He sold his roofing company for $17M - then the non-compete imploded
A $17 million roofing deal fell apart over a non-compete that tried to cover all 50 states.
The Superior Court of Delaware on September 25 dismissed all six breach of contract claims that FirstService Roofing Holdings and affiliated entities brought against the co-founder of Bone Dry Roofing, a Georgia-based roofing business he started in 2003.
The co-founder owned half the company. In July 2021, Roofing Corp of America acquired it for $17 million, and he stayed on - first as vice president, then as president.
Fast forward to December 2023. FirstService entities acquired the business through a merger, and the co-founder signed a Restrictive Covenant Agreement and became bound by a Shareholders' Agreement. Both agreements barred him from competing anywhere in the United States.
He resigned in April 2024, collected $300,000 in severance, and - according to the complaint - promptly broke his promises. The plaintiffs alleged he began funneling employees and customers from Bone Dry's St. Simons Island branch to a direct competitor operating out of the same Georgia county. By May 2025, his name was on that competitor's website.
Six counts followed. All breach of contract.
The court accepted that the covenants had valid consideration behind them. That was as far as the win went for the plaintiffs.
The geographic scope was the problem. Both agreements defined their territory as the entire United States, but the complaint only placed the plaintiffs' operations in Georgia and South Carolina. The court found the mismatch fatal.
And the restrictions went beyond geography. The non-compete covered not just roofing but any business the company group had engaged in or taken "reasonably substantial steps" to enter. The Shareholders' Agreement barred the co-founder from investing in any "Competitive Business" - which, the court observed, could prohibit him from buying shares in an index fund that owns a national homebuilder.
The non-solicitation clauses were no better. One carried a nationwide restriction. The other had no geographic limit at all.
The plaintiffs' fallback was blue-penciling - asking the court to trim the overbroad terms and enforce what remained. The court declined, holding that blue-penciling is an "exercise of equitable authority" the Superior Court lacked power to apply.
All six counts were dismissed.
For HR teams negotiating restrictive covenants in acquisition deals, the arithmetic is simple: a non-compete that covers 50 states when the business operates in two is not protection - it is a drafting failure.
