Court Opinion

ID: 2707471
Source: CourtListenerOpinion
Date Created: 2014-08-05 13:31:00.093421+00
Date Added: 2024-06-11T12:55:08.190217
License: Public Domain

[Cite as Berk Ents., Inc. v. Polivka, 2013-Ohio-4961.]

                                    IN THE COURT OF APPEALS

                                ELEVENTH APPELLATE DISTRICT

                                     TRUMBULL COUNTY, OHIO

BERK ENTERPRISES, INC.                                   :   OPINION
d.b.a. BERKLEY SQUARE,
                                                         :
                 Plaintiff-Appellee,
                                                         :   CASE NO. 2012-T-0073
        - vs -
                                                         :
ROBERT POLIVKA,
                                                         :
                 Defendant-Appellant.

Civil Appeal from the Trumbull County Court of Common Pleas, Case No. 2010 CV
03300.

Judgment: Reversed and remanded.

Stuart Strasfeld, Roth, Blair, Roberts, Strasfeld & Lodge, 100 Federal Plaza East, Suite
600, Youngstown, OH 44503-1893 (For Plaintiff-Appellee).

Thomas C. Nader, Nader & Nader, 5000 East Market Street, Suite 33, Warren, OH
44484 (For Defendant-Appellant).

THOMAS R. WRIGHT, J.

        {¶1}     This appeal is from a final judgment in a contract case before the Trumbull

County Court of Common Pleas. As its primary holding, the trial court ruled in favor of

appellee, Berk Enterprises, Inc., on its claim for breach of contract. Appellant, Robert

Polivka, essentially contends that the court’s decision was against the manifest weight

of the evidence because appellee (“the company”) failed to establish that he violated the

terms of a non-competition agreement. For the following reasons, this court concludes
that the evidence does not support the finding of a breach.

       {¶2}   Berk Enterprises is an Ohio corporation with its principal place of business

in Trumbull County for over thirty years. The company is comprised of three divisions.

Under its “Berkley Square” division, it engages in the business of importing plastic

cutlery for re-distribution throughout the United States. This line of products includes

items such as forks, knives, and packets containing napkins and condiments. These

products are primarily sold to individual customers or “middle-man” brokers.

       {¶3}   In late 2007, appellant was hired as a sales representative for the Berkley

Square division. Eventually, he became responsible for all sales to customers along the

Atlantic seaboard of the country, including the states of Florida and Texas. As a sales

representative, appellant had access to confidential information of the company,

including product costs and pricing, the names and sales history of all customers,

marketing plans, and financial data.

       {¶4}   In joining the company, appellant did not execute an employment contract;

i.e., he was an employee-at-will. However, he voluntarily signed a confidentiality/non-

solicitation/non-competition agreement. In return for continuing employment and other

benefits, appellant agreed not to engage in any of the following behavior:

       {¶5}   “Employee shall not, without the prior written consent of BERK, directly or

indirectly, use for his own benefit, publish or reveal to any third party any Confidential

Information, unless the person or entity has a need to know the information but only to

the extent necessary to affect the purposes of such use or disclosure and only upon

express written authorization by Berk * * *.

       {¶6}   “* * *

                                               2
       {¶7}   “Employee shall not, directly or indirectly, copy, take, or remove from

BERK’S premises (or the premises of any BERK Affiliate) any of BERK’S books,

records, customer lists, software * * * or any other documents or materials or any such

materials entrusted to BERK’S possession for the provision of BERK’S services

regardless of ownership; provided, however, Employee may be permitted to use such

BERK materials at a location other than BERK’S premises for purposes of carrying out

his employment hereunder but only upon specific authorization by BERK with the

express condition that Employee will not copy any Berk materials or retain any BERK

material following termination * * *.

