James F. Dill, Jr. v. Continental Car Club, Inc. ( 2013 )

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
August 8, 2013 Session
JAMES F. DILL, JR. ET AL. v. CONTINENTAL CAR CLUB, INC. ET AL.
Appeal from the Chancery Court for Rhea County
No. 11-CV-10652 Jeffrey F. Stewart, Chancellor
No. E2013-00170-COA-R3-CV-FILED-OCTOBER 31, 2013
Two executive employees of Continental Car Club, Inc., resigned in order to start a business
in competition with their former employer. The issues on appeal are (1) whether the
employees resigned for “Good Reason” as that term is defined in their employment
agreements; (2) whether the employees violated their employment agreements by copying
all the data on their work computers to personal computers shortly before resigning; (3)
whether the non-competition and non-solicitation provisions of their agreements are
enforceable; (4) whether the trial court correctly found the employees liable for conversion;
and (5) whether the employees violated the Tennessee or Florida Uniform Trade Secrets Act.
We hold that the employees did not establish that they resigned for “Good Reason.” We
further hold that they violated their employment agreements, and, accordingly, we reverse
the trial court’s judgment awarding them severance pay and benefits. We affirm the trial
court’s judgment on the conversion claim but modify the judgment to award the former
employer the value of tickets to a football game that one of the employees converted by
sending the tickets to business clients, then renting a bus and taking the clients to the game
several months after the employee’s resignation. We hold that the trial court correctly
determined that the covenants not to compete were valid and enforceable and that the
agreements are reasonable in time and geographic limits but overbroad in scope. Therefore,
we reverse the trial court’s judgment in part and modify it in part. With respect to the portion
of the trial court’s judgment not reversed, we affirm, as modified.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Reversed in Part and Modified in Part; With Respect to the Portion
of the Trial Court’s Judgment Not Reversed, the Judgment, as Modified,
is Affirmed; Case Remanded
C HARLES D. S USANO, J R., P.J., delivered the opinion of the Court, in which D. M ICHAEL
S WINEY and J OHN W. M CC LARTY, JJ., joined.
Edward H. Trent and Catherine E. Shuck, Knoxville, Tennessee, for the appellants,
Continental Car Club, Inc. and Fortegra Financial Corporation.
R. Wayne Peters and Gary L. Henry, Chattanooga, Tennessee, for the appellees, James F.
Dill, Jr. and James C. Thurman, Jr.
OPINION
I.
In 2009, the plaintiffs, James F. Dill, Jr. (“Dill”), and James C. Thurman, Jr., were
employed by Continental Car Club, Inc., a corporation based in Dayton, Tennessee, and
owned by James F. Dill, Sr. Continental is a motor club similar to AAA that provides
roadside assistance to individuals who sign up for membership. In October 2009, Dale
Bullard, the chief marketing officer of defendant Fortegra Financial Corporation, approached
James F. Dill, Sr. about the possibility of Fortegra purchasing Continental. They negotiated
the terms of the sale over the next several months, and the deal closed on May 15, 2010. At
that time, Dill had been essentially in charge of running the company with limited assistance
from his parents. Thurman had been employed by Continental since 1997 and was also
working in an executive capacity. The price of the Continental purchase was $11.9 million.
All of the parties agreed that an integral part of the sale was the agreement of Dill and
Thurman to stay with Continental and continue to run the company as employees of Fortegra.
The men negotiated employment agreements with Fortegra that were essentially identical,
with the exceptions that Dill was named as Continental’s Senior Vice President and Thurman
was named its Vice President, and Dill’s base annual salary was $192,000 and Thurman’s
was $150,000. The employment agreements provide1 as follows in pertinent part:
Section 1. Employment and Position. Subject to Section 2, the
Company hereby employs the Executive as Senior Vice
President of Continental Car Club, Inc., and the Executive
hereby accepts such employment under and subject to the terms
and conditions hereinafter set forth.
* * *
Section 3. Duties. The Executive shall perform services in a
managerial capacity in a manner consistent with the Executive’s
1
As noted, Thurman’s contract designated him as “Vice President.”
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position as Vice President of Continental Car Club, Inc., subject
to the general supervision of Joe McCaw, President of the
Payment Protection Division of the Company.
* * *
Section 6.06. By the Executive for Good Reason. The
Executive may terminate this Agreement effective upon written
notice to the Company for Good Reason. Such notice must
provide a detailed description of the Good Reason. . . . For this
purpose, the term “Good Reason” shall mean: (i) the assignment
to the Executive of any duties inconsistent in any substantial
respect with the Executive’s position, authority or
responsibilities as contemplated by Section 1 of this Agreement
or any duties which are illegal or unethical; or (ii) any material
failure to pay the compensation or benefits described in Sections
4 or 5 of this Agreement. Notwithstanding the foregoing, in the
event the Executive provides notice of Good Reason contained
in subclause (i) of the immediately preceding sentence, the
Company shall have the opportunity to cure such Good Reason
within 30 days of receiving such notice.
* * *
In the event that this Agreement is terminated . . . by the
Executive for Good Reason, the Executive shall be entitled to
receive, as his exclusive right and remedy in respect of such
termination, (i) his Accrued Benefits, (ii) as long as the
Executive does not violate the provisions of Section 8 and
Section 9 hereof, severance pay equal to the Executive’s then
current monthly Base Salary . . . for twenty-four (24) months
from the date of termination of employment[.]
(Italics and underlining in original.)
The agreements also contain a covenant not to compete by which Dill and Thurman
agreed that they “will not (anywhere in the United States where the Company or any of its
subsidiaries then conducts business) engage or participate in, . . . or assist in the management
of, or provide advisory or other services to . . . any business which is Competitive with the
Company” for 2 years after termination of employment. The agreements provided that they
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would “be construed under and enforced in accordance with the internal laws of the State of
Florida.”
Dill and Thurman testified that they were generally not happy working for Continental
after the company was acquired by Fortegra. They felt that they were not getting sufficiently-
detailed financial information to effectively run the company, and to monitor whether they
were on track to meet their earnings goals, referred to as “EBIDTA,” an acronym for
“earnings before interest, depreciation, taxes, and amortization.” The EBIDTA goals were
important to Dill and Thurman because their employment agreements provided for a yearly
bonus of up to 30% of their base pay if both Fortegra and Continental met their earnings
targets. Approximately four months after Fortegra acquired Continental, it purchased United
Motor Club, formerly Continental’s biggest business rival and, according to all the testimony,
a bitter enemy. Dill and Thurman were dissatisfied with the corporate structure after the
acquisition of United – they believed that they had been promised by Fortegra executives,
before the Continental purchase, that if Fortegra bought other car clubs, they would be placed
under Dill and Thurman’s management at Continental. After Fortegra bought United and,
later, a third car club called Auto Knight, the three car club companies were each generally
run as separate and equal branches of Fortegra’s motor club division, and were directed not
to compete with one another for already-existing customers. Thirteen months after Dill and
Thurman began working for Fortegra, Joe McCaw was replaced as their supervisor by John
Short, who was formerly Fortegra’s general counsel. Dill and Thurman were unhappy with
the change in their supervision.
