Legal Question in Business Law in California
So I've worked for my mom as realtor and property manager for her real estate business for 8 years now. I went to take time off because I'm pregnant with twins. The day I was supposed to leave I was told she's selling the business. In which I was going to try and purchase. So I have built many relationships with property owners that I have single handedly managed their property's for many years. Now I am starting my own real estate business with a broker whom I've been friends with for years who also worked out of the same office. My mother is threatening a lawsuit if I fallow through as planned. I have never signed any contracts with her and do not have a none compete clause. Is there any way she can concoct a case??
4 Answers from Attorneys
Is there a way, certainly. But, you should be able to win, based on the facts so far.
In situations similar to yours, threats of suit are fairly common, actual suits are fairly uncommon, and the defendant either prevails or gets a favorable out-of-court settlement most of the time when a suit does occur. Of course, even a suit that you win is monetarily and emotionally draining and time-consuming, so you want to avoid antagonizing the other side unnecessarily, especially when it's your mother.
California law encourages, on the one hand, competition between former bosses and their ex-employees; on the other, it discourages misappropriation of trade secrets. Information about clients and their particular needs can be a trade secret. In cases where it is the employee who has developed the relationship with the client, the trend of decisions is somewhat in favor of the former employee having a right to take those customers without incurring liability to the employer. This is a kind of recognition that neither the ex-employee nor the client is going to be able to de-program and forget the former relationship.
Still, I would be cautious not to remove any files, Rolodexes, etc. from the office on your last day (or at any time) and to limit your contact with your old clients to informing them of your new business affiliation (when you resume working) by sending out printed announcements. Let them contact you if they so choose.
Anyone can sue for anything. However, non-compete covenants such as these are generally not enforceable in California
As a Franchise Attorney I agree noncompete agreements are generally unenforceable, but that's not the issue as you did not sign one. The issue is potential misappropriation of confidential customer, etc. information, and you need to be careful. Consult with a good business or franchise attorney in your area for specific advice.
Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.
Franchise Foundations, a Professional Corporation
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