Vibra-Tech Engineers, Inc. v. Kavalek (849 F. Supp. 2d 462, 2012)

United States District Court for the District of New Jersey 2012-03-29

Citations

Full opinion text

OPINION PURSUANT TO FED. R. CIV. P. 52(a)(1)

IRENAS, Senior District Judge.

This case involves claims by Vibra-Tech Engineers, Inc. (“Vibra-Tech”) that Defendants Scott and Roberta Kavalek (collectively “the Kavalek Defendants”) breached employment agreements, violated the duty of loyalty, converted VibraTech’s property, and engaged in a civil conspiracy in order to benefit their own competing corporations, Geotech Instruments, Inc. (“Geotech”) and Integrated Geotechnical Solutions, Inc. (“IGS”). Vi-bra-Tech seeks compensatory, punitive and treble damages and attorneys’ fees. A twelve-day bench trial commencing on January 11, 2012 was held. The Court now issues this Opinion in accordance with Federal Rule of Civil Procedure 52(a)(1).

On June 3, 2010, the attorney for Defendants entered a stipulation which stated, inter alia:

A. Scott Kavalek and Roberta Kavalek, acting on behalf of themselves and on behalf of defendants Integrated Geo-technical Solutions, Inc. (“IGS”) and Geotech Instruments, Inc. (“Geotech”) (collectively, the “Kavalek Defendants”), knowingly and purposefully changed, manipulated, tampered with and withheld evidence that was contrary to the factual and legal contentions they have advanced in this action;

B. In so doing, Scott Kavalek and Roberta Kavalek acted with the intent and purpose to deceive both the court and the other parties to this action; and

C. After performing the acts of tampering, Scott Kavalek and Roberta Kavalek then engaged in a series of acts to conceal and cover up the actions they had taken. These included giving false deposition testimony, filing and supplying false affidavits and declarations under oath, and causing their counsel to make a series of false representations to the court, most of which were made in the Kavaleks’ presence.

The Kavaleks’ response to legitimate discovery requests mirrored the conduct they displayed while employed by Vibra-Tech and, in the case of Scott Kavalek, while bound by a two-year non-compete agreement.

TABLE OF CONTENTS

I. Introduction...............................................................468

II. Findings of Fact...........................................................471

A. Vibra-Tech ...........................................................471

B. IGS..................................................................472

C. Scott Kavalek’s involvement with IGS.....................................473

D. Diversion of business from Vibra-Tech to IGS.............................475

E. Geotech....................... 481

D. Scott Kavalek’s termination.............................................484

G. Evidence Tampering...................................................485

H. Damages..............................................................487

a. IGS-related damages...............................................487

b. Geotech-related damages............................................489

III. Conclusions of Law.........................................................489

A. Breach of fiduciary duty................................................489

B. Breach of employment agreements.......................................491

C. Tortious interference with prospective economic advantage..................491

D. Tortious interference with existing business relationships ...................492

E. Tortious interference with the Bauman Employment Agreement.............493

F. Conversion............................................................493

G. Civil conspiracy........................................................493

H. Unjust enrichment.....................................................494

I. Common law fraud.....................................................494

J. New Jersey Consumer Fraud Act........................................495

IV. Damages..................................................................496

A. Theories of recovery....................................................496

B. Disgorgement of profits.................................................498

C. Treble damages and attorneys’ fees ......................................498

D. Punitive damages......................................................499

V. Conclusion ................................................................500

I. Introduction

Vibra-Tech asserts the following claims against Defendants Scott Kavalek, Roberta Kavalek, Geotech and IGS: (1) breach of fiduciary duties; (2) breach of employment agreements; (3) tortious interference with prospective economic advantage; (4) tortious interference with existing business relationships; (5) conversion of property; (6) civil conspiracy; (7) unjust enrichment; (8) common law fraud; (9) tortious interference with Charles Bauman’s employment agreement; and (10) consumer fraud under the New Jersey Consumer Fraud Act.

The following are stipulated facts as stated in the Joint Final Pre-Trial Order.

Vibra-Tech specializes in the measurement of vibrations in construction, quarry, and mining operations, and consults in the areas of liability seismology, blasting, efficiency, structure dynamics and geophysics. (Joint Final Pre-Trial Order, Part II, ¶ 1.) Vibra-Tech also provides methods, instrumentation, and expertise to minimize effects of blasting. (Id.) Vibra-Tech maintains an office in New Jersey located at 500 A Campus Drive, RR 30, Mount Holly, NJ 08060. (Id. ^2.)

Scott Kavalek was employed by VibraTech at the New Jersey office from April 1998 until his termination on May 30, 2008. (Trial Transe. (D. Rudenko) 1/11/2012, 180:19.) Scott was hired as an Area Manager of the New Jersey office, and during his tenure at Vibra-Tech was made a Vice-President and elected to the Board of Directors. (Id. ¶ 4.) Upon commencing employment with Vibra-Tech, Scott signed an employment agreement containing the following provisions:

2. During the time of his/her employment with Employer, Employee will devote his/her entire time and energy to the furtherance of the business of Employer and shall not, in any advisory or other capacity, work for any individual, firm, or corporation other than Employer with regard to .matters that would conflict with the business of employer without first having obtained the written consent thereto of Employer duly executed by an executive officer of Employer.

3. It is recognized that the customer lists, files, books, records and accounts and all other information, data and records wherever located are the sole and exclusive property of Employer. Employee will not, at any time, either himself/herself or through or with the aid or assistance of others, take, make available to anyone not authorized to receive it by written permission, divulge or use any customer list, file, book, record or account which is the property of Employer. This prohibition includes all forms of computer programs and data.

4. Employee, at all times, recognizes and respects the advantageous business relationship which exists between Employer and its customers. Employee expressly agrees to do nothing to interfere with that advantageous relationship during the term of employment with Employer or any time after that.

5. Neither during the term of Employee’s employment with Employer, nor thereafter, will he/she disclose to any third party or make any use of any secret process, trade secret or other confidential information or confidential knowledge relating to the business, merchandising or distributing methods, processes, sources of supply, techniques, products, inventions, devices or research of Employer or its subsidiaries or affiliated companies or of any persons, firms, corporation or other individuals with whom Employer had or shall, in the future have, any business dealings or relations. Further, upon leaving the employ of Employer, Employee will not take with him/her any drawings, blueprint or other reproduction, or other specification, record or copy of confidential or proprietary material or information, without the prior written consent of any executive officer of Employer.

6. Because of the special and unique services that he/she is bringing to his/ her employment with Employer and because of the confidential nature of the information with which he/she will come in contact in the course of his/her employment with Employer, he/she will not, upon the termination of his/her employment with Employer, directly or indirectly, own, manage, operate, join, control, be employed by or participate in the management, operation or control of, or be connected in any manner with any business that deals in the same products sold or services rendered while in the employ of Employer.

(P-1.)

Roberta (Wright) Kavalek was employed at the Vibra-Tech New Jersey office from September 1997 until December 2006. (Joint Final Pretrial Order, Part II, ¶ 6.) She began as a secretary and later became the Office Manager. (Id.) Upon commencing employment with Vibra-Tech, Roberta signed an employment agreement containing the following provisions:

2. Duties. [¶]... ] Employee acknowledges that he/she is a part-time employee of the Company. Employee agrees nevertheless that he/she shall use his/ her best efforts for the benefit of the Employer and shall not engage in any other employment of a full or part-time nature during the term of employment with the Company unless the Employee shall notify the Employer thereof in writing in advance of accepting such employment.

