BB&T Ins. Servs., Inc. v. Renno

• Decision Date: 13 October 2021
• Docket Number: A21A1114
• Citation: 361 Ga.App. 415,864 S.E.2d 608
• Parties: BB&T INSURANCE SERVICES, INC. v. Hoyt E. RENNO, Jr. et al.
• Court: Georgia Court of Appeals

361 Ga.App. 415

864 S.E.2d 608

BB&T INSURANCE SERVICES, INC.

v.Hoyt E. RENNO, Jr. et al.

A21A1114

Court of Appeals of Georgia.

October 13, 2021

Timothy Riker Newton, Atlanta, for Appellant.

Warren Rhodes Hall Jr., Brian S. Abrams, Atlanta, for Appellee.

Dillard, Presiding Judge.

BB&T Insurance Services, Inc. appeals from the trial court's grant of summary judgment in favor of Hoyt E. Renno, Jr. and John Snellings Walters Insurance Agency, Inc. d/b/a Snellings Walters Insurance Agency. In doing so, BB&T asserts that the trial court erred in granting the motion because (1) Renno's employment agreement with it was ancillary to the sale of a business, (2) the terms of the agreement were enforceable under lesser scrutiny, (3) it was not estopped from enforcing the agreement, (4) Renno violated the agreement, and (5) there was sufficient evidence to withstand summary judgment on whether Snellings Walters interfered with its business relationships. For the reasons set forth infra , we affirm.

Viewed in the light most favorable to BB&T (i.e. , the non-moving party),¹ the record shows that on April 2, 2001, it entered into an employment agreement with Renno. This agreement noted that BB&T purchased Stephens & Company Insurance Services, Inc.—a company for which Renno was both a shareholder and director—and provided that Renno would be employed by BB&T. The document further reflected that BB&T wished to "secure [Renno's] participation in the business" for "reasonable and proper compensation," protect its proprietary and confidential information, and protect itself in the event Renno's employment was terminated. And under the terms of the contract, Renno was named a vice president of BB&T, and his "official position" was "Business Insurance Agent III."

Earlier, on February 8, 2001, Renno and two fellow minority shareholders in Stephens & Co. executed a document by which the majority shareholder transferred 5,985 of his 15,750 shares to the three minority shareholders (1,995 shares each), leaving them with 7,245 shares each and the majority shareholder with 9,765 shares. The document also provided that the stock transfer closing would take place "one (1) day prior to, and shall be contingent upon[ ] consummation of the contemplated business reorganization between [Stephens & Co.] and BB&T Corporation." Thus, before signing the employment agreement on April 2, 2001, Renno and the three other joint shareholders and directors of Stephens & Co. executed a transfer of assets from that company to BB&T in the reorganization.

Following the execution of these various agreements, Renno worked for BB&T until April 23, 2018, at which time both he and another employee, Cameron Davis, notified BB&T that they were resigning from their positions, effective immediately. After Renno's resignation, BB&T took inventory of his office and discovered that three-ring binders containing customer information were missing. Indeed, on the eve of his resignation, Renno was seen removing a number of items from his office, including three-ring binders. BB&T also found that, prior to his resignation, its computer system prevented Renno from exporting a contact list of some 2,000 to 3,000 of his customers to his personal email address. Additionally, just before submitting his resignation, Renno used his BB&T email account to send an email to his personal account. This email blind-copied BB&T clients to inform them of Renno's impending resignation and included within the signature line a hyperlink to his personal LinkedIn page, which had been updated to show his new professional email address and place of employment—Snellings Walters. Davis sent a similar email within the next hour. Renno and Davis then left BB&T's office and went to work for Snellings Walters that same day.

On the day Renno and Davis resigned from BB&T, Renno texted another BB&T employee, Cheryl O'Pry, requesting that she meet him and Davis for breakfast before work; and the following day, a principal from Snellings Walters sent O'Pry a text message. Shortly thereafter, O'Pry also submitted her resignation to BB&T in order to go work for Snellings Walters.

