Appeal by Defendants from orders entered 16 May 2000 and 27
June 2000 by Judge Stafford G. Bullock in Wake County Superior
Court. Heard in the Court of Appeals 6 November 2001.
The Banks Law Firm, P.A., by R. Jonathan Charleston, John P.
Roseboro, Lena D. Wade and Maricia L. Moye, for plaintiff-
appellee.
Patterson, Dilthey, Clay & Bryson, L.L.P., by G. Lawrence
Reeves, Jr., for defendant-appellants.
CAMPBELL, Judge.
This appeal arises from the trial court's grant of a
preliminary injunction which restricts the manner in which
Defendants, a licensed attorney and his law practice, may use
information obtained from DaimlerChrysler through discovery in a
separate action in which Defendants represented Peter and Frances
Pleskach (“the Pleskaches”) in a lawsuit against DaimlerChrysler
(“the Pleskach case”). Specifically, the trial court's preliminary
injunction restrains Defendants from using information obtained
through discovery in the Pleskach case to solicit clients and
generate further litigation against DaimlerChrysler. Defendants
bring forward numerous assignments of error challenging the trialcourt's findings and conclusions, and also challenging the
constitutionality of the preliminary injunction. Upon careful
consideration of the briefs, oral argument, transcript, and record,
we dissolve the preliminary injunction entered against Defendants.
I. Background
Defendant H.C. Kirkhart (“Kirkhart”) is licensed to practice
law in North Carolina and does business as The Law Offices of H.C.
Kirkhart. On or about 19 April 1999, Kirkhart, as attorney for the
Pleskaches, filed a complaint against DaimlerChrysler (“Plaintiff”)
asserting that Plaintiff had violated the New Motor Vehicles
Warranties Act (“Lemon Law Statute”),
see N.C. Gen. Stat. § 20-351
through § 20-351.10, by failing to make certain disclosures to the
Pleskaches required by N.C.G.S. § 20-351.3(d), namely: that the
Dodge Caravan (“Caravan”) the Pleskaches had purchased from
Plaintiff had previously been repurchased by Plaintiff from its
original owners as a result of the Caravan's defective condition.
(See footnote 1)
Based on this alleged violation of the Lemon Law Statute, the
Pleskaches asserted claims for fraud and unfair and deceptive trade
practices. On or about 28 April 1999, DaimlerChrysler filed its
answer denying the material allegations of the Pleskach complaint.
DaimlerChrysler later filed a third-party complaint against A.E.
Cox Corporation, d/b/a Cox Dodge, (“Cox Dodge”), the dealer from
who the Pleskaches purchased the Caravan, alleging that it was CoxDodge, rather than DaimlerChrysler, that had failed to give the
Pleskaches the required disclosures.
Subsequent to filing the complaint in the Pleskach case,
Kirkhart served DaimlerChrysler with a set of interrogatories and
a request for production of documents, seeking,
inter alia, the
vehicle identification numbers of all vehicles that DaimlerChrysler
had repurchased since 1994, the names and addresses of the original
owners of these vehicles, the names and addresses of all subsequent
purchasers of these buy-back vehicles, and the disclosure
statements for all the buy-back vehicles that had been repurchased
since 1994. DaimlerChrysler refused to produce the requested
information, objecting on grounds that the request was vague,
overly broad, unduly burdensome, and propounded for an improper
purpose.
On 21 October 1999, Judge Gregory A. Weeks, ruling on a motion
to compel discovery that had been filed by Kirkhart, ordered
DaimlerChrysler to produce the materials and information requested
by Kirkhart. On or about 26 November 1999, DaimlerChrysler
responded to the discovery requests, but provided incomplete
information, choosing to disclose only partial vehicle
identification numbers, and failing to provide the names and
addresses of the original and subsequent purchasers of buy-back
vehicles. However, DaimlerChrysler did provide approximately 850
disclosure statements, the majority of which were not signed by the
subsequent purchasers. Using these disclosure statements, which
contained complete vehicle identification numbers, Kirkhart wasable to determine the identity of current owners of vehicles that
had previously been repurchased by DaimlerChrysler pursuant to the
Lemon Law Statute. Kirkhart contacted these subsequent purchasers
by letter to determine whether they had been advised that their
vehicles were manufacturer's buy-backs. Several of the owners
contacted by Kirkhart subsequently requested that he represent them
in their own lawsuits against DaimlerChrysler for violations of the
Lemon Law Statute. In March 2000, Kirkhart filed five additional
lawsuits against DaimlerChrysler.
