of reassuring a prospective purchaser of the company; and that Propp would enforce the covenant against Puzia only in the context of the company's sale. Puzia contended at trial that these representations by Kramer and Propp were false when made, intended to secure Puzia's agreement to the restrictive covenant, and that Puzia relied upon them to his detriment. Puzia contends that Propp's fraudulent conduct presents the converse of a case such as Sabo v. Delman, 3 N.Y.2d 155, 162, 164 N.Y.S.2d 714, 718, 143 N.E.2d 906 (1957), where the New York Court of Appeals said that "a contractual promise made with the undisclosed intention not to perform it constitutes fraud." On that basis, Puzia contends that the restrictive covenant in the employment agreement is void.
I need not pursue Puzia's fraud theory further because he has not proved its factual predicate. On this issue Puzia bears the burden of proof. Kramer and Propp denied having told Puzia that DataType would not enforce the restrictive covenant. On the contrary, Kramer testified that when Puzia asked why the employment agreement and covenant were necessary, Kramer explained to Puzia "that if there was going to be a sale of shares of the stock of the company, where he would become an investor, an owner of the company, one of the requirements would be that he would have to sign a covenant not to compete." Tr. 32. That is a general proposition, unrelated in any way to a prospective sale of the company. Kramer testified further that he made it clear to Puzia that Puzia "should take these documents rather seriously, because they were being drafted by an attorney, that he should take then seriously because Mrs. Propp was going to enforce them, and . . . I even strongly urged him to talk to an attorney about them because these were rather serious documents." Tr. 36. Kramer, who has done no business for Propp since 1988 and has no stake in the outcome of this litigation, was a credible witness and I accept this testimony. Furthermore, Puzia's contention that he was a victim of fraud surfaced for the first time at the trial. He did not make that claim in an action for determination of the legal rights and restrictions of the parties to the employment agreement which he commenced in the Superior Court of New Jersey, Bergen County, on May 28, 1992. Nor did he claim fraudulent inducement in any of the several discussions he had with Propp subsequent to his departure from DataType in February 1992.
In short, Puzia has not proved his claim of fraud. The rights and obligations of the parties therefore depend upon the provisions of the restrictive covenant, viewed in the light of governing law.
DataType paid Puzia the money Puzia used to pay Propp for the shares covered by the stock purchase agreement. The increase in Puzia's salary, coupled with commissions generated by his effective salesmanship, produced annual compensation in excess of $ 100,000. But Puzia remained dissatisfied with his job at DataType. He continued to work long hours. There was no discernible progress in arranging a profitable sale of DataType to a third party. Propp had spoken of a target sales price of $ 5 million, but DataType's profits never brought the company anywhere close to such a consummation, however devoutly wished. The determination grew in Puzia's mind to leave DataType. In 1986 Puzia had incorporated a company called Integrated Sales Systems. That company never did any business. On November 18, 1991 Puzia filed with the New Jersey authorities an amendment to that company's certificate of incorporation changing its name to Pharmaceutical Direct, Inc. At about the same time he also reserved a telephone line in the name of Pharmaceutical Direct, and arranged for office space if that company ever became active. Puzia did not tell Propp of these activities.
At a lunch meeting on November 13, 1991, Puzia told Propp that he would be leaving DataType. He submitted a letter of resignation dated February 11, 1992, PX 38, effective February 21, 1992, the date on which Puzia left DataType's employ.
Puzia accepted employment with a company pursuing a different, non-competitive business, but decided after only four days that he had made a mistake. Accordingly Puzia activated Pharmaceutical Direct, Inc., and began to compete with DataType, thereby generating this litigation.
Propp's affidavit in support of plaintiff's order to show cause accused Puzia of numerous bad acts. The Propp affidavit at P3 charged that Puzia "clandestinely" set up his own competing business while still in plaintiff's employ; "pillaged" plaintiff's "most critical asset, . . . its customer list"; is soliciting plaintiff's customers by using "trade secret information contained in plaintiff's files including the customers on plaintiff's customer list and plaintiff's pricing schedules"; and (upon information and belief) is "tortiously interfering with plaintiff's contracts with its customers" by predicting that plaintiff would be "going out of business soon" and implying that Puzia was DataType's "successor," which would have "a ruinous effect on plaintiff's present and future business." Propp added the allegation in P4 of her affidavit (underlining the assertion for emphasis) that: "To date, plaintiff has lost the business of several of these Customers who, upon information and belief, are now doing business with defendant. " DataType's complaint sought, in addition to enforcement of the restrictive covenant, orders enjoining Puzia from such tortious interference; enjoining Puzia's use of DataType's "customer list"; and for an accounting.
