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Tens RX, Inc. v. Hanis

Court of Appeals of Texas, Ninth District, Beaumont

December 5, 2019

TENS RX, INC., Appellant
v.
RANDI M. HANIS, Appellee

          Submitted on October 25, 2019

          On Appeal from the 284th District Court Montgomery County, Texas Trial Cause No. 16-11-13495-CV

          Before McKeithen, C.J., Horton and Johnson, JJ.

          MEMORANDUM OPINION

          LEANNE JOHNSON JUSTICE

         Appellant TENS Rx, Inc. (TENS) appeals the trial court's order granting Appellee Randi M. Hanis (Hanis) summary judgment in its suit against Hanis for breach of contract and tortious interference with prospective relations. In granting the take-nothing summary judgment in favor of Hanis, the trial court found the covenant not to compete unenforceable. In one appellate issue, TENS argues the trial court erred in granting summary judgment in favor of Hanis because the covenant not to compete is enforceable and meets the requirements of the Covenants Not to Compete Act (CNCA). See Tex. Bus. & Com. Code Ann. § 15.50-.52. We affirm the trial court's judgment.

         Background

         On November 21, 2016, TENS filed suit against Hanis. According to TENS's First Amended Original Petition, in 2013 Hanis obtained employment with TENS and executed an employment contract with the company.[1] The employment contract contained the following non-competition clause:

6.07 Covenant - Restriction of Competition. During the one year period following Employee's termination of the employment relationship Employee agrees that he shall not compete, either directly or indirectly, either as an employee, employer, consultant, agent, principal, partner, stockholder, corporate officer, director, or in any other individual or representative capacity, engage or participate in any business that is in competition in any manner whatsoever with the business of Employer in any state or geographical territory in which Employer is conducting, has conducted or anticipates conducting its business, nor shall Employee solicit for employment or encourage current employees of Employer to terminate their employment with Employer. Employee represents to Employer that the enforcement of the restriction against non-competition would not be unduly burdensome to Employee and that in order to induce Employer to employ the Employee and provide the Employee with training and disclose highly confidential information is sufficient consideration given by the Employer to Employee for the covenant not to compete and that this covenant is necessary to protect Employer's interests which the Employee agrees are worthy of protection. Employee further represents and acknowledges that Employee is willing and able to compete in other geographical areas not prohibited by the non-compete covenant. In the event that a court of competent jurisdiction determines that the non-compete covenant does not meet the requirements of §15.50 of the Texas Business & Commerce Code ("TBCC"), then Employer and Employee agree that Employer is deemed to have requested reformation by such court pursuant to §15.51(c) of the TBCC. Employee agrees that a breach or violation of the covenant not to compete by Employee shall entitle Employer, as a matter of right, to an injunction issued by any court of competent jurisdiction, restraining any further or continued breach or violation of this covenant. Such right to an injunction shall be cumulative and in addition to, and not in lieu of, any other remedies to which Employer may show itself justly entitled. Further, during any period in which Employee is in breach of this covenant not to compete, the time period of this covenant shall be extended for an amount of time that Employee is in breach hereof.
The representations and covenants contained in this Paragraph 6.07 on the part of Employee will be construed as ancillary to and independent of any other provision of this Agreement, and the existence of any claim or cause of action of Employee against Employer or any officer, director, or shareholder of Employer, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by Employer of the covenants of Employee contained in this paragraph. In addition, the provisions of this paragraph shall continue to be binding upon Employee in accordance with its terms, notwithstanding the termination of Employee's employment.
The parties to this Agreement agree that the limitations contained in this paragraph with respect to geographic area, duration, and scope of activity are reasonable. However, if any court shall determine that the geographic area, duration, or scope of activity of any restriction contained in this paragraph is unenforceable, it is the intention of the parties that such restrictive covenant set forth herein shall not thereby be terminated but shall be deemed amended to the extent required to render it valid and enforceable.

         The amended petition further alleges that Hanis terminated her employment with TENS on October 3, 2016, and immediately sought employment with, and continues to be employed by, a direct competitor of TENS in violation of the employment contract. In its amended petition, TENS asserted causes of action for breach of contract and tortious interference with prospective relations. TENS also pleaded specific performance and requested that the trial court order Hanis to immediately cease competition with TENS.

         Hanis filed an answer and a traditional motion for summary judgment. In her motion for summary judgment, Hanis stated that she has worked in portable durable medical equipment sales since 2002, and she argued that the non-competition agreement is unenforceable because it does not have a reasonable limitation as to geographic area and does not have a reasonable limitation on the scope of activity to be restrained.

         Hanis argued that Paragraph 6.07's overly broad prohibition of competition "in any state or geographical territory in which Employer is conducting, has conducted or anticipates conducting its business[]" is based only on the activities of TENS and bears no relation to her activities. Hanis also argued that this restriction is not limited to a defined territory or even a geographic area in which TENS did business while Hanis was employed with TENS.

         As to Paragraph 6.07's restriction on scope of activity, Hanis argued it amounts to an unenforceable industry-wide prohibition. According to Hanis, Paragraph 6.07's language that she "agrees that [s]he shall not compete, either directly or indirectly, either as an employee, employer, consultant, agent, principal, partner, stockholder, corporate officer, director, or in any other individual or representative capacity, engage or participate in any business that is in competition in any manner whatsoever with the business of Employer" is based on TENS's activities not Hanis's, restricts her ability to contact TENS's customers whether she has worked with them or not, and prohibits her from selling goods or providing services to ultimate customers TENS would not, did not, or could not service. Hanis attached her affidavit to the motion and averred that when presented with the employment contract, she had serious reservations about signing the contract because it included a non-competition agreement, but she was informed by a TENS employee that the non-competition portion of the contract was a mere formality, not material to the contract, ...


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