ÿWPCA 0# °UN» %  0(E7UD9w@}4½Ñà 0Jè 0T2 0^† 0hä 0rL 0|¾ 0†: 0À 1uP 0dÅU>) 0@g D3§ B)Ú DC AMF U*“ B½ +Ú v~ AQƒ ÆÔ 0Dš 0DÞ D/" BQvÓn˜HP LaserJet 4SiHPPCL5MS,ü,,,,,ü0nLHÎ(ÖÃ9 Z ‹6Times New Roman RegularX($¡¡8§ÖhZŠ,Century-WP Regular × {Ø EÙ Ú DÜ Ý EÞ ß à Ó€ì Œƒ*#Ôô3|xì 2 ÿÿ0Indent1Ô2ÔÔ3  Ô2" ÿÿ0Indent2à0 àÔ2ÔÔ3  Ô2, ÿÿ0Indent3à0 àà0 àÔ2ÔÔ3  Ô26 ÿÿ0Indent4à0 àà0 àà0 àÔ2ÔÔ3  Ô2@ ÿÿ0Indent5à0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2J ÿÿ0Indent6à0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2T ÿÿ0Indent7à0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2^ ÿÿ0Indent8à0 àà0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô ÿÿ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)P ÿÿ8Mac DefaultMac DefaultÓ ` °šXÓ< Œ 9p`(&Times New Roman("ÿÿ$££Ò  ÒÒ  Ò&&&&'ÿÿdxd% Line 7 d""""7Border 1dd* #Cþÿ << Gÿÿ< Œ 9p`(Arial d !Ý ƒ!ÝÑ#€d#ÑÔ€ÔÝ  ÝÝ ƒ+"ÝÝ  ÝÔ€%ÔÔ€%ÔÓ  ÓÔ YYY ÔFILEDÔ€%XÔÌÌò òSeptember€24,€1997ÌÌCecil€Crowson,€Jr.ÌÔ€%ôÔAppellate€Court€Clerkó óPtPtHHÚ(ÿáÿâùFG(üHHÚ(d'h*+ ,-Cþÿ<< CÿÿƒLevel 1Level 2Level 3Level 4Level 5(3¯$¢¢Ý ƒ!ÝÝ  Ý($$””ò òÚ  Ú1Ú  Úó ó..'÷ÿ dxdüÿP PdStyl{WP}01•ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃà Ãà Ãà Ãà Ãà ÃÃÃÃÃÃÃÃÃÃÃÐ ÐÐHHÐÐ  ÐÐ2ÐÐÿÿ¸æ$ÿÐÐHHÐÐÐÐÐÐÐÐ  ÐÐ ÐÐ ÐÑÑÑGenevaÑÑ ÑÑ € ÑÑ<Px–ÈÑÒÒÒ443!#4ÒÒ$ *$ÒÒ$*$ÒÒ ÿKK ÒÒ  Geneva ÒÒ  Geneva ÒÓ.,ÓÓÓÓ6ÓÓ ÓßßßßßßßßßßßßßßßßßßÑGenevaÑÑ ÑÒ  h HD: Geneva ÒÒ  h HD: Geneva ÒÝ ƒ!ÝÔ . ÔÔ€ÔÝ  ÝÒ  ÒÒ ° ÒÒ  ÒÒ X ÒÑ\R AØ'\ÑÑ\R AØ'\ÑÔ€ÔÑ7€öiXdìdÈ7Ñ›Þ ÞÌà@ àIN€THE€COURT€OF€APPEALS€OF€TENNESSEEÌà@ àWESTERN€SECTION€AT€JACKSONÌÌßA€&) °°xdExAßÌÌRICHARD€L.€POWELL,à àà àà àà àShelby€Equity€No.€101234„2Ìà àà àà àà àà àà àà àC.A.€No.€02A01„9608„CH„00176Ìà àPlaintiff/Counter„Defendant/Ìà àAppellee,Ìà àà àà àà àà àà àà àHon.€Floyd€Peete,€Chancellor̜ـ*ÙßR€$'#A1-j|Å` Å `€€@ÿRß›V.ÌÌMcDONNELL€INSURANCE,€INC.,ÌÌà àDefendant/Counter„Plaintiff/Ìà àAppellant.ÌÌERNEST€G.€KELLY,€JR.,€Memphis,€Attorney€for€Plaintiff/Counter„Defendant/Appellee.ÌÌEUGENE€J.€PODESTA,€JR.,€Baker,€Donelson,€Bearman€&€Caldwell,€Memphis,ÏAttorney€for€Defendant/Counter„Plaintiff/Appellant.ÌÌò òòòMODIFIED€IN€PART€AND€REVERSED€IN€PARTó óóóÌÌOpinion€filed:ÌÌßA€&) °°xdE.xAßÌÌò òTOMLIN,€Sr.€J.,ó óÌÌÓÓà àRichard€L.€Powell€(hereafter€ð ðPowellðð)€filed€suit€in€the€ChanceryÏCourt€of€Shelby€County€seeking€a€declaratory€judgment€and€alleging€breachÏof€contract€and€damages€for€the€wrongful€termination€of€his€employmentÍcontract€by€Defendant,€McDonnell€Insurance€Company€(hereafterÏð ðMcDonnellðð).€€McDonnell€filed€an€answer€and€counter„claim.€€In€itsÏcounter„claim€McDonnell€asserted€that€Powell€had€breached€a€covenant€notÏto€compete€in€his€employment€contract€with€McDonnell€and€that€as€aÏresult€of€this€breach€McDonnell€was€entitled€to€injunctive€relief,€moneyÏdamages€and€attorney€fees.€€Following€a€bench€trial,€the€chancellorÏentered€an€order€of€reference€to€the€Master€requesting€his€findings€onÏspecific€issues.€€Following€the€issuance€of€the€Masterððs€Report,€and€theÏfiling€of€exceptions€thereto€by€both€parties,€the€chancellor€adopted€theÏreport€of€the€Master€with€certain€exceptions.€€The€court€held€that€whileÏthe€restrictive€covenant€in€the€employment€agreement€between€theÏparties€was€valid€and€enforceable,€the€duration€of€the€restrictive€covenantÏshould€be€limited€to€one€year.€€The€chancellor€awarded€judgment€againstÏPowell€in€the€amount€of€$141,000.00€as€damages€for€his€breach€of€a€oneÏyear€restrictive€covenant,€while€allowing€Powell€a€credit€against€theÏjudgment€in€the€amount€of€one„half€of€the€balance€in€a€reserve€account.€ÏThe€court€also€awarded€McDonnell€one„third€of€the€amount€of€attorneyÏfees€requested,€along€with€prejudgment€interest.€€Both€parties€offerÏissues€for€review€on€appeal.€€Ìà àOn€appeal€McDonnell€has€presented€the€following€issues€for€ourÍconsideration:€Whether€the€trial€court€erred:€(1)€in€limiting€the€covenantÏnot€to€compete€to€a€one€year€period€rather€than€enforcing€the€two€yearÏperiod€provided€in€the€employment€agreement;€(2)€in€reducing€the€profitÏmargin€used€to€calculate€the€damages€due€to€McDonnell€as€a€result€ofÏPowellððs€breach;€(3)€in€awarding€Powell€one„half€the€proceeds€of€theÏbalance€in€the€reserve€account;€and€(4)€in€failing€to€award€McDonnell€theÏfull€amount€of€attorney€fees€requested.€€Ìà àPowell€presents€the€following€issues€on€appeal:€Whether€the€trialÏcourt€erred€in:€(1)€awarding€McDonnell€damages€for€one€year€and€basingÏsuch€an€award€on€the€speculative€report€of€McDonnellððs€expert€witness;€(2)Ïincreasing€the€award€of€damages€based€upon€the€post„hearing€affidavit€ofÏMcDonnellððs€expert€witness;€(3)€awarding€prejudgment€interest€toÏMcDonnell;€and€(4)€failing€to€award€Powell€the€full€amount€of€his€earnedÏinsurance€commissions€up€to€the€end€of€the€30„day€termination€period€atÏthe€appropriate€percentage€rate.€€For€the€reasons€hereinafter€stated,€weÏmodify€and€reverse€the€trial€courtððs€findings.Ìà àMost€of€the€relevant€facts€are€not€in€dispute.€€McDonnell€is€a€generalÏinsurance€agency,€operating€in€Memphis.€€At€the€time€of€this€litigationÏLewis€McDonnell€served€as€the€agencyððs€president.€€Powell€joinedÏMcDonnell€as€a€commission€salesman€in€1980,€at€which€time€he€enteredÍinto€an€employment€agreement€(hereafter€ð ð1980€Agreementðð)€thatÏincluded€among€its€provisions€a€covenant€not€to€compete€and€aÏrequirement€that€either€party€could€terminate€the€employmentÏrelationship€by€giving€30€days€notice.