15 Miles

The New York Appellate Division for the Second Judicial Department found that an attorney who had sold his practice was in contempt for violating a covenant not to compete within a geographic area that was a provision of the sale

In August 2017, the plaintiff entered into a written agreement whereby it purchased the defendant’s existing law practice on North Sea Road in Southampton (hereinafter the North Sea office), together with all of the law practice’s assets, including the goodwill of the practice, in exchange for a share of monthly revenues. The agreement contained a covenant not to compete, which prohibited the defendant from practicing law within a 15-mile radius of the North Sea office for a period of five years. Soon thereafter, the defendant engaged in conduct that allegedly violated the covenant not to compete. The plaintiff commenced this action against the defendant, inter alia, alleging breach of the covenant not to compete and for injunctive relief. The defendant asserted affirmative defenses in his amended answer alleging the unavailability of injunctive relief, illegal fee splitting, and that the agreement was unenforceable for want of adequate consideration.

Plaintiff secured a preliminary injunction

On the defendant’s appeal from the April 2019 order, this Court, among other things, affirmed so much of the April 2019 order as granted the plaintiff’s motion for preliminary injunctive relief, determining, in relevant part, that the covenant not to compete was valid and enforceable and that the plaintiff established its entitlement to a preliminary injunction (see Keneally, Lynch & Bak, LLP v Salvi, 190 AD3d 961, 963). This Court also determined that the covenant not to compete did not constitute unlawful fee splitting and was not unenforceable for lack of consideration (see id.).

Contempt

Under the circumstances of this case, the Supreme Court improvidently exercised its discretion in denying the plaintiff’s four separate motions to hold the defendant in contempt. To prevail on a motion to hold a party in civil contempt, the movant must establish, by clear and convincing evidence, that the party to be held in contempt violated a lawful and clear mandate of the court, of which that party had knowledge, and that such violation resulted in prejudice to the movant’s rights (see El-Dehdan v El-Dehdan, 26 NY3d 19, 29; Matter of Mendoza-Pautrat v Razdan, 160 AD3d 963, 964). Here, the plaintiff established, by clear and convincing evidence, that the defendant knowingly violated a lawful and clear mandate of the court set forth in the April 2019 order enforcing the covenant not to compete and that such violation resulted in prejudice to the plaintiff’s rights. The plaintiff, among other things, submitted affidavits from clients of the defendant located within the geographic scope of the covenant not to compete, in which the clients averred that the scope of the defendant’s representation involved matters within that same area, as well as email correspondence in which the defendant sought legal fees for representation prohibited by the April 2019 order. The defendant’s conduct, which is not in dispute, unambiguously constituted the practice of law within the prohibited geographic area in violation of the court’s directive, warranting a finding of contempt under the circumstances.

(Mike Frisch)