Opinion
798 MDA 2021 J-S35036-21
01-14-2022
R.C. BOWMAN, INC. v. RICHARD C. BOWMAN, III Appellant
NON-PRECEDENTIAL DECISION- SEE SUPERIOR COURT I.O.P. 65.37
Appeal from the Order Entered May 21, 2021 In the Court of Common Pleas of Clinton County Civil Division at No(s): 1690-2019
BEFORE: OLSON, J., KUNSELMAN, J., and PELLEGRINI, J. [*]
MEMORANDUM
PELLEGRINI, J.
Richard C. Bowman, III (Bowman III) appeals from the order in the Court of Common Pleas of Clinton County (trial court) granting the motion for contempt of R.C. Bowman, Inc. (R.C. Bowman). We reverse the finding of contempt and correspondingly vacate the imposition of sanctions.
The background facts of this matter are contentious and we recite only those necessary for this appeal from our independent review of the record and the trial court's December 4, 2020 and May 21, 2021 opinions.
I.
R.C. Bowman was incorporated on April 19, 1999, with Richard C. Bowman, Jr., Robert K. Bowman (Rob Bowman) and Bowman III each having a one-third interest in said corporation. Rob Bowman and Bowman III are twin brothers and Richard C. Bowman, Jr. is their father. Bowman III was president, shareholder and employee of the corporation since its founding until a February 8, 2019 shareholders' meeting he failed to attend despite notice. At the meeting, because he received no nominations as a director or officer, he was removed as president. He remained an employee until his March 25, 2019 termination and continues to be a one-third shareholder.
On April 8, 2019, Bowman III established a new corporation, Richard C. Bowman, III, Inc. Since May 13, 2019, Richard C. Bowman, III, Inc., trading as Bowman Excavating, Paving and Concrete, has conducted a business in direct competition with R.C. Bowman.
On December 12, 2019, R.C. Bowman filed a complaint against Bowman III setting forth five counts, including misappropriation of trade secrets pursuant to the Pennsylvania's Uniform Trade Secrets Act (PUTSA), 12 Pa.C.S. §§ 5301-5308.
On November 18, 2019, Bowman III commenced litigation at docket number 1579-2019 seeking to have the court compel R.C. Bowman to produce its books and records for his inspection as a shareholder. The court consolidated the two actions for trial and denied Bowman III's action on December 4, 2020. His appeal of the denial was filed at docket number 415 MDA 2021 and is not relevant to this decision.
In anticipation of litigation, R.C. Bowman created a spreadsheet containing a customer list of its larger repeat customers and entered it as Exhibit 11 at trial. Pennsylvania State University (Penn State) was one of the customers on the list. On December 4, 2020, after a two-day trial that commenced on October 15, 2020, the trial court entered a verdict in favor of R.C. Bowman on its trade secret action, limited solely to the Exhibit 11 customer list. The trial court ordered that:
Richard C. Bowman, III may not contact any entity listed "on the customer list" admitted as R.C. Bowman, Inc.'s Exhibit "11" - for the purposes of soliciting business for Richard C. Bowman, III, Inc., t/a Bowman Excavating, Paving and Concrete.(Order, 12/04/20, at 2) (pagination provided).
Bowman III filed an appeal at docket number 416 MDA 2021 challenging the trial court's finding that the Exhibit 11 customer list was a trade secret. That appeal is presently before this Court and is not the subject of this decision. We presume, for purposes of this appeal, that the trial court properly found that the Exhibit 11 customer list was a trade secret.
On April 8, 2021, R.C. Bowman filed a motion for a citation for civil contempt (contempt motion) in which it asserted that Bowman III was in contempt of the court's December 4, 2020 order because he "continues to solicit business from the customers on Exhibit 11, based upon the fact that he is bidding for jobs with Penn State … [and] it appears that [he] will be awarded a Penn State contract, for which R.C. Bowman, Inc., also bid." (Contempt Motion, 4/08/21, at 1). Bowman III filed an answer to the contempt motion in which he responded that he did not solicit business from Penn State, but that Penn State contacted him and invited him to bid on projects, "as were many other companies, including, but not limited to R.C. Bowman[.]" (Answer and New Matter to Contempt Motion, 4/20/21, at 2) (pagination provided). The court conducted a hearing on the contempt motion on April 29, 2021, at which Bowman III and Rob Bowman testified.
