Contempo Communications, Inc. v. MJM Creative Services, Inc.

• Decision Date: 02 April 1992
• Citation: 582 N.Y.S.2d 667,182 A.D.2d 351
• Parties: CONTEMPO COMMUNICATIONS, INC., Plaintiff-Respondent, v. MJM CREATIVE SERVICES, INC., Margaret Nolin, Michael Wolkowitz, "John Doe" and "Jane Doe", Defendants-Appellants.
• Court: New York Supreme Court — Appellate Division

Page 667

582 N.Y.S.2d 667

182 A.D.2d 351

CONTEMPO COMMUNICATIONS, INC., Plaintiff-Respondent, v. MJM CREATIVE SERVICES, INC., Margaret Nolin, Michael Wolkowitz, "John Doe" and "Jane Doe", Defendants-Appellants.

Supreme Court, Appellate Division First Department.

April 2, 1992.

Before MURPHY, P.J., and WALLACH, KUPFERMAN, ASCH and SMITH, JJ.

MEMORANDUM DECISION.

Order of the Supreme Court, New York County (Martin Stecher, J.), entered September 12, 1990, which, inter alia, granted plaintiff summary judgment as to liability on its fifth cause of action, and denied defendants' cross-motion for summary judgment dismissing the complaint, is unanimously affirmed, without costs or disbursements.

At issue on this appeal is whether the IAS court erred in holding that a restrictive covenant in defendants' employment agreements was valid as a matter of law, and had been breached by the individual defendants.

Defendants Nolin and Wolkowitz were both employed by plaintiff Contempo in 1982 as "project managers" at an annual salary of approximately $30,000 each. Plaintiff Contempo, a New York corporation, is in the business of producing "multi-media" shows, including the creation of scripts, musical scores, and visual effects, for the use of its customers, primarily Fortune 500 companies, at their corporate meetings. As project managers, the individual defendants supervised production of shows for plaintiff's customers, and acted as liaisons between the plaintiff and its customers.

Approximately one year after the individual defendants began working for plaintiff, plaintiff, in order to reduce operating expenses, decided to merge sales and production into one position. Consequently, plaintiff terminated its sales staff and added sales responsibilities to the functions already performed by its producers. The producers were compensated for these extra activities by a Producer's Incentive Profitability Plan, whereby they were offered an opportunity to earn commissions on certain types of business which they secured for plaintiff.

Plaintiff maintains that since the merger of its sales and production functions would give its producers enormous leverage over the customers, it requested that its producers sign restrictive employment covenants. The individual defendants were therefore required to sign identical covenants on July 22, 1983, in connection with their new functions as sellers/producers. In pertinent part, the restrictive covenant provided:

"Should your employment at Contempo terminate for any reason, you will, for a period of two years from date your employment ends, refrain from competing with Contempo with respect to any business or any account which Contempo has served or is serving and in which you have participated or in any way been active prior to the termination of your employment. This, of course, only applies where your services or activities are substantially the same as, or directly related to the business in which Contempo has been engaged with respect to such business or accounts." (Emphasis added.)

On September 30, 1984, defendant Wolkowitz was terminated for reasons unclear on this record. According to plaintiff, upon his termination, defendant Wolkowitz was barred from soliciting or doing business with eight companies that he had previously serviced as an employee of the plaintiff for a two-year period.

Nolin voluntarily resigned on October 12, 1984, and according to plaintiff, by the terms of her...