Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

Forman Industries, Inc. v. Blake-Ward


September 15, 2008


On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-5332-06.

Per curiam.


Argued May 7, 2008

Before Judges Sapp-Peterson, Messano and Newman.

This appeal arises out of a former employment relationship between plaintiff, Forman Industries, Inc. (Forman), and defendant, Robert Blake-Ward. Plaintiff claimed that during the course of Blake-Ward's employment with Forman, he breached a duty of loyalty to it by diverting confidential information and customers to his new employer, defendant J & D Associates (J & D), a division of defendant United Fixtures Company, Inc. (UFCI), which induced Blake-Ward to engage in such conduct, and subsequently both Blake-Ward and UFCI reaped the benefits of Blake-Ward's disloyalty. Plaintiff also alleged that defendants' actions constituted unfair competition and misappropriation, tortious interference, breach of contract and unjust enrichment. Finally, plaintiff contended defendants breached state and federal computer protection statutes in the course of their scheme. The motion judge granted defendants' summary judgment motion in its entirety and dismissed plaintiff's complaint. The present appeal followed.

On appeal plaintiff raises the following points for our consideration:

















We have considered each of the points raised in light of the record, arguments of counsel, and applicable legal principles. We disagree with the court's determination that UFCI was not a successor corporation to United Fixtures Company (UFC) for liability purposes and the court's determination that "no rational fact-finder could admit the authenticity of [the alleged restrictive covenant]," but conclude that these rulings do not affect the court's grant of summary judgment in favor of defendants. With the exception of these two rulings, we affirm substantially for the reasons set forth in Judge LeBlon's May 25, 2007 comprehensive and well-reasoned written opinion.

Plaintiff, formed in 1984, is a closely held New Jersey corporation that specializes in, among other things, remodeling work and inspection/maintenance services for racks, displays and lighting systems, product displays and storage solutions for the retail and commercial industry across the United States. Although its headquarters is in New Jersey, its retail repair operation, Retail Repair Services, where Blake worked, was set up in Atlanta because its biggest customer, Home Depot, is also located there. Forman's majority shareholders are Scott and Steven Forman.*fn1

Blake-Ward joined Forman in 2003 and brought with him more than ten years of service in maintenance, retail repair and operations in retail establishments such as Home Depot and The Sports Authority. As a result of his prior relationship with those companies, Blake-Ward had developed a number of contacts within the large retail industry that proved valuable to plaintiff. Blake-Ward reported to Joseph McGowan, who, until his voluntary resignation in January 2005, was Forman's chief operating officer and a director of Forman.

In December 2004, McGowan shared with Blake-Ward his intention to leave the company and to start a business that would compete with plaintiff. McGowan invited Blake-Ward to join him in this new venture. The two men had a number of discussions about the venture, Blake-Ward reviewed the proposed venture's business plan and provided biographical information to McGowan in the event he decided to accept the offer. He ultimately declined the offer. McGowan voluntarily left Forman, effective January 31, 2005, and directed all of his energy to Consolidated Contractors, LLC (Consolidated), a corporation created by the management group of Forman for the purpose of engaging in contracts for union work. When it was created, McGowan was the sole member of Consolidated and it billed Forman for providing union services. It was not formed to compete with plaintiff, but after McGowan left, it became a competitor of plaintiff.

During the same time period that McGowan was discussing Blake-Ward's possible involvement in his new venture, Blake-Ward was not happy with his own employment situation and claimed that he and Scott, whom he described as a "raving lunatic," were constantly engaged in "bitter arguments" and "butting of heads" over the direction of the business. Blake-Ward shared his concerns about plaintiff's financial stability with a long-time friend, Jeffrey Nicklaus, president of J & D, a division of United Fixtures Company (UFC), who had worked with Blake-Ward when they were employed by Home Depot.

On December 15, 2004, Blake-Ward and Nicklaus met with McGowan to get advice on how to go about purchasing Forman. On December 22, 2004, Blake-Ward and McGowan held a meeting in Michigan with Nicklaus and Darryl Lovett, UFC's chief executive officer, to explore whether J & D was interested in acquiring Forman and to get further advice. Blake-Ward denies that any of plaintiff's financial information was presented during this meeting. J & D was not interested in the proposed venture, but after the meeting Nicklaus called Blake-Ward to inquire whether he was interested in joining J & D.

