E.T. Products, LLC, Plaintiff-Appellant.
D.E. Miller Holdings, Inc., et al., Defendants-Appellees.
September 23, 2016
from the United States District Court for the Northern
District of Indiana, Hammond Division. No. 2:13-CV-00424 -
Philip P. Simon, Judge.
Ripple, Rovner, and Sykes, Circuit Judges.
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.
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.
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
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
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.
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.
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.
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.
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