Centel Cellular Co. of Texas v. Light, 12-91-00009-CV

• Decision Date: 30 October 1992
• Docket Number: No. 12-91-00009-CV,12-91-00009-CV
• Citation: 841 S.W.2d 95
• Parties: 1993-1 Trade Cases P 70,197 CENTEL CELLULAR CO. OF TEXAS, Appellant, v. Debbie LIGHT, Appellee.
• Court: Texas Court of Appeals

Page 95

841 S.W.2d 95

1993-1 Trade Cases P 70,197

CENTEL CELLULAR CO. OF TEXAS, Appellant, v. Debbie LIGHT, Appellee.

No. 12-91-00009-CV.

Court of Appeals of Texas Tyler.

Oct. 30, 1992.

Rehearing Denied Nov. 30, 1992.

James T. Womack, Longview, for appellant.

Bruce A. Smith, Gregory T. Grajczyk, Longview, for appellee.

COLLEY, Justice.

The dispute in this case arises from a covenant not to compete contained in a written contract of employment between Appellee and United TeleSpectrum. United TeleSpectrum was formerly engaged in the business of selling only radio pagers but before the contract of employment was executed on October 8, 1987, TeleSpectrum received a license from the Federal Communications Commission authorizing it to sell and install cellular telephone systems in northeast Texas.

Appellee first went to work for TeleSpectrum in August of 1985 as a salesperson. She became an outstanding salesperson of pagers and received several awards for her outstanding performances. Thereafter, United TeleSpectrum sold its entire business to Appellant, Centel Cellular Company of Texas, and Appellee continued to work for Appellant as a salesperson. In the spring of 1988, Appellee was selling both pagers and cellular phones systems for Appellant, but her sales dropped markedly for several reasons. Appellee quit her job with the Appellant on May 30, 1988.

On November 30, 1988, Appellee sued Appellant alleging a cause of action under TEXAS BUSINESS & COMMERCE CODE ANN. § 15.21(a)(1) (Vernon 1987), ¹ specifically claiming that the "covenant not to compete constituted an illegal restraint on trade" under the then existing decisions in Martin v. Credit Protection Assoc., Inc., 793 S.W.2d 667 (Tex.1990), and DeSantis v. Wackenhut Corp., 793 S.W.2d 670 (Tex.1990), which adopted the so-called "common calling" doctrine declared in Hill v. Mobile Auto Trim, Inc., 725 S.W.2d 168 (Tex.1987).

On August 8, 1990, Appellee filed her third amended petition (live pleading at trial), alleging two causes of action, one under TEX.BUS. & COMM.CODE ANN., § 15.21(a)(1) (Vernon 1987) (hereinafter "Section 15.21") (Count I), and one under the common law doctrine of tortious interference with prospective contractual relationships (Count II). ²

In pre-trial proceedings, the Appellee moved for a partial summary judgment that the covenant not to compete was unenforceable. The trial court granted the motion, and on April 23, 1990, signed an interlocutory order finding that Appellee "was engaged in a common calling occupation" and that the covenant "constitutes a restraint on trade and... [violates] section 15.05(a) of the TEX.BUS. & COMM.CODE."

The trial court, on Appellant's motion to reconsider Appellee's motion for partial summary judgment, vacated the April 23, 1990 order on July 13, 1990, and in its stead, concluded simply that the covenant based on the summary judgment evidence presented was "unreasonable and constitutes a restraint on trade and is therefore unenforceable." On July 18, 1990, Appellee filed her motion to "reurge partial summary judgment." In response to that motion, the trial court on August 20, 1990, finally amended his order of July 13, 1990 by finding as a matter of law, that "the contract 'was not ancillary to an otherwise valid transaction or relationship'," and "is unreasonable and constitutes a restraint on trade and is therefore unenforceable."

On August 29, 1990, the cause was tried to a jury, and based on their verdict the court signed a judgment in favor of Appellee for actual damages.

The court submitted six jury questions. Question number one inquired whether Appellant "tortiously interfered with [Appellee] entering into a prospective contract which proximately caused damages to [Appellee]?" In that question the court instructed the jury that the elements of tortious interference with a prospective contract were as follows:

1. A reasonable probability existed that Appellee would have entered into a contractual relationship;

2. Appellant by an intentional and malicious act prevented the relationship from occurring, with the purpose of harming Appellee;

3. Appellant lacked privilege or justification to do the act, and;

4. Appellee sustained actual harm as a result of the Appellant's interference.

The jury answered question one, "Yes."

