Professional Documents
Culture Documents
14-15-01061-cv
FOURTEENTH COURT OF APPEALS
HOUSTON, TEXAS
3/11/2016 7:43:51 PM
CHRISTOPHER PRINE
CLERK
No. 14-15-01061-CV
FILED IN
14th
COURT
OF APPEALS
IN THE COURT OF APPEALS
HOUSTON, TEXAS
FOURTEENTH JUDICIAL DISTRICT
3/11/2016 7:43:51 PM
AT HOUSTON, TEXAS
CHRISTOPHER A. PRINE
Clerk
KELLEY RIEVES,
APPELLANT,
V.
BUC-EES, LTD.,
APPELLEE.
Appeal from the District Court of Brazoria County, Texas, 23rd Judicial
District
The Honorable Ben Hardin
Trial Court Cause Number 73332
APPELLANTS BRIEF
Bruce Johnson
Texas Bar # 00794029
BERG FELDMAN JOHNSON, LLP
4203 Montrose Blvd., Suite 150
Houston, Texas 77006
(713)526-0200
(832)615-1665 (fax)
bjohnson@bergfeldman.com
ATTORNEY FOR APPELLANT
ORAL ARGUMENT REQUESTED
B.
Jeffrey S. Wolff
Norton Rose Fulbright US, LLP
1301 McKinney, Suite 5100
Houston, Texas 77010
Randy E. Moore
The Moore Law Firm
7 West Way Court, Suite C
Lake Jackson, Texas 77566
H. Tracy Richardson
Buc-ees, Ltd.
327 FM 2004
Lake Jackson, Texas 77566
ii
TABLE OF CONTENTS
Identity of Parties and Counseli
Index of Authorities....vi
Statement of the Case.ix
Statement Regarding Oral Argumentxi
Issues Presented.....xii
Introduction........1
Statement of Facts.4
A.
Rieves Hiring and the Creation of the 2009 and 2010
Agreements.....4
B.
C.
The Express Purpose of the Repayment Provisions was to
Restrain Employees.9
D.
B.
Because Rieves was an At-will Employee under a Bilateral Atwill Employment Contract, No Breach Resulted from her Departure
and, absent that Breach, Buc-ees is not Entitled to Enforce the
Liquidated Damages Provision under which it Seeks Repayment of
Additional Compensation and Retention Pay....19
1.
Buc-ees Does not Seek Actual Damages, it Seeks to
Enforce a Liquidated Damages Provision...20
iii
2.
Contract Damages are to Compensate for Loss and Bucees suffered no Loss due to Rieves Departure.22
3.
The only Possible Breach of the 2010 Agreement was
Rieves Failure to Remain Employed and/or Provide Six
Months Notice............................................................23
4.
5.
Because no Breach of the 2010 Agreement Occurred, the
Liquidated Damages Provision cannot be enforced...26
C.
The Liquidated Damages Provision is Alternatively
Unenforceable because it Constitutes a Penalty...27
D.
The Term and Repayment Provisions are Unenforceable
because they constitute a Restraint of Trade which does not satisfy
the Reasonableness Standards of Covenants not to Compete under
Texas Law...28
1.
The Texas Supreme Court has Held that Damage
Provisions such as those in the 2010 Agreement are Restraints
of Trade and are Subject to the Reasonableness Standards of
Covenants not to Compete28
2.
The 2010 Agreement does not satisfy the Reasonableness
Standards of Covenants not to Compete..33
E.
The 2010 Agreement and its Provisions are Unconscionable
because they are Grossly One-Sided...34
F.
The Trial Court Erred in Granting Summary Judgment on
Rieves Claims of Unjust Enrichment, Quantum Meruit, and Breach
of Contract....38
iv
G.
The Trial Court Erred in Granting Summary Judgment on
Rieves Claims of Failure to Mitigate, Estoppel, Quasi-estoppel, and
Waiver ....39
H. The Trial Court Erred in Awarding Attorney Fees to Bucees..40
Conclusion.....44
Prayer....45
Certificate of Service.....47
Certificate of Compliance47
Appendix..48
A.
Final Judgment
B.
Order Granting Buc-ees, Ltd.s Motion for Partial Summary
Judgment
C.
2009 Agreement
D.
2010 Agreement
E.
Texas Business & Commerce Code 1.718
F.
Texas Business & Commerce Code 15.05
G.
Texas Business & Commerce Code 15.50-.52
INDEX OF AUTHORITIES
United States Constitution
U.S. CONST. amend. XIII 1) .32
Case Authority:
20901, Inc. v. Parker, 249 S.W.3d 392 (Tex. 2008) 19
APRM, Inc. v. Hartnell, No. 01-01-00831-CV, 2002 WL 1435995 (Tex.
