Crump Insurance Services v. All Risks, Ltd.
727 S.E.2d 131
Ga. Ct. App.2012Background
- Three Georgia employees (Duran, Feldhaus, Yoss) with All Risks signed agreements containing restrictive covenants, a Maryland forum-selection clause, and a Maryland choice-of-law clause.
- In 2010 the employees left All Risks for Crump Insurance Services (Texas) and sued in Georgia to declare the covenants unenforceable.
- Trial courts dismissed under the forum-selection clause; Crump et al. appealed, arguing GA public policy voids the covenants and MD would enforce them.
- Georgia law enforces governing-law clauses unless contrary to public policy or state interests; restrictive covenants must be reasonable in duration, geography, and scope.
- The trial court found the covenants were not geographically limited, extended two years with tolling for breaches, and violated Georgia public policy against restraint of trade; MD law was discussed as an alternative enforcement framework.
- On appeal, the court affirmed, holding the covenants were unenforceable under Georgia law and that Crump failed to show a Maryland court would apply Maryland law to enforce them, thus upholding the forum-selection clause.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are the covenants enforceable under Georgia public policy? | Crump argues GA public policy prohibits such restraints. | All Risks contends covenants are enforceable under either GA law or MD law. | No; covenants violate Georgia public policy and are unenforceable. |
| Should the Maryland forum-selection clause be honored given likelihood Maryland would apply MD law? | Maryland would likely apply MD law and enforce covenants, avoiding GA policy. | Maryland court would apply MD law and enforce covenants. | Yes; forum clause upheld because no showing MD would enforce; Georgia policy not overridden. |
Key Cases Cited
- CS-Lakeview at Gwinnett, Inc. v. Simon Property Group, 283 Ga. 426 (2008) (enforce chosen-law absent contrary public policy)
- Fuller v. Kolb, 238 Ga. 602 (1977) (reasonableness of restraints; duration and scope matter)
- Coleman v. Retina Consultants, 286 Ga. 317 (2009) (scope/territorial limits; restraint validity)
- Rollins Protective Svcs. Co. v. Palermo, 249 Ga. 138 (1982) (reasonableness; contract restrictions require balance)
- Bunker Hill Intl. v. Nationsbuilder Ins. Svcs., 309 Ga.App. 503 (2011) (to avoid forum, must show likely MD enforcement would respect GA policy)
- Becker v. Bailey, 268 Md. 93 (1973) ( Maryland view that covenants protect unique services/trade secrets)
- Ecology Svcs. v. Clym Environmental Svcs., 181 Md. App. 1 (2008) (Maryland standard for noncompete reasonableness)
- Hunter Group, Inc. v. Smith, 9 F. App’x 215 (2001) (Maryland court applying Georgia-like public policy factors)