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Tradestaff & Co. V. Nogiec, 77 Va. Cir. 77 (Chesapeake 2008)

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Tradestaff & Co. V. Nogiec, 77 Va. Cir. 77 (Chesapeake 2008) Positive As of: June 10, 2014 7:25 PM EDT TradeStaff & Co. v. Nogiec Circuit Court of the City of Chesapeake, Virginia September 4, 2008, Decided Case No. CL08-1512 Reporter: 77 Va. Cir. 77; 2008 Va. Cir. LEXIS 226 TradeStaff & Co., d/b/a 1800SKILLED.com v. outside the statute of frauds and need not be in Seth Nogiec, Chipton Ross, Inc., and C. A. writing. The court also found that the Jones, Inc. non-compete agreement was overly broad and would not be enforced by the court. The court Core Terms reasoned that although the employer had a legitimate business interest in keeping its demurrer, non-compete, restrictive covenant, customer lists and relationships intact, the conspiracy, geographic, covenants, statute of non-compete agreement was unlimited in both frauds, allegations, termination, conspire, its geographic and functional scope. Next, the contractual relationship, former employee, court found that the employer did not allege that common law conspiracy, unenforceable, any of its customers had breached their contracts enforceable, tortious interference, overly broad, with the employer due to the actions of customers, serviced, parties, pleaded, cause of defendants, nor had they asserted a decrease in action, provides, legitimate business, former revenue. Finally, the court found that parties employer, particularity, competitive, indirectly, could not conspire to violate an unenforceable functions, alleged conspiracy contract because to do so would not be a criminal or unlawful purpose. Case Summary Outcome Procedural Posture The demurrer was sustained as to Count I with Plaintiff former employer filed suit against prejudice. The demurrer was sustained as to defendants, former employee and a competitor, Counts II, III, IV, and V; however counsel was alleging five causes of action including (I) granted leave to amend within thirty days. breach of contract, (II) tortious interference with a contractual relationship, (III) statutory LexisNexis® Headnotes conspiracy, (IV) common law conspiracy, and (V) breach of fiduciary duties. The matter was Civil Procedure > ... > Responses > Defenses, before the court on defendants’ joint demurrer. Demurrers & Objections > Demurrers Overview HN1 A demurrer tests the legal sufficiency of Defendants argued on demurrer that Counts I facts alleged in pleadings, not the strength of through IV should be dismissed because (1) the proof. Further, a demurrer admits the truth of the written agreement attached to the amended facts contained in the pleading to which it is complaint did not apply because it had expired, addressed, as well as any facts that may be (2) the oral agreement was barred by the statute reasonably and fairly implied and inferred from of frauds, and (3) the restrictive covenant was those allegations. A demurrer does not, however, overly broad and unenforceable. The court found admit the correctness of the pleader’s that the alleged at-will employment contract was conclusions of law. A trial court is not permitted 77 Va. Cir. 77, *77; 2008 Va. Cir. LEXIS 226, **226 on demurrer to evaluate and decide the merits of employee’s ability to earn a livelihood, and is the allegations set forth in a Complaint, but only reasonable in light of sound public policy. A may determine whether the factual allegations of non-compete agreement requires consideration the Complaint are sufficient to state a cause of of the restriction in terms of function, action. geographic scope, and duration. Contracts Law > Procedural Matters > Statute of Labor & Employment Law > ... > Conditions & Frauds > General Overview Terms > Trade Secrets & Unfair Competition > Noncompetition & Nondisclosure Agreements HN2 The Virginia Statute of Frauds states that unless a promise, contract, agreement, HN5 While generally courts should gather representation, assurance, or ratification, or factual evidence to determine the reasonableness some memorandum or note thereof, is in writing of a restrictive covenant and to balance the and signed by the party to be charged or his interests of the employee and the employer, agent, no action shall be brought upon any some non-competition clauses are so overly agreement that is not to be performed within a broad on their face that a factual hearing is not year. Va. Code Ann. § 11-2(8) (1950). An necessary. agreement does not fall within the statute of frauds if that which one of the parties is to do is Labor & Employment Law > ... > Conditions & Terms > Trade Secrets & Unfair Competition > all to be performed within a year; in other words, Noncompetition & Nondisclosure Agreements the agreement must contemplate non-performance by both parties within the year. HN6 Virginia courts will