       {¶8}   “* * *

       {¶9}   “During Employee’s employment by BERK and for a period of one (1) year

following the date of termination of employment, neither Employee nor any Affiliate of

Employee shall, as proprietor, director, officer, partner, shareholder, employee, agent,

independent contractor or otherwise, for himself or on behalf of any other person or

entity: (i) engage in or carry on, directly or indirectly, any activity or business as an

employee, independent contractor or agent, partner or otherwise, which provides,

designs, develops, markets, invests in, imports, produces or sells any products,

services, or businesses, which are the same or similar to, or competitive with those

designed, developed, produced, marketed, invested in, provided or sold by BERK and

its Affiliates (a ‘Competing Business’); (ii) have a direct or indirect interest in, or be

Affiliated with, or render any services for, any person or entity engaged or carrying on,

directly or indirectly, any Competing Business in the Territory; (iii) induce or attempt to

induce any client, customer or supplier of BERK to reduce the business done by such

                                            3
supplier, customer or client with BERK and/or its Affiliates; (iv) divert or attempt to divert

any of the BERK’S’s and/or any of its Affiliates’ business to Employee or to any party on

whose behalf Employee is acting, either directly or indirectly, or solicit any of BERK’S

and/or any of its Affiliates’ customers/suppliers with whom Employee dealt on behalf of

BERK and/or any of its Affiliates during the time the Employee is employed by BERK;

(v) solicit or induce any Employee, distributor, sales representative, agent or contractor

of BERK to terminate his, her or its employment or other relationship with BERK or any

of its Affiliates; or (vi) engage in any practice, the purpose or result of which is to evade

the provisions of this Agreement or to commit any act that is detrimental to the

successful continuation by BERK and its Affiliates of its/their business.”

       {¶10} During the first two years of his employment, appellant was paid a yearly

salary and a bonus based upon his gross sales.            However, in January 2010, the

company instituted a “commission” plan, under which a sales representative’s pay was

predicated upon a percentage of the gross profit he generated for the company in a

particular month.    The percentage of a sales representative’s monthly commission

would vary according to the amount of gross profit collected from his customers. When

the new commission system first took effect, appellant was obligated to sign a copy of

the plan.

       {¶11} The original “commission” plan remained in effect for the first three months

of 2010. In April 2010, the company instituted a second “commission” plan that was

slightly different than the original. Again, appellant was required to sign a copy of the

second plan when it took effect.

       {¶12} During the first three months of 2010, the company failed to pay appellant

                                              4
in accordance with the original commission plan. For example, in relation to February

2010, the company did not use the correct percentage in determining the amount of the

gross profit to which he was entitled. As a result, appellant did not receive the total sum

he earned under the commission plan. However, he did not register a complaint about

his pay while he remained an employee of the company.

       {¶13} On June 16, 2010, appellant and Diane Pringey formed R & G Packaging,

LLC, an Ohio corporation. Appellant first met Pringey while she was employed by Berk

Enterprises as director of purchasing. Under the articles of incorporation for their new

entity, appellant owned 75% of the original shares of stock, and Pringey owned the

remaining 25%. As the foundation for the new business, they planned to import and sell

plastic cutlery and other disposable products, similar in nature to Berkley Square’s line

of products.

       {¶14} Approximately one month later, on July 27, 2010, appellant resigned his

position with Berk Enterprises. Over the next few weeks, he either called or visited at

least three distributors which had formed part of his clientele while he worked for Berk.

According to appellant, these calls or visits were made simply to inform the distributors

that he was no longer employed by Berk, and he did not make any sales presentation to

the distributors at that time.

       {¶15} In December 2010, appellant received two e-mails from Mark Williamson,

a broker with whom appellant had transacted business during his employment at Berk.

Due to a miscue in the e-mails’ transmission, a Berk employee also received copies of

the communications. In the first e-mail, Williamson asked appellant to quote him a price

for certain products. According to appellant, he did not attempt to sell any products to

                                            5
Williamson at that time, but only provided the requested quote so that Williamson could

compare it to the quotes he had received from three other companies.

      {¶16} Upon learning of the Williamson e-mails from its employee, Berk filed the

underlying civil action against appellant. In its complaint, the company raised claims for

breach of contract and tortuous interference with its prospective economic advantage.

Essentially, the complaint asserted that, upon quitting the company, appellant violated

multiple clauses of the confidentiality/non-solicitation/non-competition agreement. For

its primary relief, the company sought a permanent injunction enjoining appellant from

competing for the business of its customers for a period of one year.

