Lead Opinion
OPINION
Aрpellants, Dr. Ronald Norlund (R. Nor-lund), Dr. Dawn Norlund (D. Norlund) and Indiana Cataract and Laser, P.C. (ICL) appeal the trial court’s December 8, 1995, findings, conclusions and order granting a preliminary injunction against them on behalf of appellees, Dr. Joseph Faust (Faust) individually and d/b/a Faust Eye Center (Eye Center) and Faust Eye Center, P.C. (Faust, P.C.).
Appellants present five issues for review which this court restates as follows:
1. Whether the trial court erred in finding that the actions of appellants breached the covenant not to compete;
2. Whether the trial court erred by enforcing a covenant not to compete which was in contravention of an Indiana statute;
3. Whether the trial court erred in allowing Faust Eye Center, P.C. to enforce the terms of the agreement entered into by Faust Eye Center;
4. Whether the trial court erred in finding the terms of the covenant not to compete reasonable as against appellant, R. Norlund; and,
5. Whether the trial court erred in finding the terms of the covenant not to compete reasonable as against appellants, D. Norlund and ICL.
Pursuant to Trial Rule 52(A), the trial court entered findings and conclusions.
Appellee Faust is an ophthalmologist previously d/b/a Faust Eye Center. In December 1993, Faust incorporated as Faust Eye Center, P.C. Faust Eye Center derived most of its business from the general public prior to 1991. In 1991, Faust decided that he would focus on obtaining business through referrals from optometrists. He felt that he could create an amiable relationship between himself and optometrists who would refer their patients to him for secondary eye care. In order to facilitate the relationship between himself, an ophthalmologist, and the optometrists, Faust decided to hire a highly-skilled high-profile optometrist. That рerson would perform duties as a medical optometrist and as a optometric liaison, building referral relationships with other area optometrists.
R. Norlund learned of Faust’s plan and wrote Faust about the employment opportunity. R. Norlund noted that he had the medical skills as well as the outgoing personality to fulfill the needs of this new position.
Shortly after R. Norlund’s letter to Faust in May, 1991, the parties began negotiating a contract. During the negotiations, R. Nor-lund’s legal counsel wrote to Faust’s counterpart noting that the contract which they were contemplating would be in violation of I.C. 25-1-9-5. The statute makes it illegal for an optometrist to accept employment from anyone other than another optometrist or a corporation formed by an optometrist. Faust offered to alter the agreement so as not to render it in contravention of the statute, but, “[u]ltimately, R. Norlund chose not to ... alter the agreement.” Record at 404.
The parties entered into an Employment Agreement on or about July 27, 1991. Pursuant to the Employment Agreement, the duties of R. Norlund were defined as follows: “Section 2 Duties...
(i) serving as an Optometric Liaison including, but not limited to, building a relatiоnship for the Eye Center with potential referring optometrists for non-primary care ocular services (which would include diagnosis and management of ocular disease and ocular surgery) to be performed by the Eye Center, management of the referral relationship and providing education and assistance to potential referring optometrists;
(ii) serving as a Medical Optometrist including, but not limited to, diagnosis and management of ocular disease for patients of the Eye Center; and
(in) [s]uch additional or different duties as may be prescribed, from time to time, by the Eye Center.”
Record at 583.
The Agreement also contained a covenant not to compete which provided in relevant part:
Section 7 Post Employment Covenant Not to Compete. For a period of two (2) years after the termination of this Agreement for any reason by either party, whether voluntarily or involuntarily, including by expiration of its term:
(i) Dr. Norlund shall not contact, directly or indirectly, any Referring Optometrist with regard to ocular care services or techniques or with regard to former, current or potential patients of the Referring Optometrist (a “Referring Optometrist” is an optometrist who has referred patients to the Eye Center while Dr. Norlund was employed by the Eye Center);
(ii) Dr. Norlund shall not discuss with a Referring Optometrist (whether the discussion is initiated by him or by the Referring Optometrist) any ocular care services or techniques or anyformer, current or potential patients of the Referring Optometrist;
(iii) Dr. Norlund shall not perform any services as an Optometric Liaison (viz. services substantially similar to those described in clause (i) of Section 2) for, or in association in any way with, any ophthalmologist in the counties specified on Exhibit A.
