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QUAKER CITY ENGINE REBUILDERS v. DOREEN L. TOSCANO AND JACK W. MCCULLOUGH AND TOSMAC (10/07/87)

submitted: October 7, 1987.

QUAKER CITY ENGINE REBUILDERS, INC.
v.
DOREEN L. TOSCANO AND JACK W. MCCULLOUGH AND TOSMAC, INC., APPELLANTS



Appeal from the Order entered February 4, 1987 in the Court of Common Pleas, Civil Division, of Philadelphia County, No. 2711, January 1987.

COUNSEL

James F. Carney, Norristown, for appellants.

Howard L. Bobb, Philadelphia, for appellee.

Rowley, Wieand and Olszewski, JJ.

Author: Per Curiam

[ 369 Pa. Super. Page 574]

OPINION OF THE COURT:

This is an appeal from a preliminary injunction entered by the Court of Common Pleas of Philadelphia County enjoining

[ 369 Pa. Super. Page 575]

    and restraining appellants from "any further business contacts or dealing with customers present or past of [appellee], and conducting business competitive with that of [appellee] . . . until final hearing . . . ." Of the three issues raised by appellants, the principal question is whether appellee has established a clear right to relief where appellant McCullough's contract with appellee, which contains a restrictive covenant, is for performance of services as an independent contractor, and not as an employee. For reasons which follow, we find it necessary to remand this case to the trial court.

Appellee sells and distributes rebuilt auto and truck engines. Appellant McCullough began to work for appellee as director of sales on May 20, 1985, pursuant to an oral agreement. At some point later, McCullough notified appellee of his intention to leave the company. McCullough did not stop performing sales for the company, but as a result of his dissatisfaction, an agreement was entered into on February 1, 1986 whereby appellant Tosmac, Inc. ("Tosmac") would act as a sales representative for appellee in the capacity of an independent contractor. As part of the agreement, McCullough became responsible for his own travel and entertainment expenses. Additionally, the agreement contained a restrictive covenant as follows:

15. If this agreement is terminated by either party "Salesman" agrees that it wll (sic) not engage, directly or indirectly, either for itself or as agent or employee of any other, in manufacturing, buying, selling or dealing in automotive products that could be construed as competitive with the products of company, in the territory hereinabove described, for a period of 2 years after the termination of the agency herein created, without the written consent of the company.

The agreement was signed on behalf of Tosmac by appellant Jack McCullough, President, and appellant Doreen Toscano, Secretary. Appellant McCullough testified that he understood the terms of paragraph 15, and that he signed the agreement willingly.

[ 369 Pa. Super. Page 576]

In November, 1986, Tosmac ceased performing sales work for appellee. In January, 1987, appellee filed this action in Equity in which it alleged that on or about January 2, 1987, appellants began mailing advertisements to potential customers to purchase rebuilt engines from them, in violation of paragraphs 12, 13 and 15 of the agreement. The last paragraph of the advertisement stated:

I need your help to be successful. For the business you had given me while I was with Quaker City, I wish to thank you very much.

Appellee sought a preliminary injunction and temporary restraining order. A hearing was held on February 2, 1987, at which time the trial court entered an order granting the preliminary injunction and enjoining appellants "from any further business contacts or dealing with customers present or past of [appellee]." Appellants appealed the order of the trial court and filed a request for supersedeas pending appeal. The request for supersedeas was denied, and a concise statement of matters complained of on appeal was filed on April 8, 1987.

The issues raised by appellants on appeal are: (1) Did Quaker City prove that a preliminary injunction was warranted, and that immediate and irreparable injury would result if an injunction did not issue? (2) Did Quaker City prove that monetary damages would not be adequate to redress any injury suffered? (3) Did Quaker City establish a clear right to relief in that (a) appellant Tosmac was an independent contractor and not an employee, (b) there ...


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