North American Outdoor Products, Inc. (NAOP) was a company created to facilitate the sales of outdoor goods to mass retail merchants.  The company marketed products such as instant garages, sporting goods, shelters, and canopies.  Mr. Curt Dawson worked for NAOP in its sales and marketing department from February 1999 to April 2, 2004.  He worked as the National Sales Manager for a period of time in Florida but returned to work in Connecticut when NAOP agreed in a January 2003 meeting to an annual raise of $25,000.00 and related moving expenses. In March 2003, management requested that Mr. Dawson sign an Employment Agreement that contained and explained several restrictive covenants that would become effective upon termination.

The Non-Compete Agreement

The agreement prohibited him from competing with NAOP for twelve months following termination as well as soliciting any entity that NAOP had transacted with in the three-year period prior to termination.  Mr. Dawson signed and returned the employment and non-compete agreement on March 26, 2003 but a representative for the company did not sign the document at that time.  A representative for NAOP only signed the document on March 20, 2004 when the company learned of Mr. Dawson’s intent to voluntarily terminate his employment.

NAOP brought legal action against Mr. Dawson and sought an injunctive order from the court to enforce the provisions of the non-compete agreement.  Mr. Dawson however presented multiple defenses as to why the restrictive covenants were unenforceable: 1) lack of consideration, 2) unreasonable time and geographical restrictions, 3) unclean hands on the part of NAOP, and 4) lack of necessary signatures.  The court found in favor of Mr. Dawson, held that the non-compete agreement was unenforceable, and denied NAOP’s request for injunctive relief.

Adequate Consideration

Under Connecticut law, a non-compete agreement must have sufficient consideration to make the document legally binding upon the parties.  For enforcement of a restrictive covenant, the employee must receive something in exchange for his or her covenant.  The agreement at hand did not bestow any new benefit upon Mr. Dawson and stated that his continued employment was the consideration for the agreement.

Connecticut courts have concluded, however, that “continued employment is not [sufficient] consideration for a covenant not to compete entered into after the beginning of the employment”.  NAOP claimed that the raise and moving expenses promised in January 2003 demonstrated adequate consideration but the court rejected this notion because those promises bore no substantial connection to the written agreement from March 2003.

The Court’s Decision

Furthermore, the court concluded that the covenant not to complete was unenforceable because of inherent ambiguities in its language.  Courts cannot create a binding contract in the absence of a meeting of the minds between the parties.  The plaintiff, in this case NAOP, bears the burden of proof with respect to demonstrating a meeting of the minds in order to prove its version/interpretation of the alleged contract.  The court looked to the plain language of the agreement to ascertain whether it articulated clear and concise provisions that led to a meeting of the minds between Mr. Dawson and NAOP.

The court concluded that the agreement was unclear about material details, namely the effective date of the provisions and the identification of the specific parties.  The agreement was a bilateral document that required signatures of both parties in order to be complete and become legally binding.  The absence of NAOP’s signature at the same time as Mr. Dawson’s thus rendered the agreement unenforceable.

Maya Murphy P.C. has proudly been included in the 2024 Edition of Best Law Firms®, ranked among the top firms in the nation. In addition, Managing Partner Joseph C. Maya has been selected to The Best Lawyers in America® 2024 for his work in Employment Law and Education Law in Connecticut. Recognition in Best Lawyers® is awarded to firms and attorneys who demonstrate excellence in the industry, and is widely regarded by both clients and legal professionals as a significant honor.

Our firm in Westport, Connecticut serves clients with legal assistance all over the state, including the towns of: Ansonia, Beacon Falls, Bethany, Bethel, Branford, Bridgeport, Brookfield, Cheshire, Danbury, Darien, Derby, East Haven, Easton, Fairfield, Greenwich, Guilford, Hamden, Madison, Meriden, Middlebury, Milford, Monroe, Naugatuck, New Canaan, New Fairfield, New Haven, Newton, North Branford, North Haven, Norwalk, Orange, Oxford, Prospect, Redding, Ridgefield, Seymour, Shelton, Sherman, Southbury, Stamford, Stratford, Trumbull, Wallingford, Waterbury, West Haven, Weston, Westport, Wilton, and Woodbridge. In addition to assisting clients in Connecticut, our firm handles education law and employment law matters in New York as well. 

If you have any questions about employment law or education law in Connecticut, or would like to speak to an attorney about a legal matter, please contact Joseph C. Maya and the other experienced attorneys at Maya Murphy, P.C. at (203) 221-3100 or JMaya@Mayalaw.com to schedule a free initial consultation today.