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A sales representative accused of violating non-compete and confidentiality covenants after resigning from his job was not required to pay his employer’s costs and attorney fees after the parties settled their dispute, the Pennsylvania Superior Court ruled in an opinion written by Judge Michael T. Joyce. The employment contract containing the restrictive covenants specified that should the employer, Executrain of Allentown and Harrisburg, prevail in any action under the agreement, the employee, Michael Wiest, would reimburse Executrain for expenses incurred, including attorney fees and costs. “Neither party in this case emerges as the clear-cut winner,” Joyce wrote in Profit Wize Marketing v. Wiest. “As the plain and unambiguous meaning of ‘prevail’ requires Executrain to ‘triumph’ or ‘win’ in the underlying action, we do not find that Executrain is entitled to an award of attorney fees and costs.” The case arose when Wiest resigned from Executrain and signed on with one of its competitors two weeks later, the opinion states. According to the court, Wiest allegedly solicited numerous Executrain customers and used confidential information in violation of his agreement with the company. Executrain subsequently sought a preliminary injunction, asking that the defendant not be permitted to work for the competing company in Executrain’s marketing area for two years, that the defendant be enjoined from divulging or using the plaintiff’s customer information, and that Wiest be prevented from soliciting, obtaining or attempting to obtain Executrain’s customers or prospective customers. Additionally, the plaintiff requested compensatory damages, costs and attorney fees of more than $50,000 altogether, the opinion indicates. During a hearing on the preliminary injunction motion, the parties informed the Lehigh County Court of Common Pleas that they had reached a settlement and would stipulate to entry of a permanent injunction. As a condition of the settlement, Joyce wrote, Executrain agreed to waive damages and losses except for attorney fees and costs. Wiest said he would not communicate with or solicit 65 of his former employer’s customers for one year. The parties agreed to submit the claim for attorney fees and costs to the trial court. In the end, Executrain was awarded nearly $15,000. The lower court, in its order, said it had awarded just part of the fees requested since Executrain only “‘partially prevailed’” in obtaining relief, Joyce wrote. According to the Superior Court, Wiest essentially raised only one issue for review: whether Executrain had prevailed in the underlying action. The court identified its standard of review as plenary and turned to the plain and ordinary meaning of “prevail.” “Prevail,” the court decided, means to triumph or to win. “In light of these definitions, we do not find that Executrain is entitled to a reimbursement of its attorney fees and costs as it did not prevail or win in the underlying action,” Joyce wrote. ” … By entering into a stipulation for the entry of a permanent injunction, both Executrain and [Wiest] managed to preserve certain legal rights and willingly relinquished others. … Such a resolution, in keeping with the nature of most settlement agreements, evidence a compromise.” In addition, the three-judge panel including Judges Joseph A. Hudock and Patrick R. Tamilia said the court was not permitted to fashion an equitable remedy as the trial court had done. “Although the lower court attempted to craft such a remedy, the language of the contract does not so provide,” the opinion states. Executrain also argued that the court was constrained to interpret the contractual language in view of federal statutes authorizing attorney fees and costs to a prevailing party, the opinion indicates. The judges disagreed. “[Executrain] cites a number of federal cases which have interpreted the ‘prevailing party’ statutory language to include those parties who obtained relief through a settlement,” Joyce wrote. ” … While we recognize that our federal courts have interpreted this statutory language in a broader fashion than we have interpreted the contractual language in the instant case, our federal courts have done so in light of a different consideration.” The consideration, the court found, was equal access to the justice system for those asserting federal civil rights or anti-discrimination claims. “Such a consideration is not applicable in the instant case,” Joyce wrote. Similarly, the court determined that the Pennsylvania Administrative Agency Act did not control its interpretation of the employment contract’s language. That act, the opinion indicates, defines a “prevailing party” for purposes of awarding attorney fees as “‘a party in whose favor an adjudication is rendered on the merits of the case … or who obtains a favorable settlement approved by the Commonwealth Agency initiating the case.’” According to Joyce, the court had to interpret the language of the private contract according to the plain and ordinary meaning of the terms of the agreement. Finally, the panel rejected Executrain’s claim that the court’s interpretation of “prevailing party” would deter settlements. “Foremost,” Joyce wrote, “one could certainly argue, in the alternative, that an interpretation which allows for any settlement to constitute a victory for a plaintiff would deter the defendant from settling the case. … Second, nothing in this memorandum precludes the parties from explicitly providing in the contract whether a party might ‘prevail’ in the event of a settlement or from establishing criteria to determine who the ‘prevailing party’ is when a settlement occurs. Third, we do not find that such an interpretation dissuades settlement because the parties could simply incorporate the allocation of attorney fees and costs into their settlement agreement.” Though both parties’ briefs identified the standard of review as abuse of discretion, the court found that the cases cited to support the proposition are distinguishable from Profit Wize. In the cases identified by the parties, the opinion states, trial courts had statutory discretion to determine whether attorney fees and costs were appropriate. “In the instant case, however, an award of attorney fees and costs was not subject to the trial court’s discretion,” Joyce wrote. “Rather, [Wiest] agreed that he would bear these expenses if Executrain prevailed against him in a suit or action under the Agreement. As such, whether Executrain is eligible for these fees, as a prevailing party, is a question of law.” Jack M. Seitz of Blank Rome Comisky & McCauley, Allentown, represented Executrain. Gary L. Mason of Klafter Mason Record & Socher, Manalapan, N.J., was counsel for Wiest. Sara A. Austin of Blakey Yost Bupp & Rausch in York served as local counsel for Wiest.

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