*1
905
request
light
DCS filed with its
tion.
paperwork
miniscule risk of
approve
Adjust-
error,
the court
the Informal
interest,
the “compelling” State
Stepfather
the court aware
ment made
less-than-compelling
Stepfa-
interest of
molesting
convicted of child
had been
ther, I
process
would find no due
violation.
completed
had not
the sex offender treat-
See,
A.I.,
e.g., In re
suant the Informal agreed complete
ther sex offender
treatment, complete but he did not
treatment. Mother’s admission that her
children were CHINS included her ac- that she
knowledgement Stepfa- allowed her though
ther live with children even COATES, Appellants E. Steven completed he had not sex offender treat- -Defendant, highly unlikely Stepfather ment. It is presented could have evidence to refute all v. trial the information the court obtained WAGONS, HEAT INC. and Man during Adjustment proceed- the Informal Products, Inc., ufacturers ings or that he have impugned could Moth Appellees-Plaintiffs. er’s admission to such an extent that the court have would found these children No. 64A03-1004-PL-232. See, N.E., e.g., were not CHINS. In re (Ind.2010) 102, 919 N.E.2d 104 (affirming Appeals Court of Indiana. finding trial court’s that children were 23, Feb. 2011. CHINS based on mother’s admission thereof, despite presen father’s denial and allegation);
tation of evidence to refute (Ind.Ct. Hill, v.
Eads (a
App.1990) complaint, “verified unrefuted alone, standing is sufficient to estab evidence”)
lish ... a preponderance of the
(discussing proof required for civil nui action).
sance Stepfa- court’s decision not to hear
ther’s evidence before deciding these chil-
dren were in need of services created little
risk of an erroneous CHINS determina- te one side of reasonably prudent person the issue rather than the other.” lead a to believe” (7th ed.1999). Dictionary State, Black’s Law allegation was true. Meister v. (Ind.2010) (discussing N.E.2d issu-
5. "Probable cause” involves determination warrant). ance of search whether "the fact and circumstances would *4 Grimmer,
Edward P. Austgen Kuiper & Associates, P.C., Point, IN, Crown Attor- ney Appellant. Schmidt,
Kathryn Butler, D. Jeremy J. LLP, Burke Cuppy Costanza & Merrill- ville, IN, Attorneys Appellees. OPINION *5 BAILEY, Judge. Summary
Case (“Coates”) Steven E. Coates appeals from the trial grant court’s of a prelimi- nary injunction against him and favor of (“Heat Inc., Wagons, Heat Wagon”) and Products, (“Manufac- Manufacturers Inc. Products”) “MPI”). turers (collectively, part We affirm in part. and reverse in Issues presents issues, Coates numerous which we reframe and restate as whether the trial court granting abused its discretion in preliminary injunction against him be- cause
1. There no risk of irreparable harm PHP from Coates’s op- continued eration of his business that would preliminary entitle PHP to a injunc- tion, prospective legal and remedies will protect suffice to MPI’s inter- ests; 2. MPI did not establish its likelihood of success on the merits of its claim against him because the covenant not to is unenforceable and MPI committed the first material underlying employ- breach of the ment agreement; and heaters, large injunction parts are ov- heater construction terms of the 3. The types products the covenant the same erly broad relative to and sells manufacturers. seeks to enforce. other 1986, operating still Beginning while History Facts Procedural business, MPI, Harold started another (“Ha- father, Harold Coates Coates’s was also Second Source. Second Source rold”), shareholder majority was in the sale heater portable involved Products. and Manufacturers Wagon Heat parts Harold’s father order parts. would in Man- minority shareholder was through Second Source and sell them Manufacturers Products. ufacturers PHP. sells, manufactures, and leases Products 31, May On April Harold died. mills, heater portable large heaters steel in Manufacturers all of shares units, conditioning sys- parts, air and Heat tems, Wagon including Products goods. porta- and other related — shares —were to John Walsh sold of Manufacturers ble heater division (“Walsh”) (“Barney”). John Barney Porta- separately as Products is marketed (hereafter Parts The new owners MPI retained Coates ble Heater “PHP”) 29, 1996, employee, May as an on approximately and accounts for signed Employment Agreement Products’ sales. 