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What Types of Agreements Are Governed by Florida’s Statute Governing Restrictive Covenants?

Posted in Labor & Employment

Although there have been subsequent revisions, the Florida legislature adopted its current version of its statute governing restrictive covenants, Florida Statute § 542.335, during the 1996 legislative session. Section 542.335 includes a “legitimate business interests” standard, reflecting the legislature’s view that “if the proponent of the restriction demonstrates that the restraint is reasonably necessary to protect one or more ‘legitimate business interests,” then, absent a strong defense, the court must accord such interest or interests an appropriate measure of protection.” Henao v. Professional Shoe Repair, 929 So. 2d 723, 727 (Fla. 5th DCA 2006), quoting John A. Grant & Thomas Steele, Restrictive Covenants: Florida Returns to the Original “Unfair Competition” Approach to the 21st Century, 70 Fla. B.J. 53, 53-56 (Nov. 1996). By adopting the legitimate business interests standard, the legislature rejected the “contract approach” to enforcing restrictive covenants. Id.

One issue the arises from time to time in non-compete litigation is what types of agreements fall within the scope of Florida’s non-compete statute. According to Grant & Steele’s article in 1996, restrictive covenants governed under section 542.335 includes “all contractual restrictions on competition, such as noncompetition/nonsolicitation agreements, confidentiality agreements, exclusive dealing agreements, and all other contractual restraints on trade.” Henao, 929 So. 2d at 726, citing Grant & Steele, supra, at 55 (noting that section 542.335 is broadly “aimed at making enforcement of bona fide restrictive covenants easier and more certain.”) See also, Environmental Services, Inc. v. Carter, 9 So. 3d 1258, 1262 (Fla. 5th DCA 2009)(holding that Fla. Stat. § 542.335 employs the term “restrictive covenants” and includes all contractual restrictions such as noncompetition/nonsolicitation agreements, confidentiality agreements, exclusive dealing agreements, and all other contractual restraints on trade.)

Section 542.335 casts a wide net. Not only does its provisions apply to traditional non-compete agreements, but instead applies to any agreement that acts as a restraint on trade. These include noncompetition agreements, confidentiality agreements and exclusive dealing agreements. This is significant, as section 542.335 has many presumptions that work for and against a party seeking to enforce such agreements.

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Jason Cornell is an equity partner with the law firm Fox Rothschild LLP. Jason practices in Fox Rothschild’s Litigation and Family Law departments in West Palm Beach, Florida. Jason focuses his practice on commercial and civil litigation throughout Florida, with an emphasis on non-compete litigation. You can reach Jason at (561) 804-4415 or jcornell@foxrothschild.com.

Below are some recent posts Jason has written on Florida non-compete litigation:

Common Defenses to Enforcement of a Non-Compete Agreement

Are Non-Compete Agreements Enforceable Against Third Parties?

What Are the Burdens of Proof When Enforcing a Non-Compete Agreement?

Florida’s Fifth District Narrowly Construes Geographic Scope Provision in Non-Compete Agreement

What is the Effect of Deeding Non-Marital Property Prior to a Florida Divorce Proceeding?

Posted in Divorce & Family Law

In a Florida divorce, does property that is otherwise non-marital become marital property merely because one spouse added the other spouse to a deed? Florida’s First District Court of Appeal addressed this issue recently in McKee v. Mick, 120 So. 3d 162 (Fla. 1st DCA 2013). In McKee, the trial court classified a wife’s burial plot as non-marital property. On appeal, the First District reversed based on the evidence presented at trial.

The wife in McKee received two burial plots during the marriage as gifts from a family member. After receiving the burial plots, the wife added the husband to the deed on the property. During the divorce proceeding, the wife claimed the burial plots were non-marital property. However, at trial the wife testified that she added her husband’s name to the deed “believing the parties’ marriage would last.” Id. at 163. On appeal, the First District found that the trial court incorrectly deemed the burial plot as non-marital property. The appellate court noted that for purposes of equitable distribution, marital assets include “[i]nterspousal gifts during the marriage.” Id., citing Fla. Stat. 61.075(6)(a)(1)(c). According to the appellate court, the wife’s testimony that she added the husband’s name to the deed because she thought the marriage would last established the property as a gift. Id.

