Fowler v. Printers II, Inc., 64

CourtCourt of Special Appeals of Maryland
Citation89 Md.App. 448,598 A.2d 794
Docket NumberNo. 64,64
PartiesMari-Ane FOWLER, et al. v. PRINTERS II, INC. ,
Decision Date01 September 1991
David P. Blackwood (J. Gordon Forester, Jr. and Greenstein, Delorme & Luchs, P.C., on the brief) Washington, D.C., for appellants

Wayne G. Travell and David A. Rosenberg (Tucker, Flyer & Lewis, P.C., on the brief) Washington, D.C., for appellee.

Argued before BISHOP, WENNER and MOTZ, JJ.

MOTZ, Judge.

This case arises out of a nonsolicitation clause in an employment contract. Appellee/cross appellant, Printers II, Inc. ("Printers"), brought this action in the Circuit Court for Montgomery County (Weinstein, J.) against its former employee, Mari-Ane Fowler ("Fowler") and her new employer, Holladay-Tyler Printing Corporation ("Holladay-Tyler"). After a bench trial, the circuit court (Weinstein, J.) found that: (1) Fowler breached her employment contract with Printers and (2) Holladay-Tyler tortiously interfered with that employment contract. The lower court entered judgment for Printers against both Fowler and Holladay-Tyler in the aggregate amount of $410,976.00.

[598 A.2d 797]

On appeal, appellants/cross appellees, Fowler and Holladay-Tyler, raise the following issues: 1

1. Certain restrictive covenants in the employment contract are unenforceable as a matter of law.

2. The trial court erred in finding that Holladay-Tyler tortiously interfered with the employment contract.

3. The trial court erred in its calculation of damages.

In its appeal and cross-appeal, Printers asserts:

4. The trial court improperly limited Printers' damages.

5. The trial court erred in failing to award damages for Fowler's solicitation of a Printers' employee.

6. The trial court erred when, without a hearing or any findings of fact, it refused to impose sanctions on Fowler.

We affirm in most material respects, reverse one element of the damage award, and remand for further findings of fact on one ancillary issue and on the sanctions.


On September 19, 1988, after having her lawyer examine it, Fowler executed a written employment contract with Printers, a commercial printer doing business in the Washington metropolitan area with yearly sales in excess of $20 million. Printers determined that it wanted to have its important sales personnel under employment contracts in order to protect Printers' client base.

When she signed the contract, Fowler was given a $15,000 raise, so that her annual salary totaled approximately $110,000. As one of Printers' top salespeople, Fowler achieved approximately $4 million in aggregate sales in fiscal year 1988. For more than seven months after signing the contract, Fowler accepted the higher salary and continued as an employee of Printers. At no time during her employment did she complain to Printers about the employment contract, or in any way indicate to Printers that she felt the employment contract was invalid.

In the employment contract, Fowler agreed that during the period of her employment by Printers and for one year after termination of employment, she would not disclose information concerning Printers' business, divert or solicit any business from Printers, service or take orders from any accounts or customers of Printers or hire any employee of Printers. The scope of the accounts/customer restriction was limited to those accounts and customers that had contact with Printers within the twelve months immediately preceding the termination date.

On May 1, 1989, Fowler submitted her written resignation to Printers. Her letter expressed "deep regret" at leaving Printers. At a meeting with Printers' Vice President, in which Fowler gave him this letter of resignation, she assured him that she would not solicit or service clients of Printers and acknowledged her obligations under the contract of employment.

It appears that within hours of terminating her employment relationship with Printers, Fowler became employed by Holladay-Tyler, one of Printers' competitors in the printing business, at a pay cut of approximately $20,000.00. On May 2, 1989, the day after her resignation from Printers and her first full day as a salesperson at Holladay-Tyler, Fowler began contacting the accounts/customers which she had serviced at Printers.

Printers became aware of these solicitations and on May 8, 1989, advised Fowler in writing that such solicitations constituted a violation of her employment contract. Printers further demanded that she cease this activity. On May 9, 1989, Printers notified, in writing, the President of Holladay-Tyler, Howard Sullivan, that Printers intended to enforce Fowler's contract and hold Fowler and Holladay-Tyler liable for any violations of it. Indeed, Printers sent Sullivan a copy of the contract with specific reference made to the restrictive covenants contained in the contract. Nevertheless Fowler continued to solicit business from her former clients with the knowledge and encouragement of her new employer, Holladay-Tyler.