6. Confidential Information. The Employee agrees that all formation information of a technical or business nature, such as know-how, trade secrets, business information, plans, data, processes, techniques, identity of customers and customer lists, pricing information, and instrument development (the “Confidential Information”) acquired in the course of his/her employment under this Agreement is a valuable business property right of the Company. The Employee covenants and agrees that such Confidential Information, whether in written, verbal or other form, shall not be disclosed to anyone outside the employment of the Company without the Company’s written authorization. The disclosure restriction shall apply during employment and after Employee’s termination of employment with the Company, until the Confidential Information is generally available to the public.

7. Return of Documents. Upon the termination of this Agreement for any reason, the Employee shall forthwith return and deliver to the Company any properties belonging to the Company including, but not limited to, keys, credit cards, and equipment. Moreover, the Employee shall not retain any original or copies of any books, papers, price lists, customer contracts, bid or customer lists, files books of account, notebooks or other documents or data relating to the Company or any of its operations, all of which materials are hereby agreed to be the property of the Company.

(P-2.)

Charles Bauman was hired as a field technician for Vibra-Tech’s New Jersey office and was employed from June 2004 to November 2006. (Joint Final Pretrial Order, Part II, ¶ 10.) Upon hire, Bauman signed an employment agreement with covenants and restrictions identical to those in Scott Kavalek’s employment agreement. (Id. ¶ 11.) The Bauman Employment Agreement was signed by Scott Kavalek on behalf of Vibra-Tech and witnessed by Roberta Kavalek. (Id. ¶ 12.)

On December 3, 2004, Scott and Roberta Kavalek incorporated Geotech, which is in the business of selling geotechnical equipment. (Id. ¶¶ 13-14.) Scott is the President of Geotech and Roberta is an employee of Geotech. (Id. ¶¶ 15-16.)

On May 16, 2005, Roberta incorporated IGS and acts as its President. (Id. ¶¶ 18-19.) Since its incorporation in 2005, IGS performs vibration monitoring services and is a competitor of Vibra-Tech. (Id. ¶ 20.)

The employment agreements at issue in this case are governed by Pennsylvania law, while the common law claims as well as the New Jersey Consumer Fraud Act claim are governed by New Jersey law. (Id. ¶¶ 23-24.)

II. Findings of Fact

A. Vibra-Tech

1. Vibra-Tech works primarily in the area of vibration monitoring, but also installs geotechnical equipment, such as crack meters, tilt meters, and inclinometers. (Trial Trans. (D. Rudenko) 1/11/2012,110:21-121:6; Trial Trans. (D. T. Froedge) 1/18/2012,107:9-107:23).

2. Because of the specialized nature of the services Vibra-Tech provides, most new employees, including Scott Kavalek, are trained within the company. Upon commencement of his employment, Scott received substantial training to acquaint him with the business of Vibra-Tech. He also attended a variety of seminars and conferences during his employment to further his technical and management skills. (Trial Trans. (D. Rudenko) 1/11/2012, 137:2-137:18,140:25-141:5).

3. Vibra-Tech employees establish close relationships with its clients. Because of the specialized services VibraTech performs and the safety issues involved, the clients must be confident that Vibra-Tech is able to protect them from future problems or solve existing problems. Customer relationships are important to Vibra-Tech’s work. Vibra-Tech is frequently called by repeat clients that are prime contractors on major construction projects and asked to submit a bid as a subcontractor. (Trial Trans. (G. New-mark) 1/12/2012, 131:12-131:21; Trial Trans. (D. T. Froedge) 1/18/2012, 131:15— 131:20; Trial Trans. (S. Kavalek) 1/26/2012, 95:3-96:3).

4. Marilyn Rochner was the Chief Financial Officer of Vibra-Tech. Six months after the commencement of this action, on November 21, 2008, Rochner passed away. (Trial Trans. (D. T. Froedge) 1/18/2012, 119:8-119:9).

5. Vibra-Tech Area Managers serve a central role in the company’s operations. They are responsible for promoting the services and products of Vibra-Tech, conducting direct and indirect sales, collecting past due accounts, attending trade shows, soliciting new business, writing proposals and bids for new business, providing support and assisting in the development and implementation of promotional activities, strategies and budgets. Area Managers receive bonuses which are based upon the profits generated within their area. Area Managers are also responsible for hiring all employees, firing all employees, and scheduling all employees in their area offices.

6. As Area Manager of the New Jersey office, which covers New Jersey, the five New York City boroughs and Long Island, Scott Kavalek gained more than ten years of experience learning the business of Vibra-Tech, fostering relationships with customers, earning customer trust, and developing the New Jersey office into a productive and profitable branch of Vi-bra-Tech.

7. During Scott’s tenure, the New Jersey office became one of the most successful at Vibra-Tech and he was therefore elected as a member of the Board of Directors on November 29, 2007.

8. While employed at Vibra-Tech, Roberta was trained in vibration monitoring techniques and equipment, and gained knowledge of Vibra-Tech’s customers and the vibration monitoring industry in general. In addition to office duties, she performed field work when necessary. Field work included conducting vibration monitoring, pre-blast inspections, post-blast inspections, claim investigations, and environmental monitoring, as well as the operation of equipment.

9. Vibra-Tech Office Managers are responsible for assisting the Area Manager in the day-to-day operations of the office, including preparing reports, preparing sales orders, collecting past due accounts and scheduling employee work assignments.

B. IGS

10. Until recently, IGS conducted its business from 213 Front Street, Mt. Holly, NJ, which was and is the home address of the Kavaleks. Recently, IGS opened a new office at 2800 Sylon Boulevard, Hainesport, NJ.

11. Roberta Kavalek acted as the President and sole record owner of IGS, performing various duties for the company including customer solicitation, contract negotiation, billing, field work, remote monitoring, and meeting with clients. (Trial Trans. (R. Kavalek) 1/17/2012, 99:15-100:2, 101:5-101:9; 1/25/2012, 7:11-7:13; P-313 at KE 0281). Scott Kavalek performed numerous services on behalf of IGS while he was still employed by VibraTech, including customer solicitation, field work, remote monitoring, meeting with clients, billing clients, and contract negotiation.

12. The Kavaleks used IGS’s business accounts as if they were their own personal bank accounts, making large amounts of personal purchases on their company issued credit cards. (P-118; P-119; P-120). Those credit card bills were then paid using IGS company funds from IGS bank accounts. (Trial Trans. (R. Kavalek) 1/17/2012, 151:23-162:23; P-306J). In addition, Roberta Kavalek transferred $946,775 from the IGS business checking account to her own personal checking accounted between May 2006 and June 2011. (P-172). The Kavaleks also arranged for Roberta Kavalek’s three teenaged children to receive $44,388 in payments from IGS. (P-173).

13. From its creation, Roberta Kavalek withdrew hundreds of thousands of dollars from IGS either in the form of checks, cash withdrawals or electronic bank funds transfers. (Trial Trans. (R. Kavalek) 1/18/2012, 71:7-77:9; P-172). Two electronic transfers totaling $145,000 from an IGS business checking account to Roberta Kavalek’s personal bank account were made on June 4, 2008, four days after the Complaint in this action was filed and served on the Kavalek Defendants. (Trial Trans. (R. Kavalek) 1/18/2012, 73:13-74:24; P-172).

14. Of the five employees hired by IGS in its first five years of operation, four were present or former Vibra-Tech employees: Scott Kavalek, Roberta Kavalek, Charles Bauman, and Michael Conrow. (Trial Trans. (R. Kavalek) 1/26/2012, 28:22-31:13).

