American Exp. Financial Advisors, Inc. v. Topel

• Decision Date: 09 March 1999
• Docket Number: No. Civ.A. 97-B-1741.,Civ.A. 97-B-1741.
• Citation: 38 F.Supp.2d 1233
• Parties: AMERICAN EXPRESS FINANCIAL ADVISORS, INC., Plaintiff, v. Stephen H. TOPEL, Defendant.
• Court: U.S. District Court — District of Colorado

Page 1233

38 F.Supp.2d 1233

AMERICAN EXPRESS FINANCIAL ADVISORS, INC., Plaintiff, v. Stephen H. TOPEL, Defendant.

No. Civ.A. 97-B-1741.

United States District Court, D. Colorado.

March 9, 1999.

COPYRIGHT MATERIAL OMITTED

Barbara W. Gall, Maria Luisa Sepulveda, Sherman & Howard, Denver, CO, David E. Schoenfeld, Dawn E. Gard, Grippo & Elden, Chicago, IL, for plaintiff.

Dennis A. Graham, William J. Munn, Clanahan, Tanner, Downing and Knowlton, P.C., Denver, CO, for defendant.

MEMORANDUM OPINION AND ORDER

BABCOCK, District Judge.

In this action arising out of an alleged independent contractor relationship, defendant Stephen H. Topel moves to dismiss, pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief may be granted, claim one for breach of contract filed by plaintiff American Express Financial Advisors, Inc. (AMEX). Also pending are the following motions filed by AMEX: 1) Rule 12(b)(6) motion to dismiss Mr. Topel's second and third counterclaims for intentional interference with contractual relations and abuse of process, respectively; and 2) Fed.R.Civ.P. 56 summary judgment motion on claim one for breach of contract, claim five for intentional interference with prospective business relationships, and claim six for breach of fiduciary duty. AMEX seeks summary judgment also on Mr. Topel's counterclaim one for breach of contract, counterclaim two for intentional interference with contractual relations, and counterclaim three for abuse of process. After consideration of the motions, briefs, and arguments, I conclude that summary judgment should be granted in part in favor of AMEX and denied in part. I also deny as moot, AMEX' Rule 12(b)(6) motion to dismiss counterclaims two and three. Further, I deny Mr. Topel's Rule 12(b)(6) motion to dismiss claim one.

I.

The following facts are undisputed. Mr. Topel, a resident of Lakewood, Colorado, worked as a financial planner for AMEX pursuant to the Planner Agreement entered into by the parties on or about April 29, 1992. Mr. Topel terminated his relationship with AMEX on May 21, 1997, effective May 23, 1997. Facts specific to each motion are set out below.

II.

Claims, Counterclaims, and Pending Motions

                CLAIM NO. PENDING COUNTERCLAIM NO. PENDING
                MOTION MOTION
                ONE — breach of            — Topel's Rule         ONE — breach of contract           AMEX' Rule 56 summary
                contract                   12(b)(6) motion to                                        judgment
                                           dismiss
                                           — AMEX' Rule 56
                                           summary judgment
                                           motion
                TWO — misappropriation     NONE                   TWO — intentional interference     — AMEX' Rule
                of trade secrets with business                      12(b)(6) motion to
                                                                  relationship                       dismiss
                                                                                                     — AMEX' Rule 56
                                                                                                     summary judgment
                                                                                                     motion
                THREE — violation          NONE                   THREE — abuse of process           — AMEX' Rule
                of Lanham Act                                                                        12(b)(6) motion to
                § 43(a)                                                                              dismiss
                                                                                                     — AMEX' Rule 56
                                                                                                     summary judgment
                                                                                                     motion
                FOUR — conversion          NONE
                FIVE — intentional         AMEX' Rule 56
                interference with          summary judgment
                prospective business       motion
                relationships
                SIX — breach of fiduciary  AMEX' Rule 56
                duty                       summary judgment
                                           motion
                

III.

Under Rule 12(b)(6), a district court may dismiss a complaint for failure to state a claim upon which relief can be granted if it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). If the plaintiff has pled facts that would support a legally cognizable claim for relief, a motion to dismiss should be denied. Id. In reviewing the sufficiency of the complaint, all well-pled facts, as opposed to conclusory allegations, must be taken as true. Weiszmann v. Kirkland & Ellis, 732 F.Supp. 1540, 1543 (D.Colo.1990). All reasonable inferences must be liberally construed in the plaintiff's favor. Id.

IV.

