Court Opinion

ID: 2832115
Source: CourtListenerOpinion
Date Created: 2015-08-28 23:10:00.666346+00
Date Added: 2024-06-11T09:19:07.388005
License: Public Domain

J-A17044-15

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

BOYDS, LP                                          IN THE SUPERIOR COURT OF
                                                         PENNSYLVANIA
                         Appellant

                    v.

TUNG TO AND JOHN DOE, INC., D/B/A
“TOBOX”

                         Appellees                       No. 3517 EDA 2014

              Appeal from the Order Entered December 3, 2014
            In the Court of Common Pleas of Philadelphia County
                      Civil Division at No(s): 131100048

BEFORE: GANTMAN, P.J., BENDER, P.J.E., and OTT, J.

MEMORANDUM BY GANTMAN, P.J.:                         FILED AUGUST 28, 2015

      Appellant,   Boyds,   LP,   appeals   from   the   order    entered   in   the

Philadelphia County Court of Common Pleas, which deemed as final the

order sustaining in part and overruling in part the preliminary objections of

Appellees, Tung To and John Doe, Inc., d/b/a/ “ToBox,” and the order

denying Appellant’s petition for a preliminary injunction. We affirm.

      The relevant facts and procedural history of this case are as follows.

Appellant is a high-end clothing retailer in Philadelphia, with several

departments, including men and women’s footwear.                 Appellee Tung To

(“Appellee To”) entered into an employment agreement (“Agreement”) with

Appellant on September 27, 2009, to work as a floor manager and buyer for

Appellant’s footwear department.       The Agreement contained a covenant
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(“Non-Compete Covenant”), which provided:

        Nondisclosure, Confidentiality, Non-Interference and
        Covenant Not to Compete

        Employee acknowledges that all documents pertaining to
        Employer’s clients, suppliers, advertisements, vendors,
        manufacturers, designers, clothing lines, prices, sales,
        profits, inventory and/or any other information related to
        Employer’s business, as they may exist from time to time
        is a valuable, special and unique asset of Employer’s
        business. Employee will not, during or after the term of
        his/her employment, disclose said documents and or
        information to any person, firm, corporation, association or
        other entity for any reason or purpose whatsoever, except
        for the business of Employer. In the event of a breach or
        threatened breach by Employee of the provisions of this
        paragraph, Employer shall be entitled to an injunction
        restraining Employee from disclosing in whole or in part,
        any and all documents pertaining to Employer’s clients,
        suppliers,    advertisements,    vendors,    manufacturers,
        designers, clothing lines, prices, sales, profits, inventory
        and/or any and all other information related to Employer’s
        business or from rendering any services to any person,
        firm corporation, association or other entity to whom such
        information in whole or in part, has been disclosed or is
        threatened to be disclosed.       Nothing herein shall be
        construed as prohibiting Employer from pursuing any other
        remedies available to Employer for such breach or
        threatened breach, including the recovery of damages
        from Employee.

        ln consideration of the execution and delivery by Employer
        of this agreement, Employee covenants and agrees that:

          (a)   Employee will not at any time or for any reason,
                directly or indirectly, for himself/herself or any
                other person, use any name or use or disclose
                any trade secret, customer list, supplier,
                advertiser, vendor, manufacturer, designer,
                business or other material confidential information
                of Employer.
          (b)   For a period commencing with the date hereof
                and ending twelve (12) months after

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                  termination of the employment provisions of
                  this Agreement, Employee shall not directly or
                  indirectly, for himself/herself or any other
                  person induce or attempt to influence any
                  supplier, vendor manufacturer, designer,
                  advertiser and/or any customer or employee of
                  Employer, or any affiliate of Employer, to
                  terminate its business with Employer or any
                  affiliate Employer.

         Covenant Not to Compete

         Employee acknowledges that during the term of his/her
         employment with Employer, that Employer shall invest
         substantial time, efforts and money in developing goodwill
         with its clients and customers, business affiliates and
         suppliers.   This goodwill is a highly valuable asset of
         [Appellant]. Accordingly, Employee agrees that in the
         event Employee’s employment terminates, regardless of
         the reason for said termination or party instituting the
         termination, Employee will not, directly or indirectly,
         individually as a partner or as an agent, employee or
         stockholder of any corporation or otherwise, for a period of
         one year from the termination of this Agreement:

            (a)   Solicit or accept a job offer from another men’s
                  and or women’s retail clothing company and/or
                  any company who engages in the sale of men’s
                  and/or women’s clothing that is within a (50) mile
                  radius of any [of Appellant’s] operation.