(iv) Dr. Norlund shall not perform any services as a Medical Optometrist (viz. services substantially similar to those described in clause (ii) of Section 2) for, or in association in any way with, any ophthalmologist in the counties specified on Exhibit A.
Record at 587.
R. Norlund began his employment with Faust in July 1991. During the time of R. Noland’s employ, Faust’s optometric referrals increased from 20% to 80-90% of his business. This increase was due to R. Nor-lund’s activities developing the network on behalf of and funded by Faust. The network grew throughout northeastern and central Indiana, and in fact, in 1994,122 optometrists in the area referred patients to Faust Eye Center for treatment.
On December 30,1998, Faust incorporated Faust Eye Cеnter as Faust Eye Center, P.C. Prior to incorporation, the Eye Center had been a sole proprietorship. Subsequent to incorporation, Faust was the sole shareholder, officer and director of Faust Eye Center, P.C. After the change, R. Norlund continued to work for and received compensation from the Eye Center in the same manner.
In late 1993 or early 1994, R. Norlund expressed interest in renegotiating his contract with Faust. Negotiations commenced and lasted throughout 1994 and early 1995. By May 1995, it became doubtful that the parties would reach an agreement; therefore, Faust issued a written notice of nonre-newal of R. Norlund’s employment agreement on May 23,. 1995. The negotiations culminated in a heated exchange on July 26, 1995 whereby R. Norlund’s employment with Faust ended with R. Norlund threatening to take 500 to 700 cataract surgeries a year away from the Eye Center.
The same day that R. Norlund left Faust’s employ, he issued a letter to optometrists in northeastern and north central Indiana on stationery bearing his name and home address. The letter concerned an ocular care device known as an Excimer Laser. The letter read in part:
“The purpose of this letter is tо determine how much interest exists among doctors of optometry practicing in northeastern and north central Indiana regarding an opto-metrically-owned Excimer Laser center. Over the past few months, approximately a dozen doctors of optometry have contacted me and discussed their interest in preparing their practices in optometry for the approval of photorefractive keratectomy. Due to the increasing interest in this subject and a desire to position optometry in a leadership role, I decided to educate myself on the issues and the options.... Some of your patients are going to want to consider this new refractive option and some will be better candidates than others. How you manage this group of future patients is the aspect yet to be determined. Will you once again be forced to accept the terms dictated by local competing ophthalmologists?”
Record at 407.
Within two weeks of leaving Faust Eye Center, R. Norlund made an interest-free loan of $30,000 to D. Norlund in order to establish Indiana Cataract and Laser, P.C. (ICL). ICL was established as a business to provide secondary eye care based upon opto-metric referrals. ICL is essentially identical in nature to Faust Eye Center.
D. Norlund is the sole shareholder in ICL. She was previously working full-time as a primary care optometrist in Northern Indiana. She had no experience running a secondary care facility and had never received a secondary care referral from another optometrist before August 1995.
R. Norlund has no ownership interest in ICL. He has never seen a patient there, nor
The above notwithstanding, R. Norlund contacted Dr. Jay McGarvey (McGarvey), a colleague from Bascom-Palmer about an opportunity with ICL. McGarvey eventually accepted a position with ICL working as a secondary ear e/medical optometrist. McGar-vey also functions as an optometric liaison for ICL. He solicits optometric referrals from optometrists in northeastern Indiana in much the same way R. Norlund did when working for Faust. ICL has received about 30 to 100 patients, most from nine optometrists who previously referred patients to Faust.
Although R. Norlund has not performed services as an optometric liaison or medical optometrist in the proscribed area, R. Nor-lund has done several things on behalf of ICL. He contacted McGarvey and advised him of the opportunity in the market in northeastern Indiana. He interviewed ophthalmologists and contacted hospital administrators concerning privileges at hospitals. He told one ophthalmologist, Dr. Orr, that ICL’s referral network would consist of optometrists with whom he had developed relationships during his time with Faust. R. Norlund also assisted D. Norlund in purchasing equipment for ICL and painting and moving office furniture.
The trial court concluded that the contract between R. Norlund, an optometrist, and Faust, an ophthalmologist violated I.C. 25-1-9-5. The statute provides that an optometrist who accepts employment from anyone other than another optometrist or a corporation formed by an optometrist is subject to disciplinary action. Although the trial court found the contract violated the statute, the court found that the contract was not void.
