Avion Systems, Inc. v. Thompson

650 S.E.2d 349 (2007)

AVION SYSTEMS, INC. v. THOMPSON.

No. A07A1488.

Court of Appeals of Georgia.

July 10, 2007.

Reconsideration denied July 30, 2007.

*350 Theodore H. Lackland, Atlanta, for Appellant.

Breedlove & Lassiter, Levi Breedlove, Monica A. York, Decatur, for Appellee.

BLACKBURN, Presiding Judge.

In this action for breach of an employment contract, the employer, Avion Systems, Inc. (Avion), claims that its former employee, Maxine Thompson, violated two provisions of the agreement by terminating her employment with Avion before the required term of one year and by then continuing her employment with the assigned employer at the job site where she had been placed through Avion. In response to a motion filed by Thompson, the trial court dismissed the action for failure to state a claim.[1] Avion appeals, claiming that it did not have an opportunity to respond to the motion and that the complaint stated a cause of action. As one of the restrictive covenants was enforceable and Avion has pled facts to support its claim for breach of contract, we reverse.

A motion to dismiss should only be granted where "the allegations of the complaint, when construed in the light most favorable to the plaintiff with all doubts resolved in the plaintiff's favor, disclose with certainty that the plaintiff would not be entitled to relief under any state of provable *351 facts." Cooper v. Unified Govt. of Athens-Clarke County.[2]

Construing all allegations of the complaint in favor of Avion, the record shows that on July 21, 2003, Thompson entered an employment agreement with Avion. In its introductory paragraph, the contract provided that Thompson was joining Avion as a "full time employee at will" for a salary of $67,620 per year. The document then set forth a section of covenants, two of which are at issue in this action:

The Employee, upon his/her own consent, agrees to provide on-site consulting services . . . for a minimum of twelve (12) months. For a period of twelve (12) months following the completion of project, the Employee unconditionally agrees to not deal directly, indirectly, or by any other means, either individually or in association with another individual or organization for any pecuniary gain with Corporation's customer or their client to whom he is assigned at the particular job site for that particular division or subdivision with whom Employee had contact. . . .

Thompson began working for Avion and was placed on a project with one of Avion's customers. On October 15, 2003, Thompson notified Avion via electronic mail that she was terminating her employment with Avion and would be working at her assignment through another contractor.

Avion brought suit thereafter, alleging that Thompson breached the covenant to provide services for one year and further breached the covenant not to compete. Thompson moved to dismiss the action for failure to state a claim, with attached certificate of service verifying that she mailed a copy of the pleading to Avion's attorney of record. Avion's attorney maintains on appeal that he did not receive a copy of this pleading and thus did not file a response. The trial court dismissed the action.

Avion now appeals, arguing dismissal was improper because: (1) Avion did not have an opportunity to respond; and (2) the complaint stated a cause of action. We disagree as to the first argument, and agree as to the second.

1. Avion first contends that it did not have a reasonable opportunity to respond to the motion to dismiss, as it did not receive a copy of the motion. "[W]here it is undisputed that service [of notice] is properly made [by mail] in accordance with the statutory provisions, actual notice is not required, and it is immaterial that the notice was not received." (Citation and punctuation omitted.) Stubbs v. State.[3] Thompson properly certified that a copy of the motion was mailed to employer's attorney of record, and Avion has produced no evidence to refute this prima facie evidence of service. We thus decline to hold that Avion did not have a reasonable opportunity to respond to Thompson's motion.

2. Avion next maintains that its complaint stated a cause of action and that therefore dismissal was improper. Because the agreement to provide services for a minimum period of 12 months was enforceable and Avion has pled facts to support the claim that Thompson breached this agreement, we agree that dismissal was improper. However, as to Thompson's alleged breach of the covenant not to work at the same job site where she was assigned through Avion, we hold that this noncompete covenant was unenforceable and that therefore the court properly dismissed that aspect of Avion's claim.

(a) Avion's complaint first alleged that Thompson breached the agreement by terminating her employment before 12 months. Thompson maintains that her agreement to provide services for 12 months was invalid and insists that this term, specifically enumerated with other restrictions in the contract, conflicted with the general provision for employment "at-will" in the introductory paragraph, which she argues allowed both parties to terminate the agreement at any time. She concludes that due to this purported conflict, the contract terms were ambiguous *352 and must be construed to provide for purely at-will employment. We disagree.

The construction of a contract is a question of law for the courts, Batson-Cook Co. v. Poteat,[4] as is the existence or nonexistence of an ambiguity in a contract, Cassville-White Assoc. v. Bartow Assoc.[5] "[W]here the terms of [a] contract are clear and unambiguous, the court looks only to the contract to find the parties' intent." Gill v. B & R Intl.[6] "[I]f the contract is ambiguous in some respect, the court must apply the rules of contract construction to resolve the ambiguity." Schwartz v. Harris Waste Mgmt. Group.[7]

