WILLIAM J. OBI AND ROSIE N. OBI, APPELLANTS,
v.
CARL C. SINGLETARY AND ANNIE L. SINGLETARY, HIS WIFE, APPELLEES

Fla. 1st DCA | 1977-06-17
No. CC-433
RAWLS, Acting C. J., and ERVIN, J., concur.
346 So. 2d 1239 Florida District Court of Appeal, First District (1977) Positive Treatment
Cited by 2 cases

AI-generated. These summaries, headnotes, and key points are machine-generated and may contain errors or omissions. Always verify against the full opinion text below. Not legal advice.

Synopsis

The Obis appealed a dismissal of their claims against the Singletarys for breach of a noncompetition agreement and failure to insure leased property. The court reversed the dismissal of the noncompetition claim, holding that goodwill can be inferred from the totality of circumstances even though not explicitly mentioned in the contract documents.


Holding

The court held that goodwill can be inferred from the surrounding circumstances, including the lease of the existing business, the sale of the business and inventory, and the noncompetition agreement itself, even though the contract did not expressly recite the transfer of goodwill. Therefore, the complaint stating a noncompetition claim was sufficient and the dismissal of count three was reversed. The dismissal of count five regarding insurance was affirmed because the contract did not specify the required amount of insurance.


Headnotes

[1] A noncompetition agreement ancillary to the sale of a business is enforceable if goodwill was transferred, even if not explicitly stated in the sale contract.

[2] The sale of a business, its inventory, and the premises it occupied, coupled with a noncompetition agreement, may be sufficient evidence to establish the transfer of good…

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Key Quotes

“One who sells the good will of a business . . . may agree with the buyer ... to refrain from carrying on or engaging in a similar business and from soliciting old customers of such employer within a reasonably limited time and area, so long as the buyer or any person deriving title to the good will from him, and so long as such employer continues to carry on a like business therein.”

Establishes the statutory basis under Florida law for enforcing noncompetition agreements when goodwill is sold.

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Facts & Procedural History

On October 4, 1974, the Singletarys leased to the Obis a building and land called 'Jones Road Grocery' on a renewable five-year term and sold them the…

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Opinion of the Court
SMITH, Judge.

SMITH, Judge.

Plaintiffs Obi appeal from a Duval County circuit court judgment dismissing their contract claims against appellees Singletary for failure of the Obis’ second amended complaint to state a cause of action in counts three and five. Count three sought an injunction against the Singletarys’ violation of their agreement not to compete with the grocery business purchased by the Obis from the Singletarys. Count five sought damages for the Singletarys’ alleged failure to insure the leased grocery premises to full value. On October 4,1974, the Singletarys leased to the Obis the land and building identified as “Jones Road Grocery” for a renewable five year term and sold the Obis “the business, goods and inventory known as Jones Road Grocery.” Subsequently, in an addendum to the sale agreement, the Singletarys agreed:

“Seller hereby covenants and agrees that he will not engage either as a proprietor, stockholder, partner or managerial employee in any other grocery business or any such business similar in nature to Jones Road Grocery within a three (3) mile radius of Jones Road Grocery located at 1023 Jones Road, Jacksonville, Duval County, Florida.”

The Obis’ claim to enforce the noncompetition agreement was dismissed because the second amended complaint did not in terms allege, and the contract by which the grocery was sold did not in terms recite, that goodwill was sold. The dismissal effectively invalidates the noncompetition agreement.

Section 542.12, Florida Statutes (1975) provides:

“(2) One who sells the good will of a business . . . may agree with the buyer ... to refrain from carrying on or engaging in a similar business and from soliciting old customers of such employer within a reasonably limited time and area, so long as the buyer or any person deriving title to the good will from him, and so long as such employer continues to carry on a like business therein. Said agreements may, in the discretion of a court of competent jurisdiction be enforced by injunction.” (Emphasis added.)

Although the contract documents exhibited with the pleading did not explicitly transfer the “goodwill” associated with Jones Road Grocery, we conceive they are sufficient to raise the issue and that, when evidence of the surrounding circumstances is adduced, the factfinder may properly conclude that goodwill was sold and consequently that the noncompetition agreement is enforceable. That goodwill was transferred is evidenced by the lease of the existing “Jones Road Grocery” property, by the sale of the Singletarys’ “business” as well as their “goods and inventory,” and by the noncompetition agreement itself, which was premised on the parties’ belief that there existed and had been transferred to the new owners an intangible asset consisting of customers’ satisfaction with the Single-tarys’ proprietorship of Jones Road Grocery. An expectation of continuing patronage is goodwill. See Vancil v. Anderson, 71 Idaho 95, 227 P. 2d 74 (1951); Valley Mortuary v. Fairbanks, 119 Utah 204, 225 P. 2d 739 (1950); Gable v. Carpenter, 136 Neb. 669, 287 N.W. 70 (1939); Handyspot Co. of Northern California v. Buegeleisen, 128 Cal.App.2d 191, 274 P. 2d 938 (1954).

In the absence of an express provision concerning the duration of the noncompetition contract, it will be considered terminable within a reasonable time depending on the circumstances. Sound City, Inc. v. Kessler, 316 So. 2d 315 (Fla. 1st DCA 1975).

Count three was not defective in its failure to anticipate and foreclose the affirmative defense of illegality by alleging the purchase and sale of goodwill. Fla.R.Civ.P. 1.110; Hough v. Menses, 95 So. 2d 410 (Fla.1957); Akin v. City of Miami, 65 So. 2d 54 (Fla.1953).

No error appears in the dismissal of count five, alleging the Singletarys’ failure to insure the leased premises against fire to “full value.” The contract did not specify the amount of fire insurance required.

AFFIRMED IN PART, REVERSED IN PART.

RAWLS, Acting C. J., and ERVIN, J., concur.


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Citator

Cited By

  • Best Towing & Recovery, Inc. v. Beggs, 531 So. 2d 243 (Fla. 2d DCA 1988)
    …Florida Statutes (1985), the trial court granted the appellees’ motion to dismiss for failure to state a cause of action and denied the appellant leave to amend. The court also found that the instant case was distinguishable from Obi v. Singletary, 346 So. 2d 1239 (Fla. 1st DCA 1977), where the court found a similar complaint to be sufficient. We find that the trial court erred in its application of the statute and in its analysis of Obi. We turn first to the statute which states in relevant part: [*245] 542…

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