Sears Termite & Pest Control v. Arnold

• Decision Date: 22 November 1999
• Docket Number: No. 98-4715.,98-4715.
• Citation: 745 So.2d 485
• Parties: SEARS TERMITE AND PEST CONTROL, INC., Appellant, v. David ARNOLD, individually and d/b/a/ Diamond Termite & Pest Control, and Gary Atchey, individually and as agent for Diamond Termite & Pest Control, Appellees.
• Court: Florida District Court of Appeals

745 So.2d 485

SEARS TERMITE AND PEST CONTROL, INC., Appellant, v. David ARNOLD, individually and d/b/a/ Diamond Termite & Pest Control, and Gary Atchey, individually and as agent for Diamond Termite & Pest Control, Appellees.

No. 98-4715.

District Court of Appeal of Florida, First District.

November 22, 1999.

Allen J. McKenna of Garwood, McKenna, McKenna & Wolf, P.A., Orlando, for Appellant.

Nickolas G. Petersen, Shalimar, for Appellees.

ERVIN, J.

Appellant, Sears Termite and Pest Control, Inc., appeals an order denying its motion to enjoin appellees temporarily, David Arnold, Diamond Termite & Pest Control, and Gary Atchey, from soliciting Sears' customers or hiring Sears' employees. We reverse, as we are unable to discern any reason for the court's denial of the motion.

Sears was formerly known as All America Termite and Pest Control, Inc. All America had hired Arnold as a sales technician, and he executed an employment contract on May 1, 1992, agreeing not to compete with All America for two years upon termination of employment by soliciting All America's customers or by hiring All America employees. On March 17, 1997, Sears Roebuck and Co. purchased 100 percent of the stock of All America, and subsequently changed its name to Sears Termite and Pest Control.

Arnold was promoted to zone manager, supervising employees in Inverness, Naples and Fort Walton Beach, Florida, as well as Charlotte, North Carolina. Atchey was one of Arnold's assistant managers in Fort Walton Beach, and also signed a non-compete agreement. On September 11, 1997, Arnold began a sole proprietorship, called Diamond Termite & Pest Control. Thereafter, Sears filed a complaint for damages for breach of contract and a motion for temporary injunction against Arnold, Diamond and Atchey. After an evidentiary hearing, the court denied the motion for temporary injunction without comment.

Appellees' primary argument on appeal is that the agreements were unenforceable, because Arnold and Atchey signed them when employed by All America, which did not assign the contracts to Sears. Their assignment, however, was not required under the facts at bar. Sears Roebuck's acquisition of All America's stock did not affect its contractual rights and obligations. 18 C.J.S. § 283 Corporations (1990) ("The fact that there is a change in the ownership of corporate stock does not affect the corporation's existence or its contract rights, or its liabilities.") (footnotes omitted). Accordingly, the change from "All America Termite and Pest Control" to "Sears Termite and Pest Control, Inc." was merely a name change, and did not affect the employer's corporate identity. See Stewart v. Preston, 80 Fla. 473 & 479, 86 So. 348 (1920).

In contrast, in Johnston v. Dockside Fueling of North America, Inc., 658 So.2d 618 (Fla. 3d DCA 1995), the employee was no longer bound by a non-compete agreement in his employment contract with Dockside Fueling Service, because during Johnston's employment, Dockside Fueling was dissolved and transferred its assets to Dockside N.A. Accord Schweiger v. Hoch, 223 So.2d 557 (Fla. 4th DCA 1969) (after dissolution of partnership and creation of new one, accountant's continued employment did not constitute consent to assign original contract containing non-compete agreement). A 100 percent stock purchase does not involve a dissolution of the corporate entity.

Appellees' contention that the non-compete agreement was invalid because it did not include a geographical limitation is incorrect, as the courts have held that when such an agreement is otherwise valid but lacks a geographic restriction, the courts should supply a reasonable restriction. Kenco Chem. & Mfg. Co. v. Railey, 286...