Subcarrier Communications, Inc. v. Day

• Decision Date: 16 April 1997
• Citation: 299 N.J.Super. 634,691 A.2d 876
• Parties: SUBCARRIER COMMUNICATIONS, INC., a New Jersey Corporation, Plaintiff-Respondent, v. Dona L. DAY, Daycomm, Inc., a New Jersey Corporation, and Sytex, Inc., a New Jersey Corporation, Defendants-Appellants.
• Court: New Jersey Superior Court — Appellate Division

Page 634

299 N.J.Super. 634

691 A.2d 876

SUBCARRIER COMMUNICATIONS, INC., a New Jersey Corporation Plaintiff-Respondent, v. Dona L. DAY, Daycomm, Inc., a New Jersey Corporation, and Sytex, Inc., a New Jersey Corporation Defendants-Appellants.

Superior Court of New Jersey Appellate Division.

Argued Feb. 25, 1997.

Decided April 16, 1997.

David B. Katz, Livingston, for appellants Dona L. Day and Daycomm, Inc.

Thomas F. Quinn, Newark, for appellant Sytex, Inc. (Wilson, Elser, Moskowitz, Edelman & Dicker, attorneys; Mr. Quinn, of counsel and on the brief; Ann Schmidtberger Pagano, on the brief).

Gregory R. Milne, Red Bank, for respondent (Cassidy, Foss & San Filippo, attorneys; Mr. Milne, on the brief).

Before Judges DREIER, D'ANNUNZIO and VILLANUEVA.

The opinion of the court was delivered by

DREIER, P.J.A.D.

Defendants, Dona L. Day, Daycomm, Inc. and Sytex, Inc., appeal by leave granted from a preliminary injunction which, inter alia, prohibited them from dealing with specific customers of plaintiff, Subcarrier Communications, Inc. ¹ The order was entered after defendant Day terminated her employment as Vice President of plaintiff; formed her own company, defendant Daycomm, Inc.; and then became employed by defendant Sytex, Inc. The order also granted plaintiff the relief of enjoining defendants from disclosing plaintiff's allegedly confidential information. Further, the order required defendants to return plaintiff's property and provide a monthly accounting. Pending our hearing of this appeal, we stayed the portion of the preliminary injunction prohibiting defendants from soliciting business from, or doing business with, the ten companies. We nevertheless prohibited defendants from interfering with existing contracts between plaintiff and certain of the named customers. We also modified the accounting requirements.

Defendant Day was first employed by plaintiff Subcarrier Communications, Inc. in 1992. Plaintiff's president, John Paleski, certified that Day was hired as an "independent contractor" and that "[s]he also held the office of corporate vice president." He also stated that plaintiff corporation is engaged "in the business of acquiring and managing tower sites and other sites for wireless communications systems. Basically, [plaintiff] searches for, locates and leases (or purchases) favorable sites on towers and buildings for communication companies to place their wireless communication devices." Plaintiff asserts in its brief that its " 'stock in trade' ... consists of its customer lists, its portfolio of site locations, its rate structures and its engineering reports."

Day worked at plaintiff corporation from 1992 until she chose to leave the company on August 16, 1996. Day's duties included, according to Paleski: (1) "the negotiation of lease terms with customers;" (2) "responsibility for maintaining the confidentiality of [plaintiff's] rate structures or client lists and other corporate property;" and (3) "signatory authority over certain [corporate] bank accounts...." In addition, in March 1996, plaintiff asked Day to open a new office for it in Eatontown.

Day left plaintiff's employ intending to have her own company, but about two weeks after she left plaintiff, she was hired by defendant Sytex, Inc. Day states that Daycomm, Inc., did not begin business until after August 16, 1996, and that the company made no sales and had no profits. Plaintiff, however, alleges that Day formed the company while she was still its vice president. It was not until approximately nine weeks after Day left plaintiff's employ that plaintiff sought the temporary restraints that are the subject of this dispute.

Sytex, Inc. interviewed Day on September 3, 1996, and then hired her to help it commence operations. Day's work at Sytex involved creating a database of potential sites and otherwise building an antenna site management business for Sytex. Day certified that the information required to find a potential site is all in the public domain, either through personal observation, the Internet, or one of several trade publications. She explained that the companies in the field basically look for tall buildings in a geographical area and solicit their owners or managers for antenna leases. If a lease is possible, the final step is finding a telecommunications user interested in the site. Day denied taking or converting any corporate property for her personal use either before or after she left plaintiff's employ, except she did admit to taking a Point of Contact (POC) list. But even as to that list, she certified that the information on it is readily available and that she threw the list away after Paleski forced his way into her apartment. ²