On 13 January 2000, DaimlerChrysler filed a motion for a
temporary restraining order which was granted
ex parte by Judge
Stafford G. Bullock (“Judge Bullock”). Finding that Kirkhart had
been “soliciting business in violation of the discovery rules and
ethical rules applicable to all attorneys,” Judge Bullock
restrained him “from any actions that use discovery material to
generate litigation,” specifically prohibiting Kirkhart “from
sending letters of solicitation to potential litigants.” On 3
February 2000, Judge Henry V. Barnette (“Judge Barnette”) converted
this temporary restraining order into a preliminary injunction
specifically prohibiting Kirkhart “from sending letters of
solicitation to potential litigants whose names were discovered
during discovery in [the Pleskach] case.” On 2 March 2000, Judge
Barnette granted the Pleskaches' motion to set aside the
preliminary injunction and ordered that the injunction be withdrawn
on the grounds that the trial court did not have personal
jurisdiction over Kirkhart since he was not a party in the Pleskachcase. On 3 March 2000, Judge Henry W. Hight, Jr., denied
DaimlerChrysler's previously filed motion for a protective order,
by which DaimlerChrysler sought the exact relief that had been
granted by Judge Barnette's dissolved preliminary injunction.
On 6 March 2000, DaimlerChrysler filed its complaint in the
instant case against Defendants alleging that Kirkhart's use of the
information obtained through discovery in the Pleskach case to
solicit potential clients violated N.C. Gen. Stat. § 84-38, which
prohibits the solicitation of legal business, and the rules of
civil discovery and ethics applicable to all attorneys. In
addition to seeking a permanent injunction prohibiting Defendants
from using discovery material from the Pleskach case to solicit
potential litigants, DaimlerChrysler asserted the following five
causes of action: (1) barratry, (2) libel, (3) prospective
interference with contractual relationship, (4) tortious
interference with business enterprise, and (5) unfair and deceptive
trade practices.
On 2 May 2000, Judge Barnette entered a temporary restraining
order identical to the injunction that had previously been entered
and dissolved in the Pleskach case. On 16 May 2000, Judge Bullock
entered an order converting this temporary restraining order into
a preliminary injunction. On 2 June 2000, Defendants filed a
motion to dissolve or rescind the injunction, arguing (1) that no
discovery rule prohibited attorneys from using information obtained
through discovery in one case as the basis for instituting one or
more new cases, (2) that the ethical rules of the legal professiondid not prohibit the solicitation of clients, but, in fact,
expressly permitted it, subject to certain restrictions, and (3)
that the injunction violated Defendants' free speech rights under
the First Amendment to the United States Constitution.
Defendants' motion to dissolve or rescind the injunction was
heard by Judge Bullock on 12 June 2000. At the conclusion of the
hearing, Judge Bullock stated:
The motion to dissolve the injunction is
denied; however, the injunction may be
modified to the extent that it does not
violate Rule 7.3, direct contact with
prospective clients[,] and to the extent that
it does not violate any of the ethical rules.
Both sides submitted proposed orders to Judge Bullock
reflecting their respective interpretations of his ruling. On 27
June 2000, Judge Bullock entered the order prepared by Plaintiff's
counsel, which read as follows:
It is ORDERED that the defendants be and
are hereby restrained from using information
that the defendants obtained from the
plaintiff through discovery requests to
generate unrelated litigation against the
plaintiff, and may not use such materials for
illegal solicitation.
It is also ORDERED that the defendants in
their solicitation must obey laws relating to
unfair and deceptive trade practices, common
law barratry, G.S. Section 84-38, which
prohibits the solicitation of legal business,
and Rule 26(b)(1) of the North Carolina Rules
of Civil Procedure.
