Enforcing Non-Compete Agreement with Injunctive Relief

Posted by David Adelstein on March 19, 2017
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There are numerous employers that want employees to sign a non-compete, non-disclosure, and non-solicitation agreement (collectively, the “non-compete agreement”).   For good reason, they don’t want to train employees to learn the business’ trade secrets and business practices (e.g., marking strategies, pricing, techniques, customer lists, etc.) only to then compete with the employer and solicit its clients.   The non-compete agreement will allow the employer to move for injunctive relief if a former employee violates the agreement to maintain the status quo and prevent the irreparable harm to the employer.

An example is as follows. In Allied Universal Corp. v. Given, 42 Fla. L. Weekly D631a (Fla. 3d DCA 2017), an employer that engaged in the manufacture and distribution of water treatment chemicals hired an employee. The company trained the employee regarding its practices and provided him with proprietary information such as production costs, customer lists, prospective customer lists, and marketing and pricing information. The employee’s non-compete agreement provided he would not compete with the employer for 18 months after leaving the company and within a 150-mile radius of any of the employer’s facilities. The employee left the company to work for a competitor and the employer moved for a preliminary injunction to enforce the non-compete agreement against the employee.

The trial court denied the employer’s motion for a preliminary injunction after an evidentiary hearing. The employer appealed. Because a trial court has discretion in granting or denying an injunction, its decision will not be overturned absent an abuse of discretion. In this case, the appellate court reversed the trial court finding the trial court abused its discretion in denying the granting of the preliminary injunction.

Non-compete agreements in Florida will be governed by Florida Statute s. 542.335, which is designed to construe restraints on trade and commerce in favor of providing reasonable protection to legitimate business interests. The statute includes a non-exhaustive list of legitimate business interests, such as, trade secrets, valuable confidential information, customer goodwill, substantial relationships with specific prospective or existing customers, specialized training, etc.

A party moving for a preliminary injunction must establish:

  • “the likelihood of irreparable harm and the unavailability of an adequate remedy at law;
  • a substantial likelihood of success on the merits;
  • that the threatened injury to the petitioner outweighs any possible harm to the respondent; and
  • that the granting of the temporary injunction will not disserve the public interest.”

Allied Universal Corp., supra.

Importantly, the “breach of a non-compete agreement that threatens a former employer’s goodwill and relationships with its customers, indicates that nothing short of an injunction would prevent this loss.” Allied Universal Corp., supra.

At the evidentiary hearing, the employer established legitimate business interests that it wanted to protect including the employer’s relationship with specific existing and prospective customers. The evidence showed that the employer trained the employee in its production techniques, marketing strategies, and pricing strategies.  Hence, the employer showed it would be irreparably harmed by the employee’s violation of the non-compete agreement—the employer’s business would be harmed if the employee were to use the employer’s customer information, relationships, and marketing strategy in his new employment. This meant that the burden shifted to the employee to establish the absence of an irreparable injury, which the employee was unable to do. For this reason, the appellate court reversed the trial court and remanded with directions for the trial court to grant the temporary injunction.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Strict Construction of Condominium and Homeowner Association’s Declarations

Posted by David Adelstein on March 13, 2017
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Do you live in a condominium or in a homeowner’s association? If so, then you know you are governed by a Declaration of Condominium (in the case of condominium unit ownership) or a Declaration of Covenants (in the case of home ownership).   Please review these in addition to any amendments that may modify any of the paragraphs or covenants. These are recorded in the official, public records where the condominium or homes are located.   So, you can obtain these documents online with ease.

 

Declarations are covenants running with the land operating as a contract between the governing association and owners.   See Woodside Village Condominium Ass’n, Inc. v. Jahren, 806 So.2d 452 (Fla. 2002). For this reason, Declarations are strictly construed, particularly when it comes to restrictive covenants therein, since a Declaration serves as the constitution of the condominium or community.   See, Pudit 2 Joint Venture, LLP v. Westwood Gardens Homeowners Ass’n, Inc., 169 So.3d 145, 147-48 (Fla. 4th DCA 2015); Lathan v. Hanover Woods Homeowners Ass’n, Inc., 547 So.2d 319, 321 (Fla. 5th DCA 1989).

 

Sure, there is a statutory scheme relating to condominiums (Florida Statutes Chapter 718) and homeowner’s associations (Florida Statutes Chapter 720). These statutory schemes are certainly important. But, it all generally starts with the governing documents (constitution) of your condominium or community – particularly, the Declaration and all recorded amendments.  Before you become crosswise with your association, spend the time to read the Declaration and any amendments.  

