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00-2827 Equity Enterprises, Inc. v. Milosch

By: dmc-admin//July 16, 2001//

00-2827 Equity Enterprises, Inc. v. Milosch

By: dmc-admin//July 16, 2001//

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“Therefore, because section 5.1 does not contain any geographical restrictions, section 5.1 fails and the jury finding that it was reasonable is an error of law.”

In addition, we conclude that the stipulated damages clause of the contract, sec. 4.2, is unreasonable because the amount of damages in the case of any alleged breach by plaintiff is ascertainable and the damages provided for in the contract may be grossly disproportionate to the actual harm sustained by the company.

“In other words, section 4.2 provides that the agent must comply with all the terms and conditions of the entire agreement in order to receive “further commissions otherwise payable hereunder.” Thus, section 4.2 requires as a condition for receiving payments of renewal commissions that the terminated agent comply with all other sections, which includes section 5.1. The two sections must be read together. When read together, sections 5.1 and 4.2 place substantially similar restraints on Milosch vis-à-vis Equable and make him subject to forfeiture of renewal commissions if he violates any of the restraints. Like the restraints in Streiff [v. Am. Family Mut. Ins. Co., 118 Wis.2d 602 (1984)], these restraints are indivisible and unreasonable for overbreadth.

“In sum, the contracts between Milosch and Equable contain two indivisible and unreasonable covenants not to compete. We therefore reverse so much of the judgment giving Equable actual damages and attorney’s fees. We reinstate Milosch’s counterclaim for his deferred commissions and remand to the trial court for a hearing limited to a determination of the amount of deferred commissions to which Milosch is entitled.”

Reversed and remanded.

CONCURRING OPINION: Brown, P.J., concurring. “I agree with the majority that the noncompete clause is invalid. In my view, if the noncompete clause is invalid, then Milosch has not violated any condition of the contract. If Milosch has not violated a valid condition of the contract, section 4.2, which allows forfeiture of renewal commissions upon violation of the contract, may not be invoked. Therefore, Equable cannot use section 4.2 to relieve itself from paying further commissions to Milosch for the simple reason that Milosch has not violated any valid covenant of the contract. Thus, all of the majority’s discussion taking place after holding that section 5.1 is invalid, is unnecessary.”

Dist II, Waukesha County, Hassin, J., Anderson, J.

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