Republic Services, Inc. v. Martha E. Rodriguez and Custom Copying Solutions, LP D/B/A Cornerstone Reporting ( 2014 )

Reversed and Remanded and Memorandum Opinion filed June 26, 2014.
In The
Fourteenth Court of Appeals
NO. 14-12-01054-CV
REPUBLIC SERVICES, INC., Appellant
V.
MARTHA E. RODRIGUEZ AND CUSTOM COPYING SOLUTIONS, L.P.
D/B/A CORNERSTONE REPORTING, Appellees
On Appeal from the 164th District Court
Harris County, Texas
Trial Court Cause No. 2011-49315
MEMORANDUM OPINION
Appellant Republic Services, Inc. appeals the trial court’s order granting
appellees’ motion for partial summary judgment and dismissing Republic’s
remaining claims. In its first issue, Republic contends summary judgment for its
former employee, appellee Martha Rodriguez, was improper for various reasons,
including: (1) the covenant not to compete that it alleges she breached is not
unenforceable as a matter of law because it imposed reasonable restraints that were
ancillary to or otherwise part of an enforceable agreement; and (2) even if the trial
court determined the covenant imposed unreasonable restraints, it should have
reformed the covenant rather than invalidated it. Republic contends in its second
issue that summary judgment for Rodriguez’s new employer, appellee Custom
Copying Solutions, L.P. d/b/a Cornerstone Reporting (Cornerstone), was likewise
improper because it was based solely on the unenforceability of the covenant.
We hold appellees did not prove as a matter of law that the entire covenant
was unenforceable, and therefore appellees were not entitled to summary judgment
on Republic’s claims. We reverse the trial court’s judgment and remand for
further proceedings.
BACKGROUND
Republic Services, Inc. is a Texas corporation that provides court reporting
services, process services, and record retrieval services for law firms, insurance
companies, and corporate legal departments. Martha E. Rodriguez signed an
employment agreement with Republic in 2007 that listed her position as
“Manager/Marketing Director.” According to the agreement, the position’s duties
included making calls to existing and prospective customers, assisting in the
pricing of jobs, interfacing with production employees to assure timely completion
of jobs, and assisting other employees in providing the highest level of customer
service. The employment agreement also included non-competition, non-
solicitation, and non-disclosure clauses “in consideration for [Republic’s]
disclosure of confidential and trade secret information” to Rodriguez. Republic
agreed “to disclose to [Rodriguez] confidential and trade secret information
concerning its customers or client relationships, business plans, and business
information.” The non-competition clause includes the following language:
2
For a period of twelve (12) months after termination of her
employment under and pursuant to this Agreement, whether with or
without cause, the Employee will not, (i) make known to any person,
firm, or corporation the names and addresses of any of the customers
of the Company or any other information pertaining to such
customers, or (ii) approach, contact, cause to be contacted, or
communicate with any customer or account, for whom Company
performed services at any office where Employee performed any
duties during the two years immediately preceding Employee’s
termination of employment with Company.
***
For a period of twelve (12) months after termination of her
employment, under and pursuant to this Agreement, whether with or
without cause, the Employee will not, (i) solicit, divert, or accept
orders for record retrieval, court reporting, and other related services
for or on behalf of any individual or firm, from any customer for
whom Company performed services at any office where Employee
performed any duties for two years immediately preceding
Employee’s termination of employment with Company or (ii) own
any interest in, be an employee of, be an officer or director of, be a
consultant to, or be associated in any way with a competitor of the
Company within the county, or counties, where Employee worked
while employed hereunder. . . . [S]hould the work place of Employee
be changed or expanded, the county or counties set forth above, shall
be the county or counties where Employee was employed during the
last eighteen months immediately prior to termination of employment.
Rodriguez worked for Republic for nearly six years, during which she
assigned and scheduled outside court reporters and videographers to meet the
needs of Republic’s clients. Republic trained Rodriguez to use the “RB8” software
system for scheduling the services and sending invoices. The training consisted of
reading a binder of materials and attending webinars. Rodriguez would also invite
her personal contacts to lunch with her and her boss at Republic; these contacts
included friends who were responsible for setting depositions for the law firms
where they worked.
