J-S01045-16


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

LEHIGH ANESTHESIA ASSOCIATION                 IN THE SUPERIOR COURT OF
                                                    PENNSYLVANIA
                        Appellant

                   v.

MICHAEL MELLON, CRNA

                        Appellee                   No. 1570 EDA 2015


                    Appeal from the Order May 5, 2015
              In the Court of Common Pleas of Lehigh County
                    Civil Division at No(s): 2012-C-3692


BEFORE: GANTMAN, P.J., MUNDY, J., and MUSMANNO, J.

MEMORANDUM BY GANTMAN, P.J.:                       FILED APRIL 26, 2016

     Appellant, Lehigh Anesthesia Association (“LAA”), appeals from the

order entered in the Lehigh County Court of Common Pleas, which granted

summary judgment in favor of Appellee, Michael Mellon, CRNA. We affirm.

     The relevant facts and procedural history of this case are as follows.

Appellee, a certified nurse anesthetist, began working for LAA in 2001. Both

parties entered into a written employment agreement (“Agreement”) on

September 24, 2001. Paragraph 9 of the Agreement contains a restrictive

covenant, which states in relevant part:

        9. Restrictive Covenant

           A.    In the course of inviting Employee to join
        Employer’s practice of anesthesia, and in his employment,
        he will be introduced to and have made available to him
        certain of Employer’s contacts and referring doctor
        relationships, hospital sources, business and professional
J-S01045-16


       relationships and the like. Employee acknowledges that
       because he has not been in a private (fee-for-service)
       practice in anesthesia previously, he has no referring
       doctor or facility following in the area, nor does he have
       any substantial experience in the “business” of a private,
       fee-for-service anesthesia practice.

           Accordingly, Employee recognizes and agrees that
       termination of his employment for any reason followed by
       his entering into a business or practice competitive with
       that of Employer (i.e., the rendering of anesthesia services
       to clients of Employer), as an employee, owner,
       contractor, or otherwise, would allow Employee to take
       many of the sources of the Employer’s success with
       Employee to the ongoing practice’s detriment, for
       Employer would have established the Employee is in a
       situation that makes him a very strong competitor for the
       Employer’s current and potential practice sources.

          Therefore, Employee agrees that he will pay to
       Employer the amount specified below for each “client” of
       “Employer” for whom he, or his subsequent employers(s),
       employee(s), subcontractor(s) or the like, provide,
       services to within the twenty-four (24) months after
       termination of this Agreement.    Any amounts payable
       hereunder shall be due in two (2) equal installments
       thirteen (13) and twenty-five (25) months after
       commencement of Employee’s competitive activity.

           For purposes of this Paragraph 9, “Employer” is defined
       to include Lehigh Anesthesia Associates, P.C., and the
       Center for Ambulatory Anesthesia, Inc., and Employer’s
       “clients” are clients of any of those entities.

                                *      *    *

          For this purpose, Employer’s clients are clients for
       whom Employer has provided any billable services within
       the forty-eight (48) months preceding Employee’s
       termination of employment.

                                *      *    *

          B.    For   the   reasons    described   above,   Employee

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           further agrees he will not solicit any clients or contractual
           arrangement of the Employer or convert to his possession
           and/or disclose in any manner any contractual
           arrangements, patient lists, addresses or other data about
           the patients, clients, and/or contracts neither before nor
           after termination of his employment hereunder. All such
           information is hereby agreed to be confidential to
           Employer and of essential importance to its ongoing
           practice. All reasonable legal fees and costs incurred by
           Employer in connection with the enforcement of this
           subparagraph upon a breach hereof of Employee shall be
           paid by employee.

(See Appellee’s Brief in Support of Motion for Summary Judgment, Exhibit D

at 6-8; R.R. at 25a-27a).           LAA subsequently terminated Appellee’s

employment in May 2012, after receiving numerous complaints from

patients    and   clients   regarding   Appellee’s   poor   work   and   behavior.

Thereafter, Appellee began working for Professional Anesthesia Consultants,

P.C. (“PAC”) in King of Prussia. While working for PAC, Appellee provided

anesthetist services for Carlisle Endoscopy Center (“CEC”), one of LAA’s

clients from 2001 until 2011.