In addition to relying on the testimony, the First District in McKee cited to Fla. Stat. 61.075(6)(a)(2) which provides that “[a]ll real property held by the parties as tenants by the entireties, whether acquired prior to or during the marriage shall be presumed to be a marital asset;” see also, Beal Bank, SSB v. Almand & Assoc., 780 So. 2d 45, 54 (Fla. 2001)(holding that “[i]n the case of ownership of real property by husband and wife, the ownership in the name of both spouses vests title in them as tenants by entireties.”) This presumption, however, can be overcome. As the McKee court recognized, the party claiming that property held by husband and wife is non-marital carries the burden of proof.

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Jason Cornell is an equity partner with the law firm Fox Rothschild LLP. Jason practices in Fox Rothschild’s Litigation and Family Law departments in West Palm Beach, Florida. Jason focuses his practice on civil litigation throughout Florida, with an emphasis on divorce and family law, as well as non-compete litigation. You can reach Jason at (561) 804-4415 or jcornell@foxrothschild.com.

Below are some recent articles Jason has written on Florida divorce law:

What are Florida’s Residency Requirements for a Divorce?

Temporary Alimony in Florida (Part 1): Maintaining a Standard of Living.

Understanding Equitable Distribution in a Florida Divorce.

When Will a Florida Court Award Rehabilitative Alimony?

How Do Florida Courts Determine a Spouse’s Ability to Pay Alimony?

 

Florida Construction Liens: How Does the Supplier of Materials Establish that Product was Furnished to an Improvement or Subdivision?

Posted in Construction & Real Estate, General Litigation

In order for a supplier of materials or a “materialman” to have a construction lien on a property, his product must either be specially fabricated or actually incorporated into the property. Specifically, Florida’s construction lien statute defines “furnish materials” to mean “to supply materials which are incorporated in the improvement including normal wastage in construction operations; or specially fabricated materials for incorporation in the improvement…” It does not include “any design work, submittals, or the like preliminary to actual fabrication of the materials; or supply materials used for the construction and not remaining in the improvement, subject to diminution by the salvage value of such materials; and includes supplying rental equipment, but does not include supplying handtools.” Fla. Stat. § 713.01(13).

I.  Delivery as Proof of Incorporation of Materials into the Project 

Because it can be impractical for a materialman to prove that the products he furnished to a subdivision project were actually incorporated into the project, Florida law dictates that a showing that the materials were delivered to the project site is prima facie evidence that the materials were, in fact, incorporated into the subdivision.” Fla. Stat. § 713.01(13). To be entitled to the benefit of this presumption, “evidence must be presented which establishes that materials were, in fact, delivered to project…” American Ins. Co. v. Coley Elec. Supply Co., Inc., 354 So. 2d 390 (Fla. 1st DCA 1978). The materialman bears the burden of proof of delivery or special fabrication before being entitled to the presumption.

II.  What Evidence is Sufficient for Delivery?

In Dublin Co. v. Brady Sales, Inc., 380 So. 2d 1095 (Fla. 5th DCA 1980), the Court held that testimony by the president of a material supplier was sufficient evidence for purposes of establishing delivery and taking advantage of the prima facie presumption of incorporation. However, in Beautyware Plumbing Supply Co. v. Columbiad Apartments, Inc., 215 So.2d 42, 44 (Fla. 4th DCA 1968), the Court held that proof that a materialman delivered product to the contractor, without a showing that the delivery occurred at the project site, was insufficient as a matter of law to establish a construction lien in favor of the materialman.

III.  Special Fabricators

Fabricators of custom and specially designed products are governed by a different rule when it comes to incporation. To the extent that a materialman can establish that the product he produced was specially fabricated for a particular project, the materialman can establish entitlement to a lien. This is true regardless of whether the materials were actually delivered to the job site. See Oolite Indus., Inc. v. Millman Const. Co., Inc., 501 So. 2d 655, 656 (Fla. Dist. Ct. App. 1987). In order for a product to be considered “specially fabricated” under Florida’s Construction Lien Law, the materials must be “materials which are ‘not generally suited for nor readily adaptable to use in’ a like improvement.” Surf Properties, Inc. v. Markowitz Brothers, Inc.75 So.2d 298, 302 (Fla.1954). In other words, the specially fabricated materials must have been designed for the particular project and not be appropriate for use in a similar project. To illustrate, in Stunkel v. Gazebo Landscaping Design, Inc., 660 So. 2d 623 (Fla. 1995), the Florida Supreme Court held that trees selected by homeowners for installation at their property by a landscaper were “specially fabricated materials.” Ultimately, as long as the parties intended the specially fabricated products to be incorporated into the improvement, the special fabricator can establish a lien regardless of delivery assuming the other requirements of the statute are met.

