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Tuesday, March 31, 2020

Iowa court upholds ruling in lawyer's favor in real estate agent's dispute over noncompete clause

State Court

By Charmaine Little | Jan 23, 2020

Contract07

DES MOINES, Iowa (Legal Newsline) – An Iowa court has affirmed summary judgment for a lawyer sued over allegations of malpractice in a case over an agreement drafted between two real estate agents.

Judge Mary Tabor of the Iowa Court of Appeals wrote the Jan. 9 opinion and Presiding Justice Richard H. Doyle and Justice Julie Shumacher concurred.

Geri Doyle, along with her company Geri Doyle Inc., sued Mark Otto and Otto Law Office concerning a non-compete clause that Doyle signed when she parted ways with her business partner Caren DeVoe. 

The clause said Doyle couldn’t work for a competing company in the same county for 10 years. In hopes of proving the noncompete clause wasn’t enforceable, Doyle sued Otto, the lawyer who wrote the agreement, citing tort claims, as well as DeVoe. A lower court granted summary judgment for Otto, finding that Doyle failed to prove her claims. The appeals court affirmed but for different reasons, citing the breach-of-duty factor.

“Even viewing the summary-judgment record in the light most favorable to Doyle, we find no evidence Otto breached any duty to her,” wrote Tabor. 

The judge pointed out that Otto told the parties the agreement was enforceable, but not for 10 years. He said a reasonable timeframe would be two to five years, which aligns with existing law. Still, despite Otto’s advice, both sides entered the contract with the decade-long clause. Doyle alleged that Otto didn’t properly counsel her before she signed the agreement but the judges disagreed.

“Nothing in the record shows Doyle did not understand the term when she signed the contract," Tabor wrote. "In fact, the record evidence is to the contrary.” 

Tabor pointed out that Doyle is a “sophisticated” real estate agent and the agreement went through multiple drafts before she and the other parties signed. Doyle said that she could’ve walked away from the agreement after DeVoe and her husband refused to lessen the term from 10 years, but she didn’t.

Her fraud claim also fell short as she couldn’t prove that Otto lied to her with hopes of getting her to sign the contract under false pretenses.

She was also denied her request as the judges discovered no evidence that Otto took part in infringing on Doyle’s rights.

Doyle and DeVoe first went into business together in 2005 after working together for a Newton real estate company. Ten years later, Doyle sold her interest to DeVoe’s husband, Philip Clevenger. Both sides retained Otto, who represented both sides, to write the purchase agreement.

The dispute comes concerning how the contract was negotiated. Otto said Doyle spoke on the terms independently with Clevenger and DeVoe, and Otto’s responsibility was to document the agreed upon terms. Doyle, however, says that she, Clevenger and DeVoe had several conversations after they retained Otto, and Doyle agreed that Otto would be their attorney. She said she didn’t request Otto represent her solely, and she didn’t pay him but thought he would “watch over my best interest,” according to the opinion.

After much back and forth, both sides agreed to the noncompete clause and signed. Otto then drafted a final purchase agreement with the language “Geri hereby gives her covenant not to compete in the business of Doyle & DeVoe LLC for a period of ten (10) years in Jasper County,” according to the lawsuit. Doyle conceded that she didn’t read the final draft before signing.

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Iowa Court of Appeals