or 

defenses. When two or more statements are made in the alternative and one of them if 

made independently would be sufficient, the pleading is not made insufficient by the 

insufficiency of one or more of the alternative statements. A party may also state as 

many separate claims or defenses as he has regardless of consistency and whether 

based on legal or equitable grounds. All statements shall be made subject to the 

obligations set forth in Rule 11." Civ.R. 8(E)(2). 

{¶68} Thus, a party may raise counterclaims that are inconsistent with defenses. 

The fact that Miller counterclaimed for breach of the Agreement, while simultaneously 

asserting that J&B's claim for breach of the Agreement was discharged in bankruptcy 

does not mean that Miller waived the bankruptcy discharge defense. See, e.g., 

CommuniCare, Inc. v. Wood Cty. Bd. of Commrs. 161 Ohio App.3d 84, 2005-Ohio-2348, 

829 N.E.2d 706, at ¶21 (concluding that neither the timing of the pleading of a defense 

nor the existence of claims potentially inconsistent with that defense compelled a finding 

of waiver since alternative pleading is permitted under Civ.R. 8(E)(2).) Accordingly, this 

argument under J&B's second assignment of error is meritless. 

Estoppel of Bankruptcy Discharge Defense 

{¶69} J&B next argues that summary judgment was improper because either 

promissory or equitable estoppel applies to prevent Miller from asserting the bankruptcy 

discharge defense. Miller counters that J&B waived this argument by failing to raise it in 

its brief in opposition to the motion for summary judgment, or in its objections to the 

magistrate's decision. 

{¶70} J&B did amend its complaint to include a "claim" for estoppel, after Miller 

amended his answer to include the bankruptcy discharge defense. J&B did not specify 

which type of estoppel or how it was to be employed. However, in the language of the 
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amended complaint below, J&B was alleging equitable estoppel and using it defensively; 

not as a separate cause of action but rather as a tool to prevent Miller's use of the 

bankruptcy discharge defense. See, e.g., Merriner v. Goddard, 7th Dist. No. 08-MO-2, 

2009-Ohio-3253, at ¶98 (noting that under Ohio law equitable estoppel doctrine may be 

employed to prohibit the inequitable use of a defense.) 

{¶71} Count Four, entitled "Estoppel" states in relevant part: 

{¶72} "30. MILLER, at all material times alleged in Count One, Count Two and 

Count Three, has materially, economically and commercially gained an advantage 

against J&B competing in the restrictive market place as set forth in the AGREEMENT. 

{¶73} "31. For over five (5) years MILLER has mislead, [sic] induced, encouraged 

and fraudulently misrepresented to J&B the AGREEMENT was in full force and effect and 

MILLER received all the benefits that derived therefrom. 

{¶74} "32. MILLER should be estopped from repudiating the AGREEMENT after 

five (5) years of receiving the benefits therefrom to the detriment of J&B. 

{¶75} "33. MILLER should be estopped from alleging a discharge in bankruptcy 

after having received all the benefits of the AGREEMENT." 

{¶76} Notably, in its brief in opposition to Miller's motion for summary judgment, 

J&B did not argue that Miller should be equitably estopped from asserting the bankruptcy 

discharge defense. And in its objections, J&B merely made a blanket statement that its 

"fraud and estoppel claims raise genuine issues of material fact." J&B neither explained 

specifically what facts were in dispute nor argued that Miller should be equitably estopped 

from asserting the bankruptcy defense. Thus, J&B waived its estoppel argument on 

appeal and we are constrained to review for plain error only. 

{¶77} "'A prima facie case for equitable estoppel requires a plaintiff to prove four 

elements: (1) that the defendant made a factual misrepresentation; (2) that it is 

misleading; (3) [that it induced] actual reliance which is reasonable and in good faith; and 

(4) [that the reliance caused] detriment to the relying party.' " Helman v. EPL Prolong, 

Inc. (2000), 139 Ohio App.3d 231, 246, 743 N.E.2d 484 (Seventh District), quoting Doe v. 