 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Insurance Coverage Disputes where the Focus is the Policy Language

Posted by David Adelstein on March 06, 2017
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Insurance coverage disputes are fairly common between an insured and his/her/its insurer.   These are important disputes to an insured, particularly when they have been damaged and their insurer refuses to defend them from a third-party claim or otherwise denies coverage. An insured never wants to be in this position—understandably so. On the other hand, an insurance policy is not designed to cover every single risk under the sun as there are exclusions identified in policies for risks or perils that are not covered.   This ultimately means an insured needs to have an appreciation of those risks or perils not covered (in case he/she/it needs to procure another policy or a policy endorsement to cover certain risks or perils).

There are insurance coverage disputes where the primary focus is on the policy language. The material facts are not in dispute; the dispute is centered on whether the undisputed facts create coverage under the applicable policy. In this instance, the insurance coverage dispute is an issue for the court and not for a jury.

A recent case explains the appellate standard of review in insurance coverage disputes, particularly when the overriding issue has nothing to do with the facts and everything to do with the policy language:

We review the instant appeal from a final judgment interpreting the provisions of an insurance policy to determine coverage de novo. Where the facts are not in dispute and the language of an insurance policy is unambiguous and not subject to conflicting inferences, “its construction is for the court, not the jury.” Moreover, even where an ambiguity exists, if the facts are not disputed “it is within the province of the trial judge not the jury to resolve the ambiguity as a matter of law.” Here, because neither a factual dispute nor an ambiguity was demonstrated to exist, the coverage issue raised below should have been decided by the court below and on the record below….

Zurich American Ins. Co. v. Cernogorsky, 42 Fla. L. Weekly D476b (Fla. 3d DCA 2017) (internal citations omitted).

If you have questions regarding an insurance policy or you are involved in an insurance coverage dispute, do the prudent thing, consult an attorney that understands insurance.  Insurance is challenging, even for experienced practitioners, so do not assume you can navigate the complicated insurance waters solo.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Don’t Neglect Mediation!

Posted by David Adelstein on February 26, 2017
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I believe in the process of mediation for all disputes, particularly complicated factual business disputes.   I use the word “process” because that is what mediation really is – a series of actions to achieve a particular end. Mediation can be a tiring process. A frustrating process. An informative process. A continuing process. A result oriented process. In certain instances, a futile process. Oftentimes, mediation is a mixture of all of the above. But, mediation allows parties to make a business decision based on their perception of risk — the risk of losing or the risk of a damages award (greater or lesser than expectations).   This business decision is important because a party, typically, never wants to bank on the resources and uncertainty that goes along with trial (and, then the appeal) without truly knowing where that case could have been resolved at during the course of a dispute.

 

The process of mediation should not be taken for granted. Preparation is important. I believe in learning the facts and developing the theme of the case and persuasively presenting this theme at mediation.   This may include demonstrative aids. A powerpoint. Handouts of key documents. A well-versed narrative. The participation of fact witnesses. The participation of experts. You name it — whatever best tells the story of the dispute.

 

I also want to hear the other side’s presentation of their theme because they may make good points that factor into a party’s business decision. Look, in my experience, there is no such thing as a slam dunk dispute. If it was truly a slam dunk dispute, parties could probably resolve the dispute without the assistance of counsel. As such, there are probably issues of contention that are worth considering, whether from a factual or legal perspective.

 

Once the presentations and themes are out there, there is strategy that goes into trying to get the case resolved. This strategy comes from the mediator and, of course, the parties. I prefer an aggressive mediator. What I mean by this is I prefer a mediator that is not afraid to be direct or assertive with a party. I know if a mediator is being direct with my client he/she is doing the same thing with the other party. I need a mediator that is going to be more than simply a message carrier. He/she needs to be able to get the parties to compromise from their positions and oftentimes the only way to do this is to be strategically direct and assertive. A good mediator finds a way to get cases resolved or puts the parties in the best position to make a business decision, even if that decision results in an impasse at mediation.  

The clip above from the movie Wedding Crashers is a great opening scene in a movie dealing with the mediation of a family law dispute.  Sure, this is an unorthodox mediation, but it was a hilarious strategy that allowed the parties to make a business decision.  

 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

 

 

 

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Stay Money Judgment Pending Appeal

Posted by David Adelstein on February 24, 2017
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A money judgment is entered against you, but you are going to appeal. Can the collection of the money judgment be stayed pending appellate review? Yes.

Florida Rule of Appellate Procedure 9.310 provides in material portion:

(a) Application. Except as provided by general law and in subdivision (b) of this rule, a party seeking to stay a final or non-final order pending review shall file a motion in the lower tribunal, which shall have continuing jurisdiction, in its discretion, to grant, modify, or deny such relief. A stay pending review may be conditioned on the posting of a good and sufficient bond, other conditions, or both.

(b) Exceptions.

