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CAN A NON-COMPETE AGREEMENT PROTECT MY BUSINESS?

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No business remains static. Over time, people enter and exit the business. If you are the owner, you may want to plan for an eventual sale, separation, or succession. It is important to discuss these issues with a qualified St. Petersburg Business Law Attorney who can provide you with a legal roadmap. If and when change does come to your business, you want to avoid a potentially messy situation that might spark litigation.

Florida Court Rules Jilted Business Partner Cannot Seek Punitive Damages

Here is an example of what can go wrong when a business relationship goes south. This is an ongoing Florida case. Two doctors started a professional medical practice together. Each had a legal ownership interest in the business.

At one point, one partner (the plaintiff) agreed to buy out the other’s interest. The defendant retained his voting rights and management position pending receipt of full payment for his share. In the interim, according to the plaintiff, the defendant found a new partner and opened a competing practice.

The plaintiff accused the defendant of, in effect, stealing proprietary business information from what was now her solo practice. She claimed the defendant “improperly used and copied patient data and appointment schedules” from her company’s database. After filing the initial lawsuit, the plaintiff asked the court for permission to add a claim for punitive damages.

Punitive damages, as the name implies, are designed to punish a defendant rather than compensate a victim for their losses. Under Florida law, punitive damages are only available in a civil lawsuit if there is evidence that the defendant personally engaged in “intentional misconduct or gross negligence.” Here, the plaintiff said the defendant’s alleged acts constituted “intentional misconduct.”

The Florida court of appeals in this case held the plaintiff’s request for punitive damages was inappropriate. She failed to identify any evidence that the defendant “improperly diverted” any patients from her practice to the defendants. In fact, the trial judge previously rejected an allegation of fraud on this same point. Therefore, while the plaintiff can still proceed with other parts of her lawsuit, she cannot seek any punitive damages.

Get Help From A Florida Business Attorney Today

This case illustrates an issue that frequently arises when someone wants to leave a business: non-compete agreements. It is not uncommon for a business contract to require one party to not participate in the same trade or profession with the other party. This can refer to people in an employer-employee relationship, or business partners like the medical practice described above.

Non-compete agreements are generally enforceable under Florida law. Any restrictions must be “reasonable in time, area, and line of business.” They must also be in writing and signed by the person against whom it is enforced. The party seeking enforcement must also demonstrate a “legitimate business interest,” such as protecting secrets or relationships with existing customers. In other words, you cannot enforce a non-compete agreement solely because you are mad at a former business partner and want to keep them from earning a living.

If you need help with a non-compete or non-disclosure agreement, call Kira Doyle Law at 727-800-3782. We provide a wide variety of operational legal services for businesses in the St. Petersburg area and within Florida. Let us help you with your exit strategy and succession planning needs for your business!