Modern Environments Inc. v. Stinnett

PRESENT: All the Justices
MODERN ENVIRONMENTS, INC.
v. 	Record No. 011268 	OPINION BY JUSTICE ELIZABETH B. LACY
April 19, 2002
JOHNETTA R. STINNETT
FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH
Frederick B. Lowe, Judge
In this appeal, an employer contends that the trial court
erred in holding that a covenant not to compete prohibiting a
former employee from being employed in any capacity by a
competitor is over-broad and unenforceable.
Johnetta R. Stinnett worked as a salesperson for Modern
Environments, Inc. (Modern) from 1995 until the fall of 2000.
Modern is in the business of selling and installing office
furniture. 	In April 2000, Stinnett signed an employment
agreement with Modern that contained a one year non-compete
clause. 	Within one year after leaving Modern's employ,
Stinnett accepted employment with a company that was a
competitor of Modern. 	Modern notified Stinnett and her new
employer by letter that Stinnett's employment with the
competitor violated the non-compete clause and that legal
action would be instituted unless Stinnett terminated her new
employment.
Stinnett filed a declaratory judgment action seeking a
declaration that the non-compete provisions of her employment

contract were unenforceable because they were over-broad and
contrary to public policy.1 Modern responded by filing a
demurrer and cross-bill seeking an injunction against
Stinnett's further employment in violation of the non-compete
clause. 	Following briefing and argument of counsel, the trial
court entered an order reciting that "for reasons stated on
the record," the restrictive covenants in the employment
agreement are "over-broad and unenforceable as a matter of
law." 	We awarded Modern an appeal.
This Court evaluates the validity and enforceability of
restrictive covenants in employment agreements using well
settled principles. 	First, covenants in restraint of trade
are not favored, will be strictly construed, and, in the event
of an ambiguity, will be construed in favor of the employee.
Richardson v. Paxton Co., 203 Va. 790, 795, 127 S.E.2d 113,
117 (1962). 	Second, the employer bears the burden to show
that the restraint is no greater than necessary to protect a
legitimate business interest, is not unduly harsh or
oppressive in curtailing an employee's ability to earn a
livelihood, and is reasonable in light of sound public policy.
Roanoke Engineering Sales Co., Inc. v. Rosenbaum, 223 Va. 548,
552, 290 S.E.2d 882, 884 (1982). 	Finally, each case must be
1 The question whether the invocation of the declaratory
judgment statute was proper in this case has not been raised
2

determined on its own facts. 	Id.; Meissel v. Finley, 198 Va.
577, 579, 95 S.E.2d 186, 188 (1956).
The provision of the employment agreement at issue
states:
Employee agrees that for as long as Employee remains
employed by the company, and for a period of one (1)
years [sic] after Employee's employment with the
Company ceases, Employee will not (i) directly or
indirectly, own, manage, operate, control, be
employed by, participate in or be associated in any
manner with the ownership, management, operation, or
control of any business similar to the type of
business conducted by the company or any of its
affiliates (a "competing business"), which competing
business is within a fifty (50) mile radius of the
home office or any business location or locations of
the Company or any of its affiliates at which
Employee worked.
(emphasis added).
Modern asserts that the trial court erred by declaring
that the covenant not to compete was facially over-broad
because it prevented the former employee from working in any
capacity for a competitor of her former employer.2 This
assertion is based on Modern's position that this Court has
previously enforced identical or similar language in other
employment agreements and has not held such language to be
over-broad. 	Modern cites the following cases in support of
and we express no opinion in that regard.
2 The trial court's rationale is not expressed in the
final order; however, Modern's characterization of the basis
for the holding is consistent with the record and is not
contested by Stinnett.
3

