Court Opinion

ID: 4019391
Source: CourtListenerOpinion
Date Created: 2016-07-27 18:13:45.038501+00
Date Added: 2024-06-11T14:45:33.987751
License: Public Domain

J. S11013/16

NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37

DONNA SCOTT, T/A BUCKINGHAM                :    IN THE SUPERIOR COURT OF
DANCE AND EXERCISE STUDIO                  :          PENNSYLVANIA
                                           :
                   v.                      :
                                           :
LAURA GIACOMELLI AND LIBRA                 :
DANCE STUDIO, LLC,                         :       No. 2090 EDA 2015
                                           :
                          Appellants       :

               Appeal from the Order Entered June 22, 2015,
               in the Court of Common Pleas of Bucks County
                       Civil Division at No. 2011-07442

BEFORE: FORD ELLIOTT, P.J.E., OTT AND MUSMANNO, JJ.

MEMORANDUM BY FORD ELLIOTT, P.J.E.:                     FILED JULY 27, 2016

      Laura Giacomelli (“Giacomelli”) and Libra Dance Studio, LLC (“Libra”),

(collectively, “appellants”) appeal the order of the Court of Common Pleas of

Bucks County that entered judgment in the amount of $96,217 against them

and in favor of Donna Scott (“Scott”), trading as Buckingham Dance and

Exercise Studio (“Buckingham”).

                                 I. Background.

      Scott   owned      and   operated   Buckingham   which   was   located   at

2547 Bogarts Tavern Road, Buckingham, Bucks County, Pennsylvania. Scott

and her husband, Herbert Scott, owned the property as tenants by the

entireties. Buckingham provided dance and exercise instruction to members

of the general public.
J. S11013/16

      Giacomelli started working at Buckingham in 2007 as an independent

contractor.   She also worked at other dance studios both before and after

she started working at Buckingham.           When she started at Buckingham,

Giacomelli taught mostly one night per week, at the rate of $35-40 per hour.

During her second year at Buckingham, Giacomelli taught one or two days a

week. During her third year, which was the 2009-2010 season, Giacomelli

taught three days per week at Buckingham and two days per week at

another dance studio.    Scott was aware that Giacomelli worked at various

other dance studios when Giacomelli was also working for her.                  Scott

informed Giacomelli at the end of the 2009-2010 season, which was in June

2010, that she was going to promote Giacomelli to the position of artistic

director of Buckingham. In addition, Scott offered Giacomelli a $5 per hour

raise effective at the start of the 2010-2011 season.

      Just prior to the start of the 2010-2011 season, Scott required all

teachers to sign a Service/Not to Compete Agreement (Agreement).

Giacomelli initially refused to sign the Agreement but did so because she

believed that Scott would terminate the employment arrangement with her if

she did not sign it. Giacomelli signed the Agreement on August 29, 2010.

      Giacomelli did not teach at other studios during the 2010-2011

season.       She   taught   approximately    16   classes   per   week   in    the

non-competitive dance portion of Buckingham for 4 to 5 hours per night, 5

days a week.

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     Giacomelli started a competition team in 2008-2009 in order to

challenge the students and to provide an opportunity for older dancers to

remain at Buckingham.    Scott agreed to allow Giacomelli to establish the

team which Giacomelli called the Buckingham Dance Company (“BDC”).

During the first year of the BDC, parents made checks payable to either

Giacomelli or Brenda Jagelka, who was brought in to assist with tap and jazz

choreography for the BDC. Any sums collected for the BDC were collected

directly from the parents and were not paid to Buckingham or Scott.      In

subsequent years, all payments were made to Giacomelli, who kept all of the

books, records, and accounts for the BDC. Giacomelli also maintained the

roll books and records for the BDC. The BDC participated in two or three

competitions per year.    The amount a dancer or her parents paid to

Giacomelli was dependent on how many routines and styles of dance the

dancer performed or learned.     Each dancer at the BDC took classes at

Buckingham. Each dancer was required to be a part of the ballet program at

Buckingham in addition to whatever style the dancer was dancing on the

competition team. According to Giacomelli, participation in the BDC resulted

in significantly increased enrollments for Buckingham. In June 2011, there

were between 200 to 300 students enrolled at Buckingham, while Giacomelli

had about forty girls on her dance team.

                                   -3-
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                        II. Restrictive Covenant.

     The   Agreement    provided   that   Giacomelli   was   to   serve   as   an

independent contractor and provide dance instruction, commencing on

September 7, 2010, and continuing for a period of nine months and that

Giacomelli was to receive pay of $45 per hour for actual instruction services

provided. The Agreement further provided the following:

           7.    During the 9 month term of this Agreement,
                 and for a period of one (1) year thereafter this
                 service agreement is signed Instructor shall
                 not:

                 a.    Solicit any students through any
                       means. . .     by   email,  social
                       networks, mail, telephone, word of
                       mouth, or any other means of
                       communication who are clients of
                       the Studio, or otherwise induce
                       them to discontinue lessons at the
                       studio or to patronize or engage
                       any other dance or exercise studio
                       or instructor;

                 b.    Within a radius of twenty[-]five
                       (25) miles of the Studio’s present
                       physical location, without the
                       written consent of the Studio,
                       engage in the business of the
                       teaching or instructing of any form
                       of dance or exercise, whether as
                       an instructor or as a sole
                       proprietor, partner, shareholder,
                       officer, director, employee, agent
                       or other representative of any
                       entity which engages in such
                       business.

