Oxford Financial Group, Ltd. v. Evans

• Decision Date: 19 September 2003
• Docket Number: No. 49A02-0303-CV-214.,49A02-0303-CV-214.
• Citation: 795 N.E.2d 1135
• Parties: OXFORD FINANCIAL GROUP, LTD. formerly d/b/a Oxford Financial Advisors Corporation and the Trust Company of Oxford, Appellants-Plaintiffs, v. Philip Richard EVANS, Leslie Denise Michael, John Thomas Trott, John Charles Wortman, The Valeo Financial Group, LLC., Appellees-Defendants.
• Court: Indiana Appellate Court

795 N.E.2d 1135

OXFORD FINANCIAL GROUP, LTD. formerly d/b/a Oxford Financial Advisors Corporation and the Trust Company of Oxford, Appellants-Plaintiffs, v. Philip Richard EVANS, Leslie Denise Michael, John Thomas Trott, John Charles Wortman, The Valeo Financial Group, LLC., Appellees-Defendants.

No. 49A02-0303-CV-214.

Court of Appeals of Indiana.

September 19, 2003.

E. Davis Coots, Elizabeth I. Van Tassel, Coots, Henke & Wheeler, P.C., Carmel, IN, Attorneys for Appellants.

John R. Maley, Larry A. Mackey, John T.L. Koenig, Barnes & Thornburg, Indianapolis, IN, Attorneys for Appellees.

OPINION

BARNES, Judge.

Case Summary¹

Oxford Financial Group ("Oxford") appeals the length of a preliminary injunction entered by the trial court that prohibits Philip Evans, Leslie Michael, John Trott, and John Wortman (collectively "the Defendants") from competing with or contacting clients of Oxford, the Defendants' former employer. We affirm in part and reverse and remand in part.

Issue

The restated issue before us is whether the trial court erred in prohibiting the Defendants from competing with Oxford or soliciting Oxford clients for only twelve and eighteen months, respectively, instead of for eighteen and twenty-seven months, in alleged contravention of the parties' non-compete agreements.

Facts

We note initially that resolving this case required much separating of the wheat from the chaff inserted by both parties in their briefs. Oxford provided a litany of allegedly "illegal" activity by the defendants that is irrelevant to the issue of the proper length of the preliminary injunction, and the defendants responded with allegations regarding Oxford's purported violations of various investment firm regulations and statutes and ethical improprieties that are similarly irrelevant. With apologies to former Tennessee senator Howard Baker, the central factual question in this case is what did Oxford know, and when did it know it?

The relevant facts are these. Oxford is a financial services firm based in Carmel that provides financial advice to wealthy clients. The Defendants were employed by Oxford as associate directors. As a requirement of employment, each Defendant signed a non-compete agreement. There are three relevant provisions of that agreement for purposes of this case. Paragraph 4 essentially prohibits competition with Oxford for twelve months post-employment by any ex-employee in any county where Oxford has at least five clients. Paragraph 5 prohibits any ex-employee from contacting any Oxford client "with respect to providing financial planning or investment management services" for eighteen months post-employment. Finally, paragraph 6(e) states:

If Employee violates a restriction in paragraph 4 or 5 and if Oxford does not immediately learn of the violation, then the original time period for the restriction shall be enlarged and extended by adding to it (i) the number of days from the date of that violation to the date when Oxford learned or should have learned of that violation, and (ii) the number of days equal to 50% of the number of days in the original restriction period specified in this Agreement.

Appellant's Addendum to Brief, Tab D pp. 3-4.

In late 2001, the Defendants began making plans to leave Oxford and start their own financial services firm. Oxford somehow became aware of these plans. On April 17, 2002, Oxford president Christopher LaMothe confronted defendant Michael about whether she was involved in a plan with others to leave Oxford and begin working for a competitor. When Michael failed to directly confirm or deny that information, she was immediately fired.² Thereafter, defendants Trott and Evans were also asked whether they planned to leave Oxford, and they denied that they were planning to do so. However, on April 19, 2002, defendants Trott, Evans, and Wortman submitted their resignation from Oxford through their attorney, for the stated reason that they were concerned they might be exposed to criminal and/or civil liability for alleged illegal activities by Oxford.

Oxford and the Defendants thereafter entered into negotiations regarding the non-compete agreements. On May 3, 2002, counsel for the Defendants sent a letter to counsel for Oxford, which stated in part:

My clients have not violated any term of the Confidentiality Agreement and Agreement Not To Compete and will not engage in conduct violating the Agreement during meaningful negotiations between the parties (the stand still period you referenced).... We would appreciate a response to our settlement proposal by the close of business, Tuesday, May 7, 2002, that Oxford release my clients from all restrictive agreements in exchange for my clients' release of Oxford for its acts detrimental to them and a mutual confidentiality agreement.

