Lamp v. American Prosthetics, Inc.

379 N.W.2d 909, 1986 Iowa Sup. LEXIS 1064
CourtSupreme Court of Iowa
DecidedJanuary 15, 1986
Docket84-1428
StatusPublished
Cited by26 cases

This text of 379 N.W.2d 909 (Lamp v. American Prosthetics, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lamp v. American Prosthetics, Inc., 379 N.W.2d 909, 1986 Iowa Sup. LEXIS 1064 (iowa 1986).

Opinion

LARSON, Justice.

Roger A. Lamp, a former employee of American Prosthetics, Inc., brought a declaratory judgment action to resolve the question of the enforceability of a restrictive covenant in his employment contract. The district court held the covenant was unenforceable and, on appeal, the court of appeals affirmed. On further review, we also affirm.

Lamp’s contract of employment, as manager of American Prosthetics’ Mason City *910 office, contained a covenant not to compete with the employer within 100 miles of any of its Iowa offices. Because of the relatively large number of offices in Iowa, the practical effect of the covenant was to prohibit competition in virtually the whole state. Lamp was discharged by American Prosthetics and immediately opened up a prosthetics business in the same building in which he had previously managed the business for his former employer. It is undisputed that, in his new venture, Lamp drew on the education and experience gained through his employment with American Prosthetics and actually serviced some of its former customers. American Prosthet-ics claimed a reduction in its Mason City business of approximately fifty percent.

Because this case was tried in equity, our review is de novo. Iowa R.App.P. 4. In deciding whether to enforce a restrictive covenant, the court will apply a three-pronged test: (1) Is the restriction reasonably necessary for the protection of the employer’s business; (2) is it unreasonably restrictive of the employee’s rights; and (3) is it prejudicial to the public interest? See Iowa Glass Depot, Inc. v. Jindrich, 338 N.W.2d 376, 381 (Iowa 1983); Ehlers v. Iowa Warehouse Co., 188 N.W.2d 368, 369 (Iowa 1971); Baker v. Starkey, 259 Iowa 480, 493, 144 N.W.2d 889, 897 (1966).

American Prosthetics argues that the restrictive covenant was enforceable as written. It has an alternative argument, however, that, in the event the court should find the restrictive covenant to be too broad to be enforced, it could modify it to allow partial enforcement. In presenting this argument, it relies on the Ehlers case, which first adopted that approach, and on Farm Bureau Service Co. of Maynard v. Kohls, 203 N.W.2d 209 (Iowa 1972), which applied the Ehlers rationale.

In Ehlers this court, in effect, overruled a line of prior Iowa cases which had held that a covenant which was too restrictive to be enforced could not be modified to salvage the enforceable provisions. 188 N.W.2d at 370. This “all or nothing at all” approach was based on the theory that the parties’ agreement must be enforced, if at all, in the form in which it had been drafted; the court would not rewrite it for them. See, e.g., Smith v. Stowell, 256 Iowa 165, 125 N.W.2d 795 (1964). In Smith, this court quoted the following rule with approval:

The court may not rewrite the contract for the purpose of accomplishing that which, in its opinion, may appear proper, or, on general principles of abstract justice, or under the rule of liberal construction, make for the parties a contract which they did not make for themselves, or make for them a better contract than they chose, or saw fit, to make for themselves, or remake a contract, under the guise of construction, because it later appears that a different agreement should have been consummated in the first instance, or in order to meet special circumstances or contingencies against which the parties have not protected themselves.

Id. at 172, 125 N.W.2d at 799 (quoting 17A C.J.S. Contracts § 296(3) (1963)). See also Baker, 259 Iowa at 490,144 N.W.2d at 895. This view, that a court would not modify a restrictive covenant, was considered to be the majority view at the time Ehlers was decided. 188 N.W.2d at 370. The “emerging” view at the time of Ehlers, and the view espoused by such writers as Williston and Corbin, however, was that, if such a covenant is void only because it is too broad, a court in the interest of justice should require enforcement of it to the extent that it is not overbroad. Id.

The district court in the present case held the covenant was too broad to be enforced as written. It did not attempt to modify it. The court of appeals took the same approach. It held the agreement was too restrictive to be enforced. It did not address the issue of modification, although it was raised by American Prosthetics on appeal.

