[Cite as Lindsey Constr. & Design, Inc. v. Luttrell, 2014-Ohio-1720.]
COURT OF APPEALS
STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT
LINDSEY CONSTRUCTION & : JUDGES:
DESIGN, INC. : Hon. William B. Hoffman, P.J.
: Hon. Sheila G. Farmer, J.
Plaintiff-Appellant : Hon. Craig R. Baldwin, J.
:
-vs- :
:
ANTHONY LUTTRELL, ET AL. : Case No. 2014CA00006
:
Defendants-Appellees : OPINION
CHARACTER OF PROCEEDING: Appeal from the Court of Common
Pleas, Case No. 2013CV01747
JUDGMENT: Affirmed
DATE OF JUDGMENT: April 21, 2014
APPEARANCES:
For Plaintiff-Appellant For Defendants-Appellees
ROBERT E. SOLES, JR. CHRISTOPHER A. MARUCA
KARA DODSON ANTHONY CELO
FAITH DYLEWSKI 201 East Commerce Street
KEVIN COX Suite 316
6545 Market Avenue North Youngstown, OH 44503
North Canton, OH 44721
Stark County, Case No. 2014CA00006 2
Farmer, J.
{¶1} Appellant, Lindsey Construction & Design, Inc., is a general construction
contractor company. On February 7, 2012, appellant hired appellee, Anthony Luttrell,
as a general manager. Appellee signed a noncompetition agreement, agreeing not to
compete with appellant for a two year period within one hundred miles of appellant's
principal place of business if appellant was terminated from employment.
{¶2} In March 2012, appellee, on behalf of appellant, hired Timothy Waggoner
to work as a sales agent. He signed an independent contractor agreement and an
addendum containing a noncompetition clause.
{¶3} In May 2012, appellee hired Stephen Carouthers to work as a sales agent.
He too signed an independent contractor agreement however, there is no evidence that
he ever signed an addendum containing a noncompetition clause. Mr. Carouthers left
appellant's employ three months later, in August 2012.
{¶4} In March 2013, while still working for appellant, appellee formed Avaran
Management Group, LLC, and Mr. Carouthers formed Carouthers Management &
Consulting, LLC. Both of these companies are members of the Ohio limited liability
company, Falcon General Contractors, LLC. Falcon is in the construction and
remodeling business.
{¶5} On April 2, 2013, Mr. Waggoner resigned his position with appellant and
began employment with Falcon. Appellee also resigned at about this same time.
{¶6} On June 28, 2013, appellant filed a complaint against all the
aforementioned parties. Appellant alleged breach of restrictive covenant, breach of
fiduciary duty, breach of contract, unfair competition, intentional interference with
Stark County, Case No. 2014CA00006 3
prospective economic advantage, misappropriation of confidential business information,
and breach of note. Appellant sought a preliminary injunction to enjoin the parties from
continuing to engage in conduct that caused the breach. A hearing before a magistrate
was held on August 1, 2013. By decision filed August 27, 2013, the magistrate denied
the injunction. Appellant filed objections. By judgment entry filed December 13, 2013,
the trial court denied the objections and adopted the magistrate's decision.
{¶7} Appellant filed an appeal and this matter is now before this court for
consideration. Assignments of error are as follows:
I
{¶8} "IT WAS REVERSIBLE ERROR FOR THE TRIAL COURT TO FAIL TO
ENFORCE THE CLEAR TERMS OF THE NONCOMPETITION AGREEMENT TO THE
EXTENT NECESSARY TO PROTECT THE LEGITIMATE INTERESTS OF
APPELLANT."
II
{¶9} "THE TRIAL COURT ABUSED ITS DISCRETION WITH RESPECT TO
ITS FINDING THAT APPELLANT SOUGHT TO PREVENT ONLY ORDINARY
COMPETITION."
III
{¶10} "THE TRIAL COURT ERRED IN FINDING THAT PLAINTIFF WAS NOT
LIKELY TO SUCCEED ON THE MERITS, BECAUSE LUTTRELL ADMITTEDLY
BREACHED THE NONCOMPETITION AGREEMENT."
Stark County, Case No. 2014CA00006 4
IV
{¶11} "THE TRIAL COURT COMMITTED REVERSIBLE ERROR IN FINDING
THAT PLAINTIFF WILL NOT SUFFER IRREPARABLE HARM IN THE ABSENCE OF
INJUNCTIVE RELIEF."
