Court Opinion

ID: 3121722
Source: CourtListenerOpinion
Date Created: 2015-10-16 14:12:51.255568+00
Date Added: 2024-06-11T11:53:08.864663
License: Public Domain

COURT OF APPEALS
                         SECOND DISTRICT OF TEXAS
                              FORT WORTH

                             NO. 02-10-00336-CV

RICKY J. PICKLE, INDIVIDUALLY,                                     APPELLANT
AND D/B/A RJ PICKLE &
ASSOCIATES, CPA’S

                                       V.

TRACI D. JOHNSON                                                    APPELLEE

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          FROM THE 67TH DISTRICT COURT OF TARRANT COUNTY

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                        MEMORANDUM OPINION1

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                               I. INTRODUCTION

      Appellant Ricky J. Pickle, individually, and d/b/a RJ Pickle & Associates,

CPA’s, appeals the trial court’s grant of Appellee Traci D. Johnson’s motion for

summary judgment. In four issues, Pickle contends that the trial court erred by

      1
      See Tex. R. App. P. 47.4.
finding that the parties’ non-solicitation agreement contained a five-year

limitation;2 that the trial court erred by refusing to allow him to file a second

amended petition; that the trial court did not dispose of all issues in its judgment;

and that the trial court erred by awarding attorneys’ fees to Johnson. We will

affirm.

                                 II. BACKGROUND

      Johnson, her father, and her uncle had a partnership in a certified public

accountant business. Pickle purchased the business on December 23, 2002.

Following the close of the sale, Pickle employed Johnson. Johnson remained an

employee of Pickle until the fall of 2007, when she resigned. Sometime after she

resigned, Johnson began competing with Pickle.         In her course of business,

Johnson sent notices to some of the accounts she formerly serviced both when

she was a partner in the original business and later when she worked for Pickle.

      On December 19, 2008, Pickle filed a breach of contract suit seeking

damages and injunctive relief. Pickle pleaded that the agreement to purchase

the original partnership from Johnson included two separate covenants. First,

according to Pickle’s pleadings, the contract of sale included a non-compete

covenant with a time limit of five years. Second, Pickle pleaded that the contract

of sale contained a separate non-solicitation agreement with no time limit and

      2
        Even though Pickle labels his first argument in terms of the trial court
finding that Johnson ―did not violate the non-solicitation portion of the business
sales agreement,‖ the body of Pickle’s argument only addresses the trial court’s
interpretation of the non-solicitation agreement between the parties.

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that Johnson had breached that agreement. The language giving rise to both

arguments is found in section 1.3 of the contract of sale, which reads in its

entirety:

       1.3 Covenant Not to Compete or Solicit. Upon the purchase of the
       Partnership’s Assets covered by this Agreement and for a period ending
       on the fifth (5th) anniversary of the Closing Date, the Partnership, John L.
       Hodgkiss, Traci D. Johnson, and William R. Hodgkiss, jointly and severally,
       hereby each agree that they will not directly or indirectly within the Texas
       counties of Tarrant, Dallas, and Denton, enter into or engage generally in
       competition with Buyer in the accounting, auditing, tax preparation, or other
       similar or related businesses in which the Buyer is engaged on the Closing
       Date, either as an individual on his/her own or as a partner or joint
       venturer, or as an employee or agent for any person or entity, or as an
       officer, director, shareholder, manager, member, or otherwise. Further, the
       Partnership, John L. Hodgkiss, Traci D. Johnson, and William R. Hodgkiss
       shall not during such five (5) year period, directly or indirectly, copy,
       disclose, disseminate, divulge, communicate, furnish, reveal, use to the
       detriment of Buyer or for the benefit of any other person or persons, or
       misuse in any way any confidential or proprietary information or trade
       secrets of the Buyer or the Assets sold hereby, including, but not limited to,
       personnel information, financial information, customer information,
       accounting processes and procedures, correspondence, internal
       memoranda, or any other proprietary or technical information.

               In addition, the Partnership, John L. Hodgkiss, Traci D. Johnson,
       and William R. Hodgkiss, jointly and severally each agree that they will not
       solicit any client or customer listed among the Assets being sold.

