Michael Kelton v. Peter T. Stravinski
Michael Kelton v. Peter T. Stravinski
06:13:2006
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIFTH APPELLATE DISTRICT
MICHAEL KELTON et al.,
Cross-complainants and Appellants,
v.
PETER T. STRAVINSKI et al.,
Cross-defendants and Respondents.
F047031(Super. Ct. No. MCV16751)
O P I N I O N
APPEAL from a judgment of the Superior Court of Madera County. James E. Oakley, Judge.
Wild, Carter & Tipton and Steven E. Paganetti for Cross-complainants and Appellants.
Motschiedler, Michaelides & Wishon and Russell K. Ryan for Cross-defendants and Respondents.
In conjunction with forming a partnership for the purpose of developing industrial warehouses, appellants, Michael Kelton and Kelton & Associates, Inc. (collectively Kelton), and respondents, Peter T. Stravinski and Peter T. Stravinski & Associates, Inc. (collectively Stravinski), each agreed to not build, develop and operate a warehouse without including the other. Based on alleged violations of this covenant, Kelton sought damages from Stravinski. Accordingly, the enforceability of this covenant not to compete is the pivotal issue on appeal.
The trial court determined that this covenant violated Business and Professions Code section 16600 and was therefore unenforceable as a matter of law. Finding that all of Kelton's causes of action against Stravinski in the cross-complaint were premised on the covenant not to compete, the trial court entered judgment for Stravinski. The court first granted summary adjudication on two causes of action in Stravinski's favor and thereafter sustained Stravinski's demurrer without leave to amend on the remaining causes of action.
Kelton contends the covenant not to compete was enforceable because Kelton and Stravinski were involved in an ongoing business relationship. Kelton further argues that even if the covenant is illegal, it should be enforced to prevent Stravinski from being unjustly enriched. Finally, Kelton contends that the cross-complaint as amended stated causes of action that were not based on the covenant not to compete.
As discussed below, the trial court was correct. This covenant not to compete does not come within any exceptions to the general rule that such covenants are void. In the partnership context, an ongoing business relationship does not validate the covenant. Further, this is not a compelling situation that justifies equitable enforcement of the covenant. In the nonpublished part of this opinion, we hold that the demurrer to the amended cross-complaint was properly sustained without leave to amend. Accordingly, the judgment will be affirmed.
BACKGROUND
By an agreement dated May 5, 1992, Stravinski and Kelton formed a general partnership called Warehouse Development Company for the purpose of developing industrial warehouses. Each particular piece of property to be acquired and developed was to be designated by a project statement that would constitute an amendment to the partnership agreement. The parties further agreed that, notwithstanding the existence of this agreement, each partner could â€
06:13:2006
FIFTH APPELLATE DISTRICT
MICHAEL KELTON et al.,
Cross-complainants and Appellants,
v.
PETER T. STRAVINSKI et al.,
Cross-defendants and Respondents.
F047031(Super. Ct. No. MCV16751)
O P I N I O N
APPEAL from a judgment of the Superior Court of Madera County. James E. Oakley, Judge.
Wild, Carter & Tipton and Steven E. Paganetti for Cross-complainants and Appellants.
Motschiedler, Michaelides & Wishon and Russell K. Ryan for Cross-defendants and Respondents.
In conjunction with forming a partnership for the purpose of developing industrial warehouses, appellants, Michael Kelton and Kelton & Associates, Inc. (collectively Kelton), and respondents, Peter T. Stravinski and Peter T. Stravinski & Associates, Inc. (collectively Stravinski), each agreed to not build, develop and operate a warehouse without including the other. Based on alleged violations of this covenant, Kelton sought damages from Stravinski. Accordingly, the enforceability of this covenant not to compete is the pivotal issue on appeal.
The trial court determined that this covenant violated Business and Professions Code section 16600 and was therefore unenforceable as a matter of law. Finding that all of Kelton's causes of action against Stravinski in the cross-complaint were premised on the covenant not to compete, the trial court entered judgment for Stravinski. The court first granted summary adjudication on two causes of action in Stravinski's favor and thereafter sustained Stravinski's demurrer without leave to amend on the remaining causes of action.
Kelton contends the covenant not to compete was enforceable because Kelton and Stravinski were involved in an ongoing business relationship. Kelton further argues that even if the covenant is illegal, it should be enforced to prevent Stravinski from being unjustly enriched. Finally, Kelton contends that the cross-complaint as amended stated causes of action that were not based on the covenant not to compete.
As discussed below, the trial court was correct. This covenant not to compete does not come within any exceptions to the general rule that such covenants are void. In the partnership context, an ongoing business relationship does not validate the covenant. Further, this is not a compelling situation that justifies equitable enforcement of the covenant. In the nonpublished part of this opinion, we hold that the demurrer to the amended cross-complaint was properly sustained without leave to amend. Accordingly, the judgment will be affirmed.
BACKGROUND
By an agreement dated May 5, 1992, Stravinski and Kelton formed a general partnership called Warehouse Development Company for the purpose of developing industrial warehouses. Each particular piece of property to be acquired and developed was to be designated by a project statement that would constitute an amendment to the partnership agreement. The parties further agreed that, notwithstanding the existence of this agreement, each partner could â€
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