Centennial Lending Group v. Seckel Capital

J-A04018-17

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

CENTENNIAL LENDING GROUP, LLC IN THE SUPERIOR COURT OF

PENNSYLVANIA

Appellee

v.

SECKEL CAPITAL, LLC

Appellant No. 822 EDA 2016

Appeal from the Order Entered February 12, 2016

In the Court of Common Pleas of Philadelphia County

Civil Division at No(s): October Term, 2015 No. 01023

BEFORE: SHOGAN, J., SOLANO, J., and PLATT, J.*

MEMORANDUM BY SOLANO, J.: FILED OCTOBER 26, 2017

Appellant, Seckel Capital, LLC, appeals from the order granting a

preliminary injunction in favor of Appellee Centennial Lending Group, LLC on

its claim of unfair competition. We conclude the record supports the trial

court’s issuance of a preliminary injunction; but because the trial court failed

to order the filing of a bond, we are constrained to vacate the order and

remand with instructions to reissue the preliminary injunction with a bond

requirement.

In October 2015, Centennial sued Seckel, presenting claims for

misappropriation of trade secrets under the Pennsylvania Uniform Trade

Secrets Act (“PUTSA”),1 conversion, tortious interference with contract,

____________________________________________

* Retired Senior Judge assigned to the Superior Court.

1 See 12 Pa.C.S. §§ 5301-5308.

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aiding and abetting breach of a fiduciary duty, unfair competition, and

tortious interference with business relations. Centennial also moved for a

preliminary injunction. Centennial requested an order mandating (1) the

return and destruction of confidential information of Centennial that was in

the possession of Seckel, (2) that Seckel be enjoined from acquiring more of

Centennial’s confidential information, and (3) that Seckel be prohibited from

soliciting Centennial’s employees for employment. Trial Ct. Op. at 2.

The court held a two-day evidentiary hearing on the motion on

February 3-4, 2016, at which the following was established.

Susan Meitner is the president and chief executive officer of

Centennial, a residential mortgage broker whose potential customers include

potential borrowers and referral sources — that is, prior customers and real

estate agents acting to buy or sell a home. N.T., 2/4/16, at 9, 65-66. When

Centennial first began operations, it did not have its employees sign any

agreements addressing confidentiality. Id. at 79. Subsequently, in 2013,

Centennial asked some of its then-current employees, including Celeste

Spadaccini,2 one of Centennial’s loan officers, to acknowledge receipt of a

handbook with a confidentiality provision and to sign a document with a

confidentiality clause. Id. at 80; R.R. at 28a-29a.3

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2 Her last name is spelled differently throughout the record; we use the

spelling reflected in her affidavit. R.R. at 196a.

3 Seckel describes this document as an unenforceable employment

agreement, Seckel’s Brief at 21; Centennial calls it an “Origination Plan” that

(Footnote Continued Next Page)

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John Seckel is the president of Seckel Capital, another mortgage

broker. During the summer and fall of 2015, Centennial had twenty-two

loan officers. N.T., 2/3/16, at 45; R.R. at 913a. That summer, Seckel hired

six of Centennial’s loan officers and one of its loan processors. N.T., 2/4/16,

at 26, 131. Mr. Seckel personally recruited two of those loan officers and

reached out to others at Centennial. Id. at 125-26. The six loan officers

hired by Seckel comprised almost 30% of Centennial’s loan officers.

Additionally, after Centennial “let go” two other loan officers, Seckel hired

them. Id. at 49, 131. Mr. Seckel also interviewed three other Centennial

employees, including a loan officer, but decided not to hire them. Id. at

138-39. As discussed in further detail below, Mr. Seckel also interviewed

and offered a job to Spadaccini, who declined the offer. Centennial contends

that it lost $500,000 in the fourth quarter of 2015, after $70 million of its

business went to Seckel as a result of Seckel’s hiring of its employees. Id.

at 58-59.

Ed Walsh, a Seckel vice president and branch manager, is one of the

six former Centennial loan officers who was hired by Seckel. Shortly after

midnight on February 4, 2016, the second day of the hearing, Walsh e-

mailed Meitner and Steven Winokur, another Centennial employee, from his

non-work account. N.T., 2/4/16, at 64-65, 68. The e-mail stated that if

(Footnote Continued) _______________________

it uses “for the purpose of providing meaning and market competitive

financial rewards” for its loan officers. R.R. at 28a.

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Centennial did not pay Walsh compensation to which he claimed to be

entitled, Walsh would destroy Centennial:

The clock is ticking. You have 3 days to pay me in full or i will

unleash the wolves. My money is too long for you. Time is to

short I will destroy your company....Period pay what you owe or

its game over. I have more in cash in my fucking safe, then

your entire family has all in. Wrong man to play games with.

