Appeal by plaintiff from an order entered 3 March 2005 by
Judge W. Osmond Smith, III in Wake County Superior Court. Heard in
the Court of Appeals 25 January 2006.
Jerry R. Everhardt for plaintiff-appellant.
Everett Gaskins Hancock & Stevens, LLP, by Hugh Stevens and
Ashley N. Matlock, for defendant-appellees.
Coordinated Health Services, Inc. (plaintiff) appeals from an
order entered 3 March 2005 granting partial summary judgment in
favor of defendants Primary Health Choice, Inc., Thad J. Davis and
Daryl E. Hagins (defendants). We affirm the trial court's order.
Plaintiff and defendant Primary Health Choice, Inc. are
competitor North Carolina corporations that contract with various
county mental health agencies to provide in-home services to the
agency's clients. The agency's clients must obtain the approval of
the county mental health agency to change providers for their in-home services. Both plaintiff and defendants hold contracts with
Southeastern Regional Mental Health, Developmental Disabilities and
Substance Abuse Services (Southeastern Regional), an area program
that provides mental health, developmental and substance abuse
services to children and adults in Bladen, Columbus, Robeson, and
Scotland counties. These contracts are non-exclusive and the
program maintains contracts with several companies providing
similar services as plaintiff and defendants. Several of
plaintiff's employees responsible for providing in-home services
have been hired by defendant Primary Health Choice, Inc.
Defendants Davis and Hagins are Primary Health's principal
officers and are former employees of plaintiff. Neither Davis nor
Hagins were employed by plaintiff under a written employment
contract, nor was either ever asked to sign any kind of
anti-competitive agreement or covenant; both were at-will
employees who were free to go to work for anyone they chose at any
time. Plaintiff's general practice is not to have written
contracts with its employees.
Plaintiff filed its initial complaint on 3 November 2003 and
an amended complaint on 24 February 2004. Plaintiff asserts claims
for Trespass to Chattels, Breach of Fiduciary Duty, Violation
of Trade Secrets Protection Act, Tortious Interference with
Contract, Unfair Trade Practices, and Civil Conspiracy. In
its Amended Complaint, plaintiff alleges, inter alia
defendants are competing in the same business and in the samegeographic area where they were employed by plaintiff; that
plaintiff has created training manuals and other business materials
which it treats as trade secrets; that the individual defendants
either removed or copied such materials and are using them in their
new business; that other former employees of Coordinated have
accepted employment with Primary Health; that the defendants
removed or copied confidential client medical records and used them
to solicit business from Coordinated clients; and that the
defendants are now providing services to clients or consumers who
formerly were served by Coordinated. Defendants filed an answer to
plaintiff's amended complaint on 29 March 2004, denying all
On 15 April 2004, defendants filed a Motion for Summary
Judgment. On 3 March 2004, the trial court partially granted
defendants' motion as to plaintiff's claims for breach of fiduciary
duty, tortious interference with plaintiff's contracts with local
mental health agencies, and tortious interference with plaintiff's
contracts with its employees. The trial court's order denied
defendants' motion for summary judgment as to plaintiff's claims
for trespass to chattels, violations of the North Carolina Trade
Secrets Protection Act, violations of the North Carolina Unfair and
Deceptive Trade Practices Act, and civil conspiracy. Plaintiff
filed a voluntary dismissal without prejudice on 30 March 2005 with
respect to his four surviving claims and appeals the entry of
Plaintiff raises the issues of whether the trial court erred
in granting defendants' motion for summary judgment as to
plaintiff's claims of: (I) breach of fiduciary duty; and (II)
tortious interference with contract. For the reasons below, we
affirm the trial court's order.
We first note plaintiff has included a significant amount of
material in the appendix to its brief that was not included in the
record nor filed as exhibits to this appeal. Plaintiff includes
excerpts from the treatise North Carolina Law of Torts
Order No. 44 of the Governor of North Carolina, excerpts from the
1995 Annual Report of the North Carolina Commission on Business
Laws & the Economy
, and a 7 March 2001 Memorandum by North Carolina
Supreme Court Chief Justice I. Beverly Lake, Jr. These materials
are not properly before this Court and will not be considered. See
Horton v. New South Ins. Co.
