Gelder Medical Group v. Webber

Citation41 N.Y.2d 680,363 N.E.2d 573,394 N.Y.S.2d 867
Parties, 363 N.E.2d 573, 87 A.L.R.3d 321 GELDER MEDICAL GROUP, Respondent, v. Freeman B. WEBBER, Appellant.
Decision Date05 May 1977
CourtNew York Court of Appeals

Donald C. Carmien, Binghamton, for appellant.

Thomas G. O'Neil, Sidney, for respondent.

BREITEL, Chief Judge.

In an action by a medical partnership for a permanent injunction to enforce a restrictive covenant not to compete, defendant physician appeals. He had been expelled as a partner pursuant to the partnership agreement. Special Term granted the injunction on summary judgment under CPLR 3212, and dismissed defendant's counterclaim for a declaratory judgment and damages resulting from plaintiff's alleged breach of the partnership agreement. A divided Appellate Division affirmed.

At issue is whether a partner who has been forced out of a partnership as permitted by the partnership agreement may be held to his covenant not to compete within a restricted radius of 30 miles for a five-year period.

There should be an affirmance. Having joined a partnership governed by articles providing for the expulsion without cause of a member on terms that are not oppressive, and including a reasonable restrictive covenant, defendant may not complain of its enforcement.

The Gelder Medical Group, a partnership engaged in practicing medicine and surgery in Sidney, New York, was first formed in 1956. Some 17 years later, defendant Dr. Webber, then 61 years old and a newcomer to Sidney, a village of 5,000 population, was admitted to the small partnership following a one-year trial period in which he was employed by the group as a surgeon. Previously, after having entered the field of surgery, he had drifted from one professional association to another in two different provinces of Canada and in at least four different States of this country in the northeast and midwest. He came to the group from Columbus, Indiana.

As had the other members of the group who had joined since its inception, and critical to plaintiff's complaint, Dr. Webber had agreed that he "will not for five years after any (voluntary or involuntary) termination of his association with said Gelder Medical Group, practice his profession within a radius of 30 miles of the Village of Sidney, as a physician or surgeon * * * without the consent, in writing, of said Gelder Medical Group." The partnership agreement also provided a procedure for the involuntary withdrawal of partners. Thus, it was, in pertinent part, provided that "In the event that any member is requested to resign or withdraw from the group by a majority vote of the other members of the group, such notice shall be effective immediately and his share of the profits to the date of termination shall be computed and he shall be paid in full to the date of termination of his employment pursuant to his agreement with the association."

Dr. Webber's association turned out to be unsatisfactory to his partners. His conduct, both professional and personal, assertedly became abrasive and objectionable to his partners and their patients, a cause of "intolerable" embarrassment to the group. Revealing is a letter of a psychiatrist who, after his formal termination, examined Dr. Webber a number of times on the referral of the partnership. In the psychiatrist's words, Dr. Webber initially "appeared clinically with what would be termed an adjustment reaction of adult life with anxiety and depression". While the psychiatrist concluded that the adjustment reaction soon cleared, he summed up his description of Dr. Webber as a perfectionist who was a "rather idealistic sincere, direct, frank individual who quite possibly could be perceived at times as being somewhat blunt." In fact, Dr. Webber, in one of his affidavits, conceded, commendably, that he is probably "more of a perfectionist and idealist than he should be."

Although during the association difficulties were from time to time discussed with Dr. Webber, the unhappy relationship persisted. In October, 1973, the discord culminated with the group's unanimous decision to terminate Dr. Webber's association with the partnership. After Dr. Webber refused to withdraw voluntarily, the group, in writing, formally notified him of the termination. It was effective immediately, and, on the basis of an accounting, Webber was paid $18,568.41 in full compliance with the articles of agreement which, it is notable provided for voluntary or involuntary termination on substantially the same terms. But that did not end the unpleasantness.

In about two months, the expelled partner, disregarding the restrictive covenant, resumed his surgical practice as a single practitioner in Sidney. The group, to protect its practice, promptly brought this action to enjoin Dr. Webber's violation of the restrictive covenant and obtained a temporary injunction. Dr. Webber instituted his own action for a declaratory judgment and for damages in allegedly wrongfully expelling him. The actions were consolidated.

The plain meaning and intended effect of the restrictive covenant and the provisions for expulsion are not now in dispute. Dr. Webber urges, however, that the court superimpose a good faith requirement on the partnership's right to expel and to enforce the restrictive covenant. Also urged is the inevitable argument that the restrictive covenant is unreasonable under the circumstances.

The applicable law is straightforward. Covenants restricting a professional, and in particular a physician, from competing with a former employer or associate are common and generally acceptable (see, e. g., Karpinski v. Ingrasci, 28 N.Y.2d 45, 47-49, 320 N.Y.S.2d 1, 2-5, 268 N.E.2d 751, 752-753; see, generally, Validity and Construction of Contractual Restrictions on Right of Medical Practitioner to Practice, Incident to Partnership Agreement, Ann., 62 A.L.R.3d 970). As with all restrictive covenants, if they are reasonable as to time and area, necessary to...

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    ...It is axiomatic that every contract has an implied covenant of good faith and fair dealing. Gelder Medical Group v. Webber, 41 N.Y.2d 680, 684, 363 N.E.2d 573, 577, 394 N.Y.S.2d 867, 871 (1977); United States v. R.J. Reynolds Tobacco Co., 416 F.Supp. 316, 326 (D.N.J. 1976) ("Delaware courts......
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2 books & journal articles
  • The Fiduciary Duties of General Partners
    • United States
    • Colorado Bar Association Colorado Lawyer No. 17-10, October 1988
    • Invalid date
    ...E.g., Shindler v. Marr & Associates, 695 S.W.2d 699, 703-4, err ref n r e (Tex. Civ.App. 1985). 66. E.g., Gelder Medical Group v. Webber, 41 N.Y.2d 680, 394 N.Y.S.2d 867 (1977); see, UPA § 31(1)(d). 67. E.g., Gorger v. Gorger, 276 Or. 267, 555 P.2d 1 (1976); Nagel v. Field Services, Inc., 1......
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    • ABA General Library Guide to Protecting and Litigating Trade Secrets
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