H. B. Rentals, Lc v. Maurice Bledsoe, Jr.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

CA 09-478

H. B. RENTALS, LC, ET AL.

VERSUS

MAURICE BLEDSOE, JR.

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APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT
PARISH OF LAFAYETTE, NO. C-20086279
HONORABLE DURWOOD WAYNE CONQUE, DISTRICT JUDGE

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SHANNON J. GREMILLION
JUDGE

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Court composed of Oswald A. Decuir, Michael G. Sullivan, and Shannon J.
Gremillion, Judges.

AFFIRMED.

Robert B. Worley, Jr.
Jones, Walker, et al.
201 St. Charles Avenue, 47th Floor
New Orleans, LA 70170-5100
(504) 582-8000
Counsel for Plaintiffs/ Appellants:
Superior Energy Services, Inc.
H. B. Rentals, LC

Joel P. Babineaux
Babineaux, Poche, Anthony & Slavich, LLC
P. O. Box 52169
Lafayette, LA 70505-2169
(337) 984-2505
Counsel for Plaintiffs/Appellants:
Superior Energy Services, Inc.
H. B. Rentals, LC

Michael P. Maraist
Maraist Law Firm
600 Jefferson Street, Suite 403
Lafayette, LA 70501
(337) 266-2230
Counsel for Defendant/Appellee:
Maurice Bledsoe, Jr.

Michael Y. McCormick
McCormick, Hancock & Newton
1900 W. Loop South, Suite 700
Houston, TX 77027
(713) 297-0700
Counsel for Defendant/Appellee:
Maurice Bledsoe, Jr.

GREMILLION, Judge.

H.B. Rentals, L.C., and Superior Energy Services, Inc. (H.B.) appeal a partial

summary judgment rendered in favor of Maurice Bledsoe, Jr., dismissing their

demands against Bledsoe seeking injunctive relief and damages. For the reasons that

follow, we affirm.

FACTS

Bledsoe was the president of H.B. when it was acquired by Superior in 2000.

At the time, he signed an agreement not to compete with H.B. and not to solicit H.B.’s

customers for a period of two years following termination of his employment. The

agreement “restricted” the geographic territory within which Bledsoe was prohibited

from competing and soliciting in accordance with an appendix thereto, as well as

within the States of Texas, Mississippi, Alabama and Florida. The appendix lists all

64 Louisiana parishes. The agreement contained no severance, but did stipulate that

its terms were not binding if Bledsoe was terminated for reasons other than disability

or for cause. Bledsoe resigned from H.B. in August 2008, and went to work for

TanMar Rentals, LLC, a competitor of H.B.. H.B. then filed suit.

Bledsoe filed a motion for partial summary judgment in which he asserted that

the agreement was overly broad, and that the consequence of the contract’s

overbreadth was its nullity. Bledsoe based this argument on the supreme court’s

decision in SWAT 24 Shreveport Bossier, Inc. v. Bond, 00-1695 (La. 6/29/01), 808

So.2d 294, which held that the statute governing non-compete agreements, La.R.S.

23:921, merely prohibited an employee subject to such an agreement from operating

his own business and not being employed by another. He further argued that the

provisions of La.R.S. 23:921(H) were enacted after he signed the agreement, and are

not applicable to his case. Thus, he argued, the agreement did not prohibit his

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employment with TanMar.

The trial court granted Bledsoe’s motion for partial summary judgment as to

the allegations of H.B. that he violated the agreement by his employment with

TanMar, and seeking injunctive relief. H.B. then perfected this appeal.

ANALYSIS

Non-compete agreements (non-competes) are governed by La.R.S. 23:921.

Section (A)(1) (emphasis added) opens with a very strong statement of public policy

disdain for these contracts:

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.

Since its enactment in 1962 by Act 104, this statute has undergone several

amendments, most of which were aimed at addressing situations that were simply not

contemplated by the legislature in the original bill, such as relationships between

franchisors and franchisees and the creation of limited liability companies. Many

amendments, though, were aimed at strengthening the enforcement of these

agreements. The trend in the jurisprudence, as well, seems to have swung in the

direction of greater enforceability of non-competes.

Prior to 2003, paragraph (D) was not included in §921.1 Paragraph (D)

specifically provides that a person who becomes employed by a competitor may be

deemed to be carrying on or engaging in a similar business. Thus, in SWAT 24, a

2001 case, the production manager of a construction company was not barred from

employment by another construction company in which he held no equity interest.

The Louisiana Supreme Court interpreted paragraph (C) of the statute to only allow

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This was amended by Acts 2003, No. 428. The paragraph was originally designated as
(H), but was redesignated (D) upon approval by the governor under authority granted to the
Louisiana Law Institute.

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an employer to prohibit his former employee from establishing his own business in

competition with the former employer. The rationale was the use by the legislature

of the phrase “carrying on or engaging in a business similar to that of the employer,”

as the conduct that could be enjoined by such an agreement. Carrying on or engaging

in a business is not synonymous with accepting employment.

Thus, in the form the statute took when the non-compete was executed by

Bledsoe, such agreements could not restrain one from leaving the employ of another

and going to work as an employee of his competitor; rather, one was allowed to

restrain one’s employees only from setting up their own businesses in competition.

See Swat 24, 808 So.2d 294.