(Appellant’s Complaint, filed November 4, 2013, Exhibit B; R.R. at 36a).

      Appellee To ended his employment with Appellant on September 16,

2013. That same day, Appellant learned that Appellee To was planning to

open his own men’s footwear store in Philadelphia, and that he had taken a

confidential list of Appellant’s clients.   Appellee To allegedly returned the

client list on October 24, 2013, and opened his own store, ToBox (“Appellee

ToBox”), in Philadelphia on October 31, 2013.

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      Appellant filed a complaint against Appellees on November 4, 2013,

which alleged breach of contract, misappropriation of trade secrets and

confidential information, unfair competition, and breach of duty of loyalty.

Appellees filed preliminary objections to the complaint on November 25,

2013, to which Appellant responded.         Thereafter, on December 9, 2013,

Appellant filed a petition for preliminary injunction, inter alia, to enjoin

Appellees from competing with Appellant.        Appellees filed a response on

December 30, 2013.        That same day, the court sustained in part and

overruled in part Appellees’ preliminary objections. The court subsequently

denied Appellant’s petition for preliminary injunction on January 14, 2014.

      On January 23, 2014, Appellants filed a motion to amend the court’s

December 30, 2013 order, to which Appellees filed a response. The court

denied Appellant’s motion on February 20, 2014. Meanwhile, Appellees filed

an answer to Appellant’s complaint with new matter on January 20, 2014.

Appellant   filed   preliminary   objections   to   the   pleading.   Appellees

subsequently filed several amended answers with new matter, and Appellant

filed preliminary objections to each amended filing.

      Eventually, the parties settled all claims except Appellant’s allegations

of breach of the Non-Compete Covenant. Thus, on December 3, 2014, the

court entered an order that deemed as final the December 30, 2013 and

January 14, 2014 orders dismissing Appellant’s claims of breach of the Non-

Compete Covenant, and dismissed with prejudice all other claims. Appellant

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timely filed a notice of appeal on December 4, 2014.

      Appellant raises the following issues for our review:

         DID THE TRIAL COURT ERR IN SUSTAINING [APPELLEES’]
         PRELIMINARY OBJECTIONS TO [APPELLANT’S] COMPLAINT
         AND DISMISSING [APPELLANT’S] CLAIMS AGAINST
         [APPELLEES] FOR BREACH OF THE AGREEMENT’S NON-
         COMPETE COVENANT, WHERE THE AGREEMENT INCLUDED
         A VALID AND BINDING NON-COMPETE RESTRICTIVE
         COVENANT, AND WHERE [APPELLANT] PLEADED FACTS IN
         THE COMPLAINT DEMONSTRATING THAT [APPELLEES]
         VIOLATED THE NON-COMPETE COVENANT?

         DID THE TRIAL COURT ERR IN DENYING [APPELLANT’S]
         PETITION FOR PRELIMINARY INJUNCTION, WHERE
         [APPELLANT] ESTABLISHED ALL OF THE PREREQUISITES
         REQUIRED UNDER THE LAW TO ENJOIN [APPELLEES]
         FROM VIOLATING THE AGREEMENT’S NON-COMPETE
         COVENANT?

(Appellant’s Brief at 7).

      In its first issue, Appellant argues the facts alleged in Appellant’s

complaint were more than sufficient to overcome Appellees’ preliminary

objections to Appellant’s claims for breach of the Non-Compete Covenant.

Appellant asserts the Non-Compete Covenant is an enforceable restrictive

covenant.    Specifically, Appellant avers the Non-Compete Covenant was

executed    incident   to   Appellee   To’s   employment   with   Appellant,   the

restrictions imposed are reasonably necessary for Appellant’s protection

because Appellee To was privy to confidential information relating to

Appellant’s customers and suppliers, and the restrictions imposed are

reasonably limited in geographic scope and duration.          Appellant contends

Appellees violated the Non-Compete Covenant by opening a store in

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Philadelphia. Appellant alleges the Non-Compete Covenant is not so limited

