Emily's Cookie Mix v Cora Ltd. P'ship, (04-1630) 11/15/2005

Appeal by plaintiff from order entered 7 September 2004 by Judge Robert H. Hobgood in Alamance County Superior Court. Heard in the Court of Appeals 17 August 2005.

Ridge & Holley, by David K. Holley, for plaintiff-appellant.

Lewis & Roberts, PLLC, by James A. Roberts, III and Geoffrey S. Proud, for defendants-appellees.

    ELMORE, Judge.

    Emily's Cookie Mix, Inc. (plaintiff) appeals an order of the trial court dismissing its complaint pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure. Plaintiff is a North Carolina corporation with its principal offices in Alamance County, North Carolina. On 1 May 2002 plaintiff entered into an agreement with defendant CORA Limited Partnership (CORA) to lease shop premises in Burlington, North Carolina from defendant. The terms of the lease included an agreement that the plaintiff-tenant “shall not use the leased property for any purposes other than COOKIES usewithout the written consent of the Landlord.” At this same time, defendants Kelly Jo Donovan (Donovan) and Tonya Rae Hunter (Hunter) owned and operated “The Beverage Gallery,” which was located in the same business development as plaintiff's shop.
    Plaintiff took possession of the premises and began operating its business under the name “Emily's Cookie Shoppe.” After the start of operations, the parties agree that plaintiff began advertising the sale of coffee in its store window and that defendants Donovan and Hunter later requested the removal of said signs and advertisements. Defendants assert that these advertisements constituted a violation of plaintiff's lease agreement and were detrimental to the business efforts of defendants Donovan and Hunter. Plaintiff refused to remove the advertisements at which point defendant CORA also demanded that plaintiff cease selling and advertising the sale of beverages.
    According to plaintiff, on 7 January 2003, defendant CORA filed suit against plaintiff for Summary Ejectment from the leased premises due to unauthorized use of the premises, and defendant CORA's claim was dismissed with prejudice. Plaintiff alleges that it requested discussions with defendant CORA regarding the possible renewal of the lease, but that defendant refused to consider any renewal. Plaintiff alleges that this refusal was a direct result of efforts by defendants Donovan and Hunter, who conspired with and induced defendant CORA to attempt to terminate the lease without consideration of renewal.    On 22 August 2003 plaintiff filed the instant action in the Superior Court of Alamance County. Defendants filed an Answer, Counterclaims, and a Motion to Dismiss all claims pursuant to Rule 12(b)(6). The trial court granted defendants' motion and dismissed plaintiff's claims. From this order entered 7 September 2004, plaintiff appeals.
    Plaintiff asserted two separate claims in its complaint: tortious interference with contract, and unfair and deceptive trade practices in violation of N.C. Gen. Stat. § 75-1.1. With respect to the claim of tortious interference, plaintiff argues that the trial court erred in dismissing the claim since plaintiff satisfied all of the substantive elements. Specifically, plaintiff contends that the complaint sufficiently stated the existence of a valid lease contract between itself and defendant CORA; alleged attempts by defendants Donovan and Hunter to terminate the lease contract; and that defendants' actions were malicious.
    In reviewing a dismissal of a complaint for failure to state a claim, this Court must determine as a matter of law whether the complaint alleges the substantive elements of a legally recognized claim. See Sutton v. Duke, 277 N.C. 94, 104-05, 176 S.E.2d 161, 167 (1970). The elements of tortious interference with contract are “1) the existence of a valid contract between plaintiff and a third party; (2) knowledge by defendant of the contract; (3) acts by defendant to intentionally induce the third party not to perform the contract; (4) defendant's acts were committed without justification; and (5) actual damage to the plaintiff.” Barker v.Kimberly-Clark Corp., 136 N.C. App. 455, 462, 524 S.E.2d 821, 826 (2000) (citing Childress v. Abeles, 240 N.C. 667, 674, 84 S.E.2d 176, 181-82 (1954)).
    A motion to dismiss a claim of tortious interference is properly granted where the complaint shows the interference was justified or privileged. See Peoples Security Life Ins. Co. v. Hooks, 322 N.C. 216, 367 S.E.2d 647 (1988). Our Supreme Court has stated that competition in business may serve as a justification for interference in another's business relations. Id. at 221, 367 S.E.2d at 650. In Peoples Security, the plaintiff insurance company sued the defendant, a former district manager and employee, for hiring a number of employees away from the plaintiff's business to work with the defendant at a competing insurance company. Id. at 217-18, 367 S.E.2d at 648. The plaintiff argued that the defendant tortiously interfered with employment contracts between the plaintiff and its employees. Id. at 219, 367 S.E.2d at 649. The Court concluded that the defendant's actions constituted justifiable interference into the plaintiff's business relations where the plaintiff and defendant are competitors. Id. at 222, 367 S.E.2d at 650.
