LAWN DOCTOR, INC. v. RIZZO et al
OPINION filed. Signed by Magistrate Judge Tonianne J. Bongiovanni on 10/24/2017. (km)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
LAWN DOCTOR, INC.
Civil Action No. 12-1430 (TJB)
JOSEPH RIZZO, et al.,
BONGIOVANNI, United States Magistrate Judge
This matter comes before the Court upon Lawn Doctor, Inc.’s (“Lawn Doctor”)
supplemental motion for sanctions filed pursuant to the Court’s January 31, 2017 Order. (Docket
Entry No. 80).
Defendants Joseph Rizzo and Annamaria Rizzo (collectively, the “Rizzos”)
oppose Lawn Doctor’s motion. The Court has fully reviewed all arguments raised in support of
and opposition to Lawn Doctor’s motion. The Court considers the aforementioned motion
without argument pursuant to L.Civ.R. 78.1(b). For the reasons set forth more fully below,
Lawn Doctor’s motion shall be held in abeyance and administratively terminated, pending
Background and Procedural History
This matter arises out of a Franchise Agreement Lawn Doctor and the Rizzos entered into
on May 14, 2002. The Franchise Agreement granted the Rizzos the right to own and operate a
Lawn Doctor lawn care business within a defined geographic area in Florida for a 20 year term.
On March 7, 2012, Lawn Doctor filed suit against the Rizzos alleging that as a result of their
breach of the Franchise Agreement, said agreement was terminated and the Rizzos failed to
comply with their contractual post-termination obligations. (See generally, Lawn Doctor’s
Verified Complaint; Docket Entry No. 1). At the same time it filed its Verified Complaint
against the Rizzos, Lawn Doctor also moved for an order to show case and preliminary
injunctive relief. (See generally, Docket Entry No. 1-9).
The District Court, with the agreement of the parties, granted Lawn Doctor’s application
for a preliminary injunction. (See Mem Op. and Order of 6/25/2012 at 6; Docket Entry No. 23).
However, “[i]n light of the unreasonable scope of the restrictive covenant” contained in the
Franchise Agreement, the District Court denied Lawn Doctor’s application to enforce same. (Id.
at 6-7). Instead, the District Court scheduled an evidentiary hearing on the enforceability of a
less restrictive covenant not to compete and directed the parties to coordinate any relevant
discovery with the undersigned. (Letter Order of 7/6/2012 at 1; Docket Entry No. 25). This
Court set a discovery schedule on August 9, 2012. (Order of 8/9/2012; Docket Entry No. 26).
While discovery was ongoing, the Court conducted a telephone conference with the parties
during which they advised that they agreed upon a consent injunction, which eliminated the need
for the District Court to conduct a hearing regarding the appropriate scope of the restrictive
covenant not to compete. Instead, all they required was for the Court to determine whether
“irrigation services” should be covered by the restrictive covenant.
In light of the foregoing, the evidentiary hearing set before the District Court was
cancelled, and the Court set a briefing schedule regarding the parties’ dispute as to whether
“irrigation services” fell within the definition of a “Competitive Business” in the restrictive
covenant of the parties’ underlying Franchise Agreement. (Letter Order entered on 10/1/2012;
Docket Entry No. 28). The term “Competitive Business” was defined in Section 4B of the
Franchise Agreement to be, “[a]ny business which operates, or grants franchises or licenses to
others to operate, a business for the establishment, care and conditioning of lawns or other
vegetation or any related or ancillary services, including, but not limited to, trees, shrubbery and
other plant life.” (Schmierer Cert.to Mot. to Enforce Settlement Agreement, Ex. B at 8; Docket
Entry No. 30-2). The parties consented to have this issue and any other that might arise referred
to the undersigned. (See 10/1/2012 Consent to Jurisdiction by U.S. Magistrate Judge; Docket
Entry No. 29).
This Court determined that the parties had reached an enforceable settlement agreement
regarding the Consent Injunction to be entered and that this was so despite the fact that they did
not discuss whether “irrigation services” fell within the definition of “Competitive Business”
contained in the Franchise Agreement. (Mem. Op. of 12/11/2012 at 13 -15; Docket Entry No.
35). With respect to the ultimate question of whether “irrigation services” fell within the
aforementioned definition of “Competitive Business” the Court found that when the terms
defining “Competitive Business” are given their plain and ordinary meaning “it is clear that an
irrigation services business is a Competitive Business prohibited by the parties’ settlement
agreement.” (Id. at 17). In reaching this conclusion, the Court determined:
Irrigation services are not tangentially related to the
“establishment, care and conditioning of lawns.” Instead, they
clearly fall within the plain and ordinary meaning of those terms.
The Rizzos do not provide any real argument to the contrary.