€€The€pertinent€provisions€of€theÏ1980€Agreement€are€as€follows:ÌÓÓÌà8 à2.€This€contract€and€agreement€shall€be€for€an€original€term€ofÏThree€(3)€years€unless€sooner€terminated€by€either€party€givingÏto€the€other€30€days€written€notice€of€his€intention€toÏterminate€the€agreement€on€a€specific€date.€€Unless€soÏterminated,€the€contract€shall€automatically€renew€itself.Ìà8 à9.€œEMPLOYEE›€[Powell]€agrees€that€he€will€not€within€a€period€ofÏthree€(3)€years€following€the€date€of€his€voluntary€terminationÏof€employment€with€the€CORPORATION,€[McDonnell]€or€hisÏretirement€therefrom,€or€within€two€years€if€discharged€by€theÏCORPORATION,€directly€or€indirectly,€by€or€for€himself,€or€asÏthe€agent€of€another,€or€through€all€others€as€his€agent:Ìà8 à(a)à àDivulge€the€names€of€the€corporationððs€policy€holders€andÏà àaccounts€to€any€other€person,€firm€or€corporation;Ì€à8 à(b)à àIn€any€way€seek€to€induce,€bring€about,€promote,Ïfacilitate,€à àor€encourage€the€discontinuance€of€or€in€any€wayÏsolicit€for€or€in€behalf€of€himself€or€others,€or€in€any€wayÏquote€rates,€accept,€receive,€write,€bind,€broker,€or€transferÏany€renewal€or€replacement€of€any€of€the€insurance€business,Ïpolicies,€risk€or€accounts,€written,€issued,€covered,€obtainedÏ(whether€through€the€efforts€of€the€salesman€or€not)€or€carriedÏby€the€CORPORATION.Ìà8 àœ(c)›à àIn€the€event€it€shall€become€necessary€for€theÏCORPORATION€to€enforce€any€of€the€provisions€of€this€non„competition€clause€by€suit€or€action€in€any€court€against€agent,Ïagent€agrees€that€he€shall€and€will€pay€to€the€corporation,€inÏaddition€to€any€damages,€costs€and€disbursements€provided€byÏlaw,€a€reasonable€attorneyððs€fee€and€all€other€expenses€ofÍlitigation.ÌÌÌÓÓà àIn€1988€Powell€signed€a€new€employment€agreement€(hereafter€theÏð ð1988€Agreementðð)€with€McDonnell€that€incorporated€many€of€the€termsÏof€the€1980€Agreement,€including€those€set€forth€above.€€The€1988ÏAgreement€included€a€provision€dealing€with€the€establishment€of€aÏreserve€account€for€bad€debts,€by€which€a€certain€percentage€of€PowellððsÏearned€sales€commissions€were€placed€in€a€separate€account€so€as€toÏoffset€any€outstanding€insurance€premiums€that€Powellððs€clients€failed€toÏpay.€€This€provision€in€essence€meant€that€Powell€would€create€a€sinkingÏfund€to€guarantee€the€payment€of€his€clientsðð€insurance€premiums€to€theÏagency.€€Thus€if€a€client€failed€to€timely€pay€an€insurance€premium,€fundsÏfrom€the€reserve€account€would€be€used€to€pay€the€premium.€€At€the€timeÏof€Powellððs€termination€there€was€an€outstanding€credit€balance€in€hisÏreserve€account.Ìà àDuring€the€course€of€his€employment€by€McDonnell,€Powell€became€aÏprofitable€salesman.€€However,€after€the€execution€of€the€1988€AgreementÏit€appears€that€the€parties€became€involved€in€a€dispute€regardingÏMcDonnellððs€decision€to€levy€ð ðservice€chargesðð€against€the€reserveÏaccount.€€The€record€reflects€that€after€McDonnell€was€forced€to€pay€offÍseveral€large€debts€in€the€form€of€unpaid€premiums€as€a€result€of€PowellððsÏclients€failing€to€make€timely€payment€of€the€same,€McDonnell€proceededÏto€levy€ð ðservice€chargesðð€against€the€balances€in€Powellððs€reserveÏaccount.€€The€service€charges€were€collected€from€the€interest€generatedÏon€the€funds€in€the€reserve€account.€€Powell€contended€that€this€practiceÏwas€unauthorized€by€the€1988€Agreement.€€The€issue€of€these€ð ðserviceÏchargesðð€spurred€a€growing€dissatisfaction€with€management€amongÏseveral€McDonnell€employees,€including€Powell.Ìà àIn€January€1992,€in€an€attempt€to€resolve€the€disagreements€overÏthis€issue,€Lewis€McDonnell€submitted€a€revised€employment€contract€toÏPowell,€(hereafter€ð ðthe€1992€Agreementðð),€which€contained€twoÏprovisions€not€previously€found€in€the€1980€and€1988€agreements.€€TheÏfirst€of€these€provisions€expanded€the€language€relating€to€the€reserveÏaccount€provision€to€include€ð ðinterest€and€late€charges.ðð€€This€languageÏsought€to€clearly€establish€that€McDonnell€had€the€right€to€deduct€serviceÏcharges€from€the€reserve€accounts.€€The€second€provision€included€a€newÏnon„compete€clause€which€not€only€retained€the€restrictions€set€forth€inÏthe€two€earlier€agreements,€but€also€required€an€absolute€bar€ofÏemployment€in€any€competing€insurance€business€within€Shelby€County€forÏthe€first€six€months€following€the€termination€of€the€employmentÍagreement.Ìà àAs€of€February€1992,€Powell€began€informing€competing€insuranceÏagencies€of€his€desire€to€leave€McDonnell.€€Shortly€thereafter€LewisÏMcDonnell€informed€Powell€that€his€continued€employment€with€McDonnellÏwas€contingent€upon€his€execution€of€the€new€employment€agreement€noÏlater€than€March€5,€1992.€€McDonnell€further€communicated€to€Powell€thatÏhis€refusal€to€sign€the€new€agreement€would€be€treated€as€his€resignationÏfrom€the€company.€€Powell€refused€to€sign€the€new€agreement.Ìà àSome€two€weeks€later€on€March€19,€1992,€Lewis€McDonnell€advisedÏPowell€that€his€òòde€factoóó€resignation€had€been€accepted€and€tendered€aÏcheck€to€Powell€for€the€next€monthððs€salary.€€In€this€regard€PowellÏcontends€to€this€court€that€the€1988€Agreement€entitled€him€to€a€30€dayÏnotice€of€termination,€during€which€time€he€was€entitled€to€receiveÏcommission€checks€based€on€sales€closed€by€him€prior€to€his€termination.€ÏMcDonnell€contends€on€the€other€hand,€that€by€providing€Powell€with€anÏextra€monthððs€salary€it€satisfied€the€30€day€notice€requirement.