    In the case at bar, plaintiff asserts that defendants Donovan and Hunter unlawfully and maliciously induced defendant CORA to refuse to renew the lease between CORA and plaintiff. However, in order for plaintiff to maintain the action, it must show that defendant's actions were unjustified. Here, the lease agreement between plaintiff and defendant CORA was drafted to prevent directcompetition between the tenants of the business development. When plaintiff began selling coffee and advertising the sale of beverages it violated the lease and placed itself in direct competition with defendants Donovan and Hunter. With the existence of direct competition between the parties, Donovan and Hunter's actions in seeking to have plaintiff comply with its lease were justified, not malicious or unlawful.
    Plaintiff argues nonetheless that its complaint sufficiently stated a claim for tortious interference because a motion to dismiss should not be granted unless the plaintiff is entitled to no relief under any set of facts which could support the claim. See Embree Construction Group v. Rafcor, Inc., 330 N.C. 487, 490- 91, 411 S.E.2d 916, 920 (1992). However, Embree requires that the complaint adequately allege the substantive elements of tortious interference with contract. Id. at 500, 411 S.E.2d at 925. Thus, plaintiff's claim of tortious interference must “allege facts demonstrating that defendants' actions were not prompted by 'legitimate business purposes.'” Id. at 500, 411 S.E.2d at 926. Plaintiff has failed to make such a showing.
    Plaintiff's second cause of action alleges unfair and deceptive trade practices based upon a civil conspiracy between defendant CORA and defendants Hunter and Donovan. This Court has defined a civil conspiracy as “[a]n agreement between two or more individuals to do an unlawful act or to do a lawful act in an unlawful way.” Colvard v. Francis, 106 N.C. App. 277, 281, 416S.E.2d 579, 581 (internal quotation omitted), disc. review denied, 332 N.C. 146, 419 S.E.2d 570 (1992).
    Plaintiff relies chiefly on Pedwell v. First Union Natl. Bank, 51 N.C. App. 236, 275 S.E.2d 565 (1981), to argue that 12(b)(6) dismissals should not be allowed where a plaintiff alleges a civil conspiracy to prevent the performance of a contract. In Pedwell, the plaintiffs alleged that the defendant bank made a contract to sell a condominium to the plaintiffs and that the bank and the defendant finance company conspired to deny the plaintiffs a loan in order to prevent the plaintiffs from performing their contractual obligations. Id. at 237-38, 275 S.E.2d at 566-67. This Court reversed the dismissal of the plaintiffs' claim since the defendants' alleged actions, if true, would have constituted an unlawful act for which they would have been liable to the plaintiffs. Id. at 238, 275 S.E.2d at 567.
    The facts in the instant dispute are distinguishable from Pedwell. The actions of defendants Donovan and Hunter, even if true, cannot be an “unfair act affecting commerce,” like the allegations in Pedwell. Unlike the legitimate business reasons that prompted the actions by defendants Donovan and Hunter in the instant case, Pedwell involved an executory contract between the parties and the defendant bank's specific legal duty not to act to prevent the plaintiffs from performing that contract. See id. at 237-38, 275 S.E.2d at 556-57.
    Furthermore, claims of civil conspiracy must meet a factual threshold. A plaintiff's complaint cannot simply speculate aboutwrongdoings without stating actual facts about the alleged conspiracy. See Fox v. Wilson, 85 N.C. App. 292, 301, 354 S.E.2d 737, 743 (1987) (plaintiff must allege wrongful overt acts in order to state claim for recovery based upon civil conspiracy); see also Shope v. Boyer, 268 N.C. 401, 405, 150 S.E.2d 771, 774 (1966) (complaint for civil conspiracy must allege facts, rather than conclusions, that conspiracy existed). Plaintiff here did not allege the existence of any specific wrongful acts by defendants pursuant to a civil conspiracy. In short, the complaint was lacking of any facts regarding defendants' alleged unlawful conduct.
    Finally, plaintiff argues that there is no precise definition of unfair and deceptive acts and that allegations of “malicious interference with contract and conspiracy to damage its business . . . are sufficient to survive a motion to dismiss.” We determine that plaintiff is not entitled to such a favorable presumption. The fact that plaintiff has included claims of tortious interference and conspiracy in its complaint does not make such allegations indisputable facts beyond this Court's review. Whether or not such claims are founded is a legal conclusion that this Court reviews without a presumption of truth. See Miller v. Rose, 138 N.C. App. 582, 592, 532 S.E.2d 228, 235 (2000) (“In ruling on a Rule 12 (b)(6) motion to dismiss, the trial court regards all factual allegations of the complaint as true. . . . Legal conclusions, however, are not entitled to a presumption of truth.”)(internal citation omitted). Therefore, for the reasons discussed supra, we affirm the order of the trial court.
    Affirmed.
    Judges CALABRIA and GEER concur.
    Report per Rule 30(e).

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