A-Line TDS, Inc. v. Frank Martuscelli

IN THE COURT OF APPEALS OF IOWA
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No. 25-1077
Filed April 15, 2026
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A-Line TDS, Inc.,
Plaintiff–Appellant,
v.
Frank Martuscelli,
Defendant–Appellee.
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Appeal from the Iowa District Court for Black Hawk County,
The Honorable Andrea J. Dryer, Judge.
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AFFIRMED AND REMANDED WITH INSTRUCTIONS
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Brandon M. Schwartz and Michael D. Schwartz of Schwartz Law Firm,
Oakdale, Minnesota, attorneys for appellant.

Adam J. Babinat and Luke M. Zahari of Redfern, Mason, Larsen & Moore,
P.L.C., Cedar Falls, attorneys for appellee.
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Considered without oral argument
by Tabor, C.J., and Badding and Sandy, JJ.
Opinion by Sandy, J.

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SANDY, Judge.

A-Line TDS, Inc. (A-Line) appeals the district court’s order granting
Frank Martuscelli’s motion for summary judgment. A-Line argues the
district court abused its discretion by ruling on Martuscelli’s summary
judgment motion before it ruled on A-Line’s motion to compel, and erred in
granting summary judgment for Martuscelli. We affirm, determining the
district court did not abuse its discretion or commit any error of law. We
award Martuscelli his reasonable attorney fees and remand for the district
court’s determination of appropriate appellate attorney fees.

BACKGROUND FACTS AND PROCEEDINGS
Martuscelli signed a non-compete agreement with his employer,
A-Line, in May 2015. Before that, Martuscelli worked for Transformer
Disposal Specialists, Inc., a company which A-Line later purchased. The
non-compete agreement with A-Line limited Martuscelli’s ability to compete
with A-Line during his employment and for a period thereafter due to
Martuscelli’s technical expertise in “the business of providing
decommissioning and buying, collecting, processing, recycling and selling
scrap metal, oil, and oil filled electrical equipment, and in the business of
removal of all equipment and structures associated therewith, and in the
business of selling surplus assets.”

Under the non-compete agreement and relevant to this suit,
Martuscelli agreed he would not “engage in the business of, or be employed
by, or perform services for, any firm . . . similar to [A-Line]” for a period of
three years after the end of his employment at A-Line. Under a non-
inducement covenant, he also agreed not to “induce, either directly or
indirectly, any employee, agent, independent contractor, supplier, customer
or any other person or organization to terminate or alter its relationship with

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A-Line” during that same period. Lastly, the non-disclosure covenant
provided that Martuscelli would not “directly, or indirectly, use for
[Martuscelli] or use for, or disclose to, any party other than A-Line, any
secrets or confidential information or data regarding the business of A-Line”
at any time during or after his employment with A-Line. In furtherance of
that non-disclosure provision, Martuscelli agreed that he would
deliver to A-Line all property belonging to A-Line, including but not
limited to all memoranda, notes, records, plans, or other documents made
or compiled by, delivered to, or otherwise acquired by, [Martuscelli],
concerning costs, uses, methods, designs, applications, or purchasers of
products sold by or brokered by A-Line or any confidential products,
process, system, or method used, developed, acquired or investigated by
A-Line.

Martuscelli’s employment with A-Line ended on March 28, 2018. On
that date, he signed a resignation agreement which reaffirmed Martuscelli’s
“continuing obligations” under the non-compete agreement. It also required
Martuscelli to “turn over his cell phone and all numbers included therein to
[A-Line] upon execution of this Agreement.” An A-Line employee then
drove Martuscelli to a local Verizon store where a Verizon employee, at
Martuscelli’s direction, transferred “some, but not all, of the data” on
Martuscelli’s old cell phone to a new cell phone with a new number.1 The
district court found that Martuscelli did not personally place any of the old
phone’s data onto the new phone.

The aforementioned non-compete and non-solicitation covenants of
the non-compete agreement expired on March 28, 2021. On April 8, 2024,
over six years after the end of his employment with A-Line, Martuscelli

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Martuscelli’s old phone number was both his personal and work phone number
during his employment with A-Line. He had no other phone number until turning over
his old phone and phone number to A-Line.

