MFA OIL COMPANY, Plaintiff-Respondent v. KEVIN MARTIN and MARTIN PROPANE, LLC ( 2020 )

MFA OIL COMPANY, )
)
Plaintiff-Respondent, )
)
v. ) No. SD36063
)
KEVIN MARTIN ) Filed: January 27, 2020
and MARTIN PROPANE, LLC, )
)
Defendants-Appellants. )
APPEAL FROM THE CIRCUIT COURT OF DOUGLAS COUNTY
Honorable Elizabeth A. Bock, Associate Circuit Judge
AFFIRMED
Kevin Martin (“Defendant Martin”) appeals from the trial court’s judgment
enforcing a covenant not to compete. Defendant Martin raises three points – (1) the trial
court “erroneously declared and applied” the law because the covenant as enforced “is
overbroad;” (2) the trial court “erroneously declared and applied” the law in enforcing
Defendant Martin’s covenant not to compete because MFA’s offer and Defendant
Martin’s acceptance of a subsequent job as operations manager superseded Defendant
Martin’s 1999 Manager Agreement; and (3) the trial court “erroneously declared and
applied” the law in enforcing Defendant Martin’s covenant not to compete in that
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Defendant Martin’s covenant not to compete “is a prohibited restraint of trade” under
section 431.202, RSMo 2016. We reject each of these points, and affirm the trial court’s
judgment.
General Standard of Review
“We are required to affirm the judgment of the trial court in this
non-jury case, ‘unless there is no substantial evidence to support it, it is
against the weight of the evidence, or unless it erroneously declares or
applies the law.’” Williams v. Frymire, 186 S.W.3d 912, 916 (Mo. App.
2006) (quoting Harness v. Wallace, 167 S.W.3d 288, 289 (Mo. App.
2005)). . . . This court presumes the trial court’s judgment is valid, and it
is the appellant’s burden to show otherwise. Williams, 186 S.W.3d at 916.
Warren v. Dunlap, 532 S.W.3d 725, 727 (Mo.App. S.D. 2017). “Where a misapplication
of law is asserted, our review is de novo.” Smith v. Great American Assurance Co., 436
S.W.3d 700, 704 n.3 (Mo.App. S.D. 2014) (internal quotation marks and citation
omitted).
In a court-tried case, “[a]ll fact issues upon which no specific findings are made
shall be considered as having been found in accordance with the result reached.” 1 Rule
73.01(c), Missouri Court Rules (2019). “Our standard of review requires us to view the
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Defendant Martin does not complain that the trial court failed to make a finding of fact that Defendant
Martin specifically requested the trial court to make, and has not referred us to any place in the record
where Defendant Martin requested “findings on the controverted material fact issues specified by
[Defendant Martin]” under Rule 73.01(c). Several days before trial, Defendant Martin did file a one
sentence, general request for “an opinion including findings, on controverted material facts, in this case,”
and, a few days after trial, did provide proposed findings of fact and conclusions of law to the trial court by
email. However, a general request for findings of fact and the submission of proposed findings to aid the
trial court are insufficient to require the trial court to make specific findings under Rule 73.01(c). See
Rocking H Trucking, LLC v. H.B.I.C., LLC, 427 S.W.3d 891, 894 n.1 (Mo.App. W.D. 2014) (“We are
cognizant of the principle that ‘even if a request for findings of fact under Rule 73.01 is made, a trial court
need not make findings of fact unless the movant clearly and unequivocally specifies the controverted fact
issues.’ Berlin v. Pickett, 100 S.W.3d 163, 167 (Mo.App.W.D.2003).”); Sneil, LLC v. Tybe Learning
Center, Inc., 370 S.W.3d 562, 567 (Mo. banc 2012) (“In a court-tried case, ‘it is the parties’ duty to
specifically request findings of fact and conclusions of law, identifying the issues they wish the court to
decide.’[] Hammons v. Ehney, 924 S.W.2d 843, 849 (Mo. banc 1996). ‘Merely submitting proposed
findings to aid the court does not trigger the court's duty to make findings of fact and law.’ Id.” (footnote
omitted)).
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evidence in the light most favorable to the judgment and ignore all contrary evidence and
inferences.” Ward v. Dennis Oil Co., 560 S.W.3d 38, 39 (Mo.App. S.D. 2018).
Facts and Procedural Background
Defendant Martin and MFA entered into an agreement on May 10, 1999, as set
forth in part below.
1. EMPLOYMENT
MFA OIL hereby employs MANAGER [previously identified as
Defendant Martin] as a manager at its bulk plant and/or propane plant in
Seymour, Missouri, and MANAGER hereby accepts said employment
subject to all the terms, conditions, and limitations hereinafter set forth.
2. RESPONSIBILITIES
MANAGER is to serve as a bulk plant and/or propane plant
manager at the plant referred to in Paragraph 1 above and in the
surrounding territory as designated by MFA OIL. MANAGER agrees to
actively solicit orders and make sales of the products of MFA OIL. . . .
MANAGER agrees to devote his full time to the performance of his duties
as bulk plant and/or propane plant manager as outlined in the
MANAGER’s job description a copy which is attached hereto as Exhibit
A.[ 2]
....