Nicklaus' discussion with Blake-Ward continued during the month of January 2005 both telephonically and in person at different locations, including Atlanta and Pennsylvania. Blake-Ward also reviewed a document Nicklaus prepared entitled Technical Service Overview (TSO), which addressed expanding J & D's product lines and diversifying its sources of revenue within a growth oriented market. The TSO included a reference to Blake-Ward being retained. Blake-Ward's discussion with Nicklaus and two of J & D's vice-presidents in Pennsylvania on January 14, 2005, also included their disclosure to Blake-Ward of J & D's potential acquisition of Green Technical Services (GTS), a New Hampshire-based equipment service company. Blake-Ward acknowledged that he improperly submitted an expense reimbursement request for that meeting to plaintiff.

At the same time that Blake-Ward was exploring other employment opportunities, he continued to perform his responsibilities with plaintiff, which included traveling to Florida along with McGowan on January 20 to meet with Ed Costa and Jim Simmons of Office Depot to discuss renewal of plaintiff's contract with Office Depot. Costa and Blake-Ward had known each other since 1992 when Costa also worked at Home Depot with Blake-Ward. Costa did not recall any discussion about McGowan's plans during this meeting or Blake-Ward's employment plans. Simmons, on the other hand, got the impression during the meeting that Blake-Ward and McGowan were partners and that the lighting maintenance contract that Office Depot had with plaintiff would go where Blake-Ward went.

During the latter part of January, Blake-Ward met with Christopher Cruthis of The Sports Authority. Although Blake-Ward told Cruthis that he was leaving Forman, he did not tell Cruthis where he was going or attempt to solicit The Sports Authority's business for any company other than Forman.

On February 8, 2005, Blake-Ward tendered his resignation, was asked to reconsider and, apparently after doing so over a weekend trip to Florida, confirmed his intent to resign. He agreed, however, to delay his departure for one month. Despite being asked on a number of occasions where he was going and whether he would become a competitor, Blake-Ward did not reveal his plans. His resignation became effective March 4, 2005. He immediately joined J & D, which began operating under the name Retail Service Solutions in the same office complex as plaintiff's Retail Repair Services division.

Within a month after Blake-Ward left Forman, Office Depot switched from plaintiff to J & D. According to Costa, Blake-Ward never asked him to switch to J & D, although Nicklaus assumed that Blake-Ward had contacted Office Depot soon after he started at J & D because they met with Office Depot within a week after Blake-Ward joined J & D. Also, shortly after Blake-Ward left Forman, five of plaintiff's employees resigned and commenced employment with J & D. One such employee, Michael White, indicated that he approached Blake-Ward for a position, not the other way around. After commencing employment with J & D in April, White contacted several of plaintiff's employees to see whether they were interested in joining J & D.

In addition to the loss of the contract plaintiff had with Office Depot and several employees to J & D, Scott claimed that plaintiff lost money from its Home Depot account. Blake-Ward denied disclosing confidential information regarding plaintiff to anyone at J & D and denied soliciting plaintiff's employees while still at plaintiff. Moreover, he denied taking any of plaintiff's files. He claimed that White was the only employee of plaintiff with whom he communicated about employment with J & D and did so only after White had contacted him.

On April 4, 2005, plaintiff filed a complaint in the Chancery Division of Superior Court seeking injunctive relief and damages against Blake-Ward, Joseph McCowan, Consolidated, former employees Lee Donat and Jamie DeReamer, and Forte Carpentry, Inc., a former subcontractor of plaintiff. Specifically, plaintiff claimed breach of the duty of undivided loyalty, misappropriation of confidential information, unfair competition, tortious interference, breach of contract, and unjust enrichment. Plaintiff sought preliminary and permanent injunctive relief. In an order dated May 17, 2005, the Chancery Division judge denied plaintiff's request for a preliminary injunction prohibiting defendants from using its confidential or proprietary information, soliciting its customers, and soliciting its employees.

