Opinion
Case No. 6:05-cv-793-Orl-28KRS.
September 23, 2005
ORDER
Plaintiff Pirtek USA, LLC ("Pirtek") has filed the instant action against Scott Layer ("Mr. Layer"), his wife Sandy Layer ("Mrs. Layer"), and two corporations, S and L Limited, Inc. ("S L") and SLL Limited, Inc. ("SLL"). Pirtek is the American master franchisee for Pirtek Fluid Systems Pty. Ltd., an Australian company engaged in the business of selling and servicing industrial and hydraulic hoses and related components. Mr. Layer and S L formerly operated a Pirtek franchise, and this lawsuit arises from events occurring after the termination of the franchise agreement.
This case is currently before the Court on Plaintiff's Amended Motion for Preliminary injunction (Doc. 15). In that motion, Pirtek seeks an injunction enforcing the noncompetition agreement that was contained in the franchise agreement. The Court held a hearing on the motion on August 29, 2005, and now issues the following ruling.
Initially, Pirtek also sought an injunction against the Defendants' infringement of Pirtek's trademarks and requiring assignment of the franchise's telephone numbers to Pirtek in accordance with the post-term obligations of the franchise agreement. However, Pirtek now concedes that the marks are no longer being used by Defendants, that the telephone numbers have been assigned to Pirtek, and that therefore Pirtek's request for injunctive relief as to these two issues is now moot. (See Pirtek's Proposed Findings of Material Fact, Conclusions of Law and Order for Prelim. Inj., Doc. 59 at 8 ¶ 7, 9 ¶ 9).
I. Background
On December 31, 2001, Mr. Layer and Pirtek entered into a Franchise Agreement ("the Agreement"). (Agreement, Ex. A to Doc. 14). In that Agreement, Pirtek granted Mr. Layer a license to use Pirtek's trademarks, trade names, and service marks, as well as a license to operate a Pirtek hose service business within a designated territory in the Tampa, Florida area for a period of ten years. (Agreement at 3, 5). The Agreement required Mr. Layer to complete Pirtek's training program, to sell only products approved by Pirtek, and to maintain certain books and records on the business premises. (Agreement at 3, 5, 13-15).
The Agreement contained a noncompetition provision which reads as follows:
Franchisee (including specifically Principal Owner and also any Personal Guarantors . . .) may not engage as an owner, partner, director, officer, franchisee, employee, consultant, agent or in any other capacity in any business that sells products and services similar to the products and services sold by a Pirtek business within the Territory or 15 miles of the Territory or any Promotional Zone or the territory or promotional zone of any other Pirtek center for a period of two (2) years after expiration or termination of this Agreement. In addition, for the same two (2) year period, Franchisee may not employ or seek to employ any person who is at that time employed by any other Pirtek franchise or center or otherwise directly or indirectly induce such person to leave his or her employment. Franchisee expressly agrees that the two (2) year period and 15 mile radius are the reasonable and necessary time and distance needed to protect Franchisor if the Agreement expires or is terminated for any reason. Agreement at 22 ¶ 12.C.). The Agreement also contained a provision specifically providing for injunctive relief in the event of breach. (See Agreement at 23 ¶ 13.C.).
On May 20, 2002, with Pirtek's consent, Mr. Layer assigned his rights in the Agreement to Defendant S L and continued as a Personal Guarantor. (Assignment and Consent Agreement, Ex. B to Doc. 14). It is undisputed that Mrs. Layer worked at the Pirtek franchise while it was operated by Mr. Layer and S L, but the extent of her involvement is somewhat contested. Mr. and Mrs. Layer agree, however, that Mrs. Layer was identified as "Designated Manager" for the Pirtek franchise for one day. (See Decl. of Scott Layer, Attach. to Doc. 44, at 4; Decl. of Sandy Layer, Doc. 44 at 4 ¶ 18). Moreover, Mr. Layer states that Mrs. Layer assisted with bookkeeping for the franchise. (Decl. of Scott Layer, Attach. to Doc. 44, at 4).
