Please ensure Javascript is enabled for purposes of website accessibility
Home / News Stories / Damages knocked down in noncompete case

Damages knocked down in noncompete case

telecommunications_mainA telecommunications company won its suit against a contract worker accused of siphoning away its business, but there was a catch.

The plaintiff company persuaded a jury to award damages for the worker’s violation of a noncompete/nonsolicitation clause in the parties’ contract. But, after trial, the judge knocked down the damages based on the way the plaintiff pleaded its case.

The company’s complaint asked for damages “in excess of” $100,000. Under Virginia law, however, the winning company could collect no more than the dollar amount requested in the ad damnum. The judge cut the jury award of $137,575 to the sum named in the pleading.

The trial court also said the company failed to show that the owner and sole employee of the defendant company was personally liable for the damage award. The court set aside the award against the contract worker who owned the competing company.

Government work

Plaintiff Solentus Inc. is a Virginia corporation that contracts exclusively with the Federal Aviation Administration to provide management and systems engineering services, according to the May 4 opinion in Solentus Inc. v. Lam (VLW 017-8-047).

Defendant Gentlerock Technologies is a limited liability company that also contracts with the FAA. Defendant Henry Lam is the sole member and employee of Gentlerock.

The two parties had worked together in recent years. In 2009, Gentlerock contracted with Solentus to provide services for Solentus’ senior systems engineer.

The parties’ contract included a noncompete/nonsolicitation clause that prohibited the “Consultant,” identified as Gentlerock, from soliciting or accepting work from a Solentus customer within 12 months of ending work with Solentus.

Pursuant to the contract with Solentus, Gentlerock began work supporting Thien Ngo, a program manager in the FAA’s Technical Center Office.

In April 2014, Gentlerock stopped work with Solentus. Within months, it became apparent that Gentlerock was working with a different contractor, Concepts Beyond LLC, to provide support for Ngo, the suit alleged.

Solentus sued and the jury returned a verdict for Solentus, against both Lam and Gentlerock. Trial evidence supported Solentus’ claim that the job descriptions for each contract were “substantially similar,” Fairfax Circuit Judge Daniel E. Ortiz wrote.

In post-trial motions, the defendants argued damages “in excess of $100,000” could not be awarded under Virginia pleading rules, the evidence did not support a finding that the defendants violated the nonsolicitation clause, and Lam was not a party to the subcontract and could not be personally liable.

Ortiz upheld the finding that Gentlerock had violated the subcontract. The Fairfax judge said Solentus presented “more than credible evidence that Gentlerock was performing substantially the same work as it had been with Solentus, for the exact same program manager within the FAA’s ANG-C subdivision.”

The judge agreed with the defendants that Lam could not be held personally responsible. Lam had signed the contract on behalf of his LLC and he was not individually bound, according to the court.

Reduced damages

The court also rejected Solentus’ contention that the defendant had waived any defense against the ad damnum clause by failing to object to the pleadings

Virginia Supreme Court Rule 3:2(c) says a plaintiff must provide “the iiiamountiii of damages requested,” the judge emphasized, and dictionary definitions and additional circuit court authority interprets that to mean a specific sum.

“Stating ‘in excess of’ does not state an iiiamount,iii it does not provide a total number or quantity, nor even a specific iiirange,iii but rather a iiifloor,”iii Ortiz wrote. The only “ascertainable ‘amount’” in this case was the $100,000 figure, he said.

A court can sustain a demurrer to an improper ad damnum, or can consider a plaintiff’s request to amend an ad damnum, under some circumstances.

A plaintiff may find it necessary to increase the ad damnum after discovery, or “if something happens in the case,” according to Fairfax lawyer John C. Cook, who represented the defendants in iiiSolentus.iii

When it comes to the ad damnum clause itself, “I’ve been on both sides of the issue,” Cook said. He has sought leave to amend to increase an ad damnum in some cases, and in other cases, he has challenged a plaintiff’s ad damnum as faulty, as in iiiSolentus.iii

The standard for the trial court to allow an amendment is prejudice to the other side.

“The reason for specifying a dollar amount is so we all can prepare,” Cook said. A defendant has to engage in risk analysis: “What’s the downside of this case, how much can we lose. If you change the ad damnum, it may be too late for the other party to react to it.”

In an unpublished order in 2010, the Supreme Court of Virginia reaffirmed the rule that you can’t get more than you sue for. The plaintiff sought “approximately” $50,000, and the trial judge thought $79,512 was close enough, and awarded judgment on that amount. Citing a 1986 decision that held that post-verdict amendments may not be granted, the high court reduced the judgment to $50,000.

Baltimore lawyer Anthony Vittoria, who represented Solentus, declined comment on the case, except to say a motion for reconsideration is pending.

VLW 017-8-047