Court Opinion

ID: 9912571
Source: CourtListenerOpinion
Date Created: 2023-12-22 19:02:10.505273+00
Date Added: 2024-06-11T13:00:20.186965
License: Public Domain

Filed 12/22/23 VCA Animal Hospitals v. Hampel CA4/1
                 NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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or ordered published for purposes of rule 8.1115.

                COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                 DIVISION ONE

                                         STATE OF CALIFORNIA

 VCA ANIMAL HOSPITALS, INC.,                                          D081424

           Plaintiff and Respondent,

           v.
                                                                      (Super. Ct. No. 37-2022-
 NANCY HAMPEL,                                                        00036623-CU-BC-CTL)

           Defendant and Appellant.

         APPEAL from an order of the Superior Court of San Diego County,
Eddie C. Sturgeon, Judge. Affirmed.
         Murchison & Cumming, Anton Handal, and Adesh Singh for Defendant
and Appellant.
         Blank Rome, Cheryl S. Chang, Travis Jang-Busby, and Jessica A.
McElroy for Plaintiff and Respondent.
                                               INTRODUCTION
         Nancy Hampel, DVM, appeals an order granting a preliminary
injunction requested by her former partner and employer, VCA Animal
Hospitals, Inc. (VCA). The injunction prohibits Hampel from practicing
veterinary medicine at a veterinary facility next door to the clinic she sold to
VCA. The order also requires Hampel to refrain from holding herself out as
affiliated with the neighboring facility. Hampel contends the noncompetition
agreement she signed when she sold her business interest to VCA is

unenforceable under Business and Professions Code1 sections 16600 and
16601 because the term of the agreement concludes five years after she
terminated her employment with VCA. She also contends the court granted
relief not requested by VCA and that the injunction is overly broad and
vague. We disagree with each contention. We conclude the trial court
properly exercised its discretion when it issued the preliminary injunction.
VCA demonstrated a likelihood of prevailing based on an enforceable
noncompetition agreement and the relative harm balanced in favor of
granting the injunction. We further conclude Hampel had adequate notice of
the relief requested and the preliminary injunction is not overly broad or

vague. We, therefore, affirm the order.2

1    All further statutory references are to the Business and Professions
Code unless otherwise specified.
2      Hampel initially filed a petition for writ relief on January 9, 2023,
seeking a stay of the preliminary injunction. She filed an appeal of the same
order on January 27, 2023, for which the court used the same appellate
docket number (D081424). After considering an informal response from VCA
and an informal reply, we denied Hampel’s petition for writ of
mandate/supersedeas (order issued Feb. 3, 2023, D081424). Since this
opinion disposes only of Hampel’s appeal, we refer to the parties by their
designations associated with the appeal. Similarly, we confine the counsel
listing to only those who appeared in the appeal.

                                       2
                                BACKGROUND3
A. VCA Enters Into Partnership with Hampel and Johnson
      VCA describes itself as “a family of hometown animal hospitals
committed to making a positive impact for pets, people, and the communities
it serves.” VCA identifies established veterinary practices to purchase and
operate. Sometimes it partners with the veterinarians who built a practice,
other times it buys the practice. When VCA acquires an established practice,
VCA relies on the ability to acquire the goodwill of the practice to continue
serving the existing clients.
      In 2007, Hampel and her husband, Richard Johnson, entered a
partnership with a VCA subsidiary to merge their respective veterinary
practices. Hampel and Johnson, through their corporation Creative
Veterinary Services, Inc. (Creative), held 75 percent interest in the
partnership. The VCA subsidiary held a 25 percent interest. The new
partnership operated where Hampel and Johnson had their practice—600
Broadway in El Cajon, California—under the name Animal Medical Center of
El Cajon, L.P.
B. VCA’s Buyout and Covenants Not to Compete
      Several years later, VCA decided to exercise the partnership
agreement’s buyout option. Hampel and Johnson sold their interest in the
practice to VCA in 2014 for $5,258,240. VCA continues to operate the
practice under the name VCA Animal Medical Center of El Cajon (VCA El
Cajon).

3     At a motion for a preliminary injunction, the trial court is required to
make certain findings, expressly or by implication. We defer to these findings
to the extent they are supported by substantial evidence. (Alliant Ins.
Services, Inc. v. Gaddy (2008) 159 Cal.App.4th 1292, 1309.) Accordingly, we
view the facts in the light most favorable to the prevailing party, VCA.

