FLORIDA NON-COMPETE AGREEMENTS: NON-COMPETE PERIODS MAY NOT BE EXTENDED UNLESS THERE IS AN EQUITABLE REASON

Non-compete provisions in employment contracts are not prohibited so long as such contracts are reasonable in time, area, and line of business. In any action concerning enforcement of a non-compete provision the court considers the terms of the contract as agreed to by the parties. If the non-compete period has expired, a court may not extend the period unless there is an equitable reason to do so. Peter Mavrick has substantial experience with non-compete litigation throughout the State of Florida.

In Vela v. Kendall, 905 So.2d 1033 (Fla. 5th DCA 2005), Quality Assurance Home Delivery (“Quality”), operated a delivery service for various retail stores. Quality entered into an agreement Charles Robert Vela (“Vela”) wherein Vela agreed to provide delivery services for Quality’s delivery clients as an independent contractor. The agreement contained a non-compete provision which restricted Vela from making deliveries for Quality’s clients “for a period of no less than two years from the date of termination.”

On May 1, 2001, Vela was terminated. Five months after termination, Quality demanded in writing that Vela stop delivery services in violation of the non-compete provision of the agreement. Quality later filed a lawsuit against Vera and sought damages and injunctive relief, including temporary injunctive relief. A non-jury trial was conducted, and the trial court entered judgment in favor of Quality. The judgment awarded damages for violation of the non-compete provision in the employment contract and an injunction against Vera. Vera immediately appealed.

The judgment was entered on March 24, 2004, nearly three years from the date Quality terminated its contract with Vela. The judgment enjoined Vera from making deliveries to or on behalf of Quality’s customers for two years from the date of the judgment. Vera argued that by granting damages for violation of the non-compete provision, and by extending the non-compete period for another two years, Quality has been given a double recovery. The appellate court did not agree with Vera’s reasoning; however, it reversed the injunction on other grounds.

The appellate court held that “[a]s a general rule, a trial court cannot by use of an injunction extend the terms of a contract after its termination.” Vela v. Kendall, supra. Equity may sometimes make it necessary to extend the terms of the contract. See Florida Power Corp. v. Town of Belleair, 830 So.2d 852 (Fla. 2d DCA 2002), decision quashed, 897 So.2d 1261 (Fla. 2005). See also Florida Power Corp. v. City of Winter Park, 887 So.2d 1237, 1240–41 (Fla. 2004). In Town of Belleair v. Florida Power Corp. 897 So.2d 1261 (Fla. 2005), the Florida Supreme Court held that a court can extend the term of a contract period where the balance of equities involved “may render such an action necessary and proper.” Town of Belleair v. Florida Power Corp., 897 So. 2d 1261 (Fla. 2005). For example, a court may find that a breach of the non-compete provision should toll the non-compete period so that the full non-compete period agreed to by the parties is fulfilled. See Tarantola v. Henghold, 254 So.3d 1110 (Fla. 1st DCA 2018),

Quality did file a motion for a temporary injunction during the lawsuit. Quality also did not allege that Vera breached of the non-compete provision during the nearly three-year period from the beginning of the lawsuit through trial. The non-competition time period agreed to by the parties, therefore, expired before the trial. The appellate court held that Quality was treated with complete fairness by virtue of its recovery of damages for the violation of the non-compete provision during the two-year period. The appellate court held that the trial court erred in extending the injunction period for two years after the date of the judgment. The appellate court reasoned that the extended term creates a term not agreed to by the parties, and therefore erroneously extends the contract terms. Vela v. Kendall, supra. The injunction was reversed.

Peter Mavrick practices non-compete litigation throughout Florida, including cases in Miami-Dade, Broward, and Palm Beach Counties. This article does not serve as a substitute for legal advice tailored to a particular situation.