Kelton

In conjunction with forming a partnership for the purpose of developing industrial warehouses, appellants, Michael Kelton and Kelton & Associates, Inc. (collectively Kelton), and respondents, Peter T. Stravinski and Peter T. Stravinski & Associates, Inc. (collectively Stravinski), each agreed to not build, develop and operate a warehouse without including the other. Based on alleged violations of this covenant, Kelton sought damages from Stravinski. Accordingly, the enforceability of this covenant not to compete is the pivotal issue on appeal.

The trial court determined that this covenant violated Business and Professions Code section 16600 and was therefore unenforceable as a matter of law. Finding that all of Kelton’s causes of action against Stravinski in the cross-complaint were premised on the covenant not to compete, the trial court entered judgment for Stravinski. The court first granted summary adjudication on two causes of action in Stravinski’s favor and thereafter sustained Stravinski’s demurrer without leave to amend on the remaining causes of action.

Kelton contends the covenant not to compete was enforceable because Kelton and Stravinski were involved in…