Advance Wire Forming, Inc. v. Stein

Advance Wire Forming, Inc., et al., Plaintiffs, v. Jeffrey Stein, et al., Defendants

No. 1:18cv723

United States District Court, N.D. Ohio

May 11, 2022

MEMORANDUM OPINION & ORDER

PAMELA A. BARKER, U.S. DISTRICT JUDGE.

This matter is before the Court upon the following Motions filed by Defendants Jeffrey Stein and Plastic and Products Marketing, LLC: (1) Motion in Limine to Exclude Evidence and Argument regarding Dismissed Counts (Doc. No 188); (2) Motion in Limine to Exclude Alleged Misrepresentations that Induced Plaintiffs to Enter into the Settlement Agreement (Doc. No. 220); (3) Motion in Limine to Exclude Parol Evidence (Doc. No. 190); and (4) Motion in Limine to Exclude Reference, Testimony, or Evidence of Plaintiffs' Claim that Jeffrey Stein Intentionally Sabotaged a Plastics Order Received by Plaintiff Advance Wire Forming, Inc. (Doc. No. 187.) Plaintiffs Advance Wire Forming, Inc., Advance Industries Group, LLC, AIG Holdings, LLC, and James Williams filed Briefs in Opposition on March 15 and April 8, 2022 respectively. (Doc. Nos. 192, 193, 195, 222.)

For the following reasons, Defendants' Motions in Limine to Exclude Evidence and Argument regarding Dismissed Counts (Doc. No. 188) and to Exclude Evidence regarding Alleged Misrepresentations (Doc. No. 220) are granted in part and denied in part. Defendants' Motion in Limine to Exclude Parol Evidence (Doc. No. 190) is granted in part and denied in part. Defendants' Motion in Limine to Exclude Evidence of Plaintiffs' Claim that Stein Intentionally Sabotaged a Plastics Order received by Plaintiff AWF (Doc. No. 187) is denied.

I. Relevant Background

A. Factual Background

The Court summarizes the facts relevant to the instant Motions as follows.^[1] Plaintiff Williams and Defendant Stein were formerly co-owners of Plaintiffs Advance Wire Forming, Inc. (“AWF”), Advance Industries Group, LLC (“Industries”), and AIG Holdings, LLC (“Holdings”). (Deposition of Jeffrey Stein (Doc. No. 133-1) at Tr. 5-6, 8.) In July 2015, Stein was hospitalized and treated for various mental health conditions. (Doc. No. 153-16, Doc. No. 153-18, Doc. No. 151-8.) While Stein was in the hospital, his son Michael Stein (“Michael”) came to the offices of AWF and took possession of a prototype for a cooler that his father had been developing for AWF. (Deposition of Michael Stein (Doc. No. 131-1) at Tr. 87.)

Stein did not return to work for Plaintiffs after he was discharged from the hospital. Instead, in January 2016, Stein, through counsel, made a demand for mediation and arbitration to discuss a buy-out of his interests in AWF, Industries, and Holdings. (Williams. Aff. (Doc. No. 158-46) at ¶ 11.) The parties and their counsel engaged in formal mediation proceedings in March 2016, culminating in the execution of a “short form” agreement regarding the terms of a buy-out (hereinafter “March 2016 Mediation Agreement”). (Doc. No. 153-30.)

Plaintiff alleges that, between the date Stein left AWF in July 2015 and March 2016, Williams' and Monroe's communications regarding AWF and a potential buy-out of Defendant Stein's interests were with Stein's son, Michael. (Williams Aff. at ¶ 12; Monroe Aff. at ¶ 9.) Both Williams and Monroe state that, during these communications, Michael represented that his father “was stressed out, suicidal, and suffering from a nervous breakdown.” (Williams Aff. at ¶ 15; Monroe Aff. at ¶ 10.) Michael also allegedly told them that Stein wanted to retire and move to Florida, and that “his father was too concerned about his physical and mental well-being and was in no shape to ever work again.” (Williams Aff. at ¶ 15, 18.) See also Monroe Aff. at ¶ 15.

Between March and June 2016, the parties, through counsel, exchanged drafts of a formal Settlement Agreement. In June 2016, the parties executed a formal (1) Settlement Agreement and Mutual Release; and (2) Non-Competition Agreement. (Doc. Nos. 153-36, 153-37.) In the former, Stein agreed to assign, transfer, and sell all of his shares in AWF, Industries, and Holdings, in exchange for a monetary payment from Plaintiffs. (Doc. No. 153-36 at ¶¶ 1, 2.) In addition, the June 2016 Settlement Agreement contains mutual release provisions, as well as (among other things) a confidentiality provision, a provision requiring Stein to use his best efforts to locate and return the cooler prototype, and a non-disparagement provision. (Id. at ¶¶ 10, 15, 19.)

