Reformation of Overbroad Non-Compete Agreements in Texas (Part III)

We are blogging on “Non-competes, Trade Secrets, Fiduciary Duties, and the Inevitable Disclosure Doctrine.” Mark Oberti has prepared a detailed paper on all of these issues, which can be found here.

Section 15.51(c) “precludes a damages award for conduct prior to any necessary reformation of the scope of the covenant.” Mann Frankfort, 289 S.W.3d at 855 (Hecht, J., concurring); see also SafeWorks, 2009 WL 959969, at *5 (“If a court reforms a covenant not to compete in order to make it reasonable and enforceable, ‘the court may not award the promisee damages for a breach of the covenant before its reformation and the relief granted to the promisee shall be limited to injunctive relief.’” (quoting TEX. BUS. & COM. CODE § 15.51(c)); Butler, 51 S.W.3d at 796 (“Applying section 15.51 to this case, once the trial judge reformed the covenant, money damages were precluded. No damages can be awarded for breach prior to the reformation; after reformation, the current injunction was in place preventing ReGlaze from competing with, and thus, harming Arrow.”). See also Alliantgroup, L.P., 803 F. Supp. 2d at 621 (granting summary judgment against employer’s claim for monetary damages based on breach of non-compete because all of the conduct that caused the damages occurred prior to the court’s reformation of the overbroad non-compete); Rimkus Consulting Group, Inc., 688 F. Supp. 2d at 673 (same).

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