Posts tagged with "protection"

Policy of Enforcing Connecticut Non-Compete Agreements to Protect Employer’s Interests

Torrington Creamery, Inc. v. Davenport, 126 Conn. 515 pertains to a dispute regarding a non-compete agreement between an employer and employee in the dairy products industry in 1940.  While this case is by no means recent, it is a seminal case that lays the groundwork for the policy of enforcing non-compete agreements in Connecticut on the grounds of protecting the employer’s interest.  Specifically, this is one of the first Connecticut cases to address the enforceability of a company’s non-compete agreements when another company acquires it.

Case Background

The High Brook Corporation employed Mr. Preston Davenport as a farm manager and superintendent beginning in 1932 at its Torrington, Connecticut location.  The company produced and distributed dairy products in the towns of Torrington, Litchfield, Winsted, Thomaston, New Milford, New Preston, and Greenwich, all towns in western or southwestern Connecticut.  High Brook changed its name to The Sunny Valley Corporation in March 1938 and on April 15, 1938, had Mr. Davenport sign an employment contract.

The contract specified that Mr. Davenport would receive a fixed compensation with no set duration and that he would be subject to several restrictive covenants.  A non-solicitation clause prohibited Mr. Davenport from soliciting, either directly or indirectly, Sunny Valley or its successor’s customers for a period of two years.  Meanwhile, a non-compete clause prohibited Mr. Davenport from engaging in the dairy production and distribution industry in the towns where Sunny Valley operated.

Another clause in the employment agreement stipulated that a court’s invalidation of a portion of the agreement would not affect the legally binding nature of the other provisions.  Sunny Valley sold its operations and assets to Torrington Creamery, Inc. in October 1938 and the company discharged Mr. Davenport from employment on October 18, 1938.  He proceeded to start his own dairy production and distribution business in February 1939 in the towns of Torrington and Litchfield.

The Court’s Decision 

Torrington Creamery sued Mr. Davenport to enforce the duration and geographical limitations of the restrictive covenant he had signed with Sunny Valley Corporation.  The Superior Court in Litchfield County found in favor of Torrington Creamery, Mr. Davenport appealed the decision, and the case went on to the Connecticut Supreme Court where it affirmed the lower court’s decision.

The Supreme Court found the terms of the non-compete agreement to be reasonable and necessary for the protection of Torrington Creamery’s business interests.  The notion of “protecting an employer’s business interests” is a driving force and major policy concern when deciding whether to enforce a non-compete agreement under Connecticut law.  Restrictive covenants become valuable assets of the employer and courts generally hold that the employer is entitled to the right to safeguard these assets.

Equally as important, the court held that the employer benefits contained in a restrictive covenant can be assigned to a purchaser in the event of the sale of the business and its assets.  Thus, when a company acquires another company, it gains the legal authority to enforce the acquired company’s valid non-compete agreements.  Courts view restrictive covenants as valuable business assets that provide for the necessary protection of the employer and any successor company.

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 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.

Non-Compete Enforceability: Must Protect Legitimate Interest & Not Be Punitive

Ranciato v. Nolan, 2002 Conn. Super. LEXIS 489

Historic Restoration and Appraisal, LLC (HRA) was engaged in the business of restoring primarily detached single-family homes that had suffered casualty damage from fire and/or water.  The company employed Mr. Timothy Nolan to work as a project manager for jobs located throughout the state of Connecticut.  Mr. Nolan’s employment began on November 18, 1996 and the company informed him shortly thereafter that his employment was contingent on the execution of a non-compete agreement.

The parties signed the restrictive covenant on November 21, 1996 and it prohibited Mr. Nolan from performing the same services offered by HRA in the states of Connecticut, Massachusetts, and Rhode Island for a period of three years.  The agreement did not affect Mr. Nolan’s ability to offer painting or home improvement services that were not in connection to fire and/or water damage.  In exchange for this employment restriction, the agreement stipulated that Mr. Nolan’s annual salary would be $48,500.  He felt that he would be fired if he failed to sign the agreement and signed it without consulting a legal professional.