4. RULES and REGULATIONS
MANAGER agrees to abide by all rules, regulations, and policies
of MFA OIL which are now in effect or may hereafter be adopted.
5. COMPENSATION
As the sole and only compensation to MANAGER for the
performance of his duties hereunder, MANAGER shall be paid a wage,
salary, or commission as the parties hereto have mutually agreed . . . .
6. TERM
This AGREEMENT shall be for no specified period of time and
may be terminated at any time by either party with or without cause and
2
The attached job description is less than two pages.
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with or without notice. Such termination shall not affect any obligation or
liability of either of the parties hereto accruing prior to the effective date
of such termination.
7. NON-COMPETE
For a period of three (3) years after MANAGER leaves the employ
of MFA OIL, MANAGER agrees not to work for another company
engaged in the sale of petroleum products within a thirty five (35) mile
radius of the MFA OIL AB7 Seymour plant. For a period of three (3)
years after MANAGER leaves the employ of MFA OIL, MANAGER
agrees not to individually engage in the sale or delivery of petroleum
products within a thirty five (35) mile radius of the MFA OIL AB7
Seymour plant. MANGER acknowledges that this non-compete
agreement is essential to his employment by MFA OIL and if he breaches
this non-compete agreement MFA OIL may seek injunctive relief to
enforce the provisions of this paragraph along with any other remedy
available in law or equity.
8. COMPLETE AGREEMENT
This AGREEMENT constitutes the complete agreement between
the parties hereto, and may not be amended, changed or altered, except in
writing, signed by the parties hereto.
Defendant Martin’s first job with MFA was when he was “hired as a plant
manager at Seymour[.]” About a year later, MFA moved Defendant Martin to Hartville
as a plant manager for Laclede Electric, MFA Propane. After MFA “bought out” Laclede
Electric, Defendant Martin continued as plant manager at Hartville for a short time before
he became plant manager at Mansfield when MFA “merged” the Hartville and Seymour
plants into a new plant at Mansfield.
In 2015, MFA “restructure[ed]” its employment organization and Defendant
Martin became a “service tech” in Mansfield. As a service tech, Defendant Martin’s
interaction with customers was limited to talking with customers when he went to set a
tank or pick up a tank. His salary as a plant manager was converted to an equivalent
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hourly wage, but Defendant Martin lost his eligibility for a potentially substantial
manager bonus.
A few months later in April 2016, Defendant Martin applied for and was selected
to be an operations manager in Mansfield. Eventually, MFA moved Defendant Martin to
Rogersville. In this position, Defendant Martin dealt with three plant managers. As an
operations manager, Defendant Martin again was eligible for manager bonuses and his
job description was more as a service manager.
On Friday, December 22, 2017, Defendant Martin sent an email to Andy Hays
and Kenny Steeves with MFA. The email stated in part, “Please accept this as my formal
notice of my resignation from MFA Oil. My last day will be Friday, January 5, 2018.”
In March 2018, Defendant Martin organized Martin Propane LLC (“Defendant
Martin Propane”), and is its sole member and employee. Defendant Martin Propane’s
business is “[r]etail propane sales,” and Defendant Martin Propane is a competitor of
MFA. Defendant Martin Propane has a large propane storage tank, plant, propane
delivery truck, and tank trailer. The storage tank and plant are located at 3335 Highway
5, Mansfield, Missouri. The storage tank and plant, “most, if not all, of” Defendant
Martin Propane’s customers, and Defendant Martin’s home where the propane delivery
truck “sometimes” is kept, are within thirty-five miles of MFA’s AB7 Seymour plant,
and Defendant Martin individually is engaging in the sale or delivery of propane within
thirty-five miles of MFA’s AB7 Seymour plant.
When Defendant Martin resigned his employment with MFA, he “didn’t know
whether there was [a covenant not to compete] there or not, I didn’t remember signing
one.” Defendant Martin “was probably 100 percent sure [he] was going to [start a
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competing business with MFA] . . . toward the end of February, first of March” 2018, but
began investigating steps toward that goal as early as August and October 2017 while he
was still employed with MFA.
Defendant Martin’s employment with MFA began on May 10, 1999, and
“cease[d]” on January 5, 2018. During the entire period from May 10, 1999 through
January 5, 2018, Defendant Martin was employed solely by MFA as a plant manager, as
a service technician, and as an operations manager.
After resigning and leaving MFA on January 5, 2018, Defendant Martin did not
do anything for “two months,” and then started a propane business – “Martin Propane.”
Defendant Martin “formed [his] LLC . . . around the end of March or first of April” 2018.
Defendant Martin then “spent the summer building a plant, buying a truck and trying to
get insurance lined up and suppliers, carriers,” and now has “approximately 30
customers, none of which are currently buying from MFA. They all own their own tank.”
