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Keywords

damagestrialcompliance
plaintiffdamagesappealtrial

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Totaro, Duffy, Cannova & Co., LLC v. Lane, Middleton & Co., LLC, Not Reported in Atl. Rptr., 2006 WL 4543337

Facts

Merritt Lane, a certified public accountant, entered into a non-solicitation agreement with TDC after selling his compliance accounting business. Despite this agreement, Lane solicited TDC's clients by sending them letters announcing his new practice. This led to TDC receiving numerous disengagement letters from clients who switched to Lane's services. The trial court found that Lane's actions violated the agreement and caused economic harm to TDC.

Lane used TDC's client list to mail between 125 and 150 letters to TDC clients.

Issue

Did Merritt Lane violate the non-solicitation agreement with Totaro, Duffy, Cannova & Company, and if so, did this violation cause damages to TDC?

Lane now argues on appeal that the award of damages should be reversed, because there is no evidence that any act of alleged solicitation caused any damage to TDC.

Rule

The court applied the principle that a breach of a non-solicitation agreement can lead to damages if it can be shown that the breach caused economic harm to the other party.

The trial court relied upon that principle as well and cited Tessmar v. Grosner, 23 N.J. 193, 128 A.2d 467 (1957), and American Sanitary Sales Co. v. State, Dep't of Treasury, 178 N.J.Super. 429, 435, 429 A.2d 403 (App.Div.1981) in support.

Analysis

The court found that Lane's actions of soliciting TDC's clients through a mailing constituted a breach of the non-solicitation agreement. The close timing between the solicitation and the disengagement letters received by TDC provided a sufficient basis to infer that Lane's actions were a proximate cause of TDC's loss of clients, despite Lane's argument that the clients were not induced by his solicitation.

The trial court's conclusion in this respect is amply supported by competent credible evidence.

Conclusion

The Appellate Division affirmed the trial court's decision, concluding that there was competent credible evidence supporting the finding that Lane violated the non-solicitation agreement and that TDC suffered damages as a result.

We thus adopt, by reference, the calculations and conclusions he reached, as reflected in his memorandum of opinion.

Who won?

Totaro, Duffy, Cannova & Company prevailed in the case because the court found that Lane's solicitation of clients violated the non-solicitation agreement, leading to economic harm for TDC.

The close temporal proximity between the mailing of the solicitation letters and TDC's receipt of 159 Lane-crafted disengagement letters, is sufficient evidence to infer that, had there been no interference, plaintiff would have received the economic benefit of servicing these clients.

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