1 IN TH E COURT OF APPEALS O F THE ST ATE OF NEW MEXICO

2 O pin ionN um

be r: ___ ____ ___ 3 Fi lin g D at e: Marc h 25 , 201 5 4 N O. 33, 475 5 KI DSKARE, P.C., 6 Plaintiff-Appellee, 7 v
. 8 TYLER MANN, 9 D ef

en da nt- Appe llant.
10 AP PE AL FR OM T HE D ISTRICT C OUR T OF SA N JU AN CO UN TY 11 Sa nd ra A . P ri ce , D ist ri ctJu dg e
12 Jane B. Yohalem 13 San ta Fe, NM 14 for Appellee 15 Law O ffice s of Michael E . Moze s, P .C. 16 Michael E . Moze s 17 Alb uq ue rq ue , NM 18 fo r Appe llant1 OPIN ION

2 WECH SLER , Jud ge. 3 { 1} T his c as e is an a ppe al by ade nti st, D r. T y le r Mann, w ho was fo un d bythe 4 district court to have violated the covenant not to com pete in his em

ploy m ent contract 5 with his form er e m

ploy er, KidsKare, P. C. (K i d s Kare). On a ppeal, D r. Mann raises 6 fo ur cl ai m s of

e rr or : ( 1) K ids K ar e la ck ed standi ng t o e nf

or ce the c ove na nt n ot t o 7 co m pe te ; ( 2) the c ove na nt not to com pe te w as une nf

or ce ab le as w ri tte n and w as not 8 am en ab le to the m odi fi catio n m ad e by the dis tr ic t cour t; (3 ) K ids K ar e w ai ve d it s r igh t 9 to enforce the covenant; and (4) prio r breach of t he covenant by KidsKare r endered 10 the c ove na nt une nf

or ce ab le
. W e hol d that , co ntr ar y to the ar gum en t of Dr
. Mann, the 11 co ve nant n ot t o c om

pe te w as a m en ab le to m odi fi catio n by the dis tr ic t c ourt be ca

use 12 the a gr ee m en t e xpl ic itl y pr ovi de d f

or am en dm en t of an y

une nf or ce ab le pr ovi sio n and 13 en fo rc em en t t o th e fu ll ex te nt dee m ed re as ona ble an d enf

or ce ab le by

the r ev ie w ing 14 co urt. N or

a re w e pe rs ua de d by

D r. Mann’ s othe r ar gum en ts. W e the re fo re a ff irm the 15 dis tr ic t c ourt. A lso , w e aw ar d att or ne y fe es to K ids K ar e fo r thi s a ppe al a nd r em an d 16 to th e d is tri ctco ur t fo r pr oc eed in gs co ns is te nt wit h t hi s h ol di ng . 17 BACKGRO UND 18 { 2} D r. Mann w as hir ed by K ids K ar e in M ay

200 6. A t tha t tim e, K ids K ar e w as a 19 ch ai n of

de nta l se rv ic e pr ovi de rs w ithse ve ra l of fi ce s inN ewMe xic o. A s part of the11 T he te xt o f the “ Co ve na nt N ot t o C om pe te ” fo und at

S ectio n 4.1 of

the 1 12 em plo ym en t a gr ee m en t, pr ovi de d, in pe rt ine nt p ar t: 13 A sso ci at e ag re es that f or atw el ve ( 12) m o n thpe ri od f oll ow ing the 14 da te that A sso ci at e’ s e m plo ym en t t er

m ina te s f or a ny r ea son, inc lud ing , 15 w ith out

li m itatio n, te rm ina tio n by E m plo y er w it hout c au se or 16 re sig na tio n by A sso ci at e . . . , Em

pl oyee sha ll not

pr ovi de a ny 17 professional dental services o f any of the ty pes of dentistry

