Steenhoven v. College Life Ins. Co. of America

• Decision Date: 16 January 1984
• Docket Number: No. 2-783A254,2-783A254
• Citation: 458 N.E.2d 661
• Parties: John R. STEENHOVEN, Defendant-Appellant, v. The COLLEGE LIFE INSURANCE COMPANY OF AMERICA, Plaintiff-Appellee.
• Court: Indiana Appellate Court

Page 661

458 N.E.2d 661

John R. STEENHOVEN, Defendant-Appellant, v. The COLLEGE LIFE INSURANCE COMPANY OF AMERICA, Plaintiff-Appellee.

No. 2-783A254.

Court of Appeals of Indiana,

Second District.

Jan. 16, 1984.

Stephen A. Harlow, Maribelle G. Harlow, Harlow, Wright & Englert, P.C., Indianapolis, for defendant-appellant.

Terrill D. Albright, James H. Ham, III, Paula F. Cardoza, Baker & Daniels, Indianapolis, Joseph T. Bumbleburg, Ball, Eggleston, Bumbleburg & McBride, Lafayette, for plaintiff-appellee.

RATLIFF, Judge, writing by designation

STATEMENT OF THE CASE

Appellant John R. Steenhoven appeals from the Tippecanoe Superior Court's grant of a preliminary injunction in favor of appellee College Life Insurance Company of America (College Life). We affirm in part and reverse in part.

FACTS

Appellant Steenhoven began to work for College Life in August 1967 pursuant to a "SPECIAL AGENT'S CONTRACT." He worked for College Life as an independent contractor until October 31, 1982, when his contract terminated. Some time prior thereto, Steenhoven approached Minnesota Mutual Life Insurance Company (Minnesota Mutual) about employment. Steenhoven proposed the replacement of approximately one-third ( 1/3) of his College Life business with more favorable Minnesota Mutual policies. Steenhoven was to receive a special commission arrangement from Minnesota Mutual, in excess of his arrangement with College Life, for converting the block of

policies. In early 1983 Steenhoven began to convert the policies of his targeted clients in wholesale fashion. This was substantially completed in just a few months. In the process of converting the policies, Steenhoven failed to return certain property of College Life subsequent to his termination. College Life brought an action alleging breach of Steenhoven's agent's contract, misappropriation of trade secrets, conversion, unfair competition, and wrongful interference with policyholder relationships. Upon College Life's motion the lower court granted a preliminary injunction enjoining Steenhoven from contacting College Life policyholders and inducing them to terminate or replace their policies and from using College Life's property which Steenhoven had in his possession. It is from this order that Steenhoven now appeals.

ISSUE

Steenhoven presents a number of interrelated issues on appeal. However, these may be combined into one all-encompassing issue:

Did the lower court abuse its discretion in granting College Life's request for a preliminary injunction?

DISCUSSION AND DECISION

We initially note that the grant or denial of a preliminary injunction rests within the sound equitable discretion of the trial court. Wells v. Auberry, (1982) Ind.App., 429 N.E.2d 679, 682; Captain & Co., Inc. v. Towne, (1980) Ind.App., 404 1159, 1161; Negley v. Lebanon Community School Corp., (1977) 173 Ind.App. 17, 20, 362 N.E.2d 178, 180, trans. denied. This court will not interfere with the exercise of that discretion unless it is shown that the trial court's action was arbitrary or constituted a clear abuse of discretion. Rees v. Panhandle Eastern Pipe Line Co., (1978) 176 Ind.App. 597, 604, 377 N.E.2d 640, 645; Negley, 173 Ind.App. at 20-21, 362 N.E.2d at 180. The discretion to grant or deny preliminary injunctive relief is measured by several factors, including whether the plaintiff's remedies at law are inadequate ¹ thus causing irreparable harm pending resolution of the substantive action if the injunction does not issue, ² whether the plaintiff has demonstrated at least a reasonable likelihood of success at trial by establishing a prima facie case, ³ whether the threatened injury to the plaintiff outweighs the threatened harm the grant of the injunction would occasion upon the defendant, ⁴ and whether by the grant of a preliminary injunction the public interest would be disserved. Indiana State Department of Welfare, Medicaid Division v. Stagner, (1980) Ind.App., 410 N.E.2d 1348, 1353. In determining whether an abuse of discretion exists in the grant or denial of a preliminary injunction, this court is necessarily involved with a review of the trial court's findings of fact. ⁵ Whether such findings of fact are adequate depends upon whether they are sufficient to disclose a valid basis under the issues for the legal result reached in the judgment and whether they are supported by evidence of probative value. In re Marriage of Miles, (1977) 173 Ind.App. 5, 8, 362 N.E.2d 171, 174, trans. denied. Such findings may not be set aside unless they are clearly erroneous. ⁶ Negley, 173 Ind.App. at 21, 362 N.E.2d at 180. If the findings are clearly erroneous, we must conclude that the lower court abused its discretion in granting the preliminary injunction. Id.

