Georgia Appeals Court Vacates Attorney Fee Award in Covenant Not to Compete Case

It is not unusual for a potential employee to be asked to sign a covenant not to compete as part of the hiring process in certain industries, particularly those involving sales. These agreements are clearly designed to favor the employer, not the employee, and are designed to prevent the employee from “stealing business” from the employer by luring customers to another company should the employment relationship end.

If the employee leaves his or her employment and the employer believes that the covenant not to compete has been violated, it may file suit against the employee, seeking injunctive relief, attorney fees, and other possible remedies. If you have a question that relates to a covenant not to compete, reach out to an Atlanta employment law attorney.

Facts of the Case

In a recent case, the plaintiff was a building supply company that sought to enforce a contractual agreement entered into between it and the defendant, a former employee. In September 2017, the trial court entered an order in the plaintiff’s favor, ordering the defendant to cease competing against it as a salesman (or in other capacities) for a period of two years. Less than two months later, the plaintiff filed a motion for contempt, claiming that the defendant had disobeyed the court’s order.

The trial court held a hearing on the issue of the defendant’s alleged contempt of the previous order and found that there was sufficient evidence to hold the him in contempt for several violations of the order but insufficient evidence of certain other alleged violations. The trial court also awarded attorney fees and costs to the plaintiff pursuant to OCGA § 9-15-14(a), (b).

The Court’s Decision

The Court of Appeals of Georgia vacated the lower tribunal’s ruling and remanded the case for further proceedings. The court began by declaring that it was unable to conduct a meaningful review of the trial court’s award of attorney fees and costs because the lower court had failed to make the necessary findings of fact required under § 9-15-14. Under the statute, a trial court is required to conduct a hearing on a motion for attorney fees and make findings of fact specifying the conduct that such an award is to be based upon.

Here, not only did the trial court fail to make the requisite factual findings, it awarded the full amount of attorney fees requested by the plaintiff even though the defendant prevailed on two of the plaintiff’s claims regarding his alleged contempt. In light of its holding on these issues, the court did not find it necessary to consider the defendant’s argument that he had not received sufficient notice that the issue of attorney fees would be considered at the hearing.

Experienced Atlanta Employment Law Attorneys

Attorney John L. Mays at the Atlanta law firm of Parks, Chesin & Walbert provides legal advice and representation to employees and former employees in many different types of situations, including disputes arising as a result of covenants not to compete and disagreements concerning other employment agreements. For an appointment to learn more about how our office can be of assistance to you, call us now at 877-986-5529.

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