United States District Court, E.D. Virginia, Alexandria Division
O'Grady, United States District Judge
matter comes before the Court on Plaintiff NVR Inc.'s
Motion for a Temporary Restraining Order. Dkt. No.
Plaintiff asks this Court to enjoin Defendant David Nelson
from working for Siminini Homes, Inc., a Charlotte-based home
developer and construction company; or for any other company
covered by a non-compete clause in Defendant's contract
with Plaintiff. For the reasons discussed below, the Court
orders that Motion is DENIED.
NVR, Inc. ("NVR") is a Virginia corporation in the
business of selling and constructing homes. It operates under
a variety of trade names including Ryan Homes and does
business in 28 metropolitan areas in fourteen states
including Charlotte, North Carolina. Plaintiff divided the
Charlotte region into three Divisions covering the city and
surrounding counties. Defendant David Nelson is a former
employee of Ryan Homes who worked for Plaintiff as the
Division Manager in the North Division of Charlotte from
approximately January 1, 2014 until his termination on or
about August 30, 2016. As the Division Manager, Defendant was
responsible for, among other things, sales functions, profits
and losses, ongoing homebuilding efforts, and
strategic-decisions about the policies and guidelines for
Plaintiffs operations in the area. On or about August 24,
2016, Plaintiff informed Nelson that his employment with the
Company was terminated due to performance deficiencies. On
October 31, 2016, Defendant joined Simonini Homes, Inc.
("Simonini"). Simonini is also engaged in the
homebuilding industry in the Charlotte area.
Defendant's tenure at NVR, he signed various compensation
agreements: a stock option agreement on February 7, 2014; two
more on May 27, 2014 (the "Equity Agreements"); and
a Homebuilding Profit Center Manager EBIT Incentive Program
Description and Participation Agreement (the "EBIT
Agreement") (collectively "the Agreements").
The most recent EBIT Agreement was Dated: May 6, 2016 but
Plaintiff avers that Defendant received payments through the
EBIT program in March of 2015 and 2016 presumably through
earlier, unsubmitted, versions of the EBIT Agreement. The
Agreements contain an identical noncompete provision which
provides in relevant part that:
During your Service and for a period of twelve (12) months
after your service ends.. .you shall not anywhere in the
Restricted Area (as defined below):... (b) render services
to.. .any person or entity that competes with the Company or
an Affiliate in the residential homebuilding, mortgage
financing, or settlement services business where such
services are competitive with any of the services you
provided to the Company or to an Affiliate during the
twenty-four (24) months prior to termination of your Service.
Dkt. No. 21, Exh. A at 6. The Agreements define the
"Restricted Area" as:
"those counties and other units of local government in
which the Company engaged in residential homebuilding
business activities, mortgage financing business activities,
or settlement services business activities, as applicable (x)
over which you had any management responsibility at any time
during the twenty-four months prior to termination of your
Service or (y) from which you received, as part of your work
duties, Confidential Information regarding such business
activity, at any time during the twenty-four months prior to
termination of your Service.
filed a Complaint on October 20, 2016 alleging that Defendant
misappropnated and converted Plaintiffs trade secrets and
other information, and thereby breached his contract when he
left Plaintiffs employment. Dkt. No. 1. The next day
Plaintiff filed a motion for a preliminary injunction and
temporary restraining order to prevent Defendant's use of
the allegedly misappropriated information. Dkt. No. 4. The
parties reached an agreement on how Defendant would handle
the relevant information in his possession and the Court
dismissed the motion pursuant to the parties'
stipulation. Dkt. No. 16. On December 21, 2016, Plaintiff
filed an amended complaint alleging that Defendant breached
the non-compete provision in the Agreements by joining
Simonini. Dkt. No. 18. Plaintiff contemporaneously filed a
second motion for a temporary restraining order to enjoin
Defendant's employment with Simonini. Dkt. No. 19. After
conferring with the Plaintiff, the Court converted the motion
to one for a preliminary injunction and scheduled it for a
hearing. The parties fully briefed the matter and the Court
heard arguments on January 5, 2017.
order to succeed on a request for preliminary injunction, the
movant "must establish  that he is likely to succeed
on the merits,  that he is likely to suffer irreparable
harm in the absence of preliminary relief,  that the
balance of equities tips in his favor, and  that an
injunction is in the public interest." Winter v.
Natural Resources Defense Council, Inc., 555 U.S. 7, 20
(2008); see also Centro Tepeyac v. Montgomery Cnty.,
722 F.3d 184, 188 (4th Cir. 2013). A preliminary injunction
is "an extraordinary remedy that may only be awarded
upon a clear showing that the plaintiff is entitled to such
relief." Winter, 555 U.S. at 22. "The
purpose of a preliminary injunction is merely to preserve the
relative positions of the parties until a trial on the merits
can be held." United States v. South Carolina,
720 F.3d 518, 524 (4th Cir. 2013) (quoting Univ. of Tex.
v. Camenisch, 451 U.S. 390, 395 (1981)) (internal
quotation marks omitted).
Likelihood of Success on the Merits
must first establish that it is likely to succeed on the
merits of its breach of contract claim against Defendant. The
elements of a breach of contract action under Virginia law
are: "(1) a legally enforceable obligation of a
defendant to a plaintiff; (2) the defendant's violation
or breach of that obligation; and (3) injury or damage to the
plaintiff caused by the breach of obligation." Filak
v. George, 267 Va. 612, 619 (2004).
contends that Defendant breached the non-compete provisions
in the Agreements. Defendant argues that the Agreements are
invalid for lack of consideration so the non-compete
provision is not binding. In the alternative, Defendant
alleges that the non-compete provision in the Agreements is
not reasonable. The Court considers these issues in turn.
Consideration for the Agreements
contract law requires the standard elements of offer,
acceptance, and consideration for the formation of a valid
contract." Hill v. Alstom Power, Inc., No.
3:13-CV-00496-JAG, 2013 WL 6408416, at *2 (E.D. Va. Dec. 6,
2013). Consideration exists where an employer makes a
unilateral offer to an employee and the conditions of that
unilateral offer are performed. Jensen v. Int'l Bus.
Machs. Corp., 454 F.3d 382, 387 (4th Cir. 2006) (citing
Nicely v. Bank of Va. Trust Co., 277 S.E.2d 209, 212
(Va. 1981)). Sufficient consideration does not exist when an
employee is terminated before his rights under the unilateral
contract vest. Chapman v. Asbury Auto. Grp., Inc.,
No. 3:15CV679, 2016 WL 4706931, at *4 (E.D. Va. Sept. 7,
argues that the Agreements were not supported by
consideration because he signed the Agreements after he began
his employment and did not immediately receive any benefits
or promise of continued employment. Rather the Agreements
only offered future benefits which did not vest. Accordingly,
Defendant believes the Agreements lacked consideration.
Plaintiff counters that Defendant did receive the benefit of