The court further concluded that Faust had established a prima facie case that the covenant was enforceable. It found that the covenant had been breached directly by R. Norlund and indirectly by R. Norlund in concert with ICL and D. Norlund. The trial court noted that the evidence suggests that R. Norlund is contacting optometrists in an effort to gain optometric referrals for ICL.
Upon the preceding determinations and conclusions, the trial court entered a preliminary injunction which enforced parts of the covenant not to compete against R. Norlund, D. Norlund, and ICL. The appellants were enjoined from:
“contacting, directly or indirectly, any of the 122 referring optometrists listed on Defendants’ Exhibit I admitted into evidence with regard to former, current or potential patients of said referring optometrists[;]
... discussing with any of the 122 referring optometrists listed on Defendants’ Exhibit I admitted into evidence (whether the discussion is initiated by them or by a referring optometrist) any former, current or potential patients of the referring optometrists[; or]
... performing any services as an opto-metric liaison or medical optometrist, as those terms are defined in the Employment Agreement admitted into evidence in this case as Defendants’ Exhibit B for, or in association in any way with, any ophthalmologists in the counties specified on Exhibit A to the Employment Agreement admitted into evidence as Defendants’ Exhibit B.”
Record at 417-18.
I.
STANDARD OF REVIEW
The granting of a preliminary injunction is within the discretion of the trial court, and this court’s review is limited to the determination of whether or not the trial court clearly abused that discretion. Harvest Ins. Agency v. Inter-Ocean Ins. Co. (1986) Ind.,
When considering the granting or denial of a preliminary injunction, the trial court’s discretion is measured by several factors. These factors include:
1) Whether or not the party seeking the injunction has an adequate remedy at law;
2) Whether granting the injunction would disserve the public interest;
3) Whether the party has established a reasonable likelihood of success at trial; and,
4) Whether the injury to the party seeking the injunction outweighs the harm to the party who would be enjoined.
Indiana State Bd. of Public Welfare v. Tioga Pines Living Center, Inc. (1994) Ind.App.,
A party seeking a preliminary injunction must establish a prima facie case at the preliminary injunction hearing. The party is not required to show that he is entitled to relief as a matter of law, nor is he required to prove and plead a ease which would entitle him to relief upon the merits. Rees v. Panhandle Eastern Pipe Line Co. (1978)
II.
FAUST’S REMEDIES AT LAW ARE INADEQUATE
Appellants first argue that Faust has not carried his burden of showing that his remedies are inadequate at law and that he will suffer irreparable harm. It is true that a party seeking an injunction must show irreparable injury. Id. However, the irreparable injury requirement does not demand that Faust point to specific losses in his business. As stated by the trial court: “[i]n-junctive relief is appropriate if it is more practical or efficient than that afforded by law”. Record at 414 (citing Community Care Centers, supra
The trial court also impliedly concluded that R. Norlund was violating the covenant not to compete directly and indirectly through D. Norlund and ICL. Upon examination of the record, this court cannot say that it was unreasonable for the trial court to have so concluded.
The trial court writes that “R. Norlund has made written contact with optometrists in the proscribed territory concerning the establishment of an optometrically-owned Ex-cimer Laser center (an ocular care device) in violation of the covenant.” Record at 413. R. Norlund’s covenant forbade him from contacting referring optometrists, either directly or indirectly, with regard to former, current or potential patients. R. Norlund mailed a letter to the optometrists on the day he left Faust Eye Center. The letter in question is directed toward optometrists. The letter is also patient-oriented and is geared to prospective referrals of patients which have the same sort of problems with which Faust deals. It was certainly within the province of the trial court to conclude that this letter was a violation of the covenant not to compеte.
We agree that these findings and conclusions reflect irreparable injury to Faust. See Peters v. Davidson, Inc. (1977)
III.
THE EMPLOYMENT AGREEMENT
(A) I.C. 25-1-9-5 Does Not Invalidate the Agreement
This court must determine whether I.C. 25-1-9-5 (Burns Code Ed.1996), which subjects optometrists to disciplinary sanctions for accepting employment to practice optometry from anyone other than another optometrist or a corporation formed by an optometrist, renders the entire contract between R. Norlund and Faust illegal and therefore void. Although this court is of the view that the contract entered into is in contravention of the statute, R. Norlund may not be heard to avail himself of this defense in the light of the fact that he entered into the contract with full knowledge of the statute in question.
