No. 04-654

IN THE SUPREME COURT OF THE STATE OF MONTANA

2005 MT 102

MONTANA MOUNTAIN PRODUCTS, 

Plaintiff and Appellant, 

v.

DAWN CURL and COLUMBUS CUSTOM PRODUCTS, 

Defendants and Respondents. 

APPEAL FROM: The District Court of the Twenty-Second Judicial District, 

In and For the County of Stillwater, Cause No. DV 2002-19, 

Honorable Blair Jones, Presiding Judge 

COUNSEL OF RECORD:

For Appellant:

John Crist and Eric Edward Nord, Crist Law Firm, Billings, Montana 

For Respondents:

Thomas E. Towe, Towe, Ball, Enright, Mackey & Sommerfeld, 

P.L.L.P., Billings, Montana 

For Amicus Curiae: 

Tom Singer, TTS Civil Trial Attorneys, pllc, Billings, Montana 

 Submitted on Briefs: March 23, 2005

 Decided: April 26, 2005

Filed:

__________________________________________

Clerk
2

Justice W. William Leaphart delivered the Opinion of the Court. 

 

¶1 Montana Mountain Products (MMP) appeals from the grant of summary judgment to

Dawn Curl and Columbus Custom Products (CCP). We affirm.

¶2 We restate the issues on appeal as:

¶3 1. Whether Curl’s covenant not to compete is an unlawful restraint on trade.

¶4 2. Whether the District Court erred in granting summary judgment to Curl on MMP’s

claims of intentional interference with contractual relations and business relations.

FACTUAL AND PROCEDURAL BACKGROUND

¶5 In 2001 Dawn Curl worked for a company named Montana Cincha, Inc., located in

Absarokee, Montana. Montana Cincha’s business almost exclusively involved finishing

products for Montana Silversmiths. These products included watchbands and luggage tags.

 The work involved picking up materials from the Montana Silversmiths plant, finishing the

materials, and then delivering them back to the plant. 

¶6 In August of 2001, MMP purchased Montana Cincha, Inc. MMP continued the same

business operation, with Montana Silversmiths as its only customer. After hiring Curl, MMP

requested that Curl sign an employment contract. The contract included the following

covenant not to compete:

Curl acknowledges a duty of loyalty to MMP and agrees to refrain from

competing with MMP during the term of her employment with MMP. Curl

further agrees to refrain from competing with MMP following the termination

of her employment with MMP for a period of 3 years within a 250 mile radius

of any MMP location. Competition means providing subcontract labor for

Montana Silversmiths or any other customer of MMP and/or reproducing
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MMP’s designs or products placed in development or production during Curl’s

employment with MMP for wholesale and/or retail distribution.

Not long thereafter, in January 2002, Curl’s employment with MMP ended. By March 2002,

CCP, a brand-new company, hired Curl as its plant manager. By all accounts, CCP’s line

of work is nearly identical to that of MMP. Each finishes products for Montana Silversmiths, and each counts Montana Silversmiths as its only customer. It is undisputed that the

existence of CCP has resulted in less business for MMP. 

¶7 MMP sued Curl and CCP, claiming breach of contract, intentional interference with

contractual relations and intentional interference with business relations. Curl moved for

summary judgment, which the District Court granted. MMP now appeals.

STANDARD OF REVIEW

¶8 We review a grant of summary judgment de novo, assessing the same standard under

Rule 56, M.R.Civ.P., as the district court. Barr v. Great Falls Intern. Airport Auth., 2005

MT 36, ¶ 13, 326 Mont. 93, ¶ 13, 107 P.3d 471, ¶ 13. The district court must decide, while

viewing the offered proof in the light most favorable to the non-moving party, whether there

exists any genuine issue of material fact. Olympic Coast Inv. v. Wright, 2005 MT 4, ¶ 19,

325 Mont. 307, ¶ 19, 105 P.3d 743, ¶ 19. If none exists, the district court must then decide

whether to grant the motion as a matter of law. Olympic Coast, ¶ 19.