App.Houston [1st Dist.], July 3, 2002, no pet.)33
Black v. Victoria Lloyds Ins. Co., 797 S.W.2d 20 (Tex. 1990)18
J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003)..26
Deming v. Nationwide Mut. Ins. Co., 905 A.2d 623 (Conn. 2006).31
DeSantis v. Wackenhut Corp., 793 S.W.2d 670 (Tex. 1990)..33, 34
Exxon Mobil Corp. v. Drennan, 452 S.W.3d 319 (Tex. 2014).....3, 4
Ferguson v. Bldg. Materials Corp. of Am., 295 S.W.3d 642 (Tex. 2009)18
Frankiewicz v. National Comp Associates, 633 S.W.2d 503 (Tex. 1982)31
Franklink, Inc. v. GJMS Unlimited, Inc., 401 S.W.3d 705 (Tex. App.
Houston [14th Dist.] 2013, no pet.) ......44
Garden Ridge L.P. v. Advance Intl, Inc., 403 S.W.3d 432 (Tex. App.
Houston [14th Dist.] 2013, pet. denied)...23
Glattly v. Air Starter Components, Inc., 332 S.W.3d 620 (Tex. App.
Houston [1st Dist.] 2011, pet. denied) )...44
Leach v. Conoco, Inc., 892 S.W.2d 954 (Tex. App.Houston [1st Dist.] 1995,
writ dismd w.o.j.)......18
Light v. Centel Cellular Co. of Tex., 883 S.W.2d 642 (Tex. 1994)...25, 26
vi
Magill v. Watson, 409 S.W.3d 673 (Tex. App.Houston [1st Dist.] 2013, no
pet.)....28
Mann, Frankfort, Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844
(Tex. 2009)..18, 19, 30
Marsh USA, Inc. v. Cook, 254 S.W.3d 764 (Tex. 2011)..25, 30, 32, 33
Nacogdoches Heart Clinic, P.A. v. Pokala, No. 12-11-00133-CV, 2013 WL
451810 (Tex. App.Tyler, Feb. 6, 2013, pet. denied) ....32
Nixon v. Mr. Property Mgmt. Co., 690 S.W.2d 546 (Tex. 1985)..18
Peat Marwick Main & Co. v. Haass, 818 S.W.2d 381 (Tex.
1991)3, 15, 23, 31
Perez v. Texas Disposal Systems, Inc., 103 S.W.591 (Tex. App.San
Antonio 2003, no pet) ....44
Phillips v. Phillips, 820 S.W.2d 785 (Tex. 1978) ..27, 28, 29
Pinson v. Red Arrow Freight Lines, 801 S.W.2d 14 (Tex. App.Austin
1990, no writ)39
In re Poly-American, LP, 262 S.W.3d 337 (Tex. 2008).34, 35, 42
Ritchie v. Rupe, 443 S.W.3d 856 (Tex. 2014)..25
Sawyer v.E.I. DuPont De Nemours and Co., 430 S.W.3d 396 (Tex.
2014)..25, 26
Ski River Development, Inc. v. McCalla, 167 S.W.3d 121 (Tex. App.Waco,
2005, pet. denied)37
Southwell v. University of the Incarnate Word, 974 S.W.2d 351 (Tex.
App.San Antonio 1998, pet. denied).26
Stewart v. Basey, 245 S.W.2d 484 (Tex. 1952)..23, 27
Valence Operating Co. v. Dorsett, 164 S.W.3d 656 (Tex. 2005)19, 23
vii
viii
1
2
3
4
CR000007-15.
CR000017-24.
CR000021-23.
CR000076-161.
ix
On April 27, 2015 the 23rd District Court of Brazoria County, Texas,
the Honorable Ben Hardin presiding, granted Buc-ees Motion for Partial
Summary Judgment. 5
On June 23, 2015, Buc-ees filed a Second Motion for Summary
Judgment seeking summary judgment on, among other things, its breach of
contract counterclaim. 6
On July 13, 2015, Rieves filed a Motion to Reconsider the granting of
Buc-ees Motion for Partial Summary Judgment. 7
On July 17, 2015, Rieves filed a Motion for Summary Judgment
seeking, among other things, summary judgment on Buc-ees breach of
contract counterclaim. 8
On July 21, 2015, the 23rd District Court of Brazoria County, Texas,
the Honorable Ben Hardin presiding, denied Buc-ees Second Motion for
Summary Judgment. 9
On July 27, 2015, the 23rd District Court of Brazoria County, Texas,
the Honorable Ben Hardin presiding, ordered the matter referred to
mediation. 10
The Order Granting Summary Judgment is included in the appendix. A request to
supplement the record has been made as the Order Granting Summary Judgment in the
Clerks Record is the proposed order submitted by Buc-ees rather than the Order signed
by the trial court.
6 CR000712-841.
7 CR001505-38.
8 CR0001576-2227.
9 CR002238.
5
xi
provisions.
inquire as to the impact any decision will have on Texas law, Texas
employers and employees, restraints of trade on employees, and the future
sanctity of the Texas employment at-will doctrine.
ISSUES PRESENTED
I.
The trial court erred by granting summary judgment in favor of
Buc-ees on its breach of contract counterclaim.
1.
The trial court erred in determining on summary
judgment that the 2010 Agreement was enforceable.
2.
The trial court erred in determining on summary
judgment that the 2010 Agreement was breached.
3.
The trial court erred in determining on summary
judgment that the repayment provisions of the 2010 Agreement did
not constitute liquidated damages provisions.
4.
