Boyds, LP v. To, T. ( 2015 )

J-A17044-15
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
BOYDS, LP IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellant
v.
TUNG TO AND JOHN DOE, INC., D/B/A
“TOBOX”
Appellees No. 3517 EDA 2014
Appeal from the Order Entered December 3, 2014
In the Court of Common Pleas of Philadelphia County
Civil Division at No(s): 131100048
BEFORE: GANTMAN, P.J., BENDER, P.J.E., and OTT, J.
MEMORANDUM BY GANTMAN, P.J.: FILED AUGUST 28, 2015
Appellant, Boyds, LP, appeals from the order entered in the
Philadelphia County Court of Common Pleas, which deemed as final the
order sustaining in part and overruling in part the preliminary objections of
Appellees, Tung To and John Doe, Inc., d/b/a/ “ToBox,” and the order
denying Appellant’s petition for a preliminary injunction. We affirm.
The relevant facts and procedural history of this case are as follows.
Appellant is a high-end clothing retailer in Philadelphia, with several
departments, including men and women’s footwear. Appellee Tung To
(“Appellee To”) entered into an employment agreement (“Agreement”) with
Appellant on September 27, 2009, to work as a floor manager and buyer for
Appellant’s footwear department. The Agreement contained a covenant
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(“Non-Compete Covenant”), which provided:
Nondisclosure, Confidentiality, Non-Interference and
Covenant Not to Compete
Employee acknowledges that all documents pertaining to
Employer’s clients, suppliers, advertisements, vendors,
manufacturers, designers, clothing lines, prices, sales,
profits, inventory and/or any other information related to
Employer’s business, as they may exist from time to time
is a valuable, special and unique asset of Employer’s
business. Employee will not, during or after the term of
his/her employment, disclose said documents and or
information to any person, firm, corporation, association or
other entity for any reason or purpose whatsoever, except
for the business of Employer. In the event of a breach or
threatened breach by Employee of the provisions of this
paragraph, Employer shall be entitled to an injunction
restraining Employee from disclosing in whole or in part,
any and all documents pertaining to Employer’s clients,
suppliers, advertisements, vendors, manufacturers,
designers, clothing lines, prices, sales, profits, inventory
and/or any and all other information related to Employer’s
business or from rendering any services to any person,
firm corporation, association or other entity to whom such
information in whole or in part, has been disclosed or is
threatened to be disclosed. Nothing herein shall be
construed as prohibiting Employer from pursuing any other
remedies available to Employer for such breach or
threatened breach, including the recovery of damages
from Employee.
ln consideration of the execution and delivery by Employer
of this agreement, Employee covenants and agrees that:
(a) Employee will not at any time or for any reason,
directly or indirectly, for himself/herself or any
other person, use any name or use or disclose
any trade secret, customer list, supplier,
advertiser, vendor, manufacturer, designer,
business or other material confidential information
of Employer.
(b) For a period commencing with the date hereof
and ending twelve (12) months after
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termination of the employment provisions of
this Agreement, Employee shall not directly or
indirectly, for himself/herself or any other
person induce or attempt to influence any
supplier, vendor manufacturer, designer,
advertiser and/or any customer or employee of
Employer, or any affiliate of Employer, to
terminate its business with Employer or any
affiliate Employer.
Covenant Not to Compete
Employee acknowledges that during the term of his/her
employment with Employer, that Employer shall invest
substantial time, efforts and money in developing goodwill
with its clients and customers, business affiliates and
suppliers. This goodwill is a highly valuable asset of
[Appellant]. Accordingly, Employee agrees that in the
event Employee’s employment terminates, regardless of
the reason for said termination or party instituting the
termination, Employee will not, directly or indirectly,
individually as a partner or as an agent, employee or
stockholder of any corporation or otherwise, for a period of
one year from the termination of this Agreement:
(a) Solicit or accept a job offer from another men’s
and or women’s retail clothing company and/or
any company who engages in the sale of men’s
and/or women’s clothing that is within a (50) mile
radius of any [of Appellant’s] operation.
(Appellant’s Complaint, filed November 4, 2013, Exhibit B; R.R. at 36a).