Agreement, 8/29/10 at 2-3 ¶7.

                                    -4-
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     Over a period of more than two years, the Scotts and Giacomelli

discussed the possibility of Giacomelli purchasing Buckingham and the real

property on which it was located. In April or May 2011, Giacomelli informed

the Scotts that she would not be purchasing the business and the real

property which the Scotts valued at a total of $935,000.

     Shortly after that, Giacomelli informed Scott that she would finish out

the 2010-2011 season and then leave Buckingham and would not return.

On May 16, 2011, Scott informed the parents of Buckingham students and

the parents of the competition team members that Giacomelli would not be

returning to teach in the next season.

     On August 1, 2011, Giacomelli opened a dance studio under the Libra

name at 1507 West Street Road in Warminster, Bucks County, Pennsylvania.

The dance studio was located approximately 8 to 10 miles from Buckingham.

                              III. Complaint.

     On August 18, 2011, Scott commenced an action in the trial court

against appellants. Scott alleged:

           19.   Further, at the time of her departure,
                 Giacomelli retained [Scott’s] customer list; and
                 utilizing that list, Giacomelli solicited [Scott’s]
                 clients and customers either directly and/or
                 indirectly, including but not limited to posting
                 on her website and on the social media.

           20.   Of the approximately thirty-eight competition
                 team members who were expected by
                 Ms. Scott to enroll in her July 5, 2011 summer
                 session, only eight actually enrolled as a result
                 of Giacomelli’s solicitation, resulting in a loss of

                                     -5-
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                  over $10,000 in projected revenues to the
                  studio.

            21.   The loss of the approximately thirty or more
                  students who were solicited by Giacomelli to
                  leave [Scott’s] competition team, as well as
                  the loss of numerous non-competition students
                  from the sixteen other classes which were
                  taught by Giacomelli, will have a significant
                  impact upon [Scott’s] Fall enrollment, and thus
                  upon [Scott’s] expected revenues. As of the
                  date of this filing, only one member of the
                  competition team, out of 38, has enrolled for
                  the Fall session.

            22.   Not only will [Scott] lose the students who
                  have already been solicited by Giacomelli, it
                  has been the history of [Scott’s] business over
                  the years that once a family has enrolled a
                  child for instruction, that family typically
                  enrolls additional family members along with
                  friends for dance instruction with [Scott].
                  Thus, by tapping into [Scott’s] current list of
                  enrolled students, the defendant Giacomelli will
                  have a significant impact upon the future
                  revenue stream, the good will of [Scott’s]
                  business, and the future viability of the
                  business.

Complaint, 8/18/11 at 6-7 ¶¶ 19-22.

      In Count I of the Complaint, Scott sought enforcement of the

restrictive covenant and asked the trial court to enter an order that required

appellants to account for all business and profits obtained in violation of the

restrictive covenant and to disclose all of the names and addresses of Scott’s

former clients who were enrolled or would be enrolling at Libra. Scott also

sought an injunction to restrain the appellants from soliciting or contacting

past and present customers of Scott, to restrain the appellants from

                                     -6-
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competing with Scott within the area and time proscribed by the parties’

restrictive covenant, and that the trial court order appellants to return all

written trade secrets obtained from Scott, including but not limited to,

Scott’s customer lists, roll books, and price lists.

      In Count II of the Complaint, Scott sought damages for breach of

contract in excess of $50,000. In Count III of the Complaint, Scott sought

the return of all trade secrets wrongfully appropriated by appellants and an

award of damages from the loss of trade secrets appropriated by

appellants.1

                              IV. Non-Jury Trial.

      A non-jury trial commenced in the trial court on February 6, 2014.

Scott called Giacomelli to testify on cross-examination. Giacomelli testified

that she refused to sign an employment contract with Scott for the

2009-2010 season because she was teaching at another studio within a

25-mile radius of Buckingham. She did not believe that it was appropriate

to sign a covenant not to compete because she was working elsewhere.

(Notes of testimony, 2/6/14 at 50.) When Scott presented Giacomelli with

the Agreement for the 2010-2011 school year, Giacomelli initially refused to

sign it, but Scott told her that if she did not sign it, she could not work for

her that school year. (Id. at 54.) Giacomelli testified that she started the

1
 Originally, there was a Count IV to the Complaint which Scott withdrew on
November 9, 2011.

                                       -7-
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competition team at Buckingham. (Id. at 59.) Giacomelli explained that the

money from the competition team went to her and not to Scott. (Id. at 72.)

Giacomelli admitted that when she started her new dance studio, she was

aware that its location was less than 25 miles from Buckingham in violation

of the covenant not to compete. (Id. at 106-107.)

       Giacomelli testified on direct examination that the creation of the

competition team resulted in more classes and registrations at Buckingham.

