Clark's Sales & Services, Inc. v. John D. Smith and Ferguson Enterprises, Inc. - 1/22/14

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Wednesday  January 22, 2014 
11:00 AM  EST

10:30 a.m. 49A02-1306-PL-552. Clark’s Sales & Service, Inc. (“Clark’s”) appeals the trial court’s order denying its motion for preliminary injunction as to a restrictive covenant it sought to enforce against former Clark’s employee, John D. Smith, and his new employer, Ferguson Enterprises Inc.  Smith worked for Clark’s for approximately fourteen years before leaving to work for Ferguson.  During his employment with Clark’s, Smith signed an employment agreement which included a noncompetition provision.  The trial court concluded that the noncompetition provision that Clark’s drafted is overly broad and unenforceable. Clark’s maintains that the noncompetition provision is reasonable and enforceable as written but, in the event we determine that it is not, Clark’s requests this Court to apply the blue pencil doctrine to make the provision reasonable and enforceable. If it is determined that the noncompetition provision in the employment agreement is (or can be made) reasonable and enforceable, Smith and Ferguson assert that Clark’s request for an injunction must still fail because Clark’s previously committed a material breach of the employment contract it now seeks to enforce.  Clark’s responds that a “survival of obligations” provision in the contract precludes Smith from raising the material breach defense.

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