Yorsch v. Morel

223 So. 3d 1274, 16 La.App. 5 Cir. 662, 2017 WL 3166970, 2017 La. App. LEXIS 1379
CourtLouisiana Court of Appeal
DecidedJuly 26, 2017
DocketNO. 16-CA-662
StatusPublished
Cited by13 cases

This text of 223 So. 3d 1274 (Yorsch v. Morel) 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
Yorsch v. Morel, 223 So. 3d 1274, 16 La.App. 5 Cir. 662, 2017 WL 3166970, 2017 La. App. LEXIS 1379 (La. Ct. App. 2017).

Opinions

WICKER, J.

I rThis appeal arises out of a judgment of the district court denying plaintiff Frederick E. Yorsch’s request for a preliminary injunction to restrain defendant, Stephen D. Morel, from undertaking various employment activities with several alleged competitors of Nola Title Company, L.L.C. and My Tax Sale Resources, L.L.C. (the “Companies,” collectively)—two member-managed limited liability companies of which Yorseh and Morel are the only two members—and from soliciting or targeting clients of the Companies. Through his “Verified Petition for Temporary Restraining Order, Preliminary Injunction and Permanent Injunction,” Yorseh sought enforcement of a “Non-Circumvention and Non-Competition Agreement” (the “Agreement”) into which Yorseh and Morel entered as members of the Companies. As indicated by its title, the Agreement contained both a non-competition clause and a non-circumvention clause. On the merits, Yorseh argues that, each clause independently entitles him to injunctive relief. After a careful review of the Agreement and of the applicable law, we hold that both clauses are unenforceable on their face. Because we find the scope of the non-competition clause to be impermissibly broad and because we find that the non-circumvention agreement is not geographically bound as required by La. R.S. 23:921, we affirm the district court’s judgment.

FACTUAL AND PROCEDURAL BACKGROUND

On April 19, 2006, Yorseh and Morel formed Nola Title Company, L.L.C. (“Nola Title”), a member-managed limited liability company, to offer closing and title insurance services for the sale of properties.1 Yorseh and Morel are Nola Title’s sole members. At the district court hearing on Yorsch’s request for a | preliminary injunction, Yorseh testified that, around 2008, Nola Title entered into the market of offering closing and title insurance services for tax sale properties. According to Yorseh, Nola Title dealt with “anything with tax sales in the chain of title” and offered these services to several municipalities, parishes, or jurisdictions. On August 1, 20Í4, Morel and Yorseh formed My Tax [1277]*1277Sale Resources, L.L.C. (“MTSR”), a member-managed limited liability company, of which Morel and Yorsch are the sole members. According to Yorsch, “[MTSR] was set up... for research and vetting of tax-adjudicated properties for—to be able to issue title insurance.”

Due to the procedural posture of this case, the facts were not fully developed in the district court. It is not clear, and we decline to speculate as to, what precipitated the parties’ decision to enter into the Agreement which Yorsch presently seeks to enforce by means of injunction. The record indicates that on July 10, 2015, Yorsch and Morel executed the following agreement:

NON-CIRCUMVENTION AND NON- ' COMPETITION AGREEMENT
This agreement, effective as of July 10, 2015 (the “Effective Date”), is by and between Stephen D. Morel and Frederick E. Yorsch. The parties hereto are hereinafter at times collectively referred to as the “Members” and.each referred to as a “Member”, [sic]
RECITALS
WHEREAS, the Members are the members of Nola Title Company, LLC (“Nola Title”) and My Tax Sale Resources, LLC (“MTSR”) hereinafter, the “Companies”;
WHEREAS, the Companies have entered into a business arrangement with Archon ■ Information Systems/Civic Source (“Civic Source”), whereby the Companies shall handle the issuance of the policies and the closing for tax adjudicated real estate for Orleans Parish, St. Landry Parish, St. Mary Parish, St. Bernard Parish, Tangipahoa Parish, City of Gretna, City of Bogalusa, More-house Parish, East Carroll Parish, Point Coupee Parish and City of New Iberia, as well as have right of first refusal to -conduct and/or, within a reasonable period of time establish to CivicSource [sic] the Companies’ ability to perform such professional services in any other location. The Companies also intend to provide title insurance for secondary sales • | aand/or refinances of adjudicated properties (hereinafter, the “Business”);
WHEREAS, thé Companies intend to enter into an agreement with Civic Source regarding both the Business and the exploration and pursuit of the Business in other parishes of Louisiana or other states with respect to the handling of the sales, closings and title policy issuances for tax adjudicated real estate (the “Opportunity”);
WHEREAS the Members agree to not circumvent or compete against the Companies with respect to the Business or the Opportunity.
NOW THEREFORE, in consideration of the mutual promises set forth herein, the Parties hereto agree as follows:
1. Non-Circumvention: Both Members hereby agree not to circumvent the Companies in any dealings regarding the Business or the Opportunity with any title insurance companies, including without limitation WFG National Title Insurance Company, or with any government municipalities, parishes, or counties; and each of the Members will not in any manner, except on behalf of the Companies, access, contact, solicit and/or communicate with such parties or accept any business, support, investment, or involvement from such parties or enter into any arrangement or transaction with such parties with respect to such matters, without the other Member’s express written consent or other Member’s direct involvement.
2. Non-Competition. [sic] Except with the express written consent of the other Member, neither Member shall directly ' or indirectly perform any of the follow[1278]*1278ing activities: work for, manage, operate, control, engage or participate in (whether as a principal, agent, representative, proprietor, member, consultant, partner or employee), or engage or invest in, own, manage, operate, finance, control or participate in the ownership, management, operation, financing or control of, be employed by or associated with, or render services or advice or other aid to, or guarantee any obligation of, any person or entity engaged in any business whose activities.compete in any way with the Business or the Opportunity. Each of the Members acknowledges that the Companies conduct the Business in the following parishes in the State of Louisiana: Orleans Parish, St. Landry Parish, St. Mary Parish, St. Bernard Parish, Tangipahoa Parish, City of Gretna, City of Bogalusa, More-house Parish, East Carroll Parish, Point Coupee Parish and City of New Iberia (collectively, the “Covered Parishes”), and accordingly, the restrictions contained herein shall apply to the Covered Parishes. Members shall amend the Covered Parishes, as needed, to include the Business in other parishes and counties obtained by the Opportunity.
3. Period of Effectiveness: The term of this agreement will commence on the Effective Date and continue with respect to each Member for as long as such Member holds an ownership interest in either of the Companies and for a period of two years thereafter.
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223 So. 3d 1274, 16 La.App. 5 Cir. 662, 2017 WL 3166970, 2017 La. App. LEXIS 1379, Counsel Stack Legal Research, https://law.counselstack.com/opinion/yorsch-v-morel-lactapp-2017.