Background
C&A Scientific Company and its principal, Sam Xiang, became embroiled in a business dispute with former executive and minority shareholder Chenhua “Kenny” Yu. After leaving C&A, Yu operated CoreAmp, Inc. and, after his one-year noncompete and non-solicitation periods had expired, began working with C&A customer Carolina Biological Supply Company. Carolina Biological asked CoreAmp to replace C&A as a supplier, and CoreAmp made an initial sale.
C&A’s lawyer then warned Carolina Biological that Yu was violating contractual obligations and asked it to stop dealing with him. Carolina Biological suspended the relationship pending resolution of the dispute. Yu and CoreAmp sued for tortious interference with business expectancy, while C&A counterclaimed for breach of Yu’s noncompete and non-solicitation obligations and disclosure of trade secrets. The trial court invalidated the noncompete, and a jury awarded Yu and CoreAmp $200,000 on their interference claim while rejecting C&A’s remaining counterclaims.
The Court’s Holding
The Court of Appeals affirmed. It held that the noncompete could not be judicially reformed because its final conditional clause was incomplete and there was no clear and convincing evidence of what the parties intended. Independently, the covenant was fatally overbroad: it barred Yu from working for or holding a financial interest in the same or a similar business even when the work would not compete with C&A, and it imposed a worldwide restriction without evidence that C&A needed global protection.
The court also held that sufficient evidence supported the tortious-interference verdict. Yu and CoreAmp had more than a subjective hope of future business because Carolina Biological had asked CoreAmp to replace C&A, supplied a product list for pricing, and begun purchasing from CoreAmp before C&A intervened. Yu’s unobjected-to testimony that the relationship had a net value of $300,000 per year supported the $200,000 award. Finally, C&A failed to preserve its appellate authentication challenge to the English translation of a Mandarin letter; any error was also harmless.
Key Takeaways
- A court cannot reform an incomplete contractual clause without clear and convincing evidence establishing both the mistake and the parties’ actual intended language.
- A noncompete that prohibits noncompetitive work, passive financial interests, and activity worldwide without demonstrated need is unenforceably overbroad under Virginia law.
- An accepted vendor relationship, exchanged pricing information, and initial performance can establish a probable business expectancy rather than a merely speculative opportunity.
- Unobjected-to lost-profit testimony remains available for the jury’s consideration, and an evidentiary theory raised on appeal must match the specific objection made at trial.
Why It Matters
The decision underscores the drafting risk of vague or sweeping restrictive covenants. Virginia courts will not reconstruct a defective provision when the record does not reveal the parties’ actual agreement, and narrow duration alone cannot save restrictions that are excessively broad in function or geography.
The opinion also illustrates how a developing commercial relationship can support tortious-interference liability before a long-term supply contract is finalized. For litigators, it emphasizes the importance of timely, theory-specific evidentiary objections, particularly when damages testimony or translated documents are introduced.