              This covenant by the Partnership, John L. Hodgkiss, Traci D.
       Johnson, and William R. Hodgkiss is an independent agreement and the
       existence of any claim or cause of action of the Partnership, John L.
       Hodgkiss, Traci D. Johnson, or William R. Hodgkiss against Buyer will not
       constitute a defense to the enforcement by Buyer of this covenant. Buyer,
       the Partnership, John L. Hodgkiss, Traci D. Johnson, and William R.
       Hodgkiss hereby agree to the sum of FOUR THOUSAND AND NO/100
       DOLLARS ($4,000.00) as consideration for this covenant. However,
       Buyer, the Partnership, John L. Hodgkiss, Traci D. Johnson, and William
       R. Hodgkiss agree that said sum shall not be construed to be liquidated
       damages for breach of said covenant and that irreparable harm will be
       sustained by Buyer if the Partnership, John L. Hodgkiss, Traci D. Johnson,

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        or William R. Hodgkiss violates the provisions of this paragraph. The
        Partnership, John L. Hodgkiss, Traci D. Johnson, and William R. Hodgkiss
        therefore agree Buyer may seek equitable as well as legal remedies
        against each of them if the Partnership, John L. Hodgkiss, Traci D.
        Johnson, or William R. Hodgkiss breaches or attempts to breach this
        covenant not to compete or solicit which may include, but not be limited to,
        a temporary restraining order and temporary injunction.

               If a court determines that the foregoing restrictions are too broad or
        otherwise too restrictive under applicable law, including with respect to
        time or space, the court is hereby requested and authorized by the parties
        hereto to revise the foregoing restrictions to include the maximum
        restrictions allowed under the applicable law. Sellers expressly agree that
        breach of the foregoing would result in irreparable injuries to Buyer, that
        the remedy at law for any such breach will be inadequate and that upon
        breach of these provisions, Buyer, in addition to all other available
        remedies, shall be entitled as a matter of right to injunctive relief in any
        court of competent jurisdiction without the necessity of proving the actual
        damage to Byer [sic].

              Notwithstanding the above to the contrary, this covenant is not
        intended to prevent John L. Hodgkiss from continuing his existing financial
        advisory business within its current scope of services.

        Ultimately, Johnson filed a motion for summary judgment, contending that

there are not two separate covenants in the agreement but that rather there is

one covenant not to compete or solicit that contained a single five-year limitation

agreement, which expired December 23, 2007. Johnson also sought attorneys’

fees.

        After a series of hearings, on May 3, 2010, the trial court found that the

purchase agreement contained one covenant limited by a single five-year period

that expired on December 23, 2007, and granted summary judgment in favor of

Johnson. The trial court then held a hearing regarding attorneys’ fees and later

entered a final judgment, which states: ―Because the Court’s partial summary

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judgments signed May 3, 2010, disposed of the balance of the claims pending in

this cause, this Order specifically disposes of all claims between all parties in

combination with earlier Orders.‖ This appeal followed.

                                    III. DISCUSSION

      A.     Time Limitation on Covenant Not to Compete or Solicit

      In his first issue, Pickle contends that the trial court erred by granting

Johnson’s motion for summary judgment predicated on an interpretation of

section 1.3 that it was the intent of the parties that the five-year limitation was

intended to apply to the non-solicitation portion of the covenant not to compete or

solicit. Specifically, Pickle argues that because the five-year limitation is in the

first paragraph of section 1.3, where language pertaining to non-competition

exists, and only the second paragraph specifically mentions a restraint upon

solicitation of clients by the sellers, then the intent of the parties is clear that they

intended to treat the two paragraphs as two distinct covenants. According to

Pickle, the first paragraph relates to competition and the second paragraph

relates to solicitation of existing clients by the seller at the time of sale. And,

according to Pickle, the first paragraph contains a five-year limitation and the

second paragraph contains none; thus, Pickle argues that section 1.3 was

intended to be unlimited in time as it pertains to the solicitation of Johnson’s

former clients.

      Johnson counters that portions of section 1.3 would be rendered

meaningless under Pickle’s interpretation. Johnson also contends that the plain

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language of section 1.3 unambiguously expresses that the parties intended the

entire section to be treated as one covenant, with the five-year limitation applying

to the entire section as a whole. The trial court granted Johnson’s summary

judgment and interpreted section 1.3 as having a single five-year limitation on

competition and solicitation ending on December 23, 2007—five years after the

sale of the business to Pickle.