(Notes of testimony, 2/7/14 at 26.)      Giacomelli further testified that Scott

notified her in June of 2010 that she would be receiving a raise to $45 per

hour in the fall of 2010. At that time, Scott did not request that Giacomelli

sign the Agreement. (Id. at 43-44.) Giacomelli explained that there were

approximately 20 dance studios in an 8-mile radius from Buckingham and

142 in a 25-mile radius from Buckingham. (Notes of testimony, 7/21/14 at

61.)

       John E. Mitchell (“Mitchell”), a certified public accountant who was also

certified in financial forensics and accredited in business valuation and the

managing partner of MDG, LLC, testified on behalf of Scott that Scott lost

$124,272    in   revenue   in   the   one-year   period   after   Giacomelli   left

Buckingham.       (Id. at 25-26.)     According to Mitchell, 38 students left

Buckingham to go to Libra when Giacomelli started Libra. (Id. at 28.) On

cross-examination, Mitchell admitted that he did not calculate lost profits.

(Id. at 79.)     Mitchell later revised the loss in revenues by attempting to

                                       -8-
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calculate the cost of products sold, such as dancewear, and concluded that

the economic damages were $106,425.                  He determined that the sales of

items accounted for $35,693 in revenue, with costs of $17,847.                  (Id. at

128.)

        Scott testified and described her business, the development of the

competition        team,   and   the   possibility     of   Giacomelli’s   purchase   of

Buckingham. Scott testified that after Giacomelli left, the competition team

dropped from approximately 40 students to approximately a dozen. (Id. at

113-114.) On cross-examination, Scott testified that even though she could

not produce them, Giacomelli signed restrictive covenant agreements in

prior years before 2010. (Id. at 153.) Scott admitted that her dance studio

had no unique methods of instruction and was like any other dance studio.

(Id. at 167-168.)

                      V. Conclusions of the Trial Court.

        The trial court made the following relevant conclusions of law:

              9.      Here, the covenant not to compete in the
                      Agreement is ancillary to the main purpose of
                      the Agreement, which was for the employment
                      of Ms. Giacomelli as an independent contractor
                      to teach dance, in exchange for compensation
                      to be paid by Ms. Scott of [Buckingham]. . . .

              ....

              14.     Ms. Scott of [Buckingham] has protectable,
                      legitimate business interests related to her
                      customer and/or client bases at [Buckingham],
                      along with acquired goodwill.

                                          -9-
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          15.    Ms. Giacomelli was instrumental in the creation
                 of the Competition team, and therefore she
                 understood Ms. Scott’s need to limit future
                 competition. . . .

          ....

          18.    Courts seldom criticize restraints of six months
                 or a year on the grounds of duration, and even
                 longer restraints are often enforced. . . . The
                 restraint on Ms. Giacomelli of one (1) year
                 following her departure from [Buckingham] in
                 June of 2011, was well within acceptable
                 practices of restraint in non-competition
                 agreements in this Commonwealth.

          ....

          20.    We cannot on this record declare that, as a
                 matter of law, the subject Non-Compete is
                 unreasonable in regard to the geographic limit.
                 In addition to the reasonable time restriction of
                 only one year following employment at
                 [Buckingham], we find the 25 mile geographic
                 radius restriction reasonable.

          21.    Accordingly, in sum, we find the terms of the
                 restrictive covenant not to compete in the
                 parties’ subject Agreement to be reasonable in
                 terms of duration as well as with regard to
                 geographical limitations.

          22.    Ms. Giacomelli created and opened [Libra] with
                 actual knowledge she was violating the
                 Non-Compete Agreement which she had
                 signed.    While Ms. Giacomelli essentially
                 admitted such actual knowledge in her
                 testimony,   we     found     Ms. Giacomelli’s
                 testimony which was at variance with this
                 knowledge to lack credibility.

          ....

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          24.    There was adequate, valuable consideration for
                 the Non-Compete executed between the
                 parties on August 29, 2010. Ms. Giacomelli
                 received a raise in compensation from $40.00
                 per hour to $45.00 per hour, which
                 represented a 12.5% pay increase, and her
                 title was changed from Instructor to Artistic
                 Director.   Accordingly, her job status at
                 [Buckingham] was beneficially changed.

          25.    While the anticipated pay raise and promotion
                 to Artistic Director were discussed verbally in
                 the spring of 2010 by Ms. Scott and
                 Ms. Giacomelli, such beneficial changes did not
                 take place until Ms. Scott and Ms. Giacomelli
                 executed the written Agreement on August 29,
                 2010. The record supports the conclusion that
                 both parties understood this to be a reasonable
                 arrangement,      given  that    dance   school
                 programs are typically based upon a
                 September through June dance year.

          26.    Regardless    of    whether    prior    written
                 employment agreements were executed, and
                 regardless of whether Ms. Giacomelli was a
                 continuous    independent     contractor     for
                 Ms. Scott and [Buckingham], or whether the
                 Agreement executed on August 29, 2010 was
                 the first Non-Compete Agreement signed by
                 Ms. Giacomelli, there was adequate, valuable
                 consideration    supporting   the    restrictive
                 covenant in the form of change in job status,
                 and/or in the form of an increase in pay from
                 the previous year.

          ....