Question two asked whether "[Appellee] suffered injury to her business or property by reason of [Appellant's] conduct?" In this question the court gave an accompanying instruction to the jury that the court had ruled that the covenant not to compete was unenforceable. The jury answered question two, "Yes."

In question number three, the jury was asked whether "the covenant not to compete had an adverse effect on competition in the cellular phone market?" The jury said, "No."

Question number four went unanswered pursuant to the court's preceding instructions.

In response to question number five, the jury found the amount of reasonable attorney's fees that Appellee incurred at trial and would incur on appeal.

This verdict was received; whereupon, Appellant filed its motion for judgment non obstante veredicto that the Appellee take nothing based on, inter alia, the grounds that, (1) the court should disregard the answer to question number one because the evidence conclusively establishes that Appellant "was justified and privileged" to take the action it did, after Appellee "quit" working for Appellant, and (2) that there was no evidence to support the affirmative finding to question number one.

Appellant alleges ten points of error. By its first point, Appellant claims that the court erred in granting the "partial summary judgment" for Appellee. By its second point of error, Appellant argues that the trial court "erred in denying" its motion for summary judgment on the whole case.

We hold the opinion that the court's action overruling Appellant's summary judgment motion under the facts and circumstances reflected by this record does not constitute reversible error. See Ackermann v. Vordenbaum, 403 S.W.2d 362 (Tex.1966), and Tobin v. Garcia, 159 Tex. 58, 316 S.W.2d 396 (1958). Therefore, we now turn to address Appellant's first point of error.

Under established law, the question of whether a covenant not to compete is reasonable and therefore enforceable, is a question of law for the court. DeSantis v Wackenhut Corp., 793 S.W.2d 670, 682 (Tex.1990); Henshaw v. Kroenecke, 656 S.W.2d 416, 418 (Tex.1983). According to DeSantis, a covenant not to compete must meet the standards of reasonableness, (1) "[the covenant] must be ancillary to an otherwise valid transaction or relationship"; (2) "the restraint created by the [covenant] must not be greater than necessary to protect the promisee's legitimate interests"; and, (3) "the promisee's need for the protection afforded by the [covenant] ... must not be outweighed by either the hardship to the promisor or any injury likely to the public." DeSantis, 793 S.W.2d at 681-82.

The DeSantis court explained the first of the reasonableness criteria by saying that the covenant is unreasonable "unless it is part of and subsidiary to an otherwise valid transaction or relationship which gives rise to an interest [of the promisee] worthy of protection." Id. at 682. "Such transactions or relationships include ... employment relationships." Id. The court gave examples of such worthy interests, viz., "business goodwill, ... and other confidential or proprietary information." Id. The court also recognized that the covenant must be "limited appropriately as to time, territory, and type of activity," but noted that a court sitting in equity has the power to reform or modify a covenant to make it reasonable in respect to time, territory, and type (scope) of activity. Id. The court then explained that in consideration of the third criteria, the covenant may not impose undue "hardship to the promisor.... Before [a covenant] will be enforced, its benefits [for promisee] must be balanced against its burdens, both to the promisor and the public." Id. The court continued, saying, that while the covenant can permissibly accomplish a "salutary purpose" that encourages "an employer to share confidential, proprietary information with an employee in furtherance of their common purpose," the employer may not by reason of a superior bargaining power "take unfair advantage" of his employee, thereby impairing the "employee's personal freedom and economic mobility." Id. In applying the "reasonableness standards" prescribed by DeSantis to this case, we are free to eliminate the "common calling" doctrine of Hill v. Mobile Auto Trim Inc. and Bergman v. Norris of Houston, 734 S.W.2d 673 (Tex.1987), by reason of new legislation (TEX.BUS. & COMM.CODE ANN. §§ 15.50-15.51 (Vernon Supp.1992)). See DeSantis, 793 S.W.2d at 683. To decide the law question here presented in the context of the summary judgment rule (TEX.R.CIV.P. 166a(a)), it would appear that we must either uphold or overturn the trial court's decision on the reasonableness of the covenant without the luxury of relying on whether any material questions of fact were raised and must be decided by the trier of fact at a trial on the merits. To do so, however, we must examine the contract and the face of the covenant as well as the pertinent underlying facts and circumstances surrounding the execution of the contract of employment, and the covenant not to compete contained therein as revealed by the summary judgment evidence.

The summary judgment evidence consists of Appellee's affidavit and the so-called employment contract, both attached to Appellee's motion for a partial summary judgment, as well as the exhibits ³ attached to Appellant's response to Appellee's motion and the oral deposition of LaQuita Allen and Appellee Debbie Light.

The language of the preamble to the contract contains purported agreements of the contracting parties that, United TeleSpectrum provides and sells complex ...