Lapolla Industries, Inc. v. Hess
325 Ga. App. 256
Ga. Ct. App.2013Background
- Lapolla Industries alleged Premium Spray Products and Hess hired former Lapolla employees in violation of noncompete covenants in their Lapolla employment agreements.
- Premium and Hess filed a declaratory judgment action seeking a declaration that they did not tortiously interfere because the covenants were void and unenforceable.
- The trial court granted partial final judgment on Count 2 (declaratory relief about the covenants) and found the covenants void and unenforceable, precluding tortious interference.
- Lapolla and Kramer appeal challenging standing and the legal conclusion that the covenants were void as a matter of law.
- The court held Premium and Hess had standing to seek declaratory relief under OCGA § 9-4-2 because they had an interest adverse to Lapolla's position.
- The court ruled that covenants in subparagraph (a), (c), and part of subparagraph (d) were void and unenforceable, but two covenants (subparagraph (b) and part of subparagraph (d)) were not automatically unenforceable under the nonseverability rule and required separate analysis.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to seek declaratory relief | Premium and Hess had an interest and standing under OCGA § 9-4-2. | Lapolla contends Premium and Hess lacked standing as non-parties to the agreements. | Premium and Hess have standing to seek declaratory relief. |
| Validity of the noncompete covenants on their face | The covenants were void and unenforceable as a matter of law. | The covenants could be enforceable depending on scope and severability. | The covenants in subparagraph (a), (c), and part of (d) are void on their face; the nonseverability rule applies to those three covenants. |
| Effect of nonseverability rule on remaining covenants | Nonseverability should render all restrictive covenants unenforceable if any fail. | Two covenants (subparagraph (b) and part of (d)) may be analyzed separately and could be enforceable. | Three covenants are unenforceable under nonseverability; remaining two are analyzed separately and not automatically unenforceable. |
| Forum selection and choice of law | Georgia public policy should not enforce Texas forum or Texas choice of law to undermine Georgia policy. | Texas law and forum should apply due to forum selection/choice-of-law clauses. | Georgia law governs enforceability; Texas forum and law would be unlikely to be enforced; court refused to enforce forum selection and Texas law in this context. |
| Impact of pre-2011 restrictive covenant framework | Georgia law prior to 2011 governs enforceability of covenants since agreements are pre-May 11, 2011. | Not applicable if 2011 Act would apply. | OCGA § 13-8-50 et seq. does not apply; pre-2011 Georgia law governs; covenants analyzed accordingly. |
Key Cases Cited
- Enron Capital & Trade Resources Corp. v. Pokalsky, 227 Ga. App. 727 (1997) (standing to seek declaratory relief when rights uncertain)
- Roadtrac, LLC v. Sunstates Refrigerated Svcs., 250 Ga. App. 317 (2001) (noncompete covenants and severability analysis)
- Sunstates Refrigerated Svcs. v. Griffin, 215 Ga. App. 61 (1994) (nonseverability rule for covenants; certain covenants analyzed together)
- Uni-Worth Enterprises v. Wilson, 244 Ga. 636 (1979) (nonseverability and severability in restrictive covenants)
- McNease v. Nat. Motor Club of America, 238 Ga. 53 (1976) (overbreadth and indefiniteness invalidate noncompete provisions)
- Desantis v. Wackenhut Corp., 793 S.W.2d 670 (Tex. 1990) (Texas choice-of-law effects on enforceability of covenants)