Pay what you owe or it game over. Final warning I’m

undefeated in court!!!!

Centennial’s Ex. 59; R.R. at 964a (punctuation and spelling as in original). 4

That same morning of February 4, 2016, Walsh also posted on his

Facebook5 page: “FYI, if you burn me, I will destroy you, period. Money is

long. Time is short, and it did say CLG [Centennial] tick-tock to [sic].” N.T.,

2/4/16, at 70.6 Meitner is not a Facebook “friend” with Walsh, but Meitner’s

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4 Later that day, at the preliminary injunction hearing, Meitner read a

sanitized version of the e-mail into the record. N.T., 2/4/16, at 67-68. We

note that none of the exhibits introduced at the hearing were transmitted to

this Court as part of the certified electronic record. However, the exhibits

were made part of the reproduced record and no party has challenged their

authenticity.

5 Facebook is a social networking website on which “[u]sers of that Web site

may post items on their Facebook page that are accessible to other users,

including Facebook ‘friends’ who are notified when new content is posted.”

Elonis v. United States, ___ U.S. ___, 135 S. Ct. 2001, 2004 (2015). A

user may make a posted item viewable by any user of Facebook or only to

such selected users as their Facebook “friends.” A user may also edit an

item after posting it. See Daison v. Loudoun Cty. Bd. of Supervisors,

___ F. Supp. 3d ___, 2017 WL 3158389, *2 (E.D. Va. 2017); Facebook,

“How do I edit a post that I've shared from my Page?,” https://www

.facebook.com/help/1376303972644600 (as accessed on Oct. 25, 2017).

6 It appears that Walsh later edited the Facebook post to remove the

reference to Centennial (“CLG”), as a printout of the post states, “Just a FYI!

(Footnote Continued Next Page)

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assistant viewed the post and notified her of its content. N.T., 2/4/16, at

70.7

A portion of the hearing was devoted to Seckel’s attempt to hire

Spadaccini and to gain access to Centennial information on Spadaccini’s

laptop computer. Centennial typically issued laptops to its mortgage

brokers. N.T., 2/4/16, at 114. A broker could electronically store a

summary of a customer’s personal and financial information for networking

and potential future business purposes in a customized database accessible

on the laptop through software named “Encompass”. Id. at 104; N.T.,

2/3/16, at 72-73; R.R. at 27a, 196a, 215a. The laptop also could be used to

access Centennial’s customer relationship management software, called

“Mortgage Returns,” in which a broker could enter customer names and

other personal information, such as birthdays, for marketing purposes. N.T.,

2/3/16, at 21, 86; N.T. 2/4/16, at 112; R.R. at 321a-22a. The programs

appear to be integrated with each other, and information is easily shared

between the two. Ex. 1, Suppl. Decl. of Meitner, at ¶ 11, 11/13/15, to

(Footnote Continued) _______________________

If you burn me, I will destroy you! Period! Money is long, time is short!!!

Tick tock.” Centennial’s Ex. 60; R.R. at 966a.

7 After the hearing, the record reflects that Walsh, on February 9, 2016, e-

mailed Meitner and Winokur an apology for his “unprofessional email” and

disclaiming any intent to destroy Centennial. R.R. at 985a. The e-mail also

asserted that “John Seckel had no idea I wrote that e-mail and it is by no

means a representation of Seckel Capital.” Id.

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Centennial’s Reply Brief in Further Supp. of Centennial’s Pet. for a Special

and/or Prelim. Inj., 11/19/15, R.R. at 322a.

In late August and early September of 2015, Seckel contacted

Spadaccini and extended a job offer to her, which Spadaccini initially

accepted (though she later changed her mind and rejected the offer). N.T.,

2/4/16, at 98-99, 101. Spadaccini met with Mr. Seckel and Nabil Farhat,

Seckel’s chief financial officer. At that meeting, Spadaccini expressed

concern that she would be unable to start working for Seckel immediately

“because it would be very labor-intensive to extrapolate four years of

business. I had four of my best years at Centennial Lending. I closed $125

million of business. To pull all of that documentation out, I was a little

concerned that I wouldn’t be able to do it.” Id. at 103. Spadaccini was

referring to the customer relationship information that she accumulated at

Centennial. Id. at 104. According to Spadaccini, Farhat suggested that if

she brought her laptop, Seckel would be able to extract the information from

Encompass. Id. at 103, 106.

A few days later, Spadaccini again met with Farhat, and she brought

her laptop with her. N.T., 2/4/16, at 106; R.R. at 286a. At that second

meeting, Spadaccini used her password to sign into Encompass, and Farhat

used the laptop to “create those reports,” N.T., 2/4/16, at 106, that is, the

spreadsheets containing the customer information. Spadaccini’s laptop was

used to e-mail the spreadsheet reports from Spadaccini’s personal e-mail

account to Mr. Seckel. Id. at 107; see Exs. 4 & 5 to Centennial Ex. 44, R.R.

