MAPEI Corporation sued former employee Stephen Prosser for violation of a contractual noncompete covenant. Finding that the agreement containing that noncompete covenant had been superseded by a subsequent agreement which covered substantially the same subject matter, contained a superseding-agreement clause, but omitted the noncompete covenant, the trial court granted summary judgment to Prosser. MAPEI appeals, arguing that the trial court
“We review a ruling on a motion for summary judgment de novo, viewing the evidence and all reasonable inferences that may be drawn from it in the light most favorable to the non-movant.” American Control Systems v. Boyce,
So viewed, the record shows that Prosser, a chemist, became an employee of MAPEI when MAPEI acquired his employer in 2009. On June 7, 2011, as a condition of employment, Prosser signed the agreement containing the noncompete covenant. On June 14, 2011, Prosser signed a similar agreement omitting that noncompete covenant. Prosser ended his employment with MAPEI on October 26, 2011, and began working as a chemist for another company, which led to MAPEI’s filing this action for breach of the agreement containing the noncompete covenant. The parties moved for summary judgment. The trial court granted Prosser’s motion and denied MAPEI’s, finding that the agreement omitting the noncompete covenant replaced the agreement containing the noncompete covenant in whole. MAPEI filed this appeal.
1. The terms of the agreements.
(a) The June 7, 2011 agreement, containing the noncompete covenant.
The second introductory paragraph of the agreement containing the noncompete covenant referred to the agreement as “this Employee Confidentiality Agreement.” The agreement provided that for five years after his employment ended, Prosser would not disclose MAPEI’s confidential information, which it defined and which Prosser acknowledged was a “valuable and unique asset[ ] of [MAPEI,] ... essential to [its] success, and that. . . derive[s] economic value from not being known to those outside [MAPEI].” It included a nonsolicitation
own, manage, operate, join, control, be employed by or with, consult with or work with a Competing Business anywhere in the United States where doing so [would] require [him] to provide a Competing Business with the same or similar services [he] provided to [MAPEI] while [he] was employed by [MAPEI].
It defined “competing business” as any entity that was “directly engaged in whole or in relevant part in any business or enterprise that is the same as, or similar as, the [b]usiness of [MAPEI], which is defined as a manufacturer of adhesives, sealants, and other chemical products for the building industry.”
The agreement required Prosser to acknowledge that all intellectual property he created while employed by MAPEI belonged to MAPEI and assigned his rights in such property to MAPEI.
It contained a superseding-agreement clause:
This Agreement, including the assignment [of rights to intellectual property] described in paragraph 7 above, shall continue after I am no longer employed by [MAPEI]. This Agreement totally replaces all prior contractual agreements or understandings between us, whether oral or written, about confidential information or any other subject matter contained herein.
(b) The June 14, 2011 agreement, omitting the noncompete covenant.
The agreement omitting the noncompete covenant shares many attributes of the agreement containing the noncompete covenant. In fact, large parts of it are identical. Like the preceding agreement, its second introductory paragraph referred to the agreement as “this Employee Confidentiality Agreement.” It provided that Prosser would not disclose MAPEI’s information, which it defined and which Prosser acknowledged in language almost identical to that of the preceding agreement, which contains the noncompete covenant, was a “valuable and unique asset of [MAPEI,] • • . essential to [its] success and that derives economic value from not being known to those outside [MAPEI].” In language identical to that of the preceding agreement, it required Prosser to acknowledge that all intellectual property he created while employed by MAPEI belonged to MAPEI and to assign
2. The agreement containing the noncompete covenant was not revived.
MAPEI argues that the trial court erred in ruling that the later-signed agreement nullified the agreement containing the non-compete covenant, and that, therefore, there was no binding noncompete clause at the time Prosser left MAPEI’s employment. It argues that Prosser revived the agreement containing the noncompete covenant by ratifying it after he had signed the agreement omitting the noncompete covenant.
As detailed above, both agreements contained identical superseding-agreement clauses providing that the agreement “totally replaces all prior contractual agreements or understandings between us, whether oral or written, about confidential information or any other subject matter contained herein.” And since both agreements concerned confidential information, whichever agreement became effective later replaced the prior agreement.
(a) Delivery.
MAPEI argues that the agreement containing the noncompete covenant became effective later, even though Prosser signed it first, because Prosser revived it when he physically handed it over to his boss in July 2011, without mentioning that he had signed the agreement omitting that covenant. The law of contracts is to the contrary. A contract that is intended to be signed by both parties, and so appears on its face, is complete when thus signed. Clarke Bros. v. McNatt,
(b) Acceptance of compensation.
MAPEI argues that an employee who accepts compensation under a later contract, which provides that it “supersedes any previous agreement,” ratifies terms of the later contract. But this proposition just as easily applies to the fact that Prosser accepted compensation under the contract omitting the noncompete covenant, as to the fact that he accepted compensation under the contract containing that covenant.
3. The evidence does not show a mutual mistake entitling MAPEI to reformation.
MAPEI argues that the trial court should have reformed the contract on the basis of a mutual mistake of fact: that the parties intended an agreement containing a noncompete covenant. To justify reformation of a contract on the ground of mutual mistake, the evidence of the mistake must be “clear, unequivocal, and decisive.” Prince v. Friedman,
4. The agreement omitting the noncompete covenant replaced the preceding agreement in its entirety.
MAPEI argues that even if Prosser did not ratify the agreement containing the noncompete covenant, the agreement omitting the noncompete covenant only replaced the confidentiality provisions of the agreement containing the noncompete covenant, leaving intact the noncompete and nonsolicitation covenants. This argument is defeated by the language of the superseding-agreement clause itself, which is identical in both agreements. That clause provides: “This Agreement totally replaces all prior contractual agreements or understandings between us, whether oral or written, about confidential information or any other subject matter contained herein.” As we have recently reiterated,
contract construction proceeds in a series of steps, moving from one to the next only if necessary. The construction of contracts involves three steps. At least initially, construction is a matter of law for the court. First, the trial court must decide whether the language is clear and unambiguous. If it is, the court simply enforces the contract according to its clear terms; the contract alone is looked to for its meaning. Next, if the contract is ambiguous in some respect, the court must apply the rules of contract construction to resolve the ambiguity. Finally, if the ambiguity remains after applying the rules of construction, the issue of what the ambiguous language means and what the parties intended must be resolved by a jury. Because the first two of these steps involve questions of law, the trial court’s application of them is reviewed de novo on appeal.
Estate of Pitts v. City of Atlanta,
Judgment affirmed.