On October 22, 2004, Pirtek, through counsel, sent Mr. and Mrs. Layer a Notice of Default of the Agreement. (Letter from Craig Miller to Scott and Sandy Layer of 10/22/04, Ex. C to Doc. 14). That letter identified several alleged defaults under the Agreement and advised that failure to cure those defaults within 30 days would constitute good cause for termination of the Agreement. (Id.). The defaults noted in the letter included failure to maintain required books and records; and purchase of, and maintenance in inventory of, house and fittings from an unapproved supplier. (Id.).
On March 16, 2005, Pirtek, through counsel, sent Mr. and Mrs. Layer and S L a Notice of Termination of the Agreement. (Letter from Craig Miller to Scott and Sandy Layer and S L Limited, Inc. of 03/16/05, Ex. D to Doc. 14). The Notice of Termination noted that during an inspection of the business on March 11, 2005, Pirtek representatives had observed $8000 worth of unapproved hose; had noted a failure to maintain books and records; and had deduced from a review of business records that a competing hose business under the name of "On Site Hydraulics" was being operated from the business site. (Id. at 1-2). The Notice of Termination stated that the Agreement would terminate thirty days from March 16, 2005 due to failure to cure the defaults identified in the October 22 letter. (Id. at 1). The March 16 letter reminded the Layers and S L of the noncompetition provision of the Agreement. (Id. at 4).
On April 26, 2005, Pirtek sent the Layers and S L another letter giving them "formal written notice that, effective April 22, 2005, the Franchise Agreement dated December 31, 2001, between Pirtek USA and Scott Layer . . . has been terminated. . . ." (Letter from Craig Miller to Scott and Sandy Layer and S L Limited, Inc. of 04/26/05, Ex. E to Doc. 14). That letter again reminded the Layers and S L of the noncompetition provision of the Agreement. (Id. at 3).
According to Mr. Layer, he and S L ceased operating as a Pirtek franchise sometime between March 16, 2005 and April 16, 2005. (Decl. of Scott Layer, Doc. 44 at 2 ¶ 4). It is undisputed that Defendant SLL currently owns and operates a hydraulic hose business called On-Site Hydraulics" at the same address that Mr. Layer and S L formerly operated their Pirtek franchise. (Decl. of Sandy Layer, Doc. 45 at 2 ¶ 5). According to Mrs. Layer, she is the owner and sole director and shareholder of SLL, a corporation which "is in no way affiliated with, or related to, S L Limited, Inc." (Id. at 1 ¶ 2). SLL was incorporated on March 18, 2005. (Id. at 2 ¶ 7).
Defendants have advised the Court that Mr. and Mrs. Layer are separated and in the process of getting a divorce. During the hearing on the preliminary injunction motion on August 29, 2005, Defendants' counsel stated that Mr. Layer "gave" Mrs. Layer the business; according to counsel, "he [Mr. Layer] just walked away from it and she [Mrs. Layer] decided to continue to operate it." Defendants deny that Mr. Layer is involved in the operation of On-Site Hydraulics.
Pirtek filed this suit against Mr. Layer and S L on May 26, 2005, along with a motion for preliminary injunction. (Comal., Doc. 1; Mot. for Prelim. Inj., Doc. 2). On June 2, 2005, Pirtek filed an Amended Complaint adding Mrs. Layer and SLL as Defendants. (Am. Comal., Doc. 14). That same day, Pirtek filed an Amended Motion for Preliminary Injunction. (Doc. 15). As noted above, the court heard oral argument on the motion on August 29, 1995.
In its Amended Complaint, Pirtek alleges counts of trademark infringement, unfair competition, breach of covenant not to compete, conspiracy to breach non-compete covenant, breach of contract (post-termination obligations), and specific performance. (See Am. Comal., Doc. 14).