Em ploy ee 18 provided while e m ploy ed by Em ploy er w ithin a ra dius o f one hundred 19 (1 00) m il es of any of E m plo y er ’ s of

fi ce s; and, f

or ape ri od o f fi ve ( 5) 20 y ears f

oll ow ing the da te that A sso ci at e’ s em pl oy m en t t er

m ina te s, 21 children and/or Medicaid patient dental s er vices shall not exceed ten 22 percent (10%) of the total p at i en t s in their future practice of dentistry 23 within one hun dred (100) m iles o f an y a rea that has KID SK ARE P. C. 24 offices and/o r within one hund red (100 ) m iles of an are a that provides 25 subs tanti al pa tie nts to K ID SK A RE P
. C. f

or de nta l se rv ic es . 2 1 em plo ym en t a gr ee m en t be tw ee n th e pa rt ie s, D r. Mann a gr ee d th at , a ft er te rm ina tio n 2 of his association with K idsKare, (1) he wa s not to provide the ty pe of dentistry

that 3 he pe rf orm ed fo r K ids K ar e w ith in o ne hun dr ed m ile s of a ny K ids K ar e of

fi ce f or one 4 y ear, a nd ( 2) his pr ac tic e co uld not c onsi st o f m or e than ten pe rc en t Med ic ai d or c hil d 5 pa tie nt s er

vic es if tha t pra ct ic e w as w ith in one hundre d m ile s of a K ids K ar e of

fi ce or 6 w ith in o ne hun dr ed

m ile s of an ar ea tha t pr ovi de d asub stanti al num be r of pa tie nts to 7 a K idsKare office. 1 8 { 3} In January

2010 , D r. Mann subm itted his n otice of resignation t o KidsKar e. 9 Four day s after

his final day

at K idsKare, on April 12, 201 0 , Dr
. M an n o pened an 10 of fi ce thr ee m ile s f

ro m the K ids K are o ffi ce w he re he ha d pr ac tic ed
. O n M ay 10,3

1 2010 , Kid sKare f

ile d an a ct ionto en fo rc e the c ove na nt n ot t o c om pe te . I n it s 2 co m pla int , it a sse rt ed that D r. Mann v iol at ed

the pr ovi sio n th at

pr ec lud ed

him f ro m 3 practicing the sam e ty

pe of dentistry within one hund red m iles of a KidsKare off ice 4 an d w ith in o ne y ear of r es ign at ion
. 5 { 4} T he dis tr ic t c ourt bif ur cate d the tr ia l. T he co urt fi rs t co nc lud ed that c lause one 6 of the c ove nant not to com

pe te w as r ea sona

ble a s to the tw el ve m onth ti m e pe ri od b ut 7 tha t the one hun dr ed

m ile r es tr ic tion f

ro m a ny K ids K ar e of

fi ce w as ove rb ro ad

a nd, 8 the re fo re , une nf

or ce ab le a s w ri tte n. A s it s r em edy , the dis tr ic t co ur t re fo rm ed the 9 distance pr ov i si ono f

c l aus e o ne b y

r e du c i ng t he r a di us t o t hi rt y m i l e s, f i nd i ng t ha t 10 the covenant was thus enforceable. 11 { 5} A ft er

atr ia l on the m er its , the dis tr ic t co urt fo und tha t D r. Mann b re ac he d th e 12 co ve nant not to com

pe te by ope ratin g an off

ic e app ro xim at el y

thr ee m ile s f

ro m the 13 KidsKare off

ice w ithin one y ear of l eavi ng his em ploy m ent and provid ing services 14 from that office sim ilar to those he provid ed at K idsKare. The district court entered 15 a tot a l j ud gm e nt i n t he a m ount of $8 8, 63 9. 40 i n f a vo r of K i ds K a r e . I taw arded 16 dam ages in the am ount of $44,449.40, a f igure ba s ed o n the am ount billed byDr
. 17 Mann for services rendered within one y ear of leaving K idsKare to patients w ho had 18 be enpa tie nts of

