Court Opinion

ID: 4098546
Source: CourtListenerOpinion
Date Created: 2016-11-16 04:23:09.359324+00
Date Added: 2024-06-11T14:45:27.011076
License: Public Domain

J-A21042-16

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

MEYER-CHATFIELD CORP.               :      IN THE SUPERIOR COURT OF
                                    :            PENNSYLVANIA
          v.                        :
                                    :
BANK FINANCIAL SERVICES GROUP,      :
STEVEN GOLDBERG, STEVEN             :
GOLDBERG SOLE PROPRIETORSHIP,       :
DAVID PAYNE, ARNOLD WINICK,         :
WILLIAM BORCHERT AND DANIEL         :
BARBAREE                            :
                                    :
_______________________________     :
                                    :
MEYER-CHATFIELD ADMINISTRATIVE      :
SERVICES, LLC                       :
                                    :
          v.                        :
                                    :
BANK FINANCIAL SERVICES GROUP,      :
STEVEN GOLDBERG, STEVEN             :
GOLDBERG SOLE PROPRIETORSHIP,       :
DAVID PAYNE, ARNOLD WINICK,         :
WILLIAM BORCHERT AND DANIEL         :
BARBAREE                            :
                                    :
APPEAL OF: BANK FINANCIAL           :
SERVICES GROUP, STEVEN              :
GOLDBERG, STEVEN GOLDBERG SOLE      :
PROPRIETORSHIP, DAVID PAYNE,        :
ARNOLD WINICK, WILLIAM BORCHERT,    :
DANIEL BARBAREE (THE “BFS           :          No. 3385 EDA 2015
PARTIES”)

            Appeal from the Order entered October 19, 2015
         in the Court of Common Pleas of Montgomery County,
             Civil Division, No(s): 2013-29858, 2013-30326,
                          2014-11331, 2015-02972
J-A21042-16

MEYER-CHATFIELD CORP.                    :      IN THE SUPERIOR COURT OF
                                         :            PENNSYLVANIA
           v.                            :
                                         :
BANK FINANCIAL SERVICES GROUP,           :
STEVEN GOLDBERG, AND DAVID               :
PAYNE                                    :
                                         :
_______________________________          :
                                         :
BANK FINANCIAL SERVICES GROUP,           :
STEVEN GOLDBERG; STEVEN                  :
GOLDBERG SOLE PROPRIETORSHIP,            :
DAVID PAYNE; AND ARNOLD WINICK           :
                                         :
           v.                            :
                                         :
MEYER-CHATFIELD CORP.                    :
                                         :
APPEAL OF: BANK FINANCIAL                :
SERVICES GROUP, STEVEN                   :
GOLDBERG, DAVID PAYNE, ARNOLD            :
WINICK, WILLIAM BORCHERT, DANIEL         :
BARBAREE, AND STEVEN GOLDBERG            :           No. 227 EDA 2016
SOLE PROPRIETORSHIP

             Appeal from the Order entered December 10, 2015
           in the Court of Common Pleas of Montgomery County,
               Civil Division, No(s): 2013-29858, 2013-30326

BEFORE: BENDER, P.J.E., DUBOW and MUSMANNO, JJ.

MEMORANDUM BY MUSMANNO, J.:                   FILED NOVEMBER 15, 2016

     Bank Financial Services Group, Steven Goldberg (“Goldberg”), Steven

Goldberg Sole Proprietorship, David Payne, Arnold Winick, William Borchert

and Daniel Barbaree (collectively “Defendants”) appeal from (1) the October

19, 2015 Order granting a preliminary injunction in favor of Meyer-Chatfield

Corporation (“Meyer-Chatfield”); and (2) the December 10, 2015 Order

                                -2-
J-A21042-16

denying   Defendants’   Motion   to   Dissolve,   Modify,   and/or   Clarify   the

Preliminary Injunction Order (the “Motion to Dissolve”).1       We dismiss the

appeal as moot.

      In its Opinion, the trial court set forth the relevant factual and

procedural background, which we adopt for the purpose of this appeal. See

Trial Court Opinion, 12/29/15, at 1-9.     On October 28, 2015, Defendants

filed a timely Notice of Appeal of the October 19, 2015 Order. On December

2, 2015, Defendants filed the Motion to Dissolve, which the trial court denied

on December 10, 2015. Defendants thereafter filed a Notice of Appeal of the

December 10, 2015 Order.2

      On appeal, Defendants raise the following issues for our review:

      1. Did the trial court commit legal error in issuing, and then
         refusing to dissolve, modify, or clarify, an [i]njunction to
         enforce restrictive covenants in an agreement, when the
         covenants are invalid because no consideration was given for
         any of the agreement’s renewal terms?

      2. Did the trial court commit legal error in enjoining, and then
         refusing to dissolve, modify, or clarify the [O]rder enjoining,
         competition in 13 states, when the agreement it purports to
         enforce limits competition in only two; the agreement was
         never amended in writing to add other states to the

1
 Defendants separately appealed the two Orders. We consolidated the two
appeals pursuant to Pa.R.A.P. 513.

2
 We note that this is an interlocutory appeal as of right from the grant, in
part, of a preliminary injunction, pursuant to Pennsylvania Rule of Appellate
Procedure 311(a)(4) (stating, “[a]n appeal may be taken as of right and
without reference to Pa.R.A.P. 341(c) from … [a]n order that grants or
denies, modifies or refuses to modify, continues or refuses to continue, or
dissolves or refuses to dissolve an injunction…[]”).