II. Discussion
A. Preliminary Injunction Standard
"A district court may grant injunctive relief only if the moving party shows that: (1) it has a substantial likelihood of success on the merits; (2) irreparable injury will be suffered unless the injunction issues; (3) the threatened injury to the movant outweighs whatever damage the proposed injunction may cause the opposing party; and (4) if issued, the injunction would not be adverse to the public interest." Siegel v. Lenore, 234 F.3d 1163, 1176 (11th Cir. 2000) (en banc). "A preliminary injunction is an extraordinary and drastic remedy not to be granted unless the movant clearly carries the burden of persuasion as to the four requisites.'" All Care Nursing Serv., Inc. v. Bethesda Mem'l Hosp., Inc., 887 F.2d 1535, 1537 (11th Cir. 1989) (quoting United States v. Jefferson County, 720 F.2d 1511, 1519 (11th Cir. 1983)) (internal marks omitted).
In the instant case, Pirtek seeks to enforce its noncompetition agreement under Section 542.335, Florida Statutes, which provides in part that "[a] court shall enforce a restrictive covenant by any appropriate and effective remedy, including, but not limited to, temporary and permanent injunctions. The violation of an enforceable restrictive covenant creates a presumption of irreparable injury to the person seeking enforcement of a restrictive covenant." § 542.335(1)(j), Fla. Stat. This statute also provides that "[a] court shall not enforce a restrictive covenant unless it is set forth in a writing signed by the person against whom enforcement is sought." § 542.335(1)(a), Fla. Stat.
A plaintiff seeking to enforce a restrictive covenant must "plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant. . . . Any restrictive covenant not supported by a legitimate business interest is unlawful and is void and unenforceable." § 542.335(1)(b), Fla. Stat. The statute provides:
The term `legitimate business interest' includes, but is not limited to:
1. Trade secrets, as defined in s. 688.002(4).
2. Valuable confidential business or professional information that otherwise does not qualify as trade secrets.
3. Substantial relationships with specific prospective or existing customers, patients, or clients.
4. Customers, patient, or client goodwill associated with:
a. An ongoing business or professional practice, by way of trade name, trademark, service mark, or "trade dress";
b. A specific geographic location; or
c. A specific marketing or trade area.
5. Extraordinary or specialized training.
§ 542.335(1)(b), Fla. Stat. In addition to establishing the existence of a legitimate business interest, the plaintiff also must "plead and prove that the contractually specified restraint is reasonably necessary to protect the legitimate business interest or interests justifying the restriction." § 542.335(1)(c), Fla. Stat. If the plaintiff makes a prima facie showing of such reasonable necessity, "the person opposing enforcement has the burden of establishing that the contractually specified restraint is overbroad, overlong, or otherwise not reasonably necessary to protect the established legitimate business interest or interests." § 542.335(1)(c), Fla. Stat. Moreover, "[i]n determining the enforceability of a restrictive covenant, a court . . . shall not consider any individualized economic or other hardship that might be caused to the person against whom enforcement is sought." § 542.335(1)(g)1., Fla. Stat.
B. The Merits of Pirtek's Motion 1. Substantial Likelihood of Success on the Merits
Pirtek has met its burden of establishing a substantial likelihood of success on the merits of its claims for breach of the noncompetition provision of the Agreement. Pirtek has shown that the noncompetition agreement is valid and enforceable against the Defendants.
a. Reasonableness
The restrictive covenant is "reasonable in time, area, and line of business." § 542.335(1), Fla. Stat. Defendants do not challenge the reasonableness of the terms of the covenant, which covers only the area within fifteen miles of a Pirtek franchise territory or promotional zone for a period of two years. Cf. 542.335(1)(d)2, Fla. Stat. (providing that "a court shall presume reasonable in time any restraint 1 year or less in duration and shall presume unreasonable in time any restraint more than 3 years in duration" where the defendant is a former franchisee or licensee of a trademark or service mark). The covenant prohibits "acting as an owner, partner, director, officer, franchisee, employee, consultant, agent or in any other capacity in any business that sells products and services similar to the products and services sold by a Pirtek business," and thus it is also reasonable as to "line of business."
b. Written, Signed Covenant
The covenant is set forth in writing and is signed by Mr. Layer. Mr. Layer undisputedly assigned his franchise rights to S L with Pirtek's approval (see Assignment and Consent Agreement, Ex. B to Doc. 14); thus, S L is also clearly bound by the noncompetition clause. (See Agreement at 31 ¶ 16.H.) (providing that the Agreement "shall be binding upon and inure to the benefit of the administrators, executors, heirs, successors and assigns of the parties").
