S. Felt Co. v. Konesky

• Decision Date: 31 August 2020
• Docket Number: CV 119-200
• Parties: SOUTHERN FELT COMPANY, INC., Plaintiff, v. MICHAEL KONESKY, Defendant.
• Court: U.S. District Court — Southern District of Georgia

SOUTHERN FELT COMPANY, INC., Plaintiff, v. MICHAEL KONESKY, Defendant.

CV 119-200

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF GEORGIA AUGUSTA DIVISION

August 31, 2020

ORDER

Before the Court is Defendant Michael Konesky's ("Defendant") partial motion for summary judgment. (Doc. 26.) The Clerk of Court gave Plaintiff Southern Felt Company, Inc. ("Plaintiff") timely notice of Defendant's motion, the summary judgment rules, the right to file affidavits or other materials in opposition, and the consequences of default. (Doc. 27.) Therefore, the notice requirements of Griffith v. Wainwright, 772 F.2d 822, 825 (11th Cir. 1985) have been satisfied. For the following reasons, Defendant's partial motion for summary judgment (Doc. 26) is DENIED.¹

I. BACKGROUND

A. The Parties

Plaintiff is a South Carolina corporation with its principal place of business in North Augusta, South Carolina. (Compl., Doc. 1, ¶ 6.) Plaintiff employed Defendant for over twenty years, and, at the end of his tenure, Defendant was the Vice President of Global Sales. (Id. ¶¶ 2, 14.) Defendant is a Georgia citizen who "provided services on behalf of [Plaintiff] in Georgia and South Carolina." (Konesky Decl., Doc. 26-2, ¶¶ 3, 6.)

B. Lydall Purchased Plaintiff's Stock

In February of 2014, Lydall, Inc. purchased Plaintiff from Andrews Industries Ltd. through a stock acquisition thereby becoming Plaintiff's parent company. (Compl., ¶ 13; see also Konesky Dep., Doc. 42-7, at 99:10-14, 19-20.) Lydall is a Delaware corporation with its principal place of business in Manchester, Connecticut, and Lydall's General Counsel, Chad McDaniel, works in Connecticut. (McDaniel Aff., Doc. 42-5, ¶¶ 2-3, 7.)

C. Employment Benefits Defendant Received

On February 21, 2014, Lydall granted Plaintiff restricted shares, and this "restricted stock grant was only given to specific members of management . . . as part of the acquisition of the stock of [Plaintiff], including [Defendant]." (Trinks Aff., Doc. 42-4, ¶¶ 6(a), 7.) This initial stock grant "had a more advantageous vesting schedule" than the remaining stock Defendant receivedbecause it partially vested annually until fully vesting after three years. (Id. ¶¶ 8-9.) Thereafter, Lydall granted Defendant stock every December but that stock only vested at all after three years of continued employment. (Id. ¶¶ 9-10.) The dates for the December stock grants were: December 5, 2014; December 4, 2015; December 9, 2016; December 8, 2017; and December 7, 2018. (Id. ¶ 6(b)-(f); id., Exs. B-F, at 6-10.²) Only the initial stock grant and the first two December stock grants vested because Defendant resigned on October 16, 2019. (Id. ¶ 11.)

In addition, Lydall - through its CEO and Vice President of Human Resources, Dale Barnhart and William Lachenmeyer, respectively — signed off on a twenty percent pay raise for Defendant, which included the standard 3% annual increase and an additional 17% increase. (Pratt Aff., Doc. 42-3, ¶¶ 7, 15; id. Ex. G, at 24-25.) Of note, Messrs. Barnhart and Lachenmeyer approved both of Defendant's pay raises on December 18, 2014. (Id. ¶ 15.) Defendant also received other "benefits including car allowance payments, medical/dental benefits, wellness reimbursements for fitness equipment for he and his wife and a company gas card." (Pl.'s Resp. Opp'n Mot. for Summ. J., Doc. 42, at 12 (citing Pratt Aff., ¶¶ 6, 12(c)-(f); id. Exs. C, D, E, & F, at 8-23).)

D. Restrictive Covenant Agreement

In 2014, the Parties negotiated and signed the "Confidentiality, Invention[,] and Non-Compete Agreement" ("Restrictive Covenant Agreement"). (Restrictive Covenant Agreement, Doc. 26-2, at 3-4.) On September 26, 2014, Plaintiff signed the Statement Verifying Receipt of New Hire Documents, acknowledging his receipt of the Restrictive Covenant Agreement. (Pratt Aff., ¶ 12(b); id. Ex. B, at 7.) Defendant then negotiated the substance of the Restrictive Covenant Agreement with Mr. McDaniel by sending a revised and signed version, which included removing the non-compete provision. (Konesky Dep., at 107:9-108:22; McDaniel Aff., ¶¶ 5-6.) Defendant signed the Restrictive Covenant Agreement on December 18, 2014. (Restrictive Covenant Agreement, at 4.) Mr. McDaniel reviewed and accepted the changes and executed the revised Restrictive Covenant Agreement in Connecticut. (McDaniel Aff., ¶¶ 5-9.)