Blue Cross/Blue Shield of Ohio (1992), 79 Ohio App.3d 369, 379, 607 N.E.2d 492. 
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{¶78} However, as this court explained in Merriner, supra at ¶98, where equitable 

estoppel is applied defensively, it is better explained via the related concept of waiver by 

estoppel: 

{¶79} "Waiver by estoppel '"exists when the acts and conduct of a party are 

inconsistent with an intent to claim a right, and have been such as to mislead the other 

party to his prejudice and thereby estop the party having the right from insisting upon it."' 

National City Bank v. Rini, 162 Ohio App.3d 662, 2005-Ohio-4041, 834 N.E.2d 836, at 

¶24, citing Mark-It Place Foods, Inc. v. New Plan Excel Realty Trust, 156 Ohio App.3d 65, 

2004-Ohio-411, 804 N.E.2d 979, at ¶57. 'Waiver by estoppel allows a party's inconsistent 

conduct, rather than a party's intent, to establish a waiver of rights.' Id." Merriner at ¶99. 

{¶80} Miller is not equitably estopped from asserting the bankruptcy discharge 

defense. As discussed, supra, a party may voluntarily comply with its obligations under a 

discharged contract, but absent a reaffirmation agreement, that compliance does not 

create a new enforceable obligation. Sections 524(c),(f), Title 11, U.S.Code. In re 

Whitmer, supra, 142 B.R. at 815. 

{¶81} Moreover, Miller did not misrepresent his financial situation to J&B. To the 

contrary, diDonato admitted he knew about Miller's financial problems, including the 

possibility of a bankruptcy filing. diDonato chose not to take any action on this 

knowledge, such as consult legal counsel regarding the potential ramifications. Rather, 

he stated he considered this Miller's "personal business." Miller did not mislead J&B to its 

prejudice by continuing to comply with the contract post-discharge. Therefore, the trial 

court did not commit error, let alone plain error. 

{¶82} Regarding, J&B's promissory estoppel argument which was never raised in 

the trial court, this "is a quasi-contractual concept where a court in equity seeks to prevent 

injustice by effectively creating a contract where none existed by supplying the element of 

consideration when necessary. The device is not available to override the terms of an 

express contract where one exists." TLC Healthcare Servs., L.L.C. v. Enhanced Billing 

Servs., L.L.C., 6th Dist. No. L-08-1121, 2008-Ohio-4285, at ¶24, citing Telxon Corp. v. 

Smart Media of Delaware, Inc., 9th Dist. No. 22098, 2005-Ohio-4931, ¶58. Here there is 
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no question that the parties had an express contract. Therefore, promissory estoppel 

does not apply to this case. Accordingly, this argument under J&B's second assignment 

of error is meritless. 

Bankruptcy Discharge of Claim for Injunctive Relief 

{¶83} J&B next argues that the trial court erred by determining that its claim for 

injunctive relief was barred by the bankruptcy discharge, because it is separate from the 

claim for damages and therefore survives the discharge. Again, Miller counters this 

argument has been waived. Because this argument was not raised in the objections to 

the magistrate's decision, it is reviewable for plain error only. 

{¶84} The trial court's decision regarding the dischargeability of the injunctive relief 

was erroneous. As aforementioned, a "claim" is defined by the Bankruptcy Code as, inter 

alia, the "right to an equitable remedy for breach of performance if such breach gives rise 

to a right to payment, whether or not such right to an equitable remedy is reduced to 

judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or 

unsecured." Section 101(5)(B), Title 11, U.S.Code. 

{¶85} In Ohio v. Kovacs, 469 U.S. 274, 105, S.Ct. 705, 83 L.E.2d 649, the United 

States Supreme Court addressed the issue of whether a state-court injunction ordering 

the clean-up of an environmental site was discharged under section 101(5)(B). The state 

court had appointed a receiver to take possession of the property. While cleanup was 

underway the debtor filed bankruptcy. The Supreme Court held that because the 

injunctive relief requested necessarily gave rise to a payment of money, the clean up 

costs, it was a claim dischargeable in bankruptcy. Id. at 283. 