Defendants do not really dispute that Mr. Layer is bound by the noncompetition agreement (except to the extent that they argue that the noncompetition agreement is not enforceable). In other words, they do not challenge the applicability of the covenant to Mr. Layer or S L. If for no other reason, even though Mr. Layer assigned his rights under the franchise agreement to S L, he remains bound by the noncompetition agreement by virtue of his status as Principal Owner of S L and as Personal Guarantor. (See Agreement at 22 ¶ 12.C. (noncompetition provision)) (providing that the noncompetition agreement applies to Principal Owner and Personal Guarantors).
Although Mrs. Layer and SLL resist applicability of the noncompetition agreement to them on the basis that they did not sign the agreement, their position is unavailing, and the Court has no trouble concluding that the covenant is enforceable against not only Mr. Layer and S L but also Mrs. Layer and SLL. First, at a minimum, Mrs. Layer and SLL are assignees of Mr. Layer and S L. Notwithstanding that there is no formal assignment of the business rights in the record to Mrs. Layer or SLL (as is concededly the case as to S L), counsel for the Defendants stated during the motion hearing that Mr. Layer "gave" Mrs. Layer the business; according to counsel, "he [Mr. Layer] just walked away from it and she [Mrs. Layer] decided to continue to operate it." Thus, Mrs. Layer and SLL are also assignees who are bound by the noncompetition provision; the fact that Pirtek did not approve such an assignment does not alter the fact that Mrs. Layer and SLL are assignees of Mr. Layer and S L. (See Agreement at 24 ¶ 14.A.) (providing that "[a]ny sale (including installment sale), lease, pledge, management agreement, contract for deed, option agreement, gift or otherwise or any arrangement pursuant to which Franchisee or Principal Owner turns over all or part of the daily operation of the Business licensed hereunder to a person or entity who shares in the losses and/or profits of the Business in a manner other than as an employee shall be considered a transfer for purposes of this Agreement") (emphasis added); see also Black's Law Dictionary 127 (8th ed. 2004) (defining assignee as "[o]ne to whom property rights or powers are transferred by another"). Indeed, it would be absurd for a contracting party to be able to avoid the effect of a clause providing that the contract is binding on assignees by merely not getting required permission or approval for an assignment; to allow such to occur would in effect be to allow two breaches of a contract to negate a first breach.
Moreover, even without the "binding on assigns" clause of the Agreement and statement by counsel that Mr. Layer "gave" Mrs. Layer the business, Mrs. Layer and SLL are still bound by the noncompetition provision. Courts have refused to permit avoidance of obligations in a noncompetition agreement through use of a "straw man." Cf. N. Am. Prods. Corp. v. Moore, 196 F. Supp. 2d 1217, 1229, 1230 (M.D. Fla. 2002) (noting that "Florida courts have not hesitated to enforce non-compete agreements against both the employee who signed the agreement as well as against the corporation through which the corporation conducted business even where the employee was the only signatory to the non-compete agreement," enforcing non-solicitation agreement where fellow employee solicited customer, and holding that signator to agreement cannot avoid the reach of the non-solicitation agreement by using a straw man to make the phone calls," as "any other result would render a non-compete clause or a non-solicitation clause to be unenforceable by use of the simple expedient of performing all solicitations in the name of a corporate nonsignatory or through use of an agent to aid and assist the ex-employee in violating the agreement"); Dad's Properties, Inc. v. Lucas, 545 So. 2d 926, 928-29 (Fla. 2d DCA 1989) (enforcing noncompete agreement against wife and corporation owned by her where only her husband and corporation jointly owned by husband and wife were parties to noncompete agreement, holding that "individuals and entities may be enjoined from aiding and abetting a covenantor in violating a covenant not to compete" and that "an injunction binds the parties defendant but also those identified with them in interest, in privity with them, represented by them or subject to their control"). Thus, Mrs. Layer and SLL, as well as Mr. Layer and S L, may properly be enjoined from engaging in a competing business.
