Court Opinion

ID: 6352972
Source: CourtListenerOpinion
Date Created: 2022-06-23 16:11:07.15183+00
Date Added: 2024-06-11T09:13:44.397884
License: Public Domain

J-A06034-22

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

    HOWARD HANNA D/B/A HOWARD                  :   IN THE SUPERIOR COURT OF
    HANNA REAL ESTATE SERVICES                 :        PENNSYLVANIA
                                               :
                       Appellant               :
                                               :
                                               :
                v.                             :
                                               :
                                               :   No. 967 WDA 2021
    MICHAEL HORNUNG, AN                        :
    INDIVIDUAL; JENNIFER CROUSE, AN            :
    INDIVIDUAL; LEAH GEORGE, AN                :
    INDIVIDUAL; COMPASS, INC. F/K/A            :
    URBAN COMPASS, INC., A                     :
    DELAWARE CORPORATION AND                   :
    COMPASS PENNSYLVANIA, LLC, A               :
    DELAWARE LIMITED LIABILITY                 :
    COMPANY                                    :

                 Appeal from the Order Entered August 6, 2021
       In the Court of Common Pleas of Allegheny County Civil Division at
                            No(s): GD 21-001894

BEFORE:      MURRAY, J., SULLIVAN, J., and COLINS, J.*

DISSENTING STATEMENT BY COLINS, J.:                 FILED: JUNE 23, 2022

        Based upon the nature of the non-compete clauses at issue here, I agree

with the learned Majority’s conclusion that this case falls within the capable-

of-repetition mootness exception. But see infra. However, I disagree with

the Majority’s determination that the trial court abused its discretion in finding

that Howard Hanna (“Hanna”) failed to establish that (1) a preliminary

injunction was necessary to prevent immediate and irreparable harm from the

____________________________________________

*   Retired Senior Judge assigned to the Superior Court.
J-A06034-22

alleged breach by Appellees Jennifer Crouse and Leah George of their non-

compete clauses that could not be adequately compensated by money

damages and (2) greater injury would have occurred from denying the

preliminary injunction than from granting it. Therefore, I respectfully dissent.

      I begin my discussion with the well-established precept that this Court

“exercises a highly deferential [abuse of discretion] standard of review with

respect to the grant or denial of a preliminary injunction.”          Pittsburgh

Logistics Sys., Inc. v. Beemac Trucking, LLC, 249 A.3d 918, 923 (Pa.

2021); see also Weeks v. Department of Human Services, 222 A.3d 722,

727 (Pa. 2019).

      [O]n 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
      decree or that the rule of law relied upon was palpably erroneous
      or misapplied will we interfere with the decision of the [trial court].

Summit Towne Centre, Inc. v. Shoe Show of Rocky Mount, Inc., 828

A.2d 995, 1000 (Pa. 2003) (citation omitted; emphasis added).

      The trial court in this matter quite clearly set forth “apparently

reasonable grounds,” supported by the preliminary injunction record, to

bolster the court’s determination that Hanna failed to meet its burden of

proving the first two preliminary injunction requirements. Summit Towne

Centre, 828 A.2d at 1000 (citation omitted).          Moreover, contrary to the

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Majority, I do not believe that the trial court palpably erred when applying the

relevant legal standards.

      The trial court first found that Hanna failed to demonstrate that a

preliminary injunction was necessary to prevent immediate and irreparable

harm that could not be adequately compensated by money damages. See

Pittsburgh Logistics, 249 A.3d at 934 n.7. Hanna attempted to show at the

preliminary injunction hearing that it was harmed when, in the period covered

by the non-compete agreements, Crouse and George listed multiple properties

within a five-mile radius of their prior Hanna offices and that these listings

damaged Hanna’s existing client relationships as well as its goodwill in the

Pittsburgh area.