                                 -3-
J-A21042-16

        restriction, as the contract requires; and [Meyer-Chatfield]
        gave no consideration to restrain competition in any
        additional states?

     3. Did the trial court commit legal error in enjoining, and then
        refusing to dissolve, modify, or clarify the [O]rder enjoining,
        competition in servicing [bank-owned life insurance] policies,
        where [Meyer-Chatfield] does not provide such services and
        none of the [D]efendants had an employment relationship or
        non-compete agreement with Meyer-Chatfield Administrative
        Services, LLC [], the separate Meyer-Chatfield affiliate that
        provides such services?

     4. Did the trial court commit legal error in issuing, and then
        refusing to dissolve, modify, or clarify, an [i]njunction that
        enjoins competition with all banks with which Meyer-Chatfield
        has ever done business, when the agreement it purports to
        enforce restricts competition only as to banks with which
        Meyer-Chatfield transacted [business] as of August 16, 2013?

     5. Did the trial court commit legal error in enjoining, and then
        refusing to dissolve, modify, or clarify the [O]rder enjoining
        “anyone acting on [Goldberg’s] behalf, including [the named
        Defendants],” from competing with Meyer-Chatfield, without
        clarifying that the other Defendants may compete
        independently of Goldberg, where Goldberg is the only
        Defendant bound by a restrictive covenant?

     6. Did the trial court commit legal error in issuing, and then
        refusing to dissolve, modify, or clarify, an [i]njunction that
        enjoins competition from October 2015 to October 2016,
        where the one-year restrictive covenants had expired before
        the [i]njunction was issued and a prior [O]rder had already
        enjoined competition for seven months?

     7. Did the trial court commit legal error in issuing, and then
        refusing to dissolve, modify, or clarify, an [i]njunction that
        does not definitely, clearly, and precisely set forth the banks
        (which] Defendants are prohibited from contacting[,] or the
        conduct from which they are prohibited?

     8. Did the trial court commit legal error in enjoining, and then
        refusing to dissolve, modify, or clarify the [O]rder enjoining,
        the disclosure or use of “Confidential Information” without

                                -4-
J-A21042-16

         adequately specifying the information or the conduct that is
         prohibited as to such information, and where the information
         is not protectable because it is publicly available and/or was
         disclosed by Meyer-Chatfield?

      9. Did the trial court abuse its discretion in issuing the
         [i]njunction where there is not apparently reasonable ground
         for finding [that] it was needed to avoid irreparable harm,
         and no finding was made that the [i]njunction would not
         cause more harm than it intended to prevent?

      10. Did the trial court err in requiring Meyer-Chatfield to post
         an injunction bond of only $1,000.00 and refusing to modify
         the [i]njunction to require a greater bond, when
         [D]efendants’ likely damages from the improperly issued
         [i]njunction far exceed $1,000[.00]?

      11. Did the trial court commit legal error when it found that
         the arguments in the [M]otion to dissolve, modify, and/or
         clarify the [i]njunction were waived or when it otherwise
         rejected them because it incorrectly treated the [M]otion as
         an untimely motion for reconsideration, when a motion to
         dissolve an injunction may be brought “at any time” and is
         governed    by    a    different standard   than   one    for
         reconsideration?

      12. Did the trial court abuse its discretion and/or commit legal
         error when it held that the ends of justice would not be
         served by dissolving, modifying, or clarifying the [i]njunction,
         particularly when it provided no principled basis to conclude
         that it exercised its discretion properly in denying the Motion
         to Dissolve?

Brief for Appellants at 4-7.

      Appellate courts review the grant of a preliminary injunction for an

abuse of discretion:

      The standard of review applicable to preliminary injunction
      matters … is highly deferential. This highly deferential standard
      of review states that in reviewing the grant or denial of a
      preliminary injunction, an appellate court is directed to examine

                                  -5-
J-A21042-16

     the record to determine if there were any apparently reasonable
     grounds for the action of the court below.

Duquesne Light Co. v. Longue Vue Club, 63 A.3d 270, 275 (Pa. Super.

2013) (citation and internal quotation marks omitted).

     Prior to addressing the merits of Defendants’ appeal, we must first

determine whether this appeal is moot.

     As a general rule, an actual case or controversy must exist at all
     stages of the judicial process, or a case will be dismissed as
     moot. An issue can become moot during the pendency of an
     appeal due to an intervening change in the facts of the case or
     due to an intervening change in the applicable law. In that case,
     an opinion of this Court is rendered advisory in nature. An issue
     before a court is moot if in ruling upon the issue the court cannot
     enter an order that has any legal force or effect.

In re L.Z., 91 A.3d 208, 212 (Pa. Super. 2014) (quoting In re D.A., 801

A.2d 614, 616 (Pa. Super. 2002) (en banc).

     Here, the dispute centers on a preliminary injunction Order that

prohibited Defendants from engaging in certain conduct for a one-year

period extending from October 19, 2015, to October 19, 2016.               See

Preliminary Injunction Order, 10/19/15, at 2. That Order expired on October

19, 2016.     Therefore, Meyer-Chatfield can no longer enforce the Order.