Defendants appealed from the injunction entered on 16 May 2000
and the modification entered on 27 June 2000. Subsequent to
docketing their appeal and filing their brief, Defendants filed a
petition for writ of certiorari, seeking an alternative means ofobtaining immediate appellate review of the trial court's
preliminary injunction.
II. Appealability of a Preliminary Injunction
In
A.E.P. Industries v. McClure, 308 N.C. 393, 302 S.E.2d 754
(1983), our Supreme Court addressed the appealability of
preliminary injunctions as follows:
A preliminary injunction is interlocutory in
nature, issued after notice and hearing, which
restrains a party pending final determination
on the merits. G.S. § 1A-1, Rule 65.
Pursuant to G.S. § 1-277 and G.S. § 7A-27, no
appeal lies to an appellate court from an
interlocutory order or ruling of a trial judge
unless such order or ruling deprives the
appellant of a substantial right which he
would lose absent a review prior to final
determination.
Id. at 400, 302 S.E.2d at 759. “Thus, the threshold question
presented by a purported appeal from an order granting a
preliminary injunction is whether the appellant has been deprived
of any substantial right which might be lost should the order
escape appellate review before final judgment.”
State v. School,
299 N.C. 351, 358, 261 S.E.2d 908, 913 (1980).
In the instant case, Defendants contend that they will be
deprived of a substantial right--their First Amendment right to
free speech--if the trial court's preliminary injunction escapes
immediate appellate review. However, we need not determine whether
the preliminary injunction affects a substantial right pursuant to
N.C. Gen. Stat. §§ 1-277 and 7A-27(d), because we have elected to
grant Defendants' petition for writ of certiorari pursuant to N.C.
R. Civ. P. 21(a)(1) to address the merits of this appeal.
III. Standard of Review
Since Defendants have elected to appeal before the ultimate
questions raised by the pleadings are decided at a trial on the
merits, the sole question before us is whether the trial court
erred in its issuance of the preliminary injunction.
As a general rule, a preliminary injunction
is an extraordinary measure taken by a court
to preserve the status quo of the parties
during litigation. It will be issued only (1)
if a plaintiff is able to show
likelihood of
success on the merits of his case and (2) if a
plaintiff is likely to sustain irreparable
loss unless the injunction is issued, or if,
in the opinion of the Court, issuance is
necessary for the protection of a plaintiff's
rights during the course of litigation.
Investors, Inc. v. Berry, 293 N.C. 688, 701, 239 S.E.2d 566, 574
(1977) (emphasis in original).
In reviewing a trial court's grant of a preliminary
injunction, “an appellate court is not bound by the findings, but
may review and weigh the evidence and find facts for itself.”
A.E.P. Industries, 308 N.C. at 402, 302 S.E.2d at 760. However,
while this Court is not bound by the findings or ruling of the
lower court, there is a presumption that the lower court's decision
was correct, and the burden is on the appellant to show error.
Conference v. Creech, 256 N.C. 128, 140, 123 S.E.2d 619, 626-27
(1962). Thus, “a decision by the trial court to issue or deny an
injunction will be upheld if there is ample competent evidence to
support the decision, even though the evidence may be conflicting
and the appellate court could substitute its own findings.”
Wrightsville Winds Homeowners' Assn. v. Miller, 100 N.C. App. 531,
535, 397 S.E.2d 345, 346 (1990)
.
“Finally, we note that the findings of fact and other
proceedings of the trial court which hears the application for a
preliminary injunction are not binding at a trial on the merits.”
Kaplan v. Prolife Action League of Greensboro, 111 N.C. App. 1, 16,
431 S.E.2d 828, 835 (1993). “The same is true of our decision upon
this appeal and our statement of the facts upon which our
conclusion rests.”
Board of Elders v. Jones, 273 N.C. 174, 181,
159 S.E.2d 545, 551 (1968).
IV. Analysis of Plaintiff's Claims
Defendants contend that Plaintiff cannot demonstrate the
requisite likelihood of success on the merits of its case to
support entry of the preliminary injunction. Plaintiff's complaint
alleged five separate causes of action: (1) barratry; (2) libel;
(3) prospective interference with contractual relationship; (4)
tortious interference with business enterprise, and (5) unfair and
deceptive trade practices. In granting the preliminary injunction,
the trial court did not specifically reference any of these claims.
