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255 P.3d 1058
Colo.
2011
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Background

  • Lucht's Concrete Pumping, Inc. (Colorado corporation) sues Tracy Horner, a former at-will employee, and Everist Materials, LLC over a 2003 noncompetition agreement.
  • Horner resigned in March 2004 and began working for Everist three days later, directly competing with Lucht's in the mountain region.
  • Horner signed a noncompetition agreement April 15, 2003, promising not to solicit employees/customers for 12 months and to keep trade secrets confidential.
  • Trial court granted summary judgment against Lucht's on lack of consideration; bench trial favored Horner and Everist on other claims.
  • Court of Appeals held that continued at-will employment, after signing the covenant, cannot constitute consideration for a post-hire agreement.
  • Colorado Supreme Court reverses, holding forbearance from terminating an existing at-will employee constitutes adequate consideration for a noncompetition agreement; case remanded to assess reasonableness of the covenant.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Is continued at-will employment after signing a noncompete adequate consideration? Lucht's contends forbearance from termination provides consideration. Horner/Everist argue continued employment offers no new consideration. Yes; forbearance constitutes adequate consideration.
Does the forbearance analysis apply equally to post-hire agreements as to initial hiring? Continued employment under negotiation can serve as consideration. No distinction should be drawn between initial and post-hire promises. No distinction; continued at-will relationship can support post-hire covenants.
Must noncompetition agreements be reasonable in duration/scope, and can the matter be remanded for reasonableness? Reasonableness is part of enforceability. Reasonableness must be evaluated; lack of consideration was dispositive below. Remand to assess reasonableness and proceed consistent with the opinion.
Is there a requirement that consideration be expressly cited in the contract? Consideration can be inferred from continued employment. Explicit citation is unnecessary but noted. Consideration may be inferred; not required to be expressly stated.

Key Cases Cited

  • Continental Air Lines, Inc. v. Keenan, 731 P.2d 708 (Colo. 1987) (continuation of at-will employment constitutes consideration for termination procedures)
  • Freudenthal v. Espey, 45 Colo. 488 (Colo. 1909) (any benefit or detriment at contract formation constitutes consideration)
  • W. Fed. Sav. & Loan Ass'n of Denver v. Nat'l Homes Corp., 167 Colo. 93 (Colo. 1968) (peppercorn-type consideration suffices; not require value assessment)
  • Coors Brewing Co. v. Floyd, 978 P.2d 663 (Colo. 1999) (continuation of at-will employment is adequate consideration)
  • Kuta v. Joint Dist. No. 50(J), 799 P.2d 379 (Colo. 1990) (continuation of at-will relationship as consideration; distinction from preexisting contractual duties)
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Case Details

Case Name: Lucht's Concrete Pumping, Inc. v. Horner
Court Name: Supreme Court of Colorado
Date Published: May 31, 2011
Citations: 255 P.3d 1058; 2011 WL 2139903; 2011 Colo. LEXIS 436; 32 I.E.R. Cas. (BNA) 823; 09SC627
Docket Number: 09SC627
Court Abbreviation: Colo.
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