Appellee To ended his employment with Appellant on September 16,
2013. That same day, Appellant learned that Appellee To was planning to
open his own men’s footwear store in Philadelphia, and that he had taken a
confidential list of Appellant’s clients. Appellee To allegedly returned the
client list on October 24, 2013, and opened his own store, ToBox (“Appellee
ToBox”), in Philadelphia on October 31, 2013.
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Appellant filed a complaint against Appellees on November 4, 2013,
which alleged breach of contract, misappropriation of trade secrets and
confidential information, unfair competition, and breach of duty of loyalty.
Appellees filed preliminary objections to the complaint on November 25,
2013, to which Appellant responded. Thereafter, on December 9, 2013,
Appellant filed a petition for preliminary injunction, inter alia, to enjoin
Appellees from competing with Appellant. Appellees filed a response on
December 30, 2013. That same day, the court sustained in part and
overruled in part Appellees’ preliminary objections. The court subsequently
denied Appellant’s petition for preliminary injunction on January 14, 2014.
On January 23, 2014, Appellants filed a motion to amend the court’s
December 30, 2013 order, to which Appellees filed a response. The court
denied Appellant’s motion on February 20, 2014. Meanwhile, Appellees filed
an answer to Appellant’s complaint with new matter on January 20, 2014.
Appellant filed preliminary objections to the pleading. Appellees
subsequently filed several amended answers with new matter, and Appellant
filed preliminary objections to each amended filing.
Eventually, the parties settled all claims except Appellant’s allegations
of breach of the Non-Compete Covenant. Thus, on December 3, 2014, the
court entered an order that deemed as final the December 30, 2013 and
January 14, 2014 orders dismissing Appellant’s claims of breach of the Non-
Compete Covenant, and dismissed with prejudice all other claims. Appellant
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timely filed a notice of appeal on December 4, 2014.
Appellant raises the following issues for our review:
DID THE TRIAL COURT ERR IN SUSTAINING [APPELLEES’]
PRELIMINARY OBJECTIONS TO [APPELLANT’S] COMPLAINT
AND DISMISSING [APPELLANT’S] CLAIMS AGAINST
[APPELLEES] FOR BREACH OF THE AGREEMENT’S NON-
COMPETE COVENANT, WHERE THE AGREEMENT INCLUDED
A VALID AND BINDING NON-COMPETE RESTRICTIVE
COVENANT, AND WHERE [APPELLANT] PLEADED FACTS IN
THE COMPLAINT DEMONSTRATING THAT [APPELLEES]
VIOLATED THE NON-COMPETE COVENANT?
DID THE TRIAL COURT ERR IN DENYING [APPELLANT’S]
PETITION FOR PRELIMINARY INJUNCTION, WHERE
[APPELLANT] ESTABLISHED ALL OF THE PREREQUISITES
REQUIRED UNDER THE LAW TO ENJOIN [APPELLEES]
FROM VIOLATING THE AGREEMENT’S NON-COMPETE
COVENANT?
(Appellant’s Brief at 7).
In its first issue, Appellant argues the facts alleged in Appellant’s
complaint were more than sufficient to overcome Appellees’ preliminary
objections to Appellant’s claims for breach of the Non-Compete Covenant.
Appellant asserts the Non-Compete Covenant is an enforceable restrictive
covenant. Specifically, Appellant avers the Non-Compete Covenant was
executed incident to Appellee To’s employment with Appellant, the
restrictions imposed are reasonably necessary for Appellant’s protection
because Appellee To was privy to confidential information relating to
Appellant’s customers and suppliers, and the restrictions imposed are
reasonably limited in geographic scope and duration. Appellant contends
Appellees violated the Non-Compete Covenant by opening a store in
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Philadelphia. Appellant alleges the Non-Compete Covenant is not so limited
in scope as to prohibit Appellee To from only soliciting or accepting a job
from an unrelated third party. Rather, Appellant asserts the plain language
of the Non-Compete Covenant implicates all forms of work for a competitor
of Appellant. Appellant states the Non-Compete Covenant prohibits Appellee
To, “individually…as a stockholder,” from “directly or indirectly” engaging in
restricted activity, which includes Appellee To’s ownership of Appellee
ToBox. Appellant contends Appellee ToBox is a distinct legal entity from
Appellee To, and that Appellee ToBox offered Appellee To a position as an
operator, which he affirmatively accepted. Additionally, Appellant claims
that, even if the Non-Compete Covenant is ambiguous, it is for the trier of
fact to resolve any ambiguity. Appellant maintains it met its burden of
stating a meritorious claim against Appellees for breach of the Non-Compete
Covenant. Appellant concludes this Court should reverse the trial court’s
December 30, 2013 order sustaining in part and overruling in part Appellees’
preliminary objections, and reinstate Appellant’s claims for breach of the
Non-Compete Covenant. We disagree.
