Inergy Propane, LLC v. Lundy

2009 OK CIV APP 8, 219 P.3d 547, 2008 Okla. Civ. App. LEXIS 102, 2008 WL 5726461
CourtCourt of Civil Appeals of Oklahoma
DecidedAugust 13, 2008
Docket103,914. Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 2
StatusPublished
Cited by7 cases

This text of 2009 OK CIV APP 8 (Inergy Propane, LLC v. Lundy) is published on Counsel Stack Legal Research, covering Court of Civil Appeals of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Inergy Propane, LLC v. Lundy, 2009 OK CIV APP 8, 219 P.3d 547, 2008 Okla. Civ. App. LEXIS 102, 2008 WL 5726461 (Okla. Ct. App. 2008).

Opinions

JOHN F. FISCHER, Judge.

1 1 David L. Lundy, individually and d/b/a Dave Lundy Propane, appeals from a temporary injunction requiring Lundy to remove any propane tanks from Lineoln, Logan, Pottawatomie and Cleveland counties and to comply with the terms of a non-compete agreement and the terms of a confidentiality [551]*551and non-solicitation agreement. After reviewing the record and hearing the oral arguments of counsel, we find the evidence in the record sufficient to warrant the issuance of a preliminary injunction and affirm.

BACKGROUND FACTS

12 Lundy started working in the propane business in 1977. On October 26, 1992, Lun-dy sold his propane business to Beck & Root Fuel Company (Beck & Root) pursuant to an Asset Purchase Agreement. As part of that transaction, Lundy signed a Covenant Not to Compete (Non-Compete Agreement). The Non-Compete Agreement provided that Lundy would not engage in the propane business in Lincoln, Logan, Pottawatomie and Cleveland counties for a period of 15 years. Separate consideration was agreed for the Non-Compete Agreement in the amount of $300,600, payable in 180 monthly installments of $1,670. Inergy Propane, LLC, is the sue-cessor in interest to Beck & Root. The date and terms of this acquisition are not apparent from the record.

13 After the sale of his propane business, Lundy went to work for Inergy in essentially the same geographic area previously served by the business he sold in 1992. He was employed from 1998 to 2000, and again from June 2002 to January 2005. As partial consideration for his second employment, Inergy required and Lundy signed a Confidentiality and Non-Solicitation Agreement (Non-Solicitation Agreement). That Agreement defined confidential information to include Inergy's customer information and customer lists, its pricing information, business strategies and other trade secrets. Excluded from this definition was information rightfully known to Lundy prior to his employment and information properly within the public domain. The Non-Solicitation Agreement prohibited Lun-dy from disclosing or using Inergy's confidential information during the term of and after termination of his employment. The Non-Solicitation Agreement also prohibited Lundy, for one year following termination of his employment, from hiring Inergy employees to work for another employer. Finally, the Non-Solicitation Agreement prohibited Lundy, for two years following termination of his employment, from soliciting or diverting the business of any Inergy customer within fifty miles of the Inergy locations to which Lundy had been assigned. A provision in the Non-Solicitation Agreement acknowledges that it is not intended to prohibit competition between Inergy and Lundy or his employment by a competing firm except as prohibited by the terms of the Agreement.

T4 Lundy resigned from his second employment at Inergy in January 2005, and started a new propane business. The customers of Lundy's new business included former Inergy customers and non-Inergy customers located in the four counties mentioned in the Non-Compete Agreement.

1 5 Inergy filed suit on August 9, 2005, and moved for a preliminary injunction on March 29, 2006. At the hearing on its motion, Iner-gy introduced evidence showing that certain customers of Lundy's new business had been Inergy customers, that Lundy utilized old Inergy sales tickets with his new customers, at least some of which did not clearly disclose the identity of Lundy's new operation, and that Lundy had made disparaging remarks to some Inergy customers in an effort to obtain their business. Lundy acknowledges that former Inergy customers are customers of his new business but contends that they sought him out and that he did not solicit their business. The district court granted Inergy's motion for preliminary injunction on October 5, 2006. It is from that order that Lundy appeals.

