Bryceland v. Northey

• Court: Arizona Court of Appeals
• Writing for the Court: KLEINSCHMIDT; GRANT, C.J., and FIDEL
• Citation: Bryceland v. Northey, 160 Ariz. 213, 772 P.2d 36 (Ariz. App. 1989)
• Decision Date: 04 April 1989
• Docket Number: No. 1,CA-CV,1
• Parties: John BRYCELAND dba Johnny B's Disc Jockey Express, Plaintiff-Appellee, v. Barry NORTHEY and Jane Doe Northey, husband and wife, and Jonathan L. Malvin and Jane Doe Malvin dba Maestro Entertainment Services, Defendants-Appellants. 88-081.

Page 36

772 P.2d 36

160 Ariz. 213

John BRYCELAND dba Johnny B's Disc Jockey Express, Plaintiff-Appellee, v. Barry NORTHEY and Jane Doe Northey, husband and wife, and Jonathan L. Malvin and Jane Doe Malvin dba Maestro Entertainment Services, Defendants-Appellants.

No. 1 CA-CV 88-081.

Court of Appeals of Arizona Division 1, Department D.

April 4, 1989.

[160 Ariz. 214] Steven T. Augenstein, Mesa, for plaintiff-appellee.

John D. Lewis, Tempe, for defendants-appellants.

OPINION

KLEINSCHMIDT, Judge.

This case presents questions about the construction and application of language in a contract that the appellee characterizes as a covenant not to compete. We agree that the language constitutes such a covenant, but we find that the restriction it creates is unreasonably broad and should not be enforced. We therefore reverse the judgment.

FACTS AND PROCEDURAL HISTORY

John Bryceland, dba Johnny B's Disc Jockey Express, is engaged in the mobile disc jockey business providing recorded entertainment played by a disc jockey (deejay) at parties, weddings, dances, and similar functions. In addition to playing recorded music, the deejay often acts as a master of ceremonies and involves the group in games and dances. Bryceland has numerous competitors in the mobile disc jockey business in the Phoenix area.

Barry Northey and Jonathan Malvin applied to become deejays for Johnny B's Disc Jockey Express in 1985 and 1986 respectively. They received both classroom and on-the-job training from Bryceland. After completing their training, Northey and Malvin signed identical contracts with Bryceland in which they agreed to perform upon request. The contracts expressly provided that the deejay was an independent contractor.

Bryceland advertised, secured customers and contracted with customers to provide services for various private functions. Bryceland then assigned the jobs to its deejay. Northey performed services for Bryceland from approximately September 1985 until February 1987. Malvin performed services from January 1986 to February 1987. Shortly after leaving Johnny B's, Malvin and Northey went to work for another mobile disc jockey service owned by Northey's father.

In June 1987, Bryceland sued Malvin and Northey to enjoin them from competitive activities and alternatively sought $5,000 as damages against each defendant. He also sought to recover for the alleged disclosure of confidential information. Following a trial to the court, judgment was entered in favor of Bryceland enjoining Northey and Malvin from competing in the mobile disc jockey business within a fifty-mile radius of the City of Phoenix for a two-year period of time dating from each defendant's respective termination dates. The court found in favor of Northey and Malvin on Bryceland's claims that they had disclosed trade secrets, customer lists, training information or any other confidential information.

Northey and Malvin have appealed from that portion of the judgment enjoining their activities and argue that: (1) the contract language does not restrict them from working for other deejays; (2) if the contract does restrict them, it is unreasonable as to time, geographical area and customers served; and (3) they were independent contractors so that the restraint on their employment is not ancillary to a contract of employment or agency and is therefore unenforceable.

