Midcom, Inc. v. Oehlerking

2006 SD 87, 722 N.W.2d 722, 2006 S.D. LEXIS 146, 2006 WL 2781041
CourtSouth Dakota Supreme Court
DecidedSeptember 27, 2006
Docket23623
StatusPublished
Cited by14 cases

This text of 2006 SD 87 (Midcom, Inc. v. Oehlerking) is published on Counsel Stack Legal Research, covering South Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Midcom, Inc. v. Oehlerking, 2006 SD 87, 722 N.W.2d 722, 2006 S.D. LEXIS 146, 2006 WL 2781041 (S.D. 2006).

Opinions

KONENKAMP, Justice.

[¶ 1.] While employed at Midcom, Inc., Anthony J. Oehlerking signed a covenant not to compete. When he resigned to work for a direct competitor, Midcom sought to enforce the covenant. Oehlerk-ing claimed, however, that it was void and otherwise unenforceable. After a trial, the circuit court ruled that the covenant was valid and enforceable. The court issued two judgments, one enjoining Oehlerking from violating the covenant, and one awarding Midcom attorney’s fees based on a provision in the contract allowing a reasonable award of fees to the prevailing party. Oehlerking appeals both judgments. Because Oehlerking’s notice of appeal from the first judgment was untimely, we dismiss that appeal. On the second judgment, we affirm the award of attorney’s fees.

Background

[¶ 2.] Midcom is based in Watertown, South Dakota. It produces electronic components primarily for the telecommunications industry. Just after he received his degree in electrical engineering, Oehlerking was hired by Midcom in 1994 as a design engineer. Over the next several years, he earned promotions and salary increases. Then, in 1998, Midcom offered him a “Performance Stock Unit Appreciation Rights Agreement.” Included in the agreement was a covenant not to compete provision. He signed a second similar agreement in February 2000 with another noncompetition clause. By its terms, Oeh-lerking was restricted from competing directly or indirectly with Midcom anywhere it does business for at least two years after leaving his job with Midcom..

[724]*724[¶ 3.] In the late 1990s, Midcom’s business did particularly well. Oehlerking received sizable bonuses in addition to his $85,000 salary as the manager of the LAN business unit. According to Midcom, for fiscal years 1999 and 2000, the bonuses Oehlerking received in addition to his salary were $36,517 and $20,984 respectively. In the latter part of 2000, however, Mid-com suffered a significant downturn in business. Effective April 2001, Midcom discontinued employee bonuses, reduced salaries, and ceased its contributions to retirement plans.

[¶ 4.] As a consequence, Oehlerking suffered a twenty percent salary reduction. He believed that the true effect was a sixty-five percent reduction because he lost the bonuses and contributions to his retirement account. His taxable income before the reduction, as reflected by his tax documents, was $115,901 in 2000, and $90,041 in 2001. In 2002, his income fell to $71,404, and, in 2003, it increased to $79,055. According to Midcom, though, his income before the reductions was “unusually high” because of the bonuses paid for fiscal years 1999 and 2000.

[¶ 5.] Nonetheless, when Midcom instituted its benefits reductions, it assured Oehlerking and other employees that the salaries would eventually be restored. Indeed, Midcom began increasing salaries in July 2002. Oehlerking’s salary went from $70,054 during the reduction, to $85,800 after the restoration. For Oehlerking, however, this was not a “restoration” because he still did not receive bonuses or retirement contributions. Equally detrimental, in Oehlerking’s view, was his demotion from the manager of the LAN business unit to a product manager. In losing his managerial responsibilities, he felt “deeply saddened, psychologically distressed, and humiliated.” According to Midcom, however, he was demoted because the company had restructured. In fact, Oehlerking’s last performance review, in April 2004, was positive. Also, the demotion did not affect his salary. And, according to the company, he retained the same, if not more, job responsibilities.

[¶ 6.] Despite these changes, which began in 2001, Oehlerking continued with the company. In 2004, however, he was contacted by Pulse Engineering of San Diego, California and offered employment that would return some of the benefits he originally enjoyed with Midcom. This opportunity was attractive to Oehlerking, and, on June 25, 2004, he gave Midcom his resignation letter. Thereafter, he was invited to meet with his supervisor, in-house counsel, and Midcom’s president. Oehlerking went to the meeting thinking that Midcom might present him with a counteroffer. But the covenant not to compete was the only item on the agenda. Pulse Engineering is a direct competitor of Midcom, selling the same products for the same applications.

[¶ 7.] After he left in July 2004, Mid-com brought suit to enforce the covenant not to compete by seeking an injunction, as well as attorney’s fees allowable under the agreement Oehlerking had signed. On July 29, 2004, after an evidentiary hearing, the circuit court issued a preliminary injunction enforcing the terms of the agreement and enjoining Oehlerking from accepting or continuing employment with Pulse Engineering.

[¶8.] In trial the following October, Oehlerking argued that Midcom detrimentally altered all material aspects of his employment so much that it amounted to a “constructive discharge.” Under this theory, he claimed that the covenant was void. He further asserted that Midcom was es-topped from enforcing the covenant against him because it had not enforced the same covenant against at least three [725]*725other employees. The court rejected Oeh-lerking’s arguments, finding that the covenant was enforceable and that Midcom was not estopped from enforcing the agreement.

[¶ 9.] After the trial, Midcom requested attorney’s fees and costs of $18,360.05.1 Oehlerking objected, claiming that the fee was unreasonable in light of the fact that this case proceeded so quickly, the issues were not new, and his total fees, by contrast, were $8,029. A hearing was held on February 2005, and the court concluded that the fees were reasonable and awarded Midcom the entire amount requested.

[¶ 10.] On appeal, Oehlerking argues that (1) the circuit court erred in enforcing the covenant not to compete, and (2) the court erred in its award of attorney’s fees. Midcom contends that Oehlerking failed to timely file his notice of appeal on the first issue.

1. Timeliness of Appeal

[¶ 11.] If Oehlerking failed to timely appeal, we will have no jurisdiction to consider his arguments. Long v. Knight Const. Co., Inc., 262 N.W.2d 207, 208-09 (S.D.1978). Under our former version of the rule, in effect at the time, an appeal was timely when a notice of appeal was filed “within sixty days after the judgment or order shall be signed, attested, filed, and written notice of entry thereof shall have been given to the adverse party.” SDCL 15-26A-6.2 See Sawyer v. Farm Bureau Mut. Ins. Co., 2000 SD 144, ¶ 9, 619 N.W.2d 644, 647. We regard the term “judgment” to mean a “judgment which is final rather than interlocutory.” Riede v. Phillips, 277 N.W.2d 720, 722 (S.D.1979) (citations omitted). To be final, a judgment must “finally and completely adjudicate all of the issues of fact and law involved in the case.” Griffin v. Dwyer, 88 S.D. 357, 358, 220 N.W.2d 1, 2 (1974) (citing Dolan v. Hudson, 83 S.D. 144, 156 N.W.2d 78 (1968)); see also Riede, 277 N.W.2d at 722.

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Midcom, Inc. v. Oehlerking
2006 SD 87 (South Dakota Supreme Court, 2006)

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Bluebook (online)
2006 SD 87, 722 N.W.2d 722, 2006 S.D. LEXIS 146, 2006 WL 2781041, Counsel Stack Legal Research, https://law.counselstack.com/opinion/midcom-inc-v-oehlerking-sd-2006.