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Fyfe Co., LLC v. Structural Group, Inc.

United States District Court, D. Maryland

September 7, 2016

FYFE CO., LLC, et al.,
v.
STRUCTURAL GROUP, INC., et al.

          MEMORANDUM

          Catherine C. Blake United States District Judge.

         Plaintiffs Fyfe Co., LLC (“Fyfe”), Fibrwrap Construction Services, Inc., and Fibrwrap Construction Services USA, Inc. (“Fibrwrap”), bring this lawsuit against defendant Structural Group, Inc. (“Structural”), and individual defendants Jason Alexander, Mark Geraghty, Anna Pridmore, and Shaun Loeding. They assert various tort and breach of contract claims relating to the individual defendants' resignation from Fyfe or its affiliated companies. Now pending are plaintiffs' motion for partial summary judgment (ECF No. 173), and defendants' motion for summary judgment, or in the alternative, partial summary judgment. (ECF No. 182).[1]

         The motions are fully briefed, and no oral argument is necessary. See Local R. 105.6. For the reasons set forth below, plaintiffs' motion will be denied in part and denied in part without prejudice, and defendants' motion will be granted in part, denied in part, and denied in part without prejudice.

         BACKGROUND

         Fyfe manufactures products used in construction strengthening systems for the repair and restoration of buildings; the Fibrwrap plaintiffs specialize in concrete repairs as well as the installation and construction of construction strengthening system products. All plaintiffs are incorporated in Delaware and headquartered in Missouri. (ECF No 175, Ex. 2, ¶¶ 2-12). Defendant Structural, allegedly a direct competitor of plaintiffs, is a specialty construction, repair, and maintenance services company incorporated and headquartered in Maryland. (ECF No. 67, ¶ 27; ECF No. 127, ¶ 27).

         Until December 2012, each individual defendant worked for Fyfe or its affiliated companies. (ECF No. 67, ¶ 64; ECF No. 127, ¶ 64). Alexander, Geraghty, and Pridmore are all residents of California, and Loeding is a resident of New York. As part of their employment contracts, Geraghty, Pridmore, and Loeding (Vice President of Sales and Marketing for Fibrwrap, Vice President of Pipelines for Fyfe, and Vice President of Engineering for Fibrwrap, respectively) agreed not to use Fyfe or its parent companies' confidential information and trade secrets for his or her own personal benefit or that of a third party. (ECF No. 1, Ex. 3; ECF No. 1, Ex. 4; ECF No. 1, Ex. 5). In addition, they agreed not to “directly or indirectly participate in the recruitment, solicitation or hiring” of any employee of Fyfe or its parent companies by any other person or entity. (ECF No. 1, Ex. 3, p. 3; ECF No. 1, Ex. 4, p. 3; ECF No. 1, Ex. 5, p. 2). Likewise, Alexander, who held the position of Vice President of both Fyfe and Fibrwrap, signed an Executive Employment Agreement, which prohibited him from using confidential information for anyone other than Fyfe, from engaging in business that competed against Fyfe, and from soliciting its employees to leave their employment. (ECF No. 175, Ex. 11).

         The individual defendants announced their resignations from Fyfe or its parent companies on December 13, 2012-Alexander and Loeding gave December 28, 2012, as their last day of employment, and Pridmore and Geraghty gave December 31, 2012, as their last day. (ECF No. 127, ¶ 64; ECF No. 175, Ex. 6, p. 3). Each began his or her new position at Structural the following month. (Id.). Plaintiffs allege that, during this time, each individual defendant solicited the others to defect from Fyfe and its affiliated companies and accept employment at Structural. (See ECF No. 67). Plaintiffs also allege that, before leaving plaintiffs' employ, the individual defendants destroyed plaintiffs' files; improperly communicated with Structural; improperly bid on projects without disclosing a conflict of interest; and used plaintiffs' confidential information and trade secrets at Structural to compete with plaintiffs. (See id.).