MFA sued and asked that the trial court “not allow Mr. Martin to sell propane within 35
miles of our Seymour plant” individually or while working for another company. 3
Trial Court’s Findings of Fact and Conclusions of Law
The trial court entered a judgment against Defendant Martin on Count I of MFA’s
petition enforcing the covenant not to compete in Defendant Martin’s May 1999 Manager
Agreement according to its terms, but limiting the phrase “petroleum products” to bulk
propane not sold for recreational use. The judgment provided Defendant Martin is
“permanently enjoined” for three years from January 5, 2018, from individually or while
“working for another company” selling bulk propane for other than recreational use
3
Defendant Martin acknowledged that he is in violation of the terms of the covenant not to compete
contained in his May 1999 Manager Agreement if that covenant is still valid.
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within 35 miles of MFA’s Seymour propane plant. The trial court entered judgment in
favor of Defendant Martin Propane LLC on Count II of MFA’s petition because MFA
“failed to prove any damage.”
Analysis
Defendant Martin raises three points – (1) the trial court, even with its limitation
of the phrase “petroleum products” to bulk propane not sold for recreational use,
“erroneously declared and applied” the law in enforcing Defendant Martin’s covenant not
to compete in that the covenant as enforced “is overbroad;” (2) the trial court
“erroneously declared and applied” the law in enforcing Defendant Martin’s covenant not
to compete because MFA’s offer and Defendant Martin’s acceptance of an operations
manager position superseded Defendant Martin’s 1999 Manager Agreement including
Defendant Martin’s covenant not to compete that is included in that agreement; and (3)
the trial court “erroneously declared and applied” the law in enforcing Defendant
Martin’s covenant not to compete in that Defendant Martin’s covenant not to compete “is
a prohibited restraint of trade” under section 431.202, RSMo 2016. Section 431.202, by
its terms, applies to written covenants “promising not to solicit, recruit, hire or otherwise
interfere with the employment of one or more employees.” Section 431.202.1.
The trial court resolved these issues by finding Defendant Martin’s changes in
position with MFA were not a “breach” of Defendant Martin’s 1999 Manager
Agreement, and, if the changes were a “breach,” Defendant Martin “waived” the breach
by continuing his employment with MFA without objection to the changes. The trial
court then concluded that the phrase “petroleum products” in Defendant Martin’s
covenant not to compete should be limited to bulk propane not sold for recreational use,
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and, with that limitation, Defendant Martin’s covenant not to compete was reasonable
and should be enforced.
Points I and II
A look at the four corners of the contract indicates that Defendant Martin agreed
to a covenant not to compete for three years after he “left the employ” of MFA.
Defendant Martin did not leave the employ of MFA Oil until January 5, 2018. Defendant
Martin does not raise as an issue any of his early transfers, nor does he raise the issue that
his employment as a service technician was a termination of his employment. The facts
are that Defendant Martin was continuously within the employ of MFA and was a
manager at the time of his resignation. The trial court did not err in finding that MFA did
not breach the contract prior to Defendant Martin’s resignation. 4
As for the reasonableness of Defendant Martin’s covenant not to compete that
prohibited him from selling, directly or indirectly, bulk propane not sold for recreational
use within the circular, 35-mile radius, geographic area where he had been the manager
of a bulk plant and multiple propane plants for MFA, “precedent in Missouri supports the
reasonableness of a two-year non-compete agreement for an operations manager that is
limited to 50 miles from where services were rendered by the employee.” Whelan
Security Co. v. Kennebrew, 379 S.W.3d 835, 846-47 (Mo. banc 2012); see also Osage
Glass, Inc. v. Donovan, 693 S.W.2d 71, 74 n. 2 (Mo. banc 1985) (enforcing a non-
compete agreement prohibiting an operations manager from working for a competitor in
Missouri for a period of three years) and Alltype Fire Protection Co. v. Mayfield, 88
S.W.3d 120, 123–24 (Mo.App. 2002) (enforcing a two-year non-compete agreement
4
We do not address the hypothesized situation whether the covenant would apply if Defendant Martin had
been demoted to a service technician and remained in that position until his resignation or if there had been
a lapse in employment.
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spanning a 100–mile radius against a customer service representative). We cannot say as
a matter of law that Defendant Martin’s covenant not to compete for a period of three
years in a 35-mile radius, as modified by the trial court, was not reasonable.
Point III
Defendant Martin argues that section 431.202 prohibits the covenant at issue
because the covenant is a restraint on trade. Section 431.202 is not applicable to
Defendant Martin’s covenant not to compete because the statute by its terms is limited to
written covenants “promising not to solicit, recruit, hire or otherwise interfere with the
employment of one or more employees,” and Defendant Martin’s covenant does not
promise not to do any of these things. Defendant Martin bases his argument on
subdivisions (3) and (4); however, section 431.202.3 specifically states “[n]othing in[]
subdivision (3) or (4) of subsection 1 of this section is intended to create, or to affect the
validity or enforceability of, employer-employee covenants not to compete.” Defendant
Martin does not refer us to any authority that supports the application of section 431.202
to a traditional covenant not to compete as in this case.
Defendant Martin’s three points are denied; the trial court’s judgment is affirmed.
Nancy Steffen Rahmeyer, J. – Opinion Author
Gary W. Lynch, P.J., – Concurs
William W. Francis, Jr., J., – Concurs
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