1. Wrongful Interference_tortious interference with contract_justification for bid
Summary judgment was properly granted for defendant Brickman on a claim for tortious
interference with plaintiff's contract to provide landscaping services for defendant Glaxo.
Brickman's bid for the contract was a legitimate business interest and indicates a non-malicious
motive for its “interference” with plaintiff's contract. Plaintiff did not present evidence that
Brickman acted without justification.
2. Wrongful Interference_tortious interference with contract_employee responsible for
bid process_non-malicious explanation
Summary judgment was properly granted for defendant Mueller on a claim for tortious
interference with plaintiff's contract to provide landscaping services to defendant Glaxo where
Mueller was the Glaxo employee responsible for providing landscaping services who opened
plaintiff's contract for bids, ultimately awarding the new contract to defendant Brickman.
Plaintiff's bid for the new contract was nearly $1 million higher than Brickman's, which
provided a legitimate, non-malicious business explanation for Mueller's actions.
3. Trade Secrets_contract bid_disclosure authorized in process
Summary judgment was appropriate on a trade secrets claim where plaintiff contended
that defendant Mueller had revealed confidential information from a contract bid, but, as a part of
the bidding process, plaintiff signed a letter that allowed Glaxo (Mueller's employer) to use and
disclose bid information at its discretion.
4. Fraud_reasonable reliance--sharing contract bid information
Summary judgment was properly granted for defendants on a fraud claim arising from the
sharing of bid information with a competitor. There were provisions in the bid information
sufficient to put plaintiff on notice that submitting a bid was tantamount to surrendering control
of that information. Any contrary assumption by plaintiff was not reasonable reliance.
5. Costs_attorney fees_action not brought in bad faith
There was no abuse of discretion in a trial court finding that an action arising from a
contract bidding process was not brought in bad faith, lacking in justiciable issues of fact or law,
or frivolous or malicious, and an order denying defendant attorney fees was affirmed.
Wallace W. Bradsher, Jr., for plaintiff-appellant-cross-
appellee.
Womble Carlyle Sandridge & Rice, P.L.L.C., by Pressly M.
Millen, for defendant-appellee-cross-appellants.
EAGLES, Chief Judge.
Plaintiff Area Landscaping, L.L.C. (“Area”) appeals from an
order granting summary judgment in favor of defendants Glaxo-
Wellcome, Inc. (“Glaxo”), The Brickman Group, Ltd. (“Brickman”),
and Michael Mueller. Area argues that the trial court erred in
granting defendants' motion for summary judgment because several
genuine issues of material fact exist. Defendants cross-appeal
from an order denying sanctions against plaintiff. Defendants
argue that the trial court should have sanctioned plaintiff with
payment of full trial costs and payment of defendants' attorney
fees. After careful review of the record and briefs, we disagree
and affirm both orders.
In July 1997, Area entered into a contract with Glaxo which
bound Area to provide landscaping services for Glaxo over a five-
year term until July 2002. Glaxo was Area's only customer from
1991 to 1999. In the summer of 1996, an angry confrontation about
Area's services occurred between Michael Mueller, a Glaxo employee,
and Barney Pittman, one of Area's co-owners. Area contends that
Mueller in response opened the bidding process on the landscaping
contract before Area's contract expired. On 5 October 1999, Glaxo
notified Area that the landscaping contract would be put up forbid. The 1997 contract between Area and Glaxo contained a clause
that allowed Glaxo to terminate the agreement for any reason, as
long as Area was given thirty days' notice. However, Area alleges
that the bidding process would not have been initiated in 1999 but
for Mueller's animosity following his argument with Barney Pittman.
Area contends that Mueller gave Brickman, a competitor,
confidential information that belonged to Area. This “inside
information” allowed Brickman to underbid Area and be awarded the
new contract. Area's complaint alleges that Mueller and
representatives from Brickman discussed Area's irrigation methods
and the various components of Area's contract bid.
Brickman offered to provide landscaping services for Glaxo for
$699,456 in 2000. Brickman's price estimate increased to $720,432
for 2002. Area offered landscaping services for a price of
$1,648,839 each year, with an additional charge for irrigation.
Glaxo awarded the contract to Brickman. On 14 December 1999, Glaxo
representative Darren Dasburg wrote to Area, informing Area that
the new contract had been awarded to Brickman and that Area's
contract would be cancelled on 31 January 2000.
