Noncompete Agreement Ancillary to Sale of a Business - Death of Obligor

Boyd, et al. v. Mills, etc., [Ms. 1190615, Apr. 23, 2021], ___ So. 3d ___ (Ala. 2021). In a case of first impression, the Court (Mitchell, J.; Parker, C.J., and Bolin, Shaw, Wise, Bryan, Sellers, Mendheim, and Stewart, JJ., concur) affirms the summary judgment entered by the Etowah Circuit Court’s summary judgment in favor of the Estate of Thomas Batey and holds that a noncompete agreement ancillary to the sale of a business did not terminate upon Batey’s death. The noncompete agreement did not expressly address what would happen in the event of Batey’s death but merely provided that the buyers “shall” pay Batey $2,136,631.62 “in 120 equal monthly payments of $17,805.26 starting on December 1, 2006 and continuing on the first (1st) day of each month thereafter until paid in full.” Ms. *5. The Court first explains that

“Contracts resting on the skill, taste, or science of a party, i.e., those contracts wherein personal performance by the promisor is of the essence and the duty imposed cannot be done as well by others as by the promisor himself, are personal and do not survive his death.” Cates v. Cates, 268 Ala. 6, 10, 104 So. 2d 756, 759 (1958). But “[a] contract that is not one for personal services survives the death of the decedent,” and the decedent’s personal representative has the right to enforce the contract. McGallagher v. Estate of DeGeer, 934 So. 2d 391, 403 (Ala. Civ. App. 2005).

Ms. **6-7.

The Court holds

Batey signed the noncompete – which was separate from the employment agreement, had separate consideration, and contained only negative covenants – ancillary to the sale of Batey’s stock in Batey & Sanders and as required by the stock agreements. In addition, the parties entered the noncompete as “further consideration for the purchase of [Batey’s] shares” conveyed in the stock agreements. Under these facts, “the essential benefit” of the noncompete was a purchase of “the business’s goodwill (as opposed to the seller’s expertise),” so Batey’s death “does not deprive the [buyers] of this benefit.”

Ms. **11-12, quoting Mail & Media, Inc. v. Rotenberry, 213 Ga. App. 826, 827, 446 S.E.2d 517, 519 (1994).

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