Court Opinion

ID: 9771019
Source: CourtListenerOpinion
Date Created: 2023-08-29 16:29:09.403087+00
Date Added: 2024-06-11T07:31:23.860541
License: Public Domain

OPINION ON MOTION FOR REHEARING

In a supplemental motion for rehearing, appellee Permian Court Reporters, Inc. urges us to reconsider our opinion in light of recent amendments to the Texas Business and Commercial Code. The amendments still require that a covenant not to compete be ancillary or part of an otherwise enforceable agreement; Permian argues, however, that new language in Tex.Bus. & Com.Code Ann. § 15.51(b) should alter the outcome here. That amended section reads:
If the primary purpose of the agreement to which the covenant is ancillary is to obligate the promisor to render personal services, for a term, or at will, the promis-ee has the burden of establishing that the covenant meets the criteria specified by Section 15.50 of this code. Act of May 14, 1993, 73rd Leg., R.S. Ch. 965, § 2, 1993 Tex.Sess.Law Serv. 12 (Vernon) [to be codified at Tex.Bus. & Com.Code Ann. § 15.-51(b) ].
Permian claims this manifests a legislative recognition that at-will contracts may be otherwise enforceable agreements which will support noncompetition agreements. Permian further relies upon additional language added at Tex.Bus. & Com.Code Ann. § 15.52 which expressly “preempts any other criteria for enforceability of a covenant not to compete .... ” These amendments took effect September 1,1993 and apply to all covenants entered into before, on or after the effective date of this Act unless the enforceability of *729the covenant has been finally adjudicated. Thus, they apply to the case here.
Permian argues that, in light of these amendments, we erred in holding that its at-will contract with Stanley Burgess cannot support the noncompetition agreement because it met the legislatively-imposed burden of proving the contract contained valid consideration satisfying the criteria of § 15.50. We disagree.
The Texas Supreme Court recently held in Light v. Centel Cellular Company of Texas, 37 Tex.Sup.Ct.J. 17, 1993 WL 392211 (October 6, 1993) that the new amendments need not alter its conclusion that an at-will employment contract, similar to the one at issue here, was:
[N]ot ancillary to an otherwise enforceable agreement and is an unreasonable restraint of trade and unenforceable on grounds of public policy. Id. at 18.
Following the Supreme Court’s lead, we again note that the contract between Burgess and Permian was terminable at will by either party, for any reason. It was therefore not an “otherwise enforceable agreement” and cannot meet the criteria necessary to sustain a covenant not to compete. The recent legislative amendments to the relevant statutes do not change our conclusion. Appellee’s motion for rehearing is overruled.