Watercolor Salon LLC v. Hixon, 2021-IA-01151-SCT

CourtUnited States State Supreme Court of Mississippi
Writing for the CourtMAXWELL, JUSTICE
PartiesWATERCOLOR SALON LLC v. NEALIE HIXON
Docket Number2021-IA-01151-SCT
Decision Date01 December 2022

WATERCOLOR SALON LLC
v.

NEALIE HIXON

No. 2021-IA-01151-SCT

Supreme Court of Mississippi, En Banc.

December 1, 2022


DATE OF JUDGMENT: 09/29/2021

COURT FROM WHICH APPEALED: MADISON COUNTY CIRCUIT COURT HON. DEWEY KEY ARTHUR JUDGE

TRIAL COURT ATTORNEYS: ROY H. LIDDELL MICHAEL A. HEILMAN EDWARD TAYLOR POLK DANIEL JAMES HAMMETT

ATTORNEYS FOR APPELLANT: ROY H. LIDDELL MICHAEL DAVID ANDERSON

ATTORNEYS FOR APPELLEE: MICHAEL A. HEILMAN DANIEL JAMES HAMMETT

MAXWELL, JUSTICE

¶1. The trial court denied Watercolor Salon LLC's motion for a temporary restraining order and preliminary injunction filed against Watercolor's former employee Nealie Hixon. The motion was based on an employment, confidentiality, and noncompetition agreement. Because Nealie was twenty years old and thus legally a minor when she entered the agreement, the trial court held the agreement was unenforceable.

¶2. We granted Watercolor's petition for interlocutory appeal.

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¶3. On appeal, Watercolor argues its employment agreement meets the statutory exception that permits minors eighteen years or older to enter into enforceable contracts "affecting personal property."[1] Watercolor insists that, because the employment agreement protects Watercolor's intellectual property and includes liquidated damages upon breach, it necessarily is a contract affecting personal property. In other words, as Watercolor sees it, a minor who is eighteen can enter any type of contract if any type of personal property is affected in any way.

¶4. We find this logic is flawed and stretches the statutory minor disability exception too far. Just because an employment contract restricts an employee from taking intellectual property or covers what happens upon breach or termination does not completely change the fundamental nature of the contract. And here the fundamental nature of the contract was a noncompetition agreement that Nealie would give up her ability to work in a certain geographical area for a fixed time in exchange for continued employment at a higher hourly wage. So this employment contract was simply a contract affecting Nealie's right to work, not her personal property. Thus, the statutory exception does not apply. And because Nealie disaffirmed the contract, it is unenforceable against her.

¶5. We therefore affirm the denial of Watercolor's motion for injunctive relief, which was based solely on the unenforceable agreement. Whether Watercolor has any remaining claims against Nealie that are not based on the contract, such as the taking of trade secrets, remains to be determined on remand.

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Background Facts & Procedural History

¶6. Watercolor is a hair salon with two locations, one in Jackson and one in Ridgeland, Mississippi. Nealie started working for Watercolor in September 2020. Six months later, at Watercolor's request, she signed the employment, confidentiality, and noncompetition agreement. She was twenty years old when she signed it.

¶7. Under the contract's noncompetition provision, Nealie agreed that for three years following termination of her employment by Watercolor she would not work for another salon located within a fifteen-mile radius of Watercolor's locations. The agreement also prohibited Nealie from disseminating Watercolor's proprietary information or using its trade secrets. In the event of a breach, the contract provided for liquidated damages.

¶8. Nealie resigned by text message in July 2021. Her message to Watercolor stated she was going to dental hygienist school. But Watercolor soon learned Nealie had begun working at another salon in Brandon, Mississippi. Because this salon was within the fifteen-mile prohibited radius, Watercolor texted Nealie back that, per their agreement, she must immediately stop working there. Nealie refused, asserting that her new employer-while perhaps within fifteen miles of a Watercolor location "as the crow flies"-was in reality located eighteen miles away by car.

