Avisena, Inc, v. Santalo, Case No. 3D10-178 (Fla. 3d DCA 2011)
By: Jay Lewis
On September 15, 2008, Alberto C. Santalo was terminated by Avisena, Inc., a Florida corporation. On September 16, 2009, Santalo’s newly formed business, CareCloud, began to compete with Avisena. Santalo had been the founder, president and chief executive officer of Avisena before his termination. Avisena filed a complaint and request for a temporary injunction claiming that Santalo was violating the non-compete clause of his employment contract. The employment contract included a post-employment restrictive convenant with time restrictions dependent on how his employment was terminated. If the Santalo was terminated for cause, he could not compete for 18 months. If the he was terminated without cause, Santalo could not compete for one year. Finally, if Santalo terminated his own employment without cause, he could not compete for a period of two years. Although the parties stipulated that Santalo was terminated by the company without cause, Avisena requested that the two-year restriction be placed on Santalo.
In the preliminary hearing, Santalo testified that he formed CareCloud in January, 2009, but he did not begin to compete with Avisena until after the twelve-month restriction had expired. Avisena argued the two-year, not the twelve-month, non-compete applied. The trial court agreed with Santalo’s interpretation of the contract and refused Avisena’s request for a preliminary injunction. Avisena appealed.
Florida law requires a party seeking a temporary injunction to establish all four of the traditional elements: (1) a likelihood of irreparable harm and the unavailability of an adequate remedy at law; (2) a substantial likelihood of success on the merits; (3) the threatened injury to the petitioner outweighs any possible harm to the respondent, and (4) the granting of a temporary injunction will not disserve the public interest. The burden of persuasion rests on the applicant. See Cordis Corp. v. Prooslin, 482 So. 2d at 489, 490 (Fla. 3d DCA 1986).
The appellate court affirmed the lower court’s finding that Avisena had failed to prove a substantial likelihood of success on the merits. The appellate court interpreted the underlying employment contract to provide for a twelve-month non-competition period following a termination by the company without cause. Avisena asserted the applicable restrictive clause states, "Employee shall not for a period of two (2) years during the period of time immediately following the Employee's termination of employment with the company [compete with the company]” However, the court highlighted the language “...Employee’s termination of employment…” and interpreted it to mean that if the employee decided to terminate his own employment, only then will a two-year restriction apply. But because the Avisena had stipulated that it had terminated Santalo without cause, the court determined a one year restriction applied.
Additionally, the appellate court found no evidence that Santalo had violated the clause by soliciting Avisena’s customers or employees prior to the expiration of the one-year restriction. The court cited Harllee v. Professional Serv. Indus., Inc., 619 So.2d 298 (Fla. 3d DCA 1992) which held that “mere preparation to open a competing business, such as assisting in the opening of a bank account, the obtaining of office space and other services with respect to the future employer are insufficient to demonstrate a breach.”
The dissent argued that the majority is “read[ing] language into the parties' agreement that simply is not there.” The dissent further asserted that in the case of ambiguity in contract interpretation, extrinsic evidence should be considered so as to do justice to the contracting parties’ intent. The dissent pointed to Avisena’s testimony that it was both parties’ intent to have Santalo restricted for two years after termination. Santalo did not recall any such conversation. The dissenting justice argued that if an individual does not recall an event it does not mean that the event did not happen and therefore the majority should have looked to parole evidence to make its decision.
