Financial Firm’s Non-Compete and Non-Solicitation Agreement Deemed Unenforceable by Appeals Court.

Case Name:  Cara Miller v. Honkamp Krueger Financial

Court: United States Court of Appeals for the Eighth Circuit

Date of Opinion: August 24th, 2021

Judges:  Shepherd, Erickson, and Kobes.

Overview:  Appellant appealed a decision of the lower court, one that granted a preliminary injunction against the appellant enjoining them from breaching a non-compete and non-solicitation agreement.

Background:  In 2006 Cara Miller and HFKS entered into a written employment agreement and Miller began her work as a financial advisor.  In 2016, the two parties entered into an Ancillary Agreement which updated the non-solicitation part of the agreement, but did not include a non-compete section. 

Miller terminated her employment agreement in 2020 after HFKS was acquired by Blucora, Inc.  She then filed a declaratory judgment action seeking a declaration that the Ancillary Agreement was not enforceable, and immediately began working for Mariner, a direct competitor to HFKS.  After a two day evidentiary hearing, the district court entered an order enforcing the non-compete provision as well as the non-solicitation part of the agreement.  Miller and Mariner have filed an appeal from that opinion, challenging the district court opinion that HFKS was likely to succeed on it’s claim regarding the non-compete and non-solicitation parts of the agreements.

Miller and Mariner argue to the appeals court that the Ancillary Agreement, which did not contain a non-compete opinion, superseded the original agreement, which did contain the non-compete language.  In addition, Miller and Mariner state that the non-compete provision did not survive the termination of the employment agreement.

The court opined that the non-compete provision only survives the termination of Miller’s employment, not the employment agreement.  Thus, when Miller provided written notice that she was terminating her employment, the provision of the non-compete language was no longer in force. 

In addition, Miller and Mariner argue that the non-solicitation provision would impermissibly prohibit Miller from accepting unsolicited business from her former clients.  The court states that they agree with this argument.

Conclusion:  The court opines that HKFS would not likely win on their breach of contract claim and reverses and vacates the preliminary injunctions put forth by the district court.

Steven M. Cohen
Law Librarian | + posts

Steven M. Cohen is a law librarian at a midsize law firm in New York City.  He was the creator of Library Stuff, one of the first library blogs, which lasted over 15 years.  He obtained his MLS from Queens College in 2002.  His passions include legal research, reading novels, and rooting on his favorite sports teams.