The trial court erred in determining on summary
judgment that the liquidated damages provisions were enforceable.
5.
The trial court erred in determining on summary
judgment in the 2010 Agreement is not a bilateral contract.
6.
The trial court erred in determining on summary
judgment that non-illusory consideration supported the 2010
Agreement and the repayment provisions.
II.
The trial court erred in granting summary judgment
determining that the liquidated damage provisions of the 2010 Agreement
did not constitute an unenforceable penalty
III. The trial court erred in granting summary judgment
determining that the repayment provisions of the 2010 Agreement did not
constitute liquidated damages provisions
xii
a.
The trial court erred in granting summary judgment
finding that the restraint of trade imposed by the 2010
Agreement was reasonable as to time.
b.
The trial court erred in granting summary judgment
finding that the restraint of trade imposed by the 2010
Agreement was reasonable as to scope.
c.
The trial court erred in granting summary judgment
finding that the restraint of trade imposed by the 2010
Agreement was reasonable as to geography.
d.
The trial court erred in granting summary judgment
finding that the restraint of trade imposed by the 2010
Agreement was ancillary to an otherwise enforceable
agreement.
e.
The trial court erred in granting summary judgment
finding that the restraint of trade imposed by the 2010
Agreement protected legitimate business interests of Buc-ees.
f.
The trial court erred in granting summary judgment
finding that the restraint of trade imposed by the 2010
Agreement was not greater than required to protect any
legitimate business interests of Buc-ees.
VII. The trail court erred in granting summary judgment on
Rieves claim that the 2010 Agreement and its provision are
unconscionable.
VIII. The trail court erred in granting summary judgment on
Rieves unjust enrichment, quantum meruit, and breach of contract
claims.
IX. The trail court erred in granting summary judgment on
Rieves claim of Failure to Mitigate, Quasi-estoppel, and Waiver.
X.
xiv
1.
The trial court erred in awarding attorney fees to
Buc-ees under the superseded 2009 Agreement.
2.
The trial court erred in awarding attorney fees to
Buc-ees under paragraph 6.08 of the 2010 Agreement.
3.
The trial court erred in awarding attorney fees to
Buc-ees under Texas Civil Practice & Remedies Code chapter
38.
4.
The trial court erred in awarding attorney fees to
Buc-ees because paragraph 6.08 is unenforceable due to
vagueness.
5.
The trial court erred in awarding attorney fees to
Buc-ees because the 2010 Agreement is unenforceable in whole
as it is not supported by consideration.
6.
The trial court erred in awarding attorney fees to
Buc-ees because paragraph 6.08 is not supported by
consideration.
7.
The trial court erred in awarding attorney fees to
Buc-ees because paragraph 6.08 constitutes an unenforceable
penalty.
8.
The trial court erred in awarding attorney fees to
Buc-ees because paragraph 6.08 is unenforceable as part of an
unconscionable contract.
9.
The trial court erred in awarding attorney fees to
Buc-ees because paragraph 6.08 is an unconscionable onesided attorney fees provision.
10. The trial court erred in awarding attorney fees
incurred in defense of Rieves Declaratory Judgment claims to
Buc-ees because the award is neither just nor equitable.
11. The trial court erred in awarding attorney fees to
Buc-ees because Buc-ees attorney fee claim is preempted by
the Texas Covenant not to Compete Act.
xv
xvi
INTRODUCTION
Buc-ees hired Rieves to provide personal services as an assistant
manager in one of its convenience stores. 15
employee. 16
Not wishing to bind itself to Rieves but desiring to bind Rieves to it,
Buc-ees devised a means of preventing Rieves from leaving as permitted by
her at-will status. Buc-ees required Rieves pay it to leave.
Don Wasek, Buc-ees president, testified, had [Rieves] stayed the
48 months and gave six months (sic) notice, she would not owe [Buc-ees]
any money. 17:
the only basis on which Buc-ees [seeks] to require Kelley
Rieves to repay the retention pay and the additional
compensation that was paid to her while she was employed by
Buc-ees is that she did not work for a minimum of 48 months
from the effective date of the 2010 Agreement and she failed to
give six months written separation notice to Buc-ees of her
intent to leave. 18
other than the fact that [Rieves] didnt work for 54 months
after entering into the 2010 written agreement, Buc-ees
wouldnt have a claim to to get the money back that it paid
her 19
Gregg Wingert, Buc-ees operations manager testified:
15
16
17
18
19
Q.
So going back to the time period of May 2012 in which the
retention pay is reflected to be $66,720.29, do you think
providing someone- -an employee a bill by Buc-ees of
$66,720.29 when they want to leave Buc-ees employ impacts
their voluntary ability to leave Buc-ees employ?
A.
To the extent that it needs to be a consideration if they
want to leave, yes. 20
Wingert continued:
Q.
The only way to avoid a bill for $66,720.29 is to either- either/or work out the full term of a contract or give six months
notice before you decide to leave?
A.
I believe its both, sir.
Q.
OK. Otherwise you get to pay the $66,000.00 in
retention pay?
A.