      {¶17} In answering the complaint, appellant raised one counterclaim against the

company, seeking reimbursement for the compensation that was not paid to him under

the original commission plan.

      {¶18} A one-day bench trial went forward in February 2012. Besides calling two

of its present employees as witnesses, the company called appellant to testify on cross-

examination. During that testimony, appellant gave a specific description of the activity

in which he engaged immediately after leaving his employment with the company.

      {¶19} As part of its factual findings in the final judgment, the trial court found that

the company did not compensate appellant in accordance with the original commission

plan during the first quarter of 2010; hence, the court entered judgment for appellant on

his sole counterclaim for the amount of $14,078.57. However, the trial court also found

that appellant violated provisions of the confidentiality/non-solicitation/non-competition

agreement by contacting Berkley Square customers immediately after forming the new

business and terminating his employment at Berk. Moreover, the court found that the

                                             6
violation was ongoing for five months until the company initiated the litigation. Thus, the

final judgment enjoined appellant from taking any new steps to compete with Berk for a

one-year period starting from the date of the decision. Finally, the court ordered that the

company would not be liable to pay appellant for the unpaid compensation until the one-

year no-compete period had elapsed.

       {¶20} In appealing the determination concerning the breach of non-competition

term, appellant asserts six assignments of error for review:

       {¶21} “[1.] The trial court erred by enforcing a covenant not to compete when the

employer had materially breached the employment agreement.

       {¶22} “[2.] The trial court’s finding that [appellant] violated the restrictive

covenant was against the manifest weight of the evidence.

       {¶23} “[3.] The trial court erred in enforcing the covenant not to compete even

though there was a lack of consideration.

       {¶24} “[4.] The trial court erred in enforcing the covenant not to compete for one

year from the date of the judgment entry.

       {¶25} “[5.] The trial court erred in conditioning the judgment in favor of

[appellant] for unpaid compensation upon compliance with the one year compliance with

the covenant not to compete.

       {¶26} “[6.] The trial court erred in ordering interest to not accrue until one year

after the date of the judgment.”

       {¶27} Under his first assignment, appellant essentially argues that the trial court

should have never addressed the issue of whether he violated the “no-compete” aspect

of the confidentiality/non-solicitation/non-competition agreement. Specifically, he states

                                            7
that the trial court should have concluded that the non-competition covenant could not

be enforced against him after the company failed to fully compensate him for the work

he performed during the first three months of 2010. According to him, the failure to pay

was a material breach which foreclosed the company’s ability to enforce any term of the

confidentiality/non-solicitation/non-competition agreement.

      {¶28} In regard to the enforcement of a non-competition clause, Ohio case law

generally excuses a non-breaching party from complying with such a clause when the

party attempting to enforce the clause has already committed a material breach of the

contract. Jackson v. State Farm Fire & Cas. Co., 461 Fed. Appx. 422, 2012 U.S. App.

LEXIS 2417, *13 (6th Cir.2012). As to what constitutes a material breach of a contract,

Ohio courts have considered the following factors:

      {¶29} “(1) the extent to which the injured party will be deprived of the benefit that

he reasonably expected, (2) the extent to which the injured party can be adequately

compensated for the part of that benefit of which he will be deprived; (3) the extent to

which the party failing to perform or to offer to perform will suffer forfeiture, (4) the

likelihood that the party failing to perform or to offer to perform will cure his failure,

taking account of all the circumstances including any reasonable assurances, and (5)

the extent to which the behavior of the party failing to perform or to offer to perform

comports with standards of good faith and fair dealing.” Brakefire, Inc. v. Overbeck, 144

Ohio Misc.2d 35, 2007-Ohio-6464, ¶44.

      {¶30} In claiming that the company’s failure to fully pay him should be viewed as

a material breach of the terms of his employment, appellant relies heavily upon the

holding in Brakefire. However, even though the trial court in Brakefire held that the

                                            8
failure to comply with a compensation term constituted a material breach, that decision

was primarily predicated upon the fact that the employer changed the rate of the

employees’ wages without their permission when they had a justified expectation their

consent was needed to alter the term. Id. at ¶45. Here, appellant never asserted the

company acted improperly in changing the means of calculating his compensation

under the initial commission plan of January 2010. There is no evidence that appellant

objected to the new compensation plan, or challenged the company’s ability to enforce

it.

