Florida Statute section 542.335(1)(f) prohibits a court from not enforcing a non-compete agreement on the grounds that the party seeking enforcement is a third-party beneficiary or assignee. The statute provides:
(1)(f) The court shall not refuse enforcement of a restrictive covenant on the ground that the person seeking enforcement is a third-party beneficiary of such contract or is an assignee or successor to a party to such contract, provided:
(2) In the case of an assignee or successor, the restrictive covenant expressly authorized enforcement by a party’s assignee or successor.
Court’s have liberally construed section 542.335(1)(f)(2)’s requirement that the restrictive covenant expressly authorize enforcement by an assignee or successor. For example, in Patel v. Boers, 68 So.3d 380 (Fla. 5th DCA 2011), the Fifth District reversed a trial court that held, in essence, that restrictive covenants can only be enforced by an assignee or beneficiary “if the requisite statutory language is included in the covenants.” Id. at 381. In Patel, an employment agreement between dentists contained an assignment clause whereby the parties “specifically agreed that the mutual and reciprocal covenants and agreements, rights and obligations contained in [the agreement] are assignable …” The same agreement also contained a non-compete clause. Id. at 381.
The owner of the dental practice sold the practice to a third party who later sought to enforce the non-compete clause against a former employee of the practice. The trial court agreed with the employee’s argument that the non-compete agreement was not properly assigned to the party purchasing the practice and the enforcing party appealed. Id. at 380. On appeal, however, the Fifth District reversed, holding that the assignment language contained within the employment agreement was sufficient to constitute an express authorization of enforcement by an assignee or successor as required under the statute. Id. at 381, citing Price v. RLI Ins., Co., 914 So.2d 1010, 1013-14 (Fla. 5th DCA 2005)(explaining that an assignment is a transfer of all the interests and rights to the thing assigned and that the assignee stands in the shoes of the assignor and may enforce the contract against the original obligor).
It is important to note the difference in the ability to assign non-compete agreements under the current statute, 542.335, and its predecessor 542.33. Under the prior statute, a non-compete agreement could be assigned, but only if the employee consented to the assignment. DePuy Orthopaedics, Inc., v. Waxman, 95 So.3d 928, 935 (Fla. 1st DCA 2012), citing Corporate Express Office Products, Inc. v. Phillips, 847 So.2d 406, 413 (Fla. 2003). Section 542.335 replaces section 542.33 and applies to non-compete agreements entered into on or after July 1, 1996. The newer statute expressly provides for the assignment of non-compete agreements and it is reversible error for courts to rely on case law applying the predecessor statute to contracts entered after the July 1, 1996 effective date. DePuy Orthopaedics, Inc., v. Waxman, 95 So.3d at 936.