Court Opinion

ID: 3173445
Source: CourtListenerOpinion
Date Created: 2016-01-29 16:03:35.959458+00
Date Added: 2024-06-11T11:57:52.861057
License: Public Domain

MEMORANDUM DECISION
                                                                       Jan 29 2016, 7:25 am
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be
regarded as precedent or cited before any
court except for the purpose of establishing
the defense of res judicata, collateral
estoppel, or the law of the case.

ATTORNEYS FOR APPELLANTS                                 ATTORNEYS FOR APPELLEE
Danny E. Glass                                           Patrick A. Shoulders
Adam E. Glass                                            Jean M. Blanton
Fine & Hatfield, PC                                      Ziemer, Stayman, Weitzel
Evansville, Indiana                                      & Shoulders
                                                         Evansville, Indiana
Gary I. Blackman
Levenfeld Pearlstein, LLC
Chicago, Illinois

                                           IN THE
    COURT OF APPEALS OF INDIANA

Brian L. Cain, Nancy Ilderton                            January 29, 2016
and Wells Fargo Advisors, LLC,                           Court of Appeals Case No.
Appellants-Respondents,                                  82A04-1510-PL-1646
                                                         Appeal from the Vanderburgh
        v.                                               Circuit Court
                                                         The Honorable David D. Kiely,
Old National Bancorp, Inc.,                              Judge
Appellee-Petitioner                                      Trial Court Cause No.
                                                         82C01-1508-PL-4324

Baker, Judge.

Court of Appeals of Indiana | Memorandum Decision 82A04-1510-PL-1646 | January 29, 2016       Page 1 of 8
[1]   Brian Cain and Wells Fargo Advisors, LLC (“Wells Fargo”) (collectively,

      “Defendants”) appeal the preliminary injunction order issued by the trial court

      in favor of Old National Bancorp, Inc. (“ONB”). Finding that Defendants

      consented to the issuance of the order, we affirm.

                                                     Facts
[2]   Cain became an employee of ONB in January 2003. As part of his

      employment, he signed a Confidentiality and Non-Solicitation Agreement (the

      2003 Agreement). The Agreement sought to prevent Cain from doing the

      following for a one-year period after his employment terminated: soliciting or

      accepting the business of any ONB “customer”; soliciting or accepting the

      business of any “prospective customer” of ONB; advising any entity doing

      business with ONB to change their relationship with ONB; or inducing any

      ONB employee to leave ONB. Appellee’s App. 166. “Customer” was defined

      as “a person or entity who is a customer of the Employer at the time of

      Employee’s termination of employment or with whom the Employee had direct

      contact on behalf of the Employer. . . .” Id. at 167. “Prospective customer”

      was defined as “a person or entity who was the direct target of sales or

      marketing activity by the Employee or whom the Employee knew was a target

      of the Employer during the one year period preceding the Employee’s

      termination. . . .” Id.

[3]   When Cain began employment with ONB, he was involved in banking only.

      Beginning in 2010, he transitioned to the role of financial advisor and became

      Court of Appeals of Indiana | Memorandum Decision 82A04-1510-PL-1646 | January 29, 2016   Page 2 of 8
      registered as a securities salesperson. ONB is not licensed to sell securities, so it

      directs this business to a licensed third-party broker, LPL Financial (LPL).

      ONB still receives payments based on advice LPL provides to ONB customers,

      and ONB pays LPL a percentage fee for regulatory oversight.

[4]   While remaining an employee of ONB, Cain became a registered representative

      of LPL. He signed a Financial Representative Agreement with LPL on

      November 1, 2010 (the LPL Agreement). Upon his transition, Cain

      immediately came into possession of a book of investments worth $78 million,

      which had been built by the person he replaced.

[5]   Cain resigned from his employment with ONB on August 21, 2015, and began

      working for Wells Fargo within the week. Immediately upon signing, Wells

      Fargo paid Cain a $500,000 bonus. On August 25, 2015, ONB filed a

      Complaint1 and a Petition for Preliminary Injunction, alleging that Cain’s

      activities with Wells Fargo constituted a violation of the 2003 Agreement.

[6]   The trial court held a preliminary injunction hearing on September 15, 2015.

