A decision without a published opinion is authority only in the case in which such decision is rendered and should not be cited in any other case in any court for any other purpose, nor should any court consider any such decision for any purpose except in
the case in which such decision is rendered. See Rule of Appellate Procedure 30 (e)(3).
NO. COA01-94
NORTH CAROLINA COURT OF APPEALS
Filed: 7 May 2002
DALE K. CLINE, CPA, PLLC,
Plaintiff-Appellant,
Cross-Appellee,
v
.
Catawba County
No. 00-CVS-2114
PEGGY R. DAHLE,
Defendant-Appellee,
Cross-Appellant.
Appeal by plaintiff and defendant from order entered 1
November 2000 by Judge Claude S. Sitton in Catawba County Superior
Court. Heard in the Court of Appeals 7 January 2002.
Tate, Young, Morphis, Bach & Taylor, LLP, by Thomas C. Morphis
and Valeree R. Adams for plaintiff appellant-appellee.
Sigmon, Clark, Mackie, Hutton, Hanvey & Ferrell, P.A., by
Warren A. Hutton, for defendant appellant-appellee.
McCULLOUGH, Judge.
Plaintiff Dale K. Cline, CPA, PLLC (Cline) and defendant Peggy
R. Dahle appeal from an order granting summary judgment in favor of
defendant on plaintiff's claims, granting summary judgment in favor
of plaintiff on defendant's counterclaims, and denying plaintiff's
motion for injunctive relief. The pertinent facts are as follows:
Plaintiff is a North Carolina professional limited liability
company with its principal place of business in Catawba County,
North Carolina. Cline provides certified public accounting
services to the general public. On 3 January 1983, plaintiff and defendant entered into an
employment agreement which contained a non-competition provision.
Over the next several years, the business entity headed by
plaintiff changed forms several times -- from proprietorship, to
partnership, to proprietorship, to professional limited liability
company. Despite these organizational changes, Ms. Dahle remained
continuously employed with the different entities from 1983 until
she was terminated on 5 April 2000. Ms. Dahle re-signed employment
agreements with plaintiff on 1 November 1993, 1 May 1995, and 1
August 1999; each employment agreement contained a non-competition
provision. The non-competition provision from the 1999 employment
agreement stated that:
The parties acknowledge the importance to
Employer of his clients and knowledge of his
clients' business obtained by doing work for
particular clients. To that end, Employee
agrees that for a period of two (2) years from
the date of leaving the employment of
Employer, and within a geographic radius of
fifty (50) miles of the Employer's office ...
the Employee will not directly or indirectly,
either as an Employee, Officer, Director,
Agent, Stockholder, Partner, Self-employed
Individual, Contractor, Consultant, or
otherwise accept any accounting work for any
clients of Employer which were clients of
Employer during any time Employee worked for
Employer up to the time of termination of this
Agreement.
The parties acknowledge that in the event
of a breach of this covenant not to compete,
and even though injunctive relief may be had
by Employer, that in the event a client is
lost due to Employee's breach of this article,
that a valuable loss will have been sustained
by Employer and that the true value of said
loss would be difficult to ascertain by a
court or a jury. To that end, the partiesagree that in the event Employee breaches this
covenant and Employer loses a client, then and
in that event Employee shall pay to Employer
the greater of Thirty-seven Percent (37%) of
the fees paid by the client to the Employer
over the most recent thirty-six (36) month
period prior to the Employee's termination of
employment with the Employer or One Hundred
Percent (100%) of the fees billed to the
client by the Employer in the most recent
twelve (12) month period prior [to] the
Employee's termination of employment with the
Employer. The parties agree that said sum is
not a penalty but a good faith effort of the
parties to agree in advance on the value of
Employer's damage claim against Employee in
the event of breach of this contract. Said
sum if not voluntarily paid by Employee to
Employer, shall be reduced to a judgment
against Employee. The parties agree and
acknowledge that the existence of damages
shall not effect [sic] Employer's right to
obtain an injunction to restrain and enjoin
Employee from violating the provisions of this
Agreement.
