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First Financial Bank, National Association v. Williams

United States District Court, W.D. Kentucky, Paducah Division

October 2, 2019

FIRST FINANCIAL BANK, NATIONAL ASSOCIATION, PLAINTIFF
v.
TIMOTHY N. WILLIAMS, DEFENDANT

          MEMORANDUM OPINION AND ORDER

          Thomas B. Russell, Senior United States District Judge.

         This matter is before the Court on Plaintiff First Financial Bank's (“First Financial”) Motion for a Temporary Restraining Order and Preliminary Injunction. [DN 4.] Defendant Timothy Williams (“Williams”) responded, [DN 16], and First Financial replied, [DN 18.] Fully briefed, this matter is now ripe for adjudication. For the reasons stated herein, Plaintiff's motion for a Temporary Restraining Order is GRANTED.

         I. BACKGROUND

         This action arises out of Defendant Williams's former employment with First Financial. Williams was Vice President of Mortgage Services for Heritage Bank from October 2013 until July 22, 2019. [DN 4-2 at 3.] Heritage Bank maintained its headquarters in Hopkinsville, Kentucky and operated in locations throughout Southwest Kentucky and Northern Tennessee. [DN 4-2 at 32.] Heritage Bank merged into First Financial on July 27, 2019. [Id. at 9.]

         In January 2017, Williams entered into an Employment Agreement (“Agreement”) with Heritage Bank. [Id. at 3.] The Agreement restricts Williams from: (1) working for or with a competitor for one year after termination that is located in a city Heritage maintains a branch or within 50 miles; (2) soliciting employees or clients of Heritage for one year; and (3) disclosing confidential information of Heritage. [DN 4-2 at 3-4.] First Financial alleges Williams planned secret meetings with employees of Heritage Bank and encouraged them to remove confidential business information in violation of the Agreement. [Id. at 7-8.] Heritage Bank terminated Williams who began working for First Advantage. [Id. at 9.] First Financial also asserts Williams is in violation of the non-compete provision in the Agreement by working for First Advantage. [DN 4-1 at 12.] First Financial initiated this suit against Williams on September 5, 2019 in Christian County Circuit Court. [Id. at 41.] Williams then properly removed to this Court. [DN 1.]

         II. LEGAL STANDARD

         To determine whether a preliminary injunction should issue under Federal Rule of Civil Procedure 65(a), the Court weighs four factors: “(1) whether the movant has a strong likelihood of success on the merits, (2) whether the movant would suffer irreparable injury absent a stay, (3) whether granting the stay would cause substantial harm to others, and (4) whether the public interest would be served by granting the stay.” Ne. Ohio Coal. for Homeless & Serv. Employees Int'l Union, Local 1199 v. Blackwell, 467 F.3d 999, 1009 (6th Cir. 2006). “These factors are not prerequisites that must be met but are interrelated considerations that must be balanced together.” Mich. Coal. of Radioactive Material Users, Inc. v. Griepentrog, 945 F.2d 150, 153 (6th Cir. 1991). “For example, the probability of success that must be demonstrated is inversely proportional to the amount of irreparable injury the movants will suffer absent the stay.” Blackwell, 467 F.3d at 1009. The party seeking the preliminary injunction bears the burden of justifying such relief. McNeilly v. Land, 684 F.3d 611, 615 (6th Cir. 2012) (citing Granny Goose Foods, Inc. v. Bhd. of Teamsters & Auto Truck Drivers Local No. 70, 415 U.S. 423, 441 (1974)).

         III. DISCUSSION

         1. Enforceability of the Agreement

         First Financial and Williams both assert rights found in the Agreement between Williams and First Financial. The Court must first determine whether this agreement is enforceable. First Financial states the Agreement is enforceable under Kentucky law. Williams does not argue this point. Covenants not to compete that involve professional services will be enforced unless “very serious inequities would result.” Lareau v. O'Nan, 355 S.W.2d 679, 681 (Ky. 1962). The Court agrees with First Financial that it obtained the ability to enforce such covenants after the merger of Heritage bank into First Financial. Again, Williams does not dispute this point.

         The Court must also determine whether the provisions First Financial seeks to enforce are reasonable. The Agreement restricts Williams from competing with First Financial in any county it maintains a branch and within 50 miles of such counties, and from soliciting First Financial's employees and customers. These restrictions were agreed to be in place for one year after termination of employment.

         First Financial has cited Kentucky authority that has consistently upheld similar restrictions. The Court agrees that the restrictions found in this Agreement are in line with those held to be reasonable. See Higdon Food Service v. Walker, 641 S.W.2d 750 (Ky. 1982); Central Adjustment Bureau, Inc. v. Ingram Associates, Inc., 622 S.W.2d 681, 686 (Ky. App. 1981). Considering Williams' position within First Financial, and the restrictions agreed to, the Court finds that the restrictions are not unduly burdensome and reasonably protect First Financial's interests. See Ceresia v. Mitchell, 242 S.W.2d 359, 364 (Ky. App. 1951).

         2. Temporary Restraining Order

         A. Whether the Movant Has a Strong Likelihood of Success on the Merits

         “Although no single factor is controlling when determining whether a preliminary injunction should issue, the likelihood of success on the merits is often the predominant consideration.” Pacheco v. Waldrop, 2013 U.S. Dist. LEXIS 81593 *14 (W.D. Ky. June 10, 2013). The Court will give great consideration to this factor. Williams argues that there is no likelihood of success on the merits because the Agreement is no longer enforceable. A finding that there is no likelihood of success on the merits is usually fatal. See Michigan State v. Miller, 103 F.3d 1240, 1249 (6th Cir. 1997).

         Williams specifically asserts that the Agreement is unenforceable because he invoked Section 10 of the Agreement. Section 10 of the Agreement gives Williams the right to “immediately terminate this Agreement free of the obligations imposed by paragraph 7 and 8 herein in the event of a “Change of Control” of Heritage”. The Agreement also allowed this option to be “exercised at any time by Employee after the effective date of a Change of Control.” Williams ...


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