CONTRACT RESTRICTIONS

The contract provision at issue is paragraph ten, titled "Restrictive Covenant," which provides:

Upon termination of this Agreement and for a period of two (2) year [sic] thereafter, or any extensions or renewals thereof, and within a geographical area encompassing fifty (50) miles radius of the City of Phoenix, and also such other locations beyond said area where DeeJay has performed on behalf of Company, the DeeJay agrees that he will not, without prior written consent of Company, directly or indirectly, alone or as a member of a partnership, or as an officer, director, shareholder or employee of any corporation, organization or firm be engaged in or concerned with the activities of Company and DeeJay further agrees that he will not be employed by any customer or client of Company or potential customer or client. DeeJay shall not disclose any trade secrets, customers, lists, training information, or any confidential information to anyone not a party to this Agreement.

At trial, Malvin testified that he understood paragraph ten to mean that while he worked for Bryceland he could not do "related disk-jockey work." Under cross-examination by Bryceland's attorney, Malvin expanded upon this understanding, stating that he understood that this provision did not prohibit him from being a mobile deejay or performing related activities after termination of his agreement with Bryceland. This testimony was inconsistent with Malvin's prior deposition testimony, read into the record, that he believed he could not work as a mobile deejay after termination of the agreement but could work in related fields.

Northey testified that his understanding of paragraph ten was that it prevented him from working as a deejay for himself or others during the period of time that he was a deejay for Bryceland.

On appeal, Malvin and Northey's interpretation of paragraph ten is that it does not restrict them from working for others in similar occupations after their agreements with Bryceland terminated. They insist that it simply prohibits them from continuing to work for Bryceland. They single out the phrase "he will not ... be engaged in or concerned with the activities of Company" and argue that this language is simply a prohibition against continued involvement with Bryceland. The trial court found that paragraph ten restricts Northey and Malvin from working as mobile deejays after the termination of their agreement with Bryceland for a period of two years.

The interpretation of a written contract is a question of law to be determined by this court independent of the trial court's interpretation. Harte v. Stuttgart Autohaus, Inc., 146 Ariz. 382, 383, 706 P.2d 394, 395 (App.1985). In making our determination we begin by attempting to ascertain the intent of the parties from the four corners of the instrument. Hofmann Co. v. Meisner, 17 Ariz. App. 263, 265, 497 P.2d 83, 85 (1972).

We reject Northey and Malvin's interpretation of the contract for several reasons. First, paragraph ten must be read as a whole and in light of all other parts of the contract. See Cavanagh v. Schaefer, 112 Ariz. 600, 602, 545 P.2d 416, 418 (1976). Contrary to Northey and Malvin's assertion at trial, paragraph ten does not prohibit them from working as deejays for others or for themselves while they were working for Bryceland. This prohibition is expressly covered in paragraph six of the agreements. Paragraph ten contains a covenant not to be "engaged in or concerned with the activities of Company" and not to be "employed by any customer or client of Company or potential customer or client" for two years following termination of the agreement. We will interpret a contract in a manner which gives a reasonable meaning to the manifested intent of the parties rather than an interpretation that would render the contract unreasonable. Employer's Liability Assur. v. Lunt, 82 Ariz. 320, 328, 313 P.2d 393, 399 (1957). It is unreasonable to assert that "activities of Company" means simply that following termination of the agreement, the deejay cannot continue to work for the company. The first sentence of paragraph ten presumes a termination of any working relationship between the parties. When read in conjunction with the prohibition against employment by any "customer or client" or "potential customer or client" of the Company, "activities of Company" must refer to the kind of activities in which the Company is engaged--i.e., a mobile disc jockey service. In light of this express language, Northey and Malvin's attempt to relate paragraph ten to a restriction of their activity during the term of the agreement is patently unreasonable.

REASONABLENESS OF THE RESTRICTIVE COVENANT

Bryceland, in support of his argument that the covenant is enforceable, cites Titus v. Superior Court, 91 Ariz. 18, 368 P.2d 874 (1962). The Titus case, like this case, involved the application of a restrictive employment covenant to a disc jockey, although the disc jockey there was a full-time radio station employee, not a part-time performer at a mobile deejay service. Titus, moreover, was a special action in which the court simply held that A.R.S. § 12-1802(5), which specifies that an injunction is not available...