COMPOUNDING DOCS, INC. v. SCSC ENTERPRISES, LLC

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
COMPOUNDING DOCS, INC., a Florida corporation,
CDRX LLC, a Delaware limited liability company, ELAINE CAIRNS,
LARYCEE MCNEAL, LORALEI PACHEJO, and LESLIE ENCARNACION,
Appellants,
v.
SCSC ENTERPRISES, LLC, a Florida limited liability company,
KGJ ENTERPRISES, LLC, a Florida limited liability company,
SIMFA ROSE PHARMACEUTICAL SPECIALTY, INC., MARGIE BRETT,
SCOTT MAZZA, and SCOTT MAZZA CONSULTING, LLC,
a Florida limited liability company,
Appellees.
No. 4D21-3282
[August 10, 2022]
Appeal of a nonfinal order from the Circuit Court for the Seventeenth
Judicial Circuit, Broward County; Michele Towbin-Singer, Judge; L.T.
Case No. CACE21-010593.
James S. Telepman of Cohen, Norris, Wolmer, Ray, Telepman,
Berkowitz & Cohen, North Palm Beach, for appellants.
E. Scott Golden and Brandon D. Cole of Golden Law, Fort Lauderdale,
for appellees.
PER CURIAM.
Affirmed.
CONNER and ARTAU, JJ., concur.
FORST., J., concurs in part and dissents in part with an opinion.
FORST., J., concurring in part, dissenting in part.
Appellants, four former employees of Appellee SCSC Enterprises, LLC
and its related corporate entities (“SCSC”), and Compounding Docs, Inc.
(and its related corporate entity), appeal a trial court order denying the
Appellants’ motion to dissolve an ex parte temporary injunction. Appellee
SCSC filed the motion for a temporary injunction in response to the four
individual Appellants allegedly violating noncompetition and
confidentiality agreements, leaving their jobs with SCSC, and taking
similar jobs with Appellant Compounding Docs.
The trial court found SCSC satisfied the elements for a temporary
injunction against both the four former employees and their new
employer. 1 The court accepted the argument that the temporary
injunction was necessary to protect SCSC’s trade secrets and customer
lists and to prevent direct solicitation of SCSC’s customers. On appeal,
the Appellants argue the trial court abused its discretion by maintaining
the injunction. I join the majority in rejecting this argument and affirming
that portion of the trial court’s order without discussion.
The trial court further ordered SCSC to post a bond of $20,000. The
Appellants’ appeal contends that this bond is too low and is based, in part,
on an error of law. I agree with the Appellants and would reverse and
remand the issue of the bond’s amount to the trial court. Thus, solely with
respect to this aspect of the trial court’s order, I dissent.
Background
While employed with SCSC, the four employees signed noncompetition
and confidentiality agreements. Each of the agreements include a
provision that if an employee breaches any of the
noncompete/confidentiality obligations, SCSC may seek injunctive relief
without posting a bond.
SCSC referenced the “no bond” confidentiality clauses in its emergency
motion for a temporary injunction without notice, arguing that, pursuant
to these waivers, no bond was required as to the four former employees.
The motion “suggest[ed] that [$20,000 was] an appropriate amount” for a
bond as to Compounding Docs. The subsequent temporary injunction
1 To obtain a temporary injunction, the moving party must demonstrate: (1)
irreparable harm will result if relief is not granted; (2) no adequate remedy at law
exists; (3) there is a substantial likelihood of success on the merits; and (4) the
entry of an injunction will serve the public interest. Dubner v. Ferraro, 242 So.
3d 444, 447 (Fla. 4th DCA 2018) (citing Univ. Med. Clinics, Inc. v. Quality Health
Plans, Inc., 51 So. 3d 1191, 1195 (Fla. 4th DCA 2011)); Burtoff v. Tauber, 85 So.
3d 1182, 1183 (Fla. 4th DCA 2012). “The movant must also show a clear legal
right to the injunction.” Dubner, 242 So. 3d at 447 (citing McKeegan v. Ernst, 84
So. 3d 1229, 1230 (Fla. 4th DCA 2012)).
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order referred to the “no bond” clauses and implicitly accepted SCSC’s
“suggest[ion],” setting SCSC’s required bond at the amount of $20,000.
In the Appellants’ motion to dissolve the temporary injunction, they
argued that the provision in each of the employees’ noncompetition
agreements waiving the requirement to post a bond was not enforceable.
The motion referenced section 542.335(1)(j), Florida Statutes (2021), which
states: “No temporary injunction shall be entered unless the person
seeking enforcement of a restrictive covenant gives a proper bond, and the
court shall not enforce any contractual provision waiving the requirement of
an injunction bond or limiting the amount of such bond.” (emphasis added).
SCSC’s response merely asserted that the $20,000 bond covered all of the
defendants, not merely the corporate defendant, and “the bond was
required in that amount precisely because the Defendants have the
opportunity to come to the Court and allege potential injuries in a greater
amount.”
