Cox v. Altus Healthcare and Hospice, Inc.
308 Ga. App. 28
| Ga. Ct. App. | 2011Background
- Cox and Altus entered covenants including nondisclosure and non-solicitation while Cox employed at Altus in 2008; negotiations for Cox to purchase Altus occurred but did not consummate; Cox resigned in September 2009 and started a competing provider; Altus sued to enforce covenants resulting in a March 3, 2010 interlocutory injunction; Cox appealed April 23, 2010 and sought leave to amend for wrongful restraint; Altus later dismissed injunctive relief with prejudice and the injunction was dissolved on September 30, 2010; Cox sought damages for wrongful restraint during the injunction period (March 3–Sept 30, 2010); the appeal proceeded on whether the injunction was enforceable and whether damages are recoverable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the appeal is moot and still ripe for damages | Cox argues wrongful restraint remains actionable and damages may be pursued | Altus contends mootness after dissolution bars relief | Not moot; remanded for damages if injunction wrongful |
| Whether the covenants are enforceable under pre-2010 Georgia law | Cox claims covenants lack reasonable scope and are unenforceable | Altus contends covenants are permitted as reasonable restraints | Covenants unenforceable on face for nondisclosure, non-solicitation, and non-recruitment; rest of covenants invalid under strict scrutiny |
| Whether, if any covenant is invalid, all covenants fail under Georgia law | If any covenant invalid, none should be enforceable | All covenants collapse if one is invalid | Georgia law: if one covenant is unenforceable, all are unenforceable; the injunction was improper. |
Key Cases Cited
- Lowe's Home Center v. Garrison Ridge Shopping Center & etc., 283 Ga.App. 854, 643 S.E.2d 288 (Ga. App. 2007) (abuse of discretion standard for injunctions when facts undisputed)
- Storer Broadcasting Co. v. Peek, 247 Ga. 1, 273 S.E.2d 605 (Ga. 1981) (supercedeas and mootness related to injunctions)
- Hogan Mgmt. Svcs. v. Martino, 242 Ga.App. 791, 530 S.E.2d 508 (Ga. App. 2000) (wrongful restraint damages recoverable after injunction)
- Howard Schultz & Assoc. v. Broniec, 239 Ga. 181, 236 S.E.2d 265 (Ga. 1977) (restrictions must be reasonable in time and scope)
- Orkin Exterminating Co. v. Walker, 251 Ga. 536, 307 S.E.2d 914 (Ga. 1983) (reasonableness of covenants examined for employment restraints)
- Habif, Arogeti & Wynne, P.C. v. Baggett, 231 Ga.App. 289, 498 S.E.2d 346 (Ga. App. 1998) (test for reasonableness of covenants in employment context)
- Global Link Logistics v. Briles, 296 Ga.App. 175, 674 S.E.2d 52 (Ga. App. 2009) (indefinite restrictions render covenants void on face)
- Koger Properties v. Adams-Cates Co., 247 Ga. 68, 274 S.E.2d 329 (Ga. 1981) (enforceability of restrictive covenants controlled by language)
- Uni-Worth Enterprises v. Wilson, 244 Ga. 636, 261 S.E.2d 572 (Ga. 1979) (enforceability depends on language and scope)
- Advance Technology Consultants v. RoadTrac, 250 Ga.App. 317, 551 S.E.2d 735 (Ga. App. 2001) (if one covenant fails, others may likewise be void under strict scrutiny)
- Osta v. Moran, 208 Ga.App. 544, 430 S.E.2d 837 (Ga. App. 1993) (blue-penciling discussion related to covenants)