Robert Butch Trost, Sr. v. Donald O'Connor

Louisiana Court of Appeal·Decided April 4, 2007·No. CA-0006-1281·Unknown

Opinion

STATE OF LOUISIANA

COURT OF APPEAL, THIRD CIRCUIT

06-1281

ROBERT BUTCH TROST, SR., ET AL. VERSUS DONALD O’CONNOR, ET AL.

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APPEAL FROM THE

FOURTEENTH JUDICIAL DISTRICT COURT PARISH OF CALCASIEU, NO. 03-3741 HONORABLE DAVID KENT SAVOIE, DISTRICT JUDGE

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ULYSSES GENE THIBODEAUX

CHIEF JUDGE

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Court composed of Ulysses Gene Thibodeaux, Chief Judge, Marc T. Amy, and Glenn B. Gremillion, Judges.

AFFIRMED AND REMANDED FOR THE TRIAL COURT’S DISPOSITION OF THE CONTEMPT JUDGMENT.

James Buckner Doyle 4809 Ihles Road Lake Charles, LA 70605 Telephone: (337) 474-9989 COUNSEL FOR:

Defendants/Appellants - Donald O’Connor, Complete Insulation, Drywall, and Painting, LLC, and Complete Drywall and Paint, LLC

Oliver Jackson Schrumpf Law Offices of Oliver “Jackson” Schrumpf and Charles Schrumpf (APLC)

3801 Maplewood Drive Sulphur, LA 70663 Telephone: (337) 625-9077 COUNSEL FOR:

Secondary Plaintiffs/Appellants - Robert Butch Trost, Sr. and Lake Area Supply, Inc., d/b/a Lake Area Insulation, Drywall and Paint

THIBODEAUX, Chief Judge.

Defendants, Donald O’Connor, and the corporations he formed, Complete Insulation, Drywall, and Painting, LLC, and Complete Drywall and Paint, LLC (Mr. O’Connor), appeal the trial court’s judgment awarding damages to the plaintiffs, Robert Butch Trost and his business entity, Lake Area Supply, d/b/a Lake Area Insulation, Drywall, and Painting (Mr. Trost), as a result of Mr. O’Connor’s violation of a valid non-compete agreement. The trial court also determined that Mr. O’Connor had intentionally violated a November 2003 preliminary injunction, and reinstated a jail sentence imposed upon Mr. O’Connor that had been suspended. For the following reasons, we affirm the trial court’s judgment and remand for implementation of the suspended jail sentence as amended by the trial court.

I.

ISSUE

The following issues are properly raised for this court’s consideration:

1. Should this Court decline to apply the “law of the case” doctrine and reconsider its own ruling in this same case in which it was adjudged that the non- compete agreement between the parties was valid, because that decision was either palpably erroneous or its application would create manifest injustice?

2. Did the trial court err when it declared the sale of one of Mr.

O’Connor’s corporations to his brother a “sham”?

3. Did the trial court err by applying an incorrect method for the calculation of damages?

4. Did the trial court err when it reinstated the previously suspended jail sentence because it found Mr. O’Connor had violated the terms of his probation by continuing to intentionally violate the preliminary injunction, even though that jail

sentence could be avoided by paying the damage award owed to Mr. Trost in $25,000.00 monthly installments?

Mr. Trost has filed an appeal asking that we reinstate the previously suspended jail sentence that was reimposed by the trial court because of Mr. O’Connor’s intentional violation of the November 2003 preliminary injunction issued in this case. The reimposition of the suspended sentence was set aside by this court in the writ decision responding to Mr. O’Connor’s writ application. Trost v. O’Connor, CW 06-964. Mr. Trost has also asked this Court to award him an additional sum of money as attorney fees for defending this appeal.

II.

FACTS

Mr. Trost is in the business of contracting with homeowners and builders to supply insulation, drywall installation, and painting services. While other artisans in the drywall business in southwest Louisiana provided some part of the services covered by Mr. Trost’s business, his was the only corporation to provide all of these services by one contractor.

