STEVE JOHNSTON AND SHORELINE MARINE FUEL DELIVERY, INC., APPELLANTS,
v.
DOCKSIDE FUELING OF NORTH AMERICA, INC., APPELLEE
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Appellants Johnston and Shoreline Marine challenged a judgment enforcing a non-compete covenant against them, arguing the covenant was not assignable to Dockside N.A. when the original employer Dockside was dissolved and reorganized. The court reversed, holding that personal service contracts are not assignable without explicit consent, and mere continued employment cannot constitute such consent.
The court held that personal service contracts are not assignable without the parties' consent, and that an employee's continued employment with a successor corporation following a corporate dissolution does not constitute sufficient knowledge or consent to the assignment of the non-compete covenant.
[1] A contract for personal services is not assignable by either party unless the parties consent to such an assignment.
[2] Continued employment with a new corporation after the dissolution of a previous employer does not, in and of itself, constitute consent to the assignment of an employment…
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Join FLexlaw to unlock all legal intelligence“The general rule in Florida is that a contract for personal services is not assignable by either party unless the parties consent to such an assignment.”
Establishes the controlling legal principle that personal service contracts require explicit consent to be assigned.
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Join FLexlaw to unlock all legal intelligenceJohnston was employed by Dockside Fueling Service, Inc. in February 1990 and executed a non-compete agreement. In November 1990, Dockside was dissolve…
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PER CURIAM.
The defendants, Steve Johnston and Shoreline Marine Fuel Delivery, Inc. [Shore line], appeal from an adverse final judgment, from the denial of their motion for a new trial, and from an adverse final cost judgment. The plaintiff, Dockside Fueling of North America, Inc. [Dockside N.A.], cross-appeals from the trial court’s denial of its motion for injunctive relief. We reverse.
In August 1986, Dockside Fueling Service, Inc. [Dockside] was incorporated in Florida and began selling marine fuel. In February 1990, Johnston was employed by Dockside to fuel and service its customers. He executed a six-paragraph document titled “General Rules” that contained a covenant not to compete.
In November 1990, after Dockside was involved in a fuel spill at Watson Island and upon the advice of counsel, Dockside was dissolved. Three months later, in February 1991, Dockside N.A. was incorporated, and Dockside’s assets were transferred to Dockside N.A. Throughout all this time, Johnston continued to work for Dockside and Dockside N.A. In May 1991, Johnston informed Dockside N.A. that he was going into business for himself. Subsequently, Dockside N.A. fired him. In July 1991, Johnston’s business, Shoreline, began its operations performing the same services as Dockside N.A. Shoreline also solicited and serviced customers that had previously been serviced by Dockside and Dockside N.A. Thereafter, Dockside N.A. filed suit against Johnston and Shoreline seeking to enforce the non-compete agreement. Specifically, Dockside N.A. sought injunctive relief, damages, and attorneys fees and costs. The defendants answered the complaint and alleged several affirmative defenses.
At the final hearing, the trial court found that the “General Rules” constituted a valid employment agreement, and that because the transfer of assets from Dockside to Dockside N.A. constituted nothing more than a name change, it was enforceable by Dockside N.A. Therefore, the trial court entered judgment against the defendants, denied the defendants’ motion for a new trial, and awarded the plaintiff attorney’s fees and costs. This appeal and cross-appeal followed.
Johnston contends that the trial court erred, as a matter of law, by determining that Dockside’s rights, pursuant to Johnston’s covenant not to compete, were transferred from Dockside to Dockside N.A. Johnston further argued that personal service contracts are generally not assignable, that the “General Rules” did not contain a provision allowing such assignment, and that Johnston never consented to nor ratified such an assignment. We agree.
The general rule in Florida is that a contract for personal services is not assignable by either party unless the parties consent to such an assignment. Schweiger v. Hoch, 223 So. 2d 557, 558 (Fla. 4th DCA 1969) (citing Orlando Orange Groves Co. v. Hale, 119 Fla. 159, 161 So. 284 (1935)). When a corporation is dissolved and a new one created, the employee’s continued employment can not in and of itself be construed as sufficient knowledge and consent to conclude that the assignment was consented to or ratified by the employee. Schweiger, 223 So. 2d at 559.
In the instant case, Dockside was dissolved and three months later, a new corporation, Dockside N.A., was created. As in Schweiger, Johnston’s continued employment with the new corporation in and of itself was not sufficient to constitute consent to the assignment of his employment contract from Dockside to Dockside N.A. Therefore, Dockside N.A. may not enforce the non-compete agreement contained in the employment contract. We reverse the final judgment and the final cost judgment, and remand for further proceedings consistent with this opinion.
Because this issue is dispositive, we do not address the other points raised on appeal or cross-appeal.
Reversed and remanded.
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Corporate Express Off. Prods., Inc. v. Phillips, 847 So. 2d 406 (Fla. 2003)…(“[A]s a general rule, any change in the membership of a firm operates as a dissolution of the same and the formation of a new partnership.”). Similar to the partnership dissolution in Schweiger, Johnston v. Dockside Fueling of North America, Inc., 658 So. 2d 618 (Fla. 3rd DCA 1995), involved an effort by a new corporation to enforce a noncompete agreement entered into by a former employee and a dissolved corporation. The Third District cited Schweiger with approval and held that the employee’s continued emp…
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Sears Termite & Pest Control, Inc. v. Arnold, 745 So. 2d 485 (Fla. 1st DCA 1999)…Sears Termite and Pest Control, Inc.” was merely a name change, and did not affect the employer’s corporate identity. See Stewart v. Preston, 80 Fla. 473 & 479, 86 So. 348 (1920). In contrast, in Johnston v. Dockside Fueling of North America, Inc., 658 So. 2d 618 (Fla. 3d DCA 1995), the employee was no longer bound by a non-compete agreement in his employment contract with Dockside Fueling Service, because during Johnston’s employment, Dockside Fueling was dissolved and transferred its assets to Dockside N.A…
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Phillips v. Corporate Express Off. Prods., Inc., 800 So. 2d 618 (Fla. 5th DCA 2001)…ment cannot in and of itself be construed as sufficient knowledge and consent to conclude that the assignment was consented to or ratified by the employee.” Schweiger, 223 So. 2d at 559; see also, Johnston v. Dockside Fueling of North America, Inc., 658 So. 2d 618 (Fla. 3d DCA 1995). Despite the well-settled law on the issue, the First District, in Sears Termite and Pest Control, Inc. v. Arnold, 745 So. 2d 485 (Fla. 1st DCA 1999), held that “a 100% stock purchase does not involve the dissolution of the corpo…
Previewing 3 of 7 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Orlando Orange Groves Co. v. Hale, 119 Fla. 159 (Fla. 1935)
- Goulden v. Manreka Corp., 119 Fla. 248 (Fla. 1935)
- Schweiger v. Hoch, 223 So. 2d 557 (Fla. 4th DCA 1969)