       {¶31} Instead, the evidence in this case supports the conclusion that the failure

to fully compensate appellant for his work was due solely to the company’s basic error

in applying the new formula. For example, the evidence tended to show that the wrong

percentage was used in determining how much of the gross profits for February 2010

should be paid to appellant. Accordingly, there is nothing to indicate that the company

acted in bad faith in failing to fully compensate appellant while he was still an employee.

As to this point, there is no dispute that appellant did not raise any objection concerning

the extent of his compensation until after the company instituted the action against him.

       {¶32} Taken as a whole, this was not a situation in which the company’s officers

purposely tried to withhold compensation from appellant when they knew that he was

entitled to it under the original commission plan. Furthermore, the company’s payment

of the amount owed, plus interest, will be sufficient to place appellant in the position he

would have been in if the correct compensation had been paid timely in 2010. Under

such circumstances, the failure to pay full compensation immediately did not constitute

a material breach which would excuse appellant from complying with the terms of the

                                            9
confidentiality/non-solicitation/non-competition agreement. For this reason, appellant’s

first assignment is not well-taken.

       {¶33} Under his second assignment, appellant challenges the trial court’s finding

that, during the one-year period after he left his position with the company, he engaged

in behavior which constituted a violation of the non-competition covenant. Although his

argument is couched in terms of manifest weight of the evidence, appellant essentially

maintains that the actions he took after June 2010, i.e., forming a new “plastic cutlery”

business and contacting three former clients who were still customers of the company,

was not sufficient to show that he was competing with his prior employer.

       {¶34} In concluding that appellant had breached the non-competition covenant,

the trial court predicated its analysis primarily upon the finding that, even if appellant did

not make any actual sales of plastic cutlery during the five months following his last day

with the company, he was taking steps to ensure that his new business would be able to

begin to make such sales as soon as the one-year period ended. During his testimony

on cross-examination, appellant admitted four points which readily supported the court’s

underlying finding: (1) appellant and his partner created their new corporation in June

2010, even before appellant quit his job; (2) the new business would sell the same line

of products as the “Berkley Square” division of Berk; (3) immediately after leaving Berk,

appellant telephoned and/or visited three Berkley Square customers to inform them of

his decision to quit; and (4) the new business was already compiling an inventory of the

plastic cutlery by importing it from China. In light of the foregoing, there was no dispute

that appellant intended for his business to begin competing with his former employer the

first day after the non-compete period was over.

                                             10
       {¶35} Therefore, the issue before the trial court was whether the terms of the

non-competition covenant forbid appellant from taking initial steps to form his new

corporation, without actually engaging in any business. The resolution of this question

turns upon the exact wording of the non-competition covenant. In interpreting the terms

of such a covenant, Ohio courts have generally applied the same rules of construction

as are used in construing any contractual language. See, e.g., Case v. Case, 12th Dist.

Butler No. CA2001-04-075, 2001 Ohio App. LEXIS 8678, *12 (Oct. 29, 2001). “The

intent of the parties to a contract is presumed to reside in the language they chose to

employ in the contract, and common words will be given their ordinary meaning unless

manifest absurdity results or some other meaning is clearly evidenced from the face or

overall content of the instrument.”       Id. citing Foster Wheeler Envirsponse, Inc. v.

Franklin Cty. Convention Facilities Auth., 78 Ohio St.3d 353, 361 (1997).

       {¶36} The non-competition covenant delineates six categories of behavior which

an employee is not allowed to do for one year following the last day of his employment.

The first category is entitled a “Competing Business,” and contains the broadest

language of any of the six categories.         Pursuant to this category, an employee is

prohibited from engaging in, “directly or indirectly, any activity or business as * * * [a]

partner or otherwise, which provides, designs, develops, markets, invests in, imports,

produces or sells any products * * * which are the same or similar to, or competitive with

those * * * provided or sold by Berk and its Affiliates * * *.”