15. Scott Kavalek never reported to anyone at Vibra-Tech that he had a business relationship with IGS. (Trial Trans. (D. T. Froedge) 1/18/2012, 112:15-118:7; Trial Trans. (D. Petras) 1/19/2012, 138:17-138:19). In fact, he affirmatively lied to Douglas Rudenko and Sean Shamany about this at the time of his termination interview, saying that neither he nor Roberta Kavalek had any involvement with IGS. (Trial Trans. (S. Shamany) 1/19/2012, 95:12-95:22; Trial Trans. (S. Kavalek) 1/17/2012, 93:18-93:24).

16. Roberta Kavalek never reported to anyone at Vibra-Tech, other than Scott Kavalek, that she had a business relationship with IGS. (Trial Trans. (D. Rudenko) 1/11/2012, 153:8-153:10; Trial Trans. (D.T. Froedge) 1/18/2012,112:15-113:7).

17. Scott and Roberta Kavalek purposefully failed to disclose to Vibra-Tech that they were the owners and employees of IGS. (Trial Trans. (R. Kavalek) 1/25/2012,104:18-104:22).

18. Scott and Roberta Kavalek failed to disclose their relationship with IGS to Vi-bra-Tech, in part, because they feared that Vibra-Tech would fire them for their disloyalty. (Trial Trans. (R. Kavalek) 1/25/2012, 57:3-57:7; Trial Trans. (S. Kavalek) 1/26/2012, 97:25-98:6).

C. Scott Kavalek’s involvement with IGS

19. Scott Kavalek has conducted business on behalf of IGS under the job titles ‘Vice President,” “Senior Project Manager,” and “Sales Representative.” (P-30; P-38; P-38A; P-38B; P-38C; P-38D; P-38E; P-38F; P-38G; P-38H; P-39; P-39A; P-39B; P-39C; P-39D; P-39E; P-39F; P-39G; P-39H; P-391; P-39J; P-39K; P-39L; P-306K; P-124 at KE 2052-2053; P-313 at KE 0059, 1952; P-327; P-334 at McLAREN 708).

20. Scott Kavalek set up the domain name for IGS’s website, as well as IGS’s email system and all individual IGS e-mail accounts. With Roberta Kavalek’s knowledge and agreement, Scott Kavalek assigned several IGS e-mail addresses to himself. Scott Kavalek thereafter used those addresses to conduct IGS business. (Trial Trans. (S. Kavalek) 1/13/2012, 49:3-49:9, 56:10-57:8).

21. From IGS’s formation, Scott Kavalek had check signing authority for the principal bank account of IGS. On the signature card for the account, Scott Kavalek listed himself as “Vice-President” of IGS. The card was signed by both Scott and Roberta Kavalek, attesting to its accuracy. By signing the document the Kavaleks certified that “(1) I am the Secretary or Assistant Secretary of the Corporation named above, (2) the above named person(s) are these person(s) currently empowered to act under the Corporate resolutions authorizing this account and the banking services provided therein, (3) that the title and signature set forth opposite the names of each person are true and genuine.” (P-306K); (Trial Trans. (S. Kavalek) 1/13/2012, 62:23-63:13, 65:17-66:10).

22. Scott Kavalek was the drawer of seventeen IGS paychecks to Charles Bauman, including the first seven. All of these checks were issued to Bauman before Scott Kavalek left Vibra-Tech. (Trial Trans. (S. Kavalek) 1/13/2012, 68:16-69:4; P-129A). Scott Kavalek was also the drawer of numerous other checks issued on behalf of IGS. (Trial Trans. (B. Linden-berg) 1/24/2012, 129:17-129:18; P-93E). Scott Kavalek also endorsed for deposit numerous checks made payable to IGS. (Trial Trans. (B. Lindenberg) 1/24/2012, 132:17-135:5; P-306C at BOA 676, 681, 686, 692, 695, 696, 717).

23. Scott Kavalek also had IGS credit cards issued in his name. (Trial Trans. (R. Kavalek) 1/17/2012, 107:3-107:12; P-118). The IGS credit cards issued in Scott Kavalek’s name were used by him for over $60,000 in purchases. (P-170). All receipts for credit card purchases produced by the Kavalek Defendants were signed by Scott Kavalek. (P-119 at D 00431-00433).

24. During the time that he was still employed by Vibra-Tech, Scott Kavalek ordered computers on behalf of IGS. (P-127; Trial Trans. (S. Kavalek) 1/13/2012, 99:24-102:10; P-124 at D 00333-00335).

25. During the time he was still employed by Vibra-Tech, Scott Kavalek communicated with the following manufacturers and suppliers on behalf of IGS:

a. Bruel & Kjaer. (Trial Trans. (S. Kavalek) 1/13/2012, 102:11-103:9, 104:25-105:7; P-124 at D 00339, 00343-00344).

b. Instantel. (Trial Trans. (S. Kavalek) 1/17/2012, 9:4-10:9; P-169A).

c. RST Instruments. (Trial Trans. (S. Kavalek) 2/1/2012, 93:2-95:1; P-360 at RST 0102-0103; P-227).

26. During the time that he was still employed by Vibra-Tech, Scott Kavalek communicated with or about the following IGS clients (who were also present or former Vibra-Tech clients) on behalf of IGS:

a. McLaren Engineering: Port Imperial job. (P-92; Trial Trans. (S. Kavalek) 1/13/2012, 105:18-110:5, 113:1-120:10, 141:9-142:15; 1/17/2012,65:14-68:17; Trial Trans. (R. Kavalek) 1/25/2012, 221:3-222:13; P-124 at D 00434-00441, 00454-00589, 00617; P-334 at McLAREN 691).

b. McLaren Engineering: Staten Island job. (Trial Trans. (S. Kavalek) 1/13/2012, 126:2-127:21, 131:16-133:15; P-124 at D 00589-00595).

c. Langan Engineering. (Trial Trans. (S. Kavalek) 1/13/2012, 134:19-141:7; P-124 at D 00600-00602).

d. Newmark Engineering. (Trial Trans. (S. Kavalek) 1/13/2012, 156:20-159:2; P-124 at D 007835-007845; Trial Trans. (G. Newmark) 1/23/2012,11:7-11:19, 13:3-13:9,14:23-15:7,15:25-16:22).

e. Kline Engineering: Astor Place job. (Trial Trans. (S. Kavalek) 1/13/2012, 169:20-171:9; P-124 at D 007855, 007856; P-326).

f. Kline Engineering. (P-313 at KE 0058-60, 1951-52; P-124 at D 007879).

g. Kline Engineering: Parkview job. (P-508 (Deposition of Marie Gardiner) at 39:14-40:9).

h. Kline Engineering: 95th Street job. (P-508 (Deposition of Marie Gardiner) at 39:14-40:9).

i. Atlantic Yards Development Corporation, Inc. (Trial Trans. (S. Kavalek) 1/17/2012, 12:25-13:5; P-124 at D 007882; P-169 at D 00748).

