Procedural Posture

Defendant appealed from a judgment and an order that denied defendant a new trial in the Superior Court of Los Angeles County (California), which held that defendant breached a contract and competed unfairly in an action alleging that defendant diverted away plaintiff’s patients and violated an agreement.

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Overview

Plaintiff entered into an agreement with defendant for defendant to take possession of plaintiff’s office and equipment, renting plaintiff’s staff of employees, when plaintiff entered into military service. The agreement required defendant to devote talents to the preservation, maintenance, and enlargement of the practice. Plaintiff alleged that defendant breached the contract as defendant diverted the patients to defendant’s new practice and left plaintiff with eighty percent less patients. Plaintiff brought an action against defendant for damages and unfair competition. Defendant contended that there was no restrictive covenant in the agreement and that defendant had the right to take the practice with him to a new location. The court held that there was an implied covenant of good faith and fair dealing. The court affirmed the award of damages to plaintiff.

Outcome

The court affirmed the judgment and order of the superior court and held that plaintiff was entitled to damages because defendant did not complete the contract in good faith as defendant willfully and intentionally diverted away a substantial portion of plaintiff’s patients.