Ex-exec loses noncompete appeal, must pay company’s appellate fees

A former co-owner of a Fort Wayne mechanical contracting business who violated noncompete agreements by consulting for a Fishers competitor after he was fired lost his appeal Thursday and was ordered to pay more of his former employer’s legal fees.

Wayne Zollinger worked for various Wagner Meinert Engineering entities since 1996, eventually becoming a vice president and co-owner. In 2011, a new entity called Wagner-Meinert LLC bought the assets and business of Wagner-Meinter Inc., earning Zollinger a pro rata share of more than $1.8 million. At the same time, he became vice president of operations for the new entity and paid $324,000 for a 3.6% stake in the company.

In doing so, Zollinger signed noncompete agreements that restricted his ability to work for a competitor in his business area for 42 months after his termination. In 2015, Zollinger profited on his shares by more than $1 million when he and other members were bought out by WME’s majority owners. Zollinger remained a member of the board under the new arrangement until he was terminated in 2018 for submitting false expense reports.

Afterward, the company notified Zollinger, reminding him of his noncompete restrictions. After Zollinger informed the company he needed to work in his business area for a few more years, WME first sued seeking a declaratory judgment asking the Allen Superior Court to declare the noncompete agreement enforceable and applicable, which the court did, ordering Zollinger to comply.

A few weeks later, WME amended its complaint to add a breach of contract claim after learning Zollinger did consulting work for a competitor, Freije-RSC Engineered Solutions of Fishers. After the court awarded summary judgment to WME on some issues, it concluded after a bench trial that Zollinger’s work with Freije violated the terms of his noncompete that remained in force after his termination with WME. The court awarded no damages to WME but ordered Zollinger to comply with the noncompete and pay WME $38,657 in legal fees.

Zollinger appealed, but he now will owe his former company more in legal fees after the Indiana Court of Appeals affirmed the trial court Thursday.

“WME contends that it is also entitled to an award of appellate attorney’s fees,” Judge Nancy Vaidik wrote for the panel. “We agree. … Zollinger’s only response to WME’s request for fees is that the restrictions in the Operating Agreement are not enforceable and that, even if they are, he did not violate them. Because we have rejected those arguments, WME is entitled to an award of reasonable appellate attorney’s fees, and we remand to the trial court for a determination of the appropriate award.”

The panel otherwise affirmed the trial court in all respects.

The case is Wayne Doug Zollinger v. Wagner-Meinert Engineering, LLC, 19A-PL-1501.