McGlinchey's Commercial Law Bulletin is a biweekly update of recent, unique, and impactful cases in state and federal courts in the area of commercial litigation.


Discovery Rule under UTSA

New Technology Products v. Scotts Miracle-Gro., 3d Dist. Union No. 2022-Ohio-3780.

In this appeal, the Third Appellate District affirmed the trial court's decision to grant summary judgment to the defendant, finding, among other things, that the claim for misappropriation under Ohio's Uniform Trade Secrets Act was time-barred.

The Bullet Point: Ohio's Uniform Trade Secrets Act (UTSA) has a four-year statute of limitations from when the misappropriation was discovered or, through reasonable diligence, should have been discovered. Under the statute, "discovery" means: "knowledge of such facts as would lead a fair and prudent man, using ordinary care and thoughtfulness, to make further inquiry." Thus, under the UTSA, "[t]he discovery rule requires the owner of a trade secret to conduct a timely and reasonable investigation after learning of possible misappropriation * * *."

"The discovery rule is wholly consistent with the nature of trade secrets; because trade secrets are not subject to a filing system, owners' diligence in taking affirmative steps to protect them is crucial."

Revocable License

Valentine v. Cedar Fair, Slip. Op. No. 2022-Ohio-3710.

In this appeal, the Ohio Supreme Court ruled in favor of an amusement park on claims for unjust enrichment and breach of contract when the park was closed due to the COVID-19 pandemic. The court found that while season ticket holders held revocable licenses, the amusement park was not required to compensate them for closing the park.

The Bullet Point: A "license" in property law is when a landowner gives another person permission to do something on his or her property without granting that person any estate in the property. An admission ticket to an event or attraction is a license generally revocable at the landowner's will. Further, written and unwritten terms and conditions may limit permission to enter the land. Here, the terms and conditions expressly permitted the amusement park to change the times and dates the park was opened.

Attorney's Fees Under the CSPA

Homestead Interiors, Inc. v. Hines, 11th Dist. Geauga, No. 2022-Ohio-3700.

In this appeal, the Eleventh Appellate District reversed in part a trial court decision to award the party who successfully defeated a claim under Ohio's Consumer Sales Practices Act (CSPA) attorney's fees because the court did not first make a determination that the action was baseless, groundless, or in bad faith.

The Bullet Point: R.C. 1345.09(F) permits a court to award attorney's fees to the prevailing party in a CSPA claim if the consumer brought a groundless action or maintained it in bad faith. Thus, before making an award of attorney's fees under R.C. 1345.09(F)(1), the trial court must make a determination that the consumer arguing a violation of this chapter has brought or maintained an action that is groundless, and the consumer filed or maintained the action in bad faith.


Acceptance of an Offer of Judgment

Suarez Trucking FL Corp. v. Souders, No. SC21-369 (Fla. Oct. 20, 2022)

The Supreme Court of Florida concluded that filing a notice of acceptance of an offer made under the offer of judgment and demand for judgment statute results in the formation of a binding settlement agreement.

The Bullet Point: Once a written offer is made under Florida's offer of judgment and demand for judgment statute and an acceptance of that offer is timely filed, an enforceable settlement agreement is created. The framework of the statute contemplates that a filed notice of acceptance constitutes a promise to perform in accordance with the terms of the offer. In this case, the Supreme Court of Florida resolved a direct conflict between the Second and Fourth District Court of Appeal regarding whether written acceptance of an offer under the offer judgment and demand for judgment statute formed a binding contract. The Fourth District previously determined that a filed notice of acceptance was sufficient to form a settlement contract. At the same time, the Second District concluded that a settlement contract could only be formed by performance. Agreeing with the Fourth District, the Court held that filed acceptance is effective so long as it constitutes a positive and unqualified assent to the offer, and acceptance by performance is not required to create a binding settlement agreement. The Court, therefore, concluded that the Second District erred in holding that no contract was formed based upon the filed notice of acceptance.

Relief from Restrictive Covenants

Gate Venture, LLC v. Skinner, No. 1D21-3574 (Fla. 1st DCA Oct. 19, 2022)

The First District examined the test to be applied when a party seeks to remove or cancel deed restrictions.

The Bullet Point: Under Florida law, a change in the circumstances and the neighborhood materially affecting the lands will warrant granting relief from restrictive covenants. The test to be applied is whether the parties' original intent to the covenants can be reasonably carried out or whether the conditions and circumstances existing at the time the restrictions were placed on the land changed to such an extent that the original purpose of the restrictions was rendered ineffective. In this case, the trial court concluded that a complaint seeking the removal of deed restrictions failed to state a cause of action because no party was prevented from adhering to the covenants at issue. On appeal, the First District held that the trial court instead should have focused on whether the complaint sufficiently alleged that a change in circumstances made the original purpose of the restrictions ineffective. Engaging in that same inquiry, the First District found that the complaint satisfied the test and therefore reversed the order of dismissal.

Possession of Collateral After Default

Hohns v. Thompson, No. 5D21-3143 (Fla. 5th DCA Oct. 14, 2022)

The Fifth Circuit determined that the trial court erred in holding that a secured creditor was required to file a lawsuit in order to enforce a note after default.

The Bullet Point: Secured creditors are empowered to take possession of collateral after a debtor's default without the necessity of filing suit. This is because "self-help repossession" is a long-standing privilege under Florida law, and statutes have been enacted to regulate it. Section 679.609, Florida Statutes, authorizes a secured party to take possession of the collateral after default without judicial process if it proceeds without breach of the peace. Section 679.610 then provides for the disposition of collateral after default, authorizing a party to sell, lease, license, or otherwise dispose of the collateral. Alternatively, a secured party in possession of the collateral may, after the debtor's default, propose to retain the collateral in satisfaction of the obligation.

In this appeal, the Fifth District concluded that the trial court incorrectly determined that the debtor retained his interest in the collateral as a result of the secured creditor's failure to file a lawsuit enforcing the note. The Fifth District found that the debtor had been divested of his interest in the collateral by virtue of his default under the note. The implication of the statutory language makes clear that the creditor was not required to file a lawsuit to take possession of the collateral. Accordingly, the judgment in favor of the debtor was reversed.

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