A & B Bolt & Supply, Inc. v. David S. Dawes and Whitco Supply, L.L.C.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

04-699

A&B BOLT & SUPPLY, INC.

VERSUS

DAVID S. DAWES AND WHITCO SUPPLY, L.L.C.

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APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT,
PARISH OF LAFAYETTE, NO. 2003-3999,
HONORABLE KRISTIAN D. EARLES, DISTRICT JUDGE

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MICHAEL G. SULLIVAN
JUDGE

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Court composed of Jimmie C. Peters, Michael G. Sullivan, and John B. Scofield,*
Judges.

REVERSED AND REMANDED.

Alan K. Breaud
David John Calogero
Breaud & Lemoine
Post Office Box 3448
Lafayette, Louisiana 70502
(337) 266-2200
Counsel for Plaintiff/Appellant:
A&B Bolt & Supply, Inc.

*
John B. Scofield participated in this decision by appointment of the Louisiana Supreme
Court as Judge Pro Tempore.

Jeffrey M. Baudier
Jennifer L. Anderson
H. Mark Adams
Jones, Walker, Waechter, Poitevent,
Carrere & Denegre
500 Dover Blvd., Suite 120
Lafayette, Louisiana 70503
(337) 406-5610
Counsel for Defendants/Appellee:
David S. Dawes
Whitco Supply, L.L.C.

SULLIVAN, Judge.

A&B Bolt & Supply, Inc. (A&B) appeals the trial court’s grant of judgment on

the pleadings in favor of David S. Dawes (Dawes) and Whitco Supply, L.L.C.

(Whitco). For the following reasons, we reverse.

Facts and Procedural Background

Dawes and other family members were once the owners of A&B. After

successfully developing the business, the Dawes family sold their interest in A&B to

Industrial Holdings, Inc., which sold it to T-3 Energy Services, Inc. (T-3), the present

owner. Dawes signed an Employment Agreement (Agreement) with T-3 that became

effective May 7, 2001. The Agreement had an initial term of two years and provided

for two renewable terms of one year each. The Agreement expired on May 7, 2003,

but Dawes remained with T-3 as an “at will” employee until July 1, 2003, when he

resigned. At that time, he formed his own company, Whitco, which conducts the

same type of business A&B conducts.

The Agreement contained the following provisions which are pertinent to the

issues presented herein:

1. Term. Employer hereby agrees to employ Employee and
Employee hereby accepts employment, on the terms and conditions
hereinafter set forth. The term of Employee’s employment under this
Agreement shall commence on the date hereof (“Effective Time”) and
shall continue until the earliest of (a) the date Employer terminates it
for just cause upon fifteen (15) days written notice, (b) the death of
Employee, or (c) two (2) years (the “Term of Employment”). The term
of Employee’s employment is renewable for two one-year periods
thereafter upon the mutual agreement of the parties.

....

3.3 Covenant Not to Compete. Employee hereby
agrees that:

3.3.1. Business of Company. The
business of the Company is to distribute
fastener related products, pipes, valves,

fittings, and other supplies to companies in
the oil and gas and industrial fabrication
industries (the “Business”).

3.3.2. During the Term of Employment
and for one (1) year following the termination
or resignation of Employee’s employment
under this Agreement (the “Non-Compete
Period”), he will not . . . work on the
acquisition or development of any line of
business, property or project in which the
Employer is then involved or has worked with
or evaluated in the last year.

3.3.3. During the Term of Employment
and during the Non-Compete Period, he will
not solicit or induce any person who is or was
employed by the Employer at any time during
such term or period (A) to interfere with the
activities or Business of the Employer in the
Territory or (B) to discontinue his or her
employment with the Employer, or employ
any such person in a business or enterprise
which competes with the Business of the
Employer in the Territory.

....

9.2 Any termination of Employee’s employment and
any expiration of the Term of Employment under this
Agreement shall not affect the continuing operation and
effect of Section 3 hereof or this Section 9, which shall
continue in full force and effect with respect to [E]mployer
and Employee and their respective heirs, executors,
personal representatives, successors or permitted assigns.
Nothing in Section 9 hereof shall be deemed to operate or
shall operate as a release, settlement of discharge of any
liability of Employee to Employer or others from any act or
omission by Employee enumerated in Section 8 hereof as
a possible basis for termination of Employee’s employment
for good cause.