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began employment with Sunbelt Solomon Services, LLC (Sunbelt). Sunbelt
is a business competitor to A-Line.

The district court summarized Martuscelli’s relevant
communications after he began his employment at Sunbelt as follows:
After he began working for Sunbelt, [Martuscelli] texted or called
Thomas Dougherty, a former employee of [A-Line]. [Martuscelli] had
known Dougherty since the early 2000s, when Dougherty worked as a
truck driver for Transformer Disposal Specialists. They also raced cars
together.

[Martuscelli] contacted Dougherty to see if Dougherty would
consider working for Sunbelt. Dougherty was not interested in working for
Sunbelt.

[Martuscelli] also asked Dougherty for information about a
material handling system for which [A-Line] owns the U.S. patent.
Dougherty had used the tool and knew how it worked.

Photographs, drawings, descriptions, and details of [A-Line]’s
patented material handling system are publicly available by means of a U.S.
patent record search.

After he began working for Sunbelt, [Martuscelli] called or texted
another former employee of [A-Line], Donald Conrad, whom
[Martuscelli] had known since working for Transformer Disposal
Specialists, to see if Conrad would consider working for Sunbelt.
[Martuscelli] arranged for a meeting between Conrad and Sunbelt
representatives. Conrad met with Sunbelt representatives. Sunbelt offered
Conrad employment, but Conrad did not accept it.

[Martuscelli] also asked Conrad about the material handling
system for which [A-Line] owns the U.S. patent.

[Martuscelli] has not replicated or attempted to replicate the
material handling system for which [A-Line] owns the U.S. patent.

After he began working for Sunbelt, [Martuscelli] called or texted
Mike Pendergrass, a representative of Entergy Arkansas, Inc., a customer
of [A-Line], to see if Entergy Arkansas, Inc. would do business with

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Sunbelt. [Martuscelli] had known Pendergrass since 2013 when
[Martuscelli] worked for Transformer Disposal Specialists

A-Line filed its petition against Martuscelli on May 30, 2024. It raised
three claims against Martuscelli. The first claim was for breach of contract
with A-Line alleging that Martuscelli used A-Line’s information, “including
trade secrets, confidential information, and data” as well as sharing the same
with Sunbelt. In its tortious-interference-with-contract claim, A-Line alleged
that Martuscelli “intentionally and improperly interfered with A-Line’s
customer contracts by using A-Line’s information, including trade secrets,
confidential information, and data that Martuscelli had and provided to
Sunbelt to improperly compete with A-Line.” A-Line broadly claimed that
Martuscelli’s actions under those counts had “damaged” it. Lastly, A-Line
raised a tortious-interference-with-prospective-advantage claim, alleging
that Martuscelli interfered with A-Line’s prospective contractual and
business relationships by “using A-Line’s information, including trade
secrets, confidential information, and data,” which A-Line claims “caused
the relationships to fail to materialize.”

Martuscelli moved for summary judgment, arguing there are no
undisputed material facts. A-Line opposed summary judgment under Iowa
Rule of Civil Procedure 1.981(6) and additionally moved to compel further
discovery. In June 2025, the district court granted Martuscelli’s motion for
summary judgment. The court concluded:
The record lacks evidence from which the trier of fact could find
[A-Line] suffered financial losses resulting from the March 2018 transfer
of data from [Martuscelli]’s old cell phone to the newer cell phone
[Martuscelli] has used since March 2018.

The record lacks evidence from which the trier of fact could find
[Martuscelli] improperly interfered with a contract [Martuscelli] knew
existed between [A-Line] and a third party.

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The record lacks evidence from which the trier of fact could find
[Martuscelli] improperly interfered with a prospective contractual or
business relationship between [A-Line] and a third party.

A-Line now appeals the district court’s order.

ERROR PRESERVATION
A-Line initially argues that the district court abused its discretion in
ruling on Martuscelli’s motion for summary judgment before first ruling on
its motion to compel. Martuscelli challenges error preservation on this issue,
noting that the ruling on summary judgment did not address A-Line’s motion
to compel and that A-Line failed to move to enlarge following the ruling.