V
{¶12} "THE TRIAL COURT APPLIED THE INCORRECT STANDARD WHEN IT
CONCLUDED THAT THIRD PARTIES WOULD BE HARMED WITHOUT BALANCING
THE HARM TO ALL PARTIES."
{¶13} Prior to discussing appellant's assignments of error, a procedural issue
must be addressed.
{¶14} First, as conceded by appellant in its brief at 4, fn.1, the trial court's
decision relative to Timothy Waggoner is moot because he no longer works for Falcon
and is no longer violating the terms of the agreement.
{¶15} Secondly, each of appellant's assignments of error argue only the
enforceability of the agreement relative to Anthony Luttrell. No citations in the brief refer
to Stephen Carouthers. Mr. Carouthers was employed by appellant for three months
and he resigned in August 2012. T. at 132. There is nothing in evidence to establish
that he ever signed an addendum containing a noncompetition clause. T. at 38-39.
There are no references or agreements relative to Mr. Carouthers included in the
assignments of error.
{¶16} Accordingly, we dismiss the appeal as it pertains to Mr. Waggoner and Mr.
Carouthers.
Stark County, Case No. 2014CA00006 5
I, II, III, IV, V
{¶17} Appellant challenges the trial court's decision in denying the preliminary
injunction request against appellee Luttrell. We disagree.
{¶18} The decision to grant or deny an injunction is within the trial court's sound
discretion. In order to find an abuse of discretion, we must determine the trial court's
decision was unreasonable, arbitrary or unconscionable and not merely an error of law
or judgment. Blakemore v. Blakemore, 5 Ohio St.3d 217 (1983).
{¶19} A party requesting a preliminary injunction must show: (1) there is a
substantial likelihood that the plaintiff will prevail on the merits; (2) the plaintiff will suffer
irreparable injury if the injunction is not granted; (3) no third parties will be unjustifiably
harmed if the injunction is granted, and (4) the public interest will be served by
the injunction. Procter & Gamble Co. v. Stoneham, 140 Ohio App.3d 260 (2000).
{¶20} In the magistrate's August 27, 2013 decision, adopted by the trial court in
its judgment entry filed December 13, 2013, the trial court concluded the evidence failed
to establish any loss of jobs to Falcon, the noncompetition contract was overbroad, and
there was no proof of irreparable harm to appellant or no harm to third parties. The trial
court concluded the following:
Upon review, the Court finds that Plaintiff has not established, by
clear and convincing evidence, that there is a substantial likelihood that it
will prevail on the merits of the underlying substantive claim or that they
would suffer irreparable harm if the injunction is not granted. Additionally,
the Court finds that the issuance of the injunction will harm third parties,
Stark County, Case No. 2014CA00006 6
and that the public interest would not be served by issuing the preliminary
injunction.
{¶21} The noncompetition agreement between appellant and appellee, attached
to the June 28, 2013 complaint as Exhibit B, contains the following provision in pertinent
part:
3. Non-Competition. Employee (or a member of Employee's
immediate family) shall not:
b) for a period of two (2) years after the Termination Date,
regardless of how said termination may have occurred, directly or
indirectly, own, manage, operate, control, accept employment or a
consulting position with, or otherwise advise or assist or be connected with
in any way, directly or indirectly, any individual and/or entity which
engages in or otherwise carries on any business activity which in any way
competes with the Business or which carries on activities substantially
similar to the Business anywhere within a one hundred (100) mile radius
of the principal office of the Business (the "Territory").
{¶22} In Raimonde v. Van Vlerah, 42 Ohio St.2d 21 (1975), paragraphs one and
two of the syllabus, the Supreme Court of Ohio held the following:
Stark County, Case No. 2014CA00006 7
1. A covenant not to compete which imposes unreasonable
restrictions upon an employee will be enforced to the extent necessary to
protect an employer's legitimate interests. (Paragraphs two and three of
the syllabus in Extine v. Williamson Midwest, 176 Ohio St. 403, overruled.)
2. A covenant restraining an employee from competing with his
former employer upon termination of employment is reasonable if the
restraint is no greater than is required for the protection of the employer,
does not impose undue hardship on the employee, and is not injurious to
the public.