In June 2005, UFCI, a Delaware corporation with headquarters in Indiana, purchased UFC. Like UFC, UFCI did not do business in its own name. Rather, it operated through three divisions, two of which are UFC's former divisions, J & D and National Store Fixtures.

The parties subsequently reached a settlement of some claims and executed a voluntary stipulation of dismissal on June 14, 2006 as to those claims against Steve and Scott Forman,*fn2

McGowan, Donat, DeReamer and Consolidated. The remaining claims were transferred to the Law Division by order dated July 11, 2006.

Although not part of the record on appeal, plaintiff apparently filed two amended complaints because on July 28, 2006, plaintiff filed a third amended complaint adding UFC and UFCI, as well as J & D, National Store Fixtures, and Retail Service Solutions, as defendants. The latter three entities were the names under which UFC and UFCI did business. In addition, plaintiff added counts alleging violation of New Jersey and federal computer fraud statutes, as well as for conversion, and breach of a restrictive covenant.

Plaintiff retained an expert in corporate finances, Samuel J. Kursh. In his report, Kursh concluded that as a result of Blake-Ward's actions, plaintiff suffered economic damages in lost profits in business diverted to UFCI and Consolidated. Specifically, the report found that between June 1, 2005, and October 31, 2006, plaintiff lost $1,240,482 to UFCI, and would lose an additional approximately $1.5 million by the first quarter of 2008. With respect to Consolidated, the report concluded that plaintiff would lose $1,246,323 by the first quarter of 2008. In addition, the report claimed that plaintiff suffered a loss of $1,622,863 in other damages as a result of Blake-Ward's actions. The total economic loss estimated was $5,590,288.

On April 30, 2007, Blake-Ward and UCFI filed motions for summary judgment. The court conducted oral argument on May 25, 2007 and, on that same date, issued its written decision granting summary judgment.*fn3 UFC did not make an appearance below, but plaintiff apparently never moved for a default.


We first dispense with the trial court's ruling that UFCI could not be held liable as a successor corporation to UFC. The court first determined that Delaware law should be applied because UFC and UFCI are Delaware corporations with no presence in New Jersey and there was also a Delaware choice of law provision in the asset purchase agreement. Analyzing the claim under Delaware law, the court rejected plaintiff's contention that UFCI's purchase agreement was merely a continuation of UFC's business. While the choice of law provision in the asset purchase agreement governs the parties to the agreement, Kalman Floor Co. v. Jos. L. Muscarelle, Inc., 196 N.J. Super. 16, 21 (App. Div. 1984), plaintiff was not a party to that agreement. Therefore, the resolution of which law should be applied required analysis under New Jersey's flexible "governmental interest" standard, which requires application of the law of the state with the greatest interest in resolving the particular issue that is raised in the underlying litigation. Gantes v. Kason Corp., 145 N.J. 478, 484 (1996). In the absence of a conflict between the law of the forum state, New Jersey law is applied. Ibid. Because the discrete issue of relevance here was whether the sale constituted a de facto merger or a mere continuation of the purchased business and New Jersey and Delaware principles of law are the same in this regard, there was no conflict between the two states and the court could have applied New Jersey law.


In New Jersey, generally, when a company sells its assets to another company, the acquiring company is not liable for the selling company's liabilities simply because it has succeeded in ownership to the seller's assets, "including those arising out of the [seller's] tortious conduct." Ramirez v. Amsted Industries, Inc., 86 N.J. 332, 340 (1981) (citations omitted). Among the exceptions to this general rule is when (1) "the purchasing corporation is merely a continuation of the selling corporation;" or (2) "the transaction amounts to a consolidation or merger of the seller and purchaser[.]" Woodrick v. Jack J. Burke Real Estate, Inc., 306 N.J. Super. 61, 73 (App. Div. 1997), appeal dismissed, 157 N.J. 537 (1998). These two exceptions tend to overlap and are often treated together. Ibid. While the determination is fact sensitive and involves consideration of a number of factors, the critical inquiry is whether there was an intent on the part of the contracting parties to effectuate a merger or consolidation rather than a sale of assets. Id. at 74. The intent may be inferred from such factors as, did management continue with the same personnel, did the general business operations, physical location, and composition of personnel remain the same, as well as any express provisions contained in the purchase agreement, and continuity of ownership. Id. at 72.