27. During the time that he was still employed by Vibra-Tech, Scott Kavalek performed field work on behalf of IGS for at least the following IGS clients who were also present or former Vibra-Tech clients:

a. McLaren Engineering: Port Imperial job. (Trial Trans. (S. Kavalek) 1/13/2012, 123:20-124:25; 1/17/2012, 65:14-68:17; Trial Trans. (R. Kavalek) 1/25/2012, 220:21-222:13; P-334 at McLAREN 691).

b. McLaren Engineering: Staten Island job. (Trial Trans. (S. Kavalek) 1/13/2012,126:25-127:6).

c. Kline Engineering: Astor Place job. (Trial Trans. (S. Kavalek) 1/13/2012, 162:15-163:15, 164:18-165:11; 1/17/2012, 24:21-25:8; Trial Trans. (R. Kavalek) 1/25/2012,78:15-84:4; P-327; P-313 at KE 0231, 0232, 0281, 0464: P-508 at 37:4-37:19, 83:5-85:6).

d. Kline Engineering: Rockview job. (Trial Trans. (S. Kavalek) 1/17/2012, 62:17-63:10).

e. Kline Engineering: Parkview job. (P-508 (Deposition of Marie Gardiner) at 39:14-40:9).

f. Kline Engineering: 95th Street job. (P-508 (Deposition of Marie Gardiner) at 39:14-40:9).

g. Newmark Engineering. (Trial Trans. (G. Newmark) 1/23/2012, 24:4-25:13)

28. Scott Kavalek had extensive e-mail correspondence concerning IGS business with numerous former, present and potential Vibra-Tech customers using his IGS email accounts, scottk@igs-inc.com and scott@igs-inc.com. Scott Kavalek’s e-mail communications contained signatures that provided his contact information with IGS. (Trial Trans. (S. Kavalek) 1/13/2012, 103:16-103:20; P-124 at D 00434-00441, 00493-00495, 00599, 00601-00606; P-232 at D 03488; P-236 at D 03511; P-326).

29. All invoices from Instantel to IGS were directed to Scott Kavalek. (P-169A).

30. For the Atlantic Yards job, Scott Kavalek set up the business arrangement with the client so that Vibra-Tech would provide some services, but IGS would provide rental of seismographs. (Trial Trans. (S. Kavalek) 1/17/2012, 12:25-13:5; P-124 at D 007882). On March 29, 2007, Scott Kavalek received an e-mail about the structure of the deal from the attorney for the Atlantic Yards Development Corporation. This e-mail mentioned that IGS would provide equipment for the job. IP-169 at D 00748). On March 30, 2007, Scott Kavalek sent the attorney’s e-mail to Jason Gearlds, attorney for Vibra-Tech, but deliberately removed the sentence regarding IGS. (Trial Trans. (S. Kavalek) 1/17/2012, 18:23-22:16; P-169 at D 00802-00803). The only rational explanation for his action is that he was attempting to prevent Vibra-Tech from learning of the existence of IGS, IGS’s involvement in the Atlantic Yards job, and his own involvement with IGS.

31. Despite IGS billing clients for hundreds of hours of work performed by Scott Kavalek and Roberta Kavalek, the Kavaleks maintained that they kept no records whatsoever of the time that they spent performing work for IGS clients. (Trial Trans. (S. Kavalek) 1/13/2012, 165:9-166:19; Trial Trans. (R. Kavalek) 1/17/2012, 129:19-129:22). I find this testimony not to be credible. It is apparent that the practice in the industry is to maintain contemporaneous time records of work performed to be used in billing clients. The Kavalek Defendants’ failure to produce such records suggests that they would have demonstrated Scott Kavalek’s extensive involvement in the affairs of IGS.

32. At trial Scott Kavalek continued to attempt to downplay his role. For example, with respect to the Kline Engineering Astor Place job, for which Scott went to the job site on behalf of IGS on close to 100 days, Scott Kavalek denied that this constituted aiding a competitor of VibraTech. Instead, Scott Kavalek claimed that by him performing work on IGS jobs, IGS was actually helping him in his capacity as a Vibra-Tech Area Manager. (Trial Trans. (S. Kavalek) 1/26/2012, 113:3-115:6).

D. Diversion of business from VibraTech to IGS

33. During and after their tenure at Vibra-Tech, the Kavaleks diverted present and prospective customers away from Vi-bra-Tech and to IGS.

34. Glenn Newmark of Newmark Engineering, P.C. worked frequently over the years with Vibra-Tech when he was employed as a senior officer of Site Blauvelt, Inc., a major contractor. (Trial Trans. (G. Newmark) 1/12/2012, 133:5-135:3). Because of his positive experiences having Vibra-Tech perform vibration monitoring services under Scott Kavalek’s supervision, Newmark approached Scott Kavalek for services after he stared his own company, Newmark Engineering P.C., on September 23, 2005. (Trial Trans. (G. Newmark) 1/12/2012, 135:14-137:2; Trial Trans. (S. Kavalek) 1/13/2012, 5:4-5:7). Newmark called Scott Kavalek and requested that Vibra-Tech provide services on the Roslyn Viaduct job, which his company was undertaking. Scott Kavalek informed Newmark that his “new company” IGS could perform the services. (Trial Trans. (G. Newmark) 1/12/2012, 139:10-140:23). Although he was still Area Manager for Vibra-Tech, Scott Kavalek nonetheless diverted New-mark’s business to IGS. (Trial Trans. (G. Newmark) 1/12/2012,138:14-138:24).

35. The principal IGS contact for New-mark was Scott Kavalek until this lawsuit was filed in June 2008, after which he dealt somewhat more with Roberta Kavalek. Prior to June 2008, Newmark had only limited contact with Roberta Kavalek on IGS matters. (Trial Trans. (G. Newmark) 1/12/2012, 127:23-128:4, 141:8-142:15). Scott Kavalek also prepared bills for New-mark on behalf of IGS and communicated with Newmark about billing issues. IP-124 at D 007827, 007835).

36. In 2006, Scott Kavalek received a phone call from Ray Volpe at McLaren Engineering, a long-standing Vibra-Tech client, asking that Vibra-Tech perform certain inclinometer measurements on a project known as Port Imperial. Scott Kavalek sent the client to IGS instead of having Vibra-Tech perform the job. Scott Kavalek actually performed most of the work which IGS billed McLaren for on this job. (Trial Trans. (S. Kavalek) 1/13/2012, 107:7-110:5; 1/17/2012, 71:21-71:25).

37. Scott Kavalek received a later call from McLaren Engineering asking that Vibra-Tech perform vibration monitoring at a job on Staten Island. Scott Kavalek again referred the client to IGS instead of having Vibra-Tech perform the job. Then Scott Kavalek did the work for IGS. (Trial Trans. (S. Kavalek) 1/13/2012, 127:19-127:21; 1/26/2012, 209:11-209:16).

38. The Atlantic Yards project was a job performed on behalf of Forrest City Ratner Corporation (“Forrest City”). While Vibra-Tech provided vibration monitoring services, Scott Kavalek arranged for IGS to rent the seismographs to Forrest City that Vibra-Tech would monitor. (Trial Trans. (S. Kavalek) 1/17/2012, 12:15-20:10). Scott Kavalek originally bid on the Atlantic Yards job on behalf of Vibra-Tech and secured the job. However, he thereafter structured the contractual arrangements so that IGS would provide seismograph rentals to Forrest City for the job instead of Vibra-Tech. Scott Kavalek also structured the deal so that IGS would be paid all of its rental fees “up front,” which assisted IGS because IGS had no capital to expend at the time the job began. The Atlantic Yards job was one of the largest jobs IGS completed, resulting in $245,500 of revenue to IGS. (P-140; P-169B; Trial Trans. (S. Kavalek) 1/17/2012, 12:25-13:5; 1/31/2012, 35:12-48:4; P-12 at 6a).