On July 27, 2011, Dill and Thurman each sent an identical letter of resignation to
Fortegra management, which stated in pertinent part as follows:
Please be advised that I am compelled to terminate my
employment with Good Reason. Below is an enumeration of
several of the reasons.
1. The inability of Fortegra to produce and deliver accurate and
timely financial statements constitutes a breach in [sic] contract
in that I have not been given the tools to properly manage
Continental Car Club (CCC). Thus I was potentially rendered
unable to reach prescribed goals for performance and bonus.
Basic financials have been requested since July of 2010. When
they have been sporadically provided, they have been inaccurate
and misleading. As those inaccuracies were pointed out, no
explanation of any adjustments or corrections was provided.
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2. No review regarding 2010 CCC performance has been done.
3. No goals for 2011 have been discussed or set for expected
performance or bonus potential.
4. With the dictate of the CEO that no employees may be hired
without his approval, my position and authority as an executive
charged with the management of CCC has been diminished
without proper notification.
Both Dill and Thurman testified that they intended to start a competing car club immediately
after resigning. A day or so before resigning, they hired a company called VOLState, Inc.
to copy all of the data on their work computers owned by Fortegra to recently-purchased
personal laptops. John Short testified that upon receiving the resignation letters, he
immediately called Dill and Thurman to try to alleviate their concerns and address their
complaints, in an attempt to dissuade them from leaving Fortegra. After a meeting where it
became clear that Dill and Thurman could not be persuaded to stay, Fortegra sent letters on
August 3, 2011, reminding them of the contractual provisions restricting competition or
solicitation of Fortegra’s customers for 24 months. The letters stated that “none of the items
enumerated in your resignation letter constitute Good Reason as defined in the Employment
Agreement.”
On August 18, 2011, Dill and Thurman filed a complaint against Continental and
Fortegra, alleging fraudulent inducement, misrepresentation, breach of contract, and breach
of the implied duty of good faith and fair dealing. They requested injunctive relief and asked
the trial court to declare that they were entitled to full severance pay under their employment
contracts, and that the non-compete provisions were void and unenforceable. Fortegra
answered and filed a counterclaim alleging breach of the employment agreements,
conversion, and violation of the Tennessee and/or Florida Uniform Trade Secrets Act.
Following a hearing, the trial court denied the plaintiffs’ request for temporary injunctive
relief and ruled that Florida law was applicable under the agreements. After a bench trial,
the trial court entered an order incorporating its final judgment that contained the following
findings of fact and conclusions of law:
Under Florida law, any breaches of the Executive Employment
and Non-Competition Agreements . . . by Defendants are not
sufficient to excuse Plaintiffs’ continued performance under the
Agreements. Therefore, Plaintiffs must comply with their
Agreements – including the non-competition and non-
solicitation provisions in Section 9 of their Agreements – for a
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period of twenty-four months from Plaintiffs’ termination of
employment on July 27, 2011.
. . . [T]he Court finds that Plaintiffs terminated their
employment with Defendants for “Good Reason” under the
Agreements and have not violated Sections 8 or 9 of the
Agreements. Because Plaintiffs terminated their employment
for “Good Reason,” Plaintiffs are entitled to compensation and
any other damages outlined in Section 7.02 of the Agreements.
* * *
Regarding Defendants’ counterclaim, the Court finds in favor of
Defendants and against Plaintiffs on Defendants’ claim of
[c]onversion. Plaintiffs are ordered to return any information
belonging to Defendants that Plaintiffs removed from
Defendants’ computers. The Court expressly finds that
Plaintiffs took that information for the purposes of litigation
only and Defendants did not suffer any damages as a result of
Plaintiffs taking any such information. Therefore, no further
damages are awarded to Defendants on their counterclaim.
Fortegra timely filed a notice of appeal.
II.
On appeal, Fortegra raises the following issues, as quoted from its appellate brief:
1. Did the trial court err in determining that Dill and Thurman
resigned their employment with Fortegra Financial Corporation
for “Good Reason” as that term is defined in Section 6.06 of
their Executive Employment and Non-Competition Agreements?
2. Did the trial court err in determining that Dill and Thurman
did not violate Articles 8 and 9 of the Executive Employment
and Non-Competition Agreements when they surreptitiously
copied all documents and data on their work computers
immediately prior to their resignations for the purpose of
starting a competing car club and retained the Company
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information even after Fortegra requested that all material
belonging to the Company be returned?
3. Did the trial court err in determining that Dill and Thurman
did not violate the Florida and/or Tennessee Uniform Trade
Secrets Act?
Additionally, Dill and Thurman raise the following issues:
4. Did the trial court err in enforcing the non-competition and
non-solicitation provisions of the employment agreements?
5. Did the trial court err in finding in favor of the defendants on
their conversion claim?
III.
In this non-jury case, our review is de novo upon the record, with a presumption of
correctness as to the trial court’s factual determinations, unless the evidence preponderates
otherwise. Tenn. R. App. P. 13(d); Murfreesboro Med. Clinic, P.A. v. Udom, 166 S.W.3d
674, 678 (Tenn. 2005). The trial court’s conclusions of law, however, are accorded no such
presumption. Udom, 166 S.W.3d at 678; Campbell v. Florida Steel Corp., 919 S.W.2d 26,
35 (Tenn. 1996). Our de novo review is subject to the well-established principle that the trial
court is in the best position to assess the credibility of the witnesses; accordingly, such
determinations are entitled to great weight on appeal. Columbus Med. Servs., LLC v.
Thomas, 308 S.W.3d 368, 383 (Tenn. Ct. App. 2009); Vantage Tech., LLC v. Cross, 17
S.W.3d 637, 644 (Tenn. Ct. App. 1999).
The first two issues – whether Dill and Thurman resigned for “Good Reason” as
defined in the agreements, and whether they violated Sections 8 or 9 of the agreements –
require the interpretation of their employment contracts. Under Florida law,
[t]he trial court’s interpretation of a contract is a question of law
subject to de novo review. Whitley v. Royal Trails Prop.
