Momar, Inc. v. Watcon, Inc. (mem. dec.)
71A03-1603-PL-621
| Ind. Ct. App. | Nov 3, 2016Background
- Watcon hired Janowiak in 1988 under a written employment agreement containing noncompetition, confidentiality, and nonsolicitation clauses; he managed ~53 active Watcon customer accounts and had access to confidential customer information.
- Janowiak left Watcon in September 2015 and immediately began employment with Momar (Aquatrol division); Momar had not previously sold in his Watcon territory.
- After switching employers, Janowiak solicited and sold competing products to some of his former Watcon customers; Momar employees accompanied him and later continued servicing those accounts.
- Watcon obtained a preliminary injunction (Nov. 24, 2015) against Janowiak; after continued conduct, Watcon amended its complaint and the trial court extended the injunction to enjoin Momar as well (Mar. 21, 2016).
- The injunction bars Momar through September 3, 2017 from, in concert with Janowiak, generating/accepting orders or servicing any of the 53 identified former Watcon customers for products/services that compete with Watcon, and from using/divulging Watcon confidential information.
Issues
| Issue | Plaintiff's Argument (Watcon) | Defendant's Argument (Momar) | Held |
|---|---|---|---|
| Enforceability / likelihood of success | Agreement protects legitimate employer interests; "users" are identifiable 53 accounts; covenant limited to competing products | Paragraph 9’s geographic and activity scope is overbroad and unenforceable; "users" not sufficiently definite; paragraph bars non‑competing sales | Court: covenant reasonable and enforceable; "users" shown to mean 53 accounts and paragraph 2 narrows activity to competing products — likelihood of success shown |
| Adequacy of legal remedies / irreparable harm | Monetary damages inadequate because loss of goodwill, confidential customer data, and sales relationships cause irreparable harm | Damages and subsequent legal relief would be adequate; injunction unnecessary | Court: Watcon demonstrated irreparable harm and inadequacy of legal remedies; injunction appropriate |
| Balance of harms | Harm to Watcon from continued solicitation outweighs Momar’s lost profits; Momar induced breach | Injunction will harm Momar and its customers; public interest favors competition and ability to serve customers | Court: threatened injury to Watcon outweighs harm to Momar; bond requirement protects Momar from wrongful injunction claims |
| Public interest and scope of injunction wording | Enforcement of parties’ bargain and protection of goodwill serves public interest; injunctive language accurately implements agreement | Injunction unlawfully modifies contract (uses "53 Current Customers", "generate/accept/fill") and overreaches beyond "solicit" | Court: wording faithfully implements parties’ intent and contract when read as whole; injunction terms are within equitable discretion and not an impermissible modification |
Key Cases Cited
- Apple Glen Crossing, LLC v. Trademark Retail, Inc., 784 N.E.2d 484 (Ind. 2003) (preliminary injunction standards).
- Barlow v. Sipes, 744 N.E.2d 1 (Ind. Ct. App. 2001) (requirement for trial courts to make special findings for injunctions).
- Gleeson v. Preferred Sourcing, LLC, 883 N.E.2d 164 (Ind. Ct. App. 2008) (standard of review for findings).
- Norlund v. Faust, 675 N.E.2d 1142 (Ind. Ct. App. 1997) (injunction appropriate when damages are speculative and goodwill is at stake).
- Cohoon v. Fin. Plans & Strategies, Inc., 760 N.E.2d 190 (Ind. Ct. App. 2001) (protecting employer goodwill via restrictive covenants).
- Cent. Ind. Podiatry, P.C. v. Krueger, 882 N.E.2d 723 (Ind. 2008) (equity required when legal remedies are inadequate).
- Robert’s Hair Designers, Inc. v. Pearson, 780 N.E.2d 858 (Ind. Ct. App. 2002) (noncompete breach can cause irreparable harm to client relationships).
- Unger v. FFW Corp., 771 N.E.2d 1240 (Ind. Ct. App. 2002) (loss of goodwill and reputation supports injunction).
- State Farm Fire & Cas. Co. v. Riddell Nat’l Bank, 984 N.E.2d 655 (Ind. Ct. App. 2013) (contracts read as a whole; harmonize provisions).
- Washel v. Bryant, 770 N.E.2d 902 (Ind. Ct. App. 2002) (contract interpretation principles).
- Field v. Alexander & Alexander of Ind., Inc., 503 N.E.2d 627 (Ind. Ct. App. 1987) (specificity required in noncompete scope).
- Seach v. Richards, Dieterle & Co., 439 N.E.2d 208 (Ind. Ct. App. 1982) (customer‑class limitations can substitute for geographic limits).
- Robert Neises Constr. Corp. v. Grand Innovations, Inc., 938 N.E.2d 1231 (Ind. Ct. App. 2010) (trial court’s broad equitable discretion in shaping remedies).