39. Despite the Kavalek Defendants’ contention that since IGS was mentioned in the contract and therefore Vibra-Tech knew or should have known of IGS’s involvement in the project, IGS was only mentioned in one sentence of a seven-page single-spaced contract, and then only obliquely. The contract also specifically stated that Vibra-Tech “shall provide all labor, materials, equipment, and services required to perform the scope of the work.” (Trial Trans. (D. T. Froedge) 1/19/2012, 58:9-55:14; P-362 at VT08170824; P-362 at VT 0817, VT 0823-0824).

40. Scott Kavalek initially solicited and secured Kline Engineering P.C. as a client for Vibra-Tech in 2005. (P-508 (Deposition of Marie Gardiner) at 26:23-28:9). Kline Engineering subcontracted numerous vibration monitoring and crack metering work to Vibra-Tech. (P-508 (Deposition of Marie Gardiner) at 23:5-24:24, 25:8-26:22).

41. Eventually, Kline Engineering started subcontracting its vibration monitoring work to IGS. This occurred because Kline called Scott Kavalek when it needed vibration monitoring services and Scott Kavalek diverted the business from VibraTech to IGS. (P-508 (Deposition of Marie Gardiner) at 35:22-36:5, 41:441:12).

42. On jobs performed by IGS for Kline Engineering, Scott Kavalek, Roberta Kavalek, and Charles Bauman all performed field work. (P-508 (Deposition of Marie Gardiner) at 37:4-37:19; P-509 at 15:2-15:12). Scott Kavalek submitted proposals to Kline Engineering on behalf of IGS, and signed them as IGS’s “Vice President” and “Senior Project Manager.” (P-142; P-314; P-327; P-508 (Deposition of Marie Gardiner) at 40:10-41:12; P-313 at KE0059,1952).

43. After the transition from VibraTech to IGS, Kline Engineering’s point of contact for the provision of vibration monitoring services continued to be Scott Kavalek, now acting on behalf of IGS instead of Vibra-Tech. (P-508 (Deposition of Marie Gardiner) at 41:5 — 42:9; P-509 (Deposition of Arnold Kline) at 17:19-18:12). It is reasonable to infer that Scott Kavalek diverted Kline Engineering’s vibration monitoring business from Vibra-Tech to IGS. This inference is also supported by the voluminous amount of contacts that Scott Kavalek had with Kline over the term of their relationship at IGS. (See supra ¶¶ 26e-h, 27c-f).

44. Vibra-Tech issued a laptop computer to Roberta Kavalek during her employment at the company. She did not return the laptop when she left Vibra-Tech in December 2006. In approximately February or March 2008, some fourteen months after she left Vibra-Tech for IGS, VibraTech discovered the laptop previously issued to Roberta Kavalek in its Mount Holly equipment garage. (Trial Trans. (D. Petras) 1/19/2012,127:9-128:2).

45. Diane Petras, Vibra-Tech’s current New Jersey Office Manager and Roberta’s successor, examined the laptop and discovered “Blastware”, a software program utilized by Vibra-Tech to collect, organize and manage data from seismographs. Petras also discovered Blastware files in the recycling bin of the computer, indicating that Roberta Kavalek had attempted to delete the files. Petras determined that the Blastware documents were related to projects performed by IGS in 2006 and 2007. The Blastware documents also demonstrated that the Kavaleks converted Vi-bra-Tech seismographs and installed them on a job secured by IGS for Kline Engineering, P.C. (P-123; Trial Trans. (D. Petras) 1/19/2012, 128:3-137:1; P-74; P-75).

46. In 2006, IGS installed Vibra-Tech seismographs on an IGS job for Kline Engineering called “Astor Place,” because IGS did not have the required equipment. Scott Kavalek simply took Vibra-Tech’s equipment from Vibra-Tech’s stockroom for IGS use on the Astor Place job. (Trial. Trans. (S. Kavalek) 1/13/2012, 173:25-175:21; 1/17/2012,36:15-38:13). All of this occurred while both Kavaleks were still full-time employees of Vibra-Tech.

47. With respect to 281 Broadway Holdings, also known as the 57 Reade Street job, Vibra-Tech performed vibration monitoring on the demolition phase. IGS performed vibration monitoring on the subsequent construction phase of the job. IGS secured this contract in January 2007, only six weeks after Roberta Kavalek left her position at Vibra-Tech. Despite having knowledge of the project, Scott Kavalek failed to submit a bid for the construction phase and otherwise did not attempt to secure the work for VibraTech. (P-168; P-303; P-304; P-305; Trial Trans. (S. Kavalek) 2/1/2012, 40:12-43:19).

48. In proposals sent on behalf of IGS to Kline Engineering, the Kavaleks simply copied similar proposals that they had used at Vibra-Tech. The formatting and much of the phrasing of the IGS proposals was identical to what Vibra-Tech used. (Trial Trans. (S. Kavalek) 1/17/2012, 56:16-60:17; P-313 at KE 001-003, 1951-1952).

49. Roberta Kavalek relied on Scott Kavalek to secure business for IGS. In a proposal submitted to McLaren Engineering, Roberta Kavalek signed Scott Kavalek’s name at the end of the proposal. Roberta Kavalek admitted that the reason she signed Scott Kavalek’s name on the proposal was because Scott Kavalek made the initial contact with the client. (Trial Trans. (S. Kavalek) 1/17/2012, 72:22-73:12; 1/18/2012, 92:21-94:25; P-334 at McLAREN 707-708).

50. Roberta Kavalek also admitted that Scott Kavalek made the initial contact with Kline Engineering for the Port Imperial job, and was responsible for IGS being able to secure the Atlantic Yards job. (Trial Trans. (R. Kavalek) 1/25/2012, 221:3-222:13, 224:4-225:9).

51. Roberta Kavalek also relied on Scott Kavalek’s ability to prevent VibraTech from competing with IGS for any jobs. From the formation of IGS in 2005 until the termination of his employment with Vibra-Tech in May 2008, Scott Kavalek never submitted a proposal on behalf of Vibra-Tech for any job that IGS bid on. (Trial Trans. (S. Kavalek) 2/1/2012, 101:12-101:18). I find this fact to be remarkable. This could have happened only if Scott and Roberta Kavalek were actively sharing information on what business and what specific jobs IGS was pursuing. I further find that it is proof that Scott Kavalek and Roberta Kavalek were in active collusion to prevent Vibra-Tech from submitting competing proposals.

52. Former Vibra-Tech customers who became IGS customers, either while Scott Kavalek was still employed by Vibra-Tech or during the two-year non-competition period after the termination of Scott Kavalek’s employment, included:

a. The Atlantic Yards Development Co., LLC (P-7)

b. Cutrupi & Company (Trial Trans. (R. Kavalek) 1/17/2012,121:3-122:21).

c. Kline Engineering, P.C. (Trial Trans. (R. Kavalek) 1/17/2012, 121:3-122:21; P-7).

d. Langan Engineering & Environmental Services (Trial Trans. (R. Kavalek) 1/17/2012, 121:3-122:21; P-7).

e. McLaren Engineering, P.C. (P-7)

f. Newmark Engineering, P.C. (Trial Trans. (R. Kavalek) 1/17/2012, 121:3-122:21; P-7).

g. Quality Control Laboratories, LLC

h. Site — Blauvelt Engineers

i. Turner Construction Company

53. Gross sales by IGS to the former Vibra-Tech customers who became IGS customers between 2005 and 2009 totaled $1,526,359. (P-12 at 6a).