Here, after UCFI purchased UFC, J & D began performing lighting, rack repair, installation and service, and retail store remodeling. According to Nicklaus, J & D became more of a service business. However, Nicklaus's duties did not change, and J & D's customers and employees remained the same. Nicklaus was unsure whether UFC still existed. Of additional significance is the fact that both UFC and UFCI's operations were, and are, in South Bend, Indiana, and that there is no evidence in the record that UFC is anything but a shell corporation. Further, there is commonality in name between UFC and UFCI. In addition, UFCI made offers to, and subsequently hired, J & D's employees, including Nicklaus. Finally, J & D's customers remained the same after the sale. Therefore, in large part, continuity of personnel and physical location and cessation of the ordinary business of the predecessor, are present here. On balance, we are satisfied that these factors weigh more heavily towards a determination of successor liability. Nonetheless, the judge's ruling on this issue does not bar his ultimate decision to grant summary judgment. See Isko v. Planning Bd. Of Livingston, 51 N.J. 162, 175 (1968) ("It is a commonplace of appellate review that if the order of the lower tribunal is valid, the fact that it was [partially] predicated upon an incorrect basis will not stand in the way of its affirmance.").


Turning to the merits of whether summary judgment was appropriate, a court should grant summary judgment when "the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c). If there exists a single unavoidable resolution of the alleged disputed issue of fact, that issue should be considered insufficient to constitute a genuine issue of material fact. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Thus, when the evidence is so one-sided that one party must prevail as a matter of law, summary judgment should be granted. Ibid.

Because the evidence must be viewed most favorably towards the non-moving party, together with all favorable inferences, when subjective elements of willfulness, intent or bad faith are material, such determinations are usually left to the trier of fact. Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 447 (2007). Nonetheless, even where subjective intent is involved, summary judgment is appropriate when the facts are so one-sided no contrary conclusion could otherwise be reached. Id. at 450.

A. Duty of Loyalty

An employee has a duty, during his or her period of employment, not to act contrary to the employer's interest, not to compete with his or her employer, and not to assist an employer's competitor. Lamorte Burns & Co. v. Walters, 167 N.J. 285, 302 (2001); Cameco, Inc. v. Gedicke, 157 N.J. 504, 516 (1999). "An employee's duty of loyalty to his or her employer goes beyond refraining from privately soliciting the employer's customers while still employed. The duty of loyalty prohibits the employee from taking affirmative steps to injure the employer's business." Lamorte Burns, supra, 167 N.J. at 305.

An employee has the right to plan and prepare for future employment, id. at 304, but in doing so, is not entitled to solicit customers or do other acts in direct competition with the employer's business. Id. at 302. Thus, in the absence of a covenant not to compete after termination of employment, an employee may anticipate the future termination of his employment and, while still employed, make arrangements for some new employment by a competitor or the establishment of his own business in competition with his employer.

The only restriction to such action is that he may not solicit his employer's customers for his own benefit before he has terminated his employment. Nor may he do other similar acts in direct competition with the employer's business. This would constitute a breach of the undivided loyalty which the employee owes to his employer while he is still employed. It is the nature and character of the act performed that will determine if there has been an actionable wrong and whether or not the act has caused some particular injury to the employer. The mere planning, without more, is not a breach of an employee's duty of loyalty and good faith to his employer. [Auxton Computer Enters., Inc. v. Parker, 174 N.J. Super. 418, 423-24 (App. Div. 1980 (citations omitted).]

Thus, the question of whether an employee has breached the duty of loyalty is fact sensitive. Cameco, supra, 157 N.J. at 516. Here, there is nothing in the record, when it is viewed most favorably towards plaintiff, which evidences any disloyalty towards plaintiff. Specifically, the record is devoid of any evidence, beyond plaintiff's mere assertions, that Blake-Ward took client information that he used to set up a competing business, that Blake-Ward solicited plaintiff's clients or misled plaintiff about his plans. See Lamorte Burns, supra, 167 N.J. at 305 (finding breach of loyalty where defendants, who were subject to employment agreements that prohibited disclosure of confidential information and solicitation of company clients who nonetheless set up a competing business more than a year prior to resigning, solicited company clientele, leased office space on behalf of the new venture prior to leaving, and lied about resignation plans over a year before leaving). Rather, Blake-Ward's actions, in the absence of competent evidence that demonstrated otherwise, could only be viewed as an effort to plan and prepare for his future. Id. at 304; Auxton, supra, 174 N.J. Super. at 424.

