RENDERED: MAY 5, 2023; 10:00 A.M.

NOT TO BE PUBLISHED

Commonwealth of Kentucky

Court of Appeals

NO. 2022-CA-0648-MR

CHARLES DAMON MOORE APPELLANT 

v. 

APPEAL FROM SHELBY CIRCUIT COURT

HONORABLE CHARLES R. HICKMAN, JUDGE

ACTION NO. 14-CI-00628

PEGASUS INDUSTRIES/PACKAGING, LLC APPELLEE 

OPINION

AFFIRMING

**   **  **

BEFORE: COMBS, EASTON, AND ECKERLE, JUDGES.

EASTON, JUDGE: The Appellant (“Moore”) seeks reversal of the judgment in 

favor of the Appellee (“Pegasus”) enforcing a liquidated damages provision in the 

employment contract between them. Finding no error by the circuit court, we 

affirm.
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FACTUAL AND PROCEDURAL BACKGROUND

Moore began working with Pegasus in 2012 as a production manager. 

Moore signed an Employment Agreement on September 26, 2012. This contract 

contained several covenants.

Paragraph 4 of the Employment Agreement states Moore would 

receive specialized training while employed with Pegasus. During his 

employment, Moore would learn trade secrets and business methods of Pegasus. 

Such knowledge allowed Pegasus to rely upon Moore as its employee to help 

Pegasus compete in its field of business. The sharing of this information would 

harm Pegasus and thus was prohibited in Paragraph 6(a). In Paragraph 6(b), 

Moore agreed that for a period of two years and within an area of one hundred 

miles he would not “engage in any activity which may be in interference with or in 

competition with the interests of” Pegasus.

Paragraph 7 of the Employment Agreement begins with a recognition 

by Moore “that a violation of provisions of this Agreement will surely result in 

damage . . . .” A further provision states: “in the event that damages to the 

Employer are not ascertainable, then Employee shall be liable to Employer for 

Twenty-Five Thousand Dollars ($25,000.00) in liquidated damages. Employee 

agrees to pay a reasonable attorney’s fees and cost of suit.” 
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Nifco was a customer of Pegasus. Pegasus performed work for Nifco, 

including “kitting,” a process of putting certain related items together for 

packaging and shipping. Pegasus had a dozen employees, including Moore, 

stationed at Nifco when fulfilling purchase orders from Nifco. Pegasus bought a 

property near Nifco and some specialized equipment in anticipation of this 

relationship continuing.

Moore quit his job with Pegasus on August 4, 2014. Within two 

months, he was working for Nifco. According to testimony in the record, this 

change resulted in an “awkward” and “cold” or even “hostile” environment for the 

Pegasus employees at Nifco. Nifco would not return Pegasus’ calls.

The business relationship between Nifco and Pegasus rapidly 

deteriorated as shown by Pegasus’s well-documented income data from the time 

Moore started working at Nifco. The $250,000 annual income stream from Nifco 

to Pegasus diminished to just a trickle. Several Pegasus employees working at 

Nifco lost their jobs due to this reduction in business. The equipment Pegasus 

purchased for the Nifco work would not be used, as there was no expansion much 

less continuation of their interaction.

The first hearing in this case in 2015 focused on whether the circuit 

court would issue a temporary injunction. At the conclusion of that hearing, the 

circuit court denied a temporary injunction finding no irreparable injury in that 
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damages could be awarded. Subsequently, the circuit court granted summary 

judgment in favor of Pegasus on the question of whether Moore violated the 

covenants of the Employment Agreement.

As it turns out, Moore would not work at Nifco for even a year. He 

did some self-employed work after he left Nifco. Moore then became a production 

technician for a bedding company in Louisville by the time of the second hearing

in 2018.

At the second hearing in 2018, the remaining question was what 

damages could be awarded in this case. Moore (and essentially Nifco on his 

behalf) argued Moore had nothing to do with the changes Nifco made with respect 

to Pegasus. Nifco simply decided to go a more cost-efficient way, which happened 

to involve a different supplier. With respect to damages, Moore insisted Pegasus 

could not establish any damages resulting from Moore’s competing employment.

The question of whether Moore violated the Employment Agreement 

is not presented on appeal. The appeal is limited to the later decision by the circuit 

court to award liquidated damages of $25,000 with attorney’s fees and costs of 

$17,968.03.

STANDARD OF REVIEW

The opinion and order appealed from was a summary judgment. 

