Court Opinion

ID: 9797458
Source: CourtListenerOpinion
Date Created: 2023-08-31 04:21:21.695462+00
Date Added: 2024-06-11T08:55:39.469543
License: Public Domain

Judge Pro Tem GUTIERREZ,
dissenting.
I respectfully dissent. While I concur that Pinnacle had a protectable business interest in the customer goodwill developed by Hessing, I do not agree that the covenant not to compete unreasonably prevents Hessing from working in any capacity.
The majority holds that “services” is not expressly defined and therefore fails to limit the scope of activities that Hessing is prohibited from offering, selling, or trading. To ascertain the intention of the parties, a court must view a contract as a whole and consider it in its entirety. Canyon View Irrigation Co. v. Twin Falls Canal Co., 101 Idaho 604, 619 P.2d 122 (1980). In this case, the majority does not find it necessary to address the clause in the covenant not to compete that requires Hessing to “first provid[e] an opportunity to contract the work through [Pinnacle]” and the clause regarding “releasing a particular project to [Hessing]...”
Hessing was an engineer who developed specialized products. The parties necessarily contemplated the fact that Hessing could create products directly for Pinnacle’s clients in competition with Pinnacle’s interests. Indeed, that is exactly what happened in this case. In my opinion, the covenant not to compete does not unreasonably restrict Hessing. He is free to compete in all lines of business unrelated to product development. Hessing is also free to compete in product development after giving Pinnacle the right of first refusal to any product or project for any of Pinnacle’s past or current customers. This is a reasonable restriction that is neither unduly harsh nor oppressive on Hessing’s part.
Additionally, I would hold that the district court erred in refusing to modify the covenant not to compete to narrow the geographic scope. As explained in Insurance Ctr., Inc. v. Taylor, 94 Idaho 896, 899, 499 P.2d 1252-1255 (1972), “the modification principle allows a court to escape the rule of arbitrary refusal to enforce a covenant which, while unreasonable or indefinite in some of its terms, nevertheless serves to protect a legitimate interest of the parties or the public as the ease may be.”
The majority holds that the covenant not to compete unreasonably prohibited Hessing from providing services to Pinnacle’s clients, both current and past, without regard to whether Hessing had any contact with those clients. Because the covenant failed to reasonably limit the geographic scope of the prohibited activity, the majority determines that the covenant could not be considered reasonable. I would hold that the district court should have used its equitable powers to provide a reasonable geographic limitation. The district court should have limited the geographical area to “[Pinnacle clients], both current and past, with whom Hessing had had contact.” This would not rewrite the covenant, but would modify it to allow enforcement. Pinnacle clearly had a legitimate business interest in the customer relationship developed by Hessing through his contact with Casinovations. The district court should have modified the covenant to protect that interest.
As stated in Insurance Ctr., “enforcement is variable upon the circumstances of each ease.” Id., 94 Idaho at 899, 499 P.2d at 1256. In this case, the facts could not be more compelling. Unlike the development of general commodity, this case involved a specialized field of engineering, a specific commodity and a specific supplier. Pinnacle contracted with Hessing to develop a prototype of the single-deck card shuffler *372for Casinovations in February, 1997. A month later, Casinovations abandoned the development of the single-deck shuffler. Pinnacle next requested Hessing work on a six-deck card shuffler on behalf of Casinovations. A month after that, Hessing delivered the prototype to Casinovations, who then approached him to work in-house as a mechanical engineer. Hessing contracted with Casinovations and completed the development of the six-deck card shuffler. Hessing continued to be employed by Casinovations and began working on another multideck card shuffler. Hessing would not have been hired by Casinovations but for Pinnacle’s relationship with Casinovations. The covenant supplied a restriction on time and scope of activity. The geographic area could be reasonably restricted to those clients, past and present with whom Hessing has had contact. To hold otherwise only leads to an inequitable and unjust result. Therefore, I would reverse and remand.
Accordingly, I would award attorney fees on appeal to Pinnacle under I.C. § 12-120(3) as the prevailing party on appeal.
For each of these reasons, I respectfully dissent.