         Plaintiffs filed their first complaint on January 16, 2013, seeking damages and other relief for these alleged acts. (ECF No. 1). They filed an amended complaint on January 22, 2013 (ECF No. 13), and after the court granted the individual defendants' motion to dismiss, the plaintiffs filed a second amended complaint on August 5, 2013. (ECF No. 67). Two subsequent motions to dismiss were denied. (ECF No. 125). Ten claims now remain against the defendants, either individually or jointly: breach of contract (Counts I and V); breaches of fiduciary duty and the duty of loyalty (Counts II and IV); misappropriation of trade secrets (Count III); unfair business practices (Count VII); aiding and abetting (Count VIII); tortious interference with contractual relations (Count IX); civil conspiracy (Count X); and preliminary and permanent injunctive relief (Count XI).

         In their motion, plaintiffs assert they are entitled to summary judgment in their favor on Counts II and IV, and parts of Counts I and IX. (ECF No. 173). Defendants move for summary judgment on all claims. (ECF No. 182).

         STANDARD OF REVIEW

         Federal Rule of Civil Procedure 56(a) provides that summary judgment should be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “A dispute is genuine if ‘a reasonable jury could return a verdict for the nonmoving party.'” Libertarian Party of Va. v. Judd, 718 F.3d 308, 313 (4th Cir. 2013) (quoting Dulaney v. Packaging Corp. of Am., 673 F.3d 323, 330 (4th Cir. 2012). “A fact is material if it ‘might affect the outcome of the suit under the governing law.'” Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). Accordingly, “the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment.” Anderson, 477 U.S. at 247-48.

         When considering a motion for summary judgment, the court must view the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in that party's favor. Dennis v. Columbia Colleton Med. Ctr., Inc., 290 F.3d 639, 645 (4th Cir. 2002). At the same time, the court must “prevent factually unsupported claims and defenses from proceeding to trial.” Bouchat v. Balt. Ravens Football Club, Inc., 346 F.3d 514, 526 (4th Cir. 2003) (quoting Drewitt v. Pratt, 999 F.2d 774, 778-79 (4th Cir. 2003)). The critical question is whether a reasonable fact finder could return a verdict for the non-moving party, or whether the movant would, at trial, be entitled to judgment as a matter of law. See Anderson, 477 U.S. 242; Shealy v. Winston, 929 F.2d 1009, 1012 (4th Cir. 1991).

         Finally, when reviewing cross-motions for summary judgment, as in this case, the court must “review each motion separately on its own merits to determine whether either of the parties deserves judgment as a matter of law.” Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003), cert. denied, 540 U.S. 822 (2003) (internal citation and quotation marks omitted). “The court must deny both motions if it finds there is a genuine issue of material fact, [b]ut if there is no genuine issue and one or the other party is entitled to prevail as a matter of law, the court will render judgment.” Thomas v. Artino, 723 F.Supp.2d 822, 829 (D. Md. 2010) (internal quotation marks omitted) (citing 10A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2720 (3d ed. 1983)).

         ANALYSIS

         Between the parties' respective motions for summary judgment, each of the ten counts remaining in the second amended complaint is at issue. To more efficiently address the parties' arguments, this opinion is organized by type of claim rather than by count. For the reasons that follow, plaintiffs' motion for summary judgment will be denied in part without prejudice (as to the Count II and IV claims for breach of fiduciary duty and breach of duty of loyalty), and denied in part (as to all remaining claims). Defendants' cross-motion for summary judgment will be granted in part (as to the portions of Counts I and IX arising from Alexander's alleged breach of the non-compete, and Count III in its entirety), denied in part without prejudice (as to portions of Counts I and V arising from the alleged misuse of confidential information, as well as the Count II and IV claims for breach of fiduciary duty and breach of duty of loyalty), and denied in part (as to all remaining claims).

         I. Breach of Contract Claims

         A. Under California Law, the Covenant Not to Compete in ...


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