RAKESH MARWAHA, Plaintiff-Appellee, v. WOODRIDGE CLINIC, S.C., Defendant-Appellant. | ) ) ) ) ) ) ) ) ) | Appeal from the Circuit Court of Du Page County. No. 01--MR--1020 Honorable |
This case concerns the enforceability of a covenant not tocompete. Plaintiff, Rakesh Marwaha, sued, seeking a declaratoryjudgment that the covenant was not enforceable. Defendant,Woodridge Clinic, S.C., countersued for injunctive relief anddamages based on plaintiff's alleged violation of the covenant. OnJuly 23, 2002, the trial court granted plaintiff's motion forsummary judgment, finding that the covenant was not enforceable. Defendant timely appeals. We affirm.
Plaintiff is a medical doctor, and defendant is a medicalclinic. On April 23, 1993, plaintiff entered into an employmentagreement with defendant. The employment agreement provided that"[t]he employment of the Doctor shall be for the period beginningJuly 1, 1993 and ending June 30, 1996." The employment agreementcontained no provision for automatic extension or continuationbeyond June 30, 1996.
The employment agreement contained a covenant not to competethat stated as follows:
"The Doctor agrees that upon termination of the Doctor'semployment for any reason, the Doctor shall not in any wayconduct a practice, contact patients of Employer, participatein a medical practice as an employee, partner, shareholder,owner or consultant, within a ten mile radius of any officesof the Employer and local hospitals for a period of two years,or for such radius and period of time as any Court may deemfair and reasonable. Doctor will not maintain staffprivileges at said local hospitals after his termination. Should said Courts find the ten mile radius and two yearperiod unreasonable, which provision the Doctor agrees to bebound on, Doctor agrees to pay for all attorney fees, legalfees, Court costs, service fees and any other expense oflitigation, should the Employer have to go to Court to enforcethis provision in seeking a Restraining Order or for damagesincurred by the Employer in enforcing this provision. Thisprovision shall survive the termination of this agreement, andno matter what, shall continue to be enforceable against theDoctor."
After the expiration of the employment agreement on June 30,1996, plaintiff continued to work for defendant. He finallyreceived a notice of termination on November 24, 2001. During theinterim, plaintiff and defendant were engaged in a dispute overwhether and under what terms plaintiff would become a partner inthe medical practice. In its brief, defendant admits that, otherthan those provisions that provided that they survived thetermination of the agreement, the employment agreement did notgovern the relationship between the parties after June 30, 1996.
At trial, defendant contended that plaintiff's termination onNovember 24, 2001, triggered the noncompete clause because thenoncompete clause provided that it survived the termination of theemployment agreement. The trial court rejected this argument andgranted plaintiff's motion for summary judgment.
The trial court identified several independent grounds for itsholding. We concern ourselves only with the first because it isdispositive of the issue. The trial court held that the word"employment," as used in the phrase "upon termination of theDoctor's employment" in the noncompete clause, referred toemployment under the employment agreement. Plaintiff's employmentunder the employment agreement terminated on June 30, 1996. Thus,the clause was not triggered by the November 24, 2001, terminationthat took place five years after the expiration of the employmentagreement. On appeal defendant argues that this holding was error. We disagree.
We review de novo the trial court's grant of a motion forsummary judgment. Guillen v. Potomac Insurance Co. of Illinois,203 Ill. 2d 141, 149 (2003). Additionally, courts strictlyconstrue and interpret covenants not to compete, and any doubts orambiguities must be resolved against the restriction. BloomingtonUrological Associates v. Scaglia, 292 Ill. App. 3d 793, 798 (1997).
The only reasonable reading of the covenant not to compete isthat the language "termination of the doctor's employment" referredonly to employment under the employment agreement. An earliersection of the agreement provided that "[t]he employment of theDoctor shall be for the period beginning July 1, 1993 and endingJune 30, 1996." This statement clearly uses "employment" in thesense of the employment contemplated under the employmentagreement. It has long been the rule that "[u]nless a contraryintent is evident, words used in one sense in one part of acontract are deemed of like significance in another part." CedarPark Cemetery Ass'n v. Village of Calumet Park, 398 Ill. 324, 334(1947). Defendant, however, points to language in a later sectionof the contract that states, "In addition to the above, after thethird year of employment, provided that the Doctor is stillemployed by the Employer, and provided that the Doctor hasperformed his medical services as agreed to in this contract,Employer shall give the Doctor at that time, an opportunity topurchase stock in the Employer Company ***." This provision uses"employed" in the general sense of working for the company. Atbest, this statement creates an ambiguity as to the meaning of"employment" in the covenant not to compete. Again, we construeambiguities against the party seeking to enforce a covenant not tocompete.
We observe that it would be strange for parties to anemployment contract to provide for a noncompete provision to existin perpetuity. Such a provision would govern the terms of othernot-yet-existent employment contracts between the same parties. Inmost circumstances, parties would be better positioned to decidethe scope of noncompete agreements that apply to future employmentcontracts when they negotiate those contracts because, at thattime, they would have the benefit of greater information abouttheir future circumstances. Defendant responds that the languagestating that the noncompete clause "shall survive the terminationof this agreement, and no matter what, shall continue to beenforceable against the Doctor" specifically provides that theclause applies to future employment relationships between theparties. The more reasonable interpretation of this statement,however, is that the parties simply meant to clarify that thenoncompete provision, although triggered at or prior to thetermination of the employment agreement, would continue to beeffective for its two-year term even if that term extended beyondthe term of the employment agreement.
In our view, the covenant not to compete was triggered only bythe termination of the employment under the employment agreement,not by the termination of subsequent employment under a differentagreement. This conclusion is reinforced by the rule that courtsare to strictly construe restrictive covenants. We hold thatplaintiff's termination on November 24, 2001, did not trigger thenoncompete clause. The judgment of the circuit court of Du PageCounty is affirmed.
Affirmed.
GROMETER and GILLERAN JOHNSON, JJ., concur.