Our scope of review of the trial court’s decision to sustain preliminary
objections in the nature of a demurrer is plenary. Soto v. Nabisco, Inc.,
32 A.3d 787, 789 (Pa.Super. 2011). We apply the same standard of review
as the trial court. De Lage Landen Financial Services, Inc. v. Urban
Partnership, LLC, 903 A.2d 586, 589 (Pa.Super. 2006).
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A demurrer is an assertion that a complaint does not set
forth a cause of action or a claim on which relief can be
granted. A demurrer by a defendant admits all relevant
facts sufficiently pleaded in the complaint and all
inferences fairly deducible therefrom, but not conclusions
of law or unjustified inferences. In ruling on a demurrer,
the court may consider only such matters as arise out of
the complaint itself; it cannot supply a fact missing in the
complaint.
Soto, supra at 790. “We will reverse a trial court’s decision to sustain
preliminary objections only if the trial court has committed an error of law or
an abuse of discretion.” Id. “Where the complaint fails to set forth a valid
cause of action, a preliminary objection in the nature of a demurrer is
properly sustained.” Id.Rule 1028 of the Pennsylvania Rules of Civil Procedure provides, in
relevant part:
Rule 1028. Preliminary Objections
(a) Preliminary objections may be filed by any party to
any pleading and are limited to the following grounds:
* * *
(2) failure of a pleading to conform to law or rule of
court or inclusion of scandalous or impertinent matter;
(3) insufficient specificity in a pleading;
(4) legal insufficiency of a pleading (demurrer);
* * *
Pa.R.C.P. 1028(a)(2)-(4) (emphasis added).
A trial court may also sustain preliminary objections in the nature of a
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demurrer if it “appears from the face of the complaint that recovery upon
the facts alleged is not permitted as a matter of law.” Kelly v. Kelly, 887
A.2d 788, 790-91 (Pa.Super. 2005), appeal denied, 588 Pa. 770, 905 A.2d
500 (2006).
Instantly, the trial court reasoned:
When considering preliminary objections, all material facts
and all inferences set forth in the complaint must be
admitted as true. Haun v. Community Health Systems,
Inc., 14 A.3d 120, 123 (Pa.Super. 2011). However, the
court is not bound to accept as true any averments in the
pleading that are in conflict with exhibits that are attached
to that pleading. Philmar Mid-Atlantic, Inc. v. York
Street Associates [II], 389 Pa.Super. 297, 299-301,
566 A.2d 1253, 1254 (1989). Moreover, restrictive
covenants are not favored in Pennsylvania. See
Jacobson & Co. v. Intl Env’t Corp., 427 Pa. 439, 235
A.2d 612 (1967). “The failure of an employer to include
specific provisions in an employment contract will not be
judicially forgiven or corrected at the expense of the
employee.” Hess v. Gebhard [& Co. Inc.], 570 Pa. 148,
[169,] 808 A.2d 912[, 924] (2002). [Here,] [t]he subject
contract provides that [Appellee To] may not “solicit or
accept a job offer from another men’s or woman’s retail
clothing company.” [Appellant] alleges that [Appellee To]
opened up his own men’s retail clothing store. Thus, given
the plain language of the [Agreement] when compared to
the allegations of the complaint, [the trial] court finds that
the breach of contract, as to the violation of the [Non-
Compete Covenant], to be legally insufficient as [Appellee
To] did not solicit or accept a job but instead opened up
his own store. …
(Trial Court’s Order, filed December 30, 2013, at 1 n. 1) (citation to record
omitted). We accept the court’s interpretation of the Non-Compete
Covenant. An examination of this provision indicates the Non-Compete
Covenant barred Appellee To from certain activities, but it did not preclude
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outright ownership of his own business. Therefore, the court did not abuse
its discretion in sustaining in part and overruling in part Appellees’
preliminary objections. See Soto, supra at 790.