(Emphasis added.)

On July 23, 2003, A&B filed a Petition for Temporary Restraining Order,

Preliminary and Permanent Injunction and Damages, which was granted by the trial

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court. The temporary restraining order (TRO) was dissolved after a hearing on a

motion to dissolve the TRO filed by Dawes and Whitco. A&B filed a writ application

with this court, seeking to reverse the action of the trial court. The application was

denied in an unpublished opinion. See A&B Bolt & Supply, Inc. v. Dawes, 03-1073

(La.App. 3 Cir. 8/15/03). A&B’s writ application to the supreme court was also

denied. See A&B Bolt & Supply, Inc. v. Dawes, 03-2411 (La. 9/5/03), 852 So.2d

1034. Dawes and Whitco then filed a Motion for Judgment on the Pleadings or,

alternatively, to Clarify and/or Correct Judgment. After a hearing, the trial court

granted the motion and dismissed the action with prejudice.

A&B appeals and assigns three errors:

1) the trial court failed to properly interpret the contract
pursuant to the applicable articles of the Civil Code;

2) the trial court erred in refusing to enforce the Agreement;

3) the trial court erred in granting a Motion for Judgment on
the Pleadings.

Standard of Review

A motion for judgment on the pleadings presents solely a question of law.

Lemelle v. City of Opelousas, 540 So.2d 1232 (La.App. 3 Cir. 1989); Dragon v. Am.

Bank & Trust Co., 205 So.2d 473 (La.App. 3 Cir. 1967). Appellate review of a

question of law is simply to determine whether the trial court was legally correct.

Weeks v. T.L. James & Co., Inc., 626 So.2d 420 (La.App. 3 Cir. 1993), writs denied,

93-2909, 93-2936 (La. 1/28/94), 630 So.2d 794.

Discussion

Motion for Judgment on the Pleadings

Article 965 of the Louisiana Code of Civil Procedure provides:

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Any party may move for judgment on the pleadings after the
answer is filed, or if an incidental demand has been instituted after the
answer thereto has been filed, but within such time as not to delay the
trial. For the purposes of this motion, all allegations of fact in the
mover’s pleadings not denied by the adverse party or by effect of law,
and all allegations of fact in the adverse party’s pleadings shall be
considered true.

“A motion for judgment on the pleadings should be granted only when facts are

so clear and unquestioned that a trial on the merits is unwarranted.” Noel v. Pelican

Well Logging Serv., Inc., 93-1277, p. 4 (La.App. 3 Cir. 5/4/94), 640 So.2d 529, 531.

The trial and the appellate courts are limited to a review of the pleadings. For

purposes of this motion, all facts contained in the pleadings filed by the party against

whom the motion for judgment on the pleadings is filed must be assumed to be true,

and all allegations made by mover are denied. Id.

The trial court’s grant of judgment on the pleadings was premised on A&B’s

allegations that Dawes and Whitco were in violation of the Covenant Not to Compete

provision of the Agreement and the following phrase contained within that provision:

“During the Term of Employment and for one (1) year following the termination or

resignation of Employee’s employment under this Agreement.” (Emphasis added).

The trial court interpreted this phrase to provide that only termination or resignation

“under [the] Agreement” triggered the Covenant Not to Compete and that Dawes was

not terminated nor did he resign “under [the] Agreement” because the Agreement

expired by its own terms two months before he resigned. Therefore, the trial court

reasoned that the Covenant Not to Compete was never effected.

The trial court did not consider the effect of other provisions of the Agreement

on paragraph 3.3.2. Paragraph 9.2 provides in part: “Any termination of Employee’s

employment and any expiration of the Term of Employment under this Agreement

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shall not affect the continuing operation and effect of Section 3 . . . which shall

continue in full force and effect.” This language indicates that the parties intended

the Covenant Not to Compete to be effective regardless of whether Dawes’

employment was terminated under the terms of the Agreement or whether the

Agreement simply expired under its own terms. This is the opposite of what the trial

court determined. Accordingly, the facts of this matter are not “clear,” and the

judgment on the pleadings was improperly granted.

Disposition

The judgment of the trial court is reversed, and the case is remanded to the trial

court for further proceedings. The costs of this appeal are assessed to David S.

Dawes and Whitco Supply, L.L.C.

REVERSED AND REMANDED.

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