Section 542.335, Florida Statutes, permits the enforcement of non-compete and other restrictive covenants by assignees and successors, provided that “the restrictive covenant expressly authorized enforcement by a party’s assignee or successor.” But how specific does this express authorization have to be? In an employment agreement with numerous provisions, including a restrictive covenant, is a general statement that the agreement is enforceable by an assigner or successor sufficient? Or does such language have to appear in the restrictive covenant itself?
The Fifth Circuit of Appeal’s recent decision in Patel v Boers, Case No. 5D09-4250 (Fla. 5th DCA, August 26, 2011) offers some useful guidance on this issue.
Boers, a dentist in Ocoee, Florida, brought another dentist, Cheng, into his practice. Boers and Cheng signed a Provider Agreement that, among other things, contained a non-compete provision restricting Cheng’s post-employment activities. The Provider Agreement also contained a general assignment clause whereby Cheng and Boers “specifically agreed that the mutual and reciprocal covenants and agreements, rights and obligations contained in this Provider Agreement are assignable only by [Boers].”
Subsequently, Boers sold his practice to another dentist, Patel. Cheng worked for Patel for nearly a year and then left Patel’s employment. Patel sued Cheng, claiming that he violated the non-compete provision.
The trial court dismissed Patel’s claim against Cheng on the grounds that Patel lacked standing, since the Provider Agreement did not contain language that “expressly authorized enforcement.”
The Fifth DCA reversed, holding that “[t]he assignment language contained in the instant Provider Agreement is sufficient to constitute an express authorization of enforcement by an assignee or successor as required by the statute.”
Although the Fifth DCA’s decision contains little analysis, it is clear from the court’s holding that a general assignment clause, such as the one contained in the Provider Agreement, i.e. an assignment clause that covers the entire agreement, is sufficient to constitute an “express authorization of enforcement by an assignee or successor” under section 542.335. In other words, the assignment language need not be contained in the restrictive covenant itself, as long as it appears somewhere in the agreement and is applicable to the agreement as a whole.