in scope as to prohibit Appellee To from only soliciting or accepting a job

from an unrelated third party. Rather, Appellant asserts the plain language

of the Non-Compete Covenant implicates all forms of work for a competitor

of Appellant. Appellant states the Non-Compete Covenant prohibits Appellee

To, “individually…as a stockholder,” from “directly or indirectly” engaging in

restricted activity, which includes Appellee To’s ownership of Appellee

ToBox.   Appellant contends Appellee ToBox is a distinct legal entity from

Appellee To, and that Appellee ToBox offered Appellee To a position as an

operator, which he affirmatively accepted.     Additionally, Appellant claims

that, even if the Non-Compete Covenant is ambiguous, it is for the trier of

fact to resolve any ambiguity.    Appellant maintains it met its burden of

stating a meritorious claim against Appellees for breach of the Non-Compete

Covenant.   Appellant concludes this Court should reverse the trial court’s

December 30, 2013 order sustaining in part and overruling in part Appellees’

preliminary objections, and reinstate Appellant’s claims for breach of the

Non-Compete Covenant. We disagree.

      Our scope of review of the trial court’s decision to sustain preliminary

objections in the nature of a demurrer is plenary. Soto v. Nabisco, Inc.,

32 A.3d 787, 789 (Pa.Super. 2011). We apply the same standard of review

as the trial court.   De Lage Landen Financial Services, Inc. v. Urban

Partnership, LLC, 903 A.2d 586, 589 (Pa.Super. 2006).

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         A demurrer is an assertion that a complaint does not set
         forth a cause of action or a claim on which relief can be
         granted. A demurrer by a defendant admits all relevant
         facts sufficiently pleaded in the complaint and all
         inferences fairly deducible therefrom, but not conclusions
         of law or unjustified inferences. In ruling on a demurrer,
         the court may consider only such matters as arise out of
         the complaint itself; it cannot supply a fact missing in the
         complaint.

Soto, supra at 790.      “We will reverse a trial court’s decision to sustain

preliminary objections only if the trial court has committed an error of law or

an abuse of discretion.” Id. “Where the complaint fails to set forth a valid

cause of action, a preliminary objection in the nature of a demurrer is

properly sustained.” Id.

      Rule 1028 of the Pennsylvania Rules of Civil Procedure provides, in

relevant part:

         Rule 1028. Preliminary Objections

         (a) Preliminary objections may be filed by any party to
         any pleading and are limited to the following grounds:

                                  *    *     *

            (2) failure of a pleading to conform to law or rule of
            court or inclusion of scandalous or impertinent matter;

            (3) insufficient specificity in a pleading;

            (4) legal insufficiency of a pleading (demurrer);

                                  *    *     *

Pa.R.C.P. 1028(a)(2)-(4) (emphasis added).

      A trial court may also sustain preliminary objections in the nature of a

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demurrer if it “appears from the face of the complaint that recovery upon

the facts alleged is not permitted as a matter of law.” Kelly v. Kelly, 887

A.2d 788, 790-91 (Pa.Super. 2005), appeal denied, 588 Pa. 770, 905 A.2d

500 (2006).

     Instantly, the trial court reasoned:

        When considering preliminary objections, all material facts
        and all inferences set forth in the complaint must be
        admitted as true. Haun v. Community Health Systems,
        Inc., 14 A.3d 120, 123 (Pa.Super. 2011). However, the
        court is not bound to accept as true any averments in the
        pleading that are in conflict with exhibits that are attached
        to that pleading. Philmar Mid-Atlantic, Inc. v. York
        Street Associates [II], 389 Pa.Super. 297, 299-301,
        566 A.2d 1253, 1254 (1989).            Moreover, restrictive
        covenants are not favored in Pennsylvania.                See
        Jacobson & Co. v. Intl Env’t Corp., 427 Pa. 439, 235
        A.2d 612 (1967). “The failure of an employer to include
        specific provisions in an employment contract will not be
        judicially forgiven or corrected at the expense of the
        employee.” Hess v. Gebhard [& Co. Inc.], 570 Pa. 148,
        [169,] 808 A.2d 912[, 924] (2002). [Here,] [t]he subject
        contract provides that [Appellee To] may not “solicit or
        accept a job offer from another men’s or woman’s retail
        clothing company.” [Appellant] alleges that [Appellee To]
        opened up his own men’s retail clothing store. Thus, given
        the plain language of the [Agreement] when compared to
        the allegations of the complaint, [the trial] court finds that
        the breach of contract, as to the violation of the [Non-
        Compete Covenant], to be legally insufficient as [Appellee
        To] did not solicit or accept a job but instead opened up
        his own store. …

(Trial Court’s Order, filed December 30, 2013, at 1 n. 1) (citation to record

omitted).     We accept the court’s interpretation of the Non-Compete

Covenant.     An examination of this provision indicates the Non-Compete

Covenant barred Appellee To from certain activities, but it did not preclude

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outright ownership of his own business. Therefore, the court did not abuse

its discretion in sustaining in part and overruling in part Appellees’

preliminary objections. See Soto, supra at 790.

