BURSON et al.
MILTON HALL SURGICAL ASSOCIATES, LLC.
BARNES, P. J., SELF and MERCIER, JJ.
Hall Surgical Associates, LLC ("MHSA") sued James
Burson (a physician), N. Hadley Heindel (a physician), and
Esther Askew (a physician's assistant) (collectively, the
"Former Employees") for alleged misappropriation of
trade secrets (Count I); breach of the duty of loyalty and
good faith as to Burson and Heindel, and "under a theory
of unfaithful agent" as to Askew, for "steal[ing]
and misappropriat[ing] . . . trade secrets [and] confidential
and proprietary business information, " and violating
restrictive covenants in their employment contracts (Count
II); for alleged breach of their employment contracts (Count
III); and for attorney fees and litigation expenses (Count
IV). The Former Employees moved the trial court to dismiss
the suit pursuant to OCGA § 9-11-12 (b) (6), asserting,
among other things, that the restrictive covenants in the
Former Employees' contracts were unenforceable and they
could not be held liable for failing to comply with void
covenants, and thus neither Count II nor Count III was
viable. The trial court summarily denied the Former
Employees' motion to dismiss and certified its ruling for
immediate review. This Court granted the Former
Employees' application for interlocutory appeal.
Former Employees appeal the trial court's denial of their
motion to dismiss, contending that the court erred (1) by
failing to grant the motion to dismiss Count III as to Burson
and Heindel (the "Physicians") because the
restrictive covenants in their contracts, which seek to
expand the geographical restrictions to include offices to
which the Physicians are transferred, are unreasonable and
unenforceable; (2) by failing to grant the motion to dismiss
Count III as to the Physicians because the restrictive
covenants in their contracts prevent them from accepting
overtures from former patients and are an unreasonable
restraint of trade; (3) by failing to grant the motion to
dismiss Count III as to Askew, because the restrictive
covenant in her contract, which is applicable to any
territory to which she might be assigned, is too indefinite
to be enforced; and (4) by failing to grant the motion to
dismiss Count II, breach of fiduciary duty, as to all three
Former Employees because they cannot be held responsible for
failing to honor an unenforceable contract. For the reasons
that follow, we affirm in part and reverse in part.
We review a grant or denial of a motion to dismiss to
determine whether the allegations of the complaint, when
construed in the light most favorable to the plaintiff, and
with all doubts resolved in the plaintiff's favor,
disclose with certainty that the plaintiff would not be
entitled to relief under any state of provable facts. A trial
court's ruling on a motion to dismiss is subject to de
novo review on appeal.
Penny v. McBride, 282 Ga.App. 590 (639 S.E.2d 561)
(2006) (citation and punctuation omitted).
regard to employment contracts, Georgia law now generally
permits the "enforcement of contracts that restrict
competition during the term of a restrictive covenant, so
long as such restrictions are reasonable in time, geographic
area, and scope of prohibited activities, " subject to
certain limitations with regard to the types of employees
against whom such restrictions may be enforced. OCGA §
13-8-53 (a); see OCGA § 13-8-52 (a) (1).
Any restrictive covenant not in compliance with the
provisions of [OCGA Title 13, Chapter 8, Article 4] is void
and unenforceable; provided, however, that a court may modify
a covenant that is otherwise void and unenforceable so long
as the modification does not render the covenant more
restrictive with regard to the employee than as originally
drafted by the parties.
OCGA § 13-8-53 (d). The current statutory provisions
governing enforcement of restrictive covenants in employment
contracts, OCGA § 13-8-50 et seq., became effective May
11, 2011, and apply to "contracts entered into on and
after [May 11, 2011] and shall not apply in actions
determining the enforceability of restrictive covenants
entered into before such date." Ga. L. 2011, p. 399,
§§ 4-6; see Becham v. Synthes
USA, 482 Fed.Appx. 387, 388-389 (I) (A) (11th Cir.
to May 11, 2011, however, "Georgia law disfavored
restrictive covenants[, ] . . . [and] Georgia's
constitution also forbade the . . . General Assembly from
authorizing restrictive covenants." Becham,
supra at 388 (I) (A) (citations omitted); see (2009) Ga.
Const. of 1983, Art. III, Sec. VI, Par. V (c).
However, a restrictive covenant contained in an employment
contract [entered into prior to May 11, 2011] is considered
to be in partial restraint of trade and will be upheld if the
restraint imposed is not unreasonable, is founded on a
valuable consideration, and is reasonably necessary to
protect the interest of the party in whose favor it is
imposed, and does not unduly prejudice the interests of the
public. . . .Whether the restraint imposed by the employment
contract is reasonable is a question of law for determination
by the court, which considers the nature and extent of the
trade or business, the situation of the parties, and all
Coleman v. Retina Consultants, P.C., 286 Ga. 317,
319-320 (1) (687 S.E.2d 457) (2009) (citations and
punctuation omitted). Under the prior law, courts could not
modify void and unenforceable covenants. "Even if only a
portion of a non-compete clause in an employment contract
would be unenforceable, the entire covenant must fail because
this Court will not apply the blue-pencil theory of
severability to such restrictive covenants."
Id. at 320 (1) (citation omitted).
Count III and the Physicians' Contract
is undisputed that Burson's contract with MHSA was
entered into on May 1, 2010 and that Heindel's contract
with MHSA was entered into on November 19, 2010, and thus the
restrictive covenants contained in both contracts are subject
to the pre-2011 law, and unenforceable provisions therein
cannot be reformed. See Coleman, supra. The
Physicians contend that the trial court erred in denying the
motion to dismiss Count III (breach of contract) as to the
Physicians when the geographical restrictions in their
agreements are unreasonable and unenforceable. We disagree.
10 of Burson's contract contains restrictive covenants
related to his employment, and provides that "for a
period of two (2) years after termination of his employment .
. . [he] will not directly or indirectly engage in the
practice of the specialty of Otolaryngology or head and neck
surgery within a geographic area that is within a radius of
ten (1) miles of the Shakerag Building (the
"Territory")." Section 10 of Heindel's
contract provides that he "will not directly or
indirectly engage in the practice of the specialty of
Otolaryngology or head and neck surgery within a geographic
area that is within a radius of ten (10) miles of the office
at which [he] is assigned when he ...