U3S Corp. of America v. Parker

• Decision Date: 05 December 1991
• Docket Number: No. A91A0805,A91A0805
• Citation: U3S Corp. of America v. Parker, 202 Ga.App. 374, 414 S.E.2d 513 (Ga. App. 1991)
• Parties: U3S CORPORATION OF AMERICA v. PARKER, et al.
• Court: Georgia Court of Appeals

Page 513

414 S.E.2d 513

202 Ga.App. 374

U3S CORPORATION OF AMERICA v. PARKER, et al.

No. A91A0805.

Court of Appeals of Georgia.

Dec. 5, 1991.

Reconsideration Denied Dec. 20, 1991.

Certiorari Denied March 20, 1992.

Vincent, Chorey, Taylor & Feil, Celeste McCollough, Atlanta, for appellant.

Bovis, Kyle & Burch, Steven J. Kyle, Atlanta, for appellees.

POPE, Judge.

U3S Corporation of America d/b/a Must Software International ("Must") purchased a computer software product line known as Nomad from D & B Computing Services, Inc. ("D & B"). Subsequently, Must hired former D & B employees Doris Bihm and Joe Oliver to serve as professional services consultants to its customers, but did not hire former D & B employee Larry Parker. Parker established Diversified Business Systems, Inc. ("Diversified") and Bihm and Oliver, while still employed by Must, each invested $10,000 to become shareholders of Diversified. First Bihm and then Oliver left Must to work for Diversified. Diversified provides professional consulting services to clients which use Nomad software. Must claims that by engaging in these services, Bihm and Oliver have breached the terms of their employment contract with Must and Parker has breached the terms of his employment contract with D & B which, Must claims, it is entitled to enforce.

Must filed suit against Diversified and the three individuals seeking certain injunctive relief and damages for breach of the terms and conditions of employment contracts, tortious interference with contractual relationships, conspiracy to commit tortious interference with contractual relationships, breach of the duty of loyalty and good faith and, against Parker and Diversified, aiding and abetting Bihm and Oliver to breach their duty of loyalty and good faith. The defendants counterclaimed for damages for abusive litigation. The trial court granted defendants' motion for summary judgment on those three counts of the complaint alleging breach of terms and conditions of employment contracts and the two counts alleging conspiracy to commit tortious interference with contractual relationships. The trial court denied Must's motion for partial summary judgment on the counterclaim. Must appeals these rulings. The trial court also granted defendants' motion for summary judgment on the two counts of the complaint in which Must sought injunctive relief, but Must does not appeal these rulings.

1. Preliminarily, we note that all parties to this appeal have relied heavily in their briefs on hearsay evidence. In arriving at the disposition of this appeal we have not considered inadmissible hearsay evidence but have relied, primarily, upon the terms of the various written contracts which were properly before the trial court on the motions for summary judgment.

2. Must first argues the trial court erred in granting summary judgment to defendants on those counts of the complaint alleging breach of the terms and conditions of each individual's employment contract (Counts I, II and V).

(a) In regard to defendant Parker, Must claims Parker's activities with Diversified constitute a breach of the terms and conditions of his previous employment with D & B. The threshold issue is whether Must is entitled to enforce D & B's rights under Parker's employment contract.

Must purchased the rights to the Nomad software line pursuant to an asset purchase agreement. The assignment to Must of rights under the terms and conditions of D & B's employment contracts was made by a separate document to the asset purchase agreement. D & B's employment agreement rights were assigned to Must only "to the extent that such employment agreements relate to the System and the NOMAD2 Business (as defined in the Asset Purchase Agreement ...)...." This proviso merely served to exclude from the assignment the right to enforce those employment agreement rights which are unrelated to that part of the business which was sold to Must. The purchase agreement documents clearly show, however, that Must was assigned the right to enforce any violation of an employment agreement that related in any way to that part of the business sold to Must. Since D & B no longer holds any interest in the System and Nomad2 business, to construe the agreement otherwise, as set forth in the dissenting opinion, would lead to the absurd result of leaving no party with the authority to protect the System and Nomad2 business from nondisclosure and non-solicitation violations.

