is plainly an impermissible restriction on competition.
Thus, Mr. Peroff's suggested interpretation of Paragraph 7(D) of the Shareholders Agreement runs contrary to the very ethical principles he has invoked to obtain invalidation of Paragraph 7(C) of this agreement. Were this Court to accept his interpretation, Mr. Peroff would be able to appropriate as much of the goodwill of Liddy Sullivan as he could in the form of existing clients, while being entitled to compensation for a third of whatever remained. This result would be neither equitable nor could it have been intended by the parties. Rather, it is plain that the parties would not have agreed to compensate a withdrawing partner for goodwill without an ability to ensure that the partner would not diminish that goodwill by taking existing clients. Thus, the Court finds that the compensation provided for goodwill is not severable from the duty to refrain from taking existing clients from the firm. The holding of this Court is therefore that where a partnership agreement provides that a withdrawing partner shall be entitled to a portion of the value of the firm conditioned upon not competing with the firm, a withdrawing partner shall be entitled to a portion of the value of the firm regardless of whether he competes with the firm or not, but the valuation of the firm shall not take account of the goodwill of the firm.
Accordingly, the Court finds that Mr. Peroff is entitled to be compensated for one third of the value of Liddy Sullivan, measured as the firm's assets minus its liabilities, with its assets to include its accounts receivable, work in progress and fixed assets.
IV. RIGHT TO AN ACCOUNTING
Mr. Peroff contends that he is entitled to an accounting. However, Paragraph 7(E) of the Shareholders Agreement provides that "solely at his cost and expense, the withdrawing Partner or his duly authorized representative, shall have the right to audit the books and records of the partnership to ensure of the accuracy of the payments made pursuant to Paragraphs (a) through (e)." The Court finds that this provision constitutes a waiver of a judicial accounting. See Raymond v. Brimberg, 99 A.D.2d 988, 473 N.Y.S.2d 437, 439 (1st Dept., 1984). Accordingly, Mr. Peroff is not entitled to a court ordered accounting.
V. INJUNCTIVE RELIEF
Mr. Peroff also seeks an order from this Court directing that Liddy Sullivan forward his mail, provide appropriate information to parties making inquiry as to his whereabouts, and comply with the requests of clients to deliver their files to him. Liddy Sullivan contends that it is already in compliance with these requests and that Mr. Peroff's application for injunctive relief is consequently moot. Although it may therefore serve only to affirm a state of affairs that already exists, the Court will nonetheless direct such relief.
For the reasons stated above, the Court declares that Mr. Peroff is entitled under the Shareholders Agreement to one third of the value of Liddy Sullivan, measured as the firm's assets minus its liabilities, with its assets to include its accounts receivable, work in progress and fixed assets.
The Court also directs Liddy Sullivan as follows: (1) That upon written request by any client of Liddy Sullivan to forward its files to Mr. Peroff, Liddy Sullivan shall identify all files pertaining to the client's affairs and deliver such files to Mr. Peroff and shall thereafter forward to Mr. Peroff all mail pertaining to the affairs of such clients; (2) That any party inquiring for Mr. Peroff shall be informed that he no longer practices with Liddy Sullivan and shall be given his current business telephone number and his current business address; (3) That Liddy Sullivan shall promptly forward to Mr. Peroff all mail addressed to him.
Finally, the Court denies Mr. Peroff's request for an accounting. The parties are hereby advised to appear for a pre-trial status conference on June 24, 1994, at 2:00 p.m. in Courtroom 312.
Dated: May 18, 1994
New York, New York
Peter K. Leisure