      In its second issue, Appellant claims Appellees’ conduct has caused

and will continue to cause Appellant to sustain irreparable harm because

Appellees opened a business in Philadelphia that competes with Appellant,

and Appellant will suffer permanent injury to its customer and supplier

relationships.   Appellant alleges greater injury will occur from refusing to

grant a preliminary injunction than from granting it because the harm to

Appellant’s customer relationships is likely to be significant, whereas

Appellee To’s ability to earn a living will not be significantly harmed because

he is free to work anywhere that does not violate the Non-Compete

Covenant. Appellant contends an injunction will restore the parties to their

status before the breach occurred.      Appellant also asserts it is likely to

prevail on the merits of the claim of breach of the Non-Compete Covenant

because the parties entered into this provision of the Agreement in

conjunction with Appellee To’s employment with Appellant, the protections

the Non-Compete Covenant offers Appellant are reasonably necessary to

protect Appellant’s legitimate business interests, and the Non-Compete

Covenant is reasonably limited in duration and geographic scope. Appellant

avers an injunction is also reasonably suited to stop Appellees’ offending

activity because there is no indication Appellees will refrain from violating

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the Non-Compete Covenant unless prohibited by court order.             Appellant

maintains there is no indication that entering an injunction against Appellees

will harm the public interest. Appellant concludes this Court should reverse

the trial court’s January 14, 2014 order denying Appellant’s petition for

preliminary injunction. We disagree.

      Our review of the court’s denial of equitable relief in this case

implicates the following legal principles:

         [I]n general, appellate courts review a trial court order
         refusing or granting a preliminary injunction for an abuse
         of discretion. We have explained that this standard of
         review is to be applied within the realm of preliminary
         injunctions as follows:

            [W]e recognize that on an appeal from the grant or
            denial of a preliminary injunction, we do not inquire
            into the merits of the controversy, but only examine
            the record to determine if there were any apparently
            reasonable grounds for the action of the court below.
            Only if it is plain that no grounds exist to support the
            [order] or that the rule of law relied upon was
            palpably erroneous or misapplied will we interfere
            with the decision of the [trial court].

Eckman v. Erie Ins. Exchange, 21 A.3d 1203, 1206 (Pa.Super. 2011)

(internal citations and quotation marks omitted).     “This standard is highly

deferential.” Id. at 1207.

      Pennsylvania Rule of Civil Procedure 1531 governs preliminary and

special injunctions, in pertinent part, as follows:

         Rule 1531. Special Relief. Injunctions

         (a) A court shall issue a preliminary or special injunction
         only after written notice and hearing unless it appears to

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         the satisfaction of the court that immediate and irreparable
         injury will be sustained before notice can be given or a
         hearing held, in which case the court may issue a
         preliminary or special injunction without a hearing or
         without notice. In determining whether a preliminary or
         special injunction should be granted and whether notice or
         a hearing should be required, the court may act on the
         basis of the averments of the pleadings or petition and
         may consider affidavits of parties or third persons or any
         other proof which the court may require.

Pa.R.C.P. 1531(a).   “The purpose of a preliminary injunction is to prevent

irreparable injury or gross injustice by preserving the status quo as it exists

or as it previously existed before the acts complained of in the complaint.”

Ambrogi v. Reber, 932 A.2d 969, 974 (Pa.Super. 2007), appeal denied,

597 Pa. 725, 952 A.2d 673 (2008).             “Any preliminary injunction is an

extraordinary, interim remedy that should not be issued unless the moving

party’s right to relief is clear and the wrong to be remedied is manifest.” Id.

