North American Products Corp. v. Moore
| Decision Date | 02 April 2002 |
| Docket Number | No. 5:01CV193OC10GRJ.,5:01CV193OC10GRJ. |
| Citation | 196 F.Supp.2d 1217 |
| Parties | NORTH AMERICAN PRODUCTS CORPORATION, Plaintiff, v. Michael J. MOORE and Tru-Cut, Defendants. |
| Court | U.S. District Court — Middle District of Florida |
Theresa M. Gallion, Anthony J. Hall, Orlando, FL, for Plaintiff.
Alan M. Gerlach, Jr., Ford & Harrison, LLP, Orlando, FL, for Defendants.
ORDER GRANTING PRELIMINARY INJUNCTION
The Plaintiff's motion for a temporary restraining order and preliminary injunction (Doc. 20) was referred to the United States Magistrate Judge (Doc. 23) to conduct such proceedings as necessary to the making of a report and recommendation concerning the matter.
After full briefing, the submission of evidentiary materials, and a hearing, the Magistrate Judge issued his Report and Recommendation (Doc. 42) suggesting to the Court that the Plaintiff's motion should be Granted in part and Denied in part, and that a preliminary injunction should issue against the Defendants.
Both sides have filed objections to the Report and Recommendation (see Docs. 43, 44, 45 and 46). The Defendants object to the granting of any injunctive relief while the Plaintiff's objections center upon the length of operative period of the recommended preliminary injunction and the amount of the injunction bond to be required.
Upon de novo review of the record and due consideration of the parties' objections, the Court has determined that the objections should be overruled (except in one respect) and that the thorough and well reasoned Report and Recommendation of the Magistrate Judge should be adopted and confirmed except for the term or length of the preliminary injunctive relief to be granted.1
It is, therefore, ORDERED AND ADJUDGED:
1. The Plaintiff's motion for a preliminary injunction (Doc. 20) is GRANTED to the extent provided in paragraphs 2 and 3 below, and is otherwise DENIED.
2. The Defendants, their officers, agents, servants, employees, attorneys and those persons in active concert or participation with them who receive actual notice of this order by personal service or otherwise, are hereby preliminarily restrained and enjoined from directly or indirectly soliciting business involving the maintenance, repair or sale of tools, including cutting tools, from any customers of North American Products Corporation within the State of Florida and with which Michael J. Moore made sales efforts while employed by North American Products Corporation in the year prior to April 1, 2001.
3. This preliminary injunction shall be effective upon the filing by the Plaintiff of a surety bond in the amount of $500,000 for the payment of such costs and damages as may be incurred or suffered by any party who is found to have been wrongfully enjoined or restrained by this Order, and shall then continue in effect pending further Order of the Court but not to exceed 360 days from the date of this Order.
IT IS SO ORDERED.
REPORT AND RECOMMENDATION1
Pending before the Court on an Order of Reference (Doc. 23) are Plaintiff's Motion For Temporary Restraining Order And Preliminary Injunction2 (Doc. 20) and Plaintiff's Memorandum Of Law In Support Of Motion For Temporary Restraining Order And Preliminary Injunction. (Doc. 21.) Defendant filed its memorandum in opposition to the application for preliminary injunction (Doc. 28).
As evidence in support of its request for a preliminary injunction Plaintiff, North American Products Corporation ("NAPCO"), has filed the following: (1) a copy of a North American Products Corporation Employment Agreement—Production Employment, Executed by Michael J. Moore ("Moore") and NAPCO in 1991 (the "1991 Employment Agreement")3; (2) a NAPCO Employment Agreement—Sales Personnel, executed by Moore and NAPCO in 1998 (the "1998 Employment Agreement")4; (3) Articles of Incorporation of Tru-Cut, Inc. ("Tru-Cut")5; (4) Affidavit of Michael Epstein6; (5) Affidavit of Roy King7 (6) Affidavit of Judy Haven8; (7) Affidavit of Keith Lewallen9; (8) Affidavit of Milford Keene10; (9) Deposition of Moore11; (10) Deposition of Horst Riese12; (11) Deposition of Carl Hopkins13; (12) Deposition of John Bennett14; and (13) April 2001 invoices from Tru-Cut to various customers.15
In opposition to the request for a preliminary injunction the Defendants filed (1) the affidavit of Moore, dated November 19, 2001; (2) the affidavit of Lucian Myers; (3) the affidavit of John Bennett16; and (4) the deposition transcript of Lucian Myers.17
A hearing limited to argument of counsel was held on November 27, 2001 and, the parties were permitted to supplement the record after the hearing on several selected issues.18 In addition —after the hearing and with the Court's permission — the Plaintiff filed (1) a 1997 employment agreement, that had only just been located and (2) copies of management and profile documents submitted by Defendant to Bank of America in February 2001 in order to obtain financing for Tru-Cut.19 Lastly, and most recently on January 10, 2002, NAPCO filed supplemental authority regarding Defendant Moore's material breach defense. (Doc. 38.) Accordingly, the matter is now ripe for resolution. For the reasons discussed below, NAPCO's Motion For Preliminary Injunction is due to be GRANTED in part and due to be DENIED in part.
