FOURTH D I VI SI ON

M C FA DDEN, C. J.

, DOYLE, P. J.

, and COOM ER, J.

N O T IC E : M otions for r e c ons i de r a tion m us t be

ph y sic a l ly r e ce iv ed i n our c le r k ’s offic e w ithin te n

da y s of the da te of de c is ion to be de e m ed tim e ly file d.

http://w w w .ga a ppe a l s .us /r ule s

M ar ch 12, 2020



# I n th e Co u r t o f

A p p eals o f

G eo r g ia

A1 9 A1 75 0

. FORTRESS INVESTM ENT GROUP, L LC et al

. v

. HOLSINGER.

C O O M E R , J u d ge.

Fo rt res s In v es t m en t Gro up LLC an d Hy b ri d GP Ho ld i n g s LLC (co l l ect i v el y

,

“ A ppe lla nts” ) a ppe a l f r om t h e s up eri o r co u rt ’ s o rd er g ran t i n g J oel Ho l si n g er’ s m o t i o n

fo r an i n t erl o cu to ry i n

ju n ct i o n t o en

jo i n Ap p el l an t s fro m en fo rci n g o r t h reat en i n g o r

at t em p t i n g t o en fo rce th e res t ri ct i v e co v en an t s ari si n g fro m hi s em p l o y m en t wi th

Fo rt res s

. On ap p eal

, Ap p el l an t s co n t en d t hat t h e t ri al co u rt erred b y g ran t i n g t h e

p rel i m i nary i n

ju n ct i o n wi t h o ut wei g h i ng t h e ev i den ce of Ho ls in g er’ s u n cl ean h an d s ;

b y ad o p t in g an an al y s is t hat ov erl o ok ed m at eri al p ro v i s i o ns o f t h e p art i es ’ ag reem en t ;

an d b y en t eri n g an o v erb ro ad o rd er. Becau s e we ag ree t hat th e i n ju n ct i o n is o v er l y

b ro ad

, we v acat e t he ju d g m en t an d rem an d t h e cas e fo r th e t ri al co u rt t o en ter an o rd ert h at do es n o t p rev en t Fo rt res s f r o m p u rs u i n g rem ed i es t h at d o no t d ep en d o n t h e

res t ri ct i v e co v en an t s co n t ai n ed i n o r i nco rp o rat ed i nt o t h e em p l oy m en t ag reem en t

.

Vi ewed i n t h e l i g ht m os t fav o rab le to t h e ru li n g b el o w, 1 t h e ev i d en ce s h o ws

t h a t i n 2 0 0 8

, Ho l s i n g er b ecam e an em p l o y ee o f Fo rt res s

. Fo rt res s i s an as s et

m an ag em en t fi rm t hat pro vi des ex p ert i s e acro s s a wi d e ran g e of i nv es t m en t st rat eg i es

o n b eh al f o f i n st i tu ti o n al cl i en t s an d p ri v at e i n v es t o rs wo rl d w i d e. W h en he was fi rs t

h i r e d by Fo rt res s

, Ho l s i n g er s i g n ed an em p l o y m en t ag reem en t u nd er wh i ch h e

b ecam e a m an ag i n g d i rect or an d m an ag er o f t h e At l an t a o ffi ce o f Fo rt res s

. Ho l s i n g er

en t ered a n ew em

p l o y m en t ag reem en t wi t h Fo rt res s d at ed J an u ary 1 5

, 2 01 0

, wh i ch

s u p ers ed ed h is earl i er ag reem en t

. Un d er t h e 2 0 1 0 em p l o y m en t ag reem en t, Ho l s i n g er

co n ti n u ed t o m an ag e t h e At l an t a o ffi ce o f Fo rt res s u n t i l h e res i g n ed i n 2 0 1 8

.

Th e 2 01 0 em

p lo y m en t ag ree m e n t i n cl u d es a s eri es o f res tri ct i v e co v en an t s

,

i n cl u d i n g (1 ) a o ne-y ear n o n -co m pet e cl au s e (t he “ No n -Co m p et e C l au s e”); (2 ) an

ei g h t een -m o n t h p ro h i b i t i o n on s o l i ci t i n g o r h i ri n g cu rren t o r fo rm er e m p l o y ees o f

Fo rt res s (t h e “ No n -Recru i t m en t Cl au s e”); an d (3 ) an ei g ht een -m o n th pro h i bi t i o n o n

s o li ci t in g cert ai n in v es t o rs an d o t h er en t i ti es w h o h ad d o n e b u s i n es s wi t h F o r t r e s s

1 See S r i s ova n a v. Ca mb o d i an Bu dd h i s t S o ci et y, In c.

, 2 6 9 Ga. A p p

. 60 0

, 6 0 0

(6 0 4 SE2 d 6 3 7 ) (2 0 0 4 ).

2(t he “ N o n -So l i ci tat i o n Cl au s e”). Th e 2 0 1 0 em p l o y m en t ag r e em en t l i s t s t h es e

res t ri ct i v e co v en an t s in a sect i o n t i t l ed “ P r o t e c t i ve Co v en an t s,” an d in cl u d es a

p ro v is i o n (t h e “ To l l i n g Cl au s e”) s t at i n g t hat “ Th e t em p oral du rat i on of t he Pro t ect i v e

Co v en an t s s h al l n o t ex p i re, an d s h al l b e t o l l ed

, d u r i n g a n y p eri o d i n w h i ch

. . . y o u

are

. . . i n v i o l at i o n o f an y o f s u ch Pro t ect i v e Co v en an t s

, an d al l s uch res t ri ct i o n s s h al l

au t o m at i cal l y b e ex t en d ed b y t h e p eri o d o f

. . . y o u r v i o l a t i o n o f an y s u ch

res t ri ct i o n s .”

