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COA rules preliminary injunction wrongly extended noncompete agreement

November 13, 2013

In reviewing a dispute over the terms of a noncompete agreement, the Indiana Court of Appeals reminded the trial court that a preliminary injunction has limits.

Even though the Court of Appeals affirmed the preliminary injunction against Robert Kuntz, it determined the trial court had erred when it extended the duration of the noncompete and awarded attorney fees.

Kuntz sold his business repairing electric auto parts and leased the company’s property to JS Hare Inc. in 2007. At that time, Kuntz entered into a noncompete agreement prohibiting him from doing similar work for the next seven and a half years.

In December 2011, JS Hare sold its assets to EVI, LLC. Several months later, after EVI became concerned that Kuntz was violating his noncompete, it filed suit and requested a preliminary injunction.

The Court of Appeals ruled in Robert Kuntz, Kunodu, Inc. and B-K Interests, LLC v. EVI, LLC, 02A03-1301-PL-14, that the trial court did not abuse its discretion in granting a preliminary injunction against Kuntz.

However, the COA pointed out the purpose of a preliminary injunction is to preserve the status quo until the court can issue a ruling on the dispute.

Therefore, since the last uncontested position of the parties was that the noncompete agreement expired in October 2014, the trial court should not have tacked on additional months. Also, since neither party had prevailed with a judgment or settlement that grants the relief sought, the lower court erred by awarding attorney fees to EVI.

 

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