Therefore, we will examine all five of Plaintiff's claims.
A. Barratry
Plaintiff alleged that Defendants had committed barratry by
willfully, intentionally, and wantonly soliciting or attempting to
solicit a large number of claims against Plaintiff in return for
forty percent (40%) of the recovery from those claims. At common
law, barratry was defined as “'the offense of frequently excitingor stirring up suits and quarrels between his majesty's subjects,
either at law or otherwise.'”
State v. Batson, 220 N.C. 411, 412,
17 S.E.2d 511, 512 (1941) (quoting 4th Blackstone, p. 134). The
common law offense of barratry has also “'been applied
independently of statute to one soliciting a large number of claims
of the same nature, and charging a fee for his services in
connection with the claim contingent on the amount recovered.'”
Id.
at 413, 17 S.E.2d at 512 (quoting 10 Am. Jur.
Champerty and
Maintenance, par. 3, p. 551). In
Batson, our Supreme Court held
that the common law offense of barratry was still in full force and
effect in this State, stating, in pertinent part:
Barratry being a common law offense, and
having never been the subject of legislation
in North Carolina, and not being destructive
nor repugnant to, nor inconsistent with, the
form of government of the State, is in full
force therein.
Id. Subsequent to the Court's decision in
Batson, the General
Assembly enacted N.C. Gen. Stat. § 84-38, which codified in part
the common law offense of barratry. N.C.G.S. § 84-38 remains in
effect, and reads in pertinent part:
It shall be unlawful for any person . . . to
solicit or procure through solicitation either
directly or indirectly, any legal business
whether to be performed in this State or
elsewhere, or to solicit or procure through
solicitation either directly or indirectly, a
retainer or contract, written or oral, or any
agreement authorizing an attorney . . . to
perform or render any legal services, whether
to be performed in this State or elsewhere.
N.C. Gen. Stat. § 84-38 (1999). While the General Assembly has chosen to codify the common law
offense of barratry in the context of the solicitation of legal
business, we find no decision of the Supreme Court or this Court
recognizing the existence of a civil cause of action based on the
common law principle of barratry.
However, the courts of this State have applied the related
common law principles of champerty and maintenance in the context
of a civil action.
See Merrel v. Stuart, 220 N.C. 326, 17 S.E.2d
458 (1941);
Smith v. Hartsell, 150 N.C. 71, 63 S.E. 172 (1908);
Wright v. Commercial Union Ins. Co., 63 N.C. App. 465, 305 S.E.2d
190 (1983). “The term “maintenance” has been defined by our courts
as 'an officious intermeddling in a suit, which in no way belongs
to one, by maintaining or assisting either party with money or
otherwise to prosecute or defend it.'”
Wright, 63 N.C. App. at
469, 305 S.E.2d at 192 (quoting
Smith v. Hartsell, 150 N.C. 71, 76,
63 S.E. 172, 174 (1908)). ““Champerty” is a form of maintenance
whereby a stranger makes a 'bargain with a plaintiff or defendant
to divide the land or other matter sued for between them if they
prevail at law, whereupon the champertor is to carry on the party's
suit at his own expense.'”
Id. (quoting same).
While recognizing
their continued force and effect in this State, our Supreme Court
in
Smith noted that many exceptions to the principles of champerty
and maintenance have been recognized, “so that they may be adapted
to the new order of things in the present highly progressive and
commercial age.”
Smith, 150 N.C. at 77, 63 S.E. at 174
. Among the
exceptions recognized by the Court in
Smith is that therelationship of attorney and client will often justify parties in
giving each other assistance in lawsuits.
Id. at 77, 63 S.E. at
175.