Th e 20 1 0 em

p l o y m en t ag reem en t no t es t h at Ho l s i n g er was g ran ted i nt eres ts in

Hy bri d as p art o f h i s co m

p en s at i o n fo r h i s w o rk as a Fo rt res s em p l o y ee. Hy

b ri d ’ s

l i m i ted l iab i li t y ag reem en t co n t ai n s a “ Du t y o f Lo y al t y ” p ro v i s i o n (t h e “ Du t y o f

Lo y al t y Cl au s e”) t h at

, i n rel ev an t p art

, i m p o s es o n Ho l s i n g e r an d o t h er Hy b ri d

m em b ers a “ d u t y

an d o b l i g at io n

. . . t o refrai n fro m co m pet i n g w it h an y m em

b er o f

t h e C r e d i t Fu n d s Gro up i n th e co n d u ct o f i t s b us i n es s b efo re t he d i ss o lu t i o n o f

[Hy b ri d ] .” Th e “ Cred i t Fu n d s Gro u p ” in cl u d es Fo rt res s

, i n v es t m en t fu n d s or en t i ti es

as s o ci at ed d i rect l y o r i n di r e c t l y wi t h Fo rt res s

, an d a ho s t o f affi l i at es

. Th e Du t y o f

Lo y al t y Cl au s e d o es n o t ex p i re wi t h t h e t erm i n at i o n o f a m em b er’ s em p lo y m en t wi th

Fo rt res s

, b ut p urp ort ed ly ap pl i es u nt i l t h e di s s ol ut i o n o f H y b ri d

, wh i ch can oc cu r o n l y

wi t h th e co n s en t o f Hy

b ri d ’ s m an ag i n g m em

b er. M o reo v er, a m em

b e r

, s u c h as

3Ho l si n g er, can n o t vo l u n t ari l y res i g n o r wi t h d raw fro m Hy b ri d p ri o r t o d i s s o l u t i o n

u n l es s Hy b ri d ’ s m an ag i n g m em

b er al l o ws i t

.

H o l s i n g er’ s 2 0 1 0 em

pl o y m en t ag reem en t ex p res s ly i n co rp o rat es th e Du t y o f

Lo y al t y Cl au s e as fo l l ows : “ al l res t ri ct i o n s an d co v en a n t s co n t ai n ed i n th e Hy b ri d

D o c u m en t s (i ncl u d i n g wi t h o ut l i m i t at i o n

, th e ‘ Du t y o f Lo y al t y ’ as d efi n ed t h erei n )

are h ereb y i n co rp o rat ed b y referen ce i n t o t h i s Let t er Ag reem en t

. ” Ho l s i n g er res i g n ed

fro m Fo rt res s i n M arch 2 01 8

. At t h at t im e, h i s v es t ed Hyb r i d i n t eres t s w ere v al u ed

at ap p ro xi m at el y $ 3 0 m i l l io n. Aft er res i g n i n g fro m F o r t r e s s, Ho l s i n g er m et wi th

se v eral o th er fi rm s reg ard i ng fu t u re em p l o y m en t

, i n cl u d i n g an as s et m a na ge m e nt f ir m

n am ed Ares O p erat io n s L LC. In -h o u s e co u n sel fo r Fo rt res s s en t Ares l et t ers i n J u n e

an d No vem

b er 20 1 8

, al leg i n g Ho l s i n g e r h ad v i o lat ed h is res t ri ct i v e co v en an t s an d

t h reat en in g t o s u e Ares fo r faci l i tat i n g t h o se al leg ed b reach es if Ares h i red h i m

.

Fo rt res s fo l l o wed wi t h an o t h er l et t er t o Ares o n D ecem b er 17

, 2 0 1 8

. U n l i k e t h e

p rev i o u s t wo l et t ers

, th is o n e was sen t by ou t s id e co un s el fo r Fo rt res s

. Th e Decem b er

1 7

, 2 0 1 8 l et t er accu s ed Ho l si n g er o f b reach i n g h i s r e s t r i ct i v e co v en an t s an d

t h reat en ed “ t h at A res wi l l co m p o u n d i t s ex p o s u re ev en fu rt h er i f it co n s u m m at es t h e

h i ri n g o f M r. Ho l s i n g er.” Ei g h t een d ay s l at er, Ho l s i n g er fi l ed s u it i n Fu lt o n Co u n t y

Su p eri o r Co u rt s eek i n g (1 ) a d e cl arat i o n t h at t h e res tri ct i v e co v en an t s d es cri b ed

4ab o ve are i n v al i d an d u nen fo rceab le an d (2 ) i n ju n ct i v e rel i ef b arri n g Ap pel l an t s fro m

en fo rci n g o r t h reat en in g t o en fo rce t h e res t ri ct iv e co v en a n t s

. On J an u ary 1 6

, 2 0 1 9,

Ho l si n g er s o u g ht an i n t erl o cu t ory i n ju n ct i o n b arri n g Ap p el l an t s fro m “ en fo rci n g o r

t h reat en in g o r at t em

p t in g t o en f

o r c e res tri ct i v e co v en an t s ari s in g fro m h i s

em pl o y m en t wi t h Fo rt res s [.] ” On Feb ru ary 5

, 2 0 19

, Fo rt r e s s f i l ed an “ em erg en cy

m o ti o n ” as k i n g t h e s u p eri or co u rt t o co m p el Ho ls i n g er t o s ub m it h i s el ect ro n i c

d ev ices fo r fo ren s i c im ag i n g an d t o ret urn al l eg ed l y co n f i d e n t i al i n fo rm at i o n

. Th e

s u p eri o r co u rt fo u n d n o em erg en cy an d d en i ed t he m ot i o n

.

On Feb ru ary 1 9

, 2 0 1 9

, Ap p el l an t s fi l ed t h ei r m em o ran du m i n o p p o s i t i o n to

Ho l si n g er’ s m o t i o n fo r an i n t erl o cu t o ry i n j u n ct io n

. Th e s am e d ay

, befo re Ap p el l an t s

fi led the i r m e m or a ndum

, Hy b ri d ’ s m an ag i n g m em

b er rep u rch as ed Ho l s i n g er’ s v es t ed

i n t eres t s i n Hy

b ri d

, b as ed o n h i s a l l e g ed l y di s l o y al co n du ct

. In t h ei r m em oran d u m

,

A p p e l lan t s arg u ed t h at

, as a res u l t o f H y b ri d ’ s p u rch as e o f Ho l s in ger’ s i n t eres t in

Hy bri d

, Ho l s i n g er was no lo ng er a m em b e r o f Hy b ri d an d n o l o n g er s u b

ject t o t h e

Du t y o f Lo y al t y Cl au s e. Co n seq u en t l y

, acco rd i n g t o Ap p el l an t s

, t h e q u es t i o n o f

wh et h er th e Du t y o f Lo y al t y Cl au s e was en fo rceab l e was t h u s m oo t

. Aft er a h eari n g,

t h e s u p eri o r co u rt g ran t ed Ho l s i n g er’ s m o ti o n

.

