Roberson v. C.P. Allen Const. Co., Inc.

• Decision Date: 07 May 2010
• Docket Number: 2080537.
• Citation: 50 So.3d 471,30 IER Cases 1242
• Parties: James ROBERSON and Penhall Company, Inc. v. C.P. ALLEN CONSTRUCTION COMPANY, INC., d/b/a ABC Cutting Contractors.
• Court: Alabama Court of Civil Appeals

50 So.3d 471

30 IER Cases 1242

James ROBERSON and Penhall Company, Inc.

v.C.P. ALLEN CONSTRUCTION COMPANY, INC., d/b/a ABC Cutting Contractors.

2080537.

Court of Civil Appeals of Alabama.

May 7, 2010.

Robert W. Shores, Fultondale, for appellants.

Jonathan E. Raulston and John R. Bowles of Engel, Hairston & Johanson, P.C., Birmingham, for appellee.

On Application for Rehearing

MOORE, Judge.

This court's opinion of January 29, 2010, is withdrawn, and the following is substituted therefor.

James Roberson and Penhall Company, Inc., appeal from a judgment awarding C.P. Allen Construction Company, Inc., d/b/a ABC Cutting Contractors ("ABC"), $50,000—$25,000 in "nominal" damages based on Roberson's breach of a noncompete agreement and $25,000 in damages for Penhall's tortious interference with that agreement.

ABC, a concrete-cutting company, hired Roberson on August 14, 1995, and soon thereafter began training him as a dispatcher and salesman.On September 11, 1995, Roberson signed an employment contract that contained the following clause:

"I acknowledge that by virtue of my employment I will acquire information concerning [ABC's] operations, suppliers, and customers, and that such information constitutes valuable and confidential information.I agree that for a period of two years from the date of termination of my employment with [ABC], I shall not directly or indirectly contact, sell and/or service any [of ABC's] customers, potential customers or customers solicited by [ABC] that I did in fact contact, sell, solicit and/or service during my employment with [ABC] which are located in the State of Alabama and south of the northernmost point of Cullman, Alabama and north of the southernmost point of Clanton, Alabama."

In the almost 9 years following his signing that agreement, Roberson became ABC's primary salesman for at least 36 ABC customers that were located in the territory outlined in the agreement (hereinafter referred to as "the covered territory").

On August 2, 2004, ABC terminated Roberson's employment.Thereafter, Roberson contacted Penhall, one of ABC's two chief competitors in the Birmingham concrete-cutting market, about obtaining a sales position.With full knowledge of the noncompete agreement Roberson had signed, Penhall hired Roberson, and he started working for Penhall on January 3, 2005.Thereafter, Roberson, on behalf of Penhall, contacted some of his former ABC clients in the covered territory and completed sales to those clients amounting to approximately $4,000.ABC issued a letter to Roberson requesting that he cease and desist from further soliciting business from its clients.

On February 24, 2005, ABC filed a two-count complaint against Roberson seeking an injunction and damages on account of his alleged violation of the noncompete agreement and seeking damages for Roberson's alleged conversion of company property.ABC also applied for a temporary restraining order on March 17, 2005, and for a preliminary injunction on April 4,2005.Following hearings on April 7 and 8, 2005, the trial court denied ABC's requests for a temporary restraining order and for a preliminary injunction on April 20, 2005.ABC subsequently amended its complaint to add a claim against Roberson for allegedly violating the Alabama Trade Secrets Act, Ala.Code 1975, § 8-27-1 et seq., adding Penhall as a defendant, and asserting that Penhall tortiously interfered with ABC's noncompete agreement with Roberson.

The case proceeded to trial on June 30, 2008.On October 3, 2008, the trial court entered a judgment awarding ABC $25,000 in "nominal" damages on its breach-of-contract claim against Roberson and $25,000 in damages on its intentional-interference-with-contractual-relations claim against Penhall.Following the denial of their postjudgment motion, Roberson and Penhall appealed to this court; this court remanded the case to the trial court for it to adjudicate the conversion and trade-secrets claims.At the request of ABC, the trial court dismissed those claims with prejudice, rendering the October 3, 2008, judgment final.SeeN.H. v. T.A.P.,963 So.2d 97, 99(Ala.Civ.App.2007)("A final judgment is one that ' "disposes of all claims or the rights and liabilities of all parties." ' "(quotingWright v. Wright,882 So.2d 361, 363(Ala.Civ.App.2003), quoting in turnCarlisle v. Carlisle,768 So.2d 976, 977(Ala.Civ.App.2000)));see alsoFaulk v. Berry,984 So.2d 426, 427(Ala.Civ.App.2007).The appeal then ripened for this court's consideration.SeeBaugus v. City of Florence,968 So.2d 529, 533(Ala.2007).

