injunction

Value of Severability Clause

Posted by David Adelstein on June 16, 2018
Trial Perspectives / Comments Off on Value of Severability Clause

 

 

 

Severability clauses have become fairly commonplace in contracts.  Cut and paste provisions.  However, these clauses can provide tremendous value.  A sample of a severability clause is as follows:

If any provision of this Agreement, the deletion of which would not adversely affect the receipt of any material benefit by or in favor of any party or substantially increase the burden of any party to this Agreement, shall be held to be invalid or unenforceable to any extent, the same shall not affect in any respect whatsoever the validity or enforceability of the remainder of this Agreement.

There are numerous ways to draft this type of clause with the essence being that if anything in the contract is deemed invalid or unenforceable, the balance of the provision and contract shall remain in full force and effect.  Such a provision, regardless of how it is worded, is known as a severability clause. 

An example of the application of the severability clause can be found in Premier Compounding Pharmacy, Inc. v. Larson, 43 Fla. L. Weekly D1340a (Fla. 4th DCA 2018), dealing with a non-compete agreement between a pharmacy and pharmacist. 

The non-compete agreement in the case contained language that the pharmacy (employer) could obtain injunctive relief without posting an injunction bond.  Requiring a temporary injunction to be posted without a bond is contrary to Florida Statute s. 542.335(j) which states in relevant part, “No temporary injunction shall be entered unless the person seeking enforcement of a restrictive covenant gives a proper bond, and the court shall not enforce any contractual provision waiving the requirement of an injunction bond or limiting the amount of such bond.”

Based on this statute, the language in the non-compete agreement that allowed the employer to move for a temporary injunction without posting a bond was not legal. 

Without going into all of the details of the case, the appellate court maintained that the language in the non-compete agreement that allowed the employer to move for a temporary injunction without posting a bond can be eliminated from the provision, with valid legal obligations remaining in the agreement, i.e., the temporary injunction can be  issued while requiring the employer to post a bond pursuant to Florida law.  

Additionally, the provision also allowed the employer to recover attorney’s fees in obtaining the injunctive relief.  The trial court denied the employer’s request for fees (although the injunction was entered) finding the provision unenforceable because of the preceding invalid sentence that allowed the employer to obtain an injunction without posting a bond.  No different than the appellate court eliminating the “without a bond” from the provision, the court held that, “because the extent of unenforceability of the provision goes solely to the ‘no bond’ requirement of the injunction, the remainder of the provision and the agreement is still enforceable, including the attorney’s fees provision.” Premier Compounding Pharmacy, Inc., supra.

Hence, while the provision at-issue was contrary to Florida law, the severability provision provided value in simply eliminating the invalid language and enforcing the remainder of the provision.

 

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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Injunctive Relief + Attorney’s Fees Awarded in Favor of an Owner and Against Her Association

Posted by David Adelstein on May 12, 2018
Trial Perspectives / Comments Off on Injunctive Relief + Attorney’s Fees Awarded in Favor of an Owner and Against Her Association

Here is a case that may give associations some degree of consternation.  I think it should because it supports permanent injunctive relief against an association to comply with its governing documents when managing or maintaining a surface water management system / stormwater management system.   This case, discussed below, would extend beyond a surface water management system to any covenant in the governing documents.  

In Coconut Creek Homeowner’s Association, Inc. v. Gonzalez,  43 Fla.L.Weekly D1045a (Fla. 4th DCA 2018), a homeowner sued her homeowner’s association for failing to manage the association’s surface water management system.  The homeowner sued the association for breach of the governing documents (Declaration, bylaws, etc.) and for a permanent / mandatory injunction to compel the association to comply with its governing documents to fix the swales and drainage system (common elements owned by the association).   The lack of management of the surface water management system caused flooding problems and damage to the homeowner’s home.

The jury found that the association breached its governing documents in failing to manage the surface water management system, but awarded the homeowner $0 caused by the breach associated with her claimed damages.  But, the trial court, as affirmed by the appellate court, granted a mandatory / permanent injunction against the association to enforce restrictive covenants in the governing documents. Specifically, the injunctive relief was issued to order the association to fix the swales and drainage system and comply with its governing documents.  

Now, the association perhaps thought this was not all that bad because it did not owe the homeowner any monetary damages based on the jury’s verdict of $0.  However, the appellate court found that because the homeowner prevailed on the significant issues of her case, she is entitled to her attorney’s fees and costs.  Thus, a mandatory / permanent injunction is issued against the association requiring it to comply with the governing documents and it is liable for the homeowner’s attorney’s fees and costs, which are likely significant after a trial.  Please check out this article for more information relating to the attorney’s fees aspect of this case. 

If you live in a community governed by an association (whether a homeowner’s association or condominium association), make sure you seek counsel that appreciates the issues associated with your governing documents.  And, an association needs to likewise consider the issues so it understands its responsibilities under the governing documents and potential outcomes associated with owner disputes.

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

Posted by David Adelstein on January 17, 2017
Appeal / Comments Off on Quick Note: So You Want to Appeal an Injunction Entered Against You…

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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