Owners’ Ass’n, Inc., 910 So. 2d 381, 383 (Fla. 5th DCA 2005).
The parties’ intent, which must be gleaned from the four corners
of the document, governs contract interpretation and
construction. Crawford v. Barker, 64 So. 3d 1246, 1255 (Fla.
2011); Whitley, 910 So. 2d at 383. A clear, complete and
unambiguous contract does not require judicial construction.
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Jenkins v. Eckerd Corp., 913 So. 2d 43, 50 (Fla. 1st DCA
2005). In interpreting a contract, “[c]ourts are not to isolate a
single term or group of words and read that part in isolation; the
goal is to arrive at a reasonable interpretation of the text of the
entire agreement to accomplish its stated meaning and purpose.”
Delissio v. Delissio, 821 So. 2d 350, 353 (Fla. 1st DCA 2002);
see also Am. Home Assurance Co. v. Larkin Gen. Hosp., Ltd.,
593 So. 2d 195, 197 (Fla. 1992) (stating determination of intent
requires consideration of contract’s language, subject matter,
and object and purpose).
Horizons A Far, LLC v. Plaza N 15, LLC, 114 So. 3d 992, 994 (Fla. Dist. Ct. App. 2012).
Furthermore, “[t]he contract should be reviewed as a whole and all language given effect,
and where the language is clear and unambiguous, the contract should be enforced as it
reads.” PNC Bank, N.A. v. Progressive Emp’r Servs. II, 55 So. 3d 655, 658 (Fla. Dist. Ct.
App. 2011) (quoting Leisure Resorts, Inc. v. City of West Palm Beach, 864 So. 2d 1163,
1166 (Fla. Dist. Ct. App. 2003)).
IV.
A.
The first issue we address is whether the trial court correctly concluded that Dill and
Thurman established that they resigned for “Good Reason” – as that term is specifically
defined in the employment agreements as follows:
For this purpose, the term “Good Reason” shall mean: (i) the
assignment to the Executive of any duties inconsistent in any
substantial respect with the Executive’s position, authority or
responsibilities as contemplated by Section 1 of this
Agreement[.]2
Resolution of this issue will determine whether Dill and Thurman are entitled to a significant
benefit – severance pay in the amount of their regular base salaries for two years, plus
additional substantial benefits such as continuing health, dental and life insurance coverage,
2
The agreements further define “Good Reason” as “the assignment to the Executive of any duties
. . .which are illegal or unethical; or (ii) any material failure to pay the compensation or benefits described
in Sections 4 or 5 of this Agreement.” Neither Dill nor Thurman has alleged that Fortegra asked them to do
anything illegal or unethical, or that it failed to pay them as required by the contract.
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as agreed to by the parties in Section 7.02 of the agreements. We conclude that Dill and
Thurman did not establish that they resigned for “Good Reason” for the following reasons:
(1) several of the complaints made by Dill and Thurman about their work environment, and
later relied upon as reasons for quitting, were not enumerated or raised in their resignation
letters, as required by the agreements; (2) none of Dill and Thurman’s complaints, including
those that they failed to raise with Fortegra, establish that Fortegra assigned to either Dill or
Thurman “any duties inconsistent in any substantial respect with [his] position, authority or
responsibilities”; and (3) the testimony, including that of Dill, establishes that Fortegra had
effectively cured perhaps the most serious complaint, the lack of sufficiently detailed
financial information, well before Dill and Thurman resigned.
The employment agreements evince the clear intent of the parties that Fortegra must
be given specific notice of the employees’ alleged “Good Reason” complaints supporting
their decision to resign, and an opportunity to cure them. In this regard, the agreements state:
The Executive may terminate this Agreement effective upon
written notice to the Company for Good Reason. Such notice
must provide a detailed description of the Good Reason. . . .
Notwithstanding the foregoing, in the event the Executive
provides notice of Good Reason . . ., the Company shall have
the opportunity to cure such Good Reason within 30 days of
receiving such notice.
(Emphasis added.) The resignation letters complain of the following: inability of Fortegra
to produce and deliver accurate and timely financial statements; no review of Continental’s
2010 performance; no earnings goals set for 2011; and Fortegra CEO Rick Kahlbaugh’s
decision to require approval for all new company hires. However, much of Dill and
Thurman’s proof and argument at trial and on appeal focus on a different set of complaints:
(1) Fortegra’s subsequent acquisition of Continental’s chief rival, United, and Dill and
Thurman’s allegation that Fortegra broke a promise that any other car clubs bought later by
Fortegra would be put under their leadership at Continental; (2) the shift of accounting
methods from a cash basis (used by Continental before the sale) to an accrual basis, which
was required by the Securities and Exchange Commission and comported with Generally
Accepted Accounting Principles; and (3) the replacement of Joe McCaw with John Short as
the immediate supervisor of Dill and Thurman. The trial court held as follows with regard
to these complaints:
Some of these are matters that are the realities of moving into a
large corporate structure and could have been anticipated. There
are no specific promises or guarantees in the contract itself
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regarding the future realignment or dealing with Mr. Short’s
[sic: McCaw’s] retirement or the fact that he might leave the
company for some other reason, and neither did the contract
specify no other car club would[] be bought or, if so, it would be
put under their direction. These are matters that could have
been put into the contract at the time of negotiation.
We agree with these observations. We also agree with the trial court’s ruling that Dill and
Thurman established no breach of the employment agreements by Fortegra. Moreover,
regarding the complaints that Dill and Thurman failed to raise with Fortegra before filing this
lawsuit, because the agreements required them to provide written notice with a detailed
description of their “Good Reasons,” they should not be heard to argue after the fact that
these complaints provided them with “Good Reason” to resign.
When John Short received the resignation letters, he immediately called Dill and
Thurman to set up a face-to-face meeting to address their complaints. Short testified that he
was surprised by the resignations. When Short met with Dill and Thurman, they discussed
the grievances enumerated in the letters point-by-point. Short testified that he looked at the
resignation letters and “said, well, we can address all these things immediately and just ticked
them off . . . It’s like we can address and fix, cure, if you will, all these things and give it to
them.” All of Fortegra’s executives testified to the effect that they wanted to work with Dill
and Thurman and keep them as employees. Dill testified as follows about the meeting with
Short:
Two days after Jim Thurman and I quit, we had been speaking
back and forth to John [Short] and he stated repeatedly that he
was sorry about the situation, that he wanted to try to keep
us. . . .[He said] I want to do what we can to keep you guys. We
spoke over and over.
