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Employment – Contract – Noncompete – Competitive Activity

A noncompete agreement will not be enforced against a defendant who left BB&T Insurance because the noncompete provision is so broad it would prevent defendant from encouraging any BB&T employee or even, an independent contract janitor, from pursuing higher education, says a Richmond Circuit Court.

This action arises from William Moore’s and Donna Perkinson’s decisions to voluntarily terminate their employment with BB&T and their subsequent decision to accept employment with Thomas Rutherfoord Inc., a BB&T competitor. Plaintiff has sued, alleging breach of fiduciary duties, breach of contract, tortious interference with contract, tortious interference with business expectancy, common law and statutory conspiracy and violation of the Virginia Uniform Trade Secrets Act.

The court finds plaintiffs have failed to state a claim for breach of fiduciary duty. Plaintiffs alleges Moore and Perkinson “changed the process for obtaining renewal information for existing BB&T Insurance customers that were coming up for renewal” and Moore “met with only one or two of the accounts coming up for renewal before he resigned his employment.” Plaintiff alleges Moore “delayed the consummation of renewal business with current BB&T Insurance customers … so that he could usurp the opportunities for himself and/or Rutherfoord.” Plaintiff alleges Moore encouraged Perkinson to terminate her employment with BB&T and that together they encouraged another employee to leave. Plaintiff alleges Moore notified his colleagues and customers of his intentions to leave BB&T.

The court finds the allegations as plead do not constitute a claim for a breach of fiduciary duties during or after employment with BB&T. At best, they are conclusions that lack a sufficient factual basis to so apprise Moore and Perkinson of the claims against them and to enable them to formulate a defense. While the court recognizes that defendants’ actions exceeded mere preparation, the court finds these actions as pled do not sufficiently state a cause of action for a breach of fiduciary duties.

As to the noncompete agreement signed by defendants, the court finds the non-compete and confidentiality provisions are unenforceable and the agreement is invalid in its entirety.

Plaintiff urges the court to analyze the enforceability of the agreement under a “sale of business” standard. The court declines to use this standard, as it finds its adoption would constitute an unwarranted expansion of the law. The court instead will look to whether the restrictions are reasonable and no greater than necessary to protect the employer’s legitimate business interest.

The non-competition agreement provides that for two years after termination of his employment with BB&T, Moore cannot solicit any employee to leave BB&T, solicit any supplier of goods or services to BB&T, engage in any “competitive activity” with any “BB&T insurance customer” or engage in any “competitive activity” within the restricted territory. Competitive activity is defined as the sale, trade or service or attempted sale, trade or service of insurance products. BB&T customer is defined as anyone who, within a two-year period ending before the employee’s termination, contacted the employee or someone supervised by the employee regarding insurance products or other activities of BB&T Insurance. Restricted territory is defined as the city of Petersburg, any county contiguous to Petersburg, the independent city or county to which the employee was primarily assigned by BB&T Insurance within the last two preceding years before the end of employee’s employment with BB&T Insurance and any county contiguous to such independent city or county.

The parties do not take issue with the two-year durational scope of the agreement and the geographic area covered by the restrictions. The functional restrictions of the agreement are in controversy. The terms “insurance products,” “any other business activities of BB&T” and “solicit, encourage, or support,” are not defined and are ambiguous. These ambiguities will be construed against BB&T and in favor of Moore. The restrictions are overbroad because they are not limited to commercial or personal insurance businesses that are in direct competition with BB&T.

Moore appears to be prohibited from working for a rental car company because he would be required to “sell” or offer insurance for the vehicles rented by the company. Because the prohibition is not limited to employment that would be in competition with BB&T, it is not narrowly drawn to protect the employer’s legitimate business interest. It is unduly burdensome on Moore’s ability to earn a living and is offensive to the public policy of the commonwealth.

The confidentiality provision also is unenforceable as a matter of law, as the employee is restricted during the term of employment with BB&T Insurance “and for perpetuity” after the employee’s separation, which covers the “rest of his life.”

The court sustains the demurrer to the claim for tortious interference with a business expectancy because plaintiff has failed to sufficiently plead interference by use of an improper method. Likewise, plaintiffs have failed to plead a cause of action for violation of the VUTSA or for common law or statutory conspiracy.

The court sustains defendants’ demurrers to all seven counts of plaintiff’s claim and dismisses counts II and III.

BB&T Insurance Services Inc. v. Thomas Rutherfoord Inc. (Taylor, J.) No. CL09-4550, Feb. 9, 2010; Richmond Cir.Ct.; Lynn Jacob, Heath Galloway for BB&T Insurance; Todd A. Leeson, Michael Finney for Rutherfoord; Frank Cowan, Scott Stovall for Moore; Joe Owen for Perkinson. VLW 010-8-046, 15 pp.

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