Furniture Mfg. Corp. v. Joseph

• Court: Missouri Court of Appeals
• Writing for the Court: SMART
• Citation: Furniture Mfg. Corp. v. Joseph, 900 S.W.2d 642 (Mo. App. 1995)
• Decision Date: 30 May 1995
• Docket Number: No. WD,WD
• Parties: FURNITURE MANUFACTURING CORP. d/b/a Fixtures Furniture, Appellant, v. Michael L. JOSEPH, Peter J. Raskis and JR Associates, Inc., Respondent. 49577.

Page 642

900 S.W.2d 642

FURNITURE MANUFACTURING CORP. d/b/a Fixtures Furniture, Appellant, v. Michael L. JOSEPH, Peter J. Raskis and JR Associates, Inc. Respondent.

No. WD 49577.

Missouri Court of Appeals Western District.

May 30, 1995.

Leonard B. Rose, Kansas City, for appellant.

James M. Yeretsky, Kansas City, for respondent.

Before SPINDEN, P.J., and ULRICH and SMART, JJ.

SMART, Judge.

Furniture Manufacturing Corporation, d/b/a Fixtures Furniture ("Fixtures"), appeals from a denial of a preliminary injunction and an order dissolving a temporary restraining order against respondents Michael L. Joseph, Peter J. Raskis, and JR Associates, Inc. (all respondents will be collectively referred to herein as "JR"). Fixtures contends that the trial court erred in dissolving the TRO and in failing to grant a preliminary injunction by: (1) holding that Fixtures failed to show a substantial probability of irreparable harm such as would justify an injunction; and (2) applying a balancing of hardship tests weighing against the issuance of an injunction.

Background Facts

Fixtures is a Kansas City, Missouri manufacturer of commercial tables and chairs. Fixtures has approximately 40 manufacturer's representatives operating throughout the United States and Canada. Michael L. Joseph is a former employer of Fixtures who became an independent manufacturer's representative in 1983, representing Fixtures and Nemschoff, a manufacturer of wood furniture for hospitals and student unions. On June 1, 1983, Fixtures and Joseph entered into a "Manufacturing Representative Agreement" ("Agreement") containing the following provisions:

4. Duties. Company hereby agrees that Manufacturers Representative is to act as Company's Manufacturers Representative to sell the goods manufactured by Company only in the territory particularly defined in the map attached. Manufacturers Representative agrees to endeavor, to the best of his ability to devote not less than 30% [this figure is crossed out and 70% is written in the margin] of his sales time to such representation of the Company and without prior written consent of the Company not to represent for other companies or offer for himself the solicitation of orders for or the sale of any items of the same nature or of similar agreement. Manufacturers Representative further agrees that he will not, without prior written consent of the Company, which shall not be arbitrarily refused, (a) devote more than 10% of his sales time to represent for other companies or offer for himself the solicitation of orders for the sale of any items in any territory other than that as defined in the map attached, or (b) take on any more lines to represent than those already established as per the effective date of this agreement....

9. Restrictive Covenant. As a further inducement and consideration to Company to enter into this Agreement, Manufacturers Representative shall not, for a period of one year upon termination for any reason whatsoever, whether as a Manufacturers Representative, employee, officer, director, shareholder, or consultant, work in any administrative or supervisory capacity or sales in any manner whatsoever with any company directly or indirect [sic] competitive with the business of Company in the same territory served during this agreement.

10. Termination of Agreement. Either party may terminate this agreement on two weeks written notice to the other. The Company may terminate this agreement for cause at any time without prior notice to Manufacturers Representative....

19. Right to Injunction or Restraining Order. Manufacturers Representative hereby acknowledges that violation of the terms of this agreement by him with respect to his obligations under certain paragraphs of this agreement, including but not limited to paragraph 4 with respect to duties ... would result in irreparable harm and damage to the Company not adequately compensable by money damage, and he agrees that in the event of such violation of any term of this agreement that the Company may, in its absolute discretion, seek injunctive relief including exparte temporary restraining order in order to avoid such irreparable harm....

In March, 1988 Joseph was joined by Peter J. Raskis. Joseph and Raskis formed JR Associates, Inc. Both men signed separate, identical amendments to the June 1, 1983 Agreement dated November 11, 1988 signifying their agreement to be bound by the terms of the agreement. Since 1988, the range of manufacturers represented by JR has broadened considerably. By 1994, JR's sales of Fixtures products consisted of well below fifty percent of JR's total sales.

