An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Proced ure.

NO. COA03-898


Filed: 18 May 2004

JAMES W. WEBB, JR., d/b/a

v .                         Haywood County
                            No. 97 CVD 097
ROGER D. KNIGHT, Individually
and WAYNE HAWKINS, Individually

    Appeal by plaintiff from orders entered 3 September 1998 and 13 December 2002 by Judge Stephen J. Bryant in Haywood County District Court. Heard in the Court of Appeals 19 April 2004.

    Patrick U. Smathers, for plaintiff-appellant.

    Brown, Ward & Haynes, P.A., by Frank G. Queen, for defendant- appellee Knight.

    MARTIN, Chief Judge.

    Plaintiff James W. Webb, Jr. filed his complaint in this action on 24 January 1997 seeking compensatory damages as well as temporary and permanent injunctive relief upon allegations that defendants had breached provisions of their employment agreements with plaintiff. The trial court issued a temporary restraining order on 24 January 1997 prohibiting defendants from preparing tax returns for plaintiff's former customers. Defendants filed answers denying the material allegations of the complaint. On 14 March1997, the trial court entered a consent order providing, inter alia, “[d]efendants are prohibited and restrained from preparing or filing any income tax return for any customer of plaintiff . . . whose business defendants have directly solicited.” Neither the record nor the order itself reflects the duration of the order's effectiveness.
    The matter came on for trial before the court sitting without a jury on 2 July 1998. Briefly summarized, plaintiff's evidence tended to show that he owns an H & R Block franchise located in Waynesville, North Carolina, and has operated a tax return preparation and bookkeeping business for 17 approximately years. Defendants Roger D. Knight and Wayne Hawkins worked as employees of that business during the 1996 “tax season”, which lasts from January until April of each calendar year. Both defendants had worked for plaintiff during at least five previous tax seasons, and each had been required to sign a “Tax Return Preparer's Employment Agreement” (Agreement) each calendar year before beginning their employment. The 1996 Agreement contained the following provisions:
        10.    Noncompetition Covenant. Employee covenants that during the two-year period following termination of this Agreement (such period to be extended by any period(s) of violation), he or she will not, in the city of employment hereunder or within twenty-five (25) miles from the corporate limits of such city, prepare an income tax return or file a return electronically for any of the Company's customers (that is, persons whose last filed state or federal income tax returns were prepared by the Company or by Employee in breach of this Agreement).
        11.    Antisolicitation Covenant. Employee covenants that during the two-year period following termination of this Agreement (such period to be extended by any period(s) of violation), he or she will not solicit, divert or take away, or attempt to solicit, divert or take away, directly or indirectly, any of the Company's customers or clients, including without limitation, those who were serviced by Employee or with whom Employee became acquainted by reason of access to or knowledge of information gained while employed by the Company.

Each defendant signed a separate copy of the Agreement on 4 January 1996. Both defendants worked for plaintiff until approximately 15 April 1996, preparing income tax returns.
    In the Fall of 1996, defendant Knight informed plaintiff that he was opening his own tax preparation business. Knight's new business was called “Computerized Bookkeeping and Tax Service,” and was located within 25 miles of plaintiff's office. A number of Knight's customers were former customers of plaintiff's business, although the record is unclear as to how many former Block customers actually sought Knight's services. Knight advertised his new business on radio and television and personally handed out business cards. Defendant Hawkins was employed part-time by Knight as a tax return preparer, and worked “two afternoons a week” in late January, late March and in April of 1997.
    At the close of plaintiff's evidence, defendants moved to dismiss pursuant to N.C. Gen. Stat. § 1A-1, Rule 41(b). The trial court made findings of fact and concluded that the plaintiff had failed to prove that the restrictions contained in the Agreements were “reasonable both as to time and territory.” The trial courtallowed defendants' Rule 41(b) motion and dismissed plaintiff's action.
    In apt time, plaintiff moved for a new trial pursuant to N.C. Gen. Stat. § 1A-1, Rule 59 on grounds that his counsel had been incapacitated during the trial due to a prescription drug interaction. By order entered 13 December 2002, the trial court denied plaintiff's motion for a new trial, finding that plaintiff's counsel was not incapacitated during the trial. Plaintiff gave notice of appeal from both orders.