3
After Rodriguez quit her job at Republic, Cornerstone hired her. At
Cornerstone, Rodriguez calls and schedules court reporters, videographers, and
interpreters for Cornerstone’s customer base. Rodriguez claimed Cornerstone “had
everything up and running” by the time she began working there, but according to
Keith Morgan, a former employee of Cornerstone, Rodriguez was “responsible for
creating the infrastructure that enabled Cornerstone’s court reporting division to
begin operations,” including setting up Cornerstone’s “RB8” software system and
locating court reporters to perform services.
Republic field suit against both Rodriguez and Cornerstone. Republic
alleged that Rodriguez breached her employment agreement’s non-competition
clause by:
• “taking a position for Cornerstone, a competitor of Republic’s in Harris
County”
• “assisting Cornerstone in contacting Republic’s customers”; and
• “seeking to poach court reporting business therefrom.” 1
Republic alleged that Cornerstone tortiously interfered with the employment
agreement by hiring Rodriguez and contacting Republic’s customers in order to
divert court reporting business. Republic also alleged that both Cornerstone and
Rodriguez had tortiously interfered with its prospective business relationships, that
Cornerstone was vicariously liable for Rodriguez’s breach of contract, and that
Cornerstone and Rodriguez were engaged in a civil conspiracy.
1
We refer to the allegations of Plaintiff’s Second Amended Petition, filed July 26, 2012,
rather than Plaintiff’s Third Amended Petition, filed August 24, 2012, because the trial court’s
August 24 order granting summary judgment does not refer to the Third Amended Petition, grant
leave to file the Third Amend Petition within seven days of the summary judgment hearing, or
give other indication that the court considered the Third Amended Petition. Tex. R. Civ. P. 63;
Goswami v. Metro. Sav. & Loan Ass’n, 751 S.W.2d 487, 491 n. 1 (Tex. 1988); see also Espeche
v. Ritzell, 65 S.W.3d 226, 330 (Tex. App.—Houston [14th Dist.] 2001), rev’d on other grounds,
87 S.W.3d 536 (Tex. 2002).
4
Appellees Cornerstone and Rodriguez filed a traditional motion for partial
summary judgment on the enforceability of the covenant not to compete and on
Republic’s claims against Cornerstone. Appellees argued Republic’s claim for
tortious interference was dependent on proof that Cornerstone tortiously interfered
with Rodriguez’s employment agreement, which in turn required proof that the
non-compete clause was valid and enforceable. According to appellees, however,
the non-compete clause was unenforceable as a matter of law because it (1)
“contains an unreasonable industry-wide exclusion, which impose[s] greater
restraints than necessary to protect the business interests and goodwill of
[Republic],” and (2) is not ancillary to or part of an otherwise enforceable
agreement at the time the agreement was made. The motion asked the trial court to
dismiss Republic’s claims against Cornerstone for tortious interference with
contract and with prospective business relationships, and reform the non-compete
agreement as the court deemed reasonable and appropriate.
The trial court signed an order granting the motion for partial summary
judgment on August 24, 2012. The order held the covenant not to compete
unenforceable and dismissed with prejudice Republic’s breach of contract claim
against Rodriguez and its claims against Cornerstone for tortious interference with
contract and with prospective business relations. The order also states that all
other relief is denied, that it disposes of all remaining claims in the suit, and that it
is a final appealable order.2
2
The order therefore additionally disposes of Republic’s claims that Rodriguez tortiously
interfered with prospective business relations, that Cornerstone is vicariously liable for
Rodriguez’s breach of contract, and that Rodriguez and Cornerstone engaged in a civil
conspiracy against Republic. Republic has not raised an issue on appeal complaining that the
court dismissed these claims, as well as Republic’s breach of contract claim against Rodriguez,
even though appellees’ motion did not seek that relief. Instead, Republic attacks each of the
summary judgment grounds advanced by appellees and contends that the trial court’s summary
judgment for Rodriguez and Cornerstone should be reversed in its entirety. As explained below,
5
ANALYSIS
In two issues, Republic contends the trial court erred in dismissing its claims
because the covenant at issue was enforceable. We conclude that appellees did not
conclusively show the covenant was unenforceable in its entirety. Because
appellees’ summary judgment grounds were premised on the covenant’s
unenforceability, we reverse the summary judgment in their favor.
