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Vulcan Steel Structures, Inc. v. McCarty

Court of Appeals of Georgia

October 6, 2014

VULCAN STEEL STRUCTURES, INC. et al.
v.
McCARTY et al

Restrictive covenants. Cook Superior Court. Before Judge Perkins.

Michael S. Bennett, Sr., James T. Bennett, for appellants.

Coleman Talley, C. Hansell Watt IV, for appellees.

MCFADDEN, Judge. Phipps, C. J., Andrews, P. J., Barnes, P. J., Ellington, P. J., Doyle, P. J., Miller, Dillard, Boggs, Ray, Branch and McMillian, JJ., concur.

OPINION

Page 459

McFadden, Judge.

Vulcan Steel Structures, Inc. and affiliated companies (" Vulcan" ) appeal the order declaring the restrictive covenants in an agreement with former employee Gary John McCarty to be unenforceable. We hold that the nonsolicitation of customers covenant in the agreement is unenforceable because it prohibits McCarty from accepting business from unsolicited clients. And the 2008 agreement is not subject to blue-penciling, since it was entered into before the effective date of the act revising the law related to restrictive covenants in contracts. Holton v. Physician Oncology Svcs., 292 Ga. 864, 870 (3), n. 4 (742 S.E.2d 702) (2013). Accordingly, because the nonsolicitation of customers covenant is unenforceable, none of the covenants in the agreement are enforceable. We therefore affirm.

The facts relevant to the appeal are not in dispute. McCarty was employed by Vulcan from 1996 until May 9, 2013. On October 13, [329 Ga.App. 221] 2008, McCarty signed an agreement that contained confidentiality, noncompete, and nonsolicitation covenants. The nonsolicitation

Page 460

of customers covenant in the agreement provided:

I agree that while employed and for two (2) years following termination of my employment, I shall not, on my own behalf or on behalf of any person or entity solicit, contact, call upon, communicate with or attempt to communicate with any customer of my employer or any representative of any customer or prospect of my employer, with the intent of providing any product competitive with engineered steel building products marketed or manufactured by my employer during the period of two (2) years immediately preceding termination of my employment. Provided that the restriction set forth in this paragraph shall only apply to customers or prospects of my employer, and representatives of customers and prospects of my employer, with whom I had material contact during such two year period. " Material contact" exists between me and each customer or potential customer of my employer if interaction took place between us in an effort to further a business relationship with or for my employer.

When McCarty left Vulcan and was hired by Hornet Steel Buildings, Inc., his current employer, Vulcan filed this lawsuit against McCarty, Hornet, and two other Hornet employees. It alleged, among other things, that McCarty had breached the noncompete and nonsolicitation covenants in the agreement. The defendants sought a declaration that the agreement was unenforceable as well as the dismissal of all claims that depended on the enforceability of the agreement. The trial court granted that relief, and Vulcan filed this appeal.

" [T]he reasonableness of a restrictive covenant is a question of law, which is subject to de novo review. Moreover, [under the former law] restrictive covenants that are ancillary to employment contracts receive strict scrutiny and are not blue-penciled." Murphree v. Yancey Brothers Co., 311 Ga.App. ...


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