€€Ìà àIt€is€undisputed€by€either€party€that€following€the€date€of€the€noticeÏof€termination€to€Powell,€he€began€to€actively€court€clients€whom€he€firstÏdeveloped€as€an€agent€of€McDonnell.€€McDonnell€received€over€sixty€agentÏof€record€letters€from€Powellððs€former€clients,€informing€McDonnell€thatÍtheir€insurance€relationship€was€thereby€canceled.€€The€first€of€theseÏletters€was€dated€March€20,€1992,€the€day€following€the€notification€toÏPowell€of€his€termination.€€In€addition,€a€large€percentage€of€PowellððsÏcustomers€refused€to€renew€their€accounts€with€McDonnell€followingÏPowellððs€termination.€€Ìà àShortly€after€his€termination€Powell€filed€this€suit€againstÏMcDonnell€in€which€he€sought€damages€for€his€alleged€wrongfulÏtermination€along€with€a€declaratory€judgment€as€to€his€right€to€competeÏagainst€McDonnell€under€the€1988€Agreement.€€Throughout€the€ensuingÏlitigation,€it€was€Powellððs€contention€that€he€had€been€wrongfullyÏterminated€by€McDonnell€and€that€this€invalidated€the€covenant€not€toÏcompete.€€Powell€also€contended€that€McDonnell€failed€to€follow€theÏcompensation€terms€set€out€in€the€1988€Agreement.Ìà àIn€its€counter„claim,€McDonnell€contended€that€Powell€breached€theÏrestrictive€covenant€in€the€1988€Agreement,€thereby€entitling€it€to€moneyÏdamages,€reasonable€attorney€fees€and€costs.€€Following€a€bench€trial,€theÏchancellor€ruled€preliminarily€that€he€was€upholding€the€covenant€not€toÏcompete,€but€was€reducing€its€effective€period€from€two€years,€asÏprovided€in€the€œ1988€Agreement,›€to€one€year.€€The€chancellor€refused€toÏaward€Powell€any€commission€income€received€from€his€pre„terminationÍsales€during€the€thirty€day€period€following€the€notice€of€termination€toÏPowell€on€March€19,€1992.€€He€also€found€Powell€liable€for€the€amount€ofÏany€uncollected€insurance€premiums€up€to€the€amount€then€existing€in€hisÏreserve€account.€€Ìà àThe€chancellor€thereafter€entered€an€order€of€reference€to€theÏMaster,€calling€on€the€Master€to€determine€the€appropriate€measure€ofÏdamages€that€might€be€due€McDonnell€for€the€breach€of€both€a€one€year€andÏa€two€year€covenant€not€to€compete.€€The€Master€was€also€directed€toÏresolve€any€controversy€surrounding€the€distribution€of€the€reserveÏaccount€proceeds€and€to€determine€the€proper€amount€of€attorney€fees€andÏexpenses€to€be€paid€to€McDonnell.€€Ìà àIn€his€report€the€Master€found€that€McDonnell€had€suffered€a€loss€inÏthe€amount€of€$180,000€for€Powellððs€breach€of€the€1988€Agreement€if€theÏrestrictive€covenant€were€given€a€life€of€one€year€and€that€if€given€a€lifeÏof€two€years,€McDonnellððs€damages€for€a€breach€of€such€a€covenant€not€toÏcompete€would€amount€to€$225,000.€€The€Master€also€found€that€neitherÏparty€owed€any€amount€to€the€other€regarding€the€reserve€account.€ÏFinally,€the€Master€awarded€McDonnell€60%€of€the€attorney€fees€andÏexpenses€requested.€€Ìà àBoth€parties€filed€exceptions€to€the€Masterððs€report.€€Thereafter€theÍchancellor€adopted€the€Masterððs€report€with€the€following€exceptions:ÌÓÓÌà8 à(1)€The€damages€awarded€McDonnell€should€be€calculated€byÏusing€a€lower€profit€margin€than€that€employed€by€the€SpecialÏMaster,€thus€reducing€the€one€year€damage€award€to€$141,000.Ìà8 à(2)€The€parties€should€equally€split€the€balance€in€the€reserveÏaccount€as€of€April,€1992,€which€amounted€to€œ$33,184.41.›Ìà8 à(3)€The€attorneyððs€fees€awarded€to€McDonnell€were€reducedÏfrom€60%€to€one„third,€the€amount€initially€requested€byÏMcDonnell.ÌÌÌÓÓThis€appeal€followed.Ìà@ àò òI.€The€Covenant€Not€to€Compete.ó óÌà àOn€appeal€McDonnell€contends€that€the€chancellor€was€in€error€inÏlimiting€the€enforcement€of€the€restrictive€covenant€to€a€one€year€periodÏas€opposed€to€the€two€year€period€the€parties€had€agreed€upon.€€TheÏchancellor€upheld€the€restrictions€in€the€employment€agreement€asÏreasonable€and€valid,€rejecting€Powellððs€contention€that€McDonnell€forcedÏhis€resignation€by€requiring€him€to€enter€into€a€new€employmentÏagreement€with€provisions€that€he€contended€were€unreasonable€andÏoppressive.Ìà àBefore€addressing€the€issue€raised€by€McDonnell,€we€must€firstÏconsider€the€contention€by€Powell€as€to€the€invalidity€of€this€restrictiveÏcovenant.€€While€it€is€often€stated€that€such€covenants€are€not€favored€inÍlaw€as€being€in€restraint€of€trade,€nonetheless€the€courts€of€this€state€asÏwell€as€others€have€never€failed€to€uphold€such€covenants€where€theÏrestrictions€contained€therein€are€found€to€be€reasonable.€€òòDabora,€Inc.€v.ÏKlyneóó,€884€S.W.2d€475€(Tenn.€App.€1994).€€Our€courts€have€frequentlyÏrecognized€that€employers€have€a€definable€and€protectable€interest€inÏpreventing€former€employees€from€competing€against€them€for€theÏcustomers€that€the€employer€helped€to€establish.€€In€òòHasty€v.€Rent„A„Driver,€Inc.óó,€671€S.W.2d€471,€473€(Tenn.€1984),€our€supreme€courtÏrecognized€the€enforceability€of€restrictive€covenants€where€the€employeeÏclosely€associated€with€or€had€repeated€contact€with€the€employerððsÏcustomers€so€that€the€customer€tended€to€associate€the€employerððsÏbusiness€with€the€employee.€€Ìà àThe€restrictive€covenant€sought€to€be€relied€upon€by€McDonnell€wasÏcontained€in€both€the€1980€and€1988€agreements€freely€signed€by€theÏparties.€€The€record€reflects€that€covenants€not€to€compete€are€common€inÏthe€insurance€business€and€were€standard€practice€at€most,€if€not€all€ofÏthe€insurance€agencies€in€the€Memphis€community.