R. Norlund argues that I.C. 25-1-9-5 renders the contract between the parties unenforceable. The statute provides that an optometrist:
“is subject to the exercise of disciplinary sanctions ... if, after a hearing, the board finds [that the optometrist] has accepted employment to practice optometry from a person other than:
(1) A corporation formed by an optometrist under I.C. 23-1.5; or
(2) An individual who is licensed as an optometrist under this article and whose legal residence is in Indianа.” Id.
It is well-established that the language of statutes should be construed according to their plain, ordinary and usual meaning. Marion County Sheriff’s Merit Bd. v. Peoples Broadcasting, Corp. (1989) Ind.,
Generally, the law declares that a contract made in contravention of a statute is void. Maddox v. Yocum (1941)
In Noble, supra,
The court went on further to note that the lessees in the case never “moved into the apartment and thus never benefitted in any way from the ... agreement." Id. at 112. (emphasis supplied). The opposite holds true here. R. Norlund did benefit from the agreement, and in fact, has benefitted fully therefrom. By voiding the contract, the only effect will be to cost Faust part of his agreed-upon bargain.
Faust asks this court to recognize the principles of equity which forbid a party from accepting the benefits of a contract and then disavowing its validity. As enunciated in Raymundo v. Hammond Clinic Assoc. (1983) Ind.,
(B) The Assignment of the Agreement From.Faust to Faust, P.C.
Norlund also argues that the employment contract between himself and Faust cannot be enforced by Faust Eye Center, P.C. because Faust, P.C. was never a party to the contract. The employment contract between Faust and Norlund is one for personal services as evidenced by the contract itself. Indiana courts have recognized that, as a general rule, personal services contracts are not assignable by the employer. See, Jones v. Servel (1962)
This court must address the effect of Faust’s incorporation as Faust Eye Center, P.C. with respect to Norlund’s employmеnt contract. Norlund points out that Faust never made a formal assignment of the employment contract to the corporation. Appellants Br. at 46. However, it is clear that Faust Eye Center, P.C. became obligated to pay R. Norlund’s salary under the contract. Appel-lee points to Peters v. Davidson, Inc., supra
Although Peters ’ holding is distinguishable from the present case, the court addressed a relevant point when it said:
“We do not feel that an employee, who freely enters into an employment agreement containing an enforceable covenant not to compеte, should be relieved of his contractual obligations simply because his employer’s name changed following a valid merger whereby the rights to the employment agreement are transferred. This would seem to be especially true in those cases where, as here, the employee continues to accept the benefits of his agreement without objection to the merger.” Id. at 562.
In Ruberoid Co. v. Glassman Constr. Co. (1967)
Finally, in Spengler, supra
In so far as the Florida court observed that continued employment alone will not constitute consent to the assignment of a personal services contract, we agree. The parties must have knowledge of the assignment in order to consent to it. Parties have the right to determine with whom they contract. Spengler, supra
We are thus brought to Justice Traynor’s reasoning set forth above. This court perceives no reason why the contract between Faust, P.C. and R. Norlund should not be enforced. The contract did not contain a specific provision that it could not be assigned by Faust.
IV.
THE COVENANT NOT TO COMPETE
Covenants not to compete are agreements in restraint of trade, and as such, they are not favored by Indiana cоurts and are to be narrowly construed. See, e.g., Harvest Ins., supra
(A) Covenants Not to Compete in Restraint of Medical Services
Covenants not to compete which restrict medical services in a particular area are not void per se as against public policy. Id.; Medical Specialists, Inc. v. Sleweon (1995) Ind.App.,
However, our Supreme Court held in Raymundo, supra,
“[w]ith respect to Dr. Raymundo’s claim that the covenant is inimical to the public interest and unenforceable as a matter of public poliсy, he has not supported his claim with any cogent argument or authority as to why a physician’s agreement not to compete should be treated differently, as a matter of public policy, than that of other business or professional people. His comments that it is in the public interest for physicians, as a group, to determine their code of conduct and ethical standards, that enforcement of such covenants may inflict a hardship upon the covenantor and that the public may thereby be denied medical services are unpersuasive in the light of the public interest in the freedom of individuals to contract.” Id.
