Court Opinion

ID: 5864070
Source: CourtListenerOpinion
Date Created: 2022-01-13 01:27:32.617132+00
Date Added: 2024-06-11T08:44:31.646842
License: Public Domain

Asch, J. (dissenting).
I would affirm the order of Special Term enjoining defendant from soliciting or providing professional accounting services to former clients of plaintiff. This is a classic case for granting a preliminary injunction to enforce a restrictive covenant. The covenant which plaintiff sought to enforce is contained in a letter agreement dated October 1,1979, and reads in pertinent part: “In consideration of the benefits which will inure to me as a partner in, or a withdrawn partner of* * * I agree with the firm as follows *** I agree that I shall not use such information concerning the firm’s business or trade secrets which I have acquired * * * Moreover I further agree that for a period of two years after I withdraw from the firm that I will not without its prior written consent, provide professional services such as those *371provided by the firm to any client of the firm, or for the purpose of providing such professional services, solicit or participate in the solicitation of any client of the firm, which was a client of the firm any time during the twelve months prior to my withdrawal and for whom I provided any service in the five year period preceding my withdrawal”. Defendant admittedly solicited or began accounting work for several of plaintiff’s clients which he hád serviced within five years of his departure from plaintiff. The issue of whether defendant voluntarily “withdrew” from the firm or was fired was not raised by him at Special Term. In any event, “withdrawal” need not be voluntary for the restrictive conditions to apply. Such a distinction, if any, is not significant in this case. Plaintiff’s organization manual makes this clear. It describes circumstances under which a partner may be asked to withdraw from the firm, “unfortunate or distressing as it may be”. The nonsolicitation, nonservice agreement, therefore, restricted defendant whether he withdrew or was “fired” (was asked to withdraw) as a partner (see Young & Co. v Crosley, NYLJ, June 2, 1983, p 5, col 1 [Grossman, J.]). The provision is no more than a reasonable restriction to protect a legitimate economic interest of the plaintiff accounting firm. By the express terms of the agreement, plaintiff would only prohibit defendant from soliciting and serving a limited class of clients for a limited period of time. There is no restriction at all on defendant’s practice of his profession with any other clients or in the geographic area. The agreement which is sought to be enforced originally arose in 1964 when defendant and his father sold their accounts to plaintiff in return for substantial benefits then and in the future. However, there is no need to buttress the validity of the defendant’s present duty upon that old agreement. The defendant over the years has been a party to a series of withdrawal agreements with plaintiff. He signed the first one upon becoming a partner in 1967 and voluntarily, without any objection, signed all of the successor articles of partnership, each of which contained a noncompete provision. In 1974 this provision was placed in a separate less restrictive noncompete letter agreement, later superseded by a “noncompete” letter agreement in 1979, both of which defendant also signed. It is this latest nonsolicitation, nonservice letter agreement of October 1, 1979, with which we are concerned. It is clear that in New York, covenants restricting an employee or partner from competing with his former employer or partnership are customarily upheld if the restrictions are “reasonable as to time and area, necessary to protect legitimate interests, not harmful to the public, and not unduly burdensome” (Gelder Med. Group v Webber, 41 NY2d 680, 683). The agreement herein certainly satisfies all the foregoing criteria. In a case involving a very similar restriction upon partners in a national accounting firm, this court observed: “The restraints are not general, appear reasonably limited in time and appear reasonably related to [the firm’s] legitimate interests. Nor are [the partners] prohibited from practicing their profession in any way except that they may not render services to [the firm’s] clients.” (Matter of Schachter [Witte & Co.], 52 AD2d 121, 125, affd 41 NY2d 1067.) Plaintiff has also demonstrated that the defendant herein had a unique and extraordinary role within plaintiff firm. Defendant maintained and developed close relations with plaintiff’s clients because of the nature of his professional relationship and because of the special role he was given in the Baltimore office by the plaintiff. This is an important factor in enforcing this restrictive covenant (see Service Systems Corp. v Harris, 41 AD2d 20; Goldberg Co. v Stern, 53 AD2d 246). The defendant has benefited financially from his relationship with the firm for the last 18 years. I note that defendant will receive retirement benefits upon reaching the age of 60 from the plaintiff firm, which benefits are primarily unfunded and paid out of future profits, and although no longer a partner, he shared in the firm’s profits for fiscal 1983.