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A Connecticut court has considered whether a real estate broker could enforce a noncompete clause found in a contract it entered into with a real estate salesperson.
In 2003, Mayra Garcia ("Salesperson") signed a contract ("Contract") with Century 21 Access America ("Brokerage") affiliating herself with the Brokerage as an independent contractor. After five months, the Salesperson terminated her affiliation with the Brokerage and associated herself with another real estate brokerage firm less than fifteen miles away from the Brokerage.
The Brokerage brought a lawsuit against the Salesperson, arguing that the Salesperson violated a noncompete clause in the Contract. The lawsuit sought a temporary injunction against the Salesperson which would bar her: from working for the Brokerage's competitor; from soliciting the Brokerage's customers; and from interfering with the Brokerage's other business relationships.
The Superior Court of Connecticut, District of Fairfield, denied the Brokerage's request for an injunction on the grounds that enforcement of the restrictive covenant would merely be punitive. In order to obtain injunctive relief based on the violation of a restrictive covenant found in a contract, the party seeking the relief must prove that it will likely prevail in its lawsuit and that the balance of the burdens imposed upon each party favors the issuance of the injunction. The court found it did not matter whether the Salesperson was an independent contractor, as a noncompete clause could still be enforced against an independent contractor. Another Connecticut court had enforced a similar noncompete clause against a real estate salesperson, and so the Brokerage argued that the court should enforce this clause against the Salesperson.
The court found that the facts did not support the Brokerage's argument, as there is nothing about the Salesperson's association with a competitor which would unfairly harm the Brokerage. While the Salesperson had received some training from the Brokerage, none of the knowledge she gained in the training would amount to a trade secret needing protection. Nor had the Salesperson obtained other confidential information during her tenure at the Brokerage, as she was a new salesperson who completed one transaction during her short tenure at the Brokerage. Nor did she have any unique skills or other confidential information which would benefit the competing brokerage. Based on these facts, the court ruled that the Brokerage did not have a protectible interest which would allow the enforcement of the noncompete clause and so the Brokerage would not likely succeed in its lawsuit against the Salesperson. Therefore, the court rejected the Brokerage's application for a temporary injunction.
Century 21 Access America v. Garcia, No. 4000081, 2004 WL 1966048 (Conn. Super. Ct. Aug. 6, 2004). [This is a citation to a Westlaw document. Westlaw is a subscription, online legal research service. If an official reporter citation should become available for this case, the citation will be updated to reflect this information].
Editor's Note: Following the publication of the above summary, Kenneth Scala of the Brokerage contacted Legal Affairs to alert us to the fact that the same noncompete at issue in the above case had been upheld twice before. In Century One Access America v. McGregor-McLean, No. CV04-4000764S (Conn. Super. Ct. Nov. 4, 2004) and Century 21 Access America v. Lisboa, No. -------- (Conn. Super. Ct. May 8, 2003), the Brokerage received injunctions against two former salespeople. In the McGregor-McLean case, the court found that the noncompete clause prohibited the salesperson from working on any listings within 15 miles of the Brokerage's offices. The court rejected the salesperson's argument that her new office location was outside of the 15-mile radius set forth in the noncompete clause, and stated that the noncompete clause covered more than just the salesperson's office location. Thus, the court entered an injunction prohibiting the salesperson from working as a "real estate agent within a fifteen (15) mile radius" of the Brokerage's offices.