Lighting Galleries, Inc. v. Drummond

543 S.E.2d 419, 247 Ga. App. 124, 2001 Fulton County D. Rep. 257, 17 I.E.R. Cas. (BNA) 23, 2000 Ga. App. LEXIS 1435
Court of Appeals of Georgia·Decided December 1, 2000·No. A00A1123·Published·Cited by 1 cases

Opinion

Phipps, Judge.

Lighting Galleries, Inc. (LGI) filed an action for injunctive relief and damages against two of its former employees, Amanda Berryman Drummond and Brian Carlisle, and their new employer, Southern Lighting Gallery, Inc. (SLG). LGI appeals an order of the trial court denying motions to temporarily restrain Drummond, Car-lisle, and SLG from violating noncompete and nondisclosure covenants in Drummond’s and Carlisle’s employment agreements with LGI.

With respect to the covenant not to compete, we affirm the denial of the injunction against Carlisle because the covenant was overbroad as it applied to him. We reverse the denial of the injunction to enforce the covenant against Drummond and SLG because the covenant was not overbroad as to Drummond and the record shows that she had engaged in activities at SLG which violated the covenant. We affirm the denial of the injunction to enforce the nondisclosure provision because the record does not establish that Drummond or Carlisle disclosed or was threatening disclosure of any confidential information to SLG.

LGI consists of four operating divisions: (1) Augusta Lighting, which maintains a showroom in Augusta, Georgia; (2) American Light Source, which consists solely of mail order and telephone sales; (3) Lights Plus, which maintains a showroom in Lexington, South Carolina; and (4) Putzel’s Lighting, which maintains a showroom in Macon, Georgia.

[125] Drummond worked as a salesperson for Augusta Lighting from September 17, 1996, to December 14, 1998, when she was terminated. Carlisle was hired by LGI to work in the Augusta Lighting warehouse on March 10, 1997. On September 4, 1997, he was transferred to American Light Source, where he worked as a mail order salesperson.

On November 29, 1997, Drummond and Carlisle were required to sign employment agreements which contained covenants against competition, disclosure of confidential information, and solicitation of customers. In early 1998, Carlisle was trained as a showroom sales consultant at Augusta Lighting and was transferred to the Lexington, South Carolina, showroom, where he worked as a salesman. On December 30, 1998, Carlisle resigned from employment with LGI and returned to Augusta.

SLG hired Drummond as a showroom manager on June 1, 1999. On June 18, it hired Carlisle in a sales capacity.

On September 16, LGI filed a complaint against Drummond, Carlisle, and SLG, seeking damages, expenses of litigation, and temporary and permanent injunctions against violation of the employment agreements. LGI also filed a motion for temporary injunction, asserting that Drummond and Carlisle had violated the noncompete, nondisclosure, and nonsolicitation clauses in the employment agreements.

The trial court granted the motion with respect to the nonsolicitation provision but denied it with respect to the noncompete and nondisclosure clauses. LGI appeals the denial of its motion to temporarily enjoin Drummond, Carlisle, and SLG from violating the noncompete and nondisclosure clauses.

The granting and continuing of injunctions shall always rest in the sound discretion of the judge, according to the circumstances of each case. This power shall be prudently and cautiously exercised and, except in clear and urgent cases, should not be resorted to.1
“Covenants against competition which are contained in employment contracts are considered to be in partial restraint of trade and will be upheld only if they are strictly limited in time and territorial effect, and are otherwise reasonable considering the business interest of the employer sought to be protected and the effect on the employee.” [Cit.]2

[126] The employer has interests in protecting its investment in the development of the employee’s skills and craft and in preventing the employee from taking unfair advantage of customer relationships he developed while working for the employer.3 The employee has a right to earn a living without unreasonable restrictions.4

Whether a restraint is reasonable is a question of law for determination by the court.5 The trial court’s findings of fact will not be set aside on appeal unless clearly erroneous.6

1. The noncompetition covenant comprises the following provisions:

Employee’s Territory. Employee acknowledges and agrees with Employer that Employee’s activities in the execution of his/her duties will be conducted within the following counties in the State of Georgia: Columbia and Richmond, and Aiken county in the State of South Carolina.
Disqualified Employment in Employee’s Territory. During the time of Employee’s employment by Employer, and for a period of two (2) years thereafter, the Employee will not engage in employment as a residential lighting sales consultant in Employee’s designated territory on behalf of himself/herself or any competitor of Employer.

(a) As to Carlisle, there was evidence that the employment agreement may have been superseded by a subsequent agreement that he signed when he was transferred to the South Carolina showroom.7 But even if we assume that the agreement was not rescinded by a subsequent agreement, the noncompetition covenant was unreasonable as it applied to Carlisle. The covenant flatly banned him from working as a residential lighting sales consultant in the Augusta area for two years after he ceased working for LGI. But, because LGI had transferred him to Lexington, South Carolina, he had not worked in the Augusta area for approximately one year before'he left LGI. Given Carlisle’s long absence from the area, it was unreasonable to impose the full two-year restriction upon his [127] employment there.8

(b) However, as to Drummond and SLG, we find that the court abused its discretion in not granting an injunction to enforce the noncompete covenant. The court found that the covenant was over-broad and nonspecific and that there was no competent evidence that Drummond had worked elsewhere as a residential lighting sales consultant, as prohibited by the agreement.

In regard to its conclusion that the covenant was overbroad and nonspecific, the court determined that the prohibition against employment as a residential lighting sales consultant provided insufficient guidance as to what conduct was proscribed. It is true that

[a] non-competition covenant which prohibits an employee from working for a competitor in any capacity, that is, a covenant which fails to specify with particularity the activities which the employee is prohibited from performing, is too broad and indefinite to be enforceable.9

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Lighting Galleries, Inc. v. Drummond, 543 S.E.2d 419, 247 Ga. App. 124, 2001 Fulton County D. Rep. 257, 17 I.E.R. Cas. (BNA) 23, 2000 Ga. App. LEXIS 1435 (Ga. Ct. App. 2000).

543 S.E.2d 419 (Lighting Galleries, Inc. v. Drummond) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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