Foncannon Tax & Financial Services, LLC v. Stephen C. Gubler (mem. dec.) ( 2017 )

MEMORANDUM DECISION
FILED
Pursuant to Ind. Appellate Rule 65(D), Apr 12 2017, 10:24 am
this Memorandum Decision shall not be
CLERK
regarded as precedent or cited before any Indiana Supreme Court
Court of Appeals
court except for the purpose of establishing and Tax Court
the defense of res judicata, collateral
estoppel, or the law of the case.
ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE
Patrick A. Duff George C. Barnett, Jr.
Duff Law, LLC Barnett Law, LLC
Evansville, Indiana Evansville, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Foncannon Tax & Financial April 12, 2017
Services, LLC, Court of Appeals Case No.
Appellant-Plaintiff, 82A05-1606-CC-1263
Appeal from the Vanderburgh
v. Superior Court
The Honorable Richard G.
Stephen C. Gubler, P.C., and D’Amour, Judge
Stephen C. Gubler, Trial Court Cause No.
Appellee-Defendant. 82D07-1505-CC-2568
Bailey, Judge.
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Case Summary
[1] Foncannon Tax & Financial Services, LLC (“Foncannon Services”) sued
Stephen C. Gubler, P.C. (“the Corporation”), and Stephen C. Gubler, in his
individual capacity (“Gubler”), for violation of a covenant not to compete
connected to Gubler’s sale of the Corporation’s assets to Foncannon Services.
The trial court granted summary judgment to Gubler and the Corporation.
Foncannon Services now appeals.
[2] We reverse and remand.
Issue
[3] Foncannon Services presents a single issue, which we restate as whether the
trial court improvidently granted summary judgment.
Facts and Procedural History
[4] In 2004, Gubler was nearing retirement, and decided to sell the assets of his
accounting practice to Foncannon Services. As part of this transaction, Gubler,
on behalf of the Corporation, signed a consulting agreement (“the Agreement”)
that included a covenant not to compete. The Agreement identified Foncannon
Services as “Purchaser,” the Corporation as “Consultant Firm,” and provided,
among other things:
1. Consulting Services. During the period that begins on
January 3, 2005 and ends on December 31, 2007 or such later
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date as may be mutually agreed to by the parties (the “Consulting
Period”), Consultant Firm shall consult with and advise
Purchaser as to those matters in connection with the Practice as
to which Consultant Firm’s experience and expertise would be
useful and valuable, including, but not limited to, the following:
(a) advice and consultation with respect to customer relations
and advertising programs; (b) evaluation and development of and
advice and consultation with respect to marketing programs and
strategies; (c) advice with respect to competitors’ products and
marketing programs; (d) rendering assistance to Purchaser to
maintain its relationships with clients, suppliers and others with
whom there have been beneficial relationships; (e) review and
consultation in connection with monthly operating statements of
Purchaser; (f) review and consultation in connection with annual
financial statements of Purchaser; (g) rendering assistance to
Purchaser in establishing relationships with new clients; and (b)
such other consulting services as Purchaser may reasonably
request. All service to be performed by Consultant Firm will be
rendered by Stephen C. Gubler.
(Hereinafter “the Consulting Services Provision”). (App’x Vol. 2 at 105.) For
these services, the Agreement provided for payment of $4,000 per month on or
before the first day of February, March, April, May, and June of each year of
the Consulting Period. (App’x Vol. 2 at 106.)
[5] The Agreement included a non-competition and non-solicitation provision that,
in relevant part, provided:
4. Noncompetition and Nonsolicitation. Stephen C.
Gubler covenants and agrees that he will not, during the
Consulting Period or at any time within five years thereafter,
directly or indirectly, on his own behalf or on behalf of any third
party, whether as an agent, employee, employer, officer, director,
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shareholder, member, principal, consultant, independent
contractor, partner, creditor or in any other capacity:…
(b) induce, cause, solicit, advise or influence any
person, business or entity who was a customer of
Purchaser during the Consulting Period, or
(c) perform any accounting, tax preparation, or
related services within one hundred eighty (180) miles of
the Purchaser.
Consultant Firm acknowledges and understands that it is
essential and reasonable, in order to protect Purchaser’s interests
under this Agreement, that Consultant Firm be restricted in the
manner described above during the Consulting Period.
(App’x Vol. 2 at 106-107.) The Agreement also included a provision requiring
that modifications to the Agreement be made only in writing.
[6] Gubler, through the Corporation, provided business consulting services to
Foncannon Services through 2007. After that time, Gubler continued to
perform work for Foncannon Services. The nature of that work centered upon
tax preparation and advising for clients of Foncannon Services, and payment
for these services largely followed the same terms as set out in the Agreement.