, 122 N.C. App. 265, 268, 468 S.E.2d
856, 858 (1996) ([I]t [is] improper [for a party] . . . to attach
a document not in the record and not permitted under N.C. R. App.
P. 28(d) in an appendix to its brief.); see also,
N.C. R. App. P.
9(a) (stating that review is limited to the record and transcript),
and N.C. R. App. P. 28(b) (describing proper contents of
Standard of Review
Under Rule 56(c) of the North Carolina Rules of Civil
Procedure, summary judgment shall be granted if there is no
genuine issue as to any material fact and that any party is
entitled to a judgment as a matter of law. N.C. Gen. Stat. §1A-1, Rule 56(c) (2005). In ruling on a motion for summary
judgment, the court may consider the pleadings, depositions,
admissions, affidavits, answers to interrogatories, oral testimony
and documentary materials . . . . Dendy v. Watkins
, 288 N.C. 447,
452, 219 S.E.2d 214, 217 (1975). All such evidence must be
considered in a light most favorable to the non-moving party.
Howerton v. Arai Helmet, Ltd.
, 358 N.C. 440, 470, 597 S.E.2d 674,
693 (2004). Where there are genuine, conflicting issues of
material fact, the motion for summary judgment must be denied so
that such disputes may be properly resolved by the jury as the
trier of fact. Id.
at 468, 597 S.E.2d at 692.
The purpose of summary judgment is to determine whether any
issues of material fact exist and, if not, eliminate the necessity
of a full trial where only questions of law are involved. Foster
v. Winston-Salem Joint Venture
, 303 N.C. 636, 641-42, 281 S.E.2d
36, 40 (1981). The movant has the burden of establishing the
absence of any triable issues of fact. Id.
This burden may be met
in one of two ways: (1) by proving an essential element of the
opposing party's claim does not exist, cannot be proven at trial,
or would be barred by an affirmative defense; or (2) by showing
through discovery that the opposing party cannot produce evidence
to support an essential element of her claim. Dobson v. Harris
352 N.C. 77, 83, 530 S.E.2d 829, 835 (2000) (citations omitted).
If the moving party satisfies its burden of proof, the non-moving
party cannot rest upon her pleadings, and must set forth specific
facts showing that there is a genuine issue for trial. N.C. Gen.Stat. § 1A-1, Rule 56(e) (2005); Lowe v. Bradford,
305 N.C. 366,
369-70, 289 S.E.2d 363, 366 (1982). The opposing party need not
convince the court that he would prevail on a triable issue of
material fact but only that the issue exists. Id.
at 370, 289
S.E.2d at 366.
Plaintiff first asserts the trial court erred in granting
defendants' motion for summary judgment as to its claim of breach
of fiduciary duty by defendants Davis and Hagins. Plaintiff argues
the responsibilities, the extent of their use and control of
confidential patient information, and their written acknowledgment
of their obligation to maintain the confidentiality of that
information entailed the presence of a degree of trust and
confidence beyond that of ordinary commercial dealings and
establishes a fiduciary duty owed by them to plaintiff. We
For a breach of fiduciary duty to exist, there must first be
a fiduciary relationship between the parties. Dalton v. Camp
N.C. 647, 651, 548 S.E.2d 704, 707 (2001). A fiduciary
has been broadly defined . . . as one in which
there has been a special confidence reposed
in one who in equity and good conscience is
bound to act in good faith and with due regard
to the interests of the one reposing
confidence . . . [and] it extends to any
possible case in which a fiduciary
relationship exists in fact, and in which
there is confidence reposed on one side, and
resulting domination and influence on the
at 651, 548 S.E.2d at 707-08 (quoting Abbitt v. Gregory
N.C. 577, 598, 160 S.E. 896, 906 (1931)). Generally, 'the
relation of employer and employee is not one of those regarded as
353 N.C. at 651, 548 S.E.2d at 708
(quoting King v. Atlantic Coast Line R.R. Co.