Yet, Wasek testified, [Rieves was] free to leave the company anytime she
chooses and were free to terminate her anytime we choose. 22
Every contract, , in restraint of trade or commerce is unlawful. 23
Wingert identifies the restraint, testifying:
Q.
Buc-ees reason for having the procedure that is
described in paragraph 9 of Exhibit 3 is to retain employees in
its employ and also to prevent them from going to work for
other employers?
A.
Yes, sir. An employees free to leave at any time and go to
work for whomever they want. However, if that happens and
20
21
22
23
CR000217; CR000233.
CR000233.
CR000407.
TEX. BUS. & COMM. CODE 15.05(a).
they have not met the minimum term and/or provided the
specified notice that they have signed to then the company- then they do forfeit that unearned amount of retention pay. 24
The Texas Supreme Court held in Peat Marwick Main & Co. v. Haass, 818
S.W.2d 381 (Tex. 1991), that provisions clearly intended to restrict the
right to render personal services are in restraint of trade and must be
analyzed for the same standards of reasonableness as covenants not to
compete to be enforceable. 25 The 2010 Agreement at issue here do not
even attempt to satisfy that standard.
Buc-ees will most certainly return to Exxon Mobil Corp. v. Drennan,
452 S.W.3d 319 (Tex. 2014) claiming it makes its contract enforceable
under Texas law.
impacted Haass.
The two questions posed in Drennan were:
whether New York choice-of-law provisions in a Texas based
corporations
executive
bonus-compensation
incentive
programs (sic) are enforceable and, if not, whether the
programs provisions allowing forfeiture of an executives bonus
awards for engaging in detrimental activity are enforceable
under Texas law. 26
The Supreme Court did not reach the second question and said so three
times, stating:
24
25
26
27
28
29
30
contracts. 31
31
32
33
34
35
36
37
38
39
40
41
CR000230.
CR002212;
CR001400.
CR002081.
CR002081.
CR002081.
CR002081;
CR001400;
CR001402.
CR001398.
CR002081;
CR000227.
CR001400.
CR001402.
CR000422-23.
Wasek told Rieves she would initially be paid an hourly rate and a flat
monthly additional amount which would later convert to a salary and a
monthly percentage of store profits 42
Agreement. 43
A year later, as Wasek requested, Rieves visited him again. 44 During
this meeting, Wasek determined how much Rieves was compensated the
prior 12 months. 45 Wasek took that amount, applied the previously selected
percentage split and arrived at a weekly salary and a category labeled
Retention Pay. 46 Rieves asked to change the percentage split but was
refused. Wasek told Rieves it was too late, she had already selected.47
Rieves was then asked whether she wanted a twelve month contract or to
complete the remaining 48 from the 2009 Agreement. 48 Rieves chose to
complete the 48. 49 Wasek chuckled, telling Rieves it was not smart; she
was young and would figure out one day why that was a mistake. 50 Wasek
also assured Rieves that, if, at the end of the year, she had not made the
CR001402.
CR000573.
44 CR001408; CR002081.
45 CR002081.
46 CR001410.
47 CR002081.
48 CR001410.
49 CR001410.
50 CR001410. The fact that 12 months was offered counters Buc-ees assertion that long
term contracts such as Rieves were required to prevent the revolving door of employees.
42
43
same amount she made the prior year to see him and Buc-ees would make
up the difference. 51
Wasek recalls nothing about the meetings or how Rieves
compensation terms were arrived at. 52
B.
51
52
53
54
55
56
CR001411.
CR000475-80; CR000482-84.
CR000289-90.
CR000244; CR000482.
CR001403.
CR001403.
demand for repayment. 57 Rieves believed she was complying with Waseks
request when she resigned.
In response to Rieves e-mail, Wingert obtained a summary of Rieves
compensation during her employment, including the amount of Additional
Compensation and Retention Pay. 58 In the normal course of business, Bucees utilizes this information when an individual desires to leave its
employ. 59 The information was specifically obtained in preparation for a
meeting between Rieves and Wasek to discuss her desire to depart. 60
According to Wingerts calculations, Rieves was paid $66,720.29 gross in
Additional Compensation and Retention Pay over the course of her
employment. 61
In discussing the matter with Rieves, Wingert presented four options.
First, she could simply decline the new job offer. Second, Rieves could pay
Buc-ees $66,720.29. Rieves third option was to get the money from her
new employer. Fourth, Rieves could wait until February 25, 2014 to accept
the new job. 62 In his discussion with Rieves, Wasek provided three options.
Rieves could, ask her new employer to pay it stay and work out her
CR000487-89.
CR000232; CR000247; CR000294.
59 CR000217-18.
60 CR000232.
61 CR000294; CR000232.
62 CR000231; CR000333; CR000294 (the term of the 2010 Agreement was 48 months
from date of first employment, August 25, 2009 plus the 6 month notice period).
57
58
agreed upon term and notice [or] pay it back. 63 Rieves proposed working
out the six months of the notice period but was refused. 64
Rieves accepted the new job. Rieves provided formal notice on May
31, 2012. 65 Rieves last day was July 12, 2012. 66 A year after her notice,
Buc-ees sent Rieves a demand for payment of $66,720.29 plus interest and
attorney fees. 67
C.
