American Speedreading Academy, Inc. v. Holst

• Citation: 496 S.W.2d 133
• Decision Date: 24 May 1973
• Docket Number: No. 7482,7482
• Parties: AMERICAN SPEEDREADING ACADEMY, INC., Appellant, v. Donald R. HOLST et al., Appellees.
• Court: Court of Appeals of Texas. Court of Civil Appeals of Texas

Page 133

496 S.W.2d 133

AMERICAN SPEEDREADING ACADEMY, INC., Appellant, v. Donald R. HOLST et al., Appellees.

No. 7482.

Court of Civil Appeals of Texas Beaumont.

May 24, 1973.

William M. Hayner, Dallas, for appellant.

C. Bruce Stratton, Liberty, for appellees.

KEITH, Justice.

Plaintiff below sought a temporary injunction to restrian the violation of an agreement not to compete. Upon the hearing, the trial court modified a temporary restraining order previously issued and refused to enter a broader order sought by plaintiff below and the appeal is from the denial of the complete relief sought.

Appellant, plaintiff below, according to its pleadings, 'is in the business of selling, counseling, advising and soliciting accelerated learning, speed reading and related topics to the general public and owning, operating, managing, licensing and directing speed reading academies where individuals are taught the art of speed reading through classes and demonstrations.'

It alleged that the defendant was a former employee of plaintiff who had executed a written instrument wherein he agreed not to compete with plaintiff for a period of two years after he left plaintiff's employment 'within a 1,000 mile radius of any class conducted by the company, its successors or assigns, or a classroom used by the company, its successors or assigns.'

Further allegations were that defendant had breached said agreement by establishing an organization known as 'National Speedreading School,' in violation of the agreement not to compete and was using 'its tests, acceptance letters, sales materials, teaching manuals and other materials' used by plaintiff which, according to the allegations were 'unique in its field.' All of such activity was, according to the pleading, to the great damage of plaintiff for which it had no clear, complete, and adequate remedy at law. Plaintiff also sought actual and exemplary damages upon the final hearing.

Defendant's verified answer attacked the geographical area of the noncompetitive agreement as being unreasonable and void; denied that he had received the 'materials' from plaintiff, averring that he had such materials in his possession before he ever entered into any relationship with plaintiff; and pleaded, inter alia, the doctrines of laches and unclean hands.

Extensive oral and documentary evidence was introduced upon the hearing, the latter being before us in original form.

The trial court, being of the opinion that the covenant not to compete was unreasonable as written and that it should 'be revised to make it reasonable by limiting said covenant not to complete to Dallas County, Texas,' modified the temporary restraining order so as to make the temporary injunction applicable only in Dallas County . It also found that the 'materials, methods, processes and techniques of plaintiff are not trade secrets,' dissolved the prior restraining order preventing defendant's use thereof and denied a temporary injunction against such use.

By its first point, plaintiff complains that the trial court 'abused its equity powers by unreasonably limiting the covenant not to compete to Dallas County, Texas.'

At the time of the execution of the agreement not to compete, on June 12, 1971, defendant was employed by the plaintiff at its Dallas office and the plaintiff had no school, classroom, or place of business in or near Jefferson or Orange Counties in Texas. Defendant began his operations in Beaumont about January 25, 1972, and plaintiff established that it had entered into a franchise agreement with one Joe Francis to operate an 'American Speedreading Academy' in Jefferson and Orange Counties, and he had been in business 'Beaumont since January of '72,' but no more specific date is shown. Plaintiff operates some twenty-two schools in Texas and elsewhere in the nation, but outside of Dallas, our record reveals only two specific locations--Beaumont and San Angelo, both operated as franchise establishments.

Upon oral submission, counsel for plaintiff admitted, as indeed he was compelled to, that the area restriction in the contract was unreasonable. In Lewis v. Krueger, Hutchinson and Overton Clinic, 153 Tex. 363, 269 S.W.2d 798, 799 (1954), the Court affirmed an injunction granted after the contractual period of time had been reformed to one which was reasonable. This was followed by Spinks v . Riebold, 310 S.W.2d 668, 670 (Tex.Civ.App., El Paso, 1958, error ref.), wherein the trial court was directed to confine an injunction to a limited area wherein the defendant would actually compete with his former employer.

Then, in Weatherford Oil Tool Company v. Campbell, 161 Tex. 310, 340 S.W.2d 950, 952 (1960), Justice Walker synthesized the holdings by saying: 'These cases hold that although the territory or period stipulated by the parties may be unreasonable, a court of equity will nevertheless enforce the contract by granting an injunction restraining the defendant from competing for a time and within an area that are reasonable under the circumstances.'

Accord: Orkin Exterminating Company v. Veal, 355 S.W.2d 831, 832 (Tex.Civ.App., Fort Worth, 1962, error ref. n.r.e.); Ramey v. Combined American Insurance Company, 359 S.W.2d 523, 526 (Tex.Civ.App., San Antonio, 1962, no writ); Arrow Chemical Corporation v. Anderson, 386 S.W.2d 309, 314 (Tex.Civ.App., Dallas, 1965, error ref. n.r.e.); Wilson v. Century Papers, Inc., 397 S.W.2d...