Insights

Home > News & Insights > Insights > Virginia Supreme Court Upholds Demurrer To Non-Compete Suit

Share this on:   a b j c

Virginia Supreme Court Upholds Demurrer To Non-Compete Suit

Published by on December 30, 2008

In KBH Corporation vs. David R. McGeorge Car Company, Inc., decided December 12, 2008, in an unpublished order, the Virginia Supreme Court sustained a demurrer to a complaint seeking to enforce a non-compete agreement.  A copy of the Court’s order is here.  More after the break. The Plaintiff, KBH Corporation, a retailer and wholesaler of […]

In KBH Corporation vs. David R. McGeorge Car Company, Inc., decided December 12, 2008, in an unpublished order, the Virginia Supreme Court sustained a demurrer to a complaint seeking to enforce a non-compete agreement.  A copy of the Court’s order is here.  More after the break.

The Plaintiff, KBH Corporation, a retailer and wholesaler of only used automobiles, filed a Complaint to enjoin a former employee from working for a competitor.  The competitor, David McGeorge Car Company, Inc., was a dealer of both new and used cars.  The trial court held that the non-compete provision in question was overbroad and unenforceable because the language of the provision barred the employee from working for McGeorge in any of its activities, not merely in those that directly competed with KBH.  The Supreme Court affirmed the decision. 

Significantly, KBH was engaged in a particular subset of business:  the wholesaling of used automobiles.  The non-compete provision at issue in the case sought to preclude the employee from affiliating with “any business which purchases, sells, or distributes automobiles.”  The Supreme Court found that such a wide ranging prohibition was manifestly unnecessary to protect the employer’s competitive advantage. 

Although this was not a published decision of the Virginia Supreme Court, the decision once again highlights the need for employers with non-compete provisions in Virginia to be vigilant in updating those contracts as time goes by.  In order to be enforceable in Virginia, non-compete agreements must be specifically and narrowly tailored to protect the employer’s legitimate interest.

Topics: ,

Share:   a b j c