     On September 6, 2012, LAA filed a praecipe for a writ of summons

against Appellee.     LAA filed a complaint on February 28, 2013, against

Appellee that alleged breach of the Agreement’s restrictive covenant.

Appellee filed on March 20, 2013, an answer with new matter and

counterclaims. On April 11, 2013, LAA filed an answer and new matter to

the counterclaims, to which Appellee replied.        Appellee filed, on April 30,

2014, a motion for summary judgment and a brief in support of his motion.

LAA filed a response on May 30, 2014, as well as a memo in opposition to

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the summary judgment motion.          Appellee filed a reply brief on June 10,

2014.

        The court granted Appellee’s summary judgment motion on September

2, 2014, as to all of LAA’s claims. Thereafter, Appellee filed a praecipe to

discontinue his counterclaims.     LAA timely filed a notice of appeal on May

29, 2015.      The court ordered LAA on June 5, 2015, to file a concise

statement of errors complained of on appeal pursuant to Pa.R.A.P. 1925(b),

and LAA timely complied on June 25, 2015.

        LAA raises the following issues for our review:

           DID THE TRIAL COURT ERR AS A MATTER OF LAW AND/OR
           ABUSE ITS DISCRETION IN HOLDING THAT BECAUSE
           [LAA] HAD TERMINATED [APPELLEE]—REGARDLESS OF
           THE REASON—THEN AS A MATTER OF LAW, [LAA]
           FORFEITED THE RIGHT TO ENFORCE THE CLIENT-
           SPECIFIC RESTRICTIVE COVENANT IN [APPELLEE’S]
           EMPLOYMENT AGREEMENT, AND IN RELYING ON
           INSULATION CORP. OF AMERICA V. BROBSTON, 667
           A.2D 729 (Pa.Super. 1995) FOR THAT PROPOSITION?

           DID THE TRIAL COURT ERR AS A MATTER OF LAW AND/OR
           ABUSE ITS DISCRETION IN GRANTING [APPELLEE’S]
           SUMMARY JUDGMENT MOTION, AND REFUSING TO
           ENFORCE THE CLIENT-SPECIFIC RESTRICTIVE COVENANT
           IN [LAA’S] EMPLOYMENT AGREEMENT, ON THE BASIS
           THAT THE COVENANT WAS AIMED AT RESTRAINING
           [APPELLEE] “FROM THE EXERCISE OF HIS PROFESSION
           WITHIN CERTAIN GEOGRAPHIC…BOUNDS” WHEN THE
           COVENANT CLEARLY WAS NOT BASED ON ANY
           GEOGRAPHIC LIMITATION?

           DID THE TRIAL COURT ERR AS A MATTER OF LAW AND/OR
           ABUSE ITS DISCRETION IN GRANTING [APPELLEE’S]
           SUMMARY JUDGMENT MOTION AND REFUSING TO
           ENFORCE    THE   RESTRICTIVE  COVENANT    IN  HIS
           EMPLOYMENT AGREEMENT ON THE BASIS THAT THERE

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         WAS NO GENUINE ISSUE ON THE MATERIAL FACT AS TO
         WHETHER [LAA] HAD TERMINATED [APPELLEE] FOR POOR
         JOB PERFORMANCE?

(LAA’s Brief at 5).

      In the issues combined, LAA argues the restrictive covenant at issue

should be enforced. LAA claims the court’s reliance on Brobston, supra is

misplaced in light of more recent case law that confirms LAA’s termination of

Appellee does not automatically prohibit LAA as a matter of law from

enforcing a restrictive covenant against Appellee.       LAA also alleges the

restrictive covenant did not prohibit Appellee from practicing his profession

within a particular geographic area upon termination; the covenant allowed

Appellee to provide anesthesia services at any facility so long as it was not

one of the 40+/− medical offices or facilities in eastern and central

Pennsylvania under contract with LAA or which had been under contract with

LAA during the four-year period before Appellee’s termination. LAA claims

Appellee violated these terms of the restrictive covenant when, after his

termination in 2012, Appellee took a position with PAC in King of Prussia.