                                       3
      As required by the purchase agreement, and in consideration for VCA
purchasing their interest in the practice, both Hampel and Johnson executed
noncompetition agreements. The purchase agreement allocated $235,966 of
the purchase price to those agreements.
      Hampel agreed she would not work with a companion animal hospital
within a 20-mile radius of VCA El Cajon. Hampel also agreed not to solicit
VCA employees or customers to leave VCA El Cajon. Hampel negotiated an
exemption permitting her involvement in a veterinary technician training

school.4

4      We focus on Hampel’s noncompetition agreement, which is the
agreement at issue in this appeal. Her noncompetition agreement provided
in pertinent part, “During the term hereof, [Hampel] agrees that, within a
twenty (20) mile radius . . . of the Premises, [Hampel] shall not, without the
prior written consent of VCA Sub, directly or indirectly, own, manage,
operate, join, control, finance or participate in the ownership, management,
operation, control or financing of, or be connected as an officer, director,
employee, principal, agent, representative, consultant, investor, owner,
partner, stockholder (except as a holder of less than one percent (1%) of the
issued and outstanding voting stock of a publicly held corporation), member,
manager or joint venturer or otherwise permit [Hampel’s] name to be used by
or in connection with, or lease, sell, or permit to use any real property or
interest therein owned by [Hampel], to any companion animal veterinary
medical practice. . . . Notwithstanding the foregoing, this does not preclude
[Hampel] from either directly or indirectly owning, managing, operating,
joining, controlling, financing or participating in the ownership,
management, operation, control or financing of or be connected as an officer,
director, employee, principal, agent, representative, consultant, investor,
owner, partner, stockholder, member, manager or joint venture, or otherwise
permit [Hampel’s] name to be used in connection with, or to lease, sell or
permit to use any real property or interest therein owned by [Hampel] in a
veterinary technician training school.”
       Companion animals include dogs, cats, and small exotic species such as
rabbits, minks, hamsters, gerbils, or rats.

                                      4
      The noncompetition agreement specified the term of the agreement:
“The term of this Agreement shall commence on the date hereof and shall
terminate on the date which is the later to occur of the following: (i) that
date which is five (5) years following the date hereof; or (ii) that date which is
five (5) years following the last date on which [Hampel] is employed at [VCA
El Cajon].”
C. Hampel’s Continued Practice with VCA El Cajon While Forming
   All God’s Creatures Animal Hospital

      Hampel continued practicing with VCA El Cajon as a VCA employee.
She also served as medical director of VCA El Cajon. Hampel left VCA El
Cajon on March 10, 2022, telling VCA she intended to retire.
      In early 2022, Hampel and Johnson formed All God’s Creatures Animal
Hospital, Inc. (AGC), a veterinary facility next door to VCA El Cajon. The
articles of incorporation and statement of information submitted to the
California Secretary of State listed Hampel as a director and secretary.
D. Dispute Arises Upon Hampel’s Departure from VCA El Cajon
      Soon after Hampel left VCA El Cajon, she posted an announcement on
a personal Web site stating, “We are very excited to announce that Dr. Nancy
Hampel will be relocating to her new privately owned veterinary practice
along with her husband Dr. Richard Johnson. In April 2022, their new
animal hospital All God’s Creatures Animal Hospital will open at its location
616 Broadway El Cajon, CA 92021.”
      VCA sent a cease and desist letter to Hampel advising her that she was
violating the noncompetition agreement by opening a competing veterinary
practice next to VCA El Cajon. If she continued, VCA intended to pursue all
legal and equitable remedies, including seeking injunctive relief as
authorized by the noncompetition agreement.

                                        5
      The parties met informally and engaged in two mediations over several
months, but they were unable to resolve the dispute. They scheduled a third
mediation session and VCA asked Hampel and Johnson to refrain from
opening AGC until they completed negotiations. Nevertheless, AGC opened
in early September 2022 when Johnson began seeing patients.
      Hampel said she was self-employed, but served as the dean and senior
instructor at the Vet Tech Nursing Academy. She denied that AGC hired

her. She is, however, an officer and director of Vet Tech Nursing Academy.5
      She claims everything she does at AGC is for teaching purposes. She
agreed AGC offers veterinary services to patients in connection with the
teaching academy. More than 75 percent of the patients treated at AGC are
seen for teaching. Hampel estimates that 25 percent of the patients they see
at the facility are former VCA patients.
E. VCA Sues and Seeks a Temporary Restraining Order
      After informal negotiations failed, VCA sued Hampel for breach of
contract, breach of implied covenant of good faith and fair dealing, breach of
the duty of loyalty and unfair competition. VCA filed an amended complaint
adding claims against Johnson and AGC for intentional interference with
contractual relations, civil conspiracy, and unfair competition. VCA prayed
for a preliminary and permanent injunction, general and punitive damages,
restitution, disgorgement, costs of suit, and attorney fees.
      VCA also applied for a temporary restraining order. In support of its
request for a restraining order, VCA declared Hampel’s association with AGC

5      Hampel described a veterinary technician as someone licensed by the
state to perform certain tasks on animals that unlicensed people may not
perform, “they are independent thinkers as a critical part of the veterinary
care team.” She likened them to a registered nurse in human medicine.

