### IN THE COURT OF APPEALS OF TENNESSEE AT KNOXVILLE December 5,

2000 Session PATRICIA K.

BAKER, indivi

dually and PATR

ICIA K. BAKER

, d/b/a PATTY’S PAMPERED NA ILS, v. TIFFANY HOOPER (MOA TES), and JULIA RENAE ELLISON, and ANNETTE GOINES, and DAWN WE IR, and ANNETTE G

OINES and DAWN

WEIR as co-owners of

and d/b/a VOGUE BEAUTY SALON Direct Appeal from the Circuit Court for McMinn County No. 21493 Hon. Russell Simmons, Circuit Judge

FILED MARCH 15, 2001 No. E2000-01615-COA-R3-CV

Plaintiff appeals the Court’s modification of h er non-competition agreement with defendants and the amount of damag

es awarded, as w

ell as the Court’s r

efusal to recuse . We affirm.
Tenn. R. App. P.3 Appe al as of Right; Judgme

nt of the Circuit Cour

t Affirmed.
H ERSCHEL P ICKENS F RANKS , J., delivered the opinion of the court, in which C HARLES D. S USANO , J R ., J., and D. M ICHAEL S WINEY , J., joined.

Vance L. Ba

ker, Jr., Athens, Te

nnessee, for App

ellants. Steven B. Ward, Madisonville, Tennessee, for Appellee, Dawn Weir. Larry B. Nolen, Athens, Tenne ssee, for Appellee, Annette Goines Johnson.
H. Chris Trew, Athen

s, Tennessee, fo

r Appellees,

Tiffany Ho

oper (Moates) a

nd Julia Renae Ellison.

OPINION

In this action to enfo rce a non-competition clause in an owner/independent contractor agreement,

Patricia K. Baker (“B aker”), d/b/a Patty’s Pampered Nails, appeals from the Trial Court’s judgment dis missing her claims ag ainst defendants Annette Goines and Dawn Weir, individually and-2-

as co-owners of Vogue Salon. The Court also modified the non-competition agreement and awarded nominal damages against defendants Tiffany H ooper Moates (“Moa

tes”)a nd Julie Renae Ellison (“Ellison”). Baker

is owner/operato

r of a nail salon in

Athens, Tennessee, and

in her Complaint, she alleged that Moates and Ellison breached their employment contract, and that

Goines and Weir, co-owners of Vo

gue Salon, induc

ed Moates and Ellis

on to breach their

respective cont

racts. The contracts be

tween Baker a

nd Moates and Elliso

n provide in pertin

ent part:
THE OWNER AND CONTRACTOR AGREE TO OBSERVETHE FOLLOWI

NG MUTUAL STI

PULATION

S: 5. To keep a Client Profile and record which will be the property of Owner and information not to be taken from premises.
8. Contractor is not

to compete by opening another licensed nail salon in Contractors name

or being the man

aging nail tec

hnicia n of a competitive nail salon in McMinn County for one (1) year subsequent to termination date from Patty's Pampered Nails, or working

as a nail technician in another salon or store for six (6) months in McMinn County subsequent

to termination date

from Patty's Pampered Nails.
14. Contractor shall be responsible for and pay all her withhold ing taxes, including, but not limited to, fe deral withholding, medicare and social security. Owner wi ll pro vide Contractor with 1099 form annually. 15. Advertising expenses will be divi ded pro-rata

among Contractors and Owner except for telephone advertising expenses which will be paid by the Owner.
Su bse que ntl y, defendants were granted a summary judg ment on the basis that the covenant not to compete constituted, an unreasonable restraint on trade and was unenforceable. On appeal to this Court, we held that Tennessee law allows non-co mpet e covenants in independent contractor

relationships, and that Baker had a legitimate busine

ss interest to protect. The case was remanded for additional find ings concerning the reasonableness of the provisions of the non-compe t e covenant. The case was tried, and the Court dismissed defendants Goines and

