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All opinions are subject to modification and technical correction prior to official publication in the North Carolina Reports and North Carolina Court of Appeals Reports. In the event of discrepancies between the electronic version of an opinion and the print version appearing in the North Carolina Reports and North Carolina Court of Appeals Reports, the latest print version is to be considered authoritative.
BUSINESS CABLING, INC., Plaintiff, v. BARRY W. YOKELEY and
VITAFOAM INCORPORATED, Defendants
Filed: 17 April 2007
Unfair Trade Practices_bids through former employee_no contract or conspiracy
The evidence and the trial court's findings following a bench trial did not support the
conclusion that defendant engaged in an unfair and deceptive trade practice in accepting bids for
work through a former employee of plaintiff (there was no non-compete agreement). None of the
court's extensive findings state how defendant knowingly participated with the former
employee to solicit defendant's business or to usurp a business opportunity, there is no evidence
of a conspiracy, no evidence of detrimental reliance, and no contract. Defendant cannot be
placed at risk for accepting one competitor's bid over another. The court's judgment was
Appeal by defendant Vitafoam Incorporated and cross appeal by
plaintiff from judgment entered 22 June 2006 and order entered 26
June 2006 by Judge John O. Craig, III, in Guilford County Superior
Court. Heard in the Court of Appeals 28 March 2007.
Stephen E. Lawing, for plaintiff-appellee/cross appellant.
Wyatt Early Harris Wheeler LLP, by William E. Wheeler, for
Kennedy Covington Lobdell & Hickman, LLP, by William G.
Scoggin, for Amicus Curae North Carolina Citizens for Business
Vitafoam, Incorporated (defendant) appeals from judgment and
order entered following a bench trial in which the court concluded
defendant had engaged in unfair and deceptive practices (UDP)
with Business Cabling, Inc. (plaintiff). Plaintiff cross appeals
only the portion of the judgment allowing credit to defendant forany amount it recovers from Barry W. Yokeley (Yokeley). We
Plaintiff is a North Carolina corporation with its principal
place of business located in Davidson County, North Carolina.
Plaintiff installs industrial grade computer cables. In 2004, Bud
and Shira Hedgepeth owned ninety percent of plaintiff's outstanding
Yokeley was employed by plaintiff from 26 November 2001 to 6
February 2004. During this time, Yokeley was an officer and
director of the corporation and owned ten percent of plaintiff's
stock. Yokeley was plaintiff's sole representative in sales and
marketing. His duties included: (1) soliciting new customers; (2)
making business proposals to new and existing customers; (3)
entering into contracts on plaintiff's behalf with customers; and
(4) supervising, performing, and carrying out these contracts with
plaintiff's customers. Yokeley's employment was not subject to any
covenant not to compete or a non-solicitation agreement with
Defendant is a North Carolina corporation with its principal
place of business located in Guilford County, North Carolina.
Defendant manufactures foam used in various applications.
Richard Loftin (Loftin), Yokeley's father-in-law, was
defendant's chief operating officer until April 2004. In 2003,
Loftin informed Yokeley that defendant was considering an update of
its computer network and might require new computer cable of thetype installed by plaintiff. Loftin was not involved in any
contract negotiations between plaintiff and defendant.
Between May and July 2003, Yokeley submitted a bid on behalf
of plaintiff for a small cable installation at defendant's High
Point facility. Jim Bridges (Bridges) was defendant's
information technology director at that time and possessed
authority to accept such small bids. Bridges accepted Yokeley's
bid, the work was completed, and defendant paid plaintiff in full.
In July 2003, defendant was considering a major upgrade of its
computer network at its locations in: (1) High Point; (2)
Greensboro; (3) Thomasville, North Carolina; (4) Tupelo,
Mississippi; and (5) Chattanooga, Tennessee. On 28 July 2003,
plaintiff through Yokeley submitted bids to perform the cable
installation at these locations.
Bridges informed Yokeley that no contract would exist between
plaintiff and defendant until: (1) each separate agreement was
approved by defendant's senior management; (2) a capital expense
budget proposal was approved; (3) defendant was assigned a purchase
order number; and (4) the purchase order number was given to
Between 19 September 2003 and 30 September 2003, Bridges
accepted plaintiff's proposals on defendant's behalf for the High
Point and Greensboro facilities. Plaintiff completed the work at
both facilities, invoiced defendant, and was paid in full in
December 2003. In late 2003 or early 2004, defendant hired David Kame
(Kame) as its new chief financial officer. Kame was instructed
to carefully review all proposed projects. Defendant's Thomasville
and Chattanooga projects were placed on indefinite hold. The
Tupelo project remained under consideration.
