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E.T. Products, LLC v. D.E. Miller Holdings, Inc.

United States Court of Appeals, Seventh Circuit

September 20, 2017

E.T. Products, LLC, Plaintiff-Appellant.
v.
D.E. Miller Holdings, Inc., et al., Defendants-Appellees.

          Argued September 23, 2016

         Appeal from the United States District Court for the Northern District of Indiana, Hammond Division. No. 2:13-CV-00424 - Philip P. Simon, Judge.

          Before Ripple, Rovner, and Sykes, Circuit Judges.

          SYKES, CIRCUIT JUDGE.

         Doug Miller and his son Tracy signed a broad noncompetition agreement when Doug sold his fuel-additives business, E.T. Products, to a group of investors in January 2011. Doug sold his other company, Petroleum Solutions, to John Kuhns about a year later. E.T. Products's new owners sued the Millers for breaching the noncompete by providing assistance to Kuhns as he learned the Petroleum Solutions business.

         The Millers responded by attacking the noncompete as overbroad and unenforceable. They also pointed out that their assistance to Kuhns came at a time when Petroleum Solutions was E.T Product's distributor, not its competitor. When E.T. Products severed its relationship with Petroleum Solutions at the end of 2012, Doug told Kuhns that the noncompetition agreement prevented further help and ceased assisting him. E.T. Products insisted that the act of advising its distributor was off limits and that Doug also violated the noncompete by failing to break a lease with Kuhns when he found another supplier. Ruling on cross-motions for summary judgment, the district judge held that the noncompetition agreement was enforceable but the Millers did not breach it.

         This appeal requires us to apply some familiar principles of contract interpretation: contract terms are read reasonably, in the context of the entire document, and with the contract's textually evident purposes in mind. Read that way, the noncompetition agreement is not overbroad. Though enforceable, the evidence introduced at summary judgment establishes as a matter of law that the Millers did not breach the agreement. A company's distributor is not its competitor, so the Millers' assistance to Kuhns in 2012 was fair game. And the noncompete, read reasonably, did not require Doug to break his preexisting lease with Kuhns. We therefore affirm.

         I. Background

         Doug Miller owned two companies located in Bremen, Indiana: E.T. Products, which blended and sold fuel-additive products, and Petroleum Solutions, which blended and sold lubricant products. Petroleum Solutions also supplied a few customers with E.T. Products fuel additives. After a long career, Doug put his two businesses up for sale so that he could soon retire.

         In January 2011 a group of investors led by Tom Blakemore purchased E.T. Products for $4.95 million. As part of the sale, Doug and his son Tracy signed essentially identical noncompetition agreements. (For ease of reference, we will refer to them as a single agreement.) The noncompete had a five-year duration and was quite broad in geographic scope and in the range of activities it proscribed. The agreement prohibited the Millers from assisting anyone involved in any company either directly or indirectly engaged in the same industry as E.T. Products anywhere in North America. The Millers were also forbidden to directly or indirectly own, operate, invest in, advise, render services for, or otherwise assist any such competitor.

         After selling E.T. Products, Doug continued to own Petroleum Solutions for about a year until John Kuhns purchased it in January 2012. Doug was generous to Kuhns: He provided low-interest financing for the purchase, a lease for the land on which the business operated, training in lubricant blending, and consulting help as Kuhns learned the business. Tracy helped by training Kuhns on the company's computer programs for a few months after the sale.

         At first Petroleum Solutions continued to purchase E.T. Products fuel additives for resale; that is, E.T. Products was its supplier. That changed in late 2012. At around that time, Blakemore fired Tom Patton, an E.T. Products salesman. When Doug learned of this development, he connected Patton to Kuhns, who hired him as a salesman for Petroleum Solutions. E.T. Products contends that Patton thereafter began competing for its customers in violation of his own noncompetition agreement. In December 2012 E.T. Products ceased using Petroleum Solutions as its distributor and sued Patton and Petroleum Solutions to enjoin this competitive activity. The details of that litigation are not relevant here.

         Petroleum Solutions found a new supplier and also began blending its own products. When Doug heard that E.T. Products had severed its relationship with Petroleum Solutions, he told Kuhns that he could no longer assist him in the additives business due to his obligations to E.T. Products under the noncompetition agreement. Kuhns's lease of the business property continued uninterrupted, but the Millers thereafter ceased all assistance to Kuhns and his business.

         Litigation soon followed. The Millers filed suit in state court accusing E.T. Products of violating a release. E.T. Products responded with this federal suit accusing the Millers of breaching the noncompetition agreement. The cases were eventually ...


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