Since our Supreme Court has found it unnecessary to revisit the principle enunciated in Raymundo, namely that the public’s general interest in medical services is subservient to the public interest in the freedom of individuals to contract, and despite reservations to the contrary, this court holds that a
The decision in this case is made easier, however, by noting that R. Norlund is not restrained from providing medical services.
The findings of the trial court refer to a “void in the market”; however, that is not tantamount to saying that the result of the covenant not to compete was injurious to the public. There are often voids in the market which do not necessarily injure the public. Furthermore, the “void” referred to here is for a person performing services as an opto-metric liaison, not a person performing medical services. This court cannot say that the trial court erred in concluding that this contract did not disserve the public interest. Therefore, the decision of the trial court that the covenant not to compete is not against the public interest is affirmed.
(B) Faust’s Protectable Interest
The quintessence of the ease before this court is the validity of the terms of the covenant not to compete. This court must look to whether the terms of the covenant “were reasonable with respect to (1) the necessity of the breadth of the protection for thе covenantee [Faust]; (2) the restriction upon the covenantor [R. Norlund]; and (3) the public interest.” Harvest, supra,
As earlier noted, covenants not to compete are in restraint of trade and generally disfavored See Harvest, supra,
Consequently, courts have held covenants not to compete valid when they protect an employer’s interest in trade secrets, Jenkins v. King (1946)
If an employee is hired in order to generate such good will, he may be enjoined from subsequently contacting those customers or using that good will to his advantage. See Miller, supra,
R. Norlund was employed by Faust to generate good will between Faust and the area optometrists. Although Faust does not have a protectable interest in the patiеnts of those optometrists, Faust does have an interest in the good will created by R. Norlund on Faust’s behalf. Therefore, that interest is protectable and the action of the trial court enjoining R. Norlund from contacting any of the optometrists as outlined in the court’s order sections 8 and 4 is valid.
The trial court also upheld the portion of the covenant which prevented R. Norlund from acting as an optometric liaison or medical optometrist for or in association with any ophthalmologist within the specified counties. All that portion of the covenant does is prevent R. Norlund from practicing his livelihood. So long as R. Norlund is not contacting any of the optometrists previously mentioned, Faust has no protectable interest. If there is no protectable interest involved, an employer may not forbid an employee to subsequently work in his profession in such a large area. Without contacting the optometrists listed, R. Norlund has no advantage which any other optometrist would not have starting a business in the area. Consequently, section 4 of the trial court’s injunction is hereby held invalid.
(C) The Geographic and Time Restraints of the Restrictive Covenant
If the employer has a protectable interest, that employer may restrict an employee from competing, after the period of employment, in an area that is not unreasonably broad and for an amount of time that is also not unreasonable. Here the trial court concluded that two years was not an unreasonable length of time. The trial court found that sections i and ii of Norlund’s covenant extended to the 122 practicing optometrists fisted on defendant’s exhibit I. These were optometrists who had referred patients to Faust during the time of R. Norlund’s employ. The use of territorial boundaries is only one method of limiting a covenant’s scope, and when a covenant not to compete contains a restraint which clearly defines a class of persons with whom contact is prohibited, the need for a geographical restraint is decreased. Field, supra,
V.
ENJOINING PERSONS NOT PARTIES TO THE COVENANT
The most challenging question before this court is whether or not D. Norlund and ICL may be appropriately enjoined from the activities contained in R. Norlund’s covenant not to compete. We hold that D. Norlund and ICL may so be enjoined.
Subsequent to her disassociation with H & R Block, June wrote a letter to former H & R Block clients informing them that she would no longer be with the company and expressing her dissatisfaction with Block’s “unwarranted” price increases. In her letter, she also mentioned that she would be helping out her husband in his tax service. In the same envelope (which happened to be H & R Block stationery with the H & R Block name blacked out), Robert included a letter that declared he was starting a new tax service and would provide that service at 10% off the price the customers had paid the previous year. Id. at 759.
In addition to the above, Robert told the post office that all mail addressed to their new office at 900 Main Street should be delivered there, even if addressed to Block. Finally, when the new Block franchisee called information for Block’s number, she was asked if she wanted the 802 Main Street (the location of the new Block office) or 900 Main Street number. Id.