On further review to this court, American Prosthetics argues that this was error; *911 it argues that, if the court found the covenant to be too broad, it must, under Ehlers and its progeny, decide whether it was enforceable to any extent. It argues that, if the agreement is found to be overly broad by covering all American Prosthet-ics’ offices in the state of Iowa, nevertheless a restrictive covenant prohibiting competition by Lamp, within a certain radius of Mason City, would be reasonable. The covenant, it argues, should at least be enforced to that extent.

We agree with the district court, and the court of appeals, that the restrictive covenant swept too broadly to be enforced as written. The evidence does not show such an extensive restriction is reasonably necessary to protect American Prosthetics. See 6A Corbin on Contracts § 1394, at 94-97 (1962).

The issue remains, however, whether we should enforce the covenant, as requested by American Prosthetics, to the extent it is not unreasonable. The problem with this approach is that, while Ehlers allows for modification of such agreements, it does not require a court to do so sua sponte. The issue of partial enforcement was never raised by the pleadings in district court, although it was mentioned in a trial court brief. Following an adverse ruling by the district court in which the issue was not addressed, American Pros-thetics simply filed a notice of appeal. It did not file a motion under Iowa Rule of Civil Procedure 179(b) to bring the issue to the court’s attention.

In State Farm Mutual Auto Insurance Co. v. Pflibsen, we said:

It is well settled that a rule 179(b) motion is essential to preservation of error when a trial court fails to resolve an issue, claim, defense, or legal theory properly submitted to it for adjudication. Consequently, none of those separate issues are properly before us for decision. Issues must ordinarily be presented to and passed upon by the trial court before they may be raised and decided on appeal.

350 N.W.2d 202, 206-07 (Iowa 1984) (citations omitted).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

AmSpec, LLC v. Calhoun
S.D. Georgia, 2022
Glascock v. Covenant Medical Center, Inc.
Court of Appeals of Iowa, 2022
Ag Spectrum Co. v. Elder
191 F. Supp. 3d 966 (S.D. Iowa, 2016)
REG Seneca, LLC v. Harden
938 F. Supp. 2d 852 (S.D. Iowa, 2013)
Sutton v. Iowa Trenchless, L.C.
808 N.W.2d 744 (Court of Appeals of Iowa, 2011)
NCMIC Finance Corporation v. Artino
638 F. Supp. 2d 1042 (S.D. Iowa, 2009)
Wachovia Securities, L.L.C. v. Stanton
571 F. Supp. 2d 1014 (N.D. Iowa, 2008)
Thrasher v. Grip-Tite Manufacturing Co.
535 F. Supp. 2d 937 (S.D. Iowa, 2008)
Pro Edge, L.P. v. Gue
374 F. Supp. 2d 711 (N.D. Iowa, 2005)
Reiss v. Financial Performance Corp.
279 A.D.2d 13 (Appellate Division of the Supreme Court of New York, 2000)
Revere Transducers, Inc. v. Deere & Co.
595 N.W.2d 751 (Supreme Court of Iowa, 1999)
Lemmon v. Hendrickson
559 N.W.2d 278 (Supreme Court of Iowa, 1997)
Uncle B's Bakery, Inc. v. O'ROURKE
920 F. Supp. 1405 (N.D. Iowa, 1996)
Curtis 1000, Inc. v. Youngblade
878 F. Supp. 1224 (N.D. Iowa, 1995)
The Phone Connection, Inc. v. Harbst
494 N.W.2d 445 (Court of Appeals of Iowa, 1992)
Diversified Fastening Systems, Inc. v. Rogge
786 F. Supp. 1486 (N.D. Iowa, 1991)
Rasmussen Heating & Cooling, Inc. v. Idso
463 N.W.2d 703 (Court of Appeals of Iowa, 1990)
Bayly, Martin & Fay, Inc. v. Pickard
1989 OK 122 (Supreme Court of Oklahoma, 1989)

Cite This Page — Counsel Stack

Bluebook (online)
379 N.W.2d 909, 1986 Iowa Sup. LEXIS 1064, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lamp-v-american-prosthetics-inc-iowa-1986.