– Vinculum, Inc. v. Goli Techs., LLC, 2024 Pa. LEXIS 238, 2024 WL 697165 (February 21, 2024) (Brobson, J.).
In this discretionary matter, we must decide whether Appellant Vinculum, Inc. (Vinculum) is entitled to recover attorney fees and lost-profit damages purportedly extending beyond a one-year, non-compete period that flowed from Goli Technologies, LLC’s (Goli LLC) breach of a consulting agreement (Consulting Agreement). After a bench trial, the Court of Common Pleas of Bucks County (trial court) rejected Vinculum’s attempts to obtain both attorney fees and lost-profit damages, reasoning that attorney fees were inappropriate based on the nature of the case and that Vinculum was not entitled to damages beyond the scope of the one-year, non-compete period set forth in the Consulting Agreement. The Superior Court affirmed the trial court’s decision, agreeing with its rationale on both issues.
For the reasons that follow, we reverse the Superior Court’s decision affirming the trial court’s denial of attorney fees and remand to the Superior Court with instructions to vacate the trial court’s judgment and remand to the trial court for a hearing solely on the issue of attorney fees. At the hearing, the trial court should provide Vinculum with the opportunity to introduce evidence of the attorney fees that it incurred as a consequence of Goli LLC’s breach of the Consulting Agreement. The trial court may consider the reasonableness of the amount of the attorney fees sought in light of the specific facts of this case but must render some award in Vinculum’s favor. As to lost-profit damages incurred beyond the one-year, non-compete period set forth in the Consulting Agreement, we conclude that the Superior Court erred insofar as it imposed an absolute bar on the award of damages incurred after the non-compete period expired. Nonetheless, because we also conclude that Vinculum did not establish at trial that it suffered lost-profit damages extending beyond the non-compete period, we affirm the Superior Court’s decision to affirm the trial court’s denial of lost-profit damages on alternative grounds.
The attorney fee provision set forth in the Consulting Agreement is subject to only one reasonable interpretation: Goli LLC agreed to pay Vinculum its reasonable attorney fees incurred in enforcing the non-compete provision against Goli LLC. Goli LLC breached the Consulting Agreement on two occasions during the one-year, non-compete period by openly competing with Vinculum, prompting Vinculum to pursue legal action against Goli LLC that resulted in an award of $32,145 in damages in favor of Vinculum—i.e., Vinculum successfully enforced the non-compete provision against Goli LLC. Because the attorney fee provision is entirely one-sided in favor of Vinculum, Vinculum is entitled to a reasonable amount of attorney fees regardless of whether Goli LLC succeeded on its counterclaims. The prevailing party paradigm simply does not apply. In other words, the plain and unambiguous language of the Consulting Agreement does not require Vinculum to be a prevailing party to entitle Vinculum to a reasonable award of attorney fees; it only requires that Vinculum be successful in enforcing the non-compete provision of the Consulting Agreement against Goli LLC, which Vinculum clearly accomplished.
In short, contrary to Vinculum’s protestations, the trial court clearly afforded Vinculum the opportunity to demonstrate why it was entitled to lost-profit damages beyond the scope of the one-year, non-compete period set forth in the Consulting Agreement due to Goli LLC’s breach and subsequent competition, but Vinculum failed to do so. Instead, the record is clear that the damages Vinculum sought to obtain were highly speculative, if not nonexistent. While we agree that restrictive covenants are important business tools to prevent the theft of customers and unfair competition, Rullex Co., LLC v. Tel-Stream, Inc., 659 Pa. 446, 232 A.3d 620, 624 (Pa. 2020), it is equally manifest that “[t]he law does not permit a damages award to be based on mere guesswork or speculation.” Helpin, 10 A.3d at 270. As such, we conclude that the trial court did not abuse its discretion in sustaining Goli LLC’s counsel’s objections to Vinculum’s counsel’s questioning at trial concerning the consultants that Goli LLC placed at PennDOT after the expiration of the non-compete period and the profits it earned from doing so, and, therefore, the Superior Court properly affirmed the trial court’s decision relative to lost-profit damages, albeit for different reasons.
We reverse the Superior Court’s decision affirming the trial court’s denial of attorney fees and remand to the Superior Court with instructions to vacate the trial court’s judgment and remand to the trial court for the trial court to hold a hearing solely on the issue of attorney fees. At the hearing, the trial court should provide Vinculum with the opportunity to introduce evidence of the attorney fees that it incurred as a consequence of Goli LLC’s breach of the Consulting Agreement. If the evidence is properly admitted over any objections that Goli LLC may make, the trial court may consider the reasonableness of the attorney fees in light of the specific facts of the case and render some award in Vinculum’s favor. As to lost-profit damages beyond the one-year, non-compete period set forth in the Consulting Agreement, we conclude that the Superior Court erred insofar as it imposed an absolute bar on the award of damages after the non-compete period expired. Nonetheless, because we conclude that Vinculum did not establish at trial that it suffered lost-profit damages extending beyond the non-compete period, we affirm the Superior Court’s decision affirming the trial court’s denial of lost-profit damages on alternative grounds.
