Martin v. Linen Systems for Hospitals, Inc.

• Decision Date: 17 May 1984
• Docket Number: No. 01-83-0342-CV,01-83-0342-CV
• Citation: 671 S.W.2d 706
• Parties: Leroy E. MARTIN, Appellant, v. LINEN SYSTEMS FOR HOSPITALS, INC., et al., Appellee. (1st Dist.)
• Court: Texas Court of Appeals

Page 706

671 S.W.2d 706

Leroy E. MARTIN, Appellant, v. LINEN SYSTEMS FOR HOSPITALS, INC., et al., Appellee.

No. 01-83-0342-CV.

Court of Appeals of Texas Houston (1st Dist.).

May 17, 1984.

John S. Kiibler, Jr., Kiibler & Kiibler, La Porte, for appellant.

Stan Nix, Stan Nix & Associates, Kingwood, for appellee.

Before LEVY, WARREN and DOYLE, JJ.

OPINION

LEVY, Justice.

Appeal is taken from a judgment temporarily enjoining appellant, Leroy E. Martin, from competing with his former employer, Linen Systems for Hospitals, Inc., doing business as Alamo Linen Service ("Alamo"), for the period of January, 1983, through February 1, 1984, thus enforcing a modified covenant not to compete. Appellant's present employer is Admiral Linen Service ("Admiral"), whose business is in substantial and direct competition with Alamo.

Finding that all terms of the non-competition agreement were enforceable, the trial court modified the length of time in which Martin was restricted from seeking competitive employment from 18 months to one year, and reduced the restricted territory from a 10-mile radius of any business or customer of Alamo to a 10-mile radius of Alamo's principal business office in Houston.

Martin's first point of error contends that the order is overbroad as to the type of work he is restricted from doing. Alamo's "industrial" business was described as comprising about 20% of its total sales, the rest consisting of the "general linen" business. Martin is seeking permission on appeal, as he did in the trial court, to solicit industrial accounts inside Houston. Before working for Admiral Linen, Martin solicited out-of-town industrial accounts for Alamo Linen, and had access to Alamo's customer list and pricing information. About half of Alamo's customers are within a 10-mile radius of their main office, and about 90% of all their customers are in Harris County. Generally, Admiral's and Alamo's industrial territories, as distinguished from their general linen accounts, do not coincide--Admiral's being within, and Alamo's without, the City of Houston. Martin has no official job title with Admiral Linen and it is unclear from the record as to what type of work appellant will do for Admiral.

As a consequence of the trial court not filing findings of fact or conclusions of law--neither side having requested any--all reasonable presumptions will be indulged in favor of there having been sufficient evidence to sustain the trial court's judgment. Weber v. Hesse Envelope Co., 342 S.W.2d 652 (Tex.Civ.App.--Dallas 1960, no writ).

The purpose of a temporary injunction is to preserve the status quo pending trial on the merits, and the review on appeal is to determine whether the trial court abused its discretion. Brooks v. Expo Chemical Co., 576 S.W.2d 369, 370 (Tex.1979); Davis v. Huey, 571 S.W.2d 859 (Tex.1978); Transport Co. of Texas v. Robertson Transports, Inc., 152 Tex. 551, 261 S.W.2d 549 (1953).

The test for validity of a non-competition covenant, set forth in Weatherford Oil Tool v. Campbell, 161 Tex. 310, 312, 340 S.W.2d 950, 951 (1960), is "whether it imposes upon the employee any greater restraint than is reasonably necessary to protect the business and goodwill of the employer". Covenants against competition are generally not favored by our courts because of the public policy against restraints of trade and the hardships resulting from interference with a person's means of livelihood. Byers v. Texas--Pecos Abstract Co., 18 S.W.2d 1096 (Tex.Civ.App.--El Paso 1929, writ dism'd.); Custom Drapery Co. v. Hardwick, 531 S.W.2d 160 (Tex.Civ.App.--Houston [1st Dist.] 1975, no writ). The burden of proving the necessity for and the reasonableness of the non-competition covenant is with the employer. Custom Drapery Co. v. Hardwick, supra, at 164.

Where reasonableness has been shown, this Court has granted injunctive relief to protect a former employer's clientele, Kidde Sales & Serv., Inc. v. Peairson, 493 S.W.2d 326, 329-30 (Tex.Civ.App.--Houston [1st Dist.] 1973, no writ). Proof of a continued breach of a non-competition agreement by a highly trained employee constitutes prima facie proof of probable injury. Hartwell's Office World v. Systex Corp., 598 S.W.2d 636 (Tex.Civ.App.--Houston [1st Dist.] 1980, writ ref'd n.r.e.).

In Martin's second point of error, he contends that the order is overbroad as to the area in which appellant is restricted from working. When a court finds a non-competition covenant to be reasonable, it will grant an injunction to enforce the covenant, but if the covenant is excessive or arbitrary, the court may either refuse to enforce the covenant or reform its terms to make them reasonable. Bob Pagan Ford, Inc. v. Smith, 638 S.W.2d 176, 178 (Tex.App.--Houston [1st Dist.] 1982, no writ). The trial court modified the instant original covenant not to compete from within a 10-mile radius of any customer of Alamo's, down to a 10-mile radius of Alamo's main offices. There is sufficient evidence to establish that appellant had worked within the 10-mile radius of Alamo's main offices.

The area restriction, as modified by the trial court, appears to be reasonable and consistent with the guidelines suggested by the Supreme Court of Texas. "Reasonableness", said the Court, "... requires a balance of the interests of the employer, the employee, and the public while being mindful of the basic policies of individual liberty, freedom of contract, freedom of trade, protection of business, encouragement of competition and discouragement of monopoly". Matlock v. Data Processing Security, Inc., 618 S.W.2d 327, 329 (Tex.1981) and cases therein cited.

Instead of invalidating a non-competition covenant whose area restrictions are overbroad, Texas courts have usually reformed the covenant by reducing the area to whatever is reasonable in time and scope under the circumstances, depending largely upon the nature and extent of the employer's business operations. What constitutes a "reasonable" area is generally considered to be the territory in which the employee worked while in the employment of his employer. Justin Belt Co. v. Yost, 502 S.W.2d 681, 685 (Tex.1973); Bob Pagan Ford, Inc., supra, at 178.

We are not persuaded that the trial court abused its discretion in modifying the area and type...