70% of Manufacturers at issue Wagon (“Agreement”) heaters in this case.1 Heat manufactures signed ing conditioning systems Employment Agreement Coates or air and relat- 1. The *6 components any designated Wagon parts and Manufac- and in both Heat ed markets A, collectively em- Products as Coates's of the states listed attached turers on Exhibit hereto; regular provision for ployer. It also included Coates, (ii) disclose, pay discuss, a minimum copy increases in set at divulge, or per year. Agreement also $2160.00 The exploit attempt use or to use otherwise or compete, a covenant with the any included not to exploit competition in or manner in stating: provisions relevant case contrary to this the with or to the interests of records, (a) Employer any Non-Competition by Employee, customer lists or 9. the methods, acknowledge Employee marketing plans parties The that the business and strategies, gained gain and con- or has will continue to and financial information any proprietary the trade in- confidential information about other secrets or siderable any Employer, Employer, of the which could be formation of of the it be- businesses acknowledged injurious Employee ing by Employee Employer to the if the the regarding were to use such for his own all such the busi- information information Therefore, agrees Employee Employer of the in- benefit. the ness is confidential during employment property the the the that hereunder, term of his formation exclusive (2) years Employer. Upon em- period and for a of two termination of his hereunder, ployment employee after the effective the termination of the will date of hereunder, Employee’s promptly Employer return docu- all not, (in indirectly: Employee directly shall or ments records whatever form or and whatsoever, (i) medium) any capacity containing pro- in either as confidential or joint partner prietary Employer, or in- an individual or as a information of the venturer, employee, agent cluding copies or Em- or as an thereof then in the control, representative person ployee’s possession any or business or whether officer, director, others; enterprise, prepared by him or or as an or (having than a nominal shareholder more otherwise, investment) (b) engage Employee acknowledges in com- that com- or necessary petition Employer, pliance with with to this section 9 is them, manufacture, marketing, goodwill proprietary protect in the and other leasing, products Employer, and a breach will distribution or sale of interests in, to, continuing irreparable dam- or services heaters or heat- result in and related MPI, remained an March MPI ordered electric motors assigned manag- and was the title of sales manufactured Emerson Electric from in- primary responsibilities er. His work computer irregularity S&S. After a for PHP to purchasing products cluded S&S’s record on computers, MPI’s an MPI sell, in aiding marketing and sale of employee located an Emerson Electric in- PHP, identifying products those new voice associated with the order products catalog, to add to PHP’s sales sharing showed S&S its address with assisting price adjustments in set- personal residence. MPI investi- ting pricing customer discounts. He also gated July 2009 discovered Coates’s 90% of purchased parts used to manu- role S&S. “large
facture construction heaters” for a 20, 2009, July On complaint MPI filed a company.” (App.18.) “sister seeking enjoin Coates from continued Beginning April when he knew Source/S&S, operation of Second later MPI Barney, would sold to Walsh and amending complaint pursue dam- began to operate Second Source ages for breach of contract. Coates an- (“S&S”). Supply under the name S&S swered and entered a counterclaim for particular, Coates continued to sell declarative relief and compensatory dam- through to MPI S&S when buy S&S could ages. products sell the to MPI for a lower 25, 2009, On November MPI filed its MPI price purchase than could the same Verified Petition for Preliminary and Per- parts, even after S&S took a mark-up on Injunction. 12, 2010, manent April On goods. Sales to MPI constituted after parties filed stipulated facts and $228,535.23 of S&S’s revenues from 1996 hearing, exhibits and a the trial court en- 2009; sales to other customers tered its Order Granting Preliminary In- $3,030.00. period only same amounted (“the Order”) junction against Coates. (App.20.) appeal This followed. Coates hid his continued involvement in *7 S&S from MPI. He did not inform MPI’s Discussion and Decision management that he operating was S&S. I. Standard Review used directly addresses not' con- business, operate nected to him to the To obtain a preliminary injunc including a Valparaiso friend’s address in tion, moving party the by must show a a mailing as address and a Store in UPS (1) preponderance of the evidence that: its Nevada, Vegas, Las as the address remedies at law are inadequate and that checking S&S’s products account. When irreparable harm will during occur the S&S to MPI sold arrived at MPI from (2) pendency result; of the action as a it vendors, S&S’s swap Coates would out the has at least a reasonable likelihood of suc packing slips replace manufacturer’s cess on the by establishing merits a prima them with S&S packing slips so that his (3) case; facie the threatened harm it faces involvement S&S would not be revealed. outweighs the potential injunc harm the 1, 2009, May On pose Walsh terminated tion would to the non-moving party; (4) without cause. public the interest would not be age Employer to the for which there will injunctive be be entitled to and other such relief, adequate remedy including no at law. In the damages, event of the award of as by Employee may breach the proper. of the cove- be herein, 36-37; Employer nants contained (App. emphasis original.) will 912 enough injunctive relief. Id. at by injunction. support to granting
