LUCHT'S CONCRETE PUMPING, INC. v. Horner

224 P.3d 355, 29 I.E.R. Cas. (BNA) 460, 2009 Colo. App. LEXIS 1041, 2009 WL 1621306
CourtColorado Court of Appeals
DecidedJune 11, 2009
Docket08CA0936
StatusPublished
Cited by6 cases

This text of 224 P.3d 355 (LUCHT'S CONCRETE PUMPING, INC. v. Horner) is published on Counsel Stack Legal Research, covering Colorado Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
LUCHT'S CONCRETE PUMPING, INC. v. Horner, 224 P.3d 355, 29 I.E.R. Cas. (BNA) 460, 2009 Colo. App. LEXIS 1041, 2009 WL 1621306 (Colo. Ct. App. 2009).

Opinion

Opinion by

Judge ROMAN.

Plaintiff, Lucht's Conerete Pumping, Inc. (LCP), appeals the trial court's judgments in favor of defendants, Tracy Horner and Everist Materials, LLC (Everist), on claims regarding a noncompete agreement, duty of loyalty, and misappropriation of trade value. We affirm in part, reverse in part, and remand with directions.

I. Background

According to the trial court's findings of fact, LCP is in the conerete pumping business. Concrete pumpers use pumps that are mounted on trucks to deliver ready-mixed concrete to a construction site. Defendant Horner came to work for LCP as its mountain division manager in 2001. LCP understood that the key to the success or failure of its mountain division depended upon Horner and the relationships he would establish in that region. No other LCP employee possessed meaningful customer relationships in that region.

On April 15, 2008, two years after going to work for LCP, Horner, an at-will employee, was asked to sign, and did sign, an "employee non-disclosure and confidentiality agreement." The agreement stated, among other things, that in the event of Horner's termination, he agreed to return all company property and documents and further agreed not to compete with LCP for a period of twelve months following his termination.

Horner resigned from LCP on March 12, 2004.

Three days later, on March 15, 2004, Hor-ner began working for Everist. Everist is a supplier of ready-mix concrete and had many of the same customers in the mountain region as LCP. Shortly after Horner began working for Everist, Everist entered the concrete pumping business and began directly competing against LCP. Everist and Horner had begun discussing the possibility of Everist entering the concrete pumping business- and bringing Horner over as its pumping manager-as early as February 2004.

LCP alleged at trial that Everist's entry into the concrete pumping market, with Hor-ner as its pumping manager, directly led to LCP's demise in the mountain region and further alleged that its decision to discontinue its business in that territory was a direct result of Everist's competition and Horner's decision to work for Everist.

LCP sued Horner for breach of contract, breach of duty of loyalty, breach of fiduciary duty, and misappropriation of trade values. It also sued Everist for aiding and abetting breach of duty of loyalty, aiding and abetting breach of fiduciary duty, intentional interference with contract, and misappropriation of trade values.

The trial court granted summary judgment in favor of Horner on the noncompete agreement, concluding that the agreement was unenforceable due to lack of consideration. Following a bench trial, the court issued a judgment that included extensive findings of fact and found in favor of Horner and Everist on all remaining claims.

This appeal followed.

II. Noncompete Agreement

LCP contends the trial court erred in ruling as a matter of law that the noncompete agreement signed by Horner was unenforceable for lack of consideration. We conclude that continued employment was not sufficient *358 consideration; instead, independent consideration was required to make the noncompete agreement at issue enforceable.

A. Standard of Review

Summary judgment is appropriate when the pleadings and supporting documentation demonstrate that no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. C.R.C.P. 56(c);, Martini v. Smith, 42 P.3d 629, 632 (Colo.2002). Appellate review of a summary judgment is de novo. Martini 42 P.3d at 632.

B. Consideration

We are asked to decide whether the continued employment of an already existing employee constitutes consideration for a noncompete agreement. This is a matter of first impression in Colorado. We hold that when an employee continues his or her job without receiving additional pay or benefits when a noncompete agreement is signed, the agreement lacks consideration. Under these cireumstances, additional consideration is required for the valid formation of the agreement.

A covenant not to compete must be supported by consideration. Freudenthal v. Espey, 45 Colo. 488, 499, 102 P. 280, 283-84 (1909). "Consideration is defined as '[slome-thing (such as an act, a forbearance, or a return promise) bargained for and received by a promisor from a promisee; that which motivates a person to do something, [especially] to engage in a legal act." Int'l Paper Co. v. Cohen, 126 P.3d 222, 225 (Colo.App.2005) (quoting Black's Law Dictionary 324 (8th ed.2004)); see Compass Bank v. Kone, 134 P.3d 500, 502 (Colo.App.2006) (consideration may be "a benefit received or something given up as agreed upon between the parties" (quoting CJI-Civ. 4th 80:5 (1998))).

Here, after already working for LCP, Hor-ner was asked to and did execute a noncom-pete agreement. However, he was not given a pay increase, promotion, or additional benefits in consideration of his new commitment. In short, Horner did not receive anything in return for his promise not to compete.

LCP contends that Horner's continued employment is sufficient consideration. We reject this contention. We have found no Colorado case where an already employed worker is required to give up something in exchange for merely continuing employment. Colora do law guides us to the conclusion that continued employment under the same terms is insufficient to constitute consideration, that is, a benefit received or thing given. See Compass Bank, 134 P.3d at 502.

In Metropolitan State Faculty Federation v. State, 32 Colo.App. 420, 425, 514 P.2d 784, 786 (1973), another division of this court found valid consideration where employees received employment to which they were not previously entitled under an earlier contract and therefore received a benefit in exchange for modifications to a second contract. Here, in contrast, Horner was already employed by LCP and received no additional benefit for his promise not to compete.

LCP asks us to hold, as some other jurisdictions have done, that an employer's forbearance of its right to discharge an at-will employee is sufficient consideration. See Lake Land Emp. Group of Akron, LLC v. Columber, 101 Ohio St.3d 242, 804 N.E.2d 27, 31-32 (2004). However, a covenant not to compete is unlike other "proposal[s] to renegotiate the terms of the parties' at-will employment." Id. at 32. Accordingly, we decline to so hold. Covenants not to compete not only are disfavored in Colorado, see Nat'l Propane Corp. v. Miller, 18 P.3d 782, 787 (Colo.App.2000), but also require an employee's promises that endure beyond the at-will relationship. While an employer may agree to continue an at-will employee's employment if the employee agrees to sign the covenant, nothing prevents the employer from discharging the employee at any future date. Thus, the employer's promise requires nothing more than was already promised in the original at-will agreement. See Midwest Sports Mktg., Inc. v. Hillerich & Bradsby of Canada, Ltd., 552 N.W.2d 254

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224 P.3d 355, 29 I.E.R. Cas. (BNA) 460, 2009 Colo. App. LEXIS 1041, 2009 WL 1621306, Counsel Stack Legal Research, https://law.counselstack.com/opinion/luchts-concrete-pumping-inc-v-horner-coloctapp-2009.