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CHEM SPRAY SOUTH, INC. v. BAZILE, 2013 CA 0035. (2013)

Court: Court of Appeals of Louisiana Number: inlaco20130809234 Visitors: 16
Filed: Aug. 09, 2013
Latest Update: Aug. 09, 2013
Summary: NOT DESIGNATED FOR PUBLICATION PARRO, J. Chem Spray South, Inc. (Chem Spray) appeals a judgment in favor of its former employee, Timothy J. Bazile, denying its request for a preliminary injunction based on a non-competition agreement. For the following reasons, we affirm the judgment and remand. FACTUAL AND PROCEDURAL BACKGROUND Bazile was hired by Chem Spray in 1995 as an operator/sprayer and later became a general foreman. Chem Spray is a vegetation management business, providing herbicid
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NOT DESIGNATED FOR PUBLICATION

PARRO, J.

Chem Spray South, Inc. (Chem Spray) appeals a judgment in favor of its former employee, Timothy J. Bazile, denying its request for a preliminary injunction based on a non-competition agreement. For the following reasons, we affirm the judgment and remand.

FACTUAL AND PROCEDURAL BACKGROUND

Bazile was hired by Chem Spray in 1995 as an operator/sprayer and later became a general foreman. Chem Spray is a vegetation management business, providing herbicide application, grass mowing, landscape services, arborist services, utility right-of-way management, related consulting services, air boat and marsh buggy rentals, and retail sales of herbicides. In November 2006, Bazile signed an Employee Confidentiality and Non-Competition Agreement (Agreement) with Chem Spray, stating that for a period of two years after termination of his employment for any reason, he would not engage in any business similar to that of Chem Spray or solicit customers of Chem Spray in certain described parishes, including Iberville Parish. Bazile voluntarily terminated his employment with Chem Spray on July 9, 2012. During the same month, Chem Spray lost a grass-cutting contract with LBC in Iberville Parish that it had held for just over a year.

After leaving Chem Spray, Bazile accepted a job with American Industrial Plant Services, Inc. (American), a plant servicing company that provides contract maintenance services, structural fabrication, vessel fabrication and repairs, pipe fabrication, exotic alloy welding, handling of industrial equipment, sandblasting, painting, concrete sandblasting, and similar services. Bazile's first assignment in his new job was to work as a general maintenance laborer at LBC. One of the tasks LBC assigned to him was cutting grass at the LBC plant — the same grass he had cut one time during his employment with Chem Spray.

When Chem Spray learned of this, it filed suit against Bazile, seeking injunctive relief that would prohibit him from carrying on or engaging in a business similar to that of Chem Spray for two years following the termination of his employment in the parishes enumerated in the Agreement. The petition claimed that Bazile was in direct violation of the Agreement by working for a Chem Spray competitor in Iberville Parish. In addition to injunctive relief, the petition sought damages due to the breach of the Agreement, interest, court costs, and attorney fees. A hearing on Chem Spray's motion for a preliminary injunction was set for August 13, 2012.

Bazile answered the petition, generally denying most of its allegations, and asserting, among others, the affirmative defense that American was not engaged in the same type of business as Chem Spray, and even though some of their customers might be the same, the type of work engaged in by American had no relationship or similarity to the type of work and services provided by Chem Spray. After several continuances, the motion was tried on September 28, 2012. The court took the motion under advisement and asked the parties for briefs on the issue of whether Louisiana's non-compete statute, LSA-R.S. 23:921, extended to hourly workers, as well as to higher-level employees. After considering those briefs, the arguments of counsel, and the evidence submitted, the court denied the preliminary injunction on the grounds that American was not a competing business to Chem Spray. Therefore, Bazile had not violated the terms of the Agreement. A judgment to this effect was signed November 2, 2012, and this appeal followed.

APPLICABLE LAW

Preliminary Injunction

An appeal may be taken as a matter of right from an order or judgment relating to a preliminary injunction. LSA-C.C.P. art. 3612(B); see Roba, Inc. v. Courtney, 09-0509 (La. App. 1st Cir. 8/10/10), 47 So.3d 509, 514 n.12. The question of whether the preliminary injunction should be granted or denied is addressed to the sound discretion of the trial court, and its decision will be disturbed on review only in cases where a clear abuse of its discretion has been shown. Lassalle v. Daniels, 96-0176 (La. App. 1st Cir. 5/10/96), 673 So.2d 704, 708, writ denied, 96-1463 (La. 9/20/96), 679 So.2d 435, cert. denied, 519 U.S. 1117, 117 S.Ct. 963, 136 LEd.2d 848 (1997).

