Opinion ID: 2639694
Heading Depth: 1
Heading Rank: 5

Heading: Did the district court abuse its discretion when it issued a preliminary injunction pending trial on the merits in this action?

Text: [¶ 11] The granting or refusing of an injunction pendente lite is a matter resting largely in the discretion of the court, to be exercised so as to prevent injury, considering the situation of the parties. And the Appellate Court will not interfere with or control the action of the court below in such case, unless it has been guilty of a clear abuse of discretion. Weaver v. Richardson, 21 Wyo. 343, 132 P. 1148, 1151 (1913). [¶ 12] Appellants argued that the district court abused its discretion in issuing the injunction because enforcement of the non-compete agreement was barred by the statute of frauds. The district court found that because Noecker admitted that he believed he was bound by the first non-compete when he returned to WellDog, he was estopped from invoking the statute of frauds as a defense. This idea has support in Wyoming law. In Kincheloe v. Milatzo, 678 P.2d 855, 860 (Wyo. 1984), we said that equitable doctrines could be used to prevent a party from invoking the statute of frauds to perpetuate a fraud. It is not necessary for us to decide whether such a concept could be relevant here because there was enough evidence of the existence of a written contract to allow the district court to issue an injunction pending discovery and trial. Noecker testified that he did not remember signing a new non-compete when he returned to the company in 2004. However, GST's representative testified that the company was very careful about observing its standard operating procedure of having all employees sign non-compete agreements. A written covenant not to compete dated August 16, 2004, is listed on the asset purchase agreement between WellDog and GST. Other documents that would have been signed in conjunction with the non-compete were produced at the hearing. Given the amount of evidence presented at the hearing indicating the existence of a written non-compete agreement, we cannot say that the district court abused its discretion when it ordered an injunction pending further discovery and trial. [¶ 13] Appellants finally argue that a preliminary injunction was not appropriate because the non-compete agreements are unenforceable as a matter of law. Appellants point out that the reasonableness of a covenant not to compete is a question of law to be determined by the court and reviewed de novo. Hopper, 861 P.2d at 542-43. However, that determination will necessarily depend on facts that must be developed in due course at the appropriate stage of litigation. The district court found, based on the limited review required for a preliminary injunction, that the covenants were likely to be enforced. The district court stated 6. A valid and enforceable covenant not to compete requires a showing that the covenant is: (1) in writing; (2) part of a contract of employment; (3) based on reasonable consideration; (4) reasonable in durational and geographical limitations; and (5) not against public policy. See, e.g., Tench v. Weaver, 374 P.2d 27, 29 (Wyo. 1962); Ridley v. Krout, 180 P.2d 124, 128 (Wyo. 1947); Dutch Maid Bakeries v. Schleicher, 131 P.2d 630, 634 (Wyo. 1942); Wyo. Stat. Ann. § 1-23-105 (1988). Further, the Wyoming Supreme Court has recognized the rule that a covenant not to compete entered into contemporaneously with the employment itself is enforceable and is supported by sufficient consideration. Hopper v. All Pet Animal Clinic, Inc., 861 P.2d 531, 540 (Wyo. 1993). 7. The reasonableness of a covenant not to compete is assessed upon the facts of the particular case and a review of all of the circumstances. See, e.g., Hopper, 861 P.2d at 540. In evaluating reasonableness, a court may consider the degree of inequality in bargaining power; the risk of the covenantee losing customers; the extent of respective participation by the parties in securing and retaining customers; the good faith of the covenantee; the existence of sources or general knowledge pertaining to the identity of customers; the nature and extent of the business position held by the covenantor; the covenantor's training, health, education, and needs of his family; the current conditions of employment; the necessity of the covenantor changing his calling or residence; and the correspondence of the restraint with the need for protecting the legitimate interests of the covenantee. See, e.g., Hopper, 861 P.2d at 540. The district court found that there was evidence that a covenant not to compete existed in writing, that the document was signed ancillary to a legitimate employment relationship that constituted reasonable consideration, and that GST had presented evidence that could lead the court to conclude that a restriction that was national in nature but narrowly tailored to one aspect of the industry was reasonable under the circumstances. If any part of a covenant not to compete is found unreasonable and therefore unenforceable, the court may decline to enforce the unreasonable provisions. Hopper, 861 P.2d at 545-47. None of the terms of the non-compete agreement in this case were facially unreasonable and the court did not abuse its discretion when it found, based on the evidence before it at the hearing, that Appellee was entitled to an injunction pending full development of the facts and determination on the merits. We note that these findings do not constitute a determination on the merits, but are preliminary findings in the context of the limited evidence presented at the hearing for a preliminary injunction.