Court Opinion

ID: 4152385
Source: CourtListenerOpinion
Date Created: 2017-03-14 20:00:57.557123+00
Date Added: 2024-06-11T14:30:09.914627
License: Public Domain

NOT FOR PUBLICATION                            FILED
                     UNITED STATES COURT OF APPEALS                        MAR 14 2017
                                                                        MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS
                            FOR THE NINTH CIRCUIT

    DEBORAH CALDWELL, an individual              Nos. 14-17255
    domiciled in New Mexico,                          15-15986

                      Plaintiff-Appellee,        D.C. No. 3:13-cv-08043-PGR

     v.                                          MEMORANDUM*

    J & J ROCKET COMPANY, DBA JP
    Consultants, an Arizona corporation,

                      Defendant-Appellant..

                    Appeal from the United States District Court
                             for the District of Arizona
                 Paul G. Rosenblatt, Senior District Judge, Presiding

                      Argued and Submitted February 13, 2017
                             San Francisco, California

Before: CANBY, SILER**, and HURWITZ, Circuit Judges.

*
      This disposition is not appropriate for publication and is not precedent except
as provided by Ninth Circuit Rule 36-3.
**
      The Honorable Eugene E. Siler, Jr., Senior United States Circuit Judge for the
Sixth Circuit, sitting by designation.
      J & J Rocket Company (d/b/a “JP Consultants”) appeals from the judgment

and award of attorney’s fees in favor of Deborah Caldwell. For the following

reasons, we affirm.

      1. Arizona law requires restrictive covenants to be reasonable. Valley Med.

Specialists v. Farber, 982 P.2d 1277, 1283 (Ariz. 1999). “A restriction is

unreasonable and thus will not be enforced . . . if the restraint is greater than

necessary to protect the employer’s legitimate interest.” Id. Although there is no

bright-line rule for determining reasonableness, id., the three-year restrictive

covenant in Caldwell’s contract with JP Consultants for a one-year position is

facially unreasonable. The Arizona cases make clear that a covenant is unreasonable

if it lasts beyond the time necessary to train a replacement, id. at 1284 (citing Amex

Distrib. Co. v. Mascari, 724 P.2d 596, 604 (Ariz. Ct. App. 1986)), and no Arizona

case has approved a covenant of three years for an employment contract of one year,

see id. at 1284–85 (rejecting three-year restriction); Bryceland v. Northey, 772 P.2d
36, 40 (Ariz. Ct. App. 1989) (rejecting two-year restriction); Amex, 724 P.2d at 604–

05 (rejecting three-year restriction).

      2. JP Consultants failed to submit evidence in support of its affirmative

defense that Caldwell breached her agreement. “Under Arizona law, a material

breach occurs when (1) a party fails to perform a substantial part of the contract or

one or more of its essential terms or conditions or (2) fails to do something required

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by the contract which is so important to the contract that the breach defeats the very

purpose of the contract.” Dialog4 Sys. Eng'g GmbH v. Circuit Research Labs, Inc.,

622 F. Supp. 2d 814, 820 (D. Ariz. 2009) (citation omitted).            Although an

independent contractor has a duty not to compete with the principal regarding the

subject matter of the relationship, she is entitled to “make arrangements to compete”

after the conclusion of the contract. See McCallister Co. v. Kastella, 825 P.2d 980,

982 (Ariz. Ct. App. 1992) (quoting Restatement (Second) of Agency § 2 (1958)). JP

Consultants offered no evidence that Caldwell solicited any of its current clients, or

any entity that it was interested in obtaining as a client, during the course of the

relationship.

      3.   Arizona law gives courts discretion to award attorney’s fees to the

successful party in a contract case. Ariz. Rev. Stat. Ann. § 12-341.01. Awards of

attorney’s fees are reviewed for abuse of discretion. Lange v. Penn Mut. Life Ins.

Co., 843 F.2d 1175, 1184 (9th Cir. 1988). The district court carefully considered the

work performed by the attorneys and did not abuse its discretion in awarding

attorney’s fees to Caldwell.

      AFFIRMED.

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