Instead, they focus on the fact that Lawn Doctor does not provide
irrigation services to customers as part of its comprehensive lawn
care package, irrigation services are not mentioned in the parties’
original Franchise Agreement, the Rizzos never provided irrigation
services as franchisees of Lawn Doctor and the includion/exclusion
of irrigation services from the applicable restrictive covenant was
not discussed when the parties reached their settlement agreement.
For the reasons set forth above, the fact that the parties
failed to address whether irrigation services would be prohibited
by the restrictive covenant is irrelevant. The parties did not have
to account for “every possible contractual provision to cover every
contingency” in order to enter into a binding and enforceable
settlement. Bistricer, 231 N.J. Super. at 147. Similarly, the fact
that the Rizzos never provided irrigation services to customers
when they operated their Lawn Doctor Franchise and the fact that
Lawn Doctor does not generally provide those services to
customers is a non-starter. Here, the Rizzos[’] restrictive covenant
was not limited to lawn care and conditioning services actually
provided by Lawn Doctor. Instead, the Rizzos agreed to refrain
from operating “a business for the establishment, care and
conditioning of lawns or other vegetation or any related or
ancillary services, including, but not limited to, trees, shrubbery
and other plant life.” (Schmierer Cert. Ex. b at 8). While it
certainly would have been better for the Rizzos to have negotiated
for the more limited restrictive covenant, it is not the Court’s
province to make a better contract for them. See Graziano, 326
N.J. Super. at 342. Instead, the Court must enfoce the contract as
written, which here clearly prohibits the Rizzos from operating an
irrigation services business.
(Id. at 18-19). The Court further determined that the restrictive covenant also protected Lawn
Doctor’s legitimate business interests, including Lawn Doctor’s interest in protecting its
customer relationships and good will, did not impose an undue hardship on the Rizzos, and was
not injurious to the public. (Id. at 19-21). As a result, the Court found that “the restrictive
covenant as written [wa]s valid and enforceable” and, consequently “Lawn Doctor [wa]s entitled
to a declaratory judgment that the Rizzo’s irrigation services business violates same.” (Id. at 22).
After the Court entered its Opinion and Order to this effect, this matter was closed and the parties
executed a Consent Injunction, which explicitly stated that “Irrigation services fall within the
definition of “Competitive Business[.]” (Consent Injunction Order, ¶ (f); Docket Entry No. 37).
During the period of the restrictive covenant, an issue arose regarding the Rizzos’ alleged
violation of same. This led to Lawn Doctor filing a motion for a temporary restraining order.
(See generally, Motion of 8/21/2013; Docket Entry No. 38). The Court held a hearing on Lawn
Doctor’s motion for a temporary restraining order on September 13, 2013. During this hearing,
the Court determined that the Rizzos violated the Consent Injunction entered in this matter (a)
when Defendant Joseph Rizzo (“J. Rizzo”) became a lender to a “Competitive Business” within
the restricted area defined in the Consent Injunction by transferring ownership of Advanced
Enviro Care to Daniel Wilkerson (“Wilkerson”) in return for a promissory note for $275,000
payable on July 31, 2014 (the “Wilkerson Deal); (b) by failing to properly remove the Lawn
Doctor logo from certain work vans; and (c) by failing to reassign all of Lawn Doctor’s
telephone numbers back to Lawn Doctor. While the Court required Defendants to immediately
correct the logo and telephone number issues, the Court left open the question of what other
sanctions would be imposed. (See Tr. of Proceedings Held on 9/13/2013 Tr. at 26:6-23; Docket
Entry No. 53). Of particular concern was the Wilkerson Deal.
According to the Consent Injunction entered in this matter on January 25, 2013, for 18
months from the date of the entry of the Consent Injunction, the Rizzos were:
[E]njoined and restrained from having any interest as a disclosed
or beneficial owner, investor, lender, partner director officer,
manager, consultant, employee, representative or agent, or in any
other capacity, in any Competitive Business located within (i) the
Rizzos’ Franchise Territory as defined in Exhibits A & B to Lawn
Doctor’s original OTSC; (ii) fifty (50) miles of the Franchise
Territory’s boundaries; or (iii) any territory granted by Lawn
Doctor to any other Lawn Doctor franchisee. “Competitive
Business” means any business which operates, or grants franchises
or licenses to others to operate, a business for the establishment,
care and conditioning of lawns or other vegetation or any related or
ancillary services, including, but not limited to, trees, shrubbery
and other plant life. Irrigation services fall within the definition of
(Consent Injunction, ¶ (f)). Thus, even assuming that the Rizzos did not operate Advanced
Enviro Care 1 themselves in contravention of the Consent Injunction, J. Rizzo’s transfer of
ownership of Advanced Enviro Care to Daniel Wilkerson in return for a secured promissory note
Advanced Enviro Care is a “Competitive Business” as that term is defined in the Consent
Injunction and is located in the restricted territory outlined in the Consent Injunction.
for $275,000 due to be paid on July 31, 2014, 6 days after the restrictive covenant outlined in the
Consent Injunction expired, violated the terms of same because, as just outlined, according to the
Consent Injunction, the Rizzos were prohibited “from having any interest as a
. . . lender . . . in
any Competitive Business[.]” The Court advised the Rizzos of this fact numerous times during
the motion hearing held on September 13, 2013 and even afforded them the opportunity to undo
the Wilkerson Deal or, as suggested by Lawn Doctor, assign the promissory note for $275,000 to
“I think its’s a problem that clearly you made this transfer as a lender. You’re not
supposed to do that. It’s prohibited under the consent judgment.” (Tr. of
Proceedings Held on 9/13/2013 at 11:18-21; Docket Entry No. 53).
