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Brenneman v. NVR

February 9, 2007

DONALD BRENNEMAN, PLAINTIFF,
v.
NVR, INC. DEFENDANT.



The opinion of the court was delivered by: District Judge Susan J. Dlott

ORDER GRANTING PLAINTIFF'S MOTION FOR A TEMPORARY RESTRAINING ORDER

This matter comes before the Court on Plaintiff's Motion for a Temporary Restraining Order. (Doc. 3.) Plaintiff Donald Brenneman filed both his Complaint (doc. 2) and the Motion for a Temporary Restraining Order (doc. 3) on January 26, 2007 in the Butler County Court of Common Pleas. Defendant NVR, Inc. subsequently removed the suit to this Court on January 31, 2007. The Court held a hearing on Plaintiff's Motion for a Temporary Restraining Order on February 7, 2007. For the reasons set forth below, the Court GRANTS Plaintiff's Motion.

I. BACKGROUND

Defendant NVR is a national company that operates homebuilding and mortgage lending services in twelve states throughout the Eastern United States. In the Southwest Ohio region and the surrounding areas, NVR's homebuilding segment does business as Ryan Homes. Ryan Homes develops and builds residential communities in and around Cincinnati, Dayton, and Northern Kentucky. NVR also operates mortgage lending segments consisting of NVR Mortgage and NVR Settlement Services, whose focus is to fill the mortgage lending and title services needs of NVR's homebuyers.

Plaintiff worked for Ryan Homes for more than twenty years before being terminated on October 16, 2006. He began in 1985, taking an entry level position as a production technician. Over time, Plaintiff worked his way up through the company, and was promoted to General Manager in 2001. As General Manager, Plaintiff worked primarily in the Southwest Ohio region.*fn1 Defendant promoted Plaintiff again in 2004 to Vice President and Assistant Manager of the Cincinnati South region, which covered Hamilton and Clermont counties in Ohio and Boone, Kenton, and Campbell counties in Northern Kentucky.

In connection with his promotion to General Manager in 2001, Plaintiff became eligible to purchase stock options. To take advantage of this benefit, Plaintiff voluntarily entered into the NVR, Inc. 2000 Broadly Based Stock Option Plan Stock Option Agreement. (See Doc. 2, ex. A.) Plaintiff subsequently executed two other stock option agreements in 2004 and 2005 (hereinafter, the three agreements are collectively referred to as the "Stock Option Agreements"). All three agreements contain restrictive covenants pertaining to non-competition and confidentiality. The covenants are substantially similar except that the non-competition provision appearing in the 2005 agreement increased the term of the non-competition agreement from one to two years. The restrictive covenants included in the 2001 and 2004 agreements state the following:

Non-competition and Confidentiality. In consideration of the promises set forth in this Stock Option Agreement, the Optionee (i) agrees to maintain the confidentiality of any and all information concerning NVR and its affiliates, whether with respect to its business, operations, finances, employees or otherwise during the period of his or her employment and for three (3) years after the termination of such employment, and (ii) agrees that, upon termination of employment, and during the one (1) year period following termination, he or she will not compete with NVR or with any of its affiliates, directly or indirectly in any phase of the residential homebuilding business or mortgage financing business or settlement services business at any location within any Standard Metropolitan Statistical Area (as determined by the Census Bureau, Department of Commerce, United States Government) in which Optionee has had managerial responsibility for any office or affiliate of NVR within the two-year period prior to the Optionee's termination of employment and (iii) agrees that he or she will not hire or solicit for hiring, directly or indirectly, any person now or hereafter employed by NVR or any affiliate of NVR within the Standard Metropolitan Statistical Area(s) over which he or she holds managerial responsibilities for two (2) years after termination of employment and (iv) agrees that he or she will not utilize the services of or attempt to acquire real property, goods or services from any developer, supplier or subcontractor now or hereafter utilized by NVR or any affiliate of NVR for two (2) years after termination of employment or (v) agrees not to make or retain copies of any documents, forms, blueprints, designs, policies, memoranda or other written information developed by NVR or any affiliate of NVR now or hereafter produced and/or circulated by NVR and further agrees not to copy, transfer or otherwise retain any electronic data (including information stored on a hard drive or disk), software (including proprietary software), computer data bases or other non-print information produced, designed, owned copyrighted or utilized by NVR.

The Optionee acknowledges that the restrictions set forth in this Section 8 and elsewhere in this Agreement are reasonable and necessary to protect the business and interests of NVR and its affiliates and that it would be impossible to measure in money the damages that could or would accrue to NVR and its affiliates in the event that the Optionee fails to honor his or her obligations under this Section 8. Therefore, in addition to any other remedies NVR or its affiliates may have, it shall have the right to have the Optionee's obligations hereunder specifically performed by order of any court having jurisdiction, without the necessity of proving actual damage. (Doc. 2, exs. A, B.)

Under the Stock Option Agreements, Plaintiff's stock options would not vest until December 31, 2006 at the earliest. On October 16, 2006, mere months before the first of Plaintiff's stock options was to vest, Defendant terminated Plaintiff.*fn2 As a result, Plaintiff never had an opportunity to exercise the options.

Following his termination, Plaintiff obtained a Vice President position with Oberer Residential Construction, Ltd. ("Oberer"), which company does business as Gold Key Homes. Defendant claims that it is in direct competition with Oberer in Southwest Ohio. When Defendant learned of Plaintiff's employment with Oberer, Defendant sent a cease and desist letter to Oberer, advising Oberer of the non-competition provision in the 2005 Stock Option Agreement and asking Oberer to terminate Plaintiff. Oberer responded that it did not compete with Defendant and challenged the enforceability of the agreement. The two companies entered into negotiations; however, the negotiations proved fruitless and Oberer ultimately terminated Plaintiff on January 11, 2007. Plaintiff subsequently filed the instant action, seeking a declaratory judgment and injunction to prevent Defendant from further threatening or seeking enforcement of the non-competition provision.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 65 authorizes the Court to grant a temporary restraining order. When deciding whether to grant preliminary injunctive relief, the Court considers four factors: (1) whether the movant has a strong likelihood of success on the merits; (2) whether the movant would otherwise suffer irreparable injury; (3) whether issuance of preliminary injunctive relief would cause substantial harm to others; and (4) whether the public interest would be served by issuance of a preliminary injunctive relief. See Leary v. Daeschner, 228 F.3d 729, 736 (6th Cir. 2000); see also Mason County Med. Ass'n v. Knebel, 563 F.2d 256, 261 (6th Cir. 1977).

III. ANALYSIS

A. Strong Likelihood of Success on ...


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