Reardigan v. Shaw Industries, Inc.

• Decision Date: 18 May 1999
• Docket Number: No. A99A0394.,A99A0394.
• Citation: 238 Ga. App. 142,518 S.E.2d 144
• Parties: REARDIGAN v. SHAW INDUSTRIES, INC.
• Court: Georgia Court of Appeals

518 S.E.2d 144

238 Ga. App. 142

REARDIGAN v. SHAW INDUSTRIES, INC.

No. A99A0394.

Court of Appeals of Georgia.

May 18, 1999.

Ford & Harrison, John L. Monroe, Jr., Jeffrey D. Mokotoff, Atlanta, for appellant.

Perrie, Buker, Jones & Morton, J. William Haley, Drew, Eckl & Farnham, Gregory G. Schultz, Atlanta, for appellee.

SMITH, Judge.

This appeal involves the construction of a non-competition and non-solicitation agreement executed by appellant Pat Reardigan, a former employee of appellee Shaw Industries. Because the agreement was sufficiently limited in duration, territorial coverage, and scope of activity, the trial court correctly granted injunctive relief, and we affirm.¹

In 1990, Reardigan was hired by Bell-Mann, Inc., now merged with Shaw. Bell-Mann and Shaw sell carpet and other floor coverings in the Atlanta area. Reardigan dealt primarily with developers and contractors on construction projects in the Atlanta metropolitan area and the Southeast, submitting bids for supplying carpet and floor covering to the projects. In 1992, Reardigan executed an employment contract with Bell-Mann containing two agreements relevant here. The clause headed "Noncompetition" provides in relevant part:

You covenant and agree that during your employment with Bell-Mann and for a period ending on December 31st of the calendar year following the calendar year in which your employment terminates, you will not, on your own behalf or in the service or on behalf of others, compete with Bell-Mann anywhere within the Atlanta Metropolitan Statistical Area, as said term is defined by the United States Office of Management and Budget (the "Territory"), by engaging or attempting to engage in the business of buying, selling and installing carpet and other floor coverings for residential or commercial uses, in circumstances where your responsibilities and duties are substantially similar to those performed by you for Bell-Mann.

At the time of execution of the contract, the Atlanta Metropolitan Statistical Area ("MSA") contained eighteen counties; it has since been revised to include two more.

The contract also contains a clause headed, "Non-solicitation of Customers," providing:

You covenant and agree that during your employment with Bell-Mann and for a period ending on December 31st of the calendar year following the calendar year in which your employment terminates, you will not, anywhere within the Territory, on your own behalf or in the service or on behalf of others, call on, solicit or take away as a client or customer or attempt to call on, solicit or take away as a client or customer any individual, partnership, corporation or association that was a client or customer of Bell-Mann and was serviced by you or under your supervision during your employment with Bell-Mann.

On June 26, 1998, Reardigan resigned from Shaw. He later took a position with Floors With Dimensions, Inc., a direct competitor of Shaw. This litigation followed.

1. In determining the legality of a restrictive covenant, a court may consider the nature and extent of the business, the situation of the parties, and all other relevant circumstances. W.R. Grace & Co. v. Mouyal, 262 Ga. 464, 465(1), 422 S.E.2d 529 (1992). "Whether the restraints imposed by an employment contract are reasonable is a question of law for determination by the court. However, facts are sometimes necessary to determine whether a questionable restriction, though not void on its face is, in fact, reasonable." (Citations and punctuation omitted.) Rollins Protective Svcs. Co. v. Palermo, 249 Ga. 138, 139(1), 287 S.E.2d 546 (1982). To determine the reasonableness of the restrictions as applied to the facts presented, the courts have established a three-element test of duration, territorial coverage, and scope of prohibited activity. Sysco Food Svcs. &c. v. Chupp, 225 Ga.App. 584, 585(1), 484 S.E.2d 323 (1997).

(a) In a footnote and citing no authority, Reardigan claims that the restriction is unreasonable with respect to duration because its length varies depending on the date of termination of employment. But the restriction ends at a date certain: December 31 of the calendar year after the calendar year when employment terminates, and it "is definite and not limitless. [Cit.]" Smith v. HBT, Inc., 213 Ga.App. 560, 563(4), 445 S.E.2d 315 (1994). While the actual length of the restriction imposed by this contract is somewhat variable depending upon the date of termination or resignation, the maximum possible length, two years, is within that held permissible under Georgia law. U3S Corp. &c. v. Parker, 202 Ga.App. 374, 378(2)(b), 414 S.E.2d 513 (1991) (two years); see also Smith, supra (five years). The ending date of the restriction is ascertainable with certainty immediately upon the employee's termination or resignation, and it is therefore no more indeterminate than a restriction of a certain number of months or years. The end of such a restriction also becomes ascertainable only when the date of termination is established. The contract is not unreasonable with respect to duration.

(b) Reardigan also asserts that the territorial coverage in the contract is overbroad. We disagree. The 18 counties enumerated in the Atlanta MSA, with the exception of a small portion of Coweta County, lie well within a 50-mile radius of Shaw's business. This court has considered the radius within which certain enumerated counties lie as relevant to the reasonableness of a territorial limitation. Pittman v. Harbin Clinic Professional Assn., 210 Ga.App. 767, 769(1), 437 S.E.2d 619 (1993). And territorial limits of a 50-mile radius of the employer's business have been held to be reasonable in Georgia. See, e.g., Smith, supra at 563(3), 445 S.E.2d 315; Annis v. Tomberlin & Shelnutt Assocs., 195 Ga.App. 27, 31(2), 392 S.E.2d 717 (1990); McMurray v. Bateman, 221 Ga. 240, 255(4), 144 S.E.2d 345 (1965).

Shaw's computer records showed successful bids by Reardigan in eight of the eighteen counties in the Atlanta MSA as it existed at the time of the contract, as well as in Alabama, Tennessee, and Florida. Evidence also was presented that Reardigan solicited business on projects in most or all of the Atlanta metropolitan area. In contrast to the regional salesperson assigned to call on customers in a particular territory, Reardigan relied upon his relationships with contractors and developers to obtain subcontracts for the installation of carpet. Reardigan acknowledged that he often did not know the counties in which these contractors' work was performed, and that he bid as many as 30 jobs in a week. Uncontradicted evidence was presented that these contractors and developers performed work throughout the Atlanta metropolitan area and the Southeast.

In construing territorial restrictions in an employment contract, the trial court must examine the reasonableness of the restriction in view of all the facts and circumstances surrounding the case. Restrictions related to the territory in which the employee was employed, as opposed to the territory in which the employer...