5“ [A] t ri al co u rt h as bro ad d i s cret i o n t o d eci de wh et h er t o g r a n t o r d en y a

req u es t fo r an i n terl ocu t o ry i nju n ct i o n. W e wi l l n o t d i s t u rb t h e res u l t reach ed b el o w

u n l es s we fi n d a m an ifes t ab u s e o f d i s cret i o n

, a t o t al lack of ev i den ce t o s up p o rt t h at

ru l i n g, or an erro n eo u s i n t erp ret at io n o f t h e l aw.” S r i s o v a n a

, 2 69 Ga. A p p

. at 6 0 1

(ci t at i o n s an d p u n ct u at i o n o m i t t ed ).

1

. Ap p el l an t s co n t e n d t h at t h e t ri al co u rt erred i n refu s i n g to co n s i d er t h e

u n refu t ed ev i d en ce o f H o l s i n g er’ s u n cl ean h an d s

. W e d i sag ree. Th e t ri al co u rt

s p eci fi cal l y ad d res sed Ap pel l an t s ’ u n cl ean h an d s arg u m e n t in i t s ord er g ran t i n g

Ho l si n g er’ s m o t i o n

, fi n d in g t h at Ap p el l an t s ’ “ un cl ean h an d s d efen s e d o es n o t ju s t i fy

refu si n g t o en

jo i n p ro s p ect i v e en fo rcem en t o f t he res t ri ct i ve co v en an t s [.] ” .

“ Un cl ean h an d s ” i s a s h o rt h an d referen ce t o OCGA § 2 3 -1 -1 0

, wh ich

s t at es

, “ He wh o wo u ld h av e eq u it y m us t d o eq u i t y an d m

u s t gi v e effect

t o al l eq u i t ab le ri gh ts o f t h e o t h er p art y res p ect i ng t h e s u b ject m at t er o f

t h e act i o n.” OCGA § 2 3 -1 -1 0 em b od i es b ot h t h e “ u n cl ean h an ds ”

d o ct ri n e an d th e co n cep t t h at o n e wi l l n ot b e p erm i t t ed t o t ak e ad v an tag e

o f h i s o wn w r o n g

. Ho wev er, rel i ef i s p recl u d ed on l y if t h e in eq u i t y s o

i n fect s t h e cau s e o f act i o n t h at t o en t ert ai n i t w o u l d b e v io l at i v e o f

co n s ci en c e

. Th e i n eq u it y m u s t rel at e d i rect ly t o th e t ran s act i o n

co n cern i n g wh ich co m

pl ai n t i s m ad e. Th e ru l e refers t o eq u i t ab l e ri g h t s

res p ect i n g t h e s ub

ject -m at t er o f th e act i on

. It do es n o t em brace o u ts id e

m at t ers

.

6Ba n k o

f New Y o r k Mel l o n v. Ed

mo n d s o n

, 3 4 4 G a. Ap p

. 8 2 3, 82 6 (1 ) (8 12 SE2 d 2 9 9 )

(2 0 1 8) (ci t at i o ns o m i t ted ). A pp el l an t s co n ten d t h at t here i s u n refu t ed ev i d en ce t h at

Ho l si n g er, wh i l e a m an ag i n g d i rect o r o f t h e At l an t a o ffi ce o f Fo rt res s an d a m em b er

o f Hy b ri d

, recru i t ed s u b o r d i n a t e s t o l eav e Fo rt res s fo r A res

, a m ajo r co m p et i t o r o f

Fo rt res s

, d own l o ad ed v al u ab l e p ro p ri et ary i n fo rm at i o n b el on g in g t o Fo rt res s t o g ai n

an u n fai r co m

p et i t i v e ad v an t ag e, t h en co n ceal ed hi s wro n g d o i n g t hro u g h frau d an d

d ecei t

. Ap p el l an t s arg u e th at t h i s i s ev id en ce o f un cl ean h an d s

, wh i ch b ars

Ho l si n g er’ s cl ai m s fo r i n

ju n ct i v e rel i ef as a m at t er o f l aw b ecau s e i t d i rect l y rel at es

t o t h e s u b

j e c t m at ter o f Ho l s i n g er’ s cl ai m s

– – t h e res t ri ct i v e co v en an ts i n t h e

em pl o y m en t ag reem en t

. Th e t ri al co u rt co n s i dered wh et h er Ho l s i n g er h ad u n cl ean

h a n d s

, bu t fo u nd t hat “ Ho ls i n g er can n o t h av e u n cl ean h an ds fo r v i o l at i n g an

u n en fo rceab l e co v en an t ” an d t h at “ ev en i f H o l s i n g e r v i o l at ed h i s d u ti es u n d er a

Co n fi d en t i al i t y A g reem en t o r so l i ci t ed p art i es to l eav e wh i l e h e was s t i l l em p l o y ed

,

t h at w o ul d n o t ren d er p os t -t erm i n at i o n res t rai n t s o n s ol i ci t at i on an d recru i t m en t

en fo rceab l e g o i n g fo rward , i f t h o s e res t rai n t s v i o l at e Geo rg i a l aw an d p o l i cy .”

Ap p el l an t s arg u e t h at t h e t ri al co u rt s h o u ld n o t hav e ev en reach ed t h e q u es t i o n

o f wh et h er t h e res t ri ct i ve co v en an t s i n t h e em p l o y m en t ag reem en t were en fo rceab l e

b ecau s e u n cl ean han d s i s a t h res h o l d i s s u e t h at m u s t b e d eci d ed befo re t h e m eri t s o f

7t h e cas e are reach ed

. Ho wev er, t o det erm in e wh et h er u n cl ean h an d s b ars i n ju n ct i v e

rel i ef, a tri al co u rt m

u s t fi rs t d et erm i n e wh et h er t h e p art y s eek i n g i n ju n ct i v e rel i ef h as

u n cl ean h an d s

. See, e.g

., Bi s h o p Ed d i e Lo n g Mi n i s t r i es

, In c. v. Di l l a rd

, 2 72 Ga. Ap p.

