Court Opinion

ID: 9620194
Source: CourtListenerOpinion
Date Created: 2023-08-22 05:39:38.968717+00
Date Added: 2024-06-11T18:04:48.229577
License: Public Domain

STEWART, Justice
(dissenting):
I dissent. First, Kasco’s appeal was untimely, and this Court is without jurisdiction. Second, this appeal is moot because the eighteen-month injunction period has long ago expired, even from the time of Benson’s termination of employment and under the most liberal policy for extending that period. Third, assuming that the merits of the appeal are properly before the Court, I submit that the majority errs in ruling that the trial court made adequate findings under Robbins v. Finlay, 645 P.2d 623 (Utah 1982), in support of the injunction. In any event, the requirements of Finlay were not met. In my view, the majority opinion eviscerates Finlay and, in effect, allows noncompetition agreements to be enforced in virtually any case involving salespersons competing against former employers.
I
We granted Kasco’s petition for an interlocutory appeal pursuant to Rule 5 of the Utah Rules of Appellate Procedure. Under that rule, a petition for an interlocutory appeal must be filed within twenty days from the entry of the order appealed from. Kasco filed its petition for interlocutory appeal from the trial court’s denial on May 9, 1990, of Kasco’s motion to modify a preliminary injunction. The preliminary injunction had been entered previously on April 10, 1989. The petition for interlocutory appeal was filed May 29, 1990, within twenty days of the denial of the motion to modify, but over one year after the entry of the injunction. The timeliness of the petition for interlocutory appeal turns on whether the petition should have been filed within twenty days of the entry of the injunction or within twenty days of the denial of the motion to modify.
One of Kasco’s contentions on the merits of this appeal is that the trial court erred in ruling that the eighteen-month injunction enforcing the noncompetition covenant should have run from March 1, 1989, when Larry Benson was terminated, not from August 1988 when, arguably, there was an anticipatory breach of the covenant by Benson. That, however, was one of the issues the trial court adjudicated on April 10, 1989, when the injunction was first entered. Kasco failed to file a petition for interlocutory appeal within twenty days of that order. Instead, it waited for nearly a year to file its motion to modify the preliminary injunction in which it reargued the exact issue, together with other issues unrelated to this basic issue. When Kasco lost, it petitioned for interlocutory review of the denial of the motion to modify. But re-raising the issue of when the injunction should begin to run was not really a modification issue all, as the majority blithely assumes. That issue had been ruled on when the injunction was issued.
Kasco’s strategy should not be allowed to succeed. Motions to reconsider cannot extend the time for filing an appeal, Peay v. Peay, 607 P.2d 841, 843 (Utah 1980), unless they can be deemed motions for a new trial, Watkiss & Campbell v. FOA & Son, 808 P.2d 1061, 1064-65 (Utah 1991). In considering the motion to modify, the trial court did not treat it as a motion for a new trial.
Even if Kasco’s motion could be deemed a motion for new trial, it was not filed within ten days of the trial court’s order as required by Utah Rule of Civil Procedure 59(e). Nor was it the equivalent of any other motion that might extend the time for filing a notice of appeal. See Utah R.App.P. 4(b); Watkiss & Campbell, 808 P.2d at 1065 & n. 11.
Kasco asserts that its petition was timely filed because a trial court has the prerogative, either on its own motion or on application of a party, to correct an order at any *94time if entered by “mistake, inadvertence, surprise, or excusable neglect, as provided by Rule 60(b), U.R.C.P,” and cites as support Rees v. Albertson’s, Inc., 587 P.2d 130 (Utah 1978). However, Kasco has never contended that it filed a motion under Rule 60(b) of the Utah Rules of Civil Procedure, and, in any event, the motion to modify was not filed within three months of entry of the order, as required by Rule 60(b)(7).
Kasco also argues that because this Court granted the petition for an interlocutory appeal, the jurisdictional issue must be deemed to have been decided. That is not the case. Petitions for interlocutory appeal are disposed of on the papers in a summary fashion. The jurisdictional question, although referred to in those papers, has not heretofore been squarely presented. It is now properly before the Court.
The majority simply concludes that because a preliminary injunction “by its very nature” is subject to modification, Kasco’s appeal from denial of its motion to modify is timely. Supra at 88. The unfortunate result of the majority’s position is that a party may now use a motion to modify an injunction as a means to extend indefinitely the time to file an out-of-time petition for interlocutory appeal of the grant of a motion for a preliminary injunction and thereby subvert the time limitation in Rule 5 of the Utah Rules of Appellate Procedure.1
II
On the merits, the majority holds that Kasco is entitled to an injunction against Larry D. Benson, his wife Connie A. Benson, and their son Robert Benson and that under Larry Benson’s employment contract, the eighteen-month noncompetition injunction should run from the date Benson terminated his employment, rather than from the date that Kasco was put on notice of Benson’s intent not to comply with the covenant not to compete.