Dill had complained in early 2011 about his dissatisfaction with the financial
information that he was receiving from the company. Short responded by directing Teresa
Peel, the vice president of financial operations for Fortegra’s motor club division, and Krista
Gayle, a CPA working for Fortegra, to provide Dill more detailed financial information. On
March 15, 2011, Short sent an email to Dill informing him that “Teresa Peel and Krista Gayle
will be providing financial analysis and reporting support for our group. I encourage them
to work directly with each of you and your teams, and you too should look at them as a
resource that you should call upon directly.” Peel testified that she began sending detailed
monthly financial reports as Dill had requested. She never received a request from Dill
asking for more information or questioning the accuracy of the reports. Dill testified that
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Peel sent him the detailed financial information he requested in February 2011, stating as
follows:
Q: And tab 54 should be all company reports for the months of
February, March, April, May, and June?
A: I – I see one for February. Okay. This appears to be March,
April, May.
Q: You got these every month, right?
A: Yes.
Q: And these reports, again, identified by customer and client
their sales for the month, sales for the year, cancellations by the
month and year, and all commissions paid by month and year?
A: Yes.
* * *
Q: Look under tab 57. It’s a quarterly report for all of the car
clubs, is it not?
A: It says consolidated car clubs, yes.
Q: All right. You received this from Teresa Peel?
A: I received it from somebody with regard to the planning
meeting that was going to take place in May.
Q: All right. In that document it contains a breakout of
Continental Car Club’s performance; correct?
A: Yes.
* * *
Q: . . .So you’ve got the breakout, then, for your totals that
include membership fees, which are your sales?
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A: Okay. . . .
Q: Okay. It identifies commissions, correct?
A: I’m not seeing a line item that just says commissions.
Q: Second and third line under activity name, one is auto club
service fee income, which are the commissions paid on the
sales.
A: Okay.
Q: And change in deferred commissions?
A: Yes.
Q: Right? And then you’ve got claims and cancellations?
A: Yes, under activity name. Yes.
Q: Correct?
A: Yes.
Q: The breakout of the fee income that you requested in [your]
February 18 th letter?
A: Yes.
* * *
Q: So as of May 20th , now you’re getting the information
requested in your February 18 th letter?
A: For the most part, yes.
The evidence, including the testimony cited above, preponderates in favor of a conclusion
that Fortegra was providing Dill and Thurman the detailed financial information needed to
run Continental, as Dill requested, months before their resignations on July 27, 2011.
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Regarding the resignation letters’ complaint that CEO Kahlbaugh had required
approval of all new hires, both Dill and Thurman testified that they never made a request to
hire anyone after that policy change took place, and that Kahlbaugh did not ever deny a
request to hire anyone. Thurman, when asked whether “that directive didn’t affect your job
one way or another,” stated, “no, it hadn’t as of that time.”
With regard to whether Fortegra assigned to Dill any duties inconsistent in any
substantial respect with his position, authority or responsibilities, Dill testified as follows:
Q: After the purchase of Continental by Fortegra, you continued
to oversee all operations at Continental?
A: For the most part.
* * *
Q: What were your responsibilities once you became employed
with Fortegra?
A: To oversee the general operation of Continental Car Club and
to continue my relationship with my customers.
Q: You continued to do that throughout your employment with
Continental?
A: Yes, I did.
Q: Your duties and responsibilities never changed, did they?
A: Somewhat, yes, they – they changed.
Q: How did they change?
A: Who I report to changed, how I report. There were different
accounting departments I guess – bookkeeping departments, that
changed. Every week there was somebody else that needed
some type of documentation. So, yes, it did change.
Q: The way you did your job changed because you had different
people to report to. But what you did didn’t change, did it?
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A: Well, that’s part of what I did.
Q: All right. You ran Continental Car Club and that remained
the same?
A: That aspect, yes.
Q: They didn’t bring anybody else in to take over your
responsibilities for the operations of Continental?
A: No.
Q: Didn’t reassign you to work with different customers than the
ones you were already working with?
A: No.
Q: And as soon as the business was sold, even though your dad
remained kind of in a consulting arrangement, you were the one
who was in charge of Continental?
A: Yes.
Thurman testified similarly, stating as follows:
Q: Your responsibilities at Fortegra following Fortegra’s
purchase of Continental, what were those?
A: Sales and more of a leadership role in the office working
with the ladies to fix problems with commissions, claims, or
cancellations, and deal with complaints.
Q: Those job duties and responsibilities remained the same
throughout your employment?
A: Yes.
Q: No change in title?
A: No.
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Q: No decrease in pay?
A: Nope. No.
* * *
Q: When Mr. Short became your immediate supervisor, your job
duties didn’t change, did they?
A: No, sir.
Based on the above, we reverse the trial court’s holding that Dill and Thurman established
that they resigned for “Good Reason” as defined and agreed upon in their employment
contracts.
B.
Additionally, we hold that the evidence preponderates in favor of finding that Dill and
Thurman are not entitled to severance pay under their employment agreements because they
violated the provisions of Section 8 of the agreements. The agreements provide that Dill and
Thurman would be entitled to severance pay if they resigned with Good Reason “as long as
the Executive does not violate the provisions of Section 8 and Section 9 hereof.” (Emphasis
added). Section 8 provides as follows:
Section 8.01. Proprietary Information. In the course of service
to the Company, the Executive will have access to confidential
specifications, know-how, strategic or technical data, marketing
research data, product research and development data,
manufacturing techniques, confidential consumer lists, [and]
sources of supply and trade secrets, all of which are confidential
and may be proprietary and are owned or used by the Company,
or any of its subsidiaries or affiliates. Such information shall
hereinafter be called “Proprietary Information” and shall
include any and all items enumerated in the preceding
sentence[.]
Section 8.02. Fiduciary Obligations. The Executive agrees that
Proprietary Information is of critical importance to the
Company. . . .The Executive agrees that he shall keep all
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Proprietary Information in a fiduciary capacity for the sole
benefit of the Company.
Section 8.03. Non-Use and Non-Disclosure. The Executive shall
not during the Term or at any time thereafter (a) disclose,
directly or indirectly, any Proprietary Information to any person
other than the Company or Executives thereof . . . or (b) use any
Proprietary Information, directly or indirectly, for his own
benefit or for the benefit of any other person or entity. At the
termination of his employment, the Executive shall deliver to the
Company all notes, letters, documents and records which may
contain Proprietary Information which are then in his possession
or control and shall destroy any and all copies and summaries
thereof.
