May 14, 2025|Franchise Frontlines
May 14, 2025 | Superior Court of Pennsylvania | Unpublished Opinion
Executive Summary
In Property Damage Restoration 2, Inc. v. KD Disaster Cleanup, LLC, 2025 WL 1393957 (Pa. Super. Ct. May 14, 2025), the Superior Court of Pennsylvania affirmed a preliminary injunction partially enforcing a SERVPRO employee’s non-compete agreement following the sale of two SERVPRO franchise locations. The employee argued the agreement lacked consideration, the geographic scope could not be rewritten to cover Pennsylvania counties, and no irreparable harm had been shown. The court found otherwise, emphasizing that the trial judge reasonably concluded the non-compete was a condition of employment despite being signed several weeks after onboarding, that the geographic scope could be reformed to reflect the actual franchise territory, and that evidence of diverted customer calls, misappropriated bids, and misuse of SERVPRO’s long-used phone number supported a finding of irreparable harm.
Relevant Background
The dispute began after Property Damage Restoration 2, Inc. (“PDR 2”) purchased the SERVPRO of Southern Delaware County and SERVPRO of West Chester franchises. According to the allegations, the day after closing, PDR 2’s owner met with employees of the former franchisee and distributed new-hire packets that included a non-competition agreement. One of those employees, Danielle Hagerty Mortimer, had worked for the seller for more than four years and continued in her role with PDR 2. She ultimately signed the non-compete on January 16, 2023, during her first payroll period.
The non-compete prohibited competition in Gloucester, Camden, and Burlington Counties in New Jersey, and within a 50-mile radius, and also restricted solicitation of customers, disclosure of customer information, and inducement of employees. The agreement contained language stating that any violation would cause “irreparable harm,” that the restrictions were reasonable, and that unenforceable provisions would automatically be modified to remain enforceable. The first page identified her employer as “SERVPRO of Southern Delaware County & SERVPRO of West Chester,” though language referencing “Employer’s License agreement in the State of New Jersey” was left in place.
Mortimer resigned in March 2023. PDR 2 alleged she had formed Restore More Restoration, LLC while still employed, solicited SERVPRO customers, continued using a cell phone number that had been marketed as SERVPRO’s for five years, and took files, bids, and customer information belonging to PDR 2. The company claimed customers mistakenly believed they were calling SERVPRO when they reached Mortimer and that she diverted opportunities to her new business. The trial court entered a preliminary injunction barring competition in Delaware and Chester Counties. Mortimer appealed.
Decision
The Superior Court affirmed.
On the issue of consideration, Mortimer argued the non-compete was unenforceable under Socko v. Mid-Atl. Sys. of CPA, 126 A.3d 1266 (Pa. 2015), because she did not receive new consideration when she signed it weeks after starting work. The appellate court disagreed. It held there were “reasonable grounds” for the trial court to find the agreement was part of the “taking of employment,” citing Rullex Co., LLC v. Tel-Stream, Inc., 232 A.3d 620 (Pa. 2020). The court noted that PDR 2’s owner testified he handed out or placed new-hire packets on employees’ desks on December 30 and told them he “needed [them] to fill it out,” and that he was “a hundred percent positive” Mortimer received “all three pages” that day. Property Damage Restoration 2, 2025 WL 1393957, at *3. Mortimer herself acknowledged she signed the entire new-hire packet, including the non-compete, during the first payroll cycle. The court emphasized the trial judge’s credibility finding that Mortimer’s execution of the agreement was “a condition of her acceptance of employment at PDR 2.” Id. at *8.
Regarding geographic scope, the court upheld the trial court’s decision to narrow the non-compete’s territorial restrictions. Pennsylvania law permits courts to “grant enforcement limited to those portions of the restrictions which are reasonably necessary to protect the employer.” Id. at *9 (quoting Sidco Paper Co. v. Aaron, 351 A.2d 250, 254 (Pa. 1976)). Although the agreement listed New Jersey counties and a 50-mile radius, PDR 2 did not operate in New Jersey. The trial court therefore limited enforcement to Delaware and Chester Counties, where PDR 2’s SERVPRO franchises actually operated, and which fell within the 50-mile radius. The Superior Court found this modification appropriate, noting that the agreement expressly permitted reformation and that limiting enforcement to the Pennsylvania counties “was neither an abuse of discretion nor a palpably erroneous application of the law.” Id. at *10.
On irreparable harm, the appellate court agreed that PDR 2 had shown non-quantifiable injury to customer relationships and goodwill. Evidence showed Mortimer continued receiving SERVPRO-intended calls because her cell phone number “had been marketed as Servpro” for years, and customers reported speaking with someone “who encouraged them not to use Servpro and to use her company.” Id. at *5. PDR 2 also presented testimony that Mortimer took files, bids, and confidential information, impairing PDR 2’s ability to compete for recurring work, including a university contract. The court emphasized that interference with customer relationships and loss of bidding opportunities constitute irreparable harm because damages cannot be calculated with precision. It cited the principle that covenants designed to prevent “unwarranted interference with customer relationships” are “prima facie enforceable in equity.” Id. at *11 (quoting John G. Bryant Co. v. Sling Testing & Repair, 369 A.2d 1164, 1167–68 (Pa. 1977)). Because apparently reasonable grounds supported the finding of irreparable harm, the Superior Court affirmed the injunction.
Looking Forward
This decision underscores the importance of distributing restrictive covenants at the outset of employment during franchise acquisitions. When employers can demonstrate that non-competes are included in the initial onboarding process and understood as a condition of continued work, courts are more willing to view later signatures as part of the “taking of employment” rather than belated additions to the relationship. Documenting this process can significantly affect enforceability.
The court’s handling of geographic scope provides similar guidance. If a restrictive covenant includes territory language that no longer reflects the employer’s actual operations—such as when template agreements carry forward references to other states—courts may reform the language to match the legitimate interests at stake. For franchisors and multi-unit operators, this illustrates the importance of updating form agreements during transitions and ensuring territorial references align with the franchisee’s actual service area.
Finally, the decision highlights how courts evaluate irreparable harm in service-based franchise systems. Restoration and remediation brands often depend on immediate customer contact, emergency response, and established goodwill. Evidence that a former employee continues to receive customer calls intended for the franchised business, uses confidential files to pursue recurring jobs, or diverts longstanding customers may be sufficient to support injunctive relief. This case shows how loss of customer trust, confusion about brand affiliation, and interference with bidding processes can establish irreparable harm even before damages are quantified.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Shareholder at Buchalter APC and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