[7] Gubler performed work for Foncannon Services into 2014’s tax season.
Foncannon Services wrote checks both to Gubler personally and to the
Corporation through June 2014, and wrote checks to Gubler personally nearly
monthly through December 31, 2014.
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[8] During the 2015 tax season, Gubler began to offer his services to elderly clients.
Rather than accept payment, Gubler requested that his clients use the money
they would have paid in fees and instead donate that money to charitable
causes. Gubler was the subject of a media profile sponsored by a tax software
company, Intuit Professional Tax. In the profile, Gubler discussed his new
charitable venture, which he funded in part from a prize from Intuit
Professional Tax. Gubler said that he had decided in April 2014 to retire from
practice, but that five months later he invited some of his and the Corporation’s
former clients over the age of 65 to join him in the venture. Gubler also
discussed plans to establish a non-profit tax service for seniors. (App’x Vol. 2 at
183-86.)
[9] Foncannon Services learned of Gubler’s activities, which were conducted under
the name of the Corporation. On May 22, 2015, Foncannon Services filed suit,
alleging breach of contract, breach of fiduciary duty, tortious interference with a
contractual relationship, and fraud against both Gubler and the Corporation.
An amended complaint was filed on August 28, 2015.
[10] On January 5, 2016, Foncannon Services filed a motion seeking preliminary
and permanent injunctions against Gubler and the Corporation.
[11] On January 26, 2016, Gubler and the Corporation filed a motion for summary
judgment as to all counts in the complaint.
[12] On February 29, 2016, a hearing was conducted on the motion for injunctive
relief and the motion for summary judgment. On March 7, 2016, the trial court
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entered summary judgment for Gubler and the Corporation as to all counts,
and denied the motion for injunctive relief as moot.
[13] On April 6, 2016, Foncannon Services filed a motion to correct error. After a
hearing, the trial court denied the motion on May 16, 2016.
[14] This appeal ensued.
Discussion and Decision
[15] Foncannon Services appeals the trial court’s denial of a motion to correct error.
We review appeals from a court’s order on a motion to correct error for an
abuse of discretion, which occurs when the trial court’s decision is clearly
against the logic and effect of the facts and circumstances before it, or when it
errs on a legal matter. City of Indianapolis v. Hicks, 932 N.E.2d 227, 230 (Ind. Ct.
App. 2010), trans. denied.
[16] Underlying the court’s order on the motion to correct error is an order for
summary judgment. We review a grant of summary judgment de novo.
Williams v. Tharp, 914 N.E.2d 756, 762 (Ind. 2009). Summary judgment is
appropriate only where there is no genuine issue of material fact and the
movant is entitled to judgment as a matter of law. Ind. Trial Rule 56(C);
Mangold ex rel. Mangold v. Ind. Dep’t of Natural Res., 756 N.E.2d 970, 973 (Ind.
2001). All facts and reasonable inferences drawn from the facts are construed in
favor of the nonmovant. Mangold, 756 N.E.2d at 973. Our review of the
motion for summary judgment is limited to those matters designated to the trial
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court. T.R. 56(H); Mangold, 756 N.E.2d at 973. We carefully review a decision
on summary judgment to ensure that a party was not improperly denied its day
in court. Mangold, 756 N.E.2d at 974.
[17] At summary judgment, Foncannon Services argued that the Consulting Period
had been extended. Gubler and the Corporation argued that there had been no
extension. The trial court entered summary judgment for Gubler and the
Corporation, reasoning that the terms of the Agreement required that there
could be no extension of the Consulting Period and, in turn, no extension of the
duration of effect of the covenant not to compete without a written
modification of the Agreement. Foncannon Services argues that the trial court
erred when it thus construed the Agreement.
[18] The appeal, then, initially presents a question of contract interpretation.
Neither Foncannon Services nor Gubler and the Corporation argue that the
contract is ambiguous. “In interpreting an unambiguous contract, a court gives
effect to the parties’ intentions as expressed in the four corners of the
instrument, and clear, plain, and unambiguous terms are conclusive of that
intent.” Nightingale Home Healthcare, Inc. v. Helmuth, 15 N.E.3d 1080, 1084 (Ind.
Ct. App. 2014).
[19] The Consulting Period was defined by the Agreement: “the period that begins
on January 3, 2005 and ends on December 31, 2007 or such later date as may
be mutually agreed to by the parties.” (App’x Vol. 2 at 183.) Foncannon
Services argues that Gubler’s continued tax preparation and work consulting for
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Foncannon Services clients, together with the ongoing payment of money in
amount and schedule like that provided for in the Agreement, was an extension
of the Consulting Period. Foncannon Services argues that this extension was
expressly included by the parties in the Consulting Period definition, and no
modification was required to give the extension effect—simply payment and
continued work by Gubler. Thus, Foncannon Services argues, the trial court
erred when it concluded that any modification of the Agreement was required
to extend the Consulting Period and, in turn, the five-year post-Consulting
Period term of the covenant not to compete.
