Opinion
No. 2D21-781
06-29-2022
JOSEPH SPINE, P.A., Appellant, v. Andrew MOULTON, M.D., Appellee.
Darryl R. Richards of Johnson, Pope, Bokor, Ruppel & Burns, LLP, Tampa, and Sharon E. Krick of Johnson, Pope, Bokor, Ruppel & Burns, LLP, Clearwater, for Appellant. Robert V. Williams and Whynter KJA Morgan-Neal of Burr and Forman, LLP, Tampa, for Appellee.
Darryl R. Richards of Johnson, Pope, Bokor, Ruppel & Burns, LLP, Tampa, and Sharon E. Krick of Johnson, Pope, Bokor, Ruppel & Burns, LLP, Clearwater, for Appellant.
Robert V. Williams and Whynter KJA Morgan-Neal of Burr and Forman, LLP, Tampa, for Appellee.
VILLANTI, Judge.
Joseph Spine, P.A., appeals the trial court's February 10, 2021, nonfinal order denying its motion for a temporary injunction enjoining Dr. Andrew Moulton from breaching certain restrictive covenants in an employment agreement. We have jurisdiction. See Fla. R. App. P. 9.030(b)(1)(B). For the reasons set forth below, we reverse the order on appeal and remand with instructions for proceedings consistent with this opinion.
I.
Joseph Spine is a medical practice that treats patients with spinal disorders. Dr. Moulton is a physician who specializes in the treatment of spinal disorders. The parties entered into an employment agreement (the Agreement) in December 2017, wherein Dr. Moulton became employed by Joseph Spine and consequentially agreed to be bound by certain restrictive covenants. Specifically, Dr. Moulton agreed to not compete directly or indirectly within the "restricted territory," or to engage in, be employed by, or consult with any business that competes with Joseph Spine, for a period of twenty-four months after termination from the practice (the restricted period). Pursuant to the Agreement, Dr. Moulton was also prohibited from soliciting business from any patients or specific prospective patients, referral sources, employees, or independent contractors of Joseph Spine during the restricted period. Dr. Moulton further agreed to terminate his provider privileges at any facilities located within the restricted territory. The parties amended the Agreement twice after its execution to reflect changes to Dr. Moulton's compensation plan, but the restrictive covenants remained the same in each version of the Agreement. During the time Dr. Moulton was employed by Joseph Spine, he primarily saw patients in the Safety Harbor office location and performed most surgeries at Mease Countryside Hospital and the Dunedin Surgery Center. Prior to his employment with Joseph Spine, Dr. Moulton did not have staff privileges at Mease. Joseph Spine alleges that it facilitated Dr. Moulton obtaining privileges at Mease and paid the requisite application fee.
The restricted territory is defined in the Agreement as a fifteen-mile radius "as the crow flies" surrounding Joseph Spine's office locations and all healthcare facilities in which Joseph Spine provides medical services.
Joseph Spine claims that in May 2020, Dr. Moulton told Dr. Samuel Joseph, Joseph Spine's founder, that he intended to open a new spinal medical practice in Safety Harbor, in close proximity to Joseph Spine's Safety Harbor location. Joseph Spine alleges that during the same conversation, Dr. Moulton told Dr. Joseph that he and his wife, Jenna Bonelli, who is also a former employee of Joseph Spine, had obtained the names of patients from Joseph Spine's database and intended to "compete" with Joseph Spine. This conversation allegedly occurred on May 6, 2020. Dr. Moulton was terminated from his employment on May 7, 2020. It was later revealed that in March 2020, Dr. Moulton and Ms. Bonelli had formed a medical practice named All Spine Care, LLC, which is located within two miles of Joseph Spine's Safety Harbor office location.
Joseph Spine has four offices within the Tampa Bay region. For purposes of the temporary injunction, Joseph Spine requested that the trial court enjoin Dr. Moulton from providing medical services and seeing patients within the restricted territory surrounding the Safety Harbor office location.
Dr. Moulton denies Joseph Spine's recounting of the termination of employment, claiming instead that the parties had verbally mutually agreed to Dr. Moulton exercising his option to "buy out" of the restrictive covenants for $500,000 in accordance with a provision in the Agreement, but that he was abruptly fired the following day. The buyout provision of the Agreement specified that Dr. Moulton would be released from the restrictive covenants upon payment of $500,000 within thirty days of his termination of employment. It is undisputed that this payment by Dr. Moulton to Joseph Spine did not occur.
