Oceanair, Inc. v. Katzman

14 Mass. L. Rptr. 414
CourtMassachusetts Superior Court
DecidedJanuary 22, 2002
DocketNo. 003343BLS
StatusPublished
Cited by3 cases

This text of 14 Mass. L. Rptr. 414 (Oceanair, Inc. v. Katzman) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Oceanair, Inc. v. Katzman, 14 Mass. L. Rptr. 414 (Mass. Ct. App. 2002).

Opinion

van Gestel, J.

This matter is before the Court after a jury-waived trial on the merits. The Court’s findings of fact, rulings of law and an order for judgment follow. Mass.R.Civ.P. Rule 52(a). Nessralla v. Peck, 403 Mass. 757, 760 (1989).

FINDINGS OF FACT

The plaintiff Oceanair, Inc. (“Oceanair”) and the plaintiff Advance Brokers, Ltd. (“Advance”) are each Massachusetts corporations with principal places of business at the same site in Revere, Massachusetts. Both corporations, at all material times, were and are engaged in the business of providing Custom house brokerage and freight forwarding services.

The defendant David E. Katzman (“Katzman”) is an individual residing in Framingham, Massachusetts.

The defendant C.H. Powell Company (“CHP”) is a corporation with its principal place of business in Westwood, Massachusetts. CHP, like Oceanair and Advance, was and is engaged in the business of providing Custom house brokerage and freight forwarding services.

Prior to December 1996, Katzman was the sole shareholder and was an officer, director and employee of Advance. Advance was a company established by Katzman’s father, and Katzman himself had been affiliated with Advance for essentially his entire working life until December 1996.

On December 31, 1996, through a series of transactions, Katzman sold 97% of his stock in Advance to the principals of Oceanair: Edward S. Kaplan (“Kaplan”), Joseph J. Wyson (“Wyson”) and Harvey Waite, II (“Waite”). At the same time, Katzman became a 3% shareholder of Oceanair.

Katzman also signed an employment agreement (the “Employment Agreement”) with Oceanair on December 31, 1996. By the Employment Agreement, Katzman was employed “as Vice President of [Ocean-air] to render the following services: (a) day to day supervision and management of the Import Departments of [Oceanair] and Advance Brokers, Ltd . . . including preparation of annual budgets and profit and loss responsibility, reporting to the President of Oceanair, Inc. and its Board of Directors; and (b) such other duties and responsibilities that are consistent with his position and the duties and responsibilities of other statutory officers of [Oceanair] as may be determined by the Board of Directors.”

Among other things, the Employment Agreement contained non-disclosure, non-solicitation and non-competition covenants. It is only the non-competition portion of the Employment Agreement that is in issue here. In pertinent part those provisions read:

[Katzman] agrees that for a period of two years following . . . the termination of [his] employment with [Oceanair] . . . whether or not. . . termination is a breach of this agreement, [Katzman] shall not solicit or accept business from or provide custom house brokerage, freight forwarding or other transportation related services to any person, firm, company, corporation, business, or entity, which was or is a client or customer of [Oceanair] . . . while [Katzman] was employed by [Oceanair], whether such solicitation or acceptance of business or the provision of services is for [Katzman’s] own Business Entity or a Business Entity that employs him or a Business Entity with which [Katzman] is associated or interested in financially or otherwise; . . .

Katzman’s employment with Oceanair terminated at the end of March 1999. His last day on the payroll was March 31,1999. Consequently, the last day of the foregoing restrictions was March 31, 2001.

Certain disputes — not material to this case — arose between Katzman and Oceanair and its principals following the termination of Katzman’s employment. Those disputes were resolved amicably, and a settlement agreement (the “Settlement Agreement”) was executed by Katzman and the Oceanair group as of March 24, 2000. Among other things, the settlement agreement made specific reference to the December 31, 1996, Employment Agreement. Further, in a release portion of the Settlement Agreement designated Sec. 3.03, it reads:

. . . the release ... by Katzman . . . and the release of Katzman by [the Oceanair group] . . . does not release or waive any claims, rights or defenses . . . pursuant to or under (i) paragraphs 9, 10, 11, 12 and 13 . . . of the Employment Agreement, (ii) common law or statute pertaining to the protection of goodwill and trade secrets . . .

Paragraph 11 of the Employment Agreement is the non-competition covenant quoted in part above on pages 2 and 3 hereof.

A major customer of Advance, for many years before it was acquired by Oceanair, was a group of companies principally in the footwear and, to a lesser extent, the apparel business, these companies being referred to collectively by all of the parties to this case as “J. Baker.” J. Baker was actually an outgrowth of a company called Morse Shoe. Among the J. Baker subsidiaries or divisions were entities called: TCMB&T, Inc.; JBI, Inc.; JBI Apparel; and WGS Corp. Most of the J. Baker business, insofar as the parties to this suit are concerned, involved the importing of footwear and apparel by oceangoing ships, although there was some minor air freight involved as well. The business of J. Baker required extensive Custom house brokerage and freight forwarding services.

[416]*416Katzman, from as early as the time when Advance was servicing Morse Shoe, was the most senior person in charge of the J. Baker business. His principal contact at J. Baker was a woman in the import section of that group of companies named Christine Lanoue (“Lanoue”). Lanoue relied heavily on Katzman’s considerable expertise in the Custom house brokerage business, calling him her mentor in the subject.

Custom house brokerage business is highly regulated by the U.S. Customs Service, an agency in the Department of the Treasury. The Code of Federal Regulations, in Title 19, is replete with rules and regulations applicable to customs brokers and the customs brokerage business.

Katzman’s significant role with Lanoue and the J. Baker accounts continued after and throughout his employment at Oceanair. It ceased, however, upon his termination of employment with Oceanair at the end of March 1999. At about that time, Katzman and Kaplan, the latter being the president of Oceanair, visited with Lanoue at her office at J. Baker to report on the termination of Katzman’s employment. She was told that the separation was by mutual agreement and was assured that everything regarding the J. Baker business would be fine. She, however, was concerned.

About a week later, Lanoue and Katzman spoke again. She remembers Katzman trying to reassure her that everything would be fine. He was, she said, very quiet and did not seem to want to go into any details.

Lanoue was upset at the change and extremely disappointed. It did not make any sense to her from a business point of view. And she was losing her major contact at one of her principal Custom house brokerage firms. Oceanair did essentially all of the J. Baker Custom house brokerage work in the Northeast. The only other Custom house broker that J. Baker was using at the time was a company called Carmichael, which handled West Coast work and some Southern ports.

Katzman had no particular employment plans when he separated from Oceanair in April of 1999. Lanoue discussed his future with him in a general way. She told him about a possible interest she had in hiring him to come in-house at J. Baker to run an import division. Her concept was some kind of a separate company or division at J.

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Cite This Page — Counsel Stack

Bluebook (online)
14 Mass. L. Rptr. 414, Counsel Stack Legal Research, https://law.counselstack.com/opinion/oceanair-inc-v-katzman-masssuperct-2002.