{¶86} In U.S. v. Whizco, Inc. (C.A.6, 1988), 841 F.2d 147, the Sixth Circuit, 

relying on Kovacs, held that a coal mine operator's Chapter 7 bankruptcy discharged the 

operator's obligation to reclaim a mine site to the extent that fulfilling the obligation to 

reclaim the site would force the operator to spend money, but to the extent the operator 

could comply without spending money, the operator's obligation to comply was not 

discharged. Id. at 150-151. 

{¶87} Building on this law, the Sixth Circuit Kennedy v. Medicap Pharmacies, 
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Inc. (C.A.6, 2001), 267 F.3d 493 held that a creditor's right to an injunction for breach of a 

covenant not to compete was not a claim dischargeable in bankruptcy. 

{¶88} "In this case, compliance with an injunction would not require the 

expenditure of money. The Kennedys would simply be required to cease operating the 

pharmacy in violation of the franchise agreement. Looking at the substance of the 

equitable relief sought, it is clear that Medicap was not seeking the payment of money. 

Medicap's right to equitable relief does not, therefore, equate to being a claim. 

{¶89} "Nor is the requested injunction an alternative to the right of payment. The 

Medicap franchise agreement is governed by Iowa law. Iowa law, therefore, determines 

the nature of Medicap's remedies arising from the Kennedys' breach. See Butner v. 

United States, 440 U.S. 48, 54-55, 99 S.Ct. 914, 59 L.Ed.2d 136 (1979). Under Iowa law, 

damages may be awarded in addition to an injunction for breach of a covenant not to 

compete. An injunction, however, is designed to avoid irreparable injury and may issue 

only when the party seeking it has no adequate remedy at law. Presto-X-Company v. 

Ewing, 442 N.W.2d 85, 89 (Iowa 1989)." Kennedy at 497-498. 

{¶90} Similarly, Ohio law allows for the award of damages in addition to an 

injunction for breach of a covenant not to compete. See, e.g., Mesarvey, Russell & Co. v. 

Boyer (July 30, 1992), 10th Dist. No. 91AP-974 at *5 ("Equitable relief and damages are 

not necessarily mutually exclusive remedies. But, where damages will adequately 

compensate an injured party for a harm suffered, equitable relief is not appropriate.") 

{¶91} J&B's request for an injunction "barring Miller from engaging in acts 

prohibited by the Agreement," is not a claim that was discharged by the bankruptcy. 

Looking to the "substance of the equitable relief sought" the injunction itself does not 

require the payment of money. 

{¶92} The trial court's analysis focused on whether J&B's amended complaint 

also sought damages for breach of the non-compete in concluding the claim for injunctive 

relief was discharged. The proper perspective is whether the result of granting the 

injunction itself necessarily causes the debtor to incur costs, not whether there is also a 

separate claim for damages. Thus, the trial court erroneously concluded that the claim 
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for injunctive relief was discharged in the bankruptcy, However, this does not rise to the 

level of plain error. Rather, this actually constitutes harmless error, in light of the trial 

court's alternative determination that the non-compete clause was unreasonable and 

therefore unenforceable. 

{¶93} "A non-compete clause prohibits a former employee from working in 

competition with his former employer and amounts to a restraint of trade, so these 

clauses will be enforced only to the extent that the restraints imposed are reasonably 

necessary to protect the employer's legitimate business interests. Brentlinger Enterprises 

v. Curran (2001), 141 Ohio App.3d 640, 645, citing Raimonde v. Van Vlerah (1975), 42 