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at 930a-50a (copies of the e-mails and spreadsheet reports at issue).8

Spadaccini denies personally sending those e-mails, however. N.T., 2/4/16,

at 120. Mr. Seckel testified that the reports he received contained

Spadaccini’s customer list. Id. at 144.9 Mr. Seckel also testified that

although he deleted the e-mails upon receiving them, he was able later to

recover the deleted e-mails. Id. at 155; R.R. at 917a-18a.

On February 12, 2016, the trial court issued an injunction that

included the following terms:

1. Seckel shall not solicit employees of Centennial, until the

conclusion of this action.

2. This Order does not prevent employees of Centennial from

applying for employment at Seckel.

3. If such an employee is hired, Seckel shall contact counsel for

both parties immediately upon the acceptance of an offer of

employment, so that both parties can manage the transition of

the employee and of any information.

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8 The reports were also downloaded to Spadaccini’s computer, her personal

cloud storage, or both (the record is imprecise). See N.T., 2/4/16, at 105,

156; R.R. at 917a. “Cloud storage is a method of storing electronic data on

remote servers — in addition to or in lieu of the device itself. Data stored in

the cloud can be accessed by an electronic device connected to the

Internet.” Wertz v. State, 41 N.E.3d 276, 285 n.8 (Ind. Ct. App. 2015).

9 Centennial has not moved to seal Spadaccini’s customer list, which is

present in the filed hardcopy of the reproduced record and the electronic

record transmitted to this Court.

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Order, 2/12/16. The order did not restore Centennial’s control over its

confidential business records, including Spadaccini’s customer list.10

However, Seckel’s counsel agreed to return that list to Centennial. N.T.,

2/3/16, at 17-18.

Seckel timely appealed. The trial court filed an opinion on June 30,

2016, that briefly explained its rationale for granting injunctive relief. The

court stated that the “injunction is designed to prevent disclosure of

confidential records belonging to Centennial until the conclusion of a law

case now at the pleading stage.” Trial Ct. Op. at 1. It continued:

Testimony at the preliminary injunction hearing made clear

that Centennial has a likely chance of success at trial and that

some of the actions Seckel has undertaken are manifestations of

bad motive to permanently harm, if not destroy, Centennial’s

business. These actions included soliciting Centennial employees

to divulge confidential information directly from computer hard

drives and systematic solicitation of Centennial employees to

leave [C]entennial, work for Seckel and then divulge their old

company’s confidential work product.

...

[T]he harm taking place is both immediate and irreparable. This

injury cannot be compensated fully by monetary damages.

...

If followed, the order properly restores Centennial to its former

control over its own confidential business records.[11]

...

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10 Centennial has not filed a cross-appeal to challenge the court’s injunctive

relief as insufficiently tailored to restore the status quo.

11 As noted above, the order did not contain provisions for restoration of

such control to Centennial.

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Centennial is entitled to equitable protection and the

transcript record reveals worrisome animus by some Seckel

personnel against Centennial’s president.

Trial Ct. Op. at 2-3.

After Seckel appealed, Centennial filed an unopposed motion to set

bond for the preliminary injunction. Seckel apparently agreed that the court

must impose a bond. Centennial’s Mot. to Set Bond for Preliminary Inj.,

11/16/16, at 3 (“Counsel for Centennial has conferred with counsel for

Seckel, who agrees that the Court must impose a bond requirement”). The

court scheduled argument for June 19, 2017. After argument, without

explaining its decision, the court denied the motion to set bond, without

prejudice. Order, 6/22/17.

On appeal, Seckel raises the following issues:

1. Whether the trial court properly entered a preliminary

injunction when Centennial . . . failed to present concrete

evidence supporting that it would suffer irreparable harm if

solicitation was not prohibited?

2. Whether the trial court proper[l]y entered a preliminary

injunction when Centennial failed to establish that it had a

likelihood o[f] . . . success o[n] the merits of its unfair

competition claim?

3. Whether the trial court properly entered a preliminary

injunction without requiring Centennial to post a bond?

Seckel’s Brief at 3.

Our standard of review follows:

Our review of a trial court’s order granting or denying

preliminary injunctive relief is highly deferential. . . . [We]

examine the record to determine if there were any apparently

reasonable grounds for the action of the court below.

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WMI Grp., Inc. v. Fox, 109 A.3d 740, 747-48 (Pa. Super. 2015).12 More

specifically:

A trial court has apparently reasonable grounds for granting the

extraordinary remedy of preliminary injunctive relief if it properly

finds that all of the essential prerequisites are satisfied.