          27.    Ms. Giacomelli implied in her testimony that
                 she executed the Non-Compete Agreement in
                 August,    2010,    under  duress,    because
                 otherwise she would have lost her job, and it
                 was too late to find a new position elsewhere
                 for the dance year.

                                   - 11 -
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          28.    The     record   is   abundantly     clear  that
                 Ms. Giacomelli could have obtained alternative
                 employment without unreasonable difficulty,
                 because she was a well-qualified and
                 well-trained   dance     instructor,   and  was
                 significantly well-established with a variety of
                 dance programs.

          29.    Ms. Scott did not place Ms. Giacomelli in a
                 position which eliminated Ms. Giacomelli’s free
                 will   in   August    2010.       Accordingly,
                 Ms. Giacomelli’s claim of duress is without
                 merit.

          ....

          30.    The restriction contained in the Non-Compete
                 provision stated that during the nine-month
                 term of the Agreement, and for a period of one
                 year thereafter, the instructor was prohibited
                 from soliciting [Buckingham] students through
                 any means by email, social networks, mail,
                 telephone, word of mouth, or any other means
                 of communication.       However, the record
                 reveals    that   such   communications     by
                 Ms. Giacomelli did, in fact, occur during the
                 pertinent time period.

          31.    The restriction in the Non-Compete also
                 prohibited Ms. Giacomelli from otherwise
                 inducing     [Buckingham]      students    from
                 discontinuing their lessons at the studio, or
                 patronizing or engaging any other dance or
                 exercise studio or instructor.      The record
                 reveals however, that during the operative
                 period     of      the  restrictive    covenant
                 Ms. Giacomelli, by way of her website for
                 [Libra],       newspaper        advertisements,
                 newsletters, and e-mail communications with
                 [Buckingham] students’ parents, directly and
                 indirectly    solicited students     to   leave
                 [Buckingham] and to enroll at [Libra], her
                 competing dance studio.

                                   - 12 -
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          32.    Ms. Giacomelli did not meet her burden of
                 establishing unreasonableness as to the Non-
                 Compete, nor did she demonstrate why it is
                 unenforceable,     given      the   facts     and
                 circumstances      of      this   litigation. . . .
                 Accordingly,    the     subject   Non-Compete
                 Agreement is enforceable, subjecting Ms.
                 Giacomelli to liability for damages caused by
                 her breaches.

          ....

          34.    Mr. Mitchell’s testimony as to the accounting
                 analysis he performed to calculate the measure
                 of damages incurred by [Buckingham] caused
                 by Ms. Giacomelli’s breaches of contract, while
                 largely uncontroverted, was flawed in some
                 respects. Such flaws were predominantly due
                 to his evaluation which relied upon data
                 provided solely by Ms. Scott, without further
                 verification. The area of greatest erroneous
                 evaluation appeared to be Mr. Mitchell’s
                 reliance on expense figures provided by
                 Ms. Scott.

          35.    Mr. Mitchell’s opinion testimony was that
                 pertinent economic damages suffered by
                 Ms. Scott were [$106,425] as a result of
                 Ms. Giacomelli’s breaches in the year following
                 her departure from [Buckingham].

          36.    Ms. Giacomelli provided essentially unrefuted
                 testimony,    including   testimony   as   to
                 [Buckingham]      expenses,   which  afforded
                 guidance to this Court by which we herein
                 modify lost profit calculations as opined by
                 Mr. Mitchell.

          37.    Based on the record in its entirety we find that
                 Ms. Scott did suffer causally related economic
                 damages in the year following the departure of
                 Ms. Giacomelli from [Buckingham] as a result
                 of Ms. Giacomelli’s breaches, but we modify

                                    - 13 -
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                 Mr. Mitchell’s calculations as indicated in the
                 following Verdict and Order.

Trial court opinion, 4/21/15 at 44-50, Conclusions of Law Nos. 9, 14-16,

20-22, 24-32, and 34-37.

     The trial court awarded Scott $96,217.00 as compensatory damages.

                           VI. Post-trial Motion.

     Giacomelli moved for post-trial relief and argued that the trial court

committed an error of law when it found that the restrictive covenant was

valid and enforceable when there was not adequate consideration, the

restrictive covenant was not reasonably limited in geographic scope,

Giacomelli signed the restrictive covenant under duress, the restrictive

covenant was unacceptable due to its timing, and Scott failed to prove

damages.

     By order dated June 18, 2015, the trial court denied the post-trial

motion.

                     VII. Issues before this Court.

     Appellants raise the following issues for this court’s review:

           (a)   In order to be enforceable, Pennsylvania law
                 requires that a restrictive covenant be ancillary
                 to the acceptance of employment, supported
                 by adequate consideration, and reasonably
                 limited in geographic scope.          Should a
                 restrictive covenant that fails to meet these
                 requirements be unenforceable?

           (b)   Pennsylvania courts have held that a contract
                 made under duress may be avoided. Was a
                 contract made under duress and therefore

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                  avoidable   where   it  was   unsuspectingly
                  presented to an employee, who had given up
                  her other employment and where she was not
                  given an opportunity to have the contract
                  reviewed by an attorney and had to sign it on
                  the spot?

            (c)   If a contract is clear and unambiguous, are the
                  parties bound to the plain language of the
                  contract?

