Chrysalis Health Care, Inc. v. Brooks

640 N.E.2d 915, 65 Ohio Misc. 2d 32, 1994 Ohio Misc. LEXIS 23
CourtHamilton County Municipal Court
DecidedJune 28, 1994
Docket93-CV-25531
StatusPublished
Cited by6 cases

This text of 640 N.E.2d 915 (Chrysalis Health Care, Inc. v. Brooks) is published on Counsel Stack Legal Research, covering Hamilton County Municipal Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Chrysalis Health Care, Inc. v. Brooks, 640 N.E.2d 915, 65 Ohio Misc. 2d 32, 1994 Ohio Misc. LEXIS 23 (Ohio Super. Ct. 1994).

Opinion

Mark P. Painter, Judge.

This decision is the result of a trial held before this court on March 23, 1994, after which post-trial memoranda were filed. Both counsel are to be commended both for the trial, which concentrated on the facts actually in dispute, and the arguments of law, which were well-researched, though under a handicap which will become clear. At issue is the enforceability of a covenant not to compete clause in an employment agreement entered into by plaintiff and defendant.

I

Facts

Plaintiff, Chrysalis Health Care, is an Ohio corporation doing business as Geriatric Nursing Care, with its principal place of business located in Cincinnati. Plaintiff provides home geriatric nursing services to its clients. Defendant, Tina Brooks, who has worked in the health care field for the last twenty-seven years, began employment with plaintiff in an at-will capacity in January 1992 as a geriatric nurse’s aide. She worked part-time in the evenings and on weekends providing health care to various clients of the plaintiff. At that time, defendant was also working full-time at The Christ Hospital and part-time at Clovernook Nursing Home and continued to do so after beginning work with plaintiff. Plaintiff was fully aware that defendant was working for and continued to work for these other local health care providers.

During June, July, and August 1992, defendant cared for one Shirley Casper, a client of plaintiff. Defendant’s last contact with the Casper account was on August 18, 1992. Sometime in September 1992, plaintiff lost the Casper account to a health care provider known as Nurses and Company. Also in September [35]*351992, defendant was hired by Nurses and Company and continued working for The Christ Hospital and plaintiff.

In December 1992, plaintiff drafted an employment agreement that it asked its employees to sign. The terms and conditions of employment included in the agreement were identical to those under which the defendant was currently working, except that the employment agreement included a covenant not to compete and a liquidated damages provision for a breach of that covenant. Employees were allegedly told that they did not have to sign the agreement and the only repercussion of not signing it would be that employees would not be given priority job assignments. When defendant was asked to sign the employment agreement, she questioned the non-compete language. Defendant was currently working for two other health care providers and she was concerned about the implications of the non-competition clause. Defendant alleges and plaintiff disputes that Diane Seiwert, plaintiffs president, and Sharon Griffin, plaintiffs office manager, told her not to worry about the non-compete clause, that it was “just a formality” and plaintiff would never enforce it.

In January 1993, plaintiff learned that defendant had been providing care for Mrs. Casper through Nurses and Company since the first of the year. In April 1993, plaintiff terminated defendant. Plaintiff then brought this action against defendant for breaching the covenant not to compete clause of the employment agreement and has requested liquidated damages in the sum of $5,000. Defendant has counterclaimed, alleging promissory estoppel and fraud in inducing the defendant to sign the employment agreement.

II

Discussion

A. Consideration

The employment agreement signed by the defendant contained a covenant not to compete. The covenant not to compete states the following: “Employee agrees that during Employee’s employment with Employer and for a period of three years after termination of Employee’s employment with Employer in any manner, whether with or without cause, Employee will not, within a fifty mile radius of Employer’s principal place of business in Cincinnati, Ohio, directly or indirectly acquire ownership of, or an interest in any business of providing health care services or in any other business in competition with Employer. Further, during Employee’s employment with Employer and for a period of ninety days following termination in any manner, whether with or without cause, Employee shall not work for, advise, consult with, serve or assist in any way, directly or indirectly, any Client, Patient/Client or party whose business is in any way [36]*36connected with health care services or in any way competitive with the activities or business of employer.”

The next paragraph of the employment agreement contains a liquidated damages provision for a violation of the covenant not to compete. The liquidated damages provision states: “Employee agrees that in the event of violation by Employee of the agreement against competition contained in this agreement, Employee will pay as liquidated damages to Employer the sum of five thousand dollars ($5,000.00) plus attorney fees incurred in collecting such sum. It is recognized and agreed that damages in such event would be difficult or impossible to ascertain, though great and irreparable, and that this agreement with respect to liquidated damages shall in no event disentitle Employer to injunctive relief.”

The first issue to be resolved is whether sufficient consideration exists to support the employment agreement. A fundamental principle of contract law is that mutual consideration is necessary to support a contract. The question here is whether continued employment alone constitutes sufficient consideration to support an employment agreement containing a covenant not to compete or whether additional consideration is needed. To date, the Supreme Court of Ohio has declined to address the question. However, at least two Ohio appellate courts have ruled on the issue, including one district which ruled both ways within a six-month period.

In Nichols v. Waterfield Financial Corp. (1989), 62 Ohio App.3d 717, 577 N.E.2d 422, jurisdictional motion overruled (1989), 45 Ohio St.3d 710, 545 N.E.2d 905, the Summit County Court of Appeals held that continued employment alone was sufficient consideration to modify an oral at-will contract. In Nichols, plaintiff was hired as an at-will employee. After he had been with the company for a period of time, plaintiff signed a letter stating that upon termination, he would not be entitled to certain sales commissions. Later, plaintiff was fired. After termination, plaintiff requested the commissions but the request was denied because of the letter he had signed. The plaintiff brought suit and the trial court awarded plaintiff the commissions. On appeal, the Nichols court reversed the trial court saying:

“It is undisputed that [plaintiff] was employed under an at-will contract. Absent the application of equitable doctrines such as detrimental reliance, the terms and conditions of an at-will contract can be prospectively changed without consideration. See Annotation (1975), 63 A.L.R.3d 539, 544-545.
“Furthermore, we find that even if consideration were required to modify the at-will employment contract, that [plaintiffs] continued employment was sufficient consideration to modify the contract.” (Emphasis added). Nichols at 719, [37]*37577 N.E.2d at 423, citing O’Brien v. Prod. Eng. Sales Co. (Jan. 8, 1988), Montgomery App. No. 10417, unreported, 1988 WL 2436; Wellendorf v. Local Union 377 (June 7, 1988), Mahoning App. No. 87 C.A. 37, unreported, 1988 WL 59811. See, also, Paglia v.

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640 N.E.2d 915, 65 Ohio Misc. 2d 32, 1994 Ohio Misc. LEXIS 23, Counsel Stack Legal Research, https://law.counselstack.com/opinion/chrysalis-health-care-inc-v-brooks-ohmunicthamilto-1994.