Delta Fuel Co. v. Loyed

218 So. 3d 184, 16 La.App. 3 Cir. 717, 2017 WL 1400507, 2017 La. App. LEXIS 704
CourtLouisiana Court of Appeal
DecidedApril 19, 2017
Docket16-717
StatusPublished
Cited by1 cases

This text of 218 So. 3d 184 (Delta Fuel Co. v. Loyed) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Delta Fuel Co. v. Loyed, 218 So. 3d 184, 16 La.App. 3 Cir. 717, 2017 WL 1400507, 2017 La. App. LEXIS 704 (La. Ct. App. 2017).

Opinion

COOKS, Judge.

IsThis appeal arises out of Defendant, Eddie Loyed’s, ’.prior,, employment with Plaintiff, Delta Fuel Company, . Inc. and his present employment, with' .Herring . Gas Company, Inc. At issue is an. “At, Will Employment . Agreement” : (hereafter Agreement) executed between Loyed and Delta Fuel on June 14, 2010.

Loyed worked in various capacities for Delta Fuel beginning with his hiring- in April of 2010. Loyed initially drove a truck that supplied propane and other petroleum products to various businesses. After receiving additional training from Delta Fuel, Loyed was named the Southern District Propane Manager >for the "Natchez, Mississippi branch of Delta Fuel. His responsibilities included -day-to-day management of Delta Fuel’s propane business in the Southern District, which included various parishes in Louisiana and counties in Mississippi. Loyed prepared pricing information for current and potential clients, identified potential clients, ■ solicited business from potential clients, and maintained client/prospect information. According to Delta Fuel, as a high'ranking employee, Loyed had access to significant-.confidential and proprietary business information related to customers. This confidential and proprietary information included Customer lists, customer financial information, marketing materials, pricing arrangements and business plans. Delta Fuel maintained if this.information was obtained by, a competitor, it would give a significant advantage to any competitor seeking to service Delta Fuel’s customers. ,

According to Delta Fuel,-it had an issue with another former ■ employee,-, and in 2010, asked all current employees to' review and enter into non-competé agreements. Loyed was given a copy of the -non-compete agreement and could have consulted an attorney if he so • chose. He [186]*186signed the non-compete agreement on June 14,2010.

^Following a drop in oil prices and general slowdown in the oil business in early 2016, Delta Fuel underwent internal restructuring. Some employees in the Natchez office were laid off, but Loyed maintained his employment, salary and benefits, although it was testified that the ability of employees to work overtime hours was largely eliminated. Loyed was asked to resume driving a propane delivery truck to make deliveries to customers, rather than some of his prior managerial duties. Loyed let it be known to his supervisors and co-workers that he was considering other employment. According to Steve Wiggington, a Divisional Manager for Delta Fuel who was Loyed’s supervisor, he was asked by Loyed if Delta Fuel would enforce his non-compete agreement if he resigned. Wiggington told Loyed that it would be enforced. Loyed also asked the same question to Victoria Bourke, who was responsible for the implementation of the non-compete agreements, and was told by her Delta Fuel would likely enforce the non-compete agreement.

On March 14,2016, Loyed resigned from his position with Delta Fuel. He them immediately began employment with Herring Gas. Delta Fuel asserts that Herring Gas is its direct competitor. Two days after his resignation, Loyed showed up at the Delta Fuel offices driving a Herring Gas truck.

Shortly thereafter, Delta Fuel filed the present action against Loyed seeking temporary, preliminary, and permanent in-junctive relief to enforce the non-compete covenant. Initially, the trial court issued a temporary restraining order in the matter on the basis of Delta Fuel’s motion for same, at which point Herring Gas intervened in the proceedings.

A full hearing on the matter was held on May 31, 2016, after which the trial court issued a preliminary injunction enjoining Loyed’s continued employment with Herring Gas finding him in breach of the Agreement. The trial court gave the following reasons in open court in support of its decision:

[¿The beginning paragraph of page eight—I mean paragraph eight, it does appear to be very definite as to what Mr. Loyed is agreeing to refrain from engaging in, but when you go down to paragraph—the next paragraph, it says, “If employee becomes employed by a competing business regardless of whether or not employee is an owner or equity interest holder of that competing business, employee shall be deemed to be carrying on or engaging in a business similar to that of the company.” So I believe that the later sentence in that paragraph does cover the business that Delta Fuel is seeking to restrict Mr. Loyed from engaging in and I’m going to deny the request that the preliminary injunction be dismissed.

The trial court signed a final judgment reflecting that ruling on June 14, 2016. Both Loyed and Herring Gas have appealed the preliminary injunction, asserting the trial court erred in finding that Loyed was in violation of the non-compete agreement and in granting the motion for preliminary injunction.

ANALYSIS

Questions of contractual interpretation are questions of law, which under Louisiana law are subject to a de novo standard of review. Mitchell v. Patterson Ins. Co., 00-612 (La.App. 3 Cir. 12/6/00), 774 So.2d 366. Thus, in interpreting the Agreement at issue, our review is de novo.

Historically, Louisiana’s public policy has disfavored non-competition agreements. SWAT 24 Shreveport Bossier, Inc. [187]*187v. Bond, 00-1695 (La. 6/29/01), 808 So.2d 294. This policy is based on the state’s “desire to prevent an individual from contractually depriving himself of the ability to support himself and consequently becoming a public burden.” SWAT 24, 808 So.2d at 298. “Because such covenants are in derogation of the common right, they must be strictly construed against the party seeking their enforcement.” Id. at 298.

Louisiana Revised Statutes 23:921(C) provides an exception to Louisiana’s public policy against non-competition agreements. It provides:

Any person, including a corporation and the individual shareholders of such corporation, who is employed 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/or from soliciting customers of the employer within a 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.

Further, La.R.S. 23:921(D) provides, in pertinent part, that “a person who becomes employed by a competing business, regardless of whether or not that person is an owner or equity interest holder of that competing business, may be deemed to be carrying on or engaging in a business similar to that of the party having a contractual right to prevent that person from competing.”

The language in La.R.S. 23:921(D) makes it permissible for an employer to prohibit an employee from seeking employment from a competitor in the restricted territory. As Delta Fuel notes, the court in Restored Surfaces, Inc. v. Sanchez, 11-529 (La.App. 5 Cir. 12/28/11), 82 So.3d 524, 528, explained that “the legislature broadened the scope of non-compete agreements by amending La.R.S. 23:921” to include the provisions of La.R.S. 23:921(D). The court further stated “[t]hus, La.R.S.

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Bluebook (online)
218 So. 3d 184, 16 La.App. 3 Cir. 717, 2017 WL 1400507, 2017 La. App. LEXIS 704, Counsel Stack Legal Research, https://law.counselstack.com/opinion/delta-fuel-co-v-loyed-lactapp-2017.