Firearms Training Systems, Inc. v. Sharp, A94A1351

• Decision Date: 26 May 1994
• Docket Number: No. A94A1351,A94A1351
• Parties: , 1994-2 Trade Cases P 70,673 FIREARMS TRAINING SYSTEMS, INC. v. SHARP.
• Court: Georgia Court of Appeals

Page 538

445 S.E.2d 538

213 Ga.App. 566, 1994-2 Trade Cases P 70,673

FIREARMS TRAINING SYSTEMS, INC. v. SHARP.

No. A94A1351.

Court of Appeals of Georgia.

May 26, 1994.

Reconsideration Denied June 6, 1994.

Certiorari Denied Sept. 16, 1994.

Herbert P. Schlanger, Atlanta, for appellant.

Barry A. Karp, Atlanta, for appellee.

BLACKBURN, Judge.

This direct appeal arises from the attempted enforcement of a restrictive covenant contained in a Property Rights, Non-Disclosure Agreement and Agreement Not to Compete executed by appellee Sharp while employed by the appellant, Firearms Training Systems, Inc., as the director of Firearms' law enforcement sales department. The trial court enjoined Firearms from enforcing the covenant.

Generally, the Supreme Court has exclusive appellate jurisdiction in matters of equity. Ga. Const. of 1983, Art. VI, Sec. VI, Par. III. However, although the case presented involves injunctive relief, "no substantive issues of equity are involved in th[is] [appeal]. Resolution of the [appeal] turns instead on the question of the validity and enforceability of the contract [provision] restricting competition, which is a question of law. [Cit.]" Pittman v. Harbin Clinic Professional Assn., 210 Ga.App. 767, 768, 437 S.E.2d 619 (1993). See also Hart v. Marion A. Allen, Inc., 211 Ga.App. 431, 440 S.E.2d 26 (1993); Smith v. HBT, Inc., 213 Ga.App. 560, 445 S.E.2d 315 (1994). ¹

Firearms is a Delaware corporation in the business of manufacturing and distributing interactive video simulators used in training law enforcement and military personnel worldwide. On January 29, 1992, Sharp signed the agreement at issue. Paragraph 10 of the agreement provided that "[a]fter termination of [his] employment with [Firearms], [Sharp] w[ould] not, for a period of three years, directly or indirectly engage in competition with [Firearms]; that is, [Sharp] w[ould] not enter or engage in the business of developing or selling electronic firearms systems (whether intended for training purposes, amusement purpose or any purposes) in the capacity [Sharp] served during [his] relationship with [Firearms] (or any capacity) either individually, as a partner or joint venture, as an employee, or as an agent, officer, director, or shareholder of any entity or person." Sharp further agreed not to disclose any trade secrets that he obtained while working with Firearms. ² The agreement also provided that Firearms' business activities and Sharp's sales responsibilities were worldwide, but Sharp testified that his sales activities were limited to the continental United States.

Sharp was terminated on May 12, 1993, and subsequently sought employment with Caswell International Corporation, a corporation involved in worldwide sales of interactive firearms training systems. However, Caswell refused to hire Sharp unless the covenant at issue was declared invalid or Firearms refused to enforce it. As a result, Sharp filed the instant action seeking a declaratory judgment and injunctive relief.

Firearms initially asserts that the trial court erred in concluding that the language contained in the covenant not to compete is overbroad, rendering the covenant unenforceable. The corporation further maintains that the restrictions contained therein are sufficiently narrow to support its validity. We disagree.

"While a contract in general restraint of trade or which tends to lessen competition is against public policy and is void (1983 Ga. Const., Art. III, Sec. VI, Par. V(c); OCGA § 13-8-2), a restrictive covenant contained in an employment contract is considered to be in partial restraint of trade and will be upheld 'if the restraint imposed is not unreasonable, is founded on a valuable consideration, and is reasonably necessary to protect the interest of the party in whose favor it is imposed, and does not unduly prejudice the interests of the public.' [Cit.] Whether the restraint imposed by the employment contract is reasonable is a question of law for determination by the court [cit.], which considers ' "the nature and extent of the trade or business, the situation of the parties, and all the other circumstances." (Cits.)' [Cit.] A three-element test of duration, territorial coverage, and scope of activity has evolved as a 'helpful tool' in examining the reasonableness of the particular factual setting to which it is applied. [Cits.]" W.R....