Joseph Spine filed a two-count lawsuit against Dr. Moulton in May 2020, requesting that the trial court enjoin Dr. Moulton from violating the restrictive covenants and seeking damages from Dr. Moulton's breach of the Agreement. In July 2020, Joseph Spine filed its motion for a temporary injunction. The trial court held three hearings on the motion, in November and December of 2020, and in February 2021. Joseph Spine alleged that Dr. Moulton saw eighty-two of its patients since his departure from the practice. Dr. Moulton testified that he had treated all of those patients during his employment with Joseph Spine and that all had come to him following his departure to continue their treatment. Dr. Joseph acknowledged during his testimony that the eighty-two patients had been treated by Dr. Moulton while at Joseph Spine but denied that it was "necessary" for Dr. Moulton to provide their follow-up care because the other physicians employed by Joseph Spine were capable of providing the necessary follow-up care.
Dr. Joseph alleged that Dr. Moulton personally contacted three Joseph Spine patients about transferring their care to his new practice. Only one patient, Mr. Joseph Albino, testified at the hearing. Dr. Moulton acknowledged calling Mr. Albino regarding his departure from Joseph Spine and offering Mr. Albino continuing care, but he said that he did so because Mr. Albino was scheduled for surgery. Dr. Moulton also said that he called somewhere between six and twelve patients who were scheduled for surgery to alert them that he was leaving the practice. Mr. Albino, however, denied he was scheduled for surgery at the time Dr. Moulton contacted him. He did not follow Dr. Moulton to his new practice and instead had his surgery with Joseph Spine.
Dr. Moulton further testified that of all of the Joseph Spine patients that he had seen while on call at Mease, none had become patients of All Spine. Dr. Moulton claimed that in their discussions prior to Dr. Moulton's departure, he and Dr. Joseph discussed Dr. Moulton continuing his services for a portion of patients seen under letters of protection, wherein Joseph Spine would receive Dr. Moulton's collectibles in exchange for the release of restrictive covenants. It is undisputed that Dr. Moulton continued to see patients of Joseph Spine for follow-up care following his termination, care for which the compensation was paid to Joseph Spine. The parties also agree that Joseph Spine paid to Dr. Moulton his collectibles for ninety days following Dr. Moulton's termination. Dr. Joseph denies that he agreed to revise the "buyout terms" of the Agreement from the $500,000 amount stated in the contract to $1.5 million in receivables.
The trial court specified in its findings of fact that Joseph Spine did not meet its burden of establishing three of the four required elements necessary to support a temporary injunction: (1) irreparable harm; (2) an inadequate remedy at law; and (3) that an injunction against Dr. Moulton would serve the public interest. The trial court stated during the hearing that in making its ruling, it considered Joseph Spine's entitlement to a presumption of irreparable harm by virtue of section 542.335(1)(j), Florida Statutes (2021), but that it was not certain the presumption afforded to Joseph Spine would "carry the day." Ultimately, the trial court found that Joseph Spine failed to meet its burden of proof that it suffered irreparable harm.
II.
The standard of appellate review of a trial court's order on a temporary injunction is a hybrid. Surgery Ctr. Holdings, Inc. v. Guirguis , 318 So. 3d 1274, 1277 (Fla. 2d DCA 2021). "To the extent the trial court's order is based on factual findings, we will not reverse unless the trial court abused its discretion; however, any legal conclusions are subject to de novo review." Id. (quoting REV Recreation Grp., Inc. v. LDRV Holdings Corp. , 259 So. 3d 232, 235 (Fla. 2d DCA 2018) ). "Where the trial court's temporary injunction concerns matters within the trial court's discretion, ‘[a]n appellant who challenges the trial court's order [on a motion for temporary injunction] has a heavy burden; the trial court's ruling is presumed to be correct and can only be reversed where it is clear the court abused its discretion.’ " Id. at 1277 (first alteration in original).
To prevail on a motion for temporary injunction, the movant must demonstrate "(1) irreparable harm to the moving party unless the injunction issues, (2) unavailability of an adequate legal remedy, (3) a substantial likelihood of success on the merits, and (4) that the public interest is supported by the entry of the injunction." Atomic Tattoos, LLC v. Morgan, 45 So. 3d 63, 64–65 (Fla. 2d DCA 2010).