54. Potential Vibra-Tech customers who became IGS customers, either while Scott Kavalek was still employed by Vi-bra-Tech or during the two-year non-competition period after the termination of Scott Kavalek’s employment, included:

a. 11-01 43rd Avenue, LLC

b. 281 Broadway Holdings, LLC

c. A-l Testing

d. BTA Building & Development

e. Extell West 57th, LLC

f. Gladden Properties, LLC

g. Mueser Rutledge Consulting Engineers

h. Risk Reduction Resources, Inc.

i. Shen Milsom & Wilke, Inc.

j. TRC Environment Corp

k. Vanderweil Engineers

l. Velocity at Greystone, LLC

55. Gross IGS sales to these potential Vibra-Tech customers who became IGS customers between 2006 and 2009 totaled $874,232. (P-12 at 6a).

56. Absent the actions of Scott Kavalek to divert customers to IGS, it is more likely than not that the potential VibraTech customers would have become VibraTech customers because the two companies provided comparable pricing, products, and services performed by the same individuals. The fact that Scott Kavalek was able to solicit these customers for IGS provides substantial evidence that he could have done the same for Vibra-Tech but for his actions to divert the customers to IGS.

57. While the Kavalek Defendants have argued that Vibra-Tech, through its CFO, Marilyn Rochner, declined to do business with certain clients, notably Kline Engineering, due to their poor payment record, I do not credit this argument. The only evidence the Kavalek Defendants have advanced to support their position is self-serving testimony claiming that Rochner told them not to do business with Kline Engineering.

58. The Kavalek Defendants claim that Vibra-Tech’s “COD list” supports their argument. A client who is substantially late in paying its bill would be placed on the COD list, which means that an Area Manager could not do business with that client unless the outstanding balance was paid, the outstanding debt was placed on a credit card, or the project was undertaken on a COD basis. Thus, a client’s placement on the COD list did not forbid an Area Manager from doing business with the client. It only meant that an Area Manager would need to work out an arrangement up-front, such as one where the client would pay for services when rendered. (Trial Trans. (D. Rudenko) 1/11/2012, 167:16-171:19; Trial Trans. (D. T. Froedge) 1/18/2012, 119:18— 120:17).

59. The Kavalek Defendants also claim that handwritten notes from Rochner exist which would substantiate their claims, but they have produced no documentary evidence that supports their position. Between the filing of this suit and the date of trial, Rochner passed away and is unable to rebut their testimony.

60. The most likely explanation for why Kline did not pay its debts to VibraTech is that the Kavalek Defendants did not pursue collection of these debts on behalf of Vibra-Tech because they knew the collections process would negatively affect IGS. When Diane Petras requested permission from Scott Kavalek to send Kline Engineering’s past due account to collections in May of 2008, Scott Kavalek specifically told her not to pursue collections efforts against Kline Engineering. (Trial Trans. (D. Petras) 1/19/2012, 142:15-144:9; P-63).

61. The Kavalek Defendants contend that Vibra-Tech declined to perform certain jobs later completed by IGS due to risks inherent in the jobs. (Trial Trans. (S. Kavalek) 1/13/2012, 24:25-25:4). I do not credit this argument. While businesses consider the risk of undertaking individual jobs, including the risks of nonpayment and liability, the Kavalek Defendants have presented no evidence that any of the jobs in question bore any risk outside the typical range of risk in the vibration monitoring business. As to the risk of non-payment, the evidence presented in this case directly contradicts the Kavalek Defendants’ claims. There is ample evidence that allegedly risky clients such as Newmark Engineering and Kline Engineering went on to provide hundreds of thousands of dollars of revenue to IGS. Newmark was responsible for $274,000 in IGS revenue and Kline was responsible for $405,000 in IGS revenue between 2005 and the end of 2009. (P-12 at 6a).

62. The Kavalek Defendants have argued that Vibra-Tech was unable to perform certain jobs, such as the Atlantic Yards job and the Avalon Bay job, due to an inability to supply necessary quantities of seismographs or to purchase Instantelmanufactured and branded seismographs, instead of Instantel-manufactured and Vi-bra-Tech-branded seismographs. The Kavalek Defendants contend that VibraTech was contractually precluded from purchasing Instantel-branded machines. (Trial Trans. (S. Kavalek) 1/13/2012, 13:14-14:17). I do not credit this argument for several reasons. First, the Kavalek Defendants have provided no rational explanation as to why Instantel, a manufacturer of seismographs, would not be willing to sell any of its seismographs to Vibra-Tech, a larger purchaser of seismographs than IGS. Second, the Kavalek Defendants have been unable to provide any contract between Vibra-Tech and Instantel which precludes Vibra-Tech from purchasing Instantel-branded seismographs for use on the jobs. Third, Vibra-Teeh’s CEO testified that Vibra-Tech had sufficient quantities of seismographs to perform the Atlantic Yards job. (Trial Trans. (D. T. Froedge) 1/18/2012, 132:4-133:10). Finally, it is not clear that there was any need for Vibra-Tech to purchase Instantelbranded seismographs because it could have used its own Vibra-Tech branded seismographs. All the Kavalek Defendants have provided in this regard is self-serving testimony that appears designed to minimize their own wrongdoing. For example, Scott Kavalek claimed that Glenn Newmark reported that certain VibraTech seismographs had a virus, but Scott never brought this problem to the attention of his superiors at Vibra-Tech. (Trial Trans. (S. Kavalek) 1/13/2012, 12:22-16:21: 1/26/2012, 168:8-170:20). Similarly, Scott Kavalek’s failure to bring any alleged seismograph supply problem to the attention of his superiors at Vibra-Tech suggests that there was no such problem. (Trial Trans. (S. Kavalek) 1/13/2012, 14:20-14:23).

63. Despite the Kavalek Defendants’ claims that they were able to provide necessary equipment that Vibra-Tech could not provide, IGS itself was unable to provide necessary equipment and the Kavalek Defendants secretly used Vibra-Tech equipment. One example of this conduct was the Astor Place job performed for Kline Engineering. (Trial. Trans. (S. Kavalek) 1/13/2012, 173:25-175:21; Trial Trans. (E>. Petras) 1/19/2012, 128:3-137:1; P — 74; P-75).

64. The Kavalek Defendants have also argued that certain clients did not use Vibra-Tech because Vibra-Tech did not provide web-based monitoring of seismographs. I do not credit this argument. Vibra-Tech had the capability to provide web-based delivery of seismograph data and has had that capability since 2003. (Trial Trans. (D. T. Froedge) 1/18/2012, 126:18-127:14). While it is Vibra-Tech’s practice to have a technician examine the data before making the data available for client viewing, if the client had insisted on unfíltered data, Vibra-Tech would have provided that service. (Trial Trans. (D. T. Froedge) 1/18/2012,127:15-128:11).

65. Despite the Kavalek Defendants’ claims that Vibra-Tech’s alleged failure to offer this kind of monitoring prevented Vibra-Tech from performing certain jobs, Scott Kavalek never informed his superiors at Vibra-Tech of any particular jobs that Vibra-Tech could perform if only it would provide these services. (Trial Trans. (D. T. Froedge) 1/18/2012, 128:12-128:14). Furthermore, Roberta Kavalek was unable to remember any job that Vi-bra-Tech was unable to bid on or obtain because of an inability to conduct web-based monitoring. (Trial Trans. (R. Kavalek) 1/25/2012,128:12-128:25).