To obtain injunctive relief under Utah Rule of Civil Procedure 65A(e), the movant must by argument and evidence convince the trial court that the requirements have been met. System Concepts, Inc. v. Dixon, 669 P.2d 421, 425 (Utah 1983). When the instant case was adjudicated, Rule 65A(e) provided that an injunction may be granted on the following bases:
(1) when it appears by the pleading on file that a party is entitled to the relief demanded, and such relief, or any part thereof, consists in restraining the commission or continuance of some act complained of, either for a limited period or perpetually;
(2) when it appears from the pleadings or by affidavit that the commission or continuance of some act during the litigation would produce great or irreparable injury to the party seeking injunctive relief;
(3) when it appears during the litigation that either party is doing or threatens, or is about to do, or is procuring or suffering to be done, some act in violation of the rights of another party respecting the subject matter of the action, and tending to render the judgment ineffectual;
(4) in all other cases where an injunction would be proper in equity.
Thus, Kasco had to show that it was entitled to the relief it demanded.
Speaking to the validity of the trial court’s determination that an injunction was warranted, the majority holds that all the requirements for issuing the injunction were met. That simply is not the case. The majority ignores a fundamental and blatantly obvious defect in the trial court’s findings. The majority asserts that “the [trial] court determined that Kasco had also met the requirements of Robbins v. Finlay, 645 P.2d 623, 627-28 (Utah 1982)....” Supra at 87-88. The majority is flatly wrong.
In a general discussion of relevant legal principles, the trial court did refer to Fin-lay. In making its findings in support of *95the injunction, however, the trial court made no findings whatsoever pertaining to the standards established in Finlay. The trial court simply found that the covenant not to compete was enforceable as a matter of black-letter contract law, that the covenant was necessary to protect the goodwill of the business, and that the restrictions of the covenant were reasonable as to time and area:
They being number one, that the covenant must be supported by consideration. That requirement is met.
Number two, that no bad faith be shown in the negotiations of the contract. I believe, likewise, even though some did not wish to sign the contract under the circumstances of its presentation, that requirement also was met.
Number three, the covenant be necessary to protect the goodwill of the business and, number four, that it be reasonable in its restrictions in terms of time and area. I believe each of those requirements is met in this contract and thus the preliminary injunction will be granted.
The injunction was patently unlawful on the face of this record because the trial court failed to make the essential finding under Finlay that Benson was not engaged in a common calling and that Kasco had a legally protectible interest. Before I discuss Finlay, however, a second point must be made.
The majority opinion states, “We have previously held that ‘ “a covenant not to compete is necessary for the protection of the goodwill of the business when it is shown that although the employee learns no trade secrets, he may likely draw away customers from his former employer, if he were permitted to compete nearby.” ’ ” Supra at 87 (quoting System Concepts, Inc. v. Dixon, 669 P.2d 421, 426 (Utah 1983) (quoting Allen v. Rose Park Pharmacy, 120 Utah 608, 617, 237 P.2d 823, 827-28 (1951))). The majority’s quotation from Rose Park is overly selective and ignores the subsequent modification of the 1951 Rose Park holding. Indeed, in the very next paragraph in System Concepts, this Court stated:
Under the Rose Park reasoning, this goodwill alone would be considered a pro-tectible interest which SCI could justifiably secure through a restrictive covenant. More recently, however, this Court has held that to justify enforcement of a restrictive employment covenant by injunctive relief the employer must show not only goodwill, but that the services rendered by the employee were special, unique or extraordinary.
669 P.2d at 426 (citing Robbins v. Finlay, 645 P.2d 623, 627-28 (Utah 1982)). In truth, the covenant in the instant case does nothing more than baldly restrain competition, which it may not do. See Columbia Ribbon & Carbon Mfg. Co. v. A-l-A Corp., 42 N.Y.2d 496, 398 N.Y.S.2d 1004, 1006, 369 N.E.2d 4, 6 (1977). The point the majority misses is that any competition with a former employer will always have an effect upon that employer’s goodwill, if goodwill is defined in terms of gross sales. On that view, all covenants not to compete seek to protect an employer’s goodwill, no matter how common the calling in which the employee is engaged. Under the majority’s rule, therefore, virtually every covenant not to compete is enforceable, irrespective of how oppressive the restriction is on the employee’s freedom to contract and work.
