Volunteer Energy Services, Inc. v. Option Energy, LLC at al

Filing 131

OPINION; signed by Judge Robert Holmes Bell (Judge Robert Holmes Bell, sdb)

UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

VOLUNTEER ENERGY SERVICES, INC.,
Plaintiff,
File No. 1:11-CV-554
v.
HON. ROBERT HOLMES BELL
OPTION ENERGY, LLC, et al.,
Defendants.
/
OPINION
This diversity breach of contract action is before the Court on Defendants’ motion to
dissolve the preliminary injunction (Dkt. No. 81), Plaintiff’s motion for contempt (Dkt. No.
119), and Plaintiff’s motion for sanctions (Dkt. No. 126). For the reasons that follow,
Defendants’ motion to dissolve the preliminary injunction will be granted, Plaintiff’s motion
for contempt will be denied, and Plaintiff’s motion for sanctions will be taken under
advisement.
I.
On July 29, 2011, this Court entered an order preliminarily enjoining Defendants from
“soliciting or attempting to solicit any customer who receives natural gas from Volunteer
Energy until further order of this Court.” (Dkt. No. 25.) On April 26, 2012, Defendants
moved to dissolve the preliminary injunction based on the expiration of the non-solicitation
clause. Volunteer opposes Defendants’ motion and has also filed a motion for contempt.

Volunteer contends that Defendants have continued to solicit Volunteer customers in
violation of the preliminary injunction. In support of this contention Volunteer references
Option Agent Anna Simonian’s communications regarding Volunteer customer Hammond
Roto in January 12, 2012, and Defendant Ivan Pillars’s communications regarding Volunteer
customer Humphrey Products in May 2012. Volunteer contends that Defendants should be
held in contempt of court, and enjoined from soliciting Volunteer customers for an additional
twelve months to compensate Volunteer for its costs in presenting this motion for contempt.
“The movant in a civil contempt proceeding bears the burden of proving by clear and
convincing evidence that the respondent ‘violated a definite and specific order of the court
requiring him to perform or refrain from performing a particular act or acts with knowledge
of the court’s order.’” Liberte Capital Group, LLC v. Capwill, 462 F.3d 543, 550 (6th Cir.
2006) (quoting Glover v. Johnson, 934 F.2d 703, 707 (6th Cir. 1991)). Ambiguities in the
order allegedly violated must be resolved in favor of the party charged with contempt. Id.
at 551 (citing Grace v. Ctr. for Auto Safety, 72 F.3d 1236, 1241 (6th Cir. 1996)).
The only evidence Volunteer has produced with respect to Option’s alleged
solicitation of Hammond Roto is Simonian’s affidavit. Simonian states that she began
consulting with Hammond Roto about gas and electricity options in early 2011, before the
preliminary injunction was issued. (Simonian Aff. ¶¶ 4-5.) Upon receiving instructions to
cease soliciting Volunteer’s gas customers, she stopped discussing alternative gas suppliers
with Hammond Roto, but continued to consult with Hammond Roto regarding alternative
electricity suppliers. (Id. at ¶ 6.) In January 2012 Agent Simonian sent an email to Integrys
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advising that Hammond Roto might be a good candidate for Integrys’ program. (Simonian
Aff. ¶ 7.) However, Simonian denies making any attempt to convince, suggest or otherwise
solicit Hammond Roto to switch gas suppliers. (Id. at ¶ 8.)
There is no evidence that Simonian directly solicited Hammond to switch gas
suppliers. The fact that Simonian consulted with Hammond about alternative electricity
suppliers and suggested to Integrys that Hammond might be a good candidate for Integrys’s
gas program is not clear and convincing evidence that Simonian violated a definite and
specific order of the court. The preliminary injunction is ambiguous at best with respect to
such conduct, and must be resolved in favor of Option, the party charged with contempt.
Scott Ludwig, the Facility Manager for Humphrey Products, a Volunteer natural gas
customer, states in his affidavit that he received numerous telephone calls from Pillars “for
the purpose of switching from Volunteer to another Alternative Gas Supplier.” (Ludwig Aff.
¶ 4.)

