Rieves v. Buc-ee's Ltd.
| Decision Date | 12 October 2017 |
| Docket Number | NO. 14-15-01061-CV,14-15-01061-CV |
| Citation | 532 S.W.3d 845 |
| Parties | Kelley RIEVES, Appellant v. BUC-EE'S LTD., Appellee |
| Court | Texas Court of Appeals |
Bruce Johnson, Houston, TX, for Appellant.
Jeffrey S. Wolff, Joy M. Soloway, Seth Isqur, Houston, TX, for Appellee.
Panel consists of Justices Christopher, Busby, and Donovan.
This summary judgment appeal presents the question whether provisions in an employment agreement that require an employee to repay substantial parts of her compensation upon termination of employment are unlawful restraints of trade. Because the provisions lack reasonable limits and impose a substantial penalty on the exercise of an at-will employee's right to quit her job, we hold that they are unenforceable. We therefore reverse the trial court's judgment and (1) render judgment that appellee Buc-ee's Ltd. take nothing on its claims against appellant Kelley Rieves; (2) render judgment declaring the "Additional Compensation" and "Retention Pay" provisions in Rieves's employment contracts to be unenforceable restraints of trade; and (3) remand the question of Rieves's entitlement to attorneys' fees to the trial court for further proceedings.
Buc-ee's operates a well-known chain of convenience stores in Texas. Rieves, a graduate of Texas Tech University with a degree in restaurant and hotel management, was working for TGI Fridays restaurants when she began to explore a potential new job as a Buc-ee's assistant manager. During this process, Rieves met with Don Wasek, Buc-ee's president. Wasek asked Rieves what payment she would need to take a job with Buc-ee's. Rieves responded that she would need to be paid at least the salary she was earning at TGI Fridays, which was approximately $55,000 per year. Wasek agreed to that amount and told Rieves it would be split between an hourly pay rate and a flat monthly amount. Wasek then told Rieves that she could pick, within specified limitations, the percentage split between the two. The split requirement was not negotiable. Rieves picked a 70-30 split. Rieves accepted an assistant manager position at one of Buc-ee's convenience stores.
Rieves signed an employment agreement with an effective date of August 25, 2009 (the 2009 Agreement). The 2009 Agreement provided that Rieves would be an at-will employee and that she would be paid an hourly wage of $14 plus a "fixed monthly bonus of $1,528.67." The monthly bonus provision is found in Article 3, entitled "Additional Compensation." This article states, in pertinent part:
3.02 For the additional compensation to be paid Employee under Paragraph 3.01, Employee shall be required to work for Employer a minimum of 60 months from the Effective date of this Agreement and shall also provide Employer with a minimum of 6 months written separation notice. In the event Employee does not meet the above requirements, regardless of the reason for termination or regardless of the reason Employee did not provide the required notification, Employee shall be required to repay all of the Additional Compensation to Employer.... In other words, in the event Employee's employment with Employer ... terminates for any reason, with or without cause, and the above requirements are not meet [sic] by Employee, Employee will be required to repay all of the additional compensation received.
About a year later, Wasek met with Rieves again. This meeting produced a new employment agreement (the 2010 Agreement). Under the terms of the 2010 Agreement, Rieves remained an at-will employee and would receive a weekly salary of $862.75. Buc-ee's reserved the right to modify this salary. Article 3 of the 2010 Agreement is entitled "Retention Pay." Under that article, Rieves would be "advanced a monthly retention payment of 1.2652% of Buc-ee's # 32 net profit paid monthly and a one time payment of $1000.00." Buc-ee's reserved the right to modify this pay as well. To earn the Retention Pay, Rieves was "required to work for [Buc-ee's] a minimum of 48 months from the Effective date of this Agreement and shall also provide [Buc-ee's] with a minimum 6 months written Separation Notice to be given only after [Rieves] fulfills [the] required minimum number of months worked." Like the 2009 Agreement, the 2010 Agreement required Rieves to repay all Retention Pay if she did not work a minimum of 48 months and give the minimum six months' written notice of separation, regardless of the reason both requirements were not met. If not repaid within 30 days of termination, the retention pay and additional compensation would accrue interest at 10 percent per year, compounded annually. Article 3 also provided that Rieves "completely understands that there is a clear and mutual understanding that Retention Pay is for all hours worked."
Among other terms, the 2010 Agreement contains the following pertinent sections:
Rieves received Additional Compensation under the 2009 Agreement and later Retention Pay under the 2010 Agreement, and she paid federal income taxes on these amounts. Rieves resigned from her employment with Buc-ee's effective July 12, 2012—about three years after she began work. A year later, Buc-ee's sent Rieves a demand for payment of $66,720.29, plus interest and attorneys' fees. Buc-ee's asserted this was the amount of Additional Compensation and Retention Pay Rieves had been paid during her employment with Buc-ee's.
Rieves responded by filing this lawsuit seeking a declaration that these provisions of the Agreements function as unreasonable restraints of trade and are therefore unenforceable. Buc-ee's filed an answer and counterclaim seeking to recover the $66,720.29, plus interest and attorneys' fees. In response to Buc-ee's counterclaim, Rieves asserted, among other defenses, that the Additional Compensation and Retention Pay provisions were unenforceable restraints of trade. Rieves later added causes of action for fraud, fraudulent inducement, negligent misrepresentation, breach of contract, quantum meruit, and unjust enrichment.
Buc-ee's filed a motion for partial summary judgment on Rieves's declaratory judgment action as well as on her affirmative defenses, asserting that the Additional Compensation and Retention Pay provisions in her employment agreements were unenforceable. Buc-ee's argued that the provisions (1) are forfeiture provisions, not unenforceable covenants not to compete; and (2) even if they are covenants not to compete, they are enforceable under Texas law. The trial court granted the motion.
Buc-ee's then filed a second motion for summary judgment on (1) its counterclaim for breach of contract; (2) Rieves's remaining affirmative defenses; and (3) all of Rieves's claims seeking monetary damages. Rieves filed a motion for summary judgment on Buc-ee's counterclaim for breach of contract and on her request for a declaratory judgment. The trial court granted Buc-ee's second motion for summary judgment, denied Rieves's motion, and then signed a final judgment awarding Buc-ee's $48,687.46 in damages plus prejudgment and post-judgment interest and attorneys' fees.1 This appeal followed.
Rieves raises numerous issues challenging the trial court's orders granting Buc-ee's motions for summary judgment and denying her own. We consolidate these challenges into three: (1) the 2010 Agreement is unenforceable due to a lack of consideration; (2) the 2010 Agreement is unconscionable; and (3) the repayment provisions found in both agreements are unenforceable restraints of trade.2 We need address only Rieves's third issue challenging the Additional Compensation and Retention Pay provisions as unenforceable restraints of trade because it provides her with all the relief she seeks on appeal regarding the agreements. Tex. R. App. P. 47.1. Finally, Rieves challenges the trial court's award of attorneys' fees to Buc-ee's.3
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