As Reported in the Macomb Daily Newspaper (Mt. Clemens, MI)
Retired auto dealer awarded $3 million on violation of non-compete by his daughter.
This case demonstrates the presumption of validity of non-compete agreements or non competition agrements in Michigan and that juries are willing to enforce and have potential to generate large verdicts.
A jury ordered the daughter of the founder of the now defunct Jerome Duncan Ford auto dealership to pay her father slightly more than $3 million, mainly for opening three competing auto dealerships.
The jury reached a verdict in the nearly two-week long civil trial in Macomb County Circuit Court that pitted Richard Duncan against his daughter, Gail, and her husband, Shashi "S.K." Tejpaul. The pair operated Jerome Duncan over its last five years before filing for bankruptcy in 2005, and opened three other dealerships.
The jury of seven men and one woman told Gail Duncan to pay $3 million for violating a no-compete clause that she signed in a contract with her father in 1993 when she took over majority control of Jerome Duncan. In the early 2000s, as president of the dealership she bought two Mazda dealerships - one across the street from Jerome Duncan and one in Woodhaven - and a former Mel Farr Hyundai/Kia dealership.The dealership went bankrupt after Ford Motor Credit discovered the dealership had sold $5.4 million worth of cars it didn't pay for, called "selling out of trust." Gail Duncan insisted that she could have saved the dealership if given time.
The entire award is against Gail Duncan as the jury released Tejpaul from any claim.
The bulk of the award was for violating the 1993 written non-compete contract, along with the small amount for shareholder oppression.
The verdict demonstrates that in Michigan juries are willing to recognize and enforce a valid non-compete agreement even between father and daughter and award substantial damages.
The verdict reinforces the benefit for Michigan employers to have reasonable non-compete agreements and Michigan employees to analyze non-compete agreements or consulting a qualified non-compete attorney before signing a non-compete agreement.