Moore began working with NAPCO as a Shipping Clerk on September 2, 1986. NAPCO has been in the business of manufacturing, selling, distributing and repairing various tools, including cutting tools. During Moore's approximate fifteen years of employment with NAPCO he was promoted from shipping clerk to various positions20 until he was appointed on January 25, 1996 to the position of Florida Service Center Manager. Subsequently, Moore switched from the production side of the business to sales, when he was appointed to be a tooling representative on April 23 1997. Moore continued in sales as a tooling representative until April 1, 2001, when he resigned without notice to pursue the tool cutting repair business as an employee and owner of Tru-Cut.
During Moore's tenure at NAPCO he executed at least three employment agreements. The first agreement was executed on or around May 28, 1991 incident to Moore's promotion to Assistant Service Center Manager.21 The 1991 Agreement contained a covenant not to compete22, a clause prohibiting solicitation of customers, while employed, and a clause prohibiting disclosure of confidential information.
In 1997, when Moore requested and received a transfer to a sales position covering a territory in the Central and North Florida areas, another employment agreement was executed (the "1997 Agreement").23 The 1997 Agreement also contains a non-solicitation clause as well as a clause prohibiting disclosure of confidential technical and sales information. The 1997 Agreement — unlike the 1991 Agreement — does not contain a blanket noncompete clause for a large geographical area, but rather contains a clause only prohibiting solicitation of customers with whom Moore had sales contact within the State of Florida, during the year preceding termination. The restriction is limited to a period of 360 days after termination as opposed to the 1991 Agreement, which provides for a restriction for 270 days after termination and broadly limits any involvement in a competing business.
On Sunday, April 1, 2001 Moore resigned his employment with NAPCO and immediately engaged in a competing business with NAPCO, as president of Tru-Cut, a Florida corporation formed on January 16, 2001. Although Moore conveyed his ownership interest in Tru-Cut to his wife in August, 2001, after this case was filed, it is not disputed that Moore functions as the chief executive officer of Tru-Cut and as such is the person ultimately responsible for the business operations of Tru-Cut.24 Prior to April 1, 2001, John Bennett ("Bennett"), a former NAPCO employee, served as head of sales for Tru-Cut. Prior to Moore's termination of employment, Bennett organized Tru-Cut's new plant, ordered and placed equipment in the plant and began to formulate a sales strategy to market to NAPCO's customers.25
Moore, himself, began making preparations to form, outfit and finance Tru-Cut months prior to his departure from NAPCO. Notably, Moore arranged bank financing, the purchase of equipment, arranged the lease of property, retained a lawyer to draft incorporation documents and issue shares in Tru-Cut and developed Tru-Cut's business plan over the first two months of 2001.26 For example, on February 23, 2001—six weeks prior to Moore's termination from NAPCO — Moore submitted an application to Bank of America for financing for Tru-Cut.27 As part of the loan process, Moore listed at least five of NAPCO's customers as "key customers" of Tru-Cut.
After April 1, 2001 NAPCO was notified by several customers that a Tru-Cut representative had contacted them to solicit their business. As of the date of the hearing Tru-Cut is servicing or has serviced a number of customers from Moore's former territory.28
Moore alleges that he is still owed various monies by NAPCO. These monies include: (1) approximately $120.00 for unreimbursed out of pocket cash expenses incurred by Moore prior to his termination on April 1, 2001, (2) $1,823.36 for commissions for March 2001 sales, and (3) $160.00 for commissions on sales made on April 1, 2001 for a total sum of $2,103.36.29 NAPCO disputes that Moore is owed any monies. According to NAPCO there is no contractual commitment to pay Moore sales commissions after termination. Instead, NAPCO contends that in October 1997 Moore made the transition to compensation based on "a base salary plus a percentage on sales made in the prior month."30 Under NAPCO's calculations and interpretation of Moore's compensation arrangements Moore's final pay was calculated and paid correctly. Further, NAPCO avers that Moore has...
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