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MULLALY v. CARLISLE CHEM. WORKS

October 16, 1959

Arthur B. MULLALY, Plaintiff,
v.
CARLISLE CHEMICAL WORKS, INC., Defendant



The opinion of the court was delivered by: WORTENDYKE

This case comes to this Court by removal from the Law Division of the Superior Court of New Jersey by reason of diversity of citizenship between the parties and the involvement of the requisite jurisdictional minimum amount.

In his amended complaint filed in this Court plaintiff, a former employee of defendant, seeks damages for alleged breach of an oral agreement to include him as a beneficiary of a retirement trust plan which he claims had been extended to employees of Advance Solvents & Chemical Corporation (Advance Solvents), a corporation of New York, which the defendant was in process of absorbing and of which plaintiff was president at the time of defendant's acquisition of its assets and stock. The matter is presently before the Court on a motion of plaintiff for summary judgment upon defendant's amended counterclaim.

 The amended counterclaim prays for a declaratory judgment that the alleged threatened entry of Metalead Products Corporation (Metalead), a corporation of the State of California, into the manufacture of a product asserted to be competitive with that made and sold by defendant, would constitute a breach of a restrictive covenant made by the plaintiff in his written employment contract with defendant, dated March 21, 1955. Plaintiff is a director of Metalead, and he and members of his immediate family jointly own stock control in Metalead. *fn1"

 In his reply plaintiff affirmatively pleads that the restrictive covenant relied upon by the counterclaimant (1) is unenforceable because unlimited as to time and territory, (2) imposes undue hardship upon the plaintiff, and (3) is void as against the public policy of the State (either New York or Ohio) in which the employment contract is alleged to have been made.

 In his motion for summary judgment, plaintiff invokes Rule 56(b) F.R.Civ.P., 28 U.S.C.A., and seeks dismissal of the amended counterclaim and an adjudication declaring that the restrictive covenant comprising paragraph 7 of the employment agreement is void and unenforceable. A true copy of the employment agreement is annexed to the amended counterclaim. Paragraph 7 thereof provides:

 '7. Mullaly agrees that, for a period of five years commencing with the date upon which Carlisle shall acquire all the Capital Stock of said Advance Solvents & Chemical Corporation, whether before or after the termination of his employment hereunder, he will not, directly or indirectly, engage in a line of business, or engage to work for any individual, firm or corporation engaged in a line of business, which is competitive with that carried on by Carlisle or Advance Solvents.'

 It is elementary that a party seeking a summary judgment must discharge the burden of convincing the Court that no genuine issue as to any material fact exists between the parties in order to be entitled to the granting of such a motion under Rule 56. Fairbanks, Morse & Co. v. Consolidated Fisheries Co., 3 Cir., 1951, 190 F.2d 817; Toebelman v. Missouri-Kansas Pipe Line Co., 3 Cir., 1942, 130 F.2d 1016. Any doubt as to the existence of a genuine issue of fact must be resolved against the moving party. We look to the pleadings, depositions, answers to interrogatories and affidavits to determine whether such genuine issues of fact exist. We are not called upon, or even permitted, on a motion such as this, to resolve any issue of fact.

 Plaintiff admits the execution and provisions of the employment agreement of March 21, 1955. He also admits that a justiciable controversy exists between the parties respecting the effect of the language of paragraph 7 of the employment agreement upon the right of Metalead to produce and sell metallic soap paint dryers. *fn2"

 There are, however, certain factual questions which surround the principal issue raised upon the restrictive covenant in the employment agreement:

 (1) Where was the employment agreement of March 21, 1955 made?

 (2) Where was the agreement to be performed?

 (3) What was the intention of the parties respecting the law which should determine the construction and validity of the contract?

 (4) Has the covenant greater amplitude than reasonably necessary to afford fair ...


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