66. The Kavaleks arranged for Charles Bauman, a Vibra-Tech Field Technician from 2004 to 2006, to work for IGS simultaneously while employed at Vibra-Tech. Beginning in 2005 and while still employed by Vibra-Tech under the supervision of the Kavaleks, Bauman performed Field Technician duties for IGS on projects for Kline Engineering, P.C. and other present or former Vibra-Tech customers. (Trial Trans. (S. Kavalek) 1/13/2012, 77:2-77:8; Trial Trans. (R. Kavalek) 1/17/2012, 126:1-134:24; 1/26/2012, 26:3-27:18; P-93C). On a number of occasions, the Kavaleks actually scheduled Bauman to work full days for IGS customers when he was being paid to work for Vibra-Tech. (Trial Trans. (R. Kavalek) 1/26/2012, 57:10-59:18; P-406). He continued his dual role until he ultimately left Vibra-Tech to work for IGS full-time in November 2006.

67. During the term of his employment with IGS and up to the end of his two-year non-competition- covenant with VibraTech, Charles Bauman worked on projects for IGS for former Vibra-Tech customers who became IGS customers, including:

a. Kline Engineering, P.C. (Trial Trans. (S. Kavalek) 1/17/2012, 39:21-40:3; Trial Trans. (R. Kavalek) 1/17/2012, 126:1-127:7, 130:9-134:24; P-313 at KE 0052-6; P-406; P-411; P-508 at 37:4-37:12, 38:23-39:5; P-509 at 15:2-15:12).

b. Langan Engineering & Environmental Services (P-406; P-408)

c. Newmark Engineering P.C. (P-352; P-406)

68. IGS sales to these Vibra-Tech customers between 2006 and 2009 totaled $827,500.

69. During the time of his employment with IGS and up to the end of his two-year non-competition covenant with VibraTech, Charles Bauman worked on projects for potential Vibra-Tech customers who became IGS customers, including:

a. 11-01 43rd Avenue, LLC

b. Gladden Properties, LLC

c. Velocity at Greystone, LLC

70. IGS sales to these potential VibraTech customers totaled $134,847.

E. Geotech

71. Geotech was and is in the business of selling geotechnical equipment. (Trial Trans. (S. Kavalek) 1/13/2012, 35:18-35:24). Geotech is also in the business of providing geotechnical services, such as sound and slip plane monitoring. Geotech also provides services to IGS as a subcontractor. (Trial Trans. (R. Kavalek) 1/17/2012, 143:4-143:17; 1/18/2012, 66:19-66:23; P-337 at Newmark 599).

72. Geotech conducted its business from 213 Front Street, Mt. Holly, NJ, which was and is the home of the Kavaleks. With IGS, Geotech recently opened a new office at 2800 Sylon Boulevard, Hainesport, NJ. (Trial Trans. (R. Kavalek) 1/17/2012,114:10-117:15).

73. According to Geotech’s corporate records, Scott Kavalek owns 60% of the stock of Geotech and Roberta Kavalek owns 40%. (Trial Trans. (S. Kavalek) 1/13/2012, 3:15-3:19; Trial Trans. (R. Kavalek) 1/17/2012,100:21-101:4; P-201)

74. Scott Kavalek is and since its formation has been the President of Geotech. (Trial Trans. (S. Kavalek) 1/13/2012, 3:15-3:19). He also set up its website. (Trial Trans. (S. Kavalek) 1/13/2012, 48:13-48:22).

75. Roberta Kavalek is and has been since its formation the Vice-President, Secretary, and an employee of Geotech. Roberta Kavalek performed all of Geo-tech’s bookkeeping. Roberta performed the great majority of Geotech’s billing to Vibra-Tech. She also performed product ordering and payment duties for Geotech. (Trial Trans. (S. Kavalek) 1/17/2012, 82:5-82:14; Trial Trans. (R. Kavalek) 1/17/2012, 100:13-100:15; 1/18/2012, 81:10-81:12; 1/26/2012, 20:25-21:9). Roberta Kavalek was an authorized signer for the Geotech bank accounts. (Trial Trans. (R. Kavalek) 1/17/2012, 167:23-167:24). Roberta Kavalek was paid income from Geotech, which she reported on her taxes. (Trial Trans. (R. Kavalek) 1/18/2012, 88:5-88:8; P-158 at D 5869).

76. Roberta Kavalek communicated with equipment suppliers, such as Canary Systems and RST Instruments, on behalf of Geotech while using her personal Geo-tech e-mail address. (Trial Trans. (S. Kavalek) 2/1/2012, 93:2-95:1; P-360 at RST 0102-0103; P-227).

77. From 2004 until the termination of the employment of each at Vibra-Tech, Scott and Roberta Kavalek conducted the business of Geotech while simultaneously employed by Vibra-Tech.

78. Scott Kavalek never reported to anyone at Vibra-Tech that he had a business relationship with Geotech. (Trial Trans. (S. Kavalek) 1/13/2012, 39:13-39:15; 1/17/2012, 88:3-88:8; Trial Trans. (D. T. Froedge) 1/18/2012, 112:15-113:7; Trial Trans. (S. Shamany) 1/19/2012, 94:2-94:7).

79. Roberta Kavalek never reported to anyone at Vibra-Tech, other than Scott Kavalek, that she had a business relationship with Geotech. (Trial Trans. (D. T. Froedge) 1/18/2012,112:15-113:7).

80. Scott or Roberta Kavalek wrote and signed all of the checks on behalf of Geotech. (Trial Trans. (R. Kavalek) 1/17/2012,108:18-108:21; P-306G).

81. A few months prior to Geotech’s incorporation in late 2004, Scott Kavalek contacted RST Instruments, a geotechnical equipment manufacturer, about becoming its representative in the New York City area. Scott Kavalek sent a lengthy solicitation e-mail from his personal AOL e-mail address and not his Vibra-Tech e-mail address, even though the use of his VibraTech e-mail address and signature would have carried more weight with a distributor. Scott Kavalek failed to notify anyone at Vibra-Tech of his attempt to become an RST distributor. (Trial Trans. (S. Kavalek) 2/1/2012, 74:17-86:2; P-360 at RST 0261, 0262).

82. Scott Kavalek made an agreement with RST Instruments whereby he would personally receive commissions from RST based on Vibra-Tech’s purchases of equipment from RST. As part of this effort, he requested equipment catalogs from RST so that he could supply them to potential customers. Roberta Kavalek communicated with RST in May 2005 on behalf of Geotech for the purpose of obtaining equipment catalogs. (Trial Trans. (S. Kavalek) 2/1/2012, 74:17-86:2; P-360 at RST 0102-0103, 0200, 0202, 0242-3, 0261, 0262). RST’s first invoices to Geotech show “commissions” paid to Geotech for sales made previously to Vibra-Tech. (P-360A).

83. After Geotech’s incorporation, the RST kickback scheme was modified so that Geotech would make purchases directly from RST, then resell that equipment to Vibra-Tech at a markup. Invoices from RST detail that Geotech received a 15% sales commission on certain equipment purchased by Vibra-Tech from RST from November of 2004 until January of 2005. (Trial Trans. (S. Kavalek) 2/1/2012, 74:17-86:2; P-360 at RST 0200, 0202, 0261, 0262; P-360A).

84. From February 2005 to April 2008, Scott Kavalek, through his position as Vi-bra-Tech’s Area Manager, caused VibraTech to purchase equipment from Geotech. Vibra-Tech could have purchased the same equipment directly from suppliers at a lower price, but Scott Kavalek misused his authority as Area Manager to demand and authorize purchases through Geotech. (Trial Trans. (S. Kavalek) 1/13/2012, 33:24-36:12; Trial Trans. (D. T. Froedge) 1/18/2012,140:22-141:3).

85. Scott Kavalek, in his capacity as Area Manager, decided what equipment Vibra-Tech ordered from Geotech. (Trial Trans. (D. Rudenko) 1/11/2012, 145:7-145:24; Trial Trans. (S. Kavalek) 1/17/2012, 6:l-6:9).