“It is a fundamental doctrine of appellate review that issues must
ordinarily be both raised and decided by the district court before we will
decide them on appeal.” Meier v. Senecaut, 641 N.W.2d 532, 537 (Iowa 2002).
Under rule 1.904, a party may file a motion to allow the district court to
“amend or enlarge its findings and conclusions, and to enable the court to
modify its judgment or enter a new judgment.” Id. at 538. But “[w]hen a
ruling is strictly limited to a question of law, a motion to reconsider amounts
to nothing more than a rehash of the legal question.” Id. Thus, a subsequent
hearing raising the same legal question” would “serve[] little purpose” and
“is merely repetitive.” Id.

In opposing summary judgment, A-Line expressly argued that
summary judgment would be inappropriate due to its pending motion to
compel and that further discovery was required more broadly under
rule 1.981. In its view, further discovery was “directly relevant to the issues
of the breach of the resignation agreement and confidential release and the
resulting damages.” A-Line asserts that by rejecting A-Line’s arguments
against summary judgment, the court also ruled on A-Line’s insistence that

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further discovery was necessary. Because A-Line did request that the district
court continue or deny the motion for summary judgment in favor of further
discovery and the court nonetheless granted summary judgment, we assume
without deciding that A-Line preserved error and proceed to the merits on
this issue.

Martuscelli further contends that A-Line failed to preserve error on its
claim that it is entitled to injunctive relief. We disagree. A-Line sought
injunctive relief in its petition. Martuscelli moved for summary judgment
“on all claims currently pending against him.” In opposing summary
judgment, A-Line argued that the disputed facts require further proceedings
to resolve all claims, including its claims to injunctive relief. The district
court then granted summary judgment on all claims. Error is preserved.

STANDARD OF REVIEW
We review the district court’s discovery rulings for abuses of
discretion, overturning those rulings only upon determination that the
court’s discretion was “exercised on clearly untenable grounds or to an
unreasonable extent.” Miller v. Cont’l Ins., 392 N.W.2d 500, 503 (Iowa 1986).

Rulings on motions for summary judgment are reviewed for correction
of legal error. Ratcliff v. Graether, 697 N.W.2d 119, 123 (Iowa 2005). Summary
judgment should be granted only where “there is no genuine issue of material
fact and . . . the moving party is entitled to a judgment as a matter of law.
There is no fact issue if the only dispute concerns the legal consequences
flowing from the undisputed facts.” Id. (citation omitted).

DISCUSSION
A-Line presents two primary arguments to us on appeal. First, it
argues that the district court abused its discretion by granting Martuscelli’s

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summary-judgment motion before first considering A-Line’s motion to
compel further discovery, which A-Line contends would have enabled it to
defend against Martuscelli’s summary-judgment motion. Second, A-Line
urges that the district court erred by granting Martuscelli’s summary-
judgment motion upon finding there were no genuine issues of material fact.

I. Motion to Compel

Following Martuscelli’s motion for summary judgment, A-Line
opposed summary judgment under rule 1.981(6) and moved to compel
discovery, requesting a copy of Martuscelli’s current phone contacts list,
employment documents with Sunbelt, various communications with
customers and former employees of A-Line, and other records, including
information about site visits he made for Sunbelt. The district court granted
summary judgment without ruling on that motion to compel.

Although a district court is permitted discretion in ruling on discovery
issues, see Miller, 392 N.W.2d at 503, that discretion has limits, see Carter v.
Jernigan, 227 N.W.2d 131, 135 (Iowa 1975) (“[A] party against whom a
summary judgment motion is made should first be allowed to discover the
facts if he desires.”). Our supreme court has repeatedly limited that
discretion when assessing the propriety of a district court’s discovery rulings
when summary judgment is at issue. See Carter, 227 N.W.2d at 135; Moser v.
Thorp Sales Corp., 312 N.W.2d 881, 891 (Iowa 1981); Iowa State Dep’t of
Health v. Hertko, 282 N.W.2d 744, 755 (Iowa 1979).

