Court Opinion

ID: 856117
Source: CourtListenerOpinion
Date Created: 2013-03-25 16:57:09.167784+00
Date Added: 2024-06-11T12:42:28.852624
License: Public Domain

Case: 12-14857          Date Filed: 03/25/2013   Page: 1 of 10

                                                                        [DO NOT PUBLISH]

                      IN THE UNITED STATES COURT OF APPEALS

                                   FOR THE ELEVENTH CIRCUIT
                                     ________________________

                                             No. 12-14857
                                         Non-Argument Calendar
                                       ________________________

                                 D.C. Docket No. 9:12-cv-80361-KLR

ARTHUR J. GALLAGHER SERVICE CO.,
RISK PLACEMENT SERVICES, INC.,

llllllllllllllllllllllllllllllllllllllll                       Plaintiffs-Counter Defendants-
                                                                                   Appellees,

                                                 versus

THOMAS EGAN,

llllllllllllllllllllllllllllllllllllllll                   Defendant-Counter Claimant-
                                                                             Appellant.
                                      ________________________

                            Appeal from the United States District Court
                               for the Southern District of Florida
                                  ________________________

                                            (March 25, 2013)

Before WILSON, PRYOR and ANDERSON, Circuit Judges.

PER CURIAM:
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      Thomas Egan appeals a preliminary injunction entered against him and in

favor of Arthur J. Gallagher Service Company and Risk Placement Services, Inc.,

to enforce nondisclosure and noncompetition covenants in an employment

agreement. Egan argues that Gallagher Service and Risk Placement Services lack

standing to enforce the covenant not to compete and first breached the employment

agreement and that the district court abused its discretion in entering the

preliminary injunction. We affirm.

                                I. BACKGROUND

      Gallagher Service and Risk Placement Services are wholly owned

subsidiaries of Arthur J. Gallagher & Company (“Gallagher”). Gallagher is an

insurance brokerage company that sells property and casualty insurance and

administers employee benefits programs. Gallagher conducted its wholesale

insurance operations through Risk Placement Services and its human resource

operations through Gallagher Service.

      Glenn Yanoff, an area president of Risk Placement Services, offered Egan a

position as an Assistant Vice President to sell and service accounts for the “RPS

organization.” In a letter containing “an outline of an offer of employment,”

Yanoff proposed that Egan receive an annual salary of $265,000 and incentive

payments based on the net revenues derived from his sales. The written offer was

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“subject to” a “Signed copy of AJGCo. Code of Ethics” and a standard

probationary period.

      Egan signed the letter and an Executive Agreement with “ARTHUR J.

GALLAGHER & CO. (‘Corporation’), its subsidiaries, divisions and affiliated and

related companies (hereafter collectively referred to as the ‘Company’)” that was

executed by the Vice President of Gallagher. The agreement contained the terms

of employment, fiduciary obligations, post-employment obligations, and remedies

for enforcement of those obligations. Paragraphs one and two of the agreement

provided that Egan was an employee of the Company and would receive a salary

and other benefits with the “underst[anding] and agree[ment] that the Company

may from time to time modify the specific terms and conditions of these

entitlements.” In paragraph 14, Egan “recognize[d] the Company’s legitimate

interest in protecting . . . those Company accounts with which [he] [would] be

associated during his employment” and “agree[d] that for a period of two (2) years

following the termination of his employment for any reason whatsoever,” he would

not solicit for insurance services or provide group insurance or benefit services for

“any existing Company account or any actively solicited prospective account of the

Company for which he performed any of the [specified] functions during the two-

year period immediately preceding [his] termination.” And paragraph 14 provided

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that “[t]he term Company account . . . shall be construed as Insured’s written via

Risk Placement Services, Inc.” In paragraph 17, Egan “recognize[d]” that his

“rights and privileges, . . . his services and his corresponding covenants to the

Company, are of a special, unique and extraordinary character, the loss of which

cannot reasonably or adequately be compensated for in damages,” and he

“underst[ood] and agree[d] that the Company [would] be entitled to equitable

relief, including a temporary restraining order and preliminary and permanent

injunctive relief, to prevent a breach of [the] Agreement.” Paragraph 21 provided

that the “Agreement supersede[d] all existing Company policies, and all previous

agreements between the parties, to the extent that such policies and agreements

consider[ed] subject matters herein addressed,” and paragraph 22 stated that the

“Agreement . . . may be enforced by any subsidiary of the Company for whom

[Egan] has provided services hereunder.”

