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CLASSIC AMENITIES, INC. v. VERBEKE

July 30, 2003

CLASSIC AMENITIES, INC., PLAINTIFF,
v.
EDMOND VERBEKE, EMPIRE AMENITIES, INC., AND READY CARE INDUSTRIES, DEFENDANTS



The opinion of the court was delivered by: John Grady, Senior District Judge

MEMORANDUM OPINION AND ORDER

The court has under consideration the defendants' motion for summary judgment. For the reasons explained in this opinion, the motion will be granted.

Factual Background

The parties in this case are competitors in the business of providing guest amenities to hotels. The "amenities" consist of packages of soaps, shampoos and similar items use in guest rooms. Plaintiff, Classic Amenities, Inc. ("Classic"), is a Delaware corporation with its principal place of business in Chicago, Illinois. The defendant Edmond Verbeke is an individual domiciled in New York. He has sold hotel and guest amenities for various companies since 1986. Classic was formed in 1996. Verbeke came to work for the company in 1996 and was made a 25 percent shareholder. He was given the title of President. The other 75 percent of the [ Page 2]

shares were owned by Gerald A. Miller. The two directors of the company at the outset were Verbeke and Stan Rozewski, a comptroller who worked for another company owned by Miller. Verbeke and Rozewski never held a meeting of the board of directors. Verbeke received no compensation as a director and performed no duties as a director of Classic. Verbeke was never given written notice or minutes of directors' meetings. Verbeke had no written employment agreement with Classic and did not execute any restrictive covenant or agreement not to compete with Classic.

Verbeke's duties with Classic consisted of selling amenities to hotel customers. In fact, he was the only full-time sales person. He worked out of his home in South Salem, New York. Many of the customers he serviced at Classic had been his customers at the companies he worked for prior to 1996.

Verbeke had three long distance telephone lines and three local lines at his home, all listed in both his name and the name of Classic Amenities. The phones were used for business purposes as well as for the Verbekes' personal purposes. Pursuant to Verbeke's arrangements with the telephone company, the bills were sent to him in his name, and he would pay the bills by personal check. He would then obtain reimbursement from Classic for the business portion of the bills.

In March of 2000, Verbeke decided to leave Classic. On March 6, 2000, he sent Gerald Miller a letter, the first paragraph of [ Page 3]

which stated that

It is with a great deal of regret that I inform you of my resignation from Classic Amenities, effective March 6, 2000. It has become increasingly clear to me that you and I no longer share a vision with regard to Classic's daily operations and future growth, and I truly believe that parting company now is the best course of action for all involved.
The letter went on to advise that Verbeke had cancelled the long distance phone lines and had requested the phone company to change the listing of the three local telephone numbers to his name alone, effective March 6, 2000.

Before resigning from Classic, Verbeke contacted Ready Care Industries, a supplier of products to Classics, to discuss a possible employment relationship. There is no evidence that Verbeke solicited any business on behalf of Ready Care before March 6, 2000, the date of his resignation from Classic. He has denied under oath that he did so. After March 6, 2000, Verbeke took a sales position with Ready Care Industries, selling guest amenities to many of the same customers he had serviced for Classic. When Verbeke left Classic, over $675,000 worth of purchase orders he had obtained were still on the books with Classic.

The first purchase order Verbeke obtained for Ready Care d/b/a Empire Amenities was on March 21, 2000.

Verbeke continues to be employed as a sales person by Ready Care Industries (also known as Empire Amenities, Inc. and Ready Razor, Inc. The difference ...


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