       {¶37} As the quoted language readily demonstrates, the first category of the

non-competition covenant does not have any express reference to acts pertaining to the

formation of a competing business.         Furthermore, it must be noted that the entire

                                              11
provision is stated in the present tense. This implies that the first category was intended

to only prohibit activities which would have an immediate adverse effect upon the extent

or volume of Berk’s business. This is in contrast to activities which, although intended

to decrease Berk’s volume in the future, will not have any adverse effect upon its sales

during the one-year non-compete period.

       {¶38} As part of its litany of prohibited behavior, the first category refers to some

activities which can occur during the formation or start-up period for a business. For

example, the act of investing funds in a corporation can take place before the entity

begins to sell its products to the public. Nevertheless, this court would reiterate that the

name given to the first category under the non-competition covenant is a “competing”

business. In light of the nomenclature and the general wording of the provision, the first

category was obviously intended to apply to activities performed in regard to an ongoing

business that is making actual sales to customers. Thus, the act of investing in a new

entity that has not made any sales would not be covered by the first category.

       {¶39} In presenting its case at trial, the company, Berk, did not introduce any

evidence showing that the wording of the non-competition covenant had resulted from

negotiations between the company and appellant.           Instead, the company’s limited

evidence only tended to show that appellant was required to sign the standard form of

the confidentiality/non-solicitation/non competition agreement, as written by Berk, near

the beginning of his employment. Given these circumstances, the lack of any express

reference in the first category to the mere formation of new business must be construed

against the company. Accordingly, this court concludes that, so long as appellant did

not try to actually market and sell any plastic cutlery during the one-year period, the first

                                             12
category of the non-competition covenant did not forbid him from taking steps to form

his new corporation.

       {¶40} The foregoing analysis would also apply to the other five categories in the

covenant. Again, none of the remaining categories contains an express reference to

the formation of a new business or associated activities. Rather, the provisions only

refer to actions which would cause immediate competition for the company’s products,

as compared to actions which will not result in sales of plastic cutlery until after the one-

year period has ended. Therefore, appellant’s actions in assisting in the creation of the

new “plastic cutlery” business did not violate the non-competition covenant.

       {¶41} In regard specifically to the calls/visits appellant made to three Berk

customers immediately after his resignation, this court would note that the third category

of the covenant prohibits any attempt to induce any client or customer to reduce the

amount of its business with the company. Obviously, if appellant had tried to induce the

three customers to immediately buy products from him or to otherwise immediately buy

fewer products from Berk, a violation would have been shown. However, there was no

such evidence. At best, the evidence only shows that appellant informed the customers

that he was no longer working for Berk and that he would be forming his own company.

       {¶42} As to appellant’s collection of an inventory of plastic cutlery during the

one-year period, Berk failed to present any evidence establishing that he in fact sold

any of the products prior to the end of the non-compete period. Without other evidence,

appellant’s mere collection of an inventory, to be sold at a future date, was not sufficient

to demonstrate a violation of the non-competition covenant.

       {¶43} In attempting to prove that appellant did take steps to actually sell his

                                             13
products during the one-year period, the company, Berk, introduced into evidence

copies of two e-mails that were sent to appellant by Mark Williamson, a manufacturing

representative with whom appellant had transacted business while working for Berkley

Square. As noted above, due to problem in the transmission of the e-mails, a present

company employee also received the e-mails when they were sent in December 2010.

Based upon the e-mails, the trial court found that appellant was engaging in the acts of

soliciting and obtaining price quotations for certain products.

         {¶44} The submitted evidence does not support the trial court’s finding on this

point.    First, as part of his testimony concerning the e-mails, appellant stated that

Williamson actually asked him to provide a quote for products that appellant’s business

would sell in the future. According to appellant, Williamson made the “quote” request to

him because appellant’s business partner had contacts with manufacturers in China. In

addition, appellant testified that, even though he did provide the quote, it was not for the

purpose of soliciting business, but only to assist Williamson in determining whether the

other quotes he had for the products were reasonable.

         {¶45} More importantly, even if the trial court concluded that appellant’s

testimony on the e-mails was not believable, there was nothing in the language of the e-

mails to indicate that appellant was violating the non-competition covenant. As to this

point, it is important to note that the e-mails only contain statements from Williamson to

appellant; there is no indication as to what appellant wrote to Williamson in response.

