Unitel Corp. v. Decker

• Decision Date: 30 April 1987
• Docket Number: Nos. C14-86-720-C,C14-86-778-CV,s. C14-86-720-C
• Citation: 731 S.W.2d 636
• Parties: UNITEL CORPORATION, Appellant, v. Richard DECKER d/b/a Coastal Cellular Company and Marilyn Barron, Appellees. UNITEL CORPORATION, Appellant, v. Richard DECKER d/b/a Coastal Cellular Company, Linda Pinchback, Randy Decker d/b/a Executive Car Phones and Gerry McCarty Wells, Appellees. (14th Dist.)
• Court: Texas Court of Appeals

Page 636

731 S.W.2d 636

UNITEL CORPORATION, Appellant, v. Richard DECKER d/b/a Coastal Cellular Company and Marilyn

Barron, Appellees.

UNITEL CORPORATION, Appellant, v. Richard DECKER d/b/a Coastal Cellular Company, Linda

Pinchback, Randy Decker d/b/a Executive Car Phones

and Gerry McCarty Wells, Appellees.

Nos. C14-86-720-CV, C14-86-778-CV.

Court of Appeals of Texas,

Houston (14th Dist.).

April 30, 1987.

Douglas B. Wyatt, James M. McGraw, Houston, for appellant.

James L. Robertson, James E. Reaves, Houston, for appellees.

Before JUNELL, SEARS and DRAUGHN, JJ.

OPINION

SEARS, Justice.

This appeal deals with the validity of a non-competition clause in a contract of employment. It is a consolidated appeal from orders denying appellant's applications for temporary injunctions against appellees in which appellant (plaintiff below) sought to enjoin appellees (defendants below) from continuing to violate non-competition agreements contained within employment contracts between appellant and appellees Barron, Pinchback and Wells. We find that the trial courts erred in denying appellant's applications for temporary injunctions against all appellees except Randy Decker d/b/a Executive Car Phones.

Appellant sells and services cellular car phones and sells air time for cellular phones on the Houston Cellular telephone system. Appellees Barron, Pinchback and Wells were sales representatives for appellant during 1986, and each signed employment contracts containing the following non-competition clause:

Employee agrees that he shall not for a period of one (1) year immediately following the termination of his employment with UNITEL for any cause whatsoever: (i) make known to any person, firm, or corporation, the names and addresses of any of the customers of UNITEL or any other information pertaining to such customers, or the names, addresses, and any information pertaining to potential customers identified by UNITEL; (ii) call on, solicit, divert, or take away any of the customers of UNITEL's business or the business or patronage of any customer of UNITEL and any of its customers, either directly or indirectly, either for himself, or for or with any other person, firm, or corporation; (iii) within twenty-five (25) miles from the outer limits or boundaries of Harris County, Texas, directly or indirectly engage in the sale of goods or services in any way connected with the sound communication equipment business, or equipment or services of a similar nature or which serves or performs substantially the same functions as any sold by UNITEL.

All three employees left appellant's employment at various times in 1986 and, in violation of the non-competition clause, went to work for other businesses involved in the sales, installation and servicing of cellular car phones and air time. Appellees Barron and Pinchback were employed by appellee Richard Decker d/b/a Coastal Cellular Company and appellee Wells by appellee Randy Decker d/b/a Executive Car Phones. After learning of their employment, appellant filed suits against Barron, Pinchback and Wells alleging breach of employment contracts, and against the Deckers for wrongful interference with business and contractual relationships. In addition to other relief, appellant sought temporary injunctions to prohibit the Deckers from wrongful interference with appellant's business and contractual relationships, and to prohibit Barron, Pinchback and Wells from continuing to work for the Deckers. Hearings were held on appellant's applications for temporary injunctions in two separate courts; both were denied. Appellant appeals both denials.

In its first three points of error, appellant contends the trial courts abused their discretion in denying appellant's applications for temporary injunctions against appellees Barron, Pinchback and Wells. An appellate court must review the contract and the evidence to determine whether the trial court ruled correctly. While the trial court's fact findings are subject to review only for legal and factual insufficiency, the construction of the restrictive covenants of a contract and the proper remedy for the breach of such covenants are strictly matters of law for our determination. Electronics Data Systems Corp. v. Powell, 524 S.W.2d 393, 395-96 (Tex.Civ.App.--Dallas 1975, writ ref'd n.r.e.).

A covenant not to compete commonly sets forth temporal and geographical restraints on the employee's ability to compete with the former employer, and the restraints must be reasonable in order to enforce the covenant. Weatherford Oil Tool Co. v. Campbell, 161 Tex. 310, 340 S.W.2d 950, 951 (1960). Under the common law of contracts, a covenant not to compete is a restraint of trade and its terms are enforceable only if the terms are reasonable in other respects. Whether a covenant not to compete is reasonable is also a question of law for the court. Henshaw v. Kroenecke, 656 S.W.2d 416, 418 (Tex.1983).

A covenant is unreasonable "if it is greater than is required for the protection of the person for whose benefit the restraint is imposed or imposes undue hardship upon the person restricted." Weatherford, 340 S.W.2d at 951. A covenant must meet four criteria in order to be deemed reasonable. First, the covenant must be necessary for the protection of the promisee, i.e., the promisee must have a legitimate interest in protecting business goodwill or trade secrets. Second, the covenant must not be oppressive to the promisor. Third, the covenant must not be injurious to the public. Fourth, the covenant should be enforced only if the promisee gives consideration for something of value. Hill v. Mobile Auto Trim, Inc., 725 S.W.2d 168, 170-71 (Tex.1987).

We first examine the necessity to protect appellant as the former employer and promisee under the covenant not to compete. According to the testimony of Patrick Stephenson, appellant's president, the cellular car phone business in Houston is highly competitive. He testified that the great success his company enjoys was due primarily to the efforts of its sales people, and that appellees Barron, Pinchback and Wells were considered some of appellant's top sales people. Stephenson also testified extensively as to his training program for the sales people that was developed over many years at appellant's expense and that appellant considers to be extensive, unique and confidential. He testified that once the training program is completed, the sales people are given customer "leads" that are generated by appellant and these leads are considered confidential. Stephenson testified that Barron, Pinchback and Wells received all of their cellular car phone sales training with appellant as none had prior cellular sales experience. It is undisputed that each used this experience in her new employment, and each was in direct competition with appellant. Also, there was evidence that at least one of appellant's current customers was contacted by appellees after leaving appellant's employment.

Appellees vigorously deny that the training and leads provided to them by appellant comprise any protectable proprietary interest. They cite Diesel Injection Sales & Services, Inc. v. Renfro, 656 S.W.2d 568, 572 (Tex.App.--Corpus Christi 1983, writ ref'd n.r.e.), wherein the Corpus court refused to enforce a restrictive employment covenant. However, the employees in the Diesel case were diesel engine mechanics who had minimum contact and exposure to customers. The methods used by the employees in the Diesel case involved matters of general knowledge to any diesel mechanic and did not require special or new work techniques. Further, the employees did not take any customer lists or have any knowledge not already possessed by their new employer.

In this case, while there is a...