The trial court found, in part, that, upon his termination, Steenhoven was contractually required to return to College Life certain materials it had provided him at the commencement of his employment and periodically thereafter. ⁷ The court then enjoined Steenhoven's use of the disputed materials. College Life contends that the lower court correctly enjoined Steenhoven due to his improper use of College Life's property subsequent to his termination. Steenhoven argues that he was not prohibited from using such materials and, in any event, had returned the disputed materials so that the part of the preliminary injunction enjoining his use of such materials was an abuse of discretion. We find ourselves in agreement with College Life's position.

Paragraph twenty-six (26) of Steenhoven's contract states, in pertinent part, that "[u]pon termination hereof AGENT ... shall immediately deliver to COMPANY, at its expense, all rate books, manuals, records, supplies, and miscellaneous materials furnished AGENT by COMPANY, all of which have remained the property of COMPANY." Record at 20 (Emphasis supplied). Steenhoven does not attack the validity of the contract. Rather, since the court's finding that the materials were the property of College Life ⁸ is adequately supported by the record, we cannot say that the finding is clearly erroneous. Further, as there is no showing on the record that the materials have been returned, ⁹ we cannot say that the court abused its discretion in enjoining Steenhoven from using the materials furnished him by the company.

We note, however, that the lower court's injunction went beyond merely enjoining Steenhoven's use of materials furnished him by the company, and included certain information acquired by Steenhoven during his employment. ¹⁰ Steenhoven argues that such information is not contemplated by the contract and, therefore, could not be the proper subject of the court's injunction. College Life contends that such information is clearly protectible under the contract and, in any event, its use violates the provisions of the Uniform Trade Secrets Act, so as to justify the court's grant of the preliminary injunction. ¹¹ In this respect we are constrained to agree with Steenhoven's position.

Paragraph twenty-six (26) of the special agent's contract is the only applicable portion of the contract to specifically address the return of the company's property upon the agent's termination. ¹² Contrary to appellee's assertion, paragraph twenty-six (26) is anything but clear in its import. It speaks only to "books, manuals, records, supplies, and miscellaneous materials furnished AGENT by COMPANY...." Record at 20. The contract does not allude to information gleaned by the employee from his employment. Because we necessarily must strictly construe the provisions of the contract against College Life, English Coal Co., Inc. v. Durcholz, (1981) Ind.App., 422 N.E.2d 302, 309, trans. denied, we must conclude that the contract does not prohibit Steenhoven's use of the information he acquired during his employment with College Life.

College Life further asserts, however, that the information utilized by Steenhoven in replacing the policies falls within the ambit of the Uniform Trade Secrets Act. Indiana Code section 24-2-3-2 (1982) (As added by Acts 1982, Pub.L. 148 Sec. 1) states:

" 'Trade secret' means information, including a formula, pattern, compilation, program, device, method, technique, or process, that:

(1) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and

(2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. [Emphasis supplied.]"

We believe the emphasized language is dispositive of the issue. While testimony at the hearing indicated that the information utilized by Steenhoven was indeed available from rate books, rate and policyowner cards, and company print-outs supplied to Steenhoven by the company, uncontradicted evidence indicated that the information was also available from the policyholder himself--from the actual policy and information given the policyholder by the company through its agent. Because it is uncontroverted ¹³ that the information was readily obtainable from the policyholder, ¹⁴ the court's finding to the contrary is clearly erroneous, ¹⁵ and cannot support the court's order enjoining Steenhoven from using such information. Such a determination precludes the appellee's argument concerning the Uniform Trade Secrets Act. While the court quite properly precluded Steenhoven from using materials furnished him by the company, the court improperly included within the scope of the injunction information Steenhoven gleaned from his employment which was readily available from another source--the policyholders themselves. Although our courts have previously noted that such information may well be protectible as trade secrets, Seach v. Richards, Dieterle & Co., (1982) Ind.App., 439 N.E.2d 208, 213; Captain & Co., Inc. v. Towne, (1980) Ind.App., 404 N.E.2d 1159, 1162, we must conclude that...