Court Opinion

ID: 4159774
Source: CourtListenerOpinion
Date Created: 2017-04-12 16:08:27.006112+00
Date Added: 2024-06-11T14:23:36.497158
License: Public Domain

MEMORANDUM DECISION
                                                                            FILED
Pursuant to Ind. Appellate Rule 65(D),                                 Apr 12 2017, 10:24 am
this Memorandum Decision shall not be
                                                                            CLERK
regarded as precedent or cited before any                               Indiana Supreme Court
                                                                           Court of Appeals
court except for the purpose of establishing                                 and Tax Court

the defense of res judicata, collateral
estoppel, or the law of the case.

ATTORNEY FOR APPELLANT                                   ATTORNEY FOR APPELLEE
Patrick A. Duff                                          George C. Barnett, Jr.
Duff Law, LLC                                            Barnett Law, LLC
Evansville, Indiana                                      Evansville, Indiana

                                           IN THE
    COURT OF APPEALS OF INDIANA

Foncannon Tax & Financial                                April 12, 2017
Services, LLC,                                           Court of Appeals Case No.
Appellant-Plaintiff,                                     82A05-1606-CC-1263
                                                         Appeal from the Vanderburgh
        v.                                               Superior Court
                                                         The Honorable Richard G.
Stephen C. Gubler, P.C., and                             D’Amour, Judge
Stephen C. Gubler,                                       Trial Court Cause No.
Appellee-Defendant.                                      82D07-1505-CC-2568

Bailey, Judge.

Court of Appeals of Indiana | Memorandum Decision 82A05-1606-CC-1263 | April 12, 2017           Page 1 of 11
                                          Case Summary
[1]   Foncannon Tax & Financial Services, LLC (“Foncannon Services”) sued

      Stephen C. Gubler, P.C. (“the Corporation”), and Stephen C. Gubler, in his

      individual capacity (“Gubler”), for violation of a covenant not to compete

      connected to Gubler’s sale of the Corporation’s assets to Foncannon Services.

      The trial court granted summary judgment to Gubler and the Corporation.

      Foncannon Services now appeals.

[2]   We reverse and remand.

                                                     Issue
[3]   Foncannon Services presents a single issue, which we restate as whether the

      trial court improvidently granted summary judgment.

                            Facts and Procedural History
[4]   In 2004, Gubler was nearing retirement, and decided to sell the assets of his

      accounting practice to Foncannon Services. As part of this transaction, Gubler,

      on behalf of the Corporation, signed a consulting agreement (“the Agreement”)

      that included a covenant not to compete. The Agreement identified Foncannon

      Services as “Purchaser,” the Corporation as “Consultant Firm,” and provided,

      among other things:

                    1. Consulting Services. During the period that begins on
              January 3, 2005 and ends on December 31, 2007 or such later

      Court of Appeals of Indiana | Memorandum Decision 82A05-1606-CC-1263 | April 12, 2017   Page 2 of 11
              date as may be mutually agreed to by the parties (the “Consulting
              Period”), Consultant Firm shall consult with and advise
              Purchaser as to those matters in connection with the Practice as
              to which Consultant Firm’s experience and expertise would be
              useful and valuable, including, but not limited to, the following:
              (a) advice and consultation with respect to customer relations
              and advertising programs; (b) evaluation and development of and
              advice and consultation with respect to marketing programs and
              strategies; (c) advice with respect to competitors’ products and
              marketing programs; (d) rendering assistance to Purchaser to
              maintain its relationships with clients, suppliers and others with
              whom there have been beneficial relationships; (e) review and
              consultation in connection with monthly operating statements of
              Purchaser; (f) review and consultation in connection with annual
              financial statements of Purchaser; (g) rendering assistance to
              Purchaser in establishing relationships with new clients; and (b)
              such other consulting services as Purchaser may reasonably
              request. All service to be performed by Consultant Firm will be
              rendered by Stephen C. Gubler.

      (Hereinafter “the Consulting Services Provision”). (App’x Vol. 2 at 105.) For

      these services, the Agreement provided for payment of $4,000 per month on or

      before the first day of February, March, April, May, and June of each year of

      the Consulting Period. (App’x Vol. 2 at 106.)