¶9. Watercolor did not stand down. Instead, it filed a complaint for temporary, preliminary, and permanent injunctive relief and for other claims and damages against Nealie. After a hearing, the trial court[2] denied Watercolor's request for temporary and

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preliminary injunctive relief. The trial court held that the noncompetition agreement between Watercolor and Nealie was unenforceable against Nealie because she was a minor when she entered it. Miss. Code Ann. § 1-3-27 (Rev. 2019). Further, the agreement did not fall under the statutory exception allowing minors to enter enforceable contracts affecting personal property. Miss. Code Ann. § 93-19-13.

¶10. Watercolor filed a petition for interlocutory appeal, which this Court granted.

Discussion

¶11. The only question on interlocutory appeal is-did the trial court err by finding the agreement unenforceable because Nealie was under twenty-one years old when she entered it? By statute, anyone under the age of twenty-one is a minor. Miss. Code Ann. § 1-3-27. And public policy gives a minor the right to disaffirm a contract "to protect the minor from his own improvidence and the overreaching of adults." Star Chevrolet Co. v. Green ex rel. Green, 473 So.2d 157, 162 (Miss. 1985) (citing Lake v. Perry, 95 Miss. 550, 49 So. 569, 572 (1909)).

¶12. There is, however, a statutory exception. "All persons eighteen (18) years of age or older, if not otherwise disqualified, or prohibited by law, shall have the capacity to enter into binding contractual relationships affecting personal property."[3] Miss. Code Ann. § 93-19-13. Elsewhere, the Mississippi Code defines personal property to mean "all tangible and intangible personal property[,]" including "cash, goods, deposit accounts, chattels, effects,

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evidences of rights of action, and all written instruments, including promissory notes, by which any pecuniary obligation, or any right, title, or interest in any real or personal estate, shall be created, acknowledged, transferred, incurred, defeated, discharged, or diminished." Miss. Code Ann. § 1-3-41 (Rev. 2019). Combining this broad definition of personal property with Section 93-3-13's disability-of-minority exception, Watercolor insists that any person eighteen years and older has the capacity to enter into binding contractual agreements if the agreement affects personal property in any way whatsoever. We disagree.

¶13. We find this incredibly broad interpretation stretches Section 93-19-13's disability removal too far. Restrictions in employment contracts that address intellectual property or provide for what happens if the contract is breached or terminated do not alter the fundamental nature of the contract. The contract still remains what it is-an employment contract with a noncompetition provision.

¶14. Here, Watercolor Salon sought a temporary restraining order and preliminary injunction based on the employment contract. Watercolor's contract with Nealie is not a sales contract, not a banking agreement, and it is not a promissory note. Nor is it a written instrument creating a pecuniary obligation. It is clearly an employment contract in which Nealie gave up her ability to work in a certain geographical area for a certain period of time in exchange for continued employment at a higher hourly wage. Therefore, the contract affects Nealie's right to work, not her personal property.

¶15. Under the dissent's logic, a contract for the sale of real property would be binding against an eighteen-year-old because the minor put down earnest money-i.e., pledged her

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personal property, which she stood to lose if she tried to back out of the contract. This is certainly not what the Legislature intended when it removed the disability of minority so persons eighteen years or older could "enter into binding contractual relationships affecting personal property." Miss. Code. Ann. § 93-19-13. Section 93-19-13 is an exception to the rule that persons under twenty-one years of age are minors who should be protected from entering binding contracts. It is not-as the dissent interprets it-an exception that swallows the entire rule and overrides the statute, making eighteen the new age of majority for any and all types of contracts.

¶16. The question whether eighteen-year-olds should be able to enter into binding employment contracts with noncompetition provisions is a policy decision for the Legislature. And this Court cannot judicially create an exception for such employment contracts by simply broadening Section 93-19-13's exception for contracts "affecting personal property." Again, this is a decision for the Legislature.

¶17. Simply put, Watercolor's employment agreement does not meet Section 93-19-13's personal-property contract exception. Because Nealie was a minor when she entered the employment contract, the law clearly allowed her to disaffirm and void it. Mellott v. Love, 152 Miss. 860, 119 So. 913, 913 (1929); cf. PAK Foods Houston, LLC v. Garcia, 433 S.W.3d 171, 177 (Tx. Ct. App. 2014)...

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