    Plaintiff assigns error to the trial court's findings and conclusion that he had failed to prove the reasonableness of the restrictions as to time and territory contained in the agreement, and to its dismissal of his complaint.
    The terms of the agreements signed by defendants provide that defendants were forbidden from preparing income tax returns for, or soliciting business from, former H & R Block customers for a “two- year period following termination of this Agreement” which, by its terms, expired on 15 April of the year it was signed, i.e. 15 April 1996. Thus, according to its terms, the agreement which plaintiff seeks to enforce ended on 15 April 1998. Although the agreement further provided that the restricted period would “be extended by any period(s) of violation,” plaintiff has made no assertion that such provision applies here; nor does the record provide evidence sufficient to support the application of such an extension. Therefore, we hold that the restriction on competition, even ifeffective, would have expired on 15 April 1998, before the trial of this matter took place. As a result, plaintiff's claims for injunctive relief have been rendered moot by the passage of time and are not properly before this Court on appeal. See Corpening Ins. Ctr., Inc. v. Haaff, 154 N.C. App. 190, 573 S.E.2d 164 (2002); Rug Doctor, L.P. v. Prate, 143 N.C. App. 343, 545 S.E.2d 766 (2001).
    With respect to plaintiff's claim for compensatory damages, our review of the evidence reveals no basis upon which damages could have been awarded even if the Agreement was enforceable. Other than testimony that a number of plaintiff's former customers had sought defendant Knight's services, there was no evidence regarding the economic loss, if any, sustained by reason of defendants' alleged breach of the Agreement. Therefore, plaintiff failed to provide any proof from which the trial court could assess damages, and dismissal of plaintiff's claim for damages was proper.
    The trial court could have awarded nominal damages for a breach of the covenant not to compete even if no evidence was available to support an award of compensatory damages. However, the trial court must first find that a valid and reasonable covenant existed before it may find that the covenant was breached. “The party who seeks the enforcement of the covenant not to compete has the burden of proving that the covenant is reasonable.” Hartman v. Odell and Assoc., Inc., 117 N.C. App. 307, 311, 450 S.E.2d 912, 916 (1994)(citations omitted), disc. rev. denied, 339N.C. 612, 454 S.E.2d 251 (1995). The party seeking enforcement must show that the covenant is:
        (1) in writing; (2) reasonable as to time and territory; (3) made a part of the employment contract; (4) based on valuable consideration; and (5) designed to protect a legitimate business interest of the employer.

Hartman, 117 N.C. App. at 311, 450 S.E.2d at 916 (quoting Young v. Mastrom, Inc., 99 N.C. App. 120, 122-123, 392 S.E.2d 446, 448, disc. rev. denied, 327 N.C. 488, 397 S.E.2d 239 (1990)). “[T]o prove that a geographic restriction in a covenant not to compete is reasonable, an employer must first show where its customers are located and that the geographic scope of the covenant is necessary to maintain those customer relationships.” Hartman, 117 N.C. App. at 312, 450 S.E.2d at 917. Plaintiff did not present any evidence to show that the time and territory restrictions were reasonable. As a result, the trial court could not make conclusions regarding the alleged breach of the covenant, nor could it award nominal damages. This assignment of error is overruled.
    Plaintiff also assigns error to the denial of his motion for a new trial. Plaintiff argues that his trial counsel did not function appropriately at trial because he was incapacitated due to a reaction to prescription medication, resulting in the denial of a fair trial.
    N.C. Gen. Stat. § 1A-1, Rule 59 provides, as pertinent here:
        (a) Grounds. - A new trial may be granted to all or any of the parties and on all or part of the issues for any of the following causes or grounds:
            (1) Any irregularity by which any party was prevented from having a fair trial[.]

G.S. § 1A-1, Rule 59(a)(1)(2003). “A motion under Rule 59(a) is addressed to the sound discretion of the trial judge, whose ruling, in the absence of abuse of discretion, is not reviewable on appeal.” Hamlin v. Austin, 49 N.C. App. 196, 197, 270 S.E.2d 558, 558 (1980)(citation omitted). “[A]n appellate court's review of a trial judge's discretionary ruling either granting or denying a motion to set aside a verdict and order a new trial is strictly limited to the determination of whether the record affirmatively demonstrates a manifest abuse of discretion by the judge.” Worthington v. Bynum and Cogdell v. Bynum, 305 N.C. 478, 482, 290 S.E.2d 599, 602 (1982).
    Plaintiff presented evidence at the motion hearing that tended to show that his trial counsel suffered from atrial fibrillation and had undergone several surgeries for the implantation of pacemakers at the time of the original trial in 1998. Counsel's physician had prescribed the use of Solatol as part of his treatment program. In some patients, Solatol causes side effects of fatigue and cognitive impairment, as well as lethargy and malaise. Plaintiff's trial counsel testified that on the day of the trial he felt woozy, light-headed, and had difficulty remembering questions that he wanted to ask the witnesses. He believed that the medication he was taking for his heart condition caused his disorientation on the day of trial. The treating physician opined that the combination of the prescription drugstaken along with Solatol could have affected counsel's ability to function and think clearly.
    However, the trial court made several findings of fact based on testimony by plaintiff, his counsel, and the physician that supported the trial court's conclusion that counsel had not been incapacitated. The trial court found that although plaintiff's counsel had complained to his physician about fatigue and malaise before the 2 July 1998 trial, he had not complained of cognitive impairment symptoms before that time. On the same date, counsel had participated in another trial before a jury, before plaintiff's case was called for trial, and had been successful in that trial. Despite his alleged illness during trial, counsel did not request a recess or move for a continuance because he was unable to proceed. He did not report to his physician immediately after the trial concluded, but waited until his next scheduled appointment on 20 July 1998. The trial court also found that counsel appeared to be lucid throughout the 2 July 1998 trial, responding to objections and posing questions to the witnesses. The trial court found that counsel's opening argument and argument against the involuntary dismissal motion indicated that his failure to ask plaintiff about the time and geographical restrictions in the Agreement covenant was the result of his belief that the law presumed provisions such as those contained in the agreements at issue to be reasonable. Based upon these findings, the trial court concluded that counsel had not been rendered incompetent or incapacitated by his heart disease medication during trial. The trial court's findingssupported its conclusion of law. We cannot say that the trial court's conclusion was an abuse of its discretion.
    Judges HUNTER and THORNBURG concur.
    Report per Rule 30(e).

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