I. Standard and scope of review
We review a trial court’s grant of summary judgment de novo. Provident
Life and Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). Viewing
the evidence in the light most favorable to the non-movant, we indulge every
reasonable inference and resolve any reasonable doubts in the non-movant’s favor.
Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848
(Tex. 2009).
To prevail on a traditional motion for summary judgment, the movant must
show that there are no genuine issues of material fact and that it is entitled to
judgment as a matter of law. Tex. R. Civ. P. 166a(c); Ron v. AirTran Airways,
Inc., 397 S.W.3d 785, 788 (Tex. App.—Houston [14th Dist.] 2013, no pet.). A
defendant who conclusively negates an essential element of a plaintiff’s claim is
entitled to summary judgment on that claim. Randall’s Food Mkts., Inc. v.
Johnson, 891 S.W.2d 640, 644 (Tex. 1995). Evidence is considered conclusive if
reasonable people could not differ in in their conclusions. Dias v. Goodman Mfg.
Co., L.P., 214 S.W.3d 672, 676 (Tex. App.—Houston [14th Dist.] 2007, pet.
denied).
In reviewing a motion for summary judgment, “we will only consider the
we agree.
6
record and summary judgment proof available to the trial court on the date of
submission.” McAllister v. Samuels, 857 S.W.2d 768, 775 (Tex. App.—Houston
[14th Dist.] 1993, no writ). Therefore, we must first resolve Republic’s motion to
strike, which challenges the scope of the summary judgment record.
Republic moved to strike a supplemental clerk’s record requested by
appellees, or alternatively asked this Court not to consider the material in the
record. The basis of Republic’s motion is that the supplemental clerk’s record is
not relevant because it is comprised entirely of material that was either not before
the trial court on summary judgment or not relied upon in support of the summary
judgment. Although appellees urge that it is improper to reject a supplemental
record as irrelevant under Texas Rule of Appellate Procedure 34.5(c), appellees
provide no authority to support the notion that this Court may consider materials
not before the trial court when reviewing its summary judgment order. Cf.
Roventini v. Ocular Sciences, Inc., 111 S.W.3d 719, 726 (Tex. App.—Houston [1st
Dist.] 2004, no pet.) (observing that under Tex. R. App. P. 34.5(c), including items
in a supplemental clerk’s record does not “compel[] the appellate court to consider
those items in reaching its decision” or render them “relevant for our decision on
the merits of a case”). When reviewing a summary judgment order, we do not
consider the summary judgment record as it could have been; we consider it as it
was at the time the trial court made the summary judgment ruling. See Maritime
Overseas Corp. v. Ellis, 971 S.W.2d 402, 411 (Tex. 1998). We turn, therefore, to
the supplemental clerk’s record to determine whether its contents were before the
trial court at the time of the ruling.
First, the supplemental record contains excerpts from the depositions of
Martha E. Rodriguez and Chad Daniel. Counsel for appellees filed these excerpts
with the trial court on March 18, 2013, as attachments to a letter to the clerk
7
requesting supplementation of the clerk’s record on appeal. As outlined above, the
trial court signed its order on partial summary judgment on August 24, 2012.
Because the deposition excerpts were not before the trial court at the time of its
summary judgment ruling, we will not consider them.
Second, the remainder of the supplemental record consists of documents
relating to a motion, response, and order to compel production of certain
confidential information that Republic provided Rodriguez. Although these
materials were on file at the time of the summary judgment proceedings, appellees
offer nothing to suggest that either party included these materials as summary
judgment evidence or gave notice of intent to rely upon them as summary
judgment evidence. We therefore conclude that these materials were likewise not
part of the summary judgment record at the time of the summary judgment ruling,
and we will not consider these materials. Republic’s alternative motion asking this
Court not to consider the material in the supplemental clerk’s record is granted.
II. Appellees have not shown as a matter of law that the covenant not to
compete was unenforceable.
