Dean Van Horn Consulting Assoc., Inc. v. Wold

Charles Wold (defendant) worked for Dean Van Horn Consulting Associates, Inc. (Van Horn) (plaintiff) for four and one-half years before he resigned. Wold, who had trained for one year, prepared tax returns for Van Horn’s clients and provided advice related to taxes and accounting. Van Horn notified its clients that Wold was separating from the company, and its president, Dean Van Horn, took over Wold’s work personally rather than hiring a replacement. Wold had signed an employment agreement with a restrictive covenant that prevented Wold from soliciting Van Horn’s customers or providing similar services to Van Horn’s customers for a period of three years after Wold’s employment ended. The employment agreement also contained a liquidated-damages clause. Two days before Wold submitted his resignation, he formed a new consulting company, Professional Consulting Group (PCG) (defendant), and later began working for PCG as a consultant providing services to Van Horn’s clients that Wold had serviced during his employment. Van Horn filed suit against Wold and PCG for Wold’s breach of the restrictive covenant and for damages. A trial court dismissed the suit against Wold. Van Horn appealed. On appeal, the Minnesota Court of Appeals reversed the trial court’s ruling, determining that the liquidated-damages and restrictive-covenant clauses were reasonable. The appellate court remanded the case to the trial court. Despite the appellate court’s ruling on reasonableness, on remand, the trial court considered the issue of reasonableness of both clauses because it had dismissed the first case before Wold had an opportunity to contribute to the record. The trial court concluded that the restrictive covenant was overbroad. For this reason, the trial court essentially modified the restrictive covenant in determining that a duration of one year instead of three years was reasonable. Van Horn appealed.