“I do find that the consent injunction has been violated because Mr. Rizzo was a
lender to a competitive business and the competitive business it’s within the area - the restricted area as outlined in the documents[.]” (Id. at 14:17-22).
“I am finding for today’s purposes that there is a violation.” (Id. at 15:11-12).
"I'm going to give you the opportunity to un[do] this deal that you made with Mr.
Wilkerson. And you can provide proof of that to us by the 27th of September. And
I will certainly consider that because you're not to be a lender in this business. So,
whatever the terms of the deal were, whether it included client lists, you need to -I'm giving [you] the opportunity to undo it." (Id. at 17:5-11).
“I am finding that there is a violation of the consent injunction. I think that’s clear.”
(Id. at 23:6-7).
"And I'm going to give you the opportunity to bow out of this deal with Mr.
Wilkerson by the 27th." (Id., at 23:10-12).
“What I have is a consent injunction. And a consent injunction clearly says that
you can’t loan money to a competing business. So, I will say to you rhetorically
and I’m not asking you to answer it. What am I supposed to do about the fact that
you violated it? Even if I’m empathetic to your -- your dire financial strait, even if
I think you didn’t have a sinister motive, you violated this consent injunction and I
have to do something about it.” (Id. at 25:13-20).
"I'm giving you the opportunity to undo this. And if you undo it, it will certainly
impact any other sanction." (Id., at 25:23-24).
"And by the 27th give you the opportunity to undo the loan that you have done -·made with Mr. Wilkerson." (Id., at 26:3-5).
"[B]y the 27th I'll give you the opportunity to tell me what, if anything has been
done with this loan." [Id., at 27:20-22].
"So before you write anything to me, let's see if anything happens with the loan
being undone." (Id., at 28:4-5).
"Well, whatever you sold to him and I don't know what you sold to him, you have
to unsell to him." (Id., at 28:25 to 29:1).
(Mr. Schmierer): "And -- and, Your Honor, I'll just say, obviously, I have to speak
with my client to get authority, but if Mr. Rizzo wants to assign that promissory
note over to my client and we get the proceeds of that sale in July 2014, I think that
would be a reasonable solution." (The Court): "So that seed is planted for you, Mr.
Rizzo." (Id., at 29:7-13).
Despite the Court’s cautionary warnings about the Wilkerson Deal, the Rizzos did not
“undue” or “bow out of” the Wilkerson Deal; nor did they elect to transfer the promissory note to
Lawn Doctor. Indeed, far from taking any of the actions suggested by the Court, the Rizzos
elected to assign the promissory note back to Advanced Enviro Care. The Rizzos’ decision in
this regard did nothing to remedy their breach of the Consent Injunction. It likewise did nothing
to assuage Lawn Doctor’s fear or the Court’s concern that what was sold to Wilkerson for
$275,000 was anything but Lawn Doctor’s customer list or other property/proprietary
In light of the foregoing, on March 14, 2014, the Court entered a Letter Order in which it
found the Rizzos to be in contempt of court because, by entering the Wilkerson Deal, the Rizzos
became a competitive lender thus violating the terms of the Consent Injunction. 2 (Letter Order
of 3/14/2014 at 4; Docket Entry No. 55). In reaching this conclusion, the Court noted that
“[w]hether Rizzo acted in good faith when he entered the Wilkerson Deal is irrelevant to the
Court’s finding of contempt as ‘[g]ood faith is not a defense to civil contempt.’” (Id. (quoting
American Bd. of Survey, Inc. v. Lasko, 532 Fed. Appx. 66, 70 (3d Cir. 2013) (quoting Robin
Woods Inc. v. Woods, 28 F.3d 396, 399 (3d Cir. 1994)) (internal quotation marks omitted)).
“To prove civil contempt the court must find that (1) a valid court order existed, (2) the
defendant had knowledge of the order, and (3) the defendants disobeyed the order.” (Letter
Order of 3/14/2014 at 4 (quoting American Bd. Of Surgery, Inc. v. Lasko, 532 Fed. Appx. 66, 6970 (3d Cir. 2013); Harris v. City of Phila., 47 F.3d 1311, 1326 (3d Cir. 1995); T. ex rel. Paul T.
v. Del. Cty. Intermediate Unit, 318 F.3d 545, 552 (3d Cir. 2003) (citations omitted)); (Docket
Entry No. 55).
