FORT LAUDERDALE NON-COMPETE AGREEMENT: INJUNCTION BOND AMOUNT

Temporary and permanent injunctions are often a part of restrictive covenant lawsuits and trade secret lawsuits. In facts, Florida’s restrictive covenant statute expressly contemplates enforcement of a restrictive covenant through an injunction and creates a presumption in favor of granting an injunction when a restrictive covenant is breached. Fla. Stat. § 542.335 (“A court shall enforce a restrictive covenant by any appropriate and effective remedy, including, but not limited to, temporary and permanent injunctions. The violation of an enforceable restrictive covenant creates a presumption of irreparable injury to the person seeking enforcement of a restrictive covenant.”). Florida’s trade secret statute similarly contemplates the imposition of an injunction when one’s trade secret is misappropriated.  Fla. Stat. § 688.003 (“Actual or threatened misappropriation may be enjoined.”). The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

In Florida, “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. Federal courts have a similar rule. Fed. R. Civ. P. 65 (“The court may issue a preliminary injunction or a temporary restraining order only if the movant gives security in an amount that the court considers proper to pay the costs and damages sustained by any party found to have been wrongfully enjoined or restrained. The United States, its officers, and its agencies are not required to give security.”). Therefore, the party seeking a temporary injunction must adequately secure its request for an injunction in case the injunction is deemed improper and harms the opposing party as a result. U.S. Lawns, Inc. v. Landscape Concepts of CT, LLC, 2016 WL 9526340 (M.D. Fla. Oct. 31, 2016). (“Typically, a security bond is required when a court enters an injunction which prevents commercial, money-making activities.”).

But how do courts determine the proper bond amount? The answer is ostensibly simple. Conduct an evidentiary hearing and present evidence demonstrating the anticipated costs and damages an injunction would cause, the adverse party’s chances of overturning the temporary injunction, and other pertinent factors. Longshore Lakes Joint Venture v. Mundy, 616 So. 2d 1047 (Fla. 2d DCA 1993) (explaining the factors to consider when conducting an evidentiary hearing on the injunction bond amount). In applying these factors, some courts have actually determined the bond amount can be $0 or a relatively de minimis amount when the potential harm posed to the non-movant is slight. See Harris v. Hous. Auth. of City of Daytona Beach, 2001 WL 36404273 (M.D. Fla. Apr. 25, 2001) (not requiring a bond where the preliminary injunction would result in minimal potential harm to the defendant); Anchor Title & Escrow, LLC v. Omega Nat’l Title Agency, LLC, 2023 WL 3564942, at *2 (N.D. Fla. Apr. 14, 2023) (requiring $1,000.00 bond). Therefore, a party requesting a significant bond amount should be prepared to present evidence demonstrating the substantial destruction an injunction would cause. One could present evidence of the business’ historic revenues and profits to demonstrate the large sums the business could not generate under an injunction. A business could also present evidence demonstrating the volume and value of customers that would leave the business if an injunction were imposed. There are likely other forms of evidence that could demonstrate the harm an injunction would cause to your business and you should consult counsel to determine what they are.

The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.