8 9 4

, 9 0 1 (2 ) (6 1 3 SE2 d 6 7 3) (2 0 0 5 ) (W h ere p l ai n t i ffs d i d n o t h av e eas em en t ri g h t s

a u t h o r i zi n g th em t o p lu g u p a d am or h arv es t t rees

, t ri al co u rt h ad g o o d reas o n t o

d en y an i n ju n ct i on b as ed o n i t s fi n d i ng t h at p l ai n t iffs ’ wro n gfu l co n d u ct i n pl u g g i n g

u p t h e d am an d harv es t i n g t rees co n s t i t u t ed u ncl ean h an ds .) Un d er t he ci rcu m s t an ces

o f t h i s cas e, t h e s u p eri o r co u rt act ed wel l wi t h i n i t s b r o a d d i s cret i o n wh en i t

d et erm i n ed t h at Ho l s i n g er co u l d no t h av e u n c l e an h an ds fo r v i o lat i n g an

u n en fo rceab l e co v en an t

.

In s uppor t of th ei r arg u m en t

, Ap pel l an t s rel y h eav i ly o n Ho ll a n d El ec., Hea t i n g

& Pl u mb i n g Co

. v. Ho l l a n d Hea t i n g & Ai r Co n d i ti o n i n g, In c., 2 5 9 Ga. 2 5 6 (3 7 9 SE2 d

4 0 4 ) (1 98 9 ). In Ho l l a n d

, t wo b us i n es s m en

, M r. H o l l an d an d M r. Hi v el y

, ag reed t h at

i f ei th er p art y ’ s em

p l o y m en t wi t h t h ei r co m

p an y was t erm i nat ed

, t h at p art y wo u l d n ot

co m p et e wi t hi n a 7 5 -m i l e rad i u s fo r t h ree y ears

. Ho l l a n d

, 25 9 Ga. at 2 5 6

. W h en M r.

Ho l lan d l eft t he co m

p a n y a n d b eg an co m

pet i n g wi t h i t, M r. Hi v el y ob t ai n ed an

i n ju n ct i o n en fo rci n g t h e co v en an t n ot t o co m p et e. Id

. Th e Su p rem e Co u rt re v e rs ed

b ecau s e Mr. Hi v el y was al s o co m p et i n g wi th t h e co m

p an y

, an d M r. Hi v el y co u l d n ot

8“ co m

p et e wi t h [ t h e co m

p an y ] an d s i m

u lt an eo u s l y i nv o ke t h e p o wer o f eq u i t y to

p rev en t M r. Ho l l an d an d Ho l l an d El ect ri c fro m d o i n g t h e s am e t h i n g .” Id

. Ho l l an d

i s n o t ap p l i cab l e t o t h i s cas e b ecau s e, u n li ke t h e p l ai n t i ff i n Ho l l an d w h o was s eek i n g

to e nf or c e a va lid n o n -co m

p et e co n v en an t

, Ho ls in g er i s s eek i n g t o en jo i n en fo rce m e nt

o f i nv al id r e str ic tive c ove nan t s

. Ho l s i n g er can ’ t h av e “ u n cl ean h an d s” fro m hi s fai l u re

t o ab i d e b y res t ri ct i ve c o ven an ts t h at are u n en fo rceab l e. A p p el l an t s h av e n ot ci t ed an y

cas e, an d we hav e n ot fo un d an y cas e, co n cl u d i n g t hat res t ri ct i ve co v en an ts vi o l at i n g

Geo rg i a pu b l i c p o l icy s h o u l d b e en fo rced b ecau se t h e y h a v e been v i o lat ed b y t h e

em pl o y ee.

Ap p el l an t s fu rt h er co n t en d t h at b y accep t i n g, w i t ho u t p ro t es t

, an ex i t l e t t er

fro m Fo rt res s wh i ch defi n ed t he d u rat io n o f th e res tri ct i v e co ven an t s

, H o l s i n g er m u s t

b e hel d t o i t s t erm s

. Ho wev er, b ecau se Ap pel l an t s d i d n o t m ak e t h i s e s t o p p el -b y

s i len ce arg um en t bel o w, i t i s wai v ed o n ap peal

. See Pf ei f f er v. Ga

. Dep t

. of Tr a n sp

. ,

2 7 5 Ga. 8 2 7

, 82 9 (2 ) (5 7 3 SE2 d 3 8 9 ) (2 0 0 2 ) (“ Ro u t i n el y

, t h is Co u rt refu ses t o rev i ew

i s su es n o t rai s ed i n t h e t ri al co u rt

. . . . Fa i r n e s s t o t h e t ri al co urt an d t o t h e p art i es

d em an d s t h at l eg al i ss u es b e as s ert ed i n t h e t ri al co u rt .” (ci t at io n s o m i t t ed )).

Fu rt h erm o re, Ap p el l an t s s ug g es t t h at becau s e Ho ls i n g er d i d n ot p ro m p t l y fi l e a

d ecl arat ory ju d g m en t act i o n u p o n recei p t o f t h e ex i t l et t er, lach es b ars h i s cl ai m s fo r

9i n

ju n ct i v e rel i ef. “ To es tab l i s h t h e affi rm at i ve d efen s e o f l ach es

, [a d efen dan t m u s t ]

co m e fo rward w i t h ev i den ce s h o wi n g i n ex cu s ab l e del ay an d p re j u d i c e res u l t i n g

t h erefro m .” Ha r vey v. Ba n k On e

, N

. A

. , 2 9 0 Ga. A p p

. 5 5

, 5 8 (2 ) (6 5 8 SE2 d 8 2 4 )

(2 0 0 8). Ap p el l an ts h av e m ad e n o s h o w i n g o f ei t h er i n ex cu s ab le d el ay o r th at t h ey

were p reju d i ced b y Ho l s in g er’ s fai l u re t o p ro m p t l y fi l e a decl arat o ry ju dg m en t act i o n

u p o n recei pt of hi s ex i t l et t er. “ Th e m ere l ap s e of ti m e i s i n s uffi ci en t t o es t ab l i s h t h e

affi rm at i v e d efen se o f l ach es .” Id

. Acco rd i n g l y

, t h is cl ai m o f erro r i s wi t h o u t m eri t

.