(1) Money Judgments. If the order is a judgment solely for the payment of money, a party may obtain an automatic stay of execution pending review, without the necessity of a motion or order, by posting a good and sufficient bond equal to the principal amount of the judgment plus twice the statutory rate of interest on judgments on the total amount on which the party has an obligation to pay interest. Multiple parties having common liability may file a single bond satisfying the above criteria.

A recent opinion out of the First District Court of Appeals shed some light on these provisions (even though there is conflicting opinions in other appellate jurisdictions). See Silver Beach Towers Property Owners Association, Inc. v. Silver Beach Investments of Destin, LC, 42 Fla. L. Weekly D442c (Fla. 1st DCA 2017).

The Court explained that the money judgment exception above in Rule 9.310(b)(1) “allows a party in an appeal of a money judgment to obtain a stay from the lower tribunal without following the procedure outlined in rule 9.310(a), which requires the filing of a motion to stay with the lower tribunal.Silver Beach Towers, supra.   In other words, if a party wants an automatic stay, the party can follow the procedure in the money judgment exception and the trial court has no authority to modify the bond amount. Indeed, the party does not need to file a motion.

However, if a party does not want to follow this automatic stay procedure, the party can still file a motion with the trial court under 9.310(a) where the trial court can condition the stay on the posting of a bond amount in the court’s discretion. Thus, 9.310(a) gives the party an alternative option to utilize by filing a motion with the trial court and letting the trial court determine the conditions warranting an appellate stay.  For parties appealing a monetary judgment, this case gives them authority to argue under to stay the money judgment for a bond amount that is perhaps less than the automatic stay bond amount found in Rule 9.310(b)(1).

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Innovative or Alternative Fees Can be a Win-Win!

Posted by David Adelstein on February 18, 2017
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What is the traditional model of lawyering?  Simply put, it is hourly billing.  There is nothing wrong with this model; however, there are other alternative or innovative attorney’s fee models out there that factor in performance, results, and efficiency.  These are models that incentivize performance which is always in a client’s best interest.  Stepping out of a comfort zone is tough considering we are all creatures of habit.  But, there are instances where trying something innovative or alternative is a win-win for you from a budgetary standpoint and, importantly, a results standpoint.  If you are interested in learning more about attorney’s fee models that may benefit your interests, check out the below chart and feel free to contact me.

 

Download (PDF, 273KB)

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Timely Filing Motion for Attorney’s Fees and Costs

Posted by David Adelstein on February 11, 2017
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Florida Rule of Civil Procedure 1.525 provides:

Any party seeking a judgment taxing costs, attorneys’ fees, or both shall serve a motion no later than 30 days after filing of the judgment, including a judgment of dismissal, or the service of a notice of voluntary dismissal, which judgment or notice concludes the action as to that party.

This is a specific statutory time period and a motion for rehearing does NOT toll this 30 day period. Jackson v. Anthony, 39 So.3d 1285, 1286 (Fla. 1st DCA 2010). This means that a motion for a final judgment taxing attorney’s fees and costs must be made within 30 days after the filing of a judgment or voluntary dismissal that concludes the action as to that party. (A court in certain circumstances may grant an extension of time to this 30 day period if the motion for extension is filed within 30 days).   Not timely filing a motion for attorney’s fees and costs can result in…(you guessed it)…a loss of a party’s right to recover attorney’s fees and costs.

In Hovercraft of South Florida, LLC v. Reynolds, 42 Fla. L Weekly D367a (Fla. 5th DCA 2017), the plaintiffs prevailed and received a final judgment. The defendant moved for a new trial and/or rehearing which was denied.   Within 30 days of the denial of the defendant’s motion for rehearing, but well outside the 30 days from when the final judgment was entered, the plaintiffs moved for attorney’s fees and costs. However, the motion for attorney’s fees was not timely filed within 30 days of the filing of the final judgment meaning…(you guessed it again)…the plaintiff’s lost the right to recover their attorney’s fees and costs!!!  Do not let this happen to you.  

Notably, an exception to this 30 day requirement is if the final judgment itself determines entitlement to attorney’s fees reserving only the right to determine the quantum of the reasonable attorney’s fees.   Hovercraft of South Florida, supra (“In order to avoid the thirty-day requirement, the judgment itself must determine entitlement to attorney’s fees and costs and reserve jurisdiction only as to the amount owed.”) Notwithstanding this exception, file the motion for attorney’s fees and costs within 30 days — no excuses.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

 

 

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A Contractual Waiver of the Right to Challenge Venue is Enforceable

Posted by David Adelstein on February 03, 2017
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Many contracts contain a forum selection provision or a venue provision.   Contracts may even contain language that parties agree not to challenge or otherwise waive the venue of any filed lawsuit.

