COLUMBUS MEDICAL SERVICES, LLC v. DAVID THOMAS AND LIBERTY HEALTHCARE CORPORATION
COLUMBUS MEDICAL SERVICES, LLC v. M. B. "JUN" PACRIS, JR., LYNNA JARDELEZA DAWN LOCKE, MARIA MADARANG, STEPHEN MONISIT, LIZA PABALATE, CANDI McMORRAN, MONICA ROBERTS, AND KIMBERLY CRAWFORD (Tenn. Ct. App. August 13, 2009)
(Consolidated Appeal)
This appeal involves a claim of tortious inducement to breach a non-compete covenant in an employment agreement. The plaintiff staffing agency employed the defendant therapists at a State residential care facility for severely disabled persons. The plaintiff agency staffed the facility under an exclusive contract which was set to expire by its own terms in June 2003. The therapists had executed restrictive covenants in their employment agreements with the plaintiff staffing agency under which they were prohibited from working at the State facility for one year after the termination of their employment with the plaintiff. The State requested bids to staff the facility under a new contract. Through the bidding process, the defendant staffing agency was awarded the contract. The defendant agency then met with the defendant therapists (who were incumbent employees), staffed through the plaintiff agency, and offered to hire them to continue working at the facility. The defendant staffing agency was aware of the non-compete covenants and agreed to indemnify the defendant therapists if the plaintiff staffing agency tried to enforce the covenants. The defendant therapists accepted positions with the defendant agency and continued working at the facility.
The plaintiff agency filed this lawsuit against the individual defendant therapists and the defendant agency. After a bench trial, the trial court concluded that the non-compete covenants were enforceable, that the defendant therapists had breached their covenants, and that the defendant staffing agency had tortiously induced the individual defendant therapists to breach their employment contracts. The defendants now appeal. We reverse, concluding that, while the plaintiff agency had a legitimate protectable business interest, the noncompete covenants are not enforceable in light of the hardship to the defendant therapists and the adverse impact on the public interest.
Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2009/columbusmed_081309.pdf
Thursday, August 13, 2009
Court reviews enforceability of an indemnity agreement and possible evidentiary errors, including violation of the statute of frauds and the parol evidence rule
WENDELL P. BAUGH, III, ET AL. v. HERMAN NOVAK, ET AL. (Tenn. Ct. App. August 13, 2009)
This case arises out of a business agreement between the parties. Plaintiffs executed a note to purchase a company. The note contained a stock transfer restriction. Subsequently, Plaintiffs entered into a business agreement with Defendants. The subject of that agreement is disputed in this lawsuit, but Plaintiffs contend that Defendants purchased one-half of the company and executed an indemnity agreement to indemnify Plaintiffs for one-half of the note on the purchase of the company. After operating for nearly ten years, the company failed.
At trial, Plaintiffs sought to enforce the indemnity agreement, and Defendants counterclaimed to recover $73,000.00 that they paid to Plaintiffs before they allegedly executed the contract. The trial court found in Plaintiffs' favor. Defendants now appeal claiming that the trial court made several evidentiary errors, that the contract is unenforceable because it violated the statute of frauds, that parol evidence regarding the terms of the contract was inadmissible, and that the corporation cannot continue its existence and sell stock after dissolution. We reverse the trial court's determination based on our finding that the contract is unenforceable as a matter of public policy.
Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2009/baughw_081309.pdf
Highers's dissenting opinion may be found at:
http://www.tba2.org/tba_files/TCA/2009/baughw_diss_081309.pdf
This case arises out of a business agreement between the parties. Plaintiffs executed a note to purchase a company. The note contained a stock transfer restriction. Subsequently, Plaintiffs entered into a business agreement with Defendants. The subject of that agreement is disputed in this lawsuit, but Plaintiffs contend that Defendants purchased one-half of the company and executed an indemnity agreement to indemnify Plaintiffs for one-half of the note on the purchase of the company. After operating for nearly ten years, the company failed.
At trial, Plaintiffs sought to enforce the indemnity agreement, and Defendants counterclaimed to recover $73,000.00 that they paid to Plaintiffs before they allegedly executed the contract. The trial court found in Plaintiffs' favor. Defendants now appeal claiming that the trial court made several evidentiary errors, that the contract is unenforceable because it violated the statute of frauds, that parol evidence regarding the terms of the contract was inadmissible, and that the corporation cannot continue its existence and sell stock after dissolution. We reverse the trial court's determination based on our finding that the contract is unenforceable as a matter of public policy.
Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2009/baughw_081309.pdf
Highers's dissenting opinion may be found at:
http://www.tba2.org/tba_files/TCA/2009/baughw_diss_081309.pdf
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