An injunction shall be issued in cases where irreparable injury, loss, or damage may otherwise result to the applicant, or in other cases specifically provided by law. LSA-C.C.P. art. 3601(A); State Machinery & Equip. Sales, Inc. v. Iberville Parish Council, 05-2240 (La. App. 1st Cir. 12/28/06), 952 So.2d 77, 80-81. A party seeking a preliminary injunction must show entitlement to the relief sought by a prima facie showing that the party will prevail on the merits of the case. See Sorrento Companies, Inc. v. Honeywell Int'l, Inc., 04-1884 (La. App. 1st Cir. 9/23/05), 916 So.2d 1156, 1163, writ denied, 05-2326 (La. 3/17/06), 925 So.2d 541. In making a prima facie showing, the plaintiff is required to offer less proof than is necessary in an ordinary proceeding for a permanent injunction. State through Louisiana State Bd. of Examiners of Psychologists of the Dep't of Health and Human Services v. Atterberry, 95-0391 (La. App. 1st Cir. 11/9/95), 664 So.2d 1216, 1220. A showing of irreparable harm is not required where the conduct sought to be restrained is unlawful, as when the conduct sought to be enjoined constitutes a direct violation of a prohibitory law. State Machinery, 952 So.2d at 81. If an employee enters into an agreement with his employer not to compete and fails to perform his obligation under such an agreement, the court shall order injunctive relief even without a showing of irreparable harm, upon proof by the employer of the employee's breach of the non-competition agreement. LSA-R.S. 23:921(H);2 Vartech Systems, Inc. v. Hayden, 05-2499 (La. App. 1st Cir. 12/20/06), 951 So.2d 247, 255.

Non-competition Agreements

Louisiana has consistently had a strong public policy against any employment contract that prohibits an employee from competing with a former employer. Louisiana Smoked Products, Inc. v. Savoie's Sausage and Food Products, Inc., 96-1716 (La. 7/1/97), 696 So.2d 1373, 1379. This public policy is expressed in LSA-R.S. 23:921(A)(1), which, at the time pertinent to this matter, provided:

Every contract or agreement, or provision thereof, by which anyone is restrained from exercising a lawful profession, trade, or business of any kind, except as provided in this Section, shall be null and void.3

Louisiana's strong public policy restricting non-competition agreements is based on an underlying state desire to prevent an individual from contractually depriving himself of the ability to support himself and consequently becoming a public burden. See McAlpine v. McAlpine, 94-1594 (La. 9/5/96), 679 So.2d 85, 91. Because such agreements are in derogation of the common right, they must be strictly construed against the party seeking their enforcement. Vartech, 951 So.2d at 254.

A number of exceptions to LSA-R.S. 23:921(A)(1) are set forth in other Subsections of the statute, including employer/employee relationships, corporation/shareholder relationships, partnership/partner relationships, and franchise/franchisee relationships. The statute defines the limited situations under which a non-competition clause may be valid in the context of each of these relationships. Kimball v. Anesthesia Specialists of Baton Rouge, Inc., 00-1954 (La. App. 1st Cir. 9/28/01), 809 So.2d 405, 410, writs denied, 01-3316 and 3355 (La. 3/8/02), 811 So.2d 883 and 886.

The exception at issue in the case before us is provided by Subsection C, which states, in pertinent part:

Any person, including a corporation and the individual shareholders of such corporation, who is employed as an agent, servant, or employee may agree with his employer to refrain from carrying on or engaging in a business similar to that of the employer and/or from soliciting customers of the employer within a specified parish or parishes, municipality or municipalities, or parts thereof, so long as the employer carries on a like business therein, not to exceed a period of two years from termination of employment.

Subsection C is clarified by Subsection D, which states:

For the purposes of Subsections B and C, a person who becomes employed by a competing business, regardless of whether or not that person is an owner or equity interest holder of that competing business, may be deemed to be carrying on or engaging in a business similar to that of the party having a contractual right to prevent that person from competing.4

The provisions of LSA-R.S. 23:921 in effect at the time that the employment agreement was executed are applicable in determining whether the non-competition agreement is enforceable. Walker v. Louisiana Health Management Co., 94-1396 (La. App. 1st Cir. 12/15/95), 666 So.2d 415, 426, writ denied, 96-0571 (La. 4/19/96), 671 So.2d 922.

ANALYSIS

The portion of the Agreement relevant to this case states the following:

2.0 COVENANT NOT TO COMPETE 2.1 Employee agrees for a period of two (2) years after termination of his/her employment for any reason, that Employee shall not, except as permitted by Employer through its prior written consent, directly or indirectly, individually or in concert with others, or through the medium of a corporation, partnership, association, joint venture or otherwise, whether as an employee, owner, partner, officer, director, promoter, representative, consultant, agent or in any other capacity, engage in any business similar to that [of the] Employer, or solicit customers of the Employer in the parishes listed below. For purposes of this agreement, the Employer's business is defined as vegetation management, which includes herbicide application, grass mowing, landscape services, arborist services, utility right of way management, related consulting services to the above, together with air boat and marsh buggy rentals and retail of herbicides.

The listed Louisiana parishes include Iberville Parish.