Rob Bowman testified that R.C. Bowman had filed an application for prequalification with Penn State that was approved and, thereafter, R.C. Bowman would get invitations to bid on projects from Penn State. He maintained that a company had to be prequalified to do any work at Penn State. Several companies bid on a project at Penn State in 2021. The Penn State bid results reflected, in pertinent part, that Bowman III had the lowest bid of $128,047.00, a company owned by a former employee of R.C. Bowman came in second and R.C. Bowman was third lowest. Rob Bowman agreed that he did not know if Bowman III contacted Penn State seeking work other than submitting his company's bid. (See N.T. Hearing, 4/29/21, at 10-12, 15-16); (R.C. Bowman's Exhibit 3, Penn State Bid Result).
Bowman III testified that prior to being terminated in March 2019, he was aware that R.C. Bowman had bid for and done projects for Penn State and that the bid results were public knowledge. He was aware that several other companies also did work for Penn State because he could see the bid results. Bowman III testified that Penn State emailed him about projects inviting his company to bid on them. In late summer of 2019, his company completed one contract for Penn State. In the summer of 2020, he applied for prequalification with Penn State, but was denied; however, not all Penn State projects required prequalification. He testified that he did not unilaterally contact Penn State soliciting business in any way after the December 4, 2020 order was issued. In 2021, Penn State emailed him to invite his company to bid, and in response, he bid on six or seven projects. He was awarded one of them. Work had not commenced at the time of the hearing, but he intended to perform it. He intended to continue submitting bids if he received an invitation to do so and to then do the work if he received the contract. He did not believe that submitting bids for projects that Penn State invited him to bid on violated the court's December 4, 2020 order because his understanding was that he was not to solicit any customers on Exhibit 11, which he understood as actively reaching out and requesting work. He conceded that he submitted the bids to Penn State "for the purpose of soliciting business for Richard C. Bowman, III, Inc[.]" (Id. at 34); (see id. at 20-25, 27-33); (Bowman III Exhibits 1 & 2, Feb. 17, 2021 Emails from Penn State to Bowman III).
On May 21, 2021, after briefing by the parties, the court entered an opinion and order that found Bowman III in contempt because submitting bids to Penn State for the purpose of soliciting business "is a clear violation of the December 4, 2020 [o]rder … prohibiting contact by [Bowman III] with any previous customer of [R.C. Bowman] contained in Exhibit "11"." (Trial Court Opinion, 5/21/21, at 3). It explained that "[a]lthough the process may have begun prior to this [c]ourt's [o]rder of December 4, 2020, [Bowman III] continued the process after December 4, 2020 which is in violation of this [c]ourt's order and is contemptuous." (Id. at 6). The court declined R.C. Bowman's request that it order Bowman III to decline the award of the Penn State bid because it could cause Penn State harm. Instead, it imposed a monetary sanction of $5,000.00 and warned that "any future violation will result in substantial monetary sanction." (Id.).
Bowman III timely appealed and filed a statement of errors complained of on appeal pursuant to this Court's order. The trial court filed a Rule 1925(a) opinion on July 19, 2021, in which it relied on it May 21, 2021 opinion. See Pa.R.A.P. 1925.
Bowman III argues that the court erred: (1) in holding him in contempt where the December 4, 2020 order was ambiguous and R.C. Bowman failed to provide evidence that he acted with wrongful intent, and (2) in awarding damages that were punitive, unreasonable, arbitrary and excessive. (See Bowman III's Brief, at 4-5, 15-25).
"[A]ppellate review of a finding of contempt is limited to deciding whether the trial court abused its discretion." Lachat v. Hinchcliffe, 769 A.2d 481, 487 (Pa. Super. 2001) (citation omitted).
II.
