RPM Performance Coatings Group, Inc. et al v. Fredrick

Filing 36

ORDER that plaintiffs are awarded final judgment against defendant in the amount of $21,838.60, plus attorneys' fees and costs in the amount of $16,668.90, for a total amount of $38.507.50.It is FURTHER ORDERED that the clerk of t he court mail a copy of this Order via regular and certified mail to defendant. Signed on 11/12/13 by Chief District Judge Fernando J. Gaitan, Jr. (Enss, Rhonda) A copy of this order and Doc. 37, clerk's judgment, was sent by regular and certified mail (article no. 7013 1710 00005617 6148) to William Fredrick, 1003 NE Clear Creek Dr., Grain Valley, MO 64029-9182 on 11/12/2013 (Melvin, Greg)

IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION

RPM Performance Coatings Group, Inc.
and Stonhard, a division of StonCorp
Group, Inc.,
Plaintiffs,
vs.
William G. Fredrick,
Defendant.

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)
)
)
) Case No. 12-1392-CV-W-FJG
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)
)

ORDER
Before the Court are the parties’ briefs regarding damages (Doc. Nos. 28, 30, 31,
32, and 34). Plaintiffs’ claims for monetary relief are addressed below.
I.

Background
Plaintiffs filed a complaint on November 26, 2012, asserting that defendant

violated the terms of his non-compete agreement with plaintiffs by accepting
employment at a competitor and bidding for competing jobs. Plaintiffs filed motions for
temporary restraining order and for preliminary injunction. On December 13, 2012, the
Court denied the motion for temporary restraining order following a teleconference in
which defendant did not participate, and ordered a preliminary injunction hearing be
held Friday, January 11, 2012.
In the meantime, on December 27, 2012, plaintiffs filed a motion for entry of
default, noting that defendant had not timely answered the complaint. On December 28,
2012, the Court issued an order for defendant to show cause on or before January 9,
2013, why an entry of default should not be made. Defendant did not respond to the

order to show cause, and so on January 10, 2013, the Court entered an order granting
the motion for entry of default and cancelling the preliminary injunction hearing. The
Court further ordered plaintiffs to file a motion for default judgment, specifying the relief
requested, on or before February 1, 2013.
On March 18, 2013, after briefing had been filed, the Court granted a default
judgment and entered a permanent injunction. The Court also directed plaintiffs to file a
brief specifying the monetary damages they believed they were entitled to.
On April 5, 2013, plaintiffs filed their opening brief regarding damages (Doc. No.
28).

Plaintiffs request a total of $126,927.98 in damages against defendant.

This

represents $96,801.58 in alleged lost profits and loss of goodwill, and $30,126.40 in
costs and attorneys’ fees. Following the Court’s review of the first round of briefs, the
Court directed the parties to answer specific questions regarding calculation of lost
profits and other damages. Plaintiffs’ response to the Court’s order has now been filed
(Doc. No. 34), and the issue is ripe for the Court’s consideration.
II.

Damages
Plaintiffs seek two forms of monetary relief as damages: (1) compensatory

damages for alleged lost profits and loss of goodwill, and (2) attorneys= fees.
A.

Compensatory Damages

Under New Jersey law (which applies to the subject employment agreement), the
following rules apply as to compensatory damages in a case involving a non-compete
agreement:
Under contract law, a party who breaches a contract is liable
for all of the natural and probable consequences of the
breach of that contract. . . . . We recognize that the goal is

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“to put the injured party in as good a position as ... if
performance had been rendered.” We have also held:
“[w]hat that position is depends upon what the parties
reasonably expected. It follows that the defendant is not
chargeable for loss that he did not have reason to foresee as
a probable result of the breach when the contract was
made.”
However, although the non-breaching party must
demonstrate that, in order to be compensable, “the loss must
be a reasonably certain consequence of the breach[,] ... the
exact amount of the loss need not be certain.” That
reasoning is in accord with our ordinary considerations about
contract damages that are uncertain in amount. . . . . As the
trial court and the majority of the appellate panel recognized,
mere uncertainty as to the quantum of damages is an
insufficient basis on which to deny the non-breaching party
relief. Although it complicates the precise calculation of
damages, our courts have long held that “[p]roof of damages
need not be done with exactitude.... It is therefore sufficient
that the plaintiff prove damages with such certainty as the
nature of the case may permit, laying a foundation which will
enable the trier of the facts to make a fair and reasonable
estimate.”
Totaro, Duffy, Cannova & Co., L.L.C. v. Lane, Middleton & Co., L.L.C., 191 N.J. 1, 1314, 921 A.2d 1100, 1108 (2007) (internal citations omitted). With that standard in mind,
the Court turns to plaintiffs’ claims for damages.
1. General Loss of Good Will
Plaintiffs first claim damages for loss of good will, asking the Court to award a
percentage of lost profits during the four months between when the case was filed
(November 2012) and when the injunction was entered (March 2013). Specifically,
plaintiffs assert that they earned an average of $15,209.65 in profit per month in
defendant’s territory in Fiscal Year 2012, but that the average profit since defendant left
is now $9,750.00 per month. Plaintiffs request 30% of the lost profits during Fredrick’s