The 1999 employment agreement and its non-competition
provision remained in effect until 5 April 2000, when Ms. Dahle's
employment with plaintiff was terminated without notice. After she
was fired, plaintiff learned that Ms. Dahle was actively soliciting
and performing accounting services for plaintiff's clients,
allegedly in violation of the non-competition provision. Plaintiff
also learned that Ms. Dahle used business cards indicating that her
office was located in Lake Lure, North Carolina, over 50 miles from
plaintiff's place of business (and therefore not in violation of
the non-competition provision.) However, Ms. Dahle listed a
Hickory, North Carolina, facsimile number on her business cards
and admitted that she performed services at her clients' places ofbusiness, some of which were located within 50 miles of plaintiff's
place of business.
On 16 June 2000, plaintiff, through his attorney, sent Ms.
Dahle a letter demanding that she stop violating the non-
competition provision and pay him a portion of the fees she
collected from his clients. Ms. Dahle did not respond. Thereafter,
on 7 July 2000, plaintiff filed a complaint which alleged breach of
contract, breach of the Trade Secrets Protection Act, and Unfair
and Deceptive Trade Practices (UDTP). Plaintiff also sought a
temporary restraining order (TRO) and a preliminary injunction. On
15 September 2000, Ms. Dahle filed her answer, motions, and
counterclaims alleging breach of contract, intentional infliction
of emotional distress, bad faith termination, and wrongful
discharge; she also sought punitive damages. Defendant amended her
answer on 19 September 2000. On 19 October 2000, plaintiff filed
a reply to Ms. Dahle's counterclaim and filed motions to dismiss
based upon N.C. Gen. Stat. § 1A-1, Rule 12(b)(6) (1999) and the
statute of limitations. On 6 October 2000, plaintiff filed a
motion for summary judgment.
A hearing on plaintiff's summary judgment motion took place
during the 23 October 2000 Civil Session of Catawba County Superior
Court. On 1 November 2000, the trial court entered an order
granting summary judgment in favor of plaintiff as to defendant's
counterclaims, denying plaintiff's motion for preliminary and
permanent injunctions, and granting summary judgment in favor of
defendant as to plaintiff's remaining claims and motion forinjunctive relief. Both parties appealed.
On appeal, plaintiff argues the trial court erred by (I)
including the unsigned affidavit of defendant in the record on
appeal; (II) granting summary judgment in favor of defendant with
respect to the employment agreement; (III) granting summary
judgment in favor of defendant with respect to plaintiff's unfair
and deceptive trade practices claim; (IV) granting summary judgment
in favor of defendant with respect to plaintiff's claim that
defendant violated the North Carolina Trade Secrets Act; and (V)
denying plaintiff's motion for a TRO and a preliminary injunction.
On appeal, defendant argues the trial court erred by (I)
dismissing her counterclaims on the basis that there was no genuine
issue of material fact with respect thereto. After careful
consideration of all the arguments presented by the parties, we
affirm the actions of the trial court in all respects.
We first note that this appeal arises from summary judgment.
On appeal, the standard of review from the trial court's grant or
denial of summary judgment is as follows:
This Court's standard of review on appeal
from summary judgment requires a two-step
analysis. Summary judgment is appropriate if
(1) the pleadings, depositions, answers to
interrogatories, and admissions on file,
together with the affidavits, show that there
is no genuine issue as to any material fact;
and (2) the moving party is entitled to
judgment as a matter of law. N.C.R. Civ. P.
56(c) (1999). Once the movant makes the
required showing, the burden shifts to the
non-moving party to produce a forecast of
evidence demonstrating specific facts, as
opposed to allegations, establishing at least
a prima facie case at trial.
Stephenson v. Warren, 136 N.C. App. 768, 771-72, 525 S.E.2d 809,
811-12, disc. review denied, 351 N.C. 646, 543 S.E.2d 883 (2000).
We further note that denial of a preliminary injunction is
also before us on this appeal. On appeal from the trial court's
grant or denial 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 v. McClure, 308 N.C.
393, 402, 302 S.E.2d 754, 760 (1983). See also NovaCare Orthotics
& Prosthetics E., Inc. v. Speelman, 137 N.C. App. 471, 475, 528
S.E.2d 918, 920-21 (2000). With these principles in mind, we turn
to the arguments presented by the parties.