Based on our reading of the Supreme Court's decision in
Batson, and other learned authorities on the subject, we conclude
that the common law offense of barratry was a crime against the
Crown (i.e, the State), but did not support a civil cause of action
against a private individual, whereas the related principles of
champerty and maintenance did create a civil cause of action that
could be brought against another person. Therefore, our Supreme
Court's recognition of the common law offense of barratry in
Batson, and the General Assembly's subsequent codification of
barratry in the context of the solicitation of legal business, do
not support the existence of a civil cause of action for barratry.
In addition, a mere violation of N.C.G.S. § 84-38 does not form the
basis for a civil cause of action against the alleged violator.
See Wilson v. Bellamy, 105 N.C. App. 446, 464, 414 S.E.2d 347, 357
(1992) (quoting
74 Am. Jur. 2d
Torts § 1 (1974)) (“no civil right
can be predicated upon a mere violation of a criminal statute, . .
.; the crime is an offense against the public pursued by the
sovereign, the tort is a private injury pursued by the injured
party”)
.
(See footnote 2)
Therefore, we conclude that there does not exist in thisState a civil cause of action for barratry. Further, to the extent
that Plaintiff's first cause of action is an attempt to state a
claim for champerty and maintenance, we conclude that Defendants'
conduct is covered by the recognized exception for the relationship
between attorney and client. For the foregoing reasons, we
conclude that Plaintiff has failed to show a likelihood of success
on the merits of its first cause of action.
B. Libel
In its complaint, Plaintiff's libel claim was set forth in the
following paragraphs:
27. That, upon information and belief,
Defendant intentionally, willfully, wantonly
and maliciously sent letters to purchasers of
previously owned vehicles sold by Plaintiff
informing them of certain “rights” and
intimating that there was a class action in
effect against the Plaintiff concerning the
resale of the vehicles. That, upon
information and belief, there is no class
action filed in any jurisdiction in the State
of North Carolina.
28. That said statement and/or intimation of
the Defendant in his letter was false,
designed to mislead and did mislead or had the
capacity to mislead. That the Plaintiff has
sustained actual damages of $1.00 or more in
counsel fees expended in an effort to stop and
restrain further publication of the letter or
further activities with regard to the letter.
That the Plaintiff further seeks actual and
punitive damages in an amount to be determined
by the trier of fact.
In addition, Plaintiff alleged that Defendants had informed
potential witnesses in the Pleskach case that they had been
defrauded by Plaintiff without any judicial determination to
support this assertion. In support of its allegations, Plaintiffattached as an exhibit to its complaint an affidavit by Jace Stowe,
a customer relations manager for DaimlerChrysler, which contained
the following paragraph:
5. The customer indicated as a result of the
letter, he had a follow-up conversation with
the attorney's [Defendants'] office, and was
informed that counsel was looking into a class
action lawsuit based on disclosure notices
against DaimlerChrysler, and that counsel
would make 40 cents on the dollar of any
recovery.
Plaintiff also attached to its complaint a copy of a letter sent by
Defendants to a subsequent purchaser of one of DaimlerChrysler's
manufacturer's buy-backs, informing the subsequent purchaser of the
requirements of the Lemon Law Statute and implying that the
subsequent purchaser may not have received full disclosure of the
defects in his vehicle. This letter asked the subsequent purchaser
to contact Defendants, but did not expressly state that Defendants
would like to represent the subsequent purchaser in a suit against
DaimlerChrysler.
In sum, Plaintiff's libel claim against Defendants is based on
allegations that Defendants informed certain individuals that they
had been defrauded by Plaintiff without any judicial determination
to support the charge, and intimated to those individuals that a
class action lawsuit had been filed against Plaintiff when no such
lawsuit had in fact been filed.
“Libel is defined as written defamation.”
Market America,
Inc. v. Christman-Orth, 135 N.C. App. 143, 149, 520 S.E.2d 570, 576
(1999). The three classes of libel long recognized under North
Carolina law are: “(1) publications obviously defamatory which
are called libel
per se; (2) publications
susceptible of two interpretations one of
which is defamatory and the other not; and (3)
publications not obviously defamatory but when
considered with innuendo, colloquium, and
explanatory circumstances become libelous,
which are termed libels
per quod.”
Renwick v. News and Observer, 310 N.C. 312, 316, 312 S.E.2d 405,
408 (1984) (quoting
Arnold v. Sharpe, 296 N.C. 533, 537, 251 S.E.2d
452, 455 (1979)).
