ANDREWS, Presiding Judge.
This appeal arises from a claim made by Lapolla Industries, Inc. that a competing business, Premium Spray Products, Inc., and Maclean Hess (on behalf of Premium) hired, or were attempting to hire, five former employees of Lapolla in violation of non-compete covenants in employment agreements between Lapolla and the former employees. In response to Lapolla's demand letter that
The trial court entered an order granting a motion by Hess and Premium for a partial final judgment on the pleadings as to count two of the complaint (which sought a declaratory judgment as to the non-compete covenants), and pursuant to OCGA § 9-11-54(b) the court entered a partial final judgment on count two.
1. Lapolla and Kramer contend that, because Premium and Hess were not parties to the employment agreements between Lapolla and the former Lapolla employees, they had no standing to seek a declaratory judgment with respect to the non-compete covenants in the agreements.
A superior court is authorized under OCGA § 9-4-2(a) and (b) to enter a declaratory judgment "to declare rights and other legal relations of any interested party" petitioning for a declaration "in cases of actual controversy" under subsection (a), and in "any civil case in which ... the ends of justice require that the declaration should be made" under subsection (b). The declaratory judgment statute is liberally construed; applies where a legal judgment is sought that would control or direct future action; and requires under subsection (a) or (b) the presence in the declaratory action of a party with an interest in the controversy adverse to that of the petitioner. Famble v. State Farm Ins. Co., 204 Ga.App. 332, 333-334, 419 S.E.2d 143 (1992); Atlanta Cas. Co. v. Fountain, 262 Ga. 16, 17, 413 S.E.2d 450 (1992).
We find under the circumstances of this case that the requirements for application of the declaratory judgment statute have been met. Similar circumstances were present in Enron Capital & Trade Resources Corp. v. Pokalsky, 227 Ga.App. 727, 490 S.E.2d 136 (1997), where an individual and his current employer were uncertain as to the legal right to continue their employment relationship in the future in light of restrictive covenants contained in an employment agreement between the individual and a former employer. Id. at 728-730, 490 S.E.2d 136. We found under those circumstances that the current employer and the individual were entitled to bring a declaratory judgment action under OCGA § 9-4-2 against the former employer seeking a declaration as to the legal effect of the covenants on the current employment relationship. Id. Similarly, in light of the non-compete covenants between Lapolla and the former Lapolla employees in the present case, Premium and Hess were uncertain as to their legal right to continue attempts to
2. Lapolla contends that the trial court erred in granting a declaratory judgment on the pleadings as to count 2 declaring as a matter of law that the non-compete covenants contained in the employment agreements between Lapolla and its former employees were void and unenforceable.
Novare Group, Inc. v. Sarif, 290 Ga. 186, 191, 718 S.E.2d 304 (2011) (citations omitted); OCGA § 9-11-12(c). In others words, "[t]he granting of a motion for judgment on the pleadings under [OCGA § 9-11-12(c)] is proper only where there is a complete failure to state a cause of action or defense." Pressley v. Maxwell, 242 Ga. 360, 249 S.E.2d 49 (1978). In considering a motion for judgment on the pleadings, a trial court may consider exhibits attached to and incorporated into the pleadings, including exhibits attached to the complaint or the answer. Raysoni v. Payless Auto Deals, LLC, ___ Ga. App. ___, 746 S.E.2d 250, 253 n. 5 (2013); Shreve v. World Championship Wrestling, Inc., 216 Ga.App. 387, 388, 454 S.E.2d 555 (1995); OCGA § 9-11-10(c).
In the present case, the complaint for declaratory judgment alleged that all five of the Lapolla former employees at issue had non-compete covenants in their employment agreements with Lapolla that were void and unenforceable under Georgia law. The complaint attached and incorporated a letter from Lapolla's attorneys to Premium and Hess regarding the "Employment Agreements and Restrictive Covenants Contained Therein between Lapolla Industries, Inc. and Ted Medford, Troy Herring, Carl McKettrick, Vincent Majewski, and Moody Ozier." The letter stated that attempts by Premium and Hess to hire any of the former employees (or actual employment of the former employees) violated non-compete covenants in their employment agreements with Lapolla; demanded that Premium and Hess cease any such activity; and stated that:
In response to the complaint, Lapolla and Kramer filed an answer which admitted that the letter attached to the complaint was a true and correct copy of the letter sent by Lapolla. The answer also attached as an exhibit a copy of one of the five employment agreements at issue (Ozier's agreement) which contained the exact "non-compete" covenants referred to in Lapolla's letter as "the Non-Compete language for each employee."