In 1998, he hired Mr. O’Connor as an independent contractor. In July of 2001, as part of ongoing employment negotiations between the parties, Mr. O’Connor signed a document entitled Independent Contractor Agreement and Covenant Not to Compete. In particular, the document contained the following language:

I further agree that I will refrain from carrying on or engaging in the business of drywall installation, estimating, insulation, painting or related activities or from soliciting customers of LAKE AREA INSULATION, DRYWALL, & PAINTING within a 75 mile radius of Lake Charles, Louisiana, and to include Calcasieu Parish, Allen Parish, Beauregard Parish, and Cameron Parish, Louisiana, within

two years from termination date of this contract with LAKE AREA INSULATION, DRYWALL & PAINTING.

I further agree and understand that if I violate any portion of this agreement, that I will pay to LAKE AREA INSULATION, DRYWALL, & PAINTING all damages sustained by them and any lost profit for which they have been deprived by my failure to comply with this agreement.

Additionally, I agree that a Court may enjoin me from soliciting, engaging in a business similar to that of LAKE AREA INSULATION, DRYWALL, & PAINTING, or providing the names or amounts of bids of any clients of LAKE AREA INSULATION, DRYWALL, & PAINTING, in accordance with this agreement.

On July 7, 2003, Mr. O’Connor called Mr. Trost and offered to purchase his business for $75,000.00. Mr. Trost’s business was earning well over $1,000,000 per year in gross income. When Mr. Trost refused the offer, Mr. O’Connor stated that he would no longer be working for Mr. Trost. When Mr. Trost arrived at his office later that morning, he found that many of his client files were missing.

In an effort to stop Mr. O’Connor from taking his clients and his business, Mr. Trost filed suit in district court to enjoin Mr. O’Connor from competing in violation of the non-compete agreement he had signed in 2001. A temporary restraining order issued, based on the stipulation of both parties. That temporary restraining order became a preliminary injunction by order of the court in August of 2003. Our court affirmed the issuance of that injunction:

enjoining and restraining Mr. O’Connor “from carrying on or engaging in his own competing business and/or from soliciting customers” of Robert Trost, d/b/a Lake Area Insulation, Drywall and Painting, for the two-year period subsequent to July 7, 2003 and within a seventy-five-mile radius of Lake Charles. The record indicates that the preliminary injunction was entered into pursuant to stipulation of the parties.

Trost v. O’Connor, 04-1172, pp. 1-2 (La.App. 3 Cir. 2/2/05), 893 So.2d 974, 975-76 (footnote omitted), writ denied, 05-512 (La. 4/22/05), 899 So.2d 575.

In the meantime, Mr. O’Connor was actively seeking employment as a drywall contractor and painter. He formed a limited liability corporation (LLC) called Complete Drywall, Insulation, and Painting, and asked a friend of his wife to sign the Articles of Organization as the sole member/manager. When that did not seem to work, Mr. O’Connor formed another LLC entitled Complete Drywall and Paint. He signed the Articles of Organization for this LLC, and continued to actively seek business in the Lake Charles area from clients of his former employer.

Mr. O’Connor was found to be in contempt of court in November of 2003 for violating the preliminary injunction. The trial judge sentenced Mr. O’Connor to one year in the parish jail. He then suspended all but 25 days of that sentence. Mr. O’Connor actually served about 11 or 12 days, and was then released. He was placed on probation for a year and a half.

When he was released from jail, Mr. O’Connor transferred the ownership of Complete Drywall and Painting to his brother, Robert, for $100.00 and “other valuable consideration.”

In February of 2004, a hearing was held on Mr. Trost’s petition to have the preliminary injunction made permanent. The court granted a permanent injunction enjoining Mr. O’Connor from competing with Mr. Trost’s business in violation of the non-compete agreement until July 7 of 2005 – two years from the date his employment with Mr. Trost ended.

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