      Egan worked for Gallagher more than four years before he resigned and

accepted employment with a competitor, Genesee Special Brokerage. Egan left

Gallagher a few months after it reduced his salary and changed his incentive plan.

After Egan changed employers, Gallagher learned that Egan was soliciting his

former customers on behalf of Genesee.

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      Gallagher Service and Risk Placement Services filed a complaint for

damages and to enjoin Egan from “violating the terms of the Agreement.” The

companies alleged that Egan had misappropriated confidential information and

induced existing customers of Risk Placement Services to move their accounts to

Genesee. Egan filed a counterclaim for breach of contract and to recover unpaid

wages. Egan alleged that the reduction of his salary and incentive plan invalidated

the agreement and that he was not bound by its covenants.

      The companies moved for a preliminary injunction. During a hearing on the

motion, Egan testified that the President of Risk Placement Services, John Head,

had promised never to reduce Egan’s salary, but Head testified that he had never

made such a promise. In addition, Egan argued that he had developed a “mature”

clientele before accepting employment with Gallagher that it now sought to

appropriate. The companies responded that Gallagher had purchased a customer

list from Egan’s former employer and paid that company $140,000 to release Egan

from a noncompetition agreement and that Egan had developed “a large part of”

his clientele while employed by Gallagher.

      The district court preliminarily enjoined Egan from violating his

nondisclosure and noncompetition covenants. The district court concluded that the

covenants were reasonable and formulated to protect legitimate business interests

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of Gallagher. The district court also concluded that the companies were likely to

prevail on their complaint about a breach of contract and that Egan was unlikely to

prevail on his counterclaim about an antecedent breach by Gallagher. The district

court discredited Egan’s testimony and found “there [was] no credible evidence to

show that [Egan] was guaranteed to receive the compensation set forth in the

employment offer for the duration of his employment” when the agreement

“indicate[d] that [Gallagher] [was] entitled to modify [Egan’s] compensation at

their discretion.” In the alternative, the district court ruled that, even had it

credited Egan’s testimony, he failed to “properly ple[ad] an oral modification of

his written employment contract.” The district court also concluded that the

factors of irreparable harm, balance of harms, and interest of the public weighed in

favor of issuing a preliminary injunction.

                          II. STANDARDS OF REVIEW

      This appeal requires that we apply three standards of review. “We review

standing determinations de novo.” Interface Kanner, LLC v. JPMorgan Chase

Bank, N.A., 704 F.3d 927, 931 (11th Cir. 2013). After the district court issues a

preliminary injunction, we review de novo its legal conclusions, its findings of fact

for clear error, and its balancing of the factors for abuse of discretion. Mesa Air

Group, Inc. v. Delta Air Lines, Inc., 573 F.3d 1124, 1128 (11th Cir. 2009). To

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obtain temporary injunctive relief, the complainant must have proved that he

would suffer irreparable harm without the injunction and an adequate remedy at

law was unavailable; there existed a substantial likelihood that he would succeed

on the merits; the threatened injury outweighed any possible harm to the

respondent; and a temporary injunction would serve the public interest. Ferrero v.

Associated Materials Inc., 923 F.2d 1441, 1448 (11th Cir. 1991).

                                 III. DISCUSSION

      Egan challenges the preliminary injunction entered in favor of Gallagher

Service and Risk Placement Services. Egan argues that the companies lack

standing to enforce the nondisclosure and noncompetition covenants because they

were not parties to the agreement or identified as third-party beneficiaries of the

agreement. Egan also argues that he can prevail on his counterclaim about an

antecedent breach of the agreement; the companies will not suffer irreparable harm

in the absence of a preliminary injunction; and the balancing of harms weigh in his

favor. We address these arguments in turn.

