Frederick v. Professional Bldg. Maintenance Industries, Inc., 3--474A56

• Decision Date: 08 April 1976
• Docket Number: No. 3--474A56,3--474A56
• Citation: 344 N.E.2d 299,168 Ind.App. 647
• Parties: James FREDERICK, Defendant-Appellant, v. PROFESSIONAL BUILDING MAINTENANCE INDUSTRIES, INC., Plaintiff-Appellee.
• Court: Indiana Appellate Court

Page 299

344 N.E.2d 299

168 Ind.App. 647

James FREDERICK, Defendant-Appellant, v. PROFESSIONAL BUILDING MAINTENANCE INDUSTRIES, INC. Plaintiff-Appellee.

No. 3--474A56.

Court of Appeals of Indiana, Third District.

April 8, 1976.

Duane W. Hartman, Glenn J. Tabor, Blachly, Tabor, Bozik & Hartman, Valparaiso, for appellant.

Herbert K. Douglas, Douglas, Douglas & Douglas, Valparaiso, for appellee.

GARRARD, Judge.

In 1967, appellee (PBM) employed appellant Frederick as a management trainee in PBM's contract cleaning and maintenance business. In 1972, Frederick resigned. When he then sought to engage in the contract maintenance business on a part time basis, PBM brought this action to enforce a covenant against competition. The trial court enjoined Frederick, and he appeals. The issue is whether the cvenant given by Frederick is enforceable. It reads as follows:

'James Frederick . . . hereby covenants . . . that he will not engage in contract building maintenance business, including, but not limited to, janitorial services, window cleaning, floor cleaning, commercial or residential cleaning, either as a sole proprietor, partner, or agent or employee of a corporation or other business organization in the following localities:

The counties of Lake, Porter, La Porte and St. Joseph in Indiana; the counties of Will and Cook, in Illinois, except Chicago; and the counties of Berrien and Van Buren in Michigan.

This covenant shall extend for a period of ten years from the date of termination of the undersigned's employment . . ..'

Such covenants are in restraint of trade and are not favored by the law. However, they will be enforced if they are reasonable with respect to the covenantee, the covenantor and the public interest. This determination must be made upon the basis of the facts and circumstances surrounding each case. It depends upon a consideration of the legitimate interests of the covenantee which might be protected, and the protection granted by the covenant in terms of time, space, and the types of conduct or activity prohibited. Donahue v. Permacel Tape Corp. (1955), 234 Ind. 398, 127 N.E.2d 235.

While the burden of proving the facts and circumstances that may justify relief rests with the party seeking to enforce the covenant, the ultimate determination of whether the covenant is reasonable is a question of law for the courts. Donahue, supra; Wiley v. Baumgardner (1884), 97 Ind. 66; Struever v. Monitor Coach Co., Inc., (1973), Ind.App., 294 N.E.2d 654.

In addition, if the covenant as written is not reasonable, the courts may not enforce a reasonable restriction under the guise of interpretation, since this would amount to the court subjecting the parties to an agreement they had not made. ¹ Donahue, supra; Wiley, supra.

In the case now before us, the evidence disclosed that Frederick was employed by PBM at a management level. Through his employment, Frederick acquired skills related to the performance of the janitorial services provided by PBM and to the technique of surveying a proposed job and computing a competitive profitable bid. However, as pointed out in Donahue, the potential use by a former employee of merely the skill and ability he has acquired will not justify a restraint.

Frederick also was privy to bidding and cost analysis information which PBM considered confidential. While there was no evidence that this information was novel or unique to PBM so as to constitute a trade secret, it is apparent that it might be utilized in an effort to undercut PBM's bids to its customers. Furthermore, Frederick acquired through his employ the advantage of personal acquaintance with the representatives of PBM's customers in the area where he worked.

In Wiley the Supreme Court stated that whatever restraint is larger than the necessary protection of the party for whose benefit the covenant is given, is unreasonable and void.

In Donahue the court reaffirmed this position but stressed the necessity of considering the effect of the restraint upon the covenantee and the public as well. The point that was being underscored...