HRA fired Mr. Nolan on January 24, 1997 after repeated incidents of discovering that he was receiving lewd and inappropriate materials via the company’s fax machine.  He began to work for McGuire Associates shortly after HRA discharged him and performed marketing and business development services in the capacity of his new position.  Unlike HRA, McGuire is a preferred builder and the court held that it did not compete with HRA.  The company sued Mr. Nolan in Connecticut state court and asked the court to enforce the non-compete agreement that the parties had executed.  The Superior Court of Connecticut in New Haven rejected HRA’s request and held that the company “suffered no financial loss as a result of the defendant’s employment by McGuire”.

The Non-Compete Agreement

According to the non-compete agreement, Mr. Nolan can be in breach only if he works at a company that is “in competition with” HRA.  While the court acquiesced that HRA and McGuire were both in the construction industry, it held that they performed significantly different services and were not in competition with each other for clients or projects.  The industry classified HRA as a “fire chaser” because it received most of its jobs by monitoring police reports and fire scanners to alert them of individuals that needed repairs for fire and/or water damage.

McGuire however was a preferred builder and provided services for not only single-family homes, but also commercial and municipal buildings.  The courts interpreted the significant differences between the two companies as adequate evidence that Mr. Nolan was not “in competition with” HRA because of his new employment with McGuire.

The Court’s Decision 

Furthermore, the court discussed the reasons why a court would enforce a non-compete covenant, specifically referencing the legal system’s desire to balance and protect the parties’ interests.  Courts generally grant injunctions to enforce a non-compete agreement when the plaintiff employer can provide adequate evidence that the former employee’s breach will result in adverse financial consequences.  The court noted that this policy did not apply to the case since HRA had not suffered any financial loss or hardship and Mr. Nolan did not have any access to confidential information that would be harmful to the company should it be disclosed.

Additionally, the court concluded that the time and geographical restrictions in the agreement were unreasonable given the facts of the case.  HRA did not have anything to lose because of McGuire employing Mr. Nolan because of the differences in their business operations and the court held that the restrictions, if enforced, would only serve to prevent Mr. Nolan from employment at another company.

The policy to enforce non-compete agreements focuses on protecting the interests of the employer and not to punish the employee and excessively restrict future employment opportunities.  Specifically, the court cited that HRA could only “benefit from protection in the New Haven area” and that the “tri-state restriction imposed on the defendant was not necessary to protect any legitimate interests of the plaintiff and, therefore, [the agreement] was not ‘reasonably limited’”.

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.

Court Invalidates Non-Compete Agreement for Unreasonable Restrictions

Trans-Clean Corp. v. Terrell, 1998 Conn. Super. LEXIS 717

Trans-Clean Corp. was a company engaged in the business of restoring exteriors and interiors of commercial buildings.  The company began to employ Mr. Alton Terrell as a salesman and manager in December 1990 in connection with the company’s acquisition of Travel Washer, Inc..  The parties executed an employment agreement that created a one-year term of employment, specified the compensation schedule, and contained a non-competition covenant.  The non-compete agreement stated that Mr. Terrell was prohibited for two years following the completion of his employment contract or any renewal thereof from competing with Trans-Clean within sixty miles of the company’s main office in Stratford, CT.

The parties negotiated a pay increase in 1993 and a new compensation schedule was created.  Trans-Clean considered this a renewal of the original employment contract and held the belief that the non-compete agreement was still valid and in effect.  Mr. Terrell however did not share the same view and did not treat the pay increase and new compensation schedule as a renewal of the original contract.  While the parties had different interpretations of the pay increase, there were no direct discussions to clarify its characteristics.

The Dispute

Mr. Terrell suddenly resigned from Trans-Clean in September 1997 and proceeded to create his own commercial restoration company and solicited business from individuals/businesses on Trans-Clean’s customer list.  Trans-Clean sued Mr. Terrell and asked the court to issue an injunction to enforce the non-compete agreement and prevent any further violations.  The court had to tackle two central issues to decide the dispute: 1) whether customer lists are protected trade secrets and 2) the nature and reasonableness of the employment contract and non-compete agreement.  It held that the lists were not trade secrets that entitled Trans-Clean to an injunction and further concluded that the non-compete agreement was unreasonable and unenforceable.