"With respect to civil contempt, it is axiomatic that courts have always possessed the inherent power to enforce their orders and decrees by imposing sanctions for failure to comply with said orders. The order that forms the basis for the contempt process in civil proceedings must be definitely and strictly construed." Wood v. Geisenhemer-Shaulis, 827 A.2d 1204, 1207 (Pa. Super. 2003) (citation, bracket and internal quotation marks omitted). "[I]n proceedings for civil contempt of court, the general rule is that the burden of proof rests with the complaining party to demonstrate, by [a] preponderance of the evidence that the defendant is in noncompliance with a court order." Habjan v. Habjan, 73 A.3d 630, 637 (Pa. Super. 2013) (citation omitted).
It is undisputed that the contempt proceeding in this case was civil in nature. (See Trial Ct. Op., 5/21/21, at 3-4).
To be punished for contempt, a party must not only have violated a court order, but that order must have been definite, clear, and specific-leaving no doubt or uncertainty in the mind of the contemnor of the prohibited conduct. Because the order forming the basis for civil contempt must be strictly construed, any ambiguities or omissions in the order must be construed in favor of the defendant. … To sustain a finding of civil contempt, the complainant must prove certain distinct elements: (1) that the contemnor had notice of the specific order or decree which he is alleged to have disobeyed; (2) that the act constituting the contemnor's violation was volitional; and (3) that the contemnor acted with wrongful intent. …Stahl v. Redcay, 897 A.2d 478, 489 (Pa. Super. 2006), appeal denied, 918 747 (Pa. Pa. 2007) (citation and internal quotation marks omitted). Put succinctly, "the alleged contemnor must know of the prohibited conduct, with any ambiguities, omissions, or uncertainties in the order construed in favor of the alleged contemnor, the act constituting the violation must be deliberate, and the act of the alleged contemnor must have been done with improper intent." Sutch v. Roxborough Mem'l Hosp., 142 A.3d 38, 68 (Pa. Super. 2016), appeal denied, 163 A.3d 399 (Pa. 2016) (citations omitted).
The trial court explains that, in this case:
Richard C. Bowman, III had notice of the specific [o]rder and the contact by [him] to Penn State [] by submitting a bid was volitional. The [c]ourt also finds that [] Richard C. Bowman, III's contact with Penn State University was carried out with wrongful intent.
The litigation in this case concerned the fear of [] R.C. Bowman, Inc. that [] Richard C. Bowman, III would utilize the knowledge and information that [he] had obtained while employed and acting as an officer of [R.C. Bowman] to [his] benefit and [R.C. Bowman]'s detriment. [Bowman III] wasted little time in confirming [R.C. Bowman]'s fear by utilizing a customer list and knowledge that [he] had obtained while at [R.C. Bowman]'s business to attempt to be prequalified for bidding
purposes at Penn State [] while this litigation was pending and then submitted bids thereafter.
… Richard C. Bowman knew that [o]rder existed and moved forward with the bids. Therefore, the actions were volitional. Finally, the contemptor, Richard C. Bowman, III acted with wrongful intent. It is clear that Richard C. Bowman, III has violated this [c]ourt's previous [o]rder of December 4, 2020 and that [he] is in contempt.
… [Bowman III] has admitted [his] contact with Penn State [] was to solicit business for [his company]. [He] had approached Penn State [] and continued to approach and solicit business [there]. Although the process may have begun prior to this [c]ourt's order of December 4, 2020, [Bowman III] continued the process after December 4, 2020 which is in violation of this [c]ourt's [o]rder and contemptuous.(Trial Ct. Op., 5/21/21, at 4-6) (record citation omitted).
In the underlying matter, the court denied R.C. Bowman's request that Bowman III be enjoined from using the skill and knowledge he acquired by being an employee, only granting the PUTSA claim as to the Exhibit 11 customer list. (See Trial Court's Opinion, 12/04/20, at 15-16) (noting that although R.C. Bowman "claims that [Bowman III's] new business is utilizing the skill and knowledge that [he] acquired while [at R.C. Bowman, ]" "a trade secret does not include a worker's aptitude, skill dexterity, or his manual or mental ability."); (Order, 12/04/20, at 2) (pagination provided).
