Duration of Covenant Not to Compete is Not Equitably Extended Under Facts Presented; But Waco Court Contemplates Availability of Equitable Extension Under Certain Facts

Farmer v. Holley, 2007 WL 2446769 )Tex. App.- Waco August 29, 2007

Seller and Buyer of Dance Studio entered into a Sale and Purchase Agreement that contained a covenant not to compete. Thereafter, Seller accepted employment with a competing dance studio. Buyer sued. Seller argues that the "trial court erred in determining the ending date of the covenant not to compete to be five years from the date of judgment, November 13, 2011, rather than five years from the date of the agreement, February 27, 2009." In retort, Seller argues that "it would be 'patently unfair; for [Buyer] to receive credit for the time period during which violations of the covenant not to compete were 'continuous and persistent.'" the Waco Court of Appeals stated in its opinion; "We do not hold that a covenant not to compete cannot be equitably extended, but hold that the record does not support Holley's argument that the violations of the covenant, if any, were 'continuous and persistent'. Thus the trial court erred in equitably delaying the start of the covenant not to compete until the date of the judgment rather than the date of the agreement."

Texas Civil Trial Law Alert-August