A. Defendant Topel's motion to dismiss AMEX's claim one for breach of contract

Mr. Topel seeks dismissal of AMEX's claim one for breach of the Planner's Agreement in which AMEX alleges that he willfully breached several covenants in the Planner's Agreement including a noncompetition covenant. C/O ¶ 60; see also C/O Ex. D, § IV.1(g). Mr. Topel contends that under Colorado law, the noncompetition covenant is void. Therefore, he is entitled to dismissal of AMEX' claim one for breach of contract. For the following reasons, I will deny the motion.

1. Facts

For five years, Mr. Topel worked as a financial planner for AMEX pursuant to a written contract with AMEX. (Planner Agreement). Mr. Topel received copies of both his Planner Agreement and separate documents setting forth certain key terms of this contract prior to starting work as an agent for AMEX. C/O ¶ 16-17. Mr. Topel signed the Planner Agreement as a condition of his affiliation with AMEX. Id. at 54. Pursuant to the Planner Agreement, Mr. Topel received training and what AMEX characterizes as confidential trade secret information, comprised of customer identities, addresses, financial holdings, investment objectives, and buying preferences. Id. at 21-22.

The Planner Agreement, which Mr. Topel now seeks to avoid, prohibits him, for a period of one year after resigning from AMEX, from soliciting or selling investments and financial services, directly or indirectly, to those AMEX customers in the territory he served or learned about through AMEX. See C/O Ex. D, § IV.I.(g). This provision is one of seven related covenants purporting to protect AMEX trade secrets and confidential information:

Section IV — Restrictions on Your Activities

1. "Using Information You Acquire"

(a) You must not, without the written consent of [AMEX], use any information you acquired while this Agreement was in force in a manner adverse to the interests of [AMEX], an Affiliate or an Issuer. You also must not:

(1) Encourage or induce anyone to terminate an agreement with [AMEX], an Affiliate or Issuer without [AMEX'] consent; ...

(4) Encourage or induce any Client to sell, surrender or redeem any Product or Service distributed or offered by [AMEX] or an Affiliate or Issuer without [AMEX'] consent.

(b) All of the above provisions apply while the Agreement is in effect and after it ends.

(c) All [customer] Records and Materials are the property of [AMEX], an Affiliate or an Issuer. All rights to Records and Materials that you prepare or create in connection with the performance of this Agreement are hereby assigned to [AMEX].

(d) You are responsible for the safe-keeping of these items. When this agreement ends, all of these items remain [AMEX] property. You must return all of them, ... without demand or compensation.

(e) While this Agreement is in effect and after it ends, you agree that you will not reveal the contents of any [AMEX] property or allow them to be revealed.... You will not allow any of this information [names, addresses and Financial information] about Clients or potential Clients to be revealed.

(f) You agree that the identity of Clients and potential Clients is confidential information. For one year after this Agreement ends, you agree not to use any such information in connection with any business in competition with [AMEX] or an Affiliate or Issuer.

(g) For one year after this Agreement ends, you agree that you will not, in the territory where you sought applications for Products or Services under this or any other agreement with [AMEX] or an Affiliate, directly or indirectly offer for sale, sell or seek an application for any Product or Service issued or provided by any company to or from a Client you contacted, dealt with or learned about while you represented [AMEX] or an Affiliate or Issuer or because of that representation....

Planner Agreement, § IV. I (emphasis added).

According to AMEX, after Mr. Topel tendered his resignation in late May 1997, it learned that he was violating the terms of his Planner Agreement and was actively soliciting and diverting the AMEX customers he serviced on its behalf. See, e.g., C/O ¶ 7.

a. Choice of law

The Planner Exhibit provides:

This Agreement is a Minnesota contract, governed by Minnesota law.... You agree to the jurisdiction of State of Minnesota courts for determining any controversy in connection with this Agreement.

C/O, Ex. D, Planner Agreement, Sec. VII, 2.

AMEX has not asserted the forum selection clause but relies on the choice of Minnesota law provision in the Planner Agreement. Mr. Topel contends that Colorado law should apply to this dispute, because "the application of Minnesota law would violate the strong public policy of this State to void noncompetition agreements." Mtn. to Dismiss, p. 3. See Commercial Credit Co. v. Higbee, 92 Colo. 346, 20 P.2d 543 (Colo.1933); Dresser Industries, Inc. v. Sandvick, 732 F.2d 783 (10th Cir.1984) (foreign law will not be enforced if it is contrary to the settled public policy of this state).

Section 8-2-113(2), C.R.S., the State of Colorado's statute addressing noncompetition agreements, provides:

Any covenant not to compete which...