In the first e-mail, Williamson states that a shipment will soon arrive in “Mia port,” and

that he needs to know “cost” plus delivery as soon as possible. Given that Williamson is

asking for a quote from appellant, the wording of the e-mail is consistent with appellant’s

                                            14
testimony. In the second e-mail, Williamson provides information regarding his costs in

dealing with a specific manufacturer. He then states he hopes the information will help

appellant in dealing with his manufacturer. Therefore, the second e-mail confirms that

appellant is taking step to develop an inventory of products, but does not show that he

has taken the next step and actually sold products to customers.

      {¶46} Taken as a whole, the evidence presented by Berk, as the plaintiff in the

underlying action, did not establish that appellant had actually started to compete with

the company by trying to sell plastic cutlery to the same type of customers. Rather, the

company was only able to prove that he was merely preparing to compete for the same

business after the one-year period had elapsed. Since mere preparation did not conflict

with any express provision of the non-competition covenant, the trial court erred in

finding that appellant had violated the covenant. For this reason, appellant’s second

assignment has merit.

      {¶47} Under his next assignment, appellant maintains that the non-competition

provision of the confidentiality/non-solicitation/non-competition agreement should have

been declared unenforceable due to a lack of consideration. As to this point, he notes

that, on both occasions in which the company amended its basic policy for determining

the amount of his compensation, he was never required to execute a new copy of the

confidentiality/non-solicitation/non-competition agreement.

      {¶48} In asserting the foregoing argument, appellant appears to assume that the

two compensation plans he signed in 2010 constituted his entire employment contract

with the company. However, the unrefuted testimony of the company’s chief financial

officer demonstrated that appellant was an employee-at-will during the entire term of his

                                           15
employment. In addressing the issue of consideration for a non-competition covenant in

the context of an at-will employment relationship, the Supreme Court of Ohio has

stated:

       {¶49} “At-will employment is contractual in nature. * * * In such a relationship,

the employee agrees to perform work under the direction and control of the employer,

and the employer agrees to pay the employee at an agreed rate. Moreover, either an

employer or an employee in a pure at-will employment relationship may legally

terminate the employment relationship at any time and for any reason. * * * In the

event that an at-will employee quits or is fired, he or she provides no further services for

the employer and is generally entitled only to wages and benefits already earned.

       {¶50} “* * *

       {¶51} “The presentation of a noncompetition agreement by an employer to an at-

will employee is, in effect, a proposal to renegotiate the terms of the parties’ at-will

employment. Where an employer makes such a proposal by presenting his employee

with a noncompetition agreement and the employee assents to it, thereby accepting

continuing employment on new terms, consideration supporting the noncompetition

agreement exists. The employee’s assent to the agreement is given in exchange for

forbearance on the part of the employer from terminating the employee.

       {¶52} “We therefore hold that consideration exists to support a noncompetition

agreement when, in exchange for the assent of an at-will employee to a proffered

noncompetition agreement, the employer continues an at-will employment relationship

that could legally be terminated without cause.” (Citations omitted.) Lake Land

Employment Grp. of Akron, LLC v. Columber, 101 Ohio St.3d 242, 2004-Ohio-786, ¶17-

                                            16
20.

      {¶53} Pursuant to the foregoing Supreme Court authority, the consideration for a

non-competition covenant is viewed as separate from any compensation term in an at-

will employment relationship. That is, the employee’s continuing employment is always

the consideration the employer gives in exchange for the acceptance of the covenant

not to compete. For this reason, it was simply unnecessary for the company in our case

to have appellant execute a new copy of non-competition covenant each instance the

compensation scheme was altered. Accordingly, to the extent that the company gave

proper consideration in exchange for appellant’s assent to the confidentiality/non-

solicitation/non-competition agreement, his third assignment does not have merit.

      {¶54} Under his next two assignments, appellant challenges two orders in the

trial court’s final judgment which stemmed from the determination that he breached the

non-competition covenant. First, under his fourth assignment, he contends that the trial

court erred in ordering that the running of the one-year non-compete period must begin

anew as of the date of the judgment. Second, under the fifth assignment, he argues

that the trial court erred in postponing the company’s payment of the unpaid 2010 sales

commissions until after the one-year non-compete period was completed.