K ids K ar e, e xc lud ing pa tie nts w ho w er e re fe rr ed to D r. Mann b y4

1 de nti sts , w he the r em

plo y ed by K ids K ar e or not . It al so aw ar de d att or ne y fe es in the 2 am ou nt of $ 44 ,14 0, an d p os t-ju dg m en t i nt eres t at th e rat e o f 8.7 5%. 3 STANDI NG 4 { 6} D r. Mann arg ue d unpe rs ua siv el y to th e distri ct

c ourt f or sum m ar y j udgm en t 5 that KidsKar e lacked standing to enforce the covenant not to c om pete. He now ar gues 6 tha t t he d i s t r i c t c o u rt c o m m i t t e d e rr o r . W e r e v i e w a s u m m a ry j u d g m e n t r

u l i ng d e 7 no vo . Self v. United P arcel Serv., Inc. , 1998 -N MS C- 046, ¶ 6, 126 N
. M. 396 , 970 P
. 2d 8 582. 9 { 7} D r. Mann r el ie s up on 4 2 U
. S. C. § 13 96 a( a) (2 3) ( 2012 ), ase ct ionof the 10 Me dic ai d A ct

that pr ovi de s stri ct

f re ed om of ch oic e fo r Me dic ai d pa tie nts to c hoos e 11 tre at m en t from an y pa rti c i p a t i n g p ro vi de r. See P lann ed Parenthood o f Ind., Inc. v. 12 C o m m ’ r o f I n d

. St a t e D e p ’ t of H ea lth , 699 F
. 3d 9 62, 974 ( 7thCi r. 201 2) ( “ Se ct ion 13 1396 a( a) (2 3) m an da te s th at . . . . Me dic ai d pa tie nts ha ve the r igh t t o r ec ei ve c ar e fr om 14 th e q ua li fie d p ro vi de r of th ei r ch oi c e . ”). Un de r th e p ert in en t p art of t hi s s ect io n, a 15 sta te plan f

or m ed ic al a ssi stanc e m

ust : 16 [P] rovide that . .
. any indiv i d u al eligible for m edical assistance 17 (i nc lud ing dr

ugs) m ay obt ai n such a ssi stanc e fr om a ny ins tit uti on, 18 ag en cy , co m

m uni ty pharm ac y , or pe rs on, qua lif ie d to pe rf

orm the 19 service or services required (including an organization which provid es 20 such services, or arranges for th eir availabili ty , on a pre paym ent basis), 21 who un de rta ke s t o p ro vi de hi m su ch ser vi ces [.]5

1 Section 1396 a(a) (23). Dr . Mann is correct that, u n d er t his section , hea lth care 2 providers do not have the right to enforce the fre edom of choice provision intended 3 to pro te ctMed ic ai d re ci pi en ts . Se e R X Pharm ac ie s Plu s, Inc

. v . W ei l , 883 F
. S upp. 4 549, 55 4 ( D
. C o l o . 1 9 9 5 ) ( s t a t i n g t h a tS e c t i o n 1 3 9 6 a ( a ) ( 2 3 ) d o e s n o tc o n f e r a ny 5 enforcea

ble rights on Medicaid providers). Thus, w e agre e wi t h Dr. Mann that 6 Kid sKa re i s u na bl e to su e u nd er Se ct io n 1 39 6a (a)( 23 ). 7 { 8} Howev er, K id sKa re has no t at te m pt edto en fo rce S ect io n 1 39 6a (a)( 23 ), an d we 8 do n ot see w hy it w oul d att em pt to do so unde r the f

ac ts o f thi s c as e. P er

ha ps a party 9 in D r. Mann’ s po si ti on m igh t se ek to pr ev en t the e nf

or ce m en t of

ac ove na nt n ot t o 10 com pete, claim ing that such a cov enant violated Section 1396 a(a) (23). But, as noted 11 by both K ids K ar e an d D r. Mann, the onl y int en ded be ne ficiari es of the f re ed om of 12 ch oic e co nf

er re d by Se ct ion139 6a (a )( 23) a re Me dic ai d r ec ipi en ts. T hus, D r. Mann, 13 lik e K ids K ar e, la ck s st an din g to e nf or ce S ec tio n 13 96a (a )( 23) a s ne ith er party is a 14 m edicaid recipient. Sim ply stated, S ection 1396 a(a) (23) is not applicable to this case. 15 ENF ORC EAB ILITY O F C OVE NA NT NOT TO C OMP ETE 16 { 9} Dr . Mann also con tends that th e district court com m itted error when it m odified 17 the c ove nant n ot t o c ompe te a nd f ound it thu s e nf or ce ab le
. W e re vie wthe f ind ing s 18 of f ac t of the dis tr ic t c ourt un de r a de fe re nti al , sub stanti al e vid en ce standar d and6

