Winston v. Bourgeois, Bennett, Thokey and Hickey

432 So. 2d 936
CourtLouisiana Court of Appeal
DecidedMay 16, 1983
DocketCA-0489
StatusPublished
Cited by17 cases

This text of 432 So. 2d 936 (Winston v. Bourgeois, Bennett, Thokey and Hickey) 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
Winston v. Bourgeois, Bennett, Thokey and Hickey, 432 So. 2d 936 (La. Ct. App. 1983).

Opinion

432 So.2d 936 (1983)

Robert D. WINSTON, Jr.
v.
BOURGEOIS, BENNETT, THOKEY AND HICKEY, Certified Public Accountants.

No. CA-0489.

Court of Appeal of Louisiana, Fourth Circuit.

May 16, 1983.
Rehearing Denied June 24, 1983.

*937 Bernard Marcus, Howard J. Ettinger, Deutsch, Kerrigan & Stiles, New Orleans, for plaintiff-appellee.

Moise W. Dennery, Donald H. McDaniel, McCloskey, Dennery, Page & Hennesy, New Orleans, for defendant-appellant.

Before SCHOTT, BARRY and KLEES, JJ.

PER CURIAM.

This appeal involves the application of a non-compete provision (LSA-R.S. 23:921) as it relates to a partnership agreement and a determination of what amounts are owed as a result of a partner's withdrawal.

Plaintiff, Robert D. Winston, was employed by defendant, Bourgeois, Bennett, Thokey & Hickey (BBTH), a public accounting firm, in May, 1970. In February, 1972 Winston became a C.P.A. and was admitted to practice law in October, 1975. On May 1, 1977 he was invited to become a partner in the firm, read and signed the partnership articles, and was assigned 21 "units" of participation. The firm consisted of twelve partners who owned varying amounts of units which totaled 589[1].

One year later on May 1, 1978, Daniel Clavier was admitted to the partnership, given 21 units, and guaranteed a $30,000 annual salary. Simultaneously, Winston's participation was increased to 23 units, along with adjustments to four other partners.

On September 30, 1978 Winston resigned from the partnership and sued BBTH for $8,178.38. He claimed $6,277.72 was due from his capital account, plus $1,900.66 representing his share of the partnership's profits for the quarter ending July 31, 1978 (based upon one quarter of $30,000 guaranteed per annum of which only $5,599.34 was actually paid). The firm reconvened claiming under Article II of the partnership agreement Winston owed $15,610.12 due to fees he received from former BBTH clients which he serviced within 18 months of his leaving. The parties stipulated BBTH owed Winston $6,277.72 from his capital account and $15,610.12 was the correct amount Winston owed the partnership if Article II[2] is legally enforceable. The $15,610.12 represents $8,092.20 for clients with BBTH for more than a year before Winston's withdrawal, and $7,517.92 for clients using the partnership for less than a year prior to Winston's leaving.

In written reasons the Trial Judge rejected Winston's $1,900.66 claim as unsupported. *938 He held that part of Article II upon which BBTH claims $8,092.20 amounts to liquidated damages designed to prevent solicitation which is prohibited under LSA-R.S. 23:921. However, BBTH was awarded the $7,517.92 claim based upon that portion of Article II being a restrictive covenant and not against public policy. The judgment awarded plaintiff the stipulated $6,277.72. Both parties have appealed.

Winston claims it was error to reject his $1,900.66 claim which he predicates on BBTH's $30,000 guarantee to Clavier (the newest partner). Winston argues since Clavier's compensation was based on 21 units of participation and his on 23 units, it was reasonable to believe both were entitled to $30,000 per year. James Thokey, a BBTH partner, testified a partner's income is calculated at the end of an accounting year and confirmed $30,000 was the minimum promised to Clavier, but it was payable annually, not quarterly. On cross-examination, Thokey agreed it was unrealistic for a partner with more units (Winston) to receive a smaller annual salary than a newer partner with less units. However, it was shown that the firm sought Clavier's services and his guarantee was negotiated due to another job offer. Also, there is no evidence that the actual income of Clavier exceeded Winston's. A guarantee is a minimum, not necessarily the actual amount paid. The record is insufficient for us to conclude that Winston was also guaranteed $30,000. Nor is there any basis to find that the $30,000 per annum meant that $7,500 was payable quarterly in advance. Winston did not carry his burden of proof, dismissal of this claim was reasonable and proper, and his appeal is without merit.

The next question, apparently res nova under these facts, is whether Article II of the partnership agreement comes within the purview of LSA-R.S. 23:921:

No employer shall require or direct any employee to enter into any contract whereby the employee agrees not to engage in any competing business for himself, or as the employee of another, upon the termination of his contract of employment with such employer, and all such contracts, or provisions thereof containing such agreement shall be null and unenforceable in any court, provided that in those cases where the employer incurs an expense in the training of the employee or incurs an expense in the advertisement of the business that the employer is engaged in, then in that event it shall be permissible for the employer and employee to enter into a voluntary contract and agreement whereby the employee is permitted to agree and bind himself that at the termination of his or her employment that said employee will not enter into the same business that employer is engaged over the same route or in the same territory for a period of two years.

Even though this statute refers only to an employer/employee, it has been judicially extended to various relationships which are "essentially" employer/employee.

For example, in Cust v. Item Co., 200 La. 515, 8 So.2d 361 (1942), the Supreme Court considered a non-compete agreement between two alleged partners. While the relationship "purported" to be a partnership, it was clear only one partner was bound by the non-compete proviso and the court concluded the clause was against public policy in violation of Act No. 133 of 1934 (predecessor of LSA-R.S. 23:921).

In Nelson v. Associated Branch Pilots of Port of Lake Charles, 63 So.2d 437 (La.App. 1st Cir.1953) an agreement between members of a pilots' association requiring withdrawing members to post bond (to assure no competition) was declared null and unenforceable as contrary to the public policy expressed in LSA-R.S. 23:921. The court found the Association had "control" over the member, and relying on Cust, stated at p. 439:

... Certainly, if the said act applies to such restrictions in contracts of partnership, the same would apply to the restriction contained in the agreement setting up the Association. In reality, the amount of control exercised over the members of the Association was greater than would be present in a partnership, *939 and the petitioner, with certain modifications, was no more than an employee of the Association. The By-Laws of the Association contained certain rules and regulations which are common to the employer and employee relationship.

Similarly, in McCray v. Cole, 259 La. 646, 251 So.2d 161 (1971) the Supreme Court declared null an agreement wherein a psychologist, in association with a group of psychiatrists, promised to pay $6,000 in liquidated damages should he withdraw and resume his practice in the same parish. The court held the "contract of employment violates the provisions of R.S. 23:921." It's important to note in Cole that only the psychologist was bound by the provision. However, the three psychiatrists had signed a separate contract that was examined by the 3d Circuit in McCray v. Blackburn, 236 So.2d 859 (La.App. 3d Cir.) writ denied, 256 La. 845, 239 So.2d 355 (1970). The court concluded that agreement did not violate R.S.

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Bluebook (online)
432 So. 2d 936, Counsel Stack Legal Research, https://law.counselstack.com/opinion/winston-v-bourgeois-bennett-thokey-and-hickey-lactapp-1983.