While working for PAC, Appellee provided anesthesia services for CEC, one of

LAA’s clients from 2001 until 2011.       LAA asserts the court in this case

misperceived there was some “geographic extent” to the restrictive

covenant, as Appellee could have worked for any employer that did not meet

the restrictive covenant definition of a “client.” LAA states it had a particular

interest to protect and Appellee’s termination did not affect his ability to


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J-S01045-16


earn a living. LAA maintains there are genuine issues of material fact which

barred summary judgment.      LAA concludes this Court should reverse the

order granting summary judgment and remand for further proceedings. We

do not agree.

     Initially, we observe:

        Our scope of review of an order granting summary
        judgment is plenary. [W]e apply the same standard as the
        trial court, reviewing all the evidence of record to
        determine whether there exists a genuine issue of material
        fact. We view the record in the light most favorable to the
        non-moving party, and all doubts as to the existence of a
        genuine issue of material fact must be resolved against the
        moving party. Only where there is no genuine issue as to
        any material fact and it is clear that the moving party is
        entitled to a judgment as a matter of law will summary
        judgment be entered. All doubts as to the existence of a
        genuine issue of a material fact must be resolved against
        the moving party.

        Motions for summary judgment necessarily and directly
        implicate the plaintiff’s proof of the elements of [his] cause
        of action.   Summary judgment is proper if, after the
        completion of discovery relevant to the motion, including
        the production of expert reports, an adverse party who will
        bear the burden of proof at trial has failed to produce
        evidence of facts essential to the cause of action or
        defense which in a jury trial would require the issues to be
        submitted to a jury. In other words, whenever there is no
        genuine issue of any material fact as to a necessary
        element of the cause of action or defense, which could be
        established by additional discovery or expert report and
        the moving party is entitled to judgment as a matter of
        law, summary judgment is appropriate. Thus, a record
        that supports summary judgment either (1) shows the
        material facts are undisputed or (2) contains insufficient
        evidence of facts to make out a prima facie cause of action
        or defense.

        Upon appellate review, we are not bound by the trial

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        court’s conclusions of law, but may reach our own
        conclusions. The appellate Court will disturb the trial
        court’s order only upon an error of law or an abuse of
        discretion.

           Judicial discretion requires action in conformity with
           law on facts and circumstances before the trial court
           after hearing and consideration. Consequently, the
           court abuses its discretion if, in resolving the issue
           for decision, it misapplies the law or exercises its
           discretion in a manner lacking reason. Similarly, the
           trial court abuses its discretion if it does not follow
           legal procedure.

                                *    *    *

        Where the discretion exercised by the trial court is
        challenged on appeal, the party bringing the challenge
        bears a heavy burden.

           [I]t is not sufficient to persuade the appellate court
           that it might have reached a different conclusion
           if…charged with the duty imposed on the court
           below; it is necessary to go further and show an
           abuse of the discretionary power.       An abuse of
           discretion is not merely an error of judgment, but if
           in reaching a conclusion the law is overridden or
           misapplied, or the judgment exercised is manifestly
           unreasonable, or the result of partiality, prejudice,
           bias or ill-will, as shown by the evidence or the
           record, discretion is abused.

                                *    *    *

Glaab v. Honeywell Intern., Inc., 56 A.3d 693, 696-97 (Pa.Super. 2012)

(quoting Chenot v. A.P. Green Services, Inc., 895 A.2d 55, 60–62

(Pa.Super. 2006) (internal citations and quotation marks omitted)).

     Contract construction and interpretation is a question of law for the

court to decide.   Profit Wise Marketing v. Wiest, 812 A.2d 1270, 1274


                                    -7-
J-S01045-16


(Pa.Super. 2002); J.W.S. Delavau, Inc. v. Eastern America Transport &

Warehousing, Inc., 810 A.2d 672, 681 (Pa.Super. 2002), appeal denied,

573 Pa. 704, 827 A.2d 430 (2003) (reiterating: “The proper interpretation of

a contract is a question of law to be determined by the court in the first

instance”). In construing a contract, the intent of the parties is the primary

consideration. Tuscarora Wayne Mut. Ins. Co. v. Kadlubosky, 889 A.2d

557, 560 (Pa.Super. 2005).

