Connecticut Non-Compete Invalidated on Grounds of Unnecessary Protection Afforded to Employer
by
Joseph C. Maya on Mar. 07, 2024
Summary: Sanford Hall Agency, Inc. v. Dezanni, 2004 Conn. Super. LEXIS 3574
Case Background
Ms. Lynne Dezanni worked for Sanford Hall Agency, an Avon, Connecticut based insurance company, from 1990 to 2004 where she served as a personal lines (primarily automobile and homeowners insurance) salesperson for clients whose last name started with “A” through “F”. In 1994, Ms. Dezanni signed an employment agreement that included a non-compete covenant prohibiting the solicitation or attempted solicitation of Sanford Hall’s clients or the disclosure of the company’s confidential information.
In May 2004, Ms. Dezanni was contacted by a recruiter at Sinclair Insurance Group, a direct competitor of Sanford Hall based in Wallingford, Connecticut. In the following weeks, Sanford Hall announced to its employees that it was engaging in a transaction to sell its assets. Fearing that she would no longer have a job if the company were sold, Ms. Dezanni accepted employment at Sinclair on June 11, 2004.
The company was in fact sold to a New Jersey insurance company on November 1, 2004. Sanford Hall commenced legal action alleging that Ms. Dezanni breached the written employment agreement and the non-compete covenant by soliciting its clients and disclosing confidential client information to Sinclair.
Court Ruling
Ms. Dezanni however argued that she was not in breach of the non-compete agreement because it contained unreasonable provisions and was therefore unenforceable. Additionally, she argued that the employment agreement reserved the right for her to compete in the event that Sanford Hall sold its business.
The court in this case found in favor of Ms. Dezanni and held that the non-compete agreement was in fact unreasonable and unenforceable. The court based this decision on the fact that Ms. Dezanni was not in a position at Sinclair to threaten Sanford Hall’s interests in its customer relationships and contracts.
Her job at Sanford Hall pertained to the initial contact with clients but her contact usually ended there. She was not charged with entertaining, socializing with, or schmoozing clients over the phone or in person. She would not review the contracts when they were due to expire, as the insurer and not the agent handled this business activity. The court concluded, “Dezanni’s contact with the customers was too infrequent and irregular to pose any threat to the plaintiff’s relationship with its customers”.
The court also held that the agreement excessively restricted Ms. Dezanni from pursuing her occupation and instituted unnecessary limitations because it pertained not only to past and present clients, but to also future ones as well. Ms. Dezanni was able to prove that the non-compete clause of the employment agreement afforded more protection to Sanford Hall than was reasonably necessary and as a result severely disadvantaged her and ran contrary to the interests of the public. For these enumerated reasons, the court refused to enforce the non-compete clause of the employment agreement.
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