Serving the Entire State of Florida
legal scales

Employer Entitled to Full Benefit of Term of Restrictive Covenant in Noncompetition Agreement Solidifying that Noncompetition Agreements Are Alive and Well in Florida

In case there was any doubt that noncompetition agreements were valid and enforceable in Florida, this doubt has yet again been removed by another Florida appellate court. Recently, Florida’s Second District Court of Appeals confirmed the enforceability of a noncompetition restrictive covenant against a physician.

The Court had previously reversed the trial court’s refusal to enforce the covenant, but by the time the case was remanded back to the trial court, the two year restrictive covenant period had already lapsed. So, the trial court refused to enter an injunction against the defendant/physician.

The case made its way back to the appellate court which held that where there has been a delay in the entry of a non-compete injunction, the party seeking to enforce the non-compete is entitled to the enforcement of the full non-compete period specified in the agreement between the parties. The Court specifically stated that it would be wholly unfair if the law held that a valid non-compete clause could be nullified because the non-compete period was consumed by the time it took to appeal the trial court’s ruling.

In this case, the defendant, a doctor, left his solo practice to join Florida Digestive Health Specialists, LLP (“Florida Digestive Health”). As a condition of his partnership with Florida Digestive Health, the defendant signed a partnership agreement which included a restrictive covenant. Pursuant to the terms of the restrictive covenant, the defendant was prohibited from practicing gastroenterology for a Florida Digestive Health competitor within the counties that Florida Digestive Health operated for a period of two years.

Despite the restrictive covenant, the defendant left Florida Digestive Health and joined Intracoastal Medical Group, Inc. (“Intracoastal Medical”), a large competitor of Florida Digestive Health. Accordingly, Florida Digestive Health filed a lawsuit to enjoin the defendant from working for the competitor for two-years (the non-compete period in the restrictive covenant).

The trial court held that the defendant breached the partnership agreement by joining Intracoastal Medical but was not bound by the restrictive covenant, stating that the threatened injury to the defendant outweighed the possible harm to Florida Digestive Health.

Florida’s Second District Court of Appeals disagreed with the trial court’s finding, holding that it was improper for the trial court to have considered the potential hardship of the party against whom the injunction was sought. Thus, Florida’s Second District Court of Appeals remanded the case with instructions to enforce the restrictive covenant, specifically requiring the trial court to grant the temporary injunction prohibiting defendant from violating the partnership agreement, to strike the portion of the injunction which prohibits the defendant from disparaging Florida Digestive Health and to more narrowly define the manner in which the defendant is prohibited from interfering with Florida Digestive Health’s client base.

On remand, the trial court did not grant the temporary injunction prohibiting the defendant from violating the partnership agreement nor did it more narrowly define the manner in which the defendant was prohibited from interfering with Florida Digestive Health’s client base. Florida Digestive Health immediately filed a motion to enforce the mandate ordered by the Second District Court of Appeals. At a hearing on the motion, defendant argued that the issue was moot because the two-year period of the restrictive covenant at issue had expired prior to the issuance of the mandate. In response, Florida Digestive Health argued that the two-year restrictive period was tolled during any period in which the defendant was in violation of the restrictive covenant and thus, the two-year period should begin from the ate the court entered its order enjoining the defendant from working for Intracoastal Medical and otherwise violating the partnership agreement.

The trial court neither granted nor denied the motion, and instead, it found that the date upon which the injunction would begin on remand was not addressed in the Second District Court of Appeals’ opinion and it adopted the defendant’s argument in support of its decision. Florida Digestive Health moved for reconsideration of the trial court’s apparent adoption of the mootness argument, but before a hearing could be held on said motion, Florida Digestive Health simultaneously filed its motion to enforce mandate with the Second District Court of Appeals and its notice of appeal of the trial court’s order on its motion to enforce the mandate.

Florida’s Second District Court of Appeals stated that the trial court effectively denied Florida Digest Health’s motion for temporary injunction in direct contravention of the its mandate. The Second District Court of Appeals held that where there has been a delay in entry of an non-compete injunction, the party seeking to enforce the non-compete clause is entitled to enforcement of the full non-compete period specified in the agreement between the parties, and remanded the case with instruction to enter an order granting the temporary injunction prohibiting the defendant from violating the partnership agreement and prohibiting the doctor from interfering with Florida Digestive Health’s client based in specific, not impermissibly vague terms, and that the two-year injunctive period shall commence on the date the order is entered on remand.

Accordingly, Florida’s Second District Court of Appeals demonstrated, once again, that restrictive covenants are alive and well and valid and enforceable in the state of Florida.

To read more about restrictive covenants and the requirements and enforceability thereof, click HERE. For more information about noncompetition aggreements and how they can protect your business, call us to speak with our knowledgeable Florida business litigation attorneys at Rosenthal Law Group today.

Categories