Nordon, LLC v. Schlisman

• Decision Date: 28 June 2021
• Docket Number: No. 1186 EDA 2020,No. 1056 EDA 2020,1056 EDA 2020
• Citation: 258 A.3d 554 (Table)
• Parties: NORDON, LLC v. Andrew SCHLISMAN, Appellant Nordon, LLC Appellant v. Andrew Schlisman
• Court: Pennsylvania Superior Court

258 A.3d 554 (Table)

NORDON, LLC

v.Andrew SCHLISMAN, Appellant

Nordon, LLC Appellant

v.Andrew Schlisman

No. 1056 EDA 2020

No. 1186 EDA 2020

Superior Court of Pennsylvania.

Filed June 28, 2021

Reargument Denied September 3, 2021

MEMORANDUM BY COLINS, J.:

These are cross-appeals from a judgment following a non-jury trial entered by the Court of Common Pleas of Bucks County in favor of Nordon, LLC (Nordon) and against its former employee Andrew Schlisman (Schlisman) in a breach of contract action in which Nordon sought damages and injunctive relief for violation of a non-competition agreement and payment of the unpaid portion of a loan to Schlisman. The trial court found in favor of Nordon and against Schlisman both on Nordon's claims and on counterclaims that Schlisman had filed against Nordon. The trial court awarded Nordon $293,684.54 in damages, but denied injunctive relief. For the reasons set forth below, we affirm the trial court's judgment in its entirety.

Nordon is a food service equipment distributor and marketing agent. N.T., 12/9/19, at 27. Schlisman first worked for Nordon from 2001 to 2004. Trial Court Decision and Order, 3/31/20, at 1-2; N.T., 12/10/19, at 91, 93. In connection with that employment, Schlisman had agreed to a non-competition agreement that prohibited him from soliciting Nordon's customers and employees for a two-year period after leaving his employment in an area consisting of eastern Pennsylvania, southern New Jersey, and northern Delaware. Trial Court Decision and Order, 3/31/20, at 2; N.T., 12/10/19, at 91, 93; Plaintiff Ex. 4 at 2. In 2005, Schlisman left Nordon to run a competitor of Nordon that he had acquired, Gavin & Associates (Gavin). Trial Court Decision and Order, 3/31/20, at 2. This departure was amicable. Id.

In late 2008, Gavin and Schlisman were in financial difficulty and Schlisman approached Nordon to see if it had any interest in acquiring Gavin. Trial Court Decision and Order, 3/31/20, at 3; N.T., 12/9/19, at 43-44, 109; N.T., 12/10/19, at 103-10. In early 2009, Nordon and Schlisman reached an oral agreement under which Gavin would transfer its contracts with restaurant industry manufacturing companies over to Nordon and Nordon would assume outstanding debts of Gavin and Schlisman and would hire Schlisman and Gavin's other employees. Trial Court Decision and Order, 3/31/20, at 3; N.T., 12/9/19, at 45-53, 112, 115-18. Because the amount of Gavin's and Schlisman's debts was not known at that time, the parties did, however, not finalize all terms of the agreement in 2009 and contemplated that a written agreement would be executed setting the amount that Nordon was to pay and memorializing all the terms of the agreement once that information was determined. Trial Court Decision and Order, 3/31/20, at 3-4; N.T., 12/9/19, at 44-51; N.T., 12/10/19, at 31. In February 2009, in accordance with the parties’ oral agreement, Nordon hired Schlisman as its Vice President of Contract Sales. Trial Court Decision and Order, 3/31/20, at 4; N.T., 12/9/19, at 49-52.

In April 2010, after determining the amount of the debt that it would pay, Nordon drafted a written Asset Purchase Agreement between it, Gavin, and Schlisman and provided the draft agreement to Schlisman for his review. Trial Court Decision and Order, 3/31/20, at 5; N.T. 12/10/2019 at 34-37. Schlisman did not object to any of the terms of the Asset Purchase Agreement, and Nordon and Schlisman, individually and on behalf of Gavin, signed the Asset Purchase Agreement on July 7, 2010. Trial Court Decision and Order, 3/31/20, at 5-6; 12/9/19, at 61, 67; N.T. 12/10/2019 at 38-39, 44, 79, 129, 134-36. The Asset Purchase Agreement provided that Nordon purchased the rights to Gavin's contracts with certain restaurant industry manufacturing companies listed in Section 1.2(a) of the agreement, including Duke Manufacturing Company (Duke), Stero, and Somat Company (Somat), and that Nordon would pay a total of $262,176.54 to Gavin and to third parties on Gavin's and Schlisman's behalf for these rights. Plaintiff Ex. 1 at 1-2. At the time the Asset Purchase Agreement was signed, only part of the $262,176.54 had been paid by Nordon and the parties agreed that $93,834.04 would be paid beginning June 19, 2010 in 28 equal monthly installments. N.T., 12/9/19, at 65; N.T., 12/10/19, at 143; Plaintiff Ex. 1 at 2.