IV.  Alternative Approaches

It is also permissible for a witness to testify that he or she can identify the materialman’s product in the finished improvement. See Florida East Coast Properties, Inc. v. Coastal Const. Products, Inc., 553 So. 2d 705 (Fla. 3d DCA 1989). In this respect, it may be possible for a materialman to establish either through lay or expert testimony that his or her products were delivered to the job site.

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W Mason is an associate with the law firm Fox Rothschild LLP. W practices in Fox Rothschild’s Litigation department in West Palm Beach, Florida. W focuses his practice on commercial litigation throughout Florida, with an emphasis on construction litigation. You can reach W at (561) 804-4432 or wmason@foxrothschild.com. Below are some recent posts W has written on Florida Construction Lien Law:

 

Florida Construction Liens: Enforcing Liens for Improvements to Subdivisions

Posted in Construction & Real Estate, General Litigation

Florida construction lien law specifically addresses the situation where one performs services or furnishes materials for the purpose of making a site suitable for construction of an improvement. This typically occurs in the context of subdivisions. Under Fla. Stat. § 713.04, any lienor who, regardless of privity, performs services or furnishes material to real property for the purpose of making it suitable as the site for the construction of an improvement or improvements shall be entitled to a lien on the real property for any money that is owed to her or him for her or his services or materials furnished in accordance with her or his contract and the direct contract. The total amount of liens permitted shall not exceed the amount of the direct contract under which the lienor furnishes labor, materials, or services.

I.  Subdivision Improvements Specifically Covered by Fla. Stat. § 713.04

The subdivision improvement work covered by Fla. Stat. § 713.04 includes, but is not limited to, the following work:

  • grading, leveling, excavating, and filling of land, including the furnishing of fill soil;
  • grading and paving of streets, curbs, and sidewalks;
  • construction of ditches and other area drainage facilities;
  • laying of pipes and conduits for water, gas, electric, sewage, and drainage purposes; and
  • construction of canals;
  • the altering, repairing, and redoing of any of the above.

II.  Liens on Abutting Land

The statute provides specific rules related to public use areas in subdivisions. For instance, when “services or materials are placed on land dedicated to public use and are furnished under contract with the owner of the abutting land, the cost of the services and materials, if unpaid, may be the basis for a lien upon the abutting land.” Fla. Stat § 713.04. For land to be considered “abutting” is must be continuous. There can be no intervening land. See Davis Water & Waste Industries, Inc. v. Embry Development Corp., 603 So. 2d 1357 (Fla. 1st DCA 1992).

Moreover, when “services or materials are placed upon land under contract with the owner of the land who subsequently dedicates parts of the land to public use, the person furnishing the services or materials placed upon the dedicated land shall be entitled to a lien upon the land abutting the dedicated land for the unpaid cost of the services and materials placed upon the dedicated land.” In the case of improvements that “serve or benefit real property that is divided by the improvements,” the provider shall be entitled to “a lien upon each abutting part for the equitable part of the full amount due and owing to the provider.” Fla. Stat. § 713.04. If the part of the cost to be borne by each parcel of the land subject to the same lien is not specified in the contract, “it shall be prorated equitably among the parcels served or benefited.”

III.  Notice and Recording Requirements for Subdivision Lienors

A.  Claim of Lien

In order to be entitled to a construction lien, a provider of services or materials must record a lien within 90 days of the last work or furnishing of materials at the job site. See Aronson v. Keating, 386 So.2d 822 (Fla. 4th DCA 1980).The claim of lien must be served on the owner within 15 days of recording. Fla. Stat. 713.08(4)(c).