In its second issue, Appellant claims Appellees’ conduct has caused
and will continue to cause Appellant to sustain irreparable harm because
Appellees opened a business in Philadelphia that competes with Appellant,
and Appellant will suffer permanent injury to its customer and supplier
relationships. Appellant alleges greater injury will occur from refusing to
grant a preliminary injunction than from granting it because the harm to
Appellant’s customer relationships is likely to be significant, whereas
Appellee To’s ability to earn a living will not be significantly harmed because
he is free to work anywhere that does not violate the Non-Compete
Covenant. Appellant contends an injunction will restore the parties to their
status before the breach occurred. Appellant also asserts it is likely to
prevail on the merits of the claim of breach of the Non-Compete Covenant
because the parties entered into this provision of the Agreement in
conjunction with Appellee To’s employment with Appellant, the protections
the Non-Compete Covenant offers Appellant are reasonably necessary to
protect Appellant’s legitimate business interests, and the Non-Compete
Covenant is reasonably limited in duration and geographic scope. Appellant
avers an injunction is also reasonably suited to stop Appellees’ offending
activity because there is no indication Appellees will refrain from violating
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the Non-Compete Covenant unless prohibited by court order. Appellant
maintains there is no indication that entering an injunction against Appellees
will harm the public interest. Appellant concludes this Court should reverse
the trial court’s January 14, 2014 order denying Appellant’s petition for
preliminary injunction. We disagree.
Our review of the court’s denial of equitable relief in this case
implicates the following legal principles:
[I]n general, appellate courts review a trial court order
refusing or granting a preliminary injunction for an abuse
of discretion. We have explained that this standard of
review is to be applied within the realm of preliminary
injunctions as follows:
[W]e recognize that on an appeal from the grant or
denial of a preliminary injunction, we do not inquire
into the merits of the controversy, but only examine
the record to determine if there were any apparently
reasonable grounds for the action of the court below.
Only if it is plain that no grounds exist to support the
[order] or that the rule of law relied upon was
palpably erroneous or misapplied will we interfere
with the decision of the [trial court].
Eckman v. Erie Ins. Exchange, 21 A.3d 1203, 1206 (Pa.Super. 2011)
(internal citations and quotation marks omitted). “This standard is highly
deferential.” Id. at 1207.
Pennsylvania Rule of Civil Procedure 1531 governs preliminary and
special injunctions, in pertinent part, as follows:
Rule 1531. Special Relief. Injunctions
(a) A court shall issue a preliminary or special injunction
only after written notice and hearing unless it appears to
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the satisfaction of the court that immediate and irreparable
injury will be sustained before notice can be given or a
hearing held, in which case the court may issue a
preliminary or special injunction without a hearing or
without notice. In determining whether a preliminary or
special injunction should be granted and whether notice or
a hearing should be required, the court may act on the
basis of the averments of the pleadings or petition and
may consider affidavits of parties or third persons or any
other proof which the court may require.
Pa.R.C.P. 1531(a). “The purpose of a preliminary injunction is to prevent
irreparable injury or gross injustice by preserving the status quo as it exists
or as it previously existed before the acts complained of in the complaint.”
Ambrogi v. Reber, 932 A.2d 969, 974 (Pa.Super. 2007), appeal denied,
597 Pa. 725, 952 A.2d 673 (2008). “Any preliminary injunction is an
extraordinary, interim remedy that should not be issued unless the moving
party’s right to relief is clear and the wrong to be remedied is manifest.” Id.A party seeking a preliminary injunction must establish: (1) the
injunction is necessary to prevent immediate and irreparable harm; (2)
greater injury will occur from refusing to grant the injunction than from
granting it; (3) the injunction will restore the parties to the status quo as it
existed before the alleged wrongful conduct; (4) the likelihood of success on
the merits; (5) the injunction is reasonably designed to prevent the wrongful
conduct; and (6) the injunction will not adversely affect the public interest.
