Barber v. Northern Heating Oil, Inc.

[73] OPINION NESBETT, Chief Justice. Appellant and appellee were partners in the business of selling fuel oil in Fairbanks, Alaska. Appellant sold his interest in the firm to appellee for $35,000, of which $10,-000 was stated to be consideration for the execution by appellant of a covenant not to engage in a similar business in the area. When appellant become employed as a fuel oil delivery man for a competitor some months later, appellee applied for and received a preliminary injunction. Summary judgment was subsequently granted to ap-pellee and the injunction was made permanent. Appellant’s first point on appeal is that the trial court erred in granting the preliminary injunction. Although the point is moot in view of the fact that the preliminary injunction was replaced by a permanent injunction, we shall pass on it in the belief that our comments will clarify our holding on the other points raised. At the conclusion of the hearing at which the preliminary injunction was granted the court had before it a detailed complaint, a copy of the contract of sale containing the covenant not to compete, appellant’s answer, and the oral testimony of appellant, of appellant’s new employer, and of appellee. Appellant contends that since it was undisputed, in fact admitted, that appellee had not established that he had lost any customers because of appellant’s new employment, that the imminence of injury required by AS 09.40.2301 had not been shown. The weight of authority is that a showing of an actual loss of customers or of particular pecuniary damages or inadequacy of the remedy at law need not be made where the buyer of a business seeks an injunction to restrain the seller who has executed a covenant not to compete. Irreparable injuries of the above type are presumed to result from a violation of the covenant not to compete.2 The rule is grounded in the unfairness of requiring the production of evidence which is so difficult to obtain. The reason for the rule is illustrated in part by appellant’s own testimony that already, in approximately a month in his new employment, he had actually discouraged customers of appellee from switching companies. This evidence logically supports the inference that unknown to appellant some customers may have already switched and that others would do so in the future. In view of the above rule on the presumption of damages there is no basis for appellant’s argument that the trial court misconceived the purpose of a hearing on a motion for preliminary injunction and erroneously decided the case on its merits at the hearing. The next assignment of error is based on the claim that the trial court refused to consider appellant’s affidavits that customers of appellee were not being solicited and a letter from appellant’s doctor that appellant should be protected from stress, strain and overwork, conditions that might result if he were not permitted to retain his new employment. [74] No error was committed in this respect. In view of the rule governing the presumption of damages which was properly followed by the trial court, the outcome of the hearing could not have been affected by the affidavits of 3 of some 500 customers of appellee that appellant had not solicited them to switch companies. Nor could the letter, which only stated that appellant should not engage in work which overtaxed him, have been given any controlling effect in the face of a prima facie valid contract not to engage in the sale and delivery of fuel oil. Appellant next contends that the trial court erred in granting summary judgment since issues of material fact existed. The court did not err. The only matter which the court had before it to consider in opposition to the motion for summary judgment was that presented by appellant in opposition to the preliminary injunction, plus a memorandum stating that there were genuine issues of fact concerning the validity of the covenant not to compete. Appellant failed to comply with the requirements of Civil Rule 56(e) and set forth facts showing that there were genuine issues of material fact to be determined.3 Under the circumstances the showing made by appellee in support of the preliminary injunction was sufficient to support the permanent injunction and summary judgment granted to appellee. Appellant’s last point is that the court abused its discretion when it denied appellant’s motion to amend his answer. The facts are that at the hearing on the motion for preliminary injunction held on June 30,1967, appellant stated that he would file an additional answer and counterclaim. On September 6, 1967, appellee’s motion for summary judgment was noticed for hearing on September 28, 1967. Appellant then filed his motion to amend his answer to include the defenses of duress, lack of consideration, and unclean hands on September 26, 1967, and noticed it for hearing on October 5, 1967. The proposed amended answer filed with the motion stated the proposed defenses in one-sentence conclusions containing no facts. The trial court granted appellee’s motion for summary judgment on September 28, 1967, and denied appellant’s motion to amend on October 5, 1967. The trial court did not abuse its discretion. Appellant failed to act diligently or timely. For the reasons previously stated, his showing in opposition to summary judgment was ineffective and insufficient. The one-sentence conclusions stating new defenses, without facts, provided no basis for denying summary judgment even if they had been considered by the court at the September 28th hearing. The spirit of Civil Rule 15(a) requiring that leave to amend pleadings should be freely granted in the interests of justice was not violated. There is no basis for alleging that a trial on the merits was subverted because appellant never properly advised the court of any material fact which it would produce in support of the merits of any defense. Under the rule governing summary judgment the trial court was justified in assuming that appellant had no meritorious defense. The judgment below is affirmed. Footnotes [1] AS 09.40.230 states: When it appears that (1) the plaintiff is entitled to the relief demanded, and the relief or any part of it includes restraining the commission or continuance of some act, the commission or continuance of which during the litigation would produce injury to the plaintiff; or (2) the defendant is doing, or threatens or is about to do, or is procuring or suffering to be done some act in violation of the plaintiff’s rights concerning the subject of the action and tending to render the judgment ineffectual; or (3) the defendant threatens or is about to remove or dispose of his property or a part of it with intent to delay or defraud his creditors, an injunction may be allowed to restrain such act, removal, or disposition. [2] Henderson v. Jacobs, 73 Ariz. 195, 239 P.2d 1082, 1084 (1952) ; Ditus v. Beahm, 123 Colo. 550, 232 P.2d 184, 185 (1951). [3] Alaska-Canadian Corp. v. Ancow Corp., 434 P.2d 534, 537 (Alaska 1967) ; Gil-bertson v. City of Fairbanks, 368 P.2d 214, 216 (Alaska 1962).