Plaintiff's complaint in the instant case does not bring
Defendants' communications within the second class of libel, since
it is not alleged that the communications are “susceptible of two
meanings, one defamatory, and that the defamatory meaning was
intended and was so understood by those to whom the publication was
made.”
Id. at 317, 312 S.E.2d at 408;
see also Flake v. News Co.,
212 N.C. 780, 785, 195 S.E. 55, 59 (1938)
. Further, Plaintiff does
not have a reasonable likelihood of success on the merits of its
claim under the third class of libel--libel
per quod--since it does
not appear that Defendants intended for the communications to be
defamatory, or that those who received the communications
understood them to be defamatory.
See Robinson v. Insurance Co.,
273 N.C. 391, 394, 159 S.E.2d 896, 899 (1968);
U v. Duke
University, 91 N.C. App. 171, 181, 371 S.E.2d 701, 708 (1988). The
record shows that the alleged defamatory communications were made
to subsequent purchasers of Plaintiff's manufacturer's buy-backs in
an attempt to secure them as witnesses in the Pleskach case, or to
generate additional litigation against Plaintiff. There is no
evidence that Defendants made the communications with the intent todefame DaimlerChrysler or to injure its reputation in any way.
Therefore, we focus our attention on the law relative to the first
class of libel--libel
per se.
Under the law of North Carolina, a libel
per se is a
publication which, when considered alone without innuendo or
explanation: “(1) charges that a person has committed an infamous
crime; (2) charges a person with having an infectious disease; (3)
tends to impeach a person in that person's trade or profession; or
(4) otherwise tends to subject one to ridicule, contempt or
disgrace.”
Renwick, 310 N.C. at 317, 312 S.E.2d at 409
.
“However, even where a statement is found to be actionable
per
se, the law regards certain communications as privileged.”
Market
America, 135 N.C. App. at 150, 520 S.E.2d at 576. A qualified
privilege exists when a communication is made:
“(1) on subject matter (a) in which the
declarant has an interest, or (b) in reference
to which the declarant has a right or duty,
(2) to a person having a corresponding
interest, right, or duty, (3) on a privileged
occasion, and (4) in a manner and under
circumstances fairly warranted by the occasion
and duty, right, or interest.”
Phillips v. Winston-Salem/Forsyth County Bd. Of Educ., 117 N.C.
App. 274, 278, 450 S.E.2d 753, 756 (1994) (quoting
Clark v. Brown,
99 N.C. App. 255, 262, 393 S.E.2d 137, 138 (1990)). “The essential
elements for the qualified privilege to exist are good faith, an
interest to be upheld, a statement limited in its scope to this
purpose, a proper occasion and publication in a manner and [to] the
proper parties only.”
Long v. Vertical Technologies, Inc., 113
N.C. App. 598, 602, 439 S.E.2d 797, 800 (1994). “Whether acommunication is privileged is a question of law for the court to
resolve, unless a dispute concerning the circumstances of the
communication exists, in which case it is a mixed question of law
and fact.”
Market America, 135 N.C. App. at 150, 520 S.E.2d at
576. Where the privilege exists, a presumption arises “that the
communication was made in good faith and without malice.”
Phillips, 117 N.C. App. at 278, 450 S.E.2d at 756. To rebut this
presumption, the plaintiff must show actual malice or excessive
publication.
Harris v. Proctor & Gamble, 102 N.C. App. 329, 401
S.E.2d 849 (1991).
In the instant case, we find that Defendants' communications
regarding whether Plaintiff had defrauded those contacted, and
whether a class action had been filed, were entitled to a qualified
privilege. As attorney for the Pleskaches, Kirkhart had a
legitimate interest in contacting those individuals who might
provide information useful to proving the allegations in the
Pleskach case. Kirkhart also had an interest, although likely
influenced by the selfish possibility of pecuniary gain, in
determining whether those individuals contacted had been defrauded
by Plaintiff and wished to hire Kirkhart to assist them in seeking
legal redress. Those individuals contacted by Defendants had a
definite interest in whether Plaintiff had complied with the law in
its dealings with them. The communications took place in private
letters, and appear to have been sent in good faith and in a manner
fairly warranted under the circumstances. Finally, the record
shows no evidence of actual malice or excessive publication. Therefore, we conclude that under these circumstances, Defendants'
communications were protected by a qualified privilege.