disserved only award Zimmer, Davis, 68, 162. The trial court should Inc. 71 v. N.E.2d legal remedy a will injunctive relief where review a trial (Ind.Ct.App.2010). We provides incom because inadequate a grant party’s motion for court’s that is “to plete relief or relief inefficient an injunction for abuse of dis- preliminary ends and its adminis justice prompt Id. prove any cretion. Failure Designers, tration.” Hair Robert’s required of a grant prelimi- elements for a (quoting Bryant, N.E.2d Washel v. at 864 nary injunction constitutes abuse of dis- (Ind.Ct.App. 906-907 770 N.E.2d Id. cretion. 2002)). Trial sets forth pro Rule 65 Designers Our decision in Robert’s Hair “Every relief. governing injunctive cedure proper prelim is illustrative of the use of granting temporary injunction order [a] case, inary In that re injunction. we accompanied by ... shall include or be prelimi versed court’s denial of a a trial by Rule findings required as 52.” Ind. nary injunction against employees former 65(D). special Trial Rule review the We ensuing despite of a hair salon’s salon findings required under conclusions De increase in revenue. Robert’s Hair 52(A). Trial Rule 52 clear error. T.R. signers, N.E.2d at 865. noted that We Findings clearly of fact are erroneous inability quantify loss was salon’s its evidence when record lacks or rea- goodwill “irrelevant” because loss of sonable inferences from evidence to employees revenue when its future support judgment clearly them. A is departed, taking the salon’s customers erroneous when a review of the record them, finding of “would warrant a leaves us with a firm conviction that a irreparable harm.” Id. has mistake been made. We consider Here, trial in its court noted only light the evidence in the most fa- way order that “there is no apparent judgment vorable and construe PHP, measure the loss of sales to nor findings together liberally in favor of the any way there to measure the amount of judgment. already business from that has been taken Pearson, Robert’s Hair Inc. v. Designers, 9.) (Appellant’s App. Coates.” (ci- (Ind.Ct.App.2002) in the sale Coates’s continued involvement omitted). tations after his termination irreparable MPI harm be could constitute Irreparable II. Haim *8 knowledge porta cause of the Coates’s Coates that MPI does face contends not market, knowledge ble heater his of ven a risk of harm and irreparable does not dors, by recognition and his both vendors adequate remedy lack an at law. we Thus Moreover, com customers. Coates’s first consider whether trial court petition significant potential a of fu poses abused its in determining discretion that party ture harm to MPI each because may irreparable MPI harm. have suffered competition would be in with the other for Irreparable harm is a DESA supply that harm limited as a result which cannot of that 2008 compensated through company’s closing. be damages upon competition of the underlying potentially resolution holds a action. Ind. Svcs. Family unique & Soc. Admin. of harm because of how well risk (Ind. Co., 158, Walgreen v. on products 769 N.E.2d 162 informed Coates was DESA 2002). injury” a “Mere economic is not as result of his work for PHP.
913 enforceable, foregoing, say we cannot light provisions In of a covenant clearly the trial court’s order is erro- reasonable, compete to must be which question irreparable neous on the harm question reasonable, is a of law. To be an remedy adequate or lack of at law. agreement such a containing covenant protect legitimate must interests of the III. Reasonable Likelihood of employer, and the restrictions established Success on the Merits by agreement must be reasonable in argues that MPI did not estab- Coates time, scope as to activity, geographic by preponderance lish of the evidence area. Id. at 729. produce that it could evidence to establish prima facie case for its claim. See Zim- legitimate A protectable inter mer, Thus, at 71. 922 N.E.2d Coates ar- advantage possessed by est is an an em requirement MPI failed to meet the gues, ployer, the use of which by employee prove a reasonable likelihood of after the end of the employment relation success on the merits at trial. See id. ship would make it “unfair to allow the 1) particular, argues MPI employee compete with the former em legitimate subject pro- lacked a interest Reid, ployer.” 