Davis v. Albany Area Primary Health Care, Inc. , 233 Ga. App. 311 ( 1998 )

503 S.E.2d 909 (1998) 233 Ga. App. 311

DAVIS
v.
ALBANY AREA PRIMARY HEALTH CARE, INC.

No. A98A0456.

Court of Appeals of Georgia.

July 8, 1998.

Norman J. Crowe, Jr., Sylvester, Earl McCall, Albany, for appellant.

Langley & Lee, Carl R. Langley, Albany, for appellee.

HAROLD R. BANKE, Senior Appellate Judge.

In November 1994, Grace V. Davis, M.D., and Albany Area Primary Health Care, Inc. ("AAPHC"), entered into an Agreement which prohibited Davis from practicing medicine within a 20 air-mile radius of AAPHC's medical centers for a period of two years. The parties stipulated that before the expiration of the Agreement, Davis opened a pediatric practice in Sylvester, Georgia, which was located within a 20 air-mile radius of the AAPHC clinic where she had worked most of the time. Davis worked one-half day per week at a second clinic. AAPHC operated four clinics when Davis signed the contract, and opened a fifth during Davis' term of employment.

AAPHC successfully sought an interlocutory injunction enforcing the non-compete clause. Davis challenges that decision in her sole enumeration of error. Held:

A contract in general restraint of trade or which tends to lessen competition is against public policy and is void. W.R. Grace & Co. v. Mouyal, 262 Ga. 464, 465(1), 422 S.E.2d 529 (1992) (citing 1983 Ga. Const., Art. III, Sec. VI, Par. V(c); OCGA § 13-8-2). However, "a restrictive covenant contained in an employment contract is considered to be in partial restraint of trade and will be upheld if the restraint imposed is not unreasonable, is founded on a valuable consideration, and is reasonably necessary to protect the interest of the party in whose favor it is imposed, and does not unduly prejudice the interest of the public." Id. In evaluating its reasonableness, the contract's duration, territorial coverage, and scope of activity must be considered. Id. "Whether the restraint imposed by the employment contract is reasonable is a question of law for determination by the court.... [Cit.]" Id. This court strictly scrutinizes the trial court's determination of reasonableness.^[1]Delli-Gatti v. Mansfield, 223 Ga.App. 76, 78(1), 477 S.E.2d 134 (1996).

Covenants not to compete in employment contracts are reasonable only if they are strictly limited in time and territorial effect. Orkin Exterminating Co. v. Pelfrey, 237 Ga. 284, 285(1), 227 S.E.2d 251 (1976). Such covenants generally can restrict competition only in the specific area in which the employee actually did business for the employer prior to termination. W.R. Grace & Co., 262 Ga. at 466(2), 422 S.E.2d 529. A noncompete covenant forbidding a physician from engaging in the practice of medicine for two years within a 50 mile radius of any office operated by the contracting multi-office clinic was deemed unenforceable and overbroad because no matter where the physician located a practice, the clinic could move within 50 miles of the physician. Osta v. Moran, 208 Ga.App. 544, 547(2), 430 S.E.2d 837 (1993).

This same defect exists in the Agreement at issue here. The Agreement's non-compete clause states in pertinent part: "[T]he Physician agrees that upon termination of this agreement and the employment and the employment relationship created thereby, he/she will not engage in the practice of medicine for a period of two years thereafter within a 20 air-mile radius of AAPHC's centers thereof either as an employee of another, in association with another, or as an individual unless AAPHC consents thereto in writing."

In effect, this Agreement prohibited Davis from practicing medicine in any form within a 20 air-mile radius of any of AAPHC's centers for a period of two years upon termination of the Agreement, barring her from working within 20 miles of the existing clinics where she never worked or even the new clinic opened during her tenure. No matter where Davis chose to open a medical practice, AAPHC could open a clinic within 20 air-miles and require Davis to move pursuant to the Agreement. "Such a contract is overly broad, and the result is that it is not enforceable in even the smallest area specified, though that smaller area would be a legitimate and enforceable restricted area standing alone." Wulfhorst v. Hudgins & Co., 231 Ga. 170, 172, 200 S.E.2d 743 (1973); Richard P. Rita Personnel Svcs. v. Kot, 229 Ga. 314, 317, 191 S.E.2d 79 (1972) (declining to apply the "blue pencil theory of severability" to a restrictive covenant).

As expressly stated in the Agreement, AAPHC seeks to avoid competition through this covenant. The avoidance of competition is not a legitimate business interest sufficient to justify such an uncertain geographic limitation as to where Davis may practice medicine. Osta, 208 Ga.App. at 547(2), 430 S.E.2d 837.

Notwithstanding AAPHC's contention to the contrary, Delli-Gatti v. Mansfield, 223 Ga.App. at 79(3), 477 S.E.2d 134, is distinguishable. The non-compete clause at issue there only prevented the physician from practicing in one particular county for 12 months. Id. at 78-79, 477 S.E.2d 134. It did not impede her ability to determine with certainty the area in which her post-employment activities were restricted.

Judgment reversed.

JOHNSON, P.J., and SMITH, J., concur.

NOTES

[1] We believe the consolidation provisions of OCGA § 9-11-65(a)(2) apply to this case. Thus, the standard of review used in Chambers v. Peach County, 268 Ga. 672, 673(1), 492 S.E.2d 191 (1997), is inapplicable.