Opinion
No. C3-01-766.
Filed December 4, 2001.
Appeal from the District Court, Stearns County, File No. C601667.
Jeffrey W. Lambert, Keith E. Ekstrom (for appellant)
Michael Coyne Rajkowski, Melinda M. Sanders (for respondent)
Considered and decided by Shumaker, Presiding Judge, Toussaint, Chief Judge, and Schumacher, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Appellant Neve, Inc., a retail hearing-aid sales company, sued its former salesperson, respondent Joseph Jerkovich, for violation of the noncompete agreement that prohibited him from obtaining employment with a competitor in a seven-county area for a six-month period after his termination date. The district court issued a permanent injunction, effective through August 22, 2001, restraining respondent and his new employer from using respondent's name or likeness in any marketing material or from actively pursuing former customers. The court explicitly allowed respondent to work for his new employer and to sell to customers who made an independent decision to purchase hearing aids from him. Finally, the court denied appellant's motion for attorney fees pursuant to the noncompete agreement and reserved until trial the issue of damages for breach of contract. Appellant argues that the district court erred in failing to fully enforce the provisions of the noncompete agreement and in denying an award of attorney fees.
Because the permanent injunction expired on August 22, 2001, we hold that appellant's challenge to the injunction is moot. Because the decision denying attorney fees is erroneous as a matter of law, we reverse and remand. We grant appellant's motion to strike portions of respondent's brief to the extent that he challenges adverse decisions of the district court without filing a notice of review.
DECISION I.
Appellant challenges the district court's issuance of a permanent injunction that only partially enforced the parties' noncompete agreement. Because the injunction expired on August 22, 2001, we must first address whether the challenge is moot. Even if neither party raises the issue of mootness, an appellate court must consider it because it is "a constitutional prerequisite to the exercise of jurisdiction." In re Schmidt, 443 N.W.2d 824, 826 (Minn. 1989) (citation omitted).
Generally, a court will not decide a moot question.
Well established in this state's jurisprudence is the precept that the court will decide only actual controversies. If the court is unable to grant effectual relief, the issue raised is deemed to be moot resulting in dismissal of the appeal. Moreover, the court does not issue advisory opinions, nor decide cases merely to establish precedent.
Id. (citations omitted).
Appellant seeks a ruling that the district court should have fully enforced the terms of the noncompete agreement. But the permanent injunction has now expired, and any determination by this court as to its terms would not provide actual relief and would merely be advisory. Consequently, the issue is moot and we decline to address it.
II.
Next, appellant challenges the district court's decision to deny its request for attorney fees, in which it determined that under the equitable doctrine of "unclean hands," it would be unconscionable to require respondent to bear appellant's expenses.
Under the American rule, a court may not award attorney fees absent a specific contractual provision or statutory authority. Kallok v. Medtronic, Inc., 573 N.W.2d 356, 363 (Minn. 1998). Where a contractual provision authorizes recovery of legal expenses, "Minnesota courts will enforce the provision as long as the fees are reasonable." State Bank of Cokato v. Ziehwein, 510 N.W.2d 268, 270 (Minn.App. 1994) (upholding award of attorney fees based on loan documents authorizing attorney fees for lender after default), review denied (Minn. Mar. 15, 1994).
The noncompete section of the employment contract specifically authorizes an award of attorney fees.
It is therefore agreed that in such breach event the Company shall be entitled, in addition to the $10,000 and any other remedy (a) to an injunction to restrain the violation thereof by the Sales Employee, his partners, agents, employers, and employees, and all other persons acting for or with him and (b) its costs, expenses and attorney fees incurred relating to any such action.
(Emphasis added).
The district court denied appellant's request for attorney fees based on the doctrine of "unclean hands." This equitable defense "is premised on withholding judicial assistance from a party guilty of illegal or unconscionable conduct." Medtronic, Inc. v. Advanced Bionics Corp., 630 N.W.2d 438, 450 (Minn.App. 2001) (citation omitted). It applies against a party who "has been unconscionable by reason of a bad motive, or where the result induced by his conduct will be unconscionable." Creative Communications Consultants, Inc. v. Gaylord, 403 N.W.2d 654, 658 (Minn.App. 1987) (citation omitted). The doctrine "requires something more egregious than mere litigation strategy." Medtronic, 630 N.W.2d at 450, or a "misunderstanding between the parties as to ambiguous contractual language." Creative Communications, 403 N.W.2d at 658.
The district court cited the fact that appellant had committed the first breach of the employment contract when it switched from the Beltone brand of hearing aid referred to in the employment contract to another. It also: (1) found respondent had waived this breach by continuing to work for appellant and by selling the new brand; and (2) referred to the confusing contract drafted by appellant that had led respondent to believe that his primary loyalty was to the Beltone brand. These facts do not demonstrate the egregious or unconscionable behavior required for a determination of "unclean hands" and instead reflect confusion over the contract language. Under the provisions of the noncompete agreement, appellant is entitled to attorney fees. The matter is remanded for determination of the reasonable amount of attorney fees.
III.
Finally, we address appellant's motion to strike a portion of respondent's brief. A respondent must file a notice of review pursuant to Minn.R.Civ.App.P. 106 to obtain review of an adverse decision by the district court. Arndt v. Am. Family Ins. Co., 394 N.W.2d 791, 793 (Minn. 1986). Respondent did not file a notice of review.
Appellant contends that this court should strike portions of respondent's brief because respondent sought review of adverse decisions without filing a notice of review. In response to the motion, respondent withdrew the portion of his brief in which he sought reversal of the injunction, but contends that in other portions, he was not seeking reversal but was merely supporting his argument. To the extent that respondent's arguments challenge the district court's findings and decisions, appellant's motion to strike is granted.