Watlow Elec. Mfg. Co. v. Wrob, 66866

• Citation: 899 S.W.2d 585
• Decision Date: 06 June 1995
• Docket Number: No. 66866,66866
• Parties: WATLOW ELECTRIC MANUFACTURING COMPANY, et al., Plaintiffs-Respondents, v. Ronald M. WROB, Jr., a/k/a Mike Wrob, an individual, and H.E.A.T., Inc., a Missouri Corporation, et al., Defendants-Appellants.
• Court: Court of Appeal of Missouri (US)

Page 585

899 S.W.2d 585

WATLOW ELECTRIC MANUFACTURING COMPANY, et al., Plaintiffs-Respondents, v. Ronald M. WROB, Jr., a/k/a Mike Wrob, an individual, and H.E.A.T., Inc., a Missouri Corporation, et al Defendants-Appellants.

No. 66866.

Missouri Court of Appeals,

Eastern District,

Division Three.

June 6, 1995.

Stephen M. Hereford, Clayton, for appellants.

Edward M. Goldenhersh, Gary A. Eberhardt, St. Louis, for respondents.

DOWD, Judge.

On August 17, 1992, Ronald M. Wrob, Jr., (Mike Wrob) and H.E.A.T., Inc., (HEAT), Appellants, filed a motion to vacate or modify the injunction which was ordered on June 4, 1991. In this injunction, Mike Wrob, Ronald M. Wrob, Sr., ¹ and HEAT were enjoined from competing with Respondents, Watlow Electric Manufacturing Company (Watlow) and its wholly owned subsidiary, Pacific Heater Corporation (Pacific). On January 29, 1993, the trial court entered an order denying Appellants' motion to modify, finding them in contempt, and awarding attorney's fees to Watlow and Pacific. Appellants appealed, but this court dismissed the appeal as premature finding the civil contempt order was not final because the trial court had not issued a warrant of commitment or imposed any fine. Watlow Elec Mfg. Co. v. Wrob, 878 S.W.2d 63 (Mo.App.1994). On August 5, 1994, the trial court entered a second order finding the contempt issue to be moot because Appellants had voluntarily complied with the terms of the injunction by no longer manufacturing or selling thermocouples. Appellants now appeal the trial court's refusal to modify or vacate the injunction and its award of attorney's fees. We affirm.

Other than Pacific, Watlow's wholly owned subsidiaries include Watlow St. Louis, Inc., Watlow Industries, Inc., and Watlow AOV, Inc. These entities are collectively referred to as the Watlow Group. Mike Wrob and Ronald M. Wrob, Sr., as employees of Pacific, had unrestricted access to Watlow and Watlow Group's trade secrets. They also had knowledge of the products and manufacturing equipment used by Watlow Group. They secretly incorporated HEAT while they were both still employed by Pacific in order to produce and sell heater products in competition with Watlow and Pacific. They also used false identities, entered into an equipment lease on Pacific's behalf with a fictitious entity they created, and forged signatures to misappropriate personal property belonging to Watlow and Pacific, including: product drawings, specifications, test data, customer lists, sales information, marketing information, and special equipment drawings and specifications. Using these materials, they began to manufacture products through HEAT which would be in direct competition with products of Watlow and the Watlow Group.

After learning that Mike and Ronald Wrob misappropriated several trade secrets, Watlow and Pacific entered into a release and settlement agreement whereby Mike Wrob, Ronald Wrob, and HEAT agreed to have an injunction entered against them. The injunction which was entered on June 4, 1991, essentially provided that Mike and Ronald Wrob were enjoined from competing with Watlow or any member of the Watlow Group for a period of five years.

In December 1991, Appellants began manufacturing thermocouples. According to the record, a thermocouple is a heat measuring device which can be manufactured either as a component of an electric heater or as a separate stand alone product. Both parties agree thermocouples were offered as components on the heaters manufactured by Pacific while Mike Wrob was working there. After Appellants received a letter from Respondents' counsel stating he believed they were violating the permanent injunction by manufacturing thermocouples, Appellants filed the motion to vacate or modify the injunction which is at issue in this case.

In Point I, Appellants allege the trial court erred in denying their motion to vacate the non-compete portion of its June 4, 1991 order because it is broader than necessary to protect Watlow's legitimate business interests; it unnecessarily restrains trade and is punitive; and it is vague, ambiguous, contradictory, and unenforceable under Missouri law. In response, Watlow argues we do not have jurisdiction to hear Appellants' appeal from the denial of their motion to modify or vacate the injunction because the injunction was entered into by consent of the parties. Permanent injunctions based on a condition subject to change are an exception to the time limitations of Rule 75.01 and may be vacated or modified in order to avoid unjust or absurd results when a change occurs in the factual setting or the law which gave rise to its existence. Lee v. Rolla Speedway, Inc., 668 S.W.2d 200, 204 (Mo.App.1984); Twedell v. Town of Normandy, 581 S.W.2d 438, 440 (Mo.App.1979). A court of equity has the power to modify an injunction under these circumstances "whether the decree has been entered after litigation or by consent." Humble Oil & Refining Co. v. American Oil Co., 405 F.2d 803, 812 (8th Cir.1969).

Returning to the specific issues raised in Point I, Appellants argue that "[t]o enforce a five year non-compete ban along with a prohibition against competition in products in which Watlow Group no longer competes serves no legitimate business purpose of Respondents and is an unwarranted restraint of trade and the only purpose of the ban is to punish." In arguing the trial court's order is unreasonable, Appellants rely on the standard used to determine the reasonableness of noncompetition provisions in employment contracts, not in court-ordered injunctions. However, Mike Wrob consented to having an order of permanent injunction entered against him in order to avoid being sued for violating the noncompetition provision of his employment contract. Further, a five-year injunction is reasonable in this case based on Mike Wrob's willful violation of his noncompetition agreement with Respondents. See, A.B. Chance Co. v. Schmidt, 719 S.W.2d 854, 859 (Mo.App.1986) (court enjoined defendant, a former employee, from reproducing plaintiff's confidential process for a period of five years). Appellants also argue the injunction is vague and unenforceable under Rule 92.02(d) because it does not set forth the reasons for issuing the five-year injunction. However, the trial court's injunction specifically stated:

because of their intentional, willful and wrongful conduct in order to gain an unfair advantage in the marketplace, that Defendants Ronald M. Wrob, Sr. and Ronald M. Wrob, Jr. are hereby permanently enjoined, for a period of five (5) years from the date of this Order, from in any manner, whether directly or indirectly, participating or assisting in the ownership, operation, management, marketing, employment, or in any way serving as an advisor, consultant, designer, engineer, sales representative, or independent contractor, or lender to, or in any way be connected with or involved with any 'business in competition' with Watlow Electric Manufacturing Company, Watlow St. Louis, Inc., Watlow Industries, Inc., Watlow AOV, Inc. or Pacific Heater Corporation (collectively known as the 'Watlow Group').

We find the language of the injunction sufficiently specific to meet the requirements of Rule 92.02.

Further, Appellants argue the manufacturing and selling of thermocouples is not covered by the June 4 injunction because (1) it is not a business in competition with Watlow Group; (2) the court's...