Easy Reach, Inc., et al. v. Hub City Brush, Inc.
| Docket Number: | 2005-CA-00952-COA | |
| Court of Appeals: |
Opinion Link Opinion Date: 08-08-2006 Opinion Author: IRVING, J. Holding: Affirmed in Part, Reversed & Rendered in Part |
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| Additional Case Information: |
Topic: Contract - Covenant not to compete Judge(s) Concurring: KING, C.J., LEE AND MYERS, P.JJ., SOUTHWICK, CHANDLER, GRIFFIS, BARNES, ISHEE AND ROBERTS, JJ. Procedural History: Bench Trial Nature of the Case: CIVIL - CONTRACT |
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| Trial Court: |
Date of Trial Judgment: 11-12-2004 Appealed from: Forrest County Chancery Court Judge: Johnny Lee Williams Disposition: FOUND THAT A NON-COMPETITION CLAUSE CONTAINED IN A STOCKHOLDER’S AGREEMENT WAS VALID. Case Number: 04-0057-GN-W |
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| Party Name: | Attorney Name: | |||
| Appellant: | EASY REACH, INC. (FORMERLY EASY REACH
BRUSH, INC.) AND BRANT L. CEDOTAL |
R. CHRISTOPHER WOOD |
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| Appellee: | HUB CITY BRUSH, INC. | LAWRENCE CARY GUNN |
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Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Contract - Covenant not to compete |
| Summary of the Facts: | Brant Cedotal, owner of Easy Reach, Inc., sued on behalf of himself and Easy Reach for a declaratory judgment to void a non-competition clause that bars Easy Reach from manufacturing its own brushes. The court declined to find that the non-competition agreement was invalid, and entered a judgment denying relief to Easy Reach and Brant. Easy Reach and Brant appeal. |
| Summary of Opinion Analysis: | Brant argues that the covenants not to compete lack the elements of duration of restriction and geographical limits and should be declared void as a matter of law and public policy. The enforceability of a non-competition agreement is largely predicated upon the reasonableness and specificity of its terms, primarily, the duration of the restriction and its geographic scope. The non-competition clause which relates only to shareholders is limited by both duration and location. Specifically, the clause restricts competitive activity within the first six months after a stockholder sells his interest in the company. The definition of “compete” limits the clause as to the location within five miles of any place where Hub City has a contract at the time a shareholder sells his interest in the company. Therefore, there is evidence to support the chancellor’s finding that this non-competition clause is reasonable. The other non-competition clause is not limited as to either duration or location and is therefore unreasonable and invalid. Read literally, the terms of this clause forever bar Easy Reach from engaging in the manufacture of brushes. Because the definition of “compete” contained in the agreement does not apply to Easy Reach, the clause is unlimited as to location as well. There is nothing to indicate that the Easy Reach non-competition clause is reasonable. Therefore, this non-competition clause is invalid and unenforceable. |
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