926, MacGill v. 850 N.E.2d by compete, tection the covenant not to (Ind.Ct.App.2006) 930 (quoting Unger v. at least that the court’s order is defec- trial (Ind. 1240, Corp., FFW 771 N.E.2d significant tive for lack of evidence on this Ct.App.2002)). This court has held that 2) point; of the covenant’s re- goodwill, including “secret or confidential upon strictions Coates’s activities and the information such as the names and address region in which he conduct business may of customers and the advantage acquired 8) unreasonable; MPI committed contact,” through representative a legiti- agreement the first material breach of the protectable mate interest. Pathfinder appears in which the covenant and thus Corp. 1103, Macy, Comm. v. 795 N.E.2d was not bound covenant.2 1110 (Ind.Ct.App.2003) (quoting Unger v. We must therefore evaluate MPI’s evi- (Ind. Corp., FFW 771 N.E.2d dence on the merits of its substantive Ct.App.2002)). Also subject protection above, claim though, as noted we review goodwill competitive as is the advantage findings judgment the trial court’s gained for employer through personal error, grant clear and its decision to contacts between and customer preliminary injunction for an abuse of dis- products when the offered competitors cretion. are similar. Gleeson v. Sourc Preferred A. Whether MPI had a LLC, (Ind.Ct. ing, Legitimate Interest App.2008). “general acquired skills” however, in working employer, for an may
Indiana strongly courts disfa vor as restraints of transferred unless this occurs trade covenants not to “under employment contracts. circumstances where their use [is] Cen adverse Podiatry, Krueger, employer tral Ind. v. his and would result in irrepa P.C. *9 (Ind.2008) (citations injury.” N.E.2d 728-29 rable Pathfinder, 795 N.E.2d at omitted). Such (quoting Emergency covenants construed Duneland Phy strictly Brunk, against employers. order to be sician’s Med. Group, P.C. v. argues scope 2. Coates also that the trial court’s or- relates to the of the order rather than claim, significant der is defective underlying for lack of evidence the elements of the we ad- support injunction against challenges to its Coates’s use this dress issue with Coates's other scope injunction. of certain trade names. Because this claim to See infra. parts. for DESA market substantial trans. (Ind.Ct.App.2000), N.E.2d familiarity with of and denied). knowledge Coates’s market, parts DESA heater that Here, found trial court general, parts market heater portable knowledge of the his had retained “Coates advantage developed a commercial was ac knowledge to that and used business thus can- worked for PHP. We while he prior that he had customers quire/retain that the trial court with agree Coates (Appel through PHP.” transactions sup- findings at of fact without arrived its 10.) that these court held App. lant’s evidence. porting well as knowledge, as aspects Coates’s requirements knowledge of customer agree can we with Coates Nor “through representative obtained Coates erred as a matter that the trial court contact,” legitimate protecta- a constituted gave facts determining that these law in interest, right MPI’s to “restrict as did ble true interest. It is protectable to a rise enticing away the employee from a former knowledge travel skills and general (Appellant’s customers.” employer’s old subject to being without with an 10.) App. compete. by a covenant not restriction the trial court’s say cannot here that We See, 1110. 795 N.E.2d at e.g., Pathfinder, clearly erro- conclusions were findings and knowledge of Yet much of Coates’s which both Among the facts to neous. identity and market and of the was that stipulated MPI Coates and price on is not needs of PHP’s customers adjustments” in “price was involved knowledge specific is general skill or —it a played orders and that he for customer use of this operates. PHP Coates’s how identifying products role significant him to permit could knowledge carry in customers and PHP to sell to its him undercut by allowing unfairly 18.) Coates catalog. (Appellant’s App. its only gained information using PHP’s sales MPI further that “Coates stipulated Thus, employee. an MPI because he was when to whom he sold selling to customers clearly order is say cannot we 22.) (Appellant’s App. PHP.” he was at infer lack of evidence and erroneous for customer that he knew Coates testified conclusion supporting the court’s ences calls when had handled sales names and legitimately protectable that MPI had also testified to do so. Coates required of its cus knowledge interest Coates’s actively comb the though he did not tomers and market. (“ARA”) Rental Association American customers, did for PHP neither mailing list Scope B. Restrictions PHP cus- existing filter out attempt he that even if further contends purchased. ARA list he tomers from the capable of legitimate MPI had a interest market The nature of the heater not to com- through a covenant protection further illustrates operates which PHP the cove- scope of the restrictions pete, pri- interest. was protectable him is unreasonable imposes upon nant heaters mary supplier of DESA Master the covenant is void. and thus a market which became parts, and heater reviewing When when DESA competitive much more compete, not to in a covenant PHP —at restrictions in late 2008. operation ceased time, types geography, and we review the to seek DESA urging began — Glee activity prohibits. the covenant acquire parts in an effort to heaters and *10 son, at 174. If a covenant 883 N.E.2d supply market share additional
