Opinion
No. 01-4077-SAC.
May 18, 2004
MEMORANDUM AND ORDER
The case comes before the court on the defendant's response (Dk. 206) to the court's show cause order (Dk. 204). When the plaintiff filed a motion for partial summary judgment on February 27, 2004, and the defendant failed to file any response within the period required by D.Kan. Rule 6.1(d)(2), the court issued an order requiring the defendant to show cause why the plaintiff's motion should be not considered and decided as an uncontested motion pursuant to D.Kan. Rule 7.4. (Dk. 204). The court sent this order to the defendant's attorney. The defendant prepared and filed his own response, and his attorney's signature does not appear on the response.
The defendant's filing purports to respond to the show cause order as well as the plaintiff's summary judgment motion. To the show cause order, the defendant offers that his attorney said he lacked the resources to prepare a response and referred him to a Topeka attorney who the defendant could not afford to retain. Consequently, the defendant says he "has been trying to answer charges made against him." (Dk. 205, ¶ 9). To the plaintiff's motion, the defendant summarily alleges that the non-competition clause in his employment agreement with the plaintiff is unenforceable under Texas law, that the defendant does not have records showing the plaintiff refunded his $500 reserve account, that the plaintiff's actions have prevented him from competing with the plaintiff and damaged the defendant in the amount of $95,000 plus attorney's fees, and that the defendant did not say during his deposition that he sold competitive memberships to 100 former members of the plaintiff.
As the plaintiff points out, the defendant's stated reasons for his untimely response fall short of the excusable neglect standard in D.Kan. Rule 7.4. The defendant offers no basis for his delay or for failing to seek an extension of time to oppose the plaintiff's motion. Nor does the defendant ask for additional time to submit any other response to the plaintiff's motion. Instead of ignoring the defendant's untimely response and treating the plaintiff's motion as uncontested, the court will consider the defendant's response and subject it to the standards and procedures governing summary judgment proceedings.
SUMMARY JUDGMENT STANDARDS
A court grants a motion for summary judgment under Rule 56 of the Federal Rules of Civil Procedure if a genuine issue of material fact does not exist and if the movant is entitled to judgment as a matter of law. The court is to determine "whether there is the need for a trial — whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). There are no genuine issues for trial if the record taken as a whole would not persuade a rational trier of fact to find for the nonmoving party. Matsushita Elec. Indust. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
The initial burden is with the movant to "point to those portions of the record that demonstrate an absence of a genuine issue of material fact given the relevant substantive law." Thomas v. Wichita Coca-Cola Bottling Co., 968 F.2d 1022, 1024 (10th Cir.), cert. denied, 506 U.S. 1013 (1992). The moving party need not disprove the nonmoving party's claim or defense; it need only establish that the factual allegations have no legal significance. Dayton Hudson Corp. v. Macerich Real Estate Co., 812 F.2d 1319, 1323 (10th Cir. 1987). Once the moving party has carried its burden under Rule 56(c), the nonmovant must "come forward with specific facts showing that there is a genuine issue for trial as to elements essential to" the nonmovant's claim or position. Martin v. Nannie and Newborns, Inc., 3 F.3d 1410, 1414 (10th Cir. 1993) (citations omitted). The opposing party may not rely upon mere allegations or denials contained in its pleadings or briefs. Rather, the opposing party must come forward with significant admissible probative evidence supporting that party's allegations. Anderson v. Liberty Lobby, Inc., 477 U.S. at 256. To be sufficient, the evidence must be "in specific, factual form for a jury to return a verdict in that party's favor.'" Thomas v. International Business Machines, 48 F.3d 478, 484 (10th Cir. 1995) (quoting Bacchus Industries, Inc. v. Arvin Industries, Inc., 939 F.2d 887, 891 (10th Cir. 1991)). A party relying on only conclusory allegations cannot defeat a properly supported motion for summary judgment. White v. York Intern. Corp., 45 F.3d 357, 363 (10th Cir. 1995).