There are six essential prerequisites that a party must

establish prior to obtaining preliminary injunctive relief.

The party must show: 1) that the injunction is necessary

to prevent immediate and irreparable harm that cannot be

adequately compensated by damages; 2) that greater

injury would result from refusing an injunction than from

granting it, and, concomitantly, that issuance of an

injunction will not substantially harm other interested

parties in the proceedings; 3) that a preliminary injunction

will properly restore the parties to their status as it existed

immediately prior to the alleged wrongful conduct; 4) that

the activity it seeks to restrain is actionable, that its right

to relief is clear, and that the wrong is manifest, or, in

other words, must show that it is likely to prevail on the

merits; 5) that the injunction it seeks is reasonably suited

to abate the offending activity; and, 6) that a preliminary

injunction will not adversely affect the public interest. The

burden is on the party who requested preliminary

injunctive relief.

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12 We have explained:

It is somewhat embarrassing to an appellate court to discuss the

reasons for or against a preliminary decree, because generally in

such an issue we are not in full possession of the case either as

to the law or testimony — hence our almost invariable rule is

to simply affirm the decree, or if we reverse it to give only a

brief outline of our reasons, reserving further discussion until

appeal, should there be one, from final judgment or decree in

law or equity.

WMI Grp., 109 A.3d at 743 n.2 (citation omitted and emphasis in original).

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. . . Simply, the moving party must establish a prima facie right

to relief. If the moving party’s right to relief is unclear, then a

preliminary injunction should not issue.

Synthes USA Sales, LLC v. Harrison, 83 A.3d 242, 249-50 (Pa. Super.

2013) (citations, quotation marks, and footnote omitted). Seckel’s issues

contest only the first and fourth prerequisites.

Irreparable Harm

In justifying the injunction, the trial court inferred irreparable harm

from Seckel’s past actions, which “included soliciting Centennial employees

to divulge confidential information directly from computer hard drives and

systematic solicitation of Centennial employees to leave [C]entennial, work

for Seckel and then divulge their old company’s confidential work product.”

Trial Ct. Op. at 2. In evaluating the trial court’s assessment of irreparable

harm, we apply the aforementioned deferential standard of review. WMI

Grp., 109 A.3d at 747-48; accord, Summit Towne Centre, Inc. v. Shoe

Show of Rocky Mount, Inc., 828 A.2d 995, 1000-01 (Pa. 2003).

In challenging Centennial’s showing of irreparable harm, Seckel begins

with the premise that a preliminary injunction should issue only if the

“threatened monetary loss is so great as to threaten the existence of the

business.” Seckel’s Brief at 12 (quoting Three County Servs., Inc. v.

Phila. Inquirer, 486 A.2d 997, 1001 (Pa. Super. 1985)). Seckel points out

that the court’s order did not instruct Seckel to return or destroy any

allegedly misappropriated Centennial documents. Id. The order also did not

prohibit Seckel from using such documents. Id. Thus, according to Seckel,

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the trial court’s opinion “suggests that [it] found that irreparable harm would

be caused by the hiring of additional employees of Centennial who were not

restricted from taking unspecified documents from Centennial.” Id. at 13.

Building on that suggestion, Seckel contends that Centennial failed to

adduce sufficient evidence of monetary loss from Seckel’s past hiring of 30%

of Centennial’s loan officers. Seckel’s Brief at 13. In Seckel’s view,

Centennial’s contention that it lost $500,000 in the fourth quarter of 2015,

after $70 million of business went to Seckel, is in tension with Centennial’s

assertion, in one of its pleadings, that Centennial was one of the “fastest

growing private companies in America.” Id. at 14 (citing R.R. at 376a).

Seckel then shifts to whether irreparable harm could flow from any use

of Spadaccini’s customer list.13 Seckel’s argument necessarily presumes

that the customer list is a trade secret, though Seckel does not concede that

point. Seckel argues:

If before a trial on the merits, Seckel makes a mortgage loan to

any person listed on a customer list that is determined to be

improper, then Centennial can easily prove that Seckel made a

loan to such customer and calculate the lost revenues from any

such loan. Given that most customers do not come back for a

new mortgage loan for five to ten years, it is unlikely that there

could be a large quantity of loans that Seckel could make using

any allegedly improperly obtained customer list. Thus, the use

of Ms. Spadaccini’s customer list until that case goes to trial,

could not cause Centennial to go out of business . . . .

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13For ease of discussion, we refer to the customer list as “Spadaccini’s” list.

At trial, the parties may resolve whether the information in that list qualifies

as a Centennial trade secret or belongs to Spadaccini.

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Seckel’s Brief at 14. Therefore, according to Seckel, “the alleged harm

Centennial would suffer if Seckel solicited its employees or hired its

employees without restricting what documents the employees could take,

can be adequately compensated by money damages,” and no preliminary

injunction should have issued. Id. at 15.

