Haas v. Hodge

California Court of Appeal Jun 24, 1959 No. Civ. 23577Published

Before: Ashburn

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Holding. The court held that a restrictive covenant in a medical association contract is unenforceable because the defendant was an employee who possessed no goodwill to sell, and thus the agreement did not fall within the statutory exception for the sale of goodwill.

Issues

Whether the defendant sold his interest in the goodwill of a medical practice to the plaintiff, thereby validating a restrictive covenant under Business and Professions Code section 16601.

Disposition. affirmed

Quotations verified verbatim against the opinion

“An analysis of the writing discloses the defendant became an employee of plaintiff, or at least occupied a status akin to that of employee, and hence had no good will to sell.”

“Defendant could not sell the present or future good will of the business in this instance, for the business and its good will belonged to plaintiff Haas.”

ASHBURN, J.

This case arises from a contract for the association of two doctors in the practice of medicine. The relationship having terminated, plaintiff Dr. George S. Haas

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brought suit against defendant Dr. James C. Hodge to obtain an injunction against his practicing within 25 miles of plaintiff’s offices, for damages and other relief. Judgment went for defendant and plaintiff appeals therefrom.

The contract (received in evidence as Exhibit 3) provides: “It is hereby stipulated and agreed by the parties that in the event this agreement is terminated for any reason whatsoever, that from and after the said termination, Dr. Hodge shall not maintain an office for the practice of his profession at any place within a radius of 25 miles from the said office of Dr. Haas. ’ ’ Also:

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That Dr. Hodge expressly hereby disclaims, absolutely and irrevocably, any right or claim of right to any the professional practice herein mentioned and referred to and to the good-will thereof.”

Plaintiff’s office is at 1200 West 80th Street in Los Angeles, and defendant, after the contract was terminated, opened an office for the practice of his profession in Inglewood, Los Angeles County, at a distance considerably less than 25 miles from plaintiff’s location, some 5 miles therefrom.

Appellant’s counsel has limited the appeal to the question whether defendant sold to plaintiff his interest in the good will of the business, thus falling within the validating effect of section 16601, Business and Professions Code, quoted

infra.

The trial court found: “That at no time during or after the association of plaintiff and defendant in their practice of medicine was there a sale of goodwill of the practice by either of the parties to the other.” Appellant’s brief says: “Plaintiff appeals and hereby limits the appeal to the question of the validity of the contract, Exhibit 3 introduced in evidence, that is to say, Appellant contends that the restrictive covenant in Exhibit 3 is valid and that the conclusion of the trial court to the contrary is erroneous as a matter of law.. . . This appeal is limited to a consideration of that point alone,

Haas v. Hodge

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ASHBURN, J.

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