Ozark Appraisal Service, Inc. v. Neale

• Decision Date: 20 February 2002
• Docket Number: No. 24141.,24141.
• Citation: 67 S.W.3d 759
• Parties: OZARK APPRAISAL SERVICE, INC., Plaintiff/Appellant, v. Kimberly NEALE, Defendant/Respondent.
• Court: Missouri Court of Appeals

67 S.W.3d 759

OZARK APPRAISAL SERVICE, INC., Plaintiff/Appellant, v.Kimberly NEALE, Defendant/Respondent.

No. 24141.

Missouri Court of Appeals, Southern District, Division One.

February 20, 2002.

Wendy E. Garrison, Neosho, for Plaintiff-Appellant.

George R. Spence, Clark and Spence, Bentonville, for Defendant-Respondent.

Before SHRUM, P.J., MONTGOMERY, J., and BARNEY, C.J.

KERRY L. MONTGOMERY, Judge.

Ozark Appraisal Service, Inc., (Plaintiff) appeals from an adverse judgment on its claim involving a non-compete agreement with its former employee, Kimberly Neale(Defendant).Plaintiff filed a petition seeking a permanent injunction enforcing the parties' covenant not to compete.Defendant filed a counterclaim seeking compensation for work done while employed by Plaintiff.The trial court denied the request for a permanent injunction and ordered Plaintiff to pay Defendant damages in the amount of $13,911.20 on her counterclaim.In this appeal, Plaintiff submits three Points Relied On.The first two points challenge the trial court's denial of Plaintiff's request for a permanent injunction, and the third point challenges the award of damages.

We view the evidence in the light most favorable to the trial court's judgment and set forth the facts in that manner.Scott Dennis is the sole shareholder of Plaintiff.Since its inception in 1989, Plaintiff has been in business to appraise the fair market value of real estate and chattels in portions of Missouri and Arkansas.On July 25, 1995, Plaintiff hired Defendant to work as an apprentice under a supervising appraiser.While apprenticing, Defendant worked 2000 hours over a two-year period and attended classes at Lifetime Learning in Springfield, Missouri.In 1998Defendant passed the state examination in Missouri.She then became a certified appraiser in both Missouri and Arkansas.

When Defendant began her employment with Plaintiff, she was paid an hourly wage.In the fall of 1995, Plaintiff began paying Defendant 50 percent of each appraisal she completed.The following December Defendant began working out of her home in Bentonville, Arkansas, instead of going into the office.She built an office onto her home and used Plaintiff's telephone number and post office box at her home office.Prior to her certification as an appraiser, Defendant would travel to Plaintiff's office in Pineville, Missouri, to pick up orders.She would return the completed appraisals for a certified appraiser to review and sign.In the fall of 1997, Plaintiff made Defendant a partner in the company.Thereafter, Defendant was paid 90 percent of each appraisal she completed.

During December of 1996, Defendant was informed she was required to sign a document entitled "Business Agreement" or she would be fired.The agreement included a covenant not to compete that provided:

It is recognized that [Plaintiff] does not desire to train appraisers and then allow them to leave as soon as they are either licensed or certified and go into direct competition with [Plaintiff].By the same token, [Defendant], does not want to be released from employment with [Plaintiff] and then not be allowed to continue to work as a Real Estate Appraiser in the Four State area.

It is also recognized the [Plaintiff] has a "vested" interest in protecting its "trade secrets, clientele lists, business contacts and appraisal methods, including formulations, etc.", and [Defendant] has a "vested" interest in continuing her career as a Real Estate Appraiser in the Four-State area.

Therefore, [Defendant] agrees that, upon [her] departure from [Plaintiff] for any reason, he/she will [not] practice as an appraiser for a period of one (1) year, within 95 miles from any [office operated by Plaintiff], unless agreed by both parties.

....

Further, [Plaintiff] agrees that [Defendant] can only be dismissed as an employee or partner if violation of any of the following occurs:

(1) Stealing, misrepresentation of the company, or any behavior which would be considered unprofessional, unscrupulous or unprofessional by any reasonable person.

Rather than leaving her job, Defendant signed the agreement.

In 1999Plaintiff adopted a centralized accounting system.Plaintiff did not charge appraisers for the use of the accounting system during a one-year trial period, but at the end of January 2000, Defendant received a bill in the amount of $253 for her share of the accounting system for that month.Defendant was not pleased with the new system because she felt it was inaccurate and had many errors.

