B.W. Rogers Co. v. Wells Bros., Inc.
| Decision Date | 27 February 2012 |
| Docket Number | CASE NO. 17-11-25 |
| Citation | 2012 Ohio 750 |
| Parties | B.W. ROGERS CO., PLAINTIFF-APPELLEE, v. WELLS BROTHERS, INC., ET AL., DEFENDANTS-APPELLANTS. |
| Court | Ohio Court of Appeals |
Appeal from Shelby County Common Pleas Court
Judgment Affirmed
APPEARANCES:
Jonathan S. Zweizig for Appellants
Richard H. Wallace for Appellee
{¶1} Defendants-Appellants, Wells Brothers, Inc. ("Wells") and Panel Control, Inc. ("PCI") (or, collectively, "Wells/PCI" or "Appellants"), appeal the judgment of the Shelby County Court of Common Pleas, finding that the Memorandum of Intent that was entered into between Wells/PCI and Plaintiff-Appellee, B. W. Rogers Co. ("BWR" or "Appellee"), was a binding, enforceable contract. On appeal, Wells/PCI contends that the trial court erred when it failed to grant its motion for summary judgment; when it found that a valid agreement existed; when it erroneously "filled in the gaps" in the purported agreement; and when it failed to enforce the terms/time limitations of the alleged contract. For the reasons set forth below, the judgment is affirmed.
{¶2} BWR is in the business of distributing mechanical and electrical components along with providing control panels. Wells/PCI is primarily engaged in construction and related services, although a small percentage of its business is also in the area of control panels. BWR and Wells/PCI are direct competitors in the control panel business. (Tr. pp. 194-195; 201)
{¶3} Andrew Haag ("Haag") was one of four key managers at BWR, and was principally involved in the panel business. (Tr. pp. 105-106) Haag had signed a non-competition and non-solicitation agreement with BWR in January2009 ("Non-Compete Agreement").1 Haag left BWR in June of 2009, and BWR exercised its right to enforce the Non-Compete Agreement. Haag accepted a check from BWR for $60,978.10 and agreed not to compete against BWR. (Tr. p. 13) Haag then went to work for Wells/PCI shortly thereafter. (Id.) In September of 2009, BWR filed a lawsuit against Haag seeking an injunction and enforcement of the Non-Compete Agreement, Shelby County Common Pleas Case No. 09-CV 364 ("Prior Litigation"). Wells/PCI was not a party to this lawsuit, but its attorney, Robert Harrelson ("Atty. Harrelson" or "Wells/PCI's attorney") represented Haag in the litigation.
{¶4} On October 9, 2009, rather than taking Haag's scheduled deposition, BWR, Haag, and Wells/PCI entered into extensive, day-long settlement negotiations. The negotiations on behalf of BWR were conducted by Thomas Fusonie ("Atty. Fusonie" or "BWR's attorney"), and Atty. Harrelson, who represented the interests of Wells, PCI and Haag. The negotiations resulted in a hand-written, three-page document styled a "Memorandum of Intent" (hereinafter, "MOI"). Although Wells/PCI's attorney wrote the agreement, it was a joint effort and was thoroughly discussed by all, including BWR's attorney, Haag, and James Verona ("Verona"), a V.P. of BWR who was present at the negotiations. In addition, Wells/PCI's attorney personally contacted Wells/PCI's V.P. of Financeand Sales Manager, Ken Steinke, and read and discussed the terms with him. Verona consulted with Rick Rogers, president of BWR, concerning the settlement. All were in agreement with the terms, and Atty. Harrelson was authorized to sign the MOI on behalf of Wells and PCI; Verona signed on behalf of BWR; and Haag signed personally.
{¶5} The MOI contained six paragraphs setting forth the settlement and agreement between the parties and was intended to be a type of "global settlement." (Tr., p. 18; Trial Exhibit 1 - MOI) The primary purpose of the MOI was to provide BWR with consideration in return for BWR's agreement to dismiss its case against Haag, and to allow Haag to continue to work for Wells/PCI, which directly violated the Non-Compete Agreement. (Tr. p. 31)
{¶6} Paragraphs 2 and 4 of the MOI provided that the benefits to BWR were to be as follows: (1) Wells/PCI was not to compete, solicit, or interfere with any existing BWR customers involved in the panel and/or distribution business, excluding the Peerless and Stolle customers (the Peerless and Stolle companies were both in Wells/PCI's top ten panel customers, as well as being customers of BWR); and, (2) Wells/PCI was to make BWR the preferred supplier for any electromechanical components for which BWR was an authorized distributor. (Tr. p. 33; Ex. 1) BWR was to provide its customer list to Wells/Haag "for an agreement of said customers, subject to reasonable confidentiality protection."(Ex. 1) If Wells/PCI violated this provision within the two-year period, Wells/PCI was to pay BWR 25% of any such improper sales.
