Onbrand Media v. Codex Consulting, Inc.

• Decision Date: 19 November 2009
• Docket Number: No. A09A0867.,A09A0867.
• Parties: ONBRAND MEDIA et al. v. CODEX CONSULTING, INC., et al.
• Court: Georgia Court of Appeals

687 S.E.2d 168

301 Ga. App. 141

ONBRAND MEDIA et al. v. CODEX CONSULTING, INC., et al.

No. A09A0867.

Court of Appeals of Georgia.

November 19, 2009.

Levi Breedlove, for appellants.

Weatherly, Kerven & Seigel, Mitchell G. Weatherly, Mark L. Seigel, for appellees.

DOYLE, Judge.

OnBrand Media, Inc., and Lisa Jones began negotiations with Codex Consulting, Inc., and Open Systems, Inc. ("OSI"), to form a joint venture agreement for the development of a software program that they would market to a specific company. After the negotiations were ultimately unsuccessful, OnBrand and Jones filed suit against Codex and OSI, alleging multiple claims, including, inter alia, breach of contractual duty of good faith and fair dealing and breach of confidentiality. OnBrand and Jones appeal the grant of summary judgment to Codex and OSI. Finding no error, we affirm.

To prevail on a motion for summary judgment, the moving party must demonstrate that

there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. OCGA § 9-11-56(c). A de novo standard of review applies to an appeal from a grant of summary judgment, and we view the evidence, and all reasonable conclusions and inferences drawn from it, in the light most favorable to the nonmovant.¹

So viewed, the record shows that OSI provides technology services and software development to various companies, including Aflac Insurance, with whom it had entered into a Master Services Agreement for certain programming services. Jones, through her company, OnBrand, developed and produced a multimedia email software program called "EyeMail." Jones introduced EyeMail to OSI in 2005, describing it as a marketing tool for sending out e-mail messages with embedded audio, video, animated graphics, and flash applications to a list of recipients. OSI, OnBrand, and Jones then approached Aflac, pitching EyeMail as a tool for promoting Aflac insurance products to its suppliers. Although Aflac initially declined, it ultimately expressed an interest in using EyeMail as a sales tool for its sales force and requested a working prototype by January 2007.

In 2005 and 2006, the parties discussed forming a joint venture to pursue the Eye-Mail project with Aflac, and Jones proposed a specific joint venture agreement in November 2006. The parties, however, never signed such an agreement. During the negotiations, OSI realized that the EyeMail program would require a separate "portal" or web-based interface, and OSI approached Codex Consulting, which agreed to develop the portal in exchange for a share of the ultimate EyeMail subscription revenues. Before OnBrand and Jones would agree to disclose technical details regarding EyeMail, which Codex needed to understand in order to design the portal, they insisted that Codex and OSI sign nondisclosure agreements with OnBrand. Thus, Codex and OSI executed separate documents with OnBrand entitled "Information Exchange/Non[-]Disclosure Agreements" ("NDAs") in October 2006.

In December 2006, Jones sent Codex an email with the subject line, "EyeMail Code — Aflac Men in Sauna," to which she attached three pages of HTML script with the title, "OnBrand Media's Code behind Aflac Men in Sauna EyeMail." Codex and OSI ultimately concluded that there was no software application behind EyeMail and nothing contained therein could interface with a web portal, and thus, the program was not a feasible product to sell to Aflac. Thereafter, Codex and OSI developed a separate web portal and a software program called "RightMail" for creating and sending e-mail messages.²

Although Codex and OSI continued business negotiations with OnBrand, hoping that Jones and her company could assist in selling the RightMail program to Aflac, the negotiations ultimately ended after OnBrand and Jones threatened legal action when Codex and OSI refused to call the program Eye-Mail.

OnBrand and Jones filed suit against Codex and OSI in June 2007, alleging claims for breach of contractual duty of good faith and fair dealing, misappropriation of trade secrets, deceptive trade practices, fraud and deceit, tortious interference with a business opportunity, intentional infliction of emotional distress, violation of the Georgia Uniform Deceptive Trade Practices Act ("UDTPA"), and breach of confidentiality. Codex and OSI filed a motion for summary judgment, which the trial court granted, and this appeal followed.

