181 So. 3d 192
La. Ct. App.2015Background
- In 2004 Edwards, Starks, Pattridge, and Gardner formed Endurall, Inc.; all four signed a non‑competition and proprietary information agreement as a condition of receiving stock.
- The non‑compete referenced La. R.S. 23:921 "as amended" and provided for reformation to meet statutory requirements if a court found it deficient.
- In 2012 a deadlock among shareholders led to liquidation and an auction of Endurall stock; Pattridge and Gardner purchased the shares, and Edwards received over $1.1 million.
- After selling his stock, Edwards helped form DHE, LLC (a direct competitor) and used sale proceeds and other assistance to support DHE while maintaining business activities near Endurall’s market.
- Endurall sued; the trial court found the non‑compete valid (applying the statute as amended), found Edwards breached it, reformed geographic limits at oral ruling, and issued an injunction through the non‑compete’s expiration (July 31, 2015); damages were addressed separately.
- On appeal the court affirmed: it gave effect to the contract language "as amended," held the non‑compete enforceable against a former shareholder, found breach established, and rejected Edwards’ challenges as meritless or moot (scope moot due to expiration).
Issues
| Issue | Plaintiff's Argument (Pattridge/Gardner/Endurall) | Defendant's Argument (Edwards) | Held |
|---|---|---|---|
| Validity of non‑compete given La. R.S. 23:921 | The contract is valid; parties intended the statute "as amended" to apply and bind future law changes | 2004 statute made such shareholder non‑competes void; public policy forbids enforcement | Court: contract language "as amended" shows intent to apply later amendments; non‑compete valid and enforceable |
| Proper interpretive method / reformation | Enforce per written terms; allow limited reformation to conform to statute if necessary | Contract ambiguous or invalid; reformation improper | Court applied contract interpretation rules; gave effect to "as amended" and found reformation authority in contract; would have reached same result under 2004 law |
| Scope (geographic/time) of restriction | Narrow scope to listed parishes/municipalities (trial court reformed orally) | Scope overly broad and unenforceable | Reformation was made at oral ruling but not included in final judgment; issue now moot because temporal limit expired July 31, 2015 |
| Breach and remedy (injunction) | Edwards used sale proceeds and active assistance to form/operate competitor — injunctive relief appropriate under La. R.S. 23:921(H) | No basis for injunction; no irreparable injury shown | Court found sufficient evidence of breach (business activity, use of funds, office, facilitation) and ordered injunction per statute; affirmed |
Key Cases Cited
- Rosell v. ESCO, 549 So.2d 840 (La. 1989) (standard of review for factual findings)
- SWAT 21 Shreveport Bossier, Inc. v. Bond, 808 So.2d 294 (La. 2001) (contract interpretation principles)
- Louisiana Smoked Products, Inc. v. Savoie's Sausage & Food Products, Inc., 696 So.2d 1373 (La. 1997) (analysis of non‑competes and public policy considerations)
- Clovelly Oil Co. v. Midstates Petroleum Co., 112 So.3d 187 (La. 2013) (giving contractual words their common and usual meaning)
- Brewer v. J.B. Hunt Transport, Inc., 35 So.3d 230 (La. 2010) (two‑part inquiry for manifest error review)
- Khammash v. Clark, 145 So.3d 246 (La. 2014) (deference to trier of fact on credibility)
- RJAM, Inc. v. Miletello, 44 So.3d 283 (La. App. 2d Cir. 2010) (four‑corners rule for written instruments)
- Winston v. Bourgeois, Bennett, Thokey & Hickey, 432 So.2d 936 (La. App. 4th Cir. 1983) (pre‑2008 treatment of non‑employment non‑competes)