The Business Divorce Law Report
A case in which a restrictive covenant was enforced against an accountant who happened to be beneficiary under her deceased former employer’s will is among recent business divorce cases worthy of note.
Restrictive Covenant Given in Purchase Agreement Survives Death
A covenant not to compete given in connection with the sale of an accounting practice is enforceable against a beneficiary of will who happened to be a competitor of the practice that bought the
deceased account. Here is what happened in McCarthy & Co, P.C. v. Steinberg, a case before a federal court in Pennsylvania. Harris Fox sold his accounting practice to the plaintiff with a multi-year restrictive covenant. The terms of the sale provided for payment of 25 percent of the revenue earned from Fox’s clients during the five-year period. The restrictive covenant remained in place for three years after the last payment under the sale agreement. The defendant, Judith Steinberg, had worked for Fox for 24 years and at the time of the sale, Fox had asked that plaintiff hire her. Steinberg stayed for four years, then resigned started practicing with a direct competitor. Continue reading