B. Misappropriation and Unfair Competition

In Points I and II, plaintiff argues that the trial court erred in dismissing its claim that defendants misappropriated proprietary or confidential information and engaged in unfair competition. Plaintiff claims Blake-Ward misappropriated plaintiff's financial and customer information, including balance sheets, income statements and financial reports, and that UFCI induced Blake-Ward to engage in such conduct. Judge LeBlon expressly found that the record, viewed most favorably towards plaintiff, did not support such a conclusion:

There is no specific indication of what precautions Forman took to safeguard its allegedly confidential information. The absence of this factor is fatal to its claim. There is nothing concerning nondisclosure in the alleged Employment Agreement and it is undisputed that Forman has never required its employees to sign confidentiality agreements. While Forman contends that such a provision was included in its employee handbook, there is nothing to prove that RBW [Blake-Ward] was provided with a copy of the handbook. . . . The handbook, moreover, fails to describe the nature of the information that Forman considers to be confidential.

With respect to the unfair competition claim, the court held:

Although plaintiff argues that UFCI participated in efforts to use RBW to steal plaintiff's business, it again fails to offer any substantiation of actual wrongdoing on the part of UFCI. Upon analysis, plaintiff's assertions demonstrate that UFCI sought to ultimately compete with Forman. There is no legal authority referred to by plaintiff that proscribes such intentions. Beyond that, there is nothing in the record of this case that demonstrates that UFCI utilized RBW to compete with plaintiff while RBW was still employed by plaintiff.

To be legally protectable, information need not rise to the level of a trade secret and may otherwise be publicly available. Platinum Mgmt., Inc. v. Dahms, 285 N.J. Super. 274, 294 (Law Div. 1995). The key to determining the misuse of information is the relationship of the parties at the time of disclosure and the intended use of the information. Ibid. Matters of general knowledge within an industry may not be classified as confidential. Whitmyer Bros., Inc. v. Doyle, 58 N.J. 25, 33-34 (1971).

While plaintiff met with his new employer, there is no evidence that he discussed which of plaintiff's customers he could bring to J & D, nor was he advised by plaintiff that such information was confidential. Plaintiff points to its employee handbook, which provided that it was "a violation of company policy to provide confidential or proprietary . . . information to competitors, other organizations, or unauthorized [company] employees. Also, you are not permitted to work for a competing business while a [company] employee." However, Blake-Ward claimed he never received a copy of the handbook, and assuming, for purposes of summary judgment, that plaintiff provided this handbook to Blake-Ward, it is undisputed that Scott Forman indicated that he did not tell Blake-Ward what information was considered confidential, nor were any company documents identified as confidential. According to Nelson Tirado, plaintiff's vice-president of business development, plaintiff did not treat its company information and documents as confidential. Moreover, plaintiff does not point to anything in the handbook that clarifies what information is confidential or proprietary.

Similarly, while customer lists can be considered confidential and subject to protection, Lamorte Burns, supra, 167 N.J. at 299, where an entity's customers are a matter of general knowledge in an industry, or are easily discernable, and personal contacts are taken from job to job, the rule is different. Subcarrier Commc'ns, Inc. v. Day, 299 N.J. Super. 634, 642-43 (App. Div. 1997). As we have previously stated, what an employee "br[ings] to his employer, he should be able to take away. This is little different than the tradesman who brings his tools to his employer and upon separation leaves with them . . . ." Coskey's Television & Radio Sales & Serv., Inc. v. Foti, 253 N.J. Super. 626, 637 (App. Div. 1992).

Here, there is no evidence to indicate that plaintiff's customers were not known in the industry or that the service plaintiff provided required secrecy. As Tirado testified during his deposition, it was "not a secret who our accounts are." Moreover, there is nothing in the proofs to indicate that plaintiff's pricing and bid specifications were confidential. Plaintiff did not have any computer models or computer programs for creating bids, quotes or pricing. Nor did plaintiff have a model or formula relating to such matters. In addition, costs used to estimate bids changed daily. Nor was there any evidence in the record that plaintiff ever marked any of its documents as confidential.

