Simpson v. Kelly Services, Inc.

339 So. 2d 490
CourtLouisiana Court of Appeal
DecidedFebruary 9, 1977
Docket13031
StatusPublished
Cited by14 cases

This text of 339 So. 2d 490 (Simpson v. Kelly Services, Inc.) 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
Simpson v. Kelly Services, Inc., 339 So. 2d 490 (La. Ct. App. 1977).

Opinion

339 So.2d 490 (1976)

Robert SIMPSON et ux., Plaintiffs-Appellees,
v.
KELLY SERVICES, INC., Defendant-Appellant.

No. 13031.

Court of Appeal of Louisiana, Second Circuit.

November 1, 1976.
Rehearing Denied December 6, 1976.
Writ Refused February 9, 1977.

*491 Hargrove, Guyton, Ramey & Barlow by Thomas J. Wyatt, Shreveport, Cedric A. Richner, Jr., Detroit, Mich., for defendant-appellant.

Hamilton & Sermons by Joel M. Sermons, Shreveport, for plaintiffs-appellees.

Before BOLIN, MARVIN and JONES, JJ.

En Banc. Rehearing Denied December 6, 1976.

MARVIN, Judge.

Kelly Services supplies temporary employees to various businesses across the nation. In 1974, it terminated the services of plaintiff, Mrs. Simpson, as its agent and manager of its Shreveport branch office. Mrs. Simpson, joined with her husband as co-plaintiff, brought suit on the contract she had with Kelly Services.

The contract contains provisions for liquidated damages in the event of Mrs. Simpson's termination and a formula or schedule by which these damages are to be determined. It also contains an agreement not to compete and for liquidated damages which are applicable to Mrs. Simpson. The lower court resolved the contractual dispute in plaintiff's favor. Kelly Services appeals. We reverse and remand.

The pertinent sections of the contract provide that Kelly Services may terminate its contract at any time,

". . . but Kelly shall thereupon become obligated to pay to the Manager . . . a sum [determined by schedule or formula which follows] . . .
"Payment of such sums to the Manager shall be contingent upon the Manager's continued compliance with all of the provisions of paragraph 11 below and schedule A attached and shall be compensation for such compliance with the limited Agreement Not To Compete.
* * * * * *
"11. Kelly's Rights Upon Termination. Upon termination of this agreement for any reason, the Manager agrees:
* * * * * *
"(d) Not to compete with Kelly for a limited period of time after the effective date of termination of this agreement and in limited geographical areas as more specifically set forth on Schedule A attached hereto and incorporated by reference herein, which Schedule the Manager acknowledges he has read and signed."

Schedule A, which follows, provides that:

". . . the Manager shall not compete with Kelly after the effective date of termination for a period of six (6) months, within fifty (50) miles of any city in which Kelly is then doing business.
* * * * * *
"4. The Manager further agrees that a violation by him of the terms hereof will result in damage to Kelly which will be difficult or impossible to determine exactly. Therefore, in addition to any equitable remedy Kelly may have, if the Manager *492 violates the provisions of the terms hereof, the Manager agrees that Kelly shall be entitled to recover from the Manager as liquidated damages all profits earned or received by the Manager from the operation of such competitive business for a period of six (6) months. The Manager's profits for this purpose shall be computed without deduction of any compensation paid to him."

On October 8, 1974, Kelly Services informed plaintiffs in writing that Mrs. Simpson's services as manager under the contract were being terminated effective October 11, 1974. When this notification was delivered by Kelly employees, a dispute arose as to the amount Mrs. Simpson would receive as termination or severance compensation under the contract. This dispute was resolved at the close of the evidence below when appellant's counsel conceded the effective date of the contract, which in effect determined the amount of severance compensation due, if due at all, was as plaintiffs had originally contended.

After the dispute as to severance compensation arose on October 8, plaintiffs, beginning on Monday, October 14, continued in essentially the same business, at the same location and using the same office furnishings, but with a new telephone number and name, Jean Simpson Temporary Employment.

The lower court did not consider the effect of R.S. 23:921[1], finding it was not necessary to determine whether Mrs. Simpson was an employee or independent contractor of Kelly Services.

When Kelly Services gave notice of termination it agreed to pay severance compensation provided by the contract to Mrs. Simpson. Kelly Services contended the contract with Mrs. Simpson had been in effect less than five years and that the amount it would owe was less than Mrs. Simpson claimed on the contention that the contract had been in effect over five years. The phase of the dispute was eventually resolved by concessions of defendant and by the trial court before it rendered its decision.

In written reasons for judgment, the lower court found that Kelly Services breached the contract by its failure to pay the "proper" sum upon Mrs. Simpson's termination and was thereby barred from claiming damages against Mrs. Simpson because of her competing with Kelly Services, contrary to the non-competition and liquidated damage provisions of the contract. The lower court found that the actions of Kelly Services concerning the amount of severance compensation constituted an "anticipatory breach" of the type recognized in Marek v. McHardy, 234 La. 841, 101 So.2d 689 (1958). The lower court's reliance on Marek is misplaced.

Dr. Marek there agreed that he would work 36 months on salary for the defendant doctors, at the end of which time he would be further compensated with a ten percent ownership in the medical group or partnership and its facilities. In the 34th month, the defendant doctors advised Dr. Marek that they had no intention of fulfilling the contract and that he would have to pay for the ten percent interest if he wanted it. Dr. Marek left the group, went to practice elsewhere and sued for his interest. Defendants resisted on several grounds, including the contention that Dr. Marek himself breached the contract when he did not continue to work for defendants the remaining *493 two months of the 36 month period. The Supreme Court said Dr. Marek was legally justified in treating the contract as breached when defendants informed him they would not make the transfer to him as promised. The case was then remanded for trial on the merits.

In Marek, the court was not construing contractual provisions of the type at issue here which provide for the contingency of termination at will, with liquidated damages, and which stipulate against competition by the terminated party against the other for a six-months period after termination.

The contract at issue here is for an indefinite period. It provides that either Mrs. Simpson or Kelly Services may terminate the contract, with or without cause. It also provides in detail for the contingency of termination, final accounting between the parties and for payment after termination of commissions earned before termination.

In the written notice of termination, Kelly Services unequivocally said in part:

"We will pay you the commissions earned to the date of termination and a sum of money equal to net commissions earned in the three preceding months as provided in Paragraph 8(b).

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