General Automotive Manufacturing Co. v. Singer

Singer (defendant), was formerly employed at General Automotive Manufacturing Co. (Automotive) (plaintiff), holding the title of general manager of operations. When he was hired, Singer executed an employment contract with Automotive which provided for a base salary plus 3% commission of Automotive’s gross sales. The contract prohibited Singer from engaging in other employment and/or disclosing company information that would personally benefit Singer or harm Automotive’s business. During his term of employment, Singer attracted a substantial number of orders that could have been offered to Automotive. But, Singer decided that Automotive lacked the necessary facilities to fill those orders at a competitive price. Singer then secretly took the orders himself, contracted with a rival machine shop to do the work, and kept the difference between the price he quoted and the amount he paid the machine shop. Singer later set up his own manufacturer’s consulting business, brokering orders for the same types of products Automotive manufactured. Singer remained an employee of Automotive while running his enterprise, without telling Automotive anything about his side business. Automotive eventually found out about Singer’s venture and sued him for breach of contract and violation of the fiduciary duty he owed to Automotive. The trial court found that Singer had breached his contract and fiduciary duty by running a business that directly competed with Automotive while remaining Automotive’s employee. The trial court ordered Singer to pay Automotive an amount equal to the profit he made from his side business.