[5]   The Agreement included a non-competition and non-solicitation provision that,

      in relevant part, provided:

                     4. Noncompetition and Nonsolicitation. Stephen C.
              Gubler covenants and agrees that he will not, during the
              Consulting Period or at any time within five years thereafter,
              directly or indirectly, on his own behalf or on behalf of any third
              party, whether as an agent, employee, employer, officer, director,

      Court of Appeals of Indiana | Memorandum Decision 82A05-1606-CC-1263 | April 12, 2017   Page 3 of 11
              shareholder, member, principal, consultant, independent
              contractor, partner, creditor or in any other capacity:…

                             (b) induce, cause, solicit, advise or influence any
                       person, business or entity who was a customer of
                       Purchaser during the Consulting Period, or

                              (c) perform any accounting, tax preparation, or
                       related services within one hundred eighty (180) miles of
                       the Purchaser.

              Consultant Firm acknowledges and understands that it is
              essential and reasonable, in order to protect Purchaser’s interests
              under this Agreement, that Consultant Firm be restricted in the
              manner described above during the Consulting Period.

      (App’x Vol. 2 at 106-107.) The Agreement also included a provision requiring

      that modifications to the Agreement be made only in writing.

[6]   Gubler, through the Corporation, provided business consulting services to

      Foncannon Services through 2007. After that time, Gubler continued to

      perform work for Foncannon Services. The nature of that work centered upon

      tax preparation and advising for clients of Foncannon Services, and payment

      for these services largely followed the same terms as set out in the Agreement.

[7]   Gubler performed work for Foncannon Services into 2014’s tax season.

      Foncannon Services wrote checks both to Gubler personally and to the

      Corporation through June 2014, and wrote checks to Gubler personally nearly

      monthly through December 31, 2014.

      Court of Appeals of Indiana | Memorandum Decision 82A05-1606-CC-1263 | April 12, 2017   Page 4 of 11
[8]    During the 2015 tax season, Gubler began to offer his services to elderly clients.

       Rather than accept payment, Gubler requested that his clients use the money

       they would have paid in fees and instead donate that money to charitable

       causes. Gubler was the subject of a media profile sponsored by a tax software

       company, Intuit Professional Tax. In the profile, Gubler discussed his new

       charitable venture, which he funded in part from a prize from Intuit

       Professional Tax. Gubler said that he had decided in April 2014 to retire from

       practice, but that five months later he invited some of his and the Corporation’s

       former clients over the age of 65 to join him in the venture. Gubler also

       discussed plans to establish a non-profit tax service for seniors. (App’x Vol. 2 at

       183-86.)

[9]    Foncannon Services learned of Gubler’s activities, which were conducted under

       the name of the Corporation. On May 22, 2015, Foncannon Services filed suit,

       alleging breach of contract, breach of fiduciary duty, tortious interference with a

       contractual relationship, and fraud against both Gubler and the Corporation.

       An amended complaint was filed on August 28, 2015.

[10]   On January 5, 2016, Foncannon Services filed a motion seeking preliminary

       and permanent injunctions against Gubler and the Corporation.

[11]   On January 26, 2016, Gubler and the Corporation filed a motion for summary

       judgment as to all counts in the complaint.

[12]   On February 29, 2016, a hearing was conducted on the motion for injunctive

       relief and the motion for summary judgment. On March 7, 2016, the trial court

       Court of Appeals of Indiana | Memorandum Decision 82A05-1606-CC-1263 | April 12, 2017   Page 5 of 11
       entered summary judgment for Gubler and the Corporation as to all counts,

       and denied the motion for injunctive relief as moot.

[13]   On April 6, 2016, Foncannon Services filed a motion to correct error. After a

       hearing, the trial court denied the motion on May 16, 2016.

[14]   This appeal ensued.

                                  Discussion and Decision
[15]   Foncannon Services appeals the trial court’s denial of a motion to correct error.

       We review appeals from a court’s order on a motion to correct error for an

       abuse of discretion, which occurs when the trial court’s decision is clearly

       against the logic and effect of the facts and circumstances before it, or when it

       errs on a legal matter. City of Indianapolis v. Hicks, 932 N.E.2d 227, 230 (Ind. Ct.