€€Agreements€inÏrestraint€of€trade,€such€as€covenants€restricting€competition,€are€notÏinvalid€òòper€seóó€and€will€be€enforced,€provided€they€are€deemed€reasonableÏunder€the€particular€circumstances.€€òòAllright€Auto€Parks,€Inc.€v.€Berryóó,€409ÍS.W.2d€361,€363€(Tenn.€1966).€€In€acknowledging€a€similar€protectableÏinterest,€the€eastern€section€of€this€court€in€òòFederated€Mut.€Implement€&ÏHardware€Ins.€Co.€v.€Andersonóó,€351€S.W.2d€411,€415€(Tenn.€App.€1961),Ïstated:ÌÓÓÌà8 àA€business€is€built€upon€the€confidence€of€its€customers€andÏthe€employee€gains€acquaintances€and€sells€the€customers€byÏusing€the€good€will€of€the€employer.€€The€employerððs€dealingsÏwith€its€customers€through€the€employee€gives€the€employeeÏconfidential€knowledge€that€should€not€be€divulged€or€used€forÏhis€own€benefit.€€It€is€by€reason€of€this€personal,€if€notÏconfidential,€relationship€which€the€parties€sustain€thatÏcontracts€to€protect€the€employer€by€restriction€of€subsequentÏemployment€within€reasonable€limits€of€time€and€of€space€areÏpermitted€and€sanctioned,€and€equity€will€enjoin€the€employeeÏfrom€competing€in€violation€of€his€covenant.ÌÌÌÓÓà àThe€record€in€this€case€is€clear€that€insurance€agencies€encourageÏtheir€salesmen€to€develop€personal€relationships€with€their€customers.€ÏMcDonnell€and€other€similar€agencies€invest€sizable€amounts€of€resourcesÏto€enable€salesmen€such€as€Powell€to€develop€such€relationships.€€ThisÏinvestment€by€the€agency€includes€not€only€the€resources€of€the€agencyÏitself,€but€the€additional€expense€of€automobile€and€entertainmentÏallowances,€which€sometimes€include€even€€country€club€dues.€€All€ofÏthese€agency€expenditures€are€for€the€sole€purpose€of€permitting€andÏencouraging€agents€or€salesmen€to€develop€these€customers€as€friends.€€InÍthis€case,€utilizing€McDonnellððs€resources€and€his€own€skills,€PowellÏdeveloped€personal€relationships€with€many€of€McDonnellððs€customers.€ÏUpon€leaving€McDonnell€Powell€had€a€competitive€advantage€to€vie€forÏthese€customersðð€business,€an€advantage€developed€at€McDonnellððs€expense.€ÏThe€restrictions€in€this€agreement€with€which€we€are€dealing€have€asÏtheir€goal€the€protection€of€McDonnellððs€legitimate€interest€and€to€usÏappear€reasonable€in€all€respects.Ìà àIn€contending€that€the€chancellor€should€completely€disregard€theÏviability€of€this€restrictive€covenant,€Powell€cites€òòCentral€AdjustmentÏBureau€v.€Ingramóó,€678€S.W.2d€28€(Tenn.€1984).€€The€supreme€court€inÏòòIngramóó€acknowledges€that€an€at„will€employee€can€be€discharged€for€anyÏreason€without€breaching€a€contract,€but€that€a€discharge€which€isÏð ðarbitrary,€capricious€or€in€bad€faithðð€is€a€type€of€discharge€that€couldÏhave€a€bearing€on€the€enforceability€of€a€noncompetitive€covenant.€€ThereÏis€nothing€in€this€record€to€establish€that€McDonnell€acted€in€any€wayÏtoward€Powell€in€an€arbitrary,€capricious€or€bad€faith€manner.€€BothÏparties€had€executed€an€employment€contract€that€provided€that€eitherÏparty€had€the€option€of€terminating€the€relationship€upon€giving€€thirtyÏdays€notice.€€While€still€an€employee€of€McDonnell,€Powell€had€openly€andÏfrequently€declared€the€unenforceability€of€his€existing€employmentÍcontract.€€Even€prior€to€the€termination€of€his€employment,€Powell€wasÏnegotiating€for€office€space€and€with€other€McDonnell€employees€wasÏseeking€to€create€a€competing€insurance€agency,€as€well€as€notifying€hisÏcustomers€of€his€intent€to€leave€McDonnell€and€take€these€customers€withÏhim.€€In€addition,€Powellððs€conduct€after€his€termination€reinforced€hisÏinappropriate€conduct€prior€to€termination.€€The€evidence€does€notÏpreponderate€against€the€chancellorððs€ruling€that€this€restrictive€covenantÏwas€enforceable.Ìà àHaving€found€the€restrictive€covenant€enforceable,€we€next€turn€toÏthe€chancellorððs€finding€that€the€restrictive€covenant€should€beÏenforceable€for€only€one€year€rather€than€the€two€years€as€called€for€inÏthe€employment€agreement.€€We€note€first€of€all€that€this€restrictiveÏcovenant€continued€for€three€years€in€the€event€Powell€voluntarilyÏterminated€the€employment€relationship.€€McDonnell€never€sought€toÏenforce€the€restrictive€covenant€for€three€years,€and€presented€proof€ofÏdamages€only€for€breach€covering€a€one€year€or€a€two€year€period.€€We€alsoÏnote€that€the€chancellor€failed€to€make€any€specific€findings€of€factÏpertinent€to€his€ruling€that€the€covenant€not€to€compete€should€only€beÏenforced€for€a€one€year€period.€€Under€these€circumstances€there€is€noÏpresumption€of€correctness€and€our€review€as€to€this€issue€on€appeal€is€òòdeÍnovoóó.€Ìà àThe€record€reflects€that€a€substantial€amount€of€the€insuranceÏbusiness€that€Powell€wrote€while€employed€by€McDonnell,€and€thus€mostÏof€the€business€that€he€took€from€McDonnell€in€breach€of€his€contract,€wasÏannually€renewable€insurance€business.€€The€one€year€ruling€of€theÏchancellor€has€the€effect€of€giving€McDonnell€the€benefit€of€only€oneÏbusiness€cycle€to€be€compensated€for€the€competitive€advantage€thatÏPowell€gained€at€the€expense€of€McDonnell.Ìà àThis€court€has€already€noted€and€quoted€from€the€case€of€òòFederatedÏMut.€Implement€&€Hardware€Ins.€Co.€v.€Andersonóó,€òòsupraóó,€wherein€a€two€yearÏrestrictive€covenant€against€an€insurance€agent€was€enforced€when€theÏagent,€following€termination,€immediately€opened€his€own€generalÏinsurance€agency€in€the€same€city€where€he€had€previously€been€employed.