      However, as the trial court recognized, the only harm that Hanna had

proved it suffered at the injunction hearing was lost commissions on identified

home sales, which “could of course be calculated, and [Hanna] could therefore

be adequately compensated in monetary damages.”            Trial Court Opinion

(“TCO”), 10/25/21, at 4 (unnumbered). The evidence Hanna submitted at the

hearing was confined to commissions on specific properties that Appellees

listed within the five-mile exclusion area during the relevant non-compete

terms.   N.T., 6/3/21, at 57-72; N.T., 6/7/21, at 23-26, 39-49; Hearing

Exhibits 3, 5-6, 8, 12-14. Thus, Hanna’s claimed damages related only to a

limited number of properties and are readily amenable to calculation based

upon Hanna’s commission schedules agreed to between Hanna and Appellees.

See Amended Complaint, 3/23/21, Exhibit B ¶4, Exhibit C ¶4; see also

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Summit, 828 A.2d at 1002-03 (irreparable harm is not shown where records

are kept that allow for quantification of business loss); Greenmoor, Inc. v.

Burchick Construction Co., Inc., 908 A.2d 310, 315 (Pa. Super. 2006)

(monetary loss that is compensable via a breach of contract action and

subsequent money judgment does not constitute irreparable harm).

       Furthermore, the trial court appropriately concluded on the record

before it that Hanna’s claimed harm of a loss of clients was belied by the fact

that Hanna “repeatedly acknowledged that the clients and client loyalty . . .

belonged to [Appellees] as self-employed independent contractors,” not to

Hanna.1 TCO at 4. The evidence at the hearing showed that Hanna not only

acknowledged, but actually promoted to prospective hires, that clients and

client loyalty belong to the agent rather than Hanna. N.T., 6/17/21, at 118-

21; Hearing Exhibits G-I (recruiting material stating that “[m]aintaining your

clients” is a benefit of becoming a Hanna agent and that Hanna agents are

permitted “[m]ore time focusing on their clients and growing their business”).
____________________________________________

1 Hanna challenges this finding on appeal, arguing that the Sales Associate
Agreements and Pennsylvania law both provide that listings are the property
of real estate broker rather than agents.          See 63 P.S. §§ 455.606,
455.606a(b)(1); Amended Complaint, 3/23/21, Exhibit B ¶8, Exhibit C ¶8.
Crucially, however, the question is not the ownership of the property listings—
there is no allegation that Appellees violated state law by transferring listings
without the clients’ consent—but instead whether a departing Hanna agent
can continue their relationship with their clients at a new brokerage. In any
event, the sole question before this Court is whether there were any
“apparently reasonable grounds” for the trial court’s finding that client loyalty
belonged to Hanna’s agents. Summit Towne Centre, 828 A.2d at 1000
(citation omitted). Here, the record supported the trial court’s finding as to
client loyalty.

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As the trial court explained in its ruling, Hanna did not present any evidence

that it had a pre-existing relationship with Appellees’ clients whose sales

allegedly violated the restrictive covenants. TCO at 4. Moreover, Hanna’s

claims that Appellees’ actions harmed its overall goodwill and reputation in

the Pittsburgh market were based upon vague, speculative testimony and

were properly rejected by the trial court. See Summit, 828 A.2d at 1001-

02; Greenmoor, 908 A.2d at 315 (preliminary injunction must be based upon

“concrete evidence” of irreparable harm to movant).

      The Majority concludes that Hanna should not be penalized based upon

the fact that it only showed “limited damages” but instead that irreparable

harm existed as a result of “the threat of the unbridled continuation of the

violation and resultant incalculable damage to [Hanna’s] business.” Majority

Opinion at 10-11 (quoting John G. Bryant Co., Inc. v. Sling Testing &

Repair, Inc., 369 A.2d 1164, 1167 (Pa. 1977)). However, what the Majority

overlooks is that Hanna was not only required to allege ongoing, incalculable

harm from the violation of the non-compete agreements, but it was also

required to prove that such harm would occur. See West Penn Specialty

MSO, Inc. v. Nolan, 737 A.2d 295, 299 (Pa. Super. 1999) (“[G]rounds for

an injunction are established ‘where the plaintiff’s proof of injury, although

small in monetary terms, foreshadows the disruption of established business

relations which would result in incalculable damage should the competition

continue in violation of the [restrictive] covenant.’”) (citation omitted). The

trial court reasonably concluded that Hanna did not make such a showing. As

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the trial court explained, not only are the claimed damages easily calculable