915 written, may $500,000 seeing nearly unreasonable as courts states sales of in Indeed, years. a reasonable restriction under the one or both create PHP had sales interpretation. of Licocci v. in all of the guise Cardi states listed Exhibit A of (Ind. Assocs., Inc., 556, 445 N.E.2d the Employment Agreement, nal with many 1983). However, $20,000 a provision seeing where of a states sales in excess of unreasonable, pencil the blue restriction is both 2008 and 2009. In light of Coates’s permits pro doctrine courts to strike that knowledge of and contact with PHP’s cus- vision from those which are reasonable if knowledge tomers and vendors and his the unreasonable restrictions are divisible PHP’s acquired business—all while Coates Sesco, Inc., from the rest. v. Dicen New was an MPI employee say cannot —we (Ind.2005). 684, the trial court’s determination its Order argument makes no as to the duration of geographical that the provision of the non- restriction, challenging only the rea “is compete reasonable and enforceable” sonableness of the on the geo restrictions clearly Dicen, was erroneous. Cf. graphical nature scope and of his activities (holding N.E.2d at 689 that a covenant not and the trial court’s order as it relates to compete that restricted a former em- pencil the blue doctrine. ployee from “working the land remedia- anywhere tion business in the United
Geographic Scope States” unreasonable employee’s when the scope Whether of a covenant’s “contacts were in a limited number of geographic restrictions is reasonable de states”). pends upon employer’s interest served Nor did trial court err in its use of Krueger, those restrictions. 882 the pencil blue doctrine to restrict Here, N.E.2d at 730. the trial court’s Order to the nineteen states order states that since “Coates had con in which Coates had customer contact. (19) with tacts customers and vendors in Dicen, supreme our court held that use of (32) thirty nineteen of the two [sic] states pencil the blue geo- doctrine to strike the employment since his ... the court strikes graphical limitations of an
the thirteen states with which Coates had agreement’s covenant not compete no contact and enforces the restriction as geographical scope whose encompassed to the nineteen states with which Coates the entire United States would result in did have contact.”3 “no geographical limitation at all.” Id. business, nearly-nationwide
As a The court therefore entirety held the MPI has an interest in protecting its inter the covenant not unenforcea- ests in each state in which conducts Though ble. Id. the court in Corp. Smart business in the heater and heater v. approve non-compete Grider did admitted, market. Stipu in the scope (“any county similar state in court, lated Facts submitted to the trial ... Company United States where the having business”), had contact with customers or ven ... then carries on a like it did dors in the nineteen only states listed in the so a portion because of the covenant states, injunction. In each of the nineteen in question trailing phrase, included a “to $20,000 PHP had sales in per permitted excess of the extent by applicable law.” (dis- year in both 2008 and (Ind.Ct.App.1995) some 650 N.E.2d Illinois, Ohio, Jersey, 3. The states Pennsylvania, listed New Order South Dako- Indiana, Kansas, Massachusetts, ta, Tennessee, Texas, Michigan, Washington, Virgi- West Minnesota, Missouri, Nebraska, York, nia, New and Wisconsin. *11 in a in engaging profession but en- from their language of “catch all” approving at 932-33 geographic of the area. Id. large under the forcing it circumstances alia, Faust, 675 v. court), inter Norlund (quoting, the trcms. denied. case before 1142, 1155 clari (Ind.Ct.App.1997), N.E.2d Here, it a the trial court had before N.E.2d 421 reh’g, on denial fied referred to compete not to covenant denied; (Ind.Ct.App.1997), tes. Pathfin states, specific listing exhibit individual der, 1114; Unger, at 795 N.E.2d without which could stricken each of 1245). at N.E.2d any in the limitation resulting absence of at in case re- The covenant issue this geographical of the covenant. A of the from: listing of states in Exhibit stricts Coates The all like Agreement not at Employment is whatsoever, either as an any capacity in which, all” in language the “catch Grider partner ven- joint individual or as or Dicen, sought much like covenant in turer, agent rep- as an or employee, or activity by employee limit all the restricted any for or business person resentative entirety throughout director, United officer, as enterprise, or regard without the extent of States (having a nomi- shareholder more than interest to the em- employer’s respect investment) with otherwise, engag[ing] nal or Di- Compare id. at 84 n. with ployee. competition Employer, with or cen, at court’s 839 N.E.2d The trial them, 689. manufacture, mar- any of in the strike with which decision to those states leasing, keting, distribution or sale require no rein- had contact did not in, to, heat- products or services