CORPENING INSURANCE CENTER, INC.,
Plaintiff,
v
.
LEILA R. HAAFF, f/k/a LEILA R. IMBRIANI,
Defendant.
Appeal by plaintiff from judgment entered 16 October 2001 by
Judge Melzer A. Morgan, Jr. in Guilford County Superior Court.
Heard in the Court of Appeals 12 September 2002.
Keziah, Gates & Samet, L.L.P., by Andrew S. Lasine, for
plaintiff-appellant.
Robert E. Sheahan & Associates, by Robert E. Sheahan, for
defendant-appellee.
HUDSON, Judge.
Plaintiff Corpening Insurance Center (Corpening) sued its
former employee Leila R. Haaff (Haaff) in June 2001. In its
complaint, Corpening alleged that Haaff had violated the duties of
loyalty and non-competition contained in the employment agreement
that Haaff had signed prior to beginning work. Corpening also
moved for a preliminary injunction, which the trial court denied.
Corpening then appealed. For the reasons set forth below, we
dismiss this appeal as moot.
Corpening, an insurance agency, hired Haaff in 1987 to work as
a producer (sales agent) and a customer service representative. In
this capacity, Haaff sold and serviced personal and commercial
insurance products, as well as group life and health insurance. She acted both to solicit new business on Corpening's behalf and to
service existing accounts.
As a condition of employment, Haaff signed an employment
contract, in which she agreed that she would not:
within the City of High Point and Archdale within 18 months
from the termination of employment, canvass or advertise for,
or otherwise assist anyone engaged in, nor herself engage
directly or indirectly in any line of business carried on or
contemplated at the time of the termination of her employment
by her Employer, nor furnish information directly or
indirectly to anyone engaged or interested in any such line of
business.
Haaff received $500 for signing the contract.
On April 19, 2001, Haaff voluntarily terminated her employment
with Corpening. The next day, she formed a corporation known as
Liberty Insurance Agency, Inc. (Liberty), located in Liberty,
North Carolina, which offered property, casualty, life, and health
coverage for individuals and groups. Haaff had contracted to buy
the assets of the Liberty agency from its previous owners in March
2001.
Before she terminated her employment with Corpening, Haaff
informed her clients there that she was leaving the company to open
her own agency. Haaff then solicited business from these existing
accounts and, in many cases, was able to secure agent of record
letters, designating her as the exclusive agent for the accounts to
the exclusion of Corpening. Some of these accounts were located in
High Point or Archdale.
Moreover, Haaff had an arrangement with Vickie Jones
(Jones), another former Corpening employer, whereby Jones workedfor Haaff part-time as a sales representative. Jones solicited
accounts in High Point, accounts that Haaff serviced during her
employment at Corpening, for the purpose of securing those
accounts.
Corpening filed suit on June 1, 2001, alleging that Haaff had
violated her contractual duties of loyalty and noncompetition.
Corpening also requested preliminary and permanent injunctions, an
accounting, and damages. Haaff answered Corpening's complaint and
filed five counterclaims, including a counterclaim for fraud.
Corpening moved to dismiss the fraud counterclaim for failure to
state a claim upon which relief could be granted. The superior
court granted that motion.
On August 20, 2001, Corpening filed its motion for a
preliminary injunction to enjoin Haaff from violating the terms of
the employment agreement. The court denied the motion. The court
found that the covenant not to compete was broader than necessary
to protect plaintiff's legitimate business interests.
Specifically, the agreement purports to prohibit defendant from
providing assistance to anyone engaged in any line of business
carried on by plaintiff or from assisting anyone engaged in any
line of insurance business contemplated by plaintiff at the time of
the termination of her employment rather than restricting defendant
from competing as an agent in the actual personal sale of insurance
products. The court also found objectionable the fact that the
covenant not to compete would prevent defendant from working as a
secretary, receptionist, adjuster, or custodian for or in aninsurance agency. In the court's view, because the overly broad
restrictions [were] not separable, plaintiff had failed to
demonstrate a reasonable likelihood of success at trial. Corpening
then appealed to this Court.
A preliminary injunction is interlocutory. Rug Doctor, L.P.
v. Prate, 143 N.C. App. 343, 345, 545 S.E.2d 766, 767 (2001). No
appeal lies from a trial court's denial of a preliminary injunction
unless the appellant would be deprived of a substantial right that
he would lose absent review prior to final determination. Id.; see
also N.C. Gen. Stat. § 7A-27(d)(1) (2001). However, [w]hen,
pending an appeal to this Court, a development occurs, by reason of
which the questions originally in controversy between the parties
are no longer at issue, the appeal will be dismissed for the reason
that this Court will not entertain or proceed with a cause merely
to determine abstract propositions of law or to determine which
party should rightly have won in the lower court. Benvenue
Parent-Teacher Ass'n v. Nash County Bd. of Educ., 275 N.C. 675,
679, 170 S.E.2d 473, 476 (1969). Accordingly, a plaintiff can
only seek to enforce [a] covenant for the period of time within
which the covenant proscribes. Rug Doctor, 143 N.C. App. at 345,
545 S.E.2d at 767.
In Rug Doctor, the plaintiff employer sued to enforce a
covenant not to compete, but the covenant expired while the case
was on appeal. 143 N.C. App. at 346, 545 S.E.2d at 768. This
Court declined to address the merits because the questions raised
. . . regarding injunctive relief have been rendered moot by thepassage of time. Id.; see also Herff Jones Co. v. Allegood, 35
N.C. App. 475, 479, 241 S.E.2d 700, 702 (1978) (same; because the
covenant not to compete expired while the case was on appeal,
questions relating to the propriety of the injunctive relief
granted below are not before us). Cf. Benvenue Parent-Teacher
Ass'n, 275 N.C at 680, 170 S.E.2d at 477 (where acts against which
plaintiffs had sought injunctive relief were discontinued, the
controversies which were the subject matter of this action have
ceased to exist and questions raised by the appeal are moot).
In A.E.P Industries, Inc. v. McClure, however, a divided
Supreme Court decided that the trial court had erred in denying the
plaintiff's request for injunctive relief even though the basis for
the request--also a covenant not to compete--had expired pending
appeal. 308 N.C. 393, 401, 302 S.E.2d 754, 759 (1983). A majority
of that Court noted that the appellate process is not the
procedural mechanism best suited for resolving the dispute and that
the parties would be better advised to seek a final determination
on the merits at the earliest possible time. Id. Nonetheless, the
Court went on to address the merits. Id. In the Court's view,
because this case presents an important question affecting the
respective rights of employers and employees who choose to execute
agreements involving covenants not to compete, we have determined
to address the issues. Id.
In this case, the covenant not to compete that Corpening is
seeking to enforce expired eighteen months after the termination of
employment. Haaff terminated her employment on April 19, 2001;therefore, the covenant was in effect only through October 19,
2002. That date has passed. Accordingly, we follow Benvenue
Parent-Teacher Ass'n, Rug Doctor, and Herff Jones and decline to
address the merits because questions raised by [Corpening] . . .
regarding injunctive relief have been rendered moot by the passage
of time. Rug Doctor, 143 N.C. App. at 346, 545 S.E.2d at 768. It
is not this Court's--or any court's--function to entertain or
proceed with a cause merely to determine abstract propositions of
law or to determine which party should rightly have won in the
lower court. Benvenue Parent-Teacher Ass'n, 275 N.C. at 679, 170
S.E.2d at 476.
For the reasons set forth above, this appeal is dismissed as
moot.
Dismissed.
Judges TIMMONS-GOODSON and CAMPBELL concur.
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