Enforceability of Non-Compete Clauses In The Face of Non-Payment

Yet another non-compete case in Florida addressed the importance of having restrictive covenants be independent of other terms and conditions in an employment agreement.  In Richland Towers, Inc. v. Denton, 2014 WL 941952 (Fla. 2nd DCA March 12, 2014), the court reversed a trial court’s decision denying temporary injunctive relief by a party seeking to enforce a restrictive covenant.  The key issue in the case was whether a failure to pay bonuses destroyed the ability to enforce the non-compete clause.  The trial court determined that the non-payment precluded enforcement of the non-compete provision of the contract.  The appellate court, however, disagreed.  Employing the well-accepted rule of contract interpretation, giving plain and ordinary meaning to unambiguous contract language, the court found that the contract at issue specifically established that the restrictive covenants were independent clauses and that, therefore, a prior breach, e.g., non-payment, did not destroy the enforceability of the non-compete clauses.  As a result, the appellate court supported the determination that temporary injunctive relief in favor of enforcing the restrictive covenant should have been granted.  It all comes down to contract drafting— making non-compete clauses to be independent of other contract obligations will protect the party that may someday need to enforce a non-compete agreement.