The court held that the customer lists were not trade secrets or confidential information that required protection.  There was never a company policy to designate the lists as confidential information or maintain a degree of secrecy of customers or contact persons.  Furthermore, each salesperson maintained his or her own personal contact lists and did not have any direct access to other sales representatives’ lists.  Each salesperson had the responsibility of developing his or her list, maintaining business relationships, and collecting accounts.  These lists did not amount to a business interest for which Trans-Clean was entitled to protection and injunctive relief.

Reasonableness of the Covenant

Next, the court assessed the reasonableness of the covenant not to compete and found that its provisions, specifically the geographical restriction, were unreasonable and unenforceable.  The sixty-mile radius restriction covered 75% of Connecticut, including the state’s six major metropolitan areas (Bridgeport, New Haven, Hartford, Waterbury, Stamford, and Danbury), and extended into parts of New York (including four out the five boroughs) and New Jersey.  The restriction, according to the court, was overreaching and unnecessarily infringed on Mr. Terrell’s ability to purse his occupation and obtain future employment.  He had twenty years of experience in the commercial restoration industry and it was the only field in which he had ever worked.

Renewal of the Original Agreement

Lastly, the court analyzed whether the pay increase and modification of the compensation schedule amounted to a renewal of the original agreement.  The court stated there was a “question of fact” that it needed to answer in order to decide the case.  It noted that the writing drawn up by the company regarding the pay increase did not make any reference to the original employment contract and there was no apparent connection between the two writings.

In the absence of any reference or connection, the court concluded that the pay increase was not a renewal or extension of the original employment contract.  The court noted however that Mr. Terrell “should be bound by the non-compete agreement if that agreement is found to be reasonable”.  The court’s earlier analysis revealed that the covenant was in fact unreasonable, thereby overriding Mr. Terrell’s obligation to abide by its provisions.


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.

Court Amends Time Restriction for Engineering Firm Non-Compete Agreement

Maintenance Technologies International, LLC v. Vega, 2006 Conn. Super. LEXIS 136

Maintenance Technologies International, LLC (MTI) was a Milford, Connecticut-based company that offered highly specialized engineering maintenance services to clients.  The company employed Mr. Daniel Vega as an engineer from February 25, 2002, to October 7, 2005.  His responsibilities for this position included conducting vibration analysis, infrared thermography, motor testing, and laser alignment.  He signed a covenant not to compete as part of his employment agreement with the company.

The restrictive covenant prohibited Mr. Vega, for a period of two years following termination, from engaging in competing business activities within one hundred fifty miles of MTI’s current principal place of business.  The agreement further stated that he could not own any stock in a competing business located within one hundred fifty miles of MTI’s principal place of business.

Breach of the Employment Agreement 

Mr. Vega informed his superiors that he would be voluntarily terminating his employment with the company due to family related issues and his personal ambition to finish his master’s degree in theology.  Once he quit MTI however, he began to work for Schultz Electric Co., a competing company with major offices in Connecticut, Maine, Massachusetts, and New Jersey.

MTI’s management interpreted this move as a violation of the non-compete agreement executed when Mr. Vega’s employment with the company started and sued him in Connecticut state court.  The company requested that the court enforce the provisions of the restrictive covenant in order to prevent any further violations of the agreement.  The court found in favor of MTI, granted the company’s request for an injunction, but amended the time restriction to be only one year, instead of the two-year period as stipulated in the agreement.

The Court’s Decision

In reaching its decision, the court assessed whether MTI had a legitimate interest that needed protection and whether the restrictions in the non-compete agreement were reasonable in scope.  The court recognized that the company spent a great deal of resources on training its employees and this created a valid interest according to the court.

Furthermore, the employees were on the front lines with regard to the business relationships with MTI’s customer and had direct access to proprietary and confidential information.  The court held that a company’s employees and customer relationships are its most valuable assets and are worthy of protection under Connecticut law.  Injunctive relief, therefore, was reasonably necessary for the fair protection of the employer’s business interests.