c. Legitimate Business Interest
Next, although Pirtek has not established all of the legitimate business interests that it asserts in this case, it has shown the existence of at least three such interests justifying the noncompetition agreement. Pirtek has met its obligation of proving the existence of protectible interests in its investment in specialized training, in substantial relationships with specific existing customers, and in the goodwill of its trademarks and franchise system.
First, Pirtek has established that is has a legitimate business interest in protecting its investment in "specialized training" it provided. Defendants dispute that the training provided to Mr. Layer was "extraordinary or specialized" as required by the statute. However, courts have found a protectible interest in training where the employer/franchisor provided training to an employee/franchisee who had no prior experience in, or knowledge of, the subject business. Compare Milner Voice Data, Inc. v. Tassy, 377 F. Supp. 2d 1209 (S.D. Fla. 2005) (finding that the plaintiff provided "extraordinary or specialized training" to the defendant former employee regarding the products that the plaintiff marketed; before working for the plaintiff, the employee had no experience or training on those products, and the employee was trained while working for the plaintiff, including by attendance at two, two-week training schools and another four days of training, at the plaintiff's expense of over $18,000), Aero Kool Corp. v. Oosthuizen, 736 So. 2d 25 (Fla. 3d DCA 1999) (concluding that employer was entitled to temporary injunction to enforce covenant not to compete to protect legitimate business interest in training it provided to employee where the employee had no prior experience in the field of aviation repair and became skilled in repairing and overhauling aircraft components through employer-provided training), Balasco v. Gulf Auto Holding, Inc., 707 So. 2d 858, 860 (Fla. 2d DCA 1998) (finding protectible interest in specialized training where employer "hire[d] personnel with little or no sales experience and invest[ed] considerable money and time to teach them the [employer's] way of selling cars"), and Servicemaster Residential/Commercial Servs., L.P. v. Westchester Cleaning Servs., Inc., No. 01 Civ. 2229(JSM), 2001 WL 396520, at *4 (S.D.N.Y. Apr. 19, 2001) ("Defendant cannot reasonably dispute that when Plaintiff provided it with training and confidential manuals, Plaintiff extended to Defendant the knowledge and ability to launch a restoration cleaning business and that Defendant use those tools to operate its business for fifteen years."), with Austin v. Mid State Fire Equip. of Cent. Fla., Inc., 727 So. 2d 1097, 1098 (Fla. 5th DCA 1999) (noting that the case did not involve the issue of the receipt of "training or other specialized knowledge" where the employee had "been in the industry for sixteen years and worked for other companies . . . before going to work for" the employer with whom he entered into noncompete agreement), and Passalacqua v. Naviant, Inc., 844 So. 2d 792 (Fla. 4th DCA 2003) (finding no legitimate business interest based on training where employees had prior experience in making cold call sales and testified that the company's sales tactics were generic).
In the instant case, it is undisputed that Mr. Layer had no experience in, or knowledge of, the hydraulic hose business before he was trained by Pirtek. (See Supp. Aff. of E. Morgan Arundel, Attach. to Doc. 19, at 5 ¶ 15). Pirtek provided him with "specialized training" that enabled him to run a business about which he — and his wife — otherwise would have known nothing. Although the Defendants contend that there is nothing "specialized" about knowing how to connect a hose to a fitting, this argument misses the mark. Again, Pirtek invested in the provision of training and support to someone who knew nothing about a hydraulic hose business — training that enabled Mr. Layer not only to connect hoses to fittings but to operate a franchise; he was not a technician but a business owner. Thus, Pirtek has a legitimate business interest in protecting its investment in this training.