, 157 N.C. 35, 49, 72
S.E. 801, 808 (1911)).
In the instant case, defendants Davis and Hagins were at-
will employees of plaintiff and neither had signed a covenant not
to compete with plaintiff. Both Davis and Hagins were qualified
professionals in plaintiff's Lumberton office supervising
plaintiff's direct care staff and acting as liaison between the
area mental health programs, patients and the patient's families.
Defendant's Davis and Hagins each had access to confidential
medical information of the patients served by plaintiff. However,
these factors are not sufficient to establish a fiduciary duty on
the part of Davis and Hagins. As in Dalton
, they merely serve to
define the nature of virtually all employer-employee relationships;
without more, they are inadequate to establish [an employee's]
obligations as fiduciary in nature. Dalton
, 353 N.C. at 652, 548
S.E.2d at 708. There is no showing that plaintiff was subjugated
to the improper influences or domination of either Davis or Hagins
and thus we cannot conclude that a fiduciary relationship existed
between plaintiff and Davis or Hagins. This assignment of error is
Plaintiff next contends the trial court erred in granting
defendants' motion for summary judgment as to its claims of
tortious interference with contract. Plaintiff claims that
defendants' hiring of technicians previously employed by plaintiff
effectively induced the client's family to breach the contract by
following the technician and thereby denying plaintiff the benefit
of its contracts with Southeastern Regional. Plaintiff argues that
defendants should not be permitted to accomplish indirectly what
they could not do directly. Plaintiff also argues defendants have,
through the same scheme, interfered with plaintiff's contracts
with its own employees. We disagree.
To establish a claim for tortious interference with contract,
plaintiff must show:
(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
Beck v. City of Durham
, 154 N.C. App. 221, 232, 573 S.E.2d 183,
191 (2002) (quoting United Laboratories, Inc. v. Kuykendall
N.C. 643, 661, 370 S.E.2d 375, 387 (1988)). The North Carolina
Supreme Court has further held that a competitor may hire an
employer's former employees without being liable for tortious
interference with contract. Peoples Security Life Ins. Co. v.
, 322 N.C. 216, 367 S.E.2d 647 (1988). Under the Court's
ruling in Hooks
, a claim for tortious interference with contractwill not lie where a defendant has only offered the plaintiff's
employees job opportunities which induced them to terminate their
terminable at will contracts and, by locating these employees in
their previously assigned territories, induced them to breach the
non-competition clauses contained in their contracts with the
at 221, 367 S.E.2d at 650. The Court also held
that '[t]he privilege [to interfere] is conditional or qualified;
that is, it is lost if exercised for a wrong purpose. In general,
a wrong purpose exists where the act is done other than as a
reasonable and bona fide
attempt to protect the interests of the
defendant which is involved.' Id.
at 220, 367 S.E.2d at 650
(quoting Smith v. Ford Motor Co.
, 289 N.C. 71, 91, 221 S.E.2d 282,
In the instant case, plaintiff argues that [t]he record in
this case does not permit the Court to conclude that [d]efendants'
conduct is justified by the 'wide latitude' that 'businesses should
be given . . . to go about the normal competitive activity of
recruiting the most qualified employees.' However plaintiff does
not support its statement with anything in the record and this
Court can find nothing to support plaintiff's argument.
Plaintiff's former employees were not employed under a contract,
but rather were at-will employees free to leave plaintiff's
employ at any time. Plaintiff's former employees had not signed
any non-competition agreement with plaintiff and were thus free to
leave their positions with plaintiff and immediately accept
positions with a competitor doing the exact same work. Further,plaintiff has not forecast any evidence capable of establishing
that defendants' conduct in hiring away plaintiff's former
employees was done other than as a reasonable and bona fide
to develop defendants' business interests. Thus, plaintiff cannot
establish the fourth element of their claims of tortious
interference with contract: that defendants' acts were without
justification. Accordingly, the trial court properly granted
summary judgment for defendant as to plaintiff's claims of tortious
interference with contract. This assignment of error is overruled.
Judges CALABRIA and JOHN concur.
Report per Rule 30(e).
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