The June 2016 Non-Competition Agreement also contains several additional relevant provisions, including the following:

2.3 Agreements of Stein. Stein covenants that during the Non-Competition Period, Stein will hold in confidence the proprietary information of Company and will not disclose it to any third party except with the specific prior written consent of Company. None of the foregoing obligations and restrictions applies to any part of the proprietary information that Stein demonstrates was or became generally available to the public other than as a result of a disclosure by Stein.

***

3.2 Covenants of Stein. Stein covenants that he will not, directly or indirectly whether or not for consideration, during the Noncompetition Period:

(a) (i) operate, control, advise, be engaged by, perform any consulting services for, invest in or otherwise become associated in any capacity with, any business, company, partnership, organization, proprietorship, or other entity, who or which, at any time during the Noncompetition Period, conducts the Business in any manner within a thirty (30) mile radius of either the real property located at 3636 West 58th Street, Cleveland, Ohio, or (ii) engage in any practice the purpose of which is to evade the provisions of this covenant;

(b) (i) solicit, induce or attempt to solicit or induce any employee of Company to terminate his or her relationship with Company; (b) induce or attempt to induce any supplier, contractor or customer of Company to terminate or adversely change its relationship with Company; or (c) employ any person who was an employee of Company until six (6) months after such individual's employment relationship with Company has been terminated.

(Doc. No. 153-37) (emphasis added). The Non-Competition Agreement defines the term “the Business” as follows: “‘Business'-means the sale of commercial wire.” (Id. at PageID# 6687.) In addition, it provides that the “Non-Competition Period” is five years from the execution of the agreement. (Id.)

Plaintiffs allege that, both before and after the June 2016 Agreements were executed, Stein was actively engaging in negotiations to acquire the assets of a Florida company owned by Lynne Boykin (hereinafter referred to as “Boykin Manufacturing”). (Stein Depo. at Tr. 13, 15-16; Doc. Nos. 153-24, 153-26; Boyko Depo. (Doc. No. 129-1) at Tr. 120-121.) Williams and Monroe testified in deposition that they were not aware that Stein was pursuing any business opportunities, believing that he intended to retire for health reasons.^[2] (Williams Depo. (Doc. No. 135-1) at Tr. 143-144; Monroe Depo. (Doc. No. 140-1) at Tr. 69-71.)

At some point in late 2016 or early 2017, Stein formed Defendant PPM in Florida. (Stein Depo. at Tr. 19-20.) On January 31, 2017, Defendant PPM and Boykin Manufacturing executed an Asset Purchase Agreement for the purchase and sale of the assets of Boykin Manufacturing d/b/a/ Plastics & Products. (Doc. No. 153-40.) Stein testified that PPM sells a wide variety of plastic products, including through its Amazon online store. (Stein Depo. at Tr. 25-26, 63.) It does not, however, sell wire products. (Id. at Tr. 51-53.) Plaintiffs subsequently became aware that Stein was operating Defendant PPM and ceased making monthly installment payments under the June 2016 Settlement and Non-Competition Agreements after January 2018. (Stein Aff. (Doc. No. 152-2) at ¶ 3.) In April 2018, Defendants sold a plastic condiment organizer directly to Plaintiff Williams at the address for AWF, Industries, and Holdings. (Stein Depo. at Tr. 97-100; Doc. No. 153-41.) In October 2018, Plaintiffs discovered that Defendants sold a different plastic condiment organizer to an individual in Cleveland, within a 30-mile radius of Plaintiffs' property. (Stein Depo. at Tr. 38-41; Doc. No. 153-42.) Stein acknowledged in deposition that AWF also manufactured this particular product. (Stein Depo. at Tr. 38-41.)

Plaintiffs claim (and Defendants do not dispute) that, at some point after Plaintiffs filed the instant lawsuit, Stein returned the cooler prototype that his son Michael had taken from AWF in July or August 2015.

B. Procedural Background

On February 23, 2018, Plaintiffs filed a Complaint against Stein in the Cuyahoga County Court of Common Pleas, alleging numerous state-law claims arising out of the alleged breach of the parties' Settlement and Non-Competition Agreements. (Doc. No. 1-1.) Stein removed the action to this Court on March 29, 2018 on the basis of complete diversity of citizenship. (Doc. No. 1.)

Plaintiffs filed an Amended Complaint on November 20, 2018, in which it added PPM as a Defendant. (Doc. No. 19.) As it is relevant to the issues raised in the instant motions in limine, the Court will discuss the claims asserted in the Amended Complaint in some detail.

In Count I, Plaintiffs allege claims for “breach of contract/breach of implied covenant of good faith.” (Id. at ¶¶ 69-85.) Therein, Plaintiffs first allege that Stein and PPM breached the following provisions of the June 2016 Agreements: (1) the non-competition provision set forth in Section 3.2(A) of the Non-Competition Agreement; (2) the confidentiality provisions set forth in Section 10 of the Settlement Agreement and Section 2.3(a) of the Non-Competition Agreement; (3) the cooler prototype provision set forth in Section 15 of the Settlement...