An example of such a provision was included in an operating agreement:

This Agreement is to be construed and governed by the laws of the State of Florida (without giving effect to principles of conflicts of laws). Each party hereto irrevocably agrees that any legal action or proceeding arising out of or in connection with this Agreement may be brought in any state or federal court located in Florida (or in any court in which appeal from such courts may be taken), and each party agrees not to assert, by way of motion, as a defense, or otherwise, in any such action, suit or proceeding, any claim that it is not subject personally to the jurisdiction of such court, that the action, suit or proceeding is brought in an inconvenient forum, that the venue of the action, suit or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court, and hereby agrees not to challenge such jurisdiction or venue by reason of any offsets or counterclaims in any such action, suit or proceeding. 

Of relevance, this venue provision allowed the parties to bring suit in any state or federal court in Florida and stated that the parties agree not to assert that the venue of any suit is improper.

A dispute arose between the members of the operating agreement. One of the members filed suit against the other member in Martin County, Florida. The other member moved to transfer venue to Palm Beach County, Florida arguing that nothing tied the dispute to Martin County. The trial court agreed and transferred venue to Palm Beach County.   The appellate court, however, reversed. Why? Because the parties agreed that a lawsuit could be filed in any Florida court and, importantly, that they each waive the right to challenge venue.   The parties’ agreement to waive any challenge to venue was enforceable. See Powers, Jr. v. Melick, 42 Fla. L. Weekly D288b (Fla. 4th DCA 2017).

Consider venue provisions when entering into and negotiating contracts – any type of contract.  

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

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Impeachment as to Prior Crimes in Civil Trials

Posted by David Adelstein on January 29, 2017
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In a civil trial, I want to attack (impeach) the credibility of a testifying witness by bringing up a crime that witness committed. Can I do this?

When it comes to impeaching the credibility of a witness based on crimes, Florida Statute s. 90.610 states in material part:

(1) A party may attack the credibility of any witness, including an accused, by evidence that the witness has been convicted of a crime if the crime was punishable by death or imprisonment in excess of 1 year under the law under which the witness was convicted, or if the crime involved dishonesty or a false statement regardless of the punishment, with the following exceptions:

(a) Evidence of any such conviction is inadmissible in a civil trial if it is so remote in time as to have no bearing on the present character of the witness.

So, in a criminal trial, a witness’s credibility can be attacked if (1) the witness was convicted of a crime in excess of one year (a felony) or (2) the witness was convicted of a crime involving dishonesty or a false statement regardless of the length of punishment (a misdemeanor involving dishonesty or a false statement).   But, in a civil trial, not so fast – this type of impeachment will not be permitted if the conviction is remote in time that it has no bearing on the character of the witness.   If the crime is so remote in time, there is no probative value to impeach the witness other than the prejudicial effect the knowledge of the crime may have with the jury. See, e.g., Trowell v. J.C. Penny Co., Inc., 813 So.2d 1042 (Fla. 4th DCA 2002) (“The statute directs the court to determine whether the past convictions have a bearing on the present character of the witness. Evidence of theft and shoplifting convictions in the early 1980s with no subsequent convictions would tend to suggest that the witness no longer has a propensity toward dishonesty, and thus such convictions would have little or no bearing on his present character. Evidence of a continuing pattern of theft convictions tends to suggest that the appellant’s character in this regard remains unchanged.”).

The objective in attacking a witness’s credibility based on a crime (as permitted above) is that the witness cannot be trusted—their testimony is nothing but a bunch of lies.

The procedure to attack a witness’s credibility based on a crime is quite simple.   The witness will be asked whether he/she has ever been convicted of a felony or convicted of a misdemeanor crime involving dishonesty. If the witness says yes, the next question will be to ask the witness how many times has he/she been convicted of such crimes. The lawyer impeaching the witness will already know the answer to these questions. What if the witness lies? If the witness lies or gives a misleading answer, the lawyer can impeach that testimony by introducing a certified copy of the judgment of conviction for each crime (which is usually a judgment of the conviction and the sentence). This allows the lawyer to prove that the witness has been convicted of a particular crime, however, the lawyer cannot go into the nitty gritty about the crime(s). See Porter v. State, 593 So.2d 1158, 1159 (Fla. 2d DCA 1992).

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Quick Note: So You Want to Appeal an Injunction Entered Against You…

Posted by David Adelstein on January 17, 2017
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So you want to appeal the issuance of an injunction entered against you. (There are numerous reasons why injunctive relief may be entered by the court in a civil context – check out this article as an example.) “If the injunction rests on factual findings, then a trial court’s order must be affirmed absent an abuse of discretion; but if the injunction rests on purely legal matters, then an injunction is reviewed de novo.” Nipper v. Walton County, Florida, 42 Fla. L. Weekly D171a (Fla. 1st DCA 2017). Stated differently, there is an abuse of discretion standard of appellate review if the injunction is based on factual findings by the trial court. But, assuming the facts are not in dispute and the injunction is based on a matter of law, there is a de novo standard of appellate review.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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