The Asset Purchase Agreement contained the following non-competition agreement:

3.1 Covenant Not to Compete. [Gavin] and [Schlisman] each agree, for so long as [Schlisman] remains an employee of [Nordon] and for the longer of (a) two (2) years following the termination of [Schlisman's] employment with [Nordon] and (b) two (2) years following the date [Nordon] makes the last Monthly Payment to the Bank (as described in Section 1.3(b) above) (the "Non-Competition Period"), not to compete with [Nordon] in any manner or capacity by engaging, directly or indirectly, in the business of acting as a manufacturer's representative or marketing agent to any of the companies listed in Section 1.2(a) above (the "Covered Business") , or otherwise own, be employed by, consult with or otherwise render services to any person or entity engaged in the Covered Business within the territory defined by the Manufacturers’ Agents Association for the Foodservice Industry ("MAFSI") as "Section 4" as in effect as of the date of this Agreement (and as such Section may be expanded by MAFSI during the Non-Compete Period) (the "Covered Area"). ...

* * *

3.3 Agreement Not To Interfere. During the Non-Competition Period, each of [Gavin] and [Schlisman] agree not to take any action to interfere with the relationships between [Nordon] or any subsidiary or affiliate of [Nordon], and their respective suppliers, customers, clients, or business partners. Each of [Gavin] and [Schlisman] further agree not to induce or attempt to induce any manufacturer, customer, supplier, client, business partner, or other business relation of [Nordon] or any subsidiary or affiliate of [Nordon] to withdraw, curtail or cease doing business with [Nordon] or any subsidiary or affiliate of [Nordon] , as applicable.

3.4 Non-solicitation Agreement. During the Non-Competition Period, each of [Gavin] and [Schlisman] agree not to, directly or indirectly, induce or attempt to induce any employee of [Nordon] or any subsidiary or affiliate of [Nordon] to leave the employ of [Nordon] or any subsidiary or affiliate of [Nordon], as applicable.

3.5 Special Remedies and Enforcement. [Gavin] and [Schlisman] each hereby acknowledge and agree that the breach of any provision of Article III of this Agreement will cause [Nordon] irreparable injury and damage, and consequently [Nordon] shall be entitled, in addition to and without limitation of all other remedies available to it, to injunctive and equitable relief to prevent a breach or continued breach of this Agreement , or any part of it, and to secure the enforcement of this Agreement. Such equitable remedies shall be cumulative and non-exclusive, being in addition to any and all other remedies [Nordon] may have. [Gavin] and [Schlisman] each hereby waive any requirement for securing or posting a bond in connection with [Nordon] obtaining any injunctive or other equitable relief. Further, [Gavin] and [Schlisman] each agree that any breach of any provision of Article III of this Agreement shall automatically toll and suspend the period of restraint for the amount of time that the breach continues .

Plaintiff Ex. 1 at 4-5 (emphasis added).

Schlisman remained employed by Nordon until November 2013. Trial Court Decision and Order, 3/31/20, at 7; N.T., 12/9/19, at 68-73. At Schlisman's request, Nordon loaned Schlisman $35,000 in July 2013 without interest, to be repaid by $250 deductions from Schlisman's pay each pay period. Trial Court Decision and Order, 3/31/20, at 7; N.T., 12/9/19, at 79; N.T., 12/10/19, at 52-55, 122-24; Plaintiff Exs. 12, 13. Schlisman advised Nordon on November 1, 2013 that he intended to leave and start his own business and sent Nordon notice of his resignation on November 13, 2013, stating that his resignation was effective November 5, 2013. Trial Court Decision and Order, 3/31/20, at 7-8; N.T., 12/9/19, at 73-78, 85; N.T., 12/10/19, at 156, 160; Plaintiff Ex. 18. On November 20, 2013, Schlisman formed a competing business, Platinum Marketing Company (Platinum). Trial Court Decision and Order, 3/31/20, at 8; N.T., 12/9/19, at 84, 93-94; N.T., 12/10/19, at 184. Shortly after leaving Nordon, Schlisman solicited Duke to contract with Platinum, and Duke, Stero, and Somat terminated their contracts with Nordon and signed manufacturer representative contracts with Platinum. Trial Court Decision and Order, 3/31/20, at 8-9; N.T., 12/9/19, at 85-90; N.T., 12/10/19, at 160-70; Plaintiff Exs. 23, 25, 34, 37, 38, 41, 42, 43. Schlisman also hired the Nordon employee who worked with Duke and represented to Duke that he was going to hire her over a month before she left Nordon's employ. Trial Court Decision and Order, 3/31/20, at 9; N.T., 12/9/19, at 83-84, 91-92, 170-71; N.T., 12/10/19, at 170-73, 241-43. At the time that Schlisman left Nordon, $31,508 of the $35,000 had not been paid back and has never been paid. Trial Court Decision and Order, 3/31/20, at 7, 15; N.T., 12/9/19, at 79-81, 93, 167; N.T., 12/10/19, at 55-57, 124-25; Plaintiff Exs. 14, 19 at 2.

On April 29, 2014, Nordon filed suit against Schlisman, seeking injunctive relief to enforce the non-competition agreement and breach of contract damages for the violation of the non-competition agreement and for the unpaid balance of the July 2013 loan.¹ In its complaint, captioned as "Nordon, Inc. v. Andrew Schlisman," Nordon identified itself as "Nordon, Inc." and alleged that it "is a Delaware limited liability company." Complaint ¶1. The complaint also alleged that "Nordon, Inc." was the party that entered into the Asset Purchase Agreement with Gavin and Schlisman that was attached as an exhibit to the...