Area sued defendants Glaxo, Mueller and Brickman for tortious
interference with contract, fraud, unfair and deceptive trade
practices and violations of the North Carolina Trade Secrets
Protection Act. Defendant Glaxo asserted several counterclaims
against Area regarding the performance of the landscaping contract.
The trial court granted defendants' motion for summary judgment.
Defendants voluntarily dismissed their counterclaims and filed a
motion requesting payment of costs and defendants' attorney fees.The trial court allowed the motion for costs, ordering plaintiff to
pay $3,506 out of a requested $4,323 in costs. However, the trial
court denied defendants' motion for attorney fees. Area appeals
from the order granting summary judgment. Defendants cross-appeal
from the order denying attorney fees.
[1] On appeal, Area argues that the trial court erred in
granting summary judgment in favor of defendants because there are
several genuine issues of material fact. We disagree and affirm.
The trial court granted defendants' motion for summary
judgment on plaintiff's tortious interference with contract claim.
Summary judgment is only appropriate if there are no genuine issues
of material fact and any party is entitled to judgment as a matter
of law. See G.S. § 1A-1, Rule 56 (2001). An issue of fact is
material if it would constitute any element of a claim or defense.
See Surrette v. Duke Power Co., 78 N.C. App. 647, 650, 338 S.E.2d
129, 131 (1986)(quoting City of Thomasville v. Lease-Afex, Inc.,
300 N.C. 651, 654, 268 S.E.2d 190, 193 (1980)).
Here, Area alleges that defendants Mueller and Brickman
tortiously interfered with its contractual relationship with Glaxo.
A cause of action for tortious interference with contract requires
proof of the following elements:
(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.
Beck v. City of Durham, 154 N.C. App. 221, 232, 573 S.E.2d 183, 191
(2002) (quoting United Laboratories, Inc. v. Kuykendall, 322 N.C.
643, 661, 370 S.E.2d 375, 387 (1988)). In order to demonstrate
the element of acting without justification, the action must
indicate “no motive for interference other than malice.” Filmar
Racing, Inc. v. Stewart, 141 N.C. App. 668, 674, 541 S.E.2d 733,
738 (2001). A defendant may encourage the termination of a
contract “if he does so for a reason reasonably related to a
legitimate business interest.” Robinson, Bradshaw & Hinson v.
Smith, 129 N.C. App. 305, 318, 498 S.E.2d 841, 850 (quoting
Fitzgerald v. Wolf, 40 N.C. App. 197, 200, 252 S.E.2d 523, 524
(1979)), disc. rev. denied, 348 N.C. 695, 511 S.E.2d 649 (1998).
Area alleged that defendant Brickman, a rival landscaping business,
tortiously interfered with its contract with Glaxo. However, Area
failed to present evidence that Brickman acted without
justification. Its bid for the landscaping contract was a
legitimate business interest and indicates a non-malicious motive
for their “interference” with Area's contract. The motion for
summary judgment was appropriately granted for defendant Brickman.
[2] Area's complaint also alleged that defendant Mueller
interfered with the Glaxo contract. Mueller was an employee of
Glaxo whose job duties included the supervision of various
contractors that provided services on Glaxo's campuses,
specifically including landscaping. In naming an involved, “non-
outsider” as a defendant in its interference with contract claim,
Area's complaint is unusual. However, despite defendants'
arguments to the contrary, the naming of a non-outsider defendantis not a bar to recovery. As this Court explained in a tortious
interference with contract case regarding an employment contract:
“It is true that so-called 'non-outsiders' often enjoy qualified
immunity from liability for inducing their corporation or other
entity to breach its contract . . . .” Lenzer v. Flaherty, 106
N.C. App. 496, 513, 418 S.E.2d 276, 286 (citing Smith v. Ford Motor
Co., 289 N.C. 71, 221 S.E.2d 282 (1976)), disc. rev. denied, 332
N.C. 345, 421 S.E.2d 348 (1992). However, the qualified immunity
is lost if the non-outsider acts with a wrongful purpose. See
Lenzer, 106 N.C. App. at 513, 418 S.E.2d at 286. Thus, the insider
employee Mueller would not be immune from plaintiff's allegation of
tortious interference with contract if he pursued the termination
of Glaxo's contract without justification and with malice. Here,
Area has failed to show that Mueller acted without justification.
