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Voss Engineering v. Voss Industries

OPINION FILED JULY 3, 1985.

VOSS ENGINEERING, INC., PLAINTIFF-APPELLANT,

v.

VOSS INDUSTRIES, INC., ET AL., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County; the Hon. George A. Higgins, Judge, presiding.

JUSTICE LINN DELIVERED THE OPINION OF THE COURT:

A father brought an action against his son, formerly an officer, director, and employee in his father's corporation, and against two other former employees, seeking to enjoin them from continuing to operate a competing business organization. A preliminary injunction was issued by agreement of the parties and without hearing, followed by a full trial on the merits of counts alleging breach of fiduciary duty, theft of confidential information, and violation of the Illinois Uniform Deceptive Trade Practices Act.

Following trial, the court dissolved the preliminary injunction and entered judgment in favor of defendants.

We affirm the decision of the trial court.

BACKGROUND

Plaintiff, Voss Engineering, an Illinois corporation in the business of manufacturing and selling shock and vibration absorption products, was incorporated in 1959. Voss Engineering originally began as a division of Voss Belting, incorporated in Illinois in 1948. Both Voss Engineering and Voss Belting have, since their inception, been controlled, managed, and directed by various members of the Voss family.

The majority stockholder and functional "head" of Voss Engineering is Robert J. Voss, who served as corporate president until 1976 when his son, defendant James R. Voss, was elected to serve in his place. James was also made director of both corporations and served as general manager of Voss Belting until he was terminated by his father in September 1980. Also employed at plaintiff corporation was defendant Bruce Poulsom, who worked as plant manager from January 1975 until his termination in January 1981, and defendant Michael Hannon, who worked as purchasing agent and billing clerk from February 1976, until he resigned in January 1981.

In September 1980, Robert Voss advised his son James that he was to call his mother in the hospital. When James refused, Robert informed him that he was no longer employed at Voss Engineering. Robert told James that he would have until the end of October to make up with his mother and that if he did, "there would not be any problems." Robert also told James that he would be paid through October 1980 and allowed him to use the company credit cards and car, as did other members of the Voss family who were not employed by plaintiff.

James did not reconcile with his father and, subsequent to his conditional termination in September 1980, he never returned to Voss Engineering. He performed no directorial duties, attended no corporate meetings, and did not act for plaintiff corporation in any capacity. James submitted his formal resignation as director of plaintiff corporation in April 1981, at the time plaintiff brought this action, having assumed that all his connections with Voss Engineering, including that of director, had ended in September 1980.

Subsequent to his termination in September 1980, James advised defendants Poulsom and Hannon that he was contemplating starting up a competing business organization and asked them if they would be interested in becoming part of this new enterprise. Defendants informed James of their interest. In November 1980, James incorporated defendant, Voss Industries, Inc., with James himself as the sole shareholder and director. In late November or early December, James received verbal commitments from Poulsom and Hannon to join his new enterprise. In January 1981, Hannon and Poulsom terminated their employment at plaintiff corporation and began working for Voss Industries, Inc. Neither Poulsom nor Hannon performed any duties for nor received any compensation from Voss Industries prior to their respective departures from plaintiff corporation. The extent of their activities with respect to the competing corporation prior to their actual terminations at plaintiff was confined to the planning stage and did not involve the transacting of business.

In April 1981, plaintiff filed suit seeking (1) to enjoin defendants from continuing to operate Voss Industries, (2) an accounting, and (3) damages. Upon the filing of suit, James Voss changed the name of his corporation to JVI, Inc.; formally resigned as director of plaintiff corporation; and caused all documents issuing from his business to be stamped with a printed disclaimer expressly disaffiliating Voss Industries (JVI, Inc.) from Voss Engineering, Inc.

A preliminary injunction was entered by agreement and without hearing. Following a full hearing on all counts of the complaint, the preliminary injunction was dissolved, and judgment was entered in favor of defendants. Plaintiff now appeals.

OPINION

• 1 At oral argument, plaintiff conceded that there was insufficient evidence to support counts II (theft of confidential information) and III (violation of the Illinois Uniform Deceptive Trade Practices Act) of the complaint, thereby effectively withdrawing from our consideration these counts and the assertions set forth thereunder. Consequently, the sole issue presented to this reviewing court is whether plaintiff has met his burden of proving that defendants breached their fiduciary duties to plaintiff by starting up a competing business ...


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