B.  Notice to Owner

Florida law does not require that a subdivision lienor serve a notice to owner regardless of privity. However, by electing to serve a notice to owner, the non-privity lienor obligates the owner to see that the lienor is paid to the extent that payments are made to the contractor. Fla. Stat. § 713.04(2).

C. Notice of Commencement

The legislature specifically precludes subdivision lienors from the requirement they record a notice of commencement. See Fla. Stat. § 713.04(1)(“[n]o notice of commencement shall be filed for liens under this section.”). This is primarily because a properly recorded claim of lien relates back to the date of a properly recorded notice of commencement. Therefore, institutional lenders would be remiss to make a mortgage loan to a developer where notices of commencement have already been recorded against the subdivision property because the construction lien would have priority over the lender’s mortgage due to the fact that it relates back to the notice of commencement. Therefore, this specific preclusion serves to allow developers to make preparations for improving property even when financing for the improvement has not yet been secured.

D.  Contractor’s Final Affidavit

The recent amendments to Fla. Stat. § 713.04 have made it clear that a contractor providing a subdivision improvement must comply with Fla. Stat. § 713.06(3)(d) by serving a contractor’s final affidavit in order to receive final payment. In the event that the owner makes a final payment without obtaining a the contractor’s final affidavit, the contractor has made an “improper payment.” In other words, such a payment would not serve to limit the owner’s liability when measured against the contract price pursuant to Fla. Stat. § 713.06.

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W Mason is an associate with the law firm Fox Rothschild LLP. W practices in Fox Rothschild’s Litigation department in West Palm Beach, Florida. W focuses his practice on commercial litigation throughout Florida, with an emphasis on construction litigation. You can reach W at (561) 804-4432 or wmason@foxrothschild.com. Below are some recent posts W has written on Florida Construction Lien Law:

Florida Construction Liens: Improvements that Create an Enforceable Construction Lien

Posted in Construction & Real Estate, General Litigation

Previously in this series, I discussed the property that could be the subject of a construction lien. In this part, we take a look at the definition of improvement and the “permanent benefit” requirement.

The Florida Construction Lien Law defines an “improvement” as “any building, structure, construction, demolition, excavation, landscaping, or any part thereof existing, built, erected, placed, made or done on land or other real property for its permanent benefit.” Fla. Stat. § 713.01(15)(emphasis added). Florida courts have been clear that items that are not permanent do not create enforceable construction liens. However, “permanent benefit” does not mean that the land must be made more valuable because of the addition. Rather, any permanent addition to the real property is considered an improvement. See E & E Elec. Co. v. Gold Coast 72nd St. Diner, Inc., 116 So. 2d 660 (Fla. 3d DCA 1959).

I.  Permanency

To illustrate, courts have held that residential cleaning, maintenance, and concierge services provided on behalf of condominium association did not constitute improvements to real property, and thus, were not lienable in a collection action by cleaning service. See Parc Cent Aventura East Condominium v. Victoria Group Services, LLC, 54 So.3d 532 (Fla. 3d DCA 2011). Further, a lien filed by construction company was found to be fraudulent because it included nonlienable items such as pool upkeep charges, lawn maintenance charges, homeowner’s association fees and utility charges. See Levin v. Palm Coast Builders and Const, Inc., 840 So.2d 316 (Fla. 4th DCA 2003). Moreover, a potential lienor was not entitled to construction lien on a shopping mall property for the assembly of a kiosk where trial court found that such structure was not of permanent benefit to the mall and hard-wiring into electrical outlet available at site did not make kiosk a ‘permanent improvement.’ Palm Beach Mall, Inc. v. Southeast Millwork, Inc., 593 So.2d 1121 (Fla. 4th DCA 1992). Finally, one court has held that wall-to-wall carpeting placed in apartment building was an improvement, and, therefore, supplier of such carpeting had no lien upon the real property where it was installed. See Fell v. Messeroff, 145 So.2d 238 (Fla. 3d DCA 1962).

II.  Benefit

While it may appear from the definition that an “improvement” should increase the value of the property to the owner, Florida courts have decided that it is not their duty to weight the relative advantage of structures erected on land in determining whether a lien is enforceable. Rather, where there is a permanent addition to real property, a construction lien may be enforceable. See E & E Elec. Co., 116 So. 2d at 662.