Centennial counters that it introduced evidence that Seckel actively

recruited almost 30% of its sales force, which directly resulted in reduced

revenue. Centennial’s Brief at 14. Centennial emphasizes that Seckel’s

chief financial officer obtained confidential information from Spadaccini’s

laptop. Id. at 14-15. Thus, Centennial reasons that because its loss is more

than solely a monetary loss, Seckel’s reliance on Three County Servs., is

misplaced. Id. at 16. Centennial posits that the facts of this case are more

akin to Kessler v. Broder, 851 A.2d 944 (Pa. Super. 2004), in which we

recognized that under existing case law, “the impending loss of a business

opportunity or market advantage may aptly be characterized as an

‘irreparable injury’ for . . . the purpose of a preliminary injunction.” Id.

(quoting Kessler, 851 A.2d at 951).14 Centennial also points out that even

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14 In Kessler, a dispute arose between the majority and minority

shareholders of corporations that reviewed magnetic resonance images

(“MRIs”). Kessler, 851 A.2d at 945 & n.4, 948. MRI images need to be

reviewed by radiologists, and, under an oral agreement, the majority

shareholders were supposed to allocate about one-third of the MRI reviews

to the minority shareholder. Id. at 945, 948. Because the majority

shareholders failed to adhere to the allocation agreement, the trial court

issued a mandatory preliminary injunction directing them to comply. Id. at

945. In doing so, the court rejected a defense argument that the plaintiffs

(Footnote Continued Next Page)

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if the monetary loss is small, it “foreshadows the disruption of established

business relations which would result in incalculable damage should the

competition continue . . . .” Id. at 17 (quoting West Penn Specialty MSO,

Inc. v. Nolan, 737 A.2d 295, 299 (Pa. Super. 1999)).

In Nolan, this Court observed that “the purpose sought to be achieved

by the issuance of a preliminary injunction is the avoidance of irreparable

injury or gross injustice until the legality of the challenged action can be

determined.” Nolan, 737 A.2d at 299 (quotation marks and citation

omitted). The Court affirmed the issuance of preliminary injunctive relief

because, among other reasons, the defendant’s departure from the plaintiff

to work for a competitor damaged the plaintiff’s existing customer

relationships and substantially undercut the plaintiff’s competitiveness. Id.

We agreed that even if a monetary loss is small or unascertainable,

irreparable injury nevertheless may result from the disruption of established

customer relationships, as well as a potential loss of a business opportunity

or market advantage. Id.

Here, as in Nolan, Seckel’s contention that the monetary loss is

relatively minimal or unascertainable does not negate the irreparable harm

caused by its conduct. The harm flows from the disruption of established

(Footnote Continued) _______________________

failed to establish irreparable harm because their loss of revenue was “fully

compensable by money damages,” reasoning that the plaintiffs were entitled

to an injunction because they were being inhibited from competing in the

marketplace. Id. at 951-52. On appeal, we agreed with the trial court’s

reasoning in justifying injunctive relief. Id. at 953.

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customer relationships and loss of potential business opportunities should

improper competition continue. The record set forth above supports a

conclusion that Seckel’s hiring of almost one-third of Centennial’s loan

officers resulted in an immeasurable loss of business opportunities and

market advantage.

We also note that irreparable harm will have resulted if Spadaccini’s

customer list is ultimately determined to be Centennial’s trade secret. 15

Under the PUTSA, a “trade secret” is defined to include a “customer list,”

provided it is subject to, among other conditions, efforts to “maintain its

secrecy.” 12 Pa.C.S. § 5302. Injunctive relief may issue if there is an actual

or threatened misappropriation of such a trade secret. Id. § 5303(a).

“Misappropriation” is defined as either “acquisition of a trade secret of

another by a person who knows or has reason to know that the trade secret

was acquired by improper means,” or “disclosure or use of a trade secret of

another without express or implied consent . . . .” Id. Notably, “use” is not

a required element of either definition. See id.; Synthes, Inc. v. Emerge

Med., Inc., 25 F. Supp. 3d 617, 712 (E.D. Pa. 2014). 16 The PUTSA’s

protection of trade secrets is a statutory mandate, and the Supreme Court

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15The trial court has not yet decided whether the list is a protected trade

secret and we therefore do not address that issue.

16“Although the decisions of federal courts are not binding on this Court, we

may rely on them for guidance.” Cresci Const. Servs., Inc. v. Martin, 64

A.3d 254, 258 n.7 (Pa. Super. 2013) (citation omitted).

