Title: Duong v. Fielden Hanson Isaacs Miyada Robison Yeh, Ltd.

State: nevada

Issuer: Nevada Supreme Court

Document:

136 Nev., Advance Opinion 87
IN THE SUPREME COURT OF THE STATE OF NEVADA

SCOTT VINH DUONG, M.D.; ANNIE No. 79460
LYNN PENACO DUONG, M.D.; AND
DUONG ANESTHESIA, PLLC,

Appellants, FILED

vs.
FIELDEN HANSON ISAACS MIYADA DEC 31 2020

ROBISON YEH, LTD., A. Brow
Respondent. .

Appeal from a district court order partially granting a motion

 

for a preliminary injunction based on a noncompetition agreement. Eighth
Judicial District Court, Clark County; Mark R. Denton, Judge.
Affirmed.

Howard & Howard Attorneys PLLC and Jonathan W. Fountain, Martin A.
Little, Ryan T. O'Malley, and William A. Gonzalez, II, Las Vegas,
for Appellants.

Dickinson Wright PLLC and Michael N. Feder and Gabriel A. Blumberg,

Las Vegas,
for Respondent.

BEFORE PARRAGUIRRE, HARDESTY and CADISH, JJ.

OPINION

By the Court, CADISH, J.:
The issue in this appeal is whether the district court may blue-

pencil an otherwise unenforceable noncompetition agreement pursuant to a

10-4YvAr]

 

 
provision therein allowing court modification to redeem unreasonably
restrictive clauses. In Golden Road Motor Inn, Inc. v. Islam, 132 Nev. 476,
488, 376 P.3d 151, 159 (2016), we held that district courts cannot, on their
‘own, blue-pencil a noncompetition agreement to remove unreasonably
restrictive, and thus unenforceable, aspects without addressing whether
they may do so when a noncompetition agreement contains an express blue-
penciling provision, like the agreement here. We hold that Golden Road
does not prohibit a district court from blue-penciling an unreasonable
noncompetition agreement if the agreement itself allows for it. We
therefore affirm the district court's order granting a preliminary injunction
based on the blue-penciled noncompetition agreement.
FACTS AND PROCEDURAL HISTORY

Appellants Scott and Annie Duong are anesthesiologists
working in Clark County, Nevada. They initially worked for Premier
Anesthesia Consultants. When Premier Anesthesia Consultants merged
with U.S. Anesthesia Partners, the Duongs worked under respondent
Fielden Hanson Isaacs Miyada Robison Yeh, Ltd. (Fielden Hanson). In
2016, shortly after the merger, Fielden Hanson required the Duongs to sign
an employment contract if they wished to continue their employment. The
agreement had a noncompetition clause that prohibited the Duongs from
working at several facilities. The agreement also contained a blue-penciling
provision providing that, if any provision is found to be unreasonable by a
court, “any such portion shall nevertheless be enforceable to the extent such
court shall deem reasonable, and, in such event, it is the parties’
intention ... and request that the court reform such portion in order to
make it enforceable.” The Duongs signed the agreement. Two years later,

 

 
the Duongs quit working for Fielden Hanson and began providing
anesthesiology services to surgeons in Clark County.

Fielden Hanson filed a complaint to enforce the agreement and
a motion for preliminary injunction, alleging that the Duongs violated the
noncompetition agreement. The Duongs opposed, arguing that the
noncompetition agreement was unreasonable and thus wholly
unenforeeable under Golden Road. ‘They further argued that NRS
613.195(5), which requires a court to revise an unreasonably restrictive
covenant to the extent necessary to enforce it, did not apply because it did
not become effective until after they entered into the noncompetition
agreement. The district court found that the noncompetition agreement
was overbroad and that NRS 613.195(5) applied. Accordingly, it blue-
penciled the noncompetition agreement and granted the preliminary
injunction to enforce the revised agreement. The Duongs appeal, arguing
that, under Golden Road, the district court could not blue-pencil a
noncompetition agreement entered into before NRS 613.195(5)s June 3,
2017, effective date.t

DISCUSSION

We review a decision to grant a preliminary injunction for an
abuse of diseretion. Labor Comm’r v. Littlefield, 123 Nev. 35, 38, 153 P.3d
26, 28 (2007). We will “only reverse the district court's decision when the

"The Duongs do not challenge the reasonableness of the blue-penciled
noncompetition agreement. Similarly, Fielden Hanson does not challenge
the district, court’s conclusion that the original noncompetition agreement
was unreasonably broad. Accordingly, the narrow question before us is
whether the district court had the authority to blue-pencil the
noncompetition agreement once it concluded the agreement was
unreasonably broad.

