Prior Agreement’s Forum Selection Clause was Still Enforceable

The Arizona Court of Appeals has upheld a forum selection clause against a doctor who, after selling his interest in an urgent care business to the new corporate buyer, was offered an employment position with a Phoenix-based hospital group.

When the new corporate buyer, FastMed Urgent Care, P.C., attempted to enforce a five-year covenant not to compete clause, the doctor lost his new employment position and sued Fast-Med for damages.

The doctor argued that the forum selection clause did not apply because the parties had entered into a separation agreement that settled all “matters relating to the end of” the doctor’s employment, and this agreement expressly adopted the six-month non-compete provision of a second employment agreement.  The separation agreement also provided that all disputes arising out of the separation agreement be brought in Arizona and interpreted according to Arizona law.

In Dunn v. Fastmed, the appellate court found last month that the initial purchase agreement terms requiring all matters to be litigated in Delaware applied because the doctor’s second employment agreement did not automatically encompass all of the issues and interests addressed in the original purchase agreement.  As such, the purchase agreement was independently enforceable, irrespective of the separation Agreement

By William Horne

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Posted in: Business Law

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