FIRST PIONEER FARM CREDIT, ACA v. DENNIS TOMSKY

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4036-05T54036-05T5

FIRST PIONEER FARM CREDIT, ACA,

Plaintiff-Appellant,

v.

DENNIS TOMSKY,

Defendant-Respondent.

___________________________________

 

Submitted October 17, 2006 - Decided November 2, 2006

Before Judges Skillman and Holston, Jr.

On appeal from Superior Court of New Jersey, Chancery Division, Hunterdon County, Docket No. C-14047-04.

Stark & Stark, attorneys for appellant (Thomas B. Lewis, of counsel; Amy Beth Dambeck, on the brief).

Peter A. Jeffer, attorney for respondent.

PER CURIAM

Plaintiff First Pioneer Farm Credit provides a wide range of financial and credit services to individuals and businesses involved in agriculture. These services include real estate, equipment, operating and mortgage loans, letters of credit, leases, tax services, financial record-keeping, payroll services, estate planning, business consulting, appraisals, multi-peril crop insurance, and credit insurance. First Pioneer provides these services to agricultural businesses located in the northeast, from New Jersey to Maine.

Defendant Dennis Tomsky was employed by First Pioneer from April 2001 to November 2004 to provide tax and financial services to its clients. As a condition of his employment, plaintiff was required to sign a First Pioneer "Confidentiality Agreement and Agreement Not to Compete." This agreement included expansive restrictions upon Tomsky's right to provide any tax or other financial services to First Pioneer's clients for a three-year period following the termination of his employment. The pertinent section of the agreement provided:

The EMPLOYEE agrees that in the event of his termination of employment, for any reason, and whether voluntary or involuntary, s/he shall not for a period of 3 years and within the chartered territory of any ACA utilizing Employee's services, directly or indirectly, solicit business from or provide loans, leases, tax, accounting, management or general business or financial advice, consultation or similar services to persons or businesses who are borrowers from or clients of ACA, or who had been such a borrower or client within the twelve (12) months prior to EMPLOYEE's termination, nor shall EMPLOYEE have any interest, whether as proprietor, partner, employee, officer, director or consultant, in any enterprise that competes with ACA or its affiliates in furnishing such services to such present or former borrowers or clients.

In November 2004, Tomsky voluntarily resigned his position with First Pioneer and established his own tax and financial services business. A month later, on December 22, 2004, First Pioneer filed this action in the Chancery Division, which alleged that Tomsky was "soliciting and/or servicing" First Pioneer's clients and sought to enjoin him from soliciting and/or providing services to any of First Pioneer's clients or persons or businesses who had been First Pioneer clients within the twelve month period preceding the termination of Tomsky's employment.

Shortly after the filing of the complaint, on January 7, 2005, First Pioneer obtained an order to show cause with preliminary restraints, which included a restraint against Tomsky

directly or indirectly soliciting business from OR providing loans, leases, tax, accounting, management, general business advice or financial advice to, any client or borrower of ACA or to any person or business who had been a client or borrower of ACA during the twelve (12) month period preceding Defendant Tomsky's termination of employment.

On March 17, 2005, the return date of the order to show cause, the trial court entered a preliminary injunction continuing this restraint but excluded Tomsky's current clients from the prohibition. Thus, since January 2005, Tomsky has been restrained from providing tax or other financial services to all current First Pioneer clients and all persons and businesses who were First Pioneer clients during the twelve month period preceding the termination of his employment, except for those who were Tomsky clients on March 17, 2005.

Tomsky propounded interrogatories upon First Pioneer, which included an interrogatory that sought identification of the First Pioneer clients and former clients to whom he was prohibited from providing tax and other financial services under the preliminary injunction. The disputed interrogatory asks:

Paragraph 3 of the alleged Employment Agreement between the plaintiff and the defendant indicates that the defendant is prohibited from doing certain acts for persons or businesses who are borrowers from or clients of the plaintiff or who had been a borrower or client within the twelve (12) months prior to the employee's termination. List all names and addresses of said persons.

When First Pioneer refused to answer this interrogatory, Tomsky filed a motion to compel discovery. First Pioneer filed a cross-motion for a protective order.

On December 16, 2005, the trial court entered an order granting Tomsky's motion to compel discovery, which directed First Pioneer to answer the disputed interrogatory regarding its client list. The order further provided that "[Tomsky] must not use [First Pioneer's] client list for any other purposes other than preparing for trial or to know what clients he may not solicit." This order was not accompanied by any opinion or statement of reasons.

First Pioneer filed a motion for reconsideration. On January 20, 2006, the trial court denied First Pioneer's motion. In its accompanying oral opinion, the court stated:

Defendant needs the client list to comply with this court's order and as part of its defense alleging that the employment contract was overly broad and overreaching.

Therefore, this Court compels Plaintiff to produce the names of its clients and their home town, or city, and state.

We granted First Pioneer's motion for leave to appeal the order memorializing the trial court's ruling that it must furnish Tomsky with a complete client list. We now affirm.

As with any other discovery order, our review of an order on a motion under Rule 4:10-3(g) to restrict discovery on the basis of alleged confidentiality is limited to whether the trial court abused its discretion. See Bender v. Adelson, 187 N.J. 411, 428 (2006). A customer list of a service business is confidential information that may be subject to protection under Rule 4:10-3(g). See Lamorte Burns & Co. v. Walters, 167 N.J. 285, 298-302 (2001). However, such lists are subject to disclosure through discovery if they are relevant to the claims or defenses being asserted in litigation. ALK Assocs., Inc. v. Multimodal Applied Sys., Inc., 276 N.J. Super. 310, 314-16 (App. Div. 1994). Rule 4:10-3(g) requires the trial judge to balance the rights of the parties and to take the necessary steps to protect both the interest in confidentiality and the right to discovery. Ibid.

In this case, Tomsky's need for discovery of First Pioneer's client list derives from the expansive restraints to which he is subject under the preliminary injunction entered by the trial court. The discovery order is congruent with the preliminary injunction: It requires First Pioneer to disclose the names of clients who Tomsky is restrained from soliciting or servicing under the preliminary injunction. Tomsky claims that he needs this information to comply with the preliminary injunction and to show at trial that the restrictions contained in the First Pioneer "Confidentiality Agreement and Agreement Not to Compete" are overly broad and should not be enforced as written. We are unable to conclude that the trial court abused its discretion in ruling that Tomsky's interest in obtaining First Pioneer's customer lists for these purposes was sufficiently substantial to warrant their compelled disclosure and that First Pioneer's confidentiality interests in those lists can be adequately protected by prohibiting Tomsky from using those lists "for any other purposes . . . than preparing for trial or to know what clients he may not solicit."

Affirmed.

 

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A-4036-05T5

November 2, 2006