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period of competition be awarded to them as compensation for loss of good will. The
amount requested is $6,551.58.1
Upon review of New Jersey case law, the Court cannot find support for
calculation of loss of goodwill in the manner suggested by plaintiffs. The Court will not
adopt plaintiffs’ calculations and award loss of goodwill damages; therefore, plaintiffs’
request is denied in part. However, the Court believes that plaintiffs’ calculation of lost
profits over the course of the four months of competition should be the basis for
calculation of compensatory damages. The Court finds that the reasonable amount of
lost profit damages over the course of the four months of competition is $21,838.60,
representing $5,459.65 average lost profits per month times four months. Therefore,
plaintiffs will be awarded compensatory damages in the amount of $21,838.60.
2.

Water One Project, Lost Profits

Plaintiffs assert that defendant quoted the Water One Project on behalf of
plaintiffs on September 6, 2012. On October 30, 2012, defendant quoted the same
project on behalf of DesKo, and compared Desko’s product to plaintiffs’.

Plaintiffs

assert that DesKo was awarded the project over plaintiffs (see Affidavit, Doc. No. 31,
Ex. A, ¶ 7). Plaintiffs estimate lost profits on the Water One project in the amount of
$22,750.00. Plaintiffs request the full amount in lost profits as damages.
Defendant responds that he “removed [himself] from involvement” on this project
“following notification of the non compete claim.” See Doc. No. 30. Defendant further
argues that plaintiff has not demonstrated that defendant caused damages, as plaintiff
1

$15,209.65 in 2012 profits - $9,750.00 in profit after defendant left = $5,459.65 lost
profits per month. $5,459.65 monthly lost profits X 4 months = $21,838.60. $21,838.60
X 30% = $6,551.58.
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has not provided its quote for the same project; defendant asserts that plaintiffs’ quote
was the highest provided to the general contractor, and that is why they did not get the
project. In their response to the Court’s Order (Doc. No. 34 p. 3), plaintiffs indicate that
“the decision not to accept a project gained through improper competition does not
diminish the damage to Stonhard.

Stonhard therefore requests that it be awarded

$22,750.00 for Fredrick’s competition on this project.”
Upon the Court’s review, the Court finds that plaintiffs have not shown that they
would have otherwise been awarded the project if defendant did not submit a bid on it.
In other words, the Court does not believe the lost profits on Water One are a
“reasonably certain consequence of the breach.” Totaro, 921 A.2d at 1108. Therefore,
plaintiffs’ request for lost profits damages related to the Water One Project is DENIED.
3.

Mercy Hospital Project, Loss of Goodwill

Plaintiffs assert that defendant used information and pricing from plaintiffs to bid
on a project for Mercy Hospital within his former territory. Plaintiffs state that they bid on
the Mercy Hospital project, but they were not awarded it.

Plaintiffs assume that

defendant said something to the general contractor on the Mercy Hospital project that
caused plaintiffs to lose good will.

Plaintiffs state that they would have made an

estimated $225,000.00 in net profit on the Mercy Hospital project had it been awarded
to them; they request 30% of these profits ($67,500) to be awarded as a loss of good
will attributable to defendant’s competition.
Defendant responds (Doc. No. 30) that he did not have any contact or
involvement with the contractor who did win this project, and he does not have any
knowledge of which competitor was awarded that project. In plaintiffs’ response to the

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Court’s order (Doc. No. 34), plaintiff states it “does not know what was said by Fredrick
that may have undermined the goodwill it spent years trying to cultivate, but it does
know that it was not awarded the project.” Plaintiff further states that the testimony of its
general manager is sufficient to support an award for loss of goodwill (citing to a case
from Arizona).
Noticeably absent from plaintiffs’ briefs is any indication that defendant did
anything that caused a loss of good will, or that his new employer was awarded the bid
on this project. The Court cannot find, under the facts asserted, that these damages
are a “reasonably certain consequence of the breach.”

Totaro, 921 A.2d at 1108.

Therefore, plaintiffs’ request for damages for loss of goodwill related to the Mercy
Hospital Project will be DENIED.
B.

Attorneys= fees and costs

In this matter, attorneys’ fees are recoverable pursuant to the contract between
plaintiffs and defendant. Plaintiffs seek a total of $30,126.40 in attorneys’ fees and
costs. Although defendant argues that no attorneys’ fees should be awarded, the Court
believes that some amount of attorneys’ fees is necessary, given that defendant
appears to have competed with plaintiffs for a brief period of time once he left plaintiffs’
employment.
The Supreme Court has recognized the most useful Astarting point for
determining the amount of a reasonable fee is the number of hours reasonably
expended on the litigation multiplied by a reasonable hourly rate.@ Hensley v. Eckerhart,
461 U.S. 424, 433, 76 L. Ed. 2d 40, 103 S. Ct. 1933 (1983). This result is known as the
lodestar figure and is presumed to reflect the reasonable fee. See City of Burlington v.