The trial court decided that the McCarts had acted together to breach the agreement that June had signed with H & R Block. The trial court entered an injunction against Robert and June, albeit that Robert had never signed the agreement with H & R Block.
Judge Garrard, speaking for this Court, looked to the law of other states in deciding the issue. The court concluded “ ‘... that the rule that a stranger to a covenant may be enjoined from aiding and assisting a covenantor in violating his covenant is supported by an overwhelming weight of authority.’ ” Id. at 760 (quoting West Shore Restaurant Corp. v. Turk (1958) Fla.,
The court in McCart agreed with the trial court’s reasoning that to allow Robert to continue in the tax preparation business without any of the restrictions of the covenant not to compete would frustrate the purpose of the agreеment between Block and June. The court would not allow a “mere subterfuge designed to avoid June’s obligation” to circumnavigate justice. Id.
McCart cites heavily to Arwell Div. of Orkin Exterminating Co. v. Kendrick (1971)
The court concluded that the covenant could be enforced against Marguerite. The court pointed out that “[a] party that induces another to violate his contract may be restrained from such conduct.” It also concluded that “[i]f a party knowingly participates or aides another in the violation of the contract[,] such conduct may be regarded as inducement.” Id.
The McCart court also directs the reader to Sulmonetti v. Hayes (1964)
During this time, “Frank remained in the employ of the buyer, and played an apparently passive role in organizing Grafton Oil and in soliciting the buyer’s customers.” Id. at 300. There was also evidence that Frank did not play a satisfactory role in winning back customers for the buyer or adequately performing his duties as an employee of the buyer. It seemed that the buyer’s deliveries to customers, under Frank’s command, were tardy while Emily’s deliveries from Grafton Oil were on time. Id.
Sulmonetti concluded that Emily had “deliberately and wilfully connived with her husband, and purposely acted both with him and independently of him, to appropriate to herself and her husband the good will that the buyer had purchased from Frank.” Id.
Although а person may be subject to an injunction with regard to a covenant to which she is not a party, there must be evidence that she aided or operated in concert with the covenantor to breach the covenant or that she was the alter ego of the covenantor. In Russell v. Mullis (1985) Ala.,
Jonnie used part of her money to erect a building on the land, which became “Dixieland” convenience store. Jack did oversee the construction of the budding, but that was “ostensibly to make certain that the construction did not adversely affect” that portion of the land upon which he intended to build a recreational vehicle park. Id. Dixieland was owned аnd operated solely by Jonnie. She obtained additional financing without a co-signer, she negotiated with suppliers, and licenses were issued in her name. In fact, Jack did not purchase products, assist Jonnie with inventory or marketing, or help her in any way.
The court in Russell, citing
McCart and the primordial pool of jurisprudence from which it sprang, leads this court to conclude that the trial court’s decision that R. Norlund’s covenant not to compete should be extended to enjoin D. Norlund and ICL from those activities which assist R. Norlund in breaching the covenant is not in error. It is a fundamental principle in Indiana that “[t]he law will not permit him to do indirectly, or through [others], what he could nоt do directly, by himself.” Eisel v. Hayes (1895)
Appellants argue an affirmance by this court will prevent employers from hiring anyone who is subject to a covenant to not compete. That is not the case. This decision is limited to the facts before the court. There was evidence that the covenantor had a hand in establishing the business and furthering its initial efforts. From this, the trial court could deduce that this was, in part, R. Norlund’s business. This decision should also not be interpreted to indicate that a spouse cannot conduct an independent business. In fact, the Russell case clearly shows that if there is no evidence that the covenantor is acting with or through the spouse then no injunction shall be issued. If D. Norlund was already engaged in a secondary care optometric business before R. Norlund’s covenant not to compete came into play, then that business would genuinely be hers. However, here the coincidences follow one on top of another. D. Norlund started the business shortly after R. Norlund left Faust; R. Norlund threatened to take business from Faust; R. Norlund loaned money to D. Nor-lund; R. Norlund contacted McGarvey; R. Norlund wrote a letter to all the optometrists in northeastern Indiana; R. Norlund performed services for ICL (albeit without compensation). It was certainly within the trial court’s fact-finding discretion to deduce that D. Norlund and R. Norlund were acting in concert.
