Nightingale Home Healthcare, Inc. v. Carey Helmuth and Physiocare Home Healthcare, LLC

FOR PUBLICATION
ATTORNEYS FOR APPELLANT: ATTORNEY FOR APPELLEES:
HAMISH S. COHEN ELIZABETH ZINK-PEARSON
KYLE W. LeCLERE Pearson & Bernard PSC
Barnes & Thornburg LLP Edgewood, Kentucky
Indianapolis, Indiana
Aug 28 2014, 10:16 am
IN THE
COURT OF APPEALS OF INDIANA
NIGHTINGALE HOME HEALTHCARE, INC., )
)
Appellant-Plaintiff, )
)
vs. ) No. 29A04-1403-PL-121
)
CAREY HELMUTH and PHYSIOCARE HOME )
HEALTHCARE, LLC, )
)
Appellees-Defendants. )
APPEAL FROM THE HAMILTON SUPERIOR COURT
The Honorable William J. Hughes, Judge
The Honorable William P. Greenaway, Magistrate
Cause No. 29D03-1207-PL-7011
August 28, 2014
OPINION - FOR PUBLICATION
RILEY, Judge
STATEMENT OF THE CASE
Appellant-Plaintiff, Nightingale Home Healthcare, Inc. (Nightingale), appeals the
trial court’s summary judgment in favor of Appellees-Defendents, Carey Helmuth
(Helmuth) and Physiocare Home Healthcare, LLC (Physiocare), concluding that
Helmuth’s ten-day break in employment with Nightingale served as the starting point of
his Limited Non-Competition and Non-Disclosure Agreement (Non-Compete
Agreement).
We affirm.
ISSUE
Nightingale raises three issues on appeal, one of which we find dispositive and
which we restate as: Whether the trial court properly found, as a matter of law, that a ten-
day break in employment more than two years ago marked the commencement of
Helmuth’s Non-Compete Agreement.
FACTS AND PROCEDURAL HISTORY
Nightingale is an Indiana corporation engaged in the business of providing in-
home healthcare, hospice care, and private duty care to Indiana residents. On January 24,
2008, Helmuth commenced his employment with Nightingale as a patient advocate,
promoting Nightingale’s home healthcare services in the community and to facilities and
physicians who were in a position to refer patients. As a condition of his employment,
Helmuth was required to enter into a Non-Compete Agreement, which protects
Nightingale’s proprietary and confidential information and geographically restricts
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Helmuth’s ability to unfairly compete with Nightingale for a period of two years after
separation from the company. Every Nightingale employee signs a Non-Compete
Agreement, and it is known and understood by all employees that such agreements are an
essential term and condition of their employment.
On October 16, 2009, Nightingale terminated Helmuth’s employment for
“substandard work” and “violation of company policies.” (Appellant’s App. p. 250).
After his termination from Nightingale, Helmuth ceased to receive compensation,
benefits, or perform tasks for the company. He began the process to collect
unemployment compensation benefits. However, based on conversations between
Nightingale and Helmuth following his termination, Nightingale offered “to revoke his
termination” and have him “return to work in his prior position subject to the [Non-
Compete Agreement] and the prior terms and conditions of his employment.”
(Appellant’s App. p. 186). On October 26, 2009, Nightingale re-hired Helmuth.
Helmuth was never asked to, nor did he sign a new Non-Compete Agreement.
Helmuth’s employment with Nightingale ended on March 5, 2012. Almost
immediately thereafter, Helmuth accepted employment with Physiocare as a patient
advocate, a similar position to the one he held during his employment with Nightingale
and in the similar geographical market he previously worked in.
On July 9, 2012, Nightingale filed its Complaint for damages, preliminary
injunction, and permanent injunction, alleging Helmuth breached the Non-Compete
Agreement. On September 26, 2012, Helmuth and Physiocare filed a motion for
summary judgment asserting that the Non-Compete Agreement expired in October of
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2011 and requesting a summary disposition of Nightingale’s Complaint in its entirety.
The following month, on October 29, 2012, Nightingale filed its cross-motion for partial
summary judgment contending Helmuth breached the Non-Compete Agreement. On
July 9, 2013, the trial court conducted a hearing on the parties’ motions and issued its
Order on July 16, 2013, granting Helmuth and Physiocare summary judgment and
denying Nightingale’s motion for partial summary judgment. The trial court found, in
pertinent part:
3. Nightingale terminated Helmuth’s employment on or about October 16,
2009.
4. On or about October 26, 2009, Nightingale offered to reemploy
Helmuth. Helmuth accepted re-employment with Nightingale on or about
October 26, 2009, ten (10) days following his termination.
5. Helmuth’s employment with Nightingale was not “continuing” due to
the ten (10) days of unemployment, during which time he performed no
services for Nightingale and received no compensation. Helmuth was
terminated by Nightingale and then subsequently rehired.