Before the trial court, H.B. acknowledged that the law governing the

interpretation of this non-compete was the version in existence in 2001. However,

it contends a genuine issue of material fact exists regarding whether Bledsoe is an

owner of TanMar. H.B. propounded discovery to Bledsoe seeking information on

this issue, but Bledsoe had not deigned to answer that discovery at the time his

motion for partial summary judgment was heard. However, we note that in support

of his motion, Bledsoe executed an affidavit attesting to a complete lack of ownership

interest in TanMar.

Appellate courts review grants of summary judgment de novo, applying the

same standards as would a trial court. Schroeder v. Bd. of Sup’rs. of La. State Univ.,

591 So.2d 342 (La.1991). Summary judgment is governed by La.Code Civ.P. arts.

966 and 967. Article 966, as amended by Act 483 of 1997, provides that while the

burden of proving entitlement to summary judgment rests with the mover, if the

mover will not bear the burden of proof at trial on the matter that is before the court

on the motion for summary judgment, the mover’s burden on the motion does not

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require him to negate all essential facts of the adverse party’s claim, action or defense,

but rather to point out to the court that there is an absence of factual support for one

or more elements essential to the adverse party’s claim, action or defense. Thereafter,

if the adverse party fails to produce factual support sufficient to establish that he will

be able to satisfy his evidentiary burden of proof at trial, there is no genuine issue of

material fact. Hardy v. Bowie, 98-2821 (La. 9/8/99), 744 So.2d 606.

H.B. argued before the trial court that it was entitled to discovery on the

ownership issue and summary judgment is thus premature. However, in opposition

to Bledsoe’s motion, it offered nothing in terms of even suggesting to the trial court

what areas “not addressed by the affidavit” it wished to question Bledsoe about. The

only specific questions it has identified are Bledsoe’s role in TanMar, negotiations

leading up to his employment and any employment agreements he has with TanMar.

The negotiations are not relevant, nor are any employment agreements except to the

extent they might place Bledsoe in an equity ownership capacity with TanMar, which

is addressed specifically in Bledsoe’s affidavit. Bledsoe’s role in TanMar, except to

the extent that he would be conferred with an ownership interest or directly soliciting

H.B.’s customers, which we will address infra., is similarly irrelevant.

The subject agreement distinguishes between competing against H.B. and

soliciting H.B.’s customers, both current and potential. Section 921 makes no such

distinction between non-competes and so-called “non-solicitations.” The provisions

applicable to one apply to the other, including the geographic designation

requirements. Both are contained in paragraph (C). While the agreement contains

a very broad geographic designation, the non-solicitation clause contains none.

Under the plain terms of §921, it is null and void. However, H.B. maintains that our

decision in Petroleum Helicopters, Inc. v. Untereker, 98-1816 (La.App. 3 Cir.

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3/31/99), 731 So.2d 965, writ denied, 99-1739 (La. 8/5/99), 747 So.2d 40, governs

and renders the non-compete valid. The issue in Petroleum Helicopters, as in the

present matter, is the geographic specificity of the non-compete. Paragraph (C) of §

921 allows the execution of a non-compete within “a specified parish or parishes,

municipality or municipalities, or parts thereof, so long as the employer carries on a

like business therein.” In Petroleum Helicopters, the non-compete simply prohibited

the defendant from competing “within the parishes which PHI carries on a like

business.” Id. at 968. Our reasoning in enforcing the non-compete was that although

the parishes were not specified, they were identifiable.

We find a very clear distinction between an employer attempting to comply

with the statute by narrowly tailoring an albeit somewhat flawed non-compete, and

one drafting an agreement that is overly broad such as the present agreement. Here,

H.B. not only fails specifying the parishes or municipalities in which Bledsoe is

prohibited from soliciting customers, it also attempts to prohibit him from soliciting

potential customers. We cannot discern whether this refers to customers of H.B. at

the time of the agreement, at the time Bledsoe left H.B.’s employ, or at any time

present or future. The inclusion of potential customers is particularly troubling, in

that it can be assumed that any entity in the field is a potential customer. Unlike the

situation in Petroleum Helicopters, this provision is simply so overly broad that any

attempt to reform it would not be in keeping with either the letter or spirit of the

statute.

Before this court, H.B. argues that summary judgment was premature and it is

entitled to additional discovery in order to determine whether Bledsoe had any

knowledge of the parishes in which H.B. did business. This would be relevant, it

argues, for purposes of determining the validity of the agreement under the Petroleum

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Helicopters case. This would be true, however, only if the agreement could validly

prohibit Bledsoe from becoming an employee of TanMar without acquiring an equity

interest in it. The total lack of any reference to geographic limits to the non-

solicitation agreement renders it null and void.

CONCLUSION

Agreements in restraint of trade are generally disfavored as evidenced by the

language of La.R.S. 23:921. Any such agreement that does not comply with the

statute’s dictates is declared by the legislature to be null and void. The law governing

the agreement between H.B. and Bledsoe is the law that existed when the agreement

was confected in 2000. At that time, §921 did not prohibit one from becoming an

employee of a competitor of one’s former employer.

Therefore, Bledsoe, who has no ownership interest in TanMar, is not in

violation of the agreement to not compete against H.B. The agreement not to solicit

current or potential customers of H.B. is overly broad to the point that the court is

unable to reform it. In the latter regard, it fails in two respects: it does not designate

the parishes or municipalities in which Bledsoe is prohibited from soliciting

customers, and it purports to prohibit him from soliciting potential customers.

The judgment rendered by the trial court is affirmed. All costs of appeal are

assessed against plaintiffs/appellants, H.B. Rentals, L.C., and Superior Energy

Services, Inc.

AFFIRMED.

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