The trial court found that the Appellees had made a prima facie showing that the covenant had been indirectly breached by R. Norlund in concert with D. Norlund and ICL. The cases above clearly stand for the proposition that a third party may be enjoined from those acts which would constitute a breach of the covenant not to compete if it can be shown that the third party is acting in concert with the covenantor or acting to assist the covenantor in breaching the agreement. Although the actions of the covenan-tors in the cases above cited which sustained injunctions were far more blatant and oftentimes more egregious than those of R. Nor-lund, this court cannot say that the trial court’s conclusion that the parties were acting in concert was in error. It is not this court’s place to decide whether or not Faust will ultimately prevail on the claim that D. Norlund and ICL wеre acting in concert with R. Norlund to breach the covenant. Due to the fact that this is an appeal from the granting of a preliminary injunction, the conclusion of the trial court that there is a likelihood of success on the merits must stand unless it is so improbable as to render the trial court’s determination erroneous as a matter of law. Therefore, the decision of the trial court preliminarily enjoining D. Norlund and ICL from those actions which would constitute a violation of R. Norlund’s covenant not to compete is affirmed.
VI.
CONCLUSION
The trial court’s December 8, 1995 order enjoined R. Norlund, D. Norlund and ICL from:
“contacting, directly or indirectly, any of the 122 referring optometrists listed on Defendants’ Exhibit I admitted into evidence with regard to former, current or potential patients of said referring optome-tristsf;]
... discussing with any of the 122 referring optometrists listed on Defendants’ Exhibit I admitted into evidence (whether the discussion is initiated by them or by a referring optometrist) any former, current or potential patients of the referring optometrists!!; or]
... performing any services as an opto-metric liaison or medical optometrist, as those terms are defined in the Employment Agreement admitted into evidenсe in this case as Defendants’ Exhibit B for, or in association in any way with, any ophthalmologists in the counties specified on Exhibit A to the Employment Agreement admitted into evidence as Defendants’ Exhibit B.”
Record at 417-18.
As this is an appeal from the grant of a preliminary injunction, this court may only reverse the decision of the trial court if we cannot say that the trial could reasonably have concluded that Faust made a prima facie showing before that court. We may not reweigh the evidence, and may not, independently, decide whether or not Faust, in fact, showed a likelihood of success upon the merits. As such, we must affirm the decision of the trial court with regard to the first two paragraphs of the injunction above.
As to the third paragraph, above, we must disagree with the trial court. Faust has no protectable interest outside of the relationship that he has nurtured with the referring ophthalmologists through R. Norlund. What Faust is trying to protect is the novelty of the way in which he develops patient referrals. As this is not a trade secret and any observer would be able to mimic Faust’s business practice, he may not prohibit R. Norlund, D. Norlund or ICL from performing services as an optometric liaison or аs a medical optometrist within the listed counties. The order of the trial court enjoining R. Norlund, D. Norlund and ICL from performing such services is hereby reversed and vacated.
Notes
. It is upon these 122 optometrists (listed in the record as defendants’ exhibit B) from whom Faust obtained referrals that the covenant not to compete’s restrictions are based.
. The trial court also concludes that the evidence suggests that R. Norlund has been acting as an optometric liaison in direct contradiction with its finding that R. Norlund has not been acting as an optometric liaison. However, because this court decided that sections iii and iv of the covenant not to compete are not enforceable, we need not address this apparent inconsistency. In any event we would note that a recitation to the effect that the evidence “suggests” or “indicates” the existence of a particular fact is not adequate to constitute a finding of that fact. See Perez v. United States Steel Corp. (1981) Ind.,
. Faust misleadingly argues that the statute allows an optometrist to be employed by a corporation pursuant to I.C. 23-15. However, Faust omits the fact that the corporation must be formed by an optometrist to satisfy the statute. Altematively, Faust argues that I.C. 25-24-1-5 which says that nothing in the chapter is applicable to physicians, etc., applies to the entirety of Title 25, not simply chapter 25-24-1. Appellees' interpretation is inappropriate and is rejected.
. In fact, Appellants point out that the testimony is “undisputed that after the formation of Faust, P.C., R. Norlund ceased working for Faust and began working for Faust, P.C.” Appellants Br. at 47.
. There was, however, a specific provision that disallowed assignment of the contract by R. Nor-lund. Record at 588.
. As noted below, the portion of the covenant not to compete which restrains R. Norlund from performing services as a medical optometrist within the specified region is void as a matter of law.
