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Sika Corporation v. Joseph Hostler

May 11, 2011

SIKA CORPORATION, PLAINTIFF-APPELLANT,
v.
JOSEPH HOSTLER, DEFENDANT-RESPONDENT,
AND BASF GROUP, DEFENDANT.



On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. C-118-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: October 18, 2010

Before Judges C.L. Miniman and LeWinn.

Plaintiff Sika Corporation appeals from two final orders entered on November 6 and December 18, 2009, denying its application for an award of counsel fees to be paid by defendant Joseph Hostler (Hostler) and denying its motion for reconsideration of same. We dismiss the appeal from the November order because it was not timely filed. However, we reverse the December denial of plaintiff's motion for reconsideration as a mistaken exercise of discretion.

I.

The facts can be stated briefly. Plaintiff is a New Jersey corporation with its principal place of business in Lyndhurst. Plaintiff manufactures and sells chemicals "for use in the construction industry and automotive markets." Among plaintiff's line of products are "epoxies, structural strengthening systems, wood floor bonding adhesives and primers, industrial flooring, polyurethane sealants and adhesives." Hostler has been employed in the wood-flooring business and the sale of wood-floor adhesives since 1992.

Plaintiff hired Hostler in July 2004 as its "National Sales Manager" for its "Wood Floor Bonding Unit." The parties executed a "Confidentiality, Non-compete and Assignment Agreement" on August 2, 2004. In Section One of the agreement, Hostler agreed to "hold in trust, keep confidential, and . . . not publish, disclose or otherwise disseminate to any third party or make any use of the Confidential Information of [plaintiff]" without its approval. In Section Two, Hostler agreed not to solicit on behalf of a new employer any of plaintiff's customers or employees for one year following termination. Hostler also agreed in Section Three that, for a period of one year following his termination, he would not, without the prior consent of plaintiff, directly or indirectly work for one of plaintiff's competitors or prospective competitors in any state or country in which plaintiff did business. Section Six, which is at issue here, provided that "[i]n the event of a breach . . . , [plaintiff] shall be entitled to such injunctive relief and damages and also shall be entitled to reimbursement . . . of [plain-tiff's] reasonable attorneys' fees and costs incurred by [plaintiff] in enforcing" the agreement. Attached to the agreement was a "Schedule A Employee Statement," which included a list of clients with whom Hostler had a prior relationship that would not be deemed clients of plaintiff.

In early April 2009, Hostler notified plaintiff he was leaving its employ to go to work for defendant BASF Group (BASF), a multinational chemical corporation that employs over 15,000 employees in North America with its United States headquarters in Florham Park. Hostler had been in negotiations with BASF since February 2009. BASF notified Hostler that his employment with them would not conflict with the agreement he signed with plaintiff because it permitted Hostler to continue business with those customers on the client list provided in Schedule A. Hostler accepted the offer of employment.

Plaintiff immediately commenced suit by way of order to show cause. In its April 14, 2009, complaint against Hostler and BASF, plaintiff alleged, in part, that Hostler (1) breached his contractual duties by emailing confidential information, including a customer contact list, to his private email address prior to leaving plaintiff and by maintaining possession of a "Top 20 Accounts" list which he emailed to himself in January 2009; (2) solicited plaintiff's customers on behalf of BASF while employed with plaintiff; and (3) solicited several of plaintiff's employees to work with Hostler at BASF.

The judge entered the order on April 24, 2009, requiring defendants to show cause why a preliminary injunction should not issue. That order temporarily restrained Hostler from commencing active employment with BASF; performing any duties for BASF; furnishing services to or for plaintiff's clients or customers; soliciting, contacting, or communicating with any client or customer of plaintiff; and soliciting, contacting, or communicating with any employee of plaintiff for the purpose of recruiting or hiring such employee. It also restrained defendants from maintaining, disclosing, or otherwise using any confidential, proprietary, or trade secret information belonging to plaintiff and restrained BASF from putting Hostler on its payroll.

The judge heard oral argument on the application for a preliminary injunction on May 12, 2009, and on June 18, 2009, entered a preliminary injunction. That order restrained Hostler from attempting to induce plaintiff's employees to accept employment with Hostler or any entity with which he was affiliated and preliminarily restrained defendants from hiring any of plaintiff's sales representatives who reported to Hostler. With the exception of the Schedule A client list, the order preliminarily restrained Hostler from competing with plaintiff in the floor-adhesives industry, including wood floor bonding adhesives, and from soliciting or inducing plaintiff's customers who purchased products from plaintiff over the two-year period ending April 2009. The order also recognized that Hostler had returned certain of plaintiff's documents and property and that he represented he had not given same to BASF or anyone else, but compelled him to return any additional documents or property that might remain in his possession and restrained him, or anyone acting in concert with him, from using or disclosing plaintiff's confidential information and proprietary documents. This order provided plaintiff with substantially all of the relief against Hostler that it sought in the order to show cause. The only exception was the Schedule A client list.

Following the entry of these preliminary restraints, the parties were able to amicably resolve the litigation with a final consent order. The order was entered on September 30, 2009, and reflected the parties' agreement that, through and including April 6, 2010, Hostler was restrained from soliciting or inducing plaintiff's employees to accept employment with defendants and from hiring any of plaintiff's sales representatives who reported to Hostler as of April 2009. Additionally, with the exception of the Schedule A client list, the order restrained Hostler from competing with plaintiff in the floor-adhesives industry, including wood floor bonding adhesives, and from soliciting plaintiff's customers who had purchased products or services from it during the two-year period preceding April 2009. The order also recognized that Hostler had returned certain of plaintiff's documents and property and that he represented he had not given same to BASF or anyone else, but compelled him to return any additional documents or property that might remain in his possession and restrained him, or anyone acting in concert with him, from using or disclosing plaintiff's confidential information and proprietary documents. The order further provided that the trial judge "retain[ed] jurisdiction . . . to address the issue of attorneys['] fees," the only issue remaining for resolution.

Plaintiff filed a subsequent motion for an award of counsel fees, which was denied on November 6, 2009. At the hearing on plaintiff's application, it argued that it was entitled to fees notwithstanding the fact that the trial court did not make a final ruling on the merits of plaintiff's complaint beyond granting a preliminary injunction. Plaintiff noted that there had been "certain breaches" of the confidentiality agreement that caused it to file suit to enforce the agreement. Finally, plaintiff ...


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