Weir, and held that the non-compete c

lause was unrea

sonable and modified the limitation from six months to two months. The court then fo und that Moates and Ellison had violate d the modified non-

compete agreement

by practicing as nail technicians within two months of their

termination of emp

loyment.-3-

The Court further

found that Baker

had failed to mitigate her damages and failed to prove any actual damages. The Court then awarded nominal damages in the amount of $100.00 a

gainst each of

these defendants.
Our

review of this App

eal is de novo upon the reco rd, with a presumption of correctness,

as to the T rial Cou rt’s factual determination, unless the evidence preponderates otherwise. Rule 13(d), T.R.A. P.; Union Carbide C orp. v . Huddleston , 854 S.W.2d 87, 91 (Tenn. 1993). The Trial Court’s conclusions of law, however, are acc o rded no such presumption. Campbell v. Florida Steel Cor

p . , 919 S.W.2d 26, 35 (Tenn. 1996). After the case was remanded by this Court for further consideration, t he plaint iff filed a m otion for the Tria

l Judge to recuse,

arguing that u

nder the provision

s of Rule 59.06 T.R.C. P. where a new trial has been granted because the verdict is contrary to the weight of the evidence, the plaintiff is entitled that the new trial be conducted by a different Judge, if requested. Also, plaintiff avered, Goines’ mother, Frances Johnson is employed by the Meigs County Chancery Court Clerk and Mas ter’s Office wh

ere the Honorab

le Russell E. Simmons is a regular Circ

uit Judge in

tha t district. Judge Simmons denied the motion.

Litigants are e ntitled to t he “cold neutrality of an impartial court.” Leighton v. Henderson , 414 S.W.2d 419, 421 (Tenn. 1967), and whether recusal is warranted must in the first instance be made by the

judge himself. Unless the grounds for recusal fall within those enumerated in Tenn. Const. art. 6, § 11 or T.C. A. § 17-2-101 (199 4), the Trial Judge

's refusal to re

cuse is reviewed as an abuse of discretion. Sta te v. Raspberry, 875 S.W.2d 678, 681 (Tenn. Crim. App. 1993). In making a decision, a judge must be objective and ask what a r eason able, disinterested person knowing all the relevant f acts would think about the judge's impartiality. Kinard v. Kinard , 986 S.W.2d 220, 228 (Tenn. Ct. App. 1998).

The Trial Judge did not a b use his discretion in declining to recuse himself. The Plaintiff’s reliance on Tennessee Rule of Civil Procedure 59.06 as grounds for recusal is misplaced. This Rule provides for a

new trial where a jury verdict is against the weig ht of the evidence, and is thereforeinapplicable

to the case at bar. As for the fact that the mother of one of the defendant’s was employed at the Clerk and Master’s office in Meigs County, the Trial Judge found that this did not riseto the level of a relationship that would require recusal. Plaintif

f did not state in

her motion that she intended to call Ms

. Johnson as a witness, and there was no evidence offered that the Trial Judge knew Ms. Johnson. Moreover, Johnson is employed in the office of the Chancery Court for Meigs County while Judge Simmons is a circuit court judge with his primary office in Roane County. Plaintiff’s claims against Goines and Weir were dismissed. In reviewing this action, we must take the strong

est legitimate vi

ew of the actio

n in favor of t he plaintiff, and allow all reasonable

inferences in plaintiff’s favor and disca rd all countervailing evidence. The Motion may only be granted

if there is no material evidence in the record that would support a decision for the plaintiff. See Holmes v. Wilson , 551 S.W.2d 682, 685 (Tenn. 1977).-4- At tr ial, plaintiff atte

mpted to prove a ci

vil conspiracy

, which is a combina

ti o n betweentwo or more persons to a cc omplish by concert an unlawful purpose, or to accomplish a purpose not in itself unlawful but by unlawful means. Kirksey v. Overton Pub, Inc. , 739 S.W.2d 230, 236-237 (Tenn. Ct. App. 1987).

Under Tennessee law, there are seven elements to an action for inducement to

breach a contract, both

at common law and under T.C.A. § 47-50-109. These elements are also necessary to establish a

cause of action for conspiracy to breach a c ontract. The plaintiff

must prove that there was a legal contra

ct, that the wrongdoer had sufficient knowledge of the contract, and she intended to induce its breac

h. Further, that

the wrongdoer

acted maliciously

, and the contrac

t was, in fact, breached, and the alleged act was the proximate cause of the breach, and damages resulted from that breach. TSC Industries, Inc ., v. Tomlin , 743 S.W.2d 169, 173 (Tenn. Ct. App. 1987).