Lapolla and Kramer argue for the first time on appeal that the trial court erred by ruling on the motion for judgment on the pleadings because the court should have allowed discovery with respect to the employment agreements with the former employees. Lapolla contends for the first time on appeal that it "does not have a copy of the complete agreements and never had an opportunity to seek them in discovery." According to Lapolla, it attached a copy of Ozier's employment agreement to its answer merely as an example of an agreement containing the "non-compete" language contained in its letter to Premium and Hess, and was forced to "trust that the remaining agreements were identical."
As stated above, the record shows to the contrary that Lapolla conceded in its answer that the letter it sent to Premium and Hess (attached to the complaint) set forth in "the Non-Compete language for each employee," and LaPolla's answer attached as an exhibit an employment agreement containing the same "non-compete" language set forth in the letter. Moreover, LaPolla's subsequent motion to dismiss or stay the proceedings also conceded that the pleadings set forth the "non-compete" language contained in all the agreements. Lapolla's motion states:
In the same motion, Lapolla again refers to the letter it sent to "Hess and Premium advising them that the Former Employees were acting in competition with Lapolla in violation of the Agreements." Finally, Lapolla's Brief on Appeal recognizes that:
In support of this statement in its appellate brief that all five employment agreements contained the "non-compete" covenants, Lapolla's brief cites in the record to the "non-compete" language contained in the employment agreement attached as an exhibit to its answer.
Nothing in the record shows that Lapolla or Kramer sought or was denied the opportunity for discovery with respect to Lapolla's employment agreements with its former employees. Rather, the record shows
In ruling on the motion for judgment on the pleadings, the trial court properly considered the exhibits attached to the complaint and the answer as establishing the language set forth in the "non-compete" covenants contained in the employment agreements between Lapolla and its five former employees. The trial court also correctly ruled under applicable Georgia law that the restrictive covenant considered by the court was void and unenforceable on its face.
Because the pleadings show that the restrictive covenants at issue arise out of employment agreements, the trial court correctly applied "strict scrutiny" in its consideration of restrictions on competition contained in the covenant. Gordon Document Products, Inc. v. Service Technologies, Inc., 308 Ga.App. 445, 447, 708 S.E.2d 48 (2011); American Control Systems, Inc. v. Boyce, 303 Ga.App. 664, 667, 694 S.E.2d 141 (2010). Whether the restrictions on competition contained in the "non-compete" covenants were reasonable, and therefore legal, was a question of law for the trial court. Rollins Protective Services Co. v. Palermo, 249 Ga. 138, 139, 287 S.E.2d 546 (1982).
Global Link Logistics, Inc. v. Briles, 296 Ga.App. 175, 177, 674 S.E.2d 52 (2009). Moreover, where strict scrutiny applies to a non-compete covenant in an employment agreement, Georgia does not use the "blue pencil" doctrine of severability — the rule is that the court will not sever or "blue pencil" an unenforceable non-compete covenant and enforce reasonable restrictions in other non-compete covenants, but will declare all the non-compete covenants unenforceable. Advance Technology Consultants, Inc. v. Roadtrac, LLC, 250 Ga.App. 317, 320-321, 551 S.E.2d 735 (2001); Paramount Tax & Accounting,
But the rule that unenforceable non-compete covenants will not be severed or "blue-penciled" does not apply equally to all types of covenants restricting competition. As to the five restrictive covenants set forth in the "non-compete" language at issue in the present case (see n. 2, supra), the non-severability rule applies to three of those covenants: the covenant restricting employment with a Lapolla competitor (subparagraph (a)), the covenant restricting solicitation of business from entities doing business with or competing with Lapolla (subparagraph (c)), and the covenant restricting solicitation of Lapolla customers (set forth in a portion of subparagraph (d)). Sunstates Refrigerated Services, Inc. v. Griffin, 215 Ga.App. 61-62, 449 S.E.2d 858 (1994). As to those three non-compete and non-solicitation covenants, all are treated as non-compete covenants for purposes of the non-severability rule — if any one is unenforceable, all three are unenforceable. Id.; Uni-Worth Enterprises, Inc. v. Wilson, 244 Ga. 636, 638-640, 261 S.E.2d 572 (1979); Ward v. Process Control Corp., 247 Ga. 583-584, 277 S.E.2d 671 (1981); Roadtrac, 250 Ga.App. at 320, 551 S.E.2d 735. As to the remaining two covenants, which restrict solicitation and hiring of current Lapolla employees (subparagraph (b)) and restrict disclosure of Lapolla trade secrets and confidential information (set forth as part of subparagraph (d)), those covenants are analyzed separately. Sunstates, 215 Ga.App. at 61-62, 449 S.E.2d 858. In other words, the latter two covenants do not automatically fail under the non-severability rule if any one of the other three fail. Id.; Wiley v. Royal Cup, Inc., 258 Ga. 357, 359-360, 370 S.E.2d 744 (1988); Lane Co. v. Taylor, 174 Ga.App. 356, 359, 330 S.E.2d 112 (1985).
