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Where two plaintiffs who signed employment agreements that contained non-solicitation and non-competition clauses, the plaintiffs are not entitled to summary disposition on a counterclaim, as the counterclaim sets forth a claim for breach of contract based upon an assignment of the employment agreements.
“The background between the parties is not disputed. Orchard Laboratories, Corp. (‘Orchard’) owned and operated a clinical laboratory in West Bloomfield, Michigan. Plaintiff, Stephen Taylor (‘Taylor’) was an Account Executive for Orchard beginning in October 2023. Leonard Salvaggio (‘Salvaggio’) was the Director of Sales & Marketing for Orchard beginning in November 2023. Taylor and Salvaggio signed Employment Agreements with Orchard. Both Agreements contain non-solicitation and non-competition clauses lasting for two years from the date of termination of employment.
“The parties disagree as to what transpired in February 2025. Defendants allege that Alpha Medical Laboratory LLC, d/b/a ODX Health (‘ODX’) acquired substantially all of Orchard’s Assets and began operating and managing the Lab (Defendants’ Exhibit C). Defendants further allege that Orchard assigned the Plaintiffs’ Employment Agreements as part of the acquisition (Defendants’ Exhibit C, Schedule A). Defendants argue that Plaintiffs were fully aware of the acquisition and transition to a new entity. Defendants further argue that Plaintiffs received business cards and paychecks from the new entity.
“Plaintiffs argue that Orchard shut down due to regulatory, litigation and financial problems, sold its assets to a new lab (ODX), and concealed the sale from Plaintiffs. Plaintiffs argue that they have no contract with ODX and that they never signed the required employment documents, such as a W-9. Finally, Plaintiffs argue that Orchard Labs told them the transition was a ‘rebranding.’
“ODX filed a Counterclaim alleging that Plaintiffs Taylor, Salvaggio, and Defendant Chris Agozino created a company while still employed with ODX and operated that company while still employed with ODX, including soliciting ODX’s clients and employees. ODX brought its Counterclaim for Breach of Contract (Count I), Tortious Interference with Contract (Count II), Tortious Interference with Business Relationships/Expectancies (Count III), Breach of Fiduciary Duty and Duty of Loyalty (Count IV), Conspiracy and Concert of Action (Count V), Inducement of Breach of Fiduciary Duty (Count VI), Common Law Unfair Competition (Count VII) and Unjust Enrichment (Count VIII).
“Plaintiffs argue that the assignment of the Employment Agreements is not valid, but this is a defense to the claims made. The facts alleged in the Counterclaim support a valid breach of contract action.
“Plaintiffs’ arguments as to whether the covenant is reasonable are not proper under (C)(8). Because the Counterclaim sets forth a claim for breach of contract based upon the Assignment of Employment Agreements, summary disposition is not warranted.
“Defendants have alleged that the individual Defendants were senior level management, which could create duties to the corporation.
“Under MCR 2.116(C)(8), Defendants have stated a claim for breach of fiduciary duty.
“Civil conspiracy is an actionable claim in Michigan. … Under MCR 2.116(C)(8), Defendants have stated facts sufficient to support this claim.
“Plaintiffs argue that Defendants failed to plead that the public was actually deceived and therefore, cannot claim unfair competition. However, evidence to prove the claims is not required in a Complaint, nor is it required under (C)(8). Plaintiffs ignore the allegations contained within paragraphs 56-47 of the Counterclaim, as well as other allegations that, when taken together, may support an unfair competition claim, when viewed in the light required under (C)(8).”
