Even Preparing To Compete In Texas May Be Prohibited During A Non-Competition Covenant Period

Overview.  Nationsbuilders, an insurance underwriter, and two of its ex-employees executed a contract which contained a covenant barring the individuals, for one year, from competing with the underwriter or working for an “entity that conducts or plans to conduct a business that is in competition” with the underwriter.  The ex-employees used that year to prepare for the competition that would commence after 12 months.  The underwriter claimed that what they were doing violated the non-compete agreement, and a few days ago a Texas appellate court announced that it agrees.  Nationsbuilders Ins. Services, Inc. v. Houston Int’l Ins. Group, Ltd., No. 05-12-01103-CV (Tex. App., 7/3/13).

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