Abbey Medical/Abbey Rents, Inc. v. Mignacca, 83-303-A

• Decision Date: 04 January 1984
• Docket Number: No. 83-303-A,83-303-A
• Citation: 471 A.2d 189
• Parties: ABBEY MEDICAL/ABBEY RENTS, INC. v. David MIGNACCA and New England Surgical Center, Inc. ppeal.
• Court: Rhode Island Supreme Court

Page 189

471 A.2d 189

ABBEY MEDICAL/ABBEY RENTS, INC. v. David MIGNACCA and New England Surgical Center, Inc.

No. 83-303-Appeal.

Supreme Court of Rhode Island.

Jan. 4, 1984.

Robert G. Flanders, Jr./John H. Blish, Edwards & Angell, Providence, for plaintiff.

John D. Biafore, Goldman & Biafore, Providence, for defendants.

OPINION

MURRAY, Justice.

This is an appeal from a judgment of the Superior Court awarding the plaintiff both monetary and injunctive relief for the defendants' unfair business competition. The trial justice found that the defendant David Mignacca (Mignacca), had abused his position of trust while in the plaintiff's employ by misappropriating the plaintiff's property and soliciting business from the plaintiff's customers with the hope of securing their future patronage.

Judgment was rendered for plaintiff as follows:

Compensatory damages of $12,371.16 were awarded for plaintiff's lost profits and misappropriated property; ¹ punitive damages of $15,000 were imposed upon Mignacca for his intentional misappropriation of plaintiff's property; and a two-year injunction was issued restraining both defendants, Mignacca and New England Surgical Center, Inc., their officers, agents, servants, employees, attorneys and all others in active concert or participation with them, from soliciting any business from plaintiff's regular and referral customers.

Following the issuance of the trial justice's restraining order on May 23, 1983, defendants timely petitioned this court for modification and stay of that order upon the ground that it was too broad, encompassing defendants' solicitation of both plaintiff's regular and his referral customers. Said stay was granted in an order of this court dated June 8, 1983 "only as it applies to referral customers."

Both plaintiff and defendants' have filed appeals with this court. The plaintiff moved that our order of June 8, 1983, be vacated. The defendants appeal from that portion of the trial justice's decision (1) admitting into evidence certain exhibits, (2) refusing to grant his motion for dismissal and a new trial, and (3) computing the amount of damages awarded. The relevant facts were ably set out in the trial justice's decision.

The defendant, David Mignacca, was employed by Cranston Surgical Center, Inc., and Cranston Surgical Center, Inc., of Woonsocket for a period of approximately one and one-half years. During that time the stores were owned by his father, Basil Mignacca. The majority of defendant's time was spent in the Woonsocket store. Basil Mignacca sold both of these stores to plaintiff in December of 1981.

In December of 1981, plaintiff, Abbey Medical/Abbey Rents, Inc., purchased substantially all of the assets of Cranston Surgical Center, Inc., and Cranston Surgical Center, Inc., of Woonsocket. Included in the purchase-and-sale agreement were the following items: all of the inventory, the equipment held for rental, all other fixed assets, accounts receivable, contract rights, leased equipment, goodwill, all customer lists, and all other sources of information pertaining to Cranston's and Woonsocket's past, present, and future customers.

As a condition of the purchase-and-sale agreement, Basil Mignacca entered into an employment agreement and a covenant not to compete with plaintiff. Basil remains as a branch manager with supervisory powers over the Cranston and Woonsocket stores. The plaintiff also hired defendant to serve as manager of the Woonsocket store. His duties included the generation of new business, maintenance of present accounts, the supervision of Abbey employees in the Woonsocket store, and general office management. The defendant was not, however, bound by a covenant not to compete with Abbey, nor did he sign an employment contract.

On December 20, 1982, defendant notified Abbey officials that his last day of employment for Abbey would be December 24, 1982. The defendant then opened his new business, New England Surgical Center, Inc., on January 3, 1983. New England Surgical, like plaintiff, is engaged in the rental and sale of surgical and medical supplies to the general public.

Evidence was introduced at trial that plaintiff maintained business records of its customers who bought or rented equipment. This customer list was compiled by plaintiff's employees for use in servicing individual accounts. It contained specific information, including the customer's name, address, phone number, the type of medical equipment rented or sold, the billing address, and referral sources.