Defendant never accepted plaintiff's bids to install cable at
defendant's Thomasville and Chattanooga locations. No contract was
entered into between plaintiff and defendant to perform any work at
these locations. The Thomasville and Chattanooga projects were
never performed by any vendor. Defendant ultimately sold these
In late 2003, disputes arose between Bud and Shira Hedgepeth
and Yokeley. In December 2003, Yokeley was asked to seek for other
employment. In January 2004, Yokeley began negotiations for
employment with one of plaintiff's competitors, Fleet
Communications (Fleet). During Yokeley's negotiations with
Fleet, he presented a list of potential customers he felt he could
bring to Fleet. This list included cable installations at several
of defendant's facilities, including Tupelo. Yokeley resigned from
plaintiff on 6 February 2004 and became employed by Fleet on 9
On 5 January 2004, Yokeley prepared a bid proposal in his own
name for defendant's Tupelo project, prior to resigning from
plaintiff. In mid-January 2004, Yokeley presented the bid to
Bridges. On 18 February 2004, Bridges accepted Yokeley's bid for
defendant's Tupelo project. Defendant's cable installation inTupelo was performed by Yokeley's new employer, Fleet. Fleet
invoiced defendant for the work and was paid in full.
After Yokeley became employed by Fleet on 9 February 2004,
Fleet, through Yokeley, bid on and performed several other projects
for defendant. None of these projects had been previously bid upon
by plaintiff. Plaintiff presented no evidence it was even aware of
these projects. Among the projects Fleet bid on was a new project
at defendant's Greensboro location (new Greensboro project). The
new Greensboro project was completely separate and apart from any
work plaintiff had previously bid on. On 11 February 2004,
defendant accepted Fleet's bid on the new Greensboro project.
Fleet completed the work, submitted invoices, and was paid in full.
On 11 March 2004, Shira Hedgepeth contacted Bridges on
plaintiff's behalf and inquired for updates on any of defendant's
cable projects. Bridges responded he had no idea what the status
of the projects were at that point and that until Bridges heard
from defendant's chief executive officers, and Bud Hedgepeth heard
from him, all bets [were] off. On 12 March 2004, Bridges
informed Shira Hedgepeth, I think at this point you need to plan
as though [defendant's acceptance of plaintiff's bids] is not going
to happen, which is a real possibility.
At the time this electronic mail correspondence occurred
between Shira Hedgepeth and Bridges, Bridges was aware that
defendant had contracted with Fleet through Yokeley to perform
cable installation work at defendant's Tupelo and new Greensboro
facilities. Bridges neither advised Shira Hedgepeth, nor any otherperson at plaintiff, that Fleet had performed the cable
installation at defendant's Tupelo and new Greensboro locations.
Bridges's employment with defendant was terminated on 31 March
On 15 September 2004, plaintiff filed suit against defendant
and Yokeley. Plaintiff asserted claims against defendant for: (1)
breach of contract; (2) breach of implied warranty of good faith
and fair dealing; and (3) UDP. Plaintiff asserted claims against
Yokeley for: (1) wrongful interference with contract; (2) UDP; and
(3) punitive damages. Plaintiff's claims against defendant were
tried separately from its claims against Yokeley.
On 22 June 2006, the trial court concluded defendant had
participated in UDP and entered judgment against defendant. The
trial court awarded plaintiff treble damages in the amount of
$96,272.88, $95,000.00 in attorneys fees and various other costs.
The trial court also ordered plaintiff to credit defendant for any
amount it recovered from Yokeley. Plaintiff's claims against
Yokeley were not tried and no judgment was entered against Yokeley.
Defendant appeals and plaintiff cross appeals.