The Trial Judge in his r

uling spoke of a p

reponderance

, as o pposed to ma

terial evid enc e, but his result is correct. After a careful review of the record, it is clear that all of the elementsneede d t o establish inducement of a breach of contract or conspiracy to induce a breach were not established. Plaintiff only offered evidence as to four of these elements. No e vidence was offered that Goines and/or Weir intended that Moates breach her contract, or that they in any way acted maliciously, or that their actions caused the breach. The evide n ce is that Moates contacted Goines about available space at the Vogue Salon. The Trial Court correctly pointed out that there was no evidence that

the prior social c

ontacts of Mo ates and Goines ever involved discussions concerning Moates renting space at Vogue Salon, “nor was there any evidence that the defendants [Goines] Johnson and [Weir] were aware of the circumstances of the termination when the Moates started work at their place of business.”

These claims were properly dismissed, as there was no material evide

nce of all the elements required to maintain the action.

Baker insists that the Trial Court erred in modifying the language of the covenant not to compete by reducing the time limitation, and defendants argue that the contract is unenforceable, since it is in restraint of trade.

Covenants

not to compete, because they are in rest raint of trade, a

re disfavored in Tennessee. Hasty v. Rent-A-Driver, Inc. , 671 S.W.2d 471, 472 (Tenn. 1984). As such, they are con strued strictly in favor of the employee. Howe ver, when the restrictions are reasonab le unde r some circumstances, these covenant s are enforce able. Id . The factors that are relevant in determining whether a covenant not to c

ompete is reasona

ble inclu de “the consideration supporting the agreements;

the threatened danger to the employer in the absenc e of such an agre ement; the economic hardsh ip imposed on the employee by such a covena nt; and whether or not such a covenant should be inimical to public interest.” Allright Auto Parks, Inc. v. Berry , 409 S.W.2d 361, 363 (Tenn. 1966).-5- This Court, on the prior

appeal, found tha

t plain tiff had established a

protectable interest, and that has become the law of the case. This does not end the inquiry, because on remand, the precise issue was to determine whether the non-competition clause was reasonable.

In Allright

Auto Parks , our Supreme Court held that “the time and territorial limits involved must be no greater than is necessary to protect the business interests of the employer.” 409 S.W.2d at 363. However, while numerous cases could be cited where covenants have been declared unreasonable

because of their excessive territorial limits; these provide little direction since the question of reasonableness must be decided on an ad h oc basis. Id . “As is stated by Professor Williston in his learne

d treatise on contracts, the ultimate question in each case should be ‘what is necessary for the protecti

on of the promisee’s rights and is not injurious to the public.’ Id . at 364 (quoting Williston on Contracts, Vol. 5, s 1643, pp. 4606, 4608).

It is not disputed t hat the se defendants vio lated the third pro

vision of their employment

contract, i.e., w

orking as a nail

technician in another

salon or store within six months of the termination date in McMinn Coun ty. The defendants tes tified the re were not en ough employment

opportunities outside McMinn County, necessitating their subsequent employment within that County. Ellison testified she looked into employment in D ecatur in Mei gs County as well as other places o

utside the county

, and Moates testi

fied that she di d not look for work i n Monroe County or Mei

gs County be

cause “there is not enough business” and because her home was in McMinn County.

Plaintiff offered evidence of a former cosmetologist in Decatur, Mei gs C oun ty, Tennessee, and a sales represen tativ e for State Beauty Supply. I n the latter position, McKeehan traveled throughout

the region, visiting many salons in Meigs and Monroe Counties. She testified there were 10 to 15 beauty salons in Decatur, but not that offered nail service s, and there were 15 salons (that she visited)

in Monroe County, including Sweetwater and Madisonville, with only 2 or 3 offering nail services. She further testified that when she was wor

king in Decatur

as a hair stylist, the salon received many calls regarding nail services but

there was no nail

technician at the salon or elsewhere in Decatur.