* * *
Section 8.05. Return of Documents. All notes, letters,
documents, records, tapes and other media of every kind and
description relating to the business, present or otherwise, of the
Company or its affiliates and any copies . . . shall be the sole and
exclusive property of the Company. The Executive shall
safeguard all Documents and shall surrender to the Company at
the time his employment terminates, . . . all Documents then in
the Executive’s possession or control.
(Underlining in original.)
Both Dill and Thurman candidly admitted that they intended to go into business
together running a competing car club as soon as their resignations were effective. Dill
stated, “I planned on starting another car club, going back into business as a car club in the
same industry, in the same niche.” When Dill was asked what “Freedom Car Club” was, he
responded, “that’s a name I reserved on the internet for what I thought might be a good name
for another car club.” Thurman hired VOLState to register two internet domain names for
him and Dill – “freedomcarclub.com” and freedomroadclub.com.” When Thurman was
asked on what date he “obtain[ed] the website for Freedom Car Club,” he recalled it was on
July 25 or 26 of 2011, a few days before they resigned. However, David Snyder, who runs
VOLState, testified that he registered the domain name “freedomcarclub.com” on March 16,
2011. He didn’t remember exactly when Thurman asked him to do it, but stated that it had
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to have been before the middle of March – over three months before Dill and Thurman quit.
As already noted, shortly before sending their resignation letters, Dill and Thurman
copied all of the data from their Fortegra-owned work computers to recently purchased
personal laptops. They did not tell anyone at Fortegra they had done this. After it became
clear that Fortegra was not going to persuade them to change their minds and stay, Dill and
Thurman were asked to return all company property. They did not mention or return the
copied computer data. They testified that they copied the data for only two reasons – because
some of it was personal and in anticipation of possible litigation. Thurman further testified
as follows:
Q: You understand that you were obligated to return all
company documents and materials back to Fortegra; correct?
A: Yes.
Q: And yet you walked out the door with all the information
contained on your work computer?
A: That is correct, yes.
Q: Contained financial information belonging to the company?
A: I would assume, yes.
Q: Some of those financial documents had every single
customer and client of Continental Car Club?
A: I can’t say that I had a listing of every single customer of
Continental on my computer. I –
Q: Had one of the all company reports that identifies sales,
claims, and commissions that we looked at under tab 54 earlier
that contains the entire client list of clients and customers?
A: My computer’s – it’s been examined. If it was on there, it
was on there. I mean, I – I’m not saying it was not.
* * *
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Q: That information was transferred over to your Freedom Car
Club account; correct?
A: Yes.
In his testimony, Dill stated the following, including his unequivocal admission that he
violated Section 8 of his employment agreement:
Q: You copied your entire computer, not just your personal
information from the Continental Car Club laptop that you had
the day before you resigned?
A: Yes.
* * *
Q: Right. Contained – any e-mails that were on the computer got
copied?
A: Yes.
Q: All of your Outlook contents got copied?
A: Yes.
Q: Which had names and telephone numbers of customers and
clients?
A: Just e-mails, I assume.
Q: [I]t had any documents related to the operation of the
business?
A: It had some documents related that were e-mails, the e-mails
that were sent from Jacksonville, yes.
Q: Contained financial information about the company?
A: Yes.
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Q: Contained the reports off of David O’Neil’s system which
identifies customer and amount of sales broken down with
commissions that are paid on each of these customers that are
generated on a monthly basis?
A: Yes.
Q: Contained copies of the agreements that you use in order to
sell the car club?
A: I don’t recall.
Q: And at the time you walked out with that information, you
were prepared to start up a new car club; correct?
A: Yes.
* * *
Q: Section 8.05.
A: Return of documents.
Q: Return of documents. You understood, then, at the time you
signed the agreement that you had an obligation at the end of
your employment to return all documents belonging to the
company and related to its business?
A: Yes.
* * *
Q: And when you took the information off of your computer, you
violated that section; correct?
A: Yes.
Based on the foregoing, we reverse the trial court’s award of severance pay to Dill and
Thurman, because, in addition to failing to establish a “Good Reason” to resign as defined
in the employment agreements, they violated Section 8 of the agreements.
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V.
We now turn to the issue of the enforceability of the non-compete provision of the
employment agreements. As a preliminary matter, we must determine whether Florida law
or Tennessee law applies. Although the agreements contain a choice-of-law provision that
designates Florida law, Dill and Thurman argue that Florida law regarding the interpretation
and enforcement of non-compete covenants is contrary to public policy in Tennessee. We
agree with Dill and Thurman. We have observed that “ ‘Tennessee will honor a choice of
law clause if the state whose law is chosen bears a reasonable relation to the transaction and
absent a violation of the forum state’s public policy.’ ” Wright v. Rains, 106 S.W.3d 678,
681 (Tenn. Ct. App. 2003) (quoting Bright v. Spaghetti Warehouse, Inc., No. 03A01-9708-
CV-00377, 1998 WL 205757 at *5 (Tenn. Ct. App. E.S., filed Apr. 29, 1998)). Resolution
of the question of whether applying Florida law would violate Tennessee public policy
requires an examination of the law of each state.
In Murfreesboro Med. Clinic, P.A. v. Udom, 166 S.W.3d at 678, the Tennessee
Supreme Court’s most recent decision interpreting a non-compete agreement, our High Court
reiterated the following principles:
In general, covenants not to compete are disfavored in
Tennessee. See Hasty v. Rent-A-Driver, Inc., 671 S.W.2d 471,
472 (Tenn. 1984). These covenants are viewed as a restraint of
trade, and as such, are construed strictly in favor of the
employee. Id. However, if there is a legitimate business interest
to be protected and the time and territorial limitations are
reasonable then non-compete agreements are enforceable. Id.
at 473. Factors relevant to whether a covenant is reasonable
include: (1) the consideration supporting the covenant; (2) the
threatened danger to the employer in the absence of the
covenant; (3) the economic hardship imposed on the employee
by the covenant; and (4) whether the covenant is inimical to the
public interest. Id. at 472-73 (citing Allright Auto Parks, Inc.
v. Berry, 219 Tenn. 280, 409 S.W.2d 361, 363 (1966)). Also,
the time and territorial limits must be no greater than necessary
to protect the business interest of the employer. Allright Auto
Parks, 409 S.W.2d at 363.
