ERHM ORTHOPEDICS, INC. v. TODD EDWARDS , 260 So. 3d 559 ( 2019 )

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
MOTION AND, IF FILED, DETERMINED
IN THE DISTRICT COURT OF APPEAL
OF FLORIDA
SECOND DISTRICT
ERHM ORTHOPEDICS, INC., a Florida )
corporation, )
)
Appellant, )
)
v. ) Case No. 2D18-924
)
TODD EDWARDS, an individual, )
)
Appellee. )
___________________________________)
Opinion filed January 4, 2019.
Appeal from the Circuit Court for
Hillsborough County; Steven Scott
Stephens, Judge.
Frederick J. Mills and Ryan T. Quigley of
Morrison and Mills, P.A., Tampa, for
Appellant.
John D. Mullen of Phelps Dunbar LLP,
Tampa, for Appellee.
SILBERMAN, Judge.
In this action dealing with an employment agreement, ERHM Orthopedics,
Inc. (ERHM), appeals a final order determining that there was no prevailing party and
that ERHM is not entitled to attorney's fees. Because ERHM prevailed on the significant
issues before the court and received an affirmative judgment in its favor in the form of a
permanent injunction, ERHM is the prevailing party. Thus, we reverse the order
denying attorney's fees and remand for further proceedings. Although ERHM makes its
argument in three separate issues, this case turns on the fact that under any measure
ERHM is the prevailing party.
ERHM sells orthopedic products to surgeons in multiple counties in
Florida. Todd Edwards entered into an employment agreement with ERHM in 2012.
The employment agreement contains a covenant not to compete within those counties
and a covenant not to solicit ERHM's customers for two years. The agreement also
contains an attorney's fees provision that provides for an award of fees to the prevailing
party. Edwards resigned in 2016. He now works for Orthopedic Resources of Florida,
Inc., a direct competitor of ERHM that sells orthopedic products to surgeons in the same
geographic market. ERHM filed suit against Edwards and obtained a temporary
injunction.
The temporary injunction states that it is undisputed that Edwards went to
work for a competitor and that Edwards' "post-hearing memorandum characterizes his
role with the new company as a 'commissioned sales representative.' " The trial court
rejected Edwards' argument that ERHM had no legitimate business interest in
preventing solicitation of ERHM's customers. The trial court enjoined Edwards from
working for any company that competes with ERHM within the restricted territory for two
years, except that the trial court tailored the injunction to allow Edwards to work for his
current employer in a limited capacity of "post-sale surgical 'case coverage.' "
Significantly, Edwards was prohibited from soliciting new accounts or "new business on
his new employer's existing accounts." Edwards was also prohibited from having
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contact with any of the doctors that ERHM marketed products to during the one-year
period prior to Edwards' departure from ERHM. The trial court recognized in the
temporary injunction that "case coverage is an important post-sale service" that assists
the new employer's "ability to satisfy its existing customers"; however, "the real money
of a commissioned sales representative is obviously derived from the solicitation of new
accounts."
On direct appeal, this court per curiam affirmed the temporary injunction.
See Edwards v. ERHM Orthopedics, Inc., 229 So. 3d 1229 (Fla. 2d DCA 2017). The
parties thereafter stipulated to the entry of a Consent Final Judgment and Permanent
Injunction that the trial court entered which enjoined the same activity as in the
temporary injunction. In the stipulation, Edwards waived his right to appeal the final
judgment. The trial court then held a hearing on ERHM's motion for attorney's fees.
The trial court determined that there was no prevailing party and that ERHM was not
entitled to an award of attorney's fees under the employment agreement. ERHM now
appeals from that order.
To the extent that our determination involves an interpretation of the
parties' contract, our review is de novo. Tubbs v. Mechanik Nuccio Hearne & Wester,
P.A., 125 So. 3d 1034, 1039 (Fla. 2d DCA 2013). But generally our review of a trial
court's determination of the prevailing party is for an abuse of discretion. Id."[T]he party prevailing on the significant issues in the litigation is the party that should be
considered the prevailing party for attorney's fees." Id. at 1043 (alteration in original)
(quoting Moritz v. Hoyt Enters., Inc., 604 So. 2d 807, 810 (Fla. 1992)). A trial court's
determination of the prevailing party depends on whether that party was successful "on
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any significant issue in litigation which achieves some of the benefit the parties sought
in bringing suit." Trytek v. Gale Indus., Inc., 3 So. 3d 1194, 1200 (Fla. 2009) (quoting
Moritz, 604 So. 2d at 809-10). In some cases, it may be justified to determine that there
is no prevailing party, such as when the effect is "an unjust reward to a party whose
conduct caused the failure of the contract." KCIN, Inc. v. Canpro Invs., Ltd., 675 So. 2d
222, 223 (Fla. 2d DCA 1996). But "[p]revailing party attorney's fees are just and proper
in the majority of contract litigation." Id.ERHM's conduct did not cause the failure of the parties' employment
agreement. Instead, Edwards resigned and went to work for a competitor in violation of
the agreement. The trial court stated that it was examining the economic interests that
were at stake and looked to the Trytek decision which applied a "flexible rule" to
"achieve an equitable result" in determining the prevailing party. 3 So. 3d at 1202.
Trytek dealt with a construction lien where the contractor received a net judgment of
$1525 after a set off of damages awarded on the homeowner's counterclaim. Id. at
1197. The supreme court concluded as follows:
[A] trial court has the discretion to make a determination that
neither party has prevailed on the significant issues in
litigation after a thorough examination of all the factors,
including the issues litigated, the amount of the claim of lien
versus the amount recovered on the lien, the existence of
setoffs and counterclaims by the homeowner, and the
amounts offered by either party to resolve the issues prior to
the litigation, assuming that those negotiations were not
otherwise confidential either by agreement or statute.
Id. at 1203.
Here, the trial court found that ERHM clearly prevailed on a significant
issue in the litigation because ERHM received injunctive relief. But the trial court
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recognized that it had narrowed the relief ERHM sought. The trial court also found that
it had rejected Edwards' argument that "the contract had no legal effect because it was
unsupported by a legitimate business interest." The trial court determined as follows:
The court concludes that the plaintiff had a legitimate reason
to bring the action, and that in its absence the self-restraint
of the defendant may not have prevented the intrusion into
plaintiff's legitimate business interests, so the defendant
cannot be called the prevailing party (he has not argued for
that status in any event). But because the statute worked as
expected to deter the defendant from violating most of the
plaintiff's legitimate business interests, and because the
plaintiff argued consistently for a broader remedy tha[n] the
court ultimately adopted, the court concludes there is no
prevailing party in the resolution of the motion for temporary
injunction.
In essence, the trial court found no prevailing party because the temporary
injunction, as well as the permanent injunction, allows Edwards to engage in "post-sale
surgical 'case coverage' " for the new employer. But Edwards is totally prohibited from
sales by being enjoined from soliciting new accounts or "new business on his new
employer's existing accounts." Edwards is also prohibited from having contact with any
doctors that he had marketed products to during the one-year period prior to his
departure from ERHM. Based on the circumstances here, the trial court abused its
discretion in determining that there was no prevailing party. ERHM prevailed on the
significant issues in the litigation and received injunctive relief for the time period
requested and the geographic area requested.
Therefore, we reverse the order denying ERHM's motion for attorney's
fees and remand for further proceedings.
Reversed and remanded.
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VILLANTI and ROTHSTEIN-YOUAKIM, JJ., Concur.
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