403 S.W.3d 891
Tex. App.2013Background
- Sadler Clinic Association sued Hart to enforce a noncompetition covenant in an employment contract; doctors Alam Patel Soares and Wang intervened for declaratory relief to unenforce the covenant; trial court held the buyout clause was unreasonable and unenforceable and awarded fees; on appeal, Sadler contends the contract includes a valid buyout and arbitration remedy; court reverses, holds arbitration is proper to determine a reasonable price and that attorney fees are governed by the Act; remands for reformation and price arbitration as needed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the buyout clause enforceable and must price be determined by arbitration? | Sadler argues the clause is valid and the price is binding. | Hart argues the price is unreasonable and the court may reform. | Order error: proceed to binding arbitration to fix reasonable price. |
| Can the covenant be reformed for reasonableness and what remedies exist? | Sadler seeks enforcement if reformation makes the covenant reasonable. | Physicians argue limits cannot be reformed to extend restraint. | Remand for initial reasonableness determination and potential reformation; remedies limited. |
| Do the Act's exclusive remedies preempt Declaratory Judgment Act attorney fees? | Physicians pursued fees under Declaratory Judgment Act. | Act preempts fee recovery under DJA; fees governed by Act. | Issue sustained: fees governed by Act; DJA fees precluded. |
Key Cases Cited
- Marsh USA Inc. v. Cook, 354 S.W.3d 764 (Tex. 2011) (covenant not to compete ancillary to enforceable agreement)
- Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844 (Tex. 2009) (enforceability of noncompete as a question of law; ambiguity can defeat enforceability)
- Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644 (Tex. 2006) (protect confidences; ancillary covenant context)
- Coker v. Coker, 650 S.W.2d 391 (Tex. 1983) (contract interpretation; give effect to intent; not ambiguous if definite)
- Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323 (Tex. 2011) (contract interpretation to harmonize provisions; ambiguity determined from entire instrument)