A COMPLETE HOME CARE AGENCY INC V THERESA GUTIERREZ
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STATE OF MICHIGAN
COURT OF APPEALS
A COMPLETE HOME CARE AGENCY,
UNPUBLISHED
June 29, 2004
Plaintiff-Appellant,
v
THERESA GUTIERREZ and ATRIUM HOME
AND HEALTH CARE SERVICE, INC.,
No. 246280
Macomb Circuit Court
LC No. 02-001211
Defendant-Appellees.
Before: Murphy, P.J., and Jansen and Cooper, JJ.
JANSEN, J. (concurring in part and dissenting in part).
I respectfully dissent from Section II A of the majority opinion, as I would find that the
trial court erred in finding that the covenant not to compete was legally invalid. I concur with
the majority in all other respects and, thus, I would affirm in part and reverse in part.
On appeal, a trial court's decision on a motion for summary disposition is reviewed de
novo. Dressel v Ameribank, 468 Mich 557, 561; 664 NW2d 151 (2003). Under MCR
2.116(C)(10), summary disposition is proper when “there is no genuine issue as to any material
fact, and the moving party is entitled to judgment or partial judgment as a matter of law.” A
genuine issue of material fact exists when the record, giving the benefit of reasonable doubt to
the opposing party, leaves open an issue upon which reasonable minds could differ. Allstate Ins
Co v State, 259 Mich App 705, 709-710; 675 NW2d 857 (2003). This Court also reviews
questions involving contract construction de novo. Old Kent Bank v Sobczak, 243 Mich App 57,
61; 620 NW2d 663 (2000).
On review de novo, I would find that the convent not to compete, which was signed by
defendant Gutierrez, is enforceable. Agreements not to compete are permissible in Michigan if
they are reasonable. MCL 445.774a(1); Thermatool Corp v Borzym, 227 Mich App 366, 372;
575 NW2d 334 (1998). Pursuant to MCL 445.774a(1):
An employer may obtain from an employee an agreement or covenant
which protects an employer's reasonable competitive business interests
and expressly prohibits an employee from engaging in employment or a
line of business after termination of employment if the agreement or
covenant is reasonable as to its duration, geographical area, and the type
of employment or line of business. To the extent any such agreement or
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covenant is found to be unreasonable in any respect, a court may limit the
agreement in order to render it reasonable in light of the circumstances in
which it was made and specifically enforce the agreement as limited.
[Emphasis added.]
Michigan law requires that we narrowly construe restrictive covenants. United Rentals, Inc v
Keizer, 355 F3d 399, 408 (CA 6 2004).
The restrictive covenant in question provides:
I AGREE AND UNDERSTAND THAT I WILL NOT PERFORM ANY
SERVICES FOR THE CLIENT DIRECTLY, OR INDIRECTLY, THROUGH
ANOTHER AGENCY, INDIVIDUAL, ENTITY OTHER THAN “A
COMPLETE HOME CARE” AGENCY, FOR A PERIOD OF SIX (6) MONTHS
AFTER THE LAST DAY WORKED ON ANY OF YOUR ASSIGNMENTS.
I agree with the majority, with regard to its finding that a six-month duration is a reasonable time
period and, thus, would not support the trial court’s grant of summary disposition. See Superior
Consulting Co v Walling, 851 F Supp 839, 847 (ED Mich 1994). I would also find that the
covenant is reasonable as to geographical area as it is limited to performance of services for
plaintiff’s clients for which Gutierrez provided service. But I disagree with the majority’s
finding that the restriction in the covenant is invalid as matter of law because it is unreasonably
broad.
The restrictive covenant provides that Gutierrez will not “perform any services for the
client.” A restrictive covenant, which does not allow an employee to perform services for a
client with which that employee provided service for on behalf of the employer he or she is
leaving, for a limited period of six months, is not unreasonable. This is a reasonable restriction
as to “type of employment or line of business,” when read in context. A reading of the terms
used in the covenant not to compete make it clear that the agreement was intended to prohibit
Gutierrez from performing services for plaintiff’s clients, for which she had provided services for
during her employment with plaintiff. It is apparent that the restriction is limited to the services
Gutierrez provided through her employment with plaintiff. A provision, which limits Gutierrez
from performing services for six-months on clients that she serviced for plaintiff was reasonable
as to line of work, narrowly restricting services to clients that Gutierrez serviced for plaintiff.
