Labor Ready v. Abis

Decision Date02 March 2001
Docket NumberNo. 79,79
Citation137 Md. App. 116,767 A.2d 936
PartiesLABOR READY, INC. et al., v. Alan ABIS.
CourtCourt of Special Appeals of Maryland

Gretchen N. Smith (George A. Nilson, Michael S. Poulos and Piper Marbury, Rudnick & Wolfe, LLP, on the brief), Baltimore, for appellants.

Max H. Lauten (Kramon & Graham, P.A., Baltimore, Scott M. Flicker and Paul Hastings, Janofsky & Walker, LLP, Washington, DC, on the brief), for appellee.

Argued before MURPHY, C.J., DEBORAH S. EYLER, and PAUL E. ALPERT, (Ret'd, Specially Assigned), JJ. DEBORAH S. EYLER, Judge.

Labor Ready, Inc. and Labor Ready Northeast, Inc. (referred to collectively as "Labor Ready"), appellant, challenges an order of the Circuit Court for Baltimore City granting summary judgment in favor of Alan Abis, appellee, on Labor Ready's claim for breach of a non-compete provision of an employment contract between the parties. Labor Ready presents the following questions for review, which we have rephrased:

I. Did the circuit court err in concluding that Abis's conduct in soliciting potential customers was not a violation of the territorial restriction set forth in the non-compete agreement?

II. Did the circuit court err in ruling that the non-compete agreement was unreasonable as a matter of law?

III. Did the circuit court err in granting summary judgment in favor of Abis even though he admitted violating the territorial restriction set forth in the non-compete agreement?

FACTS AND PROCEEDINGS
Labor Ready is a national firm engaged in the business of providing temporary workers to the construction, landscaping, warehousing, and light industrial markets. In April 1998, Labor Ready hired Abis to work as the branch manager of its office at 3303 Annapolis Road, in Baltimore City. On March 18, 1998, before the start of his employment, Abis signed an "At Will Employment Contract" ("employment contract") with Labor Ready. The employment contract contained a non-compete provision that reads:
It is understood and agreed that the nature of the methods employed in [Labor Ready's] business is such that [Abis] will be placed in a close business and personal relationship with the customers of [Labor Ready]. Thus, during the term of this Employment Contract and for a period of one (1) year immediately following the termination of [Abis's] employment, for any cause whatsoever, so long as [Labor Ready] continues to carry on the same business, [Abis] shall not, for any reason whatsoever, directly or indirectly, for [himself] or on behalf of, or in conjunction with, any other person, persons, company, partnership, corporation or business entity:

(a) Call upon, divert, influence or solicit or attempt to call, divert, influence or solicit any customer or customers of [Labor Ready];

(b) Divulge the names and addresses or any information concerning any customer of [Labor Ready];

(c) Own, manage, operate, control, be employed by, participate in or be connected in any manner with the ownership, management, operation or control of the same, similar, or related line of business as that carried on now by [Labor Ready] within a radius of ten (10) miles from [Labor Ready's] office at which [Abis] was last employed; and

(d) Make any public statement or announcement, or permit anyone else to make any public statement or announcement that Employee was formerly employed by or connected with [Labor Ready].

The time period covered by the covenants contained herein shall not include any period(s) of violation of any covenant or any period(s) of time required for litigation to enforce any covenant. If the provisions set forth are determined to be too broad to be enforceable at law, then the area and/or length of time shall be reduced to such area and time and that shall be enforceable.

Labor Ready discharged Abis in November, 1998. In January, 1999, Abis was hired by Preferred Labor, one of Labor Ready's competitors in the temporary employment labor business. Abis was assigned to work at Preferred Labor's Suitland office, in Prince George's County, which is more than ten miles from the Annapolis Road office of Labor Ready. On February 19, 1999, Preferred Labor transferred Abis to an office it was about to open on Reisterstown Road, in Baltimore City. That office is located within ten miles of Labor Ready's Annapolis Road office. Abis worked at the Reisterstown Road office of Preferred Labor for seventeen days. Before that office opened for business, he was transferred back to Preferred Labor's Suitland office.

On March 30, 1999, Abis became the branch manager of Preferred Labor's Essex office, in Baltimore County. That office is more than ten miles from Labor Ready's Annapolis Road office.

