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Atronix, Inc. v. Morris

Supreme Court of New Hampshire, Rockingham

October 23, 2018

ATRONIX, INC.
v.
KENNETH MORRIS & a.

          Argued: April 12, 2018

          Hinckley, Allen & Snyder, LLP, of Manchester (Christopher H.M. Carter and Kimberly M.R. Sullivan on the brief, and Mr. Carter orally), for the plaintiff.

          Devine, Millimet & Branch, P.A., of Manchester (Jonathan M. Shirley on the joint brief and orally), for defendant Scott Electronics, Inc.

          Daniel R. Tenczar, of Tyngsborough, Massachusetts, on the joint brief, and Law Office of Brian W. Leahey, P.C., of Tyngsborough, Massachusetts (Brian W. Leahey on the joint brief and orally), for defendant Kenneth Morris.

          HICKS, J.

         The plaintiff, Atronix, Inc., which brought this action for, among other things, breach of contract against defendant Kenneth Morris and tortious interference with contractual relations against defendant Scott Electronics, Inc. (Scott), appeals a decision of the Superior Court (Wageling, J.) dismissing its action for lack of standing. We reverse and remand.

         The following facts were recited in the trial court's orders. Morris started working at Atronix Sales, Inc. (Old Atronix) in 1982. He was promoted several times over the course of his employment, eventually becoming program manager in the sales department. That position entailed responsibility for the largest and most important of Old Atronix's accounts. Accordingly, in 1997, Morris was required to sign a non-compete and non-solicitation agreement (the non-compete agreement), and a non-disclosure agreement (collectively, the Agreements).

         In 2011, Old Atronix merged with Atronix, Inc. (the Company). In 2014, the Company entered into an Asset purchase agreement (the APA) with Consolidated Cable Assembly Holdings, Inc. (CCAH). Pursuant to the APA, the Company sold its assets, including the tradename "Atronix, Inc.," to a subsidiary of CCAH. The subsidiary, doing business under the name Atronix, Inc., is the plaintiff here.

         In 2016, Morris left his job with the plaintiff and was hired as a general manager by Scott, a competitor of the plaintiff. Thereafter, the plaintiff filed the instant suit, alleging breach of contract, tortious interference with contract, and violation of the New Hampshire Consumer Protection Act, see RSA ch. 358-A (2009 & Supp. 2017), and seeking a declaratory judgment and injunctive relief. The defendants moved to dismiss, asserting that the plaintiff lacked standing to enforce the Agreements. The trial court granted the motion, and denied the plaintiff's subsequent motion for reconsideration.

         On appeal, the plaintiff argues that: (1) the trial court's decision conflicts with the APA's plain terms; (2) the trial court's decision "also conflicts with the well-established rule that when a business is sold as a going concern under an asset purchase, restrictive covenants are assigned to the buyer along with goodwill and other assets necessary to the continued operation of that business"; (3) the trial court "conflated the issue of whether the non-compete agreement was assigned under the APA, with the wholly separate issue of whether Morris consented to the assignment"; and (4) consent by Morris was not required in any event.

         Because the underlying facts relevant to this appeal are undisputed, we review the trial court's ruling that the plaintiff lacks standing to enforce the non-compete agreement de novo. See In the Matter of P.B. & T.W., 167 N.H. 627, 629 (2015). The trial court's decision on that issue was based, in its words, on "[w]hether the terms of the APA transferred the right to enforce the Agreements." We note that the trial court's order, by using the term "Agreements" - which it defined to refer collectively to the non-compete agreement and non-disclosure agreement - broadly rules that neither agreement was transferred under the APA. The plaintiff, however, challenges only the court's ruling with respect to the non-compete agreement. Accordingly, we decide only the narrow issue of whether the non-compete agreement was transferred to the plaintiff under the APA.

         Determining what the APA conveyed requires us to interpret that agreement. We note that although the APA provides that it is to be governed by Delaware law, Delaware's law regarding contract interpretation does not differ materially from our own. Compare Signal Aviation Servs. v. City of Lebanon, 169 N.H. 162, 166 (2016), with Exelon Generation Acquis. v. Deere & Co., 176 A.3d 1262, 1266-67 (Del. 2017), and GMG Capital Inv. v. Athenian Venture, 36 A.3d 776, 779, 783-84 (Del. 2012).

It is axiomatic that we give an agreement the meaning intended by the parties when they wrote it. When interpreting a written agreement, we give the language used by the parties its reasonable meaning, considering the circumstances and context in which the agreement was negotiated, when reading the document as a whole. Absent ambiguity, the parties' intent will be determined from the plain meaning of the language used. Only when the parties reasonably disagree as to its meaning will the agreement's language be deemed ambiguous. If the agreement's language is ambiguous, it must be determined what the parties, under an objective standard, mutually understood the ambiguous language to mean.

Signal Aviation Servs., 169 N.H. at 166 (quotation omitted); see also Exelon Generation Acquis., 176 A.3d at 1266-67; GMG Capital Inv., 36 ...


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