1 rev ie w t h e ap pl ic at io n o f th e la w to th e fac ts de no vo . P onde r v . Sta te F arm M ut. 2 A uto
. I ns. Co

. , 20 00 -NMSC -0 33 , ¶ 7, 1 29 N.M. 69 8, 1 2 P .3d 96 0. 3 { 10} Co ve na nts not

to co m pe te that r es tr ic t e m

plo ym en t pr es en t c om

pe tin g 4 pr inc ipl es : the fr ee dom to con tr ac t and the f re ed om to w ork. F urthe rm or e, the pub lic 5 ha s an in te re st n ot o nly “ in p ro te ct ing the f

re ed om of pe rsons to co ntr ac t and i n 6 en fo rc ing c ontra ct

ua l r igh ts and o bli ga tio ns[ , ] ” but al so i n “ se ei ng tha t c om pe tit ion 7 is not unreasonably

lim ited or restricted[ .] ” Lo ve lac e Cl ini c v. M urph y , 1966-NMS C8 165, ¶ 23, 76 N
. M. 645 , 417 P. 2d 450. O ur S upr em e Co urt ha s he ld tha t a c ove nant 9 no t to co m

pe te is “ en fo rcea bl e, if

th e res tri ct io ns th us im

po se d . . . are re as on ab le .” 10 Id

. ¶ 18. “ Whether t here is a reasonable restraint depends on the fac ts of a particular 11 case[. ] ” Bowe n v. Carlsba d Ins. & Re al Estate, I nc. , 198 6-NMS C-060, ¶ 4, 104 N. M. 12 514, 724 P
. 2d 2 23. Co ve na nts not to co m pe te with r ea sona

ble r es tr ai nts w ill be 1 3 en f o r c e dw h e n“ t h e y

a r e n o ta g a i n s tp ub l i c p o l i c y , a n da n y d e t r i m e n tt o t h e p ubli c 14 int er es t i n th e poss ibl e los s of the se rv ic es of

the c ove na nto r is m or e than of fs et by 15 th e p ub li c be ne fit ari si ng ou t o f th e p res erv at io n o f th e fre ed om of c on tra ct .” 16 Lovelace , 19 66 -NMSC -1 65 , ¶ 23 (in te rn al qu ot at io n m ark s an d c it at io n o m it te d)
. 17 { 11} Dr . Mann argues that the co v en an t wa s not am enable to m odification un der 18 N ewMe xic o law . A cc or din g to D r. Mann, N ewMe xic o c as e lawdoe s no t pr ovi de 19 fo r re fo rm at ionof

te rm s of ac ove nant n ot t o c om

pe te be y ond, w he n po ssi ble , str iki ng14 I n f

ull , S ec tio n 5. 2 of

the e m plo ym en t a gr ee m en t r ea ds: 2 15 E m

plo y er an d A sso ci at e furthe r ag re e tha t i f an y pr ovi sio n of

thi s 16 ag re em en t i s he ld i n a fi na l j udgm en t or de te rm ina tio n of a ny c ourt t o be 17 ove rb ro ad

or oth er w ise unenfo rceable in an y r es pe ct , suc h pr ovi sio n 18 sha ll be - [s ic ] de em ed to be a m en de d, a nd s ha ll be bi ndi ng u pon 19 E m

plo y ee to the m ax im

um e xte nt d ee m ed

r ea sona ble a nd e nf

or ce ab le 20 by

suc h c ourt. 7 1 anind ep en de nt c lause f ound to be unr ea sona

ble
. H e al so ar gue s that , not onl y c oul d 2 the dis tr ic t co urt not al te r the ove rl y -b ro ad dis tanc e pr ovi sio n in the fi rs t cl au se of the 3 co ve nant, but , furthe r, tha t be ca use the se co nd cl au se of the c ove na nt w as a lso ove rl y 4 br oa d and, the re fo re , unr ea sona ble , the e nti re c ov en an t no t t o c om pe te sho uld

be 5 “ voi de d. ” Be ca

use w e co nc lud e tha t ana lte rn at ive ba sis to al te r the c ove na nt n ot t o 6 co m pe te a llo w s f

