Opinion
No. CV05-4017927
December 7, 2005
MEMORANDUM OF DECISION ON APPLICATION FOR TEMPORARY INJUNCTION
The plaintiff, TD Banknorth Insurance Agency ("Banknorth") is an insurance agency which employed defendants Kirsche and Holroyd until October 17, 2005. On or about that date, Kirsche and Holroyd informed Banknorth that they were leaving the agency to accept new positions with defendant Arthur J. Gallagher Company, Inc. (Gallagher).
Gallagher is not a party to the temporary injunction now in effect.
Kirsche and Holroyd also told Banknorth that they were bringing RoofConnect, a major Banknorth customer, with them to Gallagher. RoofConnect is a group of more than 20 roofing companies in different parts of the United States who have joined forces to form a "captive" insurance arrangement brokered by Banknorth. This customer generates considerable annual income to Banknorth. Banknorth has also been advised that another customer, Marathon Health Care Group, is also planning to move its business to Gallagher; Kirsche and Holroyd were also responsible for the Marathon account.
Both defendants worked for Banknorth pursuant to written employment agreements which required them to work solely for Banknorth, to maintain the confidentiality of certain proprietary information, and to refrain from soliciting Banknorth customers for thee years following the termination of their employment with Banknorth.
Exbibits 8 (Kirsche agreement) and 9 (Holroyd agreement).
After learning of defendants' intentions, plaintiff applied to this court for ex parte, temporary, and permanent injunctive relief, as well as other relief. On October 25, 2005, the court, Berger, J, issued an ex parte temporary injunction against Kirsche and Holroyd. The court has enjoined Kirsche and Holroyd from:
(a) using, disclosing, misusing or further converting in any manner or in any form any of Banknorth's confidential, proprietary or trade secret information;
(b) destroying, damaging or otherwise disposing of any of Banknorth's confidential, proprietary or trade secret information;
(c) soliciting Banknorth employees in violation of the terms of any applicable restrictive covenant or applicable laws;
(d) competing against Banknorth in violation of the terms of any applicable restrictive covenant or applicable laws; and
(e) hiding or destroying any documents or other evidence in any way concerning the allegations in this complaint.
The court also issued an Order to Show Cause summoning defendants to appear on November 14, 2005 and show cause why the temporary injunction should not be continued. Defendants appeared and, on November 9, 2005, filed a "Motion to Dissolve or Modify Ex Parte Temporary Injunction, or, in the Alternative for Immediate Hearing." This court heard evidence on November 16, 21, and 28, 2005 and thereafter reviewed briefs submitted by the parties.
The primary purpose of a temporary injunction "is to preserve the status quo until the rights of the parties can be finally determined after a hearing on the merits." Clinton v. Middlesex Mutual Assurance Co., 37 Conn.App. 269, 270 (1995). If this court is to continue the temporary injunction, plaintiff must meet its burden of proving four elements: (1) plaintiff lacks an adequate remedy at law; (2) the plaintiff will suffer irreparable harm in the absence of the injunction; (3) plaintiff is likely to prevail on the merits; and (4) the equities favor continuation of the injunction. Waterbury Teachers Ass'n. v. Freedom of Information Commission, 230 Conn. 441, 446 (1994).
Plaintiff has established a substantial likelihood that it will ultimately prevail on the merits of its claims against its former employees. The evidence presented demonstrated that Kirsche and Holroyd began discussions with Gallagher several months before they resigned from Banknorth and that it was their clear intention to bring the RoofConnect account with them. It is also clear that Kirsche and Holroyd did provide some loss and claim data about RoofConnect to Gallagher for use in its evaluation of RoofConnect as a potential customer. Moreover, it is more probable than not that plaintiff will be able to prove that defendants solicited various fellow employees to leave Banknorth to join them at Gallagher.
Plaintiff's attempts to show that it has no adequate remedy at law have been less successful. The defendants' employment agreements both provide plaintiff with remedies for various violations of their respective terms. Kirsche's agreement provides (¶ 8) that "if, during the three year period [within which he agreed not to compete], any commission or fee becomes payable to Employee or to any person, company, firm or other entity [which employs Kirsche] as a result of violation by Employee of the provisions of this agreement, Employee agrees to pay, promptly to the Company an amount equal to 50% of such commission or fee." The agreement goes on (¶ 9) to allow the employer to obtain injunctive relief against Kirsche for "the breach of any covenants contained in Paragraphs 3 through 8 hereof."
This court must therefore resolve the ambiguities in an employment agreement which, in one paragraph, provides a monetary remedy for any violation of any provision thereof and which, in the next, states that the employer has no adequate remedy at law for any breach of any covenant contained in its critical paragraphs. As defense counsel points out in his post-trial brief, the employer could have limited this liquidated-damages remedy to violations of the covenants not to solicit the employer's accounts, but failed to do so. Since the agreement was obviously drafted by Banknorth's predecessor, this ambiguity must be construed in favor of Kirsche. Plaintiff has an adequate remedy at law for its claims against this defendant.
Defendants' Post-Hearing Memorandum of Law, November 30, 2005, p. 10.
The monetary remedy set forth in Holroyd's employment agreement (¶ 10) does not apply to all potential breaches of the agreement. She, or her future employer, must pay Banknorth 50% of any consideration paid by a prior Banknorth customer, where Holroyd has solicited the customer in violation of Paragraphs 7D or 7E. All other breaches of Paragraphs 3 through 8 of the agreement entitle Banknorth "to obtain immediate temporary, preliminary and permanent injunctive relief . . . to enforce the terms of this Agreement . . ."
This agreement is also ambiguous, but the ambiguity is easier to resolve. The parties entered into a well-drafted, legally proper liquidated damages agreement with respect to any violation of the non-solicitation covenants of the employment agreement. Under these circumstances, this court cannot agree with plaintiff that it has no adequate remedy at law for any conduct by Holroyd in violation of Paragraphs 7D or 7E. See Nationwide Mutual Ins. Co. v. Stenger, 695 F.Sup. 688, 692-93 (D.Conn. 1988). With respect to the other conduct by Holroyd which plaintiff seeks to enjoin, plaintiff has no adequate remedy at law, and the injunction will remain in force against defendant Holroyd insofar as plaintiff has presented evidence showing it has a likelihood of prevailing on the merits, with the exception of subparagraph (d), which addresses competing against Banknorth in violation of the terms of the restrictive covenant.
This is not to say that the remaining four elements of the injunction shall continue to remain in effect against Holroyd. Plaintiff has produced no evidence demonstrating that defendants have engaged in any conduct which falls within the proscriptions of subparagraphs (b) or (e). The court has found that there have been efforts to cause other, current Banknorth employees to join defendants at Gallagher and will continue this part of the injunction against defendant Holroyd.
The temporary injunction, dated October 25, 2005, against defendant Kirsche is dissolved in its entirety. The injunction against defendant Holroyd is dissolved with respect to subparagraphs (b), (d), and (e), but shall remain in effect with respect to subparagraphs (a) and (c).
It is so ordered.