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Dague, 505 U.S. 562, 120 L. Ed. 2d 449, 112 S. Ct. 2638 (1992).
In the current matter, the Court finds the hourly rates billed by all attorneys to be
reasonable. However, the Court believes the number of hours expended on this matter
to be excessive, given that (1) defendant represented himself in this matter; (2)
defendant did nothing to prevent default from being entered; and (3) the only significant
hearings in this case were a brief teleconference with the Court on the motion for
temporary restraining order and a preliminary injunction hearing which was ultimately
cancelled.
The Court has considered plaintiffs’ billing records, and makes the following
downward adjustments to the hours billed by plaintiffs’ attorneys:
1.

National Counsel

Counsel indicate that partners at Bradford Neal Martin and Associates (a South
Carolina firm) spent 46 hours at $350 per hour, senior associates spent 40.40 hours at
$175 per hour, and junior associates spent 17.5 hours at $175 per hour, for a total of
$26,232.50 plus costs of $116.95 for a total of $26,349.45.
Approximately 40 of these hours were spent before the filing of this case, working
on the motion for temporary restraining order and the complaint. The complaint is 10
pages long, and mostly cites to the contract provisions allegedly violated.

The

suggestions in support of the motion for temporary restraining order and/or preliminary
injunction are 13 pages long, and consist primarily of information that should be
considered boiler-plate. The Court finds that a reasonable amount of time spent prior to
the filing of this action would be 15 hours; 7.5 hours of partner time would be $2,625.00,
and 7.5 hours of associate time would be $1,312.50.

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The Court finds that 3.5 hours reasonably were spent by the partner prior to the
temporary restraining order teleconference, for a total of $1,225.00.
With respect to preparation for the preliminary injunction hearing, much of the
billing that seems excessive (i.e., .2 for “Review of docket to see if defendant has
appeared” and .3 for “review of deadlines for Fredrick to respond” – both of the activities
would take less than a minute). The Court also will not allow counsel to bill for their time
spent travelling to the airport for the preliminary injunction hearing. The Court ultimately
reduces the amount of time for preparation for the preliminary injunction hearing to 15
hours total, given duplication of efforts and other inefficiencies.

7.5 hours of partner

time would be $2,625.00, and 7.5 hours of associate time would be $1,312.50.
Following entry of default, plaintiffs were directed to file a motion for default
judgment. Their motion sought permanent injunctive relief and requested a hearing on
damages. Such a motion should not take long to draft. Nonetheless, counsel billed
approximately 20 hours for this, with a great deal of research on side issues, such as
whether punitive damages were appropriate (1.3 hours). The Court believes 7 hours to
be reasonable for preparing the motion for default judgment. 3.5 hours of partner time
would be $1,225.00; 3.5 hours of associate time would be $612.50.
Finally, counsel billed 16.9 hours for preparation of the present brief on damages.
Again, the Court finds this amount of time to be excessive. The Court finds 7 hours to
be a reasonable amount of time to spend on this project. 3.5 hours of partner time
would be $1,225.00; 3.5 hours of senior associate time would be $612.50.
Therefore, the reasonable total for national counsel’s attorneys’ fees is
$12,775.00. The Court further finds national counsel’s request for costs in the amount

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of $116.95 to be reasonable. Therefore, the total amount awarded for national counsel
is $12,891.95.
2.

Local Counsel

Local counsel in Kansas City billed $3,776.95 for fees and costs (including costs
of filing suit and costs for service of summons). The Court has reviewed their billing
records, and does not find them excessive. Therefore, the Court will award attorneys’
fees for local counsel in the amount of $3,776.95.
The total reasonable amount of attorneys’ fees and costs in this matter,
therefore, is $16,668.90.
III.

Conclusion
Therefore, for all the foregoing reasons, it is hereby ORDERED, ADJUDGED,

AND DECREED that plaintiffs are awarded final judgment against defendant in the
amount of $21,838.60, plus attorneys’ fees and costs in the amount of $16,668.90, for a
total amount of $38.507.50.
It is FURTHER ORDERED that the clerk of the court mail a copy of this Order via
regular and certified mail to defendant at the following address: William Fredrick, 1003
NE Clear Creek Dr., Grain Valley, MO 64029-9182.
IT IS SO ORDERED.

Date: November 12, 2013
Kansas City, Missouri

S/ FERNANDO J. GAITAN, JR.
Fernando J. Gaitan, Jr.
Chief United States District Judge

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