(Emphasis added.) Numerous Tennessee appellate decisions have restated and applied the
rule that covenants not to compete “are construed strictly in favor of the employee.” See,
e.g., Hasty, 671 S.W.2d at 472; Vantage Tech., 17 S.W.3d at 644. Further, in Tennessee,
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“the economic hardship imposed on the employee by the covenant” not to compete must be
considered, and can be an important factor, in determining whether the covenant will be
deemed reasonable and enforced. Udom, 166 S.W.3d at 678; Columbus Med. Servs., 308
S.W.3d at 391 (examining hardship on former employee and stating, “[r]espectfully, in
evaluating the reasonableness and enforceability of the Therapist Defendants’ non-compete
covenants, the trial court’s analysis of the hardship to the employees should have ended with
its conclusion that the burden on the Therapist Defendants was ‘difficult’ or ‘intolerable.’ ”).
In Florida, unlike Tennessee, the interpretation of a covenant not to compete is
primarily governed by statute. Florida Statutes Annotated Section 542.335(1) provides the
following in pertinent part:
(g) In determining the enforceability of a restrictive covenant, a
court:
1. Shall not consider any individualized economic or other
hardship that might be caused to the person against whom
enforcement is sought.
* * *
(h) A court shall construe a restrictive covenant in favor of
providing reasonable protection to all legitimate business
interests established by the person seeking enforcement. A court
shall not employ any rule of contract construction that requires
the court to construe a restrictive covenant narrowly, against
the restraint, or against the drafter of the contract.
(Emphasis added). An examination of Florida’s statutory scheme reveals that, although there
are similarities, it differs from Tennessee law in two significant ways: (1) it requires
construction in favor of the former employer seeking to enforce the covenant not to compete,
as contrasted with the law in Tennessee requiring strict construction in favor of the former
employee; and (2) it bars the court from considering hardship that might be caused to the
employee by enforcement of the covenant not to compete. We conclude that Tennessee law
applies to the issue of the enforceability of the non-competition provisions of the
employment agreements. Courts in other jurisdictions considering this issue have reached
a similar conclusion. See Southwest Stainless, L.P. v Sappington, No. 07-CV-0334-CVE-
PJC, 2008 WL 918706 at *4, *6 (N.D.Okla., filed Apr. 1, 2008) (applying Oklahoma rather
than Florida law based on conclusion that “the application of Florida law contravenes
Oklahoma public policy” regarding interpretation of restrictive covenant not to compete);
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Hostetler v. Answerthink, Inc., 599 S.E.2d 271, 274-75 (Ga. Ct. App. 2003) (applying
Georgia law to restrictive covenant not to compete despite Florida choice-of-law provision).
In determining whether, under Tennessee law, a former employer has “a legitimate
business interest to be protected,” Udom, 166 S.W.3d at 678, this Court has provided the
following analytical framework:
Several principles guide the determination of whether an
employer has a business interest properly protectable by a
non-competition covenant. Because an employer may not
restrain ordinary competition, it must show the existence of
special facts over and above ordinary competition. [Hasty, 671
S.W.2d at 473.] These facts must be such that without the
covenant, the employee would gain an unfair advantage in
future competition with the employer. Id. Considerations in
determining whether an employee would have such an unfair
advantage include (1) whether the employer provided the
employee with specialized training; (2) whether the employee is
given access to trade or business secrets or other confidential
information; and (3) whether the employer’s customers tend to
associate the employer’s business with the employee due to the
employee’s repeated contacts with the customers on behalf of
the employer. Id. These considerations may operate
individually or in tandem to give rise to a properly protectable
business interest. See, e.g., AmeriGas Propane, Inc. v. Crook,
844 F. Supp. 379 (M.D. Tenn. 1993); Flying Colors of
Nashville, Inc. v. Keyt, C/A No. 01A01-9103-CH-00088, 1991
WL 153198 (Tenn. App. M.S., filed August 14, 1991).
An employer does not have a protectable interest in the general
knowledge and skill of an employee. Hasty, 671 S.W.2d at 473.
This is not only true of knowledge and skill brought into the
employment relationship, but also true as to that acquired during
the employment relationship, even if the employee obtained
such general knowledge and skill through expensive training.
See Hasty, 671 S.W.2d at 473 (“general knowledge and skill
appertain exclusively to the employee, even if acquired with
expensive training and thus does not constitute a protectible
[sic] interest of the employer”).
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In contrast, an employer may have a protectable interest in the
unique knowledge and skill that an employee receives through
special training by his employer, at least when such training is
present along with other factors tending to show a protectable
interest. Id.; Selox, Inc. v. Ford, 675 S.W.2d 474, 476 (Tenn.
1984) (“A line must be drawn between the general skills and
knowledge of the trade and information that is peculiar to the
employer’s business.”) (quoting R ESTATEMENT (S ECOND) OF
C ONTRACTS § 188 cmt. g (1981)). See also Flying Colors of
Nashville, 1991 WL 153198 at *5 (holding that training in
specialized techniques and processes of paint-mixing, together
with a special relationship with the employer’s customers, gives
rise to a properly protectable interest).
Thus, whether an employer has a protectable interest in its
investment in training an employee depends on whether the skill
acquired as a result of that training is sufficiently special as to
make a competing use of it by the employee unfair.
An employer has a legitimate business interest in keeping its
former employees from using the former employer’s trade or
business secrets or other confidential information in competition
against the former employer. Hasty, 671 S.W.2d at 473. A
trade secret is defined as any secret “formula, process, pattern,
device or compilation of information that is used in one’s
business and which gives him an opportunity to obtain an
advantage over competitors who do not use it.” Hickory
Specialties, Inc. v. B & L Labs., Inc., 592 S.W.2d 583, 586
(Tenn. App. 1979) (quoting Allis-Chalmers Mfg. Co. v.
Continental Aviation & Eng’g Corp., 255 F. Supp. 645, 653
(E.D. Mich. 1966)). The subject matter of a trade secret must be
secret and not well known or easily ascertainable. Hickory
Specialties, 592 S.W.2d at 587.
What constitutes “confidential information” is somewhat less
clear. In Heyer-Jordan & Assocs., Inc. v. Jordan, 801 S.W.2d
814 (Tenn. App. 1990), we held that the identities of the
employer’s customers did not amount to “confidential business
information” within the meaning of the employment agreement
because such information was generally available in the trade.
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We reasoned that “confidential information” is analogous to
“trade secret” and that, because customer identities are not
secret, they cannot be considered confidential. See also Amarr
Co. v. Depew, C/A No. 03A01-9511-CH-00412, 1996 WL
600330, *4-*5 (Tenn. App. W.S., filed October 16, 1996)
(holding that customer lists, customer credit information, pricing
information, and profit and loss statements did not constitute
confidential information because such information is easily
available from sources other than the employer).