             1.    Summary Judgment Standard of Review

      In a summary judgment case, the issue on appeal is whether the movant

met the summary judgment burden by establishing that no genuine issue of

material fact exists and that the movant is entitled to judgment as a matter of law.

Tex. R. Civ. P. 166a(c); Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding,

289 S.W.3d 844, 848 (Tex. 2009). We review a summary judgment de novo.

Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010).

      We take as true all evidence favorable to the nonmovant, and we indulge

every reasonable inference and resolve any doubts in the nonmovant’s favor.

20801, Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008); Provident Life &

Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). We consider the

evidence presented in the light most favorable to the nonmovant, crediting

evidence favorable to the nonmovant if reasonable jurors could and disregarding

evidence contrary to the nonmovant unless reasonable jurors could not. Mann

Frankfort, 289 S.W.3d at 848. We must consider whether reasonable and fair-

minded jurors could differ in their conclusions in light of all of the evidence

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presented. See Wal-Mart Stores, Inc. v. Spates, 186 S.W.3d 566, 568 (Tex.

2006); City of Keller v. Wilson, 168 S.W.3d 802, 822–24 (Tex. 2005).

      If uncontroverted evidence is from an interested witness, it does nothing

more than raise a fact issue unless it is clear, positive and direct, otherwise

credible and free from contradictions and inconsistencies, and could have been

readily controverted. Tex. R. Civ. P. 166a(c); Morrison v. Christie, 266 S.W.3d
89, 92 (Tex. App.—Fort Worth 2008, no pet.).

      A defendant who conclusively negates at least one essential element of a

cause of action is entitled to summary judgment on that claim. Frost Nat’l Bank

v. Fernandez, 315 S.W.3d 494, 508 (Tex. 2010), cert. denied, 131 S. Ct. 1017

(2011). Once the defendant produces sufficient evidence to establish the right to

summary judgment, the burden shifts to the plaintiff to come forward with

competent controverting evidence that raises a fact issue. Van v. Pena, 990
S.W.2d 751, 753 (Tex. 1999).

            2.     Contract Interpretation

      When interpreting a contract, we must ascertain and give effect to the

contracting parties’ intent. Perry Homes v. Cull, 258 S.W.3d 580, 606 (Tex.

2008) (O’Neill, J., concurring), cert. denied, 120 S. Ct. 952 (2009). We focus on

the language used in the contract because it is the best indication of the parties’

intent. Id. We must examine the entire contract in an effort to harmonize and

effectuate all of its provisions so that none are rendered meaningless. Seagull

Energy E & P, Inc. v. Eland Energy, Inc., 207 S.W.3d 342, 345 (Tex. 2006).

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Therefore, we will not give controlling effect to any single provision; instead, we

read all of the provisions in light of the entire agreement. Id. (citing Coker v.

Coker, 650 S.W.2d 391, 393 (Tex. 1983)). We may not rewrite the contract or

add to its language under the guise of interpretation. See Am. Mfrs. Mut. Ins. Co.

v. Schaefer, 124 S.W.3d 154, 161–62 (Tex. 2003). Rather, we must enforce the

contract as written. See Royal Indem. Co. v. Marshall, 388 S.W.2d 176, 181

(Tex. 1965). If possible, we should avoid a construction that is unreasonable,

oppressive, inequitable, or absurd. Pavecon, Inc. v. R-Com, Inc., 159 S.W.3d
219, 222 (Tex. App.—Fort Worth 2005, no pet.). Language should be given its

plain grammatical meaning unless it definitely appears that the intention of the

parties would thereby be defeated. Reilly v. Rangers Mgmt., Inc., 727 S.W.2d
527, 529 (Tex. 1987). A writing is not ambiguous merely because it lacks clarity

or because a disagreement in interpretation arises. DeWitt Cnty. Elec. Coop.,

Inc. v. Parks, 1 S.W.3d 96, 100 (Tex. 1999).

      In this case, there are a number of reasons why the language in section

1.3 demonstrates that the parties intended section 1.3 to be treated as one

covenant not to compete or solicit, with the single defined five-year time restraint

to apply to the single covenant as a whole. First, in five different instances within

the language of section 1.3, the term ―covenant‖ is used to address section 1.3

as a single covenant, and one of those instances refers to the section as ―this

covenant not to compete or solicit.‖ This prominent language belies Pickle’s

claim that there are two separate covenants intended by the language of section

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1.3 and supports Johnson’s claim that the language in section 1.3

unambiguously sets forth a single covenant not to compete or solicit.