On appeal, Roberson and Penhall argue that the trial court erred in finding the noncompete agreement to be enforceable, erred in awarding damages that were unsupported by the evidence and based on speculation or conjecture, and erred in awarding nominal damages of $25,000 for breach of the noncompete agreement.

We first address Roberson and Penhall's contention that the trial court erred in impliedly finding that Roberson and ABC had entered into an enforceable noncompete agreement.It is the public policy of Alabama that contracts restraining employment are disfavored.Booth v. WPMI Television Co.,533 So.2d 209, 210(Ala.1988)(citingDeVoe v. Cheatham,413 So.2d 1141(Ala.1982)).Pursuant to § 8-1-1(a),Ala.Code 1975, most agreements restraining employment are void.¹"Nevertheless, Alabama courts will enforce a non-compete agreement if it (1) falls within a statutory exception to the general prohibition, and (2) is reasonably limited as to territory, duration and subject matter."Nationwide Mut. Ins. Co. v. Cornutt,907 F.2d 1085, 1087(11th Cir.1990)(citing Michael L. Edwards, Covenants Not to Compete in Alabama,44 Ala. Law. 306(1983))(footnotes omitted).

Section 8-1-1(b),Ala.Code 1975, provides the statutory exception to the general rule by stating:

"[O]ne who is employed as an agent, servant or employee may agree with his employer to refrain from carrying on or engaging in a similar business and from soliciting old customers of such employer within a specified county, city, or part thereof so long as the ... employer carries on a like business therein."

A noncompete or nonsolicitation agreement between an employee and his or her employer is enforceable as a reasonablerestraint of trade pursuant to § 8-1-1(b) if:

"(1) the employer has a protectable interest;

"(2) the restriction is reasonably related to that interest;

"(3) the restriction is reasonable in time and place; [and]

"(4) the restriction imposes no undue hardship."

DeVoe v. Cheatham,413 So.2d at 1142;see alsoJames S. Kemper & Co. v. Cox & Assocs.,434 So.2d 1380, 1384(Ala.1983).

In their brief to this court, Roberson and Penhall argue only that ABC did not have a protectable interest that would sustain its right to enforce the noncompete agreement.In order to have a protectable interest, the employer must possess "a substantial right in its business sufficiently unique to warrant the type of protection contemplated by [a] non-competition agreement."Cullman Broad. Co. v. Bosley,373 So.2d 830, 836(Ala.1979);accordCalhoun v. Brendle, Inc.,502 So.2d 689, 691(Ala.1986), andGreenlee v. Tuscaloosa Office Prods. & Supply, Inc.,474 So.2d 669, 671(Ala.1985).In assessing the sufficiency of the interest at stake to determine whether it warrants protection, the supreme court, in DeVoe, supra,relied onRestatement (Second) of Contracts§ 188, Comment B (1979), which explained that contracts regarding post-employment restraint are usually justified

" 'on the ground that the employer has a legitimate interest in restraining the employee from appropriating valuable trade information and customer relationships to which he has had access in the course of his employment.Arguably the employer does not get the full value of the employment contract if he cannot confidently give the employee access to confidential information needed for most efficient performance of his job.' "

DeVoe,413 So.2d at 1142-43.By that reasoning, an employer has a protectable interest sufficient to justify enforcement of a noncompete agreement "[i]f an employee [was] in a position to gain confidential information, access to secret lists, or to develop a close relationship with clients."413 So.2d at 1143."A protectable interest can also arise from the employer's investment in its employee, in terms of time, resources and responsibility."Nationwide,907 F.2d at 1087-88.

Roberson and Penhall argue that in his role as a salesman for ABC Roberson did not have access to confidential customer lists.The evidence shows that ABC, Penhall, and one other major concrete-cutting company basically split the concrete-cutting market in the covered territory during Roberson's tenure at ABC.Those three companies solicited work from construction companies in the covered territory that performed projects requiring concrete cutting.ABC identified potential customers by using sources containing public information readily available to its competitors, such as the Yellow Pages, the Internet, and a trade publication known as the "Dodge Report."ABC also sent its salesmen on the road to look for construction projects in progress from which to solicit business.The record contains no evidence indicating that ABC took any steps to treat its customer list in a confidential manner.Hence, Roberson and Penhall maintain that under Calhoun v. Brendle, Inc., supra, ABC did not have a protectable interest that would warrant enforcement of the noncompete agreement.

Calhoun does hold that an employer does not possess a protectable interest in a customer list that it has not treated confidentially.However, Calhoun hardly stands for the proposition that an employer who deals with publicly identifiable customersmay never enforce a noncompete agreement.An employer certainly may have a protectable interest other than an interest in protecting the identity of its customers.

In this case, the undisputed evidence shows that...