Pickett v. Pelican Service Associates

• Decision Date: 20 August 1985
• Docket Number: No. 4-285A22,4-285A22
• Citation: 481 N.E.2d 1113
• Parties: Dennis PICKETT and Albert Pickett, Appellants (Defendants Below), v. PELICAN SERVICE ASSOCIATES, Appellee (Plaintiff Below).
• Court: Indiana Appellate Court

Page 1113

481 N.E.2d 1113

Dennis PICKETT and Albert Pickett, Appellants (Defendants Below), v. PELICAN SERVICE ASSOCIATES, Appellee (Plaintiff Below).

No. 4-285A22.

Court of Appeals of Indiana Fourth District.

Aug. 20, 1985.

James H. Hanson, Scopelitis & Garvin, Indianapolis, for appellants.

Craig Pinkus, Mitchell Hurst Pinkus Jacobs & Dick, Indianapolis, for appellee.

CONOVER, Judge.

Defendants-Appellants Dennis Pickett and Albert Pickett bring this interlocutory appeal contesting the issuance of a preliminary injunction prohibiting their continued employment in the waste disposal business within 75 miles of Crawfordsville, Indiana.

We affirm, but remand for the setting of bond.

ISSUE

The single issue ¹ presented for our review is whether the trial court abused its discretion when it entered the preliminary injunction.

FACTS

In September, 1981, Pelican Service Associates (Pelican) purchased Pickett Sanitation Services, a trash removal business, from Dennis and Sonya Pickett. Albert Pickett, son of Dennis and Sonya Pickett, was employed by Pickett Sanitation Service.

The written Asset Purchase Agreement (agreement) included a noncompetition clause with a provision for the future employment of Dennis and Albert. The agreement was signed by Dennis and Sonya. Albert received some of the proceeds from the sale of this family business but did not sign the agreement. Immediately upon completion of the transaction, Dennis and Albert were employed by Pelican. In accordance with the terms of the agreement, they executed covenants not to compete with Pelican in the trash disposal business. These covenants were executed the day the agreement was signed and were attached to it as exhibit C.

In March, 1984, Dennis and Albert quit working for Pelican and took employment with Global Waste Services, Inc. (Global), a competitor of Pelican. Pelican sued Dennis and Albert Pickett and others seeking a preliminary injunction to enforce the noncompetition clause against Dennis and Albert pending the outcome of the lawsuit. Following hearing, the trial court granted the preliminary injunction.

Dennis and Albert appeal. Additional facts as necessary for our review are noted below.

DISCUSSION AND DECISION

Appellants contend the court erred because (1) Pelican has no reasonable likelihood of prevailing at trial, and (2) no security was required of Pelican as required by Ind.Rules of Procedure, Trial Rule 65(C).

We have recently restated the oft-cited standard of review:

When reviewing a trial court's ruling on a motion for a preliminary injunction, we are confined to determining whether the court abused its discretion. ... We decide a trial court has abused its discretion when it has made a decision that is clearly erroneous--one against the logic and effect of the facts and circumstances presented or the reasonable, probable, and actual deductions to be drawn therefrom. Our task here boils down to investigating whether the findings of fact, made by the court and as required for a preliminary injunction pursuant to Ind.Rules of Procedure, Trial Rule 52(A), are sufficient to validly support the result reached in the court's decision and, that done, whether those findings are supported by evidence of probative value. Additionally, we may not weigh conflicting evidence but may only consider that evidence supporting the trial court's findings, conclusions, and order. ...

The establishment of a prima facie case for relief on the merits rests on the party seeking relief. Such applicant is not required to plead and prove a case that shows he will ultimately be entitled to relief. It is necessary only that the pleadings and evidence be such that it makes out a case for a proper investigation in equity and that the status quo be maintained pending such trial on the merits. (Citations omitted).

Harvest Insurance Agency v. Inter-Ocean Insurance Co. (1985), Ind.App., 478 N.E.2d 98, 103-104.

The trial court entered the following findings of fact, conclusions of law and judgment:

FINDINGS OF FACT

1. Pelican, a limited partnership located in the city of Crawfordsville, Indiana, is in the business of industrial, commercial and residential solid waste collection in the city of Crawfordsville in Montgomery County, Indiana.

2. On or about September 29, 1981, Pelican purchased substantially all of the assets, subject to liabilities, of Pickett's Sanitation Services. The acquired company was a competitor of Pelican which was owned by Dennis and his wife, Sonya Pickett. Dennis and Albert Pickett were employed by Pelican from that time until they terminated their employment with Pelican on or about March 28, 1984, to begin working for Global, also a competitor of Pelican's.