its position: 	Rash v. Hilb, Rogal & Hamilton Co., 251 Va.
281, 285, 467 S.E.2d 791, 794 (1996) (employee "shall not
directly or indirectly as an . . . employee . . . or other
participant . . . engage in any manner in any" competing
business); New River Media Group, Inc. v. Knighton, 245 Va.
367, 368, 429 S.E.2d 25, 26 (1993) (employee "would not engage
in a business that competed"); Blue Ridge Anesthesia &
Critical Care, Inc. v. Gidick, 239 Va. 369, 370, 389 S.E.2d
467, 468 (1990) (employee will not "be employed by" any
competitor); Paramount Termite Control Co., Inc. v. Rector,
238 Va. 171, 172, 380 S.E.2d 922, 924 (1989)(employee "will
not engage . . . in the carrying on or conducting the business
of" former employer); Roanoke Engineering, 223 Va. at 551, 290
S.E.2d at 883 (employee will not "directly or indirectly . . .
be employed by" any competing business); and Meissel, 198 Va.
at 579, 95 S.E.2d at 187 (employee will not "enter into the
insurance business . . . or associate himself or herself with
any" insurance agency). 	In light of the holdings in these
cases, Modern concludes that the restrictive language at issue
here is reasonable and not over-broad as a matter of law.
In the cases relied upon by Modern, however, this Court
did not limit its review to considering whether the
restrictive covenants were facially reasonable. 	The Court
examined the legitimate, protectable interests of the
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employer, the nature of the former and subsequent employment
of the employee, whether the actions of the employee actually
violated the terms of the non-compete agreements, and the
nature of the restraint in light of all the circumstances of
the case. 	The language of the non-compete agreement was
considered in the context of the facts of the specific case.
In no case did the Court hold that the language contained in
the restrictive covenant at issue was valid and enforceable as
a matter of law under all circumstances.
Furthermore, in only one case cited by Modern was the
reasonableness of a restrictive covenant challenged on the
basis that it precluded a former employee from any type of
employment with a competitor. 	In that case, the restrictive
covenant was determined to be reasonable because another
provision in the non-compete agreement specifically allowed
the employee to work in the employer's industry in a non-
competing "role." 	Blue Ridge, 230 Va. at 370-71, 389 S.E.2d
at 468. 	The restrictive covenant in this case does not
include a similar provision. 	Thus, although the issue before
us was also raised in Blue Ridge, the determination that the
non-compete provisions were enforceable provides no support
for Modern's position in this case.
Based on this review, we reject Modern's assertion that
our holdings in these prior cases require the conclusion that
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as a matter of law the language at issue is reasonable and not
over-broad. 	A conclusion that the restrictive covenant is a
reasonable restraint must rest on other grounds. 	However, no
other grounds were advanced by Modern in this case.
Modern's sole contention is that it met its burden of
showing that the restrictive covenant is reasonable because
the time and geographic limitations are reasonable and because
Stinnett is only prohibited from working for Modern's
competitors. 	Other than the bald statement in its brief that
the non-compete agreement "is reasonable and no greater than
necessary to protect Modern's legitimate business interests,"
Modern offers neither argument nor evidence of any legitimate
business interest that is served by prohibiting Stinnett from
being employed in any capacity by a competing company. 3
Compare Paramount Termite and Roanoke Engineering. 	In the
absence of any justification for imposing the instant
restraint on an employee's ability to earn a livelihood,
Modern has not carried its burden of showing that the
restrictive covenant at issue is reasonable and no greater
than necessary to protect a legitimate business interest. 4
3 The record establishes that Stinnett was a salesperson
while employed by Modern and that she was subsequently
employed by a competitor of Modern, but is silent as to the
nature of Stinnett's employment with her new employer.
4 Although the case originated as a declaratory judgment
proceeding, Modern, as the employer, had the burden to produce
6

Accordingly, we will affirm the judgment of the trial
court.
Affirmed.
evidence of reasonableness because the contract is in
restraint of trade, Roanoke Engineering, and the success of
its cross-bill depended on its ability to demonstrate the
reasonableness of the clause.
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