or dis posi tio n of

thi s c as e, w e do n ot r ea chD ef en da nt’ s arg um en t 7 reg ard in g New M ex ic o c as e la w. 8 { 12} As noted by

the district court, the em

ploy m ent agreem ent betwee n the parties 9 spe ci fi ca lly

pr ovi de d f

or th e am endm en t of

a ny pr ovi sio n f

ound by ac ourt t o be 10 “ ove rb ro ad or oth er

w ise une nf

or ce ab le [. ] ” It furthe r pr ovi de d for the e nf or ce ab ili ty 11 of the a gr ee m en t ag ai nst D r. Mann “ to the m ax im um e xte nt d ee m ed

r ea sona ble a nd 12 enforcea

ble by such c ourt.” The em ploy m ent agreem ent additio nally provided th at 2 13 al l pr ovi sio ns n ot f

ound to be “ inv al id, il le ga l or

une nf or ce ab le , in w hol e or

in part ”16 I n f

ull , S ec tio n 5. 3 r ea ds: 3 17 Se ve ra

bil ity
. I n th e ev en t tha t an y pr ovi sio n of

thi s A gr ee m en t i s 18 he ld i nva lid , il le ga l or une nf or ce ab le , in w hol e or

in pa rt , the r em ai nin g 19 pr ov is ion s of

thi s A gr ee m en t sh al l no t be e ff ec te d [ sic ] a nd s ha ll 20 continu e to be valid and enforceable. (E m phasis o m itted). 8 1 w er e to r em ai n in ta ct

a nd e nf or ce ab le
. T he se te rm s m ak e cl ear tha t, a s part of the ir 3 2 barg ai n, D r. Mann an d K ids K ar e ag re ed tha t the co ve na nt n ot t o c om pe te w oul d no t 3 fa il if pr ovi sio ns w ith in i t w er e fo und to be unr ea sona ble
. I nst ea d, the y

spe ci fi ca lly 4 ag re ed to the ty pe of refo rm at ionpe rf

orm ed by the dis tr ic t c ourt. Re fo rm at ionof 5 unr ea sona

ble c lause s w as a n as pe ct of the barg ai n of

the part ie s and c onsi ste nt w ith 6 th ei r m ut ua l i nt en t as ex pr es se d b y th e em pl oym en t ag reem en t. See Lovelace , 196 6- 7 N MS C- 165, ¶ 20 ( “ T he pur pose of the a gr ee m en t w as to cr eate le ga lly -e nf or ce ab le 8 rights and d uties between the parties. ”) 9 { 13} W e not e tha t Dr
. Mann is a highly tr ai ne d m ed ic al pr of

es sio na l. L ike the doc tor 10 in Lovelace , Dr . Mann accepted the benefits of the association with his em ploy er 11 kn owi ng th e co rres po nd in g b ur de ns if an d whe n hi s emplo ym en t t erm in at ed
. Se e id. 12 ¶ 24 (“ H e kne w tha t if an d w he n he te rm ina te d hi s a sso ci at ionthe re w oul d li ke ly be 13 a bur de n up on h im

. . . . H e ch ose to ac ce pt the bur de ns as w el l a s th e be ne fi ts o f his 14 co ntr ac t. ”)
. N oth ing in the re co rd sugg es ts tha t D r. Mann did not en te r in to the 15 em plo ym en t a gr ee m en t w ithK ids K ar e fr ee ly a nd w ithf

ull kno w le dge of

the pos t-9

1 em ploy m ent restrictions. W e d o not perceive any lack o f bargainin g power on the part 2 of D r. Mann, nor

ha s he a rg ue d th at

la ck of barg ai nin g po w er

or sop his tic at ionsho uld 3 affe ct the result in this case. I n fact, Dr . Mann has not argued any ground s on which 4 Se ct ion5. 2 of

the e m plo ym en t a gr ee m en t, w hic h expl ic itl y pr ovi de s f or r ef orm at ion 5 of the a gr ee m en t, sho uld

not be e nf or ce d. 6 { 14} T hus, the c ove nant n ot t o c om pe te w as a m en ab le to re fo rm at ionund er the 7 te rm s of