1. OnBrand and Jones argue that "[t]he trial court failed to apply the appropriate standard at the summary judgment stage. The court reviewed the facts in the light most favorable to the moving party." This enumeration presents no basis for reversal.

On the first page of its order granting summary judgment to Codex and OSI, the trial court specifically noted that it viewed the facts in "the light most favorable to the non-moving party," quoting Hannah v. Hampton Auto Parts.³ Thus, it is clear from the language of the order that the trial court was aware of the proper standard of review.

OnBrand and Jones apparently contend, however, that the trial court failed to actually apply this standard and, instead, viewed the facts in the light favorable to Codex and OSI. In support of this enumeration, OnBrand and Jones list 12 instances where the trial court allegedly failed to view the facts in the proper light.

Assuming, without deciding, that the record citations provided by OnBrand and Jones support their assertion that the trial court viewed the facts in the improper light, they have not shown — in their argument in support of this specific enumeration⁴ — how such facts are material. For example, OnBrand and Jones argue that the trial court's "characterization of Appellants' product as `the idea was, and remains the brainchild of Ms. Jones' is a conclusion reached not based on any facts presented. Appellant Jones ran a company that produced multimedia e-mails prior to Appellees and Appellants ever having met." OnBrand and Jones make no attempt to explain how that characterization, or any of the other allegedly misconstrued facts, are material to their claims or how the trial court's purported mischaracterization of the EyeMail product impacted its ruling granting summary judgment to the Defendants.

"Summary judgment is proper when no genuine issue of material fact remains."⁵ And factual disputes regarding immaterial issues do not preclude summary judgment.⁶ Thus, this enumeration provides no basis for reversal.

2. OnBrand and Jones contend that the trial court erred in granting summary judgment to Codex and OSI on each of their claims. We address each of the claims individually.

(a) Noncompete Agreements. In its final order, the trial court analyzed the noncompete provisions⁷ in the NDAs as restrictive covenants subject to the middle level of scrutiny applicable to professional partnership agreements, concluding that the noncompete provisions were unenforceable because they contained no territorial limits or limits on the scope of the restricted activity. We discern no error.

The NDAs provided, in relevant part:

A. The parties acknowledge that it may be necessary for each of them, as Discloser, to provide to the other, as Recipient, certain Information, including trade secret information, considered to be [c]onfidential, valuable[,] and proprietary by Discloser, for the purpose of evaluating a potential business relationship, in support of OnBrand Media's EyeMail Product Line....⁸

C. The parties acknowledge[ ] and agree[] that the Services and OnBrand Media logos and trade names are the property of OnBrand Media or its affiliates or suppliers. This consideration is not granting any right or license to use, link to, reproduc[e], reverse engineer, modify, duplicate, distribute, compete, display[,] or perform any such copyrighted materials used or displayed on Company [w]ebsite or to permit others to do the same, and that all such uses are prohibited without the prior written consent of OnBrand Media. The User understands that OnBrand Media Services and its website also contain or may contain copyrighted or other proprietary materials of OnBrand Media, its sponsors, advertisers[,] or other third parties. The User is not granted any right or license to use, link to, reproduce, reverse engineer, modify, duplicate, distribute, display[,] or compete with OnBrand Media products and services, and that all such uses are prohibited without prior written consent of OnBrand Media.⁹

(i) Covenants not to compete that are deemed to be an impermissible restraint of trade are unenforceable.¹⁰ However, "a restrictive covenant ... 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."¹¹

Restrictive covenants ancillary to the sale of a business traditionally have been afforded a substantial degree of protection by the Georgia courts and are viewed with the least degree of scrutiny. Conversely, covenants not to compete which are part of an employment contract receive close scrutiny to ensure that they are strictly limited in duration, territory, and prohibited activities. In between these two standards of review is the middle level of scrutiny, which is generally applied to restrictive covenants ancillary to professional partnership agreements.¹²

The type of contract under consideration does not alone dictate the appropriate level of scrutiny, however.¹³

[N]ot every contract falls directly into one of these three categories. Nor do we believe that the type of contract should automatically determine the applicable level of scrutiny. Rather, we must look to the purposes behind the varying levels of scrutiny to determine which level is most appropriate for the contract before us. One starting point is the relative bargaining power of the parties....¹⁴

Here,...