Under these circumstances, no reasonable jury could resolve the question of whether defendants engaged in misappropriation and unfair competition in favor of plaintiff. Hence, Judge Malone properly granted summary judgment on these claims. Brill, supra, 142 N.J. at 540.

C. Tortious Interference

Plaintiff maintains that it presented sufficiently disputed facts demonstrating that defendants targeted and solicited its key clients sufficient to withstand summary judgment. We disagree.

In order to establish a claim of tortious interference, a plaintiff must establish a reasonable expectation of economic advantage, interference with that right intentionally and with malice, loss of prospective gain as a result of that interference, and resulting damages. Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 751-52 (1989). Malice is not used in the literal sense to constitute ill will; rather, it means that harm was inflicted intentionally and without justification or excuse. Lamorte Burns, supra, 167 N.J. at 306. The line is drawn at conduct that is fraudulent, dishonest or illegal, which as a result interferes with a competitor's economic advantage. Id. at 307.

In Lamorte Burns, the Court found that the defendants used the plaintiff's confidential information to accomplish "a surprise weekend coup," evidencing malice and the wrongful taking of property. Id. at 308. There was nothing in the record here remotely akin to the conduct at issue in Lamorte Burns. As discussed earlier, Blake-Ward did not form a competitor company, nor did he take any of plaintiff's customers while still employed by the company. Office Depot went with UFCI only after Blake-Ward had left and after proper notice had been given to plaintiff under the contract Office Depot had with plaintiff. In addition, there is no evidence that Blake-Ward solicited Office Depot's lighting maintenance contract for any entity other than plaintiff. That Simmons, during the January 20, 2005 meeting in which Blake-Ward, McGowan and Costa were in attendance, assumed the Office Depot lighting contract would follow Blake-Ward when he left plaintiff's employ, is not equivalent to Blake-Ward affirmatively soliciting Office Depot's business while still employed with plaintiff. Id. at 303. Plaintiff does not suggest that Office Depot, once its contractual term with plaintiff expired, was not free to take its business elsewhere. Thus, the trial court properly dismissed plaintiff's tortious interference claim.

D. Computer Fraud

In Points I and VII, plaintiff maintains that the trial court erred in granting summary judgment with respect to its claim that defendants violated federal and state computer fraud statutes. The trial court, in rejecting this claim found:

Forman fails to demonstrate that either UFC or UFCI asked or encouraged RBW to take any actions regarding his Forman-issued computer. There is, therefore, an utter lack of the specific intent or recklessness required by the statutes as to UFC or UFCI.

Forman seeks to reinforce its claim against RBW with its expert's opinion as to the intentional nature of the alleged deletion of files off of RBW's Forman-issued laptop. Yet, despite the expert's opinion, there is no indication by Forman as to the specific files it alleges were deleted or any showing of damages.

Under New Jersey's Computer Related Offenses Act (CROA), N.J.S.A. 2A:38A-1 to -6, a business may recover damages for the purposeful or knowing and unauthorized tampering with its computer or computer system. Plaintiff's expert report, however, only established that data on Blake-Ward's office computer had been deleted, most of which was recovered. Moreover, as the trial court noted, there is nothing in the record identifying what, in particular, was deleted and what, if any, damages plaintiff sustained as a result of Blake-Ward's conduct in this regard. Plaintiff's own systems administrator, Nancy McDermott, testified that while there was a reduction in memory, she did not find that any of plaintiff's files had been deleted. Moreover, while McDermott confirmed that employees were not supposed to use their personal e-mail address for company business, the policy was not enforced. Finally, the record also disclosed that while Blake-Ward was employed with the company, plaintiff did not have any policy in place prohibiting employees from deleting computer files. Hence, the undisputed fact that there were deletions on Blake-Ward's computer is not, standing alone, dispositive. Consequently, the court did not err when it granted summary judgment on this claim.