Relying on its broad discretion to fashion the appropriate civil contempt sanction, the Court
determined that requiring the Rizzos to pay $178,000, what Lawn Doctor established the fair
market value of its customer list to be, was the appropriate civil contempt sanction. (Id. at 5). 3
In reaching this conclusion, the Court noted:
[T]he Consent Injunction which was entered in this matter on
January 25, 2013, and with the benefit of counsel for the
Defendants, clearly prohibited Defendants from either operating
Advanced Enviro Care in the restricted territory themselves or
acting as a competitive lender to someone buying and intending to
operate the company in said area. Defendants not only violated the
Consent Injunction when Rizzo entered into the Wilkerson Deal,
but then, after being specifically informed by the Court that the
Wilkerson Deal violated the Consent Injunction and, after being
given the opportunity to remedy the violation before the Court
determined what sanction should be entered, Defendants took no
actions to try to ameliorate their violation. Nor have the
Defendants submitted any evidence that the Wilkerson Deal did
not include Plaintiff’s customer list. Defendants’ actions post the
September 13, 2013 motion hearing, i.e., Rizzo’s assignment of the
promissory note for $275,000 back to Advance Enviro Care, only
exacerbated the problem.
(Id. at 5-6).
The Rizzos appealed the Court’s determination: (1) arguing that the Court erred in
determining that they violated the non-complete clause; (2) arguing that the civil contempt award
was arbitrary; and (3) challenging the Court’s award of attorneys’ fees and costs. (Lawn Doctor
Inc. v. Rizzo, 646 Fed. Appx. 195, 197 (3d Cir. 2016); Docket Entry No. 67-1). The Court of
Appeals for the Third Circuit, however, determined that “[a]mple evidence supports the Court’s
finding that the Rizzos violated the consent injunction” and that any “protestations that they
While not addressed in detail, the Court declined to impose the royalties sought by Lawn
Doctor. (See id. at 4-6 (noting Lawn Doctor sought $50,106.48 in royalties in addition to the
profits it lost as a result of the creation and then sale of Advanced Enviro Care to Wilkerson, but
only imposing a sanction of $178,000, which represented one way to calculate said profits, with
acted in good faith are of no avail.” (Id. at 199 (citing F.T.C. v. Lane Labs-USA, Inc., 624 F.3d
575, 582 (3d Cir. 2010) (“good faith is not a defense to civil contempt.”))). The Third Circuit
further determined that “the Rizzos are foreclosed from arguing that they did not violate the
consent injunction because AEC solely provided irrigation services, which the Rizzos maintain
were not part of the non-compete covenant.” (Id.) In this regard, the Third Circuit noted that
“[p]ursuant to the declaratory judgment, the Consent Injunction was revised to explicitly include
irrigation services within the definition of ‘Competitive Business’” and “[t]he Rizzos did not
appeal from the declaratory judgment.” (Id. at 199-200). Therefore, the Third Circuit held that
the Rizzos waived any objection to the consent injunction. (Id.) In addition, the Third Circuit
upheld the Court’s award of attorneys’ fees and costs stating that it was “persuaded that the
Rizzos willfully disregarded the injunction and that the Court’s decision to award attorneys’ fees
as compensation for their contempt was not an abuse of discretion.” (Id. at 201).
However, with respect to the $178,156.45 civil contempt sanction award, the Third
Circuit determined that because the burden in a civil contempt proceeding is on the petitioning
party, “the Court erred in shifting the burden onto the Rizzos to prove that the customer service
list had not been transferred as part of the Wilkerson Deal.” (Id.) As a result, it determined that
it was an abuse of discretion for the sanctions award to be based on the value of the customer list,
which the Court assumed, “in the absence of evidence to the contrary, had been transferred to a
third party.” (Id.) Consequently, the Third Circuit vacated the award of $178,156.45, and
remanded the issue “for consideration of compensatory damages consistent with the evidence in
the record.” (Id.)