Accordingly, an actual case or controversy no longer exists between

Defendants and Meyer-Chatfield.     Because the Defendants are no longer

                                 -6-
J-A21042-16

required to abide by the injunction, our review would be of no effect. See

In re L.Z., 91 A.3d at 212.3 Accordingly, we dismiss the appeal as moot.4

      Appeal dismissed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 11/15/2016

3
  There are three exceptions to the mootness doctrine: “this Court will
decide questions that otherwise have been rendered moot when one or more
of the following exceptions to the mootness doctrine apply: (1) the case
involves a question of great public importance, (2) the question presented is
capable of repetition and apt to elude appellate review, or (3) a party to the
controversy will suffer some detriment due to the decision of the trial court.”
In re D.A., 801 A.2d at 616. However, none of the exceptions to the
mootness doctrine apply to the facts of this case, as (1) this matter involves
an interpersonal dispute regarding a non-compete provision in the contract
of a single former employee; (2) questions regarding the enforceability of
the provision will not arise again as Meyer-Chatfield no longer employs
Goldberg; and (3) Defendants will not suffer detriment without this Court’s
ruling, as the provision is no longer enforceable.

4
  In a letter written to this Court following the close of briefing, Defendants
assert that the appeal should not be dismissed as moot, on the basis that
such a ruling would adversely affect Defendants’ ability to recover lost profit
damages if the injunction had been improvidently granted. However, even if
the appeal was not moot, we would have determined that the injunction was
properly granted for the reasons expressed by the trial court in its Opinion.
See Trial Court Opinion, 12/29/15, at 10-15; see also Trial Court Opinion,
3/14/16, at 1-6.

                                  -7-
                                                                                                   Circulated 10/17/2016 04:14 PM

                                                                                                                               Page 1

                               IN THE COURT OF COMMON PLEAS OF
                              MONTGOMERY COUNTY, PENNSYLVANIA
                                         CIVIL DIVISION

MEYER-CHATFIELD                   CORP.                                    Sup. Ct. No. 3385 EDA 2015
                                                                           Com. Pleas No. 2013-30326
                         v.

BANK FINANCIAL SERVICES
GROUP, STEVEN GOLDBERG,
STEVEN GOLDBERG SOLE
                                                                                IIII IC:rf1~~iKIJII I
                                                                                2013-30326-0+19
                                                                                                        1
                                                                                                      12/29/2015 2:56 P~I !: 10612878
                                                                                                           Opinion
PROPRIETORSHIP, DAVID PAYNE                                                     Rq,i=Z26 I 2626 F,~:so.oo
ARNOLD WINICK, WILLIAM                                                                     ~lark 1...:,) • Monaco Pro1hono1ary

BORCHERT, and DANIEL
BARBAREE

                                                       OPINION

Moore, J.                                                                                     December 29, 2015

I.          FACTS AND PROCEDURAL HISTORY

           The question presented by this appeal is whether this Court properly issued a preliminary

injunction against Steven Goldberg and anyone acting on his behalf, including Bank Financial

Services Group ("BFS"), Arnold Winick, David Payne, William Borchert, and Daniel Barbaree

(collectively, the "BFS Parties" or "Defendants").

           Meyer-Chatfield Corporation ("Meyer-Chatfield")'               is a company in the business of

providing bank-owned life insurance ("BOLi"), a highly specialized financial product. BOLi is

a single premium life insurance contract specifically designed for banks to earn tax-free income,

among other benefits.          Since its beginnings in 1992, Meyer-Chatfield has been engaged in the

design, marketing, sales, and servicing of BOLi products to the banking community nationwide.

            In 1999, Meyer-Chatfield        hired Steven Goldberg as a BOLi sales representative.                    Prior to

coming to Meyer-Chatfield,           Goldberg was an aluminum siding salesman. Thus, Goldberg was

the beneficiary of training programs and leads particular to the BOLi business that were provided

I
    Meyer-Charfield's   principal place of business is at 261 Old York Road, Suite 724, Jenkintown, Pennsylvania.
                                                                                                                          Page 2

by Meyer-Chatfield.        On March 3, 2003, Goldberg executed a sales representative agreement

with Meyer-Chatfield       (the "Goldberg Contract", or the "Contract"). (See Ex. J-100) (hereinafter,

"Goldberg Contract").        With Meyer-Chatfield's         support, Goldberg became an extremely

successful BOLi salesman, earning in excess of $2,000,000.00 in commissions during multiple

years.

         Pursuant to the terms of the Contract, defendant Steven Goldberg agreed that, during his

tenure and for a period of one year following the termination of the Goldberg Contract, he would

not, on behalf of himself, any person, firm, corporation, association, or other entity, excluding

Meyer-Chatfield:

         (i)      Solicit, serve, divert, disclose, utilize in any way, or provide information
                  concerning clients, customers and referral sources of Meyer-Chatfield or
                  other Meyer-Chatfield confidential information or proprietary information
                  to any individual or business entity;

         (ii)     Induce or attempt to induce any bank or Certified Prospect' not to do
                  business with Meyer-Chatfield;

         (iii)    Induce or attempt to induce any individual or referral source to refrain
                  from referring clients or business to Meyer-Chatfield for in connection
                  with a BOU transaction or completing a BOLi transaction;

         (iv)     Publish, disseminate or transmit, either verbally, by written or electronic
                  communication or by any other means, any disparaging or derogatory
                  statements or materials concerning Meyer-Chatfield, its shareholders,
                  employees, agents, clients, vendors, or referral sources;

         (v)      Directly, indirectly or otherwise divulge any confidential information or
                  proprietary information to any person, firm or corporation, use for its own
                  benefit or the benefit of anyone or entity other than Meyer-Chatfield.
                  "Confidential Information" includes, but is not limited to, Meyer-Chatfield
                  intellectual property, material, information, data, lists, know how,
                  procedures, referral sources, marketing materials, etc., which was learned
                  by of or used by the sales representative during the term of this agreement;

2 A "Certified Prospect" is a financial institution or corporation contacted by a Meyer-Chatfield sales representative,
such as Goldberg, during the one year period before termination of the Contract.