An employer may also have a legitimate protectable interest in
the relationships between its employees and its customers. See
Hasty, 671 S.W.2d at 473. It is often the case that the customer
associates the employer’s business with the employee due to the
employee’s repeated contacts with the customer. The employee
in essence becomes “the face” of the employer. This
relationship is based on the employer’s goodwill. The
employee’s role in this relationship is merely that of the
employer’s agent. In this role, the employee is made privy to
certain information that is personal, if not technically
confidential. Because this relationship arises out of the
employer’s goodwill, the employer has a legitimate interest in
keeping the employee from using this relationship, or the
information that flows through it, for his own benefit. This is
especially true if this special relationship exists along with the
elements of confidential information and/or specialized training.
Vantage Tech., 17 S.W.3d at 644-46 (emphasis in original; paragraph headings omitted).
The employment agreements at issue here provide as follows:
Section 9.01. Acknowledgments. The Executive and Company
agree that he is being employed hereunder in a key capacity with
the Company and that the Company is engaged in a highly
competitive business and that the success of the Company’s
business in the marketplace depends upon its goodwill and
reputation for quality and dependability. . . .
Section 9.02. General Restrictions. During the Term and for the
Non-Competition Period . . . the Executive will not (anywhere
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in the United States where the Company or any of its
subsidiaries then conducts business) engage or participate in,
directly or indirectly, as principal, agent, employee, employer,
consultant, investor or partner, or assist in the management of,
or provide advisory or other services to . . . any business which
is Competitive with the Company. . . . [A] business shall be
considered “Competitive with the Company” only if it offers
products or provides marketing, distribution, administration or
related products and services for automobile club membership
plans to financial institutions or other entities or otherwise
engages in any other business the Company and/or its
subsidiaries are engaged in or have taken steps to be engaged in
prior to the Executive’s termination of employment.
* * *
For purposes of this Agreement, the “Non-Competition Period”
shall mean the longer of (i) the Term and (ii) a period of twenty-
four (24) consecutive months after the Executive’s employment
terminates and (iii) the period during which the Company is
paying any amounts to the Executive hereunder or otherwise
providing benefits to the Executive.
(Underlining and italics in original.) The agreements further provide for a similar 24-month
non-solicitation period requiring that Dill and Thurman, after termination of employment,
will not “call upon, solicit, divert or attempt to solicit or divert from the Company or any of
its affiliates or subsidiaries any of their customers, agents or suppliers, or potential
customers, agents or suppliers.”
Fortegra does not argue that it provided Dill and Thurman with specialized training
during the approximately fourteen months they worked there. Dill and Thurman were
already effectively running Continental before Fortegra bought it, and presumably already
had sufficient training and experience to do what Fortegra hired them to do – essentially
continue to run and expand Continental. Fortegra argues that the second and third Vantage
Tech factors apply to provide them a legitimate protectable business interest. Specifically,
Fortegra asserts that Dill and Thurman were given access to trade or business secrets or other
confidential information; and that Continental/Fortegra’s customers tend to specifically
associate their business with Dill and Thurman due to their repeated contacts and
relationships with the customers on Continental’s behalf. We agree. The evidence in the
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record fully supports Fortegra’s argument that it had a legitimate business interest that was
protectable by a covenant not to compete.
All the witnesses at trial testified that the non-compete agreements were essential to
the sale of Continental to Fortegra. Fortegra would not have bought the company without
them. Several witnesses testified that the reason for this is that what Fortegra was primarily
buying was the personal customer relationships and attendant goodwill built and established
primarily by Dill and Thurman. Dill testified that he and Thurman personally knew every
significant customer of Continental. Mike Vrban, Fortegra’s senior vice president of
financial operations, testified that of the $11.9 million purchase price, $11.829 million was
categorized as “goodwill,” and further stated:
Q: Can you explain why $11.829 million was listed as good
will?
A: Because there were no tangible assets to the company per se.
Q: So what does that represent?
A: So what that would represent is obviously the value of what
we would place upon the earning stream that would come
forward which is obviously the relationships of the clients,
making sure that we do not have people who can compete with
us and take the business away, that’s really what this reflects.
Vrban testified that under applicable accounting rules, $6.4 million of the purchase was
ultimately designated “intangible assets” related to goodwill, existing customer relationships
and the non-compete agreements. Vrban explained that they had to have the non-compete
agreements because without them, “they have the ability basically to sell us a business that
they can then just take away from us.” Dale Bullard stated that “this is very much a
relationship business” and further testified that
typically there’s someone who is so critical to the business that
you say I’m only going to buy this business if certain people
continue to be here and sign an employment agreement that
includes non-compete language . . .
Q: And why does that matter?
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A: Because if you didn’t have that, I mean, they could leave
tomorrow and virtually clean out everything you just bought. . . .
Essentially they hang a shingle, be in business, and in this
business take a very significant portion of what you just bought.
Dill testified that he understood the importance and significance of the non-competes to the
deal, stating:
Q: At the time Fortegra purchased you, you understood that the
reason that your signing employment agreements with him was
important is because you had been the one running the business?
A: Yes.
Q: And then if you left, you would be able to go out and take all
of the clients away from this business that Fortegra had just
purchased?
A: Yes. There was that potential.
* * *
Q: You knew that if you were to not go with Fortegra and you
set up your own car club, you could get a lot of these customers
to come over with you because you had that relationship?
A: Potentially.
Q: And the non-compete was to make sure that that didn’t
happen?
A: Yes.
Q: I believe from when we talked in October there wasn’t a
significant client of Continental Car Club that you didn’t know
personally?
A: Yes.
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Regarding business secrets or confidential information, John Short testified as
follows:
The commission structure for selling Continental Car Club or –
like I say, they’re almost all custom built. One customer we
have one commission rate. Another has a different rate. One
gets paid a commission that all goes to the central office. One
gets paid a commission, you know, a part goes to every
employee at the account that sold it. Some go to the branch
manager and some go to central company. So very complicated,
unique. . . .
Q: What effect would that information have or what competitive
advantage would a competitor gain if they came into possession
of that information?
A: Well, it would give them immediate ability to know what our
pricing is, try and attack it, underbid the pricing, and it would be
– that’s what everyone is trying to find out. . . .
Q: So this is information that Fortegra holds closely as
confidential?
A: Absolutely.
Q: And both Mr. Dill and Mr. Thurman had access to all of that
information?
A: I would say in large part they helped create it.
