DOCTORS AND NON-COMPETES: CASE #9
The last case we will discuss in this series of Virginia court decisions on non-compete contracts and physicians comes from the Virginia Supreme Court. The case, Greenbrier Obstetrics and Gynecology v. Zenette Moore Leao,MD, was decided January 9, 2009.
Dr. Leao entered into a 3 year employment contract with Greenbrier, a professional corporation providing obstetric and gynecological services in southeast Virginia. The contract contained three important provisions:
1. Section 4.01(e) stated the agreement may
be terminated by either employer or employee without cause and without
any further obligations upon 60 days advance written notice.
2. A covenant not to compete which provided
that “for a period of 2 years following termination of employment…employee
shall not, directly or indirectly, own, manage, participate in, be employed
by, or maintain any interest in any medical practice which practices
obstetrical or gynecological medicine within a 20 mile radius of the current
office of the employer.”
3. Section 3.05(f) provided, “Employee
and employer intend that this Covenant Not to Compete shall be severable from the other
provisions contained in this agreement, and employer shall not be barred from
enforcing employee’s covenant by reason of its breach of any other provision of
Dr. Leao worked for Greenbrier for 3 years but, due to medical reasons, had to terminate her employment and provided the required 60 days written notice. She then filed suit asking the court to determine the enforceability of the non-compete provision in her contract.
The Virginia Supreme Court ruled in Dr. Leao’s favor and found the non-compete unenforceable for the following reasons:
1. Section 4.01(e) provided that, after proper notice of termination, neither party had “further obligations.”
2. Section 3.05(f) was a severability clause and an attempt by the employer to protect its ability to enforce the non-compete even if it failed to live up to its obligations under the contract.
3. The Virginia Supreme Court, viewing the agreement as a whole, found these two sections to be an “unresolvable conflict.” Accordingly, since Greenbrier drafted the agreement all ambiquities are construed against the drafter, Dr. Leao’s notice of termination ended all further obligations of the parties…including the non-compete.