finding covenant sufficient and enforceable where phrase “Referring Optometrist” used in Court of Appeals of Indiana | Memorandum Decision 71A03-1603-PL-621| November 3, 2016 Page 8 of 22 covenant was further defined by list of optometrists in exhibit
How later courts described this case
- finding covenant sufficient and enforceable where phrase “Referring Optometrist” used in Court of Appeals of Indiana | Memorandum Decision 71A03-1603-PL-621| November 3, 2016 Page 8 of 22 covenant was further defined by list of optometrists in exhibit
- granting injunctive relief when optometrist hired to generate good will breached noncompetition covenant
- noting that “a recitation to the effect that the evidence ‘suggests’ or ‘indicates’ the existence of a particular fact is not adequate to constitute a finding of that fact”
- agreeing that “continued employment alone will not constitute consent to the assignment,” and “maintaining that the parties must have knowledge of the assignment”
Written by the judges who cited it.
The opinion
FRIEDLANDER, Judge,
concurring and dissenting.
I fully concur with the majority except with regard to Issue V. In my view, the trial court erred in enjoining Denise Norlund and Indiana Cataract and Laser.
The majority concludes that McCart v. H & R Block, Inc., 470 N.E.2d 756 (Ind.Ct.App.1984), trans. denied, and the line of cases from which it sprang dictate the conclusion that D. Norlund and ICL must be enjoined from conducting business because such constitutes assisting R. Norlund in breaching the covenant not to compete. In my view, however, the facts of the instant case are sufficiently distinct from those in McCart and the cases cited therein so as to render that line of cases inapplicable.
To summarize, McCart, Arwell Div. of Orkin Exterminating Co. v. Kendrick, 131 Ill.App.2d 632 , 267 N.E.2d 352 (1971), and Sulmonetti v. Hayes, 347 Mass. 390 , 198 N.E.2d 297 (Mass.1964), stand for the proposition that a person who was not a party to a covenant not to compete may nevertheless be enjoined from activities pursuant to that covenant. In each of those cases, the court held that the nonparty could be enjoined because, in essence, the nonparty’s purported exclusive ownership was a “mere subterfuge”, McCart, 470 N.E.2d at 762 (see also Kendrick, 267 N.E.2d 352 (nonparty’s ownership was a matter of form, not substance)), and that the nonparty deliberately and wilfully acted in concert with the restricted party to violate the covenant not to compete. See also Sulmonetti.
In each of the above cases, the court examined the contributions of the party to the covenant in assessing whether the ownership of the nonparty was a mere subterfuge. However, those examinations also incorporated a comparison of the relative contributions of both the party and the nonparty. In Russell v. Mullis, 479 So.2d 727 , also cited by the majority, the court concluded that the *1160 nonparty spouse should not be enjoined, notwithstanding the fact that the spouse who was a party to the covenant participated to some extent in the business. The court concluded that the nonparty spouse was not “a front” for the other spouse. In so holding, the court noted the significant contributions of the nonparty spouse in initiating and maintaining the business.
In the instant case, D. Norlund is a licensed, practicing optometrist who desired to open her own practice. That desire was intensified when R. Norlund left Faust and thereby created a void in the market for secondary eye care. In starting ICL, D. Norlund drew upon an extensive network of personal contacts that she had developed while working for others as an optometrist. She spent considerable time during evenings and on weekends establishing ICL. She accepted a new position with reduced hours because it allowed her to spend more time establishing and developing ICL’s business.
McGarvey was also a licensed optometrist who left a successful practice in Florida in order to join with D. Norlund in establishing ICL. McGarvey negotiated his agreement entirely with D. Norlund and invested a considerable sum of his own money in ICL. D. Norlund and McGarvey are the sole officers and shareholders of ICL, which also employs another optometrist, two ophthalmologists, an administrator, and two other employees. Leases for the ICL office and equipment were obtained exclusively through D. Nor-lund’s personal credit and the personal guaranty of McGarvey. Finally, the ICL bank account is accessible only to D. Norlund and McGarvey.
On the other hand, R. Norlund possesses neither an ownership interest in nor control over ICL operations. He is neither an officer nor an employee of ICL. He has not rendered services as an optometrist for ICL nor has he received compensation from ICL.
To be sure, there is evidence supporting a conclusion that R. Norlund engaged in activities concerning ICL that were in violation of the covenant not to compete and therefore were the proper subject of injunctive relief. However, the mere fact that R. Norlund violated the covenant does not lead inevitably to the conclusion that D. Norlund and ICL are so tainted by that participation that they, too, must be enjoined. R. Norlund’s activities cannot be considered in isolation when making that determination. Rather, R. Nor-lund’s actions must be viewed in relation to the combined contributions of all parties, particularly those of D. Norlund. See, e.g., Russell, 479 So.2d 727 (1985).
After reviewing the relative contributions of the various parties, I cannot agree that D. Norlund was a “front” for R. Norlund, or that D. Norlund conspired with her husband to assist him in violating the covenant not to compete. D. Norlund’s activities in establishing ICL and developing its business, along with the combined contributions of McGarvey and the other employees of ICL, were of sufficient character in relation to the contributions of R. Norlund, that the covenant not to compete should not be construed to apply to them. I would not extend the injunction’s reach beyond the activities of R. Norlund.