Defendant and his medical corporation appealed from the decision of the Superior Court of Los Angeles County (California) granting a preliminary injunction in favor of plaintiffs in a breach of contract action.
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Plaintiffs operated a medical facility specializing in the practice of hair transplantation and male pattern reduction surgery. Defendant was a medical doctor who practiced through plaintiffs’ corporation. Plaintiffs gave defendant an independent contractor’s agreement and a stock purchase agreement that prohibited defendant from engaging in a similar practice within certain counties for three years after he left plaintiff’s medical group. Plaintiffs advised defendant that he would have to sign those agreements if he wished to stay with the group. Various disputes arose between parties. Defendant resigned from the group and opened his own practice. Plaintiffs filed a complaint alleging a breach of contract and seeking declaratory and injunctive relief. The court granted a preliminary injunction and defendant appealed. The court concluded that the provision contained in the stock purchase agreement preventing defendant from competing with plaintiffs for a three-year period was void and unenforceable under Cal. Bus. & Prof. Code § 16600.
The court reversed the order granting plaintiffs’ preliminary injunction because the stock purchase agreement preventing defendant from competing with plaintiffs for a three-year period was void and unenforceable under state law.