Generally, the equitable relief of a preliminary injunction should not be entered except when necessary to prevent substantial, immediate and irreparable harm. Citizens Coach Co. v. Camden Horse R.R. Co., 29 N.J. Eq. 299, 303-04 (E. & A. 1878). "Harm is generally considered irreparable in equity if it cannot be redressed adequately by monetary damages." Crowe v. De Gioia, 90 N.J. 126, 132-133, 447 A.2d 173 (1982). In other words, plaintiff must have no adequate remedy at law. Green v. Piper, 80 N.J. Eq. 288, 293, 84 A. 194 (Ch.1912). Also, "temporary relief should be withheld when the legal right underlying plaintiff's claim is unsettled." Crowe, supra, 90 N.J. at 133, 447 A.2d 173. "A third rule is that a preliminary injunction should not issue where all material facts are controverted. Thus, to prevail on an application for temporary relief, a plaintiff must make a preliminary showing of a reasonable probability of ultimate success on the merits." Ibid. (citations omitted). "[T]he final test in considering the granting of a preliminary injunction is the relative hardship to the parties in granting or denying relief." Id. at 134, 447 A.2d 173.

We also note that the purpose of a preliminary injunction "is to maintain the parties in substantially the same condition 'when the final decree is entered as they were when the litigation began.' " Ibid. (quoting Peters v. Public Service Corp., 132 N.J. Eq. 500, 29 A.2d 189 (Ch.1942), aff'd o.b., 133 N.J. Eq. 283, 31 A.2d 809 (E. & A.1943)). As we stated in American Employers' Insurance Co. v. Elf Atochem N.A., Inc., 280 N.J.Super. 601, 610-11 n. 8, 656 A.2d 58 (App.Div.1995):

Injunctions are usually only granted when without them there would be irreparable harm and money damages would not adequately redress the harm. Other principles to be addressed are whether the legal right on the underlying claim is unsettled, whether material facts are controverted and the "relative hardship to the parties." Additionally, there must be clear and convincing proof in order to grant an injunction.

[Citations omitted.]

See also Zoning Bd. of Adjustment v. Service Elec. Cable T.V., 198 N.J.Super. 370, 379, 487 A.2d 331 (App.Div.1985).

Day argues that the preliminary injunction should not have been issued because she has "denied ... under oath every material fact on which the plaintiff has relied...." She points out that when affidavits conflict, a court should not attempt to evaluate their credibility without an evidentiary hearing. Passaic Jr. Chamber of Commerce v. Housing Auth., 45 N.J.Super. 381, 385, 132 A.2d 813 (App.Div.1957).

Despite Day's certifications to the contrary, the trial judge found factually that the information on the POC list "is not readily available." The judge also stated, "It's not necessary that she solicit [plaintiff's customers] before she left the company. If she took the customer lists and solicited them a week or two later, that's just as bad." Further, during argument, Day's counsel pointed out to the trial judge that "[t]here's no evidence ... that she used [the POC list]." The judge disagreed, stating, "It doesn't make any difference when she used it or what she used it for. She's used it." The judge also stated that he did not believe Day no longer had the list in her possession. The judge concluded that Day has "got to be enjoined from benefiting from what she's done;" that is, from misappropriating the list. As a result of this finding, the judge issued his temporary injunction preventing all defendants "from soliciting business from and/or doing any business with" the ten specified companies until the final hearing in the matter.

The affidavits on this particular point are clearly in conflict. Day states that she did not use the list. She says that she knew of the customers from her own experience and memory and that the information was readily available to the public. Plaintiff, on the other hand, argued that Day obviously used the list to solicit customers. The court, without hearing testimony, resolved this issue in favor of plaintiff. ³

Furthermore, Day's certification categorically denied all other allegations made by plaintiff. She stated: (1) she never used corporate money for her personal expenses without permission; (2) the computer she is alleged to have taken is in fact her personal property; (3) Kinko's accidentally charged plaintiff instead of her in the amount of $32.26 for office expenses; (4) her leaving plaintiff was not a secret; and (5) she took no corporate records or documents except for the above-discussed POC list. Nevertheless, the judge kept in place the temporary restraints that directed defendants to return all corporate property and monies. Thus there is clearly a conflict between the affidavits.

Even if the court was correct that Day contacted customers from the POC list that she physically possessed for at least ten days, plaintiff was still required to "make a preliminary showing of a reasonable probability of ultimate success on the merits." Crowe, supra, 90 N.J. at 133, 447 A.2d 173. Day argues that the POC list contained only names, addresses and phone numbers that were known to her or were readily discoverable without resort to the list. The solicitation of...