621 S.E.2d 352 (S.C. 2005), 26047, Stonhard, Inc. v. Carolina Flooring Specialists, Inc.

Docket Nº:26047.
Citation:621 S.E.2d 352, 366 S.C. 156
Party Name:366 S.C. 156 STONHARD, INC., Plaintiff, v. CAROLINA FLOORING SPECIALISTS, INC., Daniel Parham, and Manuel T. Parham, Defendants.
Case Date:October 10, 2005
Court:Supreme Court of South Carolina

Page 352

621 S.E.2d 352 (S.C. 2005)

366 S.C. 156

STONHARD, INC., Plaintiff,


CAROLINA FLOORING SPECIALISTS, INC., Daniel Parham, and Manuel T. Parham, Defendants.

No. 26047.

Supreme Court of South Carolina

Oct. 10, 2005

Heard June 15, 2005.

Rehearing Denied Nov. 17, 2005.

[366 S.C. 158] Bradford Neal Martin, Laura W.H. Teer, and William S.F. Freeman, all of Walker Martin & Reibold, of Greenville, for Plaintiff.

W. Andrew Arnold and Brian E. Arnold, both of Arnold & Arnold, of Greenville, for Defendants.


Pursuant to Rule 228, SCACR, we accepted the following questions on certification

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from the United States District Court for the District of South Carolina:

I. May a non-compete agreement that contains a New Jersey choice-of-law provision but no geographical limitation be reformed (or "blue penciled") in accordance with New Jersey law and then enforced in South Carolina?

II. May a non-compete agreement that is reformed (or "blue penciled") under New Jersey law apply to support an award of damages for breaches occurring prior to the time the agreement is reformed?

III. Does South Carolina law allow a court to grant equitable relief extending the term of a non-compete agreement beyond its stated expiration date?

We answer all three questions in the negative.

Factual/Procedural Background

Stonhard, Inc. (Stonhard) sued Carolina Flooring Specialists, Inc., Daniel Parham, and Manuel Parham (Defendants) alleging, among other things, that Defendants violated the terms of a non-compete agreement.1 Stonhard is a flooring company that uses a bidding process to gain customers. Stonhard alleges that Defendants established a competing flooring business (Carolina Flooring) while still employed at [366 S.C. 159] Stonhard, and used their knowledge of Stonhard's pricing policy to marginally underbid Stonhard on several occasions. After Stonhard became aware of this conduct, Defendants were fired. Since then, Defendants have continued to operate Carolina Flooring.

While employed at Stonhard, Defendants signed a non-compete agreement which provides:

During my employment with Stonhard, and for a period of one (1) year subsequent to termination of employment with Stonhard, regardless of the reason for such termination, I shall not compete with Stonhard by engaging in any activity similar to...

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