                                                            2
                                                                                                       Page 3

           (vi)    Directly or indirectly attempt to solicit any employee or independent
                   contractor of Meyer-Chatfield to cease working with Meyer-Chatfield, or
                   enter into any type of relationship with said individuals or business
                   entities; and

           (vii)   Compete directly or indirectly within his Territory with and for any
                   business in which Meyer-Chatfield is engaged at the time of Termination
                   or separation.

(Goldberg Contract§ 7.0l(A)).

           "Territory", as set forth in the Goldberg Contract, is defined as Pennsylvania, New

Jersey, and any other states that may be assigned to Goldberg. (Goldberg Contract§ 1.03). As

the testimony before this Court made clear, Goldberg's Territory expanded to include, at least,

New York, Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont,

Maryland, and Delaware. (See N.T. 10/24/14, p. 78; N.T. 10/23/14, p. 48; N.T. 12/3/14, pp. 20-

25).

           Goldberg also had a contractual obligation under the Contract to "not attempt to divert

BOU Business away from [Meyer-Chatfield] for any reason." (Goldberg Contract§ 6.01 (C)).

           TheGoldberg Contract was entered into for an initial one year term from March 7, 2003

to March 7, 2004 (the "Term"), and was automatically renewed every year "unless either party

notifie] d] the other party in writing at least three (3) months prior to the end of the Term or any

renewal thereof that it elects to terminate [the Goldberg Contract], in which event [the Goldberg

Contract] shall expire upon the expiration of the then current renewal term." (Goldberg Contract

§ 2.01).

           In the event of Goldberg's breach of the Contract, the one year term relating to

Goldberg's restrictive covenants did not begin to run until the date Goldberg cured his breach or

breaches. Goldberg also agreed that he would be prohibited from working with a Strategic

                                                    3
                                                                                                                            Page 4

    Partner3 for the one (I) year period following termination of the Goldberg Contract. (Goldberg

    Contract § 7.01 ).

            On August 16, 2013, Goldberg purported _to tender his resignation to Meyer-Chatfield,

    effective immediately.      However, pursuant to the terms of the Goldberg Contract, Goldberg's
'
    resignation could not be effective until March. 7, 2014, at the earliest, at which time the

    covenants contained in the Goldberg Contract, which prohibited Goldberg from engaging in

    certain restricted.activities, as more fully described above, would continue for a period of one (1)

    year from the date of termination or March 7, 2015, at the earliest. Meyer-Chatfield terminated

    Goldberg for cause, effective immediately on March 5, 2014 as a result of his material and

    repeated breaches of the restrictive covenants in the Goldberg Contract and other unlawful

    conduct.4

             For years, Goldberg and Arnold Winick had marketed and sold BOLi products as

    partners, on behalf of Meyer-Chatfield. (N .T. 10/23/14, p. 45). In 2013 or earlier, Goldberg and

    Winick conspired with each other and representatives of BFS, namely Borchert and Barbaree and

    possibly others, to incite a coordinated departure of employees from Meyer-Chatfield to Bank

    Financial Services. Goldberg and/ or Winick, and possibly others, solicited and induced David

    Payne, David Schwartz, and Joseph Byrd to join them in leaving Meyer-Chatfield and beginning

    with BFS. The plan for departure included copying Confidential Information and customer lists

    3 The Contract defined a "Strategic Partner" as "an individual or organization that typically works with the banking,
    financial, and insurance communities which or who has an agreement with M-C." (Goldberg Contract § 1.06).

    J This Court found that Goldberg's breaches were ongoing up until this Court's issuance of its October 19, 2015
    Preliminary Injunction Order, and thus commencement of the one year period was tolled until after Goldberg's
    breaches had been cured as per his Contract. (See Goldberg Contract § 7 .0 I (C)(i)) ("Funhennore, the restrictive
    covenants hereinabove shall survive the termination of this Agreement for the longer of one (I) year from and after
    the date of Termination or expiration of this Agreement or one (I) year after full compliance by [Goldberg]
    following any breach.").

                                                              4
                                                                                                         Page 5

from Meyer-Chatfield      computers.     Payne, Schwartz, and Byrd each agreed to join Goldberg and

Winick and participate     directly in the scheme.

        On May 11, 2013, Winick communicated               with Goldberg regarding "our understanding

along with our desired expectations        to [sic] joining BFS"-namely,     that they would become

BFS's New England and Northeast regional partners, address "client takeovers",            and generate

business from "SG/A W clients"," who, in reality, were actually all Meyer-Chatfield clients. (Ex.

P-47). Specifically, partners Goldberg and Winick agreed and understood the following:

        New England and Northeast Regional partners
        Primary sales and servicing responsibility for banks/ credit unions in
        VA, WV, DC, MD, PA, NJ, DE, NY, CT, MA, RI, NH, VT, ME
        Protect existing renewal commissions for Current BFS Clients
        Generate new revenue opportunities within existing BFS/SGA W clients
        Create and close new client prospects                                  ·
        Commission Split 75% SGA W/ 25% BFS First year and Renewal

(Ex. P-47). Goldberg and Winick specifically sought to discuss and to clarify with defendants

Borchert and Barbaree the topic of "client takeover". (Ex. P-4 7). At the time, Goldberg and

Winick's only clients were Meyer-Chatfield clients. Indeed, prior to joining Meyer-Chatfield,

Goldberg had no BOLI clients whatsoever. (See N.T. 9/17/15, p. 153).

