532 S.W.3d 845
Tex. App.2017Background
- Kelley Rieves, an at-will assistant manager, signed two Buc-ee’s employment agreements (2009 and 2010) that paid her a salary split and monthly "Additional Compensation"/"Retention Pay."
- Both agreements required repayment of those payments if Rieves did not work a specified minimum term (60 months in 2009; 48 months in 2010) and give six months’ written notice; repayment applied regardless of reason for leaving and accrued 10% interest if unpaid.
- Rieves resigned after ~3 years and Buc-ee’s demanded repayment of roughly $66,720 (later reduced for withheld taxes); Buc-ee’s sued and sought attorneys’ fees. Rieves sued for a declaratory judgment that the repayment provisions were unenforceable restraints of trade and asserted other claims/defenses.
- The trial court granted Buc-ee’s summary judgment and awarded damages and fees; Rieves appealed.
- The court of appeals reviewed de novo and focused on whether the repayment clauses were unlawful restraints of trade under Texas law and whether the fee provision was preempted by the Covenants Not to Compete Act.
Issues
| Issue | Rieves' Argument | Buc-ee’s Argument | Held |
|---|---|---|---|
| Are the repayment provisions enforceable or unlawful restraints of trade? | Repayment clauses operate as covenants not to compete/deterrents on at-will quitting and are unreasonable. | Clauses are mere forfeiture/damages provisions (not non-competes) and therefore enforceable. | Repay provisions are unenforceable restraints of trade: lack time/geographic/scope limits and impose substantial penalty on at-will quitting. |
| Do damages-style repayment clauses implicate the Covenants Not to Compete Act reasonableness standard? | Such clauses that penalize departure must satisfy covenant reasonableness standards. | Characterized them as forfeiture/incentive provisions (Drennen/Dollgener) outside the Act. | Court applies covenant reasonableness; clauses fail because they broadly punish departure and exceed any protectable interest. |
| Is Buc-ee’s contractual attorneys’‑fees clause enforceable? | (Rieves) Fee clause is preempted by the Covenants Not to Compete Act; cannot recover under other statutes or contract. | (Buc-ee’s) Contract and other statutes authorize fees. | Fee provision preempted by the Act; Buc-ee’s cannot recover attorneys’ fees under that clause or other statutes for these claims. |
Key Cases Cited
- Marsh USA, Inc. v. Cook, 354 S.W.3d 764 (Tex. 2011) (Covenants Not to Compete Act governs enforceability of employee mobility restraints)
- Peat Marwick Main & Co. v. Haass, 818 S.W.2d 381 (Tex. 1991) (damages provisions that effectively restrict employee mobility are analyzed under covenant reasonableness standards)
- DeSantis v. Wackenhut Corp., 793 S.W.2d 670 (Tex. 1990) (enforceability of covenants not to compete is a question of law)
- Sawyer v. E.I. Du Pont de Nemours & Co., 430 S.W.3d 396 (Tex. 2014) (Texas protection of at-will employment and need for clear contractual modification)
- Frankiewicz v. Nat’l Comp Assocs., 633 S.W.2d 505 (Tex. 1982) (forfeiture of commissions as an unlawful restraint when lacking reasonable limits)
- ExxonMobil Corp. v. Drennen, 452 S.W.3d 319 (Tex. 2014) (distinguishes forfeiture/incentive provisions from non-competes; not dispositive where employer seeks return of already-paid compensation)