      The district court did not err in its determination that the companies had

standing to enforce the covenants. When “[t]he language employed in [an]

agreement is clear and unambiguous[,]” its “parties are bound by the contractual

language.” Envtl. Servs., Inc. v. Carter, 9 So. 3d 1258, 1264 (Fla. Dist. Ct. App.

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2009). The plain language of the agreement provided that the covenants extended

to “Arthur J. Gallagher & Co. . . [and] its subsidiaries,” and Egan admits that “RPS

and AJG Service are each wholly-owned subsidiaries of AJG.” See Gory

Associated Indus., Inc. v. Griffin, 397 So. 2d 1054, 1055–56 (Fla. Dist. Ct. App.

1981) (covenant not to compete in employment contract between employer “and its

affiliates” enforceable by wholly-owned subsidiary of employer when subsidiary

met the contractual definition of affiliate and employee did not deny affiliate

status); see also Churchville v. GACS Inc., 973 So. 2d 1212, 1215–16 (Fla. Dist.

Ct. App. 2008) (release in worker’s compensation settlement agreement covered

employer’s sister company when agreement executed between the employer “and

its affiliates”). Because Gallagher Service and Risk Placement Services are parties

to the agreement, we need not address Egan’s argument that the companies do not

qualify as third-party beneficiaries of the agreement.

      The district court did not abuse its discretion when it determined that

Gallagher Service and Risk Placement Services were likely to prevail on the merits

on their complaint of breach of contract. The companies established that Egan had

violated the restrictive covenants and that they would likely prevail against Egan’s

proffered defense that Gallagher first breached the contract. See Supinski v. Omni

Healthcare, P.A., 853 So. 2d 526, 532 (Fla. Dist. Ct. App. 2003). The district court

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had to “read and construe [the offer and the agreement] together,” to evaluate the

merits of Egan’s defense, Murphy v. Chitty, 739 So. 2d 697, 698 (Fla. Dist. Ct.

App. 1999) (internal quotation marks omitted), and reasonably concluded that the

companies would likely succeed on the merits. Egan contends that the written

offer created a specific “promise to pay [him] a salary of $265,000 per year . . .

without qualification or benchmarks” that superseded a general right of

modification reserved in the agreement, but his argument cannot be squared with

the agreement. Although the offer stated that Egan would receive a “$265,000

annual salary paid on the 15th and last day of the month,” paragraph two of the

agreement allowed “the Company . . . from time to time modify the specific terms

and conditions” of his “semi-annual monthly payment of compensation.” And

paragraph 21 provided that “the Agreement supersede[d] . . . all previous

agreements between the parties[] to the extent . . . [they] consider[ed] subject

matters herein addressed.” We cannot say that the district court abused its

discretion in determining that Egan was unlikely to prevail on his defense that he

was relieved of his obligations under the restrictive covenants because Gallagher

Service breached the contract.

      The district court also did not abuse its discretion when it determined that

the factors of irreparable harm and balance of harms weighed in favor of issuing a

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preliminary injunction. Gallagher Service and Risk Placement Services

established that they would suffer irreparable harm without an injunction. “An

injury is ‘irreparable’ only if it cannot be undone through monetary remedies.”

Ferrero, 923 F.2d at 1449 (quoting Cate v. Oldham, 707 F.2d 1176, 1189 (11th Cir.

1983)). The district court found that, if Egan continued to solicit his former

clients, the companies stood to lose accounts in which they had invested significant

resources, revenues from the renewal of those accounts, and goodwill cultivated

with those clients. The loss of longstanding clients and goodwill is an irreparable

injury. See id. And Egan failed to establish that the harm he suffered outweighed

that faced by the companies. Although Egan lost the ability for two years to solicit

clients with whom the companies had an ongoing relationship, he retained the

ability to compete with the companies for new accounts. These factors favored

preliminarily enjoining Egan from violating the restrictive covenants.

      We AFFIRM the preliminary injunction against Egan.

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