Ohio St.2d 21, 25-26. 'A covenant restraining an employee from competing with his 

former employer upon termination of employment is reasonable if the restraint is no 

greater than is required for the protection of the employer, does not impose undue 

hardship on the employee, and is not injurious to the public.' Raimonde at paragraph two 

of the syllabus. The factors to consider when deciding whether a noncompete clause is 

reasonable include: 1) the absence or presence of limitations as to time and space, 2) 

whether the employee represents the sole contact with the customer, 3) whether the 

employee is possessed with confidential information or trade secrets, 4) whether the 

covenant seeks to eliminate competition which would be unfair to the employer or merely 

seeks to eliminate ordinary competition, 5) whether the covenant seeks to stifle the 

inherent skill and experience of the employee, 6) whether the benefit to the employer is 

disproportional to the detriment to the employee, 7) whether the covenant operates as a 

bar to the employee's sole means of support, 8) whether the employee's talent which the 

employer seeks to suppress was actually developed during the period of employment, 

and 9) whether the forbidden employment is merely incidental to the main employment. 

Id. at 25." Alan v. Andrews, 7th Dist. No. 06 MA 151, 2007-Ohio-2608, at ¶40. 

{¶94} Although the agreement between Miller and J&B is not the typical 

employer-employee non-competition agreement as it involves a post-employment 

contract, the Raimonde factors still apply. See, e.g., Century Business Servs., Inc. v. 

Urban, 179 Ohio App.3d 111, 2008-Ohio-5744, 900 N.E.2d 1048, at ¶25 (applying 
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Raimonde to non-compete agreement entered into simultaneously with the sale of a 

business). 

{¶95} The burden is on the former employer to prove the restraint is reasonable 

and the agreement is valid. Gen. Medicine, P.C. v. Manolache, 8th Dist. No. 88809, 

2007-Ohio-4169, at ¶8. While Miller came forward with evidence and arguments why the 

clause was unreasonable, J&B presented no evidence in support of the clause and did 

not rebut the arguments Miller made in his motion for summary judgment. Instead, J&B 

chose to argue that it was unable to complete discovery on this issue. However, as 

discussed earlier, J&B did not move to set aside the magistrate's orders limiting 

discovery, nor did it avail itself of the procedures contained in Civ.R. 56(F). Thus, the trial 

court properly made a determination regarding the reasonableness of the non-compete 

based upon the evidence it had before it. 

{¶96} Further, the court correctly determined the non-compete is unreasonable 

and therefore unenforceable based on the Raimonde factors. First, there are significant 

time and place restrictions in the non-compete. It prohibits Miller from competing with J&B 

for the 20 year term of the Agreement, plus 20 additional years thereafter. It also 

prohibits Miller from competing in 56 of Ohio's 88 counties while prohibiting J&B from 

competing only in Franklin County, except for some existing accounts. Notably, Miller 

was prohibited from competing in Stark, his county of residence, and all contiguous 

counties. Further, the non-compete seeks to eliminate ordinary competition, and stifle 

Miller's sales and marketing skills and experience, much of which Miller had developed 

prior to his employment with J&B. 

{¶97} Moreover, the benefit to J&B is grossly disproportionate to the benefit to 

Miller. J&B asserts the non-compete should be enforced because the parties bargained 

for it and because Miller received valuable consideration in the form of a line of credit to 

support his fledgling business. This argument fails considering: (1) the line of credit was 

secured by Miller's "funded account," the retainage held by J&B from Miller's sales 

commissions when Miller was employed as a J&B sales agent; and (2) the parties' 

relatively unequal bargaining power. Finally, the non-compete operates as a bar to 
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Miller's sole means of support, which is his sales business. 

{¶98} Although the trial court incorrectly concluded that the claim for injunctive 

relief was discharged in bankruptcy, that determination does not rise to the level of plain 

error. Rather, this constitutes harmless error in light of the trial court's correct 

determination that the non-compete was unreasonable and therefore unenforceable. 

Accordingly, J&B's third assignment of error is meritless. 

Fraud 

{¶99} J&B's sixth and seventh assignments of error assert: 

{¶100} "The trial court erred in granting summary judgment on the fraud claim and 

incidental issues thereto based upon disputed affidavit testimony which turned on 

credibility." 