      Defendants tendered a motion to dismiss the complaint, arguing, in part, that

      Cain was only involved with former LPL customers, not ONB customers. The

      trial judge invited counsel for both sides into his chambers. The ensuing

      discussion did not occur on the record, but was recreated by ONB’s counsel in a

      1
          ONB did not file a verified complaint.

      Court of Appeals of Indiana | Memorandum Decision 82A04-1510-PL-1646 | January 29, 2016   Page 3 of 8
      verified statement of evidence—pursuant to Appellate Rule 31—and was

      certified as “accurate and complete” by the trial judge. Appellee’s App. 20.

[7]   According to the verified statement of evidence, in chambers, the trial judge

      informed the parties that his first inclination was to grant the preliminary

      injunction, but that he was willing to hear arguments and evidence from either

      side. Id. at 14. The judge asked counsel for Defendants whether he would like

      to proceed with an evidentiary hearing. Id. at 15. Defendants’ counsel replied

      that he would agree to a preliminary injunction on two conditions: that the trial

      court make no finding regarding whether the customers Cain was servicing

      were ONB customers or LPL customers; and that the preliminary injunction

      not include “prospective customers” as stated in the Employment Agreement.

      Id. The parties agreed to these conditions. Id. The trial court instructed ONB’s

      counsel to draft a proposed injunction order. This was drafted and shared with

      Defendants’ counsel—having seen it, Defendants’ counsel responded positively

      and with no objections. Id. at 17. The agreed-upon order made the following

      conclusions of law: “ONB has no adequate remedy at law and the granting of a

      preliminary injunction will not disserve the public interest. Further, ONB has

      established a reasonable likelihood of success at trial and the prospective harm

      to ONB outweighs any harm to Cain.” Appellant’s App. 9. The trial court

      issued the order granting the preliminary injunction.

[8]   On September 18, 2015, ONB filed its response to Defendants’ motion to

      dismiss. Along with the response, affidavits were filed, the substance of which

      focused on the identity of Cain’s customers. The Vice President of LPL stated,

      Court of Appeals of Indiana | Memorandum Decision 82A04-1510-PL-1646 | January 29, 2016   Page 4 of 8
       on behalf of LPL, that Cain was servicing “customers of Old National Bank.”

       Id. at 77. The affidavit also included Cain’s LPL Agreement, which states,

       “LPL hereby appoints the Representative [Brian L. Cain] as a limited agent to

       service customers of Old National Bank.” Id. at 81.

[9]    On October 7, 2015, ONB filed a motion asking that Defendants be found in

       contempt, alleging that Cain and Wells Fargo were violating the injunction.

       The Defendants filed a notice of appeal and a motion to stay the preliminary

       injunction on October 9, 2015.

[10]   The trial court held a contempt hearing on October 12, 2015. At the hearing,

       Defendants’ counsel acknowledged the preliminary injunction, and noted that

       while he would not have agreed to an injunction regarding LPL customers, he

       “did not have any objection with regard to ONB customers.” Appellee’s App.

       26. ONB presented evidence that since Cain’s departure, clients have requested

       transfers of their funds from ONB to Wells Fargo in the amount of $11.2

       million. After both parties presented evidence and argument, the trial court

       ruled that Defendants had violated the preliminary injunction, and it took the

       issue of sanctions under advisement.2 Defendants now appeal.

       2
        Since no punishment has been ordered yet, the contempt ruling is not ripe for review. State ex rel. Neal v.
       Hamilton Cir. Ct., 248 Ind. 130, 134, 224 N.E.2d 55, 58 (1967).

       Court of Appeals of Indiana | Memorandum Decision 82A04-1510-PL-1646 | January 29, 2016             Page 5 of 8
                                    Discussion and Decision
[11]   Defendants have two sets of arguments on appeal: first, that the trial court

       abused its discretion by issuing the preliminary injunction order; and second,

       that the 2003 Agreement is unenforceable under state and federal law.

[12]   We find both sets of arguments to be misplaced. When reviewing the grant of a

       preliminary injunction, “[t]he question for the court upon the interlocutory

       application is not the final merits of the case. When the cause comes to be

       heard, the final merits may be very different.” Tuf-Tread Corp. v. Kilborn, 202
Ind. 154, 154, 172 N.E. 352, 354 (Ind. 1930). The real question in this case is

       whether the Defendants consented to the issuance of the preliminary injunction

       order, and whether they will be held to it.

