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injunctionappeal
defendantinjunctiontrialappellant

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Ticor Title Ins. Co. v. Cohen, 173 F.3d 63, 14 IER Cases 1710

Facts

Title insurance companies brought an action against their former senior vice president, Kenneth C. Cohen, for breaching a noncompete covenant after he accepted a job offer from a competitor. The companies sought injunctive relief to prevent him from working in the title insurance business in New York for six months. The district court found that Cohen's services were unique and that the companies would suffer irreparable harm without the injunction. Cohen appealed the decision.

Defendant Cohen was employed by Ticor as a title insurance salesman. Cohen began working for Ticor in 1981, shortly after graduating from college, as a sales account manager and within six years was a senior vice president in charge of several major accounts.

Issue

Whether the noncompete covenant was enforceable and whether the issuance of an injunction was justified under New York law.

The principal question to be resolved is whether appellant's services as an employee were so unique to his employer as to provide a basis for injunctive relief.

Rule

Under New York law, a noncompete covenant is enforceable if it is reasonable in time and geographic scope, and if the employee's services are deemed special, unique, or extraordinary. Courts must balance the employer's legitimate business interests against the employee's right to earn a livelihood, with a strong public policy disfavoring restrictions that impair an employee's ability to work.

Under New York law, whether a restrictive covenant not to compete is enforceable by way of an injunction depends in the first place upon whether the covenant is reasonable in time and geographic area.

Analysis

The court determined that Cohen's services were unique due to his established relationships with clients, which were developed during his employment and at the employer's expense. The court also noted that the noncompete period of six months was reasonable and that the companies would suffer irreparable harm if Cohen were allowed to work for a competitor. The court found that the balance of interests favored the enforcement of the noncompete covenant.

In determining uniqueness the inquiry now focuses more on the employee's relationship to the employer's business than on the individual person of the employee.

Conclusion

The court affirmed the district court's decision to issue a permanent injunction against Cohen, preventing him from working in the title insurance business in New York for six months.

The district court's conclusion appears correct and its issuance of an injunction based on its finding of unique services clearly does not rise to the level of an abuse of discretion.

Who won?

The title insurance companies, Ticor Title Insurance Co. and Chicago Title Insurance Co., prevailed in this case. The court found that they would suffer irreparable harm if Cohen were allowed to work for a competitor due to the unique nature of his relationships with clients. The court emphasized that the noncompete covenant was reasonable in duration and scope, and that Cohen's services were indeed unique, justifying the enforcement of the covenant.

The trial court found Cohen's relationships with clients were 'special' and qualified as unique services. It deemed these relationships unique for several reasons. First, since the costs and terms of title insurance in New York are fixed by law, competition for business relies more heavily on personal relationships.

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