In ruling on the motion for declaratory judgment on count 2, the trial court considered the restrictive covenant set forth in subparagraph (a) of the "non-compete" language. The covenant set forth in subparagraph (a) provides that the former Lapolla employees shall not
This language contains no reasonable limit on the kind, character, or scope of work restricted and effectively restricts the former employees from working for a Lapolla competitor in any capacity. A non-compete covenant is too broad and indefinite to be enforceable where it contains no limit on the work restricted and effectively prohibits an employee from working for a competitor in any capacity. McNease v. Nat. Motor Club of America, Inc., 238 Ga. 53, 56, 231 S.E.2d 58 (1976); Howard Schultz & Assoc., etc., Inc. v. Broniec, 239 Ga. 181, 184, 236 S.E.2d 265 (1977); Arnall Ins. Agency, Inc. v. Arnall, 196 Ga.App. 414, 416-418, 396 S.E.2d 257 (1990); Russell Daniel Irrigation Co. v. Coram, 237 Ga.App. 758, 760, 516 S.E.2d 804 (1999). Moreover, the restriction on acting as a partner, shareholder, or owner of a competitor is overbroad and unenforceable because, by definition, it prohibited activities beyond the scope of those performed for Lapolla by its former employees. Wright v. Power Industry Consultants, Inc., 234 Ga.App. 833, 834-835, 508 S.E.2d 191 (1998), overruled on other grounds, Roadtrac, 250 Ga.App. at 321, 551 S.E.2d 735; Ceramic & Metal Coatings Corp. v. Hizer, 242 Ga.App. 391, 393-394, 529 S.E.2d 160 (2000).
Accordingly, the trial court correctly found that the pleadings show the restrictive covenant set forth in subparagraph (a) was void on its face and unenforceable as a matter of law. Under the non-severability rule, the trial court also correctly found that the restrictive covenant set forth in subparagraph (c), and the covenant restricting solicitation of Lapolla customers (as set forth in a portion of subparagraph (d)) are also unenforceable as a matter of law.
3. Lapolla and Kramer contend that the trial court erred by refusing to grant their motion to dismiss the action on the basis that the employment agreements contain forum selection clauses requiring that "venue for any action brought hereunder shall be exclusively in Harris County, Texas."
The employment agreements also contain choice of law clauses which provide that they "shall be governed by and construed in accordance with the laws of the state of Texas." Accordingly, if enforced together, the forum selection and choice of law clauses in the employment agreements would require that the present action be brought before a Texas court applying Texas law. The record shows that Premium is a Georgia corporation with its principal place of business in Georgia, and that Hess is a Georgia resident. Lapolla is a Delaware corporation with its principal place of business in Texas, and Kramer is a resident of Texas. The trial court denied the motion to dismiss and refused to enforce the forum selection and choice of law clauses on the basis of Georgia public policy.