related contract, thus terpretation of the and was heating conditioning sys- ers or air clearly erroneous. parts components related tems and and markets ... Scope Activities (App.36.) We turn now to whether Agreement “Employer” activi scope of the restriction on Coates’s identifies reasonability Wagon to include Heat collectively ties is unreasonable. The both MPI, plaintiffs not to on in this case. compete’s a covenant restrictions “pri- of an that his employee (App.34.) the activities is determined Coates contends interest a distribu- relationship mary job responsibility between the was as heaters, employer protect portable seeks to tor of their (Appel- provisions catalogue” activities other items shown its circumscribed 26.), is, primarily of the covenant. in a covenant lant’s Br. he worked Provisions PHP, this, compete they prohibit not to if for a division of MPI. From invalid Coates, portions with corollaries. competition argues of a business come two First, employee primarily which an no association because he with had worked portable parts, with seemingly dealing or activities that are harmless Heat protected Wagon relation to the interest. Mac the inclusion of in the defini- Gill, Employer N.E.2d at Seach broad (quoting impermissibly 930-31 tion of Richards, Co., con- Wagon large v. Heat Dieterle & because deals 208, 214 court heaters heat- (Ind.Ct.App.1982)). portable This struction instead of Thus the term urges has therefore found as overbroad ers. and, must be “Employer” penciled therefore invalid covenants not to blue occurs, the mean- working that restrict an from this covenant lacks when reinterpreta- any competitor employer ing impermissible of a without an prior Second, Agreement. because capacity employees and those that restrict tion of the *12 portable parts he worked in and the Coates’s other attack —that the omission “portable,” “portable” lacks the word of from before “heaters” and covenant overly “heating” overly is broad and cannot be is broad in covenant relation to inserting the protectable reasonable without word MPI’s interest —fails for simi- its text. The insertion of a “portable” into lar reasons. Coates worked for both Heat court, notes, Products, new term Wagon and Manufacturers be an use of the impermissible Wagon’s primary would blue Heat business was pencil larger doctrine. manufacture of commercial heaters. (Indeed, purchased he as much as of 90% persuaded by We are not this ar production parts Wagon). for Heat gument. interpretation As to the of “Em The omission of “portable” the term thus ployer,” pay it is true that came does not non-compete provision make the Wagon. from MPI and not Heat Howev MacGill, overbroad. 850 N.E.2d at Cf. er, stipulated that his Linked- (noting 930-31 as pro- overbroad covenant (and profile thereby In.com stated he ad visions where an had “no associ- mitted) that ation” employer’s with the engagement in purchase I all items to fulfill sales obli- proscribed activity). gations catalog compa- for our wholesale We therefore conclude that the trial ny. purchase Annual +. $3M interpretation court’s penciling and blue purchase production I also 90% of the scope provisions the covenant not to company for our sister that manu- compete was clearly erroneous. large construction heaters. factures C. First Breach Employment added.) 18; (App. emphasis PHP is not a Agreement separate corporation, but is rather an un- that, Coates next asserts even if the incorporated division of Manufacturers covenant compete applies not to to a legiti- Products with no separate legal existence protectable mate interest and is not over- company from it. PHP’s sister is Manu- restrictions, broad its the covenant is facturers company Products’ sister —Heat nevertheless unenforceable because MPI Wagon. Wagon large Heat manufactures committed the first material breach of the construction heaters. Employment Agreement by failing pay Thus, the trial court could conclude from specified salary annual increases. per- the evidence before it that Coates party When one to a contract formed work both Manufacturers Prod- commits the first material breach of that and Heat Wagon, and inclusion ucts/PHP contract, it cannot seek to enforce the companies of both within the definition of provisions against of the contract the other Employer require did not penciling. blue party if that party other breaches the con acknowledge that We covenants not to Licocci, tract at a later date. interpreted to favor the em- at 52. a party materially Whether has ployee, employer. not the Krueger, 882 breached agreement question is a N.E.2d at 729. Yet it is clear from the fact and dependent upon is several factors evidence before the trial court that Coates including: performed work for both MPI and Heat (a) Wagon and that both Coates and The extent to which the injured par- MPI/ Heat Wagon ty knew this. The will obtain the substantial benefit not, definition of Employer reasonably thus this which he could have antici- context, impermissibly pated; broad.