....
7. Following his rehire by Nightingale in October 2009, Helmuth never
reexecuted the Agreement, nor took any other action to extend the length of
the restriction or otherwise take any affirmative act to alter the clearly and
unambiguously stated terms of the Agreement.
8. The time period of the Agreement expired by its express terms two (2)
years after Helmuth’s termination of employment with Nightingale on
October 16th 2009. The restrictions of the Agreement expired on or about
October 15th, 2011 and therefore did not restrict Helmuths’s employment
with Physiocare beginning in May 2012.
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(Appellant’s App. p. 6). On March 17, 2014, the trial court amended the Order by
expressly entering final judgment on all of Nightingale’s remaining claims and making
the Order final and appealable.
Nightingale now appeals. Additional facts will be provided as necessary.
DISCUSSION AND DECISION
I. Standard of Review
Summary judgment is appropriate only when there are no genuine issues of
material fact and the moving party is entitled to a judgment as a matter of law. Ind. Trial
Rule 56(C). A fact is material if its resolution would affect the outcome of the case, and
an issue is genuine if a trier of fact is required to resolve the parties’ differing accounts of
the truth . . . , or if the undisputed facts support conflicting reasonable inferences.
Williams v. Tharp, 914 N.E.2d 756, 761 (Ind. 2009).
In reviewing a trial court’s ruling on summary judgment, this court stands in the
shoes of the trial court, applying the same standards in deciding whether to affirm or
reverse summary judgment. First Farmers Bank & Trust Co. v. Whorley, 891 N.E.2d
604, 607 (Ind. Ct. App. 2008), trans. denied. Thus, on appeal, we must determine
whether there is a genuine issue of material fact and whether the trial court has correctly
applied the law. Id. at 607-08. In doing so, we consider all of the designated evidence in
the light most favorable to the non-moving party. Id. at 608. The party appealing the
grant of summary judgment has the burden of persuading this court that the trial court’s
ruling was improper. Id. When the defendant is the moving party, the defendant must
show that the undisputed facts negate at least one element of the plaintiff’s cause of
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action or that the defendant has a factually unchallenged affirmative defense that bars the
plaintiff’s claim. Id. Accordingly, the grant of summary judgment must be reversed if
the record discloses an incorrect application of the law to the facts. Id.We observe that, in the present case, the trial court entered findings of fact and
conclusions of law in support of its judgment. Special findings are not required in
summary judgment proceedings and are not binding on appeal. Id. However, such
findings offer this court valuable insight into the trial court’s rationale for its decision and
facilitate appellate review. Id.II. Non-Compete Agreement
Nightingale now contends that the trial court erred, as a matter of law, in issuing
summary judgment in favor of Helmuth and Physiocare. Specifically, Nightingale
maintains that “[t]he undisputed material facts demonstrate that Helmuth was not
terminated in October 2009 because his termination was revoked, and he was rehired
pursuant to the existing terms and conditions of his employment arrangement—including
the [Non-Compete Agreement].” (Appellant’s Br. p. 11).
Indiana courts have generally recognized and respected the freedom to contract.
Pathfinder Commc’ns Corp. v. Macy, 795 N.E.2d 1103, 1109 (Ind. Ct. App. 2003).
However, covenants to not compete are in restraint of trade and are not favored by the
law. Id. Noncompetition agreements are strictly construed against the employer and are
enforced only if reasonable. Id. Covenants must be reasonable with respect to the
legitimate interests of the employer, restrictions on the employee, and the public interest.
Id.6
Here, the Non-Compete Agreement entered into by Helmuth on January 24, 2008,
provided, in pertinent part, that:
For a period of two (2) years after separation from [Nightingale] (regardless
of the reason for the separation), Employee shall not: [] (vii) In a
competitive capacity, directly or indirectly work for, own, advise, manage,
or act as an agent or consultant for or have any business connection or
business or employment relationship with any competitor of [Nightingale],
wherever located, whereby Employee would be providing services to or in
the Restricted Area[.]
Waiver and Amendments. Failure of [Nightingale] to insist upon strict
compliance with any provision of this Agreement shall not operate to be
construed as a waiver of any terms, provisions, or rights of [Nightingale] or
subsequent breach by Employee. Moreover, no modifications, extensions,
amendments, or waivers of this Agreement or any of its provisions shall be
binding unless in writing and signed by an executive of [Nightingale].
(Appellant’s App. pp. 85, 88).
A non-compete agreement is a quintessential contract and thus the traditional rules
of contract interpretation apply. As such, a contract is ambiguous only if reasonable
persons would differ as to the meaning of its terms. Beam v. Wausua Ins. Co., 765
N.E.2d 524, 528 (Ind. 2002). In interpreting an unambiguous contract, a court gives
effect to the parties’ intentions as expressed in the four corners of the instrument, and
clear, plain, and unambiguous terms are conclusive of that intent. Oxford Fin. Grp., Ltd.
v. Evans, 795 N.E.2d 1135, 1142 (Ind. Ct. App. 2003). Courts may not construe clear
and unambiguous provisions, nor may it add provisions not agreed upon by the parties.
