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Family Karate Center, Inc. v. Master Peters Academy of Martial Arts, LLC

Superior Court of New Jersey, Appellate Division

June 12, 2013

FAMILY KARATE CENTER, INC. and FAMILY KARATE SUPER CENTER, Plaintiffs-Appellants,
v.
MASTER PETERS ACADEMY OF MARTIAL ARTS, LLC and PETER TRIKILAS, Defendants-Respondents.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 15, 2013.

On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-1064-11.

Howard B. Felcher argued the cause for appellants (Law Offices of Howard B. Felcher, PLLC, attorneys; Mr. Felcher, on the brief).

Brian W. Stanziano and Anthony T. Betta argued the cause for respondents (Garvey, Ballou & Rogalski and Borrus, Goldin, Foley, Vignuolo, Hyman & Stahl, P.C., attorneys; Robert Ballou and Mr. Betta, on the joint brief).

Before Judges Messano and Lihotz.

PER CURIAM.

Plaintiffs, Family Karate Center, Inc., and Family Karate Super Center (collectively, FKC), appeal from two Law Division orders that granted summary judgment to defendants Peter Trikilas and Master Peters Academy of Martial Arts, LLC (Master Peters).[1]

"In an appeal of an order granting summary judgment, appellate courts 'employ the same standard [of review] that governs the trial court.'" Henry v. N.J. Dep't of Human Servs., 204 N.J. 320, 330 (2010) (alteration in original) (quoting Busciglio v. DellaFave, 366 N.J.Super. 135, 139 (App. Div. 2004)). We first determine whether the moving party has demonstrated there were no genuine disputes as to material facts. Atl. Mut. Ins. Co. v. Hillside Bottling Co., Inc., 387 N.J.Super. 224, 230 (App. Div.), certif. denied, 189 N.J. 104 (2006).

[A] determination whether there exists a "genuine issue" of material fact that precludes summary judgment requires the motion judge to consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party.

[Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).]

We then decide "whether the motion judge's application of the law was correct." Atl. Mut. Ins. Co., supra, 387 N.J.Super. at 231. In doing so, we owe no deference to the motion judge's conclusions on issues of law, and review those de novo. Ibid. (citing Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)).

We have considered the arguments made in light of the record and applicable legal standards. We affirm.

I.

FKC's complaint alleged slander, product disparagement, misappropriation of trade secrets, tortious inducement to have students breach their contracts with FKC, and tortious inducement to have FKC's employees breach their contracts. We review the motion record according plaintiffs all favorable evidence and inferences. R. 4:46-2(c).

FKC's CEO and primary shareholder was Donnalynn Patakos. Trikilas began as an FKC student at the age of four, became a junior instructor in 1998 and earned the title of head instructor in 2005. Prior to 2010, FKC was owned by Patakos and her husband, Nick Patakos; both were close friends of the Trikilas family. Patakos thought of Trikilas as part of her family. In 2010, Patakos and her husband divorced, and, pursuant to the separation agreement, Patakos took sole ownership of FKC.

By December 2010, all instructors at FKC had been asked to sign an employment agreement that contained a restrictive covenant, and all but Trikilas had executed one. The agreement's stated purpose was "to protect the confidential information, customer and student list and material . . . of the Employer which Employee uses or receives during the Employee[']s employment with the employer[.]" The agreement permitted FKC to terminate the employee without cause and in FKC's sole discretion. The agreement contained a covenant not to compete "[i]n the event of [an employee's] termination . . . for any reason, " for a period of five years, in a geographic radius of twenty miles from each of FKC's two centers.

Trikilas told Patakos that he objected to the twenty-mile radius restriction and indicated he would not sign the agreement. Patakos testified at her deposition that "[w]hen asked on December 6, 2010[, ] to sign a non-compete agreement, . . . it was clear [Trikilas] took this as a personal affront to his role in the school." She told him to "think about it" but stated that Trikilas could not work for FKC unless he signed the agreement. Patakos asserted continuously at her deposition that it was up to Trikilas to decide.

Trikilas went to work at FKC as usual on December 7, 8, and 9, 2010. On December 9, Patakos approached Trikilas and "put [the agreement] in front of him." Trikilas told her he would not sign it. Patakos could not remember what happened next, except that Trikilas "left and . . . said, good luck."

Trikilas testified at his deposition that Patakos said, "I accept this as your formal resignation." Trikilas recounted the events as follows:

I[] told her I'm not resigning, if she wanted me to leave she would have to fire me. She then said you're fired. She asked me for my keys and cell phone, my work cell, which I handed to her. I wished her the best, I collected my things and left.

FKC's former program director, Debora Sirkowski, testified at deposition that she learned from Patakos "[Trikilas] was asked to sign some[] agreement and he didn't . . . . [H]e didn't want to sign the agreement and she had to let him go."

Trikilas claimed that he filed an application for unemployment benefits with the Department of Labor and Workforce Development (the Department) on December 10, 2010. During his deposition, however, Trikilas was confronted with an "unemployment benefit schedule." The following exchange occurred between plaintiff's counsel and Trikilas:

Q. When did you first make a claim for unemployment?
A. December 10[, 2010].
Q. This document indicates December 5, 2010. Is this inaccurate?
A. The work week starts for [the Department on] Sunday, so I'm assuming that's what it is but to my knowledge that's inaccurate. I claimed unemployment 12-10.
Q. And do you have any document to demonstrate or indicate when you made such application?
A. I might. I have to check.

Plaintiff's counsel asked for the production of any documents relating to Trikilas's unemployment application. Defense counsel did not directly respond.

The exchange continued:

Q. And in connection with your application for unemployment benefits, did you indicate ...

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