[20] We agree that the trial court’s interpretation of the Agreement is in error on this
point. The Agreement does not, of itself, require a separate writing to continue
the Consulting Period, because the language of the Agreement provides for
extension of the Consulting Period. Thus, an extension is by the plain language
of the agreement not a modification.
[21] Moreover, even if the extension were a modification, a written contract can be
modified without a writing, even where the written agreement provides that it
may be modified only by means of a written modification. Skweres v. Diamond
Craft Co., 512 N.E.2d 217, 220-21 (Ind. Ct. App. 1987). In such cases,
“modification of a contract, because it is a contract, requires all the requisite
elements of a contract.” City of Indianapolis v. Twin Lakes Enterprises, Inc., 568
N.E.2d 1078, 1085 (Ind. Ct. App. 1991), trans. denied.
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[22] Even when a trial court has erred, we may affirm the entry of summary
judgment on any grounds supported by the designated evidentiary material, so
long as there is no question of material fact and the movant is entitled to
judgment as a matter of law. Lacy-McKinney v. Taylor Bean & Whitaker Mortg.
Corp., 937 N.E.2d 853, 859 (Ind. Ct. App. 2010). We cannot, however, affirm
the summary judgment decision here because the question of extension or
modification leaves remaining a question of material fact: whether there was a
mutual agreement between the parties to extend the Consulting Period or
modify the Agreement to create such an extension, and whether the
requirements for either extension or modification were satisfied.
[23] The designated evidentiary material, viewed in a light favorable to the
nonmovant, indicates the following. Gubler and the Corporation both
continued to work for Foncannon Services, and they received compensation at
times and in amounts like the compensation specified in the Agreement. Based
upon testimony from Foncannon Services’ principal, Robert Foncannon,
Gubler and the Corporation did not provide consulting work directly to
Foncannon Services after December 31, 2007, the end of the un-extended or un-
modified Consulting Period as set forth in the Agreement. Gubler and the
Corporation provided services to Foncannon Services’ clients, however, many
of whom were the Corporation’s former clients.
[24] Moreover, there is evidence that as late as 2011, some amount of Foncannon
Services’ ongoing business with the Corporation’s former clients were the result
of Gubler’s continued involvement with Foncannon Services’ accounting
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practice. An electronic message from Gubler to Robert Foncannon in April
2011 stated:
Mark Patterson emailed me. I assume wanting some free help.
He has to understand I am finished for tax season, and if he
wants my help there will be the same charge as if I were working
for Foncannon on a full-time basis. I didn’t mind helping him
initially so you could land the client.
I copied you in on the email, and you need to make it perfectly
clear to him that if he wants my help that there will be a charge
for it. I don’t expect to volunteer my time once they are a client.
And it’s not fair to you since technically I am under the non-
compete agreement although it would seem fair to be
compensated.
(App’x Vol. 2 at 139.) Thus, some of Gubler’s and the Corporation’s activity
may fall into the non-exclusive list of consulting services in the Agreement.
[25] The provisions of the Agreement provide for a possibility of extension. But the
provisions do not state that any continued work for Foncannon Services on the
part of the Corporation or Gubler personally would necessarily result in an
extension. Thus, the designated evidentiary matter is essentially silent on the
question of whether the parties agreed to an extension or modification of the
Agreement, and we are left with the arguments of the parties: Foncannon
Services insists the extension ran through 2014, and Gubler and the
Corporation insist there was no extension at all.
[26] Taking the evidence together with the inferences favoring Foncannon Services
as the nonmovant, we cannot say that there is no question of material fact as to
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the existence of a mutual agreement for extending the term of the Consulting
Period. That is a fact question to be addressed upon remand by the trial court.
We accordingly reverse the entry of summary judgment.1
[27] Reversed and remanded for further proceedings.
Robb, J., concurs.
Vaidik, C.J., concurs in result without opinion.
1
We note that the trial court opined “as an aside” that Gubler could not personally be liable for violation of
the non-compete provision of the Agreement because the contract was between Foncannon Services and the
Corporation, but not Gubler personally. (App’x Vol. 2 at 213.) We note that Gubler is named in the
Agreement as being bound by the provisions of the non-compete provision, Gubler was the sole signatory for
the Corporation, and Gubler apparently viewed himself as being bound by the non-compete provision. More
crucially, Gubler’s activities, of which Foncannon Services complains, are identified as occurring under the
auspices of the Corporation in at least one of the designated materials at summary judgment—the
advertisement from Intuit. (App’x Vol. 2 at 183.)
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