Robbins v. Finlay, 645 P.2d 623 (Utah 1982), constituted a major modification of the rule laid down in Rose Park.2 Finlay recognized that employees who engage in common callings have property interests in their labor and the right to pursue a chosen occupation for the benefit of themselves and their dependents/ Such employees necessarily learn some aspects of their employer’s business which would enable them to compete in selling products or services of the type sold by the employer. An employee’s acquisition of general knowledge or expertise and its use on behalf of a competitor after the employee leaves the first *96employer, however, does not represent unfair, unethical, or improper conduct. Indeed, the acquisition of knowledge and ability is the natural and inevitable by-product of pursuing one’s chosen occupation. It may be that an employee first learns an occupation by performing the duties of his employment. But even that does not vest the employer with any interest in the employee’s knowledge, labor, or expertise. This has long been the protection the common law has accorded individuals engaged in common callings. It would be highly exploitive of persons engaged in common callings, such as salespersons, to allow an employer to restrain them from earning a livelihood simply because; in some degree or another, the goodwill of the employer tends to rub off onto employees or because some degree of employer goodwill was created by the employees in the course of discharging their duties. The law does not allow that. Finlay, 645 P.2d at 627.
Thus, Finlay stands for the proposition that employers may not use covenants not to compete to prevent competition from former employees who engaged in common callings, such as selling, even if the employee can compete more effectively because of their employment. See also Reed, Roberts Assocs., Inc. v. Strauman, 40 N.Y.2d 303, 386 N.Y.S.2d 677, 353 N.E.2d 590 (1976); Amex Distributing Co. v. Mascari, 150 Ariz. 510, 724 P.2d 596 (Ct.App.1986).
The right to earn a living by engaging in a common calling is a fundamental right which the law must jealously protect. In Finlay, on facts somewhat similar to the instant case, we stated:
The record shows that Finlay’s job required little training and is not unlike the job of many other types of salesmen. The company’s investment in training him was small. In fact, he had previously worked as a Beltone salesman for other dealers in Canada. Furthermore, there is no showing that his services were special, unique, or extraordinary, even if their value to his employer was
high. Thus, this case is similar to Columbia Ribbon & Carbon Mfg. Co. v. A-1-A Cory., 42 N.Y.2d 496, 398 N.Y.S.2d 1004, 369 N.E.2d 4 (1977) where the court stated:
It is clear that [the covenant’s] broad-sweeping language is unrestrained by any limitations keyed to uniqueness [of the employee’s services], trade secrets, confidentiality or even competitive unfairness. It does no more than baldly restrain competition. This it may not do. [Id., 398 N.Y.S.2d at 1006, 369 N.E.2d at 6.]
It is of no moment that defendant may have been especially proficient in his work. General knowledge or expertise acquired through employment in a common calling cannot be appropriated as a trade secret. “The efficiency and skills which an employee develops through his work belong to him and not to his former employer.” Hallmark Personnel of Texas, Inc. v. Franks, Tex.Civ.App. 562 S.W.2d 933, 936 (1978). The same principles apply to the covenant here. We hold that the covenant not to compete had the effect of preventing the defendant from exploiting skills and experience which he had a right to exploit.
Finlay, 645 P.2d at 628 (footnote omitted).
The trial court and the majority ignore the fundamental policy on which Finlay rested. If the trial court had correctly applied Finlay to the facts of this case, Kasco could not have made the requisite showing under Rule 65A(e)(l) that it was entitled to the relief demanded. Finlay requires that before a trial court can conclude that a covenant not to compete is enforceable, it must first determine that the employee was not engaged in a common calling and that the employer has a legally protectible interest. Finlay, 645 P.2d at 627. A generalized assertion that preventing the completion of a former employee will protect the employer’s goodwill is not enough. Id. at 627-28; System Concepts, 669 P.2d at 426.
In this case, defendant Larry Benson was a salesman of butcher supplies. He was a route salesman, pure and simple. He covered a rural territory in Utah and Idaho. He had no trade secrets. He was *97not involved in management. As a result of his common calling, he necessarily knew both the actual and potential customers for the goods he sold in the communities of his territory. Customers of butcher supplies in such areas are not hard to find; a scan of local telephone books would quickly identify them. Finally, Kasco’s customers are not found on a secret customer list.
The majority does not even address the issue of whether Benson was engaged in a common calling. It rests solely on the specious rationale that in his territory, Benson was Kasco. Route salespersons are commonly viewed in their territories as representatives of their employers. But that is no reason to hold them in semi-bondage to their former employers when they change jobs. The majority notes that Benson was one of Kasco’s top five salespersons. The law, however, does not protect only less able individuals.
The consequence of the majority’s ruling is that a noncompetition covenant may be enforced against any route salesperson whenever it could be said that the employer may lose some sales, i.e., “goodwill,” if the former employee is not restrained from competing. That, of course, can be said with respect to all route salespersons, no matter how common their callings.
DURHAM, J., concurs in the dissenting opinion of STEWART, J.

. Clearly, the terms of an injunction may be modified after it goes into effect. However, the law is that a movant must first show some change in circumstances. Kasco has not alleged any changed circumstances that bear upon the issue of when the injunction should have commenced.

. In Rose Park, the employee enjoined was a professional person solely responsible for building the business of a small neighborhood pharmacy.