         When interpreting agreements containing clear and
         unambiguous terms, we need only examine the writing
         itself to give effect to the parties’ intent. The language of
         a contract is unambiguous if we can determine its meaning
         without any guide other than a knowledge of the simple
         facts on which, from the nature of the language in general,
         its meaning depends. When terms in a contract are not
         defined, we must construe the words in accordance with
         their natural, plain, and ordinary meaning. As the parties
         have the right to make their own contract, we will not
         modify the plain meaning of the words under the guise of
         interpretation or give the language a construction in
         conflict with the accepted meaning of the language used.

         On the contrary, the terms of a contract are ambiguous if
         the terms are reasonably or fairly susceptible of different
         constructions and are capable of being understood in more
         than one sense. Additionally, we will determine that the
         language is ambiguous if the language is obscure in
         meaning through indefiniteness of expression or has a
         double meaning.

Profit Wize Marketing, supra at 1274-75 (internal citations and quotation

marks omitted).

         Where there is any doubt or ambiguity as to the meaning
         of the covenants in a contract or the terms of a grant, they
         should receive a reasonable construction, and one that will
         accord with the intention of the parties; and, in order to
         ascertain their intention, the court must look at the

                                     -8-
J-S01045-16


        circumstances under which the grant was made. It is the
        intention of the parties which is the ultimate guide, and, in
        order to ascertain that intention, the court may take into
        consideration the surrounding circumstances, the situation
        of the parties, the objects they apparently have in view,
        and the nature of the subject-matter of the agreement.

Giant Food Stores, LLC v. THF Silver Spring Development, L.P., 959

A.2d 438, 448 (Pa.Super. 2008), appeal denied, 601 Pa. 697, 972 A.2d 522

(2009) (internal citations and quotation marks omitted).     In either event,

“[T]he court will adopt an interpretation which under all circumstances

ascribes the most reasonable, probable, and natural conduct of the parties,

bearing in mind the objects manifestly to be accomplished.”       E.R. Linde

Const. Corp. v. Goodwin, 68 A.3d 346, 349 (Pa.Super. 2013).

     The general rules of contract interpretation also apply in the context of

restrictive covenants.   Baumgardner v. Stuckey, 735 A.2d 1272, 1274

(Pa.Super. 1999). Non-compete covenants in employment contracts exist to

protect the rights of the employer. Hess v. Gebhard & Co., 570 Pa. 148,

159, 808 A.2d 912, 918 (2002).       These covenants are important business

tools, because they allow employers to prevent their employees and agents

from learning the employers’ business practices and then moving into

competition with them.    Id.    Non-compete clauses permit an employer to

protect its legitimate business interests, client base, good will, and

investments in employees.       WellSpan Health v. Bayliss, 869 A.2d 990,

996 (Pa.Super. 2005).

     For a covenant not to compete to be enforceable in Pennsylvania, it

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J-S01045-16


must be: (1) ancillary to the employment relationship; (2) reasonably

necessary for the protection of the employer; (3) reasonable in duration and

geographic reach. Missett v. Hub Inter. Pennsylvania, LLC, 6 A.3d 530,

538 (Pa.Super. 2010).    For an employment restriction to be considered

“ancillary to employment,” the restriction must relate to a contract of

employment. Modern Laundry & Dry Cleaning Co. v. Farrer, 536 A.2d

409, 411 (Pa.Super. 1987).    So long as the employment restriction is “an

auxiliary part of the taking of employment and not a later attempt to impose

additional restrictions on an unsuspecting employee, such a covenant is

supported by valid consideration and is therefore enforceable.”         Id.

Pennsylvania courts have consistently held the acceptance of employment is

sufficient consideration to support a restrictive covenant. Brobston, supra

at 733; Modern Laundry & Dry Cleaning Co., supra at 411; Records

Center, Inc. v. Comprehensive Management, Inc., 525 A.2d 433

(Pa.Super. 1987).