        On May 30, 2013, Winick e-mailed to himself a Memorandum of Understanding laying

out the "terms and conditions or the proposed business relationship between Arnold Winick/

Steven Goldberg (A W/SG) and Bank Financial Services (BFS) as of May 2013." (Ex. P-48).

        In May 2013, defendant Joseph Savino met with Goldberg, who advised Savino that:

Goldberg planned to transition his Meyer-Chatfield "team"-i.e., Winick, his partner, Payne, the

attorney, Schwartz, a BOLI administrator, and Byrd, the "tech guy"-from Meyer-Chatfield to its

direct competitor, BFS, Borchert and Barbaree; Goldberg had informed a "network" of people in

s That is, Steven Goldberg/ Arnold Winick clients.

                                                       5
                                                                                                                       Page 6

the BOLi community-i.e.,           Meyer-Chatfield's       bank customers    and referral sources-that        he and

his "team" were leaving       Meyer-Chatfield;     Goldberg would be placing            over 200 phone calls to his

"network"    and that, by doing so, Goldberg           would generate   a substantial    amount of business     for

Savino and the Savino Group and that he had already made forty such phone calls.                     (Ex. P-34, pp.

81-89;   90-102;   159;   170- 71 ).

         On July 9, 2013,     Barbaree e-mailed        Winick a "Letter of Understanding        For Joint Venture

between Bank Financial        Services   Group & BFS-Northeast"          for both Winick and Goldberg (to be

executed separately),      laying out the purpose of their joint venture and the respective duties of each

joint venture partner. Given the impropriety, Borchert directed Barbaree to provide the agreement

to Winick, Goldberg's partner/ sidekick, so that Winick could then deliver it to Goldberg, as

opposed to Borchert/ Barbaree delivering it directly to Goldberg. (Ex. P-78).

         A day later, Borchert sent Barbaree an e-mail attaching an "Addendum # l" to the Letter of

Understanding, with a request that Barbaree forward it to Winick, that obligated BFS to "pay all

legal fees for Steven Goldberg and/or Amie Winick that may be required from any/all legal

actions created from their leaving Meyer-Chatfield and engaging as Regional Partners and sales

associates of BFSG." (Ex. P-32(B)).           On August 16, 2013, the same day that Goldberg and

Winick left Meyer-Chatfield together as partners to join BFS, Goldberg, Winick, Borchert, and

Barbaree executed the "Letter of Understanding              For Joint Venture Between Bank Financial

Services Group & BFS-Northeast" and "Addendum # 1" thereto, laying out the purpose of their

joint venture and the respective duties of each joint venture partner. (Exs. P-32(A), (B), and (C)).

The Letter and Addendum were signed by Goldberg and Winick each as "Partner" of BFS-

Northeast. See id. Borchert and Barbaree signed the documents as "CEO" and "President",

respectively.

                                                            6
                                                                                                                   Page 7

        Upon joining BFS, Schwartz and Goldberg, and others at BFS, used Meyer-Chatfield's

Confidential Information to make BOLi presentations and to sel I BOLi on behalf of BFS to

Meyer-Chatfield clients and to cause Meyer-Chatfield's existing clients to alter their existing

Commission Split Agreements by replacing Meyer-Chatfield as the Agent or Broker of Record

with Borchert, BFS, Goldberg and/or Winick. (N.T. 10/23/14, p. 94).

        On October 30, 2013, Zachary Low, BFS-Northeast vice-president of sales, discussed in

an e-mail with Winick the next month's schedule for "takeover presentations" and "change of

broker letters" at thirteen Meyer-Chatfield client banks. (Ex. P-66). Borchert, BFS Founder and

CEO, outwardly supported BFS, Goldberg, and Winick 's continuous efforts to transfer clients

from Meyer-Chatfield to BFS, stating: "Excellent work bringing in your clients under our BFS

banner. Well done. Keep getting those bankers to sign and Tony will process them quickly and

efficiently so we generate more revenue for all of us. Go get 'em!" (Ex. P-50).

        To date, Defendants have taken over nearly thirty banks that purchased BOLi products

through Meyer-Chatfield to change agent of record designations with carriers so as to eliminate

Meyer-Chatfield's and Meyer-Chatfield Administrative Services's ("MCAS")6 receipt of

hundreds of thousands of trail commissions per year for many years into the future. (N.T.

I 0/24/14, p. 33). In fact, Goldberg admitted during the preliminary injunction hearing before this

Court that he has never stopped soliciting and attempting to sell BOLi to Meyer-Chatfield clients.

(See N.T. 9/18/15,    p. 6). Indeed, immediately after leaving Meyer-Chatfield and joining BFS,

Goldberg testified he and/or the other former Meyer-Chatfield personnel, i.e., Winick, sold BOLi

to the following Meyer-Chatfield clients: Guaranty Bank (Colorado) (N.T. 9118/15, pp. 51-52, 63,

93); Salisbury Bank (Connecticut) (N.T. 9/18/15, pp. 52, 92-93); Bridgehampton National Bank

6See Section ll(D) of this Opinion, below, for an explanation as to why MCAS is an entity "separate" from Meyer-
Chatfield Corporation.

                                                        7
                                                                                                                        Page 8

(New York) (N.T. 9118/15, pp. 8, 102-103);          Chelsea Groton Bank (Connecticut)             (N.T. 9/18/15,

pp. 90-91);     Greylock   Federal Credit Union (Massachusetts)          (N.T. 9/18115, pp. 91-93);

Community National Bank (New York) (N.T. 9/18/15,                   p. 92); New Tripoli (Pennsylvania)          (N.T.