      Furthermore, the second to last paragraph of section 1.3 provides that a

court may determine that the ―foregoing restrictions are too broad . . . including

with respect to time or space.‖ The geographical ―space‖ is defined once in the

beginning language of 1.3 as ―within the Texas counties of Tarrant, Dallas, and

Denton.‖ Likewise, ―time‖ is defined in the first paragraph as a ―five (5) year

period‖ that is to end ―on the fifth (5th) anniversary of the Closing Date.‖ Both of

these definitions demonstrate that the intent of the parties was to define the ―time

or space‖ restrictions of section 1.3 at the beginning and have them apply to the

entire section being read as a single covenant. Focusing on the language of

section 1.3, harmonizing each portion of the section, and giving effect to each

subparagraph therein, we conclude that as a matter of law, the intention of the

parties as expressed in the contract’s language is that section 1.3 is to be treated

as a single covenant not to compete or solicit and that there is a single time

constraint for a five-year period beginning from the purchase date of the

business.   Thus, the trial court did not err by granting Johnson’s motion for

summary judgment. We overrule Pickle’s first issue.

      B.    Amended Pleadings

      In his second issue, Pickle contends that the trial court erred by not

allowing him to file a second amended petition. Pickle argues that the trial court

―specifically instruct[ed]‖ him to file an amended pleading after the summary

                                         9
judgment hearing. Pickle does not, however, point to any evidence in the record

that the trial court made such an instruction. This court has examined the record,

and the record does not reflect that the trial court ever made such an instruction.

Johnson counters that Pickle never sought or obtained leave to amend his

pleading and that thus he waived any potential error for our review. In its order,

the trial court struck Pickle’s second amended petition specifically because Pickle

―did not obtain leave and such filing operate[d] as a surprise‖ to Johnson.

      After a summary judgment hearing but before a trial court renders

judgment, a party must obtain leave of the court to amend a pleading. Tex. R.

Civ. P. 63; see Austin v. Countrywide Homes Loans, 261 S.W.3d 68, 75 (Tex.

App.—Houston [1st Dist.] 2008, pet. denied) (―Once the hearing date for a motion

for summary judgment has passed, the movant must secure a written order

granting leave in order to file an amended pleading.‖).

      The record demonstrates that Pickle did not obtain leave to file his second

amended petition. Thus, the trial court did not err by striking this pleading. We

overrule Pickle’s second issue.

      C.     Alleged Remaining Unresolved Issue

      In his third issue, Pickle contends that the trial court granted summary

judgment in Johnson’s favor based solely ―for activities after the 5-year limitations

of the covenant had expired.‖ Pickle further contends that ―the trial court still

needed to address [Johnson’s] illicit activities while she was still employed by

                                         10
[Pickle.]‖   Thus, according to Pickle, there existed a remaining issue on his

breach of contract claim that was left unresolved by the trial court.

       The record establishes that Johnson moved for summary judgment

predicated on the defense that the five-year time limitation expired on December

23, 2007, and that after that date, she ―sent notice to some of the accounts she

formerly serviced‖ that she had left Pickle and would be opening her own

business in January. In support of this position, Johnson included deposition

testimony, among other summary judgment evidence, averring that she did not

contact former clients until ―the end of December,‖ after ―the expiration of the

agreement.‖ Pickle did not offer any summary judgment evidence contradicting

Johnson’s evidence, even though Johnsons’ evidence could have been readily

controverted. See Morrison, 266 S.W.3d at 92. Thus, the trial court implicitly

addressed the issue Pickle now contends remained after the trial court granted

Johnson’s summary judgment motion. We overrule Pickle’s third issue.

       D.     Attorneys’ Fees

       In his fourth issue, Pickle contends that the trial court erred by granting

Johnson attorneys’ fees as the prevailing party in this litigation. Pickle readily

admits in his brief that his position is predicated on this court having sustained

one of his first three issues. Because we have overruled Pickle’s first three

issues, we overrule his fourth issue as well.

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                              IV. CONCLUSION

     Having overruled each of Pickle’s four issues, we affirm the trial court’s

order and judgment.

                                                BILL MEIER
                                                JUSTICE

PANEL: WALKER, MCCOY, and MEIER, JJ.

DELIVERED: September 15, 2011

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