Acadian Cypress & Hardwoods, Inc. VS Joy Stewart
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STATE OF LOUISIANA COURT OF APPEAL FIRST CIRCUIT 2012 CA 1425 ACADIAN CYPRESS HARDWOOD INC VERSUS JOY STEWART udgment Rendered MAR 2 2 201a On Appeal from the Twenty Judicial District Court First In and for the Parish of Tangipahoa State of Louisiana 0001413 2012 No Honorable Elizabeth P Wolfe Judge Presiding Glen R Galbraith Patrick K Reso Counsel for Plaintiff Appellee Cypress Hardwood Inc Acadian Frank J DiVittorio Hammond Louisiana G Andrew Veasey Bradford H Felder Counsel for Defendant Appellant Joy Stewart Lafayette Louisiana BEFORE WHIPPLE C McCLENDON AND HIGGINBOTHAM J r a Gu C eQ j ort ccr I McCLENDON The defendant appeals from a trial court judgment granting a preliminary injunction in favor of the defendanYs former employer based on a non competition agreement For the reasons that follow we affirm FACTS AND PROCEDURAL HISTORY Joy Stewart was by Acadian Cypress employed Hardwood Inc Acadian from May 2004 through April 2012 as a sales representative and was an at employee at all times in which she worked for Acadian will Acadian is a supplier of domestic and imported hardwood lumber and plywood hardware and specialty items as well as a manufacturer of hardwood moldings Because of the amount of training that employees received and their exposure to confidential solicitation information agreement to their management Solicitation Acadian and sales Ms presented a competition non and key employees mainly Stewart signed the Agreement Agreement in September of those in non upper Competition Non 2009 She continued employment with Acadian until April of 2012 when she began employment with Deano Hardwoods LLC a competitor of Acadian Acadian filed a petition for injunctive relief and damages against Ms Stewart for her breach of the Agreement On May 21 2012 after an evidentiary hearing the trial court granted Acadian request for preliminary injunction A s judgment was signed on June 1 2012 and provided in pertinent part 1T IS HEREBY ORDERED ADJUDGED AND DECREED that a preliminary injunction issue herein efFective until the further Order of this Court but in no event for a period to exceed two years from April 27 2012 and enjoining defendant Joy Stewart from soliciting current or former customers or suppliers of Acadian Cypress Hardwoods Inc and from carrying on or engaging in a business directly or indirectly as an employee independent contractor owner principal or otherwise that competes with Acadian Cypress Hardwoods Inc specifically including but not limited to Deano Hardwoods LLC where such business provides any of the following products and services domestic and imported hardwood sales domestic and imported plywood sales milling services cypress propriety products cabinets and miliwork accessories drying services and distribution of those products Said restrictions shall only apply within the following parishes and counties 2 Louisiana St Tammany Parish Livingston Parish Tangipahoa Parish St Helena Parish Ibervilie Parish East Baton Rouge Parish West Baton Rouge Parish Ascension Parish East Feliciana Parish West Feliciana Parish Orleans Parish Jefferson Parish Jefferson Davis Parish St Charles Parish St John the Baptist Parish St Bernard Parish Evangeline Parish St Landry Parish Lafayette Parish Iberia Parish Washington Parish Cameron Parish Vermilion Parish and Acadia Parish Mississippi Pearl River County Hancock County Harrison County Hinds County Forrest County Pike County Stone County and Jackson County Alabama Mobile County and Baldwin County and IT IS FURTHER ORDERED ADJUDGED AND DECREED that a preliminary injunction issue herein enjoining defendant Joy Stewart from disclosing names and contact information of current or former customers names and contact information of current or former suppliers costs pricing or other confidential information of Acadian Cypress Hardwoods Inc confidential information being defines as any information not freely distributed to the public by Acadian be Cypress acquired Hardwoods Inc and information that cannot or independently without resort to confidential information that Acadian Cypress shared with Joy Stewart during her employment until the further Orders of this Court In her appeal Ms Stewart urges that the trial court erred in granting the preliminary injunction Ms Stewart asserts that the Agreement is void and unenforceable because 1 the Agreement does not contain a clear and unequivocal definition for when the non provisions are triggered 2 competition there was no valid cause in the Agreement and 3 the Agreement did not contain a clause which would validate otherwise valid provisions severability LAW AND DISCUSSION Historicaliy Louisiana has disfavored noncompetition agreements SWAT 24 Shreveport Bossier Inc v Bond 00 La 6 808 So 294 1695 O1 29 2d 298 Such agreements are deemed to be against public policy except under the limited circumstances delineated by statute 74H L v Derouen 10 C 0319 App La 1 Cir 9 49 So 10 13 10 10 3d Louisiana Revised Statutes 23 provides 1 921A s Louisiana strong public policy restricting non agreements is based on an competition underlying state desire to prevent an individual from contractually depriving himself of the ability to support himself and consequently becoming a public burden and also based on the fundamental right of individuals to seek success in our free society