Opinion ID: 2320967
Heading Depth: 1
Heading Rank: 5

Heading: Prevailing Party Provision

Text: Because the final two arguments raised by the defendant concern the enforceability and operation of the prevailing party provision of his non-competition agreement, we address them together. The defendant contends that the prevailing party provision of his non-competition agreement, which allows the party prevailing at trial to collect its attorney's fees, is contrary to public policy because it is a contract of adhesion and a chilling and unreasonable restraint on alternative employment. Moreover, the defendant contends that the trial court erred in awarding ACAS its attorney's fees under this provision. We address each argument in turn.
Section 5 of the defendant's non-competition agreement states, in relevant part, The prevailing party in any litigation arising under this Agreement shall be entitled to recover his or its attorneys' fees and expenses in addition to all other available remedies. As noted, the defendant contends that this provision is not enforceable because it is a contract of adhesion and because it is an unreasonable restraint on alternative employment. As to his argument regarding adhesion, although the defendant raised the issue in his notice of appeal, he failed to brief it. Therefore, the issue is deemed waived. In the Matter of Jasper-O'Neil & O'Neil, 149 N.H. 87, 91, 816 A.2d 989 (2003). Regarding his second argument, the defendant contends that this provision is contrary to New Hampshire public policy as a chilling and unreasonable restraint on alternative employment. According to the defendant, the disparity in bargaining power between the employer and the employee requires that an employer only be permitted to recover attorney's fees in a flagrant case. The defendant argues that this is a close case, and that the provision should not be enforced because [o]therwise, no one in such an employee's position would run the risk of losing at trial, even if he firmly and reasonably believed that his new job would not be competitive with his old one. While the defendant contends that enforcing such a provision in a close case would be unreasonable because it would impose a hardship on employees, that logic does not apply here. The defendant's non-competition agreement provides that: I [the defendant] will have the right, at any time during the non-competition period, to provide written notice to [ACAS] containing all the details of any proposed business activity on my part and [ACAS] shall respond within 15 days of such notice with its opinion as to whether such proposed business activity violates any obligation in this Section 3(a). Thus, the defendant had the right under his contract to obtain ACAS' opinion as to whether he was violating his non-competition agreement. Had he done so, and had ACAS stated that it believed his interactions with Accura would not violate the agreement, he might have been able to claim that he had a firmly and reasonably held belief that he was not competing. Because the defendant had the contractual right to ACAS' opinion and because he did not avail himself of that right, we do not agree that enforcing the prevailing party provision is unreasonable because he believed he was not competing.
The defendant contends that the trial court erred in awarding ACAS its attorney's fees because: (1) he did not violate his non-competition and nondisclosure agreements; and (2) the trial ought to have been confined to his counterclaims and ACAS should not have been seeking its fees. As to the first argument, for the reasons stated above, we agree with the trial court that the defendant violated his non-competition and non-disclosure agreements. Regarding the defendant's second contention, he argues that, because the trial court granted ACAS' request for a preliminary injunction, because after that ruling he amended his answer to state that he would not violate his non-competition and non-disclosure agreements by working for Accura, and because he stated that he would agree to an order stating that he would not work for Accura, there was no need for a trial to enforce his obligations under his agreements. In essence, he argues that the granting of the injunction and his agreement not to work for Accura rendered ACAS' claims moot. We disagree. The defendant had, by aiding Accura prior to his termination, violated his non-competition and non-disclosure agreements prior to accepting the position at Accura. Thus, regardless of his agreement not to work for Accura, ACAS was justified in pursuing its claim that he had violated his agreements. Also, even if he did not continue to work for Accura, ACAS still sought a ruling that it was justified in suspending his severance payments due to his violation of his agreements. Thus, ACAS' claims were not moot and it was justified in pursuing them. Because ACAS was justified in pursuing its claims, and because it prevailed on those claims, the trial court did not err by awarding ACAS its attorney's fees under the terms of the parties' contract. Affirmed.