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Cost Reduction Solutions v. Durkin Group

August 22, 2008


On appeal from the Superior Court of New Jersey, Chancery Division, Morris County, C-183-05.

Per curiam.


Submitted August 13, 2008

Before Judges R. B. Coleman and Sabatino.

Plaintiffs Cost Reduction Solutions (CRS) and Michael Albanese (collectively "plaintiffs") appeal from a July 27, 2007 order of the Superior Court, Chancery Division, Morris County, granting summary judgment in favor of defendants Durkin Group, LLC (DG), Kevin Durkin and Richard F. Ruggeri (collectively "defendants"). After reviewing the record in light of the contentions advanced on appeal, we affirm.

In October 2005, plaintiffs filed a Verified Complaint and an accompanying Order to Show Cause, alleging that Ruggeri violated post-employment limitations of a non-compete employment agreement and that Durkin conspired and cooperated with Ruggeri with full knowledge of the agreement between CRS and Ruggeri. In count two of the Verified Complaint, plaintiff alleged that Ruggeri breached a duty of loyalty he owed to CRS not to divulge its confidential information to competitors or other clients either during or after his employment.

On December 29, 2005, following the return date of the Order to Show Cause, the parties entered into a consent order that required Ruggeri to refrain from disclosing to any third party the identity of any of CRS's clients. That order was entered without acknowledgement or stipulation that Ruggeri knew the customers of CRS or that he ever received, reviewed or was advised of any customer list. Thereafter, the parties engaged in discovery and on June 8, 2007, defendants moved for summary judgment. The court heard that motion on June 20, 2007, and entered an order granting summary judgment in favor of defendants and dismissing the complaint with prejudice. On September 4, 2007, plaintiffs filed their Notice of Appeal.

The relevant facts are not in dispute. Durkin is the managing member of DG, a limited liability corporation that provides professional services such as accounting, auditing and technological expertise to various financial institutions. In his capacity as the managing member of DG, Durkin became acquainted with Albanese and learned that Albanese was the President of CRS, a company that could supply qualified professionals to provide accounting and auditing services to DG on an as-needed basis. DG engaged CRS, and in the course of that engagement, various professionals, including Albanese and Ruggeri, provided services to DG.

DG was not satisfied with the work of CRS and Albanese, and with a letter dated September 19, 2005, DG tendered what it described as "full and final payment of [its] obligation to CRS regarding Mr. Ruggeri [with] a schedule of days worked for July, August and through September 16, 2005." Notwithstanding his general dissatisfaction with the performance of CRS, Durkin acknowledges he was satisfied with the work of Ruggeri. He further acknowledges that when Ruggeri indicated that he was no longer working with CRS and that he desired to continue his working relationship with DG, DG hired Ruggeri as an independent contractor to perform accounting and auditing services on its behalf. According to Durkin's certification, he was unaware of any restrictions on Ruggeri's ability to work for DG:

At no point in time did Durkin Group have any knowledge of any restrictions on Mr. Ruggeri's ability to work with Durkin Group nor did Ruggeri advise Durkin Group of any such restrictions. Furthermore, Durkin Group had never entered into any agreement with CRS that prohibited it from engaging any former CRS contractors. In fact, as of this date, Durkin Group has never been provided any agreement restricting Ruggeri's employment with the Durkin Group.

Upon learning that Ruggeri was working directly for DG, plaintiffs initiated this civil action, contending that Ruggeri's employment with DG violated a non-compete agreement he entered into with CRS. Plaintiffs further alleged that DG and Durkin were aware of the existence of their agreement with Ruggeri based on CRS's prior business dealings with defendants. To substantiate their claim that such an agreement existed between CRS and Ruggeri, plaintiffs proffered a chain of e-mail correspondence between Albanese and Ruggeri, dated March 11, 2005, which stated the following:

Here is a simple, CPA trustworthy non-compete: You agree that you can terminate your relationship with Cost Reduction Solutions at any time, however, CRS would like as much as 30 days notice, or, at a minimum, 2 weeks.

Whatever company information that CRS or Michael F. Albanese, CPA shares with you is CRS property and use of such is not allowed without the express written consent of CRS or Michael F. Albanese, CPA.

Any customers CRS or yourself are introduced to or you share information on are CRS property and will remain so until a written ...

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