Manuel Lujan Ins., Inc. v. Jordan

673 P.2d 1306, 100 N.M. 573
CourtNew Mexico Supreme Court
DecidedDecember 5, 1983
Docket14657
StatusPublished
Cited by12 cases

This text of 673 P.2d 1306 (Manuel Lujan Ins., Inc. v. Jordan) is published on Counsel Stack Legal Research, covering New Mexico Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Manuel Lujan Ins., Inc. v. Jordan, 673 P.2d 1306, 100 N.M. 573 (N.M. 1983).

Opinion

OPINION

SOSA, Senior Justice.

Plaintiff Manuel Lujan Insurance Inc. (Lujan) sought an injunction and damages against its former employee Larry Jordan (Jordan) for engaging in post-employment competition for Lujan’s customers asserting this action violated certain provisions of the employment contract between the parties. A temporary restraining order was issued prohibiting Jordan from contacting or in any way engaging in post-employment competition for customers of plaintiff Lujan. Jordan counterclaimed for salary owed and for damages resulting from the asserted wrongful issuance of the restraining order. Hearings on the injunction and restraining order were consolidated with a trial on the merits. '

Defendant Jordan appeals from the judgment of the Bernalillo County District Court that enjoined him from competing for customers of Lujan for a two year period; failed to award him damages allegedly resulting from the issuance of the restraining order; and awarded Lujan the commissions generated by Jordan on a small number of the accounts in question.

We consider whether the district court erred in the following respects: 1) in enjoining Jordan from engaging in business in any way with certain customers of plaintiff; 2) in dismissing Jordan’s counterclaim for damages arising out of issuance of the order restraining such competition; and 3) in requiring Jordan to pay Lujan monies received from business with Lujan’s customers. We affirm the judgment of the district court.

On or about December 1, 1980 defendant Jordan began work as the salaried manager of plaintiff Lujan’s bond department. Defendant was hired with the expectation that his expertise in the bond area would enhance plaintiff’s reputation as a bonding agent and build up a substantial clientele in the bonding department. A written contract of employment was not immediately executed by the parties. This was due in part to the fact that Jordan was involved in litigation concerning a covenant not to compete contained in his employment contract with his previous employer. After that litigation was resolved, defendant and plaintiff agreed to and executed an employment contract drafted by Lujan. The contract had an effective date of December 1, 1980. Jordan resigned his position on June 7, 1982. He subsequently engaged in bonding transactions with certain businesses who had been customers of Lujan during the period of Jordan’s employment. After numerous proceedings Lujan eventually obtained an injunction prohibiting such activity.

Jordan maintains error in the district court injunction by asserting the employment contract in question prohibited only solicitation of Lujan’s bond customers, not acceptance of their business. Lujan counters that the contract precluded even acceptance of unsolicited business for a period of two years from the date Jordan resigned.

The central objective in construing a contract is to ascertain and give effect to the intentions of the parties. Leonard v. Barnes, 75 N.M. 331, 404 P.2d 292 (1965). It is axiomatic that in construing the provisions of a written contract the instrument as a whole is to be considered, Hines Corp. v. City of Albuquerque, 95 N.M. 311, 621 P.2d 1116 (1980), and each part of the contract is to be accorded significance according to its place in the contract. Schultz & Lindsay Constr. Co. v. State, 83 N.M. 534, 494 P.2d 612 (1972).

The employment contract, among other things, provided that Jordan was to work exclusively for Lujan in securing and servicing insurance and bonding contracts. He was to receive a monthly salary but no commissions. Jordan was required to notify all businesses with which he dealt that he represented Lujan and no other business entity. All records and similar materials concerning the business transactions in which Jordan was to be involved were to remain in the undisputed control and possession of Lujan. Finally, in the event Jordan was to leave Lujan’s employ, Jordan was not to solicit or compete for Lujan’s customers for a fixed period of time.

The parties differ in their interpretations of the contract, particularly in their interpretation of the non-solicitation and non-competition provisions. These provisions' were included in paragraph nine (9) of the employment contract which stated:

In event the Employee shall leave the employment of the Company, or if his employment is terminated by the Company for any reason or cause whatsoever, he shall not for a period of two (2) years from the date of termination of employment solicit the customers (policyholders) of the Company, either directly or indirectly. The purpose of this paragraph is to insure that the Employee for the periods set out herein, will not in any manner directly or indirectly enter into competition with the Company on [sic] the customers of the Company as of date of termination.

Jordan maintains that the covenant precluded solicitation but not acceptance of business from Lujan’s customers.

The primary cases cited by Jordan in attempting to distinguish between post-employment solicitation and post-employment acceptance of business are not in point. While it is true that the court in Rubel & Jensen Corp. v. Rubel, 85 N.J.Super. 27, 203 A.2d 625 (1964) allowed acceptance of unsolicited business in the face of a covenant not to solicit, the covenant there differed materially from the one before us. That covenant concerned only direct or indirect solicitation. There was no additional language precluding competition in any form as is contained in the instant contract. Rubel & Jensen is thus distinguishable on its facts.

Aetna Building Maintenance Co. v. West, 39 Cal.2d 198, 246 P.2d 11 (1952) is also distinguishable. This case considered whether a former employee could use or disclose trade secrets acquired during employment and solicit company business. The distinction between solicitation and acceptance was applied in a context substantially different from that before this Court. The major focus of Aetna was whether the alleged possession and use of trade secrets by the former employee would merit injunctive relief. The case turned primarily on equitable principles not, as here, on the construction of a restrictive covenant concerning solicitation and competition.

Reviewing the solicitation and competition provisions found at paragraph nine (9) in light of the other contractual provisions, it becomes apparent that there is some doubt as to the intention of the parties. For example, it is not clear whether the word “solicit” should be narrowly interpreted as precluding only solicitation but allowing Jordan to accept the unsolicited business of Lujan’s customers. On the other hand, inclusion of the non-competition provision in the second sentence may be viewed as including prohibitions against any acceptance of, or competition for, the customers of Lujan.

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Cite This Page — Counsel Stack

Bluebook (online)
673 P.2d 1306, 100 N.M. 573, Counsel Stack Legal Research, https://law.counselstack.com/opinion/manuel-lujan-ins-inc-v-jordan-nm-1983.