(b) relationship” injured par- ment between himself and extent to which the “beyond in MPI normal at may adequately compensated ty *13 Bros., Godby v. will situation.” Weiser of damages complete perform- for lack Inc., 237, N.E.2d (Ind.Ct.App. 659 239 ance; 1995) (Sullivan, J., plurality opinion) (citing (c) failing to party The extent which the Crouch, Ins. Co. America v. Prudential of perform already partly performed to has (S.D.Ind.1985), F.Supp. 464 796 606 aff'd preparations performance; or made (7th Cir.1986)), denied. F.2d 477 trans. (d) greater hardship The or on less law, implied good covenants of Indiana perform terminating to party failing only fair to dealing apply faith and insur contract; employment or ance and contracts where (e) willful, be- negligent The or innocent ambiguous applica as to the contracts party failing perform; of the to havior impose expressly tion of the covenants or (f) uncertainty or that greater less Inc., v. Hosp., them. Allison 883 Union perform failing perform to will party 113, (Ind.Ct.App.2008) (citing N.E.2d 123 of the the remainder contract. Wine, County v. Lake Trust Co. 704 1035, Farren, (Ind.Ct.App.1998); Apartments v. N.E.2d 1039 Tomahawk Vill. Key 1286, First Fed. Sav. Bank Ind. v. Mar (Ind.Ct.App.1991) 571 N.E.2d 1293 of (Ind.1990)). kets, Inc., 600, 559 (citation omitted). N.E.2d by the duties Among imposed cove Here, on the trial Coates’s attack faith good dealing nants of and fair an he, MPI, determination that not court’s that of employment relationship loyalty first committed the material breach employer avoiding self-serving to the Agreement ap takes three Employment Thus, has held conduct. this court proaches. He first MPI did argues that against preparation competition em salary in pay not the minimum annual duty not a ployer is violation of to promised Agree him in the crease loyalty prohibition against and the self- ment, this MPI’s constitutes long as dealing so “eontin- argues activity then breach. He that his his to exert best efforts on behalf of ue[s] through prior S&S was not to MPI’s Kopka, & employer.” his Landau Pinkus “[w]hether breach because there is (Ind.Ct. Hansen, v. 874 N.E.2d solely depends language breach on the App.2007) (going on to cite Potts v. Review and not the contract how distasteful Div., Emp. Ind. Bd. Sec. court or MPI’s think [sic] officers Coates’ denied). (Ind.Ct.App.1985), trans. 32-33.) (Appellant’s was.” Br. conduct Here, parts Coates sold to MPI through Because the covenant not to con S&S, company, own which through his he prohibitions express against tains no pattern continued a of sales that his father purchasing parts selling goods Coates engaged had when his father was the MPI, argument to goes, he has not majority shareholder of MPI. Coates be- Agreement breached the since it lacks a gan to sell to MPI when he knew the of self that other “prohibition dealing” company was to about to be sold new Agreements might (Appel such have. owners, intending only wages draw 33.) lant’s Br. employment profit from his but also way, Stated another he through from sales made S&S. Coates escape good seeks to requirements not disclose this arrangement did MPI’s dealing faith fair in an at the into new owners time he entered agreement employ- Employment Agreement that “formalized the or at time Indeed, thereafter. MPI did not relationship discover did not bring question into oper- status as the sole owner and right employer of an summarily termi- ator of S&S until after it had dismissed nate an employee). employment, having from and after The trial court reasonably could con- (and Coates)
paid thereby S&S more than clude from the evidence before it $220,000 over the course of years— IB implied Coates breached the covenants hardly an insubstantial sum.4 good faith and fair dealing imposed upon Coates seeks to excuse this conduct him his employment with MPI before *14 noting only that he with parts did this that MPI pay failed to issue him in raises com- acquire S&S could a lower price at than pliance with the terms of the Employment MPI, thereby MPI helping pay less for the Indeed, Agreement. likely Coates breach- not, however, products. same Coates did ed these covenants almost as soon as he introduce why evidence as to he could entered into Agreement. the The trial why not—nor he should not—have at- holding court’s that Coates made the first MPI, tempted, as an of to obtain material breach of the Agreement and that prices directly those employer, his MPI could therefore enforce the covenant thereby saving both the of the goods cost not was not clearly erroneous. the in markup selling and he assessed the to MPI goods himself. Coates also used TV. Provisions the Order of business addresses other than his own res- various of his argument, Coates an including address Nevada idence— challenges the itself, text of the Order checking for S&S’s account—with pur- the arguing injunctive that provisions of pose of hiding his involvement in the busi- impermissibly Order reinterpret and from employees, stating ness other MPI expand of the covenant not to that his involvement S&S was “none compete. assigns Coates error to the (Tr. 23.) of their business.” “Defendants, court’s instruction that We note that Coates did not have a Source, Coates Second shall refrain strictly employment traditional at-will con from contacting current and former cus- MPI, tract with in that he was afforded tomers and vendors of the Plaintiffs and certain protections financial in the event of accept shall not solicitation or contact from discharge from employment without cause. Plaintiffs’ current and former customers ability MPI’s to dismiss without Coates immediately with regards to heaters or cause and ability employ to leave parts.” (App.14.) heater provision This of MPI, ment with each breaching without broad, is impermissibly Order Coates Agreement, muddy does not so explains, because waters as to relieve Coates the duties a would be violation for imposed upon employees shop [him] at-will con at tracts or his hometown Walmart where general. contracts in Weiser, occasionally at (noting purchase products. N.E.2d would Cf. contact, deviation It through agreement prohibit written from would having even the normal at-will employment terms an when targeted at a former customer example, stipulated 4. As an involving that S&S (App.20- transaction 95 motors. charged per 21.) $165 MPI $6,045.00, electric motor when paid S&S Emerson Electric charged only per $65 Emerson Electric S&S $14,374.00 and received from MPI after a acting through motor. Thus Coates S&S discount, prompt payment resulting gross in a simultaneously employed by while MPI im- $8,329.00 profit of for S&S. posed markup per $100 motor on a (or vendor) Steps tion or to cease any information or rec- advertisement. from using marks must taken immedi- employment for prior ollection from the ately. purchase or the sale non-heater part Instead items [sic]. 14; Specifi- of. (App. emphasis original.) hand grenade rifle
precise
approach,
cally,
argues that
the trial court
court.