In points I and VII, plaintiff asserts that the trial court erred in dismissing its breach of employment agreement claim. Plaintiff maintains that the court failed to view the alleged agreement in the light most favorable to it and that the duration and extent of the restrictive covenant contained in the agreement was reasonable.

The court found that "no rational fact-finder could admit the authenticity of [the court] document. It was allegedly initialed six (6) months following RBW's commencement of work with Forman[.] It is not dated [and i]t is not witnessed. Moreover, there is no consideration for the three-year non-compete clause."

According to Blake-Ward, when he was negotiating his employment with plaintiff in 2003, Scott sent him a draft employment agreement which contained a restrictive covenant as well as a provision giving Blake-Ward an equity interest in the company. However, because the other owners of the company could not agree as to stock ownership, Scott Forman asked him to join the company without signing an employee agreement.

At a hearing on the order to show cause in April 2005, plaintiff's attorney represented to the Chancery Division judge that there was no restrictive covenant. However, in June 2005, Steven discovered a copy of an employment agreement that he claimed was initialed by Blake-Ward. Steven was not sure when the agreement was signed and did not know what happened to the original. Additionally, he had not read the agreement prior to signing it.

Further, Steven claimed he found the copy in a file belonging to the real estate company that owned the building where plaintiff is located. However, in a subsequent certification, Steven stated that Blake-Ward signed the agreement on March 27, 2003, and that he did not recall that Blake-Ward had done so until he found the copy of the agreement, in August 2005. Scott did not know whether Blake-Ward initialed the agreement and did not see him sign the document.

The agreement contained a restrictive covenant, which provided in pertinent part:

Employee expressly agrees that . . . during the term of this Agreement and any renewal thereof, and during the . . . three (3) year period thereafter, s/he will not . . . directly or indirectly, work for or render services for any entity which is a client of the Corporation at the time of the termination of Employee's employment with the Corporation, or who were clients of the Corporation during the one year period prior thereto . . . .

Blake-Ward's challenge to the authenticity of his signature and the absence of the original agreement are challenges that relate to the weight to accord the testimony surrounding the document's authenticity but not its consideration for purposes of defeating summary judgment or its later admissibility at the time of trial. See Biunno, Current N.J. Rules of Evidence, comment 2 on N.J.R.E. 901 and 1001-1004 (2007).

We are satisfied that when viewed in the light most favorable to plaintiff, there is a genuinely disputed issue of fact as to whether Blake-Ward executed the non-competition agreement sufficient to defeat summary judgment. Brill, supra, 142 N.J. at 540. However, because the agreement itself contains terms that, as a matter of law, are contrary to public policy, the court did not err in granting summary judgment as to this claim.

In Whitmyer, supra, and Solari Indus., Inc. v. Malady, 55 N.J. 571, 576 (1970), the Court makes clear that a non-compete agreement is enforceable. Such agreements, "if [they] 'simply protect[] the legitimate interests of the employer, impose[] no undue hardship on the employee and [are] not injurious to the public.'" Ingersoll-Rand Co. v. Ciavatta, 110 N.J. 609, 628 (1988) (quoting Whitmyer, supra, 58 N.J. at 32-33).

The public's broad concern in fostering competition, creativity, and ingenuity, is safeguarded when courts engage in a fact sensitive analysis of the agreement to safeguard against subjecting employees to undue hardship. Id. at 639. Thus, for example, in Cmty. Hosp. Group, Inc. v. More, 183 N.J. 36 (2005), the Court found a two-year post-employment non-compete requirement in a restrictive covenant not per se unreasonable but remanded the matter to the trial court because it concluded that under the particular factual circumstances of the case, the thirty-mile geographic restrictive area was excessive and had to be reduced to avoid being detrimental to the public interest. The restrictive covenant at issue here, as the trial court observed, defined the scope of the services restricted and broadly prohibited defendant from directly or indirectly working with any of its clients in any capacity and anywhere. In our view, the broad brush of this language rendered the agreement contrary to public policy and, thus, unenforceable as a matter of law, irrespective of whether Ward-Blake in fact signed it.

Finally, plaintiff's claim that defendants were unjustly enriched by virtue of their conduct is without sufficient merit to warrant further discussion in a written opinion. R. 2:11-3(e)(1)(E).


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.