Bazile testified that he signed the Agreement on November 1, 2006. His understanding at the time was that he could actually work for another company as long as he did not discuss confidential information, disclose what Chem Spray did, the jobs it bid on, or the jobs it had. His impression was that signing the Agreement was a condition of his continued employment with Chem Spray. He said, "I signed it so I could stay working." He said that when he left Chem Spray, he wanted to go into spraying, but he knew that might be covered under the Agreement. Therefore, he looked for a general maintenance job where he would not have that problem. A friend told him American was hiring, and he interviewed for a general maintenance, handyman position, which was then offered to him. When he interviewed and agreed to take the job, he was not aware that American did any grass cutting. On his first day with American, he was told to report to LBC the following day and get instructions from LBC as to his job responsibilities. In addition to cutting grass at LBC, he did painting, weeded the flower bed, kept the maintenance building clean, emptied trash barrels, and did whatever was required on a day-to-day basis. When he was with Chem Spray, he had worked at the LBC plant only one time, cutting grass.

Charles Deville, a part owner and secretary/treasurer of Chem Spray, testified on behalf of Chem Spray. He described its business as vegetation management. He said Bazile was hired in 1995 as a sprayer, and later moved up to foreman, in which position he cut trees on right-of-ways, did bush hogging for Chem Spray's customers, did spraying and some grass cutting, and ran crews. He stated that Chem Spray's business is very competitive, because there were a lot of other companies going after the same work. He confirmed that the definition of Chem Spray's business in paragraph 2.1 of the Agreement was an accurate description of the company's business. Deville said that Chem Spray was doing grass cutting work for LBC in Iberville Parish while Bazile was in its employ and had been doing that particular job since spring or summer of 2011. Chem Spray lost that job to American when it was asked to re-bid the job in July 2012. Deville did not realize Bazile had left Chem Spray's employ until he saw him cutting grass at the LBC plant for American shortly after he left Chem Spray. He said he considers American a competitor to Chem Spray in the vegetation management business, because American had competed against it for the LBC job, submitted a competing bid, and was awarded the LBC contract, which included grass cutting. He stated, "[I]f you're an opposing company and you compete against a project and you take that customer from us, you are a competitor."

In written reasons for judgment, the court found that the Agreement met the requirements of LSA-R.S. 23:921, in that it was for a period of two years and listed the parishes in which Bazile could not engage in a business that competed with Chem Spray. However, the court found that American was not a competing business with Chem Spray, stating:

American Industrial engages in vessel fabrication, pipe fabrication, welding and general maintenance services to plants. As part of its general maintenance for one of its clients, American Industrial engages in grass cutting. The Court does not find this fact alone sufficient to transform American Industrial into a competing business of Chem Spray, a vegetation management company. Therefore Mr. Bazile did not violate the terms of the non-compete agreement and the preliminary injunction requested by Chem Spray is hereby denied.

The applicable statute uses the terms, "refrain from carrying on or engaging in a business similar to that of the employer," a "like business," and a "competing business." (Emphasis added). See LSA-R.S. 23:921(C) and (D). The Agreement also uses the words, "engage in any business similar to" that of the employer. (Emphasis added). There is evidence in the record to support the court's factual finding that American's business was not similar to, like, or competing with the business of Chem Spray. Therefore, the court's conclusion on this issue cannot be said to be an abuse of discretion. Furthermore, with that evidence, Chem Spray did not meet its burden of making a prima facie showing that it would prevail on the merits of the case, thus justifying the court's denial of Chem Spray's request for a preliminary injunction against Bazile as an employee of American.

CONCLUSION

For the above reasons, the November 2, 2012 judgment of the district court, denying Chem Spray South, Inc.'s request for a preliminary injunction against Timothy Bazile, is affirmed. All costs of this appeal are assessed to Chem Spray South, Inc. The case is remanded to the district court for further proceedings.

AFFIRMED AND REMANDED.

FootNotes


1. Judge William F. Kline, Jr., retired, is serving as judge ad hoc by special appointment of the Louisiana Supreme Court.
2. Louisiana Revised Statute 23:921(H) states, in pertinent part: Any agreement covered by Subsection B, C, E, F, G, J, K, or L of this Section shall be considered an obligation not to do, and failure to perform may entitle the obligee to recover damages for the loss sustained and the profit of which he has been deprived. In addition, upon proof of the obligor's failure to perform, and without the necessity of proving irreparable injury, a court of competent jurisdiction shall order injunctive relief enforcing the terms of the agreement.
3. Louisiana Revised Statute 23:921(A)(1) was amended by 2010 La. Acts, No. 164, § 1, to add a second sentence, which states: "However, every contract or agreement, or provision thereof, which meets the exceptions as provided in this Section, shall be enforceable."
4. As noted in Green Clinic, L.L.C. v. Finley, 45,140 (La. App. 2nd Cir. 1/27/10, 30 So.3d 1094, 1098, this provision was added by 2003 La. Acts, No. 428, § 1, in order to "legislatively overrule" the case of Swat 24 Shreveport Bossier, Inc. v. Bond, 00-1695 (La. 6/29/01), 808 So.2d 294. In Swat 24, the Louisiana Supreme Court had held that the legislature intended that a non-competition agreement restraining an employee from carrying on or engaging in his own business might be valid, provided certain conditions were met. Conversely, an agreement that restrained an employee from carrying on or engaging in a competing business as the employee of another would not fall within the exception provided for by LSA-R.S. 23:921(C) and, instead, would be null and void pursuant to Subsection (A).
Source:  Leagle

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