Appellees sought summary judgment “on the non-competition covenant at
the heart of Plaintiff’s claims,” alleging the covenant is unenforceable because it is
an industry-wide prohibition that is not ancillary to or part of an otherwise
enforceable agreement. Whether a covenant not to compete is enforceable,
including the reasonableness of the covenant, is a question of law. Light v. Centel
Cellular Co. of Tex., 883 S.W.2d 642, 643 (Tex. 1994). A covenant not to
compete is enforceable if it is (1) “ancillary to or part of an otherwise enforceable
agreement at the time the agreement is made,” and (2) “contains limitations as to
time, geographical area, and scope of activity to be restrained that are reasonable
and do not impose a greater restraint than is necessary to protect the goodwill or
8
other business interest of the promisee.” Tex. Bus. & Com. Code Ann. 15.50(a)
(West 2011).
Republic’s first issue attacks the trial court’s summary judgment holding the
covenant unenforceable, which was proper if appellees proved conclusively that
one of these requirements was not met here. We consider each requirement in
turn.
A. Appellees failed to show conclusively that the non-competition
clause was not ancillary to or part of an otherwise enforceable
agreement.
Under the first requirement, we must determine (1) whether an otherwise
enforceable agreement between the parties exists, and if so, (2) whether the
covenant is ancillary to or part of that agreement. Marsh USA, Inc. v. Cook, 354
S.W.3d 764, 773 (Tex. 2011); Mann Frankfort, 289 S.W.3d at 849. An “otherwise
enforceable agreement” is one supported by sufficient consideration, not illusory
promises. See Light, 883 S.W.2d at 645–46. A covenant that is “ancillary to or
part of” the otherwise enforceable agreement is one that “give[s] rise to the
employer’s interest in restraining the employee from competing” and is “designed
to enforce the employee’s consideration or return promise in the otherwise
enforceable agreement.” Mann Frankfort, 289 S.W.3d at 849.
Section 15.50 “does not ground the enforceability of a covenant not to
compete” on “overly technical disputes . . . over whether a covenant is ancillary to
an otherwise enforceable agreement,” however. Alex Sheshunoff Mgmt. Services,
L.P. v. Johnson, 209 S.W.3d 644, 655 (Tex. 2006). Rather, “[c]onsideration for a
noncompete that is reasonably related to an interest worthy of protection, such as
trade secrets, confidential information or goodwill, satisfies the statutory nexus
. . . .” Marsh USA, 354 S.W.3d at 775. Technical disputes “such as the amount of
9
information an employee has received, its importance, its true degree of
confidentiality, and the time period over which it is received” are concerns that are
“better addressed in determining whether and to what extent a restraint on
competition is justified.” Alex Sheshunoff Mgmt. Servs., 209 S.W.3d at 655–56.
Appellees contend no “otherwise enforceable agreement” existed between
the parties because Republic failed to provide adequate consideration to make the
non-compete enforceable. Cornerstone bases this assertion on Republic’s promise
in the employment agreement “to disclose to [Rodriguez] confidential and trade
secret information concerning its customers or client relationships, business plans,
and business information,” which appellees contend Republic never performed.
According to appellees, any confidential information to which Rodriguez had
access while working for Republic did not exist until after she signed the non-
compete agreement. But “[t]here is no requirement under Texas law that the
employee receive consideration for the noncompete agreement prior to the time the
employer’s interest in protecting its goodwill arises.” Marsh USA, 354 S.W.3d at
778; see also Alex Sheshunoff Mgmt. Servs., 209 S.W.3d at 655 (“[A] covenant not
to compete is not unenforceable under the Covenants Not to Compete Act solely
because the employer’s promise is executory when made.”).
Appellees further contend that because Rodriguez compiled the confidential
information herself, primarily from publicly available websites, Republic never
provided her with any client data or lists. Yet even if the compiled information
were publicly available, which Republic disputes, “the non-competition agreement
is not invalid merely because the information gained at appellant’s expense was
generally available to the public rather than a ‘trade secret.’” Unitel Corp. v.
Decker, 731 S.W.2d 636, 640 (Tex. App.—Houston [14th Dist.] 2010, no writ).
