Chaichimansour v. Pets Are People Too, No. 2, Inc.

• Decision Date: 20 March 1997
• Docket Number: No. A96A2227,A96A2227
• Citation: 226 Ga.App. 69,485 S.E.2d 248
• Parties: , 97 FCDR 1539 CHAICHIMANSOUR et al. v. PETS ARE PEOPLE TOO, NO. 2, INC.
• Court: Georgia Court of Appeals

Page 248

485 S.E.2d 248

226 Ga.App. 69, 97 FCDR 1539

CHAICHIMANSOUR et al. v. PETS ARE PEOPLE TOO, NO. 2, INC.

No. A96A2227.

Court of Appeals of Georgia.

March 20, 1997.

Reconsideration Denied April 4, 1997.

Certiorari Denied Oct. 3, 1997.

Garcia & Powell, Ralph W. Powell, Jr., John W. Daniel, Athens, for appellants.

James P. McCrary, Atlanta, for appellee.

POPE, Presiding Judge.

Plaintiff Pets Are People Too hired defendant Suzanne Chaichimansour as the manager of one of its veterinary clinics and as a veterinarian. In her employment contract, Chaichimansour agreed that for two years following termination of her employment, she would not manage a veterinary clinic or work as a veterinarian within five miles of the clinic she managed (and at which she worked as a veterinarian) for plaintiff. Nevertheless, she voluntarily left her job and through defendant Best Friend Veterinary Services, Inc., purchased Northeast Expressway Animal Clinic, Inc., an existing veterinary practice located within five miles of plaintiff's clinic. Plaintiff brought this action to enjoin Chaichimansour from managing or providing veterinary services at the newly purchased clinic, and the trial court granted plaintiff's request for a permanent injunction. Concluding that the covenant not to compete is reasonable and enforceable, we affirm.

1. Defendants argue that the covenant not to compete is overbroad, and thus unenforceable, because it prevents Chaichimansour from serving clients whom she never saw or had contact while employed by plaintiff.

Covenants not to compete in employment contracts are enforceable if they are reasonable in terms of duration, territorial coverage, and the scope of activity precluded, considering the legitimate business interests the employer seeks to protect and the effect on the employee. See W.R. Grace & Co., etc. v. Mouyal, 262 Ga. 464(1), 422 S.E.2d 529 (1992); Watson v. Waffle House, 253 Ga. 671(2), 324 S.E.2d 175 (1985). Using this analysis, we have enforced covenants at least as restrictive as this one, including covenants which precluded competition with respect to clients with whom the employee had not had contact while working for the employer. See, e.g., Delli-Gatti v. Mansfield, 223 Ga.App. 76, 78(3), 477 S.E.2d 134 (1996) (no provision of medical services for twelve months in Upson County); McAlpin v. Coweta Fayette Surgical Assocs., P.C., 217 Ga.App. 669, 672(2), 458 S.E.2d 499 (1995) (no practice of medicine or surgery for two years in ten-county area, including part of Atlanta); Annis v. Tomberlin & Shelnutt Assocs., 195 Ga.App. 27, 30(2), 392 S.E.2d 717 (1990) (no participation in competitive business for three years within fifty-mile radius); Moore v. Preferred Research, 191 Ga.App. 26, 381 S.E.2d 72 (1989) (no pursuit of similar business for one year in twenty-five-mile radius of any of employer's places of business).

In support of their argument that the covenant is overbroad because it precludes competition with respect to clients with whom Chaichimansour did not deal while employed by plaintiff, defendants cite Darugar v. Hodges, 221 Ga.App. 227, 229, 471 S.E.2d 33 (1996) and Vortex Protective Svc. v. Dempsey, 218 Ga.App. 763, 766(2)(a), 463 S.E.2d 67 (1995), in which we did hold covenants overbroad on this ground. Vortex and Darugar in turn relied on W.R. Grace & Co., 262 Ga. at 466-467(2), 422 S.E.2d 529, in which the Supreme Court said that "the prohibition against post-employment solicitation of any customer of the employer located in a specific geographic area is an unreasonable and overbroad attempt to protect the employer's interest in preventing the employee from exploiting the personal relationship the employee has enjoyed with the employer's customers." But this quote was preceded by the statement that a restriction is enforceable as a legitimate protection of the employer's interest as long as it relates only to a specific area in which the employee actually did business for the employer prior to termination. Id. at 466, 422 S.E.2d 529.

