| Zinter Handling, Inc. v Britton |
| 2007 NY Slip Op 09655 [46 AD3d 998] |
| December 6, 2007 |
| Appellate Division, Third Department |
| Zinter Handling, Inc., Appellant, v Joseph Britton, Also Known asEarl J. Britton, et al., Respondents. |
—[*1] McNamee, Lochner, Titus & Williams, P.C., Albany (Scott C. Paton of counsel), forrespondents.
Mugglin, J. Appeal from an order of the Supreme Court (Nolan, Jr., J.), entered February 6,2007 in Saratoga County, which granted defendants' motion for summary judgment dismissingthe complaint.
Defendants were employed as salespeople by plaintiff, and each signed a covenant not tocompete in the materials handling business upon leaving employment with plaintiff for a periodof two years within a radius of 180 miles from plaintiff's principal place of business in the City ofSaratoga Springs, Saratoga County. The covenants, among other things, prohibited (1) solicitingor accepting business from any past or present customer of plaintiff, (2) advising any present orfuture customer of plaintiff not to do business with plaintiff, (3) soliciting or encouraging anyemployee of plaintiff to terminate employment with plaintiff, (4) disclosing any financial or otherconfidential information concerning plaintiff acquired while in its employ, and (5) competingdirectly or indirectly in any business similar to the business conducted by plaintiff. In addition,the covenants provided that in the event of a breach before the expiration of two years, thetwo-year period would be extended by the length of the breach.
Defendant Joseph Britton resigned from plaintiff on July 23, 2004 and formed NorthernIndustrial Supply, LLC by appropriate filings with the Secretary of State in October 2005, six[*2]days after his brother, defendant John Britton, resigned fromhis position with plaintiff. Defendants then commenced litigation against their former employerseeking a judicial declaration that the restrictive covenants were invalid and void. When SupremeCourt denied their motion for a preliminary injunction, all parties stipulated to discontinuance,without prejudice. Thereafter, in July 2006, plaintiff commenced this action seeking injunctiverelief against defendants, a declaration as to the continued validity of the restrictive covenantsand monetary damages for the alleged breach of the covenants by defendants. Following joinderof issue and during the discovery process, defendants moved for summary judgment dismissingthe complaint asserting that as to Joseph Britton, the covenant had expired, and that as to bothdefendants, the covenant was unenforceable as overly broad. Supreme Court granted the motionand plaintiff appeals, asserting that (1) the doctrine of collateral estoppel bars defendants fromcontesting the enforceability of the noncompete covenant, (2) issues remain as to whether JosephBritton breached the covenants within two years of leaving employment, (3) summary judgmentwas inappropriate as discovery is not complete, and (4) the restrictive covenants are valid andenforceable. We reject each argument and affirm.
"Collateral estoppel, or issue preclusion, 'precludes a party from relitigating in a subsequentaction or proceeding an issue clearly raised in a prior action or proceeding and decided againstthat party . . . , whether or not the tribunals or causes of action are the same' "(Parker v Blauvelt Volunteer Fire Co., 93 NY2d 343, 349 [1999], quoting Ryan vNew York Tel. Co., 62 NY2d 494, 500 [1984]). Here, plaintiff asserts that defendants' failedattempt to obtain an injunction against enforcement of the covenant in the prior litigationcollaterally estops defendants from now contesting the enforceability of the covenant. Wedisagree. Supreme Court's denial of defendants' request for a preliminary injunction waspremised on its conclusion that defendants' submissions failed to adequately establish the threeelements necessary for the issuance of a preliminary injunction (see Village of Angelica v Voith, 28AD3d 1193, 1194 [2006]). Since the issue of enforceability of the covenant was notspecifically decided by Supreme Court in conjunction with the denial of the preliminaryinjunction, the doctrine of collateral estoppel has no application (see Matter of Halyalkar vBoard of Regents of State of N.Y., 72 NY2d 261, 268 [1988]).
Next, we conclude that Supreme Court correctly determined that with respect to JosephBritton, the two-year noncompete covenant had expired. His evidentiary submissions wereadequate to shift the burden of coming forward with competent admissible evidence to plaintiffto create a genuine triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324[1986]). Plaintiff's president, in his affidavit, points to the incorporation of a business by JosephBritton in October 2005, and claims that Joseph Britton encouraged John Britton to leave hissales position with plaintiff and further claims that plaintiff had been informed by along-standing customer that it would no longer use plaintiff's services at the suggestion andurging of defendants. Plaintiff, however, offered no competent admissible evidence in support ofthe second and third allegations, and incorporation, without more, is not enough to constitute aviolation of the covenant. Thus, summary judgment with respect to this issue was appropriate.
Next, although determination of a summary judgment motion may be withheld wherediscovery is incomplete (see CPLR 3212 [f]), there must be some evidentiary showingsuggesting that completion of discovery will yield material and relevant evidence (see Lambert v Bracco, 18 AD3d619, 620 [2005]). Here, not only does it appear that plaintiff's argument is based onconjecture and speculation, the record reveals that plaintiff had other sources from which toobtain the evidence that it now claims could be obtained through deposition of defendants. [*3]Accordingly, we are unconvinced that the need for additionaldiscovery precludes a decision on defendants' motion for summary judgment.
Finally, we conclude that plaintiff's noncompete covenant is overly broad and, thus,unenforceable against defendants. "Covenants not to compete will be enforced if reasonablylimited as to time, geographic area and scope, are necessary to protect the employer's interests,not harmful to the public, and not unduly burdensome" (Battenkill Veterinary Equine v Cangelosi, 1 AD3d 856, 857 [2003][citations omitted]). Covenants not to compete, such as at issue here, are legally permissible inorder to protect the employer from unfair competition from its former employees (see Scott, Stackrow & Co., C.P.A.'s, P.C. vSkavina, 9 AD3d 805, 806 [2004], lv denied 3 NY3d 612 [2004]). Here, therecord fails to reveal that the services provided by defendants to plaintiff were in any way uniqueor extraordinary or that defendants were privy to plaintiff's confidential customer lists warrantingthe total restraint on competition found within the covenant under consideration (see BDOSeidman v Hirshberg, 93 NY2d 382, 389 [1999]; Battenkill Veterinary Equine vCangelosi, 1 AD3d at 858). Moreover, since plaintiff's covenant not to compete seeks to bardefendants from soliciting customers with whom it never had an established relationship andclients recruited through defendants' independent efforts, the covenant not to compete ismanifestly overbroad (see Scott, Stackrow & Co., C.P.A.'s, P.C. v Skavina, 9 AD3d at806). Further, we reject plaintiff's claim that even though the restrictive covenant may be overlybroad in certain respects, it nevertheless should be partially enforced to protect plaintiff'slegitimate interests (see BDO Seidman v Hirshberg, 93 NY2d at 394). Since the covenantnot to compete has now expired as to both defendants, we perceive no legitimate basis uponwhich to consider partial enforcement.
Cardona, P.J., Rose, Lahtinen and Kane, JJ., concur. Ordered that the order is affirmed, withcosts.