€€Ìà àNeither€party€disputed€the€substantial€support€that€McDonnellÏprovided€to€Powell€in€developing€Powellððs€insurance€business€as€theirÏemployee.€€McDonnell€provided€Powell€with€an€agency€infrastructure,Ïincluding€support€personnel€who€managed€the€day„to„day€communicationsÏwith€clients€and€insurance€carriers,€along€with€annual€advertising€and€aÏmarketing€budget€to€promote€the€agency€in€the€Memphis€market.€€InÏaddition,€McDonnell€saw€to€it€that€Powell€had€access€to€the€variousÍinsurance€carriers€and€underwriters€for€whom€they€wrote€insurance€forÏtheir€clients.€€Ìà àLewis€McDonnell€testified€that€the€services€mentioned€above€as€wellÏas€others€were€provided€to€facilitate€the€growth€of€personal€relationshipsÏbetween€the€agencyððs€employees€and€its€customers.€€In€the€past,€both€thisÏcourt€and€our€supreme€court€have€upheld€a€two€year€covenant€not€toÏcompete€as€a€reasonable€restriction€in€cases€involving€insurance€agents.€ÏòòSee€óóòòFederated€Mut.€Implement€&€Hardware€Ins.€Co.€v.€Johnsonóó,€382€S.W.2dÏ214€(Tenn.€1964),€òòFederated€Mut.€Implement€&€Hardware€Ins.€Co.€v.ÏAndersonóó,€òòsupraóó.Ìà àIn€òòThompson,€Breeding,€Dunn,€Creswell€&€Sparks€v.€Bowlinóó,€765ÏS.W.2d€743€(Tenn.€App.€1987),€this€court€upheld€a€three€year€restrictiveÏcovenant€in€regard€to€a€former€employee€of€a€certified€public€accountantÏpartnership.€€It€is€important€to€note€that€in€òòBowlinóó€the€restrictiveÏcovenant€involved€was€quite€similar€to€that€in€the€case€underÏconsideration€in€that€it€did€not€prevent€the€employee€from€practicing€hisÏlivelihood€in€the€same€geographical€area€as€before,€but€rather€prohibitedÏhim€from€soliciting€business€from€any€client€of€the€partnership€or€forÏworking€for€any€such€client€as€a€bookkeeper.€€This€court€noted€that:ÌÌÓÓà8 à€ð ðthis€omission€[of€a€territorial€limitation]€leaves€BowlinÏgreat€freedom€to€practice€his€profession€in€the€same€area€asÏthe€Partnership.€€Rather€than€being€limited€by€geographicÏboundaries,€he€is€only€prohibited€from€soliciting€the€businessÏof€and€working€for€a€specific€group€of€persons,€theÏPartnershipððs€clients,€for€a€period€of€three€years€after€hisÏtermination€of€employment.€.€.€.The€covenant€therefore€is€notÏunreasonable,€nor€does€it€place€an€impossible€burden€onÏBowlin.ððÌà àòòId.óó€at€745„46.ÌÌÌÓÓà àConsidering€the€substantial€percentage€of€Powellððs€business€whichÏwas€annually€renewable,€we€are€of€the€opinion€that€the€enforcement€ofÏsuch€a€provision€for€one€year€only€would€not€give€McDonnell€an€adequateÏtime€to€develop€a€relationship€with€its€clients€previously€serviced€byÏPowell.€€A€two€year€restrictive€covenant€would€allow€McDonnell€a€largerÏwindow€of€opportunity€in€which€to€cultivate€a€relationship€with€itsÏclients€similar€to€that€previously€had€by€Powell.€€Accordingly,€we€reverseÏthe€chancellorððs€ruling€in€limiting€the€restrictive€covenant€to€a€one€yearÏperiod,€and€hold€that€a€two€year€restrictive€covenant€would€more€likelyÏð ðlevel€the€playing€fieldðð€for€McDonnell.€€Ìà@ àò òII.€The€Damages€Issue.ó óÌà àBoth€parties€have€challenged€on€appeal€the€judgment€of€theÏchancellor€pertaining€to€damages,€wherein€he€awarded€McDonnellÏ$141,000,€based€upon€a€one€year€restrictive€covenant.€€McDonnell€hereÍcontends€that€the€chancellor€erred,€along€with€the€Master,€in€reducing€theÏprofit€margin€ratio€employed€by€McDonnellððs€expert€witness.Ìà àAs€noted,€the€chancellor€referred€to€the€Master€for€a€finding€of€factÏas€to€the€appropriate€measure€of€damages€due€McDonnell€as€a€result€ofÏPowellððs€breach€of€the€employment€agreement.€€McDonnell€offered€Mr.ÏAlexander€Ivy€as€an€expert€witness€as€to€this€issue.€€Ivyððs€qualificationsÏwere€never€challenged€by€Powell.€€The€record€reflects€that€Ivy€is€anÏaccredited€senior€appraiser,€a€chartered€financial€analyst€(CFA),€aÏcertified€public€accountant€(CPA),€and€a€certified€financial€planner€(CFP)Ïwho€showed€substantial€experience€in€the€fields€of€business€evaluationÏand€the€calculation€of€lost€profits.€€Ivy€proceeded€to€analyze€the€historicalÏrevenues€generated€by€Powell€prior€to€his€departure€from€McDonnell€andÏthen€made€certain€assumptions€regarding€the€number€of€clients€thatÏMcDonnell€would€have€retained€following€Powellððs€departure€had€PowellÏnot€breached€the€employment€agreement€by€actively€soliciting€McDonnellððsÏclients€to€leave€and€come€over€to€him.€€Ivy€predicted€the€future€revenueÏstreams€that€these€clients€would€have€generated€for€McDonnell€over€theÏnext€seven€years,€from€which€he€calculated€the€present€value€of€theseÏcash€flows.€€Ivy€arrived€at€McDonnellððs€lost€profits€by€deducting€fromÏthese€future€cash€flows€the€variable€costs€associated€with€the€generationÍof€the€lost€revenue,€excluding€McDonnellððs€fixed€costs.Ìà àIt€was€Powellððs€contention€that€Ivyððs€exclusion€of€McDonnellððs€fixedÏcosts€was€in€error.€€On€this€point€Ivy€testified€that€from€the€predictedÏrevenue€stream€the€only€relevant€expenses€that€should€be€deducted€inÏarriving€at€lost€profits€were€the€variable€costs€directly€associated€withÏthe€generation€of€the€revenue€itself.€€Ivy€stated€that€the€pertinent€variableÏcosts€were€Powellððs€compensation,€historically€pegged€at€40%€of€theÏrevenues€he€generated,€along€with€one„half€the€salary€paid€to€hisÏassistant€who€handled€many€of€the€administrative€duties€performed€inÏmaintaining€an€insurance€sales€practice.