The Court in W.R. Grace & Co. examined a covenant which had no geographical limitation but restricted only the employee's contact with clients the employee had contacted while working for the employer. In concluding that the covenant was reasonable, it did not hold that all covenants must restrict only the employee's contact with clients with whom he or she had contact while working for the employer in order to be reasonable. Rather, it focused on the interplay between the territorial limitation and the scope of the prohibition: if the scope of prohibited behavior is narrow enough (e.g., contacting those with whom the employee dealt while working for the employer), the covenant may be reasonable even if it has no territorial limitation or has a territorial limitation which is very broad. ¹ But if the scope of the prohibition is broader, the territorial limitation must be specified and closely tied to the area in which the employee actually worked.

In this case, the territorial limitation is specific, narrow, and closely tied to where Chaichimansour actually worked for plaintiff up until the time she left. ² Accordingly, this prohibition is reasonable even though it prohibits her from providing veterinary services to anyone within that limited area, without regard to whether she had contact with them when she was working for plaintiff.

In Vortex and Darugar, we held that covenants prohibiting competition for clients with whom the employee had not had a business relationship while employed by the employer were unreasonable, even though the covenants in those cases did have territorial limitations. It appears that these cases are distinguishable, since unlike the territorial limitation in this case, the territorial limitations in Vortex and Darugar were somewhat broader than the territory the employee's activities actually covered. But the language in Vortex and Darugar suggesting that prohibitions on competition with respect to customers or potential customers beyond those with whom the employee dealt during his employment will always be unreasonable, even if in a specified and reasonable geographic area, is disapproved. See Darugar 221 Ga.App. at 229, 471 S.E.2d 33; Vortex, 218 Ga.App. at 766-767, 463 S.E.2d 67.

2. Defendants also contend the covenant not to compete is unenforceable because the employment contract contains an unenforceable liquidated damages provision which cannot be severed. The liquidated damages provision is in a separate paragraph from the covenant not to compete, however, and that provision's reference to the paragraph containing the covenant not to compete does not make it an integral part of that paragraph. Thus, even if we assume the liquidated damages provision is unenforceable, ³ there would be no reason not to give effect to the severability agreement contained in the contract and enforce the contract without the liquidated damages clause. See OCGA § 13-1-8.

Judgment affirmed.

ANDREWS, C.J., BIRDSONG, P.J., and BEASLEY, JOHNSON, BLACKBURN, SMITH, RUFFIN and ELDRIDGE, JJ., concur.

McMURRAY, P.J., concurs in part and dissents in part.

McMURRAY, Presiding Judge, concurring in part and dissenting in part.

1. The majority in Division 1 would "disapprove" language in Vortex Protective Svc. v. Dempsey, 218 Ga.App. 763, 765(2), 766-767(2)(a), 463 S.E.2d 67, for "suggesting that prohibitions on competition with respect to customers or potential customers beyond those with whom the employee dealt during his employment will always be unreasonable, even if in a specified and reasonable geographic area...." (Emphasis supplied.) Majority opinion, Division 1, p. 249, ante. But that is precisely the rationale employed by the Supreme Court in defining the parameters of permissible restrictions in post-employment non-compete covenants. "A restriction relating to the area where the employee did business on behalf of the employer has been enforced as a legitimate protection of the employer's interest (Puritan/Churchill Chem. Co. v.McDaniel, [248 Ga. 850, 851(1), 286 S.E.2d 297 ]; Howard Shultz [Schultz] & Assoc., etc. v. Broniec, [239 Ga. 181, 183, 236 S.E.2d 265 ] ), but the prohibition against post-employment solicitation of any customer of the employer located in a specific geographic area is an unreasonable and overbroad attempt to protect the employer's interest in preventing the employee from exploiting the...