Ludwig states that “When I indicated I was pleased with Volunteer, Mr. Pillars

indicated that he had previously worked with Volunteer but he terminated that relationship
because Volunteer was an unethical company that wouldn’t do right by their customers.” (Id.
at ¶ 6.) He also states that “Mr. Pillars presented me with a blank contract in favor of Option
Energy and pressured me to sign it.” (Ludwig Aff. ¶ 7.) Defendant Pillars states in his
affidavit that he did not know Humphrey was a Volunteer gas customer when he approached
him about switching to Option. (Pillars Aff. 5.) When Pillars learned that Humphrey was
a Volunteer gas customer, he indicated that Option no longer works with Volunteer, and he
has undertaken nor further efforts to solicit Humphrey. (Pillars Aff. ¶ 6.)
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Volunteer did not supply Option with a list of Volunteer gas customers, and Volunteer
has not challenged Pillars’s statement that he did not know that Humphrey was a Volunteer
gas customer when he solicited Humphrey. Whether making negative statements about
Volunteer constitutes “soliciting or attempting to solicit” a customer is ambiguous at best and
must be resolved in favor of Option.
The Court concludes that Volunteer has not come forward with clear and convincing
evidence that Defendants violated a definite and specific order of the court. Accordingly,
Volunteer’s motion for contempt will be denied. This brings the Court back to Option’s
motion to dissolve the preliminary injunction.
The preliminary injunction was designed to enforce the Agent Agreement’s nonsolicitation provision. (Dkt. No. 24, Op. 13.) There is no dispute that the Agent Agreement
terminated on April 21, 2011, nor is there any dispute that the non-competition clause was
scheduled o expire one year later, on April 21, 2012. Option contends that because the nonsolicitation clause has expired on its own terms, the preliminary injunction should be
dissolved. Volunteer contends that in order to enable it to obtain the benefits it bargained for,
the one-year non-solicitation period should not begin to run until Option stops soliciting
Volunteer customers. Volunteer relies on B.W. Rogers Co. v. Wells Bros., Inc., No. 17-1125, 2012 WL 605519 (Ohio Ct. App. Feb. 28, 2012), in support of this argument.
In B.W. Rogers the parties entered into a two year non-compete agreement, but there
was a two year delay before the issue of the customers covered by the non-compete
agreement was resolved at trial. Id. at *11. In light of the delay, the trial court found that the
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provisions had not yet begun, and the distributor had not yet received the benefits it had
negotiated for. The trial court accordingly ordered the term of the non-compete agreement
to commence at the conclusion of the trial. The decision was affirmed on appeal. Id. at *12.
B.W. Rogers does not suggest that every breach of a restrictive covenant should result
in its extension. B.W. Rogers permits an extension of a restrictive covenant where the
original covenant did not go into effect, and one party has not obtained the benefit of its
bargain. Unlike the situation in B.W. Rogers, the non-solicitation clause in this case did go
into effect and was enforced by the Court’s preliminary injunction. In view of the parties’
dispute as to the meaning of the non-solicitation clause, this Court could, consistent with
B.W. Rogers, begin the running of the non-solicitation clause from July 29, 2011, the date
the preliminary injunction was entered. However, even under that approach, the one-year
non-solicitation period has expired. The non-solicitation clause expired either by its on terms
on April 21, 2012, or, at the latest, on July 29, 2012. Volunteer has received the benefit of
the non-solicitation clause for the full term it negotiated in the Agent Agreement. The
preliminary injunction is no longer necessary to enforce the non-solicitation clause. The
Court will accordingly grant Option’s motion and dissolve the preliminary injunction.
II.
On May 1, 2012,1 Volunteer filed a motion for sanctions based on Defendants’ alleged
failure to comply with the Court’s order compelling production of documents. Specifically,

1

Volunteer’s motion for sanctions is deemed filed as of the date Volunteer’s motion
for leave to file in excess of page limitations was filed. See (Dkt. Nos. 89, 126.)
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Volunteer asserts that Defendants have failed to produce certain emails.
The Magistrate Judge’s discovery order required Defendants to produce all emails
between Defendants and Integrys from January 1, 2010, to the present, involving any of six
listed categories of information, and all internal emails referring to Option’s agency
agreement with Volunteer, including emails sent to or from any personal email account of
the individual defendants. (Dkt. No. 69, Disc. Order.) Volunteer contends that Defendants,
in violation of the discovery order, failed to produce (1) emails from Simonian’s inbox and
sent folders from prior to 2012; (2) emails from the sent folders of Rockwood, Schmiege,
Gunia, Moss, McDaniel, and Gonzalez; (3) emails from the inboxes or sent folders of
Lanphear, Cramer, Cook, and Pillars; and (4) emails from Pillars’s and Rockwood’s personal
email accounts. (Dkt. No. 89, Brown Aff. ¶¶ 10, 12.)
In response, Defendants contend that the deficiencies identified by Volunteer are
demonstrably false. Defendants contend that the documents they produced include (1)
Simonian emails from prior to 2012; (2) emails sent by Rockwood, Schmiege, Gunia, Moss,
McDaniel, and Gonzalez; (3) emails to or from Lamphear, Cramer and Pillars; and (4) emails
from Rockwood’s personal email account. Defendants further contend that Pillars does not
have a personal email account.
Defendants’ response is not responsive to Volunteer’s assertion that Defendants failed
to produce certain categories of emails. As Volunteer notes in its reply brief, each of the
emails Defendants have attached to their response are emails found in Rockwood’s inbox
because the email was sent to him or he was cc’d on the email. The fact that Defendants
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disclosed some of Simonian’s emails from prior to 2012 that were located in Rockwood’s
inbox does not suggest that other relevant emails might not be found in Simonian’s inbox
or sent folders from prior to 2012. The fact that Defendants disclosed some emails sent by
Rockwood, Schmiege, Gunia, Moss, McDanial and Gonzalez that were located in
Rockwood’s inbox does not suggest that other relevant emails might not be found in those
individuals’ sent folders. These individuals might very well have sent relevant emails
regarding Volunteer, disputed customers, or Integrys that were not cc’d to Rockwood.
Defendants’ response to Volunteer’s motion for sanctions simply does not assure this Court
that Defendants have produced all relevant emails.
The Court will take the motion for discovery sanctions under advisement. Defendants
are directed to review their response to the discovery order and to supplement their
production, if necessary. The Court will review Volunteer’s motion for sanctions at the final
pretrial conference and will determine, at that time, whether sanctions are in order.
An order consistent with this opinion will be entered.

Date: August 20, 2012

/s/ Robert Holmes Bell
ROBERT HOLMES BELL
UNITED STATES DISTRICT JUDGE

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