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American Homepatient, Inc. v. Connors

December 4, 2006

AMERICAN HOMEPATIENT, INC., PLAINTIFF,
v.
TIMOTHY CONNORS, AND BUFFALO WHEELCHAIR, INC. D/B/A PRO2CAIR, DEFENDANTS.



The opinion of the court was delivered by: Michael A. Telesca United States District Judge

DECISION and ORDER

INTRODUCTION

Plaintiff American HomePatient, Inc., ("AHP"), proceeding pursuant to this court's diversity jurisdiction, brings state law contract claims against its former employee defendant Timothy Connors ("Connors") and his current employer defendant Buffalo Wheelchair, Inc. d/b/a Pro2Cair ("Pro2Cair") claiming that Conners has violated a non-compete agreement that he entered into while employed with AHP. Specifically, the plaintiff contends that Conners violated the non-compete agreement by commencing employment with Pro2Cair, a competitor of AHP. AHP seeks damages based on the defendants' alleged breach of contract and unfair competition.

For determination are defendants' motion for summary judgment and plaintiff's cross-motion for summary judgment. For the reasons set forth below, I hereby grant defendants' motion for summary judgment, and grant-in part and deny in-part plaintiff's cross motion for summary judgment.

FACTUAL BACKGROUND

Connors commenced his employment with AHP on August 16, 2000. AHP provides medical equipment in the Corning, New York area for patients use at home. Examples of the types of equipment sold are: respiratory products, wheelchairs, and hospital beds. AHP provides its products to patients who are often referred to AHP through physicians, hospitals, nursing homes, discharge planners, or other health care professionals. Connors worked as a general manager at AHP, and in that capacity, was responsible for all aspects of the Corning location's performance, including generation of sales and revenues. Connors was involved in marketing and soliciting business relationships with several business referral sources including doctors, nurses, and administrative personnel at hospitals and nursing homes.

Upon commencement of his employment with AHP, Connors entered into a confidentiality and non-compete agreement ("Agreement"). Under the terms of that Agreement, Connors agreed, in relevant part, not to:

[D]irectly or indirectly through any partnership, corporation, or business entity in which [Connors] has an ownership or interest or serves as an officer or employee of or as a consultant for, solicit, divert or take away the business of, any of the customers of the company that were served by [Connors] during the term of his . . . employment or any prospective customers of the Company that the [Connors] actively solicited on behalf of the company within the immediately preceding year, for the purpose of making sales or rentals of home health care devices or supplies. (Emphasis added).

After working for AHP for over four years, Conners' employment was terminated on December 16, 2004, for allegedly having made inappropriate expenditures of company funds. Four months later, on April 25, 2005, Connors accepted employment as a sales representative with Pro2Cair, one of AHP's competitors. As a sales representative, Connors meets with hospital and nursing home representatives, doctors, and nurses to persuade them to recommend the use of Pro2Cair equipment to their patients. AHP contends that such solicitation violates Connors' non-compete agreement because he is soliciting former or prospective AHP customers. Defendants contend that because the "customers" of the AHP and Pro2Cair's are actually the end users who purchase the equipment, and not the doctors, nurses, or administrative personnel who may or may not make recommendations as to which equipment should be purchased, Connors has not violated the Agreement because he has not solicited any customers.

DISCUSSION

I. Summary Judgment Standard

Rule 56 of the Federal Rules of Civil Procedure provides that a party is entitled to summary judgment as a matter of law where, "the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact." F.R.C.P. 56(c) (2003). The party seeking summary judgment bears the burden of demonstrating that no material issue of fact exists. In deciding a motion for summary judgment, the Court must view all facts in the light most favorable to the party against whom summary judgment is sought. Ford v. Reynolds, 316 F.3d 351, 354 (2d Cir. 2003).

Defendants move for summary judgment against AHP on grounds that when the term "customer" is given its plain and ordinary meaning, it is clear that Connors did not solicit any customers, and therefore did not violate the non-compete Agreement. Defendants further argue that the agreement is a contract of adhesion, and that plaintiff has not suffered any damages.

AHP cross moves for Summary Judgment on the grounds that Connors's conduct and employment is in violation of the Agreement, and that Conners's counterclaim for ...


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