In September 1989, Printers learned of these continued solicitations. Unable to obtain voluntary compliance with the contract terms by Fowler or Holladay-Tyler, Printers filed a two-count complaint on September 29, 1989. Printers alleged that: (1) Fowler breached her contract to Printers and (2) Holladay-Tyler intentionally interfered with that contract; Printers sought to be compensated in money damages for these wrongs. In addition, Printers sought an ex parte injunction against both appellants. On October 12, 1989, the circuit court granted the ex parte injunction, observing that it appeared that Fowler "actively solicited or attempted to solicit business from customers of Printers and that Holladay-Tyler may have intentionally participated with Ms. Fowler in breaching the terms of her employment contract."

On November 2, 1989, the circuit court issued an interlocutory injunction ordering, inter alia, that Fowler "be restrained and enjoined from attempting to solicit any business from each and every customer of Printers II, Inc. which she had serviced as an employee of Printers II, Inc. during the period of her employment." By the same order, the court restrained and enjoined Fowler from contacting any employee of Printers "to persuade the employees to apply for employment at Holladay-Tyler." Finally, the order restrained and enjoined Fowler from "disclosing to any person or entity any confidential proprietary information of Printers II, Inc. which she obtained during her employment." The interlocutory injunction, by its terms, expired on May 1, 1990, and there was no further claim for equitable relief. The grant of the interlocutory injunction was not appealed.

A nine-day bench trial was held from October 22, 1990 to November 1, 1990. At trial, Printers presented voluminous documentary and testimonial evidence to demonstrate that Fowler repeatedly and intentionally violated the contract and the interlocutory injunction and that Holladay-Tyler knew of, participated in, and benefitted from her actions.

On December 3, 1990, Judge Weinstein issued a well reasoned written Opinion and Order. After first carefully reviewing the above facts, 2 he found:

[t]he record is replete with evidence that Ms. Fowler actively solicited business from these accounts [eight accounts which she had serviced while at Printers] by either direct submission of bids or by personal contact with the various account representatives. Reimbursable expense accounts and telephone records relating to entertainment of these clients by Ms. Fowler to Holladay-Tyler attested to the company's actual knowledge of her activities.

He further found that "Printers II had a protectable business interest in preventing Ms. Fowler from using the contacts she had established while at Printers II to pirate its customers. It is evident that the printing business community is close knit and highly competitive." The court concluded that the restrictive covenants in the employment contract "were merely efforts to guard against the unprincipled and predatory tactics of competitors" and met the "test of reasonableness" based on the facts of this case. Accordingly, the court awarded Printers $360,976.00 in damages for breach of the employment contract by Fowler and tortious interference with it by Holladay-Tyler and $50,000.00 for damage to Printers' reputation and good will.

Printers then moved for sanctions and civil contempt and requested a hearing on its motion. On January 8, 1991, without holding a hearing, the lower court issued a short order denying Printers' motion. The parties noted timely appeals and cross appeals from both orders. Additional facts will be set forth within as necessary.

I. The Enforceability of the Restrictive Covenants in the Employment Contract

Fowler and Holladay-Tyler claim that the restrictive covenants in Fowler's employment contract with Printers are unenforceable because they "serve no legitimate interest" of Printers and because they are "overly broad."

In support of their initial argument on this point, appellants rely upon Budget Rent A Car of Washington, Inc. v. Raab, 268 Md. 478, 302 A.2d 11 (1973) and Becker v. Bailey, 268 Md. 93, 299 A.2d 835 (1973). Neither case aids their cause. It is true that in both the court refused to enforce restrictive covenants; however, in both, the employee was an unskilled worker, without unique skills, who did not solicit the customers of his former employer. Both cases, therefore, followed what the Becker court characterized as the "general rule" that an employer has a legitimate interest and so can enforce "restrictive covenants" only against those "employees who provide unique services, or to prevent the future misuse of trade secrets, routes, or lists of clients, or solicitation of customers." 268 Md. at 97, 299 A.2d 835 (emphasis added). Other cases elaborate that an employer has a...

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