In March of 2000, the partners had a meeting in which they discussed the use of the centralized accounting system.Defendant voiced her objection to the use of the system.Defendant's objection led to a "heated discussion," including "screaming, ranting and raving" by Scott Dennis.Plaintiff informed Defendantshe would use the accounting service "or else."When Defendant informed Dennis that one of her employees also objected to the system, Dennis told her that employee was fired.At that point, Defendant gathered her things and left.

Plaintiff never informed Defendant that she was fired but did order her business phone to be turned off.Plaintiff also had the lock changed on the post office box that Defendant used to receive her personal and business mail.The mail, including Defendant's personal mail, was then forwarded to Plaintiff's office in Pineville, Missouri.Plaintiff refused to give Defendant her mail until the day of the hearing.

After the business relationship between Plaintiff and Defendant ended, Defendant continued to work out of her home office under the name of Appraisal Express of Northwest Arkansas.Defendant removed all software provided by Plaintiff from her computer and purchased software for her new business.She sent letters to clients regarding her change in business and informing them she had new, lower rates.There is no dispute that Defendant was operating her new business within the prohibited 95 mile radius of one of Plaintiff's offices.

At the time her employment with Plaintiff ended, Defendant had completed some appraisals on Plaintiff's behalf and was in the process of completing others.Defendant testified that Plaintiff owed her money for several of these appraisals.Her counterclaim included a request for compensation for this work.

On April 24, 2000, Plaintiff filed for a temporary restraining order to prohibit Defendant from working as an appraiser under the terms of the covenant not to compete.The court granted the temporary restraining order and extended it twice thereafter.Following a hearing on the matter on June 26, 2000, the trial court entered an order granting a temporary injunction that prohibited Defendant from working as an appraiser within 95 miles of Plaintiff's offices.

On July 24, 2000, a trial was held on all the issues.After hearing testimony, the trial court found that "Plaintiff unilaterally attempted to modified [sic] the working agreement between it and the Defendant requiring all accounting or bookkeeping of the Defendant be done by the Plaintiff."The trial court concluded that because Plaintiff had unilaterally changed the working agreement between the parties to the detriment of Defendant, it could not enforce the covenant not to compete.Based upon this reasoning, the trial court entered judgment in Defendant's favor on Plaintiff's petition for a permanent injunction.

The court further found that Plaintiff had collected payment for appraisals made by Defendant.The court determined that Plaintiff owed Defendant a total of $ 13,911.20 and entered judgment in Defendant's favor in that amount on her counterclaim.

Plaintiff appeals the denial of its petition for a permanent injunction and the monetary award to Defendant.Plaintiff complains that the judgment of the trial court was unsupported by substantial evidence or was based upon a misapplication of the law.This court-tried case is governed by the principles set forth in Murphy v. Carron,536 S.W.2d 30, 32(Mo. banc.1976).Accordingly, we shall uphold the judgement unless it is against the weight of the evidence, erroneously declares the law, or erroneously applies the law.Silvers, Asher, Sher & McLaren v. Batchu,16 S.W.3d 340, 343(Mo.App.2000).We will only disturb a trial court's decision concerning the issuance of a permanent injunction on the grounds that it is against the weight of the evidence with great caution and the firm belief that it is wrong.Id.

In its first two points on appeal, Plaintiff challenges the trial court's decision not to grant a permanent injunction against Defendant.In Point I, Plaintiff maintains the trial court erred in failing to issue a permanent injunction because the evidence established the covenant not to compete was reasonable and had a legitimate protectable interest.Plaintiff's second point contends the trial court erroneously denied the petition for a permanent injunction based upon its determination that Plaintiff had unilaterally changed the working agreement to Defendant's detriment.Because we find Point II to be dispositive of the issue, we address it first.

In this point, Plaintiff challenges the trial court's finding that it had unilaterally modified its contract with Defendant by implementing the uniform accounting system and requiring her to use it at her expense "or else."Plaintiff acknowledges that by the terms of the Business Agreement signed by the parties, Defendant could only be dismissed if she stole, misrepresented the company, or exhibited behavior that could be considered unprofessional, unscrupulous, or unprofessional by any reasonable person.However, Plaintiff maintains the evidence failed to establish that Defendant was fired.Plaintiff further contends that the costs associated with using the accounting system would have been "miniscule" in comparison with Defendant's income so that requiring her to use the system did not amount to a...