from a discrete number of listings or sales within the designated five-mile area

over a finite period of six or eight months, but the record also supported the

conclusion that Appellees’ actions would not lead to an ongoing interference

with Hanna’s customer base as Hanna’s policy was that client loyalty belonged

to the agents, not Hanna. Cf. Rollins Protective Services Co. v. Shaffer,

557 A.2d 413, 414-15 (Pa. Super. 1989) (to show irreparable harm in order

to obtain a preliminary injunction to enforce a non-compete clause, the

movant must show unwarranted interference with customer relationships, use

of confidential information, or the like).

       The trial court’s well-reasoned finding that Hanna did not demonstrate

irreparable harm is alone sufficient grounds for this Court to affirm the denial

of the preliminary injunction. See Pittsburgh Logistics, 249 A.3d at 934

(appellate court shall affirm denial of preliminary injunction when it finds that

trial court properly determined that any one of the six elements of standard

was not met). Nevertheless, I would also hold that the trial court correctly

ruled that Hanna did not prove the second element of the preliminary

injunction standard, that greater injury would result from refusing to grant

the injunction than from granting it. Pittsburgh Logistics, 249 A.3d at 934

n.7.

       The Majority determined that the trial court improperly balanced the

large economic disparity between Hanna, a “well-established” real estate

brokerage, against Appellees’ interest in earning a living in their chosen trade

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and, in fact, the non-compete clauses only minimally affected Appellees from

pursuing their vocation. Majority Opinion at 12-14 (quoting TCO at 5); see

also AmQuip Crane Rental, LLC v. Crane & Rig Services, LLC, 199 A.3d

904, 918 (Pa. Super. 2018) (noting that courts must avoid comparing the

financial positions of a large employer to an individual employee who violates

a non-compete clause as doing so would always weigh in favor of the

employee whose livelihood would be affected by the enforcement of the

restrictive covenant).

      However, I read the trial court’s ruling differently.      The trial court

focused on the fact that the only proven harm to Hanna from the denial of the

injunction would be lost commissions on specific sales during the non-compete

clause terms and it would not suffer incalculable harm on future sales in light

of the fact that client loyalty belonged to Appellees. TCO at 4-5. As the trial

court noted, Hanna would still be able to recover the lost commissions as

damages if it ultimately prevailed in this litigation. Id. at 5. On the other

hand, the trial court found, based upon ample testimony from the preliminary

injunction hearing, that a much more pervasive harm would befall Appellees

if they were prohibited from working as agents in the geographic area in which

they focused their careers. Id. at 5; see also N.T., 6/3/21, at 93-96; N.T.,

6/17/21, at 20-21. The trial court’s balancing of harm thus was not based

simply upon a comparison of the parties’ relative financial positions but instead

was grounded on the fact that, under the unique facts of this case, Hanna

simply had not proven any harm aside from compensable monetary damages.

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      I additionally note one other point of disagreement with the Majority.

The trial court here only ruled on the first two of the six elements of the

preliminary injunction standard. After finding that the trial court abused its

discretion as to the first two elements, the Majority would remand to allow the

trial court to address the remaining four prerequisites for a preliminary

injunction. Majority Opinion at 14.

      While I agree with the Majority that we are permitted to address the

issues raised by Hanna in the current appeal via the capable-of-repetition

exception to the mootness doctrine, I do not believe that it would be a prudent

use of judicial resources to stretch this exception farther to permit an

additional round of litigation on a preliminary injunction to enforce the non-

compete clauses that have long since lapsed.       Therefore, even assuming I

were to agree with the Majority’s analysis of the issues before us in this

appeal, I would remand to the trial court solely for further litigation regarding

the merits of the non-compete clauses.

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