                                        6
“robs VCA El Cajon of the goodwill she built at her former practice, which is
the same goodwill that VCA purchased . . . . Since 2014, Dr. Hampel has
continued to build goodwill at VCA El Cajon by her position as Medical
Director. She has now acted to deprive VCA El Cajon of that goodwill by
opening a competing practice that is next door to VCA El Cajon.”
      In response, Johnson submitted a declaration stating he built a
veterinary teaching hospital “as a part of a comprehensive Animal Wellness
Campus,” which “includes facilities for animal rehabilitation, dog training,
farm animal care, a dog therapeutic exercise course, and a water therapy
pool.” The campus included a “Veterinary Technician Training Academy”
designed to train new veterinary technicians in “animal veterinary medicine”
and qualify them for certification. Johnson confirmed the hospital was open
and he was seeing patients.
      Johnson said he purchased the property at 616 Broadway in El Cajon
in 2006 (before he and his wife formed the partnership with the VCA
subsidiary), “for the specific purpose of building a veterinary technician
training school in the future.” His own agreement not to operate a
companion animal veterinary medical practice within 20 miles of VCA El
Cajon expired five years after Johnson terminated a consulting relationship
with VCA in July 2015. As of October 2022, he was proceeding with his plan
to develop a veterinary technician and nurse training school. The veterinary
hospital portion of the campus was open and he was seeing patients. He was
working with a local college and a high school to offer veterinary technician
education. Hampel, a board certified surgical specialist, was to teach “the
didactic and clinical skills required” to sit for a national veterinary technician
accrediting exam.

                                        7
      According to Johnson, VCA had its own brand recognition in San Diego
County with 40 veterinary practices in the county, including two within two
miles of the VCA El Cajon practice.
      Hampel also submitted a declaration saying she and Johnson signed
agreements limiting their ability “to own a companion animal (dogs, cats,
exotics) veterinary medical practice within 20 miles of [VCA El Cajon].” The
agreement, however, gave “an exemption for a veterinary technician training
school” without limiting “how we educate, train, and prepare our students.”
She claimed she was not violating the noncompetition agreement because the
training services were different from a companion veterinary practice.
      Hampel and Johnson submitted a declaration from their accountant.
He said the parties agreed in 2014 to a valuation formula to determine the
sale price for their share of the partnership. The buyout price was calculated
based on 75 percent of the gross revenues for the prior 12 months less certain
liabilities. The formula did not consider the value of any asset, including
goodwill. The parties allocated $235,966 of the purchase price to the
noncompetition agreements.
      The accountant said VCA could use the allocated amount as the
goodwill value and then amortize that value over 10 years. This would make
the 2022 remaining value of goodwill only $47,193.20, which is 20 percent of
the original value. He, therefore, valued Dr. Hampel’s goodwill at only
$23,596.60.
      The court granted VCA a temporary restraining order as to Hampel,
but denied the request for a temporary restraining order as to Johnson. The
court restrained and enjoined Hampel from “performing ANY veterinary
medical services at [AGC] located at 616 Broadway El Cajon, CA 92021
unless such services are rendered in connection with performing her

                                       8
responsibilities at a veterinary technician training school.” The court set a
hearing for a preliminary injunction.
F. The Court Grants the Preliminary Injunction
      VCA moved for a preliminary injunction to enjoin both Hampel and
Johnson, as well as their “officers, agents, employees, representatives, and all
persons acting in concert or participating with them, from performing any
veterinary services at [AGC] . . . until the conclusion or judgment” of this
action. VCA said it sought an injunction “with a scope broader than the
TRO” to prevent Hampel “from circumventing her noncompetition agreement
with VCA and exploiting the goodwill she built at her prior practice to
Defendants’ new competing business.” VCA contended Hampel remained in
violation of the noncompetition agreement despite the TRO. It presented
evidence she was advertising her association with the new hospital on its
Web site and was operating a veterinary technician training school at the
hospital. It alleged Johnson benefited from Hampel’s breach of the
noncompetition agreement.
      In opposition, Hampel and Johnson contended there were two
noncompetition agreements, one that ran for five years from the date of the
sale of the practice in July 2014, and the other that extended for five years
from the date Hampel terminated her employment. They argued the
noncompetition agreement tied to the end of her employment was not
enforceable under section 16600. They also contended the request for a
broader injunction was inappropriate because there was no evidence Johnson
violated his agreement.
      Johnson submitted a new declaration with substantially the same
information he provided earlier. He reported the facility had 12 students
enrolled in the veterinary technician program. Dr. Hampel was one of the

                                        9
school’s professional staff and her purpose remained to “teach the didactic
and clinical skills” required for students to sit for the national accrediting
examination for veterinary technicians. The school provided veterinary care
and training to working dogs with the local police department. They also
provided surgical services for pets of low-income families.
      The accountant submitted essentially the same information about how
the parties agreed upon the purchase price. He stated he received new
information about the sales of the VCA practice as of the end of February
2022. From this information, he opined the net revenue decreased by 45
percent since the sale of the practice. He then opined there was no goodwill
remaining in 2022 from the sold interest in the practice.
      In reply, VCA argued the noncompetition agreement contained only one
noncompetition clause and the clause was valid. VCA submitted the
declaration of Soy Ahn, VCA’s senior director of acquisitions. Ahn explained
the purchase price was based on a revenue multiplier, which is a common
metric “to reflect enterprise value.” “The enterprise value reflects the fair
value of a business that encompasses all aspects of a practice including not
only tangible assets such as equipment but also intangible assets such as the
trade name, customer relationships and of course goodwill.” Since VCA
acquired the remainder of the partnership by way of an equity purchase,
rather than an asset purchase, there was no need to itemize each asset and
liability encompassed in the sale agreement. VCA paid a lump sum for
everything.
      When VCA entered the partnership with Creative in 2007, the
respective veterinary practices contributed to and combined their goodwill,
which grew as they operated a single partnership. VCA purchased the
business’s goodwill when it purchased Creative’s interest in the partnership.