10
Rodriguez testified that Republic paid for and provided training on “RB8”
software,3 and that she was given access to Republic’s prior invoices, which
enabled her to see how many depositions a particular law firm had ordered through
Republic in a given year. Courts have recognized that training and customer
information can provide consideration. See DeSantis v. Wackenhunt Corp., 793
S.W.2d 670, 681 n.6 (Tex. 1990) (“Consideration may include special training or
knowledge afforded the promisor . . . .”); Sharma v. Vinmar Int’l, Ltd., 231 S.W.3d
405, 424 (Tex. App.—Houston [14th Dist.] 2007, no pet.) (“Customer lists, pricing
information, client information, customer preferences, buyer contacts . . . have all
been recognized as trade secrets.”).
Furthermore, although Rodriguez claimed she did not have access to
Republic’s financial information, she testified regarding “standard pricing” that
made it possible to “mak[e] a little bit of money” by continuing to do business with
a videographer with whom she had worked prior to her employment at Republic.
And based on an email Rodriguez sent her boss at Republic—which lists amounts
for “total” and “citation,” and which Republic contends is evidence that Rodriguez
compiled financial information for shareholders—we can reasonably infer
Rodriguez had access to and some awareness of Republic’s pricing practices and
financial performance. At most, appellees have challenged the “true degree of
confidentiality” of the received information, a technical dispute “better addressed
in determining whether and to what extent a restraint on competition is justified.”
Alex Sheshunoff Mgmt. Servs., L.P., 209 S.W.3d at 655–56.
Appellees’ claims of inadequate supporting consideration also fail because
3
Appellees contend on appeal that because the manufacturer created the binders and
associated free webinars for its commercially available software, the “RB8” training is not
sufficiently unique to constitute consideration for a non-compete clause. We need not resolve
this issue, which was not presented in the trial court, in light of other available evidence that
Republic provided some confidential information to Rodriguez.
11
there was evidence Republic provided Rodriguez with access to its business
goodwill, a protectable interest. See Marsh USA, 345 S.W.3d at 774 (“[W]e have
recognized on multiple occasions that goodwill, along with trade secrets and other
confidential or proprietary information, is a protectable business interest . . . .”);
Alex Sheshunoff Mgmt. Servs., 209 S.W.3d at 657 (“With Johnson’s help, as
Director of Affiliation, ASM continued to develop clients for four years after the
employment agreement was signed. Johnson helped develop ASM’s goodwill and
could have tried to capitalize on it unfairly after going to Strunk.”). Evidence
suggested that Rodriguez, at the direction of her boss at Republic, invited contacts
who had authority to schedule court reporters for their firms to lunches paid for by
her boss. There was also evidence that at least one of Rodriguez’s contacts with
this authority chose to begin scheduling court reporters through Cornerstone upon
hearing Rodriguez had changed employers. Compare DeSantis, 793 S.W.2d at 683
(“Assuming, however, that DeSantis did develop business goodwill for
Wackenhut, there is no showing that he did or even could divert that goodwill to
himself for his own benefit after leaving Wackenhut.”).
Given this evidence, we hold appellees have failed to prove as a matter of
law that the consideration for the non-competition clause—including Republic’s
business goodwill, customer order history, and the provided “RB8” training—was
not “reasonably related to an interest worthy of protection.” See Marsh USA, 354
S.W.3d at 775. As such, appellees were not entitled to summary judgment on the
ground that the covenant was not ancillary to or part of an otherwise enforceable
agreement.
B. Appellees have not proven as a matter of law that all restraints in
the non-competition agreement were unreasonable.
Turning to the second requirement, appellees’ partial summary judgment
12
motion argued in the alternative that the covenant was an illegal restraint on trade
because it imposed greater restraint than necessary to protect Republic’s business
interests. We hold appellees failed to show as a matter of law that the non-
competition agreement Rodriguez allegedly breached was unenforceable.
Section 15.50 provides that a covenant not to compete is enforceable “to the
extent that it contains limitations as to time, geographical area, and scope of
activity to be restrained that are reasonable and do not impose a greater restraint
than necessary to protect the goodwill or other business interest of the promisee.”