Next, the court examined whether the specific restriction contained in the agreement were reasonable in scope.  The court held that they amounted to a reasonable and legitimate restriction of Mr. Vega’s ability to work.  They provided an adequate amount of protection to MTI while not overreaching and unnecessarily restricting Mr. Vega’s ability to secure future employment.  The limitations still allowed many viable career options for Mr. Vega.

The court did however slightly amend the time restriction.  It was concerned that the full two years could prove to be “somewhat inequitable” and reduced the restriction to one year, instructing the parties that they could submit arguments prior to the expiration of the one year regarding a potential extension to the full two years as stipulated in the covenant not to compete.

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.

Veterinary Doctor’s Non-Compete Invalidated When Terms Unreasonably Favor Employer

Merryfield Animal Hospital v. MacKay, 2002 Conn. Super. LEXIS 4099
Case Background

Dr. Morgan MacKay worked as a doctor of veterinary medicine at Merryfield Animal Hospital, a clinic owned by Dr. Engstrom, from May 15, 2000, to April 16, 2002.  There were two employment contracts between Dr. MacKay and Merryfield that described employment from May 15, 2000, to May 15, 2001, and a second covering May 1, 2001, to April 30, 2002.  Each contained restrictive covenants and was supported by adequate consideration, specifically the second agreement listed a substantial pay increase.  The non-compete agreement prohibited Dr. MacKay from owning or working at another veterinary facility within seven miles of Merryfield for a period of two years.

Dr. MacKay voluntarily terminated his employment in a letter to Dr. Engstrom dated April 16, 2002 stating that he “could no longer tolerate the veterinarian service practices that were occurring at Merryfield”.  Following this decision, he began to work at New Haven Central Hospital, a veterinary facility located 6.2 miles from Merryfield, clearly within the seven-mile radius prohibited area as defined in the non-compete covenant.

Merryfield sued Dr. MacKay to enforce the terms of the non-compete agreement and curtail further employment at New Haven Central Hospital.  Dr. MacKay however contended that the terms of the agreement afforded Merryfield an unnecessary and unfair amount of protection, to the degree that it rendered the covenant unreasonable and unenforceable.

The Court’s Decision

The court found in favor of Dr. MacKay and held that the terms of the non-compete agreement “afforded greater protection to the plaintiff [Merryfield] than is reasonably necessary and the non-compete is unenforceable”.  The court supported its ruling with the argument that it had the obligation to ensure that the agreement should only afford a fair degree of protection to the interest of the employer while also safeguarding the interests of the employee himself.  The agreement went well beyond creating reasonable protections for Merryfield and unnecessarily restricted Mr. MacKay’s career opportunities and his ability to earn a living.

The language of the restrictive covenant was so broad and general that it prohibited several activities that Merryfield did not engage in.  For instance, the agreement prohibited Dr. MacKay from delivering veterinary care to horses, cattle, sheep, or swine even though Merryfield did not treat those types of animals.

Additionally, the wording of the agreement was so vague that it would have even prevented Dr. MacKay from working as a meat inspector.  Even the finite restriction of a seven-mile radius was deemed unreasonable given the specific circumstances of the veterinary industry in the area.  The language of the agreement would prevent Dr. MacKay from bringing in animals to New Haven Central Hospital if he was employed at a clinic that lacked surgical facilities, as was the case with the vast majority of the veterinary facilities outside the seven mile prohibited radius.

Conclusion

While the restriction of seven miles for two years is reasonable at face value, it becomes clear that it can easily transform into an incredibly unreasonable restriction in light of certain facts.  It was the use of vague language throughout the document and the unforeseen consequences that ultimately invalidated the restrictive covenant between Dr. MacKay and Merryfield.

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.

Court Enforces Non-Compete Against Connecticut Ophthalmologist

Musto v. OptiCare Eye Health Centers, 2000 Conn. Super. LEXIS 2298
Employment Background

Dr. Anthony Musto owned an eye care services professional corporation with two other doctors from 1973 to 1996.  He worked as a private practice ophthalmologist in the greater Bridgeport area until the three doctors sold the practice to OptiCare Eye Health Centers, Inc. on July 31, 1996.  Dr. Musto owned one-third of the shares of the business, sold them to OptiCare for a profit of $590,000, and signed an employment agreement with OptiCare to work as an ophthalmologist on their payroll.

