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Unlimited Opportunity, Inc. v. Waadah

Supreme Court of Nebraska

April 10, 2015

UNLIMITED OPPORTUNITY, INC., DOING BUSINESS AS JANI-KING OF OMAHA, APPELLANT,
v.
ANTHONY WAADAH, AN INDIVIDUAL, DOING BUSINESS AS LEGBO SERVICES, ET AL., APPELLEES

Appeal from the District Court for Douglas County: W. RUSSELL BOWIE III, Judge.

Edward F. Pohren, of Smith, Gardner, Slusky, Lazer, Pohren & Rogers, L.L.P., for appellant.

Philip J. Kosloske and Ryan M. Hoffman, of Anderson, Bressman & Hoffman, P.C., L.L.O., for appellees.

HEAVICAN, C.J., WRIGHT, CONNOLLY, STEPHAN, MCCORMACK, MILLER-LERMAN, and CASSEL, JJ.

OPINION

Page 438

[290 Neb. 630] Heavican, C.J.

I. INTRODUCTION

In 2008, appellant Unlimited Opportunity, Inc., doing business as Jani-King of

Page 439

Omaha (Jani-King), granted appellee Anthony Waadah a franchise in the Omaha, Nebraska, area. The franchise agreement was ultimately broken, and Waadah diverted a number of Jani-King's Omaha customers to his new business. Jani-King filed suit against Waadah for breach of the noncompete clause in the franchise agreement.

The district court found the noncompete clause included an unreasonable restraint on competition and refused to sever the offending subpart from the larger noncompete clause. Jani-King asks us to reconsider our law against severability as generally set out in H & R Block Tax Servs. v. Circle A [290 Neb. 631] Enters.[1] and CAE Vanguard, Inc. v. Newman.[2] We reaffirm our stance against severability of noncompete clauses and affirm the judgment of the district court.

II. BACKGROUND

The parties have stipulated to the following facts as summarized below:

Jani-King is a franchisor of professional cleaning and maintenance services. Its franchisees belong to a " franchise system" under the control of Jani-King. Jani-King provides to its franchisees its trade name, name recognition, goodwill, and reputation.

Under Jani-King's franchise model, Jani-King identifies, markets to, solicits, and negotiates with customers in a given operations area. Jani-King secures each client contract and then turns the client over to the franchisee. The franchisee provides the contracted-for janitorial services.

The parties have further stipulated that the noncompetition covenant in the agreement protected " the reputation and goodwill associated with the franchise's trademarks," Jani-King's " overall investment in its franchise system," and the " proprietary information and knowledge [Jani-King] disclosed to franchisees" through the course of the franchise relationship. The parties also stipulated that the " intended purpose" of the noncompetition agreements for the franchise was the " protection of the integrity of the overall franchise system [and] protection of current franchisees in the Jani-King system."

The section of the franchise agreement containing the disputed noncompete clause states in pertinent part:

Franchisee . . . agrees that, during the term of this Agreement and for a continuous uninterrupted period of (2) years thereafter . . . commencing upon expiration or termination of this Agreement, . . . Franchisee . . . shall not . . . :
. . . .
[290 Neb. 632] (d) Own, maintain, operate, engage in or have any interest in any business (hereinafter referred to as " Competing Business" ) which is the same as or similar to the business franchised under the terms of this Agreement, which Competing Business operates, solicits business, or is intended to operate or solicit business: (i) within the Territory of this Agreement; and (ii) for a period of one (1) year commencing upon expiration or termination of this ...

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