Defendant-Mignacca admitted at trial that this information was readily available only from plaintiff's files. These files were maintained by an employee of plaintiff up until the date Mignacca terminated his employment. On one particular day during his final week of employment with plaintiff, Mignacca spent most of his time at the office copy machine. Mignacca's fellow workers testified that he did not normally spend extended periods of time copying records.

A substantial amount of plaintiff's business involved the sale and rental of TENS units. ² Records of these transactions were included on plaintiff's customer list.

During his last week, Mignacca contacted one of plaintiff's customers and informed her that he was leaving his position with Abbey to start his own business. The defendant testified that he told this customer he would be willing to supply her when he began his operation. The defendant contacted other Abbey customers and informed them that he would service them in his new business, instructing them to return the equipment they had previously received from Abbey if they intended to do business with him.

Before leaving his employment with plaintiff, defendant contacted Mr. Risio, a salesman for a large medical-equipment supplier, to inquire if he would supply defendant's new business. The defendant also offered a job to one of plaintiff's employees before December 20, 1982.

The defendant used plaintiff's funds to purchase tires for his personal automobile. This action was taken without plaintiff's approval and was effected by defendant's issuance of two separate Abbey checks. (Since defendant was not authorized to issue checks over $500, two checks were necessary to complete this purchase without the approval of his supervisor.)

The defendant removed tools and a refrigerator that belonged to plaintiff from his office upon leaving his employment. Additionally, he gave a free TENS-unit to one of plaintiff's customers.

Two witnesses also testified that defendant explicitly proclaimed his intention to compete vigorously with plaintiff upon terminating his employment. Mr. Jean-Paul Dubois testified to defendant's direction of conspicuous profanity toward plaintiff in describing his future business plans.

In a nonjury case a defendant may, at the close of plaintiff's case, move for an involuntary dismissal on the ground that upon the facts and the law plaintiff has not established a right to relief. The trial justice may either determine the case on the record as it then stands or defer judgment until the close of all the evidence. In either event, he sits as the trier of the facts. William T. Young, Inc. v. Simpson, 111 R.I. 12, 14, 298 A.2d 526, 528 (1973); Levy v. Industrial National Bank, 106 R.I. 437, 260 A.2d 919 (1970). Upon reviewing the trial justice's ruling on defendants' motion under Rule 41(b)(2) of the Superior Court Rules of Civil Procedure, our task is "merely to determine whether his findings are supported by the evidence or whether in making such findings he misconceived or overlooked any material evidence." Levy, 106 R.I. at 446, 260 A.2d at 924.

Our review of the record demonstrates that plaintiff introduced evidence that plainly supported the trial justice's finding in his favor. Evidence adduced at trial concerning Mignacca's discount and give-away sales to specific Abbey customers, his removal of plaintiff's refrigerator and tools from plaintiff's office, his purchase of automobile tires for his own use with plaintiff's funds, and his statements made to Jean-Paul Dubois and Charlie DesMarais are sufficient to sustain the trial justice's denial of defendants' Rule 41(b)(2) motion. The plaintiff also maintained customer information records which were not readily available from public sources. This fact, when coupled with the inferences flowing from Mignacca's actions in spending most of a full workday at plaintiff's office copy machine during his final week of employment with plaintiff, provides further justification to sustain the trial judge's ruling. All of these acts, taken singly or in combination, reflect a pattern of disloyal conduct and breach of employer confidence that are properly condemned under the rule enunciated in Rego Displays, Inc. v. Fournier, 119 R.I. 469, 379 A.2d 1098 (1977). Indeed, this court upon review of the entire record is sorely pressed to specify what further conduct upon the part of a defendant-employee a plaintiff-employer must prove to demonstrate that degree of disloyalty sufficient to avoid defendants' motion under Rule 41(b)(2).

The defendants recognize our further duty under Rule 41(b)(2) to determine whether the trial justice after having made supportable findings applied the correct rule of law. Levy, 106 R.I. at 446, 260 A.2d at 924. The defendants argue that the prior holdings of this court in Colonial Laundries, Inc. v. Henry, 48 R.I. 332, 138 A. 47 (1927), and Go-Van Consolidators, Inc. v. Piggy Back Shippers, Inc., 111 R.I. 697, 306 A.2d 164 (1973) clearly demonstrate that the trial justice erroneously applied the proper rule of law. From our reading of those cases, we can discern no such mistake. Colonial Laundries announced the general rule that misuse of an employer's confidential customer list by a former employee constitutes unfair business solicitation which may be properly enjoined. Colonial defined confidential information to include knowledge of the names...