In light of the Third Circuit’s Opinion, the Court directed the parties to submit
supplemental briefing on the issue of what contempt damages should be awarded to Lawn
Doctor. (See Letter Order entered 5/25/2016; Docket Entry No. 68). After considering the
briefing submitted, the Court determined that the information submitted by Lawn Doctor did not
adequately support the lost profits sanction it sought. As a result, the Court denied Lawn
Doctor’s supplemental motion for sanctions without prejudice and gave Lawn Doctor an
opportunity to submit additional evidence in support of its request for contempt sanctions. (See
Order of 1/31/2017 at 1-2; Docket Entry No. 78). The instant supplemental motion for sanctions
In its motion for sanctions, Lawn Doctor relies on the following evidence to prove that its
customer list was transferred to Advanced Enviro Care: 4
(1) The following statements made by the Rizzos, which Lawn Doctor argues establish
that they transferred irrigation customers to Advanced Enviro care:
(a) The Rizzos’ statement in their opposition to Lawn Doctor’s first supplemental
motion for sanctions that “‘[Advanced] provided exclusively irrigation
services (a separate service that Lawn Doctor does not provide to its
customers) in part of the territory that [the Rizzo’s] operated their Lawn
Doctor business’” (Lawn Doctor Br. of 3/3/2017 at 6; Docket Entry No. 80
(quoting Rizzos Op. Br. of 7/14/2016 at 3; Docket Entry No. 75));
(b) J. Rizzo’s testimony stating, “I only had irrigation customers you know. It
was only a handful of customers that I owned at the time and that I just did on,
like , a maintenance basis . . . Whatever you do from there has nothing to do
with me . . . So as far as selling customers, the customers that I had weren’t
Lawn Doctor’s customers. Some were, but went to another company, but then
came back. . . . (Id. (quoting Rizzos Op. Br. of 7/14/2016 at 3 (emphasis
(c) The Rizzos’ statement in their opposition to Lawn Doctor’s first supplemental
motion for sanctions that “‘there is no evidence of actual service between
Wilkerson and any alleged Lawn Doctor’s customers for the same service.’”
(Id. (quoting Rizzos Op. Br. of 7/14/2016 at 10));
Lawn Doctor presents two theories regarding the transfer of its customer list to Advanced
Enviro Care, advocating that it was transferred to it as part of the Wilkerson Deal and/or through
J. Rizzo’s continued work on behalf of Advanced Enviro Care in the restricted territory during
the entire 18 month time period outlined in the restrictive covenant. (Lawn Doctor Br. of
3/3/2017 at 2; Docket Entry No. 80).
(d) The Rizzos’ statement in their opposition to Lawn Doctor’s first supplemental
motion for sanctions that “‘Lawn Doctor and the buyer of Rizzo’s irrigation
company provided separate and distinct services, so any alleged damages or
calculation as to the value of the list is frivolous.’” (Id. at 7 (quoting Rizzos
Op. Br. of 7/14/2016 at 13 (emphasis added))); and
(e) The Rizzos’ statement in their opposition to lawn Doctor’s first supplemental
motion for sanctions that “‘[Advanced] provided solely irrigation services.
Lawn Doctor did not provide such services to its customers. Even if there was
an exchange of list, the names were for two separate and distinct purposes
. . . (Id. (quoting Rizzos Op. Br. of 7/14/2016 at 21 (emphasis added)));
(2) J. Rizzo’s continued involvement with Advanced Enviro Care in the restricted
territory during the 18 month time period outlined in the restrictive covenant as
(a) the license plate reading “ADVANC3D” on the car registered to him; (Id. at
10 (citing Warner Cert. of 8/20/2013, ¶ 20 and Ex. F; Docket Entry No. 389));
(b) the fact that J. Rizzo remained on site at the Lena Road address, which was
where his offices had been as a Lawn Doctor franchisee (Id. at 10 (citing
Warner Cert. of 8/20/2013, ¶ 4));
(c) the text message between Vivian Quuinones, a Lawn Doctor customer, and
James Duffy, the principal of Lawn Doctor’s new franchisee in the relevant
territory, J&D Duffy Enterprises, LLC, in which Ms. Quinones wrote Mr.
Duffy, “‘Jim, joe called me today that he is not out of business and that I
paid for coralbean [one of the properties] until November 2014. He wants me
to ask you for my money back, since you lie and he dies [sic] still in
business.’” (Id. at 11 (quoting Frith Cert. of 3/7/2014, ¶ 12 and Ex. B
(emphasis added); Docket Entry No. 77-6));
(d) the statement Julia Greco, a Lawn Doctor customer, made to Mr. Duffy that
“she was returning to her ‘old supplier’” (Id. at 12 (quoting Frith Cert. of
3/7/2014, ¶ 18)); and
(e) the representation Dick Shalkop, a Lawn Doctor customer, made to Mr. Duffy
that he no longer needed Lawn Doctor’s services because he switched to J.
Rizzo’s services. (Id. (citing Frith Cert. of 3/7/2014, ¶ 21)); and
(3) The following pre-pay order forms and invoice indicating that Advanced Enviro Care
contacted Lawn Doctor customers in the restricted territory during the 18 month time
period outlined in the restrictive covenant:
(a) two pre-pay order forms for lawn service that Ms. Quinones received from
Advanced Enviro Care (Id. at 11 (citing Frith Cert. of 3/7/2014, ¶ 9 and Ex.
(b) an invoice for weed control Ms. Greco received from Advanced Enviro Care
(Id. at 11-12 (citing Frith Cert. of 3/7/2014, ¶ 16 and Ex. C)).