Addendum to Appellant's Br., Tab A. There evidently was no positive response to the settlement proposal.

On May 6, 2002, the Defendants filed articles of organization for The Valeo Financial Group, LLC. On May 17, 2002, the Defendants registered with the Indiana Secretary of State's Securities Division to be able to provide financial advisory services. At some point, although there is no evidence in the record as to precisely when, it appears the Defendants contacted Oxford clients about their departure from Oxford. On June 14, 2002, LaMothe signed a complaint against the Defendants for violating the non-compete agreements and seeking the preliminary injunction that is at issue today.³ After the complaint was filed on June 18, 2002, Oxford received letters from some of its clients giving notice that they were terminating their relationship with Oxford and hiring the Defendants.

On September 4, 2002, after conducting an evidentiary hearing, the trial court entered a preliminary injunction providing, inter alia, that the Defendants could not compete with Oxford in certain counties in Indiana, Illinois, and Florida, and that they could not solicit any current Oxford clients. The trial court placed no time limit on these prohibitions. The Defendants then filed a motion to correct error, specifically requesting a time limit for the non-compete/no solicitation provisions of the injunction. After a change of judge, the trial court eventually modified the injunction on March 17, 2003, to provide that the Defendants were not enjoined from competing with Oxford in the named counties after May 17, 2003, and were not enjoined from contacting Oxford clients after November 17, 2003. These time limitations were twelve months and eighteen months, respectively, after the Defendants registered with the Secretary of State, May 17, 2002. In placing these time limitations, the trial court rejected Oxford's argument that paragraph 6(e) of the non-compete agreement required the injunction's length to be eighteen and twenty-seven months, respectively, or an increase of fifty percent over the standard limitation period. Oxford now appeals.

Analysis

As a preliminary matter, the Defendants claim this court lacks jurisdiction to entertain this interlocutory appeal, because it is not an appeal as of right and Oxford did not follow the proper procedures to perfect a discretionary interlocutory appeal. Indiana Appellate Rule 14(A)(5) provides that a party may take an appeal as of right from an order "[g]ranting or refusing to grant, dissolving, or refusing to dissolve a preliminary injunction...." The Defendants claim that the order Oxford appeals, which modified a preliminary injunction by placing a time limit on certain parts of it, does not fall under the above rule. We disagree. By its order, the trial court effectively dissolved part of the injunction, changing it from one of indefinite duration to one with a definite ending point. We also note that the motions panel of this court has already ruled that we have jurisdiction over this appeal. Although we may reconsider a ruling by that panel, we decline to do so in the absence of clear authority establishing that it erred as a matter of law. There is no such authority in this case, and we will not revisit the motion panel's ruling.

Aside from the jurisdictional question, the first disputed issue in this case that we must resolve is the appropriate standard of review. The Defendants claim that the standard governing rulings on motions to correct error should apply because Oxford technically is appealing from the granting of such a motion. "A decision to grant a motion to correct error is reviewed for an abuse of discretion." Time Warner Entertainment Co., L.P. v. Whiteman, 741 N.E.2d 1265, 1270 (Ind.Ct. App.2001). Additionally, the issuance of a preliminary injunction is within the sound discretion of the trial court, and the scope of appellate review is limited to deciding whether there has been a clear abuse of discretion. Apple Glen Crossing, LLC v. Trademark Retail, Inc., 784 N.E.2d 484, 487 (Ind.2003). The trial court here also made findings of fact and conclusions thereon when it first issued the preliminary injunction, as required, and also entered partial findings on the motion to correct error. When findings and conclusions are made, the reviewing court must determine if the trial court's findings support the judgment and the trial court's judgment will be reversed only when clearly erroneous. Wenzel v. Hopper & Galliher, P.C., 779 N.E.2d 30, 36 (Ind.Ct.App. 2002), trans. denied. Findings of fact are clearly erroneous if the record lacks any evidence or reasonable inferences from the evidence to support them. Id. "To determine whether the findings or judgment are clearly erroneous, we consider only the evidence favorable to the judgment and all reasonable inferences flowing therefrom, and we will not reweigh the evidence or assess witness credibility." Id.

Oxford contends that we should review the trial court's decision setting a time limit on part of the preliminary injunction de novo. It argues this is the appropriate standard of review...