In interpreting the court's order, we will first look to its words and then, if necessary, to the statement or documents of record at the time it was made. See Com. ex rel. Brennan v. Brennan, 195 A.2d 150, 151 (Pa. Super. 1963). Bowman III first argues that the December 4, 2020 order "is clearly ambiguous regarding whether it prohibited [him] from working for customers on Exhibit 11 that initially contacted him." (Bowman III's Brief, at 20). He maintains that he did not violate the order because he did not unilaterally contact Penn State to solicit business where the university advertised its bid to a list of contractors, including him. (See id. at 20-23).
R.C. Bowman responds that this argument "is absurd [and] if [Bowman III] actually believed the language was ambiguous, he had the affirmative obligation to seek clarification from the [c]ourt[, ] [r]ather than … willfully bid[ding] contracts with a customer listed on R.C. Bowman Trial Exhibit 11[.]" (R.C. Bowman's Brief, at 12). First, R.C. Bowman provides no legal authority for its claim. Furthermore, we do not find this argument to be persuasive where, according to his testimony, Bowman III thought he understood what the order meant until the contempt motion was filed.
The December 4, 2020 order granted R.C. Bowman's action under the PUTSA. The court found Exhibit 11 was a trade secret and, thus, enjoined Bowman III from contacting anyone on that list to obtain business for his competing company. (See Order, 12/04/20, at 2) (pagination provided) (Bowman III "may not contact any entity listed on the customer list admitted as R.C. Bowman, Inc.'s Exhibit "11" - for the purposes of soliciting business."); (Trial Court Opinion, 12/04/20, at 16).
However, we cannot find that the order's language was "definite, clear, and specific-leaving no doubt or uncertainty in the mind of the contemnor of the prohibited conduct." Geisenhemer-Shaulis, supra at 1207 (citation, bracket and internal quotation marks omitted).
After the order's entry, Penn State contacted Bowman III and other contractors, including R.C. Bowman, via email, with a notification about an opportunity to bid on projects. (See R.C. Bowman's Hearing Exhibits 1 & 2). Upon receiving this contact, Bowman III responded to Penn State by sending a bid. Although Bowman III admitted at the hearing that his purpose for submitting the bid was to solicit business for his company, he also testified that, based on the language of the order, he did not believe this was a violation because he did not reach out to the customer first to solicit work. (See N.T. Hearing, at 34-35).
The order was premised on a finding that the customer list was a trade secret that Bowman III should be precluded from using to contact customers to solicit business for his company. Bowman III did not use the customer list and his knowledge of Penn State was not a trade secret. Based on a plain reading of the order, it was not unreasonable for Bowman III to understand it to mean that, although he was precluded from using the customer list to reach out to a customer, if they reached out to him, it was not a violation to send a bid and do any work he was awarded.
Strictly construing the December 4, 2020 order that only provided that Bowman III may not contact any entity listed "on the customer list" and resolving any ambiguities or omissions in favor of Bowman III, this language does not forbid Bowman III from working for those on that list if they seek him out to perform work. See Redcay, supra at 489 (language of contempt order must be "definite, clear, and specific-leaving no doubt or uncertainty in the mind of the contemnor of the prohibited conduct" to find party in contempt.).
Because of the way we resolve this matter, we need not address Bowman III's claim that wrongful intent was not established by direct or even persuasive circumstantial evidence under the circumstances. We also do not need to address Bowman III's claim that the $5,000 punitive damages imposed were punitive, unreasonable, arbitrary and excessive because the issue is moot.
Accordingly, we reverse the trial court's order holding Bowman III in contempt and correspondingly vacate the imposition of sanctions.
Order reversed and vacated. Case remanded. Jurisdiction relinquished.
Judge Olson joins the memorandum.
DISSENTING STATEMENT
KUNSELMAN, J.
I respectfully depart from the Majority's application of the law on a few points, and, ultimately, I dissent because I would find the trial court acted within its discretion when it held Bowman III in contempt.