Dill and Thurman had access to customer lists of both Continental and United after
Fortegra’s purchase of United. We have observed that “ ‘it has long been settled that present
customers are a protectable interest of an employer.’ ” Money & Tax Help, Inc. v. Moody,
180 S.W.3d 561, 565 (Tenn. Ct. App. 2005) (quoting Thompson, Breeding, Dunn, Creswell
& Sparks v. Bowlin, 765 S.W.2d 743, 745 (Tenn. Ct. App. 1987)) (emphasis in original).
Based on the evidence, we have no hesitancy in affirming the trial court’s ruling that Fortegra
had a legitimate business interest that was protectable by a covenant not to compete.
We further hold that the terms of the non-compete agreements signed by Dill and
Thurman are reasonable as to time and geographic constraints. “The inquiry as to
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reasonableness under the circumstances is a fact-specific one, and there is no inflexible
formula for determining reasonableness; ‘each case must stand or fall on its own facts.’ ”
Moody, 180 S.W.3d at 565 (quoting Allright Auto Parks, 409 S.W.2d at 363)). Applying
the factors outlined in Udom, we note that Dill and Thurman do not argue that there was
insufficient consideration supporting the covenant, or that the covenant is inimical to the
public interest. The proof establishes that the threatened danger to Fortegra in the absence
of the covenant is significant. Roughly fourteen months before Dill and Thurman quit,
Fortegra paid almost twelve million dollars for Continental, a company with few tangible
assets but very valuable customer accounts and relationships. Fortegra stood to lose much
of that value very quickly if Dill and Thurman walked away with the customer relationships
they had built over two decades, with the intent to compete with Fortegra.
Regarding the economic hardship imposed on Dill and Thurman by the covenant,
while it is not insignificant, it is tempered by the fact that they have education, training, and
experience at an executive managerial level that will be transferrable to other employment.
Further, as reflected in their employment agreements, both Dill and Thurman have been
involved in other commercial business ventures that provide potential income.3 It is also
significant to this analysis that Dill and Thurman voluntarily resigned from their
employment, despite Fortegra’s best efforts to retain them. See Central Adjustment Bureau,
Inc. v. Ingram, 678 S.W.2d 28, 35 (Tenn. 1984) (“Another factor affecting reasonableness
is the circumstances under which an employee leaves.”).
We find that the non-compete agreements are overbroad in one respect, however. The
agreements provide that Dill and Thurman may not engage or participate in any business
“competitive with the company,” and further state that “a business shall be considered
‘Competitive with the Company’ only if it offers products or provides marketing,
distribution, administration or related products and services for automobile club membership
plans to financial institutions or other entities or otherwise engages in any other business the
Company and/or its subsidiaries are engaged in or have taken steps to be engaged in prior
to the Executive’s termination of employment.” (Emphasis added.) The record indicates that
Fortegra owns numerous subsidiaries that are generally engaged in a broad-ranging spectrum
of business endeavors. In its brief, Fortegra cites the above provision and states, “[i]n other
words, this section precludes Plaintiffs from establishing a competing car club.” This interest
– keeping Dill and Thurman from establishing a competing car club – is precisely the interest
that is protectable by the non-compete agreement. The italicized language, precluding them
3
For example, Dill’s employment agreement provided that he “may continue his ownership of
business interests in the following entities during the term of this Agreement and any severance period: River
City Financial, People’s Choice Finance, Laurel Financial Group, Inc., Home Town Financial Services, Inc.,
Herald Print Shop, Inc., Collateral Services Corporation, and Dad’s Auto Sales, Inc.”
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from involvement in “any other business the Company and/or its subsidiaries are engaged
in,” is overbroad, and we hold it should be elided from the agreements. As modified, the
agreements are valid and enforceable.
VI.
Dill and Thurman argue that the trial court erred in finding in favor of Fortegra on its
conversion counterclaim. The trial court ordered Dill and Thurman to return any information
belonging to Fortegra that they took by copying all the data from their work computers. The
court held that Fortegra did not prove any damages resulting from the conversion, so it did
not award Fortegra a judgment other than the injunctive relief. We find no error in the trial
court’s ruling against Dill and Thurman on the conversion claim, nor in its decision declining
to award any monetary damages for the conversion of the computer data. Similarly, we find
no error in the trial court’s disposition of Fortegra’s claim based on the Florida Uniform
Trade Secrets Act (“UTSA”), Florida Statutes Annotated Section 688.001 et seq. Florida’s
version of the UTSA provides for injunctive relief for a party who proves misappropriation
of a trade secret, stating that “[a]ctual or threatened misappropriation may be enjoined,” and
“[i]n appropriate circumstances, affirmative acts to protect a trade secret may be compelled
by court order.” Fla. Stat. Ann. § 688.003(1), (3). Although the Florida UTSA further
provides for monetary damages, which “can include both the actual loss caused by the
misappropriation and the unjust enrichment caused by misappropriation that is not taken into
account in computing actual loss,” id. § 688.004(1), as the trial court held, Fortegra did not
prove damages resulting from the taking of its data.
In its counterclaim, Fortegra included a claim for conversion of the value of 20 tickets
to a University of Tennessee – LSU football game in October of 2011. Fortegra paid for the
tickets. Dill testified that he received them in July and sent them to Continental clients.
After he resigned on July 27, 2011, Dill rented a bus in October and took the Continental
clients to the football game. Dill did not reimburse Fortegra for the value of the tickets. We
hold that Dill is liable to Fortegra for the value of the tickets. At the time he entertained the
Continental customers, he was not working for Continental and had not been for several
months. Although he testified that he did not actually solicit anyone’s business on the trip,
at the same time he was hoping and planning to start a competing car club company. On
remand, the trial court shall enter a judgment against Dill in the amount of the value of the
football tickets.
VII.
The judgment of the trial court holding the non-competition and non-solicitation
provisions valid and enforceable is affirmed as modified. The judgment of the trial court on
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the conversion counterclaim in favor of the defendants is affirmed as modified. The trial
court’s rulings that Dill and Thurman established that they resigned for “Good Reason” as
defined in the employment agreements, and that Dill and Thurman did not violate Section
8 of their agreements, are reversed. Consequently, the awards to Dill and Thurman of
severance pay and benefits are reversed. Costs on appeal are assessed to the appellees, James
F. Dill, Jr., and James C. Thurman, Jr. The case is remanded to the trial court, pursuant to
applicable law, for entry of a judgment in accordance with this opinion and for the collection
of costs assessed below.
__________________________________________
CHARLES D. SUSANO, JR., PRESIDING JUDGE
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