     Nevertheless,

        Post-employment restrictive covenants are subject to a
        more stringent test of reasonableness…. This heightened
        scrutiny stems from a historical reluctance on the part of
        our courts to enforce any contracts in restraint of free
        trade, particularly where they restrain an individual from
        earning a living at his trade. This close scrutiny also stems
        from our recognition of the inherently unequal bargaining
        positions of employer and employee when entering into
        such agreements. The determination of whether a post-
        employment restrictive covenant is reasonable, and
        therefore enforceable, is a factual one which requires the
        court to consider all the facts and circumstances.          A

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J-S01045-16


          restrictive covenant found to be reasonable in one case
          may be unreasonable in others.

Brobston, supra at 733-34 (internal citations omitted).                “[A] post-

employment covenant that merely seeks to eliminate competition per se to

give the employer an economic advantage is generally not enforceable. The

presence of a legitimate, protectable business interest of the employer is a

threshold   requirement   for   an   enforceable   non-competition     covenant.”

WellSpan Health, supra at 996-97 (citations omitted).            “If the threshold

requirement of a protectable business interest is met, the next step in

analysis of a non-competition covenant is to apply the balancing test defined

by our Supreme Court.” Id. at 999 (citing Hess, supra at 163, 808 A.2d at

920). “First, the court balances the employer’s protectable business interest

against the employee’s interest in earning a living. Then, the court balances

the employer and employee interests with the interests of the public.” Id.

To weigh the competing interests of the employer and employee, the court

must conduct an examination of reasonableness. WellSpan Health, supra

at 999.

     To     determine   reasonableness,    a   covenant   must    be   reasonably

necessary for the employer’s protection, and the terms of the covenant must

be reasonably limited in terms of the temporal and geographical restrictions

imposed on the former employee. Id. (citations omitted).

          An [employee] may receive specialized training and skills,
          and learn the carefully guarded methods of doing business
          which are the trade secrets of a particular enterprise. To

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        prevent an [employee] from utilizing such training and
        information in competition with his former employer, for
        the patronage of the public at large, restrictive covenants
        are entered into. They are enforced by the courts as
        reasonably necessary for the protection of the employer.
        A general covenant not to compete, however,
        imposes a greater hardship upon an [employee]
        than upon a seller of a business. An [employee] is
        prevented from practicing his trade or skill, or from
        utilizing his experience in the particular type of work
        with which he is familiar. He may encounter difficulty
        in transferring his particular experience and training to
        another line of work, and hence his ability to earn a
        livelihood is seriously impaired. Further, the [employee]
        will usually have few resources in reserve to fall back
        upon, and he may find it difficult to uproot himself and his
        family in order to move to a location beyond the area of
        potential    competition   with    his  former    employer.
        Contrarywise, the mobility of capital permits the
        businessman to utilize his funds in other localities and in
        other industries.

Brobston, supra at 734 (citations omitted) (emphasis in original).

Furthermore, “[w]hen…the covenant imposes restrictions broader than

necessary to protect the employer, we have repeatedly held that a court of

equity may grant enforcement limited to those portions of the restrictions

that are reasonably necessary for the protection of the employer.”     Hess,

supra at 162-63, 808 A.2d at 920 (citation omitted). “If…an employer does

not compete in a particular geographical area, enforcement of a non-

competition covenant in that area is not reasonably necessary for the

employer’s protection.” WellSpan Health, supra at 1001.

     Moreover,

        Where an employee is terminated by his employer on the
        grounds that he has failed to promote the employer’s

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J-S01045-16


        legitimate business interests, it clearly suggests an implicit
        decision on the part of the employer that its business
        interests are best promoted without the employee in its
        service. The employer who fires an employee for failing to
        perform in a manner that promotes the employer’s
        business interests deems the employee worthless. Once
        such a determination is made by the employer, the need to
        protect itself from the former employee is diminished by
        the fact that the employee’s worth to the corporation is
        presumably insignificant. Under such circumstances, we
        conclude that it is unreasonable as a matter of law to
        permit the employer to retain unfettered control over that
        which it has effectively discarded as worthless to its
        legitimate business interests.

Brobston, supra at 735.       Still, “the circumstances of termination are,

alone, not determinative of whether the restrictive covenant is enforceable

under Brobston.” Missett, supra at 539.