This restriction is reasonable in this field of work because Gutierrez and other employees are put
in a unique position where they develop personal relationships with the client. Without such
restriction an employee could make a deal with the client and provide services independently
from the employer who put her in contact with the client or, as is the present situation, could
leave and go to another agency and take the client to another agency. Plaintiff offered evidence
supporting that when Gutierrez terminated her employment with plaintiff she continued
performing the same services during the same shift for the client for defendant Atrium as she had
on behalf of plaintiff. The provision did not restrict Gutierrez from working in “any capacity for
a competitor,” see Superior Consulting Co, supra at 847, but instead only placed a restriction
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that if she did work for other agencies or competitors she could not provide services for clients
she worked for while employed by plaintiff for a limited period of six months.1
Gutierrez was free to compete in the field, she was just restricted from performing
services for the “client” she serviced on behalf of plaintiff. Surely, Michael Boyagian was not
the only individual in the area in need of home nursing care. The restrictive covenant did not
prohibit plaintiff from gaining full time employment with benefits. Gutierrez was only restricted
from performing services for clients she serviced on behalf of plaintiff; i.e., Boyagian.
In addition, the covenant at issue protected plaintiff’s “reasonable competitive business
interests.” MCL 445.774a. The legitimate business interest is the retaining of clients and
goodwill. This is clearly a reasonable competitive business interest under the circumstances of
this case. Plaintiff places employees in the homes of clients where a situation is created in which
it is the employee who develops the relationship with the client. If an employee leaves an
employer and gains employment with another home care provider or decides to become an
independent contractor it is a legitimate business concern that the client will follow the employee
with which the client has developed a relationship. Clearly, this is the type of behavior the
restrictive covenant was intended to prohibit.
In Kelsey-Hayes Co v Maleki, 765 F Supp 402, 407, vacated pursuant to settlement 889 F
Supp 1583 (ED Mich 1991), the court provided:
[A] legitimate business interest . . . . must be something greater than mere
competition, because a prohibition of all competition is in restraint of trade. To be
reasonable, a covenant must protect against an employee gaining some unfair
advantage in competition with his employer. Reasonable covenants may protect
such legitimate interests as trade secrets, confidential information, close contact
with the employer's customers or customer lists, or cost factors and pricing. An
employer may not reasonably prohibit future use of general knowledge or skill.
Although, Kelsey-Hayes Co, supra has been vacated, the rationale was adopted by the court in
United Rentals, Inc v Keizer, 202 F Supp 2d 727 (WD Mich 2002) affirmed 353 F3d 399 (2004)
(“the employer's business interest justifying such a restrictive covenant must be greater than
mere competition . . . . In order to be reasonable, a restrictive covenant must protect against the
employee's gaining some unfair advantage in competition with his employer, but not prohibit the
employee's future use of general knowledge or skill”). The legitimate business interest in the
present case is clearly greater than mere competition as the personal relationship an employee
develops with plaintiff’s clients creates an unfair advantage for employees in competition with
plaintiff. The covenant in question protected plaintiff whose employees had close contact with
1
Even assuming that the phrase “any service for the client” is too broad the covenant should
have merely been construed against plaintiff in favor of defendant such that “any service” was
limited to the services Gutierrez provided to the client while she was employed by plaintiff. See
United Rentals, Inc, supra, 355 F3d at 407, citing Higgins v Lawrence, 107 Mich App 178, 309
NW2d 194, 196 (1981).
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clients and did not prohibit future use of general knowledge or skill. Gutierrez was free to use
her general knowledge and skills anywhere and for anyone, except she was not allowed to
provide service to clients she had serviced during her employment with plaintiff for a reasonable
period of six months. Thus, the covenant not to compete included in Gutierrez’s employment
contract did not prohibit use of general knowledge and skill she had obtained by working for
plaintiff. Therefore, the covenant not to compete that was included in the employment contract
protected a reasonable competitive business interest of plaintiff for purposes of MCL
445.774a(1).2
For the above reasons, I would find that the covenant not to compete included in
Gutierrez’s employment contract is reasonable for purposes of MCL 445.774a, and should have
been enforced. I would reverse the trial court’s grant of summary disposition in favor of
defendants with regard to plaintiff’s breach of the covenant not to compete claim. I concur with
the majority in all other respects and, thus, I would affirm in part and reverse in part.
/s/ Kathleen Jansen
2
In Tower Oil & Technology Co v Buckley, 99 Ill App 3d 637; 425 NE2d 1060, 1066-1067; 54
Ill Dec 843 (1981) (quoted and cited favorably in In re Talmage, 758 F2d 162, 165-166 (CA 6
1985)), the appellate court for another state provided that the “protection of an established
clientele from takeover by a former employee as a legitimate interest. . . . neither the existence
or misuse of a trade secret is required to enforce a restrictive covenant.”
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