Justin Gray Obtains $238,000 Judgment In Favor Of Physician Based Upon Breach of Restrictive Covenant

The plaintiff, an ophthalmologist, entered into an agreement with the defendant, also an ophthalmologist, to provide services at his practice. The agreement contained covenants prohibiting the defendant from (1) competing within a twenty (20) mile radius of the plaintiff’s practice, (2) soliciting the plaintiff’s patients, and (3) utilizing confidential information of the practice. The agreement also provided for liquidated damages in the event of a breach by the defendant. A few years into the relationship, the plaintiff discovered that the defendant had surreptitiously opened his own ophthalmology practice within the covenant radius. As a result, the plaintiff terminated his agreement with the defendant.

Shortly after being terminated, the defendant used confidential information that he had wrongfully obtained from the practice to send an advertisement to the plaintiff’s patients. The defendant also began to offer ophthalmology services at a second location, which was less than one (1) mile from the plaintiff’s practice. Mr. Gray was retained by the plaintiff to bring an action against the defendant in Saratoga County Supreme Court seeking injunctive relief and damages for breach of contract.

Early in the case, Mr. Gray was able to obtain injunctive relief prohibiting the defendant from practicing ophthalmology within the covenant area and soliciting the plaintiff’s patients, as well as requiring him to return the confidential information that he had taken from the plaintiff’s practice. Mr. Gray subsequently obtained summary judgment in favor of the plaintiff establishing that the agreement’s restrictive covenants and liquidated damages provisions are enforceable, and that defendant had breached them. However, the Supreme Court found that a trial was required as to the defendant’s affirmative defense that the plaintiff had waived the breaches.

After trial, the Supreme Court held that the plaintiff had not waived the defendant’s breaches and ordered an inquest on damages. After the inquest, the Supreme Court entered a judgment in favor of the plaintiff in excess of $238,000, which included liquidated damages, interest thereon, and the plaintiff’s attorneys’ fees, costs and disbursements.