            (d)   Pa.R.C.P. 4003.5(c) prohibits an expert at trial
                  from testifying beyond, or inconsistent with,
                  his report. Should an expert be prohibited
                  from testifying as to lost profits after hearing
                  the testimony of another party, where his
                  reports focus on lost revenues and where he
                  admitted that he did not calculate lost profits?

            (e)   Pennsylvania law states that damages must be
                  established      by    sufficient  evidence   and
                  testimony.       Where the plaintiff’s damages
                  on [sic] calculated on speculative, unverified
                  figures,       and     where      no    supporting
                  documentation has been provided, has the
                  plaintiff failed to prove damages?

            (f)   If the plaintiff has failed to establish a case
                  again[st] a defendant, should the judgment
                  entered against the defendant be vacated?

Appellants’ brief at 3-4.

      This court’s standard of review is limited to a determination of whether

the findings of the trial court are supported by competent evidence and

whether the trial court committed error in application of the law. This court

considers the evidence in the light most favorable to the verdict winner and

will only reverse if the trial court’s findings are unsupported by substantial

evidence or the findings are based on an error of law. Where a question of

                                    - 15 -
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law is at issue, this court’s scope of review is plenary.      The trial court’s

conclusions of law in a non-jury trial are not binding on this court because it

is this court’s duty to determine if the trial court correctly applied the law to

the facts of the case. Stephen v. Waldron Elec. Heating & Cooling LLC,

100 A.3d 660, 664-665 (Pa.Super. 2014).

            Restrictive covenants, of which non-disclosure and
            non-competition covenants are the most frequently
            utilized, are commonly relied upon by employers to
            shield their protectible business interests.     The
            non-disclosure covenant limits the dissemination of
            proprietary information by a former employee, while
            the non-competition covenant precludes the former
            employee from competing with his prior employer for
            a specified period of time and within a precise
            geographic area.       In Pennsylvania, restrictive
            covenants are enforceable if they are incident to an
            employment relationship between the parties; the
            restrictions imposed by the covenant are reasonably
            necessary for the protection of the employer; and
            the restrictions imposed are reasonably limited in
            duration and geographic extent. Sidco Paper Co. v.
            Aaron, 465 Pa. 586, 351 A.2d 250 (1976);
            Morgan’s Home Equip. Corp. v. Martucci, 390 Pa.
            618, 136 A.2d 838 (1957).        “Our law permits
            equitable enforcement of employee covenants not to
            compete only so far as reasonably necessary for the
            protection of the employer.” Sidco, 351 A.2d at
            254. However, restrictive covenants are not favored
            in Pennsylvania and have been historically viewed as
            a trade restraint that prevents a former employee
            from earning a living. See Jacobson & Co. v. Int’l
            Env’t Corp., 427 A.2d 439, 235 A.2d 612 (1967).

Hess v. Gebhard & Co., 808 A.2d 912, 917 (Pa. 2002).

                                     - 16 -
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                             A. Lack of Consideration.

     Initially,   appellants    contend      that   the   restrictive   covenant      was

unenforceable and must be stricken because the covenant was not

supported by adequate consideration.

     Generally, in order to be enforceable under Pennsylvania law, a

restrictive covenant must be ancillary or incidental to the acceptance of

employment, must be supported by adequate consideration, and must be

reasonably    limited   in     terms    of    temporal     and    geographic     scope.

Thermo-Guard, Inc. v. Cochran, 596 A.2d 188 (Pa.Super. 1991).

     For support of their contention that Scott failed to support the

Agreement with adequate consideration, appellants point to George W.

Kistler, Inc. v. O’Brien, 347 A.2d 311 (Pa. 1975). In Kistler, William J.

O’Brien   (“O’Brien”)   was    contacted      by    representatives     of   George   W.

Kistler, Inc. (“Kistler”) in approximately May 1969 concerning his possible

employment with Kistler.         Although the possibility of employment was

discussed, no decision was made at that time. In the late winter or early

spring of 1970, Kistler again contacted O’Brien to discuss employment

possibilities. After a discussion of wages, duties, benefits, and other terms

of employment, the parties agreed that O’Brien would leave his current

position and work for Kistler.         The parties did not discuss a restrictive

covenant.    O’Brien began working for Kistler on May 11, 1970.                       On

approximately his first day of work, O’Brien was asked to sign an

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employment contract which stated that in return for Kistler providing

employment and the sum of $1.00, O’Brien would not compete with Kistler

within 50 miles of Allentown for two years after he left employment with

Kistler. Id. at 313-314.

        Kistler discharged O’Brien on November 16, 1973. O’Brien went into

business for himself selling fire extinguishers. This activity competed with

Kistler to some extent. Kistler commenced an action in equity in the Court

of Common Pleas of Lehigh County (“Chancellor”) which enjoined O’Brien

from engaging in selling or servicing fire equipment within a 50-mile radius

of Allentown.    The Chancellor determined that there was no oral contract

between the parties, that the written contract was the sole agreement

between the parties, and that the employment itself was consideration for

the restrictive covenant.    O’Brien appealed to the Pennsylvania Supreme

Court.    Id.   After reviewing the record, the Pennsylvania Supreme Court

determined that a final and binding oral contract of employment existed

prior to the signing of the employment agreement because all aspects of the

employment agreement were agreed upon orally such that there was no

consideration to support the restrictive covenant. Id. at 314-316.