Section 542.335(1)(j) confers a presumption of irreparable injury where there is a violation of a valid restrictive covenant. See Variable Annuity Life Ins. Co. v. Hausinger, 927 So. 2d 243, 244 (Fla. 2d DCA 2006). This presumption is rebuttable. See Surgery Ctr. Holdings, 318 So. 3d at 1280 ; Ansaarie v. First Coast Cardiovascular Inst., P.A. , 252 So. 3d 287, 292 (Fla. 1st DCA 2018). Notwithstanding the parties’ differing accounts of the facts surrounding Dr. Moulton's termination, it is undisputed that Dr. Moulton opened a spinal medical practice within two miles of Joseph Spine's Safety Harbor location and that he treated Joseph Spine patients following his departure. And in fact, Dr. Moulton acknowledges that he did so, which clearly establishes violation of the restrictive covenants. Thus, the statutory presumption of irreparable injury arose. See Surgery Ctr. Holdings , 318 So. 3d at 1280 (reversing order denying temporary injunction against defendant physicians where "the evidence showed that three doctors are treating former patients in violation of the prohibition against solicitation in the [employment] agreements"). However, the trial court concluded that Joseph Spine failed to establish irreparable injury. This was error.
In the face of a clear violation of a valid restrictive covenant, the trial court must apply the presumption afforded in section 542.335. Id. ; see also Medco Data, LLC v. Bailey, 152 So. 3d 105, 107 (Fla. 2d DCA 2014) ("[B]ecause Medco Data was entitled to a presumption of irreparable injury based on the findings the court had already made, the court was required to apply the presumption pursuant to subsection (1)(j), shifting the burden to the defendants to establish its absence."). In other words, if the trial court finds that the restrictive covenants are enforceable and have been violated, it is non-negotiable that the statutory presumption of irreparable injury be applied. The burden is then placed on the person who violated the restrictive covenant "to establish the absence of such injury." See Variable Annuity Life Ins. Co. , 927 So. 2d at 245.
Section 542.335(1) provides that "contracts that restrict or prohibit competition during or after the term of restrictive covenants, as long as such contracts are reasonable in time, area, and line of business, is not prohibited." Additionally, "a court shall presume reasonable in time any restraint 6 months or less in duration and shall presume unreasonable in time any restraint more than 2 years in duration." § 542.335(1)(d)(1). While the record does not indicate the trial court made a specific finding that the restrictive covenants at issue here are "reasonable," the two-year time period, geographic area, and line of business restricted appear to be reasonable based upon Florida caselaw. See, e.g., Ansaarie , 252 So. 3d at 292 (affirming temporary injunction against physician restricted from practicing within a five-mile radius of former employer's practice for two years).
The trial court did not articulate why it found that Joseph Spine failed to establish irreparable injury or, as seems more likely from our review of the proceedings below, that it inferred that Dr. Moulton successfully rebutted that presumption. The record provides us with reason to believe that at least one likely reason was Dr. Joseph's testimony regarding the economic impact Joseph Spine incurred due to Dr. Moulton's breach. Dr. Joseph testified that the revenue at his Safety Harbor office, where Dr. Moulton primarily saw patients, remained "stable" following Dr. Moulton's departure, although Dr. Joseph clarified that he suffered no loss in revenue because he and the other physicians at his practice "worked harder" to account for the loss of business after Dr. Moulton left. The trial court also heard testimony that although Dr. Moulton contacted a handful of Joseph Spine patients following his departure from the practice, the parties disputed the purpose of the contact and none of the patients in question left Joseph Spine to become patients of All Spine. Whether or not this theory bears any weight, the trial court was obligated to articulate in the record the support for its conclusion that Dr. Moulton successfully rebutted the statutory presumption of section 542.335. Id .
Dr. Moulton claimed that he contacted the patients on whom he had recently performed surgery in an effort to provide continuity of care. Dr. Joseph testified that he and the remaining physicians at Joseph Spine were capable of providing postoperative care and that the contact was unnecessary and violative of the Agreement.
Further, despite Dr. Joseph's testimony regarding his practice's relative economic stability following Dr. Moulton's breach, the trial court received other evidence that Dr. Moulton's competing medical practice and his refusal to terminate privileges at Mease significantly affected new patient referrals to Joseph Spine, representing loss of future revenue and referral sources that cannot be quantified. "The question of whether an injury is ‘irreparable’ turns on whether there is an adequate legal remedy available." Surgery Ctr. Holdings, 318 So. 3d at 1282 (quoting Corp. Mgmt. Advisors, Inc. v. Boghos, 756 So. 2d 246, 247-48 (Fla. 5th DCA 2000) ). "[C]ovenants not to compete[ ] by their nature lend themselves principally to enforcement by injunction because of the difficulty of arriving at a dollar figure for the actual damage done as the result of the breach." Id . (quoting Boghos , 756 So. 2d at 247-48 ). In finding that Dr. Moulton met his burden of rebutting irreparable injury, the trial court in effect concluded that Joseph Spine has another legal remedy at its disposal other than injunctive relief—a remedy that is not apparent to this court.
