Can a Business Sue Another Business in Ohio?

An Ohio business is a legal entity, and can sue or be sued. The opposing party in the lawsuit may be another business, an individual, or a governmental entity. Most types of Ohio businesses, including corporations, LLCs and partnerships, may be sued in their own name.

A lawsuit against a sole proprietorship is effectively a suit against the proprietor, who must be the named defendant (usually with a “d/b/a Name of Business” following). 

Common Business v. Business Lawsuits

One of the most common types of lawsuits between businesses involves breach of contract. One common type of business to business breach of contract claim is a debt collection lawsuit. The statute of limitations for most contract-based debts in Ohio is six years, regardless of whether the parties are businesses or individuals. However, businesses are not entitled to the same debt collection protections as consumers. 

Some examples of a breach of contract action one business might file against another include: 

• A claim for damages based on failure to perform a contract, such as failure of a supplier to deliver goods to a retailer or supplies to a construction company
• A suit for inadequate performance on a contract, such as constructing a building in a manner that wasn’t up to local building codes or with lower-quality materials than agreed to in the contract
• Breach of a lease agreement, such as rental of retail space
• Breach of an insurance contract, as when an insurance carrier refuses to pay for losses covered under the policy, or to cover a liability of the business that should be covered under its policy

Other reasons one Ohio business might sue another include: 

• Infringement of intellectual property rights, such as trademark, copyrights, or patent rights
• Damage to the business’s property, such as when a construction company working on neighboring property does damage to the business’s land or building, or a careless delivery driver damages the company’s loading dock
• Defamation, such as when a newspaper or magazine makes damaging false statements about a business, or a competitor uses false claims about a business to gain a competitive advantage
• Tortious interference with business relationships, which often goes hand in hand with defamation–for instance, when a representative of one business calls clients of another and makes false statements about that business in order to divert clients to its own roster
• Nuisance, such as a neighboring business making improvements that cause the business’s property to flood, or giving off noxious fumes that present a hazard to employees and customers of the business

Of course, this isn’t a comprehensive list of lawsuits one business might file against another. While there are some exceptions and limitations, one business can sue another for most of the same reasons an individual could, along with a few claims that are specific to businesses.

Can a Business Sue Another Business in Small Claims Court? 

In theory, one Ohio business can sue another in small claims court. If your business is small, that may seem like an attractive option, since it’s a streamlined, less complicated process than a regular civil court case. But, there are some important limitations that mean small claims court is often not the right answer for a business filing a lawsuit. 

Those limitations are:

• The maximum amount that can be awarded in a small claims case in Ohio is $6,000, which will be insufficient to address many business disputes
• A small claims court can only award money damages–it cannot enter an injunction, order a party to perform on a contract, or otherwise resolve non-monetary claims
• Some types of business claims fall outside the jurisdiction of a small claims court, even if the amount in dispute is less than $6,000
• Limitations on what an officer or employee of a business can do in small claims court will likely necessitate hiring an attorney to represent the company, eliminating some of the incentive to use the small claims process

What Can a Business Recover in a Lawsuit Against Another Business? 

Money damages are the most common award in Ohio civil litigation, including business versus business lawsuits. Depending on the type of lawsuit and the specifics, the business may recover damages such as: 

• Sums due to it under a contract that has been breached
• Compensation necessary to make it whole after damage to property
• Compensation for unauthorized use of its trademark or copyrighted or patented material
• Damages for harm to its reputation and lost revenues due to defamation 
• Depending on the terms of a contract, lost revenues due to another company’s failure to perform 

In some circumstances, a court may also order specific performance on an Ohio contract. This is typically limited to situations in which the goods involved cannot reasonably be replaced. Punitive damages may also be awarded in a business lawsuit, under the same conditions as they might be appropriate in a case involving individuals. However, if the defendant business is a “small employer,” punitive damages are capped at the lesser of twice compensatory damages or 10% of the business’s net worth, and may not exceed $350,000.

Business Litigation Can Be Complex

As you can see, there are a wide range of reasons that one Ohio business might bring a lawsuit against another. Some seem straightforward, such as a debt collection lawsuit against a company that failed to pay a supplier’s invoice. Others, like nuisance claims and trade defamation, may be much more complicated. 

In addition, a business doesn’t have the same options an individual might for bringing a lawsuit on its own. That’s because an individual has a right to represent themselves in court, meaning that they can engage in activities such as questioning witnesses on their own behalf. But, an employee or officer of a business doesn’t have the same option, since they would be representing another entity (the business) rather than themselves. So, any business considering filing a lawsuit against another business or facing a lawsuit should speak with an experienced business litigation attorney right away.