typically enforce covenants of up to two years and have also Labor & Employment Law > Employment enforced agreements for a longer duration where Relationships > At Will Employment > Duration of Employment the scope and geographic limits were narrowly drawn. Therefore, all three factors must be HN3 In at-will employment, there is no considered together when determining if a requirement that the employer hire, or the non-compete clause is enforceable. employee work, for any length of time. Labor & Employment Law > ... > Conditions & Labor & Employment Law > ... > Conditions & Terms > Trade Secrets & Unfair Competition > Terms > Trade Secrets & Unfair Competition > Noncompetition & Nondisclosure Agreements Noncompetition & Nondisclosure Agreements HN7 Covenants not to compete which restrict HN4 Under Virginia law, reasonably drafted the former employee’s performance of functions covenants not to compete are enforceable and for his new employer are upheld by the Virginia construction of such covenants is a matter of law. Supreme Court only to the extent that the However, covenants in restraint of trade are not proscribed functions are the same functions as favored, will be strictly construed, and, in the were performed for the former employer. event of an ambiguity, will be construed in favor of the employee. When the non-compete clause Labor & Employment Law > ... > Conditions & Terms > Trade Secrets & Unfair Competition > is ambiguous and susceptible to two or more Noncompetition & Nondisclosure Agreements differing interpretations, at least one of which is functionally overbroad, the clause is HN8 The Supreme Court of Virginia has stated unenforceable. To enforce a restrictive covenant, that restrictive covenants must be reasonably the employer has the burden of proving that the limited in geographic scope. The Court has most restraint is no greater than necessary to protect often held that non-compete agreements are the employer’s legitimate business interest, is enforceable when limited to the area formally not unduly harsh or oppressive in curtailing an serviced by the former employee or within a set 77 Va. Cir. 77, *77; 2008 Va. Cir. LEXIS 226, **226 mile radius of the area formerly serviced by the In addition, if the relationship between the former employee. alleged conspirators is that of principal-agent or employer-employee, then the defendants are not Torts > Business Torts > Commercial Interference > General Overview separate entities. An entity cannot conspire with itself. HN9 To properly state a claim for tortious interference with a contractual relationship, Torts > ... > Concerted Action > Civil Conspiracy > plaintiff must allege: (1) the existence of a valid Elements contractual relationship; (2) knowledge of the HN11 A common law conspiracy consists of two relationship on the part of the interferer; (3) or more persons combined to accomplish, by intentional interference inducing or causing a some concerted action, some criminal or breach or termination of the relationship; and (4) unlawful purpose or some lawful purpose by a damage to the party whose relationship has been criminal or unlawful means. The foundation of a interrupted. Unlike a party to a contract for a civil action of conspiracy is the damage caused definite term, however, an individual’s interest by the acts committed in furtherance of the in a contract terminable at will is essentially only conspiracy. As with statutory conspiracy, an expectancy of future economic gain, and he common law conspiracy claims must be pleaded has no legal assurance that he will realize the with particularity and with more than mere expected gain. Thus, the cause of action for conclusory language. And, as with statutory interference with contractual rights provides no conspiracy claims, if the relationship between protection from the mere intentional interference the alleged conspirators is that of principal-agent with a contract terminable at will. or employer-employee, the defendants are not separate entities. Pursuant to the intra-corporate Civil Procedure > ... > Pleadings > Heightened Pleading Requirements > General Overview immunity doctrine, an entity cannot conspire Torts > ... > Concerted Action > Civil Conspiracy > with itself. Elements Headnotes/Syllabus HN10 Va. Code Ann. §§ 18.2-499 and 18.2-500 allow a plaintiff to recover if, any two or more Headnotes persons combine, associate, agree, mutually An at-will employment contract is not covered undertake, or concert together for the purpose of by the Statute of Frauds. (i) willfully and maliciously injuring another in his reputation, trade, business, or profession by A non-compete agreement that is unlimited in its any means whatever. To prove such a claim, the geographic and functional scope is overly broad plaintiff must provide evidence that the and will not be enforced. conspirators
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