€€From€this€Ivy€ascertained€thatÏPowellððs€historic€variable€costs€amounted€to€44.3%€of€the€commissionÏrevenue.€€Therefore,€55.7%€of€Powellððs€future€revenue€stream€amounted€toÏMcDonnellððs€lost€profits€and€thus€would€constitute€damages€to€be€awarded.€ÏHe€concluded€that€McDonnell€suffered€damages€in€the€amount€$246,000€forÏa€breach€of€a€one€year€restrictive€covenant€not€to€compete€and€$305,000Ïfor€a€breach€of€a€two€year€restrictive€covenant.Ìà àThe€Master€adopted€Ivyððs€calculations€and€underlying€assumptionsÏwith€the€exception€of€the€gross€profit€margin€determination.€€He€reducedÏthe€percentage€of€lost€profit€generated€by€Powell€from€55.7%€to€40%Ïwithout€any€covenant;€thereby€reducing€McDonnellððs€damages€for€breach€ofÍa€one€year€covenant€to€$180,000.Ìà àThe€chancellor€also€adopted€without€modification€the€MasterððsÏfindings€regarding€the€damage€calculations€as€performed€by€Ivy,€with€theÏexception€that€he€lowered€the€profit€margin€determination€from€40%€toÏ27.6%.€Ìà àUnder€the€law€of€this€state€McDonnell€is€entitled€to€be€placed€in€theÏsame€position€it€would€have€been€in€had€the€contract€been€performed.€ÏòòWilhite€v.€Brownsville€Concrete€Co.óó,€798€S.W.2d€772€(Tenn.€App.€1990).€ÏProfits€that€McDonnell€would€have€realized€had€Powell€honored€hisÏagreement€not€to€compete€must€be€based€upon€certain€assumptions.€€ItÏcannot€be€established€conclusively€what€would€have€happened€had€PowellÏhonored€the€restrictive€covenant€because€he€did€not€do€so.€€Uncertain€andÏspeculative€damages€are€prohibited€only€when€the€existence€of€damages€isÏuncertain,€not€when€the€amount€of€damages€is€uncertain.€€òòMoore€Constr.€Co.Ïv.€Clarksville€Dept.€of€Elec.óó,€707€S.W.2d€1,€15€(Tenn.€App.€1985).€€All€that€isÏrequired€is€proof€with€a€reasonable€degree€of€certainty.€€òòId.óóÌà àWe€cannot€determine€from€this€record€the€reasoning€behind€theÏMasterððs€€and€subsequently€the€chancellorððs€decision€to€reduce€the€profitÏmargin€determination,€as€they€both€failed€to€make€any€findings€in€thisÏregard.€€The€Master€found€that€McDonnellððs€lost€profits€should€not€beÍlimited€to€those€profits€lost€for€the€one„year€period€commencing€MarchÏ19,€1992.€€The€Master€ð ðdisagreedðð€with€the€profit€margin€assumptions€ofÏboth€McDonnell€and€Powell.€€As€to€McDonnell,€the€Master€opined€that€aÏ55.7%€profit€margin€was€ð ðtoo€restrictiveðð€in€that€Ivy€assumed€that€theseÏrestrictions€related€to€Powellððs€employmentð"ða€concept€that€heÏapprovedð"ðonly€included€Powellððs€commission€and€one„half€the€salary€ofÏthe€employee€of€McDonnell€who€assisted€Powell.€€The€Master€noted€noÏothers,€and€Powell€offered€no€proof€of€any.Ìà àIvyððs€assumption€to€exclude€fixed€costs€in€arriving€at€lost€profits€isÏnot€a€new€one.€€In€òòWhorley€v.€Tennessee€Centennial€Exposition€Co.óó,€62ÏS.W.2d€346€(Tenn.€Ch.€App.€1901)€the€court,€in€awarding€Plaintiff€lostÏprofits€as€damages€incurred€for€the€violation€of€a€contract€that€had€givenÏPlaintiff€exclusive€right€to€sell€tobacco€at€the€Tennessee€CentennialÏExposition,€deducted€the€pertinent€variable€costs€associated€with€theÏproduction€of€the€lost€revenue€but€ignored€and€did€not€deduct€anyÏunderlying€fixed€costs.€€òòSeeóó€òòalsoóó€òòFowler€v.€Printers€IIóó,€598€A.2d€794,€807Ï(Md.€App.€1991),€wherein€the€Maryland€Court€of€Appeals€stated€that€fixedÏcosts€should€not€be€considered€in€determining€lost€profits€from€the€breachÏof€a€covenant€not€to€compete.Ìà àWith€the€exception€of€the€gross€profit€margin€determination,€theÍremainder€of€the€assumptions€made€by€Ivy€in€calculating€his€damages€wereÏconcurred€in€by€both€the€Master€and€the€chancellor,€and€to€that€extent€areÏbinding€on€this€court.€€T.C.A.€ðþÿð€27„1„113.€€However,€upon€reviewing€thisÏrecord€we€are€of€the€opinion€that€the€evidence€preponderates€against€theÏaction€of€the€chancellor€in€reducing€the€determination€of€the€gross€profitÏmargin€to€27.2%.€€Based€upon€the€evidence€presented€the€chancellor€shouldÏhave€applied€the€gross€profit€margin€of€55.7%€as€developed€and€applied€byÏthe€witness€Ivy.€€We€reverse€the€chancellor€in€this€regard€and€find€thatÏMcDonnellððs€damages€for€the€breach€of€a€two€year€restrictive€covenantÏamounts€to€$305,000.Ìà àAs€for€the€contention€by€Powell€that€the€calculation€of€the€damageÏaward€at€27.6%€does€not€equate€with€the€amount€of€$141,000€as€set€by€theÏtrial€court,€our€ruling€on€the€damage€issue€renders€any€consideration€ofÏthis€issue€of€Powell€moot.Ìà@ àò òIII.€The€Reserve€Account€Balance.ó óÌà àAs€originally€contemplated€the€reserve€account€was€to€be€funded€byÏa€portion€of€Powellððs€commissions€generated€each€month€from€sales,€withÏthe€intent€that€any€unpaid€premiums€of€Powellððs€customers€would€be€paidÏto€McDonnell€from€the€proceeds€of€the€account.€€The€reconciliation€of€thisÏaccount€was€one€of€the€several€issues€referred€by€the€chancellor€to€theÍMaster.€€Ìà àThe€Masterððs€report€stated€that€there€was€a€deficit€balance€ofÏ$5,019.16€in€this€account€at€the€time€of€trial.€€This€amount€reflectedÏcontinuous€changes€in€the€account€for€some€three€years€after€Powell€hadÏleft€McDonnellððs€employment,€brought€about€by€the€making€of€lateÏpayments€on€the€part€of€Powellððs€customers,€along€with€bad€debts€as€aÏresult€of€some€customers€not€paying€at€all.€€The€Master€found€that€theÏparties€had€failed€to€agree€upon€a€proper€method€of€dividing€and€allocatingÏany€balance€that€might€remain€in€the€reserve€account€at€the€time€ofÏtermination€and€concluded€that€neither€party€was€indebted€to€the€other.