177 A.D.2d 623 | N.Y. App. Div. | 1991
In an action, inter alia, for a judgment declaring a restrictive covenant contained in an employment contract to be unenforceable, for injunctive relief, and for an accounting, based upon the defendant’s interference wdth the plaintiff’s medical practice, the plaintiff appeals (1) from an order of the Supreme Court, Westchester County (Burrows, J.), entered March 12, 1991, which granted the defendant’s motion for a temporary restraining order enforcing the restrictive covenant contained in
Ordered that the appeal from the order entered March 12, 1991, is dismissed, without costs or disbursements, as academic, in light of the determination in the order entered August 7,1991, granting the defendant’s motion for injunctive relief; and it is further,
Ordered that the order entered August 7, 1991, is affirmed insofar as appealed from and cross-appealed from, without costs or disbursements.
Over a 12-year period, from 1979 to 1991, the plaintiff worked for the defendant medical group pursuant to three employment agreements signed in his capacity first as an employee, later as a partner, and finally as a shareholder, after the medical group converted from a partnership to a professional corporation. The employment agreements each contained similar restrictive covenants prohibiting the plaintiff from engaging in the practice of his medical specialties, obstetrics and gynecology, within a specified area of northeastern Westchester County for three years following the termination of his employment.
In 1991, the defendant terminated the plaintiff’s employment, following the procedures set forth in the employment agreement. Immediately thereafter, the plaintiff opened an office and began practicing in his medical specialty within the prohibited service area, in violation of the restrictive covenant. The plaintiff claims that the covenant is unenforceable. We disagree.
It is settled that covenants restricting a physician from competing with a former employer or associate are generally enforceable, provided that they are "reasonable as to time and area, necessary to protect legitimate interests, not harmful to the public, and not unduly burdensome” (Gelder Med. Group v Webber, 41 NY2d 680, 683; see also, Karpinski v Ingrasci, 28 NY2d 45, 47-49; Penny W. Budoff, P. C. v Jenkins, 143 AD2d
However, we reject the defendant’s contention that it is entitled to relief pursuant to a clause in the restrictive covenant providing for liquidated damages of one year’s gross medical fees in the event of a breach. The Supreme Court correctly determined that the defendant should be limited to actual damages. In light of the permanent injunction granted to the defendant, one year’s gross medical fees as liquidated damages would be so disproportionate to the defendant’s loss as to constitute an unenforceable penalty (see, Truck Rent-A-Center v Puritan Farms 2nd, 41 NY2d 420, 424; Wirth & Hamid Fair Booking v Wirth, 265 NY 214, 223-224; Seidlitz v Auerbach, 230 NY 167, 173-174; Vernitron Corp. v CF 48 Assocs., 104 AD2d 409, 409-410). Kunzeman, J. P., Sullivan, Lawrence and Balletta, JJ., concur.