Houston Court of Appeals Affirms Denial of Injunction in Physician Non-Compete Case

Lasikplus of Texas, LLC v. Mattioli, No. 14-12-01155-CV (Tex. App. -- Houston [14th Dist.] Nov. 21, 2013), addressed the availability of a temporary injunction to enforce the non-compete in a physician's contract. Dr. Mattioli worked for Lasikplus under a contract that contained a non-compete and a provision requiring 120 days notice of termination. Dr. Mattioli left with 30 days notice and opened a competing business. Lasikplus sued to enforce the contract. The trial court denied Lasikplus's application for a temporary injunction, and Lasikplus appealed.

Lasikplus began with a strange argument: that the trial court erred by considering the effect of the Texas Non-Compete Act in the context of an application for temporary injunction. Lasikplus argued that the availability of a temporary injunction is governed by general rules of law, not by the statute. The Fourteenth Court of Appeals easily disposed of this argument, holding that the statute affects the probability of success on the merits, which is a mandatory element of an application for temporary injunctive relief:

However, just because section 15.50 does not control the analysis in interlocutory orders does not mean it plays no role in that analysis. As set forth above, to be entitled to a temporary injunction, an applicant must establish, among other things, a probability of ultimate success on the merits. This requirement protects opposing parties from the inherent interference of temporary injunctions when it appears unlikely that the applicant ultimately will prevail in the lawsuit. As appellants recognize, section 15.50(b) will play a pivotal and possibly dispositional role in the final outcome of appellants' cause of action for breach of the noncompete covenant. Accordingly, in order to properly assess appellants' likelihood of success on the merits, the trial court was required to consider the potential application of section 15.50(b) under the circumstances presented.

The court then turned to the application of the statute. Lasikplus's problem was that its non-compete did not contain a buyout provision, as is required for physician non-competes. The statute states:

A covenant not to compete relating to the practice of medicine is enforceable against a person licensed as a physician by the Texas Medical Board if such covenant complies with the following requirements:

. . .

(2) the covenant must provide for a buy out of the covenant by the physician at a reasonable price or, at the option of either party, as determined by a mutually agreed upon arbitrator or, in the case of an inability to agree, an arbitrator of the court whose decision shall be binding on the parties . . . .

Tex. Bus. & Com. Code 15.50(b)(2). Lasikplus argued that the trial court was obligated to reform the non-compete by adding a buyout provision. The court acknowledged that the non-compete could be reformed with respect to time, geographic area, or scope of activity, but it rejected the notion that a court could reform the non-compete to add a buyout provision:

Here, there is no indication in section 15.50 that the legislature intended to invest courts or arbitrators with the authority to reform noncompete covenants to create buy-out provisions. To the contrary, the section as a whole provides that if a noncompete covenant involving a physician does not have a buy-out clause, it is not enforceable. Tex. Bus. & Com. Code ยง 15.50(b). The language in subsection 15.50(b)(2) concerning arbitration clearly contemplates only the issue of a reasonable price for a buy-out; it does not suggest a court or arbitrator could add a buy-out clause to a covenant that does not contain one. Because the statutory language clearly supports the opposite of appellants' assertions, we need not delve into the parties' disagreements regarding legislative history.

The court thus affirmed the denial of injunctive relief.

David C. Holmes is a Houston employment lawyer with The Law Offices of David C. Holmes

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