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J. C. Ehrlich Co., Inc. v. Martin

July 9, 2009


Appeal from the Order entered May 12, 2008 in the Court of Common Pleas of Northumberland County, Civil Division, at No. CV-2007 2466.

The opinion of the court was delivered by: Orie Melvin, J.



¶ 1 Appellant, Keith D. Martin (Martin), individually and d/b/a Q & A Pest Control (Q & A), appeals from the order granting a permanent injunction in favor of Appellee, J. C. Ehrlich Co., Inc. (Ehrlich). We affirm.

¶ 2 The facts and procedural history may be summarized as follows. On April 8, 1988, Ehrlich and Martin entered into an employment agreement wherein Ehrlich employed Martin as a service technician for its pest control business. The written agreement, signed by both Martin and a representative of Ehrlich, included the following non-compete covenant.

8. Covenant Not To Compete: To induce the Company to enter into this Agreement, you represent and acknowledge that upon termination of your employment, for any reason whatsoever . you will not directly or indirectly engage in the same or a similar line of business as carried on by the Company. This covenant not to compete with the Company shall last and bind you for a period of two (2) years ... and shall extend to, include, and be enforceable within the territories or geographic areas making up each Company office where you have served Company customers . or acquired or been exposed to confidential information belonging to the Company.

Exhibit A to Complaint, Certified Record (C.R.) at 1. In August or September 2007, Martin began conducting Q & A as a pest control business within a territory in central Pennsylvania which was serviced by Ehrlich. Martin terminated his employment with Ehrlich on August 26, 2007.

¶ 3 In the meantime, in January 2006, Ehrlich entered into a stock purchase agreement with Rentokil, Inc. (Rentokil) which effectively consolidated the two companies. Martin continued to earn paychecks from Ehrlich after this merger, and Ehrlich continued to file W-2 tax reporting forms for him through the termination of his employment.

¶ 4 In December 2007, Ehrlich filed a complaint against Martin in which it sought injunctive relief. C.R. at 1. The trial court conducted a hearing on March 12, 2008, at which time counsel for both parties agreed to submit a stipulation of facts. Id. at 8, 9. By order of May 12, 2008, the trial court granted a permanent injunction in favor of Ehrlich, enjoining Martin from engaging in his pest control or other similar business within the geographic territory specified in the complaint and from divulging any confidential information relating to Ehrlich's business. This timely appeal followed, wherein Martin presents a single issue for our review: "Did the court err in failing to apply the rules of equity and the law as to non[-]compete agreements?" Appellant's brief at 1.*fn1

¶ 5 When an appellate court reviews the grant of a permanent injunction, its scope of review is plenary. Kuznik v. Westmoreland County Bd. of Comm'rs, 588 Pa. 95, 117, 902 A.2d 476, 489 (2006).

Our standard of review in addressing whether a trial court erred in granting a permanent injunction is well-settled.

In order to establish a claim for a permanent injunction, the party must establish his or her clear right to relief. However, unlike a claim for a preliminary injunction, the party need not establish either irreparable harm or immediate relief and a court may issue a final injunction if such relief is necessary to prevent a legal wrong for which there is no adequate redress at law. Additionally, when reviewing the grant or denial of a final or permanent injunction, an appellate court's review is limited to determining whether the trial court committed an error of law.

Pestco, Inc. v. Associated Products, Inc., 880 A.2d 700, 710 (Pa. Super. 2005) (citation omitted).

ΒΆ 6 A covenant not to compete is a restrictive covenant "relied upon by employers to shield their protectible business interests." Hess v. Gebhard & Co., Inc., 570 Pa. 148, 157, 808 A.2d 912, 917 (2002). "[T]he non-competition covenant precludes the former employee from competing with his prior employer for a specified period of time and within a precise geographic area." Id. at 157, 808 A.2d at 917. "In Pennsylvania, restrictive covenants are enforceable if they are incident to an employment relationship between the parties; the restrictions imposed by the covenant are reasonably necessary for the protection of the employer; and the restrictions imposed are reasonably limited in duration and geographic extent." Id. In other words, a determination of whether a non-compete agreement should be enforced "requires the application of a balancing test whereby the court balances the employer's ...

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