the e m plo ym en t a gr ee m en t. W e the re fo re tur n to the re as ona

ble ne ss o f the 8 te rm s of

the c ove nant as appl ie d by the dis tr ic t c ourt, r es tr ic tio ns o f one y ear an d 9 thirty m iles. A s to the reasonableness of the one-y ear restr i ct i on, evidence w as 10 presented that adult patients of KidsKare visit once per y ear, and Dr . Mann conceded 11 that a restric tion of o ne or t wo y ears is frequently found to be reasonable. T he district 12 co ur t co ul d th us co nc lu de th at th e on e-year res tri ct io n was reas on ab le
. See P onder , 13 2000 -N MS C- 033, ¶

7 ( “ Su bst an tial e vid en ce is suc h r el ev an t e vid en ce that a 14 re as ona

ble m ind w oul d f ind a de qua te to supp ort a

c onc lus ion
. ” (i nte rn al quo ta tio n 15 m ar ks and c itatio n om itt ed ))
. T he one -y ear re str ic tio n is f urthe r supp orte d in 16 ap pl ic ab le cas e la w. See Lovelace , 196 6- N MS C- 165, ¶¶ 24, 26, 29 ( hol din g th at a 17 thr ee -y ear re str ic tio n onadoc tor w as r easo nable a nd e nf

or ce ab le ). T he thi rty -m ile 18 re str ic tio n w as al so supp orte d by the subs tanti al e vid en ce that a ppr oxi m at el y

90% of10

1 the pa tie nts of

the F ar m ingto n of

fic e of K ids K ar e cam e fr om

w ith in a thi rty -m ile 2 ra diu s. 3 { 15} Dr . Mann do es not argue that the one-y ear tim e or thirty -m ile restrictions are 4 unreasonable or unsu pported. Instead, Dr . Man n ar gues that the dis trict court er red 5 in c onc lud ing that: (1 ) the c ove na nt not to c om pe te w as r el at ed

to a le git im at e 6 busi ne ss inte re st, an d (2) en fo rc em en t of the c ove na nt n ot t o c om

pe te did not vio la te 7 the pub lic int er es t. 8 { 16} N ei the r ar gum en t i s pe rs ua siv e. I n Lovelace , a m edical professional left 9 em plo ym en t w ith a cl ini c an d, as a re sul t, vio la te d a co ve na nt n ot t o c om pe te . 196 6- 10 N MS C- 165. O ur

S upr em e Co urt no te d th at a n e m plo y er ha s ale git im at e busi ne ss 11 in te res t in pr ot ect in g th e go od wil l of i ts pa ti en ts . Id

. ¶ 22. L ike the c lin ic in Lovelace , 12 KidsKare had a legitim ate interest in protecting its bu siness from com petition by

Dr
. 13 Mann, w ho bec am e know n to K ids K ar e pa tie nts thr oughhis e m plo ym en t. D r. Mann 14 fo cu se s his ar gum en t on the harm to the publ ic fr om en fo rc em en t of the c ove na nt n ot 15 t o com

pete, arguing that enforcem ent would deprive und erser ved Medicaid dental 16 pa tie nts of

a n a va ila

ble pr ac tit ion er. Howev er , e vid en ce w as pr es en te d th at a 17 Me di ca id p at ie nt c oul d ge t an a ppoi ntm en t a t K ids K ar e in F ar m ing tonw ith in o ne 18 busi ne ss day of m ak ing ar eque st. T he dis tr ic t c ourt’ s f ind ing that M ed ic ai d pa tie nts 19 who seek dental care are not und erser ved due to an ins ufficient num ber of providers11

1 is th eref

or e su pp or te d by su bs ta nt ia l evi de nc e i n t h e reco rd
. See P onder , 200 0- 2 N MS C- 033, ¶