In Rosenholz v. Perrine Development Company, 340 So.2d 1264 (Fla. 4th DCA 1976), the Fourth District examined a case where material was removed from land to create a lake for lake front property. The company that rented equipment for excavation to the developer sued the property owner for enforcement of a construction lien on the property. The court found that while the excavation did not increase the value of the land, the improvement constituted an improvement and permitted the enforceable lien.

In sum, Florida courts have strictly interpreted the “permanency” portion of the definition of “improvement” while giving a more liberal effect to the requirement that an improvement “benefit” a particular property. As such, potential lienors should carefully consider the character of the potential improvement in order to understand whether enforceable liens will be created.

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W Mason is an associate with the law firm Fox Rothschild LLP. W practices in Fox Rothschild’s Litigation department in West Palm Beach, Florida. W focuses his practice on commercial litigation throughout Florida, with an emphasis on construction litigation. You can reach W at (561) 804-4432 or wmason@foxrothschild.com. Below are some recent posts W has written on Florida Construction Lien Law:

 

Florida Construction Liens: Liens for Architects, Engineers, Design Professionals, and Surveyors

Posted in Construction & Real Estate, General Litigation

Pursuant to the Florida Statute, Section 713.03, a person performing professional services has a lien on the improved real property for money that is owed to him or her for his or her services used in connection with improving the real property or for his or her services in supervising any portion of the work of improving the real property. The services or supervision must be rendered in accordance with the professionals contract and with the direct contract with the owner. A “professional” for purposes of the statute is “an architect, landscape architect, interior designer, engineer, or surveyor and mapper.” The services must be performed relative to the improvement of a specific parcel of real estate. The First District has held that an architect’s services as an expert witness in arbitration did not relate to improvement of real property and therefore the architect was not entitled to a lien pursuant to Florida Statute, Section 713.

In Warsaw v. Pyms, 266 So. 2d 355 (Fla. 3rd DCA 1972) an engineer filed an action under the construction lien law for enforcement of a lien for engineering services alleged to have been performed in connection with land owned by the defendants.  In Warsaw, the owners had contracted with an architect, and the architect’s contract called for the provision of engineering services. The engineer argued that the a contract between the engineer and the owner was made through the architect as the owner’s agent. After the trial court entered summary judgment in favor of the land owners, in part, on the basis that no contract had been entered into between the parties. Id.

In examining the question of whether there was a contract between the parties, the Warsaw court held that a direct contract is not required to arise out of “face to face personal confrontation between the parties.” Id. at 356. Rather, the court held that an owner of real estate could become obligated to an engineer for professional relating to his property by a contract which is made with the engineer through an agent, such as an architect, as effectively as if the parties had entered into a contract in a face to face situation. Id.

Subpart (2) of section 713.03 specifically limits the right to claim a lien on property which is not actually improved to “architects, interior designer, engineer, or surveyor and mapper.” Section 713.01(1), Florida Statutes, defines “architect” as a person or firm authorized to practice architecture pursuant to chapter 481 or a general contractor who provides architectural services under a design-build contract authorized by s. 481.229(3). This definition specifically includes unlicensed persons acting pursuant to one statutory exemption from licensure, i.e., section 481.229(3).

In Alfred Karram v. Cantor, , the court held that a corporation that performed architectural and related services in designing single family home (which was never built), and thus fit within architect licensing statutes’ exemption for persons who make plans for one-family or two-family resident buildings, was not an “architect” within meaning of 713.01. See Karram, 634 So. 2d 210 (Fla. 41th DCA 1994). As such, the court held that the corporation was not entitled to a construction lien for services performed regardless of whether real property is actually improved. Moreover, Florida law is clear that an architect who is not licensed in Florida is not permitted to take advantage of Florida’s construction lien law. O’Kon v. Riedel, 540 So. 2d 836 (Fla. 1st DCA 1989).

In sum, professional service providers can take advantage of the construction lien law if (1) they have an enforceable contract with the owner, and (2) are properly licensed pursuant to the definitions section of Florida Statute, Section 713.01. Liens can be enforced even where improvements have not been made to the land under certain circumstances. Care should be taken to ensure that professionals’ contracts with the owner are enforceable and that the work being performed is within the scope of work performed by a professional pursuant to Florida Statute, Section 713.03. Otherwise, a construction lien may not be enforceable.

