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I started an entertainment magazine four years ago that I sold to another company through a merger last year. The merger didn't work out for me and we're trying to resolve the dissolution. My former partner is being very difficult though and intends to get everything and more. In addition to the magazine information, he now wants to extend the no-compete clause to two of my hobbies.
1) I run a local music website called AsburyMusic.com that was started before the magazine was in existence
2) I run an online radio station
Neither AsburyMusic.com nor the radio station sell advertising or try to make money. Can these two things really be considered in violation of a no-compete clause?
Also, the logo used for AsburyMusic.com predated the magazine but he wants this logo as well saying it's part of the company assets yet this website was not part of the agreement.
If you had a company that was bought out, but the merger is not working out, do you still have claim to the other company? Or did you sign and sell all of your interst in the company to your partner or someone else?
But in general first alot of non compete contracts can't even be enforced and there has to be a direct competition for customers and market share.
But if they are fighting hard, you will need an attorney
Basically, I merged with their company because they were supposedly creating a sales force, which I needed. That sales force never materialized. They were definitely in breach of the contract with regards to revenue because there was supposed to be monthly statements and 33% of profit going to me. That never happened.
As for right now. As I said, I'm not treating my website and radio station as businesses. There is no intent to try to make money with these, they are solely hobbies of mine. The website existed before the magazine and was intentionally left out of the merger agreement. As far as the radio station goes, I find it hard to believe that ANYONE could say that an online station (that doesn't sell advertising) and has at best 25 listeners at the same time could be competing with a business. Just doesn't make sense.
I know that the ex-partner is doing this out of spite. Basically I ran everything of the magazine (editor, writer, graphic design, distribution, sales, website) for an EXTREMELY low amount in order to give him time to build the sales staff. After one year, I could no longer financially stay within the amount and since there was no sign that sales people were coming, I was forced to leave. He even stiffed me out of my last paycheck.
I get the feeling he wants this to go to court but I don't understand why. As I stated, their company was clearly in breach of contract and I really don't see how they could defend it as there were statements that were supposed to happen each month and they never happened. Plus, when people hear about how little money I was making to help him out (especially for doing about 6 jobs) and the way this ended with being stiffed and all, I just don't think he realizes how bad he'll look to people.
he now wants to extend the no-compete clause to two of my hobbies.
Hello light:
First off, I dunno the details of your agreement, so I couldn't say how a court would decide.
But, at this point, since your business is already in the garbage, who cares what HE wants? If HE doesn't like what you're doing, HE'S the one who has to bring suit. HE'S the one who has to pay a lawyer. If HE'S willing to do all that, THEN hire a lawyer.
lightgrw, go with your gut instinct. If you feel he wants to go to court over this, your feeling is probably right on the money. I know it doesn't seem logical to you, but from what you have written, it sounds to me as if this guy had every intention of completely cutting you out and taking over something you started from the very beginning of your negotiations. There are many people out there that do this sort of thing. The fact that a sales force never materialized is a big red flag to me. It leads me that to believe that he feels you have something worth fighting for and he always felt he can make money off of it, or else he wouldn't be giving you such a hard time. Who wrote the original contract and did you have a lawyer go through it prior to signing it?
I would strongly advise you to find a competent contract attorney in your area. I know the cost of hiring an attorney can be problematic when funds are limited, but I do believe he was purposely getting you to this point in time to place you in this position. Due to his actions, you are now cash poor and don't have much recourse. He sounds like he still has the money and the legal backing to help him manipulate you into a corner. You will be making a serious mistake if you don't find an attorney to help you negotiate your way through this. Without the benefit of a lawyer, your partner will keep up his intimidation tactics and wear you down to the point that you will agree to anything just to disassociate yourself from him. You need an experienced attorney to be your buffer. Stop any and all discussions with your partner and instruct him to go through your lawyer. It does sound as if your partner was in violation of the agreement and you have a very good chance of regaining complete control of your magazine. But, it all depends on how the agreement was worded. Was there any kind of compensatory damage that you could claim if he didn't follow through on his promises? That should have been in the contract. With regard to your radio station and website, if they were not mentioned in the contract at all, it doesn't necessarily mean he can't touch them. Again, the wording of your contract is very important along with how you have legally established those other two "hobbies." He very well might be able to build a good case to manipulate the understanding of the contract by stating that since they are forms of entertainment, they are part of the deal in the non-compete clause and actually a part of the whole package. This guy sounds like a sneaky s.o.b., and if I were in your shoes, I wouldn't hesitate to find myself a good contract attorney. Start with an initial consult with an attorney. Show him the contract and explain the problem. There are many attorneys out there that don't charge for an initial consult. Make sure prior to the consult that you understand what the attorney charges. You might get lucky and a simple letter that is worded correctly by an attorney, may get this guy to back off.
RubyPitbull, I agree that I think his plan all along was to just force me out to take it over. I'm just at a loss as to how someone could have a no-compete clause control a person's personal life as well as their business career. Basically, I don't want the magazine back as the only reason I agreed to the merger was because I could no longer handle everything on my own. I really believed the other company would follow through on what they were supposed to do and I'd be better off in the end. The no-compete didn't bother me as I have no plans to ever start another publication. I'm done with self-employment. I just can't imagine how someone could show cause that a radio station with like a dozen listeners and a website covering one town (the magazine covered the entire state) could seriously be thought of as competition.
I've basically handed over everything that they've asked. I no longer think there's even the remote chance of getting my last paycheck (which he stiffed me on) and I don't care. I just want things over, but I refuse to have him take away:
1) my professional writing career, which the no-compete does for at least a year
and 2) my hobbies dealing with music
I just think that's above and beyond what a no-compete clause should be able to do. Has anyone ever heard of a case similar to this where a business went after somebody regarding the no-compete clause for something that WASN'T a business?
Also, does it make any difference with signing a no compete with regards to being an employee and signing a no compete with the sale of a business? This really wasn't even a true business sale. There was like $300 or so involved.
Could that aid me in the way the no-compete is treated? Because it's not like I sold the rights to the company for thousands of dollars. Does the amount being so small strengthen my case?
lightgrw, I am so sorry you seem to be at the tail end of this mess. I know what you are going through.
The biggest issue with the no-compete clause is how it is worded. But, to allay your fears abit, someone above mentioned this already. No-compete clauses are hard to defend when it directly interferes with a person's right to earn a living. So, he might be able to adequately defend a "no compete" on your starting another entertainment magazine or even working for one, but it will be more of a challenge for him to connect your radio station & website work, along with any writing you do. Again, wording is important. If you have geared your radio station, website, and writing in a way that might conflict with the magazine, such as the magazine is about the music industry and there is a possibility that it might be viewed as an extension of those other things, the issue can become rather muddied as to whether they are considered truly separate.
There have been precedents set in courts over "no compete" clauses. Many of the cases against people in your position have been thrown out due to the restrictive nature of such a clause. You have the right to earn a living, and he doesn't have the right to interfere with that. But, again, it becomes problematic if the wording is such that he can build a case for himself, and is able to get it heard before a judge. A good contract lawyer will use those older cases that are very much like yours and in which the defendant won, to attempt to throw out or dismiss any case your partner might bring against you.
Another piece of advice I have for you: Stop calling these things "hobbies." Start getting your head wrapped around the concept that these are other ways you earn your living. If you do get dragged into court and admit they are hobbies, your defense against the clause is severly weakened.
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