Opinion ID: 2195476
Heading Depth: 1
Heading Rank: 2

Heading: Interpretation of Paragraphs 1 and 3

Text: When reviewing the work product of a Superior Court justice sitting in equity, we will not disturb his or her decision unless the appellant demonstrates that the decision was clearly wrong. Moseman Construction Co. v. State Department of Transportation, 608 A.2d 34, 37 (R.I.1992) (citing Klowan v. Howard, 83 R.I. 155, 159, 113 A.2d 872, 874 (1955)). In this case, we hold that the hearing justice was clearly wrong when he declined to interpret paragraph 3 of the settlement agreement as limiting, restricting, and, in some situations, superseding the scope of the covenants not to compete that are set forth in paragraph 1 of that agreement. The hearing justice interpreted paragraphs 1 and 3 as preventing Nikoloff from working for Bolger, a chemical supplier  regardless of whether Nikoloff's personal work for Bolger involved any of the prohibited product areas and lines described in paragraph 1. To reach this conclusion, the hearing justice relied solely on the language in paragraph 1, prohibiting Nikoloff from having any financial interest in, assisting in, consulting with, or being employed by, any chemical supplier working with, or providing products or services, in connection with, any of these prohibited areas or product lines. Given this interpretation of the agreement, the hearing justice had no reason or need to reach the factual questions of whether Nikoloff's consulting work for Bolger actually fell within any of the permitted activities described in paragraph 3, and, if not, whether his work for Bolger actually involved any of the prohibited product lines or areas described in paragraph 1. We disagree with this interpretation of the agreement because it failed to give effect to the introductory language of paragraph 3, which states: Notwithstanding the    provisions of [p]aragraph[] 1    nothing contained in this [a]greement, shall prevent Nikoloff from engaging in certain permitted activities as provided for in paragraph 3. By using the phrases [n]otwithstanding the    provisions of [p]aragraph[] 1, and nothing contained in this [a]greement, the parties evinced a clear intent that the permitted activities described in paragraph 3 would limit, if not altogether trump, the breadth of the prohibitions described in paragraph 1. See Black's Law Dictionary 1091 (7th ed. 1999) (defining notwithstanding as [d]espite or in spite of'). Hence, although paragraph 1 bars Nikoloff from working for any chemical supplier involved with any of the prohibited product lines, these prohibitions are subject to and restricted by the permitted activities and products that Nikoloff can become involved in, as described in paragraph 3. Thus, we interpret paragraphs 1 and 3 of the settlement agreement as allowing Nikoloff to work for a chemical supplier, such as Bolger, so long as his work for such a supplier involves only one or more permitted products or activities as described in paragraph 3. This construction of the settlement agreement gives effect to the [n]otwithstanding language of paragraph 3, yet it still prevents Nikoloff from personally working with any of the prohibited product lines or areas listed in paragraph 1. And it also bars him from working for any chemical supplier that is involved with any such prohibited product  unless Nikoloff's work for such a supplier falls within any of the permitted areas or activities described in paragraph 3. Under our interpretation of the noncompete clauses in the settlement agreement, Nikoloff's consulting work for Bolger may not have conflicted with the settlement agreement per se because his work may have involved one or more of paragraph 3's permitted product lines or activities, rather than the prohibited products and areas described in paragraph 1. Therefore, we hold that the hearing justice improperly issued the injunction based solely on Bolger's status as a chemical supplier involved with one or more of the prohibited product lines or services. Instead, the hearing justice should receive evidence and make factual determinations about whether Nikoloff's specific work for Bolger allowed him to drop anchor inside one or more of the safe harbors mapped out in paragraph 3. If, as Nikoloff maintains, his work for Bolger was limited to the permitted areas limned in paragraph 3, then Nikoloff did not violate the terms of the settlement agreement because the introductory language in paragraph 3 ([n]otwithstanding the    provisions of [p]aragraph[] 1) trumps everything to the contrary in paragraph 1. But if Nikoloff's work, as Cranston Print argues, involved prohibited product lines or areas, then he violated the noncompete covenants contained in paragraph 1 because nothing in paragraph 3 appears to be inconsistent with this proscription. Also, according to the settlement agreement, Nikoloff is not allowed to work for any chemical supplier, including Bolger, that is involved with any prohibited product lines or areas described in paragraph 1, unless his work for that supplier falls under one of the permitted areas of work described in paragraph 3. Consequently, we remand this case to the Superior Court to determine (1) whether Nikoloff's consulting work for Bolger involved one or more of the permitted areas described in paragraph 3, or, if not, one or more of the prohibited product lines or areas set forth in paragraph 1, and (2) the overall reasonableness of these particular competitive restrictions on Nikoloff's future business activities (see part III below). If Nikoloff's work for Bolger was limited to paragraph 3 activities, then an appropriate judgment should enter in his favor. But if his work included any paragraph 1 activities with respect to prohibited product areas or lines, then the court should pass on the reasonableness of these restrictions pursuant to the analysis set forth in Part III of this opinion and, if they pass muster, it should, at a minimum, declare him to have breached the settlement agreement and enjoin him from engaging in such activities.