I. Plaintiff Cline's Appeal
(a) The Unsigned Affidavit
By his first assignment of error, plaintiff argues the trial
court erred by including defendant's unsigned affidavit as part of
the final record on appeal. We disagree.
Plaintiff objected to the inclusion of Ms. Dahle's unsigned
affidavit in the record on appeal because he believed it was
nothing more than an unsigned, unsealed, unauthenticated letter,
which does not fit the definition of an "affidavit" and is,
therefore, inadmissible. See Ogburn v. Sterchi Brothers Stores,
Inc., 218 N.C. 507, 11 S.E.2d 460 (1940) (defining an affidavit as
'[a] written or printed declaration or statement of facts, made
voluntarily, and confirmed by the oath or affirmation of the party
making it, taken before an officer having authority to administer
such oath.') Id. at 508, 11 S.E.2d at 461 (citation omitted). On12 January 2001, the trial court entered an order settling the
record on appeal. The order stated that [t]he Record on Appeal
shall also include the Affidavit of Peggy Dahle .... An unexecuted
copy of [Dahle's affidavit] shall be transmitted to the Court of
Appeals as if in fact it were a signed Affidavit due to the fact
that the original executed Affidavit was filed but through
inadvertence or mistake is not now contained within the Court file
and cannot be located[.]
To properly preserve his argument, plaintiff had to appeal the
trial court's order settling the record on appeal. See Penland v.
Harris, 135 N.C. App. 359, 363, 520 S.E.2d 105, 108 (1999). Since
plaintiff did not proceed with such an appeal, he has waived this
assignment of error, and it is therefore overruled.
(b) The Employment Agreement
By his second assignment of error, plaintiff argues the trial
court erred in granting summary judgment in favor of defendant with
respect to the Employment Agreement. We disagree.
In North Carolina, non-competition provisions between
employers and employees are valid and enforceable if they are (1)
in writing; (2) made part of a contract of employment; (3) based on
valuable consideration; (4) reasonable both as to time and
territory; and (5) not against public policy. United
Laboratories, Inc. v. Kuykendall, 322 N.C. 643, 649-50, 370 S.E.2d
375, 380 (1988). The reasonableness of a non-compete agreement is
a matter of law for the court to decide. Farr Assocs. v. Baskin,
138 N.C. App. 276, 279, 530 S.E.2d 878, 881 (2000). It is undisputed that the non-competition provision was in
writing and was part of the employment contract. However, Ms.
Dahle contends the Employment Agreement was not supported by valid
consideration because the changes in her employment were
implemented before she signed the renewal contract in August 1999.
If an employment agreement is entered into after the employment
relationship has begun, new and different consideration -- beyond
mere continuation of employment -- must be present for the
agreement to be enforceable. Machinery Co. v. Milholen, 27 N.C.
App. 678, 686-87, 220 S.E.2d 190, 196 (1975). Furthermore,
[w]here a contract's validity is
challenged on the basis of a failure of
consideration, the contract may stand or fall
depending on whether the parties actually
bargained for an exchange of promises or
performances. A court will intrude into a
private matter and enforce such a transaction
precisely because our law deems it important
to protect expectations arising from the
bargaining process.
Thus, a consideration analysis focuses on
the dynamic of the parties' transaction.
Where it is claimed that a contract exists
between A and B, the question is whether A's
promise induced B to make a counter-promise or
to begin performance of some act or to forbear
from taking some action. The flip side to
this question is whether A was induced to make
his promise in exchange for B's promise or
performance. Without this reciprocity of
inducements -- characterized as a bargained-
for exchange -- no consideration exists to
support the contract.
J. Hutson and S. Miskimon, North Carolina Contract Law § 3-6
(2001).
Here, the purported new consideration described in theEmployment Agreement was "the mutual covenants and promises of the
parties plus the employment by Employer of Employee which
constitutes a substantial and material change of circumstances in
employment compared with that of the prior employment relationship
of the parties." In actuality, Ms. Dahle changed from a full-time
employee to a part-time employee, her hours were reduced, she went
from salaried pay to hourly wages, and she was no longer required
to train other staff. However, the only changes beneficial to Ms.
Dahle were implemented before the new employment contract was
signed on 1 August 1999; thus, there was no bargained-for exchange.
