Ambiguous “General Release Agreement” and Global Restrictions Invalidate a CT Non-Compete

Connecticut Stone Supplies, Inc. v. Fresa, 2002 Conn. Super. LEXIS 4141
Case Background

This case concerns Connecticut Stone Supplies’ (CSS) legal dispute with two former employees regarding the enforcement of their non-compete agreements.  The company employed Ms. Amy Fresa from May 15, 2000, until April 4, 2002, as an Administrative Assistant.  She began to work at the company as a temporary employee in connection with Reitman Personnel and the company officially hired her as a full-time employee on August 14, 2000.  CSS had her sign an “Employee Confidentiality and Non-Competition Agreement” when it first hired her and then had her sign a “General Release and Settlement Agreement” when it terminated her employment.

The restrictive covenant prohibited her from working at a competing company for a period of two years and additionally stipulated that she could not solicit CCS’s current of potential clients within a three hundred mile radius.  She began to work for O&G, a company in direct competition with CSS, on August 2002.  Mr. Travis Simms worked for the company from March 29, 2000 until January 22, 2011 at which time he also began to work for O&G.  He signed a non-compete agreement in the same manner as Ms. Fresa but did not execute a General Release Agreement upon termination.  CSS sued both former employees in Connecticut state court and sought to enforce their respective non-compete agreements.

The Court’s Decision

Ms. Fresa and Mr. Simms argued that the non-compete agreements were not binding upon them because the covenants lacked consideration and their terms were unreasonable.  Ms. Fresa additionally contended that the General Release Agreement “extinguished any rights that might exist under it [the non-compete agreement]”.

The court found in favor of Ms. Fresa and Mr. Simms and held that their restrictive covenants with CSS were not enforceable.  The court analyzed the General Release Agreement and found that it contained ambiguous language that created an unintended benefit for CSS.  The company, according to the court, should not be allowed the benefit of enforcing the agreement merely because of an unintended, ambiguous clause in an employment agreement that it had drafted.  The court used this analysis to determine that Ms. Fresa’s non-compete was unenforceable.

How the Court Reached its Decision

The court relied on a different analysis to conclude that Mr. Simm’s non-compete agreement with CSS was unenforceable.  Here the court examined the restrictive provisions of the non-compete agreement to determine whether they were limited and reasonable in a manner that the agreement fairly balanced the interests of the parties involved.  While there was a geographical restriction associated with the non-solicitation clause (three hundred miles), the non-compete clause did not have a geographical limitation and as such “means [the employee] cannot compete anywhere in the world against the plaintiff for a period of two years from termination”.

The court found this to be completely unacceptable and held that the global prohibition on competitive employment was “patently and grossly unreasonable”.  CSS stated that is conducted business all throughout the state of Connecticut but failed to offer any evidence that it carried out global operations or that a worldwide prohibition on competing employment was necessary to protect its legitimate interests.  The court invalidated Mr. Simm’s non-compete agreement in light of the unreasonable and oppressive nature of the provisions contained in agreement that he executed with CSS.

The lawyers at Maya Murphy, P.C., are experienced and knowledgeable employment and corporate law practitioners and assist clients in New York, Bridgeport, Darien, Fairfield, Greenwich, New Canaan, Norwalk, Stamford, Westport, and elsewhere in Fairfield County.  If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.