In the fall of 1993, William Gapske, a sales manager with Fixtures, was told by Joseph that JR was handling a line called Sitag. Joseph told Gapske that JR was selling lounge furniture, a line which would not be competitive with Fixtures. Joseph did not tell Gapske that JR's representation of Sitag also included ergonomic seating which competed with Fixtures' ergonomic seating. Neither Joseph nor Raskis asked permission to handle the line, either orally or in writing. The disclosure report submitted by JR, although listing Sitag, did not disclose the fact that Sitag was competitive in ergonomic seating, but instead showed Sitag's product line as "conference room chairs, lounge chairs, sofas."

Fixtures maintains a list of major competitors for the purpose of helping identify major competitors. The list is not exhaustive, and it is updated from time to time to reflect changes in the state of the market. Sitag was not placed upon the list until after Fixtures investigated JR's involvement with Sitag.

Upon investigation, Gapske discovered that Sitag was a competitor because its products included ergonomic office seating. In January, 1994, Gapske indicated concern to Joseph about JR's continued representation of Sitag. In early February, Fixtures instructed JR to terminate representation of Sitag. On February 15, 1994, Joseph acknowledged in correspondence that JR had not asked permission from Fixtures to represent Sitag. Joseph stated that JR had viewed the decision to represent Sitag as a replacement line for Carolina Seating, a product line which JR had represented in the past. The letter requested that Polsky allow JR to continue to represent Sitag, and requested that Fixtures withdraw its "ultimatum."

Fixture's response, while expressing sympathy at some of the business and personal problems mentioned by Joseph in his letter, stated that nevertheless Fixtures had no choice but to terminate.

I cannot allow Reps to take on lines without our knowledge and especially competitors either on the Major Competitors list or not. The Sitag Eco-Sit is in competition to our discovery original [a Fixtures product] and their Liberty to our discovery passive plus and flair [other Fixtures products]....

JR was then subsequently notified that Fixtures was electing to terminate on two weeks' notice, as provided for by the agreement, to take effect on March 4, 1994. Fixtures reminded JR that JR would continue to be bound, after termination, "by certain terms including, but not limited to, the restrictive covenant, trade secrets, samples and records, confidential information, jurisdiction, and others."

In April, 1994, after Fixtures terminated the relationship with JR, JR also took on the sale of products manufactured by Allsteel. Allsteel had been identified as a major competitor from the inception of the agreement between Joseph and Fixtures. After learning that JR was also representing Allsteel, Fixtures elected to seek a temporary restraining order. Norman Polsky, chairman of Fixtures, stated that he was initially willing to waive enforcement of the restrictive covenant (with regard to JR's representation of Sitag) but that when he found out that JR had also begun to represent Allsteel he decided that Fixtures would seek enforcement of the restrictive covenant.

On May 13, 1994, a hearing was held in the Circuit Court of Jackson County on Fixtures' motion for preliminary injunctive relief. At the conclusion of Fixtures' evidence, JR moved to deny the preliminary injunction and to dissolve the temporary restraining order on grounds that the balance of the equities favored allowing JR to be free from enforcement of the covenants. By order dated May 17, 1994, the circuit court dissolved the temporary restraining order, stating:

[P]laintiff [Fixtures] has failed to show substantial probability of irreparable harm and failed to show that the balance of hardships weighs in favor of [Fixtures] such as would justify the issuance of an injunction against defendants.

JR presented no evidence at the hearing on preliminary relief because the trial court granted JR's motion at the conclusion of the evidence presented by Fixtures. Fixtures' appeal is an appeal only of the dissolution of the TRO and the denial of preliminary injunctive relief. Sua sponte, we examine the appealability of these rulings.

Appealability of Trial Court Rulings

An appeal will lie from a final decree in an injunction suit; but unless the case comes within some special statutory provision to the contrary, an appeal will not lie from an order granting, denying, or dissolving a preliminary injunction or from any other merely interlocutory order or decree. Eickelmann v. Eickelmann, 724 S.W.2d 261, 262 (Mo.App.1986); 4 C.J.S. Appeal and Error § 144 (1993). Missouri does have a statutory provision which allows an appeal from any order dissolving an injunction. Section 512.020, RSMo 1994. A temporary restraining order has been held to be an injunction within the meaning of this statute, and thus an appeal lies from an order dissolving it. Perseverance Common School Dist. No. 90 v. Honey, 367 S.W.2d 243, 246-47 (Mo.App.1963). Whether the dissolution of the temporary restraining order in this case is appealable requires reference to Rule 92.02(b), which governs the issuance of temporary restraining...