The court has considered the evidence in the light most favorable to defendant and finds summary judgment for plaintiff is proper. The defendant Edward Derringer worked as a sales agent for the plaintiff National Motor Club of American, Inc. ("NMCA") for approximately one year from 2000 to 2001. His employment agreement included a Texas choice of law provision and a non-compete provision. The latter provision barred Derringer from rendering services in his former sales area to a competitor of NMCA for one year after his termination from NMCA. Consideration for this non-compete provision included the defendant's employment as a sales agent, ten-days notice prior to termination of employment, and access to NMCA's confidential information, proprietary materials and training. The defendant voluntarily ended his employment with NMCA and within a few weeks began selling memberships and services in his former sales area for Auto Club of America, Inc. ("ACA"), a competitor of NMCA. The defendant admitted in his deposition that his going to work for ACA "was in contradiction to" NMCA's non-compete provision. (Dk. 202, Derringer Dep. pp. 24-25). Through the affidavit of NMCA's vice president, Henry Stroup, the plaintiff establishes that Derringer sold ACA memberships during the one-year protected period to over 100 former NMCA customers in Kansas. Using the average renewal period and NMCA's average expense margin, NMCA's net lost profits totals $92,956.50 for only those former NMCA members in Kansas to whom Derringer sold ACA memberships during the one-year protected period. Derringer's employment agreement further provides that "[i]n any legal action to enforce this agreement, the prevailing part shall, in addition to all relief at law or in equity, be entitled to recover its attorneys' fees and court costs." (Dk. 202, Employment Agr. ¶ 18). The defendant does not come forward with specific facts supported by significant admissible probative evidence that controvert the above facts or create any genuine issue for trial on the elements essential to the plaintiff's claim for the defendant's violation of this non-compete provision or the elements essential to the defendant's defense to this claim.
The defendant's only response to the above proof and to the plaintiff's demand for summary judgment on this claim is to assert his conclusion that the non-compete provision is unenforceable under Texas law. The defendant does not explain the basis for his opinion or offer any reasons in support of it. The court has no choice but to reject this response as nothing more than a conclusory allegation with no apparent foundation in law or fact. On its face, the non-compete provision is ancillary to an otherwise enforceable agreement with "reasonable limitations on time, geographical area, and scope of activity." See Strickland v. Medtronic, Inc., 2003 WL 187436 (Tex.App. Dallas, Jan. 29, 2003) (citing Tex. Bus. Com. Code Ann. § 15.50 (Vernon 2002)). The plaintiff is entitled to summary judgment on its claim that the defendant Derringer violated the non-compete provision and that the plaintiff should recover damages in the amount of $92,956.50 plus prejudgment and post-judgment interest and attorneys' fees and costs.
In a joint answer, the defendant Derringer asserts three counterclaims: (1) for attorney's fees for defending this action against a non-compete provision unenforceable under Texas law, (2) for tortious interference with business, and (3) for failing to make an accounting and to pay over remaining reserve account. The plaintiff has shown it is entitled to summary judgment on each of these counterclaims. Because the defendant has come forth with no legal or factual basis for finding the non-compete provision unenforceable under Texas law, the defendant cannot recover attorney's fees. The defendant also offers no evidence of intentional misconduct by the plaintiff or of damages to himself as a direct or proximate result of the defendant's misconduct. Macke Laundry Service Ltd. Partnership v. Mission Associates, Ltd., 19 Kan. App. 2d 553, 561, 873 P.2d 219, rev. denied, 255 Kan. 1002 (1994) (elements to a tortious interference claim). Through the uncontested affidavit of Henry Stroup, the plaintiff has established that Derringer was paid out all money owed to him from his reserve account. Thus, the defendant has not carried his burden so as to defeat summary judgment on his counterclaims.
IT IS THEREFORE ORDERED that plaintiff's motion for partial summary judgment against the defendant Edward Derringer (Dk. 202) is granted on the plaintiff's breach of contract claim with an award of damages in the amount of $92,956.50, plus prejudgment and postjudgment interest and attorneys' fees and costs; and is granted against the defendant Derringer on all of his counterclaims against the plaintiff.