{¶23} The Raimonde court at 25 further explained the factors to be considered:
Among the factors properly to be considered are: "[t]he absence or
presence of limitations as to time and space, * * * whether the employee
represents the sole contact with the customer; whether the employee is
possessed with confidential information or trade secrets; whether the
covenant seeks to eliminate competition which would be unfair to the
employer or merely seeks to eliminate ordinary competition; whether the
covenant seeks to stifle the inherent skill and experience of the employee;
whether the benefit to the employer is disproportional to the detriment to
the employee; whether the covenant operates as a bar to the employee's
sole means of support; whether the employee's talent which the employer
seeks to suppress was actually developed during the period of
Stark County, Case No. 2014CA00006 8
employment; and whether the forbidden employment is merely incidental
to the main employment." Extine, supra, at 406. See Arthur Murray
Dance Studios of Cleveland v. Witter (1952), 62 Ohio Law Abs. 17.
{¶24} Appellant is a construction company whose focus is insurance restoration
and reconstruction work involving residential and commercial properties. T. at 17.
Appellant does general contracting, roofing, siding, windows, additions, remodels, and
water restoration. Id. Appellant's office is located in Akron, Ohio and the 100 mile
radius basically covers northeastern Ohio. T. at 18. Most of appellant's customers
were one-time customers. T. at 54, 241.
{¶25} Appellee originally started working for appellant in 2010 as an
independent contractor salesperson. T. at 222. In 2012, appellee was hired as an
employee, becoming general manager and reporting directly to the owner of the
company. T. at 33. Appellee established strong business relationships with appellant's
customers, subcontractors, and suppliers. T. at 184-186. During the course of his
employment with appellant, appellee was demoted from general manager to sales
manager, but he was still regarded as the No. 2 man. T. at 225, 228.
{¶26} In 2013, while still working for appellant, appellee formed Avaran to satisfy
the IRS because he was simultaneously receiving a W-2 and a 1099 while working for
appellant. T. at 183, 223-224, 231. Appellee admitted he was the owner of Falcon. T.
at 184. Falcon is a full service general contractor company specializing in new home
construction, but also works on roofing, siding, storm damage claims, water mitigation,
kitchen remodeling, deck projects, and window renovations. T. at 176, 235-237.
Stark County, Case No. 2014CA00006 9
Although appellee disagreed that his new business competed with appellant's (T. at
173), the trial court concluded that in reviewing the respective websites, the companies
engaged in substantially similar construction work. Appellee claimed he was not in the
insurance restoration business like appellant, but he did solicit storm damage work and
roofing and siding work as appellant did. T. at 174-176, 232. Appellee admitted he was
doing business within the 100 mile range (Mineral City/Tallmadge). T. at 174, 176. It
was appellee's position that the noncompetition agreement was overbroad in terms of
time and geography. Appellee also argued there was no proof of irreparable harm to
appellant and there would be harm to third parties.
{¶27} The testimony establishes only two remodel jobs by Falcon were in Stark
County, with the large amount of Falcon's work in Mahoning and Columbiana Counties.
T. at 236-237. The 100 mile geographical area extends to the northeastern Ohio region
of approximately four million people according to the U.S. Census, and is the fourteenth
largest metropolitan area in the United States.
{¶28} In its complaint filed June 28, 2013, appellant requested a preliminary
injunction for strict enforcement of the 100 mile geographic limit, although the
noncompetition agreement at ¶ 9 permitted modifications to the jurisdictional
restrictions:
9. Jurisdictional Interpretation. If any court or other tribunal having
jurisdiction to determine the validity or enforceability of Sections 2, 3 or 4
herein, determines that strictly applied, such provision(s) would be invalid
or unenforceable, the, in such event, the scope, time and, if applicable,
Stark County, Case No. 2014CA00006 10
geographical provisions of said Section(s) shall be deemed modified to the
extent necessary (but only to that extent) so that the restrictions in said
Sections, as modified, will be valid and enforceable.
{¶29} We concur with the trial court's decision that the language of the
noncompetition agreement is excessive and overbroad, and given appellee's testimony,
Falcon does less than one percent of its business in appellant's major service area.
Also, no proof was presented of any direct solicitation of appellant's customers or
business leading to any possibility of a claim of irreparable harm.
{¶30} Upon review, we find the trial court correctly denied the preliminary
injunction as the noncompetition agreement was geographically overbroad, there was
no likelihood of success on the merits and of irreparable harm to appellant, and there
was the possibility of unjustifiable harm to third parties.
{¶31} Assignments of Error I, II, III, IV, and V are denied.
Stark County, Case No. 2014CA00006 11
{¶32} The judgment of the Court of Common Pleas of Stark County, Ohio is
hereby affirmed.
By Farmer, J.
Hoffman, P.J. and
Baldwin, J. concur.
SGF/sg 401