[13]   As is made clear by the verified statement of evidence, which was certified as

       accurate by the trial court, the parties consented to the issuance of the

       preliminary injunction order. More proof of the agreement is the email

       exchange that followed ONB’s drafting of the order: Defendants’ counsel

       responded positively and without objection. Further proof of the agreement is

       the fact that Defendants did not object to the order until after ONB filed an

       information to hold them in contempt. It has long been the law in Indiana that,

               In the absence of fraud, parties who are competent to contract
               and not standing in confidential relations to each other may
               agree to the rendition of a judgment or a decree respecting any
               right which may be the subject of litigation. When such a decree
               is entered it is a decree by consent. A consent decree is not a
               judicial determination of the rights of the parties. It does not

       Court of Appeals of Indiana | Memorandum Decision 82A04-1510-PL-1646 | January 29, 2016   Page 6 of 8
               purport to represent the judgment of the court, but merely
               records the agreement of the parties with respect to the matters in
               litigation. Such decree cannot be reviewed by appeal.

       State v. Huebner, 230 Ind. 461, 467, 104 N.E.2d 385, 387 (1952).

[14]   The verified statement of evidence also makes clear that the trial court was

       willing to hear evidence and arguments on the matter, but only decided not to

       when Defendants’ counsel waived that right and agreed to the order. Counsel

       also consented to the preliminary injunction order despite the fact that ONB

       had not filed a verified complaint. Therefore, insofar as the lack of evidence or

       the lack of a verified complaint constitutes an error, it is an invited error.

       Invited error is not subject to appellate review. Countrymark Coop., Inc. v.

       Hammes, 892 N.E.2d 683, 695 (Ind. Ct. App. 2008).

[15]   Defendants request us “to appreciate that under any conceivable scenario, it

       would make no sense for Cain and Wells Fargo’s counsel to agree to an

       exceedingly broad non-compete injunction order. . . .” Appellant’s Reply Br. 5

       (emphasis omitted). Counsel for Defendants also stated in an affidavit, “It was

       my understanding from the Court’s comments that the Order it was entering

       would not impose any restraining provision on the Defendants’ right to accept

       or service securities customers and was only entered as to ‘bank customers’ for

       the non-securities work.” Appellee’s App. 220.

[16]   We find counsel’s decision to agree to the order to certainly be lacking in, but

       not totally devoid of, sense. Counsel believed that Cain was servicing

       customers of LPL and not of ONB. He was confident enough in his assessment
       Court of Appeals of Indiana | Memorandum Decision 82A04-1510-PL-1646 | January 29, 2016   Page 7 of 8
       to risk the eventuality that came to pass: that a court might disagree.

       Defendants’ counsel might have made an error, in tactics and in legal analysis,

       but it was not induced by any fraud on the part of ONB or ONB’s counsel. We

       cannot save litigants from their own mistakes.

[17]   We note that, by deciding this appeal in ONB’s favor, we make no comment on

       the enforceability of the underlying 2003 Agreement. We reiterate that “a

       preliminary injunction proceeding is exactly that: preliminary.” Mercho-

       Roushdi-Shoemaker-Dilley Thoraco-Vascular Corp. v. Blatchford, 900 N.E.2d 786,

       795 (Ind. Ct. App. 2009). Defendants remain free to argue to the trial court that

       the 2003 Agreement is overbroad, oppressive, and unenforceable. But whereas

       courts will find covenants in restraint of trade void, we will not find poor

       litigation strategies to entitle a party to relief.

[18]   ONB requests appellate attorney fees pursuant to Appellate Rule 66(E). This is

       a power we exercise with extreme restraint because of the potential chilling

       effect upon the exercise of the right to appeal. Wagler v. West Boggs Sewer Dist.,

       Inc., 980 N.E.2d 363, 384 (Ind. Ct. App. 2012). Accordingly, we decline

       ONB’s request.

[19]   The judgment of the trial court is affirmed.

       Bradford, J., and Altice, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 82A04-1510-PL-1646 | January 29, 2016   Page 8 of 8