Summit Towne Centre, Inc. v. Shoe Show of Rocky Mount, Inc., 573
Pa. 637, 646-47, 828 A.2d 995, 1001 (2003).
To satisfy the fourth element, a plaintiff must demonstrate the
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behavior it seeks to restrain is actionable, the wrong is manifest, and the
right to relief is clear. Id. at 648, 828 A.2d at 1001. “[F]or conduct to be
actionable, it must breach a duty imposed by statute or by common law.”
The York Group, Inc. v. Yorktowne Caskets, Inc., 924 A.2d 1234, 1241
(Pa.Super. 2007). “[T]he party seeking an injunction is not required to
prove that he will prevail on his theory of liability, but only that there are
substantial legal questions that the trial court must resolve to determine the
rights of the parties.” Ambrogi, supra at 976.
A party seeking a preliminary injunction is bound by the pleadings
standards set forth in Pa.R.C.P. 1019, which provides, in relevant part:
Rule 1019. Contents of Pleadings. General and
Specific Averments
(a) The material facts on which a cause of action or
defense is based shall be stated in a concise and summary
form.
(b) Averments of fraud or mistake shall be averred with
particularity. Malice, intent, knowledge, and other
conditions of mind may be averred generally.
* * *
(h) When any claim or defense is based upon an
agreement, the pleading shall state specifically if the
agreement is oral or written.
Note: If the agreement is in writing, it must be attached
to the pleadings. See subdivision (i) of this rule.
(i) When any claim or defense is based upon a writing,
the pleader shall attach a copy of the writing, or the
material part thereof, but if the writing or copy is not
accessible to the pleader, it is sufficient so to state,
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together with the reason, and to set forth the substance in
writing.
Pa.R.C.P. 1019. Rule 1019 specifically requires:
the pleader to disclose the material facts sufficient to
enable the adverse party to prepare his case. A complaint
therefore must do more than give the defendant fair notice
of what the plaintiff’s claim is and the grounds upon which
it rests. It should formulate the issues by fully
summarizing the material facts. Material facts are ultimate
facts, i.e. those facts essential to support the claim.
Evidence from which such facts may be inferred not only
need not but should not be alleged…. Allegations will
withstand challenge under [Rule] 1019(a) if (1) they
contain averments of all of the facts the plaintiff will
eventually have to prove in order to recover, and (2) they
are sufficiently specific so as to enable defendant to
prepare his defense.
Lerner v. Lerner, 954 A.2d 1229, 1235-36 (Pa.Super. 2008). Material
facts include all the facts a plaintiff will eventually have to prove in order to
recover. Id. at 1236.
Here, a review of the record reveals Appellant failed to establish the
prerequisites for a preliminary injunction. See Eckman, supra. Appellant
failed to provide any support for how it has suffered or will continue to suffer
irreparable harm, or how its customer and supplier relationships will be more
adversely affected, absent a preliminary injunction, or how Appellant’s status
quo has been disturbed following the opening of Appellee ToBox, or that
substantial legal questions exist for the court to decide. See Summit
Towne, supra; Ambrogi, supra at 976. In fact, the court determined in
its December 30, 2013 order that Appellees have not violated any term of
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the Non-Compete Covenant by opening their own business. See Summit
Towne, supra; York Group, supra. Therefore, Appellant failed to
establish a sufficient basis to warrant a preliminary injunction. Furthermore,
the court concluded:
[Appellant] is a large and distinguished retail business that
has operated for more than seventy-five (75) years. As
[Appellee] To is the sole owner of [Appellee] ToBox, a
company that opened less than two months ago, [the trial]
court finds that greater injury will occur from granting the
injunction than from refusing it and thus [Appellant] has
not satisfied its burden for injunctive relief.
(Trial Court’s Opinion, filed January 14, 2014, at 4). Thus, the court had
reasonable grounds to deny Appellant’s petition for a preliminary injunction.
See Eckman, supra. Accordingly, we affirm.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/28/2015
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