On April 12, 1999, Labor Ready filed a complaint against Abis in the Circuit Court for Baltimore City alleging breach of contract and seeking injunctive relief. Labor Ready alleged that Abis was violating the non-compete provision of the employment contract in that he was working for Preferred Labor at a location within ten miles of Labor Ready's Annapolis Road office. It sought an order enjoining Abis from engaging in competition with Labor Ready through employment or involvement with Preferred Labor in violation of the employment contract. The request for injunctive relief was taken before a master who stated, after holding a hearing, that she would recommend to the court that the injunctive relief be denied. At that point, Labor Ready withdrew its request for injunctive relief.

On July 2, 1999, Labor Ready filed an amended complaint, realleging the facts in support of its contract claim as set forth in its original complaint.1 Thereafter, discovery, including the deposition of Abis, ensued.

In addition to the facts that we have recited, the facts adduced in discovery established that Abis had not solicited any customers of Labor Ready within a ten-mile radius of its Annapolis Road office. Abis had solicited and serviced new customers within that area and had hired workers who, while never having been associated with Labor Ready, nevertheless were located within the ten-mile radius.

Abis filed a motion for summary judgment. Labor Ready filed an opposition and cross-motion for summary judgment. In support of his motion, Abis argued that the language of the non-compete provision of the employment contract did not prohibit him from doing business with customers who had never been associated with Labor Ready, but were located within a ten-mile radius of Labor Ready's Annapolis Road office. He argued, in the alternative, that if the non-compete provision could be interpreted to prohibit him from doing so, it was unenforceable as overly broad and against public policy. In its cross-motion for summary judgment, Labor Ready argued that Abis had conceded that for seventeen days he had violated the non-compete provision; it further argued that Abis's solicitation of customers within ten miles of the Annapolis Road office constituted "operating" within the ten-mile radius.

The circuit court held a hearing on the motions and gave its ruling from the bench. The court ruled that with respect to the seventeen-day violation, no damages could be shown to have resulted from that technical breach. The court further ruled that the plain language of the non-compete provision did not prohibit Abis from working outside the ten-mile radius but dealing with new customers (i.e., those who never had been customers of Labor Ready) inside that radius. Finally, the court ruled that if the language of the non-compete provision could be interpreted to mean that Abis could not deal with new customers within a radius of ten miles of Labor Ready's Annapolis Road office, even though he was working at an office outside of the ten-mile radius, the provision would be unenforceable as against public policy. The court granted Abis's motion for summary judgment and denied Labor Ready's cross motion for summary judgment. It reserved, however, on the issue of whether Labor Ready was entitled to recover attorney's fees under the employment contract.

On February 14, 2000, the circuit court issued a written order memorializing its rulings. Thereafter, on March 1, 2000, by stipulation and order of the court, Labor Ready's claim for attorney's fees was dismissed without prejudice. Labor Ready then noted a timely appeal.

Additional facts will be recited as pertinent to our discussion of the issues.

STANDARD OF REVIEW

Maryland Rule 2-501(e), which governs motions for summary judgment, provides: "The court shall enter judgment in favor of or against the moving party if the motion and response show that there is no genuine dispute as to any material fact and that the party in whose favor judgment is entered is entitled to judgment as a matter of law." In relying on a motion for summary judgment, the trial court must view the facts and all reasonable inferences from those facts in the light most favorable to the nonmoving party. Brown v. Wheeler, 109 Md.App. 710, 717, 675 A.2d 1032 (1996). Yet, the nonmoving party may not rely on bare allegations or "`a mere scintilla' " of evidence to defeat a motion for summary judgment. Helman v. Kim, 130 Md.App. 181, 193, 745 A.2d 451 (2000) (quoting Barber v. Eastern Karting Co., 108 Md.App. 659, 672, 673 A.2d 744 (1996) (citing Beatty v. Trailmaster Prods., Inc., 330 Md. 726, 738, 625 A.2d 1005 (1993))). "`Thus, when a movant has carried its burden, the party opposing summary judgment "must do more than simply show there is some metaphysical doubt as to the material facts."`" Nerenberg v. RICA of Southern Md., 131 Md.App. 646, 660, 750 A.2d 655 (2000) (quoting Beatty, 330 Md. at 738, 625 A.2d 1005 (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986))).

In reviewing a trial court's grant of a motion for summary judgment, we engage in much the same analysis. If the trial court properly determined that no genuine dispute...

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