2

. Ap p el l an t s nex t co n t en d t h at t h e tri al co u rt erred i n ho l d i n g t h at t h e t o l l i n g

cl au s e i n t h e em

p l o y m en t ag reem en t i n val i d at es al l t h e pro t ect i v e co v en an ts fo r l ack

o f d efi n ed t em

p o ral l i m i t s. Th e s u p eri o r co u rt h el d t h at th e t o l l in g cl au s e v i o l at es

Geo rg i a l aw b ecau s e i t po t en t i al l y ex ten d s t h e d u rat i on o f a l l o f t h e res t ri ct i v e

co v e n a n t s w i t h o u t li m i t

. Ap p el l an t s arg u e t h at t he s up eri o r co u rt fai l ed t o co n s i d er

a cl au s e i n t h e em

p l o y m en t ag reem en t p ro v i d i n g th at i f an y r e s t ri ct i v e co v en an t i s

“ h el d t o b e u n en fo rceab l e b y reas o n o f i t ex t en di n g fo r t o o g reat a p eri o d o f t i m e . .

. s u ch co v en an t s h al l b e i n t erp ret ed t o ex t en d o n l y o ver t h e m ax i m u m p eri od o f t i m e

fo r w h i ch i t m ay b e e n f o r c eab l e

. . . as d et erm i ned by t h e co u rt m ak i n g s u ch

d et erm i n at i o n [.] ” A cco rd i n g t o Ap p el l an t s

, t hi s cl au s e, w h i ch it refers t o o n ap p eal

as t h e “ Tem

p oral Cap ,” refl ect s t h e p art i es ’ ag reem en t t h at t h e p ro t ect i ve co v en an t s

10can n ev er b e i n t erp ret ed b y a Geo rg i a co u rt as ex ceed i n g Geo rg i a l aw’ s t em p o ral

o u t er l i m i t s

. A p pel l a n t s a r g u e t h at t h e Tem p o ral Cap i n s u l at es fro m ch al len g e t h e

co v en an t s t o wh i ch i t ap p l i es . W e d i s ag ree.

Ap p el l an t s co n t en d t h at i n B u r so n v. Mi l to n Ha l l S

u r g i ca l As s o c.

, L L C

, 3 4 3

Ga. Ap p

. 1 5 9

, 1 6 3 (1 ) (a) (8 0 6 SE2 d 2 39 ) (2 0 1 7 ), we an al y zed an d ap p ro v ed a s i m i l ar

cl au s e, becau s e “ t h e c o n t ract cl earl y d efi n e[d ] t h e p ro ces s b y wh ich i t m ay b e

refo rm ed .” Ho wev er, i n Bu r s o n

, t h e p ro vi s i o n i n q u es ti o n s i m pl y al l o w ed t h e p art i es

t o rev i ew t he g eo g rap h i cal s co p e o f a res t ri ct i ve co v en an t “ fro m t i m e t o t i m e” an d to

m o di fy t h at s co p e “ on l y b y wri tt en am en d m en t to t hi s Ag reem en t .” Bu r s on

, 3 4 3 Ga.

Ap p

. at 1 6 2 (1 ) (a). Th e p r o v i s i o n i n Bu r s o n d i d n ot req u ire a co urt to refo rm an

o v erb ro ad co v en an t t o co m p l y wi t h ap p li cab l e l aw.

“ W i t h reg ard t o em

p l o y m en t co n t ract s

, Geo rg i a law n ow gen eral l y p erm i t s t h e

e n fo rcem en t o f co n t ract s t h at res t ri ct co m pet i t i on d u ri n g t h e t erm o f a res t ri ct i v e

co v en an t

, s o l o n g as s u ch r e s t r i ct i o n s are reas o n ab le i n t i m e, geo g rap h i c area, an d

s co p e o f p ro h i bi ted act i v i t i es

, s ub ject t o cert ai n li m i t at i o ns [.] ” B u r s o n

, 3 4 3 Ga. Ap p.

at 1 6 0 (ci t at i o n s an d p un ct u at i on o m i tt ed ).

An y res tri ct i v e co ven an t n o t i n co m pl i an ce wi t h t h e p ro vi s i o n s o f

[OCGA Ti tl e 1 3

, Ch ap t er 8

, Art i cl e 4 ] i s v o i d an d u n en fo rceab l e;

11p ro v i d ed

, h o wev er, t h at a co u rt m ay m o d ify a co v en an t t hat i s o t h erwi s e

v o i d an d un en fo rceab l e s o l o n g as t h e m o d i fi cat i o n d o es n o t ren d er th e

co v en an t m o re res t ri ct i v e wi t h reg ard t o t h e em pl o y ee t h an as o ri g i n al l y

d raft ed b y

t he p art i es

.

OCGA § 1 3 -8 -5 3 (d ). Th e cu rren t s t at u t o ry pro v i s i o n s g o v ern in g en fo rcem en t o f

res t ri ct i v e co v en an t s i n em p l o y m en t co n t ract s “ becam e effect i v e May 11

, 2 0 1 1

, an d

ap p ly to co n t ract s en t ered in t o o n an d aft er May 1 1

, 2 0 1 1

, a n d s h al l n o t ap p l y in

act i on s d et erm i n i n g t h e en fo rceab i l i ty o f res t ri ct i v e co v en an ts en t ered i n t o b efo re

s u ch d at e.” B u r

s o n

, 34 3 G a

. A p p

. at 1 6 0 (ci t at i o ns an d p u n ct u at io n o m i t t ed ).