DISCUSSION

ISSUE ONE

¶9 Whether Curl’s covenant not to compete is an unlawful restraint on trade.
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¶10 Section 28-2-703, MCA, states, “Any contract by which anyone is restrained from

exercising a lawful profession, trade, or business of any kind, otherwise than is provided for

by 28-2-704 or 28-2-705, is to that extent void.” Sections 28-2-704 and 28-2-705, MCA,

apply to the sale of the goodwill of a business and the dissolution of a partnership,

respectively. They are not at issue here.

¶11 In addition to these two statutory exceptions to the bar on contracts in restraint of

trade, this Court has held that only restraints on trade that are unreasonable are void. MMP

argues that that exception applies here. An example of this exception arose in O’Neill v.

Ferraro (1979), 182 Mont. 214, 596 P.2d 197. There, the owner of the Bozeman Hotel

made a covenant with a restaurant tenant that the owner would not lease any other space in

the building to any similar restaurants. O’Neill, 182 Mont. at 215-16, 596 P.2d at 198. After

the hotel leased another space to another restaurant, the first restaurant sued. The owner

claimed that the covenant was void under § 28-2-703, MCA. In considering the claim we

stated that:

[A] reasonable and limited covenant restraining trade will be considered valid.

Three things are essential to such a covenant: 

“(1) it must be partial or restricted in its operation in respect either to time or

place; (2) it must be on some good consideration; and (3) it must be reasonable, that is, it should afford only a fair protection to the interests of the party

in whose favor it is made, and must not be so large in its operation as to

interfere with the interests of the public.”

O’Neill, 182 Mont. at 218-19, 596 P.2d at 199 (quoting Eldridge v. Johnston (Or. 1952),

245 P.2d 239, 250). We concluded that the covenant satisfied all three prongs of this
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reasonableness test. It was reasonable because it “is limited to the Bozeman Hotel; the

consideration is apparently good as no question to it has been raised; and the covenant is not

so large in operation as to affect the interests of the public in any way other than to limit the

type of restaurant facility in the Bozeman Hotel.” O’Neill, 182 Mont. at 219, 596 P.2d at

199. 

¶12 We discussed the reasonableness exception in the context of an employment contract

in Dobbins, DeGuire & Tucker, P.C. v. Rutherford, MacDonald & Olson (1985), 218 Mont.

392, 708 P.2d 577. In Dobbins, three employees of a public accountancy partnership signed

an employment contract where they promised that if they left the firm and entered into a new

public accounting business within twelve months, they would owe their former firm certain

damages. The damages were computed as 100 percent of what their former firm (Dobbins)

had billed clients that the employees subsequently served in their new business. Dobbins,

218 Mont. at 393, 708 P.2d at 578. 

¶13 We recognized that O’Neill concerned a lease, whereas Dobbins concerned an

employment contract, but even so “we conclude[d] that similar principles should be applied

in the present case.” Dobbins, 218 Mont. at 396, 708 P.2d at 580. We held that “the written

contract provisions do not constitute a restraint prohibited by Section 28-2-703, MCA.”

Dobbins, 218 Mont. at 397, 708 P.2d at 580. 

¶14 In the case sub judice, the District Court concluded that Dobbins does not apply

because Dobbins’ language limits its “scope to the profession of public accounting.” Having

distinguished Dobbins, and thus having concluded that it was improper to apply the
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reasonableness test, the court determined that § 28-2-703, MCA, is “clear and unambiguous”

and that its plain meaning prohibits restraints on trade such as Curl’s covenant not to

compete.

¶15 Although the court interpreted the Dobbins rationale too narrowly, it nonetheless

concluded that the covenant was void as a restraint on trade, in violation of § 28-2-703,

MCA. Even though the District Court reached the right result, we take this opportunity to

correct the impression that the Dobbins’ rationale is limited to the profession of public

accounting. First, there is no indication from the facts of Dobbins that the employees

involved were partners. In fact, we explicitly stated that the partnership dissolution

exception of § 28-2-705, MCA, was not at issue. Dobbins, 218 Mont. at 395, 708 P.2d at

579. Second, and more importantly, although we stated that the reasonableness test should

be applied in “the profession of public accounting,” our reasons for applying the test were

not simply because of the specific profession involved. Instead, we applied the test because

we were considering whether a covenant not to compete, qua a covenant not to compete, was

reasonable. We have recognized this broader reading of Dobbins before, see State Med.