7 ( “ Su bst an tia l e vid en ce is suc h r el ev an t e vid en ce th at ar ea sona

ble 3 m ind w oul d f ind ad equa te to supp ort a c onc lus ion
. ” (i nte rn al quo ta tio n m ar ks and 4 ci ta tio n om itt ed ))
. Be ca use e nf or ce m en t of

the c ov en an t no t t o c om pe te w oul d no t 5 cause the harm to the publ ic asserted by Dr
. Mann, we agree with the d i s t ri ct co u rt 6 that the reform ed covenant does not violate pub lic policy . A s reform ed by the district 7 court, the c ovenant no t to com pete wa s reasonable and enforce able. 8 WAIV ER BY ESTOP PE L 9 { 17} D r. Mann arg ue s that the dis tr ic t cour t er re d in c onc lud ing that K ids K ar e did 10 not w ai ve it s rig ht to enf

or ce the co ve na nt not to com pe te . H e co nte nds tha t r ef er ra ls 11 to h im

f ro m K ids K ar e de nti sts a fte r he le ft e m plo ym en t c onst itu te d w ai ve r by 12 es top pe l onthe part

of K ids K ar e. K ids Kare conte nds tha t w ai ve r by e sto ppe l i s 1 3 in ap p l i c ab l e b e c au s e i tf i l e ds u i ta g a i n s tD r . M a n n t o e n f o r c e t h e c o v e n a n tn o tto 14 com pete approxim ately

thirty day s after

Dr . Mann op ened his com peting o ffice
. 15 { 18} “ [W ] ai ve r by

e sto ppe l i s pr es en t w he re aparty ’ s a ct ion s r ea sona bl y lea d th e 16 oth er party to be lie ve w ai ve r has oc curr ed a nd tha t othe r pa rty

is pr ej udi ce d by

the 17 belief. ” A the rto n v . G opi n , 2012-NMC A- 023, ¶ 13, 272 P. 3d 700. The district court 18 fo und tha t D r. Mann cou ld not hav e re as ona bly be lie ve d that K ids K ar e int en de d to 19 w ai ve its ri ght to en fo rc e the ag re em en t. Su bst an tia l ev ide nc e in the r ec or d su ppor ts12

1 this find ing. A num

ber of the f

ourteen docum ented refe rrals on w hich Dr. Mann relies 2 cam e fr om

ade nti st at the K ids K ar e of fi ce dur ing a tim e pe ri od w he n the onl y de nti st 3 who could m ake those refe rrals w as Dr . Conno lly , a good friend and housem ate of D r. 4 Mann. A lso, KidsK are filed suit a gainst Dr. Mann approxim ately thirty day s after

Dr
. 5 Mann left his posi tion at KidsKar e. That c om plaint s p ecifica lly

asserted that D r. 6 Mann v iol at ed

the f ir st c lause of the co ve na nt not to co m pe te an d soug ht i nj unc tiv e 7 relief, dam ages, and attorney fee s and c osts pursuant to th at violation . B oth th e source 8 of a t l ea st s om e of

th e refe rral s re lie d up on b y D r. Mann and the law sui t f ile d by 9 K ids K ar e supp ort the f ind in g by t he dis tr ic t c ourt tha t D r. Mann c oul d no t have 10 re as ona

bly be lie ve d that K ids K ar e int en de d to w ai ve it s r igh ts unde r the c ove na nt n ot 11 to c om

pe te . Be ca

use w ai ve r by es top pe l re qui re d suc h a be lie f, D r. Mann’ s arg um en t 12 fa ils
. 13 BREACH O F CONTRACT 14 { 19} D r. Man n ar gue s th at the f ai lur e by K ids K ar e to p ro vid e ad equa te sta ff a nd 15 supp lies, and the re ferr al of patients by KidsKare to Dr . Mann, constitut ed m aterial 16 br ea ch es of

the c ontra ct

ua l e m plo y m en t agre em en t tha t e xc use d D r. Mann f ro m 17 further per form ance, includin g adherence to the covenant not to com pete. 18 { 20} A m aterial bre ach of a contract excuses the non-breaching party from further 1 9 p e r f o rman c e un de r th e co ntract . F am i gl i e t ta v . I v i e - M i l l e r Enters., Inc. , 19 98 -NMCA-13

1 155, ¶ 14, 126 N. M. 69, 966 P.2d 777. This Court has described a m aterial bre ach as 2 the “ fa ilure to do s om ethin g th at is so f undam en ta l t o th e co ntr ac t tha t the f ai lur e to 3 perform

that oblig ation defeats an essential purpose of the contract.” Id

. ¶ 17 (internal 4 quot at ionm ar

ks and c itatio n om itt ed ). “ [T ] he m at er ia lity of abr ea chis a spe ci fi c 5 questio n of fact. ” Id