{¶101} "The trial court erred in granting summary judgment because even though 

pleadings may be vague Appellee Miller has notice of the matters of which J&B complains 

and strict application of rule requiring pleading of fraud with particularity could service no 

useful purpose." 

{¶102} Civ.R. 9(B) provides: "In all averments of fraud or mistake, the 

circumstances constituting fraud or mistake shall be stated with particularity." The 

elements of a fraud claim are: "(1) a representation (or concealment of a fact when there 

is a duty to disclose) (2) that is material to the transaction at hand, (3) made falsely, with 

knowledge of its falsity or with such utter disregard and recklessness as to whether it is 

true or false that knowledge may be inferred, and (4) with intent to mislead another into 

relying upon it, (5) justifiable reliance, and (6) resulting injury proximately caused by the 

reliance." Volbers-Klarich v. Middletown Mgt., Inc., 125 Ohio St.3d 494, 2010-Ohio-2057, 

929 N.E.2d 434, at ¶27, citing Burr v. Stark Cty. Bd. of Commrs. (1986), 23 Ohio St.3d 

69, 73, 23 OBR 200, 491 N.E.2d 1101. 

{¶103} Turning first to the specificity of J&B's fraud claim, as Miller points out, the 

trial court's adverse ruling on J&B's fraud claim was on the merits, not for a lack of 

specificity as required by Civ.R. 9. Second, to the extent J&B focuses on the fact that it 

was not allowed to complete discovery on this claim, as discussed in assignment of error 
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six, J&B is precluded from challenging the magistrate's discovery orders or arguing that 

summary judgment was premature because it failed to object to those orders and follow 

the procedures in Civ.R. 56(F). 

{¶104} Turning to the merits, the trial court correctly granted summary judgment 

on the fraud claim. There is nothing in the record demonstrating that Miller made a 

material misrepresentation to J&B, either prior to or after entering into, the Agreement. 

Rather, Miller averred that he told J&B's owner about his divorce, resulting financial 

downturn and that he planned to file bankruptcy. diDonato admitted that Miller had 

informed him he was or would be seeking a divorce, that he had debts, and that he may 

file bankruptcy. Moreover, as discussed above, the fact that Miller failed to list J&B as a 

creditor in his bankruptcy does not constitute fraud. See In re Madaj at 471. Finally, 

Miller's failure to notify J&B after-the-fact about the discharge and its legal effect on the 

parties' contract does not constitute fraud. A party may voluntarily comply with its 

obligations under a discharged contract, but that compliance does not create a new 

enforceable obligation. J&B was, at the very least, on notice that Miller might file 

bankruptcy and could have consulted counsel as to the legal effect of a bankruptcy 

discharge. Because J&B cannot prove justifiable reliance, J&B's sixth and seventh 

assignments of error are meritless. 

{¶105} In conclusion, J&B's assignments of error are meritless. Many of J&B's 

arguments were not raised at the proper time in the trial court and are therefore waived 

absent plain error. First, because J&B failed to move to set aside the magistrate's 

discovery orders, and because it failed to avail itself of the procedures contained in Civ.R. 

56(F), J&B is precluded from challenging the discovery orders on appeal, or from 

asserting that the trial court prematurely granted summary judgment prior to the 

completion of full discovery. Further, Miller's debts were not "fraudulently incurred" and 

therefore they can be excepted from the bankruptcy discharge for that reason. Miller did 

not waive his bankruptcy discharge defense by counterclaiming for breach of contract and 

injunctive relief. Neither promissory nor equitable estoppel applies to this case. And 

although the trial court erred by concluding the claim for injunctive relief was discharged 
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in bankruptcy, it does not rise to the level of plain error. Rather, this error was harmless 

in light of the trial court's correct conclusion that the non-compete clause was 

unreasonable and therefore unenforceable. Finally, the trial court properly granted 

summary judgment on J&B's fraud claim. Accordingly, the judgment of the trial court is 

affirmed. 

Donofrio, J., concurs. 

Vukovich, J., concurs.