Jorgensen v. Coppedge
| Decision Date | 27 March 2008 |
| Docket Number | No. 33964.,33964. |
| Citation | 181 P.3d 450,145 Idaho 524 |
| Court | Idaho Supreme Court |
| Parties | Brian JORGENSEN dba Medicine Man Pharmacy and Medicine Man Pharmacy, Inc., an Idaho corporation, Plaintiffs-Respondents-Cross Appellants, v. C. Michael COPPEDGE and Karen Coppedge, individually and as the last board of directors and shareholders of Acology Prescription Compounding, Inc., and Acology Prescription Compounding, Inc., a dissolved Idaho corporation, Defendants-Appellants-Cross Respondents. |
Dean & Kolts, Coeur d'Alene; for appellants. Charles Dean argued.
James, Vernon & Weeks, P.A., Coeur d'Alene, for respondents. Susan Weeks argued.
This is an appeal from an order granting a new trial in an action to recover damages for the breach of a covenant not to compete. Because the covenant not to compete is void, we vacate the order granting a new trial and remand this case with instructions to dismiss the complaint with prejudice.
Brian Jorgensen is the owner of Medicine Man Pharmacy, Inc., which operated a pharmacy in Coeur d'Alene under the name of Medicine Man Pharmacy. For convenience the Plaintiffs will be referred to collectively as "Medicine Man." During the mid-1990's, Medicine Man employed C. Michael Coppedge as a pharmacist in its Coeur d'Alene pharmacy.
In 1997, Michael Coppedge announced that he was considering leaving his employment to start a "compounding" business. Compounding is the preparation of a specialized drug product to fill an individual patient's prescription when an approved, commercial drug is not appropriate or available. At that time, Medicine Man did not engage in compounding drugs. Ultimately, Medicine Man and Michael Coppedge agreed to enter into a business arrangement in Coeur d'Alene under which the compounding business would be part of Medicine Man Pharmacy. Coppedge later named the compounding business the Acology Prescription Compounding Center. At trial, Michael Coppedge claimed the business arrangement was a partnership, and Medicine Man claimed that Coppedge was an employee.
Although the business was successful, the parties' relationship was not. On October 15, 2000, they entered into a written agreement to terminate their relationship. The parties to the agreement were Michael and Karen Coppedge and an Idaho corporation they had formed named Acology Prescription Compounding, Inc., herein collectively called "the Coppedges," and Medicine Man. Under the agreement, the Coppedges agreed to pay $20,000 for a computer system, for the prescription compounding records in that system and in another computer system, and for Medicine Man's fifty percent interest in products and equipment purchased for compounding. The agreement also provided that the Coppedges were the sole owners of Acology Prescription Compounding, Inc., and that they would own two web sites. In addition to the $20,000 purchase price, the Coppedges agreed to pay Medicine Man $12,000 per month as long as they "remain[] active in the compounding business in the Coeur d'Alene area." Medicine Man agreed not to compound any pharmaceutical prescription items in its Coeur d'Alene store or in any future Idaho stores it may open within the Coeur d'Alene market area. It also agreed to sell the Coppedges pharmaceutical products at its cost and to lease the Coppedges space.
The parties continued to have disputes between them. In October 2003, the Coppedges closed their compounding business in Coeur d'Alene, dissolved Acology Prescription Compounding, Inc., and moved to Florida. There, they formed a new corporation with the same name and resumed their compounding business. They also continued selling compounded prescriptions to some of their Coeur d'Alene customers. Medicine Man demanded that the Coppedges continue paying $12,000 per month under the agreement because they were still active in the compounding business in the Coeur d'Alene area. The Coppedges refused to do so.
On July 12, 2004, Medicine Man filed this lawsuit alleging it was entitled to damages for breach of the agreement, breach of any implied contract, unjust enrichment, and quantum meruit. The Coppedges answered and filed a counterclaim seeking damages for fraud, breach of the agreement, unfair competition, and intentional interference with a prospective business advantage.
