Mohanty v. St. John Heart Clinic, S.C.

• Citation: 832 N.E.2d 940
• Decision Date: 03 August 2005
• Docket Number: No. 1-04-0638.,1-04-0638.
• Parties: Jyoti MOHANTY and Raghu Ramadurai, Plaintiffs and Counterdefendants-Appellees, v. ST. JOHN HEART CLINIC, S.C., and John Monteverde, Defendants and Counterplaintiffs-Appellants.
• Court: Supreme Court of Illinois

832 N.E.2d 940

Jyoti MOHANTY and Raghu Ramadurai, Plaintiffs and Counterdefendants-Appellees, v. ST. JOHN HEART CLINIC, S.C., and John Monteverde, Defendants and Counterplaintiffs-Appellants.

No. 1-04-0638.

Appellate Court of Illinois, First District, Second Division.

June 30, 2005.

Rehearing Denied August 3, 2005.

Diane M. Kehl, Frederic T. Knape, Jeffrey M. Heftman, Vedder, Price, Kaufman & Kammholz, P.C., Chicago, for Appellants.

Edward T. Joyce, Lori A. Reilly, Edward T. Joyce & Associates, P.C., Chicago, for Appellees.

Justice HALL delivered the opinion of the court:

The plaintiffs and counterdefendants, Jyoti Mohanty, M.D., and Raghu Ramadurai, M.D., filed separate actions for declaratory judgment against their employer, the defendants and counterplaintiffs, St. John Heart Clinic, S.C., and John Monteverde, M.D., alleging that the defendants breached their employment contracts with the plaintiffs. The defendants filed countercomplaints alleging that the plaintiffs had violated the terms of the restrictive covenants in their employment contracts with the defendants and seeking, inter alia, injunctive relief. After the suits were consolidated, the circuit court entered temporary restraining orders against the plaintiffs. Following a hearing, the circuit court denied the defendants' motion for a preliminary injunction. The defendants bring this interlocutory appeal pursuant to Supreme Court Rule 307(a)(1) (188 Ill.2d R. 307(a)(1)).

On appeal, the defendants raise the following issues: whether the restrictive covenants were overly broad and unreasonable; whether the circuit court abused its discretion when it refused to modify the restrictive covenants; and whether the circuit court abused its discretion when it denied the defendants' motion for a preliminary injunction.

Dr. Mohanty's employment contract with the defendants provided in pertinent part as follows:

"For a period of 5 years after the termination of this Agreement, the Employee shall not (within a radius of 5 miles from any of Corporation's offices in Illinois) directly or indirectly own, manage, operate, control, be employed by participating in or be connected in any manner with any office established for the practice of medicine. In addition, the Employee shall not for a period of 5 years after termination of this Agreement practice at St. Mary of Nazareth Hospital, Norwegian American Hospital, Sacred Heart Hospital, St. Elizabeth Hospital or other hospitals any member of the Corporation is affiliated with."

Dr. Ramadurai's employment agreement with the defendants was identical to that of Dr. Mohanty, except that the duration of the restrictions was three years and within two miles of the corporation's offices.

ANALYSIS

I. Standard of Review

The decision to grant or deny a preliminary injunction rests within the sound discretion of the trial court, and a reviewing court will not disturb the decision absent a clear abuse of discretion. Keefe-Shea Joint Venture v. City of Evanston, 332 Ill.App.3d 163, 167, 266 Ill.Dec. 85, 773 N.E.2d 1155 (2002).

II. Scope of Review

In an interlocutory appeal pursuant to Rule 307(a)(1), the only question before the reviewing court is whether there was a sufficient showing made to the trial court to sustain its order granting or denying the interlocutory relief sought. Keefe-Shea Joint Venture, 332 Ill.App.3d at 168, 266 Ill.Dec. 85, 773 N.E.2d 1155. The rule may not be used to determine the merits of the case. Keefe-Shea Joint Venture, 332 Ill.App.3d at 168, 266 Ill.Dec. 85, 773 N.E.2d 1155.

III. Discussion

A preliminary injunction is a provisional remedy granted to preserve the status quo, i.e., the last, peaceable uncontested status which preceded the litigation, pending a hearing of the case on the merits. Lee/O'Keefe Insurance Agency, Inc. v. Ferega, 163 Ill.App.3d 997, 1002, 114 Ill.Dec. 919, 516 N.E.2d 1313 (1987). As a general rule, a preliminary injunction will only be granted where the party shows it (1) has a clearly ascertainable right that needs protection, (2) will suffer irreparable harm without the protection, (3) has no adequate remedy at law, and (4) is likely to succeed on the merits. Prairie Eye Center, Ltd. v. Butler, 305 Ill.App.3d 442, 445, 239 Ill.Dec. 79, 713 N.E.2d 610 (1999). The party seeking the injunction need only make a prima facie showing of evidence on the requisite elements to obtain injunctive relief. Prairie Eye Center, Ltd., 305 Ill.App.3d at 445, 239 Ill.Dec. 79, 713 N.E.2d 610.