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W Mason is an associate with the law firm Fox Rothschild LLP. W practices in Fox Rothschild’s Litigation department in West Palm Beach, Florida. W focuses his practice on commercial litigation throughout Florida, with an emphasis on construction litigation. You can reach W at (561) 804-4432 or wmason@foxrothschild.com. Below are some recent posts W has written on Florida Construction Lien Law:

In Florida, Findings of Fact Are Necessary in Order to Enforce Non-Compete Agreements

Posted in Labor & Employment

Parties wanting to enforce a non-compete agreement usually do so by seeking an injunction. Through an injunction, the enforcing party asks the court to prohibit a person or entity from breaching the terms of the non-compete agreement. Enforcement of non-compete agreements often arises in the context of an employer suing a former employee who allegedly is in breach of a non-compete agreement signed while employed with the employer. Alternatively, someone who purchased a business may seek to enforce a non-compete agreement against the person or entity that sold the business. This post addresses an issue that is relevant in both the employer/employee and buyer/seller relationships. Under either scenario, in order for a trial court to enter an injunction enforcing a non-compete agreement, the court should make certain findings of fact. Failure to make these findings may lead to reversal on appeal.

Under Florida Rule of Civil Procedure 1.610(c), a trial court must spell out the reasons for entering a temporary injunction. Edwards v. Harris, 964 So. 2d 196, 197 (Fla. 1st DCA 2007). Before a court will enter an injunction, it must determine whether the party seeking enforcement satisfied the requisite “four pronged test” for injunctive relief. Id. Under the test, a court must find a substantial likelihood of success on the merits, the existence of irreparable harm, the balance of harms supports the enforcing party and granting the injunction serves the public interest. See Cordis Corp. v. Prooslin, 482 So. 2d 486 (Fla. 3d DCA 1986). It is not enough for a court to find that each of the four factors were satisfied. Instead, the court must “make findings of fact that address the four criteria necessary to support the temporary injunction.” Edwards, 964 So. 2d at 197, citing Milin v. N.W. Fla. Land, L.C., 870 So. 2d 135, 136-37 (Fla. 1st DCA 2003)(reversing a trial court’s entry of a temporary injunction due to its failure to make findings to support its order); see also, Tom v. Russ, 752 So. 2d 1250, 1251 (Fla. 1st DCA 2000)(remanding injunction because the lower court did not make findings concerning the likelihood of success and consideration of the public interest).

In Edwards, the trial court entered an injunction enforcing a covenant not to compete. At trial, the party enforcing the non-compete agreement proved the existence of a legitimate business interest that should be enforced. Even so, the order entering the temporary injunction lacked any factual findings discussing why the injunction was necessary to protect business interests. Edwards, 964 So. 2d at 197. The order entered by the trial court in Edwards “simply state[d] that the parties had entered into a covenant not to compete and that the factors set forth in section 542.335, Florida Statutes (2005)[governing non-compete agreements] was satisfactorily met.” Edwards reminds us that it is not enough for a court to find that a party has satisfied the four pronged test warranting an injunction. Instead, the court must make specific findings explaining why each prong has been satisfied.

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Jason Cornell is an equity partner with the law firm Fox Rothschild LLP. Jason practices in Fox Rothschild’s Litigation and Family Law departments in West Palm Beach, Florida. Jason focuses his practice on commercial and civil litigation throughout Florida, with an emphasis on non-compete litigation. You can reach Jason at (561) 804-4415 or jcornell@foxrothschild.com.

Below are some recent posts Jason has written on Florida non-compete litigation:

Common Defenses to Enforcement of a Non-Compete Agreement

Are Non-Compete Agreements Enforceable Against Third Parties?

What Are the Burdens of Proof When Enforcing a Non-Compete Agreement?

Florida’s Fifth District Narrowly Construes Geographic Scope Provision in Non-Compete Agreement

 

Employers Cannot Enforce Florida Non-Compete Agreements Without First Establishing a Legitimate Business Interest

Posted in Labor & Employment

Whether a party is enforcing or defending against enforcement of a Florida non-compete agreement, it is critical to remember that the agreement is unenforceable unless there is a legitimate business interest. To this point, Florida Statute § 542.335(1)(b) provides:

The person seeking enforcement of a restrictive covenant shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant.