Lawn Doctor argues that the foregoing is more than sufficient evidence to prove that the
Rizzos transferred the customer list to Advanced. As a result, Lawn Doctor asks that
compensatory damages as a contempt sanction be entered against the Rizzos in the amount of its
lost profits, which Lawn Doctor suggests can be calculatesd as either: (1) the fair market value
of its customer list ($178,000); (2) the profits that historically were generated by J. Rizzo during
the 18 month period outlined in the restrictive covenant ($90,960); or (3) per diem sanctions of
$200 per day ($109,500). Lawn Doctor additionally seeks royalties in the amount of $50,106.48.
Further, in the event the Court was to determine that Lawn Doctor had still not carried its burden
of proof, Lawn Doctor requests permission to conduct limited discovery on whether its customer
list was transferred to Advanced Enviro Care.
The Rizzos oppose Lawn Doctor’s renewed supplemental motion for sanctions. 5 In their
opposition, they take issue with the lack of evidence “of actual service between Wilkerson and
any alleged Lawn Doctor’s customers for the same service[,]” focusing on the fact that
“Wilkerson had many new customers for irrigation services[,]” but there was no “comparison of
lawn service between Lawn Doctor and Wilkerson.” (Rizzo Op. Br. at 9). Indeed, the Rizzos
While the Rizzos apparently submitted a copy of their response in opposition to the Court and
Lawn Doctor, they never filed same with the Clerk of the Court. As a result, their opposition
does not currently appear on the Docket in this matter. So that the record is complete, the Court
is directing the Clerk of the Court to file the Rizzo’s opposition as a separate Docket Entry at the
time it files this Memorandum Opinion and Order. So there is no misunderstanding, in the
future, the Rizzos are directed to file any documents directly with the Clerk of the Court. The
undersigned may not be used as a conduit for same.
claim that “Lawn Doctor asserts that the Courts have deemed ‘irrigation’ is encompassed in the
franchise agreement, however [sic] fails to cite to the specific opinion” and argue:
AEC provided solely irrigation services. Lawn Doctor did not
provide such services to its customers. Even if there was an
exchange of list, the names were for two separate and distinct
purposes, names and addresses that could be obtained in a phone
book or on the internet.
(Id. at 9, 22).
In addition, the Rizzos also note that Lawn Doctor has not submitted any evidence that
“Rizzo benefited from the sale between he and AEC.” (Id. at 9) The Rizzos also contend that J.
Rizzo “never admitted that he transferred customers to AEC.” (Id.)
With respect to the specific customers identified by Lawn Doctor, the Rizzos argue that
the evidence submitted does not substantiate Lawn Doctor’s claims. In this regard, the Rizzos
contend that the “email from Vivian Quinones solely asked whether Advanced Enviro Care was
still in business, not Rizzo.” (Id. at 10). Similarly, the Rizzos argue that Mrs. Greco went back
to her previous company Turfmaster and “[t]here is zero evidence that AEC or Rizzo conducted
services for Greco.” (Id.) Likewise, the Rizzos claim that Mr. Shalkp “also went back to his
previous company Barefoot Lawns.” (Id.) The Rizzos maintain that simply because there “may
have been inquiries as to whether Rizzo was still conducting business, there is a lack of evidence
that Rizzo reacted to these inquiries. Rizzo was not involved with AEC or Dan Wilkerson.” Id.
at 11). They also argue that Lawn Doctor’s reliance on new information is inappropriate because
Lawn Doctor was “instructed not to introduce additional information, but then did so.” (Id. at
The Rizzos also criticize Lawn Doctor for failing to prove that they did irrigation work
and argue that “in fact Rizzo presented evidence that they did not do irrigation service.” They
further argue that Lawn Doctor failed to prove that it suffered any losses and that “[a] value
could not be placed on the customer list since Lawn Doctor does not perform irrigation services.”
(Id. at 12). The Rizzos further contend that Lawn Doctor’s $178,000 estimate of what the
Rizzos’ franchise was worth is not supportable because “a franchise owner cannot sell their
customers to anyone. Lawn Doctor retains control over the franchises, which thereby defeats
Lawn Doctor’s appraisal of the business/customer list.” (Id. at 13).
In addition, the Rizzos “dispute that they violated the Agreement, they dispute the
amount of damages and an award of attorneys’ fees.” (Id. at 14). In this vein, the Rizzos argue:
Lawn Doctor and the buyer of Rizzo’s irrigation company
provided separate and distinct services, so any alleged damages or
calculation as to the value of the list is frivolous. Lawn Doctor
should have presented evidence of income from irrigation services,
including irrigation repairs. Lawn Doctor presented no such
evidence since they do not perform the services. Knowing their
lack of evidence, Lawn Doctor seeks to conduct discovery as to
whether any list was transferred and what the actual damages were.
(Id. at 14).
The Rizzos argue that Lawn Doctor’s evidence is insufficient because:
Lawn Doctor failed to provide any credible evidence as to the
position [it] would have held [had] Rizzo not allegedly provided a
customer list to the third party. There were no financial statements
that were provided as to these accounts including net income.
