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HomeMy WebLinkAbout98-5103 civilINFORMATION SERVICES GROUP,' INC., a Pennsylvania ' Corporation, ' Plaintiff ' · V · · · JOSEPH D. HOWE, ' an individual, and ' DATAQUEST, INC., a ' Pennsylvania Corp., ' Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 98-5103 EQUITY TERM DEFE A/~TS ' MOTION FOR SUM/~RY JUDGMENT BEFORE HOFFER P.J. OLER AND GUIDO JJ. ORDER OF COURT ~/~ day of AUGUST, 1999, AND NOW, this Defendants' Motion for Summary Judgment is DENIED. By the Edward E. Gui do, J · David T. Kluz, Esquire For the Plaintiff Stephen L. Grose, Esquire For the Defendants .sld INFORMATION SERVICES GROUP,- IN THE COURT OF COMMON PLEAS INC., a Pennsylvania · OF CUMBERLAND COUNTY, Corporation, · PENNSYLVANIA Plaintiff · V.' JOSEPH D. HOWE, an individual, and DATAQUEST, INC., a Pennsylvania Corp., Defendants · NO. 98-5103 EQUITY TERM : · DEFENDANTS' MOTION FOR SUMMARY JUDGMENT BEFORE HQFFER, P,J., 0LER AND GUIDO, JJ. OPINION AND ORDER OF COURT On September 2, 1998 Plaintiff instituted this action by filing a complaint in equity against the Defendants. The action is based upon an alleged breach of the terms of a covenant not to compete contained in an employment contract between Plaintiff and Defendant Howe. The Complaint seeks to enjoin Defendant Howe from working on a certain project for Defendant DataQuest.~ It also seeks compensatory and punitive damages against both Defendants for alleged ~ Plaintiff sought a preliminary injunction against Defendant Howe. After a hearing we granted a limited injunction, but we refused to prevent Defendant Howe's employment on the project. We held, inter alia, that any harm suffered by Plaintiff could be compensated by monetary damages. Since the non-competition provision of the agreement has long since expired, the issue regarding its specific performance is now moot. 98-5103 EQUITY tortious interference with contractual relations and unfair competition. Currently before us is Defendants' Motion for Summary Judgment. The parties have briefed and argued their respective positions. This matter is now ready for disposition. FACTUAL BACKGROUND On September 25, 1998 a hearing on Plaintiff's request for a preliminary injunction was held before this Court. We made several findings of fact based upon the testimony presented at that hearing. The findings of fact which were contained in our opinion dated October 13, 1998 are relevant to the instant motion- 1) Plaintiff is in the business of locating technical job assignments and providing consulting services in connection with computer programming, software development, data base design and systems analysis. 2) Defendant DataQuest is a competitor of Plaintiff. 3) Defendant Howe was employed by Plaintiff from 1988 through August 5, 1998. In 1995, Defendant went from being a full time salaried employee to being a contract employee. As part of that change in job status, the parties entered into a written employment contract. 4) The contract contained a non-compete provision. 98-5103 EQUITY 5) For purposes of this hearing, the parties have ac~reed that the non-compete provision was supported by adequate consideration. 6) The non-compete provision prohibits Defendant Howe from workinc~ with a competitor in providinc~ services to certain specified clients of Plaintiff for a period of six (6) months after he leaves his employment with Plaintiff. 7) Defendant Howe was an at will employee at all relevant times. 8) While employed by Plaintiff, Defendant Howe gained specific and confidential knowledge regarding Defendant's staffing, employee salaries, rates, profit mar~ins, and retail pricin~ structures. 9) If the Defendant shared the above information with a competitor, the competitor could consistently underbid Plaintiff. 10) Sometime in July 1998, Defendant Howe contacted Defendant DataQuest to inquire if it had any need for his services. He was advised that Defendant DataQuest did not. 11) A few weeks later Defendant DataQuest contacted Defendant Howe to advise him that it did have a position for him. 12) Defendant Howe quit his job with Plaintiff and went to work for Defendant DataQuest on August 5, 1998. 13) Defendant Howe has been assigned to work as a subcontractor for KPMG on a project it was awarded by PennDOT. 14) PennDOT is one of Plaintiff's clients for which Defendant Howe is prohibited from working under the terms of the non-compete provision of the employment contract. 98-5103 EQUITY 15) If Defendant Howe had not left Plaintiff, Plaintiff might have been able to subcontract Defendant Howe to KPMG for the PennDOT job. 16) Defendant Howe is particularly qualified to work on the project. 17) The PennDOT project was awarded to KPMG by PennDOT well before Defendant Howe ceased working for Plaintiff. Defendant had no knowledge of, or input to, KPMG's proposal to PennDOT. Defendant has filed an affidavit from a partner at KPMG to the effect that Defendant Howe would not have been subcontracted to do work on the PennDOT project through Plaintiff DISCUSSION Defendants' Motion for Summary Judgment is based upon .Pa. Rule of Civil Procedure 1035.2 which provides as follows- After the relevant pleadings are closed, but within such time as not to unreasonably delay trial, any party may move for summary judgment in whole or in part as a matter of law (1) whenever there is no genuine issue of any material fact as to a necessary element of the cause of action or defense which could be established by additional discovery or expert report, or 2 The affidavit was attached as Exhibit B to Defendants' Brief in Support of Motion for Summary Judgment. While the Brief would not normally be considered to be part of the record, the exhibits attached thereto are referenced in the Defendants' Motion for Summary Judgment. Therefore, we have considered those exhibits in our disposition of this Motion. 