                                        10
      Ahn pointed out that the partnership’s 2013 financial statements
reflected a goodwill balance of $8,584,207. “VCA determined the amount of
[g]oodwill acquired in accordance with [g]enerally [a]ccepted [a]ccounting
[p]rinciples . . . as follows: [c]onsideration ([p]urchase [p]rice) plus [a]ssumed
[l]iabilities minus tangible assets and other intangible assets separable from
[g]oodwill.” She stated the resulting goodwill “was the most significant and
material asset of the purchase.”
      Ahn concluded by saying that competition is one of the strongest factors
that negatively impacts the value of a veterinary practice. “[T]he presence of
a competing practice next door will immediately decrease the value of VCA El
Cajon. This diminution will be compounded by the fact that the competing
veterinary practice is owned and operated [by] VCA El Cajon’s former
medical director and board-certified surgeon.”
      After considering the parties’ papers, pertinent deposition testimony,
and extensive oral argument, the court granted the preliminary injunction.
The court concluded Hampel entered the covenant not to compete in
connection with the sale of her business interest and, therefore, the covenant
was enforceable under section 16601. The court found VCA had a reasonable
probability of success on the merits of their claim and that the relative
interim harm weighed in favor of an injunction preventing Hampel from
continuing to practice at AGC. The court commented that Hampel did not
identify any irreparable harm that would come to her if she were
preliminarily enjoined from practicing at that location during this litigation.
On the other hand, the court found VCA was likely to suffer harm to its
business without an injunction “by having a competitor directly next door.”
The court stated, “Hampel is enjoined from performing any veterinary
practice at AGC, promoting AGC’s veterinary practice, or holding herself out

                                        11
to be affiliated with AGC’s veterinary practice.” The court declined to extend
the injunction to the other defendants.
      Defense counsel moved for clarification of the order, contending the
injunction was vague, overbroad, and unenforceable. The court clarified that
Hampel “cannot practice veterinary medicine at that location. Period.
Period.” Hampel appealed.
      The court denied a request to stay the preliminary injunction pending
the appeal. The court determined the injunction is a prohibitory injunction,
which is not subject to an automatic stay.
                                 DISCUSSION
                                       I.
                  General Principles and Standard of Review
      “In deciding whether to issue a preliminary injunction, a court must
weigh two ‘interrelated’ factors: (1) the likelihood that the moving party will
ultimately prevail on the merits and (2) the relative interim harm to the
parties from issuance or nonissuance of the injunction. [Citation.] . . . [¶]
The trial court’s determination must be guided by a ‘mix’ of the potential-
merit and interim-harm factors; the greater the plaintiff's showing on one,
the less must be shown on the other to support an injunction. [Citation.]”
(Butt v. State of California (1992) 4 Cal.4th 668, 677–678 (Butt).) “ ‘ “[T]he
decision to grant a preliminary injunction rests in the sound discretion of the
trial court.” ’ ” (People ex rel. Herrera v. Stender (2012) 212 Cal.App.4th 614,
629 (Stender).)
      Our review on appeal “is limited to whether the trial court’s decision
was an abuse of discretion. [Citation.]” (Butt, supra, 4 Cal.4th at p. 678.)
“The party challenging the superior court’s order has the burden of making a

                                       12
clear showing of such an abuse.” (Smith v. Adventist Health System/West
(2010) 182 Cal.App.4th 729, 739.)
      “[W]e do not reweigh conflicting evidence or assess the credibility of
witnesses; we only determine whether, interpreting the facts in the light
most favorable to the prevailing party and indulging all reasonable inferences
in favor of the trial court’s order, the trial court’s factual findings are
supported by substantial evidence.” (Stender, supra, 212 Cal.App.4th at
p. 630.) Where an issue is resolved upon declarations, “[those declarations]
favoring the contention of the prevailing party establish not only the facts
stated therein but also all facts which reasonably may be inferred therefrom.”
(Brunzell Constr. Co. v. Harrah’s Club (1967) 253 Cal.App.2d 764, 773.)
      “Where the likelihood of prevailing on the merits depends upon a
question of law . . . , the question on appeal is whether the trial court
correctly interpreted and applied the law, which we review de novo.” (Alliant
Ins. Services, Inc. v. Gaddy (2008) 159 Cal.App.4th 1292, 1300 (Alliant).) We
independently interpret a written contract where the evidence is not in
dispute. (Fillpoint, LLC v. Maas (2012) 208 Cal.App.4th 1170, 1177
(Fillpoint).)
      Finally, “ ‘our decision does not constitute a final adjudication of the
ultimate rights in controversy. [Citations.] In reviewing the propriety of a
ruling on an application for a preliminary injunction, we merely decide
whether the trial court abused its discretion based on the record before it at
the time of the ruling.’ ” (Midway Venture LLC v. County of San Diego (2021)
60 Cal.App.5th 58, 77.)