Vartech enterprise Systems Inc v Hayden OS La 1 Cir 12 951 So 247 254 2499 App 06 20 2d 3 Every contract or agreement or provision thereof by which anyone is restrained from exercising a lawful profession trade or business of any kind except as provided in this Section shall be null and void However every contract or agreement or provision thereof which meets the exceptions as provided in this Section shall be enforceable The exceptions are found in Subsection C which provides in pertinent part Any person including a corporation and the individual shareholders of such corporation who is empioyed as an agent servant or employee may agree with his employer to refrain from carrying on or engaging in a business similar to that of the employer and from soliciting customers of the employer within a or specified parish or parishes municipality or municipalities or parts thereof so long as the employer carries on a like business therein not to exceed a period of two years from termination of employment Thus to be valid a noncompetition agreement may limit competition only in a business similar to that of the employer in a specified geographic area and for up to two years from termination of employment Cellular One Inc v Boyd 1783 App 94 La 1 Cir 3 653 So 30 33 writ denied 95 La 95 2d 1367 95 15 9 660 So 449 2d Because Subsection C is an exception to Louisiana s public policy against non agreements it must be strictly construed competition Vartech Systems Inc v Hayden 05 La 1 Cir 12 951 2499 App 06 20 2d So 247 255 Generally a parly seeking the issuance of a preliminary injunction must show that he will suffer irreparable injury if the injunction does not issue and must show entitlement to the relief sought this must be done by a prima facie showing that the party will prevail on the merits of the case Vartech Systems 951 So at 255 However in the event an employee enters into an agreement 2d with his employer not to compete pursuant to LSA 23 and fails to S R 921 perform his obiigation under such an agreement the court shall order injunctive relief even without a showing of irreparable harm upon proof by the employer of 4 the s employee breach of the non agreement eompetitian See S R LSA 921H 23 In determining whether the employer has met his burden of proof the courts have been called on to consider the validity and enforceabiliry of the agreement sought to be enforced by the employer Vartech Systems 951 2d So at 255 Where the actions sought to be enjoined pursuant to a non compete agreement do not fall within the exception found in LSA 23 S R 921C or where the non agreement is found to be unenforceable for failure to compete conform to LSA 23 the employer is unable to establish that it is S R 921 entitled to the relief sought Vartech Systems 951 So at 255 2d 56 Typically a trial court enjoys considerable discretion in determining whether a preliminary injunction is warranted and the issuance of a preliminary injunction by the trial court will not be disturbed on appeal absent a clear abuse of discretion Vartech Systems 951 So at 256 2d However the underlying issue in this case is whether the noncompetition agreement falls within the exception found in LSA 23 The proper interpretation of a statute is a S R921C question of law that we review on a de novo basis J4H L 49 So at 14 C 3d In the matter sub judice Ms Stewart argues that the Agreement does not contain a clear and provisions begin unequivocal definition for when the competition non Ms Stewart argues that instead of tying the non competition provisions to a date certain such as the terminatfon of employment the Agreement states that its provisions are triggered when her relationship ends The Agreement provides in pertinent part This agreement shall only restrain competition or solicitation by Employee for a period of two 2 years after minates s ationship Employee re with Company te Emphasis added Ms Stewart argues that relationship is never defined in the Agreement and this Z Louisiana Revised Statutes 23 provides in relevani part 921H H Any agreement covered by this Section shall be considered an obligatiorr not to do and failure to perform may entitle the obligee to recover damages for the loss sustained and the profit oP which he has been deprived In addition upon proof of the obligor failure to perform and without the necessity s of proving irreparable injury a court of competent jurisdiction shall order injunctive relief enforcing the terms of the agreement 5 term can be construed multipie ways Ms Stewart avers that she still maintains personal relationships with empioyees of Acadian and therefore it can be argued that her relationship has not terminated Therefore Ms Stewart argues because the triggering mechanism is susceptible of two or more reasonable interpretations this Agreement is overly broad and not enforceable against her We disagree The words of a contract must be given their generally prevailing meaning C LSA art 2047 Words susceptible of different meanings must be interpreted as having the meaning that best conforms to the object of the contract LSA C Art 2048 Each provision in a contract must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole C LSA art 2050 In this case the term relationship is not susceptible to two or more reasonable interpretations Ms Stewart relationship with Acadian was clearly s one of employment The word relationship must be interpreted as having the