98-5103 EQUITY (2) if, after the completion of discovery relevant to the motion, including the production of expert reports, an adverse party who will bear the burden of proof at trial has failed to produce evidence of facts essential to the cause of action or defense which in a jury trial would require the issues to be submitted to a jury. Defendants' concede in their motion, as they must, that a genuine issue as to liability exists in this case. However, they argue that in light of the affidavit from the KPMG partner, there is no genuine issue of material fact with regard to damages. They further argue that Plaintiff is unable to sustain its burden of proof as to damages. Therefore, they request the entry of summary judgment in their favor. In determining whether to grant a motion for summary judgment we must examine the record in the light most favorable to the non-moving party. Ertel v. Patriot-News ~_Q~., 544 Pa. 93, 674 A.2d 1038 (1996)- City Qf York v. Schaefer Temporary Serv., Inc_., 667 A.2d 495 (Pa. Commw. Ct. 1995). Summary judgment may only be granted in cases that are clear and free from doubt. Hoffman v. Brandywine Hosp., 443 Pa. Super. 245, 661 A.2d 397 (1995) . Furthermore, as the note to Pa. Rule of Civil Procedure 1035.2 points out- 98-5103 EQUITY Oral testimony alone, either through testimonial affidavits or depositions, of the movin~ party or the movin~ party's witnesses, even if uncontradicted, is ~enerally insufficient to establish the absence of a ~enuine issue of material fact.3 Applying the above law to the facts before us, we are satisfied that it would be inappropriate to grant Defendants' motion for summary judgment. Defendants cannot simply rely upon the oral testimony of its witness that KPMG would not have allowed Plaintiff to provide subcontract labor on the PennDOT project. At the prior hearing in this matter Plaintiff presented evidence to the effect that it sustained damages in excess of $100,000 as a result of its inability to supply Defendant Howe, or another of its employees, as a subcontractor on the PennDOT project.4 Since there is a genuine issue of fact as to the existence and amount of damages sustained by Plaintiff, summary 5 judgment is inappropriate. 3 Note to Pa.R.Civ. P. 1035.2 citing Nanty-Glo v. Americ~ surety Co., 309 Pa. 236, 163 A. 523 (1932) and Penn Center HOUSe, Inc. v. Hoffman., 520 Pa. 171, 553 A.2d 900 (1989) . 4 See Plaintiff's Exhibit 4 at the September 25, 1998 proceedings. s See ~lso_Thorsen v, Iron & Glass Bank, 328 Pa. Super. 135, 476 A.2d 928 (1984) which held that if Plaintiff is able to prove a breach of contract, summary judgment should not be granted merely because there are no provable damages. 98-5103 EQUITY In the alternative, the Defendants have requested that we grant partial summary judgment in their favor on the issue of punitive damages. In their brief on this issue, Defendants argue that punitive damages are not recoverable in an equity action. Defendant cites Davis v. First National Bank of Westchester,43 D&C 3d 211 (1984) , for the proposition that a Plaintiff waives his claim to punitive damages by proceeding in equity. This is a blatant misstatement of the law. Defendants' counsel missed, or chose to ignore, numerous subsequent appellate decisions which sanctioned the award of punitive damages in equity cases.6 In Pierce v. _Penman, 357 Pa. Super. 225, 515 A.2d 948 (1986) , Plaintiff brought an equity action seeking to force her physicians to provide her with copies of her medical records. The chancellor directed that the records be turned over to her. In addition, the Plaintiff was awarded compensatory and punitive damages in connection with her ancillary claim for intentional infliction of emotional distress. The Superior Court affirmed the chancellor's award of both compensatory 6 For some unexplained reason, Plaintiff's counsel allowed Defendants' misstatement of law to go unchallenged. He did not even address the issue of punitive damages in his brief. 98-5103 EQUITY and punitive damages. ~ also _Wally v. Iraca, 360 Pa. Super. 436, 520 A.2d 886 (1987) (affirming the chancellor's award of compensatory and punitive damages); Rumbaugh v, Beck, 411 Pa. Super. 220, 601 A.2d 319 (1991) (remanding to chancellor to reassess the appropriateness of punitive damages); and SHV Coal, Inc. v, Continental Grain ~0., 526 Pa. 489, 587 A.2d 702 (1991) (reinstating the chancellor's award of punitive damages). Finally, Defendants argue that the alleged conduct of Defendants, even if proven, cannot support an award of punitive damages. We do not agree. Both Defendants were aware of the non-compete provisions in Defendant Howe's employment contract. Yet, despite those provisions and the Defendants' knowledge of them, they agreed that Defendant Howe would quit his work with Plaintiff and go to work for Defendant DataQuest in direct contravention of the language of the contract. There is certainly a question of fact as to whether such conduct displayed the level of reckless indifference to the interests of Plaintiff necessary to 7 justify an award of punitive damages. 7 $e¢ SHY Coal, In¢, v, Continental Grain Co., supra. 98-5103 EQUITY For the reasons set forth above, we will deny Defendants' request for summary judgment. ORDER OF COURT AND NOW, this 4TM day of AUGUST, 1999, Defendants' Motion for Summary Judgment is DENIED. By the Court, /s/ Edward E. Gui do Edward E. Gui do, J. David T. Kluz, Esquire For the Plaintiff Stephen L. Grose, Esquire For the Defendants :sld