FLORIDA NON-COMPETE LITIGATION: ATTORNEY-CLIENT PRIVILEGED COMMUNICATIONS ABOUT NON-COMPETE NEGOTIATIONS MAY BE SUBJECT TO DISCLOSURE

When disputes arise over which version of a non-compete agreement was the final version executed by and binding on the parties, discovery of pre-contract negotiations may become necessary. Parties often retain an attorney for those negotiations. If the attorney involved in the negotiations becomes a witness to the case, attorney-client communications may need to be disclosed to the court. However, the attorney-client privilege may still be maintained if vigorously protected. Peter Mavrick has substantial experience with non-compete litigation throughout the State of Florida.

In Courville v. Promedco of Southwest Florida, Inc., 743 So.2d 41 (Fla. 2d DCA 1999), Promedco of Southwest Florida, Inc. (“Promedco”) bought the assets of Naples Medical Center, P.A. from Gary C. Courville and William R. Cook (collectively the “Physicians”). Promedco sued the Physicians and alleged that they violated a non-compete agreement contained in one of the documents related to the sale, a split-dollar agreement. Physicians denied executing the version of the non-compete agreement produced by Promedco. Physicians contended that the documents they signed did not have a non-compete agreement that went into effect immediately after the closing, but rather it would go into effect five years later. Physicians filed an affidavit of the attorney who advised them in the transaction to support their claim that the document produced by Promedco was fraudulent.

The attorney’s affidavit stated: (1) the circumstances of the attorney’s retention by the Physicians to advise them concerning the documents for sale of the medical center, (2) that the split-dollar agreement did not contain the same non-compete clause as the one produced by Promedco, and (3) the substance of the negotiations with the medical center’s attorney wherein the final draft of the agreement included a non-compete clause that would not go into effect until five years after the agreement was executed. The attorney’s affidavit also stated that that the Physicians signed the documents on his advice that the subject non-compete would not go into effect until five years after the closing.

The trial court granted Promedco’s motion to compel production of the communications concerning the entire transaction between Promedco, the medical center, and the Physicians. The trial court held that by filing the affidavit concerning communications which might otherwise be subject to a claim of attorney-client privilege, the Physicians waived the privilege as to attorney-client communications concerning the entire transaction between Promedco, the medical center, and the Physicians. The trial court ordered production of the attorney’s file concerning the transaction, and other privileged information. The trial court further ordered that the attorney submit himself to a deposition. The Physicians immediately appealed.

The Physicians argued that the trial court’s finding of the scope of the waiver of attorney-client privilege was overbroad. The Physicians conceded that the affidavit was a waiver of attorney-client privilege but contended that the waiver should have been limited to advice concerning the absence of Premedco’s noncompete clause in the split-dollar agreement. When attorney-client privilege is waived regarding a certain matter, the waiver is limited to communications on the same matter. See First Union Nat’l Bank of Fla. v. Whitener, 715 So.2d 979 (Fla. 5th DCA 1998).

The appellate court held that the attorney’s affidavit addressed only the noncompete agreement and did not allude to other aspects of the transaction. The noncompete agreement was the focus of the litigation, therefore, the appellate court held that disclosure concerning attorney-client communications about other aspects of the complex transaction, including the transfer of assets to Promedco, representations and warranties by the parties, disclosures of financial statements, the issue of indemnification, plans for collection of accounts receivable, distribution of management and administrative duties, and assumption of leases exceeded the scope of the waiver.

The appellate court quashed the trial court’s order and remanded the case back to the trial court to enter an order that defines the scope of the waiver of the attorney-client privilege accordingly. The appellate court further ordered that the trial court should conduct an in-camera review of all communications which were identified by the Physicians as privileged and outside the scope of the waiver as found by the court on remand.

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.