Ennis, Inc. v. David Todd Scarborough Dunbrooke Apparel Corporation, Matt Gray and Larry Ramirez
427 S.W.3d 527
Tex. App.2014Background
- Ennis, a Texas corporation, employed David Scarborough under a 2006 written employment agreement containing a Texas choice-of-law clause and a two-year post‑employment noncompetition covenant.
- Scarborough lived in California for much of his tenure; Ennis had its headquarters and board in Midlothian, Texas, and Scarborough maintained an office at Ennis’s Texas headquarters and attended board meetings there.
- Ennis fired Scarborough in September 2008; shortly thereafter Dunbrooke officers (appellees) contacted and hired him, prompting Ennis to sue for claims including tortious interference with the noncompetition agreement.
- Appellees moved for judicial notice that California law applied and for summary judgment, arguing the noncompetition clause was unenforceable under California law; the trial court accepted California law and granted summary judgment for appellees.
- On appeal the Fifth Court of Appeals reviewed whether the trial court correctly applied California law (choice‑of‑law under Restatement §187/§188) and whether summary judgment on tortious‑interference claims was proper.
- The court held appellees failed to meet their summary‑judgment burden to prove California had the most significant relationship under §188(2) (place of contracting, negotiation, performance, subject matter, and parties’ domiciles), reversed the grant of summary judgment on tortious interference, and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether California law governs enforceability of the noncompete despite a Texas choice-of-law clause | Ennis: Texas law should control under the parties’ clause; contacts support Texas | Appellees: §187(2)(b) exception applies; California has materially greater relationship and interest | Court: Appellees did not prove §188 factors favor California; Texas choice-of-law stands for purposes of the summary-judgment motion |
| Burden of proof for choice-of-law at summary judgment | Ennis: Movant must prove facts showing another state's law governs | Appellees: Trial court accepted their submission that California law applied | Held: Movant (appellees) bore burden and failed to establish required facts as a matter of law |
| Timeliness of motion for judicial notice of California law | Ennis: Motion was untimely and judge relied on post‑ruling evidence | Appellees: Judicial notice motion and evidence were properly considered | Held: Court limited review to evidence filed before the judge’s October 21 ruling; post‑ruling filings not considered, and appellees still failed to carry burden |
| Grant of summary judgment on tortious-interference claims | Ennis: Summary judgment improperly granted because choice-of-law ruling was erroneous and noncompete enforceability under Texas unresolved | Appellees: Noncompete unenforceable under California law so interference claim fails as a matter of law | Held: Because applying California law was error, summary judgment on tortious interference was erroneous; reverse and remand |
Key Cases Cited
- Hughes Wood Prods., Inc. v. Wagner, 18 S.W.3d 202 (Tex. 2000) (movant bears burden to prove facts for choice-of-law at summary judgment)
- DeSantis v. Wackenhut Corp., 793 S.W.2d 670 (Tex. 1990) (applying Restatement §187/§188 in employment contract choice-of-law disputes)
- Mary Kay Inc. v. Woolf, 146 S.W.3d 813 (Tex. App.—Dallas 2004) (discussing §187(2)(b) and choice-of-law analysis)
- Great Am. Reserve Ins. Co. v. San Antonio Plumbing Supply Co., 391 S.W.2d 41 (Tex. 1965) (summary judgment should not rest on mere inference)
- Hogan v. J. Higgins Trucking, Inc., 197 S.W.3d 879 (Tex. App.—Dallas 2006) (granting summary judgment does not implicitly overrule evidentiary objections)