Generally, “rulings on motions relative to discovery should be made
before a summary judgment is considered.” Miller, 392 N.W.2d at 503. When
a district court is considering whether to delay a summary-judgment ruling
for further discovery, it must consider whether “the facts which plaintiffs
must prove are peculiarly within the knowledge of defendants.” See id. Iowa

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Rule of Civil Procedure 1.981(6) is a mechanism by which a party opposing
summary judgment can “set forth by affidavit the reasons why it cannot
proffer evidentiary affidavits and what additional factual information is
needed to resist the motion” for summary judgment. See Good v. Tyson Foods,
Inc., 756 N.W.2d 42, 46 (Iowa Ct. App. 2008) (citation omitted). This
requirement under rule 1.981 is meant to ensure that the additional discovery
could reasonably affect the case outcome and that the requested continuance
is specific and justified rather than a dilatory tactic. See Bitner v. Ottumwa
Cmty. Sch. Dist., 549 N.W.2d 295, 301–02 (Iowa 1996). The opposing party
should be able to explain “how those facts are reasonably expected to create
a genuine issue of material fact.” See id.

In its rule 1.981 argument, A-Line asserted that the information it
sought to compel was “directly relevant to the issues of the breach of the
Resignation Agreement and Confidential Release and the resulting
damages.” A-Line contended that disclosure of Martuscelli’s contacts and
communications would reveal “additional breaches [of the resignation
agreement] and likely more damages.” But these vague and general
justifications are not sufficient for continuing a summary-judgment ruling
under rule 1.981(6). Godfredson v. Ford Motor Co., No. 11-1754, 2012
WL 3026788, at *4–5 (Iowa Ct. App. July 25, 2012) (“[S]uspicion and
conjecture are insufficient to support [a] motion to compel.”). Most notably,
the motion to compel provided no explanation about what damages further
discovery would reveal. Even in its briefing on appeal, A-Line simply states
that further discovery would “vet out the timing of lost projects with
Mr. Martuscelli’s contacts and the corresponding lost projects and resulting
damages.” Failing to describe how a continuance could reasonably reveal
damages, see Bitner, 549 N.W.2d at 301, A-Line’s motion to compel served as

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a request for the company to engage in a fishing expedition whereby it would
cross-reference its own customer records with Sunbelt’s customer records.

We see no abuse in discretion in the district court’s failure to rule on
or grant A-Line’s motion to compel.

II. Summary Judgment

Summary judgment is granted only when the requesting party has
established as a matter of law that the party is entitled to judgment on the
merits. Iowa R. Civ. P. 1.981. “If the pleadings, depositions, answers to
interrogatories, admissions on file and any affidavits show no genuine issue
of material fact, summary judgment is proper.” Miller, 392 N.W.2d at 503.
But if any “genuine question of material fact remains, the motion must be
denied.” Id.

To prevail on a claim for breach of contract, a plaintiff must prove
“(1) the existence of a contract; (2) the terms and conditions of the contract;
(3) that it has performed all the terms and conditions required under the
contract; (4) the defendant’s breach of the contract in some particular way;
and (5) that plaintiff has suffered damages as a result of the breach.” Molo Oil
Co. v. River City Ford Truck Sales, Inc., 578 N.W.2d 222, 224 (Iowa 1998). To
prevail on a claim for intentional interference with a contract, the plaintiff
must prove “(1) [the] plaintiff had a contract with a third-party; (2) [the]
defendant knew of the contract; (3) [the] defendant intentionally and
improperly interfered with the contract; (4) the interference caused the third-
party not to perform, or made performance more burdensome or expensive;
and (5) damage to the plaintiff resulted.” Green v. Racing Ass’n of Cent. Iowa,
713 N.W.2d 234, 243 (Iowa 2006) (citation omitted). And to show intentional
interference with a prospective contractual or business relationship, a
plaintiff must prove “(1) [a] prospective contractual or business relationship;

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(2) the defendant knew of the prospective relationship; (3) the defendant
intentionally and improperly interfered with the relationship; (4) the
defendant’s interference caused the relationship to fail to materialize; and
(5) the amount of resulting damages.” Blumenthal Inv. Trs. v. City of West Des
Moines, 636 N.W.2d 255, 269 (Iowa 2001) (citation omitted).