Schedule A of the asset purchase agreement describes the assets assigned under "The System" as "[a]ll of the assets, properties, rights, businesses, operations and goodwill of Seller related to the System...." (Emphasis supplied.) Pursuant to the terms of the asset purchase agreement, the obligations assumed by the purchaser include: "Customer Contracts. All obligations of Seller under any license, agreement, contract ... including Consulting or Professional Services Agreements...." Thus, contrary to the conclusion of the dissenting opinion, the asset purchase agreement assigned to Must far more than just the product development or marketing aspect of D & B's business. It is obvious from the asset purchase agreement that D & B assigned to Must all interest in that part of its business known as the System, including professional services to customers. Thus, the assignment of rights under the terms and conditions of employment agreements included D & B's employment contracts with professional service employees whose work related to the System, such as defendant Parker. To the extent that the terms and conditions of Parker's employment contract are enforceable, Must was assigned the right to enforce them.

The pertinent part of the terms and conditions of Parker's employment contract states: "Employee will regard and preserve as confidential all information pertaining to the Company's business that may be obtained by him from any source as a result of his employment hereunder and he will not, without written authority from the Company, disclose to any persons, or use for his own benefit, during his employment or for a period of two (2) years thereafter, any such information relating to methods, processes, apparatus, programs or other materials conceived, designed, created or heretofore or hereafter used or developed by the Company or any of its customers, customers' lists, pricing and pricing methods, agents, suppliers or contractors, all such information being considered to relate to trade secrets and to be confidential information of the Company; he will not solicit or in any manner encourage employees of the Company to leave the employ of the Company.... This agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective heirs, beneficiaries, successors and assigns."

The trial court denied Parker's motion for summary judgment on those two counts of the complaint alleging tortious interference with Must's contractual relationships with Bihm and Oliver, expressly finding that issues of fact remain concerning Parker's liability for hiring Bihm and Oliver away from Must. One of the issues we must consider, then, is whether the alleged interference with the employment contracts of Bihm and Oliver is also a breach of the non-solicitation covenant of Parker's employment contract, as set forth above.

Parker argues the non-solicitation covenant is unenforceable because it is vague and ambiguous and not limited in time. We do not believe that the phrase "or in any manner encourage employees of the Company to leave" is so vague or ambiguous as to be unenforceable. For example, in Lane Co. v. Taylor, 174 Ga.App. 356, 360(2b), 330 S.E.2d 112 (1985), this court held enforceable a non-solicitation clause which included the phrase "or directly or indirectly cause any ... employee to leave his employment in order to work for another." Id. We also reject Parker's argument that the two-year limitation contained in the nondisclosure clause of his employment contract does not apply to the non-solicitation clause. Although the non-solicitation clause is set apart from the nondisclosure clause by a semi-colon, the time limitation is contained in the same sentence as the non-solicitation clause and, pursuant to the rules of construction, the time limitation applies to each restriction in the sentence, even those appearing after the semi-colon. See OCGA § 13-2-2(6); Bridges v. Home Guano Co., 33 Ga.App. 305, 125 S.E. 872 (1924). Thus, the trial court erred in granting summary judgment to defendant Parker on Counts I and II of the complaint alleging breach of the non-solicitation clause of his employment contract.

The trial court also granted summary judgment to Parker on Count V of the complaint alleging breach of the nondisclosure clause of his employment contract. Parker argues the nondisclosure clause is overly broad and therefore unenforceable. In particular, Parker argues that the record shows Must's customer lists are a matter of public record and since the disclosure of customer lists is one of the items of information he was prohibited from disclosing, then pursuant to the holding in Nasco, Inc. v. Gimbert, 239 Ga. 675, 238 S.E.2d 368 (1977), the nondisclosure clause is therefore unenforceable. In Nasco, the nondisclosure clause applied to " 'any information concerning any matters affecting or relating to the business of employer' including but not limited to [certain specific information]." Id. at 676(3), 238 S.E.2d 368. The Supreme Court noted that "[t]here is a great deal of public information concerning many matters which would affect or relate to the business of the employer; e.g., interest rates or minimum wage legislation." Id. Consequently, the court held the nondisclosure provision was overly broad and unenforceable. In this case, however, while the nondisclosure provision includes at least one item of information which is available to the public, the duty not to disclose is...