III.
Another likely factor in the trial court's conclusion that the presumption of irreparable injury was rebutted was Dr. Moulton's contention that Joseph Spine placed a dollar figure on its damages in the form of the buyout provision of the Agreement. Dr. Moulton claims the buyout provision is actually a liquidated damages clause in disguise. "Damages are liquidated when the proper amount to be awarded can be determined with exactness from the cause of action as pleaded; i.e., from a pleaded agreement between the parties, by an arithmetical calculation or by application of definite rules of law." Szucs v. Qualico Dev., Inc., 893 So. 2d 708, 712 (Fla. 2d DCA 2005) (quoting Bowman v. Kingsland Dev., Inc ., 432 So. 2d 660, 662-63 (Fla. 5th DCA 1983) ). Liquidated damages are distinguishable from alternative methods of performing an agreement, i.e., the payment of a specific amount to alleviate one's obligation of performance of another duty under the agreement. See Bradley v. Health Coalition, Inc. , 687 So. 2d 329, 332 (Fla. 3d DCA 1997) (citing Restatement (Second) of Contracts § 361 cmt. b (1981)). We conclude that the buyout provision of the Agreement is an alternative method of performance, and nothing in the record provides a reasonable basis leading us to believe that Dr. Moulton alleviated himself of the restrictive covenants by alternative performance of the Agreement—here, the payment of $500,000 within thirty days of his departure from the practice.
Comment b provides: "Provision for alternative performance distinguished. Although parties who merely provide for liquidated damages are not taken to have fixed a price for the privilege not to perform, there is no reason why parties may not fix such a price if they so choose. If a contract contains a provision for the payment of such a price as a true alternative performance, specific performance or an injunction may properly be granted on condition that the alternative performance is not forthcoming. But if the obliger chooses to pay the price, equitable relief will not be granted." Additionally, even assuming the parties verbally agreed to a modified buyout, such a modification was required by the terms of the Agreement to be in writing and signed by the parties, which was not the case here.
Dr. Moulton testified that the parties verbally discussed modifying the terms of the buyout provision so that Joseph Spine would receive payment owed to Dr. Moulton for services rendered under letters of protection in lieu of the $500,000, but nothing else in the record supports Dr. Moulton's contention, and Dr. Joseph denies the conversation ever occurred. It is undisputed that Dr. Moulton did not pay $500,000 to Joseph Spine within thirty days of his termination, as required by the terms of the buyout provision.
IV.
The most specific findings of the order on appeal pertained to the public policy impact of a temporary injunction against Dr. Moulton, and the trial court expressed concern at the hearings below that enforcing the restrictive covenants would adversely affect patients’ continuity of care, freedom in choosing their physicians, the bearing of risk between physicians after surgery, and the proximity of follow-up care for patients relative to where their procedures were performed. A trial court that refuses to enforce a restrictive covenant based on public policy concerns must specify in its findings the compelling reasons why enforcement is not in the public interest. See TransUnion Risk and Alt. Data Sols., Inc. v. Reilly, 181 So. 3d 548, 551 (Fla. 4th DCA 2015) ("Under section 542.335(1)(i), a trial court must specifically articulate an overriding public policy reason if it refuses to enforce a non-compete covenant based on public policy grounds."). Here, the trial court found in the order on appeal only that "specifically, as it relates to this case, a temporary injunction would interfere with a patient's right to receive post-surgical care performed by [Dr. Moulton]."
This point seems to be a nonfactor considering the proximity of the Joseph Spine Safety Harbor office, Dr. Moulton's Safety Harbor office, and Mease, which are all within approximately two miles of each other.
