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SWIFT BROS. v. SWIFT & SONS

December 11, 1995

SWIFT BROTHERS
v.
SWIFT & SONS, INC., ROBERT SWIFT, SR., and ROBERT SWIFT, JR.



The opinion of the court was delivered by: POLLAK

 Pollak, J.

 December 11, 1995

 James D. Swift and Robert Swift, Sr. are brothers. The two were business partners, under the name Swift Brothers, from 1963 to 1984. Then, in September 1984, a dispute between them led Robert Swift to leave the partnership, and to establish a new business, named Swift and Sons. The present case derives from that dispute, as well as from the alleged conduct of both brothers in the years that preceded and followed it.

 The plaintiff in this case, Swift Brothers, is a partnership and a successor to the Swift Brothers that existed from 1963 to 1984; James (also called "Pete") Swift is one of the partners in the present Swift Brothers. Robert Swift, Sr., is the sole shareholder of Swift and Sons, the firm he began to operate after leaving Swift Brothers. Both Robert Swift, Sr. and his firm are defendants in this case. The third defendant, Robert Swift, Jr., is the son of Robert Swift, Sr., and a corporate officer of Swift and Sons. (Because Robert Swift, Jr. is a relatively minor player in the present drama, the elder Robert Swift will at times be referred to simply as "Robert Swift," when this usage appears unlikely to lead to confusion.) Presently before the court is the defendants' motion for summary judgment.

 I. Background

 As is customary in ruling on a motion for summary judgment, the following account of the facts is derived from the pleadings and is read in the light most favorable to the non-moving party, who here is the plaintiff.

 James Swift and Robert Swift, Sr. first formed a partnership named Swift Brothers in June, 1963. The partnership was the successor to a similar business that had been established by James Swift in 1960. There was no written partnership agreement, but the terms of the partnership were that "each partner was to share equally in the profits and losses of the business, that each partner be engaged full time in the business and receive equal salaries and draws, and that any real estate acquired in joint names be held equally." Complaint, P 45.

 Swift Brothers' business was the delivery of janitorial services, including office cleaning, house cleaning, carpet shampooing, floor waxing, window cleaning, and smoke and odor removal. The partnership has delivered those services in Philadelphia and surrounding areas (including, at least at some times, in New Jersey and in Delaware) since 1963. Since the partnership was established, Swift Brothers alleges that it has spent approximately $ 411,772.79 promoting and advertising its name in various media. Swift Brothers asserts that its services "have enjoyed widespread and favorable public acceptance" in the area in which it operates, and that its trademarks have a substantial value.

 The defendant, Swift & Sons, Inc., is a corporation that provides janitorial services of the same general type and in the same geographic area as does Swift Brothers. Robert Swift, Sr., a former partner in Swift Brothers, holds all of the common stock of Swift & Sons. His son, Robert Swift, Jr., is a former employee of Swift Brothers, and is now an employee and officer of Swift & Sons.

 Robert Swift, Sr.'s departure from Swift Brothers, and establishment of Swift & Sons, occurred under less than amicable circumstances. In late 1983, James Swift, who has been suffering from a chronic heart condition since 1980, required hospitalization and surgery. As a result of this illness, James Swift continued some general administrative duties, but devolved most of the responsibility for the day-to-day operations of the partnership upon Robert Swift, Sr. In spring 1984, Robert Swift asked James Swift to move the partnership's business records from James Swift's home to the partnership's office, to allow easier access. In mid-1984, James Swift returned to work full-time.

 In September, 1984, without notice, Robert Swift, Sr. left Swift Brothers. When Robert Swift, Sr. left, he took with him most of the materials used in the day-to-day operation of Swift Brothers, including the business records, some estimates, consumer lists, supplies, office furniture, and a car (which was titled in Robert's name but which Swift Brothers asserts was considered a partnership asset). Robert Swift, Sr. had incorporated a firm named Swift & Sons some years earlier, in 1981 or 1982. *fn1" After leaving Swift Brothers, he began to operate this firm, with the assistance of his son, Robert Swift, Jr. Swift & Sons almost immediately ran newspaper and Yellow Pages advertisements for its services; Swift Brothers claims that these had been prepared and paid for some time before Robert Swift's departure.

 Swift Brothers asserts that, before Robert Swift left the partnership, he repeatedly took partnership assets and business for his own use. In support of this claim, Swift Brothers presents deposition testimony in which Robert Swift, Sr. states that he "sometimes" took partnership money as his own. Plaintiff's Exhibits at 32. Swift Brothers also presents an affidavit from a former Swift Brothers employee, Larry Johnson, who states that, while Robert Swift was with Swift Brothers, he at times conducted "secret jobs" in which he would arrange for work (usually, but not always, window-cleaning work *fn2" ) to be done without James Swift's knowledge, and then keep the proceeds. Customers were asked to pay for these jobs either in cash or with a check made out to Robert Swift. Larry Johnson also claims that Robert Swift maintained two sets of books, one made available to James Swift, and the other used to record the "secret" work. See Affidavit of Larry Johnson, Plaintiff's Exhibits at 49. Swift Brothers asserts that Robert Swift's "secret" work included jobs for new customers and permitted Robert Swift to develop an independent client base before beginning to operate as Swift & Sons. *fn3"

 After his departure from Swift Brothers, Robert Swift, Sr. began to actively compete with Swift Brothers for what had formerly been Swift Brothers' clients. Some of this competition took the form of advertising. Swift & Sons placed an advertisement in the Chestnut Hill Local that identified the firm as "Swift & Sons, Inc., formerly Swift Brothers." It also placed an advertisement in the Donnelly Directory, a business directory or "yellow pages," referring to "25 YEARS OF RELIABILITY, DEPENDABILITY & SERVICE."

 Swift Brothers filed suit against Swift & Sons, Inc., Robert Swift, Sr., and his son, Robert Swift, Jr., on July 18, 1989. The complaint made a range of claims, some of which have subsequently been modified or abandoned; the claims will be discussed in detail below. Briefly, however, they are:

 
1. A claim under the Lanham Act;
 
2. Claims of unfair competition, injury to business reputation, and misappropriation of goodwill;
 
3. A claim of tortious interference and diversion of funds;
 
4. A claim of misappropriation of trade secrets; and
 
5. A claim of breach of fiduciary duty.

 Robert Swift, Sr. filed a counterclaim seeking an accounting of partnership operations and assets, and demanding that Swift Brothers pay over to him his share of partnership assets. The counterclaim also asserted that James Swift had refused Robert Swift access to the books of the partnership while the partnership was in operation, and that James Swift had diverted in excess of $ 25,000 a year of partnership funds to his own use.

 Since the complaint was filed, this case has been subject to far more than its share of the ordinary vicissitudes of litigation. Efforts by this court to facilitate settlement, which included a "mini-trial" conducted before Magistrate Judge Hall, were, alas, not successful. The plaintiff has changed attorneys three times, and the defendants have changed attorneys once. The parties consented to the appointment of an independent expert to conduct a valuation of the two businesses involved, a process that, while it was helpful, also produced delay, as it, inter alia, required the parties to agree on an appropriate expert. Finally, the very regrettable illness of James Swift has necessitated occasional continuances. Now, however, Swift Brothers has obtained new counsel, and this court has assured the parties that it will endeavor to clear away any further obstacles to a rapid resolution of this matter.

 To simplify analysis of this case, the plaintiff's claims will be divided into two broad categories: those relating to events occurring up to and including Robert Swift, Sr.'s departure from Swift Brothers in September ...


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