Medical practices have a protectible interest in the patients of their physicians, and this interest is inferred from the nature of the profession. Prairie Eye Center, Ltd., 305 Ill.App.3d at 447, 239 Ill.Dec. 79, 713 N.E.2d 610. The threat of irreparable injury is related to proof of a protectable interest, and once such an interest is established, there is a presumption that injury to the party seeking the injunction will follow if the interest is not protected. Morrison Metalweld Process Corp. v. Valent, 97 Ill.App.3d 373, 380, 52 Ill.Dec. 825, 422 N.E.2d 1034 (1981). The likelihood that the party seeking the injunction will prevail on the merits is related to the reasonableness of the restrictive covenant. Valent, 97 Ill.App.3d at 380, 52 Ill.Dec. 825, 422 N.E.2d 1034. Where the limitation as to time and territory is not unreasonable, a restrictive covenant is valid and enforceable, and relief by injunction is reasonable and proper. Prairie Eye Center, Ltd., 305 Ill.App.3d at 445, 239 Ill.Dec. 79, 713 N.E.2d 610.

Initially, the parties disagree on the basis for the circuit court's finding that the covenant was overly broad and unreasonable. After determining that the geographical limitations of the covenants were "well within the ranges of proof by reported case law," the court stated as follows:

"The temporal restrictions are somewhat problematic. At the hearing, Dr. Monteverde testified that it takes a minimum of three to five years to develop a referral base and that it took some ten years prior to the arrival of Dr. Ramadurai for St. John to establish its reputation and practice.

It is significant, however, that Dr. Ramadurai [sic]¹ also testified that he imposed a three-year restriction on Dr. Ramadurai because it just came into his mind, and he imposed a five-year restriction on Dr. Mohanty because he did not trust him.

The activity restrictions clearly are greater than necessary to protect the interest of St. John. Dr. Monteverde and St. John, through Dr. Monteverde, are engaged in the practice of the medical specialty of cardiology. Dr. Monteverde testified that, also, on occasion, he engages in the practice of internal medicine.

The only protectable interests, therefore, relate to the practice of cardiology and possibly internal medicine. The covenants restrict the practice of medicine in all its various fields and specialties. Clearly, the activity restriction is overly broad and unreasonable."

Contrary to the plaintiffs' argument, the circuit court did not find the temporal restrictions of the covenant to be overly broad and unreasonable, but merely "problematic." Nonetheless, the plaintiffs urge this court to exercise our right as a reviewing court to sustain the decision of the circuit court on any grounds that are called for by the record regardless of whether the circuit court relied on the grounds and regardless of whether the circuit court's reasoning was sound. City of Chicago v. Holland, 206 Ill.2d 480, 492, 276 Ill.Dec. 887, 795 N.E.2d 240 (2003).

With regard to the temporal restriction, the circuit court did not find the time periods unreasonable in length; it merely questioned how Dr. Monteverde arrived at each time period. Similar temporal restrictions have been upheld as reasonable. See Cockerill v. Wilson, 51 Ill.2d 179, 281 N.E.2d 648 (1972) (five years); Canfield v. Spear, 44 Ill.2d 49, 254 N.E.2d 433 (1969) (three years); Prairie Eye Center, Ltd., 305 Ill.App.3d 442, 239 Ill.Dec. 79, 713 N.E.2d 610 (two years). The plaintiffs' reliance on House of Vision, Inc. v. Hiyane, 37 Ill.2d 32, 225 N.E.2d 21 (1967), is misplaced. In that case, the supreme court determined the covenant was unreasonable in that it was not restricted in time, and the geographic restriction was unreasonable where the employee was restricted from doing business where the employer had no proprietary interest. House of Vision, Inc., 37 Ill.2d at 38-39, 225 N.E.2d 21.

In the present case, the covenant was restricted in time, and the circuit court found the geographical restriction reasonable. The evidence does not support a finding that the three- and five-year temporal restrictions were unreasonable.

The circuit court did find the activity restriction to be overly broad and unreasonable because it was not limited to the practice of cardiology and internal medicine but encompassed the practice of medicine in its entirety. The defendants argue that numerous cases involving medical doctors have upheld similarly broad activity restrictions even where the employee's medical practice was limited to a particular area. See Canfield, 44 Ill.2d 49, 254 N.E.2d 433 (a dermatologist required not to engage in the practice of medicine); Prairie Eye Center, Ltd. v. Butler, 329 Ill.App.3d 293, 263 Ill.Dec. 654, 768 N.E.2d 414 (2002) (ophthalmologist restricted from engaging in, associating with or having a financial interest in any medical practice or ophthalmology practice); Retina Services, Ltd. v. Garoon, 182 Ill.App.3d 851, 131 Ill.Dec. 276, 538 N.E.2d 651 (1989) (ophthalmologist prohibited from performing medical services). However, the plaintiffs point out that the courts in those cases never specifically addressed the issue raised in this case, namely, whether a restriction against practicing medicine of any kind is too broad a restriction when the employer's area of medicine is limited in scope.

In judging the reasonableness of covenants not to compete, Illinois lower courts have...