€ÏThe€chancellor€modified€the€Masterððs€report€as€to€this€item,€finding€that€aÏcredit€balance€of€$33,000€that€was€in€existence€at€the€time€of€separationÏshould€be€divided€equally€between€the€parties,€awarding€PowellÏ$16,042.45.€€Ìà àIn€our€opinion€the€Master€was€correct€in€his€disposition€of€this€issueÏand€the€chancellor€was€in€error€in€his€modification,€which€is€not€supportedÏby€the€evidence.€€The€$33,000€credit€balance€did€not€represent€actualÏdollars,€but€was€an€accounting€measure€instituted€by€McDonnell€to€provideÏPowell€with€a€tax„€free€employment€benefit.€€The€credit€balanceÏrepresented€future€unpaid€liabilities€assumed€by€McDonnell€as€a€favor€toÍPowell€rather€than€the€actual€investment€by€Powell€of€previously€earnedÏsales€commissions.€€The€record€indicates€that€neither€party€ever€expectedÏthat€the€credit€balance€would€be€ð ðtappedðð,€with€the€proceeds€being€paidÏout€to€either€party,€but€instead€each€party€understood€that€the€creditÏbalance€served€as€a€ð ðfloatingðð€buffer€zone€for€the€absorption€of€any€unpaidÏpremiums€of€Powellððs€customers.€€Accordingly,€the€decree€of€theÏchancellor€is€reversed€in€this€regard.€€We€hold€that€neither€party€owes€theÏother€any€amount€regarding€the€reserve€account.Ìà@ àò òIV.€Attorney€Fees.ó óÌà àMcDonnell€has€appealed€that€portion€of€the€chancellorððs€decreeÏawarding€it€one„third€of€the€amount€of€attorney€fees€and€costs€requested,Ïwhich€amounted€to€$48,127.36.€€The€1988€Agreement€contained€theÏfollowing€provision€for€the€payment€of€attorney€fees€in€the€event€of€aÏbreach€by€Powell€of€the€covenant€not€to€compete:ÌÓÓÌà8 àIn€the€event€it€shall€become€necessary€for€the€CORPORATION€toÏenforce€any€of€the€provisions€of€this€non„competition€clauseÏby€suit€or€by€action€in€any€court€against€agent,€agent€agreesÏthat€he€shall€and€will€pay€to€the€corporation,€in€addition€to€anyÏdamages,€costs€and€disbursements€provided€by€law,€aÏreasonable€attorneyððs€fee€and€all€other€expenses€of€litigation.ÌÌÌÓÓà àIn€the€hearing€before€the€Master,€Powell€contended€that€only€aÍportion€of€the€attorney€fees€requested€by€McDonnell€were€recoverable,€asÏonly€a€part€of€the€dispute€between€the€parties€dealt€with€Powellððs€breachÏof€the€restrictive€covenant.€€The€Master€awarded€McDonnell€60%€of€itsÏclaimed€attorney€fees€and€costs.€€This€was€modified€by€the€chancellorÏsubsequently€by€his€holding€that€McDonnell€was€entitled€to€only€one„thirdÏof€the€total€requested€fees€and€costs.€€Ìà àMcDonnell€contends€that€a€reasonable€interpretation€of€this€attorneyÏfee€provision€is€to€the€effect€that€in€the€event€McDonnell€was€required€toÏfile€suit€for€the€enforcement€of€a€covenant€not€to€compete,€then€it€wouldÏbe€entitled€to€recover€all€reasonable€attorney€fees€and€expenses€resultingÏfrom€any€subsequent€litigation,€including€all€costs€incurred€on€appeal.€€AsÏthis€matter€involves€the€interpretation€of€a€written€agreement,€theÏappropriate€scope€of€review€is€òòde€novoóó€with€no€presumption€of€correctnessÏattaching.€€òòRainey€v.€Stansellóó,€836€S.W.2d€117,€118€(Tenn.€App.€1992).€€TheÏcontract€contains€no€general€provision€regarding€the€payment€of€attorneyÏfees.€€In€addition,€the€case€at€bar€concerns€and€involves€several€otherÏissues€not€related€to€the€covenant€not€to€compete.€€We€are€of€the€opinionÏthat€McDonnell€should€only€receive€attorney€fees€and€expenses€directlyÏrelated€to€the€breach€of€the€covenant€not€to€compete.ò ò€ó ó€In€establishing€thisÏamount,€the€appropriate€test€is€whether€each€issue€could€have€beenÍindependently€appealed,€assuming€that€Powell€had€not€breached€theÏcovenant€not€to€compete.€€Issues€such€as€the€reserve€account€and€theÏamount€of€Powellððs€compensation€are€separate€and€independent€issuesÏoutside€the€issue€of€the€breach€of€the€restrictive€covenant.€€It€does€appearÏhowever€that€the€vast€majority€of€the€time€and€effort€expended€byÏMcDonnell€focused€on€the€amount€of€damages€incurred€by€it€as€a€result€ofÏthe€breach€of€the€restrictive€covenant.€€Based€upon€this€record,€we€are€ofÏthe€opinion€that€McDonnell€should€receive€80%€of€the€attorney€fees€andÏcosts€it€incurred€in€the€litigation€at€the€trial€level.€€In€addition,€this€issueÏis€remanded€to€the€trial€court€for€a€determination€of€reasonable€attorneyÏfees€and€expenses€incurred€by€McDonnell€on€appeal,€with€80%€of€thisÏamount€to€be€awarded€to€McDonnell.Ìà@ àò òV.€Powellððs€Unpaid€Compensation.ó óÌà àPowell€contends€by€this€issue€that€the€chancellor€erred€in€onlyÏawarding€him€$3,792.80€in€unpaid€compensation.€€Powell€argues€that€notÏonly€is€he€owed€a€larger€amount€based€upon€what€he€earned,€but€also€thatÏhis€commission€should€have€been€calculated€at€a€rate€of€40%€rather€thanÏ25%.€€We€will€first€consider€whether€the€court€erred€in€ascertaining€thatÏPowell€was€entitled€to€a€credit€only€in€this€amount,€which€had€beenÏpreviously€agreed€to€by€McDonnell.€€Ìà àThe€record€reflects€that€Powell€was€advised€that€if€he€failed€to€signÏthe€new€agreement€which€had€been€submitted€to€him€on€or€before€March€5,Ï1992,€that€this€failure€to€do€so€would€be€considered€a€resignation€on€hisÏpart.€€On€March€19,€1992€McDonnell€notified€Powell€that€his€refusal€to€signÏthe€1992€agreement€as€per€the€previous€notification€was€considered€a€òòdeÏfactoóó€resignation€by€him,€which€was€accepted€by€McDonnell€as€of€thisÏlatter€date.