Texas Employment Law Update : Texas Employment Lawyer & Attorney : Russell D. Cawyer : Kelly Hart & Hallman Law Firm : Dallas TX Labor Updates

A trial court's order granting or denying a temporary injunction in a noncompete case is rarely reversed by the court of appeals.  This week the Fourteenth Court of Appeals took the unusual step of reversing a trial court's denial of an employer's application for temporary injunction seeking to prohibit a former employee from engaging in certain competitive activities.

In EMS USA, Inc. v. Shary, EMS brought suit against its former employee (Shary) to enforce the terms of a noncompetition agreement.  The agreement prohibited, in relevant part, Shary from soliciting any of the company's customers existing as of the date of termination.  The trial court issued a temporary restraining order and later held hearings on EMS's application for temporary injunction.  At two temporary injunction hearings the trial court did not take evidence but merely heard oral argument.  Shary argued that the noncompete was overly broad as a matter of law because it was not limited to the customers that he actually dealt with but instead included all customers existing on the date of his termination.  Without taking any evidence, the trial court concluded that EMS had not shown its entitlement to an injunction.

On appeal, EMS argued that the trial court abused its discretion in failing to take evidence addressing the reasonableness of the restrictions; whether the agreement should be reformed; and whether the restrictions were ancillary to or part of an otherwise enforceable agreement such as a personal services agreement. 

The Fourteenth Court of Appeals held that the trial court abused its discretion in denying the temporary injunction without first hearing evidence.  The appellate court found that the trial court should have heard evidence regarding the reasonableness of the restrictions; the circumstances surrounding the execution of the contract; and whether the former employee had dealings with all existing customers of EMS or only part of them.  Consequently, the court of appeals reversed the denial of the temporary injunction and remanded the case to the trial court for further proceedings.

A copy of the opinion is available here.

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The Fourteenth Court of Appeals in Houston recently held that it is the date the employee is provided notice of termination, and not the termination date itself, that commences the statute of limitations in a breach of contract case.  You can read the Memorandum Opinion in Malallah v. Noble Logistic Services, Inc. here.

Bader Malallah entered a three year employment contract with Noble Logistic Services, Inc. (“Noble”) that could be terminated earlier, without notice, for certain enumerated acts or omissions. Prior to the end of the three year term, Noble terminated Malallah’s employment. Four years and seven days after Malallah was first advised that his employment was terminated, but less than four years after his termination was memorialized in writing, Malallah sued for breach of contract.

Noble defended the suit on the grounds that the claims was not filed within the four year statute of limitations that applies to breach of contract claims because it was filed more than four years after Malallah was first given notice of his termination. At trial, the jury found that Malallah was terminated without good cause but also found that his termination occurred on March 2, 2001 (the date he was first given any notice of termination) rather than on March 16, 2001 (the date his termination was memorialized in writing). Therefore, despite the jury's finding that Malallah was terminated without good cause, the the trial court found that the claim was barred by the statute of limitations based on the jury's answer as to the date of termination and entered judgment for Noble. The Houston Court of Appeals [14^th Dist.] affirmed that judgment.

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