9/18/15,      pp. 93-94); Farmington    Bank (Connecticut)        (N.T. 9/18115, p. 95); Rollstone       Bank

(Massachusetts)      (N.T. 9/18/15,    p. 95); Customers       Bank (Pennsylvania)      (N.T. 9/18/15,    p. 95); and

Hamilton       Federal Bank Services (Maryland)      (N.T. 9/18/15,      pp. 117-18).     Defendants     diverted the

following additional       banks from Meyer-Chatfield          to BFS in contravention     of the Goldberg

Contract's restrictions:     Manasquan     Savings Bank; I 51 Colonial National Bank; Sanford Institution

for Savings; Fraternity Federal Savings and Loan Association; Kearney Federal Savings Bank;

Putnam Bank; Litchfield Bancorp, Collinsville Savings Society and Northwest Community Bank;

First Clover Leaf Bank; First National Bank of Suffield; Cenlar; Continental Bank; Omni

American Bank; Bank of Charlestown; Family First Bank; Windsor Federal Savings; and Profile

Bank.

           On October 2, 2013 Meyer-Chatfield filed a complaint in which BFS, Goldberg, and

Payne were named as defendants.7 This complaint alleges that defendants Payne and Goldberg,

together with BFS, formed and executed upon a plan to take Meyer-Chatfield personnel, clients,

and confidential and proprietary information, in violation of the individual defendants'

contractual and fiduciary obligations to the company, and in an unfairly competitive manner.

The complaint alleges that BFS actively participated in this unlawful conduct. Subsequently,

Meyer-Chatfield petitioned this Court to enter a preliminary injunction requiring the named

defendants to desist in certain behavior enumerated in Goldberg's employment agreement.

7
    See Complaint at Docket Number 2013-29858.

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         Altogether,     this Court held twelve days of hearings on Meyer-Chatfield's       motion for

preliminary injunction.       On October     19, 2015,   this Court entered an Order granting Meyer-

Chatfield's   motion for preliminary       injunction.   Defendants   now appeal from this Court's

Preliminary   Injunction Order.

II.      DISCUSSION
         A.      LEGAL STANDARDS
         Review of a trial court's order with respect to a preliminary        injunction is "highly

deferential." Synthes USA Sales, LLC v. Harrison, 83 A.3d 242, 248 (Pa. Super. 2013) (quoting

Warehime v. Warehime, 860 A.2d 41, 46 (Pa. 2004)). A reviewing court does not inquire into

the merits of the controversy. Hoffmanv. Steel Valley Sch. Dist., 107 A.3d 288, 290 (Pa.

Cmwlth. 2015).         Instead, appellate courts conduct a limited examination of the record to

determine whether there are any apparently reasonable grounds for the trial court's action. Id. A

trial court has reasonable grounds for entering an injunction where it properly finds that all of the

essential prerequisites are satisfied.      WM! Group, Inc. v. Fox, I 09 A.3d 740, 748 (Pa. Super.

2015).

         There are six "essential prerequisites" that a party must establish prior to
         obtaining preliminary injunctive relief. The party must show: 1) "that the
         injunction is necessary to prevent immediate and irreparable harm that cannot be
         adequately compensated by damages"; 2) "that greater injury would result from
         refusing an injunction than from granting it, and, concomitantly, that issuance of
         an injunction will not substantially harm other interested parties in the
         proceedings"; 3) "that a preliminary injunction will properly restore the parties to
         their status as it existed immediately prior to the alleged wrongful conduct"; 4)
         "that the activity it seeks to restrain is actionable, that its right to relief is clear,
         and that the wrong is manifest, or, in other words, must show that it is likely to
         prevail on the merits"; 5) "that the injunction it seeks is reasonably suited to abate
         the offending activity"; and, 6) "that a preliminary injunction will not adversely
         affect the public interest." The burden is on the party who requested preliminary
         injunctive relief ....

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                                                                                                               Page 10

Synthes USA Sales, Ll.C, 83 A.3d at 249 (quoting Warehime v. Warehime, 860 A.2d 41, 46-47

(Pa. 2004)). "Only if it is plain that no grounds exist to support the decree or that the rule of law

relied upon was palpably erroneous of misapplied             will [an appellate court] interfere with the

decision of the trial court."     Fox, 109 A.3d at 748.

         B.       MEYER-CHATFIELD MET ITS BURDEN OF SHOWING THAT A
                  PRELIMINARY INJUNCTION SHOULD BE ENTERED BY THIS
                  COURT

          This Court found that Meyer-Chatfield         was likely to succeed on the merits of its case.

Meyer-Chatfield     established   that Goldberg signed a contract containing          restrictive covenants.

This contract was in effect at the time that Goldberg purported to resign from his position as

BOU sales representative        with Meyer-Chatfield.        The contract forbade Goldberg from

competing directly or indirectly with Meyer-Chatfield            in Goldberg's    assigned Territory. The

evidence established    that Goldberg left Meyer-Chatfield,          promptly joined BFS, and began

competing, directly and indirectly,     against his former employer in violation of the restrictive

covenants that he signed.