€€Ìà àIn€a€letter€to€Powell€dated€March€19,€1992€McDonnell€informedÏPowell€as€to€the€companyððs€position€regarding€the€payment€of€any€futureÏcommissions:ÌÓÓÌà8 àI€feel€that€we€have€no€choice€but€to€consider€your€refusal€toÏsign€the€revised€contract€as€your€resignation€from€theÏemployment€of€McDonnell€Insurance,€Inc.€effective€3/19/92.€.€.€.ÏI€am€enclosing€our€company€check€to€cover€your€salary€fromÏMarch€16,€1992€thru€[sic]€April€19,€1992,€òòò òthereby€waivingÏour€right€to€30€days€notice.ó óóó€€As€soon€as€the€figures€areÏavailable€for€the€commissions€from€March€1st€to€March€19thÏwe€will€send€you€an€additional€check€for€25%€of€theÏcommissions€booked€during€that€period.€(Emphasis€Added).ÌÌÌÓÓà àIt€appears€that€the€amount€awarded€by€the€chancellor€had€beenÏdetermined€pursuant€to€the€provisions€of€this€letter,€but€had€not€been€paidÏover€to€Powell€as€a€result€of€this€litigation.€€This€amount€was€in€no€wayÏcontested€by€McDonnell.€€The€evidence€in€this€case€does€not€preponderateÍagainst€this€award€by€the€chancellor€to€Powell€of€his€unpaid€commissionÏcompensation.€€Ìà àIn€this€connection€Powell€also€contends€that€any€commissions€toÏwhich€he€was€entitled€should€have€been€calculated€at€the€rate€of€40%Ïrather€than€the€rate€of€25%.€€Powell€is€correct€in€stating€that€his€normalÏcompensation€equaled€nearly€40%€of€the€total€commission€incomeÏgenerated€for€McDonnell.€€Powellððs€òòoverallóó€compensation,€when€consideringÏthe€many€fringe€benefits€provided€to€him€by€McDonnell,€did€equal€aroundÏ40%€of€the€total€commissions€he€generated.€€However,€this€is€not€theÏcommission€rate€that€was€historically€applied€to€the€commission€itself.€ÏIt€is€uncontradicted€that€his€monthly€commissions€had€always€beenÏcalculated€at€25%€of€the€total€commissions€produced€for€McDonnell.€ÏTherefore,€we€find€these€two€sub„issues€to€be€without€merit.Ìà@ àò òVI.€Prejudgment€Interest.ó óÌà àFinally,€Powell€contends€that€it€was€error€for€the€chancellor€toÏaward€McDonnell€prejudgment€interest€accruing€from€the€time€ofÏseparation€in€March€1992.€€In€òòMitchell€v.€Mitchellóó,€876€S.W.2d€830,€832Ï(Tenn.€1994)€our€supreme€court€addressed€the€allowance€of€prejudgmentÏinterest€to€an€injured€party:€ð ðWhere,€as€in€this€case,€the€amount€of€theÏobligation€is€certain,€or€can€be€ascertained€by€a€proper€accounting,€and€theÍobligation€is€not€disputed€on€reasonable€grounds,€the€Court€may€allowÏprejudgment€interest€in€accordance€with€principles€of€equity.ðð€€The€recordÏin€this€case€indicates€that€McDonnellððs€claim€for€damages€remainedÏuncertain€throughout€the€course€of€the€trial.€€The€damages€incurred€byÏMcDonnell€were€by€no€means€certain€or€readily€ascertainable.€€Accordingly,Ïwe€are€of€the€opinion€that€the€chancellor€erred€in€awarding€McDonnellÏprejudgment€interest.€Ìà àWe€affirm€the€decree€of€the€chancellor€holding€that€the€restrictiveÏcovenant€in€the€partiesðð€employment€agreement€was€reasonable€andÏenforceable.€€This€court€is€of€the€opinion€however,€that€the€chancellorÏerred€in€limiting€the€enforcement€of€this€restrictive€covenant€for€only€aÏone€year€period,€rather€than€a€two€year€period,€as€provided€therein.€€ThisÏcourt€is€of€the€opinion€and€so€holds€that€the€chancellor€was€in€error€inÏreducing€the€gross€profit€margin€utilized€by€Plaintiffððs€expert€witness€toÏascertain€the€amount€of€Plaintiffððs€damages€from€55.7%€to€27.6%.€€In€ourÏopinion€the€preponderance€of€the€evidence€supports€the€profit€marginÏpercentage€utilized€by€Plaintiffððs€witness.€€Accordingly,€we€modify€theÏamount€of€damages€awarded€by€the€chancellor€by€increasing€the€awardÏfrom€$141,000€to€$305,000.€Ìà àWe€reverse€the€decree€of€the€chancellor€as€to€the€disposition€of€theÍreserve€account€that€equally€split€the€existing€balance€between€theÏparties.€€The€decision€of€this€court€agrees€with€that€expressed€by€theÏMasterð"ðthat€is,€the€method€of€handling€the€reserve€account€had€never€beenÏagreed€upon€by€the€parties.€€Therefore,€regarding€this€account€Powell€owesÏMcDonnell€nothing€and€McDonnell€owes€Powell€nothing.€€Ìà àRegarding€the€claim€of€McDonnell€for€attorney€fees€and€expenses,€theÏaward€of€the€chancellor€of€one„third€of€those€fees€and€expenses€sought€byÏMcDonnell€is€modified.€€In€our€opinion€the€breach€of€the€covenant€not€toÏcompete€triggered€this€entire€litigation€and€is€at€the€heart€of€this€case.€ÏIn€our€opinion€McDonnell€should€be€reimbursed€80%€of€the€attorney€feesÏand€expenses€sought,€in€the€amount€of€$38,501.88.€€McDonnell€also€seeksÏattorney€fees€and€other€legal€costs€relative€to€this€appeal.€€It€is€theÏopinion€of€this€court€that€McDonnell€is€entitled€to€same,€and€upon€remandÏthe€trial€court€is€respectfully€directed€to€conduct€an€appropriate€hearingÏto€determine€the€amount€of€these€attorney€fees€and€legal€costs.€€OnceÏdetermined,€McDonnell€is€to€be€awarded€80%€of€this€amount.Ìà àLastly,€we€are€of€the€opinion€that€the€awarding€of€prejudgmentÏinterest€by€the€chancellor€is€in€error€and€this€award€is€accordinglyÏreversed.€€€Costs€in€this€cause€on€appeal€are€taxed€90%€to€Powell€and€10%Ïto€McDonnell,€for€which€execution€may€issue€if€necessary.ÌÌÓÓÌà àà àà àà àà àà à____________________________________Ìà àà àà àà àà àà àTOMLIN,€Sr.€J.ÌÌÌÌà àà àà àà àà àà à____________________________________Ìà àà àà àà àà àà àCRAWFORD,€P.€J.,€W.S.€€(CONCURS)ÌÌÌÌà àà àà àà àà àà à____________________________________Ìà àà àà àà àà àà àHIGHERS,€J.€€€€€€€€€€€€€€€(CONCURS)