Captain and Co., Inc. v. Towne, 3-1079A272

• Decision Date: 22 May 1980
• Docket Number: No. 3-1079A272,3-1079A272
• Citation: 404 N.E.2d 1159
• Parties: CAPTAIN AND COMPANY, INC., Appellant (Plaintiff Below), v. Henry TOWNE and Towne, Inc., Appellees (Defendants Below).
• Court: Indiana Appellate Court

Page 1159

404 N.E.2d 1159

CAPTAIN AND COMPANY, INC., Appellant (Plaintiff Below), v. Henry TOWNE and Towne, Inc., Appellees (Defendants Below).

No. 3-1079A272.

Court of Appeals of Indiana, Third District.

May 22, 1980.

Samuel S. Thompson, Roger W. Benko, Thornburg, McGill, Deahl, Harman, Carey & Murray, Elkhart, for appellant.

Terry C. Shewmaker and William J. Cohen, Slabaugh, Cosentino, Walker & Shewmaker, Elkhart, for appellees.

STATON, Judge.

Captain & Company, Inc. (Captain) filed an action against Henry Towne (Towne) and Towne, Inc., seeking injunctive and monetary relief. Captain claimed that Towne, a former employee, had breached a restrictive covenant in an employment contract between the two parties. After a hearing on Captain's motion for a preliminary injunction, the trial court entered its Opinion and Order denying the requested injunctive relief.

On appeal, Captain raises two issues for our consideration:

(1) Did the trial court abuse its discretion by relying upon an erroneous legal standard in denying Captain's motion for a preliminary injunction?

(2) Was the trial court's order denying Captain's motion for a preliminary injunction contrary to and not supported by the evidence?

We affirm.

The facts relevant to our disposition of this appeal indicate that Captain is a company which specializes in insurance cleanup work and reconstruction. Pursuant to a series of one-year contracts, it had employed Towne since 1974 in the capacities of cleaner, laborer, and then, part-time estimator. Most recently, it had employed Towne as one of several company estimators and manager of all, but the financial affairs, of the company.

Each of the one-year contracts, which had been presented to Towne by Captain on a "take-it-or-leave-it" basis, contained very similar provisions. The restrictive covenant in the 1978 contract provided:

"The Employee expressly agrees that if his employment by the Corporation is terminated by himself or by the Corporation for any reason whatsoever, then for a period of two (2) years from the date of such termination, the Employee will not directly or indirectly, render any services to or become employed by, or participate, or engage in or assist others to engage in any business which is competitive to the business of the Corporation in the areas of insurance claim work, commercial building restoration and exterior building cleaning and air purification, within a fifty (50) mile radius of Elkhart, Indiana. . . ."

When Towne was presented with his 1979 one-year contract, he noted that its terms had been substantially altered from those of the prior contracts as well as from an understanding he had reached with Captain. He declined to sign the offered contract and subsequently tendered his resignation to Captain on June 11, 1979. As a favor to its owners, he continued to work until July 6, 1979. One week later, he began employment with Towne, Inc., a general contracting firm. At the time of the hearing, Towne, Inc. had been in business for six weeks. Its jobs, to that date, had involved insurance cleanup and reconstruction work.

Initially, we note that the granting or the refusal to grant a preliminary injunction is within the sound discretion of the trial court. We will not interfere with the exercise of that discretion unless there is a showing that the trial court clearly abused its discretion. Peters v. Davidson, Inc. (1977), Ind.App., 359 N.E.2d 556; Elder v. City of Jeffersonville (1975), 164 Ind.App. 422, 329 N.E.2d 654. In Indiana, an abuse of discretion has been defined as "an erroneous conclusion and judgment, one clearly against the logic and effect of the facts and circumstances before the court, or the reasonable, probable, and actual deductions to be drawn therefrom." Elder, supra, at 657.

On appeal, Captain argues that the court abused its discretion when it utilized an incorrect legal standard in rendering its judgment. Relying on Donahue v. Permacel Tape Corp. (1955), 234 Ind. 398, 127 N.E.2d 235, the trial court held, in denying the motion for preliminary injunction, that:

"Thus, the acquisition of skill and information, excepting secret trades and confidential information, and the ability which a person has acquired, belong to the individual and cannot be taken from him and, thus, are not sufficient to justify imposing a restraint."

We agree with the court in its well-reasoned analysis and conclude that it did not abuse its discretion.

Restrictive covenants are in restraint of trade and, as such, are not favored by the law. Frederick v. Professional Bldg. Main. Indus., Inc. (1976), Ind.App., 344 N.E.2d 299. However, they will be enforced if the restraint is reasonable with respect to the parties involved and the public interest. Unishops, Inc. v. May's Family Centers, Inc. (1980), Ind.App., 399 N.E.2d 760; Welcome Wagon v. Haschert (1955), 125 Ind.App. 503, 127 N.E.2d 103. The question of reasonableness is one of law for the courts, to be determined by examining the circumstances and facts surrounding each case. Frederick, supra. In making a determination of reasonableness, the court will consider the interest of the employer which might be protected by the covenant and the protection granted in terms of time, space and the types of activity proscribed. 4408, Inc. v. Losure (1978), Ind.App., 373 N.E.2d 899.

Defining Captain's protectible interest is of importance in determining whether the covenant in question is reasonable. Captain contends that Towne knows its procedures in getting sales, running job sites, working with insurance adjustors, and, most importantly, in estimating jobs. "This ability," Captain argues, "gives Towne the capacity to underbid and thereby take future jobs away from Captain."

The trial court, in its Opinion and Order, distinguished the protectible interest in the case at bar from that found in a number of Indiana cases involving...