        Appellants assert that the facts in Kistler are analogous to the facts

here.    Appellants argue that Giacomelli and Scott agreed in April of 2010

that Giacomelli would receive an increase in pay at the start of the

2010-2011 dance year and would have the title of “Artistic Director.” She

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testified that pamphlets and brochures advertising the 2010-2011 season

listed her as artistic director.     (Notes of testimony, 7/22/14 at 38.)

Appellants argue that Scott never told Giacomelli at that time that she would

have to sign the Agreement and that she did not learn about the Agreement

until just days before the start of the season when she had given up other

employment. As a result, appellants assert that the restrictive covenant was

not ancillary to employment and that, as in Kistler, Giacomelli and Scott

made a verbal agreement concerning her continued employment at

Buckingham     including   her   wages   and   title   without   mention   of   the

Agreement. Consequently, appellants believe that Giacomelli did not receive

adequate consideration for signing the Agreement.

     Though Kistler is analogous in some respects, it is different in others.

For instance, the Pennsylvania Supreme Court in Kistler determined that

the oral agreement was a complete and binding contract that covered all

aspects of the employment relationship between O’Brien and Kistler. Here,

while Scott did tell Giacomelli that her rate of pay would increase and that

she would have the title of artistic director, there was no discussion, or at

least none that can be gleaned from the record, concerning either the

duration of her employment or whether in her capacity as artistic director

Giacomelli would be an employee or an independent contractor.               These

terms were not finalized until the parties executed the Agreement. Further,

in Kistler, there was no evidence that the parties understood that O’Brien

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would not become an employee until he signed the restrictive covenant.

Here, Giacomelli was aware that Scott or Buckingham required other dance

instructors to sign similar agreements.      Furthermore, Scott had in at least

one previous year asked Giacomelli to sign such an agreement. Giacomelli

had declined because she worked at other studios. When she was asked to

sign the Agreement, Giacomelli no longer worked at other studios and would

be working solely for Scott. The court must determine whether the parties

intended to form a binding contract in the spring of 2010. This Court agrees

with the trial court that the Agreement was ancillary to Giacomelli’s

employment.

               B. Business Interests and Geographic Area.

      Next, appellants contend that the restrictive covenant was not

reasonably limited in geographic scope and was not narrowly tailored to

protect a legitimate business interest.

      In weighing the interests of the employer and the employee in terms

of a restrictive covenant, a court must determine whether the covenant was

reasonably necessary for the protection of the employer and whether the

temporal and geographical restrictions imposed on the employee are

reasonably limited.    Wellspan Health v. Bayliss, 869 A.2d 990, 999

(Pa.Super. 2005).

      The trial court found that Scott had protectable, legitimate business

interests with respect to her customer and client base at Buckingham and

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with her acquired goodwill. Giacomelli argues that because Scott admitted

that she did not have a specialized form of dance instruction and did not

provide training to Giacomelli, there is not a legitimate business interest to

protect through a restrictive covenant.      Giacomelli really does not address

the trial court’s findings as to the protectable business interest.    Clearly,

Scott’s customer base was a legitimate business interest.

      As to the geographic area, appellants argue that a 25-mile radius is

overly broad and would cause undue hardship to Giacomelli’s right to earn a

living as a dance instructor. The trial court concluded that it could not, as a

matter of law, find that the Agreement was unreasonable as to the

geographic limit. Appellants do not really explain why the 25-mile radius is

too broad other than that there were approximately 142 dance studios

within a 25-mile radius of Buckingham.          The number of dance studios,

though, does not really seem to have an effect on the alleged impact of

Giacomelli operating a competing dance studio because the impact on Scott

is that Giacomelli took her students or customer base and not that there is

an additional studio in the area. This court finds no error on the part of the

trial court.

                                    C. Duress.

      Appellants next contend that the restrictive covenant was signed under

duress.

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      In Litten v. Jonathan Logan, Inc., 286 A.2d 913 (Pa.Super. 1971),

this court explained the theory of economic duress:

            The important elements in the applicability of the
            doctrine of economic duress or business compulsion
            are that (1) there exists such pressure of
            circumstances which compels the injured party to
            involuntarily or against his will execute an
            agreement which results in economic loss, and
            (2) the injured party does not have an immediate
            legal remedy.

Id. at 917 (emphasis in original).

      The party seeking to avoid a contractual obligation on the basis of

duress bears the burden of proof.        Beato v. DiPilato, 106 A.2d 641

(Pa.Super. 1954).

      Appellants argue that because Giacomelli had given up all of her

classes at other dance studios prior to the 2010-2011 season and by late

August all of the studios would have had all of their dance teachers in place,

she had no alternative but to sign the Agreement as other opportunities

were not available.

      The trial court determined that it was clear that Giacomelli could have

obtained alternative employment without unreasonable difficulty because

she was a well-qualified, well-established, and well-trained dance instructor.

The trial court further determined that Scott did not place Giacomelli in a

position which eliminated Giacomelli’s free will.