Co n t ract s en t ered i n t o b efo re M ay 1 1

, 2 0 1 1, m u s t b e an al y zed u n d er t h e l aw o f

res t ri ct i v e co v en an t s as i t ex i s t ed b efo re t h at d at e. See H ol t o n v. Ph

ys i ci a n On co l o g

y

S vcs

., LP

, 2 9 2 Ga. 8 6 4

, 8 70 (3 ) n. 4 (7 42 SE2 d 7 0 2 ) (2 0 13 ). Ho ls in g er’ s 2 0 1 0

em pl o y m en t ag reem en t wi t h Fo rt res s was en t ered i n t o b efo re M ay 1 1, 20 1 1

. “ Un d er

t h e p ri or l aw, co u rt s co u l d n o t m o d ify v o i d an d u nen fo rceab l e co v en an t s .” Bu r s o n

,

3 4 3 Ga. Ap p

. at 1 6 1

. An d b efo re M ay 1 1

, 2 0 1 1

, Geo rg i a “ [d id ] n o t fo l l o w t h e ‘ b l u e

p en ci l ’ d o ct ri n e o f s ev erab i l it y i n co n s t ru i n g em p l o y m en t co n tract s .” Den t W i z ar d

In t l

. Co r p

. v. Br o wn

, 2 7 2 Ga. Ap p

. 5 5 3

, 5 5 6 (2 ) (6 1 2 SE2 d 8 7 3 ) (2 0 0 5 ). “ Th ere can

b e n o ‘ b l u e p en ci l th eo ry ’ o f s ev erab il i t y of co v en an t s n o t t o co m p e t e ev en wh ere

t h ere i s a s ev erab i l i t y cl au s e[.] ” La n e Co

. v. Ta yl o r

, 17 4 Ga. Ap p. 3 56

, 35 8 (2 ) (3 3 0

12SE2 d 1 12 ) (1 9 8 5 ) (p h y s i cal p reced en t o n l y ). Here, Ap p el l an t s arg u e t h at t h e

Tem p o ral Cap req u i red t h e tri al co u rt t o g o b ey o n d s i m p le s ev eran ce an d refo rm an y

o v erb ro ad co v en an ts t o co m p l y w i t h ap p l i cab l e l aw. Becau s e Geo rg i a l aw p ri o r to

M ay 1 1

, 2 0 1 1

, d id n o t al l o w co u rt s t o m od i fy v o i d an d un en fo rceab l e co ven an t s

, t h e

t ri al co u rt was n o t req u i red to ap p l y t h e Tem p o ral Cap t o refo rm t he t o l l i n g p ro v i s i o n

t o co m p l y wi t h Geo rg i a l aw. See Bu r s o n

, 3 43 Ga. Ap p

. at 16 1

. Co ns eq u en t l y

, t h e t ri al

co u rt d i d n o t err i n ho l d i n g t h at t h e t o l l i n g cl au s e i n t h e e m p l o y m en t ag reem en t

i n v al i d at es al l t h e p ro t ect i v e co v en an t s fo r l ack o f d efi n ed t em p o ral l i m i t s

.

3

. Becau s e o f o u r co n cl us i o n i n Di v is i on 2

, we n eed n o t ad dres s Ap p el l an t s ’

o t h er arg u m en t s reg ard i ng t h e v a l i d i t y o f t h e no n -recru i t m en t cl au s e an d t h e n o n

s o l i ci t at i on cl au s e.

4

. Nex t , Ap p el l an ts co n t en d t h at t h e t ri al co u rt erred in h o l d i n g t h at t h e Du t y

o f Lo y al t y

Cl au s e was i n co rp o rat ed i n t o t h e 2 0 1 0 em p l o y m en t ag r e e m e n t an d t h en

ap p ly i n g p re-M ay

1 1 , 2 0 11 l aw t o t h o s e i ss u es

. W e d i s ag ree.

Th e 20 1 0 em

p l o y m en t ag reem en t ex p l i ci tl y i nco rp o rat es t h e Du t y o f Lo y al t y

Cl au se as fo l l o ws : “ al l res tri ct i o n s an d co v en an t s co nt ai ned i n th e Hy b ri d D o cu m en t s

(i ncl ud i ng

, wi t h o u t l im i t at i o n

, t h e ‘Du t y of Lo y al t y ’ as defi n ed t h erei n ) are h ereb y

i n co rp o rat ed b y referen ce i n t h i s Let t er Ag reem en t u p o n y o u r ex ecu t i o n o f s u ch

13d o cu m en t at i o n .” Ap p el l an t s arg u e t h at t h e t ri al co urt erred b y fi n d in g t h at t h e 2 0 1 0

em pl o y m en t a g reem en t i n co rp o rat es t h at Du t y o f Lo y al t y Cl au s e “ as a Pro t ect i v e

Co v en an t .” H o wev er, su b st an ce, n o t l ab el

, d et erm i n es wh et h er a co n t ract p ro v i s i o n

i s a res t rai n t of t rad e. See, e.g

., At l a n t a Br ea d Co

. In t l

., In c. v. Lu pt o n -S mi t h

, 2 8 5 Ga.

5 8 7

, 5 89 (2 ) (6 7 9 SE2 d 7 2 2 ) (2 0 0 9 ) (t reat i n g a “ l o ya l t y p ro v i si o n ” as a res t ri ct i v e

co v en an t ; “ Su ch r e s t rai n t s, n o m at t er t h e n o m en cl at u re as s ig n ed t o t h em

, are

d i s fav o red i n th i s s t a t e as a m at t er of p u b l i c p ol i cy .”). In s u b s t an ce, th e Du t y o f

Lo y al t y Cl au s e i s a co ven an t n o t t o co m p et e

– i t i m

p os es a “ d u ty

. . . t o refrai n fro m

co m p et i n g wi th an y m em

b er o f t h e Cred i t Fu nd s Gro u p i n t h e co n d uct o f i t s

b u s i n es s [.] ” Fu rt h erm ore, t h e 2 0 1 0 em p l o y m en t ag reem en t d efi n es “ Pro t ect i v e

Co v en an t s ” t o i n cl u d e no t o n l y t h e co v en an t s ap p eari n g i n t h e “ Pro t ect i v e

Co v en an t s ” s ect i o n

, bu t al s o t ho s e t h a t are “ o th erwi se in co rp o rat ed i n t o ” t h e 2 0 1 0

em pl o y m en t ag reem en t.

