Property Tax Representatives, Inc. v. Chatam

• Decision Date: 17 January 1995
• Docket Number: No. WD,WD
• Parties: PROPERTY TAX REPRESENTATIVES, INC., Appellant, v. Jerry W. CHATAM and Concorde Associates of Kentucky, Respondents. 48873.
• Court: Missouri Court of Appeals

Page 153

891 S.W.2d 153

PROPERTY TAX REPRESENTATIVES, INC., Appellant, v. Jerry W. CHATAM and Concorde Associates of Kentucky, Respondents.

No. WD 48873.

Missouri Court of Appeals Western District.

Jan. 17, 1995.

Gregory M. Garvin, Kansas City, for appellant.

James R. Borthwick and Price A. Sloan, Kansas City, for respondents.

Before KENNEDY, P.J., and BRECKENRIDGE and SPINDEN, JJ.

KENNEDY, Presiding Judge.

Property Tax Representatives, Inc. (hereinafter referred to as PTRI), appeals from the trial court's judgment in favor of its discharged employee, Jerry Chatam, in PTRI's suit against Chatam based upon Chatam's alleged breach of the non-competition and non-solicitation agreements of his employment contract with PTRI. PTRI sought an injunction to prevent Chatam's continued employment by PTRI's competitor, Concorde Associates, Inc., and also sought damages both from Chatam and Concorde Associates.

PTRI was in the business of representing property owners in seeking reduced valuations of property for ad valorem tax purposes. This enterprise involved the appraisal of the property in question, and the representation of the property owners before the taxing officers and agencies. If it was successful in gaining a reduction in ad valorem tax valuation, it received for its services a contingent fee based upon the savings achieved by its efforts. It plied its business in the greater metropolitan Kansas City area, including Platte, Jackson, Cass and Clay counties in Missouri and Wyandotte, Johnson, Douglass, Shawnee, Sedgewick and Leavenworth counties in Kansas. PTRI also does consulting in the states of California, Michigan, Iowa, Nebraska and Arkansas.

Jerry Chatam, a certified appraiser, was employed by PTRI in 1989. He began work for it in June, 1989. His beginning salary was $32,000 per annum. At the time of his discharge on April 30, 1992, his salary had increased to $38,000 per annum. Also at the time of his discharge, he was in line for a bonus of $14,793.48 for his 1991 work, but the employment contract provided that this would be payable on July 1 of the following year, if the employee was still in PTRI's employ at that time. Because Chatam was discharged as of May 15, 1992, he was not eligible for the bonus payment when payment time came. During Chatam's employment with PTRI, his title was changed to "valuation consultant." Fred Coulson, who owned PTRI and was its chief operating officer, testified that the reason for this change was in order that one person would be in contact with the client and would be in charge of all aspects and stages of the valuation-reduction campaign, from start to finish.

At the time Chatam became a PTRI employee, he signed an employment contract which contained non-competition and non-solicitation provisions. During the three-year time of his employment, he signed two others, each taking the place of the earlier one. The last one, the version which is controlling here, was dated March 18, 1992. It obligated him, for two years after termination of his employment with PTRI, not to enter into competition with PTRI. The precise language of the non-competition and the non-solicitation clauses need not be copied here, for Chatam does not dispute that his employment by Concorde Associates, Inc., is in violation of the agreement. His position is that the agreement is not enforceable by injunction as against him because he was discharged by PTRI, without good cause, and did not quit voluntarily.

NON-COMPETITION AGREEMENT

In the spring of 1992, Chatam performed a fee appraisal for Mr. and Mrs. Nosti on four tracts of real estate. The Nostis were PTRI clients, and Chatam had done the ad valorem tax work on these same four pieces of property. The fee appraisal done by Chatam for the Nostis did not involve tax valuation; it was for Bank IV, to which the Nostis had evidently applied for a loan, for which the real estate was to be given for security. Chatam did this fee appraisal on his personal account, not in behalf of PTRI. He hired a typist to type it who was not an employee of PTRI. The typist did not use PTRI equipment. Chatam received $1200 from the Nostis for his work, from which he netted approximately $600 after the payment of expenses. Mr. Coulson testified PTRI did not do fee appraisals, the kind Chatam had done for the Nostis, and that if he, Coulson, received a request for that kind of appraisal, he would refer the person to another group who did that kind of work.

It is not claimed that Chatam had ever, during the time he had been at PTRI, done an appraisal on his own account before this time. Chatam testified that Mrs. Nosti had requested him to do the appraisal, that he had at first demurred, but at length, he had yielded to her importunity.