                                         13
                                         II.
     The Heightened Scrutiny for Mandatory Injunctions Does Not Apply
      Hampel contends the injunction issued by the trial court is mandatory,
requiring us to “ ‘ “scrutinize it even more closely for abuse of discretion.” ’ ”
(Oiye v. Fox (2012) 211 Cal.App.4th 1036, 1047–1048.) She argues the
injunction should be considered mandatory because it compelled her to stop
performing veterinary functions at the veterinary technician training school.
VCA contends the trial court properly characterized the injunction as
prohibitory because it prohibits Hampel from continuing to violate her
noncompetition agreement. We agree with VCA.
       “ ‘[T]he general rule is that an injunction is prohibitory if it requires a
person to refrain from a particular act and mandatory if it compels
performance of an affirmative act that changes the position of the parties.’
[Citation.] An injunction designed to preserve the status quo as between the
parties and to restrain illegal conduct is prohibitory, not mandatory, and does
not require heightened appellate scrutiny.” (Oiye, supra, 211 Cal.App.4th at
p. 1048.) Courts have said the status quo is “ ‘the last actual peaceable,
uncontested status which preceded the pending controversy.’ ” (United
Railroads of San Francisco v. Superior Court of San Francisco (1916) 172
Cal. 80, 87.)
      The Supreme Court has explained, “in some instances, an injunction
that is essentially prohibitory in nature may involve some adjustment of the
parties’ respective rights to ensure the defendant desists from a pattern of
unlawful conduct. . . . [A]n injunction preventing the defendant from
committing additional violations of the law may not be recharacterized as
mandatory merely because it requires the defendant to abandon a course of
repeated conduct as to which the defendant asserts a right of some sort. In

                                        14
such cases, the essentially prohibitory character of the order can be seen
more clearly by measuring the status quo from the time before the contested
conduct began.” (Daly v. San Bernardino County Bd. of Supervisors (2021) 11
Cal.5th 1030, 1046.)
      Contrary to Hampel’s contention, this situation is not like Clute v.
Superior Court of San Francisco (1908) 155 Cal. 15, 20 where the injunction
required an ousted corporate treasurer and manager to affirmatively
surrender control of a hotel to its board of directors. Nor is it like Feinberg v.
One Doe Co. (1939) 14 Cal.2d 24, 27 where a manufacturer was ordered to
terminate the employment of an employee who was no longer a member of a
union. Those cases involved orders “offer[ing] a remedy for a past violation”
as opposed to “prevent[ing] injury from future conduct.” (Daly, supra, 11
Cal.5th at p. 1046.)
      Here, the status quo—the last peaceable, uncontested status of the
parties which preceded the controversy—was when Hampel was not
performing veterinary medicine at a veterinary facility next door to VCA El
Cajon. The injunction prevents continuing injury from future conduct.
Because we conclude the injunction is prohibitory, the rule requiring
appellate courts to give greater scrutiny to mandatory injunctions does not
apply.
                                      III.
               The Trial Court Properly Granted The Injunction
A. The Noncompetition Agreement Is Enforceable
      Hampel agrees she signed the noncompetition agreement in connection
with the sale of her business interest, but she contends it should not validly
restrict “her efforts arising out of her VCA employment.” We disagree. We
conclude on this record that VCA demonstrated for purposes of obtaining the

                                        15
preliminary injunction that the agreement was enforceable and, therefore,
VCA had a likelihood of prevailing on the merits of its claims.
      “In California, contractual provisions that prevent a person from
engaging in a profession, trade or business are generally void.
(§ 16600.) . . . ‘[S]ection 16600 evinces a settled legislative policy in favor of
open competition and employee mobility.’ ” (Blue Mountain Enterprises, LLC
v. Owen (2022) 74 Cal.App.5th 537, 550 (Blue Mountain).) This policy
“affirms a person’s right to pursue the lawful occupation of his or her choice.”
(Strategix, Ltd. v. Infocrossing West, Inc. (2006) 142 Cal.App.4th 1068, 1072
(Strategix).)
      Section 16601 provides an exception to this general rule when a
noncompetition agreement is connected to the sale of a business: “Any person
who sells the goodwill of a business, or any owner of a business entity selling
or otherwise disposing of all of his or her ownership interest in the business
entity . . . may agree with the buyer to refrain from carrying on a similar
business within a specified geographic area in which the business so sold, or
that of the business entity, division, or subsidiary has been carried on, so long
as the buyer . . . carries on a like business therein.”
      “ ‘Section 16601’s exception serves an important commercial purpose by
protecting the value of the business acquired by the buyer. “In the case of the
sale of the goodwill of a business it is ‘unfair’ for the seller to engage in
competition which diminishes the value of the asset he sold.” [Citation.]
Thus, “[t]he thrust of . . . section 16601 is to permit the purchaser of a
business to protect himself or itself against competition from the seller which
competition would have the effect of reducing the value of the property right
that was acquired.” [Citation.] “One of the primary goals of section 16601 is