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has held “that where the offending conduct sought to be restrained through

a preliminary injunction violates a statutory mandate, irreparable injury will

have been established.” SEIU Healthcare Pa. v. Commonwealth, 104

A.3d 495, 508 (Pa. 2014) (collecting cases).17

Our review of the record supports the trial court’s conclusion that

Seckel solicited Spadaccini, accessed her Centennial laptop to retrieve her

customer list, and e-mailed the list to Mr. Seckel. N.T., 2/4/16, at 120.18

Therefore, if Centennial can prove that Seckel’s acquisition of Spadaccini’s

customer list violates the PUTSA, the requirement of irreparable injury

____________________________________________

17 In support of this holding, the Supreme Court cited the following

authorities in SEIU:

Commonwealth v. Coward, 489 Pa. 327, 414 A.2d 91, 98–99

(1980) (holding that where a statute prescribes certain activity,

the court need only make a finding that the illegal activity

occurred to conclude that there was irreparable injury for

purposes of issuing a preliminary injunction); Pennsylvania

Public Utility Commission v. Israel, 356 Pa. 400, 52 A.2d

317, 321 (1947) (holding that when the Legislature declares

certain conduct to be unlawful, it is tantamount to calling it

injurious to the public, and to continue such unlawful conduct

constitutes irreparable injury for purposes of seeking injunctive

relief); Commonwealth ex rel. Corbett v. Snyder, 977 A.2d

28 (Pa. Cmwlth. 2009) (affirming issuance of a preliminary

injunction and finding that irreparable harm was presumed

where there was a credible violation of the state consumer

protection statute).

SEIU Healthcare Pa., 104 A.3d at 508.

18 We note a significant distinction between retrieving and saving the

customer list for Spadaccini’s own use and what was done here: e-mailing

the customer list to Mr. Seckel, who presumably had no prior knowledge of

Spadaccini’s customers.

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automatically will have been satisfied. SEIU Healthcare Pa., 104 A.3d at

594-95.

Likelihood of Success on Centennial’s Unfair Competition Claim

Seckel’s initial premise is that Centennial failed to establish that

Spadaccini’s customer list was confidential or a trade secret. Seckel’s Brief

at 17, 21. Furthermore, Seckel argues, Centennial had no enforceable

confidentiality agreement with its employees. Seckel concedes that

Spadaccini signed a confidentiality agreement over a year after Centennial

hired her, but insists that a lack of consideration renders that agreement

unenforceable. Id. at 21. Thus, it appears Seckel is arguing that no unfair

competition claim could lie when the information at issue is not protected by

a contract or other source of legal redress. Id. at 17, 20-21. Seckel

bolsters its argument by summarizing the trial court’s oral findings that it

was unclear to the court whether the information at issue was confidential.

Id. at 23-24.

Seckel argues that Centennial failed to demonstrate that it offered

Spadaccini a job solely for the purpose of obtaining Centennial’s customer

list. Seckel references Spadaccini’s own testimony that she — not Seckel —

wanted to bring the customer list and that Seckel did not hire her for the list.

Seckel’s Brief at 24-25. Spadaccini was not aware, according to Seckel,

whether she was subject to a confidentiality provision. Id. at 25. Seckel

argues that the record was unrebutted that it never asked any Centennial

employee that Seckel hired to take away Centennial documents and bring

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them to Seckel. Id. Seckel reiterates that Centennial has not established

that Seckel (1) was aware of any alleged wrongdoing by any Centennial

employee; (2) possessed or used any of Centennial’s allegedly confidential

information; and (3) hired Centennial’s employees for the purpose of

harming Centennial. Id. at 26. With respect to the last point, Seckel notes

that it had interviewed but declined to hire three of Centennial’s employees.

Id.19

In response, Centennial notes that it presented six claims against

Seckel, but that Seckel has limited its challenge to only the unfair

competition claim. Centennial’s Brief at 18. In Centennial’s view, Seckel

waived “[a]ny challenge to Centennial’s likelihood of success on any [of] the

five other claims that independently support the trial court’s injunction.”

Id.20 Further, Centennial maintains that the record established that Seckel

“[s]ystematically induced” 30% of Centennial’s employees to leave with the

____________________________________________

19 Seckel acknowledges that one of its ex-Centennial employees, Walsh,

exhibited hostility to Centennial over a pay dispute. But, citing to mid-trial

commentary by the trial court (see N.T., 2/4/16, at 165-66), Seckel asserts

that the trial court found that Walsh was arguing about a “personal matter”

between Centennial and Walsh and that it would be a “stretch” to impute

Walsh’s actions to Seckel. Seckel’s Brief at 26-27. We note that we are

bound by the trial court’s order and decision setting forth its reasoning, but

not by commentary made before the parties completed and rested their

cases.