3. The agreement, pursuant to which Pelican acquired Pickett's Sanitation Services, was entitled "Asset Purchase Agreement: and provides in part as follows:

AGREEMENT

NOW, THEREFORE, in consideration of these premises, and the mutual covenants and agreements contained herein, the parties hereto agrees (sic) as follows:

1. Assets purchased ...

2. Purchase price ...

3. Seller Representatives and Warranties ...

4. Liabilities, Indemnification and Set Off ...

5. Employment. Purchaser agrees to employ Dennis Pickett and his son Albert Pickett and Dennis Pickett and 6. Expenses and Commissions ...

Delbert (sic) Pickett accept employment with Pelican for such term and upon such conditions as Pelican shall determine in its sole discretion. Dennis and Albert Pickett shall be employees at will and may be terminated at any time for any reason by Purchaser. Dennis and Albert Pickett agree to use their best efforts to encourage accounts previously serviced by Seller to use Purchaser in the future. In consideration for such employment Dennis Pickett and Albert Pickett agree to execute at closing an Agreement in form and content similar to Exhibit C. attached hereto.

7. Miscellaneous ...

In Witness whereof ...

4. Attached to the agreement, set forth in paragraph 3 above, as Exhibit C, are two Agreements one signed by Dennis R. Pickett and one signed by Albert D. Pickett which are dated September 29, 1981 and which reads as follows:

For good and valuable consideration, the receipt of which is hereby acknowledged, the undersigned agrees that during the term of his employment with Pelican Service Associates, ("Pelican") and for a period of five (5) years from the date of termination of his employment, for whatever reason, he shall not directly or indirectly engage in any scavenger or trash hauling service or compete with Pelican or is (sic) successors in interest in any way within a seventy-five (75) mile radius of Crawfordsville, Indiana. Indirect competition shall be deemed to include the undersigned's or his spouse's involvement, as an employee, promoter, investor, shareholder, partner, consultant, officer, agent, or representative of any entity or person engaged in a scavenger, trash hauling, recycling or disposal operation. Given the nature of his employment with Pelican and the nature of the information to which he will have access, the undersigned acknowledges that the limitations contained herein are reasonable.

5. It is clear from a plain reading of the asset purchase agreement and the covenant agreement that the employment of Albert and Dennis Pickett, subject to the terms and conditions set forth in the documents, was an integral and negotiated part of the sale of the business.

6. Dennis had been in the trash removal business for some 14 years starting out as a one man, one truck operation and building a substantial business. He knew many of the customers personally, solicited many of them and was personally involved in every aspect of the business.

7. Pelican was buying out the competition. It paid more than $87,000.00 for the business, of which $6,500.00 was in cash to Dennis Pickett, the balance going to pay debts and liabilities of the Pickett business. Pelican was buying the assets of the business, trash route, the opportunity to service established customers, and the good will of Pickett, personally, and of his business.

8. The employment was part and parcel of the deal to buy the whole business and not a separate transaction. Not only did Pelican have a substantial investment to protect, Pelican also was by employing Pickett acquiring his skill, knowhow, and expertise.

9. Global Waste Service, Inc. is a trash removal business which competes with Pelican in the Montgomery County, Indiana area and which has operations in or is related to operations conducted by the owners of Global in Bloomington, Indiana; Switz City, Indiana; Robinson, Illinois; Linton, Indiana, all of which cities are roughtly (sic) fifty to seventy-five miles from the city of Crawfordsville, Indiana.

10. Dennis Pickett, when working for Pelican solicited business, made surveys, and otherwise conducted business on behalf of Pelican in the cities of Lafayette and Kokomo, Indiana.

11. Trash removal is no longer necessarily a local business. Given the present highway system, reliable trucks and vehicles capable of efficiently hauling large loads, the financial capability of owners to establish 12. A five year term on the covenant not to compete in the proscribed area is reasonable under the facts and circumstances of this case.

and manage operations in different cities many miles apart the 75 mile restriction in the covenant not to compete is a reasonable distance.

13. Since leaving Pelican, Dennis Pickett has solicited approximately 200 customers as part of his employment with Global of which 70 have signed up to be served by Global. All of those 70 were previously Pelican customers.

14. It is obvious that Pelican has and will have suffered loss of business as a result of Pickett's activities on behalf of Global. The amount of such damage will be difficult if not impossible to determine.

15. Albert Pickett has solicited new customers on behalf of Global after leaving...