Regarding the law, I depart from the Majority's interpretation of the three-prong contempt analysis under Stahl v. Redcay, 897 A.2d 478, 489 (Pa. Super. 2006). As the Majority notes, Stahl provides in relevant part:
To be punished for contempt, a party must not only have violated a court order, but that order must have been “definite, clear, and specific-leaving no doubt or uncertainty in the mind of the contemnor of the prohibited conduct.” Because the order forming the basis for civil contempt must be strictly construed, any ambiguities or omissions in the order must be construed in favor of the defendant. In such cases, a contradictory order or an order whose specific terms have not been violated will not serve as the basis for a finding of contempt. To sustain a finding
of civil contempt, the complainant must prove certain distinct elements: (1) that the contemnor had notice of the specific order or decree which he is alleged to have disobeyed; (2) that the act constituting the contemnor's violation was volitional; and (3) that the contemnor acted with wrongful intent. A person may not be held in contempt of court for failing to obey an order that is too vague or that cannot be enforced.Id. (emphasis added).
Here, the Majority does not reach the three-prong analysis, because it first determines that the language in the trial court's order was not “definite, clear, and specific.” See Majority Memorandum, at 11, n.7 (citing Stahl, 897 A.2d at 489.) In other words, the Majority imposes a threshold question to the three-prong analysis; it first decides whether the trial court order was “too vague” or was sufficiently “definite, clear, and specific.” It concludes the three-prong analysis does not apply here since it found the order was too vague.
By contrast, I view the question of whether the order was “too vague” or “sufficiently specific” as part of the analysis regarding the contemnor's state of mind under the third prong. See Stahl, 897 A.2d at 489 (“[T]hat order must have been “definite, clear, and specific - leaving no doubt or uncertainty in the mind of the contemnor of the prohibited conduct.”) (citation omitted) (emphasis added).
Moreover, Stahl instructs that if there are ambiguities, they should be construed in favor of the defendant. Id. Stahl does not instruct that the existence of an ambiguity renders contempt impossible. Therefore, I believe the Majority terminates its contempt analysis prematurely.
Even if I am mistaken in my interpretation of Stahl, I would still depart from the Majority's decision because I would find the trial court's order here was sufficiently “definite, clear, and specific.” The order provided: “Bowman III may not contact [Penn State] for the purposes of soliciting business for [his company.]” See Order, 12/04/20, at 2 (pagination provided).
My plain reading of the order is informed by the dictionary definition of “solicit.” “Solicit” is defined as: “to ask for (something, such as money or help) from people, companies, etc.” Merriam-Webster's Online Dictionary, http://www.merriam-webster.com/dictionary/solicit (last visited January 5, 2022). I recognize that the contact was initiated by Penn State, not Bowman III. Still, I view Penn State's contact merely as an invitation for Bowman III to bid on a project - in other words, to solicit business from Penn State - which was precisely what the trial court forbade.1 Therefore, regardless of my disagreement with the Majority about the proper application of Stahl, I would still reach the three-prong contempt analysis.
Once there, I would conclude R.C. Bowman clearly satisfied the first and second prongs regarding notice and volition. Less clear is whether Bowman III acted with wrongful intent under the third prong. I see both sides. That Penn State initiated the contact is certainly a mitigating factor. However, while the contempt finding might have been a close call for the trial court, given our standard of review, it should not be a close call for this Court.
Our precedent holds that, "[e]ach court is the exclusive judge of contempts against its process, and on appeal its actions will be reversed only when a plain abuse of discretion occurs." Stahl, 897 A.2d at 488-489 (citation omitted). Thus, we must give deference to the trial court, as it attempts to safeguard its process. Frankly, under these facts, reasonable minds could differ as to whether Bowman III's actions constituted contempt. As such, the trial court would have operated within its discretion had it reached the opposite conclusion or in reaching the one it did. Thus, the trial court did not exercise its discretion "in a manner lacking reason." Lachat v. Hinchcliffe, 769 A.2d 481, 487 (Pa. Super. 2001); see also Majority Memorandum, at 6, n.3. In these circumstances, we cannot substitute our judgment for that of the trial court.
For these reasons, I must respectfully dissent.
[*] Retired Senior Judge assigned to the Superior Court.