Oxygen & Supply, Inc. v. Am. Med. Oxygen Co. (1989), 240 Mont. 70, 74, 782 P.2d 1272,

1275 (“In Dobbins, this Court determined that [the reasonableness] test should also be

applied to restrictive covenants that are found within employment contracts.”), and have

restated the broad applicability of the reasonableness exception. Daniel v. Thomas, Dean

& Hoskins, Inc. (1990), 246 Mont. 125, 144, 804 P.2d 359, 370 (“[U]nder certain factual

circumstances a covenant restraining a lawful profession, trade or business of any kind may
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be acceptable if it passes a three part test of reasonableness.”). Therefore, under Dobbins,

the District Court should have applied the reasonableness test and then determined whether

Curl and MMP’s covenant not to compete was reasonable. However, because we conclude

that the covenant is unreasonable, we nonetheless affirm the judgment of the District Court.

¶16 The covenant not to compete fails the third prong of the test. That prong, again, is

that the covenant “must be reasonable, that is, it should afford only a fair protection to the

interests of the party in whose favor it is made, and must not be so large in its operation as

to interfere with the interests of the public.” O’Neill, 182 Mont. at 218-19, 596 P.2d at 199

(quoting Eldridge, 245 P.2d at 250). We have had little opportunity to examine this prong

in the context of an employer-employee relationship. On the two occasions where we have

held, or at least suggested, that an employment contract’s covenant not to compete satisfied

the prong, the covenant only restricted the employee’s stockholdings or profits. See Daniel,

246 Mont. at 144-45, 804 P.2d at 371 (portability of stock tied to non-competition); Dobbins,

218 Mont. at 396, 708 P.2d at 579 (financial penalty for violating covenant’s conditions).

Here, on the other hand, Curl is outright prohibited from practicing her trade within 250

miles of her former employer.

¶17 MMP cites a number of foreign cases upholding covenants of broader distance and

length than Curl’s. However, in all of these cases either the law was more permissive than

Montana’s, see, e.g., McAlpin v. Coweta Fayette Surgical Assoc., P.C. (Ga. Ct. App. 1995),

458 S.E.2d 499, 501, or the employee had other realistic options within which to pursue her

trade. See, e.g., Riccardi v. Modern Silver Linen Supp. Co., Inc. (N.Y. App. Div. 1974), 356
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N.Y.S.2d 872, 879 (stating that the employee could practice, just not with former customers);

Trans-Am. Collections, Inc. v. Cont’l Account Servicing House, Inc. (D. Utah 1972), 342

F.Supp. 1303, 1306 (salesman was only restricted from practicing in a limited area and could

conduct sales in many other enterprises); Mills v. Murray (Mo. Ct. App. 1971), 472 S.W.2d

6, 12 (explaining that the effect of the restrictions was that employee could not solicit with

36 doctors, when there were 8,000 doctors in the state). Here, based on the information in

the offers of proof, Curl’s only option to practice her trade in the vicinity of where she

resides is to work in some way for a subcontractor of Montana Silversmiths. That, however,

is exactly what her covenant not to compete prohibits. Because the covenant prohibits Curl

from engaging in her profession, we conclude that it is unreasonable and therefore an

unlawful restraint on trade.

ISSUE TWO

¶18 Whether the District Court erred in granting summary judgment to Curl on MMP’s

claims of intentional interference with contractual relations and business relations.

¶19 MMP next claims that Curl committed the torts of interference with contractual

relations and interference with business relations. MMP premises both of these claims on

the assumption that Curl’s covenant not to compete is valid. We have, however, concluded

that it is void. Therefore, both of MMP’s tortious interference claims fail.

CONCLUSION

¶20 Whether § 28-2-703, MCA, is viewed as an absolute restriction on restraints on trade

(the District Court’s rationale) or a restriction on unreasonable restraints (the rationale of
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O’Neill and Dobbins), the covenant in the present case is void. The covenant not to compete

is invalid and MMP has no claim against Curl for intentional interference with contractual

or business relations. We affirm the judgment of the District Court.

/S/ W. WILLIAM LEAPHART

We Concur:

/S/ KARLA M. GRAY

/S/ JIM RICE

/S/ PATRICIA O. COTTER

/S/ BRIAN MORRIS