Rauch, Weaver, Norfleet, Kurtz & Co. v. AJP Pine Island Warehouses, Inc.

• Decision Date: 17 March 2021
• Docket Number: 4D20-417,Nos. 4D20-352,s. 4D20-352
• Parties: RAUCH, WEAVER, NORFLEET, KURTZ & CO., INC., a Florida corporation, Appellant, v. AJP PINE ISLAND WAREHOUSES, INC., a Florida corporation, Garnan Enterprises LLC, a Florida limited liability company, and Nancy Legault, individually, Appellees.
• Court: Florida District Court of Appeals

313 So.3d 625

RAUCH, WEAVER, NORFLEET, KURTZ & CO., INC., a Florida corporation, Appellant,

v.AJP PINE ISLAND WAREHOUSES, INC., a Florida corporation, Garnan Enterprises LLC, a Florida limited liability company, and Nancy Legault, individually, Appellees.

Nos. 4D20-352

4D20-417

District Court of Appeal of Florida, Fourth District.

[March 17, 2021]

Craig J. Trigoboff of Gunster, Yoakley & Stewart, P.A., Fort Lauderdale, for appellant.

John M. Bernazzoli, Hollywood, for appellee Nancy Legault.

Gross, J. Rauch, Weaver, Norfleet, Kurtz & Co. ("the Broker") appeals a final judgment entered in favor of Nancy Legault ("Legault") in the Broker's action for a breach of a confidentiality agreement related to a listing of real property. We affirm the final judgment, concluding that the trial court properly relied on section 542.335, Florida Statutes (2014).

The Broker's Listing Agreement with the Seller

In October 2014, the Broker entered into a listing agreement with AJP Pine Island Warehouses (the "Seller"), granting the Broker the exclusive right to procure a purchaser for the Seller's commercial warehouse property. The term of the listing agreement was six months. If the Broker obtained a buyer for the property during the term of the listing agreement, the commission was to be paid by the Seller, not the buyer.

The Confidentiality Agreement Between the Broker and Legault

The Broker's agent contacted Legault to tell her that the property was on the market. She expressed interest in purchasing it. The agent was familiar with Legault because he had been the listing agent when one of Legault's companies purchased the warehouse next door to the property.

Before the agent would send Legault any financial information about the property, the agent asked her to sign a confidentiality agreement with the Broker. The confidentiality agreement stated in relevant part:

By acknowledgment of receipt of this confidential information ..., you hereby agree:

1. That you will hold and treat it in the strictest of confidence, and that you will not, directly or indirectly, disclose this information to any other person, form or entity without prior authorization of the listing agent, and:

2. That you will not contact or negotiate in any way with the owners of the property as long as title to the properties are held by the current owners, and; ...

Legault hand wrote her name and contact information under the signature line and returned the agreement to the Broker in October 2014. She later testified that she intended to be bound by the agreement.

The Expiration of the Listing Agreement

The asking price for the property was $1,595,000. After receiving confidential financial information regarding the property, Legault offered $1.2 million in October 2014, which the Seller rejected. Between October 2014 and April 2015, Legault had no further negotiations with the Seller or anyone representing the Seller. The Broker's listing agreement with the Seller expired in April 2015.

The Sale of the Property to Legault's Company through a New Broker

The Seller then engaged another broker, Jay Goldman, to manage the property and work on selling it. In June or July 2015, Goldman contacted Legault to gauge her interest in purchasing the property. On July 28, 2015, Legault submitted a letter of intent to the Seller, offering to purchase the property for $1.2 million. The Seller made a counteroffer that Legault rejected.

The Seller subsequently made improvements to the property and increased the rents it was collecting. In March 2016, Goldman and Legault began negotiating again. The negotiations culminated in Legault's company, Garnan Enterprises, LLC ("Garnan"), purchasing the property from the Seller for $1.4 million in May 2016.

The Lawsuit – Pleadings Stage

After the Broker learned of the sale, the Broker sued the Seller, Legault, and Garnan. In the operative complaint, the Broker asserted the following counts: (1) a claim against the Seller for breach of the listing agreement; (2) a claim against Legault for breach of the confidentiality agreement; and (3) a claim against Garnan for unjust enrichment.

In the count against Legault, the Broker alleged that Legault "breached the Confidentiality Agreement (and specifically Paragraph 2 of same)" by negotiating directly with the Seller or its agent, excluding the Broker from the process, and "then causing Garnan to purchase the Property without paying the earned commission, even though [the Broker] was the procuring cause of the sale." The Broker sought damages against Legault of "not less than $84,000.00," which was the amount of commission the Broker would have earned on the sale of the property. Significantly, the count against Legault failed to allege either: (1) that one or more legitimate business interests justified the restrictive covenant; or (2) that the contractually-specified restraint was "reasonably necessary to protect" those interests.