At the hearing on the motion to dissolve, the Appellants provided
testimony that, if the injunction was not dissolved, Compounding Docs
would cease paying the four employees. The Appellants thus contended
in their written closing arguments that the $20,000 bond was insufficient
because it did not account for the wages which Compounding DOC had
already paid to the employees, the wages which the four employees would
lose if Compounding Docs stopped paying them until the case is resolved,
and the attorney’s fees and costs which the Appellants were likely to incur.
The trial court’s “Order Denying in Part Motion to Dissolve the
Temporary Injunction” did not comment on the bond issue, thus leaving
the $20,000 bond intact. This was one of the issues raised on appeal.
Analysis
“No temporary injunction shall be entered unless a bond is given by the
movant in an amount the court deems proper, conditioned for the payment
of costs and damages sustained by the adverse party if the adverse party
is wrongfully enjoined.” Fla. R. Civ. P. 1.610(b). “[T]he trial court is
generally afforded discretion in setting the amount of bond for a temporary
injunction entered pursuant to Rule 1.610(b), Fla R. Civ. P, and . . . abuse
of discretion is the standard of review of the grant or denial of a temporary
injunction.” Montville v. Mobile Med. Indus., Inc., 855 So. 2d 212, 215 (Fla.
4th DCA 2003).
[T]he purpose of the bond required as a condition to issuance
of a temporary injunction is to provide a sufficient fund to
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cover the adverse party’s costs and damages if the injunction
is wrongfully issued. Richard v. [Behavioral] Healthcare
Options, Inc., 647 So. 2d 976 (Fla. 2d DCA 1994). Damages
include attorney’s fees and court costs. Town of Davie v.
Sloan, 566 So. 2d 938 (Fla. 4th DCA 1990). Since the
damages recoverable for a wrongfully issued injunction are
ordinarily limited to the bond, Parker Tampa Two, Inc. v.
Somerset Dev. Corp., 544 So. 2d 1018 (Fla. 1989), the bond
initially set by the court constitutes the court’s determination
of the foreseeable damages based on the good faith
representations that are before it. Id[.], at 1021.
Id. (modifications added).
As noted above, SCSC initially maintained that the four employees
properly waived the requirement of an injunction bond. SCSC then
suggested a bond of $20,000 solely to protect Compounding Docs. The
trial court adopted this suggestion and erroneously found that the
individual Appellants had “agreed that the [Appellees] could, inter alia,
seek . . . a restraining order or injunction without the requirement to post
a bond.” After the Appellants (1) pointed out that, per section 542.335(1)(j)
“the court shall not enforce any contractual provision waiving the
requirement of an injunction bond or limiting the amount of such bond,”
and (2) provided evidence that each of the individual defendants and the
corporate defendant had “foreseeable damages” in excess of $20,000 in the
event of “a wrongfully issued injunction,” the trial court nonetheless failed
to modify the amount (or provide a rationale for failing to do so).
I recognize the deference afforded to trial courts in these cases, and
that “while foreseeable damages are considered a major factor in setting
temporary injunction bond, the court is permitted to consider factors other
than the anticipated damages and costs, including the adverse party’s
chances of overturning the temporary injunction.” Montville, 855 So. 2d at
216 (emphasis added) (citing Longshore Lakes Joint Venture v. Mundy, 616
So. 2d 1047 (Fla. 2d DCA 1993)). Here, however, the only information we
have as to the basis of the trial court’s setting of a “proper bond” with
respect to the corporate defendant and the individual defendants is that
the original $20,000 bond was based, in part, on the erroneous
representation and determination that the individual defendants had
made a binding waiver of their section 542.335(1)(j) right to a “proper
bond.”
Appellee SCSC argues, in essence, that any error in setting the bond
too low was harmless because “the Defendants have the opportunity to
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come to the Court and allege potential injuries in a greater amount.”
However, “[t]he purpose of an injunction bond is to provide sufficient funds
to cover the adverse party’s costs and damages if the injunction is
wrongfully issued.” Richard v. Behavioral Healthcare Options, Inc., 647 So.
2d 976, 978 (Fla. 2d DCA 1994) (citing Longshore Lakes Joint Venture, 616
So. 2d at 1048). A bond set too low may prove insufficient to cover the
actual damages in the event of a reversal, and successful defendants may
be unable to otherwise be made whole.
Conclusion
To summarize, the trial court set the bond at $20,000 for the corporate
and individual defendants based, in part, on the finding that the individual
defendants had made a binding waiver. Nonetheless, after being informed
that section 542.335(1)(j) precludes a court from “enforc[ing] any
contractual provision waiving the requirement of an injunction bond or
limiting the amount of such bond,” and hearing evidence with respect to
the potential damages that would be incurred by the individual
defendants, the trial court—without explanation—failed to modify the
amount of the bond. To quote a famous television line, that does not
compute. 2 Thus, I would remand the bond issue and accordingly dissent
from that aspect of the majority’s affirmance of the trial court’s order.
* * *
Not final until disposition of timely filed motion for rehearing.
2 See Does not compute, https://en.wikipedia.org/wiki/Does_not_compute
(“Perhaps the most famous use of the phrase is in the television series Lost in
Space where the robot often says, ‘It does not compute!’”)
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