Attorneys’ Fees Issues in Texas Non-Compete Cases (Part II)

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.

For Prevailing Employers:

Section 15.52 of the Texas Business and Commerce Code provides that:

The criteria for enforceability of a covenant not to compete provided by Section 15.50 of this code and the procedures and remedies in an action to enforce a covenant not to compete provided by Section 15.51 of this code are exclusive and preempt any other criteria for enforceability of a covenant not to compete or procedures and remedies in an action to enforce a covenant not to compete under common law or otherwise.

The only provision regarding attorneys’ fees in the Covenants Not to Compete Act is the one mentioned above, in section 15.51 of the Texas Business and Commerce Code. That provision makes no mention of an award of attorneys’ fees to a prevailing employer. Under section 15.52, section 15.51 preempts all other claims for attorneys’ fees that could be brought (under a declaratory judgment theory, a private agreement that provided for attorneys’ fees, or Chapter 38 of the Civil Practice and Remedies Code). See Perez, 103 S.W.3d at 594 (“section 15.52 preempts an award of [attorney’s] fees under any other law.”). Thus, under this logic, prevailing employers are not entitled to attorneys’ fees in an action brought under the Covenants Not to Compete Act to enforce a non-compete agreement in any circumstances. See Glattly v. Air Starter Components, Inc., 322 S.W.3d 620, 645 (Tex. App. –Houston [1st Dist.] 2010, pet. denied) (“We hold that the trial court properly denied Air Starter’s requests for attorney’s fees because the Covenants Not to Compete Act does not permit employers to recover their attorney’s [fees] in suits to enforce their rights under the Act.”)

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