          The injury arising from the breach of the covenant not to compete was not compensable

by money damages alone. See Records Ctr., Inc. v, Comprehensive Mgmt., Inc., 525 A.2d 433,

436 (Pa. Super. 1987) ("[T]he injury caused by violation of a covenant note to compete is

particularly   difficult to quantify for damage purposes.        As stated in Schwartz v. laundry & linen

Supply Drivers, 339 Pa. 353, 14 A.2d 438 (1940): 'The great weight of modern authority is to the

effect that one who has been or will be injured [by violation of a covenant not to compete] is

ordinarily entitled to the equitable remedy of injunction          ....   "') (citation omitted). In the

absence of this Court's imposition      of a preliminary      injunction, Meyer-Chatfield      would have been

entirely deprived of the benefit of the restrictive covenant that Goldberg signed and Meyer-

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Chatfield           paid for. This Court's Order restored the parties to their positions        prior to this

litigation.         That is, Goldberg   is now subject to all of the restrictions   contained     in the Contract that

he signed with Meyer-Chatfield,             which restrictions    he flouted prior to this Court's     entry of a

preliminary           injunction.

              C.          THE PRELIMINARY INJUNCTION ORDER ENTERED BY THIS
                          COURT IS REASONABLY SUITED TO ABATE THE OFFENDING
                          CONDUCT OF DEFENDANTS

              This Court's Order is tailored to address the harm caused by the direct and indirect

violations of the restrictive covenants contained in the Goldberg Contract. This Court's Order

states as follows:

               I.     Steven Goldberg, and anyone acting on his behalf, including BFS, BFS-
                      Northeast, Arnold Winick, William Borchert and Daniel Barbaree, is hereby
                      enjoined, for a period of one year from the date of this Order for Preliminary
                      Injunction, from:

                         1.    Competing, directly or indirectly, within the states of PA, NJ, NY,
                               MA, ME, CT, MD, NH, DE, VT, RI, CO and TX, for any bank
                               owned life insurance ("BOLi") business to banks with which Meyer-
                               Chatfield had transacted on or before August I 6, 20 I 3, including both
                               sales and servicing of BOLi:

                        11.    Diverting existing BOLi business away from Meyer-Chatfield;

                       111.    Soliciting or inducing, or attempting to induce, any existing bank
                               client of Meyer-Chatfield not to do business with Meyer-Chatfield or
                               to cease doing business with Meyer-Chatfield; and

                       iv.     Directly or indirectly using or divulging any Meyer-Chatfield
                               confidential and/or proprietary information to any person, firm or
                               corporation, for their own benefit or the benefit of any person or
                               entity other than Meyer-Chatfield.

(Prelim. Inj. Order). The substance of this Court's Order is derived from the restrictive

covenants contained in the Goldberg Contract. The Order enjoins Goldberg and those acting on

his behalf. This Court deemed such a provision necessary, as Meyer-Chatfield presented

                                                             II
                                                                                                                   Page 12

substantial evidence demonstrating that individuals and entities were acting unlawfully on behalf

of, and in conjunction with, Goldberg and BFS, including Borchert, Barbaree, Winick, and BFS-

Northeast. This Court further found that Goldberg and Winick act as partners through BFS-

Northeast, a joint venture with Borchert, Barbaree, and BFS.8 This Court's Order is crafted to

prevent the named individuals and entities from acting in such a way that allows Goldberg to

circumvent the restrictions imposed by his Contract with Meyer-Chatfield.9                  In this way, the

remaining Defendants can be enjoined.

          The Preliminary Injunction Order's non-compete provision has geographic limitations

with respect to bank clients with whom Meyer-Chatfield had a business relationship prior to

August 16, 2013.      The Order limits the injunction to those states where the evidence indicated

that Goldberg sold BOLi, i.e. Goldberg's Territory. Christopher Pezalla and David Spingler,

credible witnesses from Meyer-Chatfield,           testified that Goldberg's "Territory" expanded to

include, at least, New York, Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island,

Vermont, Maryland, and Delaware. (N.T. 10/24/14, p. 78; N.T. 10/23/14, p. 48; N.T. 12/3/14, p.

76). Furthermore, in Goldberg's own complaint filed in this matter, which he verified, he claims

8Goldberg testified that he is not and has never been Winick's partner and that neither he nor Winick are partners of
8orchen and 8FS. However, Goldberg signed contracts with Winick and Borchert as "partners", (See Exs, P-
32(A), (8), and (C)). He has also submitted several affidavits to this Coun identifying himself as a Partner of Bf'S,
Winick has as well.

Goldberg restified that he and Winick left Meyer-Chai field and joined 8f-S independent of one another. This Coun
did not find that statement credible. Goldberg and Winick were partners at Meyer-Chatfield for years, left Meyer-
Chatfield on the same day, and joined 8FS together, as panners. That the partnership continues 10 this day. In
addition, numerous e-mails, text messages, and agreements exchanged between Goldberg and Winick demonstrate
that ii is more likely than not that they had a common plan 10 simultaneously leave Meyer-Chatfield and join 8FS.
(See Exs. P-32(A), (8), and (C), P-47, and P-48). Accordingly, this Court found that Golberg and Winick operated
as panners at 8FS.
9
  For the legal grounds supponing the entry of a preliminary injunction preventing others from acting at the behest
of an employee subject 10 a restrictive covenant, see Records Ctr., Inc. v. Comprehensive Mgmt., Inc., 525 A.2d 433,
434-35 (Pa. Super. ·1987) ("We recognize that ( employees subject 10 restrictive covenants] must not be permirted 10
achieve indirectly that which they may not do directly. Certainly, they may not violate the restrictive covenants by
acting through (employees not subject 10 restrictive covenants]."). The legal principle enunciated in Record Cemer
applies here, where, as this Coun has found, Goldberg directly violated the provisions of his contract with Meyer-
Chatfield, and did so indirectly via 8FS, 8orchen, and Winick, among others, acting as proxies.

