INJUNCTIVE RELIEF ENFORCING NON-COMPETE COVENANT GRANTED BINDING FAMILY MEMBERS FOR ACTING IN CONCERT TO CIRCUMVENT RESTRICTIVE COVENANT
Plaintiff entitled to injunction relief enforcing non-compete against counterparty and his family members where evidence demonstrated family acted in concert to circumvent restrictions of the non-compete. Plaintiff’s motion for preliminary injunction and declaratory judgment granted.
Plaintiff LVL Co., LLC moved for a preliminary injunction and declaratory judgment against various defendants, including Abraham Atiyeh his company Valley Realty Holdings, Ltd., Abraham’s wife Nimita Kapoor Atiyeh and daughter Priya Atiyeh, and Nimita’s and Priya’s company Flashpoint Advertising LLC. Plaintiff, an established outdoor advertising business, entered into a purchase and sale agreement to buy the billboard business owed by Abraham. As part of the deal, Abraham was permitted to retain ownership of several billboards but could only use them to advertise businesses owned by Abraham and they could not be leased to third parties for advertising. The parties’ deal included a non-compete provision to preclude Abraham and Valley Realty from competing with plaintiff’s advertising business and a right of first refusal if Abraham wished to sell any of the billboards they retained.
Following closure of the deal, Abraham’s wife Nimita agreed to pay Abraham $6 million for the retained billboards, executing a promissory note for the full $6 million; to date, no payment had been made on that note. Thereafter, Nimita and her daughter Priya began marketing the billboards to third-party advertisers through their business Flashpoint Advertising.
Plaintiff filed suit against defendants, alleging violation of the non-compete provision of the purchase and sale agreement between plaintiff and Abraham. Plaintiff sought to enjoin Abraham and Valley Realty from assisting, engaging in, or assisting the other defendants with their advertising business; plaintiff further sought to enjoin Nimita and Priya and their companies from receiving assistance, and to enjoin all defendants from engaging in outdoor advertising business using the retained billboards. Defendants opposed plaintiff’s motion preliminary injunction and declaratory relief, arguing that Nimita and Priya and their businesses were separate entities from Abraham and Valley Realty, who provided no assistance in helping set up Flashpoint Advertising’s business, and that Nimita, Priya, and Flashpoint Advertising were not parties to the restrictive covenants between plaintiff and Abraham.
The court granted plaintiff’s motion for injunction relief, finding that plaintiff had shown that it was likely to succeed on the merits of several of its claims and had suffered irreparable harm to its business. The court found that the sale of the billboards from Abraham to Nimita was not a bona fide transaction as there was no evidence that Nimita had paid valuable consideration for the billboards as she had not made any payments on the promissory note for the purchase, and that Abraham had not transferred the local permits for the billboards suggesting he intended to remain involved with them. The court also noted that Abraham and Nimita treated the corporate defendants are mere shell companies. Thus, the court held that the sale violated the terms of the restrictive covenants, finding that defendants acted to get around the covenants.
REF: Digests of Recent Opinions, Pennsylvania Law Weekly, LVL Co., LLC v. Atiyeh, PICS Case No. 20-0726 (E.D. Pa. June 30, 2020), 43, PLW 630, Tuesday July 14, 2020
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