STANDARD OF REVIEW

16 Although the underlying issues in this appeal involve the enforcement of a contract, an action at law, see Pitco Production Company v. Chaparral Energy, Inc., 2003 OK 5, ¶ 12, 63 P.3d 541, 545, the injunce-tive relief sought by Inergy invoked the district court's equitable jurisdiction. Sharp v. 251st St. Landfill, Inc., 1996 OK 109, ¶ 4, 925 P.2d 546, 549. An injunction is an "extraordinary remedy, and relief by this means is not to be lightly granted." Amoco Prod. Co. v. Lindley, 1980 OK 6, ¶ 50, 609 P.2d 733, 745. Entitlement to injunctive relief must be established by clear and convincing evidence. Sharp, 1996 OK 109 at ¶ 5, 925 P.2d at 549. [552]*552"The standard of review imposed for the issuance of a temporary injunction is whether the district court abused its discretion or entered a decision against the evidence." Brown v. Oklahoma Secondary Sch. Activities Ass'n, 2005 OK 88, ¶ 11, 125 P.3d 1219, 1225 (footnote omitted). The discretion of the district court to grant an injunction must be made according to well established equitable principles. Cloer v. Gillespie, 1963 OK 195, ¶ 12, 386 P.2d 1015, 1018. In reviewing the decision, the appellate court will consider and weigh the evidence presented to the district court. Board of Regents v. NCAA, 1977 OK 17, ¶ 3, 561 P.2d 499, 502.

DISCUSSION

17 Lundy raises four arguments in this appeal. He challenges Inergy's authority to enforce the Non-Compete Agreement arguing it required his consent, which he did not give, before it could be assigned. He argues that the Non-Solicitation Agreement super-ceded the Non-Compete Agreement and that the later agreement specifically permits competition. He contends that the Non-Compete and Non-Solicitation Agreements are unenforceable as unlawful restraints on trade. He also argues that the extraordinary remedy of a temporary injunction is inappropriate in this case.1

I. Inergy May Enforce the Non-Compete Agreement

T8 Lundy correctly points out that the Non-Compete Agreement is not "assignable by Obligors without the prior written consent of Lundys." Beck & Root and Phillip D. Root, individually, are the parties identified in the Non-Compete Agreement as the Obligors. Although Lundy did consent, in writing, when the company was acquired by Inergy's predecessor, he did not sign any consent when Inergy acquired his former business. He argues, therefore, that Inergy cannot enforce the Non-Compete Agreement. Several problems defeat this argument.

T9 First, it is undisputed that Inergy is the successor to Beck & Root. As a general rule, a successor corporation may enforce the contractual rights of its predecessor. Cf, Farren v. Autoviable Servs., Inc., 1973 OK 4, 508 P.2d 646 (surviving corporation after merger could enforce non-compete agreement between the acquired corporation and its former president).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Exencial Wealth Advisors, LLC v. Downing
2025 NCBC 18 (North Carolina Business Court, 2025)
Aceco Valves, LLC v. Neal
W.D. Oklahoma, 2023
Chris Cardoni v. Prosperity Bank
805 F.3d 573 (Fifth Circuit, 2015)
Howard v. Nitro-Lift Technologies, L.L.C.
2011 OK 98 (Supreme Court of Oklahoma, 2011)
Shepherd v. KAWASAKI USA
2010 OK CIV APP 60 (Court of Civil Appeals of Oklahoma, 2010)
Inergy Propane, LLC v. Lundy
2009 OK CIV APP 8 (Court of Civil Appeals of Oklahoma, 2008)

Cite This Page — Counsel Stack

Bluebook (online)
2009 OK CIV APP 8, 219 P.3d 547, 2008 Okla. Civ. App. LEXIS 102, 2008 WL 5726461, Counsel Stack Legal Research, https://law.counselstack.com/opinion/inergy-propane-llc-v-lundy-oklacivapp-2008.