The Fifth Circuit Court of Appeals recently upheld judgment for an employee on a non-compete issue. Hunn v. Dan Wilson Homes, Inc., No. 13-11297 (5th Cir. June 15, 2015), available at http://www.ca5.uscourts.gov/opinions/pub/13/13-11297-CV0.pdf.
An employee of an architectural design firm resigned, leaving a client’s project unfinished. After his resignation, the client hired him to complete the project. The employer sued, alleging that the employee and the client secretly agreed to the arrangement in advance so that the employer would be cut out of the business relationship. The employer brought numerous claims against the employee and the client. The district court granted summary judgment on many of the claims and, after a non-jury trial, ruled in favor of the client and the employee on the remaining claims. The employer appealed.
While the employee had signed a non-compete agreement with the employer, that non-compete agreement was unenforceable. Texas law requires that a covenant not to compete be ancillary to another agreement that contains mutual, nonillusory promises. Here, because the relationship was one of at-will employment, the employment agreement itself did not constitute an otherwise enforceable agreement. The Court affirmed the trial court’s judgment.
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