573 S.W.3d 269
Tex. App.2018Background
- Diligent (broker) contracted with BOC Trucking (carrier) in Feb 2013; contract included a non‑solicit/noncompete clause prohibiting BOC from diverting Diligent’s clients during the contract and for 24 months after BOC’s "last contact" with any Diligent client.
- Ameriforge was a Diligent client for whom BOC hauled freight; ~10 months later, Meyers (BOC’s president/majority owner) formed a sole‑proprietor logistics business (BOC Logistics) and obtained Ameriforge as a client while using BOC Trucking to haul loads.
- Diligent sued BOC Trucking and Meyers for breach of contract (covenant not to compete), tortious interference (against Meyers), and trade‑secret misappropriation; trial resulted in jury verdicts for breach and interference, but the trial court directed a verdict dismissing the trade‑secrets claim and later granted JNOV for Meyers on tortious interference liability.
- On appeal, Diligent challenged the directed verdict (trade secrets) and the JNOV (tortious interference); BOC cross‑appealed asserting the covenant not to compete was unenforceable (overbroad/indefinite), and that damages/ancillarity issues existed.
- The court affirmed dismissal of the trade‑secrets and the JNOV on interference, but reversed and rendered on the breach claim because the covenant’s 24‑month period was indeterminable (measured from an unknowable "last contact"); accordingly the court rendered a take‑nothing judgment and reversed attorneys’ fees/costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of non‑compete time limitation | Diligent: 24 months is reasonable and enforceable as written | BOC: 24 months measured from "last contact with any client" is indeterminable and unreasonable | Held for BOC: time period is indeterminable (no way for carrier to know when "last contact" occurs); covenant unenforceable as written; damages and fees reversed and take‑nothing judgment rendered |
| Res judicata based on BOC bankruptcy closing order | Diligent: bankruptcy closing/order precludes BOC’s appeal or relitigation of breach award | BOC: documents relied on are outside record; court cannot treat closing order as claim‑preclusive on the merits | Held for BOC: the bankruptcy "Order Closing Case" did not act on the merits and does not establish claim preclusion |
| Tortious interference (JNOV against Meyers) | Diligent: Meyers acted via his separate logistics business and thus acted for personal/other‑business motives, satisfying Holloway test | Meyers: as president/agent of BOC Trucking, his actions were within the scope of agency; no evidence he acted contrary to BOC Trucking’s interests | Held for Meyers: Diligent failed to prove Meyers acted so contrary to BOC Trucking’s interests that he could only have been motivated by personal interests; JNOV proper |
| Trade‑secrets misappropriation (directed verdict) | Diligent: pricing, client contact info, and logistics needs were confidential; Meyers obtained and used pricing to undercut Diligent | BOC/Meyers: no evidence carriers had pricing, and no proof linking Meyers to use of confidential pricing information | Held for BOC/Meyers: directed verdict affirmed — plaintiff failed to produce evidence of use/misappropriation by Meyers |
Key Cases Cited
- Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844 (Tex. 2009) (ancillarity/enforceability of covenants not to compete is a question of law)
- BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789 (Tex. 2002) (when factual disputes affect legal questions, appellate review treats implied findings as supported by evidence)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (legal‑ and factual‑sufficiency standards for considering evidence in appeals)
- Cardinal Personnel, Inc. v. Schneider, 544 S.W.2d 845 (Tex. Civ. App.—Houston [14th Dist.] 1976) (a covenant with an indeterminable duration is unenforceable)
- Holloway v. Skinner, 898 S.W.2d 793 (Tex. 1995) (elements of tortious interference and special rule when defendant is corporate agent)
- Powell Industries, Inc. v. Allen, 985 S.W.2d 455 (Tex. 1998) (clarifies burden to show agent acted solely from personal motive when accused of inducing corporation’s breach)