IN RE BENNETT PAPER CORP., Bankruptcy No. 85-00782(2)

• Court: U.S. Bankruptcy Court — Eastern District of Missouri
• Writing for the Court: DAVID P. McDONALD
• Citation: IN RE BENNETT PAPER CORP., 68 B.R. 515 (Bankr. E.D. Mo. 1986)
• Decision Date: 16 September 1986
• Docket Number: Bankruptcy No. 85-00782(2),Adv. No. 86-0013(2).
• Parties: In re BENNETT PAPER CORPORATION, Debtor. BENNETT PAPER CORPORATION, Plaintiff, v. Gerald McGRAW, an individual, Jefferson Smurfit Corporation, and Alton Packaging Corporation, Defendants.

68 B.R. 515 (1986)

In re BENNETT PAPER CORPORATION, Debtor BENNETT PAPER CORPORATION, Plaintiff, v. Gerald McGRAW, an individual, Jefferson Smurfit Corporation, and Alton Packaging Corporation, Defendants.

Bankruptcy No. 85-00782(2), Adv. No. 86-0013(2).

United States Bankruptcy Court, E.D. Missouri, E.D.

September 16, 1986.

Barry S. Schermer, Clayton, Mo., Joel Pelofsky, Kansas City, Mo., for debtor.

Donald H. Whaley, Terry J. Galganski, Clayton, Mo., for plaintiff.

Jordan B. Cherrick, St. Louis, Mo., for Jefferson and Alton.

Gordon F. Webb, St. Louis, Mo., for McGraw.

MEMORANDUM OPINION

DAVID P. McDONALD, Bankruptcy Judge.

INTRODUCTION

On January 10, 1986, Bennett Paper Corporation ("Bennett"), Debtor, filed its Petition For Injunctive Relief and Damages against Defendants Gerald McGraw ("McGraw"), Jefferson Smurfit Corporation ("Jefferson") and Alton Packaging Corporation ("Alton"). Initially, Bennett's Complaint consisted of three counts, the first and second of which sounded in contract and requested injunctive relief as well as money damages. On January 30, 1986, Jefferson and Alton moved to dismiss Counts I and II and McGraw moved to dismiss the entire Complaint. On February 11, 1986, the Court held a preliminary hearing on the matter, at which time all parties appeared and filed briefs in support of their respective positions. Defendants again moved for a dismissal of all or some counts of Bennett's Complaint and Bennett requested leave to file an additional brief in support of its claims for relief plead in Counts I and II. Based upon that record, on February 18, 1986, the Court determined that Bennett was not entitled to the injunctive relief it had requested in Counts I and II, but granted Bennett leave to file an additional brief in suport of its claims for relief plead in those counts. On February 26, 1986, Bennett filed its brief opposing Defendants' motions to dismiss Counts I and II and on February 28, 1986, Jefferson and Alton replied by letter addressed to the Court. On September 8, 1986, by leave of Court, Bennett amended its Complaint by adding an additional count against McGraw. Bennett, however, made no substantive changes in Counts I and II. Upon consideration of the parties' briefs, the record as a whole and for the reasons set forth below, the Court will this date enter an order dismissing Counts I and II of Bennett's Amended Complaint and set a pretrial conference on the remaining counts.

JURISDICTION

This Court has jurisdiction over the parties and subject matter of this proceeding pursuant to 28 U.S.C. §§ 1334, 151, and 157 and Local Rule 29 of the United States District Court for the Eastern District of Missouri. This is a "related proceeding" which the Court may hear and determine by reason of the consent of all parties to the proceeding.

DEFENDANTS' MOTIONS TO DISMISS

Rule 12(b)(6) F.R.Civ.P., applicable to this proceeding by reason of Bankruptcy Rule 7012(b), provides that if matters outside the pleadings are presented on a motion to dismiss, the court shall treat the motion as one for summary judgment under Rule 56 F.R.Civ.P. (Bankruptcy Rule 7056). Since numerous documents as well as depositions have been presented to the Court, the Court will treat Defendants' motions to dismiss as ones for summary judgment.

In determining Defendants' motions, the Court views the facts in the light most favorable to Bennett and assumes the allegations of Bennett's Amended Complaint to be true. Elbe v. Yankton Independent School Dist. No. 1, 714 F.2d 848, 850 (8th Cir.1983).

Taken in this light, the material facts are as follows. Since 1962, Bennett has manufactured, distributed, imported and exported paper products. In June, 1978, Bennett purchased the corporate stock of American Label Corporation and Eagle Container Corporation, each of which was 50 percent owned by Defendant McGraw. In conjunction with its purchase of McGraw's stock in these two corporations, Bennett entered into an employment agreement with McGraw which commenced on June 1, 1978, and ended on May 30, 1981. At the same time and in conjunction with his employment, McGraw also agreed that

"in the event his employment with American Label Corporation is terminated, whether by American Label Corporation, Bennett Paper Corporation, or by Employee, that he will not, during the year immediately following such termination, either directly or indirectly as a sole proprietor, partner, or employee of a partnership or corporation, call or solicit any of the customers of American Label Corporation, or Bennett Paper Corporation, which he serviced or called upon while an Employee of American Label Corporation or Bennett Paper Corporation."

Although...