       App. 2010), trans. denied.

[16]   Underlying the court’s order on the motion to correct error is an order for

       summary judgment. We review a grant of summary judgment de novo.

       Williams v. Tharp, 914 N.E.2d 756, 762 (Ind. 2009). Summary judgment is

       appropriate only where there is no genuine issue of material fact and the

       movant is entitled to judgment as a matter of law. Ind. Trial Rule 56(C);

       Mangold ex rel. Mangold v. Ind. Dep’t of Natural Res., 756 N.E.2d 970, 973 (Ind.

       2001). All facts and reasonable inferences drawn from the facts are construed in

       favor of the nonmovant. Mangold, 756 N.E.2d at 973. Our review of the

       motion for summary judgment is limited to those matters designated to the trial

       Court of Appeals of Indiana | Memorandum Decision 82A05-1606-CC-1263 | April 12, 2017   Page 6 of 11
       court. T.R. 56(H); Mangold, 756 N.E.2d at 973. We carefully review a decision

       on summary judgment to ensure that a party was not improperly denied its day

       in court. Mangold, 756 N.E.2d at 974.

[17]   At summary judgment, Foncannon Services argued that the Consulting Period

       had been extended. Gubler and the Corporation argued that there had been no

       extension. The trial court entered summary judgment for Gubler and the

       Corporation, reasoning that the terms of the Agreement required that there

       could be no extension of the Consulting Period and, in turn, no extension of the

       duration of effect of the covenant not to compete without a written

       modification of the Agreement. Foncannon Services argues that the trial court

       erred when it thus construed the Agreement.

[18]   The appeal, then, initially presents a question of contract interpretation.

       Neither Foncannon Services nor Gubler and the Corporation argue that the

       contract is ambiguous. “In interpreting an unambiguous contract, a court gives

       effect to the parties’ intentions as expressed in the four corners of the

       instrument, and clear, plain, and unambiguous terms are conclusive of that

       intent.” Nightingale Home Healthcare, Inc. v. Helmuth, 15 N.E.3d 1080, 1084 (Ind.

       Ct. App. 2014).

[19]   The Consulting Period was defined by the Agreement: “the period that begins

       on January 3, 2005 and ends on December 31, 2007 or such later date as may

       be mutually agreed to by the parties.” (App’x Vol. 2 at 183.) Foncannon

       Services argues that Gubler’s continued tax preparation and work consulting for

       Court of Appeals of Indiana | Memorandum Decision 82A05-1606-CC-1263 | April 12, 2017   Page 7 of 11
       Foncannon Services clients, together with the ongoing payment of money in

       amount and schedule like that provided for in the Agreement, was an extension

       of the Consulting Period. Foncannon Services argues that this extension was

       expressly included by the parties in the Consulting Period definition, and no

       modification was required to give the extension effect—simply payment and

       continued work by Gubler. Thus, Foncannon Services argues, the trial court

       erred when it concluded that any modification of the Agreement was required

       to extend the Consulting Period and, in turn, the five-year post-Consulting

       Period term of the covenant not to compete.

[20]   We agree that the trial court’s interpretation of the Agreement is in error on this

       point. The Agreement does not, of itself, require a separate writing to continue

       the Consulting Period, because the language of the Agreement provides for

       extension of the Consulting Period. Thus, an extension is by the plain language

       of the agreement not a modification.

[21]   Moreover, even if the extension were a modification, a written contract can be

       modified without a writing, even where the written agreement provides that it

       may be modified only by means of a written modification. Skweres v. Diamond

       Craft Co., 512 N.E.2d 217, 220-21 (Ind. Ct. App. 1987). In such cases,

       “modification of a contract, because it is a contract, requires all the requisite

       elements of a contract.” City of Indianapolis v. Twin Lakes Enterprises, Inc., 568
N.E.2d 1078, 1085 (Ind. Ct. App. 1991), trans. denied.

       Court of Appeals of Indiana | Memorandum Decision 82A05-1606-CC-1263 | April 12, 2017   Page 8 of 11
[22]   Even when a trial court has erred, we may affirm the entry of summary

       judgment on any grounds supported by the designated evidentiary material, so

       long as there is no question of material fact and the movant is entitled to

       judgment as a matter of law. Lacy-McKinney v. Taylor Bean & Whitaker Mortg.

