Fox-Morris Associates, Inc. v. Conroy

ROBERTS, Justice

(concurring).

The chancellor based his denial of the preliminary injunction on two alternate grounds. He concluded that the covenant, as written, was too broad, so that it could not be enforced without severance. From this he reasoned that appellant’s right to relief was not clear, as is required for issuance of a preliminary injunction. See Alabama Binder & Chemical Corp. v. Pennsylvania Industrial Chemical Corp., 410 Pa. 214, 189 A.2d 180 (1963). He also concluded that appellant had failed to show that irreparable harm would result from the denial of the injunction. Solely because I believe that there were “apparently reasonable grounds,” see Credit Alliance Corp. v. Philadelphia Minit-Man Car Wash Corp., 450 Pa. 367, 370-71, 301 A.2d 816, 818 (1973), for the latter conclusion, I concur in the result.

I

There was evidence from which the chancellor could have concluded that appellees were conducting their business in a manner which did not exploit any customer relationships developed while in.appellant’s employ or any trade secrets belonging to appellant which might have been known to them. If their business was so operated, appellant would apparently not suffer any legally cognizable harm (much less irreparable harm). Consequently, the chancellor could properly conclude that a preliminary in j unction would be unj ustif ied.

Appellant contends that the present mode of operation of appellees’ business is designed solely to avoid issuance of an injunction and will not be continued after the termination of this litigation. Appellant confuses the preliminary injunction with a permanent injunction. A preliminary injunction operates only during the pendency of the litigation over issuance of a final injunction, precisely the period in which appellant concedes that appellees will probably maintain their present practices. Thus, a preliminary injunction may be denied even though a permanent injunction may later be found proper if the chancellor finds that appellant’s fears are sufficiently justified.

II

I cannot agree, however, with the majority’s approval of the conclusion that the mere necessity for severance of the covenant in order to limit its enforcement to a reasonable area rendered appellant’s right to relief unclear.

Our law permits equitable enforcement of employee covenants not to compete only so far as reasonably necessary for the protection of the employer. Bettinger v. Carl Berke Associates, Inc., 455 Pa. 100, 314 A.2d 296 (1974); Reading Aviation Service Co. v. Berolet, 454 Pa. 488, 311 A.2d 628 (1973). However, where the covenant imposes restrictions broader than necessary to protect the employer, we have repeatedly held that a court of equity may grant enforcement limited to those portions of the restrictions which are reasonably necessary for the protection of the employer. Jacobson & Co. v. International Environment Corp., 427 Pa. 439, 235 A.2d 612 (1967) (unanimous); Barb-Lee Mobile Frame Co. v. Hoot, 416 Pa. 222, 206 A.2d 59 (1965) (unanimous); Morgan’s Home Equipment Corp. v. Martucci, 390 Pa. 618, 136 A.2d 838 (1957) (unanimous); Seligman & Latz of Pittsburgh, Inc. v. Vernillo, 382 Pa. 161, 114 A. 2d 672 (1955) (unanimous); see Bettinger v. Carl Berke Associates, Inc., 455 Pa. 100, 314 A.2d 296 (1974) (by implication); Plunkett Chemical Co. v. Reeve, 373 Pa. 513, 95 A.2d 925 (1953) (unanimously reaching same result by strained construction of contract); Harris Calorific Co. v. Marra, 345 Pa. 464, 29 A.2d 64 (1942) (same); Fisher v. Hager, 310 Pa. 398, 165 A. 655 (1933) (same); Monongahela River Consolidated Coal & Coke Co. v. Jutte, 210 Pa. 288, 59 A. 1088 (1904) (unanimous) (covenant incident to sale of business); Smith’s Appeal, 113 Pa. 579, 6 A. 251 (1886) (unanimous) (same). The commentators also endorse this rule. 6A A. Corbin, Contracts §§ 1394 at 104, 1390 (1962); 14 S. Williston, Law of Contracts §§ 1647B, 1647C (3d ed. Jaeger 1972); Blake, Employee Agreements Not to Compete, 73 Harv. L.Rev. 625, 683 (1960).

Because it is clear that a restrictive covenant may be enforced partially when it imposes restraints broader than necessary for the protection of the employer, it was error to conclude that the mere need for severance, standing alone, rendered appellant’s right to relief unclear. Where the precise scope of proper enforcement remains uncertain after the hearing on a request for a preliminary injunction, the trial court may properly limit the scope of its decree to those areas where enforcement would be clearly proper, but it may not deny relief entirely if the covenant is otherwise clearly enforceable.