Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Employment Law No. 04-00-00676-CV, 2/5/2003. FACTS: On original submission, a panel of this court considered whether an employer who seeks to enforce a covenant not to compete may be awarded attorneys’ fees under Texas Business Code �15.51 (the Covenant Not to Compete Act) or under Texas Civil Practice and Remedies Code �38.001(8) when the trial court reforms the covenant and the employer prevails but does not recover damages. The panel reversed the attorneys’ fee award, holding that Texas Disposal Systems Inc. was not entitled to attorneys’ fees under Texas Business and Commerce Code �15.51(c). On further appeal to the Texas Supreme Court, the Supreme Court did not consider whether this court erred in its holding; instead, it remanded the cause back to this court for consideration of whether TDS was entitled to attorneys’ fees under Texas Civil Practice and Remedies Code �38.001. HOLDING: Reversed in part and affirmed in part. TDS asserts that �15.51′s silence on whether an employer can be awarded attorney’s fees does not mandate that fees cannot be awarded under another statute, such as �38.001. TDS relies on Williams v. Compressor Engineering Corp., 704 S.W.2d 469 (Tex. App. – Houston [14th Dist.] 1986, writ ref’d n.r.e.) and Butler v. Arrow Mirror & Glass Inc., 51 S.W.3d 787 (Tex. App. – Houston [1st Dist.] 2001, no pet.). In Williams, the trial court granted an injunction to the employer, but modified the scope of the original contract. The 14th District Court of Appeals held that the employer was entitled to attorneys’ fees under �38.001 because attorneys’ fees were in the nature of costs, not damages and the employer successfully prosecuted a breach of contract claim. In Butler, the trial court enjoined the appellants from doing business in Harris and Fort Bend counties pursuant to a covenant not to compete clause in Butler’s employment agreement with his former employer, appellee, Arrow Mirror and Glass Inc. The trial court denied Arrow attorneys’ fees on the grounds that Arrow did not adequately prove a pecuniary loss. The 1st District Court of Appeals, relying on Williams, held that Arrow was entitled to its fees because it was the prevailing party. Williams may no longer apply because it was decided before the act was enacted in 1989, and Butler provides no direct support for TDS because the pre-emption issue was not raised in that case. Further, TDS’s argument ignores pre-emption language contained in the act. Various courts have held that the procedures and criteria for enforcing a covenant not to compete are exclusive and preempt any other law. See Light v. Centel Cellular Co., 883 S.W.2d 642 (Tex. 1994). In that opinion, the court strictly construed the language of the act with regard to when an employee or employer was entitled to attorneys’ fees. The court strictly construes �15.52′s language that the “remedies in an action to enforce a covenant not to compete provided by �15.51 of this code are exclusive and preempt any other . . . remedies in an action to enforce a covenant not to compete under common law or otherwise.” �15.52. Just as the act’s criteria for enforcing a covenant not to compete pre-empt other law, so do the remedies provided under the act. CRC-Evans Pipeline Int’l Inc. v. Myers, 927 S.W.2d 259 (Tex. App. – Houston [1st Dist.] 1996, no writ). The court holds that the act controls the award of attorneys’ fees, and �15.52 pre-empts an award of fees under any other law. TDS’s entitlement to attorneys’ fees, if any, is controlled by �15.51 of the act. Because this court already has held that TDS is not entitled to fees under �15.51, the trial court erred in awarding TDS fees under Texas Civil Practice and Remedies Code �38.001(8). The court reverses the trial court’s judgment as to attorneys’ fees and affirms the judgment in all other respects. OPINION: Marion, J.; L�pez, Duncan and Marion, JJ.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.