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Hydra Pools, Inc. v. Lingerfelt

Court of Appeals of Tennessee, Knoxville

June 10, 2019

HYDRA POOLS, INC.
v.
DANNY MITCHELL LINGERFELT

          Session: April 17, 2019

          Appeal from the Chancery Court for McMinn County No. 2016-CV-294 Jerri Bryant, Chancellor

         This appeal concerns whether a confidentiality agreement was assigned from one corporation to another. Danny M. Lingerfelt ("Lingerfelt") was an employee for many years of P.I., Inc. ("P.I."), a manufacturer. In 2015, Lingerfelt left P.I and a year later went to work for another company. In the meantime, Hydra Pools, the P.I. division in which Lingerfelt had worked, had become a separately chartered corporate entity, Hydra Pools, Inc. In 2016, Hydra Pools, Inc. filed a verified complaint against Lingerfelt in the Chancery Court for McMinn County ("the Trial Court") alleging that he violated the terms of a non-competition and confidentiality agreement ("the Agreement") he had entered into with P.I. Lingerfelt filed a motion for summary judgment asserting, among other things, that Hydra Pools, Inc. had no privity of contract with him because he had worked for P.I. and not its supposed successor. The Trial Court granted summary judgment to Lingerfelt on the basis that Hydra Pools, Inc. was not a party to or successor in interest to the rights or obligations of the Agreement. Hydra Pools, Inc. appeals. We hold that there is a genuine issue of material fact as to whether the Agreement was assigned by P.I. to Hydra Pools, Inc. We reverse the Trial Court's grant of summary judgment and remand for further proceedings consistent with this Opinion.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Reversed; Case Remanded

          Ryan E. Jarrad and Ann C. Pederson (Kapsimalis), Knoxville, Tennessee, for the appellant, Hydra Pools, Inc.

          Tasha C. Blakney and Troy S. Weston, Knoxville, Tennessee, for the appellee, Danny M. Lingerfelt.

          D. Michael Swiney, C.J., delivered the opinion of the court, in which John W. McClarty and Thomas R. Frierson, II, JJ., joined.

          OPINION

          D. MICHAEL SWINEY, CHIEF JUDGE.

         Background

         Lingerfelt worked for P.I. from 2007 to 2015. In March 2007, Lingerfelt signed the Agreement (formally the "Acknowledgement and Agreement Concerning NonCompetition and Confidentiality"). The Agreement contains, as relevant to the issues on appeal, [1] the following provisions:

1. In consideration of my employment, my continued employment, and the offer of certain benefits described and fully set forth herein below, acceptance of which is acknowledged, I, Danny Mitchell Lingerfelt, residing at … Madisonville, Tennessee … SSN: … make this agreement with P.I., Inc., (herein "the Company," a Tennessee corporation with its principal office in McMinn County), and agree to the noncompetition and confidentiality provisions set forth further below.
***
7. Further, I acknowledge that because of my employment, I have had and/or will have access to become familiar with various trade secrets and confidential information which belong to the Company, and I agree that such confidential information and trade secrets including copies thereof are owned and shall continue to be owned solely by the Company. This includes but is not limited to any customer files, customer lists, any business, marketing, financial, or sales records, data, plans or surveys or any other record or information relating to the present or future business, product, or services rendered or contemplated by the Company. It does not include information which the Company has voluntarily disclosed to the public without restriction or which has otherwise lawfully entered the public domain. Accordingly, I shall not now or hereafter, directly or indirectly, disclose such information to anyone outside the Company or use same for any use other than pursuant to my employment and for the benefit of the Company.
8. I agree not to remove from the Company's offices any of its property, books, records, documents, customer lists, or any copies in such documents, nor make any copies of these for any purpose whatsoever unrelated to my employment with the Company, nor to use, communicate, reveal or otherwise make available such information for any purpose whatsoever, or to divulge such information, other than to authorized employees or officers of the Company, to any ...

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