The Restrictive Covenant Agreement contained two main provisions that are at issue: the Customer Non-Solicitation Agreement and the Employee Non-Solicitation Agreement: "[F]or a period of two (2) years following the termination of [Defendant's] employment," Defendant shall not:

(i) induce or encourage any employee of [Plaintiff] to terminate his or her employment with [Plaintiff] [("Employee Non-Solicitation Covenant")], or(ii) solicit, induce[,] or encourage any person, business[,] or entity which is a supplier of, a purchaser from, or a contracting party with, [Plaintiff] to terminate any written or oral agreement, order[,] or understanding with [Plaintiff] or to conduct business in a way that results in an adverse impact to [Plaintiff] [("Customer Non-Solicitation Covenant")].

(Restrictive Covenant Agreement, ¶ 4.) The Parties also provided that the Restrictive Covenant Agreement "shall be governed by and construed in accordance with the law of the State of Connecticut, the Company's³ home office state." (Id. ¶ 5.)

E. Procedural Posture

On November 21, 2019, Plaintiff filed the present action. (See generally Compl.) In his answer, Defendant raised a counterclaim claiming that "[t]he restrictive covenants contained in the [Restrictive Covenant] Agreement are unenforceable under Connecticut, South Carolina, and Georgia law." (Def.'s Answer, Doc. 20, at 25; see generally id. at 25-32.) On January 28, 2020, Defendant filed the present partial motion for summary judgment requesting that the Court grant summary judgment in his favor as to both his counterclaim and Plaintiff's breach of contract claim. (Def.'s Mot. for Summ. J., Doc. 26, at 1.) Plaintiff responded (Pl.'s Resp. Opp'n Mot. for Summ. J.), and Defendant replied (Def.'s Reply Supp. Mot. for Summ. J., Doc. 45). The motion isnow ripe for consideration. For the following reasons, Defendant's partial motion for summary judgment (Doc. 26) is DENIED.

II. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate only if "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). Facts are "material" if they could "affect the outcome of the suit under the governing law," Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986), and a dispute is genuine "if the non[-]moving party has produced evidence such that a reasonable factfinder could return a verdict in its favor." Waddell v. Valley Forge Dental Assocs., Inc., 276 F.3d 1275, 1279 (11th Cir. 2001). The Court must view factual disputes in the light most favorable to the non-moving party, Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citation omitted), and must "draw all justifiable inferences in [the non-movant's] favor." United States v. Four Parcels of Real Prop., 941 F.2d 1428, 1437 (11th Cir. 1991) (citation, internal quotation marks, and internal punctuation omitted). The Court should not weigh the evidence or determine credibility. Anderson, 477 U.S. at 255. But "[t]he mere existence of a scintilla of evidence in support of the [non-movant]'s position will be insufficient" for a jury to return a verdict for the non-moving party. Id. at 252; accord Matsushita Elec. Indus.,475 U.S. at 587 ("When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." (footnote omitted)); Gilliard v. Ga. Dep't of Corr., 500 F. App'x 860, 863 (11th Cir. 2012).

The moving party has the initial burden of showing the Court, by reference to materials in the record, the basis for the motion. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Because the standard for summary judgment mirrors that of a directed verdict, the initial burden of proof required by either party depends on who carries the burden of proof at trial. Id. at 322-23. "When the moving party has the burden of proof at trial, that party must show affirmatively the absence of a genuine issue of material fact: it 'must support its motion with credible evidence that would entitle it to a directed verdict if not controverted at trial." United States v. Four Parcels of Real Property, 941 F.2d 1428, 1438 (11th Cir. 1991) (en banc) (emphasis omitted) (quoting Celotex, 477 U.S. at 331 (Brennan, J., dissenting)). Put another way, "the moving party must show that, on all the essential elements of its case on which it bears the burden of proof at trial, no reasonable jury could find for the non[-]moving party." Id. If the movant carries this burden, "it is entitled to summary judgment unless the non[-]moving party, in response, comes forward with significant, probative evidence demonstrating the existenceof a triable issue of fact." Id. (citation and internal quotation marks omitted).

When the movant does not bear the burden of proof at trial, it may carry the initial burden in one of two ways — by negating an essential element of the non-movant's case or by showing that there is no evidence to prove a fact necessary to the non-movant's case. See Clark v. Coats & Clark, Inc., 929 F.2d 604, 606-08 (11th Cir. 1991) (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 153, 157, 160 (1970); Celotex Corp., 477 U.S. at 320, 322-25). If - and only if — the movant carries its initial burden, the non-movant must "demonstrate that there is indeed a material issue of fact that precludes summary judgment." Id. at 608. When the non-movant bears the burden of proof at trial, the non-movant must tailor its response to the method by which the movant carries its initial burden. For example, if the movant...