20 In reply, Seckel contends that the trial court’s opinion “does not explicitly

state to which causes of action the court’s order was directed.” Seckel’s

Reply Brief at 1. Seckel maintains that after a review of the transcript, “it is

apparent” that the “court’s finding of likelihood of success” was limited only

to Centennial’s unfair competition claim. Id. at 2.

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purpose of crippling or destroying Centennial. Id. at 18-19. Centennial

highlights Seckel’s improper pursuit of Spadaccini and access of her

Centennial laptop to obtain information that Centennial insists qualifies for

trade secret status. Id. at 19, 22.

As set forth above, a court should issue a preliminary injunction only if

the moving party has established, among other things, a prima facie right to

relief. Synthes USA Sales, 83 A.3d at 249-50. The Court in Synthes

explained:

To establish a reasonable probability of success on the merits,

the moving party must produce sufficient evidence to satisfy the

essential elements of the underlying cause of action. Whether

success is likely requires examination of legal principles

controlling the claim and potential defenses available to the

opposing party. The mere possibility that the claim might be

defeated does not preclude a finding of probable success if the

evidence clearly satisfies the essential prerequisites of the cause

of action.

Id. at 250 n.4 (citation omitted).

Initially, we note that a common law unfair competition claim is

relatively broad in scope and is not limited to the misappropriation of trade

secrets. Pennsylvania State Univ. v. Univ. Orthopedics, Ltd., 706 A.2d

863, 867 (Pa. Super. 1998) (“A claim of unfair competition encompasses

trademark infringement, but also includes a broader range of unfair

practices, which may generally be described as a misappropriation of the

skill, expenditures and labor of another” (citation omitted)). In Reading

Radio, Inc. v. Fink, 833 A.2d 199 (Pa. Super. 2003), appeal denied, 847

A.2d 1287 (Pa. 2004), this Court explained:

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Offering employment to another company’s at-will employee is

not actionable in and of itself. However, systematically inducing

employees to leave their present employment is actionable when

the purpose of such enticement is to cripple and destroy an

integral part of a competitive business organization rather than

to obtain the services of particularly gifted or skilled employees.

Further, when the inducement is made for the purpose of having

the employees commit wrongs, such as disclosing their former

employer’s trade secrets or enticing away his customers, the

injured employer is entitled to protection.

Id. at 212 (citations and quotation marks omitted) (affirming jury verdict

finding defendant liable for, among other claims, unfair competition).

“[W]hen a company hires essentially all of the sales/marketing staff of one

agency, the purpose in doing so is to induce the clients of that agency to

move their business with that sales force.” B.G. Balmer & Co. v. Frank

Crystal & Co., Inc., 148 A.3d 454, 466, 472 (Pa. Super. 2016) (affirming

award of punitive damages following plaintiff’s successful verdict on, among

other claims, unfair competition), appeal denied, 2017 WL 1015542 (Pa.

Mar. 4, 2017).

Seckel’s first argument — that the contested information is not a

protectable trade secret — assumes that an unfair competition claim is

limited in scope. But to succeed on an unfair competition claim, Centennial

was not limited to demonstrating that Spadaccini’s customer list was

confidential or a trade secret. See Reading Radio, 833 A.2d at 212.

Similarly, it was unnecessary for Centennial to establish that Seckel had the

intent of hiring Spadaccini for the customer list. See id. Centennial, as

Seckel recognized in its brief, Seckel’s Brief at 26, could succeed in its unfair

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competition claim by establishing that Seckel hired Centennial’s employees

with the intent of harming Centennial.

Recognizing our highly deferential standard of review, WMI Grp., 109

A.3d at 747-48, the record supports the trial court’s issuance of a

preliminary injunction. As noted above, Seckel acknowledged hiring one of

Centennial’s loan processors and six out of Centennial’s twenty-two loan

officers, or almost 30%. N.T, 2/4/16, at 26, 131. Of those six, Mr. Seckel

personally recruited two, and he reached out to other Centennial employees.

Id. at 125-26. Seckel also hired two former Centennial loan officers after

they were “let go.” Id. at 49, 131.

The record also reflects that Walsh, formerly a Centennial loan officer

and now a vice-president at Seckel, e-mailed threats to the president of

Centennial from his personal account. N.T., 2/4/16, at 64-65, 68. Walsh

said he would destroy Centennial unless he was paid what he believed he

was owed. Centennial’s Ex. 59; R.R. at 964a. Walsh also posted a similar

threat on his Facebook page. Centennial’s Ex. 60; R.R. at 966a. Although

the court had questioned whether Walsh’s actions could be imputed to

Seckel, N.T., 2/4/16, at 166, its opinion cited the personal threat as a basis

for injunctive relief. Trial Ct. Op. at 2.