86. Roberta Kavalek issued the invoices to Vibra-Tech on behalf of Geotech. (Trial Trans. (S. Kavalek) 1/17/2012, 82:8-82:14).

87. Before Vibra-Tech discovered that the Kavaleks were actually the owners and operators of Geotech, the Kavaleks had caused Vibra-Tech to purchase more than $279,000 in equipment from Geotech. CP-81; P-93; P-209; Trial Trans. (S. Kavalek) 1/13/2012, 37:14-38:16; Trial Trans. (D. T. Froedge) 1/18/2012, 138:13 — 138:22; Trial Trans. (S. Shamany) 1/19/2012, 90:16-90:25).

88. Scott Kavalek determined what prices and therefore what markup to charge Vibra-Tech for equipment sold by Geotech. (Trial Trans. (S. Kavalek) 1/17/2012, 89:9-89:20).

89. On April 8, 2008 Scott Kavalek caused Vibra-Tech to place an order with Geotech for 25 new tilt beams for the Oliver House project at a cost of $15,375. (Trial Trans. (S. Kavalek) 1/17/2012, 75:22-76:25; P-209 at Invoice 8040801). The 25 tilt beams that were supplied by Geotech were not new, but were instead used tilt beams already owned by Vibra-Tech, which Vibra-Tech had purchased and used on another project known as Avalon Bay in 2003. Vibra-Tech was contractually obligated to remove the tilt-beams after the Avalon Bay job was completed. (Trial Trans. (D. T. Froedge) 1/18/2012, 141:4-141:21; 1/19/2012, 62:16-64:3; P-214 at VT 4899). Pursuant to the contract, the beams were salvaged by a crew of VibraTech employees, including Scott Kavalek, and were subsequently reconditioned by Vibra-Tech employees. (Trial Trans. (S. Kavalek) 1/17/2012, 77:1-81:3). Scott Kavalek did not disclose the origin of the beams to his superiors at Vibra-Tech. (Trial Trans. (S. Kavalek) 1/17/2012, 87:20-87:24).

90. The Kavalek Defendants have argued that Geotech’s sales of equipment to Vibra-Tech provided a benefit to VibraTech in that Geoteeh was supposedly able to obtain lower prices from suppliers due to its status as a distributor and to pass those lower costs on to Vibra-Tech. I do not credit this argument. The Kavalek Defendants have provided no credible evidence as to why the various suppliers would not have provided products to Vi-bra-Tech at the same price that they were provided to Geotech. If this was indeed a benefit to Vibra-Tech, it would have made sense for the Kavalek Defendants to disclose this information to their superiors at Vibra-Tech. They did not do so and, in fact, consciously concealed that relationship. (Trial Trans. (S. Kavalek) 1/13/2012, 40:25-41:2). If distributorship agreements provided lower prices to Geotech, then it stands to reason that Vibra-Tech should have been able to obtain the same distributorship agreements and the same prices since Geotech was operated by Vibra-Tech employees. Even if Geotech did obtain lower prices from suppliers than those Vi-bra-Tech could have obtained, there is only a benefit to Vibra-Tech if Geotech’s profit margin on each sale to Vibra-Tech did not exceed the amount of price advantage that Geotech obtained.

91. IGS and Geotech were substantially intertwined. IGS and Geotech shared the same office space, which was in a single room in the Kavaleks’ home. (Trial Trans. (R. Kavalek) 1/17/2012, 114:10-117:15; P-145A). IGS provided customers with a document which claimed that IGS was a distributor for several equipment suppliers, including Campbell Scientific, RST Instruments and Airlink, when it was actually Geotech that was a distributor for these suppliers. (Trial Trans. (R. Kavalek) 1/17/2012, 136:16-137:17; P-357 at VAN 022-4). Geotech and IGS shared the fax number at the Kavaleks’ home. (Trial Trans. (S. Kavalek) 2/1/2012, 90:21-91:2; P-360 at RST 0245). Geotech and IGS shared the same desktop computer in the Kavalek home and both Kavaleks had access to it. Likewise, each Kavalek had free access to each other’s e-mail accounts, including Scott Kavalek’s Vibra-Tech account. (Trial Trans. (S. Kavalek) 1/13/2012, 49:22-50:4; P-507 1/8/2010 (Deposition of S. Kavalek) at 30:2-30:24). There were numerous substantial case transfers between the companies. (P-171).

F. Scott Kavalek’s termination

92. At the conclusion of an investigation into Scott Kavalek’s conduct, on May 30, 2008, Douglas Rudenko and Sean Shamany conducted a termination interview of Scott Kavalek at the Mt. Holly office. Scott Kavalek was interviewed and falsely denied that either he or his wife, Roberta Kavalek, had any affiliation with IGS. He denied having any knowledge about the existence of IGS or its operations. (Trial Trans. (S. Kavalek) 1/17/2012, 93:18-93-24; Trial Trans. (S. Shamany) 1/19/2012, 91:1-95:22).

93. Regarding Geotech, he stated that Geotech was Roberta Kavalek’s company, but acknowledged that he had a 49% ownership interest in Geotech. He claimed that he only performed website and consulting work on behalf of Geotech. He admitted that he had never told anyone at Vibra-Tech about his relationship with Geotech. (Trial Trans. (S. Shamany) 1/19/2012, 91:1-94:7).

G. Evidence Tampering

93. Vibra-Tech uncovered a discrepancy between the IGS invoices produced by the Kavalek Defendants and corresponding IGS invoices obtained by subpoena from IGS’s customers. Specifically, the Kavaleks produced copies of invoices to IGS’s customers in discovery that listed “RK” (Roberta Kavalek) as the “Sales Rep” for Kline Engineering and Newmark Engineering. Vibra-Tech later obtained copies of the same invoices via subpoena from IGS’s customers that listed “SJK” (Scott Kavalek) as the sales representative for the very same IGS equipment and services. The Kavalek Defendants had produced comparable copies of invoices with the same identifying number, date, customer, product and price. The only difference between the IGS invoices produced by the customers and those produced by the Kavalek Defendants is that the former showed “SJK” (Scott Kavalek) as the assigned “Sales Rep” for the IGS customer and the latter showed “RK” (Roberta Kavalek). (Trial Trans. (B. Linden-berg) 1/24/2012, 103:13-115:23; P-34: P-35: P-36; P-37; P-38; P-38A-38H; P-39; P-39A-39L; P-40; P-40A-40I; P-41; P-41A-41C; P-42).

95. Vibra-Tech’s review of the Quick-Books accounting files of IGS revealed a blatant, repetitive and extensive pattern of tampering with evidence. The Quick-Books program has a feature known as “Audit Trail.” The Audit Trail report lists each accounting transaction and any additions, deletions or modifications that affect that transaction. Audit Trail reports introduced at trial demonstrated substantive alterations to the QuickBooks data for invoices issued by IGS to three of its largest customers, Kline Engineering, McLaren Engineering, and Newmark Engineering. (P-31; Trial Trans. (B. Lindenberg) 1/24/2012,116:1-126:21).

96. Exhibit P-31, page 13, is a portion of the Audit Trial report relating to IGS invoice # 612091, dated December 16, 2006. It demonstrates that the invoice was from IGS to Kline Engineering for $4575 and the “Rep” for the account was initially recorded as “Scott J. Kavalek.” The report shows that the initial data for the invoice was entered in QuickBooks on January 20, 2007. It was subsequently modified on November 9, 2008 at 16:33 (4:33 p.m.). The only change made at that time was