Alliant Ins. Services, Inc. v. Gaddy, 159 Cal. App. 4th 1292 (2008)

Alliant Insurance Services purchased a competing insurance brokerage company from G. Scott Gaddy for $4.1 million and then employed him under a senior management agreement. Both the purchase and employment agreements contained covenants whereby Gaddy agreed not to compete with Alliant or to solicit Alliant’s or Gaddy’s clients for three years following termination of employment. Once Gaddy’s employment was terminated, he began soliciting clients in violation of the non-solicitation provision. The trial court granted a preliminary injunction against Gaddy on the ground that the nonsolicitation covenant was enforceable and in view of the evidence that Gaddy had misappropriated Alliant’s trade secrets in violation of the Uniform Trade Secrets Act. The Court of Appeal affirmed, holding the non-solicitation covenant was not overly broad even though it extended to all 58 counties within the state. The Court further held that because Gaddy became an employee of Alliant following the sale of the business, the scope of the non-solicitation covenant could properly extend beyond those clients Gaddy had transferred to Alliant in the transaction.