The case was tried in October 2005. The only claims submitted to the jury were those based upon breach of the agreement and fraud. The Coppedges contended that the monthly payment provision requiring them to pay $12,000 per month while they were "active in the compounding business in the Coeur d'Alene area" only applied if their business was physically located in the Coeur d'Alene area. They also argued to the district court that the monthly payment provision constituted an invalid covenant not to compete. The district court rejected that argument, and the jury rejected the Coppedges' interpretation of the payment provision. The jury returned a special verdict finding that the Coppedges had breached the agreement causing Medicine Man damages in the sum of $68,754; that Medicine Man had breached the agreement, but had not caused the Coppedges any damages; and that Medicine Man had not committed fraud.
On August 15, 2006, Medicine Man moved for a new trial on damages and/or an additur on the grounds that there was an irregularity in the proceedings of the jury and jury misconduct, that the jury awarded inadequate damages appearing to have been given under the influence of passion or prejudice, and that the amount of damages awarded was not supported by the evidence. The motion was argued on October 31, 2006. The next day the court issued an order denying the motion based upon alleged inadequate damages or insufficiency of the evidence. It gave Medicine Man additional time to provide a transcript of the jury selection proceedings if it desired to pursue the claim of juror misconduct. Medicine Man did so, and the remaining issues on the motion for a new trial were argued on January 24, 2007. On February 14, 2007, the district court issued its order granting a new trial on the ground of juror misconduct. It reserved deciding whether the new trial would be on all issues or only damages, and it refused to condition the grant of a new trial upon an additur. The Coppedges appealed, and Medicine Man cross-appealed.
The Coppedges raise three issues on appeal: (1) Did the district court err in ruling that the monthly payment provision in the parties' agreement did not include an unenforceable covenant not to compete?; (2) Was the jury's interpretation of the monthly payment provision in the parties' agreement clearly erroneous?; and (3) Did the district court err in granting the motion for a new trial on the ground of jury misconduct? Medicine Man likewise raises three issues on its cross-appeal: (1) If the monthly payment provision in the parties' agreement is invalid, did the district court err in refusing to instruct the jury on Medicine Man's claims based upon breach of an implied contract and unjust enrichment?; (2) Did the district court err in instructing the jury as to the definition of a partnership?; and (3) Is Medicine Man entitled to an award of attorney fees on appeal pursuant to Idaho Code § 12-120(3)? We need only address the first issue raised by the Coppedges and the first and third issues raised by Medicine Man.
A. Did the District Court Err in Ruling that the Monthly Payment Provision in the Parties' Agreement Did Not Include an Unenforceable Covenant Not to Compete?
Lovey v. Regence BlueShield of Idaho, 139 Idaho 37, 46, 72 P.3d 877, 886 (2003) (citations omitted). The parties' agreement contains the following provisions:
Medicine Man Pharmacy agrees not to compound any pharmaceutical prescription items in its Coeur d'Alene store, or any future stores Medicine Man may open in the Coeur d'Alene market in the future — any store outside of the state of Idaho is not considered part of the Coeur d'Alene market area.
. . . .
Acology agrees to pay Brian Jorgensen $12,000.00 on or before the 10th of each month for the preceding month's activity to run continuously as long as Acology remains active in the compounding business in the Coeur d'Alene area. If the owners of Acology should choose to sell out, the new buyer(s) will be responsible to honor these terms or come to some type of settlement with Brian Jorgensen. If there is not a buyer and Acology closes, Medicine Man Pharmacy will have the right to immediately begin compounding prescriptions in the Coeur d'Alene market and this agreement becomes null and void upon receipt of the last months' fee.
In their arguments to the district court, the parties focused on the second paragraph quoted above. The district court ruled that it did not constitute a covenant not to compete. The court stated, In so holding, the district court erred. The above paragraphs unambiguously constitute reciprocal covenants not to compete.
The first paragraph quoted above is a covenant by Medicine Man not to compete against the Coppedges in the business of compounding prescriptions in the Coeur d'Alene market. The second paragraph constitutes a...
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...raises on appeal:We will not consider an issue not "supported by argument and authority in the opening brief." Jorgensen v. Coppedge, 145 Idaho 524, 528, 181 P.3d 450, 454 (2008) ; see also Idaho App. R. 35(a)(6) ("The argument shall contain the contentions of the appellant with respect to ......
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