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Judges differ in non-compete agreement case

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In a legal dispute regarding a non-compete agreement, the Indiana Court of Appeals judges disagreed as to whether the agreement could be enforced if the former employee's clients voluntarily left and contacted him to continue to be their accountant.

At issue in Craig P. Coffman and Coffman Proactive CPA Services, LLC v. Olson & Co., P.C., No. 53A04-0804-CV-190, is whether Olson & Co. had a protectable interest that could be enforced by a non-compete provision in an employment agreement and whether the trial court erred by voiding the liquidated damages provision in the agreement and calculating the damages award.

Craig Coffman worked as CPA for Olson & Co. and signed a confidential non-disclosure and client proprietary agreement that said upon termination of his employment with the company he couldn't contact or work with Olson clients for 24 months. If he did so, he would liable to Olson for two times the client's most recent 12-months billings with Olson if he informed the company of the violation of the agreement; if Coffman failed to inform Olson, he would be liable for three times the amount.

Coffman left the company to form his own. After he left, he was contacted by his former clients at Olson who wanted to retain him as their accountant. Coffman didn't notify or compensate Olson.

Olson filed suit against Coffman in which the trial court concluded Olson established a legitimate interest that may be protected by a covenant not to compete - the names and addresses of Olson's clients to which Coffman gained an advantage by representing them while at Olson. The trial court found the liquidated damage clause to be a penalty and unenforceable and awarded Olson nearly $80,000 based on fees Olson received from its former clients that now worked with Coffman.

The majority concluded the agreement wasn't unreasonable because Coffman had gained an advantage through representative contact with Olson's clients. Olson structured its business in a way that clients only dealt with their accountant and the agreement protected Olson's goodwill, business reputation, and client contacts against potential vulnerability if an accountant left, wrote Judge James Kirsch. The majority didn't find Coffman's argument persuasive that the agreement didn't apply to his situation because the clients had already left Olson and some even hired other accountants before contacting him.

The majority affirmed the trial court's award to be within the scope of the evidence and a reasonable determination of the damages award.

Judge Terry Crone disagreed, believing once a client voluntarily ceased doing business with Olson, any goodwill the company enjoyed with respect to those clients ceased to exist, as did any protectable interest. Absent a legitimate protectable interest, the agreement is unenforceable, he wrote, and absent actual damages, there's no basis for awarding liquidated damages.

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  1. @ President Snow, like they really read these comments or have the GUTS to show what is the right thing to do. They are just worrying about planning the next retirement party, the others JUST DO NOT CARE about what is right. Its the Good Ol'Boys - they do not care about the rights of the mother or child, they just care about their next vote, which, from what I gather, the mother left the state of Indiana because of the domestic violence that was going on through out the marriage, the father had three restraining orders on him from three different women, but yet, the COA judges sent a strong message, go ahead men put your women in place, do what you have to do, you have our backs... I just wish the REAL truth could be told about this situation... Please pray for this child and mother that God will some how make things right and send a miracle from above.

  2. I hear you.... Us Christians are the minority. The LGBTs groups have more rights than the Christians..... How come when we express our faith openly in public we are prosecuted? This justice system do not want to seem "bias" but yet forgets who have voted them into office.

  3. Perhaps the lady chief justice, or lady appellate court chief judge, or one of the many female federal court judges in Ind could lead this discussion of gender disparity? THINK WITH ME .... any real examples of race or gender bias reported on this ezine? But think about ADA cases ... hmmmm ... could it be that the ISC actually needs to tighten its ADA function instead? Let's ask me or Attorney Straw. And how about religion? Remember it, it used to be right up there with race, and actually more protected than gender. Used to be. Patrick J Buchanan observes: " After World War II, our judicial dictatorship began a purge of public manifestations of the “Christian nation” Harry Truman said we were. In 2009, Barack Obama retorted, “We do not consider ourselves to be a Christian nation.” Secularism had been enthroned as our established religion, with only the most feeble of protests." http://www.wnd.com/2017/02/is-secession-a-solution-to-cultural-war/#q3yVdhxDVMMxiCmy.99 I could link to any of my supreme court filings here, but have done that more than enough. My case is an exclamation mark on what PJB writes. BUT not in ISC, where the progressives obsess on race and gender .... despite a lack of predicate acts in the past decade. Interested in reading more on this subject? Search for "Florida" on this ezine.

  4. Great questions to six jurists. The legislature should open a probe to investigate possible government corruption. Cj rush has shown courage as has justice Steven David. Who stands with them?

  5. The is an unsigned editorial masquerading as a news story. Almost everyone quoted was biased in favor of letting all illegal immigrants remain in the U.S. (Ignoring that Obama deported 3.5 million in 8 years). For some reason Obama enforcing part of the immigration laws was O.K. but Trump enforcing additional parts is terrible. I have listed to press conferences and explanations of the Homeland Security memos and I gather from them that less than 1 million will be targeted for deportation, the "dreamers" will be left alone and illegals arriving in the last two years -- especially those arriving very recently -- will be subject to deportation but after the criminals. This will not substantially affect the GDP negatively, especially as it will take place over a number of years. I personally think this is a rational approach to the illegal immigration problem. It may cause Congress to finally pass new immigration laws rationalizing the whole immigration situation.

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