Gillen v. Diadrill, Inc.

• Decision Date: 24 September 1981
• Docket Number: No. 1923,1923
• Parties: Billy L. GILLEN and Gary Jarvis, Appellants, v. DIADRILL, INC., Appellee.
• Court: Texas Court of Appeals

Page 259

624 S.W.2d 259

Billy L. GILLEN and Gary Jarvis, Appellants, v. DIADRILL, INC., Appellee.

No. 1923.

Court of Appeals of Texas, Corpus Christi.

Sept. 24, 1981.

Rehearing Denied Oct. 29, 1981.

Second Rehearing Denied Nov. 30, 1981.

Gary Norton, Gary, Thomasson, Hall & Marks, Corpus Christi, for appellants.

Michael Kendrick, Jr., Head, Kendrick & Head, Corpus Christi, for appellee.

Before NYE, C. J., and UTTER and KENNEDY, JJ.

OPINION

UTTER, Justice.

This is an appeal from an order granting a temporary injunction. The suit was brought by appellee, Diadrill, Inc., against two of its former employees, Billy L. Gillen and Gary Jarvis, appellants, to enforce a one-year restrictive non-competitive agreement. After the hearing the trial court determined that a temporary injunction should be granted but that the agreement should be modified to a period of nine (9) months as to appellant Billy L. Gillen and to a period of six (6) months as to appellant Gary Jarvis. As to the appeal of Gary Jarvis, the court order enjoining him for six (6) months has lapsed and therefore his appeal is moot.

The appellant Gillen, during the summer of 1980, executed an employment contract with appellee and was employed by appellee until March, 1981 at which time his services were terminated. The covenant not to compete contained in the employment agreement is as follows:

"6. Covenant not to compete. In the event that the employment of EMPLOYEE hereunder shall terminate for any reason, whether because of the expiration of this agreement or otherwise, EMPLOYEE agrees that during the period of twelve (12) months following the termination of his employment he will not, directly or indirectly, either through any kind of ownership.... or as a director, officer, agent, employee or consultant, engage in the business of developing or marketing products which are competitive with products marketed by EMPLOYER at the time his employment is terminated, within the marketing area served by the EMPLOYEE during the period of his employment by EMPLOYER. It is expressly agreed that the remedy at law for breach of this covenant is inadequate and that injunctive relief shall be available to prevent the breach thereof." (Underlining ours)

Subsequently, appellant accepted a position with appellee's competitor Davis and Hicks. The evidence showed that Gillen, at the time of his termination of employment for appellee, took certain records, including price lists, inventory records, pictures of appellee's bits, and bit performance records showing the names of appellee's customers. The record further shows that he had solicited and obtained business from at least one of appellee's customers on behalf of Davis and Hicks.

Our review in this case is limited to the determination of whether the trial court abused its discretion in granting the temporary injunction. We cannot substitute our judgment for that of the trial court. Texas Foundries v. International Moulders & F. Wkrs., 151 Tex. 239, 248 S.W.2d 460 (Tex.1952).

The appellant's main points of error are that (1) the covenant not to compete was not specific enough as to the items which were to be protected; (2) the trial court enlarged upon the covenant not to compete by enjoining appellant from providing services and instructions in operational techniques; (3) the evidence was insufficient for the trial court to grant the issuance of a temporary injunction restraining appellant from providing services and instructions in operational techniques of such drill bits in that they did not constitute trade secrets; (4) the area specified in the court's order By signing the covenant not to compete appellant agreed not to "engage in the business of developing or marketing products which are competitive with products marketed by employer at the time his employment is terminated". As evidenced by the record in this case the state of the art of the technical phase of the oil business is in a constant need for new and improved methods of drilling for oil. Drilling bits are an integral part of this development. It is impossible to tell from day to day what new ideas will come forth and how they will implement the practices and procedures now in use.

was unreasonable; and (5) when an employer is in breach of an employment agreement the employer is not entitled to an injunction.

This is also true of the term "marketing". Different circumstances require different marketing techniques, information and data. It also may encompass more diversified methods of dissemination of information in some businesses as compared to others. Therefore in a non-competitive agreement of this type it would be impractical if not impossible to particularize each and every phase of developing or marketing which would need to be identified in order to protect the employers' interest.

The trial court, after hearing all of the evidence, specifically limited appellant from engaging in business in selling, marketing and developing as to three items; drill bits, stabilizers and cement mills. Under the law it was incumbent upon the trial court to particularize the specific activities from which the appellant was to be enjoined. We hold that the non-competitive agreement was not overbroad as to the specific interests to be protected thereunder. Coiffure Continental, Inc. v. Allert, 518 S.W.2d 942 (Tex.Civ.App.-Dallas 1975, writ ref'd, n.r.e.) and Toch v. Eric Schuster Corporation, 490 S.W.2d 618 (Tex.Civ.App.-Dallas 1972, writ ref'd, n.r.e.).

Appellant next claims that the trial court's order enlarged upon the covenant not to compete by prohibiting appellant from providing services and instructions in operational techniques. It is admitted by appellant and appellee that there was a conflict in the testimony as to the amount and degree of the technical advice, information or expertise acquired by appellant which was attributable to the employment with appellee. The trial court resolved this conflict against appellant. There were no findings of fact or conclusions of law requested or filed in this cause. Under these circumstances the trial court's ruling should not be disturbed, absent an abuse of discretion. As stated in Davis v. Huey, 571 S.W.2d 859 (Tex.1978):

"The appellate court may not substitute its judgment for that of the trial court. Texas Foundries v. International Moulders & F. Wkrs., supra. An abuse of discretion does not exist where the trial court bases its decisions on conflicting evidence. Zmotony v. Phillips, 529 S.W.2d 760 (Tex.1975). Here, as no findings of fact or conclusions of law were filed, the trial court judgment must be upheld on any legal theory supported by the record. Seaman v. Seaman, 425 S.W.2d 339 (Tex.1968)."

Under the evidence we believe this was not an enlargement of the obligations imposed under the non-competition agreement and did not constitute an abuse of discretion. Weatherford Oil Tool Company v. Campbell, 161 Tex. 310, 340 S.W.2d 950 (Tex.1960); Arrow Chemical v. Pugh, 490 S.W.2d 628 (Tex.Civ.App.-Dallas 1972, no writ); Obsowitz v. Askin Stores, 306 S.W.2d 923 (Tex.Civ.App.-Eastland 1957, writ ref'd) and Grace v. Orkin Exterminating Co., 255 S.W.2d 279 (Tex.Civ.App.-Beaumont 1953, writ ref'd, n.r.e.).

Appellant further contends that information which is generally available in the industry cannot be the basis of a valid covenant not to compete, citing Custom Drapery Company v. Hardwick, 531 S.W.2d 160 (Tex.Civ.App.-Houston (1st District) 1975, no writ). The evidence in this case establishes that the development, manufacturing and selling of drill bits is a highly competitive business. It is clear that the The following definition of a "trade secret" from the American Law Institute Restatement of Law has been approved:

experience gained by appellant would enable appellant's new employer, Davis and Hicks, to use the information in their operation and as a result, Davis and Hicks would become more competitive in a shorter period of time than would likely be the case without the services of appellant.

"A trade secret may consist of any formula, pattern, device or compilation of information which gives him an opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers."

See Hyde Corporation v. Huffines, 158 Tex. 566, 314...