Campbell v. Millennium Ventures, LLC

2002 NMCA 101, 55 P.3d 429, 132 N.M. 733
CourtNew Mexico Court of Appeals
DecidedAugust 2, 2002
Docket22,073
StatusPublished
Cited by16 cases

This text of 2002 NMCA 101 (Campbell v. Millennium Ventures, LLC) is published on Counsel Stack Legal Research, covering New Mexico Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Campbell v. Millennium Ventures, LLC, 2002 NMCA 101, 55 P.3d 429, 132 N.M. 733 (N.M. Ct. App. 2002).

Opinion

OPINION

FRY, Judge.

{1} In this case we decide several issues of first impression concerning an employer’s purported assignment of an employee’s non-competition agreement. Plaintiff Jack T. Campbell signed a written employment agreement that included an arbitration provision. Shortly thereafter, Campbell’s employer sold most of its assets to Defendant Millennium Ventures, LLC (Millennium) pursuant to the terms of an asset purchase agreement. Campbell filed a complaint for declaratory judgment requesting a determination that Millennium was not a party to the employment agreement. In response, Millennium requested and obtained summary judgment determining that Millennium was entitled to enforce the employment agreement, including the arbitration provision, against Campbell. On appeal, Campbell argues that the employment agreement was not assignable and, even if it were, the purchase agreement did not validly assign the employment agreement. We affirm.

BACKGROUND

{2} In September 1998, Campbell entered into the employment agreement with Sehreiber Insurance Agency, Inc. (Agency). The employment agreement stated that Campbell would sell insurance on behalf of Agency and that either party could terminate the agreement, with or without cause, with thirty days written notice.

{3} Sections 5 and 6 of the employment agreement primarily benefitted Campbell. Section 5 granted Campbell a “vested equity interest” in the insurance business he produced during his employment. Section 5 reads, in relevant part:

In the event of the Employee’s retirement, termination of employment or death, whichever occurs first, the Employer agrees to pay to the Employee or [his beneficiary] the Employee’s vested equity interest in the ... insurance accounts the Employee sold while employed by the Employer. The Employer shall make an initial down payment of twenty-five [percent] (25%) of the amount due under this paragraph within 30 days of termination, retirement or death, with the balance payable monthly over five (5) years.... In exchange for this guaranteed purchase, the Employee agrees to the non-disclosure and non-solicitation constraints and conditions set forth below.

Section 5 also set out a vested equity payout formula based upon years of service and the amount of annual commissions Campbell earned. Section 6 promised the vested equity payout set forth in Section 5 “in the event that the Employer shall discontinue operating its business.” Section 6 also provided that “this contract shall remain binding upon the Employer’s successors and the Employee.”

{4} Sections 11 and 12 of the employment agreement served to benefit Agency. Section 11, entitled “Non-Solicitation Agreement,” read in part:

The Employee covenants ... that for a period of three (3) years from and after the termination of employment with the Employer, however such termination occurs, the Employee shall not, directly or indirectly ... solicit, attempt to solicit, or accept any insurance business ... from any customer or account on the books of the Employer at the time Employee’s employment shall terminate, or within twelve (12) months prior thereto, or from any person ... or corporation [who] has been solicited on behalf of the Employer at any time during the twelve (12) months prior to the termination of the Employee’s employment. ...

Section 12 provided monetary damages for breach of Section 11 including the costs and attorney’s fees incurred to enforce this provision.

{5} Sections 16 and 18 were general provisions addressing the law governing the employment agreement and the employment agreement’s binding effect. Section 16 required “[a]ll disputes under this agreement [to] be arbitrated pursuant to the rules of the American Arbitration Association and the prevailing party [to] be entitled to payment of their reasonable attorney’s fees and costs.” Section 18 provided that the “Agreement shall inure to the benefit of and shall be binding upon the parties, their successors, assigns, or personal representatives; however, the Employee may not transfer or assign Employee’s obligations under this Agreement.”

{6} About a month after Campbell signed the employment agreement, F. Don Schreiber, president of Agency, negotiated with Millennium for the sale of his insurance business. During negotiations, Millennium sent a letter to Schreiber memorializing the parties’ initial negotiations, including a stipulation that Campbell “enter into a new non-compete agreement with our agency, similar to [his] existing agreement with [Agency]” and that the “interests of ... Jack Campbell in [his] books of business with [Agency] will be satisfied by [Agency].” Schreiber’s response acknowledged that “Jack [is] free to do as [he] wishfes] at the time of sale. [He] may quit or stay, sign or not. I have no control on what [he does] past point of sale. [He is] bound by the existing agreement as respects [his] business, only. I will encourage [him] to stay, but that is all I can do.”

{7} In December 1998, Millennium and Agency entered into the purchase agreement for the purchase and sale of “substantially all of [the] assets” of Agency for $540,000 plus accounts receivable. The provisions of the purchase agreement are discussed in detail below.

{8} After the purchase was complete, Agency paid Campbell approximately $103,000 for his vested equity interest in his accounts pursuant to the formula set out in Section 5 of the employment agreement. Agency paid Campbell additional amounts over the next few months for the accounts sold to Millennium in accordance with the ’ vesting schedule set forth in Section 5.

{9} Campbell worked for Millennium until mid-January 1999, when he resigned, alleging that Millennium had refused to honor the terms of the employment agreement. Campbell began working for a competitor of Millennium and began soliciting some of the customers he had served while employed by Agency. Millennium argued that Campbell’s actions breached the non-solicitation provisions found in Section 11 of the employment agreement, while Campbell argued that Millennium’s prior breach of the employment agreement barred Millennium from enforcing the terms of the employment agreement.

{10} Millennium filed a demand for arbitration seeking money damages for Campbell’s alleged violations of the non-solicitation provisions of the employment agreement. Campbell, initially believing that Agency had transferred the employment agreement at the time it sold the assets, submitted to arbitration and counterclaimed that Millennium had breached the employment agreement. When subsequent discovery revealed the actual wording of the purchase agreement, Campbell concluded that Millennium had not validly acquired the employment agreement because Millennium was an assignee, not a successor in interest. Campbell then filed a complaint for declaratory judgment and a motion for summary judgment in district court seeking a determination that the employment agreement was an unassignable personal services contract and that Millennium was not a party to and did not and could not acquire any rights in the employment agreement by virtue of the purchase agreement.

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Cite This Page — Counsel Stack

Bluebook (online)
2002 NMCA 101, 55 P.3d 429, 132 N.M. 733, Counsel Stack Legal Research, https://law.counselstack.com/opinion/campbell-v-millennium-ventures-llc-nmctapp-2002.