Because of the lack of consideration (a bargained-for
exchange), the non-competition provision was unenforceable as a
matter of law. See Chemical Realty Corp. v. Home Fed'l Savings &
Loan, 84 N.C. App. 27, 30, 351 S.E.2d 786, 788 (1987) (stating that
consideration must be present for a contract to be enforceable).
Therefore, the trial court correctly granted summary judgment in
favor of Ms. Dahle on this point. Finally, because the non-
competition provision fails for lack of consideration, we need not
examine whether it was reasonable as to time and territory, nor
whether it was against public policy. Plaintiff's second
assignment of error is overruled.
(c) Unfair and Deceptive Trade Practices (UDTP)
By his third assignment of error, plaintiff contends the trial
court erred in finding there was no genuine issue of material fact
regarding unfair and deceptive trade practices. Plaintiff urges
this Court to examine Ms. Dahle's behavior and conclude itqualified as unfair and deceptive trade practices. Specifically,
plaintiff argues Ms. Dahle's listing of her place of business as
Lake Lure, her use of a Hickory fax number, and her conduct of
business within 50 miles of plaintiff's place of business were
misleading and amounted to unfair and deceptive trade practices.
Despite plaintiff's characterization of Ms. Dahle's actions in
this manner, we do not believe that plaintiff has shown as a matter
of law that Ms. Dahle was engaged in unfair and deceptive trade
practices. See Furr v. Fonville Morisey Realty, Inc., 130 N.C.
App. 541, 551, 503 S.E.2d 401, 408 (1998). Ms. Dahle asserts her
right to compete with plaintiff and argues that none of her actions
fall under the definition of unfair and deceptive trade practices,
as defined by N.C. Gen. Stat. § 75-1 (1999). As we have already
determined that the non-competition provision was unenforceable, it
follows that plaintiff cannot rely upon the non-competition
provision as the basis for finding a violation of N.C. Gen. Stat.
§ 75-1.1 (1999). Plaintiff's third assignment of error is
therefore overruled.
(d) Trade Secrets
By his fourth assignment of error, plaintiff argues the trial
court erred in finding there was no genuine issue of material fact
concerning trade secrets. Specifically, plaintiff maintains the
client list was a trade secret. We do not agree.
A trade secret is business or technical information that
[d]erives independent actual or potential commercial value from
not being generally known or readily ascertainable throughindependent development ... [and] [i]s the subject of efforts that
are reasonable under the circumstances to maintain its secrecy.
N.C. Gen. Stat. § 66-152(3)(a)-(b) (1999). N.C. Gen. Stat. § 66-
152(1) states that acquisition, disclosure, or use of a trade
secret of another without express or implied authority or
consent[] is misappropriation. Confidential customer lists and
pricing information have been found to constitute trade secrets.
Drouillard v. Keister Williams Newspaper Services, 108 N.C. App.
169, 173, 423 S.E.2d 324, 327 (1992). Injunctions have been
approved when such items are improperly used. Id. at 174, 423
S.E.2d at 327.
Proper factors to consider when determining whether an item is
a trade secret are:
(1) the extent to which information is known
outside the business;
(2) the extent to which it is known to
employees and others involved in the
business;
(3) the extent of measures taken to guard
secrecy of the information;
(4) the value of information to business and
its competitors;
(5) the amount of effort or money expended in
developing the information; and
(6) the ease or difficulty with which the
information could properly be acquired or
duplicated by others.
State ex rel. Utilities Comm'n v. MCI, 132 N.C. App. 625, 634, 514
S.E.2d 276, 282 (1999). Here, the record and the depositions of
the parties indicate that the client list was distributedthroughout the office with no instructions regarding its secrecy,
propriety, or dissemination. As plaintiff presented no evidence to
the contrary, we conclude the trial court properly granted summary
judgment in favor of defendant on this point. Plaintiff's fourth
assignment of error is overruled.