There was no testimony as to whether the list contained on-going
customers. . . . Instead, Lawn Doctor just arbitrarily renders a
figure – however, such a figure is contrary to the applicable law.
Lawn Doctor needs to submit substantial evidence to prove
damages, which it has failed to do so.
(Id. at 15-16).
Indeed, the Rizzos cliam, “[t]here was no such evidence that Rizzo was ever
compensated for any customer list. There is no evidence of the value of any customer list –
Lawn Doctor failed to provide besides mere allegations of evidence that the customer list was
tendered, whether the list was current, whether the customers did service with the new company,
etc.” (Id. at 18). In this regard, the Rizzos argue “[t]here was no evidence of the dollar value of
the unused customer list.” (Id. at 21).
To the extent the Court considers permitting Lawn Doctor to conduct discovery to
support its request for contempt damages, the Rizzos argue they should be entitled to discovery
too. (Id. at 26-27). In this regard, the Rizzos argue they should be entitled to “seek documents
and testimony and as well as cross examine any witnesses.” (Id. at 26-27). With respect to the
scope of the discovery they would seek, the Rizzos argue they “should be entitled to seek
documents and testimony regarding Lawn Doctor’s alleged irrigation services, services they
surrendered to third parties, records of winterizing systems and service contracts within the zone
that AEC provided similar services.” (Id. at 10).
Finally, the Rizzos take issue with Lawn Doctor’s request for royalties, arguing that it is
an unjustified, new damages claim never before raised to the Court. (Id. at 23).
As the Third Circuit explained, “[t]he burden in a civil contempt proceeding is on the
petitioning party. Lawn Doctor, Inc. v. Rizzo, 646 Fed. Appx. 195, 201 (3d Cir. 2016) (citing
Howard Johnson, Co. v. Khimari, 892 F.2d 1512, 1516 (11th Cir. 1990)). “Sanctions for civil
contempt serve two purposes: ‘to coerce the defendant into compliance with the court’s order
and to compensate for losses sustained by the disobedience.’” Robin Woods, 28 F.3d at 400
(citing McDonald’s Corp. v. Victory Investments, 727 F.2d 82, 87 (3d Cir. 1984)). The purpose
of a compensatory award is “to make reparation to the injured party and restore the parties to the
position they would have held had the injunction been obeyed.” Id. (citation omitted). The
Court has “wide, but not unlimited, discretion in fashioning appropriate compensatory
sanctions.” Id. at 401.
Here, the only question for the Court’s consideration is the value of the contempt
sanctions to which Lawn Doctor is entitled. This Court already determined and the Third Circuit
has already affirmed that the Rizzos violated the Consent Injunction and that the Rizzos are
“foreclosed from arguing that they did not violate the consent injunction because AEC solely
provided irrigation services, which the Rizzos maintain were not party of the non-compete
covenant.” See Lawn Doctor, 646 Fed. Appx. at 200 (holding that “ample evidence supports the
Court’s finding that the Rizzos violated the consent injunction” and that the Rizzos “waived any
objection” to the Consent Injunction which “was revised to explicitly include irrigation services
within the definition of ‘Competitive Business’” because they did not appeal from the
declaratory judgment). Similarly, this Court already determined and the Third Circuit already
affirmed the Court’s award of attorneys’ fees and costs to Lawn Doctor. Id. at 201 (holding that
“we are persuaded that the Rizzos willfully disregarded the injunction and that the Court’s
decision to award attorneys’ fees as compensation for their contempt was not an abuse of
discretion” and noting that “because the Rizzos failed to file a second or amended notice of
appeal, we lack jurisdiction to consider the amount of attorneys’ fees awarded.”) Id. The only
issue remanded for further proceedings was the Court’s consideration of the value of the
sanctions to be imposed. Id. On this issue, the Third Circuit determined that the Court had
improperly shifted “the burden onto the Rizzos to prove that the customer service list had not
been transferred as part of the Wilkerson Deal.” As a result, the Circuit found that the Court
abused its discretion “in basing its sanctions award on the value of the customer list which it
assumed, in the absence of evidence to the contrary, had been transferred to a third party.” Id.
At the time the Court entered its decision, it believed, albeit mistakenly, that there was
sufficient information to support a finding that Lawn Doctor’s customer list had been transferred
to Advanced Enviro Care. As a result, the Court did not, at that time, seek to reopen the
proceedings to allow discovery to evaluate the appropriate sanction for the Rizzos’ contempt;
though it could have done so had it thought additional evidence was necessary. See, e.g., Best
Sign Systems, Inc. v. Chapman, Civil Action No. 09-5244 (FLW), 2012 WL 4505996, * (D.N.J.