                                                         12
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to be entitled         to recover commissions        in his "Territory",      pursuant to the Goldberg         Contract,     from

the sales of BOLI in Pennsylvania,                 New Jersey, Massachusetts,           Connecticut,      New York,

Delaware,        and elsewhere.       In addition,    Attorney     David Payne, working at Goldberg's              direction,

drafted a Meyer-Chatfield             document       in August 2013, identifying          Goldberg's      protected territory

as Pennsylvania,           New Jersey,    Massachusetts,       Maine, Connecticut,         Maryland,      New Hampshire,

Delaware,        Vermont,      Rhode Island,       and New York.        (Ex. P-46).      Therefore,     the admissions      and

evidence      established       that Goldberg's      Territory expanded        well beyond Pennsylvania          and New

Jersey.     That is, the evidence        demonstrated       that states were subsequently             added to Goldberg's

assigned     "Territory".

            Furthermore,         the Preliminary      Injunction    Order does not address Meyer-Chatfield                 clients

already acquired by Defendants.                 The Order prohibits Defendants             from attempting      to acquire

existing     clients      of Meyer-Chatfield       for a period of one year from October               19, 2015 regardless        of

geographic        location.     In addition     to that nationwide      restriction,    the Order proscribes      Defendants

from attemptingto             acquire bank clients      in Goldberg's      identified    Territory with whom Meyer-

Chatfield        had a business     relationship     prior to August      16, 2013.

            D.          MEYER-CHATFIELD   ADMINISTRATIVE SERVICES IS ENTITLED TO
                        THE BENEFITS OF THE PRELIMINARY INJUNCTION ORDER

             Initially,     it should be noted that this Court found that Meyer-Chatfield                   and Meyer-

Chatfield Administrative Services constitute essential parts of a single service. That is, although

Meyer-Chatfield and MCAS are technically separate legal entities, they are fully integrated.

This is demonstrated by the fact that Meyer-Chatfield                      and MCAS operate out of the same office

location at 261 Old York Road, Suite 604 in Jenkintown, Pennsylvania.                             The testimony of David

Spingler, Chief Operating Officer of Meyer-Chatfield for a time, explained that the two entities

are actually "one in the same."                MCAS was created to provide BOLi servicing on behalf of

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                                                                                                       Page 14

Meyer-Chatfield Corporation, and was established as a separate legal entity to provide assurance

to bank clients that if Meyer-Chatfield Corporation ceased to exist, MCAS would remain to

provide the necessary servicing which lasts for the life of the policy.

          The Goldberg Contract specifically provides that MCAS "shall provide ongoing after

sales support services to (Goldberg]."   The Goldberg Contract also explicitly provides that

Meyer-Chatfield Corporation shall arrange for the servicing and administration of a BOLi case

through MCAS and that MCAS "shall receive a fee for services provided before any fee split

under this Agreement." Thus; the Goldberg Contract contemplates the integral role that MCAS

plays in BOLi transactions.   Accordingly, as this Court finds that there is no practical difference

between Meyer-Chatfield Corporation and MCAS for purposes of this litigation, the Preliminary

Injunction Order can properly prohibit Defendants from competing with MCAS.

          Furthermore, this Court finds that even assuming arguendo that the entities did not

operate as a unified whole, MCAS would properly be deemed a third party beneficiary under the

Goldberg Contract. "(A] party becomes a third party beneficiary only where both parties to the

contract express an intention to benefit the third party in the contract itself .... " Altoona City

Auth. v. L. Robert Kimball & Assocs., 26 Pa. D.&.C.4th 521, 528 (Pa. C.P. 1995) (citingScarpitti

v.   Weborg, 609 A.2d 14 7, 150-51 (Pa. 1992)). Here, the express terms of the Goldberg Contract

demonstrate the intent of the parties to make MCAS a third party beneficiary thereof. MCAS

serves as, among other things, the captive and exclusive servicing arm of Meyer-Chatfield.       The

Goldberg Contract specifically provides that MCAS "shall provide ongoing after sales support

services to [Goldberg]."   The Goldberg Contract specifically provides that Meyer-Chatfield

Corporation shall arrange for the servicing and administration of a BOLi case through MCAS

and that MCAS "shall receive a fee for services provided before any fee split under this

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                                                                                                                     Page 15

Agreement."     MCAS is, therefore,     the servicing   or administering        agent to Goldberg        under the

Goldberg Contract.      Thus, MCAS has recognized            contractual   rights pursuant to the Goldberg

Contract to receive commissions       arising    from the servicing of BO LI cases.           Therefore, MCAS is

a third party beneficiary    of the Goldberg Contract pursuant to the contract's              terms.

         As a third party beneficiary     of the Goldberg       Contract, MCAS is entitled          to the same

contractual   protections   as Meyer-Chatfield     Corporation,     including    injunctive    relief.

III.     CONCLUSION

        This Court's determinations were proper and accordingly, this Court's Order should be

AFFIRMED.

                                           BY THE COURT:

                                                  ~
                                           BERNARD A. MOORE, J.

Date:   December 29, 2015
Cc:     David L. Braverman, Esq.
        Benjamin A. Garber, Esq.
        Matthew J. Siembieda, Esq.
        Timothy 0. Katsiff, Esq.
        Eric B. Smith, Esq.
        James B. Shrimp, Esq.
        Alan L. Frank, Esq.
        Samantha A. Millrood, Esq.
        Sean A. Meluney, Esq.
        H. Jeffrey Brahin, Esq.

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