Noncompete Agreement – Signature Requirement

Howard Real Estate, LLC v. Lee and JRHBW Realty, Inc., [Ms. 1210193, June 30, 2023] __ So. 3d __ (Ala. 2023). The Court (Parker, C.J.; Shaw, Wise, Bryan, Mendheim, Stewart, Mitchell, and Cook, JJ., concur; Sellers, J., dissents) affirms the Madison Circuit Court’s partial summary judgment in favor of Clair Lee and JRHBW Realty, Inc. (“RealtySouth”), in Howard Real Estate’s suit to enforce a noncompete agreement against Lee.

The Court affirms the circuit court’s conclusion that the “noncompete agreement was void because it was not signed by both parties as required by [§ 8-1-192, Ala. Code 1975].” Ms. *2.

The Court rejects Howard Real Estate’s argument that its performance constituted its mutual assent to the noncompete agreement. The Court holds “by requiring that noncompete agreements be signed by all parties, [the Legislature] altered the common-law rule that a signature is not necessary to show mutual assent. ... ‘If [a statute] requires the mutual assent to be expressed in writing, ... there can be no mutual agreement unless shown by the writing.’ Flinn v. Barber, 64 Ala. 193, 198 (1879).” Ms. *18.

The Court also rejects Howard Real Estate’s reliance on the general principle that a party “‘cannot simultaneously claim the benefits of a contract and repudiate its burdens and conditions,’ Ballard Servs., Inc. v. Conner, 807 So. 2d 519, 523 (Ala. 2001).” Ms. *22, some internal quotation marks omitted. The Court holds Lee does not claim benefits under the agreement – “she seeks only to avoid its noncompete provision. Thus, she is not estopped from contesting the validity of that provision.” Ibid.

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