Opinion
C.A. No. 1911-S.
Submitted: December 21, 1998.
Decided: March 30, 1999.
Craig A. Karsnitz, Esquire, of YOUNG, CONAWAY, STARGATT TAYLOR, Georgetown, Delaware; Attorneys for Plaintiff Tansey-Warner, Inc.
James A. Fuqua, Jr., Esquire, of FUQUA YORI, P.A., Georgetown, Delaware; Christine N. Kearns and Kimberly A. Jackson, Esquires, of SHAW, PITTMAN, POTTS TROWBRIDGE, Washington, D.C.; Attorneys for Defendant Gail D. Phelan.
MEMORANDUM OPINION
Pending is a motion for summary judgment by the defendant, Gail D. Phelan ("Phelan"), a former employee of the plaintiff, Tansey-Warner, Inc. ("TW"). The plaintiff, TW, which is a Delaware corporation in the real estate sales and rental business, brings this action (i) to enforce a non-competition provision contained in the parties' employment agreement; and (ii) to recover money damages for Phelan's breach of the non-competition provision and for unfairly competing with TW.
Phelan has also filed a counter-claim, which is not the subject of this motion, seeking $3,400 in allegedly unpaid commissions.
Phelan terminated her employment on August 29, 1997. The non-competition provision of the employment agreement expressly provides that Phelan would not compete with TW for a period of thirteen months. Phelan argues that she is entitled to summary judgment on TW's claim to enforce the non-competition agreement because more than thirteen months have elapsed since her termination, thereby mooting the non-competition claim. Phelan further contends that she is entitled to summary judgment on TW's claims for monetary damages, because TW has failed to support those claims with adequate record evidence. For the following reasons, this Court agrees, and will grant summary judgment in Phelan's favor.
I. BACKGROUND
TW's real estate business is based primarily in the Bethany Beach, Delaware area. Phelan, a licensed real estate agent, commenced employment with TW, and signed an employment agreement (the "Agreement") in February 1997. Paragraph 1(b) of the Agreement, which is the non-competition provision, stipulates that in the event of Phelan's termination from TW, she would not, for a period of thirteen months, compete either directly or indirectly by working for one of TW's competitors within three miles of Bethany Beach.
Specifically, that provision states: "[for] the period of thirteen months following employment termination, voluntary or involuntary, employee warrants not to compete directly or indirectly with employer . . ." Because the parties on this motion have disputed only the precise starting time that the non-competition provision should begin to run, Phelan has apparently conceded that the non-competition provision itself (i.e. its geographic scope and time limit) is otherwise valid as a matter of law.
On August 29, 1997, Phelan formally resigned from TW, and actually departed TW on September 6, 1997. On September 15, 1997, Phelan began working for Sea Colony Realty, a firm that competes with TW and is located within three miles of Bethany Beach.
TW filed a two-count complaint on December 23, 1997. In Count One, TW alleges that Phelan is employed with Sea Colony Realty in Bethany Beach in direct violation of the Agreement's non-competition provision. In Count Two, TW claims that Phelan is unfairly competing with TW by directly contacting TW clients to persuade them to change their rental listing to Sea Colony Realty, Phelan's new employer.
It must be noted that TW never sought to preliminarily enjoin Phelan from competing within the thirteen-month time period after Phelan left TW.
In support of her summary judgment motion, Phelan argues that because thirteen months have elapsed since she left TW, TW's claim to enforce the non-competition provision is now moot. Phelan also argues that TW has failed to supply any evidence showing that (i) she has unfairly competed with TW or that (ii) TW has suffered any damages as a result of her employment with Sea Colony Realty. For the following reasons, Phelan's arguments are correct.
II. ANALYSIS
Summary judgment is appropriate where the moving party demonstrates that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. Delaware courts have a well-recognized goal of "disposing of cases by summary judgment whenever legally permissible so as to promptly and economically resolve a dispute and avoid costly and time consuming litigation."
Friendly Fin. Corp. v. Bovee, Del. Supr., 702 A.2d 1225, 1227 (1997).
