Joseph, L. v. O'Laughlin, J.
Joseph, L. v. O'Laughlin, J. No. 1706 WDA 2015
| Pa. Super. Ct. | Aug 22, 2017Background
- Seller John O’Laughlin sold Grace Veterinary Clinic to Laurie Joseph on 12/23/2014 under an Asset Transfer Agreement that included a 5‑year, 50‑mile restrictive covenant (noncompete and nonsolicit), valued as part of the sale.
- Six months later O’Laughlin formed “O’Laughlin Veterinary Services” LLC, purchased equipment, created a Facebook page (“Coming Soon”) directing users to a location ~8–9 miles from Grace, and filed for a zoning special exception to open a clinic at 114 Eannotti Road (Dawson, PA).
- Joseph sued for injunctive relief to enforce the restrictive covenant and to stop the pending zoning hearing; the trial court entered a preliminary injunction and later a permanent injunction enjoining O’Laughlin from operating or preparing to operate a veterinary clinic within 50 miles and from soliciting clients.
- Trial court found O’Laughlin’s LLC formation, equipment purchases, zoning petition, Facebook page and communications with former clients amounted to direct or indirect participation in a competing business and solicitation in breach of the covenant.
- O’Laughlin appealed, arguing (1) the trial court wrongly relied on an unpublished Superior Court memorandum, (2) Joseph failed to prove the elements for a permanent injunction, (3) preparatory acts alone do not constitute a breach, and (4) the injunction exceeded the proof.
Issues
| Issue | Joseph's Argument | O’Laughlin's Argument | Held |
|---|---|---|---|
| 1. Reliance on unpublished precedent | Trial court’s citation was persuasive background only; record independently supports injunction | Trial court erred by relying on an unpublished Superior Court memorandum in its opinion | Court: Reliance on unpublished memorandum was error, but harmless because record independently supports injunction |
| 2. Elements for permanent injunction satisfied | Joseph established clear right (contract violation), lack of adequate legal remedy, and greater injury without injunction | Activities were preparatory, not present competition nor solicitation; Joseph failed to prove clear right or irreparable harm | Court: Joseph proved a clear right (breach of covenants via acts and solicitation), and other injunction elements (no adequate remedy, greater harm) — injunction affirmed |
| 3. Preparatory acts vs. breach | Preparatory acts (LLC, equipment, zoning, Facebook) amounted to indirect engagement in competing business prohibited by broad "directly or indirectly" language | Preparatory steps are lawful and insufficient to constitute breach until actual competition begins; cited sister‑jurisdictions and agency/loyalty cases | Court: Restrictive covenant forbade "directly or indirectly" engaging in competing business; preparatory acts here amounted to engagement and thus violated the covenant |
| 4. Scope of injunction | Injunction limited to covenant’s terms and solicitation conduct; necessary to protect purchased goodwill | Injunction exceeded proof by enjoining future acts beyond what Joseph proved | Court: Injunction affirmed; in particular Facebook solicitation and preparatory acts supported relief and balance of harms favored Joseph |
Key Cases Cited
- Kuznik v. Westmoreland County Bd. of Comm’rs, 902 A.2d 476 (Pa. 2006) (standards for review of injunctions and permanent injunctive relief factors)
- Liberty Place Retail Assocs., L.P. v. Israelite Sch. of Universal Practical Knowledge, 102 A.3d 501 (Pa. Super. 2014) (permanent injunctions do not require proof of immediate irreparable harm)
- Braun v. Wal‑Mart Stores, Inc., 24 A.3d 875 (Pa. Super. 2011) (appellate court may affirm on any basis supported by the record)
- Morgan’s Home Equipment Corp. v. Marticci, 136 A.2d 838 (Pa. 1957) (noncompete ancillary to sale of business receives distinct treatment and protects goodwill)
- Spring Steels, Inc. v. Molloy, 162 A.2d 370 (Pa. 1960) (employee preparations to compete may be permissible absent restrictive covenant)
- Peugeot Motors of America, Inc. v. Stout, 456 A.2d 1002 (Pa. Super. 1983) (requirement that actual and substantial injury is likely for injunctive relief)