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CONTRACTS 14: Disclosure of confidential information to spouse violated the confidentiality agreement.

Plaintiff, defendant’s former employer, filed a complaint alleging, that defendant breached the parties’ Confidentiality Agreement. Specifically, plaintiff alleged that around the time defendant resigned from his position, he misappropriated confidential information by sending it to his own personal computer. It was undisputed that defendant had sent sensitive information to his home computer and to his wife’s personal email address.

Confidential Information

The Confidentiality Agreement provided that Confidential Information includes any and all information related to the business of the Company or its customers, including but not limited to information concerning pricing, customers, products, processes, designs, materials, specifications, research, development, customer contacts, procedures, forms, marketing and sales strategies, etc. Confidential Information includes information that is in existence as of the date of this Agreement, and includes information that is prepared, created or developed by Employee or any other person or entity after the date of this Agreement.

Remedies

The Confidentiality Agreement that an employee acknowledges that any breach of the terms of this Agreement by Employee will cause irreparable damage to the Company and that money damages would not be sufficient to provide a fully adequate remedy for such a breach. Therefore, in the event of a breach or threatened breach of any term of this Agreement, the Company will be entitled to temporary, preliminary and permanent injunctive relief without any requirement of bond, in addition to any other legal or equitable remedies to which the Company may be entitled. . . . Employee shall be responsible to pay for the actual costs and attorney fees incurred by the Company in the enforcement of this Agreement.

Under paragraph 8 of the Confidentiality Agreement, plaintiff also sought attorney fees and other actual costs necessitated by its enforcement of the Confidentiality Agreement.

Breach of Contract

Defendant argues that plaintiff did not prove that it sustained any damages as a result of the disclosure and defendant argues that it is against public policy for a disclosure to a spouse to constitute a breach of his Confidentiality Agreement.

A party asserting a breach of contract must establish by a preponderance of the evidence that (1) there was a contract (2) which the other party breached (3) thereby resulting in damages to the party claiming breach.

In this case, where a breach occurs but does not cause any quantifiable harm, a plaintiff becomes entitled at least to nominal damages on account of the defendant’s breach

Trial

The trial court determined that defendant’s disclosure of confidential information to his spouse violated the terms of the Confidentiality Agreement. Although spousal privilege bars a husband or wife from testifying against his or her spouse without that spouse’s consent, MCL 600.2162, Defendant does not cite any legal basis for why that spousal privilege should be extended here.

At the end of the three-day trial, the trial court found in favor of plaintiff. The trial court found that plaintiff was entitled to (1) a permanent injunction prohibiting any further dissemination of confidential information; (2) nominal damages; and (3) as a matter of contract, the actual costs and attorney fees incurred. The trial court order awarded plaintiff $254,657.50 in attorney fees, $345.70 in taxable costs, and interest on the award.

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