Tex. Bus. & Com. Code § 15.50. The “basic standards for enforcement are the
same under [section 15.50] as under the common law.” Mann Frankfort, 289
S.W.3d 854–55. In order to be reasonable, the restrictive covenant “must bear
some relation to the activities of the employee.” Peat Marwick Main & Co. v.
Haass, 818 S.W.2d 381, 387 (Tex. 1991). “A covenant is unreasonable if it is
greater than required for the protection of the person for whose benefit the restraint
is imposed or imposes undue hardship upon the person restricted.” Zep. Mfg. Co.
v. Harthcok, 824 S.W.2d 654, 660 (Tex. App.—Dallas 1992, no writ). Industry-
wide exclusions are therefore unreasonable. John R. Ray & Sons v. Stroman, 923
S.W.2d 80, 85 (Tex. App.—Houston [14th Dist.] 1996, writ denied) (citing Haass,
818 S.W.2d at 386–88).
Appellees advanced a single argument in the trial court concerning the scope
of the covenant at issue: it contains an unlawful industry-wide exclusion because it
forbids association with any company that could be seen as a competitor of
Republic. Appellees did not present any ground for summary judgment arising
from Rodriguez’s promises not to (a) “make known to any person, firm, or
corporation the names and addresses of any of the customers of the Company or
any other information pertaining to such customers,” (b) “approach, contact, cause
13
to be contacted, or communicate with any customer or account, for whom
Company performed services at any office where Employee performed any duties
during the two years immediately preceding Employee’s termination of
employment with Company,” or (c) “solicit, divert, or accept orders for record
retrieval, court reporting, and other related services for or on behalf of any
individual or firm, from any customer for whom Company performed services at
any office where Employee performed any duties” for those same two years.
Republic’s allegation that Rodriguez assisted Cornerstone in contacting Republic’s
customers and seeking to “poach” their business, if true, would violate these
promises within Rodriguez’s covenant not to compete—promises that were
unchallenged by the summary judgment.
Appellees contend on appeal that these promises cannot be enforced because
they “purportedly extend[] well beyond just those clients that Rodriguez had
contact with while employed at Republic.” Cf. Haass, 818 S.W.2d at 387
(“[I]nhibiting departing employees from engaging services for clients . . . with
whom the employee had no contact while associated with the firm does not further
and is not reasonably necessary to protect [the firm’s goodwill.]”). Appellees did
not make this overbreadth argument in their motion for summary judgment,
however. See Tex. R. Civ. P. 166a(c) (“The motion for summary judgment shall
state the specific grounds therefor.”); McConnell v. Southside Indep. Sch. Dist.,
858 S.W.2d 337, 343 (Tex. 1993) (“A motion must stand or fall on the grounds
expressly presented in the motion.”). We therefore do not consider it on appeal. 4
4
We also note that appellees did not present any evidence Republic performed services
for any customers with whom Rodriguez had no contact. Cf. EMS USA, Inc. v. Shary, 309
S.W.3d 653, 660 (Tex. App.—Houston [14th Dist.] 2010, no pet.) (“[A] prohibition against
contacting existing customers does not necessarily equate to a prohibition against contacting
customers with whom the former employee had no dealings.”); id. (“Determining whether the
non-compete covenant is a reasonable restraint depends on the circumstances surrounding
14
Assuming, without deciding, that these unchallenged portions of the
covenant are severable, we turn to appellees’ industry-wide challenge. 5 Appellees’
motion for partial summary judgment contended the covenant contained an
unenforceable industry-wide exclusion for subsequent employment. Relying on
the language of the second subclause (ii) of the covenant, quoted above, appellees
argued that the non-compete agreement “attempts to restrain Rodriguez from
working or being ‘associated in any way’ with a competitor of Republic within the
county or counties, where Rodriguez worked while employed [at Republic,]” and
that “[t]his limitation purportedly excludes Rodriguez from working, in any
capacity at all, in the legal support services industry as well as any other company,
(e.g. Kinkos), that could be seen as a ‘competitor’ of Republic.”