For each of its claims, A-Line was required to assert that it suffered
damages. As we alluded to above, A-Line failed to assert any specific theory
as to how it suffered damages from Martuscelli’s purported breaches.
A-Line, appearing to recognize this problem, simply points to the general
boilerplate language in the resignation agreement which states that breaches
of the agreement “would cause irreparable harm that cannot be adequately
compensated with money damages”—justifying its requested injunction
against Martuscelli. But if the harm A-Line suffered was so severe that not
even money damages could mend it, A-Line should be able to clearly define
that irreparable harm. Indeed, A-Line itself admitted “[i]t’s very hard to say”
whether it suffered financial harm or if it had lost any contracts due to
Martuscelli’s employment with Sunbelt. It instead argues that a different
entity, Midwest Transformer “could very well have lost some transformer
orders.”

To demonstrate harm, A-Line now generally asserts that it “lost out
on temporally isolated opportunities” to solicit clients for business, citing LS
Power Midcontinent, LLC v. State for the proposition that our courts recognize
those purported missed opportunities as irreparable harm. See 988
N.W.2d 316, 338 (Iowa 2023). This case can be easily distinguished from LS
Power. At that time, Iowa Code section 478.16(2) (2023) blocked “would-be
competitors in the electric transmission market . . . from bidding against
existing Iowa operators on future projects.” See id. at 322. The LS Power

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court enjoined the statute pending the resolution of LS Power’s claims at
trial. Id. at 338. This permitted LS Power to submit bids for contracts that it
would otherwise have been statutorily prohibited from doing so. See id. The
statute’s prohibition made the harm to LS Power inevitable by restricting its
single-subject, title-clause, and equal-protection rights under the Iowa
Constitution through “rent-seeking, protectionist,” and “anticompetitive”
terms, making the statute’s inflationary effects on the Iowa electric market
“common sense” and supported by research data. See id.

Unlike LS Power, A-Line is not restricted by an anticompetitive statute
that our supreme court described as “quintessentially crony capitalism.” See
id. A-Line is instead faced with an essential element of modern capitalism:
market competition. Martuscelli is experienced with attracting potential
customers to his transformer-decommissioning employers. Sunbelt, no
doubt, hired him for his experience in that role. And absent a particularized
theory of damages arising from Martuscelli’s purported breaches, summary
judgment is appropriate here. A-Line’s inability to articulate a theory of past
harm or damages makes its claims of future harm unlikely as well.2

The district court did not err in granting summary judgment.

2
A-Line argues that under Hockenberg Equipment Co. v. Hockenberg’s Equipment &
Supply Co. of Des Moines, Inc., future harm is presumed when a party concedes that a
breach of an agreement “would result in irreparable harm to the plaintiff and entitle it to
an injunction against the defendants.” 510 N.W.2d 153, 158 (Iowa 1993). But there, a jury
expressly found that the defendants had breached the contract at issue, and the defendants
also “conceded breaching the settlement agreement.” Id. at 158. No such finding or
concession applies here.

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III. Appellate Attorney Fees

Martuscelli requests an award of his appellate attorney fees. “When
judgment is recovered upon a written contract containing an agreement to
pay an attorney fee, the court shall allow and tax as a part of the costs a
reasonable attorney fee to be determined by the court.” Iowa Code § 625.22
(2024). The parties’ resignation agreement contained a provision stating,
“The prevailing party in any legal action brought to enforce this Agreement
shall be entitled to reasonable attorney fees and costs.” Pursuant to that
provision, we agree that Martuscelli shall be awarded his reasonable attorney
fees. Because Martuscelli has not filed any affidavit in support of an award of
appellate attorney fees, we remand this issue to the district court for
determination of the appropriate amount of appellate attorney fees upon
Martuscelli’s submission of a fee affidavit.

AFFIRMED AND REMANDED WITH INSTRUCTIONS.

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