meaning that best conforms with the object of the contract 2048 See LSA C art The Agreement is clearly a non agreement between an competition employee and an employer throughout the Agreement Ms Stewart is referred to as Employee To interpret relationship as a possible personal relationship with co does not conform with the object of the contract workers Furthermore the Agreement also provides The nature of the employment re of Employee to Company as an at employee is not ationship will modified by this agreement Emphasis added This language illustrates that Ms Stewart relationship as used in this Agreement was one of employment s The only reasonable interpretation of the Agreement is that the non competition provisions were triggered when Ms Stewart employment with Acadian ended s Thus the Agreement is not overly broad as argued by Ms Stewart and this assignment of error is without merit Ms Stewart next argues that there was no valid cause for execution of the Agreement She maintains that because the terms of her employment did not 6 change after signing the Agreement she was in the same position as she was prior to signing the Agreement and therefore there was no mutuality of obligation An obligation cannot exist without a lawful cause C LSA art 1966 Cause is defined as the reason why a parky bligates himself C LSA art 1967 The cause need not have any economic value Mapp Const LLC v Southgate Penthouses LLC 09 La 1 Cir 10 29 So 548 0850 App 09 23 3d 565 writ 2743 3d denied 09 La 2 28 So 275 Aaron 10 26 Turner L C v Perret 07 La 1 Cir 5 22 So 910 915 on rehearing 1701 App 09 4 3d writ denied 09 La 10 19 So 476 1148 09 16 3d In Cellular One 653 So at 34 this Court held that any person 2d including an at empioyee may enter into a non agreement as will competition long as the agreement complies with LSA 23 In Cellular One the S R 921 defendants who signed competition non agreements as conditions of employment asserted that such agreements should be unenforceable in at will employment situations because of a lack of mutuality and an insufficiency of cause The majority disagreed and held e W do not find that the agreement is unenforceable for lack of cause The Civil Code defines a contract as an agreement by two or more parties whereby obligations are created modified or extinguished No obligation can exist without a lawful cause which is defined as the reason why a party obligates himself The defendants signed the agreements as a condition of continued employment Employment was the ualid cause ofthe contract Id Internal citations omitted and emphasis added Ms Stewart argues that this matter is distinguishable from Cellular One She asserts that unlike the present case in Cellular One the employer agreed to provide employees with non payments for a three period competition year following termination of employment However the non payments competition in Cellular One did not influence the court decision s that continued I employment alone is a valid cause for a contract In this matter the Agreement provides In consideration for Employer continued employment with Company s the parties hereby agree as follows 7 Emphasis added The Agreement clearly states that the cause of this employment with Acadian where at will contract is Ms Stewart continued s hile V1 we recognize the inequities that may arise employment is sufficient valid cause for a competition non agreement we find Cellular One to be controlling Therefore we reject Ms s Stewart argument that the Agreement is unenforceable for a lack of cause Accordingly we conclude that the trial court did not err in granting the preliminary injunction against Ms Stewart CONCLUSION For the foregoing reasons we affirm the June 1 2012 judgment of the trial court Costs of this appeal are assessed against Ms Stewart AFFIRMED 3 Because we find that Ms Stewart first two assignments of error are without merit we need s not address her third assignment of error 8 ACADIAN CYPRESS STATE OF LOUISIANA HARDWOOD INC COURT OF APPEAL VERSUS FIRST CIRCUIT JOY STEWART NUMBER 2012 CA 1425 vv i WHIPPLE C concurring J In considering this matter de novo as we must I note that the contract at issue and the resulting injunction restricts defendant from carrying on or engaging in a competing business in a significant geographic area iin 34 e parishes spanning a huge geogaphic area across three states Thus although not raised as error I am troubled by the extensive geographic area set forth in the agreement which I find comes perilously close to rendering such a contract unenforceable as an overly broad restriction on the interests of free enterprise However this issue was not specifically challenged on appeaL Nonetheless I recognize that the legislature has not included any limitation on the geographic scope of a non agreement compete only that the time specified in a non compete agreement can not exceed two years Accordingly the result reached by the majority in this regard is correct Moreover while I am sympathetic to the issue of fundamental faimess impacted by upholding such agreements even where no additional economic consideration has been given as noted and set forth in the well dissenting reasoned opinion by Judge Shortess in this court Cellular One decision I am nonetheless s bound to follow this circuit prior published opinion Thus I concur in the result s which is legally correct
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