                                         16
to protect the buyer’s interest in preserving the goodwill of the acquired
corporation.” ’ ” (Blue Mountain, supra, 74 Cal.App.5th at p. 550.)
      In Blue Mountain, an individual entered into a series of agreements
selling his interest in a company and agreeing to serve as the chief executive
officer of the newly formed company for five years. The employment
agreement included a covenant not to solicit the business of customers for
three years after termination of his employment. (Blue Mountain, supra, 74
Cal.App.5th at pp. 543–544.) The appellate court upheld the nonsolicitation
covenant concluding it was enforceable under section 16601 because the
individual disposed of his ownership interest “while concurrently agreeing
under the [e]mployment [a]greement to ‘refrain from carrying on a similar
business within a specified geographic area in which the business so sold.’ ”
(Id. at pp. 553–554.) The court determined the agreements were
substantially part of one transaction and should be construed together even
though they did not reference one another. (Id. at p. 554.)
      The Blue Mountain court followed a similar holding in Hilb, Rogal &
Hamilton Ins. Services v. Robb (1995) 33 Cal.App.4th 1812 (Hilb) in which
the appellate court concluded the placement of a noncompetition clause in an
employment agreement signed in connection with a merger agreement did
not affect the clause’s enforceability under section 16601. (Blue Mountain,
supra, 74 Cal.App.5th at p. 553 citing Hilb at pp. 1825–1826.) The
noncompetition agreement, which extended for three years following the
termination of the defendant’s employment with the new company, was
enforceable because the defendant disposed of his entire ownership stake in
the sold business in exchange for valuable consideration. (Hilb, at pp. 1824–
1825.) The evidence before the court established the defendant agreed to the

                                      17
noncompetition covenant “in his capacity as a selling shareholder/employee
not solely as an employee.” (Id. at p. 1827.)
      Similarly, in Alliant, supra, 159 Cal.App.4th 1292 , a majority
shareholder of a business sold his interest in the business to Alliant and then
became employed by Alliant. He signed both a stock purchase agreement and
an employment agreement with identical noncompetition covenants that
terminated either five years after the effective date of the agreements or two
years after the shareholder terminated his employment. (Id. at pp. 1295–
1297.) The Alliant court upheld a preliminary injunction enforcing the
noncompetition covenants. (Id. at p. 1295.)
      Fillpoint, supra, 208 Cal.App.4th 1170, a case upon which Hampel
relies, does not assist her. In that case, the parties signed two separate and
distinct noncompetition covenants. One noncompetition covenant was in a
stock purchase agreement and required the defendant not to engage in a
competing business that distributed and published video games for 36
months after the stock sale. The second noncompetition covenant was in an
employment agreement in which the defendant agreed to work for the
purchasing company for three years and then further agreed he would not
compete with the company for a year after either the expiration of the
employment agreement or earlier termination of the defendant’s
employment. (Id. at pp. 1174–1176.) Our colleagues in the Fourth Appellate
District, Division Three, considered the case after the trial court granted
nonsuit on the basis that the noncompetition covenant found in the
employment agreement was unenforceable under section 16600. (Fillpoint,
supra, 208 Cal.App.4th at p. 1176.)
      The Fillpoint court agreed the purchase agreement and the
employment agreement should be construed together. However, it

                                       18
distinguished the covenants before it from the single noncompete covenant
found in Hilb, supra, 33 Cal.App.4th 1812 and the two identical noncompete
clauses in Alliant, supra, 159 Cal.App.4th 1292. Unlike these cases, the
Fillpoint agreements were distinct and different. The purchase agreement
required noncompetition for a specific type of business for a set period after
the purchase. The employment agreement contained a broader
noncompetition and nonsolicitation covenant for a year after the termination
of the defendant’s employment. (Fillpoint, supra, 208 Cal.App.4th at
pp. 1179–1181.) The court concluded the differences between the covenants
were meaningful. The purchase agreement’s covenant not to compete
prevented the defendant from setting up a competing business or assisting
someone else to set up a competing business for three years after the
purchase. “This covenant protected the goodwill of the company, served the
purpose of section 16601, and was fully performed.” (Id. at p. 1182.) The
employment agreement’s covenant not to compete, however, was broader.
For a year after the termination of his employment, it prevented the
defendant from: (1) contacting or making sales to clients who were actual or
potential customers of the business for two years before his employment
terminated; (2) working for or owning a competing business; or (3) employing
or soliciting any of the business’s employees or consultants. The court found
significant the business’s concession that the two covenants were intended “to
deal with different damages [the defendant] might do wearing the separate
hats of major shareholder and key employee.” The court determined the
covenants in the two agreements were, by their nature, different. “The
purchase agreement’s covenant was focused on protecting the acquired
goodwill for a limited period of time. The employment agreement’s covenant
targeted an employee’s fundamental right to pursue his or her profession.”