 

 
district court abused its discretion or based its decision on an erroneous
legal standard or on clearly erroneous findings of fact.” Excellence Cmty.
Mgmt., LLC v. Gilmore, 131 Nev. 347, 351, 351 P.3d 720, 722 (2015)
(internal quotation marks omitted).
This appeal is not moot

‘As a preliminary matter, we conclude that this appeal is not
moot even though the preliminary injunction has since expired. Generally,
we will not decide moot cases. NCAA v. Univ. of Nev., Reno, 97 Nev. 56, 58,
624 P.2d 10, 11 (1981). A case is moot if it “seeks to determine an abstract
‘question which does not rest upon existing facts or rights.” Id. A case is
not moot if our ruling would affect the parties’ legal rights. Boulet v. City
of Las Vegas, 96 Nev. 611, 613, 614 P.2d 8, 9 (1980) (explaining that this
court decides appeals only when doing so affects the legal rights of the
parties). In the underlying action, Fielden Hanson seeks damages for the
Duongs’ alleged violations of the blue-penciled noncompetition agreement.
Thus, whether the district court had the authority to blue-pencil the

 

noncompetition agreement affects the parties’ legal rights, as it determines
if Fielden Hanson has a legal basis to seek damages. Accordingly, we
address the legal issue at hand.

‘The district court had the authority to blue-pencil the unreasonable
noncompetition agreement

‘The Duongs argue that, under Golden Road, the district court
it determined the

 

could not blue-pencil the noncompetition agreement on‘

  

‘agreement was unreasonably broad. However, the Duongs’ reliance on
Golden Road is misplaced. Golden Road merely held that a district court
cannot, on its own, blue-pencil an unreasonable noncompetition agreement.
132 Nev. at 488, 376 P.3d at 159. It did not prohibit courts from blue-

 

 
penciling an unreasonable noncompetition agreement pursuant to the
parties’ agreement.

In Golden Road, we acknowledged that “[clourts are not
empowered to make private agreements.” Id. In so doing, we quoted the
Arkansas Supreme Court, which addressed the blue-pencil doctrine,
stating, “{wle are firmly convinced that parties are not entitled to make an
agreement, as these litigants have tried to do, that they will be bound by
whatever contracts the court may make for them at some time in the
future.” Id. (quoting Rector-Phillips-Morse, Inc. v. Vronman, 489 S.W.2d 1,
4 (Ark, 1973) (alteration in original)). However, the noncompetition
agreement at issue in Golden Road did not include a provision authorizing
the court to blue-pencil the agreement if deemed unreasonable. 132 Nev. at
479, 376 P.3d at 153. Accordingly, that statement is dictum. See St. James
Vill,, Inc. v. Cunningham, 125 Nev. 211, 216, 210 P.3d 190, 193 (2009)
(holding that a court's statement is dictum when “it is unnecessary to a
determination of the questions involved”) (internal quotation marks
‘omitted)). It therefore does not provide a basis for invalidating the
agreement's blue-penciling provision. See id. (‘Dictum is not controlling.”).
Because the noncompetition agreement here had a blue-penciling provision,
we conclude that the district court did not abuse its discretion by blue-
penciling the noncompetition agreement and enforcing the revised

*Further, the conclusion following that statement in Golden Road is
that courts should not be in the business of making private agreements for
parties, as that is not within the “judicial province.” 132 Nev. at 488, 376
P.3d at 159. That conclusion does not, on its face, prevent the parties from
making such an agreement themselves,

 

 
agreement. See Hannam v. Brown, 114 Nev. 350, 357, 956 P.2d 794, 799
(1998) (“(TJhis court will affirm the order of the district court if it reached
the correct result, albeit for different reasons.” (internal quotation marks
omitted)). Accordingly, we affirm the district court’s order granting the

preliminary injunction.

Ce

Cadish
We emeur:
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Parraguirre
tA oct 5.
Hardesty

After we held in Golden Road that a district court did not have the
inherent authority to blue-pencil an unreasonable noncompetition
agreement, the Legislature enacted NRS 613.195(5), which requires district
courts to blue-pencil unreasonable noncompetition agreements and enforce
the revised agreement. 2017 Nev. Stat., ch. 324, § 1, at 1861. However,
NRS 613.195 did not take effect until June 3, 2017. While the Duongs argue
the statute does not apply retroactively, we decline to address the
retroactivity issue, since our holding that blue-penciling provisions within
a noncompetition agreement are enforceable is dispositive.