When Mr. Coulson learned about the Nosti appraisal by Chatam, he discharged him, after first giving him an opportunity to resign. When Chatam undertook to justify to Coulson his making the fee appraisal, Mr. Coulson said, according to Chatam's testimony: "Well, I can fire you for this reason; I can fire you for any reason. I can fire you for no reason. I'm just letting you go." PTRI did, however, send Chatam a certified or registered letter advising him he was terminated, and paid Chatam's salary for an additional two weeks (up to May 15, 1992). This, according to Coulson's testimony, was referable to a provision in the employment contract which allowed either party to terminate the contract on 14 days' notice. The letter is not in the record.

Chatam argues that his fee appraisal for the Nostis was permitted by the employment contract. He points to paragraph 6, which says:

6. DUTY TO ACT DILIGENTLY. During the period of the Employee's employment, the Employee shall devote all of the Employee's business time, attention, skill and efforts to the faithful performance of the Employee's duties hereunder; provided, however, that the Employee may engage in casual transactions and investments not in competition with the Corporation, so long as these activities, in the sole opinion of the Corporation, do not detract from the Employee's ability to perform this Agreement. The Employee shall carry out any lawful instruction of the Corporation and not act in any manner disloyal to the Corporation.

PTRI points to the same paragraph, but it emphasizes the part that limits the "casual transactions" permitted to employees to those which "in the sole opinion of the Corporation, do not detract from the Employee's ability to perform this Agreement." PTRI also says that Chatam's appraisal for the Nostis violated a "lawful instruction of the Corporation" not to engage in fee appraisals.

It is a central issue in this case whether PTRI had "cause," or "sufficient cause," or "good cause" to discharge Chatam. ¹ If PTRI had cause for Chatam's dismissal, then Showe-Time Video Rentals, Inc. v. Douglas, 727 S.W.2d 426, 431 (Mo.App.S.D.1987), indicates that it is entitled to an injunction to enforce its non-compete agreement. On the other hand, if the employer discharges an employee without cause, a court of equity may, in the exercise of its discretion, refuse to aid the employer in enforcing the employee's non-compete agreement by injunction.

The "cause," or "good cause," or "sufficient cause" that justifies dismissal of an employee is not a sharply delineated concept. Superior Gearbox Co. v. Edwards, 869 S.W.2d 239, 249 (Mo.App.S.D.1993). There are cases where the presence or absence of cause for discharge, upon given facts, is indisputable, and in those cases the court may decide the issue as a matter of law. See, e.g., Craig v. Thompson, 244 S.W.2d 37, 43 (Mo.1951); 53 Am.Jur.2d, Master and Servant § 70 (1970).

In this case, we are unable to say as a matter of law that Chatam's dismissal was for cause. It was the trial court's duty to determine, from the evidence before it, whether good cause existed for Chatam's dismissal. The court found that the fee appraisal performed by Chatam was expressly allowed by the employment contract, in that it was a "casual business transaction, not in competition with PTRI," and that Chatam's discharge was without good cause.

PTRI argues the discharge was, as a matter of law, for cause. Coulson testified: "We feel it opens us up to potential liability if we were to get involved in doing the appraisals for financial institutions.... We also utilized comparable information that we've licensed from (Kevin K Nunnink and Associates, Inc.).... [A]nd we agreed as part of them providing us with this comparable information not to use it for fee appraisal work, also concerned [sic] about just the potential problems that arise as far as a conflict of interest or perceived conflict of interest if we were to be doing the price work for a client, and also doing contingency work for them in their ad valorem tax area."

It is to be noticed that PTRI makes no claim that the Nosti appraisal was in competition with PTRI, or that it in any way interfered with Chatam's performance of his obligations to PTRI. That being the case, Chatam's offending fee appraisal is not taken out of the category of "casual transactions" permitted by paragraph 6 of the employment contract. Chatam testified, in testimony which the trial court could choose to believe, that no ban on fee appraisals by PTRI appraisers was ever communicated to him, and that he had foreseen no problem with PTRI in doing the appraisal.

What Mr. Coulson describes as the dangers of permitting PTRI's appraisers to do fee appraisals like Chatam's for the Nostis, would no doubt furnish grounds for the promulgation of a policy banning fee appraisals by PTRI appraisers. But the evidence supports the trial court's conclusion that the violation of a policy that existed only in Mr. Coulson's mind did not justify Chatam's discharge as a discharge for cause.

Besides Chatam's making of the fee appraisal, Coulson said that Chatam's unauthorized use of comparable sales data,...