       Corp., 937 N.E.2d 853, 859 (Ind. Ct. App. 2010). We cannot, however, affirm

       the summary judgment decision here because the question of extension or

       modification leaves remaining a question of material fact: whether there was a

       mutual agreement between the parties to extend the Consulting Period or

       modify the Agreement to create such an extension, and whether the

       requirements for either extension or modification were satisfied.

[23]   The designated evidentiary material, viewed in a light favorable to the

       nonmovant, indicates the following. Gubler and the Corporation both

       continued to work for Foncannon Services, and they received compensation at

       times and in amounts like the compensation specified in the Agreement. Based

       upon testimony from Foncannon Services’ principal, Robert Foncannon,

       Gubler and the Corporation did not provide consulting work directly to

       Foncannon Services after December 31, 2007, the end of the un-extended or un-

       modified Consulting Period as set forth in the Agreement. Gubler and the

       Corporation provided services to Foncannon Services’ clients, however, many

       of whom were the Corporation’s former clients.

[24]   Moreover, there is evidence that as late as 2011, some amount of Foncannon

       Services’ ongoing business with the Corporation’s former clients were the result

       of Gubler’s continued involvement with Foncannon Services’ accounting

       Court of Appeals of Indiana | Memorandum Decision 82A05-1606-CC-1263 | April 12, 2017   Page 9 of 11
       practice. An electronic message from Gubler to Robert Foncannon in April

       2011 stated:

               Mark Patterson emailed me. I assume wanting some free help.
               He has to understand I am finished for tax season, and if he
               wants my help there will be the same charge as if I were working
               for Foncannon on a full-time basis. I didn’t mind helping him
               initially so you could land the client.

               I copied you in on the email, and you need to make it perfectly
               clear to him that if he wants my help that there will be a charge
               for it. I don’t expect to volunteer my time once they are a client.
               And it’s not fair to you since technically I am under the non-
               compete agreement although it would seem fair to be
               compensated.

       (App’x Vol. 2 at 139.) Thus, some of Gubler’s and the Corporation’s activity

       may fall into the non-exclusive list of consulting services in the Agreement.

[25]   The provisions of the Agreement provide for a possibility of extension. But the

       provisions do not state that any continued work for Foncannon Services on the

       part of the Corporation or Gubler personally would necessarily result in an

       extension. Thus, the designated evidentiary matter is essentially silent on the

       question of whether the parties agreed to an extension or modification of the

       Agreement, and we are left with the arguments of the parties: Foncannon

       Services insists the extension ran through 2014, and Gubler and the

       Corporation insist there was no extension at all.

[26]   Taking the evidence together with the inferences favoring Foncannon Services

       as the nonmovant, we cannot say that there is no question of material fact as to
       Court of Appeals of Indiana | Memorandum Decision 82A05-1606-CC-1263 | April 12, 2017   Page 10 of 11
       the existence of a mutual agreement for extending the term of the Consulting

       Period. That is a fact question to be addressed upon remand by the trial court.

       We accordingly reverse the entry of summary judgment.1

[27]   Reversed and remanded for further proceedings.

       Robb, J., concurs.
       Vaidik, C.J., concurs in result without opinion.

       1
         We note that the trial court opined “as an aside” that Gubler could not personally be liable for violation of
       the non-compete provision of the Agreement because the contract was between Foncannon Services and the
       Corporation, but not Gubler personally. (App’x Vol. 2 at 213.) We note that Gubler is named in the
       Agreement as being bound by the provisions of the non-compete provision, Gubler was the sole signatory for
       the Corporation, and Gubler apparently viewed himself as being bound by the non-compete provision. More
       crucially, Gubler’s activities, of which Foncannon Services complains, are identified as occurring under the
       auspices of the Corporation in at least one of the designated materials at summary judgment—the
       advertisement from Intuit. (App’x Vol. 2 at 183.)

       Court of Appeals of Indiana | Memorandum Decision 82A05-1606-CC-1263 | April 12, 2017            Page 11 of 11