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J. S11013/16

      This court agrees with the trial court.    Giacomelli did not attempt to

obtain employment elsewhere. Nothing in the record establishes that Scott

placed Giacomelli in a position to act involuntarily to sign the contract.

      Further, if a party ratifies the contract, that party loses the power to

avoid a contract because of duress.        National Auto Brokers Corp. v.

Aleeda Development Corp., 364 A.2d 470, 476 (Pa.Super. 1976).

“Ratification results if a party who executed a contract under duress accepts

the benefits flowing from it, or remains silent, or acquiesces in the contract

for any considerable length of time after the party has the opportunity to

annul or avoid the contract.” Id. Here, Giacomelli received payment under

the terms of the Agreement for her teaching duties for the duration of the

2010-2011 dance/school year. It was only after Scott sought to enforce the

terms of the Agreement that Giacomelli claimed duress. The trial court did

not err when it determined that the theory of duress did not apply.

                           D. Competition Team.

      Appellants next contend that the restrictive contract is inapplicable

because it does not apply to the competition team as the Agreement only

mentions Buckingham.

      Although the trial court did not address this issue in its original

opinion, it did in the opinion issued in response to Giacomelli’s statement of

matters complained of on appeal. The trial court reasoned:

            At trial, Ms. Giacomelli testified that she believed she
            was signing the Non-Compete as to [Buckingham],

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J. S11013/16

          but not signing as to the Competition Team. . . . We
          did not find this testimony credible. While within the
          language of the Agreement[,] the parties were
          referred to as “BDS” and “Ms. Giacomelli”, the record
          supports the conclusion that the Competition Team
          was a facet of [Buckingham]. The record is clear
          that Ms. Giacomelli established the Competition
          Team and was solely responsible for management
          and control as its director. . . . However, the record
          is also clear that the Competition team was
          established under the imprimatur of Ms. Scott and
          [Buckingham]. . . .     As is true of many business
          relationships, the fact that an individual is cloaked in
          a role of significant authority does not necessarily
          translate into tacit permission from the business
          owner for the individual to carve out a division of the
          business and take it with her when she changes
          employment. It is an employer’s right to protect its
          interests in customer relationships that have been
          acquired through the efforts of the employee by way
          of    a   reasonably     crafted   covenant     not   to
          compete. . . .

                Our finding that Ms. Giacomelli’s testimony
          that she was not aware that the Non-Compete
          related to the Competition Team as well as her
          regular role at [Buckingham] was not credible is
          buttressed by the language of the Agreement.
          Paragraph 2 of the Non-Compete reads, verbatim:

          2.    Studio shall provide the premises upon
                which the instructors or lessons are
                provided by the instructor to the
                students, at no charge to the instructor,
                with the exception of group and
                solo/private instructions/lessons for the
                competition team members/students.

                 A reasonable interpretation of this language
          clearly indicates that as a signatory to the
          Non-Compete, Ms. Giacomelli was on notice that the
          Competition Team was within the ambit of the
          Agreement.

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J. S11013/16

            ....

                  It was clear to this Court, and it should have
            been readily apparent to Ms. Giacomelli, that the
            exception to the “no charge” policy in paragraph two
            (2) of the Non-Compete relates to the Competition
            Team, which indicates that the Agreement is
            applicable to the Competition Team. We find this
            matter complained of within [Giacomelli’s] appeal,
            then to be wholly without merit.

Rule 1925 opinion, 9/3/15 at 4-5 (citations omitted).

      This court agrees with the trial court’s reasoning.     Further, although

Giacomelli operated the competition team, Scott was a signer on the

competition team bank account, the team had the name “Buckingham”, and

operated from Buckingham’s location.

                        E. Duration of Agreement.

      Appellants next contend that, under the plain language of the

Agreement, the Agreement would expire one year from the date it was

signed. Giacomelli signed the Agreement on August 29, 2010. She opened

for business with Libra on August 1, 2011 and held summer camps later in

August 2011.     Libra received $3,011.25 in fees for the summer camps.

Giacomelli argues that that amount should be the limitation of her damages.

      The trial court notes that Giacomelli failed to raise this issue before the

trial court, and consequently, it is waived. A review of the record confirms

the trial court’s observation.   An issue that is not raised in the trial court

cannot be raised for the first time on appeal. Pa.R.A.P. 302(a); See In re

F.C. III, 2 A.3d 1201, 1211-1212 (Pa. 2010).

                                     - 25 -
J. S11013/16

      The trial court also points out that even if not waived, this issue has no

merit because the plain language in Paragraph 7 of the Agreement provides

that the restrictions in terms of non-competition continue for a 9-month

term of the Agreement and for one year thereafter.            A review of the

Agreement confirms the trial court’s assessment.