Dr. Moulton urges us that continuity of care is an "overriding public policy reason," and points to Mr. Albino as an example of a patient who was dissatisfied with his care at Joseph Spine and elected to leave that practice. There are two problems with Dr. Moulton's argument: first, the record reflects that he had not actually performed surgery on Mr. Albino at the time of his termination and departure from Joseph Spine. Instead, Dr. Moulton called Mr. Albino to advise him that he would no longer be employed with Joseph Spine and suggested that he could still perform the surgery if Mr. Albino wished to proceed. Second, despite the trial court's findings that its public policy concerns were limited to "this case, with these facts," the record does not indicate any unique or special circumstances distinguishing continuity of care with the patients affected here from other patients who are generally affected by restrictive covenants enforced against physicians practicing in Florida. In fact, Joseph Spine argues that the Fifth District has flatly rejected the position that because covenants against a physician interfere with a patient's right to patronize a particular physician within a specific geographic area, they are "facially ‘contrary to public health, safety, and welfare.’ " See Jewett Orthopaedic Clinic, P.A. v. White , 629 So. 2d 922, 925 (Fla. 5th DCA 1993), superseded by statute § 542.33, Fla. Stat. (1990), as recognized in King v. Jessup , 698 So. 2d 339, 340-41 (Fla. 5th DCA 1997). But see § 542.335(1)(j), Fla. Stat. (1996) (creating rebuttable presumption of irreparable injury in presence of valid restrictive covenants). While Joseph Spine somewhat mischaracterizes the Fifth District's dicta in Jewett , it is true that our sister court observed that the 1990 amendment to section 542.33 reflected that "the legislature intended to codify prior case law ... which recognized that courts are not bound to enforce a covenant against a physician ... when enforcement would be inimical to the public health, safety or welfare" but also recognized that there may be times when enforcement of a restrictive covenant against a physician may cause harm to patients and the public. Jewett , 629 So. 2d at 925 ; see also Lloyd Damsey, M.D., P.A. v. Mankowitz, M.D., 339 So. 2d 282 (Fla. 3d DCA 1976) (affirming denial of injunction against surgeon where trial court found that restricting surgeon from practicing in geographic area that had shortage of surgeons would have adverse impact on the public); Surgery Ctr. Holdings, 318 So. 3d at 1282 ("[A]n injunction cannot be denied on this basis unless the trial court specifically articulates the public policy and how the public policy outweighs the need for the injunction.").
Section 542.335(1)(i), which controls restrictive covenants entered into after July 1, 1996, requires a trial court to explain why a patient's continuity of care "substantially outweighs" Florida's long-established precedent of protecting legitimate business interests. Here, the trial court's brief mention of protecting patients’ continuity of care does not explain why this concern substantially outweighs enforcement of the restrictions against Dr. Moulton. Dr. Moulton failed to present evidence that patients in this geographic area are underserved or otherwise unable to obtain the healthcare he provides.
V.
Because Joseph Spine was entitled to a presumption of irreparable injury and there is inadequate evidence supporting a finding that Dr. Moulton successfully rebutted that presumption, the trial court's denial of Joseph Spine's motion for a temporary injunction was error. It is also clear that Joseph Spine had no other adequate remedy at law than the injunctive relief it sought. Accordingly, we reverse the order on appeal and remand to the trial court for entry of a temporary injunction against Dr. Moulton.
Reversed and remanded with instructions.
LUCAS, J., Concurs.
SMITH, J., Concurs specially
SMITH, Judge, Concurring specially.
I concur that the record below established that Joseph Spine is entitled to a temporary injunction against Dr. Andrew Moulton because he established all of the requisite elements, including the first element—substantial likelihood of success on the merits. In the trial court's order denying the temporary injunction, the trial court declined to reach this issue:
2.) As to the first element, the Court does not make any determination as to the merits or demerits of the respective claims or defenses that either party may ultimately be able to prove nor with respect to the relief, legal or equitable, if any, that either party may be entitled to receive based on the proof that is ultimately presented. Those matters will be determined at a later scheduled trial on the merits of the action.
The majority opinion is equally silent as to this first element. And so, I write only to clarify that in order for a temporary injunction to issue, an aggrieved party is required to prove each and every element prescribed by Atomic Tattoos , 45 So. 3d at 64–65. "Evidence that an enforceable covenant not to compete was breached will support a trial court's finding of the likelihood of success on the merits." Id. at 66 (citing Walsh v. PAW Trucking, Inc. , 942 So. 2d 446, 448 (Fla. 2d DCA 2006) ). Here, there is no question given the violations detailed above, that Joseph Spine met this prong. Therefore, I agree that Joseph Spine is entitled to a temporary injunction consistent with this opinion and that the trial court should set the required bond pursuant to Florida Rule of Civil Procedure 1.610(b) (2021).