Second, Pirtek has established a legitimate business interest in "substantial relationships with specific . . . existing customers." See § 542.335(b)(3.), Fla. Stat. Pirtek has presented sales reports from the subject franchise showing significant, repeat business on a month-to-month basis from several named customers. (See Supplemental Aff. of E. Morgan Arundel, Attach. to Doc. 19, at 3-4; Monthly Reports, Ex. B to Arundel Supplemental Aff.). Defendants argue that there were no substantial customer relationships and that if so, they were Mr. Layer's customers rather than Pirtek's; Defendants have submitted declarations from a handful of customers to this effect. (See Doc. 46). However, the Court is not persuaded. The evidence submitted by Pirtek is sufficient to establish substantial customer relationships amounting to a protectible legitimate business interest.
Finally, Pirtek has also established a legitimate business interest in goodwill associated with its trademarks and with its franchises. Affidavits filed by Pirtek employees support its reputation for quality, as does the Affidavit of one of its customers. (See Aff. of Nitsa Nichols, Doc. 54 at 1 ¶ 4 (stating that she informed an On Site Hydraulics representative "that Ryder would be using Pirtek because of the better quality and service that Pirtek provides to its customers")). Although Mr. Layer disputes some of the content of Ms. Nichols's affidavit, he acknowledges that she "advised [him] that she believed that the quality of the hoses now being sold by On Site Hydraulics was inferior to the quality of the hoses and fittings sold by Pirtek." (Decl. of Scott Layer, Attach. to Doc. 56, at 2 ¶ 8).
An interest in the goodwill associated with trademarks is a specifically listed legitimate interest in Section 542.335, and it is an interest that has been protected by courts. See, e.g., AmeriSpec, Inc. v. Metro Inspection Servs., Inc., No. CIV.A.3:01-CV-0946-D, 2001 WL 770999, at *4 (N.D. Tex. July 3, 2001) ("AmeriSpec has demonstrated that its trademark has developed goodwill. It is entitled to protect that goodwill by preventing a former franchisee who operated under its trademark for ten years from competing against it. The law recognizes as a legitimate business interest the right to protect the goodwill associated with a trademark."). And, while goodwill associated with a company's franchise system is not specifically listed in the Florida statute's non-exclusive list of legitimate business interests, it is akin to (and somewhat overlapping with) trademark-related goodwill, has been enforced by courts in other states, and is entitled to protection. Cf. Quizno's Corp. v. Kampendahl, No. 01 C 6433, 2002 WL 1012997, at *5 (N.D. Ill. May 20, 2002) ("A non-compete covenant may be similarly necessary to protect a franchisor's good will. . . . Quizno's developed a system for operating sandwich restaurants and thereby developed good will in its trademarks. Kampendahl recognized the value of this good will when he purchased the Quizno's franchise. Upon termination, Kampendahl is prohibited from continuing to capitalize on the good will created by his franchisor by selling sandwiches nearly identical to those offered by Quizno's.") (citations and footnote omitted); Servicemaster Residential/Commercial Servs., L.P. v. Westchester Cleaning Servs., Inc., No. 01 Civ. 2229(JSM), 2001 WL 396520, at *3 (S.D.N.Y.Apr. 19, 2001) ("There is a recognized danger that former franchisees will use the knowledge that they have gained from the franchisor to serve its former customers, and that continued operation under a different name may confuse customers and thereby damage the good will of the franchisor.");Rita's Water Ice Franchise Corp. v. DBI Inv. Corp., No. 96-306, 1996 WL 165518, at *4 (E.D. Pa. Apr. 8, 1996) ("[The franchisor] has an interest in the good will its franchise has created as well as an interest in being able to place a new franchise in the area as quickly as possible."); Jiffy Lube Int'l, Inc. v. Weiss Bros., Inc., 834 F. Supp. 683, 691-92 (D.N.J. 1993) ("The `protectible interest' prong is clearly satisfied. Jiffy Lube not only has a valid interest in protecting the good will it has developed over the years by having its franchisees