. It is interesting to note, however, that R. Nor-lund himself has pointed out that if he does provide services while employed as an optometrist by an ophthalmologist, he may be in violation of I.C. 25-1-9-5.
. Because this court disposed of section 4 of the trial court’s order, we need not deal with whether the geographic restriction, which covered counties from which Faust had never received a referral, was overbroad as a matter of law.
. The trial court concludes that Ind.Trial Rule 65(D) empowers it to enter a binding injunction against a party "in active concert or participation" with the defendant in the case. Record at 414. However, T.R. 65(D) declares that an injunction entered in an action is “binding only upon the parties to the action, their officers, agents, servants, employees, and attorneys, and upon those persons in active concert or participation with them.” T.R. 65(D). The rule does not dictate against whom an injunction may be made, it dictates upon whom an injunction is binding. The question in this case is not whether an injunction made against R. Norlund may be enforced against D. Norlund; it is whether or not D. Norlund herself may be enjoined. T.R. 65(D) deals with enforcement. See Kasco Services Corp. v. Benson (1992) Utah,
. Jay McGarvey is not a party to this appeal. Therefore we make no decision whether McGar-vey could also be enjoined from those acts which would breach the covenant not to compete if the trial cоurt found that he was acting in concert with R. Norlund.
. Paragraphs two (2) and three (3) of the trial court's December 8, 1995 order.
. Paragraph four (4) of the trial court's December 8, 1995 order.
Concurrence Opinion
concurring and dissenting.
I fully concur with the majority except with regard to Issue V. In my view, the trial court erred in enjoining Denise Norlund and Indiana Cataract and Laser.
The majority concludes that McCart v. H & R Block, Inc.,
To summarize, McCart, Arwell Div. of Orkin Exterminating Co. v. Kendrick,
In each of the above cases, the court examined the contributions of the party to the covenant in assessing whether the ownership of the nonparty was a mere subterfuge. However, those examinations also incorporated a comparison of the relative contributions of both the party and the nonparty. In Russell v. Mullis,
In the instant case, D. Norlund is a licensed, practicing optometrist who desired to open her own practice. That desire was intensified when R. Norlund left Faust and thereby created a void in the market for secondary eye care. In starting ICL, D. Norlund drew upon an extensive network of personal contacts that she had developed while working for others as an optometrist. She spent considerable time during evenings and on weekends establishing ICL. She accepted a new position with reduced hours because it allowed her to spend more time establishing and developing ICL’s business.
McGarvey was also a licensed optometrist who left a successful practice in Florida in order to join with D. Norlund in establishing ICL. McGarvey negotiated his agreement entirely with D. Norlund and invested a considerable sum of his own money in ICL. D. Norlund and McGarvey are the sole officers and shareholders of ICL, which also employs another optometrist, two ophthalmologists, an administrator, and two other employees. Leases for the ICL office and equipment were obtained exclusively through D. Nor-lund’s personal credit and the personal guaranty of McGarvey. Finally, the ICL bank account is accessible only to D. Norlund and McGarvey.
On the other hand, R. Norlund possesses neither an ownership interest in nor control over ICL operations. He is neither an officer nor an employee of ICL. He has not rendered services as an optometrist for ICL nor has he received compensation from ICL.
To be sure, there is evidence supрorting a conclusion that R. Norlund engaged in activities concerning ICL that were in violation of the covenant not to compete and therefore were the proper subject of injunctive relief. However, the mere fact that R. Norlund violated the covenant does not lead inevitably to the conclusion that D. Norlund and ICL are so tainted by that participation that they, too, must be enjoined. R. Norlund’s activities cannot be considered in isolation when making that determination. Rather, R. Nor-lund’s actions must be viewed in relation to the combined contributions of all parties, particularly those of D. Norlund. See, e.g., Russell,
After reviewing the relative contributions of the various parties, I cannot agree that D. Norlund was a “front” for R. Norlund, or that D. Norlund conspired with her husband to assist him in violating the covenant not to compete. D. Norlund’s activities in establishing ICL and developing its business, along with the combined contributions of McGarvey and the other employees of ICL, were of sufficient character in relation to the contributions of R. Norlund, that the covenant not to compete should not be construed to apply to them. I would not extend the injunction’s reach beyond the activities of R. Norlund.