Fourth Department – Preliminary injunction: TDA LLC v. George Lacy and Lacey Heavy Equipment Repair

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New York State Supreme Court, Appellate Division, Fourth Judicial Department

Preliminary injunction

Non-compete provision – Loss of goodwill – Scope of injunction

TDA LLC v. George Lacy and Lacey Heavy Equipment Repair

CA 21-00315

Appealed from Supreme Court, Erie County

Background: The parties entered into an asset purchase agreement whereby the plaintiff purchased the defendants’ land, certain assets, and the goodwill of the defendants’ business of maintaining, repairing and renting heavy construction equipment. The APA included a non-compete provision. The parties also entered into an equipment rental agreement which permitted the defendants to store the heavy equipment on the plaintiff’s property and allowed the plaintiff to rent the equipment to its customers in return for the defendant’s receipt of a percentage of the rental fee. The plaintiff commenced an action alleging breaches of the non-compete agreement and breached the rental agreement by impeding the plaintiff’s access to the rental equipment. The defendants appealed from an order that granted the plaintiff’s motion seeking a preliminary injunction.

Ruling: The Appellate Division modified. The court noted that the plaintiff established irreparable injury in the form of loss of goodwill and damage to customer relationships. However, the lower court’s enjoining the defendant from removal of the heavy equipment from the plaintiff’s property went beyond what was appropriate. The equipment rental agreement entitled the defendants to remove the heavy equipment stored on the plaintiff’s property so long as they informed the plaintiff.

Christopher D. Galasso, of Gross Shuman, for the defendants-appellants; David E. Gutowski, of Zdarsky Sawicki & Agostinelli, for the plaintiff-respondent.