do business at the Turnersville location, but it also has an interest in being able to place a new franchisee at or near the same location where this good will has been created. A reasonably crafted restrictive covenant is a legally acceptable means of protecting those interests."); Novus Franchising, Inc. v. Taylor, 795 F. Supp. 122, 127-28 (M.D. Pa. 1992) ("`[B]y the use of the franchisor's name and ability the franchisees availed themselves of the beneficial provision of the franchise contract.' . . . [T]he Novus name and method, while perhaps not carrying with it the instant consumer recognition of Coca-Cola, nevertheless presents a name which is known in the windshield repair field and carries a quantum of value and goodwill.") (quoting Piercing Pagoda, Inc. v. Hoffner, 351 A.2d 207, 211 (Pa. 1976)); Economou v. Physicians Weight Loss Ctrs. of Am., 756 F. Supp. 1024, 1032 (N.D. Ohio 1991) ("[The franchisor] does in fact claim a legitimate business interest. . . . [P]laintiffs' existing business poses a danger to [the franchisor's] prospective business. This danger, first, is a potential harm to [the franchisor's] goodwill. In such a situation, the franchisee has gained knowledge and experience from the franchisor, and to allow the franchisee to use this knowledge and experience to serve former or potential customers of the franchisor would work a hardship and prejudice to the latter. . . . There is a second, and clearly more important, business interest at stake here — survival of the business itself."); H R Block Tax Servs., Inc. v. Circle A Enters., Inc., 693 N.W.2d 548,556 (Neb. 2005) (concluding that the franchise agreement before it was "analogous to a sale of a business for purposes of determining the enforceability of the posttermination covenant not to compete" and that it was "clear that the main purpose of obtaining a franchise from H R Block is to trade on the reputation and goodwill of its service mark and thereby acquire customers").
d. Reasonably Necessary
Finally, Pirtek has shown that the noncompetition covenant "is reasonably necessary to protect the legitimate business interest or interests justifying the restriction." § 542.335(1)(c), Fla. Stat. Without enforcement of this provision of the Agreement, Pirtek's interests will not be protected.
2. Irreparable Injury
Under the Florida statute, "[t]he violation of an enforceable restrictive convent creates a presumption of irreparable injury to the person seeking enforcement of [the] restrictive covenant." § 542.335(1)(j), Fla. Stat. Defendants have not rebutted this presumption, and thus this element is satisfied here.
3. Threatened Injury to Pirtek Versus Damage to Defendants
Section 542.335(g) provides that "[i]n determining the enforceability of a restrictive covenant, a court . . . shall not consider any individualized economic or other hardship that might be caused to the person against whom enforcement is sought." Moreover, any harm to Defendants is of their own making due to their conduct in flouting the terms of the contract with Pirtek.See, e.g., Jiffy Lube Int'l, Inc. v. Weiss Bros., Inc., 834 F.Supp. 683, 693 (D.N.J. 1993) "To the extent that the defendants suffer significant . . . damage from the granting of the preliminary injunction, this harm is a predictable consequence of their willful breach of contract and their misconduct. As such, it is not the type of harm from which we seek to protect a defendant. . . . [T]he often painful harm which follows a defendant who willfully breaches a contractual undertaking is not a basis for denying a plaintiff the relief to which it is legally entitled."). Thus, the balance of harms — even if a proper consideration under Section 542.335 — favors Pirtek here.
4. The Public Interest
Finally, enforcement of the noncompetition agreement furthers the public interest. Cf. Rita's Water Ice, 1996 WL 165518, at *5 ("[T]he public interest supports contractual enforcement by preventing competition in violation of a valid restrictive covenant."); I Can't Believe It's Yogurt v. Gunn, No. Civ.A. 94-OK-2109-TL, 1997 WL 599391, at *20 (D. Colo. Apr. 15, 1997) ("There is a public interest in the enforcement of a valid covenant not to compete, particularly in the franchise context.").