The proof at trial failed for the most part to substantiate these charges. There is no persuasive proof that Puzia made disparaging remarks about DataType's customers, which is to say pharmaceutical companies and advertising agencies. Nancy Piasecki, DataType's traffic manager whose office adjoined Puzia's, testified that she overheard Puzia disparaging DataType during telephone conversations with individuals named Doug Hess and Duane Taylor. Hess is a personal friend of Puzia's from college days. He prints various business forms. Puzia had become disenchanted with DataType. I am prepared to accept that he said so to his old friend Hess in tones sufficiently penetrating for Piasecki to hear him. But Hess was not a customer of DataType's. Whatever disparaging remarks Puzia made to Hess about DataType could not constitute tortious interference with the latter's business.
Piasecki also testified that she overheard Puzia making negative remarks about DataType in a conversation with Taylor, the sole proprietor of an advertising "boutique" called Orion Associates. Orion had given business to DataType. Puzia denies having disparaged DataType to Taylor. Taylor testified at trial that Puzia had not done so. He further testified that at no time prior to Puzia's departure from DataType had Puzia made to Taylor the sort of crude, disparaging comments attributed by Piasecki to Puzia. Tr. 294-95. On the contrary, Taylor testified that he was surprised when he was indirectly informed that Puzia had left DataType because he had expressed no prior dissatisfaction. Tr. 295. While Taylor is an acquaintance of Puzia, the relationship is not close, and Taylor has nothing to gain in the litigation. I credit his testimony.
I do not credit the testimony of Piasecki that during the beginning of 1992, she overheard ten or fifteen "business" telephone calls in which Puzia said "that the company was going to go down the tubes in six months, it was going to go down the crapper, how everyone there was incompetent." Tr. 269. Piasecki, who is presently employed at DataType and consequently must be regarded as an interested witness, could not identify the other parties to these telephone calls. While she testified that she reported them to Propp and to Michelle Rinaldi, another DataType employee, Propp did not confirm that report in her testimony and Rinaldi was not called to testify. Plaintiff offered no evidence from any customer to whom Puzia had spoken in such terms.
Plaintiff did offer the deposition of Sol Meyer, the executive vice president of Dynatron, a data processing and production facility for the direct mail industry. Dynatron is a vendor of services to DataType. Meyer had dealt with Puzia for several years. In late 1991 Puzia visited Meyer at the latter's office and said he was going to leave DataType and anticipated "going into the direct mail and do what he was doing at DataType as soon as DataType goes out of business." Dep. Tr. 9. Puzia said to Meyer that he thought DataType was going to go out of business "because he was the only one who was selling or had the ability to sell, and . . . he was running the company." Id. Puzia asked Meyer if Dynatron would render services to Puzia's company when it became active. Meyer agreed to do so, but in a subsequent discussion with Propp, in which Propp asked Meyer not to do business with Puzia, Meyer yielded to that request "because of the relationship Dynatron has had with DataType." Id. at 14. Indeed, Meyer cancelled the first order Puzia gave to him part way through its completion.
Within the context of DataType's claims against Puzia, there is less to this than meets the eye. In the first place, Dynatron cannot be regarded as a DataType customer. Dynatron was and is a DataType vendor. Even within that quite different context, Puzia caused DataType no damage because Dynatron ceased doing business with Puzia as soon as Propp made that request of Meyer.
According to Puzia's account of his conversation with Meyer, he told Meyer that DataType would fail if Propp, who maintained her own computer consultancy at a different address, did not become more personally involved in the company's business, but that if she did there was no cause for concern. Meyer does not deny that Puzia said that to him. Meyer's primary concern, understandably enough, was whether DataType would pay his outstanding invoices. Meyer testified:
I recall Scott telling me that when he leaves, DataType would be in trouble. That's my recollection. If he said that Gail Propp has to take control over it or not, or those two things are dependent upon each other, I wasn't paying that close attention to the semantics of that conversation, what it will take to make it go.
He clearly stated that the company will not be able to last for any long period of time. I do recall him saying six months, and that's my recollection. Dep. Tr. 31-32.