Burns Clinic Medical Center v. Vorenkamp , 165 Mich. App. 224 ( 1987 )

165 Mich. App. 224 (1987) 418 N.W.2d 393

BURNS CLINIC MEDICAL CENTER, PC
v.
VORENKAMP

Docket No. 96238.

Michigan Court of Appeals.

Decided September 23, 1987.

Miller, Canfield, Paddock & Stone (by Carl H. von Ende, Gregory L. Curtner and Jay B. Schreier), for plaintiff.

Goldstein, Serlin, Eserow, Rosenbaum & Baker, P.C. (by Joel H. Serlin and Bruce M. Gorosh), and Stroup, Mulhauser, Johnson & Tresidder, P.C. (by Nathaniel W. Stroup), for defendant.

Before: CYNAR, P.J., and WEAVER and J.H. HAUSNER,^[*] JJ.

WEAVER, J.

Plaintiff appeals as of right from an order of the Emmet Circuit Court granting summary disposition in favor of defendant. We affirm.

I

Defendant is a doctor who completed his five-year orthopedic residency in June of 1983. Pursuant to an employment agreement, which defendant had signed on December 23, 1982, defendant began working for the plaintiff medical clinic on July 1, 1983. As a condition of employment defendant was required to become both a shareholder in the plaintiff medical clinic and a partner in its Health Facilities Partnership. The employment agreement also contained the following covenant not to compete:

Upon termination of this Agreement for any reason whatsoever the Doctor shall not for a period of fifteen (15) months thereafter engage in the practice of medicine or surgery in Emmet County, Michigan, except that the foregoing shall not apply after the Doctor attains age fifty-five (55) and has been employed by the Corporation for at least fifteen (15) years.

Approximately three years later, in June of 1986, defendant in his letter of resignation informed plaintiff of his intent to continue practicing orthopedic surgery in Emmet County immediately following the last day of his employment with plaintiff. Therefore, before termination of defendant's employment on June 30, 1986, plaintiff sued defendant for violation of the parties' covenant not to compete. When plaintiff moved for summary disposition on the basis of MCR 2.116(C)(9) and (10), the trial court instead granted summary disposition in defendant's favor. The Michigan Supreme Court subsequently denied plaintiff's motion for leave to appeal prior to a decision by this Court.

II

Plaintiff first argues that, although the covenant not to compete was prohibited by MCL 445.761; MSA 28.61 at the time the agreement was signed, the covenant is presently enforceable because plaintiff seeks enforcement after the statute's repeal.

We disagree. MCL 445.761; MSA 28.61, in effect at the time defendant signed the employment contract, provided that covenants not to compete were illegal and void as against public policy. Therefore the disputed covenant was unenforceable at the time the contract was signed. Cardiology Associates of Southwestern Mich, PC v Zencka, 155 Mich App 632, 641-642; 400 NW2d 606 (1985).

Except where a repealing act expressly seeks to validate agreements which were statutorily void at their inception, the repealing act will not validate previously void agreements. Webber v Howe, 36 Mich 149, 155 (1877). Because the covenant here at issue was void from its inception and because the repealing act did not expressly seek to validate prior void agreements, MCL 445.787; MSA 28.70(17), the subsequent repeal of MCL 445.761; MSA 28.61 did not render the covenant subject to later enforcement. Compton v Joseph Lepak, DDS, PC, 154 Mich App 360, 370-372; 397 NW2d 311 (1986), lv den 428 Mich 862 (1987).

III

Plaintiff's next argument is that MCL 445.766; MSA 28.66, the "sale of business" exception to MCL 445.761; MSA 28.61, permits the enforcement of the covenant not to compete.

We disagree with plaintiff's reasoning. As noted by the trial court, defendant was not yet even an employee of the plaintiff medical clinic when he signed the agreement. Because defendant at that time had no practice and owned no stock, business interests or good will, he did not sign the contract in connection with the sale of a business or good will, but only as an incident of his employment. By the time defendant terminated his employment he owned only ten of the clinic's nearly six thousand outstanding shares — or less than two-tenths of one percent of its total holdings. Similar to the situation in Cardiology Associates, supra, it is apparent that defendant, without selling a separate business interest or good will, was merely reselling what he had initially purchased from the corporation. 155 Mich App 641-642.

IV

Finally, plaintiff argues that with respect to its claim for breach of fiduciary duty the trial court erred in granting summary disposition to defendant under MCR 2.116(C)(10).

This argument is without merit. We note that in addition to its motion for summary disposition under MCR 2.116(C)(9) (failure of the opposing party to state a valid defense), plaintiff also moved for summary disposition under MCR 2.116(C)(10), requesting judgment as a matter of law because, except as to damages, there were no genuine issues of material fact. Now, after the trial court's award of summary disposition to defendant instead of to plaintiff under MCR 2.116(I)(2), plaintiff asserts that such fact issues did exist as to defendant's alleged breach of fiduciary duty.

Although we need not address issues raised for the first time on appeal, Oakland Co v Detroit, 81 Mich App 308, 313; 265 NW2d 130 (1978), lv den 403 Mich 810 (1978), we note that plaintiff failed to plead facts establishing or supporting its assertion that defendant breached a fiduciary duty to plaintiff by improperly soliciting clinic business for his new professional venture. Plaintiff was aware that defendant was contacting patients to inform them of his departure, since the form letter which he sent to patients was drafted with plaintiff's full knowledge and aid. Viewing the evidence in a light most favorable to defendant as the nonmoving party, therefore, the trial court properly denied plaintiff's motion for summary disposition, granting the motion instead to defendant. See MCR 2.116(G), (I). Omega Construction Co v Altman, 147 Mich App 649, 652; 382 NW2d 839 (1985), lv den 425 Mich 877 (1986).

Affirmed.

NOTES

[*] Circuit judge, sitting on the Court of Appeals by assignment.