When a circuit court grants a motion for summary judgment, the standard of 
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review for the appellate court is de novo because only legal issues are involved. 

Hallahan v. The Courier-Journal, 138 S.W.3d 699, 705 (Ky. App. 2004).

Whether liquidated damages are to be awarded for a breach of 

contract involves the interpretation of the governing contract. The question is one 

of law. The circuit court looks at the circumstances to decide whether the 

liquidated damages provisions will be enforced, or the case proceeds to a factual 

determination of actual damages. Because this is a question of law, our review of 

the circuit court’s decision enforcing liquidated damages is de novo. Patel v. Tuttle 

Properties, LLC, 392 S.W.3d 384, 386 (Ky. 2013). 

ANALYSIS

Citing Black’s Law Dictionary, this Court has defined liquidated 

damages as damages “contractually stipulated as a reasonable estimation of actual 

damages to be recovered by one party if the other party breaches.” Goetz v. Asset 

Acceptance, LLC, 513 S.W.3d 342, 346 (Ky. App. 2016). We have recognized 

liquidated damages provisions as “particularly appropriate” for restrictive 

covenants in employment situations. Daniel Boone Clinic, P.S.C. v. Dahhan, 734

S.W.2d 488, 491 (Ky. App. 1987).

The leading early case on liquidated damages is Fidelity & Deposit 

Company of Maryland v. Jones, 75 S.W.2d 1057 (Ky. 1934). The “only inquiry” 

in such a case is whether the parties intended the liquidated damages provision as 
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compensation for a breach. Id. at 1060. If it serves only as a penalty, it is not 

enforceable. Id. at 1059.

Moore relies upon other language in Jones: “[I]f no damages have 

been sustained by reason of the violation of the agreement, a clause liquidating the 

damages will not avail the plaintiff. In such case only nominal damages are 

recoverable.” Id. at 1059-60. It stands to reason that if no damages are shown, 

then the liquidated damages amount would be disproportionate and would serve 

only as a penalty.

Kentucky would later adopt the Restatement (Second) of Contracts § 

356(1) (1981) on this subject. Mattingly Bridge Co., Inc. v. Holloway & Son 

Constr. Co., 694 S.W.2d 702, 705 (Ky. 1985). We then consider alternately both 

the anticipated loss and the actual loss when determining whether a liquidated 

damages provision is to be enforced. It will be enforced if it does not serve as a 

penalty only. Id. 

The argument between the parties here helps to illustrate the very 

reason for liquidated damages. It would be very difficult to ascertain to what 

degree Moore’s use of his training, Pegasus’ in-house knowledge, and experience 

would harm Pegasus. Pegasus lost some of that investment when Moore left. 

Moore’s influence with Nifco and the negative impact on the working relationship 

between the companies could be a causative factor in Nifco’s decision to 
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discontinue its relationship with Pegasus. Yet other factors may also have to be 

considered.

Neither the circuit court nor this Court must accept the explanation 

offered by Nifco of pure coincidence in the deterioration of the relationship with 

Pegasus. The testimony (at both hearings) of the environment at Nifco with 

Moore’s presence combined with the contemporary decline in Pegasus income 

from Nifco was sufficient circumstantial evidence to establish actual damage apart 

from the lost training value issue. The inability to establish an amount with 

certainty is the justification for liquidated damages. Considering the intangibles 

anticipated by the parties with the evidence of an actual and substantial economic 

loss, at least partially connected to Moore, the circuit court did not err in 

concluding the legal question of the validity of the liquidated damages provision in 

this case. 

With respect to attorney’s fees, KRS 411.195 is an exception to the 

“American Rule” under the common law. If a contract provides for attorney’s 

fees, they may be awarded. See Gibson v. Kentucky Farm Bureau Mut. Ins. Co., 

328 S.W.3d 195, 204 (Ky. App. 2010). In this case, the Employment Agreement 

authorizes an award of attorney’s fees. The circuit court awarded such fees based 

upon documented billing statements of the fees incurred.
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CONCLUSION 

The opinion and order of the Shelby Circuit Court awarding liquidated 

damages and attorney’s fees and costs is AFFIRMED. 

ALL CONCUR. 

BRIEFS FOR APPELLANT: BRIEF FOR APPELLEE:

Nathan Thomas Riggs C. Gilmore Dutton, III

Shelbyville, Kentucky Katherine H. Whitten

 Shelbyville, Kentucky