The Express Purpose of the Repayment Provisions was
to Restrain Employees
Soon after learning of Rieves desire to depart, Wingert corresponded
with her stating:
After having carefully processed on the content of it, our take is
that what you are essentially saying is that you have a job offer.
We understand the circumstances you describe around this job
offer but its still a job offer.
Kelley consider the implications to the Company to accept
harming our business to facilitate your help with another.
Ironically, the paragraphs in your employment contract were
written to prevent this very thing from even being a
consideration on your part.
We dont want you to leave under these circumstances. 68
63
64
65
66
67
68
CR000495-96.
CR002212.
CR000334; CR000249-50.
CR000334.
CR000599-600.
CR000338.
69
70
71
72
73
74
75
CR000252.
CR000248 (emphasis added).
CR000248.
CR000227.
CR000227.
CR000458-59.
CR001403.
10
Buc-ees takes the position that it is not the stick of repayment that
compels restraint, it is the carrot of not repaying. Either way, restraint is
the purpose. As Wingert describes it:
Q.
So in that situation [leaving prior to the specified term
and/or providing the specified notice] then the employee has to
pay a penalty of the unearned retention pay back to Buc-ees
then; is that what youre saying?
A.
Well, I wouldnt refer to it as that, sir. I refer to it as we
positively incent with retention a person to remain on their
agreed tenure with a specified notice with a positive incentive. 76
Wingert nearly forgot the Buc-ees line when he testified, the reason
[Rieves] wanted to leave [accept other employment] was the very reason
that we have our employment contracts to prevent folks - -to incent them to
stay. 77 Wingert quickly returned to the Buc-ees line.
Q.
And prevent them from leaving, I guess, is the corollary to
that statement?
A.
Q.
Well you used the word prevent earlier, right? I mean
you did say the word prevent?
A.
I did.
Q.
And am I mistaken that what you were - - what you were
intending to say there was that you prevent them from leaving
and to retain them with Buc-ees - - in Buc-ees employment?
76
77
CR000227-28.
CR000252.
11
A.
If I said the word prevent allow me to correct myself,
78
sir.
Even using Wingerts term incent, the provisions are to incentivize
people to remain employed at Buc-ees. 79
The
CR000252.
CR000252.
80 CR000252.
81 CR000229.
82 CR000232.
83 CR000498-500; CR000593 ( wed love the opportunity to have you back.-August 28, 2012).
84 CR002212.
78
79
12
85
86
87
88
89
90
91
92
93
94
CR000603.
CR000613.
CR000616.
CR000618.
CR000584.
CR000746; CR00815-18.
CR000568; CR000573.
CR002082.
CR002082.
CR000569.
13
Breach of Contract
95
CR002588-90.
14
Restraint of Trade
Unconscionability
The 2010 Agreement and its terms are grossly one-sided. The terms
In
15
Attorney fees
Buc-ees is not entitled to attorney fees under any scenario it
itself based on the 2010 Agreement, rather it sought to enforce the 2010
Agreement; the attorney fee provision is an unenforceable fee shifting and
one-sided fee provision; and Buc-ees attorney fee claim is preempted by
the Texas Covenants not to Compete Act.
III.
ARGUMENT
A.
Standard of Review
98
18
favorable to the non-movant, crediting evidence favorable to the nonmovant unless a reasonable juror could not. 103 Evidence contrary to the
non-movant is disregarded unless a reasonable juror could not likewise
disregard it. 104
When both parties move for summary judgment on the same issue,
one being granted and one being denied, the analysis is slightly altered.
The Court considers the summary judgment evidence presented by both
parties, determines all questions presented, and, in the event it is
determined the trial court erred, renders the judgment the trial court
should have rendered. 105
B. Because Rieves was an At-will Employee under a
Bilateral At-Will Employment Contract, No Breach Resulted
from her Departure and, absent that Breach, Buc-ees is not
Entitled to Enforce the Liquidated Damages Provision
under which it Seeks Repayment of Additional
Compensation and Retention Pay
TEX. R. CIV. P. 166a cmt. 1997.
20901, Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008); Nixon, 690 S.W.2d at 54849.
103 Fielding, 289 S.W.3d at 848.
104 Fielding, 289 S.W.3d at 848.
105 Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).
101
102
19
1.
Buc-ees Does not Seek Actual Damages, it Seeks to
Enforce a Liquidated Damages Provision
In exchange for Rieves personal services, Buc-ees agreed to:
In addition to Employees regular weekly salary, Employee will
be advanced a monthly Retention payment of 1.2652% of Bucees #32 net profit paid monthly and a one time (sic) payment of
$1,000.00. 106
This fulfilled the 2009 Agreement in which Buc-ees agreed to pay Rieves
[a] fixed monthly bonus of $1,528.67. Bonus will be changed to a % of
store net sometime in the future at employers (sic) Discretion (sic). 107
Thus, Retention pay under the 2010 Agreement was a continuation of
Buc-ees pre-existing agreement to pay Rieves a fixed monthly bonus. The
2010 Agreement merely quantified the percentage and changed the name.
The 2010 Agreement contained other provisions concerning
Retention Pay.
