When Sentinel Integrity Solutions filed a $9 million lawsuit against a former employee and his new employer, the company probably expected to emerge with damages, an injunction, or both. It left instead with a $750,000 attorney fee obligation, the direct product of a Texas statute that treats knowing enforcement of an overbroad noncompete as an event triggering fee liability against the employer.
Sentinel Integrity Solutions, Inc. v. Mistras Group, Inc., Jody W. Olson, and Carey Roberts was decided by the Texas First Court of Appeals on October 22, 2013, in Case No. 01-12-00370-CV, on appeal from the 295th District Court of Harris County. AZA Law, the Houston commercial litigation firm, represented Mistras Group and the individual defendants throughout the proceedings. Representing the defense were John Zavitsanos, Todd Mensing, Elizabeth Pannill Fletcher, and Jane Robinson.
Sentinel provides nondestructive testing services for industrial infrastructure, including refineries and bridges. After Jody Olson left Sentinel to join Mistras, a competitor operating in the same market, Sentinel sued for breach of Olson’s covenant not to compete and tortious interference by Mistras with the employment agreement. Before the case reached a jury, AZA Law successfully defeated Sentinel’s attempts to halt Olson’s employment through a temporary restraining order and a temporary injunction; neither request succeeded. Litigation then moved toward a three-week jury trial.
What Sentinel Alleged
Sentinel’s claims rested on a noncompete that Olson signed upon his promotion within the company. A Sentinel manager testified at trial that the geographical scope of the covenant was deliberately drawn broadly, designed to “cover pretty much all of the general areas that we think or anticipate would be covered.” Sentinel’s own counsel acknowledged that the geographic restrictions were overbroad. That concession would carry consequences at the fee stage.
Under Texas Business and Commerce Code Section 15.50, a noncompete is enforceable only if it is ancillary to an otherwise enforceable agreement and contains reasonable limitations on time, geography, and scope of activity. Courts may reform an overbroad covenant rather than void it. Section 15.51, however, adds a fee-shifting provision that applies when the employer knew the covenant was unreasonable and pressed enforcement beyond what its legitimate business interests required.
Jury Findings on Liability and Fees
After three weeks of trial, the jury returned findings that cut against Sentinel on every element that mattered. On the noncompete claim, the jury found that Sentinel had provided Olson with confidential information. That finding satisfied one prerequisite under Section 15.50, but the jury also found that Sentinel had not provided Olson with a definite term of employment or specialized training, both of which Texas courts have held are required for a noncompete to be enforceable under the statute.
On tortious interference, the jury concluded that Mistras had not intentionally interfered with Olson’s employment agreement. Combined with the noncompete ruling, that finding produced a complete defense verdict: Sentinel recovered nothing on its $9 million demand.
The findings that directly activated Section 15.51 went further than no liability. The jury found that Sentinel knew, at the time it sought to enforce the covenant, that the limitations it contained were unreasonable. It also found that Sentinel had attempted to enforce the noncompete to a greater extent than necessary to protect any legitimate business interest. Those two findings are the statutory trigger for fee-shifting under Section 15.51, which authorizes a court to award attorney fees against an employer that proceeds with enforcement despite knowing the covenant exceeds what is legally permissible.
Fee Shifting Under Section 15.51
AZA Law secured a trial court judgment awarding Olson $750,000 in attorney fees for the trial court proceedings, plus conditional appellate fees in the event Sentinel pursued further review. Sentinel did appeal.
Section 15.51’s fee-shifting provision works differently from most Texas fee-award statutes. Rather than requiring a finding that the prevailing party deserves fees, it specifically penalizes an employer’s conduct in bringing the enforcement action. A Texas employer who pursues a noncompete that it knows to be overbroad accepts the risk that its former employee, if successful, will recover fees entirely separate from any damages analysis. The provision addresses a particular enforcement pattern: an employer files suit on a covenant it already knows won’t survive scrutiny, calculating that litigation costs will pressure the former employee into compliance before any judicial ruling arrives.
What the Appellate Ruling Means
Sentinel appealed both the liability verdict and the fee award. The Texas First Court of Appeals affirmed the no-liability findings, leaving intact the jury’s determination that Mistras had not tortiously interfered and that the noncompete’s enforceability requirements had not been met. On the fee issue, the appellate court affirmed as modified and remanded, confirming the fee award’s legal basis under Section 15.51 while sending certain aspects of the fee calculation back to the trial court for further proceedings.
Appellate courts modifying and remanding fee awards in Section 15.51 cases often do so because the statute requires that fees be tied specifically to enforcing the covenant rather than the litigation as a whole. Sentinel v. Mistras involved both noncompete claims and related trademark and tortious interference allegations. Separating the fee-generating work from the non-fee-generating work required a fresh calculation at the trial court level. AZA Law had also litigated a related trademark proceeding in parallel; Sentinel’s service mark was found to be generic or descriptive, and the mark was cancelled with a complete defense verdict on all trademark claims.
For Texas employers, the case reinforces a risk that overbroad drafting creates. Writing a noncompete with deliberately expansive geography does not simply produce a covenant subject to judicial reform. It produces a covenant that, if challenged by an employee who prevails, may generate substantial fee exposure under Section 15.51. Proof that the employer knew the limitations were unreasonable and pressed enforcement anyway is sufficient; bad faith in a traditional sense is not required.
For employees and the companies that hire them, Sentinel v. Mistras illustrates what a well-prepared defense looks like at the trial level. AZA Law blocked the preliminary injunction before the case reached the jury. Olson worked throughout the litigation rather than sitting out while the dispute was resolved. At trial, AZA Law secured the Section 15.51 jury findings needed to shift fees as a deliberately pursued outcome, not a byproduct of the defense verdict. A $750,000 award requires that kind of groundwork at the jury charge stage, and the record in this case shows exactly how it was built.
Texas noncompete litigation rarely produces published appellate opinions that turn on the fee-shifting mechanism with this level of factual specificity. Sentinel v. Mistras remains a reference point for practitioners on both sides of covenant disputes, in part because the record so clearly traces how a knowing-enforcement finding gets made at the jury stage and what it costs when it does.