5. Bond
The Florida statute provides that "[n]o temporary injunction shall be entered unless the person seeking enforcement of a restrictive covenant gives a proper bond." § 542.335(1)(j), Fla. Stat. Pirtek proposes a bond of only $10,000 based on losses that the franchise suffered. Mrs. Layer, however, estimates that her business is worth $450,000 and asserts that a bond in that amount should be required. (See Decl. of Sandy Layer, Doc. 45 at 6 ¶ 24). Having reviewed the monthly reports of the franchise (Ex. B to Supplemental Aff. of E. Morgan Arundel, Attach. to Doc. 19) showing regular losses, and noting that Mrs. Layer did not provide any support for her valuation estimate, the Court finds that a bond of $50,000 is adequate in this case.
III. Conclusion
As set forth above, Pirtek has satisfied all four of the necessary elements for a preliminary injunction to enforce its noncompetition agreement. Accordingly., it is ORDERED and ADJUDGED as follows:
1. Plaintiff's Amended Motion for Preliminary Injunction (Doc. 15) is GRANTED in part and DENIED in part.
2. During the time period running from the date that a bond is filed (as set forth in paragraph 5 below) until April 22, 2007, Defendants Scott Layer, S L Limited, Inc., Sandy Layer, and SLL Limited, Inc., as well as their administrators, executors, heirs, successors, assigns, agents, and anyone acting in concert or participation with them, shall not engage as an owner, partner, director, officer, franchisee, employee, consultant, agent, or in any other capacity that sells products and services sold by a Pirtek business: (a) within the former "Territory" and Promotional Zone," as defined below, of the former Pirtek franchise operated by one or more of the Defendants, which consists of the following area in and around Tampa, Florida:
Territory: In the northwest corner, beginning at the junction of 1-4 and 301, south on 301 to Carroll Boulevard, west on Carroll Boulevard to Orient Road, south on Orient Road to Adamo Drive, east on Adamo Drive to 78th Street, south on 78th Street to 676A (Madison Avenue), west on Madison Avenue and Pendola Point Road, continuing west over Hillsborough Bay until reaching a point due south of Armenia Avenue, north on Armenia Avenue to Hillsborough Avenue, east on Hillsborough Avenue to 301.
Promotional Zone: In the northwest corner, beginning at Veteran's Expressway and Ehrlich Road, east on Ehrlich Road and continuing on Bears Avenue to Downs Boulevard to Fletcher Avenue to 1-75, south on 1-75 to Progress Boulevard (676A), then along the southern border of the Exclusive Territory to Bayshore Boulevard, south to Garden Point, following the isthmus to the west to the junction of 275 and Memorial Highway to 589, north on 589 to Veteran's Expressway, north on Veteran's Expressway to Ehrlich Road.
(b) within 15 miles of the aforementioned Territory and Promotional Zone; and (c) within 15 miles of any territory or promotional zone of any territory or promotional zone of any Pirtek business. In addition, during the same time period, the Defendants may not employ or seek to employ any person who is at that time employed by any other Pirtek franchise or business or otherwise directly or indirectly induce such person to leave his or her employment.
3. Within fifteen days of the posting of the required bond as set forth in paragraph 5 below, Defendants shall file with the Court, and shall serve on Plaintiff's counsel, a statement setting forth the manner and form in which the Defendants have complied with the terms of this preliminary injunction.
4. Other than as noted in paragraphs 2 and 3 above, the motion for preliminary injunction is DENIED.
5. This injunction shall not become effective until Pirtek posts a bond with this Court in the amount of $50,000.
6. Plaintiff's Motion for Leave to Submit Additional Evidence in Support of its Amended Motion for Preliminary Injunction (Doc. 64) is DENIED. DONE and ORDERED.