For the foregoing reasons, we conclude that Plaintiff has
failed to show a likelihood of success on the merits of its libel
claim.
C. Tortious Interference With Contract
In its third cause of action, Plaintiff alleged that
Defendants' solicitation, or attempted solicitation, of clients to
file lawsuits against Plaintiff had interfered with the contractual
relationships between Plaintiff and those individuals being
solicited, thereby damaging the goodwill between Plaintiff and
those solicited. While Plaintiff titles this cause of action
prospective interference with contractual relationship, it appears
to be based on alleged interference with the existing contractual
relationships between Plaintiff and those individuals being
contacted by Defendants. Thus, we analyze it as a claim for
tortious interference with contract.
The five elements of tortious interference with contract were
set forth by the Supreme Court in
United Laboratories, Inc. v.
Kuykendall, 322 N.C. 643, 370 S.E.2d 375 (1988), as follows:
(1) a valid contract between the plaintiff and
a third person which confers upon the
plaintiff a contractual right against a third
person; (2) the defendant knows of the
contract; (3) the defendant intentionally
induces the third person not to perform the
contract; (4) and in doing so acts without
justification; (5) resulting in actual damage
to plaintiff.
Id. at 661, 370 S.E.2d at 387
. Plaintiff's complaint fails to
identify any specific contract with DaimlerChrysler that a third
party has been induced not to perform as a result of Defendants'
conduct. Therefore, we conclude that Plaintiff has failed to show
a likelihood of success on the merits of its tortious interference
with contract claim.
D. Tortious Interference with Prospective Economic Advantage
Plaintiff's fourth cause of action asserts that Defendants'
actions have interfered with public confidence in the quality of
vehicles resold by Plaintiff, thereby damaging Plaintiff's
goodwill. We read these allegations as an attempt to state a claim
for tortious interference with prospective economic advantage.
In order to maintain an action for tortious interference with
prospective advantage, Plaintiff must show that Defendants induced
a third party to refrain from entering into a contract with
Plaintiff without justification.
Cameron v. New Hanover Memorial
Hospital, 58 N.C. App. 414, 440, 293 S.E.2d 901, 917 (1982)
.
Additionally, Plaintiff must show that the contract would have
ensued but for Defendants' interference.
Id.
Here, Plaintiff has failed to identify any particular contract
that a third party has been induced to refrain from entering into
with Plaintiff. Thus, Plaintiff has failed to establish a
likelihood of success on the merits of its tortious interference
with prospective advantage claim.
E. Unfair and Deceptive Trade Practices
In its final cause of action, Plaintiff alleged that
Defendants' activities in soliciting and attempting to solicit
clients constituted unfair and deceptive trade practices. N.C.
Gen. Stat. § 75-1.1(a)(“the Act”) provides: “Unfair methods of
competition in or affecting commerce, and unfair or deceptive acts
or practices in or affecting commerce, are declared unlawful.”
N.C.G.S. § 75-1.1(a)(1999). Although the Act was intended to
benefit consumers, its protections do extend to businesses in
appropriate situations.
Dalton v. Camp, 353 N.C. 647, 656, 548
S.E.2d 704, 710 (2001). In order to prevail on a claim for unfair
and deceptive trade practices, a plaintiff must show: “(1)
defendant committed an unfair or deceptive act or practice, (2) the
action in question was in or affecting commerce, and (3) the act
proximately caused injury to the plaintiff.”
Id. at 656, 548
S.E.2d at 711
.
Plaintiff's unfair and deceptive trade practices claim rests
on its claims for barratry, libel, tortious interference with
contract and tortious interference with prospective economic
advantage. Having concluded that Plaintiff has failed to establish
a sufficient likelihood of success on the merits of these claims,
we likewise find an insufficient likelihood of success on
Plaintiff's unfair and deceptive trade practices claim.