Ap p el l an t s co n t en d t h at ev en i f th e 2 01 0 em p lo y m en t ag reem en t in co rp o rat ed

t h e Du t y o f Lo y al t y Cl au s e, t he t ri al co u rt erred i n ap p l y i n g p re-M ay 1 1

, 2 01 1 l aw to

i s su es i n v o l v i n g t h at cl au s e. Becau s e Ap p el l an t s m ak e t hi s arg u m en t fo r t h e fi rs t t i m e

o n ap peal

, “ th e co n t en ti o n m us t b e d eem ed t o h av e been w ai v ed .” Tr op

, In c. v. Ci t y

o f Br o okh a ven

, 2 96 Ga. 8 5 , 9 0 (3 ) (7 6 4 SE2 d 3 9 8 ) (2 0 1 4 ). Ap p el l an ts co n t en d t h at

14t h ey d i d n o t wai v e th i s arg u m en t b ecau s e t h ey ad dres s ed t h e i m p act o f t he Geo rg i a

Res tri ct iv e Co v en an t s A ct i n t h ei r b ri ef fi l ed i n t h e s u p eri o r co u rt

. H o wev er,

Ap p el l an t s d id n o t arg u e b el ow t h at t h e s u p eri o r co u r t sh o ul d an al y ze t h e Du t y o f

Lo y al t y Cl au s e u nd er t h e Geo rg i a Res t ri ct i v e C o v e n a n t s Act

. A p p el l an t s m ad e a

d i fferen t arg u m en t b el ow

– – i n re s p o n s e t o Ho l s i ng er’ s arg u m en t t h at g ran t i n g t h e

i n t erl o cu t o ry i n

ju n ct io n wo u l d n o t d i s s erv e t h e p u bl i c i n t eres t

, Ap p el l an t s arg u ed

t h at

, ev en t h o u g h t he u n d erl y i n g ch an g es t o Geo rg ia l a w s e t fo rt h i n t h e Geo rg i a

Res t r ict i v e Co ven an t s A ct are n o t ret ro act i v e, t h e en act m en t o f t h e Geo rg i a

Res tri ct iv e Co ven an ts Act s ho ws t h at Geo rg i a p u b l i c p o li cy n o l o n g er d i s fav o rs

res t ri ct i v e co v en an t s

.

5

. Nex t

, Ap p el l an t s co n ten d t h at t h e tri al co u rt erred b y h o l d i n g t h at t h e New

Yo rk fo ru m

s el ect i o n cl au s e was i n v al id . W e d i s ag ree.

C h o i c e -o f-l aw an d fo ru m -s el ect i o n cl au s es m ay b e i nv al i d i f en fo rcem en t

wo u l d co n t rav en e Geo rg ia p u b l i c p o l i cy

. Bu n ker Hi l l In tl

., Lt d

. v. Na t i on s bu i l d

er In s

.

S vcs

., In c., 3 0 9 Ga. Ap p

. 5 0 3

, 5 0 6 (7 1 0 SE2 d 6 6 2 ) (2 0 1 1 ). “ [I] f a p art y can s h o w b o th

t h at a res t ri ct i v e co ven an t v i o l at es Geo rg i a p u b l i c p o l icy an d t h a t a co u rt i n t h e

s el ect ed fo ru m

l i k el y wo u l d fi n d t h e res t ri ct i v e co v en an t en fo rceab l e, a co m p el l i n g

reas on ex i s t s t o av o i d th e c o n t r a c t u al fo ru m s el ect i o n cl au s e.” Ca r s o n v. Ob o r

15Ho l di n g Co

., LLC

, 3 18 Ga. Ap p. 6 4 5

, 6 4 8 (7 3 4 SE2 d 4 7 7) (2 0 12 ). A p p el lan t s arg u e

t h at Ho l s i n g er fai led t o p res en t s u ffi ci en t ev i den ce fro m wh i ch t h e t ri al co urt co u ld

co n cl u d e t h at a New Yo rk co urt wo u l d ap p l y l aw t h at co n fl i ct s wi t h Geo rg i a p o l i cy

.

Fu rt h erm o re, A p pel l an t s arg ue t h at ev en i f a New Yo rk co u rt d i d ap p l y New Yo rk

l aw, l i t i g at i n g th e cas e i n New Yo rk is ap p ro p r i a t e b ecau s e New Y o rk l aw an d

Geo rg i a l aw po s t-Geo rg i a Res t ri ct i v e Co v en an t s A ct are c o n s i s ten t

. Th e 2 0 1 0

em pl o y m en t ag reem en t s el ect s New Yo rk l aw, an d

, as th e s u peri o r co u rt fo u n d

, a

New Yo rk co u rt wo ul d l i k el y h o n o r t h e New Yo rk ch o i ce-o f-l aw p ro v i s i o n u n d er i t s

“ s u b s t an t i al rel at i o n s h ip ” t es t

. N ew Yo rk p erm i t s i t s co u rt s “ t o s ev er an d g ran t p art i al

en fo rc e m e n t o f an o verb ro ad em p l oy ee res t ri ct iv e co v en an t .” BDO S ei d ma n v.

Hi r s h b er g

, 7 1 2 NE2 d 1 2 2 0

, 1 2 2 6 (N. Y. 1 9 9 9 )

. T h u s

, en fo rci n g t h e New Yo rk

fo rum

- se le c tion c la

u s e w oul d co n t rav en e Geo rg i a’ s s t ro n g p u b l i c p o l i cy ag ai n s t b l u ep en ci l i n g em

p l o y m en t co nt ract s en t ered i n t o b efo re M ay 1 1

, 20 1 1

. See Bu n ker Hi l l

,

3 0 9 Ga. Ap p

. at 5 0 6. Acco rd in g l y , t h e s u p eri o r co u rt d i d n o t err i n h ol d i n g t h at t h e

New Yo rk fo ru m

s el ect i o n cl au s e was i n v al i d

.