                                 F. Mitchell.

      Appellants next contend that the trial court erred when it allowed

Mitchell to testify to a report that was handwritten over the lunch hour and

offered in response to issues raised on cross-examination. Mitchell prepared

a 2013 report concerning what appellants call a business appraisal of

Buckingham. Then, on April 28, 2014, Mitchell issued a supplemental report

which contained an analysis of the economic damage allegedly suffered by

Scott as a result of Giacomelli’s violation of the Agreement. When Mitchell

testified initially, he did not calculate lost profits but lost revenue.   After

Mitchell heard testimony regarding the markup on costumes and dancewear,

he attempted to make a new calculation regarding lost profits and was

recalled to the stand. Mitchell reduced the amount of damages as a result of

this new calculation. Appellants argue that they suffered prejudice as they

were unable to conduct discovery and prepare rebuttal on the issue of lost

profits when the trial court permitted Mitchell to amend his reports and

attempt to calculate lost profits based upon Scott’s testimony and unverified

information.

                                    - 26 -
J. S11013/16

      The trial court essentially accepted Mitchell’s testimony but then

modified or reduced the amount of damages from the figure calculated by

Mitchell.

      Pa.R.C.P. No. 4003.5 provides in pertinent part:

            [T]he direct testimony of the expert at the trial may
            not be inconsistent with or go beyond the fair scope
            of his or her testimony in the discovery proceedings
            as set forth in the deposition, answer in an
            interrogatory, separate report, or supplement
            thereto. However, the expert shall not be prevented
            from testifying as to facts or opinions on matters on
            which the expert has not been interrogated in the
            discovery proceedings.

Pa.R.C.P. No. 4003.5.

      Courts have implemented the rule through an inquiry as to whether a

discrepancy between the information contained in the expert report and the

expert’s testimony would prevent the other party from preparing a

meaningful response or would mislead the other party. See Chanthavong

v. Tran, 682 A.2d 334, 340 (Pa.Super. 1996).

      Here, Mitchell revised his assessment based on testimony provided by

both Scott and Giacomelli. Mitchell revised his assessment to the benefit of

Giacomelli. It is difficult to see how Giacomelli either was prevented from

responding to Mitchell’s testimony or was misled in some way by it.     This

court finds no error here.

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                               G. Damages.

      Appellants next contend that Scott failed to meet her burden to prove

damages because the proper measure of damages was lost profits and not

what revenue Scott would have received if Giacomelli had remained

employed at Buckingham.       Appellants argue that Mitchell’s reports and

testimony are based on “nothing more than . . . speculation.” (Appellants’

brief at 31.) Appellants also argue that Mitchell was not given a separate

revenue breakdown for the Competition Team and therefore could not

account for which fees were generated by the Team, which was important

because those fees went to Giacomelli. Mitchell further did not account for

normal attrition and assumed that all of the students who left Buckingham

would return to Buckingham if they did not go to Libra.        Further, some

students may have decided to leave Buckingham because Giacomelli was no

longer there.   Appellants also assert that Scott’s testimony concerning the

markup on dancewear and other clothing items was unclear at best.

      While the measure of damages was to some extent speculative,

damages arising from the violation of a covenant not to compete can be

difficult to calculate accurately. Worldwide Auditing Services v. Richter,

587 A.2d 772, 777-778 (Pa.Super. 1991).           The accurate measure of

damages would be the amount of profits lost because of the violation of the

restrictive covenant. Mitchell and the trial court attempted to determine this

amount through the revenue lost due to the number of students that left

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Buckingham for Libra. The trial court made its determination based on the

testimony of Scott, Mitchell, and Giacomelli as well as its credibility

determinations of that testimony. This court finds no error.

                                 H. Libra.

     Finally, appellants contend that the judgment is improper as to Libra

because Libra was not a party to the Agreement and the customer list which

Giacomelli/Libra obtained was the list of the members of the Competition

Team for which Giacomelli maintained the records.      Appellants also assert

that the members of the team could be easily ascertained by anybody

observing the competition.

     The trial court addressed this issue:

           To suggest, as have Appellants, that [Libra] was not
           party to the Agreement and that therefore judgment
           should not have been entered against [Libra] would
           simply allow Ms. Giacomelli to evade the duty
           imposed upon her in the restrictive covenant, which
           reads in relevant part, at paragraph 7b, as follows:

           . . . Instructor shall not . . . engage in the business
           of the teaching or instruction in any form of dance or
           exercise, whether as an instructor, as a sole
           proprietor,      partner,      shareholder,     officer,
           director, employee, agent or other representative
           of any entity which engages in such business.
           (emphasis added [by trial court]).

           It is disingenuous to suggest that [Libra] was not a
           party to the Agreement and that therefore judgment
           as to [Libra] was entered in error. The record is
           abundantly clear that Ms. Giacomelli established
           [Libra] in May of 2011, that [Libra] is the owner and
           operator of her dance studio, and that Ms. Giacomelli
           is the sole member and Chief Operating Officer of

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           [Libra]. . . . Ms. Giacomelli used the address of her
           personal residence when she executed the Operating
           Agreement for [Libra]. . . . Ms. Giacomelli’s personal
           e-mail address is libradancecompany@yahoo.com.
           The above facts are portions of the substantial
           evidence presented at trial indicating that [Libra] is
           the legal entity associated with the dance studio
           business operated by Ms. Giacomelli in violation of
           the restrictive covenant.

           It is clear, then, that this matter complained of on
           appeal is without merit.

Rule 1925 opinion, 9/3/15 at 7-8 (citations omitted).

     This court agrees with the trial court.

     Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 7/27/2016

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