We hold that the contract provided that although the employment was generally at-will, it was subject to Thompson's agreement to refrain from terminating her employment for 12 months. To the extent there was any conflict in terms as to whether Thompson could terminate her employment at-will or was limited to a fixed term of at least one year, we resolve this issue by principles of contract construction. Pursuant to OCGA § 13-2-2(4), we favor a construction that upholds the contract "in whole and in every part." Furthermore, "when a provision specifically addresses the issue in question, it prevails over any conflicting general language." Woody's Steaks, LLC v. Pastoria.[8] Where, as here, the parties have explicitly set forth restrictions on the time and manner in which an employee may terminate employment, these specific terms must prevail over any conflicting general language of employment at-will. Such a construction effectuates the clear intent of the parties, upholds the contract "in whole and in every part," and is also consistent with the common and enforceable practice of placing restrictions, such as notice provisions or covenants not to compete, on otherwise at-will employment agreements. See Burritt v. Media Marketing Svcs.[9] See also The Ins. Center v. Hamilton.[10]

Thompson further insists that the covenant was invalid because it was not "reciprocal," i.e., it imposed limitations on the employee's ability to terminate employment but did not define any such limitations on the employer. "[A] covenant is not unreasonable merely because the employer reserved the right to terminate the employee's services at any time with or without cause." Spalding v. Southeastern Personnel of Atlanta.[11] Where, as here, the employer offers employment and agrees to pay definite compensation, this consideration is adequate to sustain the contract, and "[t]he fact that the employee agrees to further restrictions and warranties not placed upon the employer does not divest the contract of mutuality." Landmark Financial Svcs. v. Tarpley.[12]

(b) Avion's second allegation was that Thompson breached the agreement by continuing to work at the job site where she had been assigned through Avion. We hold that the applicable covenant not to compete was unenforceable.

Covenants against competition in employment agreements are in partial restraint of trade and are thus upheld only when strictly limited: the restrictions must be reasonable, considering the business interests of the employer needing protection and the effect of the restrictions on the employee. Pregler v. C & Z, Inc.[13] A three-element *353 test of duration, territorial coverage, and scope of activity provides a helpful tool in examining the reasonableness of a restrictive covenant in an employment contract. Sanford v. RDA Consultants.[14] A covenant not to compete that does not specify with particularity the nature of the business activities in which the employee is forbidden to engage is generally considered unreasonable. Howard Schultz, etc., Inc. v. Broniec.[15] By failing to specify the type of activities prohibited, such covenants in effect restrict employment in any capacity, even if completely unrelated to the employer's business, and are thus impermissibly overbroad as not reasonably necessary to protect the employer's interests. Horne v. Drachman.[16] See also Allied Informatics v. Yeruva.[17]

Here, the covenant did not specify the activities in which Thompson was prohibited from engaging, but instead prohibited her from dealing with a client "for any pecuniary gain," regardless of whether her activities were related to Avion's business. The provision was thus overbroad and unenforceable, as it is not reasonably necessary to protect the interests of Avion. Thompson was therefore entitled to partial dismissal as to Avion's claim that she breached her agreement by continuing to work at the same job site where she had been assigned.

Judgment affirmed in part and reversed in part.

RUFFIN and BERNES, JJ., concur.

NOTES

[1] Thompson moved the trial court to dismiss the action (for failure to state a claim) or, in the alternative, for summary judgment. The trial court's judgment granting the motion did not specify whether it was a dismissal or summary judgment. As the motion asked for dismissal, requesting summary judgment only in the event dismissal was not granted, and as the trial court did not enter an order denying the motion to dismiss, we construe this order as one for dismissal rather than for summary judgment.

[2] Cooper v. Unified Govt. of Athens-Clarke County, 275 Ga. 433, 434(2), 569 S.E.2d 855 (2002).

[3] Stubbs v. State, 202 Ga.App. 670, 415 S.E.2d 486 (1992).

[4] Batson-Cook Co. v. Poteat, 147 Ga.App. 506, 508, 249 S.E.2d 319 (1978).

[5] Cassville-White Assoc. v. Bartow Assoc., 150 Ga.App. 561, 564(3)(a), 258 S.E.2d 175 (1979).

[6] Gill v. B & R Intl., 234 Ga.App. 528, 530(1)(a), 507 S.E.2d 477 (1998).

[7] Schwartz v. Harris Waste Mgmt. Group, 237 Ga.App. 656, 660(2), 516 S.E.2d 371 (1999).

[8] Woody's Steaks, LLC v. Pastoria, 261 Ga.App. 815, 818(1), 584 S.E.2d 41 (2003).

[9] Burritt v. Media Marketing Svcs., 204 Ga.App. 848(2), 420 S.E.2d 792 (1992).

[10] The Ins. Center v. Hamilton, 218 Ga. 597, 603(2), 129 S.E.2d 801 (1963).

[11] Spalding v. Southeastern Personnel of Atlanta, 222 Ga. 339, 343(1), 149 S.E.2d 794 (1966).

[12] Landmark Financial Svcs. v. Tarpley, 236 Ga. 568, 571(3), 224 S.E.2d 736 (1976).

[13] Pregler v. C & Z, Inc., 259 Ga.App. 149, 150(1), 575 S.E.2d 915 (2003).

[14] Sanford v. RDA Consultants, 244 Ga.App. 308, 310(1), 535 S.E.2d 321 (2000).

[15] Howard Schultz, etc., Inc. v. Broniec, 239 Ga. 181, 184(2), 236 S.E.2d 265 (1977).

[16] Horne v. Drachman, 247 Ga. 802, 805(2), 280 S.E.2d 338 (1981).

[17] Allied Informatics v. Yeruva, 251 Ga.App. 404, 406(2), 554 S.E.2d 550 (2001).