Pielet v. Pielet

686 F.2d 1210
CourtCourt of Appeals for the Seventh Circuit
DecidedAugust 12, 1982
DocketNo. 81-2117
StatusPublished
Cited by9 cases

This text of 686 F.2d 1210 (Pielet v. Pielet) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pielet v. Pielet, 686 F.2d 1210 (7th Cir. 1982).

Opinion

NICHOLS, Associate Judge.

This case comes before the court on appeal from a judgment against appellants entered by the Honorable Bernard M. Decker, United States District Court for the Northern District of Illinois, Eastern Division, on June 11, 1981.

In 1975, defendant, Arthur Pielet, bought all of the common stock of the family scrap metal business from his brothers, Seymour, Samuel, and Irving. Previously, all four brothers had owned the business in equal shares. The business had grown in a few years from small beginnings, and became highly successful. Plaintiffs-appellees sold their interests in the business to Arthur, receiving as consideration $10 million in cash and some $600,000 in used equipment. In addition, plaintiffs were to remain on the payroll of Pielet Bros. Scrap and of Joliet Railway Equipment Co., another family business, as part-time consultants through January 1, 1977, receiving, in addition to [1212]*1212their salaries, the right to their interests in the companies’ profit-sharing plans. One year later, Arthur claimed that his brothers, by virtue of various actions they had taken, forfeited all rights in the corporate profit-sharing funds.

The case was first brought in an Illinois State Court as an action where plaintiffsappellees sought declaratory relief regarding their rights under the above-mentioned profit-sharing plans. On defendants’ motion, the case was removed to the U. S. district court where defendants counterclaimed for damages and injunctive relief alleging violations of certain noncompetition agreements and acts of unfair competition. The noncompetition agreements were actually provisions of the employment contracts entered into as part of the 1975 buyout.

Prior to trial, plaintiffs moved for partial summary judgment, seeking a declaratory judgment that they were permitted to deal in scrap in Chicago and that the forfeiture of their interest in the Pielet Bros, profit-sharing plan was illegal. Although plaintiffs-appellees’ interests in both the Pielet Bros. Employees’ Profit-Sharing Plan and the Joliet Railway Equipment Company Employees’ Profit-Sharing Plan are the subject of this appeal, the latter plan, i.e., the Joliet Railway Plan, was not in issue on plaintiffs’ motion for partial summary judgment.

On February 3, 1978, the district court filed a memorandum opinion and order denying plaintiffs’ motion for partial summary judgment on both the scrap-dealing and the forfeiture issues. In its opinion, the court concluded that section 7 of each of the employment agreements was meant to, and did in fact, govern the amount of competition that was to be permitted between the parties notwithstanding the existence of a noncompete provision in the Pielet Bros, profit-sharing plan.

Section 7 of the employment agreements provided:

Both parties recognize that the services to be rendered under this Agreement and the knowledge now possessed and to be acquired hereunder by Employee are special, unique, and of extraordinary character. [Employee] shall not, for a period of five years subsequent to the date of this Agreement, directly or indirectly, alone, or as a member of a partnership or as an officer, director, stockholder or investor of or in any other corporation or enterprise (except as an investor in a publicly held corporation listed on a national securities exchange), or otherwise, own, operate or participate in the ownership or operation of a scrap yard or shredder within Chicago, Illinois or 100 miles of the city limits of Chicago, Illinois, excluding the cities of Milwaukee, Wisconsin and Sterling, Illinois. During such period, Employee shall not communicate or divulge to any person, firm or corporation, either directly or indirectly, any business affairs of Employer, any experience gained by him in the Employer’s employ, the names of any of Employer’s customers, or any other information not generally available to the public relating to Employer’s business affairs or products.

The pertinent provisions of the Pielet Bros, profit-sharing plan relating to non-competition were as follows:

8.01 Any participant who becomes a Terminated Employee shall be entitled to receive the entire amount of his account attributable to his Employee Contributions, and, unless he has been discharged for “cause,” as hereinafter defined, he shall be entitled to receive that portion (sometimes referred to herein as the “vested interest”) of the amount of his account attributable to Employer Contributions as is shown by the following table:
If the Number of his Pull Consecutive Plan The Portion of the Amount Years of Participation of his Account Balance Is: Shall Be:
1 10%
2 20%
3 30%
4 40%
5 50%
6 60%
7 70%
9 90%
10 or more 100%
[1213]*12138.02 Discharge for “cause” shall mean discharge for * * * actively engaging in or working for a business in direct competition with an Employer while employed by an Employer. * * *

The equivalent provisions of the Joliet Railway Plan were:

8.01 Any Participant who becomes a Terminated Employee shall be entitled to receive the entire amount of his Account Balance attributable to his Employee ■ Contributions, and, unless he commits or has committed a “prohibited act” (as hereinafter defined), he shall be entitled to receive that portion (sometimes referred to herein as the “vested interest”) of his Account Balance attributable to Employer Contributions as is shown by the following: table:
If the Number of his Full Consecutive Plan Years of Participation Is: The Portion of the Amount of his Account Balance Shall Be:
1 10%
2 20%
3 30%
4 40%
5 50%
6 60%
7 70%
8 80%
9 90%
10 or more 100%
10.04 For purposes of the Plan, a “prohibited act” shall mean any of the following: * * * (d) engaging in activity, while in the employ of an Employer, which competes with any activity of an Employgp. * * *

The district court also concluded that section 7 was ambiguous and to clarify the ambiguity, it would be necessary to resolve disputed facts, which could not be done on a motion for summary judgment. This conclusion made trial necessary.

Subsequent to the denial of partial summary judgment, the case proceeded to trial on plaintiffs’ claim for profit-sharing plan benefits and defendants’ claims for breach of contract and unfair competition, before a jury on April 20, 1981. At the trial, there was a good deal of evidence about the actual negotiation of Arthur’s purchase and the related employment agreements. There is no need to state this evidence in detail. At the least of it, the jury could have found that Arthur fully understood that by section 7 his brothers would compete with a scrap yard or shredder outside 100 miles of Chicago and buy and sell within that limit.

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Bluebook (online)
686 F.2d 1210, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pielet-v-pielet-ca7-1982.