Peoples Sec. Life Ins. Co. v. Fletcher, Del. Ch., 1988 LEXIS 37, *5 (March 16, 1988).
A. Enforcement of the Non-competition Agreement
Several material facts are undisputed: the Agreement states that Phelan will not compete with TW for thirteen months; Phelan left TW on September 6, 1997; and thirteen months have elapsed since Phelan left TW. TW argues, however, that the Agreement means that Phelan will not compete for a thirteen month period following (but not necessarily immediately following) Phelan's employ with TW. Because Phelan commenced employment with Sea Coast Realty almost immediately after leaving TW and, thus, has never had any period (let alone a thirteen month period) of non-competition, TW contends that the non-competition provision remains in force. TW is mistaken.
When interpreting a contract provision the Court must focus on the contracting parties' intent. Where the provision is unambiguous and has a generally prevailing meaning, the Court will give effect to that plain meaning and disregard any extrinsic evidence that tends to show an alternate construction.
Watkins v. Beatrics Co., Del. Supr., 560 A.2d 1016, 1021 (1989); Klair v. Reese, Del. Supr., 531 A.2d 219, 223 (1987).
Klair, 531 A.2d at 223.
The non-competition provision at issue here states that Phelan would not compete with TW for "the period of thirteen months following employment termination, voluntary or involuntary. . . ." I find that the plain meaning of that non-competition language is clear: Phelan could not compete with TW for thirteen months starting from the date she left TW. That interpretation is consistent with how this Court and courts from other jurisdictions have construed similar provisions.
People v. Security Life Insurance Co. v. Fletcher, Del. Ch., C.A. No. 913, mem. op. at 5, Hartnett, V.C. (March 16, 1998) (holding that covenant not to compete that had expired by its own terms mooted a request for injunctive relief); accord Nat'l Survival Game, Inc. v. NSG of LI Corp., N.Y. App. Div., 565 N.Y.S.2d 127, 128 (1991) (finding that non-competition period began to run immediately upon termination even though the word "immediately" was not used in the relevant provision); Geisinger Clinic v. DiCuccio, Pa. Super., 606 A.2d 509, 514 (1992) (holding that non-competition agreement that stated "this restriction shall endure for a period of two years from the date of termination" meant period of non-competition began on date of employee's termination and continued for two years from that date).
Thus, the non-competition period commenced on September 6, 1997, the day Phelan ended her employment with the plaintiff, and concluded exactly thirteen months later, on October 6, 1998. Because the non-competition provision has now expired by its own terms, any claim for its equitable enforcement is moot.
In addition, the record is devoid of evidence that indicates that TW suffered monetary damages as a result of Phelan's alleged breach of the non-competition provision. Indeed, in TW's opposing brief, TW concedes it failed to provide any evidence of monetary damages that were a direct result of Phelan's alleged breach. Consequently, TW's monetary damages claim cannot survive summary judgment.
B. Unfair Competition Claim
Phelan also contends that she is entitled to summary judgment on TW's unfair competition claim. I agree. In the absence of an enforceable non-competition provision, an employee who leaves one employer to join another is under no obligation to refrain from dealing with clients from the earlier employment. As found above, the non-competition provision in the Agreement has expired by its own terms. Any claim by TW to enforce that provision is now moot. Indeed, TW has now conceded this issue by failing to address the issue in its brief. Moreover, and in any event, TW has failed to place of record any evidence that would support its claim. Accordingly, summary judgment will be granted in Phelan's favor on this Count as well.
Meyer Ventures, Inc. v. Barnak, Del. Ch., C.A. No. 11502, mem. op. at 12, Allen, C. (Nov. 2, 1990); Wilmington Trust Co. v. Consistent Asset Management, Del. Ch., C.A. No. 8867, Allen, C. (Mar. 25, 1987).
III. CONCLUSION
For the foregoing reasons, Phelan's motion for summary judgment dismissing TW's complaint is granted. IT IS SO ORDERED.