A 2003 decision by Florida’s Fourth District Court of Appeal illustrates a court’s unwillingness (and inability) to enforce a non-compete agreement when an employer cannot establish a legitimate business interest. See Passalacqua v. Naviant, 844 So. 2d 792 (Fla. 4th DCA 2003). In Naviant, the employer provided “opt-in email marketing” which offered marketing services through the internet. The employee in Naviant applied and received a job for the employer wherein he signed a non-compete agreement. The non-compete provided that in exchange for receiving compensation, the employee “will not, for a period of two (2) years after the end or termination of individual’s relationship with corporation … engage in a business in the continental United States that is the same or similar to the [business of the company].” Id. at 794.

Three weeks after starting work for his employer, the employee in Naviant left the company to start up his own business as a direct competitor of his employer. The employer, in turn, brought an action against the former employee seeking to enforce the non-compete agreement. The trial court entered a non-final order enforcing the non-compete agreement and the former employee appealed. On appeal, the Fourth District reversed, finding that the record below lacked the showing required to grant an injunction enforcing the non-compete. Id. at 797.

In reviewing the record below, the Fourth Circuit found that the “case contains nothing constituting proof of any ‘legitimate business interest,’ as defined in the statute …” Instead, the court found that the only testimony presented in support of the employer’s claims was that of its CEO who testified that the employee misappropriated employer data and solicited customers. The court, however, noted that not one of the customers allegedly solicited were named in the complaint, motion for injunction or any of the exhibits. Instead, the CEO testified that his company had developed a unique methodology which allowed it to capture a large part of the market over the years. However, the appellate court was not convinced, instead finding that the employer’s marketing was not unique. For example, the marketing manual the employer relied upon “was anything but a compilation of widely known and commonly used sales and marketing techniques.” Id. at 796.

Variant serves as a reminder that employers, when seeking to enforce non-compete agreements, have to do more than assert customers were contacted or marketing ideas were duplicated. Instead, applying the rationale of Variant, employers should be prepared to identify specific customers who were solicited by the employee or unique marketing strategies that are proprietary and subject to protection. The employer in Variant did not go far enough in proving its case, resulting in a reversal by the appellate court.

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Jason Cornell is an equity partner with the law firm Fox Rothschild LLP. Jason practices in Fox Rothschild’s Litigation and Family Law departments in West Palm Beach, Florida. Jason focuses his practice on commercial and civil litigation throughout Florida, with an emphasis on non-compete litigation. You can reach Jason at (561) 804-4415 or jcornell@foxrothschild.com.

Below are some recent posts Jason has written on Florida non-compete litigation:

Common Defenses to Enforcement of a Non-Compete Agreement

Are Non-Compete Agreements Enforceable Against Third Parties?

What Are the Burdens of Proof When Enforcing a Non-Compete Agreement?

Florida’s Fifth District Narrowly Construes Geographic Scope Provision in Non-Compete Agreement

Florida Supreme Court Addresses Parental Rights Arising From a Same Sex Relationship

Posted in Divorce & Family Law

In November, the Florida Supreme Court issued a decision addressing the parental rights of two women who conceived a child through assisted reproductive technology. The case, DMT v. TMH involved two women who were in a long-term relationship when they decided to conceive a child. To do so, TMH (the “Biological Mother”) provided an egg which was carried by DMT (the “Birth Mother”) following fertilization through to birth. After the child was born, the couple raised the child together until problems arose and they separated. Following the separation, the Birth Mother “absconded to an undisclosed location with the child …” Opinion at *3.

The Biological Mother eventually located the Birth Mother in Australia wherein she served her with a petition to establish parental rights. The Biological Mother also sought a declaration of statutory invalidity regarding Florida Statute 742.14, Florida’s assisted reproductive technology statute (the “ART Statute”). Under the ART Statute, an egg or sperm donor must relinquish any claim to parental rights or obligations to the donation or resulting child. The statute makes an exception for a “commissioning couple,” which it defines as the intended mother and father of a child who will be conceived through assisted reproductive technology.