In the event Employee does not meet the above
requirements, regardless of the reason for termination or
regardless of the reason Employee did not provide the required
notification, Employee shall be required to repay all of the
Retention Pay to Company In other words, in the event
Employees employment with Company, its successors or
assigns terminates for any reason, with or without cause, and
the above requirements are not met by Employee, Employee
will be required to repay all of the Retention Pay received 108
106
107
108
CR000568, 3.01.
CR000573, 3.01.
CR000568, 3.02.
20
CR000568, 3.02. Paragraph 3.05 required the employee remain employed during
the entirety of the six months.
110 CR000571, 6.06.
111 CR000573, 3.02.
112 CR000408; CR000444-45.
113 CR000541-42.
114 CR000542-43.
109
21
CR000390-91; CR000397-98.
CR000390.
CR000391.
CR000391.
CR000391.
CR000398-99.
CR000402.
CR000445-46.
22
Buc-ees
relies
on
liquidated
damages
provision.
accruing from the breach of specified contractual obligations. 125 The Texas
Supreme Court expressly identified a repayment clause similar to that here
as a form of liquidated damages. 126 Liquidated damages are recoverable
only when a failure to perform contractual obligations has occurred. 127
3.
The only Possible Breach of the 2010 Agreement was
Rieves Failure to Remain Employed and/or Provide Six
Months Notice
The only breach capable of triggering the liquidated damages
provision was Rieves failure to remain employed for 54 months and/or
124
23
provide six months notice after 48 months. 128 Rieves made no promise to
repay Buc-ees.
128
129
130
131
CR000568.
CR001481.
CR000508.
CR000435-37; CR000459; CR000534-537.
24
between two parties to the contract, each party being both a promisor and a
promisee. 132 Rieves and Buc-ees were each promisor and promisee.
a.
As an Unmodified Bilateral At-will Employment
Contract, the 2010 Agreement contained only Illusory
Promises, making it Unenforceable
Texas is steadfastly an at-will employment state. for well
over a century, the general rule in this State, as in most
American jurisdictions, has been that absent a specific
agreement to the contrary, employment may be terminated by
an employer or the employee at will, for good cause, bad cause,
or no cause at all. 133
Employers and employees can modify the at-will relationship but the intent
to do so must be unequivocal and definite. 134 At-will employment contracts
may be entered on any matter except those that limit the ability of either
party to terminate employment at will. 135
As Buc-ees repeatedly
Venegas v. American Energy Services, 302 S.W.3d 299, 302 (Tex. 2009).
Ritchie v. Rupe, 443 S.W.3d 856, 885-86 (Tex. 2014)(internal citations omitted).
134 Ritchie, 443 S.W.3d at 86; Sawyer v. E.I. DuPont De Nemours and Co., 430 S.W.3d
396, 403 (Tex. 2014).
135 Light v. Centel Cellular Co. of Tex., 883 S.W.2d 642, 644 (Tex. 1994), abrogated on
other grounds by Marsh USA Inc. v. Cook, 354 S.W.3d 764, 773-75 (Tex. 2011).
136 It takes no imagination to predict Buc-ees response were Rieves fired within the 54
months and claimed the 2010 Agreement was not at-will but rather, had a term of 54
months based on the same provisions Buc-ees relies on here.
132
133
25
each is perfectly free to do with or without reason at any time, the promise
is illusory and cannot support an enforceable contract. 137
Consideration for a promise, by either the employee or the
employer in an at-will employment (sic), cannot be dependent
on a period of continued employment. Such a promise would
be illusory because it fails to bind the promisor who always
retains the option of discontinuing employment in lieu of
performance. When illusory promises are all that supports a
purported bilateral contract, there is no contract. 138
Rieves was not required to remain employed and Buc-ees was not required
to maintain that employment and pay Rieves. Any promises to remain
employed or provide six months notice were illusory.
The only
consideration for the bilateral 2010 Agreement was and remained illusory.
No consideration supports the 2010 Agreement and no valid contract
existed which Rieves could breach by leaving.
5.
Because no Breach of the 2010 Agreement Occurred,
the Liquidated Damages Provision cannot be enforced
The elements of a breach of contract claim are: (1) the existence of a
valid contract; (2) the plaintiff performed or tendered performance; (3) the
defendant breached the contract; and (4) the plaintiff was damaged as a
result of the breach. 139 There was no valid contract, there was no breach,
138
26
judgment on Buc-ees breach of contract counterclaim. Because both Bucees and Rieves sought summary judgment on this claim, this Court may
render a decision that Buc-ees take nothing by way of its breach of contract
counterclaim.
C.
The Liquidated Damages Provision Is Alternatively
Unenforceable because it Constitutes a Penalty
A term fixing unreasonably large liquidated damages is void as a
penalty. 140 This presents a question of law for the Court. 141
All agree that to be enforceable as liquidated damages the damages
must be uncertain and the stipulation must be reasonable. 142
Even
140
141
142
143
144
27
146
28
departure as she was free to leave. No fact issue exists as the provision is
void on its face as a penalty and may be so declared in Rieves favor. 147
D. The
Term
and
Repayment
Provisions
are
Unenforceable because they constitute a Restraint of Trade
which does not satisfy the Reasonableness Standards of
Covenants Not to Compete under Texas Law
1.
