Collier HMA Physician Management, LLC v. Brian Menichello, M.D.
223 So. 3d 334
| Fla. Dist. Ct. App. | 2017Background
- Collier HMA (a Florida LLC) employed Dr. Brian Menichello under a 3‑year Employment Agreement (terminable on 90 days' notice) that included a 12‑month post‑termination restrictive covenant. The Agreement expressly disclaimed third‑party beneficiaries and did not authorize enforcement by successors/assigns.
- During the Agreement term, Community Health Systems, Inc. (CHS) acquired Health Management Associates, Inc. (HMAI), the ultimate parent of Collier HMA, by merging HMAI into a CHS subsidiary. Collier HMA itself remained intact as the same single‑member LLC and continued to employ and pay Dr. Menichello.
- Dr. Menichello provided 90 days' notice and then began working for an affiliate of Naples Community Hospital, which Collier HMA claimed breached the restrictive covenant. Collier HMA sought injunctive relief; Menichello asserted a "successor" defense under Fla. Stat. § 542.335(1)(f), arguing the covenant was unenforceable because it did not expressly authorize enforcement by successors.
- The circuit court treated the merger as changing the substance/identity of the employer (focusing on corporate "culture/mode of operation" changes) and granted summary judgment for Menichello, concluding Collier HMA was a successor and thus could not enforce the covenant.
- On appeal, the Second District reversed: applying traditional corporate‑law principles (per Florida Supreme Court precedent), the court held Collier HMA did not become a successor to itself or otherwise lose enforcement rights; the CHS–HMAI merger changed the ultimate parent but did not alter Collier HMA’s identity, ownership, assets, or role as Menichello’s employer.
Issues
| Issue | Collier HMA's Argument | Menichello's Argument | Held |
|---|---|---|---|
| Whether Collier HMA became a "successor" under § 542.335(1)(f) after CHS's acquisition of HMAI | The corporate form shows Collier HMA remained the same entity (no consolidation, assignment, or transfer); thus it is not a successor and can enforce the covenant | The merger made CHS (through its subsidiary) the successor in substance; courts should look to the transaction's substance (ownership/control) and corporate "mode of operation" | Reversed lower court: apply traditional corporate‑law form over substance; Collier HMA did not become a successor and may seek enforcement |
| Whether summary judgment was appropriate on the successor defense | Contract language and corporate form negate successor status; factual disputes (amendment/ratchification) could preclude summary judgment but primary ruling sufficed | The merger facts established successor status as a matter of law | Summary judgment for Menichello was erroneous; appellate court reversed and remanded for further proceedings |
Key Cases Cited
- Corporate Express Office Prods., Inc. v. Phillips, 847 So. 2d 406 (Fla. 2003) (courts should apply traditional corporate‑law principles and focus on transaction form, not corporate "culture/mode of operation," when assessing successor status for noncompetes)
- Cellco P'ship v. Kimbler, 68 So. 3d 914 (Fla. 2d DCA 2011) (statutory construction of § 542.335(1)(f) regarding enforceability by assignees/successors)
- Am. Int'l Grp., Inc. v. Cornerstone Buss., Inc., 872 So. 2d 333 (Fla. 2d DCA 2004) (parent and wholly owned subsidiary are separate legal entities)
- Unijax, Inc. v. Factory Ins. Ass'n, 328 So. 2d 448 (Fla. 1st DCA 1976) (doctrine and proof required to treat a subsidiary as mere instrumentality of parent)