     Instantly, the trial court relied on Brobston and concluded:

        [D]espite its asseverations in respect to the court’s duty to
        scrutinize the “fact[s] and circumstances” of each case,
        [LAA] nevertheless fails to point to any fact of record
        indicative of why the present matter is distinguishable
        from Brobston. Rather, perusal of [LAA’s] brief reveals
        merely the contention that the present restrictive covenant
        does not resemble to the sort of “unfettered control” to
        which Brobston adverted in arriving at is holding. The
        argument is unavailing. Here, as in Brobston, the subject
        covenant is aimed at restraining the previous employee
        from the exercise of his profession within certain
        geographic and temporal bounds.

        Additionally, [LAA] argues that even though an employee
        may be terminated for cause, he may still have
        “knowledge of protectable trade secrets, or significant
        customer contacts constituting protectable business
        interests.” However, such an argument misconstrues the
        import of Brobston.      The disclosure of trade secrets
        remains actionable as a common law tort…but what
        Brobston proscribes is an employer discarding an

                                    - 13 -
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        employee deemed worthless by the organization while
        simultaneously asserting, through a restrictive covenant,
        that the employee is nevertheless capable of posing a
        competitive threat.      The [Superior] Court, in fact,
        underscored this very point: “The salesman discharged for
        poor sales performance cannot reasonably be perceived to
        pose the same competitive threat to his employer’s
        business interests as the salesman whose performance is
        not questioned, but who voluntarily resigns to join another
        business in direct competition with the employer.”
        Brobston, supra [at 735-36]. As such, any “significant
        customer contacts,” so long as they do not constitute
        confidential information protected by the law of tort,
        cannot be deemed a legitimate business interest of the
        employer vis-à-vis a discarded employee.

        The facts and circumstances of this case reveal no genuine
        issue of fact on the issue of whether [LAA] terminated
        [Appellee] for what it deemed to be poor job performance.
        In view of [LAA’s] failure to point to any record evidence to
        refute such a conclusion, as a matter of law it cannot
        prevail on any claim based on the subject restrictive
        covenant. [Appellee] is, therefore, entitled to summary
        judgment in his favor on the claim.

(Trial Court Opinion, filed July 2, 2015, at 4-6) (some internal citations

omitted).   The record supports this decision.      An examination of the

restrictive covenant at issue reveals that the terms are both ambiguous and

overly broad or unreasonable. The covenant specifically prohibits Appellee

from rendering anesthesia services to any of LAA’s current or former clients

dating back to 2008.     (See Appellee’s Brief in Support of Motion for

Summary Judgment, Exhibit D at 6; R.R. at 25a.)        The covenant defines

“clients” as those “for whom [LAA] has provided any billable services

[within] the forty-eight (48) months preceding [Appellee’s] termination of

employment.” See id. Nevertheless, LAA interprets the term “clients” more

                                   - 14 -
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broadly to include also businesses which conduct business with current and

prior clients of LAA, even if these businesses have not been direct clients of

LAA. By virtue of this unwarranted extension, LAA wants to hold Appellee in

violation of the restrictive covenant because, after his termination, Appellee

took a position with PAC in King of Prussia. While working for PAC, Appellee

was asked to provide anesthesia services for CEC, which happened to be one

of LAA’s clients from 2001 until 2011.       Thus, the reach of the covenant

terms is overly broad and cannot be understood to limit businesses in PAC’s

position. See Profit Wize Marketing, supra. There is no indication from

the surrounding circumstances that the parties intended for the covenant to

restrict Appellee by restricting his new employer. See Giant Food Stores,

supra. The covenant restrictions in this regard are broader than necessary

to protect LAA’s business interests.   See Hess, supra.      Interpreting the

covenant so generally as to restrict Appellee from working for any employer

that might happen to conduct business with one of LAA’s current or former

clients places an undue hardship on Appellee in terms of finding potential

future employment, especially when coupled with the unlimited geographical

scope of the covenant.   See Brobston, supra.       Construing the restrictive

covenant so broadly is not reasonably necessary to protect LAA, whereas it

prevents Appellee “from practicing his trade or skill, or from utilizing his

experience in the particular type of work with which he is familiar.” See id.;

WellSpan Health, supra.         We conclude the court properly granted


                                    - 15 -
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summary judgment in favor of Appellee. See Glaab, supra. Accordingly,

we affirm.

     Order affirmed.

Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 4/26/2016




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