Former Owners Challenge NationsRent Noncompete Agreements

Four former independent rental business owners last week filed a lawsuit against NationsRent in a Delaware Bankruptcy Court, seeking to have non-compete covenants declared void and unenforceable.

The former owners - Jim Ziegler of Colorado, John Greene and Steven Koehler of California and Rafael Garzarelli of Utah - sold their businesses to NationsRent for cash, unsecured promissory notes and NationsRent stock. After NationsRent filed for Chapter 11 reorganization in December 2001, the stock was rendered essentially worthless and the former owners have not received payments owed them for the sale of their businesses. The former owners signed restrictive covenants preventing them from working in the rental equipment industry for periods ranging from two to five years.

"Our position is simple," Ziegler said. "NationsRent has breached its obligation to us. We should be able to move on and operate businesses. We need to feed our families. Some of us have been in this industry most of our careers. It's what we know."

"NationsRent has defaulted under these sales agreements and sought protection from the bankruptcy court, yet they continue to maintain that these restrictive covenants - prohibiting the families that started these businesses from earning a living - are valid and enforceable,” added Boulder, Colo.-based attorney Giovanni Ruscitti, who is representing these and several other former owners. “Our immediate goal is to get these guys back working." At press time, a hearing date had yet to be set. NationsRent officials could not be reached for comment.

TAGS: Ar Syndicate
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