| Riedman Corp. v Gallager |
| 2008 NY Slip Op 00920 [48 AD3d 1188] |
| February 1, 2008 |
| Appellate Division, Fourth Department |
| Riedman Corporation et al., Appellants, v Robert D. Gallager et al.,Respondents. |
—[*1] Sugarman Law Firm, LLP, Syracuse (Timothy J. Perry of counsel), fordefendants-respondents.
Appeal from an order of the Supreme Court, Onondaga County (James P. Murphy, J.),entered October 4, 2006 in a breach of contract action. The order granted defendants' motion for,inter alia, summary judgment dismissing the amended complaint.
It is hereby ordered that the order so appealed from is unanimously affirmed without costs.
Memorandum: Plaintiffs commenced this action seeking damages arising from the allegedbreach of the employment agreement between Robert D. Gallager (defendant) and plaintiffRiedman Corporation (Riedman) and the agreement between defendant, Riedman, anddefendant's former employer, Haylor, Freyer & Coon (HFC) (HFC agreement). The employmentagreement provided that defendant would use confidential customer information only infurtherance of his employment with Riedman and that he would refrain from soliciting oraccepting insurance or bond business from any Riedman customers for two years after hisemployment was terminated. Pursuant to the HFC agreement, Riedman paid HFC $250,000 torelease defendant from his prior employment agreement with HFC and allegedly purchasedcertain of defendant's accounts from HFC. Defendant continued to serve any customers whochose to follow him from HFC to Riedman and, through his own efforts, he also acquired newcustomers while employed by Riedman. When Riedman sold all of its assets to plaintiff Brown& Brown, Inc. (Brown & Brown), defendant declined the offer of a position with Brown &Brown and accepted a position with defendant Hatch-Leonard/Markin Shaw, Inc.(Hatch-Leonard). Defendant began to transfer the accounts in his business book from Riedman toHatch-Leonard, including accounts that were allegedly purchased by Riedman pursuant to theHFC agreement and accounts that defendant acquired during his employment with Riedman.Defendants moved for, inter alia, summary judgment dismissing the amended complaint, andSupreme Court granted the motion. We affirm.
Generally, an employment agreement not to compete will be enforced to the extent that "it isreasonable in time and area, necessary to protect the employer's legitimate interests, not [*2]harmful to the general public and not unreasonably burdensome tothe employee" (Reed, Roberts Assoc. v Strauman, 40 NY2d 303, 307 [1976], reargdenied 40 NY2d 918 [1976]; see BDO Seidman v Hirshberg, 93 NY2d 382, 389[1999]). The protection of an employer's legitimate interests is limited to the protection of anemployer's trade secrets or confidential customer lists, or protection from an employee whoseservices are unique or extraordinary (see BDO Seidman, 93 NY2d at 389; Reed,Roberts Assoc., 40 NY2d at 308; Independent Health Assn. v Murray, 233 AD2d883 [1996]).
Here, although defendant was knowledgeable and experienced, his services as an insuranceagent were not unique or extraordinary (see Brewster-Allen-Wichert, Inc. v Kiepler, 131AD2d 620 [1987]; Reidman Agency v Musnicki, 79 AD2d 1094 [1981]; see alsoBriskin v All Seasons Servs., 206 AD2d 906 [1994]), and we thus conclude that defendantsestablished their entitlement to judgment as a matter of law. In opposition to the motion,plaintiffs failed to raise a triable issue of fact whether defendant used any confidentialinformation or trade secrets in his alleged violation of the employment agreement. Defendanttestified at his deposition that, upon leaving Riedman, he did not take with him any materials,records or confidential information relating to his work at Riedman. Defendant further testifiedthat he located customers through public sources such as telephone books, trade publications,referrals and social contacts. Customer lists that are readily discoverable through public sourcesare not considered to be confidential (see Reed, Roberts Assoc., 40 NY2d at 308; seealso Cool Insuring Agency v Rogers, 125 AD2d 758, 759 [1986], lv dismissed 69NY2d 1037 [1987]).
Further, plaintiffs have no legitimate interest in preventing defendant from competing withthem because they did not purchase the goodwill of either HFC or defendant pursuant to the HFCagreement and they did not subsidize or otherwise financially support the goodwill that defendantcreated with his customers. Neither the HFC agreement nor any of the documents relating to itrefers to the purchase of assets from HFC, such as customer accounts, customer lists or goodwill.Where, as here, a written agreement is unambiguous on its face, it should be interpreted inaccordance with the plain meaning of its terms (see Greenfield v Philles Records, 98NY2d 562, 569 [2002]). Although the intended transfer of goodwill may be established bycircumstances surrounding the sale, such as the purchase price or the inclusion of expressnoncompete covenants (see Mohawk Maintenance Co. v Kessler, 52 NY2d 276, 286-287[1981]), plaintiffs have not presented any evidence of such circumstances in this case. Withrespect to defendant's own good will, plaintiffs failed to contradict the testimony of defendantthat he created and maintained goodwill with his customers through his independent efforts,without suggestion or instruction from Riedman. "[I]t would be unreasonable to extend thecovenant to personal clients of defendant who came to the firm solely to avail themselves of hisservices and only as a result of his own independent recruitment efforts, which [plaintiffs] neithersubsidized nor otherwise financially supported as part of a program of client development.Because the goodwill of those clients was not acquired through the expenditure of [plaintiffs']resources, [plaintiffs have] no legitimate interest in preventing defendant from competing fortheir patronage" (BDO Seidman, 93 NY2d at 393). Present—Gorski, J.P.,Martoche, Centra and Green, JJ.