## Facts

- Dean Van Horn Consulting Associates, Inc. employed Charles L. Wold to prepare tax returns and provide tax and accounting advice to firm clients.
- Wold and the firm executed an employment contract containing a restrictive covenant barring Wold from soliciting or providing similar services to any client he had advised during his employment.
- The contract also included a liquidated-damages provision tied to Wold’s post-employment billings to the firm’s clients (50% in year one, 30% in year two, 20% in year three).
- Wold formed Professional Consulting Group, Inc. shortly before resigning and, after leaving, provided tax and accounting services through that entity to some of the same clients he served while employed by the firm.
- The firm sued Wold and his corporation for breach of the restrictive covenant and sought liquidated damages.
- In an earlier appeal, the court of appeals had stated the restrictive covenant and liquidated-damages clause were reasonable and remanded for further proceedings.
- On remand, the trial court received additional evidence on reasonableness, upheld the liquidated-damages clause, but found the restrictive covenant’s three-year duration overbroad and enforced it for only one year.
- The firm appealed, arguing the trial court exceeded the scope of remand and was bound by the prior appellate ruling that the covenant was reasonable.

## Issues

1. Whether the trial court, on remand, was barred by law-of-the-case or the scope of remand from taking additional evidence and reconsidering the reasonableness of the restrictive covenant and liquidated-damages clause.
2. Whether the trial court erred by finding a three-year post-employment restraint overbroad and enforcing the restrictive covenant for only one year.

## Decision

- The Minnesota Court of Appeals affirmed.
- The trial court was permitted on remand to take further evidence and revisit reasonableness because the earlier appellate ruling was made on a different, more limited record.
- The trial court did not err in limiting enforcement of the restrictive covenant to one year after finding the original three-year duration broader than necessary.
- The liquidated-damages clause was upheld as reasonable and not a penalty.

## Legal Principles

- Law-of-the-case does not rigidly prevent reconsideration of fact-dependent issues on remand when the prior appellate decision rested on an incomplete or materially different record.
- Employment restrictive covenants are enforceable only to the extent reasonably necessary to protect legitimate business interests and must be reasonable in scope and duration.
- Courts may partially enforce or reform an overbroad restrictive covenant by narrowing it to a reasonable term rather than invalidating it entirely.
- A liquidated-damages provision is enforceable when it represents a reasonable pre-estimate of loss for harms that are difficult to quantify and is not structured as punishment.

## Conclusion

The court affirmed the post-remand order allowing additional evidence on reasonableness, enforcing the client-based restriction for one year instead of three, and applying the agreed liquidated-damages formula to qualifying post-employment work for the former employer’s clients.


Dean Van Horn Consulting Assocs., Inc. v. Wold, 395 N.W.2d 405 (Minn. Ct. App. 1986)