The Texas Supreme Court has Held that Damage
Provisions such as those in the 2010 Agreement are
Restraints
of
Trade
and
are
Subject
to
the
Reasonableness Standards of Covenants not to Compete
The argument that Rieves was not restrained because she was an atwill employee; free to work for anyone she chose ignores the facts and the
Texas Supreme Court. The spirit and intent of the retention pay is to
oblige with a minimum term and a specified written notice. 148 Wingert
wrote:
After having carefully processed on the content of it, our take is
that what you are essentially saying is that you have a job offer.
We understand the circumstances you describe around this job
offer but its still a job offer.
Kelley consider the implications to the Company to accept
harming our business to facilitate your help with another.
Ironically, the paragraphs in your employment contract were
written to prevent this very thing from even being a
consideration on your part. 149
147
148
149
See Phillips, 820 S.W.2d at 788 and Magill, 409 S.W.3d at 680-81.
CR000229.
CR000338.
29
He was
subject to a penalty if he did so. Fielding had to make the financial decision
if providing the services warranted paying his former employer.
The Texas Supreme Court held:
150
151
30
152
153
154
155
156
31
32
Buc-ees may be many things, but above the law it is not. In Haass,
the Texas Supreme Court directly stated that damage provisions such as
Buc-ees must be analyzed under the reasonableness standard of covenants
not to compete.
2.
The
2010
Agreement
does
not
satisfy
the
Reasonableness Standards of Covenants not to Compete
The 2010 Agreement is devoid of anything remotely satisfying the
reasonableness standard of covenants not to compete. It is devoid of time
limitation, geographic limitation, and scope limitation. 161 There are no
protectable business interests the restraint is designed to protect. 162 Even if
limitationed as to time, scope, and geography, the restraint (inability to
leave to work for any other employer, anywhere, doing anything) imposed
is significantly greater than necessary to protect any legitimate business
interest Buc-ees could divine. 163 While all are missing, the absence of just
one is fatal to a covenant. 164 Leaving all that aside, the restraint still fails as
there is no otherwise enforceable agreement the provisions are ancillary
to. 165 The only agreement is an at-will employment agreement containing
only illusory promises.
See Marsh, 354 S.W.3d at 771; TEX. BUS. & COMM. CODE 15.50(a).
DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 685 (Tex. 1990).
163 TEX. BUS. & COMM. CODE 15.50(a).
164 APRM, Inc. v. Hartnell, No. 01-01-00831-CV, 2002 WL 1435995, at * 4 (Tex. App.
Houston [1st Dist.] July 3, 2002, no pet.).
165 See Marsh, 354 S.W.3d at 771; TEX. BUS. & COMM. CODE 15.50(a).
161
162
33
provisions satisfy the reasonableness standard. 166 Buc-ees did not and
cannot. The trial court erred by granting summary judgment ruling that
the provisions at issue do not constitute a restraint of trade and/or that
they satisfy the reasonableness standards for covenants not to compete.
The trial courts ruling must be reversed. Further, as the provisions do, in
fact, constitute an unenforceable restraint of trade, this Court should rule
thus as a matter of law.
E.
The 2010 Agreement and its Provisions are Unconscionable
because they are Grossly One-Sided
A contract is unconscionable if, given the parties general
commercial background and the commercial needs of the
particular trade or case, the clause involved is so one-sided that
it is unconscionable under the circumstances existing when the
parties made the contract. 167
Unconscionability is to be determined in light of a variety of factors, which
aim to prevent oppression and unfair surprise; in general, a contract will be
found unconscionable if it is grossly one-sided. 168 Whether a contract is
contrary to public policy or unconscionable at the time it is formed is a
question of law. 169 Because a trial court has no discretion to determine
what the law is or apply the law incorrectly, its clear failure to properly
166
167
168
169
DeSantis, 793 S.W.2d at 685; TEX. BUS. & COMM. CODE 15.51(b).
In re Poly-America, LP, 262 S.W.3d 337, 348 (Tex. 2008).
Poly-America, 262 S.W.3d at 348.
Poly-America, 262 S.W.3d at 349.
34
If the
The
employee is required to waive their right to a jury for any claim. 173
Regardless of where the employee lives or works, all disputes are to be
submitted to either Brazoria County, Texas courts or the United States
District Court for the Southern District of Texas, Houston Division. 174 If a
conflict or apparent conflict between the 2010 Agreement or any other
document arises which cannot be resolved between the parties, Buc-ees,
170
171
172
173
174
35
in its sole discretion shall determine what term applies based on what
Buc-ees meant. 175 The employee is to hold Buc-ees harmless, indemnify
and reimburse it for any damages, penalties, losses, or litigation expenses
Buc-ees may incur due to any act, omission, and/or commission by the
employee. 176
175
176
177
178
179
CR000570, 6.04.
CR000570, 6.07.
CR000570, 6.08.
CR000570, 6.09.1; 6.09.2.
CR000568, 2.01, 3.01.
36
CR002081-82.
CR001402.
