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Contracts Keyed to Knapp
Maness v. Collins
Facts
Maness (P) sold his business to SKM, LLC (D) which was co-owned by Mike Smith (D), his son Josh Smith (D) and Collins (D). This sale was made through an asset purchase agreement. The agreement stipulated that Maness (P) would remain in the employment of the company for three years as a production manager and he would also be entitled to annual salary. Also stipulated in the agreement was the provision which stated that Maness (P) was prohibited from competing directly or indirectly with SKM (D) throughout the United States for five years.The relationship between the company and Maness (P) nosedived as they had issues with his style of management and curtailed his authority to discipline and fire employees. The company even went as far as recalling an employee Maness (P) had fired. Without Maness’s (P) knowledge, Josh Smith (D) later held a meeting with SKM (D) employees in which he informed them that Maness (P) no longer had any authority to correct employees or tell them what to do. Maness (P) also made the drug use of Josh Smith (D) known to the management. Subsequently, Maness (P) observed that his authority had being cut. The employees became disrespectful and belligerent towards him.Five months after he was employed by SKM (D), his appointment was terminated on the grounds that he failed to fulfill his job duties and that his actions and attitude were detrimental to the company’s success. This led to Maness’s (P) suit against SKM (D) on the ground that his employment contract was breached and asserting that the non-competition agreement was not binding. At trial, the employees at SKM (D) corroborated the testimony of Maness (P) that indeed Josh Smith (D) was using and dealing in drug at the workplace and that Maness (P) was not present in the meeting in which the employees were informed that he had no authority to discipline or terminate employees. The company on the other hand, testified that the authority of Maness (P) was reduced, that he became idle, unproductive and failed to attract new customer for the company, which constituted enough ground for them to terminate his appointment.The trial court found that Josh Smith (D) was a drug addict and that the performance of Maness (P) waned after his authority was cut by the management. The court also declared that Maness (P) erred by becoming idle, but none the less, he was dealing daily with “a drug-addicted business owner” namely Josh Smith (D). Hence, the court came to the conclusion that the company and its owners did not meet their burden of proof to justify the termination of Maness’s (P) appointment under the employment agreement.Pertaining to damages, the court found that Maness (P) had the duty to mitigate his damages but did not do so by seeking employment which Maness (P) challenged on the ground that it would have been pointless due to the fact that he was prohibited from doing so by the noncompetition agreement. The court finally held that since Maness (P) failed to seek employment, he failed to mitigate his damages and this precluded any award for damages. The state’s intermediate appellate court granted review to this judgment after both parties cross-appealed.
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