Id.Nightingale now contends that even though Helmuth’s employment was
terminated on October 16, 2009, the termination was revoked and voided within one
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week, re-instating Helmuth in the same position with his preexisting salary and benefits
without having to reapply or submit any paperwork. Thus, Nightingale maintains that the
restrictive covenant of the Non-Compete Agreement did not enter into effect until he was
terminated in March 2012. In support of its argument, Nightingale relies on Campbell v.
BDP International, Inc., 2002 WL 31319927 (D.N.J. Sept. 12, 2002), where Campbell
resigned from her employment with BDP in November 1999 and was rehired in January
2000. Id. at *2. Two years later, BDP terminated her again. Id. Campbell argued that
she was not subject to an arbitration clause in her original employment because “her
break from employment from BDP ‘reset’ the terms and conditions of her employment.”
Id. at *3. Campbell pointed to the fact that she negotiated a promotion, a raise, and an
additional day of vacation time when she returned to BDP after a brief absence, and the
“company did not indicate that acceptance of re-employment constituted acceptance of
previous agreements with the company.” Id. The court found in favor of BDP because
the parties treated Campbell’s departure in 1999 as a continuous employment, evidenced
by the fact that Campbell was paid for the ten days she was off BDP’s payroll, she was
not subject to a new employee’s evaluation period, and was immediately entitled to
certain benefits not afforded to new employees. Id.
However, we find Campbell inapposite to the case at hand. First, Campbell is an
opinion emanating from the United States District Court from the District of New Jersey
and therefore, is persuasive at best. Furthermore, unlike non-compete agreements which
are disfavored under Indiana law, it is well settled that Indiana recognizes a strong policy
favoring enforcement of arbitration agreements. Sanford v. Castleton Health Care Ctr.,
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LLC, 813 N.E.2d 411, 417 (Ind. Ct. App. 2004), trans. denied. Whereas non-compete
agreements are strictly construed against the employer, when construing arbitration
agreements, every doubt is to be resolved in favor of arbitration. Id. Although both non-
compete clauses and arbitration provisions are in essence contractual agreements, they
are distinct in nature and purpose and thus are not comparable.
The designated evidence reflects that Nightingale terminated Helmuth on October
16, 2009, for “substandard work” and “violation of company policies.” (Appellant’s
App. p. 250). Helmuth was required to “turn in [his] company laptop, ID badge, office
key, company car key, and access to the offices and computers was forbidden and
removed[.] [B]ecause of this immediate termination, it was made very clear to [him] that
[he] was no longer a Nightingale employee.” (Appellant’s App. p. 234). Ten days later,
Nightingale rehired Helmuth in the same position and with the same remuneration and
benefits, with the exception of retirement contributions which “Nightingale refused to []
credit [] for [his] first period of employment.” (Appellant’s App. p. 92). Also,
Nightingale did not pay Helmuth for the ten days in between his two employment terms.
It is furthermore undisputed that Helmuth never signed a new Non-Compete Agreement.
Despite Nightingale’s characterization of Helmuth’s rehire as a revocation and
rescission of the previous termination, we find that, based on the evidence, Nightingale’s
conduct is more properly defined as a separation from the company which was
unconditional and intended to operate as a permanent termination of the employment
relationship between Nightingale and Helmuth.
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Moreover, Nightingale’s argument that Helmuth “acquiesced” to the Non-
Compete Agreement by returning to work pursuant to the same terms previously agreed
upon belies the unambiguous language of the Non-Compete Agreement which
unequivocally states that extensions or modifications to the Agreement shall not be
binding “unless in writing and signed by an executive of” Nightingale. (Appellant’s
Reply Br. p. 4) (Appellant’s App. p. 88).
Mindful that non-compete agreements are disfavored by law and strictly construed
against the employer, we conclude that there is no issue of material fact that Helmuth was
indeed separated from Nightingale on October 16, 2009, which marked the starting point
of the two-year restrictive period of the Non-Compete Agreement. Absent the execution
of a new non-compete agreement on October 26, 2009 or a written extension of the prior
Non-Compete Agreement, Helmuth’s restrictive period ended on or about October 16,
2011. Therefore, at the time of entering into an employment relationship with Physiocare
in May of 2012, Helmuth was no longer bound by the provisions of the Non-Compete
Agreement.
CONCLUSION
Based on the foregoing, we conclude that the trial court properly concluded, as a
matter of law, that a ten-day break in employment more than two years ago constituted
the commencement of Helmuth’s Non-Compete Agreement.
Affirmed.
MATHIAS, J. concurs
CRONE, J. concurs in result without separate opinion
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