Opinion
No. 74-007
Decided October 22, 1974. Rehearing denied November 19, 1974. Certiorari granted January 13, 1975.
Professional corporation brought action against physician for breach of covenant not to compete. From dismissal of that action, plaintiff appealed.
Reversed
1. CONTRACTS — Non-competition Provision — Written Instrument — Dismissal of Action — Appellate Court — Not Rewrite — Not Bound — Trial Court Determination. Since dismissal of action for breach of covenant not to compete concerned construction of a written instrument complete in its terms, the appellate court, although it may not rewrite the contract for the parties, may resolve the matter upon review, and is not bound by the trial court's determination.
2. Non-competition Provision — Employment Ended — Became Operative — Doctor — In Violation. Written employment agreement between doctor and professional corporation, considered as a whole, was intended to mean that if the term of employment expired or if the doctor's employment was discontinued for any reason and no arrangement for further employment or ownership participation in the corporation was entered by the parties, the non-competition provision of the agreement became operative; thus doctor who opened his practice after completion of the one year term of employment provided for in the agreement was in violation of that non-competition provision.
Appeal from the District Court of the City and County of Denver, Honorable Mitchel B. Johns, Judge.
Sherman Sherman, P.C., Edward H. Sherman, for plaintiff-appellant.
Berenbaum, Berenbaum Susman, Stephen T. Susman, for defendant-appellee.
Colorado Urological Associates, P.C., (Corporation) appeals from a judgment dismissing its action for damages for breach by Grossman of a covenant not to compete. We reverse.
In early 1970, Grossman was a young doctor who had just completed his training in the specialty of urology in the armed services. He had never been in Colorado before. On May 23, 1970, he executed an agreement with the Corporation which provided for a salary to him of $1,500 per month, and further specified:
"(1) Corporation does hereby employ Grossman to assist it in the practice of medicine and surgery for a period of one (1) year beginning the 6 day of July, 1970.
. . . .
"(8) Grossman for himself agrees and covenants that in the event of the termination of this agreement for any reason, if Grossman enters competitive practice, he will, within thirty (30) days of entering competitive practice, pay to the Corporation the sum of TWENTY THOUSAND DOLLARS ($20,000.00) as liquidated damages under this agreement. For the purpose of the agreement, the term "competitive practice" shall mean the practice of medicine and urological surgery, alone or with a partner, as principal or employee, within a thirty (30) mile limit of metropolitan Denver, Colorado during the twenty-four (24) months following the day on which the termination of his employment occurs."
In addition to provisions covering Grossman's duties and working conditions, the agreement also provided that:
"(9) If this employment arrangement proves satisfactory to both parties, it is the intent of both parties that at the end of this agreement Grossman shall become a Shareholder of the Corporation, gradually increasing the number of shares owned by him over a five (5) year period. At the end of the five (5) year period Grossman will own as many shares in the Corporation as any other Shareholder in the Corporation."
There is no dispute as to the facts. Prior to the end of the twelve month employment period, the parties negotiated but were not able to arrive at satisfactory arrangements for continuation of Grossman's services after the first year. He terminated his employment with the Corporation on July 6, 1971, and on July 7 he moved into his own office in Lakewood. From that time on, he has engaged in his own private practice of urology competitive with the Corporation in the Denver metropolitan area.
This lawsuit was commenced in September 1971 for the $20,000 liquidated damages specified in the contract. After trial to the court, the complaint was dismissed and judgment was entered for defendant Grossman.
No claim has been made on appeal that either the non-competition provisions or the $20,000 liquidated damages provisions of the agreement are against public policy or are unreasonable, unconscionable, or oppressive. The sole issue presented is whether the provisions of paragraph 8 apply where Grossman worked for the full one year term required under paragraph 1 and then opened his own practice in the Denver area. Grossman contends that the words "termination of this agreement for any reason" cannot be interpreted to mean "expiration of this agreement" and that the word "termination" can apply only if his employment ceased before the end of the one year term. The district court by implication adopted that interpretation.
[1,2] Since this is a matter of construction of a written instrument complete in its terms, we are not bound by the trial court's determination and may resolve the matter upon review, although we are not at liberty to rewrite the contract for the parties. Helmericks v. Hotter, 30 Colo. App. 242, 492 P.2d 85. We hold that the agreement, considered as a whole, was intended to mean that if the term of employment expired or if Grossman's employment was discontinued for any reason and no arrangement for further employment or ownership participation in the Corporation was entered into by the parties, the non-competition provision became operative. Folz v. Struxness, 168 Kan. 714, 215 P.2d 133. See Maybray v. Williams, 132 Colo. 523, 291 P.2d 677. Here, Grossman "is deliberately doing what he plainly agreed not to do, and the equities are with plaintiff." Zeff, Farrington Associates, Inc. v. Farrington, 168 Colo. 48, 449 P.2d 813; Gibson v. Angros, 30 Colo. App. 95, 491 P.2d 87.
Judgment is reversed and caused remanded with directions to set aside the dismissal and to enter judgment for the plaintiff in the principal amount of $20,000 plus interest from August 7, 1971, and costs.
JUDGE RULAND and JUDGE STERNBERG concur.