The undisputed evidence indicated that Area's unsuccessful bid for
the contract was nearly $1 million higher than the contract price
quoted by Brickman. The substantially less expensive price
certainly provided a legitimate, non-malicious business explanation
for Mueller's actions. Therefore, plaintiff's complaint and
forecast of evidence was not sufficient to allege tortious
interference with contract against defendant Mueller. Summary
judgment as to this claim was appropriately granted.
[3] Area also alleges that defendant Mueller did not manage
the contract bidding process fairly. Specifically, Area contends
that Mueller revealed to Brickman confidential information from
Area's bid regarding irrigation costs that allowed Brickman to
present a lower bid. These allegations give rise to three causesof action by Area: (1) a claim under G.S. § 66-152 et seq., the
Trade Secrets Protection Act; (2) a claim under G.S. § 75-1.1 for
unfair or deceptive trade practices; and (3) a claim for fraud.
The same event, the alleged disclosure of Area's bid information,
forms the basis for all three claims. Area claims that the
information in its bid was sealed. Area states that it did not
intend for third party competitors to have access to its pricing
information when it submitted a bid for the Glaxo contract.
The owner of a trade secret may pursue a civil action if that
secret is misappropriated. G.S. § 66-153 (2001). “Trade secret”
is defined in G.S. § 66-152(3) as follows:
“Trade secret” means business or technical
information, including but not limited to a
formula, pattern, program, device, compilation
of information, method, technique, or process
that:
a. Derives independent actual or potential
commercial value from not being known or
readily ascertainable through independent
development or reverse engineering by
persons who can obtain economic value
from its disclosure or use; and
b. Is the subject of efforts that are
reasonable under the circumstances to
maintain its secrecy.
G.S. § 66-152(3)(2001). “Misappropriation” is defined as the use
of another's trade secret “without express or implied authority or
consent . . . .” G.S. § 66-152(1)(2001). Information regarding
customer lists, pricing formulas and bidding formulas can qualify
as a trade secret under G.S. § 66-152(3). See Byrd's Lawn &
Landscaping, Inc. v. Smith, 142 N.C. App. 371, 542 S.E.2d 689
(2001); Novacare Orthotics & Prosthetics E., Inc., 137 N.C. App.
471, 528 S.E.2d 918 (2000). To determine what information shouldbe treated as a trade secret, a court should consider the following
factors:
(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)(quoting Wilmington Star News v. New Hanover
Regional Medical Center, 125 N.C. App. 174, 180-81, 480 S.E.2d 53,
56 (1997)). In order to survive a motion for summary judgment,
Area must allege facts that would allow a reasonable finder of
fact to conclude that the information in the bid was not “generally
known or readily ascertainable” and that Area has made reasonable
efforts to maintain the information's secrecy. Bank Travel Bank v.
McCoy, 802 F. Supp. 1358, 1360 (E.D.N.C. 1992), aff'd sub nom.,
Amariglio-Dunn v. McCoy, 4 F.3d 984 (4th Cir. 1993)(unpublished).
Here, Area did not act reasonably to maintain the secrecy of
its bid information. Pamela Pittman, on behalf of Area, signed a
document entitled “Proposal Letter” as part of the bidding process
for the landscaping contract. That proposal letter contained the
following clause: By submitting this proposal, Bidder [Area]
agrees that all information received by Glaxo
Wellcome from Bidder, as a result of this
Request for Proposal and subsequent thereto,
shall become the property of Glaxo Wellcome,
to be used and disclosed at its sole
discretion without further obligation to
Bidder, copyright or other restrictive legend
notwithstanding.
Area contends that this clause did not give Glaxo the right to
share information with a third party. Also Area argues that it
understood that the information within the bid would be
confidential. However, the disclaimer in the proposal letter
contained no such reservations. The disclaimer allowed Glaxo to
use and disclose bid information “at its sole discretion.” By
signing this letter and submitting information according to these
specifications, Area did not take actions to protect the bid
information. Therefore, the information did not qualify as a trade
secret as defined in G.S. § 66-152(3). Also, assuming arguendo
that Mueller gave Brickman the information, he did not
misappropriate it according to G.S. § 66-152(1) because Area gave
Glaxo express consent to use the information “at its sole
discretion.” Summary judgment on the trade secrets claim was
appropriate because there were no genuine issues of material fact
and defendants were entitled to judgment as a matter of law.
