Equitable Extension Not Always Available
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Equitable Extension Not Always Available

An auto dealership sought relief from its former executive alleging he had been a minority owner of the dealership, sold his interest back to the dealership and the repurchase agreement contained an anti-raiding restrictive covenant prohibiting him from hiring or soliciting the dealership's employees or encouraging them to leave which he breached by hiring three employees. The court found the former executive breached the covenant and extended the length of the restrictive covenant by one year. On appeal, in a case of first impression, the court held it would exercise its discretion to consider the appeal despite the threat of mootness. While the anti-raiding covenant was more appropriately deemed to arise within the sale of the business rather than the employment context, the dealership's interest in preventing its former executive from raiding its key employees was reasonable thus the anti-raiding covenant was enforceable. Nevertheless, the trial court abused its discretion by extending the length of the covenant. Although the appeals court found awarding such equitable relief may be proper; it is only proper if the party seeking the expansion has demonstrated that monetary damages would provide inadequate relief.

Automile Holdings LLC v McGovern