He worked as an OptiCare employee from August 1, 1996, to August 4, 2000, providing management with a one-year written notice of voluntary termination on August 1, 1999.  Following his termination, Dr. Musto proceeded to open a private practice office in Fairfield and perform surgeries at Bridgeport Hospital, including three extremely rare procedures: dactocystorhinostomy, blethoroplasty, and removal of eyelid tumors.

The Non-Compete Agreement

Dr. Musto signed a non-compete agreement with OptiCare as part of his employment contract and initialed each page to demonstrate he understood the agreement’s obligations and restrictions.  The restrictive covenant stipulated that Dr. Musto be prohibited from engaging in the practice of ophthalmology or ophthalmic surgery for a period of eighteen months following termination with fifteen miles of OptiCare’s Stratford or Bridgeport offices.

OptiCare sued to prevent further violations of the non-compete agreement because of Dr. Musto’s new practice in Fairfield, a location clearly within fifteen miles of the identified OptiCare offices.  The company sought to enjoin him from performing general ophthalmic surgeries at Bridgeport Hospital, also located within the geographical restrictions, but did not ask the court to prevent him from performing the three rare surgeries since he was the only doctor on staff at the hospital with the requisite expertise and knowledge to perform them.  Dr. Musto however argued before the court that the restrictions contained in the agreement were unreasonable and the court should deny OptiCare’s request for their enforcement.

The Court’s Decision

The court held that the non-compete agreement was in fact reasonable and granted OptiCare’s request for its enforcement.  The court granted the request, stating, “Where the context of the covenant not to compete is the sale of the good will of an established business, the courts recognize that enforcement of the covenant is necessary to prevent the seller from depriving the buyer of the value of the transaction”.  When OptiCare acquired Dr. Musto’s professional corporation, it purchased the asset of continued patronage from people who had been patients of that practice, and the court concluded that OptiCare was entitled to protection of this valuable asset.

When determining whether a restrictive covenant is reasonable, the court must determine if it affords more than fair and just protection to the party in whose favor it operates without unduly interfering with public interest.  The eighteen-month duration was deemed reasonable because it was short enough not to cause any unwarranted or extreme hardships on Dr. Musto’s ability to start another practice.  Additionally the court concluded that the fifteen-mile restriction was reasonable because it was not a distance greater than what was necessary to protect the good will asset that OptiCare acquired from Mr. Musto and his partners.

 

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.

Connecticut Non-Compete Invalidated on Grounds of Unnecessary Protection Afforded to Employer

Sanford Hall Agency, Inc. v. Dezanni, 2004 Conn. Super. LEXIS 3574
Case Background

Ms. Lynne Dezanni worked for Sanford Hall Agency, an Avon, Connecticut based insurance company, from 1990 to 2004 where she served as a personal lines (primarily automobile and homeowners insurance) salesperson for clients whose last name started with “A” through “F”.  In 1994, Ms. Dezanni signed an employment agreement that included a non-compete covenant prohibiting the solicitation or attempted solicitation of Sanford Hall’s clients or the disclosure of the company’s confidential information.

In May 2004, Ms. Dezanni was contacted by a recruiter at Sinclair Insurance Group, a direct competitor of Sanford Hall based in Wallingford, Connecticut.  In the following weeks, Sanford Hall announced to its employees that it was engaging in a transaction to sell its assets.  Fearing that she would no longer have a job if the company were sold, Ms. Dezanni accepted employment at Sinclair on June 11, 2004.

The company was in fact sold to a New Jersey insurance company on November 1, 2004.  Sanford Hall commenced legal action alleging that Ms. Dezanni breached the written employment agreement and the non-compete covenant by soliciting its clients and disclosing confidential client information to Sinclair.