                                       19
Thus, the Fillpoint court concluded the employment agreement’s
noncompetition covenant did not fit within the limited exception of section
16601. (Fillpoint, at p. 1183.) That is not the case here.
      This case is more akin to Hilb and Alliant where there is only one
noncompetition clause with a single purpose, to protect the goodwill VCA
purchased. The clause had alternate termination points depending on how
long Hampel continued to work at the clinic she formerly owned. But a plain
reading of the clause shows the covenant itself was directly tied to the sale of
Hampel’s interest in the veterinary practice. Because the noncompetition
clause was tied directly to the sale of the business, we conclude the

noncompetition agreement falls within the section 16601 exception.6
      A noncompetition clause connected to the sale of goodwill of business is
meant to “prevent the seller from unfairly depriving the buyer of the full
value of its acquisition, including its goodwill.” (Strategix, supra, 142
Cal.App.4th at p. 1073.) “ ‘The customers of a business are an essential part
of its goodwill. In fact, without their continued custom[,] goodwill ceases to
exist, for goodwill is the expectation of continued public patronage. (Bus. &
Prof. Code, § 14100.) [¶] When the goodwill of a business is sold, it is not the
patronage of the general public which is sold, but that patronage which has

6      The Governor signed a bill on October 13, 2023, which amends section
16600 to indicate that section shall be read broadly, in accordance with
Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, “to void the
application of any noncompete agreement in an employment context . . . that
does not satisfy an exception in this chapter.” The amendment clarifies that
it “does not constitute a change in, but is declaratory of existing law.”
(§ 16600, subd. (b) as amended by Stats 2023, ch. 828, § 1 (Assem. Bill No.
1076), effective Jan. 1, 2024.) Because we conclude the noncompetition
agreement at issue falls within the section 16601 exception for
noncompetition agreements signed in connection with the sale of the goodwill
of a business, the pending legislative amendments do not impact our decision.

                                       20
become an asset of that business.’ ” (Smith v. Bull (1958) 50 Cal.2d 294, 303.)
“Although the goodwill of a business may be the result of the personal skill,
talent, experience, or reputation of an individual connected with the business,
it may attach to and continue with the business even after the separation of
the individual on whom it was founded.” (Id. at p. 302.)
      We are not persuaded by Hampel’s arguments that any value of
goodwill that existed when VCA purchased her interest halted at the
culmination of the sale and that she separately built goodwill while employed
by VCA. As Hampel continued her employment, her client relationships
continued and so did the goodwill VCA purchased.
      Where, as here, the goodwill of a business is built largely on
relationships and reputation, it follows that the goodwill built by such an
individual does not terminate upon the sale of the business when she
continues to work there. Rather, the goodwill, based on continued
relationships and reputation, carries forward until the individual separates
from the business. The alternate termination periods in the noncompetition
agreement recognized that if Hampel continued to work at VCA the goodwill
she built before the sale would carry forward until she terminated her work
with VCA El Cajon. After her separation, the noncompetition agreement
protected this goodwill that VCA purchased.
B. The Trial Court Properly Weighed Relative Harm
      The trial court did not abuse its discretion in weighing the relative
harm to the parties and concluding that VCA would be substantially harmed
without a preliminary injunction.
      We are not persuaded by Hampel’s attempts to minimize the ability of
VCA to establish harm related to its claims by minimizing the value of
goodwill sold. Hampel’s accountant argued goodwill should be treated as a

                                      21
depleting asset such that the goodwill sold had no value by the time Hampel
terminated her employment. Courts have rejected narrow interpretations of
goodwill and have held that section 16601 does not limit goodwill “to
transactions involving any quantum of prior sales activity.” (Alliant, supra,
159 Cal.App.4th at p. 1302.) Rather, covenants not to compete typically focus
on “where the business was ‘carried on’ rather than the extent of the
‘goodwill.’ ” (Ibid., quoting Monogram Industries, Inc. v. Sar Industries, Inc.
(1976) 64 Cal.App.3d 692, 701.)
      We do not reach the issue of whether or how goodwill should be valued
on the merits in this case. For the purposes of our review, we observe only
that there is substantial evidence to support the court’s determination that
VCA established a likelihood of prevailing and that it would be harmed
without a preliminary injunction. However the parties arrived at the
purchase price, there is no dispute VCA purchased the intangible asset of
goodwill along with the business. The record contains a financial statement
listing the value of goodwill as over $8 million at the time of the sale, based
on generally accepted accounting principles. VCA presented the declaration
of a VCA regional vice president who stated that goodwill “was the most
significant and material asset of the purchase” and that Hampel’s association
with the neighboring facility “robs” VCA of the goodwill it purchased.
      VCA’s argument is cogent. VCA would not get the full value of the
goodwill it purchased if Hampel could maintain her client relationships while
she continued to work at VCA until the first alternative expired and then
immediately capitalize on those relationships by drawing them to a
competing practice next door after terminating her VCA employment.
      In contrast, Hampel did not present evidence she would be harmed by
enforcing the noncompetition agreement pending resolution of the merits of