In the wake of these resignations, multiple BB&T clients from Cobb County and counties contiguous to Cobb moved their business to Snellings Walters. And since his departure, Renno has sold and serviced insurance products in those counties. Indeed, as of April 2019, BB&T claimed it had suffered $949,395 in lost commission revenue.²

BB&T filed suit against Renno, asserting that he breached his employment agreement with regard to the provisions for non-competition, customer solicitation, employee solicitation, and confidentiality.³ BB&T later amended its complaint to add a claim against Snellings Walters for tortious interference with its contractual and employment relationships. Renno and Snellings Walters filed a motion for summary judgment, and BB&T filed its own motion for partial summary judgment. Following a hearing on the matter, the trial court issued an order on the parties’ competing motions. Specifically, the trial court concluded that the relevant covenants existed in an employment agreement, rather than within the sale agreement for Stephens & Co. to BB&T, and thus, they were subject to strict scrutiny.

In reaching its decision, the trial court concluded that the restrictive covenants related only to Renno's employment and not to the sale of the business. And as a result, the court determined that Renno had no more bargaining power with BB&T than an ordinary employee, thus supporting the application of strict scrutiny to those covenants. Alternatively, the trial court concluded that Renno's original employment agreement had expired and that subsequent renewals of the contract did not include the sale of Stephens & Co. as consideration. Finally, the court held that, regardless of the level of scrutiny applied, BB&T could not enforce the covenants due to its own breach of the contract. The court also found that no evidence supported the claim that Snellings Walters tortiously interfered with BB&T's business relationships. Accordingly, the trial court granted Renno and Snellings Walters's motion for summary judgment in its entirety and denied BB&T's motion for partial summary judgment. This appeal follows.

Summary judgment is proper if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."⁴ And to prevail on a motion for summary judgment, the moving party "must demonstrate that there is no genuine issue of material fact."⁵ If so, that party is entitled to judgment as a matter of law.⁶ This may be done by "either presenting evidence negating an essential element of the plaintiff's claims or establishing from the record an absence of evidence to support such claims."⁷ With the foregoing in mind, we turn to BB&T's claims of error.

1. For starters, BB&T asserts that the restrictive covenants in Renno's employment contract are ancillary to the sale of a business and, thus, are subject to much less scrutiny and may be blue penciled to make any overbroad terms valid. Alternatively, BB&T argues that there is a genuine issue of material fact on this question. We disagree.⁸

Restrictive covenants that impose an unreasonable restraint on trade are void as against public policy.⁹ And whether restrictive covenants are reasonable is a question of law, which we review de novo.¹⁰ In this regard, our courts apply "different levels of scrutiny to restrictive covenants depending generally upon whether the contract at issue is an employment contract, a contract for the sale of a business, or a professional partnership agreement[.]"¹¹ So, traditionally, our courts "divide restrictive covenants into covenants ancillary to an employment contract, which receive strict scrutiny and are not blue-penciled, and covenants ancillary to a sale of business, which receive much less scrutiny and may be blue-penciled."¹² And we have consistently held that "when parties execute separate contracts for the seller's sale of the business and the seller's subsequent employment and each contract contains different restrictive covenants, the restrictive covenants in the employment contract are subject to strict scrutiny."¹³

In conducting this analysis, we consider the relative bargaining power of the parties and whether there is independent consideration for the restrictive covenant.¹⁴

And courts have reasoned that contracts of employment receive strict scrutiny because they can involve "parties of unequal bargaining power,"¹⁵ while contracts for sales of business interests receive less scrutiny because they are more likely to be "entered into by parties on equal footing."¹⁶

Here, BB&T argues that the restrictive covenants at issue are ancillary to its purchase of Stephens & Co. and, thus, are subject to much less scrutiny. But Renno contends that the restrictive covenants are solely part of his employment agreement and, thus, are subject to strict scrutiny. The trial court agreed with Renno and, even viewing the evidence in the light most favorable to BB&T, we do as well.

The record shows that although Renno's employment agreement references the sale of Stephens & Co. to BB&T, only the employment agreement contains the relevant restrictive covenants, and this contract specifically provides that its purpose is to create an employment relationship between BB&T and Renno. As a result, this situation is similar to those in which the two agreements contain different restrictive covenants rather than the same restrictive covenants—i.e. , the contracts are considered separate with strict scrutiny applied to the employment agreement.¹⁷

Additionally, the acquisition agreement between Stephens & Co. and BB&T provides that, along with the other three shareholders, "[o]n the Closing...