DOMINIC WENZELL, D.M.D. P.C., Appellant,
Guy INGRIM, D.M.D., Appellee.
David A. Devine and Sarah A. Badten, Groh Eggers, LLC, Anchorage, for Appellant.
Susan D. Mack and Blake H. Call, Call, Hanson & Kell, P.C., Anchorage, for Appellee.
Before: CARPENETI, Chief Justice, FABE, WINFREE, and CHRISTEN, Justices.
Dominic Wenzell purchased a private dental clinic in Anchorage from Guy Ingrim.
The purchase agreement included a " Covenant Not to Compete" prohibiting Ingrim from the " practice of dentistry" within fifteen miles of his old clinic for two years and within ten miles for an additional three years. One year after the sale, Ingrim began employment as a dentist at the Alaska Native Medical Center (ANMC), two miles away from the clinic. Wenzell sued in superior court for breach of the covenant not to compete. The superior court found as a matter of law that Ingrim's employment at ANMC did not constitute the " practice of dentistry" and granted summary judgment in Ingrim's favor, dismissing the lawsuit. Although we conclude that Ingrim's employment at ANMC does constitute the " practice of dentistry" and vacate the superior court's grant of summary judgment, we remand the case to the superior court to determine whether Ingrim's employment at ANMC violates the covenant not to compete.
II. FACTS AND PROCEEDINGS
Wenzell and Ingrim are both professional dentists licensed to practice dentistry in Alaska. In 2005 Ingrim retained a broker to assist him in the sale of his Anchorage dental practice, Turnagain Dental Clinic. He began negotiations with Wenzell, who signed a Letter of Intent/Pre-Agreement in February 2006 to purchase Ingrim's practice. Wenzell offered $500,000 and proposed a " Restrictive Covenant" that would " restrict Dr. Guy Ingrim from practicing dentistry within a 30 mile radius [from Turnagain Dental Clinic] for a period of five years." After further negotiations, this restriction was reduced to fifteen miles for the first two years and ten miles for the next three years. The sale was consummated in May 2006. The $500,000 purchase price was broken down as follows: $400,000 for " Patient Charts & Goodwill," $10,000 for the " Restrictive Covenant Not to Compete," and the remaining $90,000 for dental equipment and supplies.
Section 13(a) of the Purchase and Sale Agreement, entitled " Seller's Covenant Not to Compete and/or Solicit," provides:
In connection with the sale to Buyer of the goodwill of the practice ..., Seller[ ] shall not carry on or engage in the practice of dentistry, either directly or indirectly, as an owner, operator, or employee, within a fifteen (15) air mile radius of the Buyer's practice ... for a period of two (2) years from the closing date and then for the ensuing three (3) years for a radius of ten (10) air miles, without the prior written permission of the Buyer.
Section 13 also includes the following liquidated damages provision:
The covenant not to compete and/or solicit is of material significance to Buyer. Because the damage Buyer will sustain will be difficult if not impossible to ascertain, if the covenant not to compete and/or solicit is breached for whatever reason, Seller shall pay Buyer Two Hundred Fifty Thousand Dollars ($250,000) as liquidated damages. Furthermore, Seller agrees that should he choose to treat any former patients of the practice other than his family members and first tier relations, that in addition to the liquidated damages set forth herein, he will pay the Buyer the sum of Three Hundred Dollars ($300) per patient.
According to Wenzell, this provision was of critical importance to him and he would not have purchased Ingrim's dental practice without it. Wenzell claims that prior to the signing of the agreement, he reminded Ingrim of his obligations under Section 13.
Following the sale, Ingrim moved with his family to Mexico, where he intended to stay for the duration of the restrictive covenant. Due to marital difficulties, however, he returned to Anchorage roughly a year later.
Upon his return, Ingrim began employment at the Alaska Native Medical Center (ANMC), in his own words " practicing dentistry." ANMC is located within fifteen miles of Turnagain Dental Clinic and provides free dental services to Alaska Natives, other Native Americans, and their children. At ANMC, Ingrim performs dental examinations, reviews x-rays, drills and fills cavities, and occasionally pulls teeth.
Upon learning that Ingrim was working at ANMC, Wenzell, through his attorney, sent a letter demanding ...