The enforceability of the forum selection clauses is a procedural issue which, under the rule of lex fori, requires application of the law of Georgia (where suit was filed), even though the employment agreements also contain choice of law clauses requiring application of Texas substantive law. Brinson v. Martin, 220 Ga.App. 638-639, 469 S.E.2d 537 (1996). A forum selection clause in a contract is prima facie valid and will be enforced unless the opposing party establishes a compelling reason that enforcement would be unreasonable under the circumstances. Iero v. Mohawk Finishing Products, Inc., 243 Ga.App. 670, 671, 534 S.E.2d 136 (2000). "[P]ublic policy may afford a compelling reason to avoid a forum-selection clause, at least to the extent that proceedings in the selected forum are likely to produce a result that offends a settled public policy of Georgia." Carson v. Obor Holding Co., 318 Ga.App. 645, 648, 734 S.E.2d 477 (2012) (punctuation and citation omitted); Iero, 243 Ga.App. at 671, 534 S.E.2d 136. A similar rule applies to enforcement of the choice of law clauses in the agreements — "the law of the jurisdiction chosen by parties to a contract to govern their contractual rights will be enforced unless application of the chosen law would be contrary to the public policy or prejudicial to the interests of this state." CS-Lakeview at Gwinnett, Inc. v. Simon Property Group, Inc., 283 Ga. 426, 428, 659 S.E.2d 359 (2008).
As set forth in division 2, supra, the lack of any limit on the scope of the restricted work rendered the non-compete covenant considered by the trial court unenforceable under Georgia law, and Georgia law rejecting application of the "blue pencil" rule of severability rendered that covenant and two additional restrictive covenants unenforceable. These rulings enforced Georgia public policy with regard to restrictive covenants in employment agreements under the Georgia law applicable to the agreements entered into prior to May 11, 2011. White v. Fletcher/Mayo/Assoc., Inc., 251 Ga. 203, 204, 303 S.E.2d 746 (1983); Hostetler v. Answerthink, Inc., 267 Ga.App. 325, 328, 599 S.E.2d 271 (2004); Bunker Hill Intl., Ltd. v. Nationsbuilder
In support of their contention that the trial court should refuse to enforce the forum selection and choice of law clauses, Premium and Hess made the necessary showing that a Texas court would likely apply Texas law to enforce the covenants in a manner contrary to applicable Georgia public policy. Carson, 318 Ga.App. at 653, 734 S.E.2d 477. Generally, contractual choice of law clauses are enforced in Texas if the chosen state has a substantial relationship with the parties and their transaction, and no countervailing public policy of the forum demands otherwise. SAVA gumarska in kemijska indus. d.d. v. Advanced Polymer Sciences, Inc., 128 S.W.3d 304, 314 (Tex.App. Dallas 2004); DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 677-678 (Tex.1990). In DeSantis, the Texas Supreme Court considered the enforceability of a Florida choice of law clause in a non-compete agreement between a Texas employee and a Florida employer. Id. at 675 The court found that Texas law controlling non-compete agreements expressed fundamental Texas public policy, and declined under the circumstances to enforce the choice of Florida law in contravention of Texas law. Id. at 681. Considering Texas's relationship to the parties and the transaction in the present case, and that state's expressed interest in enforcing its own public policy controlling non-compete agreements, it is likely that a Texas court would enforce the choice of law clauses in the employment agreements and apply Texas law. Moreover, the application of Texas law would enforce the covenants in a manner contrary to Georgia public policy. Although a Texas court would likely agree with applicable Georgia law that the non-compete covenant considered by the trial court lacked a reasonable limit on the scope of restricted work (Tex. Bus. & Com.Code Ann. § 15.50; Butler v. Arrow Mirror & Glass, Inc., 51 S.W.3d 787, 794 (Tex.App. Hous. [1st Dist.] 2001); Peat Marwick Main & Co. v. Haass, 818 S.W.2d 381, 386-388 (Tex.1991)), Texas law would, nevertheless, require that the covenant be reformed (or blue-penciled) to eliminate the unreasonable restriction and make the covenant enforceable. Tex. Bus & Co.Code Ann. § 15.51(c); Butler, 51 S.W.3d at 794, 796. Because it is likely that a Texas court applying Texas law would enforce covenants in this case that are unenforceable under applicable Georgia law and public policy, the trial court did not err by refusing to enforce the forum selection and choice of law clauses and dismiss the complaint.
Judgment affirmed in part and reversed in part.
DILLARD, J., concurs.
McMILLIAN, J., concurs in Divisions 1 and 2, and concurs in judgment only as to Division 3.