182 Ski River Development, Inc. v. McCalla, 167 S.W.3d 121, 136 (Tex. App.Waco
2005, pet. denied).
183 McCalla, 167 S.W.3d at 136.
184 McCalla, 167 S.W.3d at 136.
180
181
37
Rieves
CR002081-82.
38
restrictions on the use of the funds it now claims belong to it and which
Pinson v. Red Arrow Freight Lines, 801 S.W.2d 14 (Tex. App.Austin 1990, no
writ).
187 CR000584; CR000602-618.
186
39
Rather, Buc-ees
First under
provisions of the 2009 and 2010 Agreements. Second, under Texas Civil
Practice & Remedies Code chapter 38, and third, equitably for defending
188
CR000621.
40
CR000571, 6.06.
41
Fourth, given the other terms of the 2010 Agreement including: its
general abrogation of Rieves at-will employment rights; its illegal attempt
to obtain waiver of Rieves overtime rights (3.04); its waiver of jury trial
(5.01); its self-serving attempt to fix jurisdiction and venue (6.03); its
assignment of the ability to declare the meaning and intent of the 2010
Agreement solely to Buc-ees (6.04, 6.05, & 6.08); and its overbroad
indemnity provision (6.07), the attorney fees provision is part of an
unconscionable contract and for that reason and independently, is an
unconscionable one-sided fee shifting provision. Either in combination or
singly it is unenforceable. 190
Moreover, at least in the context of arbitration agreements, the Texas
Supreme Court recognizes that fee-splitting provisions which operate to
prohibit employees from fully and effectively vindicating statutory rights
are not enforceable. 191 Paragraph 6.08 is more insidious. Wasek asserts
the intent of the provision is to require the employee bear all attorney fees
and costs regardless of who the prevailing party is. 192
The provision
purports to shift all attorney fees and costs in an effort to prevent full and
effective vindication of the employees rights. A provision purporting to
require an employee bear both her own and Buc-ees attorney fees and costs
190
191
192
See Venture Cotton Coop v. Freeman, 435 S.W.3d 222, 231-32 (Tex. 2014).
See Poly America, L.P., 262 S.W.3d at 356.
CR000518-20.
42
win, lose, or draw is a penalty. Further, this is not a contract between two
sophisticated commercial entities, it is simply a contract between one
sophisticated entity and a person applying to be an assistant manager in a
convenience store.
Fifth, as the 2010 Agreement and paragraph 6.08 lack consideration,
each is unenforceable.
Sixth, Buc-ees is not entitled to recover attorney fees for defending
against Rieves declaratory judgment action. Given that seeking declaratory
judgment was the only recourse Rieves had in challenging the payment
provisions on which Buc-ees relies, it is neither equitable nor just to award
Buc-ees attorney fees incurred in defending her claim.
Rieves was
presented with a demand by Buc-ees leaving her three choices; pay Bucees $66,720.29; wait for Buc-ees to make good on its promise to sue her if
she failed; or ask a Court to declare the provisions on which Buc-ees relies
unenforceable.
This is
Perez v. Texas Disposal Systems, Inc., 103 S.W.591, 592-94 (Tex. App.San Antonio
2003, no pet)(chapter 38); Glattly v. Air Starter Components, Inc., 332 S.W.3d 620,
644-45 (Tex. App.Houston [1st Dist.] 2011, pet. denied)(common law); and Franklink,
Inc. v. GJMS Unlimited, Inc., 401 S.W.3d 705, 707-12 (Tex. App.Houston [14th Dist.]
2013, no pet.)(chapter 38 but noting attorney fees under both chapter 398 and common
law preempted).
193
44
incurred in this appeal and for such further and additional relief to which
she may be entitled at law or in equity regardless of whether such relief was
specifically requested in this prayer.
Respectfully submitted,
BERG FELDMAN JOHNSON, LLP
By:
46
CERTIFICATE OF SERVICE
the
11th
Joy M. Soloway
Jeffrey S. Wolff
Norton Rose Fulbright US, LLP
1301 McKinney, Suite 5100
Houston, Texas 75202
Appellants Brief was served on the following via United States
Certified Mail, RRR on the 11th day of March 2016.
Randy E. Moore
The Moore Law Firm
7 West Way Court, Suite C
Lake Jackson, Texas 77566
Elizabeth Lieb
H. Tracy Richardson
Buc-ees, Ltd.
327 FM 2004
Lake Jackson, Texas 77566
/s/ Bruce Johnson
Bruce Johnson
CERTIFICATE OF COMPLIANCE
Pursuant to Texas Rule of Appellate Procedure 9.4(i)(3), the
undersigned certifies that the word count for the portions of the Brief of the
Appellant required to be included in the word count is 9,687. This count is
based on the word count of the computer program used to prepare the
Appellants Brief.
/s/ Bruce Johnson
Bruce Johnson
47
APPENDIX
A.
Final Judgment
B.
Order Granting Summary Judgment
C.
2009 Agreement
D.
2010 Agreement
E.
Texas Business & Commerce Code 1.718
F.
Texas Business & Commerce Code 15.05
G.
Texas Business & Commerce Code 15.50-.52
48