Court Ruling

Ms. Dezanni however argued that she was not in breach of the non-compete agreement because it contained unreasonable provisions and was therefore unenforceable.  Additionally, she argued that the employment agreement reserved the right for her to compete in the event that Sanford Hall sold its business.

The court in this case found in favor of Ms. Dezanni and held that the non-compete agreement was in fact unreasonable and unenforceable.  The court based this decision on the fact that Ms. Dezanni was not in a position at Sinclair to threaten Sanford Hall’s interests in its customer relationships and contracts.

Her job at Sanford Hall pertained to the initial contact with clients but her contact usually ended there.  She was not charged with entertaining, socializing with, or schmoozing clients over the phone or in person.  She would not review the contracts when they were due to expire, as the insurer and not the agent handled this business activity.  The court concluded, “Dezanni’s contact with the customers was too infrequent and irregular to pose any threat to the plaintiff’s relationship with its customers”.

The court also held that the agreement excessively restricted Ms. Dezanni from pursuing her occupation and instituted unnecessary limitations because it pertained not only to past and present clients, but to also future ones as well.  Ms. Dezanni was able to prove that the non-compete clause of the employment agreement afforded more protection to Sanford Hall than was reasonably necessary and as a result severely disadvantaged her and ran contrary to the interests of the public.  For these enumerated reasons, the court refused to enforce the non-compete clause of the employment agreement.

Contact Us

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.

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Court Enforces Non-Compete for Breach Within the Courier Services Industry

Express Courier Systems, Inc. v. Brown, 2006 Conn. Super. LEXIS 3784

Express Courier Systems, Inc. was a company that provided courier services to large hospitals, laboratories, and other medical facilities throughout New England, New York, and New Jersey.  The company provided high-efficiency route planning, dispatch services, monitored courier performance, and analyzed customer feedback.  One of the company’s biggest accounts was with Stamford Hospital with whom it had a contract since 2000.  Express Courier generally recruited its couriers through Contractor Management Services, LLC (CMS), an independent third-party human resources firm. Express Courier employed Misters Seymour Brown, Chip Joseph, and Moses Stephenson as independent contractors from 1999, 2002, and 2005 respectively, as couriers in connection with its contract with Stamford Hospital.

Violating the Employment Agreements

In December 2005, the company required that these employees register and become members of CMS if they wished to continue to provide services as independent contractors.  As part of the registration process with CMS to continue their employment with Express Courier, the three employees signed non-compete agreements that prohibited them from working at a company providing the same or similar services within the “Standard Metropolitan Statistical Area of the Eastern Seaboard” to an entity that was a client in the preceding six months for a one-year period following termination.  Additionally, the agreements stated that Express Courier was entitled to injunctive relief in the event of a breach of the non-compete agreements.

Stamford Hospital informed Express Courier in September 2006 that it was terminating its services except for those associated with the hospital’s laboratory.  At the same time, Misters Seymour, Joseph, and Stephenson informed Express Courier that they had accepted positions with Xerox.  The employees said that the offers were “too good to refuse” and that their last days would be September 30, 2006.

All three men began to work for Xerox on October 1, 2006 where their positions were very similar to their previous ones at Express Couriers and they were paid to perform very similar services.  Express Courier saw these actions as clear violations of the non-compete agreements and sued its three former employees in Connecticut state court where it sought an injunction enforcing the provisions of the restrictive covenants.

The Court’s Ruling

All three defendants claimed that their work as Xerox employees was vastly different from the services they provided as Express Courier employees but the court rejected this argument and concluded that they were performing the same services as they had done while still employed by Express Couriers.  The court established that there was a clear breach of the agreements’ provisions but next had to determine if the provisions were in fact reasonable, a requirement for enforcement under Connecticut law.

The restrictive covenants, according to the court provided Express Courier with a reasonable degree of protection while simultaneously not preventing the former employees from securing future employment.  The Eastern Seaboard is a large geographical area but even this restriction was severely limited by only applying to Express Courier’s clients in the six months prior to an employee’s termination.

In light of a clear breach of the non-compete agreements and a finding that they contained reasonable restrictions, the court found in favor of Express Courier and granted the company’s request for injunctions enjoining the former employees from providing services to Stamford Hospital in connection with their new employment with Xerox.