      {¶55} Given our disposition of appellant’s second assignment, his fourth

assignment is moot and need not be addressed under App.R. 12(A)(1)(c). The record

shows that no aspect of the appealed judgment was stayed while this appeal remained

pending. Hence, even if the running of non-compete period was stayed during the trial

proceedings, appellant has already completed the remaining seven months of the non-

compete period. Furthermore, our disposition of the second assignment dictates that

                                          17
there should have been no delay in appellant’s recovery of the unpaid commissions. As

part of the new judgment issued upon remand, the trial court must order the immediate

payment of the amount owed by the company to appellant. To this limited extent, the

fifth assignment is well-taken.

       {¶56} Under his final assignment, appellant maintains that the trial court erred in

determining the date upon which interest on his judgment for the unpaid 2010

compensation should start to accrue. In rendering judgment in favor of appellant on his

counterclaim, the court held that interest on the $14,078.57 would not begin to accrue

until after the one-year non-compete period elapsed. Appellant not only contends that

the accruement of post-judgment interest should have begun on the date of the court’s

final judgment, but that he was also entitled to prejudgment interest.

       {¶57} As to the payment of post-judgment interest, in light of our holding under

appellant’s second assignment, it is no longer necessary to review the merits of the trial

court’s decision to delay the payment of post-judgment interest until after the one-year

non-compete was over. Since the company did not prove that appellant had violated

the non-competition covenant during the first months after his resignation, there was no

need to delay payment on the “compensation” judgment in order to ensure his future

compliance. Accordingly, pursuant to R.C. 1343.03(B), appellant was entitled to post-

judgment interest from the date the trial court’s final judgment was issued.

       {¶58} In relation to the payment of prejudgment interest, R.C. 1343.03(A) states

that “when money becomes due and payable upon any bond, bill, note, and other

instrument of writing * * *, the creditor is entitled to interest at the rate per annum

determined pursuant to section 5703.47 of the Revised Code, * * *.” Pursuant to this

                                            18
statutory provision, “[o]nce a plaintiff prevails on a contract claim, the trial court must

award the party prejudgment interest. * * * The only matter within the court’s discretion

is the determination of the starting date upon which to begin calculating the prejudgment

interest.” (Citations omitted.) Desai v. Franklin, 177 Ohio App.3d 679, 2008-Ohio-3957,

¶31.

       {¶59} In this case, appellant’s counterclaim for the unpaid compensation was

based upon the written commission plans which he was required to sign during the first

quarter of 2010; as a result, he was entitled under R.C. 1343.03(A) to an award of

prejudgment interest on the money judgment in his favor. Moreover, there is no dispute

under the facts of this case that appellant earned all of the unpaid compensation in the

first quarter of 2010; thus, since the commissions in question should have been paid by

April 1, 2010, and appellant did not commit any act warrant any delay in the accruing of

interest, he is entitled to prejudgment interest from that date.

       {¶60} In light of our holding that appellant never violated the terms of the non-

competition covenant, the company is statutorily obligated to pay both prejudgment and

post-judgment interest on the “unpaid compensation” judgment.            Appellant’s sixth

assignment is well-taken.

       {¶61} Consistent with the foregoing analysis, appellant’s second, fifth and sixth

assignments have merit.     Therefore, it is the judgment and order of this court that the

judgment of the Trumbull County Court of Common Pleas is reversed, and the case is

hereby remanded for further proceedings consistent with this opinion. Specifically, the

trial court shall issue a new final entry in which judgment shall be entered in favor of

defendant-appellant, Robert Polivka, on the entire complaint of plaintiff-appellee, Berk

                                             19
Enterprises, Inc. In addition, the new final entry shall contain an appropriate order for

the payment of both prejudgment and post-judgment interest on Polivka’s counterclaim

for unpaid compensation.

DIANE V. GRENDELL, J.,

CYNTHIA WESTCOTT RICE, J.,

concur.

                                           20