Tecspec LLC v. Donnolo

Background

Tecspec LLC and individual plaintiffs Richard Rose, Robert Senia, and Ralph Schlenker sued Michael Donnolo, Joshua Donnolo, John Michael Long, and four Braya entities. The complaint asserted claims under the federal Defend Trade Secrets Act and New York law for breach of contract and fiduciary duties, corporate waste and mismanagement, unjust enrichment, conversion, tortious interference, and unlawful competition.

The plaintiffs sought a preliminary injunction—a temporary court order issued before final judgment. They asked the court to restrict the defendants’ competition with Tecspec, prohibit possession or use of Tecspec’s confidential information and trade secrets, and require disclosure of operational information and return of physical property.

Tecspec’s operating agreement required each member, while a member and for four years after transferring the member’s entire interest, not to engage in competing business in any county where Tecspec was doing or had done business. Michael Donnolo formed Braya in 2023, and Braya manufactures and sells HVAC units. The plaintiffs alleged that Braya competed with Tecspec on projects at 730 Third Avenue and 200 Park Avenue.

Ruling on Michael Donnolo’s Competition

The court concluded that the plaintiffs were likely to succeed on their breach-of-contract claim against Michael Donnolo. It interpreted “business” in the noncompetition provision to mean business dealings or transactions, rather than only a business entity’s location. Because Tecspec had conducted business in New York County and Braya had sold HVAC units to customers there, the court found that Michael Donnolo was likely violating the agreement by conducting competing business activities in that county.

The court also found irreparable harm, meaning harm that money damages would not adequately repair, from the possible loss of customer relationships and goodwill. It determined that the balance of hardships and the public interest favored a limited injunction.

The court did not prohibit Michael Donnolo from participating in or owning a competing business entity as such. The operating agreement allowed members to engage in other business ventures, including ownership of a similar business, so long as the member did not conduct competing business in counties covered by the noncompetition provision. The court also did not separately enjoin Braya, which it treated as a distinct legal entity not bound by Michael Donnolo’s personal agreement.

Other Requested Relief

The court denied the requested injunction against Joshua Donnolo and John Michael Long because they were no longer Tecspec employees and the plaintiffs had not shown an actual and imminent future injury from their alleged past conduct. The court did not decide whether the plaintiffs were likely to succeed on the merits of those claims.

The court also denied an injunction concerning alleged trade-secret violations. It rejected a general presumption that trade-secret misuse causes irreparable harm and found that the alleged use of Tecspec’s secrets for profit could be remedied with money damages because the plaintiffs had not shown that the information had been disseminated to a wider audience or permanently lost.

Finally, the court denied the request requiring defendants to disclose operational information and return physical property. It found that the operational know-how described by the plaintiffs was not a specific, identifiable item of property that could support their conversion claim. The parties also disputed ownership of the physical items, and the plaintiffs had not shown a clear or substantial likelihood of success or irreparable harm concerning those items.

Disposition

Judge Jennifer H. Rearden granted the plaintiffs’ preliminary-injunction motion in part and denied it in part. Pending resolution of the case, Michael Donnolo is enjoined from directly or indirectly engaging in, carrying on, or being connected with or interested in business activities involving the manufacture of HVAC units for projects located in any county where Tecspec is doing business, including New York County. All other requested preliminary relief was denied. The opinion did not reach a separate preliminary-injunction motion filed by the defendants on their counterclaims.