employed by
[sic]
findings
had no
and made no
evidence
28.)
a result
regarding
Br.
confusion
dilution as
(Appellant’s
various
of his
of the
marks and Web
use
Setting
about
aside our concerns
argues
the trial
addresses. MPI
of the
sentence in this
opacity
second
points
these
need not be
court’s order on
language
we
that the
quote,
recognize
and is rea-
supported by specific findings
trial
could have been
court’s order
purpose
provi-
sonable
light
However, ex-
precision.
crafted with more
restrict
sions of the order
seek to
ercising
reading
common sense
competition with MPI.
Coates’s unfair
yields
to avoid an absurd
Order
result
*15
The trial court had some evidence before
that
interpretation
requires
of the Order
in
stipulated
the form of
facts and exhib-
“immediately,
regard
with
Coates
1)
compare
its that
it to
allowed
Coates’s
or
refrain from
parts,
heaters
PHP’s
each one’s marks.
use of
Coates’s
contacting
former
current and
customers
S&S,
company,
used the
site www.
2)
Web
Plaintiffs,
and vendors of the
not
and a red “H&P”
heatersandparts.com
accept solicitation or contact from Plain-
mark
site
printed
on that Web
and on
tiffs’ current
and former
customers.”
PHP used
red “PHP” mark
materials.
way,
this
Read
we believe
trial court’s
site www.portableheater
the Web
does
order is
overbroad and
not im-
on
parts. Coates solicited and carried
beyond
pose
impermissibly
restrictions
customers,
of
business with some
PHP’s
of the
scope
underlying covenant not to
organi-
in the same
operating
commercial
compete the
This
Order seeks
enforce.
(the ARA)
PHP.
zation
as
interpretation
comports
subpara-
(a)(ii)
graph
of
regarding
the covenant
However,
agree
we
with Coates
use of customer information and PHP’s
enjoining any
trial court’s order
marketing
validity
which
strategies,
of
by
use
www.heatersandparts.
Coates of
challenge.
covenant Coates does not
We
com
“H&P”
and the red
mark is an abuse
therefore
the trial
conclude
court’s There was
discretion.
no evidence
imposition of
provision
prelimi-
this
mark
Coates’s use of Web site or the
nary injunction does not constitute an
or
any
among
created
confusion
its current
abuse its discretion.
customers,
potential
nor did the trial court
also argues
that the trial court’s
specific findings
make
confusion as re
in
requires
order is
error when it
him to
Rule
fur
quired under Trial
52. We note
Stop using
“H&P”
ther
neither
PHP
the marks
that because
Coates nor
and/or
any portion
any
“Heaters and Parts” for
asserted
claims or
under
defenses
law,
either’s
or Second
whether
use of
[Coates
busi-
trademark
Coates’s
Source]
Source,
confusing
ness.
mark
is
Coates and Second
as
Web site and
were
agents,
likely
well as their employees
properly
or
shall
more
heard in Federal
using
stop
the website tvww.heaters
court
Lanham
under
Act. See
.
andparts.com,
stop using
seq. Finally,
§
and ...
et
the relief
U.S.C.
granted
marks
court
“H&P”
“Heaters
the trial
in its order
and/or
any
overly
Parts” on
website or other
in relation to the otherwise
publica-
broad
appropriate geographic scope of the cove-
compete
employ
Covenants not to
By
ment
are in
restricting
any
nant.
Coates from
use
contracts
restraint of trade
mark,
long
and have
of the Web address and
the trial
been disfavored in the law.
See Donahue v. Permacel Tape Corp., 234
effectively
court
restricted Coates from us-
(1955).
Ind.
volvement in states.
I a con- question re-writing also policy.
tract as a matter of A restrictive
covenant in an contract is strictly against construed employer. Podiatry,
See Krueger, Ind. P.C v. Central