{¶7} Paragraphs 1, 3, and 5 of the MOI settled issues with Haag and provided that Haag could continue employment with Wells; he was to return $40,000 of the non-compete payment to BWR, and BWR was not obligated to make any more payments to him; and, he was prohibited from engaging in any activities relating to the distribution and panel business during the two-year period of non-compete/non-solicitation. It was specifically stated in the MOI that Haag was to have no contact with Peerless and Stolle and he was not to discuss business concerning Peerless and Stolle with any employees or officers of Wells/PCI. (Ex. 1) In return, BWR would allow Haag to keep $20,978.10 of the non-compete payment, and it would dismiss the litigation against Haag with an agreed consent order to be signed by the trial court. (Id.)
{¶8} Paragraph 6 stated that the agreement between BWR and Wells/PCI would be "prepared as a separate out of court agreement signed by appropriate representatives of each company." (Ex. 1)
{¶9} Subsequent to enacting the MOI, the parties took various steps to implement the terms of the agreement. Haag returned $40,000 to BWR, and BWR filed the Consent Order with the trial court on January 21, 2010, dismissing the Prior Litigation against Haag. BWR's attorney drafted a formal agreementbetween the parties, based upon the MOI, and sent Wells/PCI a copy of its customer list. Wells/PCI's attorney made some modifications to the agreement, and the two attorneys communicated and exchanged emails over a period of time in an attempt to have the finalized, formal written document be consistent with the terms set forth in the MOI.
{¶10} The parties did not appear to have major differences concerning most of the terms of the final document, but difficulties arose concerning BWR's customer list. Wells/PCI objected to BWR's first submitted list, which appeared to be a data dump of over 10,000 customers. The two attorneys continued to work to modify the list, with Wells/BCI requesting two separate lists (separating panel from distribution customers) and requesting a reduction to customers in just the immediate tri-state area. BWR complied with these requests, eventually resulting in a list of about five or six hundred customers. However, this list was still not acceptable to Wells/PCI, who insisted an additional fifty customers be removed from the list as apparently these companies were also customers of Wells/PCI. Extensive efforts were made to create a list that was acceptable, but to no avail.
{¶11} At some point, BWR concluded that Wells/PCI was not acting in good faith and that there would never be an existing customer list that Wells/PCI would find acceptable. (Jun. 3, 2011 J.E., p. 3) In June of 2010, BWR filed atwo-count complaint against Wells and PCI, requesting: (1) declaratory judgment and an order enforcing the MOI; and (2) damages for breach of the MOI.
{¶12} Following discovery by all sides, Wells/PCI filed a motion for summary judgment in January of 2011, arguing that a "meeting of the minds" never existed between the parties as to a customer list, and that since there was no final agreement, a settlement could not be enforced. BWR responded, contending that there was a meeting of the minds, that the terms of a settlement agreement had been reached, that Wells/BCI breached that agreement, and that the issues raised by Wells/PCI merely concerned the interpretation of an existing agreement. The trial court denied the motion, finding there were genuine issues of material fact.
This Court finds that there is an issue as to whether a settlement agreement was reached between the parties. Certainly the fact that there were acts in furtherance of a settlement, e.g., a dismissal of a pending action, suggests that a settlement was reached. Other facts suggest that the terms of a settlement agreement were not finalized and that, therefore, there was not a meeting of minds. There is a dispute between the parties as to whether the essential terms had been agreed upon. Disputed issues of fact cannot be resolved by summary judgment. (Mar. 25, 2011 Order denying Wells/PCI's motion for summary judgment, p. 3)
{¶13} A one-day bench trial was held on April 12, 2011, concerning the issue of whether or not the parties had entered into an enforceable agreement. The two attorneys and officers/principals from each of the companies testified and presented documentary exhibits. The trial court eventually found that the MOI constituted an enforceable agreement, holding that:
In this case the evidence is clear the parties negotiated and intended to enter into a settlement agreement. The fact that they prepared a handwritten Memorandum of Intent signed by the respective parties or their representative is evidence these were not merely negotiations to be finalized at a later time but an intention to enter into a binding contract. The parties' conduct subsequent to the settlement negotiations also supports the intention and the belief that the parties had entered into a settlement agreement. (Jun. 3, 2011 J.E., p. 3)
{¶14} The trial court ordered that BWR was to submit a list of existing customers (defined as customers making purchases within three years) for Wells/PCI to confirm...
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