Friedman v. Lasco, 2016 MT 115 (May 17, 2016) (Wheat, J.) (5-0, aff’d)
Issue: Whether the district court abused its discretion in granting the Friedmans’ application for a preliminary injunction.
Short Answer: No.
Facts: Lascos owned Spirit Quest Archery, Inc., a professional retail archery business in Kalispell. In April 2013, they executed a buy-sell with Friedmans for the store. Friedmans paid Lascos more than $600,000 for the business, business assets, and real estate.
At the time of the sale, Lascos told Friedman they would no longer be involved in the archery business, as they intended to pursue a legal career. Lascos entered into a covenant not to compete that was incorporated into and attached to the buy-sell. It prohibited Lascos from owning an archery business that provides archery services or archery related sales, or being affiliated with any other archery sale or services provider within a 100-mile radius of the purchased property for a period of five years.
The contract further recognized the harm that violation of the non-compete would cause to the business, and allowed Friedmans to obtain an injunction without having to prove irreparable harm.
Aaron Lasco went to work for Sportsman Ski Haus in Kalispell after selling the business to Friedmans. His pay was based partly on commissions. Sportsman expanded its archery department significantly after he joined the business. Both Sportsman and Spirit Quest sell many of the same archery products, and both offer indoor shooting areas. Kevin Friedman testified that the “grand re-opening” of the new archery department at Sportsman resulted in lost sales to Spirit Quest.
In March 2013, Friedmans filed suit against Lascos, and requested a preliminary injunction to stop Aaron Lasco from working at Sportsman until the dispute is resolved.
Procedural Posture & Holding: After a hearing, the district court issued an order finding the covenant not to compete valid, and within the statutory exception provided in § 28-2-704, MCA, as a valid restraint on trade. It granted the Friedman’s request for a preliminary injunction, and concluded the Friedmans were likely to success on the merits. Lascos appeal and the Supreme Court affirms.
Reasoning: Preliminary injunctions are governed by § 27–19–201, MCA. The five subsections of the statute are disjunctive; findings that support one of the factors are sufficient to support a preliminary injunction. The Court affirms the district court’s holding that there was sufficient consideration for goodwill in the buy-sell, and that the covenant falls within the statutory exception governing covenants not to compete. It further affirms the district court’s holding that Lasco’s employment with Sportsman is likely a breach of the covenant not to compete. Thus, the Friedmans have demonstrated they ae likely to success on the merits of their claims against Lascos, and the Court affirms the district court’s decision to grant Friedmans a preliminary injunction.