Waterfield Mortg. Co., Inc. v. O'Connor, 3--1074A175

• Decision Date: 20 April 1977
• Docket Number: No. 3--1074A175,3--1074A175
• Citation: 361 N.E.2d 924,172 Ind.App. 673
• Parties: WATERFIELD MORTGAGE COMPANY, INC., Plaintiff-Appellant, v. Vincent E. O'CONNOR et al., Defendants-Appellees.
• Court: Indiana Appellate Court

Page 924

361 N.E.2d 924

172 Ind.App. 673

WATERFIELD MORTGAGE COMPANY, INC., Plaintiff-Appellant, v. Vincent E. O'CONNOR et al., Defendants-Appellees.

No. 3--1074A175.

Court of Appeals of Indiana, Third District.

April 20, 1977.

Edward N. Kalamaros, Edward N. Kalamaros & Associates, South Bend, Howard L. Chapman, Bonahoom, Chapman & McNellis, Fort Wayne, for plaintiff-appellant.

Gerald A. Kamm, Doran, Manion, Boynton & Kamm, South Bend, for defendants-appellees.

HOFFMAN, Judge.

Plaintiff-appellant Waterfield Mortgage Company, Inc. (Waterfield) appeals from the trial court's entry of summary judgment in favor of defendants-appellees arising from a restrictive covenant in an employment contract. On December 23, 1970, Waterfield and appellee Vincent E. O'Connor entered into an employment agreement, effective January 1, 1971, which provided, in part, as follows:

'6. The parties agree that the Employer (including subsidiary, or affiliated corporations, or corporations in which the Employer has a controlling interest) is engaged in the mortgage banking business, in the making of mortgage loans on its own behalf, and as agent or broker for other lenders, and in the business of lending money generally, and is also actively engaged in the business of buying and selling, developing, and otherwise dealing in real estate and interests in real estate. The parties further agree that the Employer is actively engaged in its business as aforesaid, or now contemplates such activity in the near future, throughout the States of Indiana, Illinois, Ohio, Michigan and Kentucky. The parties further agree that the nature of the employment contemplated will give the Employee access to the books and records of the Employer, to the names and addresses of its customers and principals, and to the names and addresses of investors with whom it deals, and to other information which is confidential in nature, all of which would be harmful to the Employer if the same were to be divulged or become known to any competitor of the Employer, or to any other person outside the employ of the Employer, or if the Employee were to represent or be employed by any competitor of the Employer, or in competition with the Employer, or were to engage in such competition on his own behalf. As a part of the consideration for the execution of this Agreement, and to induce the Employer to employ the Employee, and to continue such employment, subject to the terms hereof, the Employee agrees that he will not, either directly or indirectly, in any manner engage in any employment or business or any activity whatsoever which may be directly or indirectly in competition with the business or affairs of the Employer. Without limiting the generality of the foregoing, the Employee agrees that he will not engage in the mortgage banking or lending business, either on his own behalf or on the behalf of any bank, insurance company, or other person, firm, association, or corporation, other than for the benefit of the Employer. It is expressly agreed that the restrictions contained in this paragraph as to the activities of the Employee shall continue and be effective during the term of employment hereunder, and for a period of two (2) years following termination of employment for any reason, after which time said restrictions shall expire. The restrictions herein contained upon the activities of the Employee following termination of employment shall further be limited to activities within the States of Indiana, Ohio, Illinois, Michigan, and Kentucky; provided, that if said restrictive provisions shall not be enforceable for any reason in any of said States, that such fact shall in no way affect the validity or enforceability of such provisions in any of the other States above mentioned. * * *

'7. The Employee agrees that he will not at any time communicate, divulge or disclose for the use of himself or any other person, partnership, corporation or firm any information or knowledge disclosed or otherwise obtained by him during his employment by the Employer which the latter may reasonably consider to be confidential, or in the nature of a business or trade secret. * * *.'

On May 31, 1972, O'Connor terminated his employment with appellant and was subsequently employed by the remaining appellees. Waterfield filed its complaint seeking injunctive relief and damages. On January 9, 1974, appellees filed their motion for summary judgment which was subsequently granted. Thereafter, appellant's motion to correct errors was overruled and this appeal was perfected.

Appellant contends that there are genuine issues of material fact surrounding the reasonableness of the spatial limitation in the noncompetition covenant.

In reviewing the propriety of a summary judgment, the materials on file are to be construed in favor of the opponent of the motion, and any doubt as to the existence of a genuine issue of material fact must be resolved against the proponent of the motion. Collins v. Duniforn (1975), Ind.App., 323 N.E.2d 264. The burden is upon the proponent to demonstrate the absence of any genuine issue of material fact and that he is entitled to a judgment as a matter of law. Podgorny v. Great Central Insurance Co. (1974), Ind.App., 311 N.E.2d 640; Doe v. Barnett (1969), 145 Ind.App. 542, 251 N.E.2d 688 (transfer denied).

Thus the proponent must set forth sufficient facts to enable the trial court to make a decision on the legal issue presented. Askew v. Hargrave (1971), 401 U.S. 476, 91 S.Ct. 856, 28 L.Ed.2d 196; Part 2, 6 Moore's Federal Practice, § 56.16, at 56--661 to 56--663 (2d Ed. 1976).

Covenants such as the one here at issue are in restraint of trade and not favored by the law. They will be enforced, however, where the restraint is reasonably necessary to protect the employer's business, not unreasonably restrictive of the employee and not against the public interest. Grand Union Tea Company v. Walker...