      A party seeking a preliminary injunction must establish: (1) the

injunction is necessary to prevent immediate and irreparable harm; (2)

greater injury will occur from refusing to grant the injunction than from

granting it; (3) the injunction will restore the parties to the status quo as it

existed before the alleged wrongful conduct; (4) the likelihood of success on

the merits; (5) the injunction is reasonably designed to prevent the wrongful

conduct; and (6) the injunction will not adversely affect the public interest.

Summit Towne Centre, Inc. v. Shoe Show of Rocky Mount, Inc., 573

Pa. 637, 646-47, 828 A.2d 995, 1001 (2003).

      To satisfy the fourth element, a plaintiff must demonstrate the

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behavior it seeks to restrain is actionable, the wrong is manifest, and the

right to relief is clear. Id. at 648, 828 A.2d at 1001. “[F]or conduct to be

actionable, it must breach a duty imposed by statute or by common law.”

The York Group, Inc. v. Yorktowne Caskets, Inc., 924 A.2d 1234, 1241

(Pa.Super. 2007).    “[T]he party seeking an injunction is not required to

prove that he will prevail on his theory of liability, but only that there are

substantial legal questions that the trial court must resolve to determine the

rights of the parties.” Ambrogi, supra at 976.

      A party seeking a preliminary injunction is bound by the pleadings

standards set forth in Pa.R.C.P. 1019, which provides, in relevant part:

         Rule 1019. Contents of Pleadings.            General and
         Specific Averments

         (a) The material facts on which a cause of action or
         defense is based shall be stated in a concise and summary
         form.

         (b) Averments of fraud or mistake shall be averred with
         particularity.   Malice, intent, knowledge, and other
         conditions of mind may be averred generally.

                                 *     *      *

         (h) When any claim or defense is based upon an
         agreement, the pleading shall state specifically if the
         agreement is oral or written.

            Note: If the agreement is in writing, it must be attached
            to the pleadings. See subdivision (i) of this rule.

         (i) When any claim or defense is based upon a writing,
         the pleader shall attach a copy of the writing, or the
         material part thereof, but if the writing or copy is not
         accessible to the pleader, it is sufficient so to state,

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         together with the reason, and to set forth the substance in
         writing.

Pa.R.C.P. 1019. Rule 1019 specifically requires:

         the pleader to disclose the material facts sufficient to
         enable the adverse party to prepare his case. A complaint
         therefore must do more than give the defendant fair notice
         of what the plaintiff’s claim is and the grounds upon which
         it rests.    It should formulate the issues by fully
         summarizing the material facts. Material facts are ultimate
         facts, i.e. those facts essential to support the claim.
         Evidence from which such facts may be inferred not only
         need not but should not be alleged…. Allegations will
         withstand challenge under [Rule] 1019(a) if (1) they
         contain averments of all of the facts the plaintiff will
         eventually have to prove in order to recover, and (2) they
         are sufficiently specific so as to enable defendant to
         prepare his defense.

Lerner v. Lerner, 954 A.2d 1229, 1235-36 (Pa.Super. 2008).              Material

facts include all the facts a plaintiff will eventually have to prove in order to

recover. Id. at 1236.

      Here, a review of the record reveals Appellant failed to establish the

prerequisites for a preliminary injunction. See Eckman, supra. Appellant

failed to provide any support for how it has suffered or will continue to suffer

irreparable harm, or how its customer and supplier relationships will be more

adversely affected, absent a preliminary injunction, or how Appellant’s status

quo has been disturbed following the opening of Appellee ToBox, or that

substantial legal questions exist for the court to decide.        See Summit

Towne, supra; Ambrogi, supra at 976. In fact, the court determined in

its December 30, 2013 order that Appellees have not violated any term of

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the Non-Compete Covenant by opening their own business.          See Summit

Towne, supra; York Group, supra.              Therefore, Appellant failed to

establish a sufficient basis to warrant a preliminary injunction. Furthermore,

the court concluded:

         [Appellant] is a large and distinguished retail business that
         has operated for more than seventy-five (75) years. As
         [Appellee] To is the sole owner of [Appellee] ToBox, a
         company that opened less than two months ago, [the trial]
         court finds that greater injury will occur from granting the
         injunction than from refusing it and thus [Appellant] has
         not satisfied its burden for injunctive relief.

(Trial Court’s Opinion, filed January 14, 2014, at 4).    Thus, the court had

reasonable grounds to deny Appellant’s petition for a preliminary injunction.

See Eckman, supra. Accordingly, we affirm.

      Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 8/28/2015

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