Sept. 26, 2012) (noting that matter was reopened for “limited purpose” of addressing application
to hold defendant in contempt and, after hearing, court allowed plaintiff to take discovery to
determine whether defendant violated consent order); Alopex Industries, Inc. v. Seibel, 61 F.3d
919, 1995 WL 424848, *1 (Fed. Cir. 1995) (noting that District Court reopened proceedings to
allow discovery for evaluation of contempt); Tracfone Wireless, inc. v. GCA Electornics, LLC,
950 F.Supp. 2d 1326, (June 5, 2013) (noting that court reopened case with respect to defendants
based on their violation of final judgment, held defendants to be in contempt and allowed
expedited discovery concerning scope of defendants’ violation to aid in determination of
appropriate sanction). While the Court did not reopen these proceedings, it never, despite the
Rizzos’ claim to the contrary, found that doing so would be inappropriate. Nor does It read the
Third Circuit’s opinion as precluding same. While the Third Circuit indicated that any
compensatory contempt damages must be “consistent with the evidence in the record[,]” it never
prohibited the record from being reopened. Lawn Doctor, 646 Fed Appx. at 201.
Here, the Court finds that reopening the record is appropriate. As such, the Court shall
consider the additional evidence submitted by Lawn Doctor in support of its supplemental
motion for sanctions, such as evidence of J. Rizzo’s continued involvement with Advanced
Enviro Care in the restricted territory during the 18 month time period outlined in the restrictive
covenant and evidence indicating that Advanced Enviro Care contacted Lawn Doctor customers
in the restricted territory during the 18 month time period outlined in the restrictive covenant.
While this additional evidence submitted by Lawn Doctor may be sufficient for Lawn Doctor to
carry its burden to prove that Lawn Doctor’s customer list was inappropriately transferred to
Advance Enviro Care, 6 the Court shall also afford Lawn Doctor the opportunity to conduct
further discovery regarding said transfer. More specifically, the Court shall permit Lawn Doctor
to (1) subpoena Advanced Enviro Care for information concerning its customer and financial
records between January 2013 and July 2014; said subpoenas may include a request for Rule
(30)(b)(6) deposition testimony from Advanced Enviro Care; (2) subpoena Daniel Wilkerson for
testimony and records regarding the Wilkerson Deal and what was transferred to him in return
for the $275,000 promissory note; and (3) subpoena Ken Champman, Esq., for records and
testimony regarding the Wilkerson Deal. If after conducting this discovery, Lawn Doctor
believes that additional discovery is warranted, it can make an application for same.
The Court understands that the Rizzos have also requested the opportunity to conduct
discovery. At this juncture, that request is denied. The limited discovery being permitted now
concerns solely the Rizzos’ violation of the Consent Injunction and the appropriate sanction to be
imposed in light of same. The discovery the Rizzos seek to pursue, as outlined in their
opposition brief: “documents and testimony regarding Lawn Doctor’s alleged irrigation services,
services they surrendered to third parties, records of winterizing systems and service contracts
Lawn Doctor may establish that its customer list was transferred to Advanced Enviro Care
either by putting forth sufficient evidence to establish that it was transferred as part of the
Wilkerson Deal and/or that it was transferred to Advanced Enviro Care through J. Rizzo’s
continued affiliation with the company while the restrictive covenant was in effect, despite his
representations to the Court to the contrary. The Court notes that significant evidence has
already been presented that indicates J. Rizzo continued to operate a “Competitive Business” in
the restricted territory during the 18 month period outlined in the restrictive covenant, despite his
multiple representations that this was not so. The Rizzos are reminded of their obligations under
Rule 11 and are cautioned that additional sanctions may be imposed if the Court determines that
Rule 11(b) has been violated.
within the zone that AEC provided similar services[,]” is completely irrelevant. (Rizzos Op. Br.
at 10). As explained ad nauseam whether and to what extent Lawn Doctor provided irrigation
services is immaterial. The Court determined that irrigation services were included in the
definition of “Competitive Business.” The Rizzos never appealed that decision, and, as the Third
Circuit determined, they are foreclosed from challenging the inclusion of irrigation services in
the definition of “Competitive Business” now. See Lawn Doctor, 646 Fed. Appx.at 199-200.
Further, to the extent the Rizzos seek to challenge the value assigned to Lawn Doctor’s customer
list, years ago the Court determined that Lawn Doctor established that the fair market value of its
customer list was $178,000. The Court does not intend to reconsider that determination.
Lawn Doctor is directed to serve the discovery outlined above by November 6, 2017.
The parties are directed to submit a written status update regarding said discovery by December
For the reasons stated above, Lawn Doctor’s supplemental motion for sanctions shall be
held in abeyance and administratively terminated pending the additional discovery outlined
above. This matter is reopened for the limited purpose of conducting the aforementioned
discovery and determining the appropriate contempt sanction. An appropriate Order follows.
Dated: October 24, 2017
s/ Tonianne J. Bongiovanni
HONORABLE TONIANNE J. BONGIOVANNI
UNITED STATES MAGISTRATE JUDGE
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