Frantz v. Parke

Idaho Court of Appeals · Contracts

ContractsStatute of FraudsCovenants Not to CompeteEquitable EstoppelTortious Interferenceoral noncompetefive-year covenantdefinite term

Facts

Frantz, a Sandpoint chiropractor, hired Parke under an oral employment agreement for an indefinite term after Parke moved from Washington in 1982. Frantz alleged the agreement included an oral covenant barring Parke from competing for five years within fifty miles of Sandpoint, and claimed he would not have hired Parke without it. After about nine months, Parke left the practice and opened his own chiropractic office in Sandpoint. Frantz claimed reliance on the covenant through employing Parke, advertising him, referring patients to him, and remodeling office space for his use.

Issue

Is an alleged oral five-year covenant not to compete enforceable despite Idaho's one-year statute of frauds because death might occur within a year, because of full or part performance, or because Parke is equitably estopped from asserting the statute? Also, does Frantz have a tort claim based on Parke's competition, use of patient lists, and solicitation of patients?

Rule

An oral agreement for a definite term longer than one year is within Idaho's statute of frauds and is not removed from the statute merely because a party might die within a year. Neither part performance nor full performance by one party takes such a contract out of the statute; instead, such performance is relevant only as a basis for equitable estoppel. Equitable estoppel requires, among other elements, detrimental reliance by acts referable to and evidencing the alleged oral promise itself. A competitor may interfere with prospective relations if acting to compete and not using wrongful means, but may not improperly induce breach of an existing non-terminable contract.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Boise, Lena Ortiz orally hires Noah Brenner as a physical therapist for an indefinite period. Lena insists that Noah also orally agrees that if he leaves, he will not open a competing clinic within 20 miles for three years; eight months later, Noah resigns and opens a clinic nearby.

If Lena sues to enforce the oral noncompetition promise, which is the best result?

Explanation. An oral covenant not to compete for a definite term longer than one year falls within the one-year statute of frauds. The fact that it is embedded in a broader employment arrangement does not avoid the statute. The majority treated a definite multi-year noncompete as unenforceable absent a writing. (Derived from Frantz v. Parke (n.d.).)