Hilb, Rogal & Hamilton Ins. Services v. Robb

In Hilb, Rogal & Hamilton Ins. Services v. Robb (1995) 33 Cal.App.4th 1812, Hilb, Rogal and Hamilton Company (HRH) acquired an insurance brokerage firm co-owned by Stanley Robb in September 1991. As part of the acquisition, Robb and HRH executed a merger agreement; the merger agreement did not contain a covenant not to compete, but required Robb to sign a separate employment contract. (Id. at p. 1817.) The employment contract contained a covenant not to compete that extended for three years after termination of Robb's employment with HRH; as compensation for the covenant not to compete, HRH paid Robb $52,500 in addition to the $245,000 in HRH stock that he received for the sale of the brokerage firm's assets. (Id. at pp. 1817-1818.) In February 1994, Robb quit his job with HRH and immediately started to work for a competitor. (Id. at p. 1818.) HRH sued Robb for misappropriation of trade secrets and breach of the employment contract's covenant not to compete. (Ibid.) The trial court denied HRH's application for a preliminary injunction to enforce the covenant not to compete, on the ground HRH "was not likely to prevail in 'asserting the viability of the covenant.' The court noted that there were 'unanswered factual issues as to the intent of the parties in constructing the merger.' It also stated that the covenant might be invalid because it was contained in the employment contract, not in the merger agreement." (Id. at pp. 1818-1819.) In affirming the trial court's order denying the application for a preliminary injunction, the appellate court held the trial court had not erred in its implicit finding that the interim harm to Robb if the application were granted outweighed the interim harm to HRH if it were not. (Hilb, Rogal & Hamilton Ins. Services v. Robb, supra, 33 Cal.App.4th at pp. 1822-1823.) Although the appellate court did not address the trial court's finding that HRH had failed to establish a likelihood of success on the merits, it nevertheless addressed certain legal issues to "clarify or narrow the issues for the trial court in any future proceedings." (Id. at p. 1823.)