Taking all of this evidence together, the record substantiates the trial

court’s determination that injunctive relief was warranted because

Centennial demonstrated a likelihood of success on its unfair competition

claim. Although Seckel did not hire three of Centennial’s employees, its

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hiring of almost 30% of Centennial’s loan officers, in conjunction with the

threat to destroy Centennial, is sufficient to establish that a purpose of hiring

Centennial’s employees was to cripple and destroy Centennial. See Reading

Radio, 833 A.2d at 212.21 Because Centennial has established a likelihood

of success on this claim, we need not examine whether Centennial could

similarly succeed at trial on the other five claims.

The Trial Court’s Failure To Require an Injunction Bond

Although our review of an order granting preliminary injunctive relief is

highly deferential, WMI Grp., 109 A.3d at 747-48, the trial court must still

comply with the applicable rules of law in entering the injunction. Whether

the trial court properly complied with a Rule of Civil Procedure is a question

of law. See Sahutsky v. H.H. Knoebel Sons, 782 A.2d 996, 998 (Pa.

2001).

For its last issue, Seckel asserts that Pennsylvania Rule of Civil

Procedure 1531(b) required that Centennial post a bond before an injunction

could be entered. Seckel notes that the trial court’s order failed to provide

for the posting of security and argues that “an appellate court must

invalidate a preliminary injunction if a bond is not filed by the plaintiff.”

Seckel’s Brief at 27 (citing Berger v. W. Jefferson Hill Sch. Dist., 669

A.2d 1084, 1086 (Pa. Cmwlth. 1995) (citing Christo v. Tuscany Inc., 454

____________________________________________

21Of course, the fact-finder may reach different conclusions following a final

hearing.

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A.2d 1042, 1044 (Pa. Super. 1982)), appeal denied, 677 A.2d 840 (Pa.

1996)).

Centennial concedes that a bond was not posted, but asserts that the

bond’s absence does not require this Court to vacate the injunction.

Centennial’s Brief at 23. Centennial posits that when issuance of an

injunction is proper, an appropriate remedy is to remand for the sole

purpose of setting a bond. Id. at 24 (citing Walter v. Stacy, 837 A.2d

1205, 1210 (Pa. Super. 2003)). Centennial does not object to posting a

reasonable bond but suggests the issue would be moot if it again filed, and

the court now granted, a motion to set bond. As the trial court did not order

a Pa.R.A.P. 1925(b) statement, the court did not address the issue of the

bond in its Rule 1925(a) opinion.

As a prefatory matter, because Centennial filed, but the court denied

without prejudice, a motion to set a bond, Order, 6/22/17, this issue is not

moot and is properly before us for disposition. The applicable rule is

Pa.R.C.P. 1531(b), which provides that —

[A] preliminary or special injunction shall be granted only if

(1) the plaintiff files a bond in an amount fixed and with

security approved by the court, naming the Commonwealth

as obligee, conditioned that if the injunction is dissolved

because improperly granted or for failure to hold a hearing,

the plaintiff shall pay to any person injured all damages

sustained by reason of granting the injunction and all legally

taxable costs and fees[.]

Pa.R.C.P. 1531(b)(1) (emphasis added).

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In Walter, the trial court issued a preliminary injunction but refused

to order a bond. Walter, 837 A.2d at 1208. This Court held that —

The bond “requirement is mandatory and an appellate court

must invalidate a preliminary injunction if a bond is not filed by

the plaintiff.” Soja v. Factoryville Sportsmen’s Club, 361 Pa.

Super. 473, 522 A.2d 1129, 1131 (1987) (emphasis supplied).

“Even if the trial court’s order was otherwise proper, its failure to

require the posting of a bond mandate[s] our reversal of its

decision.” Id.

Id. The Court concluded —

[W]e have no choice but to vacate the order of the trial court

due to its failure to require a bond. We note however, that

although the court’s failure in this regard renders the injunction

null, the error may be cured by the re-issuance of the

preliminary injunction if the order includes the requirement of a

bond.

Id. (footnote omitted). Similarly, in Christo, because the trial court erred

in not imposing a bond, we vacated the injunction and remanded to have the

court and plaintiffs comply with Rule 1531(b). Christo, 454 A.2d at 1044.

Here, notwithstanding both parties’ agreement that the trial court

must require a bond, the trial court declined to impose that requirement.

The court did not explain its reasoning, but its decision was erroneous. See

Pa.R.C.P. 1531(b); Walter, 837 A.2d at 1208; Christo, 454 A.2d at 1044.

The trial court failed to comply with the plain language of 1531(b), which

mandates a bond. See Sahutsky, 782 A.2d at 998. Therefore, we are

constrained to vacate the injunctive order and remand with instructions to

reissue the injunction with a bond.

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Order vacated. Matter remanded with instructions. Jurisdiction

relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.

Prothonotary

Date: 10/26/2017

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