In sum, we conclude that Plaintiff has failed to show a
likelihood of success on the merits of any of its claims. Thus,
the preliminary injunction was not properly entered and is herebydissolved. To further support our decision to dissolve the
preliminary injunction, we choose to analyze whether Plaintiff is
likely to suffer irreparable loss if the injunction is dissolved.
V. Irreparable Loss
“A prohibitory preliminary injunction is granted only when
irreparable injury is real and immediate.”
Telephone Co. v.
Plastics, Inc., 287 N.C. 232, 235, 214 S.E.2d 49, 51 (1975). As
stated by the Court in
Board of Elders v. Jones, 273 N.C. 174, 159
S.E.2d 545 (1968):
The burden is upon the applicant for an
interlocutory injunction to prove a
probability of substantial injury to the
applicant from the continuance of the activity
of which it complains to the final
determination of the action. . . . An
injunction
pendente lite should not be granted
where there is a serious question as to the
right of the defendant to engage in the
activity and to forbid the defendant to do so,
pending the final determination of the matter,
would cause the defendant greater damage than
the plaintiff would sustain from the
continuance of the activity while the
litigation is pending
.
Id. at 182, 159 S.E.2d at 551-52. Further, “[a]n applicant for a
preliminary injunction must do more than merely allege that
irreparable injury will occur[;] [t]he applicant is required to set
forth with particularity facts supporting such statements so the
court can decide for itself if irreparable injury will occur.”
Telephone Co., 287 N.C. at 236, 214 S.E.2d at 52.
Plaintiff alleged that it would suffer irreparable injury from
the continuance of Defendants' solicitation “in that it will have
to defend multiple lawsuits instigated by the Defendant[s].” However, we conclude that the possibility that Plaintiff may have
to defend itself in a lawsuit, or multiple lawsuits, is not a
sufficiently substantial injury to support the preliminary
injunction. First, the mere fact that an individual or a
corporation may have to defend itself against a lawsuit that is
warranted under existing law and not brought for an improper
purpose does not rise to the level of an injury sufficient to
support the grant of a preliminary injunction. Second, the
provisions of N.C. R. Civ. P. 11 (“Rule 11") adequately protect
Plaintiff against the possibility that a large number of frivolous
lawsuits will be filed as a result of Kirkhart's solicitation.
Plaintiff is entitled to seek sanctions under Rule 11(a) if it
appears that suits have been filed against it which are not
warranted by existing law or a good faith extension of existing
law. N.C. R. Civ. P. 11(a)(1999). These sanctions, which include
reasonable expenses and attorney's fees, can be imposed not only on
the party filing the suit, but also against the party's attorney.
Id. Thus, we find that the provisions of Rule 11 are sufficient to
protect Plaintiff from the possibility that Kirkhart will assist
clients in filing frivolous lawsuits against Plaintiff. Finally,
a serious constitutional question exists as to whether Defendants
can be prohibited from engaging in the activity complained of by
Plaintiff. Having weighed the equities and the advantages and
disadvantages to the parties, we conclude that Plaintiff has failed
to show a reasonable probability of substantial injury if the
preliminary injunction does not stand.
VI. Conclusion
We conclude that Plaintiff has failed to show a reasonable
likelihood of success on the merits of its case, and has failed to
show a reasonable probability of substantial injury if the
injunction does not stand. Thus, we hold that it was error to
grant the preliminary injunction and it is hereby dissolved.
Having so concluded, we need not consider the First Amendment
arguments advanced by Defendants concerning the nature and scope of
the injunctive relief.
For the reasons stated, the orders of the trial court granting
the preliminary injunction are reversed and the case is remanded to
the Superior Court of Wake County for trial on its merits. We
reiterate that this Court's ruling dissolving the preliminary
injunction has no bearing on the rights of the parties when the
action is tried on its merits. Telephone Co., 287 N.C. at 237, 214
S.E.2d at 52; Board of Elders, 273 N.C. at 181, 159 S.E.2d at 551.
Reversed and remanded.
Judges GREENE and JOHN concur.
Footnote: 1