Legault answered the operative complaint and asserted five affirmative defenses, none of which specifically mentioned section 542.335, Florida Statutes (2014).

The Motions for Summary Judgment

Following discovery, the Broker moved for summary judgment against Legault on the issue of liability, arguing that (1) the confidentiality agreement was a valid contract, (2) Legault breached the confidentiality agreement through her "admitted use of financial information and ongoing negotiations" with the Seller after the listing agreement expired, and (3) the Broker "suffered damages as a proximate result of [Legault's] material breaches," as the Broker "did not receive its due commission" when Legault's company purchased the property.

Legault's response in opposition to summary judgment contended, among other things, that the confidentiality agreement was a restrictive covenant that was void under section 542.335, Florida Statutes, because she did not sign the confidentiality agreement and because the Broker failed to plead or prove that the restrictive covenant was reasonably necessary to protect any legitimate business interests.

Meanwhile, the Broker and the Seller filed cross-motions for summary judgment on the Broker's claim against the Seller for breach of the listing agreement.

The Trial Court's Denial of the Broker's Motions for Summary Judgment

At the summary judgment hearing, the Broker objected that Legault's argument about restraints of trade "was never pled as an affirmative defense." As a result, the Broker maintained that Legault could not rely on her restraint-of-trade argument to avoid summary judgment.

Following the hearing, the trial court denied the Broker's motion for summary judgment against Legault. The trial court ruled that: (1) the confidentiality agreement involved restrictive covenants governed by section 542.335, Florida Statutes ; (2) the confidentiality agreement was not signed by Legault, which was fatal to its enforcement; (3) Legault did not breach paragraph 1 of the confidentiality agreement because there was no evidence in the record that she disclosed the Seller's confidential information; (4) paragraph 2 of the confidentiality agreement was "indefinite in time which would otherwise render the restriction void," but the court had the authority under section 542.335(1)(c) to construe the provision more narrowly in order to protect the Broker's legitimate business interests; (5) a reasonable time limit for the duration of the restrictive covenant to protect the Broker's legitimate business interests would be the length of the listing agreement; (6) Legault did not violate paragraph 2 of the confidentiality agreement during the term of the listing agreement; and (7) the Broker's damages were too speculative. However, the trial court's order did not enter judgment in favor of Legault.

On the same day, the trial court entered a summary final judgment in favor of the Seller, ruling that no commission was due to the Broker because the listing agreement "naturally terminated at the end of the 6-month term, and all rights and obligations thereunder between [the] Broker and [the Seller] concluded on April 7, 2015."

The Entry of the Final Judgment in Favor of Legault

Although Legault had not moved for summary judgment, the Broker sent the trial court a proposed final judgment in favor of Legault. The Broker requested the trial court's entry of the proposed final judgment so that the Broker's appellate rights would vest and the Broker could seek appellate review of the trial court's order denying the Broker's motion for summary judgment. Accordingly, the trial court entered final judgment in favor of Legault.¹

The Trial Court Properly Relied on Section 542.335 in Entering Summary Judgment

The Broker first argues that the circuit court erred in denying the Broker's motion for summary judgment, where the court relied on the unpled affirmative defenses under section 542.335.

We reject that argument because the statute is not merely a catalog of affirmative defenses, but a framework for the analysis of restrictive covenants in Florida.

"An affirmative defense is an assertion of facts or law by the defendant that, if true, would avoid the action and the plaintiff is not bound to prove that the affirmative defense does not exist." Custer Med. Ctr. v. United Auto. Ins. Co. , 62 So. 3d 1086, 1096 (Fla. 2010). "The defendant has the burden of proving an affirmative defense." Id.

"An affirmative defense is waived unless it is pleaded." Johnston v. Hudlett , 32 So. 3d 700, 704 (Fla. 4th DCA 2010). Thus, "[f]ailure to raise an affirmative defense prior to a plaintiff's motion for summary judgment constitutes a waiver of that defense." Kissimmee Util. Auth. v. Better Plastics, Inc. , 526 So. 2d 46, 48 (Fla. 1988) (quoting Wyman v. Robbins , 513 So. 2d 230, 231 (Fla. 1st DCA 1987) ). In other words, a defendant may not "raise an unpled affirmative defense as a basis for resisting a motion for summary judgment." Capotosto v. Fifth Third Bank , 230 So. 3d 891, 892 (Fla. 4th DCA 2017).

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