The Trial Court accepted this evidence, and found the t er ritorial restriction to be reasonable. With respect to the period of restriction, the Trial Court found that six months was unreasonable

and unduly burdensome on the nail technicians. He held that nai l care is a hi gh maintenance pursuit because p eople genera

lly had appo

intments twice a mon

th to maintain their nai ls, two months would be a sufficient time re

striction to protec

t the plaintiff’s b

usin ess, an d concluded

that the time period was anundue economic hardship on defendants. If the scope of the cov enan t is unn eces sar ily b urd ens ome to t he em plo yee, t he co urt s wi ll e nfo rce t he co ven ant onl y “to the extent that [it is] reasonably necessary to protect the employer's interest ‘without imposing undue hardship on the employee when the public interest is not adversely affected.’” Vantage Technology , L.L.C. v. Cross, 17 S.W.3d at 647 (quoting CentralAdjustment Bureau, Inc. v. Ingram , 678 S.W.2d 28, 37 (Tenn. 1984)).-6- We hold the Courtacted within its discretion in modifying the non-compete cla

use of the contracts, rendering them reasonable and enforceable to the e xtent modified.
Fin all y, Baker appeals the Trial Court’s finding on damages. In assessing damages, the Trial Court used as the measure of damages the loss of profits which resulted from the breach of the non-compete clause, which was proper. See Powell v. McDonnell Ins., Inc ., 1997 WL 589232 (Tenn. Ct. App. 1997); Daws v. Lunsford , 1990 WL 42979 (T

enn. Ct. App. April

16, 1990). Also see generally, 25 C.J.S. Damages § 79(d) (1966).

Lost or expected profits are recoverable as da mages i f they are shown to be a consequenceof the breach, provided the amount can be p ro ved with reasonable certainty. See Morristown

Lincoln-Mercury

, Inc. v. Roy N. Lotspeich Publishing Co. , 298 S.W.2d 788 (Tenn. Ct. App. 1956). Baker

offered as proof of damages her 1996 and 1997 tax documents showing gross profit for her business during those two ye ars. The Schedule C’s in

troduced refle

cted a profit or lo

ss from business, for each of the two years. The portions of

the forms relating to business expenses were not included in the proffered exhibits.

The Trial Court obs

erved in rega

rd to these tax docum

ents: Not only did the plaintiff of

fer only the figures for gross receipts or sales, but purposely on the exhibits cut off the remainder

of the tax return a

nd profit and loss statement to deny the trier of fact the information of net profits for the years of 1996 and 1997. The conclusion that the Court draws from this is that the evidence of the net profit or loss of the

business from 1996 t

o 1997 would have been adverse to the plaintiff’s position.
An omission by a party to produce evidence in eluc

idation of the subje

ct-matter in dispu

te which is within his capabilities a

nd peculiarly

within his own knowle

dge , “frequently affords occasion for presumptions against him, sinc e it raises strong

suspicion that such

evidence, if ad

duced, would operate to his prejudice.” Doughty v. Grills , 260 S.W.2d 379, 391 (Tenn. Ct. App. 1952).

In the six months prior to their ter mination of employ

ment at Patty’ s Pampered Nails, Defendants

Moates and Elliso

n received commissions in the amount of $7,244.50 and $6,483.55 res pect ive ly. The employme nt contracts prov

ided that they

were to receive 50% of the first $600.00 of gross revenues and then 70% of anything greater than $600.00. The Trial Judge dismisse

d these figures as irrelevant be

cause the contra

cts did not indicate

if the first $600.00 was an annual or monthly amount, and the amounts received by the defendants were not the same as those ke ptby the business. Nevertheless, there are problems with usingthe commission amounts as a measure of damages. Plainti

ff’s theory

of damages is that wh en Moates and Ellison left and began work-7-

elsewherein the county

, they conta

cted clients from

her business, res

ulting in a loss of c

lie nte le. Plaintiff offered evidence

that 52 cl ients, previously serviced by defe ndants, did not return after defendants

left, but she could not say definitely that all of these we nton to be serviced by Moates or Ellison.
Fin all y, the Trial Court found that Baker failed to mitigat

e her damages, i

f she, in fact, had any. Baker testified that she was fully booked and only had one other nail technician helping her after Moates an

d Ellison left, and w

ould not have been abl

e to service all the

clients that left if they had remained. Baker did not hire any one when defendants left, for at least three months.
We conclude, as did the Trial Judge, that any damages suffer ed by Baker we

re no t proven to any reasonable degree, and we a ffirm that nominal damages were appropriate

. See Morristown

. Acco rdi ngly, we affirm the judgment of the Trial Court and re

mand with cost

of the appeal assessed to Patricia K. Baker.

_________________________ H ERSCHEL P ICKENS F RANKS , J.