(e) Injunctive Relief
By his fifth assignment of error, plaintiff asserts the trial
court erred in denying him injunctive relief. The employment
agreement provided that injunctive relief was proper if breach
occurred. In a non-competition provision, 'breach is the
controlling factor and injunctive relief follows almost as a matter
of course; damage from the breach is presumed to be irreparable and
the remedy at law is considered inadequate.' A.E.P. Industries,
308 N.C. at 406, 302 S.E.2d at 762 (quoting 43A C.J.S. Injunctions
§ 95). However, a preliminary injunction should not issue unless
the plaintiff has shown that adequate relief is not possible and
plaintiff is likely to succeed on the merits of the case. Pruitt
v. Williams, 288 N.C. 368, 372, 218 S.E.2d 348, 351 (1975). As
plaintiff had no reasonable expectation of success, denial of
injunctive relief was appropriate. Moreover, a non-competition
provision must be reasonable and valid before the trial court
should enter a preliminary injunction. In every case where the
covenant not to compete is found to be reasonable and valid ... the
plaintiff is entitled to a remedy; either the agreement must be
enforced or the court must find that plaintiff has an adequate
remedy at law for money damages. A.E.P. Industries, 308 N.C. at404, 302 S.E.2d at 761. As we have already concluded that the non-
competition provision is unenforceable, it follows that plaintiff
was unable to show that he is entitled to injunctive relief. His
final assignment of error is therefore overruled.
II. Defendant Dahle's Appeal
(a) Defendant's Counterclaims
Defendant asserted claims for breach of contract, intentional
infliction of emotional distress, bad faith termination, wrongful
discharge, and punitive damages. On appeal, she contends plaintiff
failed to offer evidence to defeat her claims. After careful
examination of the record and the arguments of the parties, we
affirm the trial court's grant of summary judgment in favor of
plaintiff.
Our state has adopted the Equal Employment Practices Act
(NCEEPA), N.C. Gen. Stat. §§ 143-422.1 to -422.3 (1999). The
NCEEPA states:
It is the public policy of this State to
protect and safeguard the right and
opportunity of all persons to seek, obtain,
and hold employment without discrimination or
abridgement on account of race, religion,
color, national origin, age, sex or handicap
by employers which regularly employ 15 or more
employees.
N.C. Gen. Stat. § 143-422.2. Though this statute exists, our
courts have never found that violation of the NCEEPA creates a
private right of action.
Mullis v. Mechanics and Farmers Bank, 994
F.Supp. 680, 687 (M.D.N.C. 1997). Therefore, in order to preserve
a cause of action for wrongful discharge, plaintiff had to file acomplaint with the EEOC within 180 days from the date of the
alleged violations by the employer.
See Morse v. The Daily Press,
Inc., 826 F.2d 1351 (4th Cir. 1987).
In the present case, Ms. Dahle was fired from her job on 5
April 2000. She therefore had until 6 October 2000 to file a
complaint with the EEOC. Because Ms. Dahle failed to file such a
complaint, her EEOC-based claim fails.
Ms. Dahle's claims for breach of contract, bad faith
termination, and wrongful discharge also fail because she was an
employee-at-will, and plaintiff was therefore entitled to discharge
her with or without cause at any time, provided the discharge was
not expressly prohibited by statute.
See Hogan v. Forsyth Country
Club Co., 79 N.C. App. 483, 497, 340 S.E.2d 116, 125 (1986).
Ms. Dahle's claim for intentional infliction of emotional
distress likewise fails because Ms. Dahle was unable to prove the
essential elements of her claim -- namely, extreme and outrageous
conduct which was intended to cause, and did cause, severe
emotional distress.
See Hogan, 79 N.C. App. at 487-88, 340 S.E.2d
at 119; and
Watson v. Dixon, 130 N.C. App. 47, 502 S.E.2d 15 (1998)
(explaining that claims for intentional infliction of emotional
distress exist when an individual's conduct exceeds all bounds
tolerated by society, and the conduct caused mental distress of a
very serious kind).
Thus, we conclude that the trial court correctly granted
summary judgment in favor of defendant on plaintiff's claims,
correctly granted summary judgment in favor of plaintiff ondefendant's counterclaims, and properly denied plaintiff's motion
for injunctive relief. Having found for Ms. Dahle on the merits of
Cline's non-competition claim, we further uphold the trial court's
denial of Cline's motion for preliminary injunction.
See Farr, 138
N.C. App. 276, 530 S.E.2d 878.
Affirmed.
Chief Judge EAGLES and Judge CAMPBELL concur.
Report per Rule 30(e).
*** Converted from WordPerfect ***