At trial, the Circuit Court judge found that the Birth Mother and Biological Mother, as a same-sex couple, could not meet the ART Statute’s definition of a “commissioning couple.” As the trial judge recognized at the time, “[t]here really is no protection for [the Biological Mother] under Florida law because she could not have adopted this child to prevent this current set of circumstances. I do not agree with the current state of the law, but I must uphold it. …” The Biological Mother appealed to the Fifth District Court of Appeal, which reversed the trial court, instead finding that the trial court’s interpretation and application of the statute violated the biological mother’s constitutional rights. The Fifth District went on to hold that the Biological Mother is “entitled to constitutionally protected parental rights to the child and that the statutory relinquishment of those rights under section 742.12 is prohibited by the Federal and Florida Constitutions.”

The Fifth District certified a question “of great public importance” to the Florida Supreme Court regarding the constitutionality of the ART Statute. The Supreme Court found the statute unconstitutional as a violation of the Due Process Clause and the Equal Protection Clause of both the Florida and United States Constitutions. The Supreme Court provided a thorough analysis for why it found the statute unconstitutional. However, the Court’s primary basis for its ruling centered on “long-standing constitutional law that an unwed biological father has an inchoate interest that develops into a fundamental right to be a parent … when he demonstrates a commitment to raising the child by assuming parental responsibilities.” Opinion at *2.

The Court reasoned that Florida’s ART Statute violates the Florida and United States Constitution’s Equal Protection Clause “by denying same-sex couples the statutory protection against the automatic relinquishment of parental rights that it affords to heterosexual unmarried couples seeking to utilize the identical assistance of reproductive technology.” Id. The Court when on to state that “[o]ur decision does not deny [the Birth Mother] the right to be a parent to her child, but requires only that [the Biological Mother’s] right to be a parent of the child be constitutionally recognized.” Id.

Through its decision, Florida’s Supreme Court recognizes that same sex parents have parental rights. Still, the Supreme Court noted that its decision was “based on the circumstances of this case …” The Court found it significant that the Biological Mother had assumed full parental responsibilities until the Birth Mother took the child away from her. Opinion at *9. The Court analogized the situation to a heterosexual couple. There, “an unmarried man who impregnates an unmarried woman does not automatically have a fundamental right to be a parent to the child, his right to be a parent develops substantial constitutional protection as a fundamental right if he assumes responsibility for the care and raising of the child.” Id., citing In re Adoption of Baby EAW, 658 So. 2d 961, 966 (Fla. 1995). There was no disputing that both the Biological and Birth Mothers had assumed responsibility for the care and raising of the child. For the Court, the ART Statute presented a “substantial equal protection problem” to deny an unwed mother the right to assert parental rights, yet allow an unwed father to assert those same rights under the ART Statute. Opinion at *10.

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Jason Cornell is an equity partner with the law firm Fox Rothschild LLP. Jason practices in Fox Rothschild’s Litigation and Family Law departments in West Palm Beach, Florida. Jason focuses his practice on civil litigation throughout Florida, with an emphasis on divorce and family law, as well as non-compete litigation. You can reach Jason at (561) 804-4415 or jcornell@foxrothschild.com.

Below are some recent posts Jason has written on Florida divorce law:

What are Florida’s Residency Requirements for a Divorce?

Temporary Alimony in Florida (Part 1): Maintaining a Standard of Living.

Understanding Equitable Distribution in a Florida Divorce.

When Will a Florida Court Award Rehabilitative Alimony?

How Do Florida Courts Determine a Spouse’s Ability to Pay Alimony?

 

EEOC and FTC Try to Settle Background Brouhaha by Issuing Guidance

Posted in Labor & Employment

I’ve posted before on the issue of background checks for employees; see prior posts here  and here.  Now, the Equal Employment Opportunity Commission (“EEOC”) and the Federal Trade Commission (“FTC”) have issued joint informal guidance concerning background checks and their suggested best practices for such checks.

The guidance can be found here.

Employers need to be particularly cognizant of handling background checks with care since the EEOC has targeted enforcement directed to class based recruitment and hiring procedures which includes background checks.
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Dori K. Stibolt is a senior associate with the law firm of Fox Rothschild LLP. Dori defends and counsels management in labor and employment litigation matters pertaining to wage and overtime claims, discrimination, harassment, retaliation, leave/restraint, and whistle-blower claims. You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.