[4] Area also alleged that defendants' misuse of its trade
secret was an unfair or deceptive trade practice according to G.S.
§ 75-1.1. Since the trial court properly granted summary judgment
as to the trade secret claim, this claim must also fail.
Similarly, Area's cause of action for fraud was vulnerable to
summary judgment. An allegation of fraud must contain thefollowing elements: “(1) false representation or concealment of a
material fact, (2) reasonably calculated to deceive, (3) made with
the intent to deceive, (4) which does in fact deceive, (5)
resulting in damage to the injured party.” State Properties, LLC
v. Ray, 155 N.C. App. 65, 72, 574 S.E.2d 180, 186 (2002)(quoting
Helms v. Holland, 124 N.C. App. 629, 634, 478 S.E.2d 513, 516
(1996)), disc. rev. denied, 356 N.C. 694, 577 S.E.2d 889 (2003).
“[R]eliance on alleged false representations must be reasonable.”
State Properties, 155 N.C. App. at 72, 574 S.E.2d at 186 (citing
Johnson v. Owens, 263 N.C. 754, 140 S.E.2d 311 (1965)). Here, Area
alleges that defendants Glaxo and Mueller falsely represented that
the information in its bid package would be kept confidential.
Area's argument relies upon the written instructions Glaxo sent to
Area and all potential bidders along with the proposal letter in
the “Request for Proposal” or RFP. These instructions included a
section entitled “Confidentiality” as follows:
This RFP, and all information contained
herein, is confidential. No information
concerning this RFP or the work required shall
be released to third parties, except
prospective subcontractors or consultants as
required for the preparation of the proposal,
without the prior written consent of Glaxo
Wellcome. All proposals submitted in response
to this RFP are the property of Glaxo Wellcome
without further obligation to Bidder.
(Emphasis added). The confidentiality provision cited above
indicates clearly that the bid information is the property of Glaxo
that can be divulged only with Glaxo's permission. This provision,
which Area cites as a indication that Glaxo would keep the
information in the bid confidential does not conflict with the
express written agreement in the proposal letter granting Glaxopermission to use Area's bid information “at its sole discretion.”
Both of these provisions were sufficient to put Area on notice that
submitting its pricing information to Glaxo was tantamount to
surrendering control over the use of that information. Any
assumption by Area that its information would not be controlled or
used by Glaxo in its sole discretion conflicted with the explicit
terms of the proposal letter and Request for Proposal. This
assumption did not constitute reasonable reliance that would
support a cause of action based upon fraud. Summary judgment for
defendants was appropriate on this claim.
[5] On cross-appeal, defendants argue that the trial court
should have granted defendants' motion for attorney fees.
Defendants' motion for attorney fees was supported by four separate
arguments: (1) that attorney fees were appropriate according to
G.S. § 66-154(d) because plaintiff Area's claim for
misappropriation of trade secrets was made in bad faith; (2) that
attorney fees were permitted according to G.S. § 6-21.5 because
Area did not present a justiciable claim; (3) that attorney fees
were appropriate under G.S. § 1D-45 because Area filed a frivolous
and malicious claim for punitive damages; and (4) that attorney
fees should have been awarded according to G.S. § 75-16.1 because
Area's unfair and deceptive trade practice claim was frivolous and
malicious.
Defendants argue that the lack of evidence in support of
Area's claims indicates that Area knowingly prosecuted a specious
claim. According to defendants' argument, this claim was frivolous
and malicious, produced by bad faith, and was not justiciable. However, the trial court explicitly found that “Plaintiff's action
was not brought in bad faith, lacking in justiciable issues of fact
or law, or frivolous or malicious.” Defendants argue that this
finding was an abuse of the trial court's discretion, but do not
offer any persuasive reason why the trial court should have made a
contrary decision. The decision to award or deny the award of
attorney fees will not be disturbed on appeal unless the trial
court has abused its discretion. Defendants failed to show abuse
of discretion. Accordingly, defendants' assignments of error in
the cross-appeal are overruled.
For the reasons stated, we affirm the trial court's order
granting defendants' motion for summary judgment and the order
denying the payment of defendants' attorney fees.
Affirmed.
Judges TYSON and STEELMAN concur.
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