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.

Assets Protected From Creditors in Connecticut

In today’s economy more and more people find themselves having a hard time paying the bills and avoiding late payments.  Still others have a problem with creditors chasing them for unpaid debts.  Now more than ever it is important for you to know what assets are protected from creditors and what are not.

Connecticut law provides some protection from creditors in a situation where your income or assets are subject to a court judgment or lien.  You can protect yourself in a variety of ways by planning ahead and consulting with a professional financial planner and an attorney.   Taking out liability insurance or setting up a corporate entity or trust for your property are examples of how you can shield your assets from future creditors.  However, there are some individual assets that are automatically protected from creditors.  Here is brief summary of the law in Connecticut:

A.            Wages

Once a creditor obtains a judgment against you, it can apply for an execution against your wages.  See Connecticut General Statutes, Section 52-361a.  Connecticut law does provide for some protection in this situation.   No more than twenty-five percent of an individual’s weekly disposable earnings may be subject to a wage execution.  The portion of disposable earnings subject to the wage execution is withheld and applied to the amount of the judgment.    In some cases, the maximum amount that can be withheld may be less depending upon the ratio between the individual’s disposable earnings and the hourly minimum wage in effect at the time of the execution.

B.             Retirement Plans

Generally, retirement plans are exempt from claims by creditors.  Both IRAs and 401ks are protected assets pursuant to Connecticut General Statues, Section 52-321a.

C.             Personal Property

Connecticut law provides a list of exempt personal property that creditors cannot claim an interest in pursuant to Connecticut General Statutes, Section 52-352b.  The list of property includes basics necessities such as apparel, bedding, foodstuffs, household furniture and appliances.  Items necessary for a person’s occupation or profession such as tools, books, instruments, farm animals and livestock feed are also considered exempt property.  Wedding and engagement rings are not subject to creditor claims as well.

D.             Insurance and Government Assistance Payments

Some insurance and government assistance payments are exempt from creditors under Connecticut General Statutes, Section 52-352b.   Health and disability insurance payments are exempt as are Workers’ compensation, Social Security, veterans and unemployment benefits.  In addition, under Connecticut General Statutes, Section 38a-453, creditors of an insured cannot seek payment from a life insurance policy beneficiary under most circumstances.

E.             Child Support and Alimony Payments

Any court approved child support payments received by a debtor are exempt and protected from creditors.  Alimony payments, to the extent that wages are exempt from creditor claims, are also protected.  See Connecticut General Statutes, Sections 52-352b & 52-361a.

F.             Real Estate

Your homestead or personal residence is exempt from creditor claims up to the value of seventy-five thousand dollars.  If a creditor has a money judgment arising out of hospital services, then the value of the exemption increases to one hundred twenty-five thousand dollars.  The exemption is calculated based upon the fair market value of the equity in the property taking into account any statutory or consensual liens on the property.  See Connecticut General Statutes, Section 52-352b.

There is no such exemption in place for commercial real estate or rental properties.

G.             Motor Vehicles

Only one motor vehicle is exempt from creditor claims up to the value of one thousand five hundred dollars.  The exemption is calculated by estimating the fair market value of the motor vehicle and taking into account any relevant liens or security interests.  See Connecticut General Statutes, Section 52-352b.

H.              Bank Accounts

         A creditor can enforce a judgment by way of a bank execution.  However, the same exemptions apply to bank accounts as they do to government assistance, insurance, alimony and child support payments as outlined above.  Therefore, you have the opportunity to challenge a bank execution based on these exemptions and prevent a creditor from taking money out of your account.   In addition, you can claim a general exemption not to exceed one thousand dollars.

In conclusion, Connecticut law prevents creditors from seizing all of your income, property, possessions and savings pursuant to a judgment or lien.  However, the law does not prevent a debt collector from jeopardizing your livelihood and financial wellbeing.  You best bet is to limit individual liability and plan ahead to avoid a creditor claim in the first place.  Consulting with a professional financial planner and an attorney is recommended.