                                       22
this case. She is not barred from practicing at a location outside the radius
identified in the noncompetition agreement. She is not barred from teaching
online or classroom courses. She is only barred from practicing veterinary
medicine at the teaching hospital next door until resolution of the merits of
the case.
      For these reasons, we conclude the trial court properly exercised its
discretion to issue the preliminary injunction.
                                       IV.
                  The Preliminary Injunction Is Appropriate
      The court’s order enjoins Hampel “from performing any veterinary
practice at AGC, promoting AGC’s veterinary practice, or holding herself out
to be affiliated with AGC’s veterinary practice.” Hampel contends the
injunction is outside the scope of the pleadings and is vague because the term
“veterinary practice” is not the term VCA used in its pleadings. We are not
persuaded.
A. VCA Requested the Relief Granted
      Hampel, who has been a veterinarian for over 40 years, acknowledged
the noncompetition agreement she signed limited her ability to own a
companion animal “veterinary medical practice” within 20 miles of VCA El
Cajon. Hampel’s announcement on her personal Web site said she was
relocating to her new “privately owned veterinary practice . . . .”
      Before the lawsuit was filed VCA sent Hampel a letter asking her to
cease and desist from opening or operating a competing veterinary practice in
violation of the noncompetition agreement. When, after several unsuccessful
mediation sessions, the defendants opened the competing facility, VCA filed
suit alleging Hampel and her husband were operating a competing veterinary
practice in violation of the noncompetition agreements. VCA asked for an

                                       23
injunction precluding the defendants from opening or operating AGC in
violation of the agreements.
      The operative first amended complaint prayed for, among other things,
a preliminary injunction requiring the defendants to “refrain from operating
any animal veterinary medical practice” at the neighboring property.
      VCA’s notice of motion for preliminary injunction sought to enjoin all
defendants “from performing any veterinary services” at AGC until the
judgment in this case. Throughout the motion, VCA discussed the need for
an injunction because Hampel and her husband opened and were operating a
competing “veterinary practice” at a location next door to VCA El Cajon.
      When Hampel asked the court to clarify the scope of the injunction, the
court stated, “She cannot practice veterinary medicine at that location.
Period. Period.”
      The cases cited by Hampel for her argument that the injunction is
somehow outside the scope of the pleadings are inapposite. This is not an
appeal on a judgment roll such as Marvin v. Marvin (1981) 122 Cal.App.3d
871, 875 where the appellate court’s review was limited to only the pleadings
because it did not have the benefit of the evidence presented to the trial
court. Nor is it a situation where a legal theory supported by the evidence
was not properly pleaded, as in Crescent Lumber Co. v. Larson (1913) 166
Cal. 168, 171. Similarly, Code of Civil Procedure section 580, subdivision (a),
which limits relief on a default judgment to that demanded in the complaint
has no application here because the purpose of that section is to ensure the
defaulting party has adequate notice of the maximum judgment that may be
assessed against it. (Los Defensores, Inc. v. Gomez (2014) 223 Cal.App.4th
377, 398.)

                                       24
      Hampel had ample notice that VCA sought a preliminary injunction to
preclude her from practicing veterinary medicine at the neighboring facility,
even in the context of teaching, until this case can be resolved on the merits.
She had the opportunity to present evidence in opposition to the request. As
the case progresses, she may continue to present evidence about the scope of
her conduct to either establish it does not violate the agreement or to further
clarify the scope of any relief the trial court may ultimately grant. Therefore,
the court’s order on the preliminary injunction did not violate due process.
(Midway Venture LLC v. County of San Diego (2021) 60 Cal.App.5th 58, 77–
78 (Midway).)
B. The Injunction is Not Vague, Ambiguous, or Overly Broad
      “ ‘An injunction must be narrowly drawn to give the party enjoined
reasonable notice of what conduct is prohibited.’ [Citation.] It ‘must be
sufficiently precise to provide a person of ordinary intelligence fair notice that
her contemplated conduct is forbidden.’ ” (Midway, supra, 60 Cal.App.5th at
p. 92; see also People ex rel. Gallo v. Acuna (1997) 14 Cal.4th 1090, 1115; In re
Berry (1968) 68 Cal.2d 137, 156; People ex rel. Gascon v. HomeAdvisor, Inc.
(2020) 49 Cal.App.5th 1073, 1082 [“ ‘An injunction must be sufficiently
definite to provide a standard of conduct for those whose activities are to be
proscribed”].) In other words, the enjoined party must be able to determine
what they may or may not do to comply for an injunction to be valid. (People
v. Gordon (1951) 105 Cal.App.2d 711, 725; City of Redlands v. County of San
Bernardino (2002) 96 Cal.App.4th 398, 415.)
      The record shows the trial court carefully considered the evidence and
weighed the potential harm to each party before fashioning the preliminary
injunction enjoining Hampel “from performing any veterinary practice at
AGC, promoting AGC’s veterinary practice, or holding herself out to be

                                       25
affiliated with AGC’s veterinary practice” pending trial of this matter.
Hampel’s claim that she cannot understand the term “veterinary practice”
appears disingenuous, at best. As the court clarified, “She cannot practice
veterinary medicine at that location.”
      The injunction is narrowly drawn. In contrast to the relief sought by
VCA, it only enjoins Hampel from practicing veterinary medicine at the
facility next to VCA El Cajon. It does not limit Hampel’s ability to practice
outside the 20-mile radius of the clinic. It does not limit Hampel’s ability to
teach so long as she is not practicing veterinary medicine next door. Nor does
it limit Johnson’s ability to practice veterinary medicine, even at the
neighboring facility. Based on this record, we conclude the trial court did not
abuse its discretion.
                                DISPOSITION
      The order is affirmed. VCA may recover its costs on appeal.

                                                            IRION, Acting P. J.

WE CONCUR:

DATO, J.

BUCHANAN, J.

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