. ¶ 16
. 6 { 21} The e m

ploy m ent agreem ent betwee n KidsKar e and Dr . Mann required 7 KidsKare to furnish Dr . Mann with ad eq u at e equ ipm ent, supplies, and staff, as 8 determ ined to be necessary and appropriate b y KidsKare. The district court f ound that 9 K ids K ar e an d D r. Mann s om et im es dis ag re ed a s to the appr opr ia te le ve ls o f 10 equip m en t, sta ff

, a nd s uppl ie s, but

that the e m

plo ym en t a gr eem en t lef t those 11 determ ination s to KidsKar e. The district court also found th at the substant ial salary 12 and productio n bonu ses KidsKare paid to Dr . Mann was evidence that K idsKare had 13 fulfilled its obl igation to m aterially suppo rt D r. Mann’ s practice. 14 { 22} Evidence in the record supp orts the district court’s f indin gs. D r. Mann rece ived 15 a pr oduc tio n bonu s fo r 2009 of $110 , 000, equa l to 55% of his ba se sa lary . H is 16 pr oj ec te d bo nus fo r 2010 , the y ear he le ft K ids K ar e, w as sim ilarl y larg e. T es tim ony 17 wa s p resented th at K idsKare spent m ore on supp lies for D r. Mann than any other 18 de nti st. A K ids K ar e de nti st t es tif ie d th at he r pr ac tic e was no t l im ite d by la ck of14

1 equipm ent or suppl ies. T est i m ony wa s also presented that the KidsKar e office wa s 2 ad equa te ly

sta ff ed
. 3 { 23} W ith regard to Dr . Mann’ s argum ent that refe rrals f rom KidsKare c onsti tuted 4 a m at er ia l bre ac h of

the e m plo ym en t a gr ee m en t, D r. Mann d oe s no t c ite a ny pr ovi sio n 5 in the contract that forbids r efer rals to him
. This argum ent is m ore properly presented 6 as an arg um en t i n s up po rt o f wai ve r by Kids Kare, as Dr. Man n d id , and whi ch we 7 ad dr es se d abo ve . 8 { 24} T he e vid en ce sup ports the dis tr ic t c ourt’ s c onc lus ionthat K ids K ar e did not 9 m aterially

breac h t h e em

ploy m ent agreem ent and that Dr. Mann wa s not excused 10 fr om the obl iga tio ns o f the c ove na nt n ot t o c om pe te on tha t ba sis
. 11 ATTO RNEY FEES FOR APPEAL 12 { 25} K ids K ar e re que sts attor ne y fe es fo r thi s ap pe al , not ing tha t the em plo ym en t 13 ag re em en t be tw ee n the part ie s pr ovi de s fo r re as ona ble a tto rn ey

f ee s and c ost s f

or a ny 14 action to e nforce its r ights . W e agre e that this provi sion enti tles KidsKare to attorney 15 fees forth is ap pe al
. Se e F am igl ie tta , 1998-NMC A- 155, ¶ 27 (aw arding attorney fee s 16 for an appeal wher e a contract called for attorney fees upon default by either party ).15

1 CON CLU SION 2 { 26} W e af

fi rm the j udgm en t of

the dis tr ic t c ourt. W e aw ard a tto rn ey f ee s f or thi s 3 ap pe al a nd re m an d to the dis tr ic t cour t for pr oc ee din gs c onsi ste nt w iththi s ho ldi ng, 4 in cl ud in g a de te rm in at io n o f ap pr op ria te att orne y fees
. 5 { 27} IT IS S O ORDERE D.
6

____ ____ ____ ____ ______ __ ____ ____ 7 JA M ES J. WE C HS LE R , Ju dg e
8 WE CO NCUR:
9

____ ____ ____ ____ ____ ____ ____ ____ 10 M IC HA EL E. V IG IL , C hi ef Ju dg e
11

____ ____ ____ ____ ____ ____ ____ ____ 12 R OD ERIC K T . KE N N ED Y , Ju dg e