Orkin Exterminating Co. v. Walker

• Court: Georgia Supreme Court
• Writing for the Court: BELL; All the Justices concur, except HILL, C.J., who concurs in the judgment only, MARSHALL, P.J., who dissents, and WELTNER; WELTNER
• Citation: Orkin Exterminating Co. v. Walker, 251 Ga. 536, 307 S.E.2d 914 (Ga. 1983)
• Decision Date: 19 October 1983
• Docket Number: No. 39712,39712
• Parties: , 1983-2 Trade Cases P 65,676 ORKIN EXTERMINATING CO. v. WALKER, et al.

Page 914

307 S.E.2d 914

251 Ga. 536, 1983-2 Trade Cases P 65,676

ORKIN EXTERMINATING CO. v. WALKER, et al.

No. 39712.

Supreme Court of Georgia.

Oct. 19, 1983.

A. Rowland Dye, Dye, Miller, Tucker & Everitt, Augusta, for Orkin Exterminating Co., Inc.

C. Thompson Harley, Leonard O. Fletcher, Augusta, for William Walker et al.

BELL, Justice.

This case concerns the validity of restrictive covenants in employment contracts.

The appellees, William Walker and Auren Mitchell, worked for the appellant, Orkin Exterminating Co. (Orkin), for about twenty years. Mitchell spent his entire career working out of Orkin's Augusta, Ga. office. He held a series of positions, including termite treater and pest control routeman. Walker worked in various cities before becoming branch manager of the Augusta, Ga. office in 1972.

Walker and Mitchell signed identical employment contracts. Paragraph 5 of each contract contains a restrictive covenant prohibiting the employee, for a period of two years following termination of employment, from engaging in certain activities, including the pest control, exterminating, fumigating, or termite control business, within the following territories: "[t]he cities of Augusta, McBean [and many other cities surrounding Augusta and the areas within a 15 mile radius of these cities] ... or within any jurisdiction or territory in which the employee worked for the company at any time during the six (6) calendar months preceding termination of employment, and identified in an employment agreement with the Company." In addition, paragraph 5 prohibited appellees from calling upon "any customer or customers of the Company for the purpose of soliciting, servicing or selling" certain listed services within the territory described above, as well as from diverting, soliciting, servicing, or taking away "any customer or customers of the the purpose of selling" those services within that territory.

Mitchell and Walker left Orkin in January of 1982 to form and operate their own exterminating company in the Augusta area. Shortly thereafter, Orkin brought suit to enjoin them from violating paragraph 5. Relying on this court's decision of Orkin Exterminating Co. v. Pelfrey, 237 Ga. 284(1), 227 S.E.2d 251 (1976), the trial court ruled that the territorial restriction imposed by paragraph 5 was too indefinite and unreasonable in that the territories to which the restrictions applied could not be determined until the date of the employees' termination. The trial court therefore granted summary judgment to Walker and Mitchell. Orkin appeals.

Covenants against competition which are contained in employment contracts are considered to be in partial restraint of trade and will be upheld only if they are strictly limited in time and territorial effect, and are otherwise reasonable considering the business interest of the employer sought to be protected and the effect on the employee. Pelfrey, supra, p. 285, 227 S.E.2d 251; Singer v. Habif, Aragetti, & Wynne, 250 Ga. 376(1), 297 S.E.2d 473 (1982); White v. Fletcher/Mayo/Associates, 251 Ga. 203, 303 S.E.2d 746 (1983). Whether the restraints imposed by a restrictive covenant are reasonable is generally a question of law to be determined by the court. Rollins Protective Services Co. v. Palermo, 249 Ga. 138(1), 287 S.E.2d 546 (1982); Pelfrey, supra, p. 285, 227 S.E.2d 251. In the instant case, although we find that the restrictive covenant contained in paragraph 5 is overbroad, we do so for different reasons than that enumerated by the trial court.

1). We first deal with the trial court's rationale. In Pelfrey we held the restrictive covenant was too indefinite to be enforceable because the contract clearly provided that its restrictions would follow the employee to any area to which he or she may have been assigned or transferred during any part of the twelve months preceding his or her termination of employment. Pelfrey, supra, p. 285, 227 S.E.2d 251. The covenant in the present case is distinguishable because its restrictions do not follow the employee unless he or she signs a new employment agreement which identifies the new territory. Thus, the covenant is not vague or indefinite in the sense described in Pelfrey, because it sufficiently delineates the territories to which the restrictions do apply, and because it contains no present obligation or promise as to unknown, future territories. Here, it is clear that Mitchell and Walker should have known at the time of signing the contract that its restrictions applied only to the Augusta area, and that the restrictions would apply to a new territory only if, in the case of a transfer, they signed a new agreement identifying the new territory to which the restrictions would apply.

2). However, as we explain below, we find that the trial court was correct in concluding that the covenant in the instant case is unreasonable and overbroad on its face.

a). First, the covenant's restrictions could be applicable in the Augusta area long after the cessation of Orkin's interest in prohibiting these employees from working there. Pelfrey supra, pp. 286-287, 227 S.E.2d 251 (Hill, J., now C.J., specially concurring). Paragraph 5 provides that an employee will not engage in certain listed activities in the Augusta area for two years after termination of his or her employment. ¹ It was possible that, after Mitchell and Walker had worked for some time in the Augusta area, Orkin could have transferred them to a new territory. It was also possible that, in that event, Orkin might have neglected to require them to sign new contracts, or might have had them execute new contracts which did not rescind the prior contracts. The appellees...