Appellees argument in the trial court rested entirely upon our decision John
R. Ray & Sons v. Stroman, 923 S.W.2d 80, 85 (Tex. App.—Houston [14th Dist.]
1996, writ denied) (citing Haass, 818 S.W.2d at 386–88). In Stroman, we
examined a covenant not to “engage in or have an interest in any business that sold
insurance policies or engaged in the insurance agency business within Harris
County and all adjacent counties for a period of five years from the date of the
Agreement” or “solicit or accept, or assist or be employed by any other party in
soliciting or accepting, insurance business from any of Ray & Sons’ accounts.”
Because Stroman was an insurance agent and the covenant prevented him from
working in the insurance industry, we held the covenant was an unenforceable,
execution of the contract; the universe of customers covered by the non-compete covenant; and
whether [employee] had dealings with all of the customers in that universe, or only some of
them.”). Thus, even were we to consider this issue, appellees could not conclusively establish
overbreadth merely by reciting the language of the agreement.
5
The parties do not address the severability question. Cf. In re Poly-America, L.P., 262
S.W.3d 337, 360 (Tex. 2008); Zep. Mfg. Co., 824 S.W.2d at 662 (“The promises not to compete
and not to disclose are separable and the unenforceability of the noncompete covenant does not
render void the nondisclosure covenant.”).
15
industry-wide prohibition.
Appellees’ attempted analogy to Stroman fails. Appellees argue without
evidence that the competitor-of-Republic scope is tantamount to an industry-wide
prohibition. But appellees offered no evidence about the industry at issue. By
contrast, Republic brought summary judgment evidence regarding companies in
Harris County that it contended were non-competitors within the “legal services”
or “legal support services” industry. Republic’s summary judgment evidence
identified such companies by name and service provided. On this record, we
cannot determine as a matter of law that the covenant imposed an unreasonable
industry-wide exclusion. We therefore conclude that the trial court erred in
holding the covenant unenforceable.
III. The trial court erred in dismissing Republic’s claims.
Appellees’ motion for partial summary judgment was premised solely on the
unenforceability of Rodriguez’s covenant not to compete. Having concluded that
appellees failed to prove as a matter of law that the covenant is not enforceable, we
hold the trial erred in dismissing Republic’s claims.
As an initial matter, because appellees failed to present the trial court with
valid grounds for holding the covenant unreasonable in its entirety, appellees have
not shown as a matter of law that there was no contract that Rodriguez could
breach or with which Cornerstone could interfere. See Ron, 397 S.W.3d at 788;
see also Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 726 (Tex. 2001)
(holding recovery for tortious interference with prospective business relationship
requires proof defendant’s conduct was independently tortious or wrongful);
Juliette Fowler Homes, Inc. v. Welch Assocs., Inc., 793 S.W.2d 660, 664 (Tex.
1990) (listing elements of tortious interference with contract).
Furthermore, section 15.51 requires reformation of the covenant “to the
16
extent necessary to cause the limitations contained in the covenant as to time,
geographical area, and scope of activity to be restrained to be reasonable.” Thus,
even if the second subclause (ii) of the covenant were an unenforceable industry-
wide exclusion, section 15.51 required the trial court to reform that subclause “to
impose a restraint that is not greater than necessary to protect [Republic’s]
goodwill or other business interest.” Tex. Bus. & Com. Code § 15.51(c) (West
2011). 6
For these reasons, we sustain Republic’s first and second issues and hold
that the trial court erred by granting summary judgment for Rodriguez and
Cornerstone.
CONCLUSION
Having sustained Republic’s issues, we reverse the trial court’s summary
judgment dismissing Republic’s claims against Rodriguez and Cornerstone and
remand for further proceedings.
/s/ J. Brett Busby
Justice
Panel consists of Justices McCally, Busby, and Simmons. 7
6
The parties’ summary judgment filings and appellate briefs do not discuss how any
reformation of the covenant by the trial court would affect Republic’s claims for damages and
injunctive relief. Accordingly, we do not address that issue. We simply point out that in light of
the statutory command of reformation, proving the second subclause (ii) unenforceable as
written is an insufficient ground—standing alone—to support summary judgment.
7
Former Justice Rebecca Simmons sitting by assignment.
17