6

. Becau s e o f o u r co n cl us i o n i n Di v is i on 5

, we n eed n o t ad dres s Ap p el l an t s ’

arg u m en t t h at t h e i nju nct i o n ord er i n co rrect l y h e l d t h at Fo rt res s wai v ed i t s ri g ht to

i n v o k e t h e New Yo rk

fo ru m -s el ect i on cl au s e.

167

. Nex t

, Ap p el l an t s co n t en d t hat t h e i n ju n ct i o n i s o verb ro ad b ecau s e i t r u l e d

o n m o o t i s s u es

. W e d o no t ag ree. Ap p el lan t s arg u e t h at t h e en fo rceab i l it y o f t h e No n

Co m p et e Cl au s e b ecam e m oo t wh en t h ey s t at ed i n a b ri ef t o t h e tri al co u rt t h at t h ey

wo u l d n o t “ s eek t o en

jo i n o r p rev en t Ho l s in g er fro m acce p t i n g em p l o y m en t

el s ewh ere.” Co u rt s ap p l y in g Geo rg ia l aw h av e reject ed s i m i l ar t act i cs , h o l d i n g t h at

“ [i ] t d o es n o t m at t er t h at t h e Defen d an t s h av e s t at ed t h at t h ey wi l l n o t s eek t o en fo rce

[an o v erb ro ad ] c o v e n a n t no t t o co m p et e.” Mo o r ad v. Af

f o r d a b l e In t er i o r S

ys t ems

,

LLC, No

. 1 : 1 1 -CV-2 5 8 0 -RWS

, 2 0 1 2 W L 16 2 2 8 9

, at * 5 (III) (N.D. G a. J an

. 1 8,

2 0 1 2 ). Un d er t h o se ci rcu m st an ces

, t h e o verb ro ad co v en an t “ s t i l l ex i s t s an d faci al l y

res t rai n s t rad e.” Id

. Ap p el l an t s s i m i l arl y arg u e th at t he en fo rceab il i t y o f t he Du ty o f

Lo y al t y Cl au s e i s m o o t becau s e, o n ce Hy b ri d ’ s m an ag i n g m em

b er rep u rch as ed

Ho l si n g er’ s v es t ed i n t eres t s i n Hy b ri d

, Ho l s i n g er w as n o l o n ger s u b ject t o t h at cl au s e.

Ho wev er, b ecau se t he 2 01 0 em p l o y m en t ag reem en t i n co rp o rat ed t h e Du t y o f Lo y al t y

Cl au se, th e v al i d i t y o f t h at cl au s e rem ai n ed at is s u e fo r p u rp os es o f as s es s i n g o t h er

res t ri ct i v e co v en an t s i n th e 20 1 0 em p l o y m en t ag reem en t

. See Den t W i z a r d

, 2 7 2 Ga.

Ap p

. at 55 6 (2 ) (b ecau s e o n e res t ri ct i v e co v en an t i n an em p l o y m en t ag reem en t was

u n en fo rceab l e, o t h er res t ri ct i v e co v en an t s i n t h e s am e ag reem en t were al s o

u n en fo rceab l e).

178

. Ap p el l an t s al s o arg u e t h at t h e i n ju n ct i o n i s ov erb ro ad b ecau s e i t i s n ot

l i m i ted t o co n d u ct i n Geo rg i a. Ho wev er, Ap p el l an t s d i d n o t arg u e b e l o w t h a t an y

i n ju n ct i o n s h o u l d b e l im i t e d t o co n du ct i n Geo rg ia. Acco rd i n g l y

, Ap p el l an t s fai l ed

t o p res erv e t h is i s s u e fo r rev i ew. See P f ei f f er , 2 7 5 Ga. at 8 2 9 (2 ).

9

. Fi n al l y

, Ap p e l l an t s arg u e t h at t h e i n ju n ct i o n i s o verb ro ad b ecau s e i t b ars

rem ed ies n o t t i ed to t h e res t ri ct i v e co v en an t s

. Ap p el l an ts co n ten d t h at th e i nju n ct i o n

i s o v erb ro ad b eca u s e i t i m p erm i s s i b ly p ro h i b i t s t h em fro m en fo rci n g t h ei r ri g h t s in

way s t h at are n o t t i ed t o t h e res t ri ct i v e co v en an t s

. Sp eci fi cal l y

, Ap p el l an t s arg u e t h at

t h e o rd er s eem s t o p rev en t Ap p el l an ts fro m p u rs ui n g t h ei r co u n t ercl ai m s fo r b reach

o f fi d uci ary du t y

, co n v ers io n , an d co m pu t er t h eft an d co m

p u t er t res p as s

. W e ag ree.

Al t h o u g h t h e s u p eri o r co urt m ay h av e n ot h av e i n ten d ed t o p rev en t Fo rt res s fro m

p u rs u i n g c o u n t ercl ai m s t h at d o n o t d ep en d o n t h e res t ri ct i v e co ven an t s, i n cl u d i n g

fi du ci ary d u ty cl ai m s

, t h e t h e o r d er m ay be co n s t ru ed as d o i n g s o an d i s

, t herefo re,

o v erl y b ro ad

. I n p a rt i cu l ar, t h e fi n al s en ten ce o f t h e ord er s t at es : “ Th is p ro h i b i t i o n

i n cl u d es

, wi th o u t l i m i tat i o n

, b ri n g i n g a laws u i t or o t h erwi s e t h reat en in g to i m p o s e

d am ag es o r an y o t h er fo rm of l i ab il i ty u p on Ho l s in g er o r an y o t h er pers o n or en t i t y

,

i n cl u d i n g an en t i t y em

p l o y i ng H olsinge r

. ” A c c or dingly

, o n rem an d

, t h e su p eri o r co u rt

m u st l i m i t t h e s co p e of t h e i n ju n ct i o n so t h at it d o es n o t p rev en t Fo rt res s fro m

18p u rs u i n g co u n tercl ai m s t h at d o n o t d ep en d o n t h e res tri ct i v e co v en an t s co n t ai n ed in

o r i n co rp o rat ed i n t o t h e em pl o y m en t ag reem en t

.

Ju d g men t va ca t ed an d ca s e r e m a n d ed wi t h d i r ect i o n

. McFa d d en

, C. J., a n d

Do yl e, P. J., co n cu r

.

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