Defendant argues the trial court erred by: (1) concluding it
engaged in UDP where the competent evidence presented and the facts
found are insufficient to justify the conclusion; (2) finding and
concluding it engaged in UDP with regard to its new Greensboro
project where plaintiff neither alleged such claim in its
complaint, nor amended its complaint to do so; (3) findingplaintiff would have obtained contracts with defendant to perform
installations at defendant's Tupelo and new Greensboro projects or
plaintiff could claim such potential installations were a
prospective advantage or business opportunity; (4) finding
plaintiff's profit margin on defendant's Tupelo and new Greensboro
projects would have been 27.3% if plaintiff had obtained those
contracts and/or finding plaintiff suffered actual damages
resulting in lost profits of $32,090.96; (5) finding defendant
unwarrantedly refused to fully resolve the underlying matter prior
to plaintiff's action; (6) awarding plaintiff its legal fees; and
(7) awarding plaintiff its court costs.
Plaintiff cross-appeals and argues the trial court erred by
allowing defendant credit for any amount plaintiff recovers from
Yokeley whether by judgment, settlement, or otherwise.
III. Standard of Review
Upon an appeal from a judgment entered in a non-jury trial,
our Supreme Court imposed three requirements on the court sitting
as finder of fact: it must (1) find the facts on all issues joined
in the pleadings; (2) declare the conclusions of law arising from
the facts found; and (3) enter judgment accordingly. Stachlowski
v. Stach, 328 N.C. 276, 285, 401 S.E.2d 638, 644 (1991). Our
standard of review is whether competent evidence exists to support
the trial court's findings of fact and whether the findings support
the conclusions of law. Sessler v. Marsh, 144 N.C. App. 623, 628,
551 S.E.2d 160, 163, disc. rev. denied, 354 N.C. 365, 556 S.E.2d
577 (2001). The trial court's conclusions of law drawn from thefindings of fact are reviewable de novo. Humphries v. City of
Jacksonville, 300 N.C. 186, 187, 265 S.E.2d 189, 190 (1980).
Defendant argues the trial court erred by concluding it
engaged in UDP. The trial court concluded:
5. Yokeley's solicitation of the cable
installation work at [defendant's] Tupelo
plant in January 2004 constituted an
interference with [plaintiff's] prospective
advantage and a diversion of a business
opportunity [plaintiff] would otherwise have
obtained, and constituted an unfair or
deceptive trade practice in trade or commerce
of North Carolina by Yokeley in which
[defendant], through its IT director, Bridges,
. . . .
8. Yokeley's solicitation on or after
February 11, 2004, on behalf of Fleet of cable
installation work in connection with
[defendant's] new Greensboro project
constituted an interference with [plaintiff's]
prospective advantage and a diversion of a
business opportunity [plaintiff] might
otherwise have obtained, and constituted an
unfair or deceptive trade practice in trade or
commerce in North Carolina by Yokeley in which
[defendant], through its IT director, Bridges,
. . . .
10. [Plaintiff] suffered actual damages as a
proximate result of Yokeley's [and
defendant's] unfair and deceptive acts and
practices in North Carolina[.]
(Emphasis supplied). Defendant asserts the trial court's findings
of fact are insufficient to justify these conclusions of law. We
Our Supreme Court has stated: Whether a trade practice is unfair or
deceptive usually depends upon the facts of
each case and the impact the practice has in
the marketplace. A practice is unfair when it
offends established public policy as well as
when the practice is immoral, unethical,
oppressive, unscrupulous, or substantially
injurious to consumers.
Marshall v. Miller, 302 N.C. 539, 548, 276 S.E.2d 397, 403 (1981)
(citations omitted) (emphasis supplied).
In order to establish a prima facie claim for
unfair trade practices, a plaintiff must show:
(1) defendant committed an unfair or deceptive
act or practice, (2) the action in question
was in or affecting commerce, and (3) the act
proximately caused injury to the plaintiff. A
practice is unfair if it is unethical or
unscrupulous, and it is deceptive if it has a
tendency to deceive. The determination as to
whether an act is unfair or deceptive is a
question of law for the court. . . .
Moreover, some type of egregious or
aggravating circumstances must be alleged and
proved before the [Act's] provisions may [take
Dalton v. Camp, 353 N.C. 647, 656-57, 548 S.E.2d 704, 711 (2001)
(internal citations and quotation omitted) (emphasis original and
The trial court concluded defendant had engaged in UDP by
knowingly participat[ing] with Yokeley to: (1) solicit
defendant's cabling business; (2) interfere with plaintiff's
prospective advantage; and (3) divert plaintiff's business
opportunity to perform cable installations at defendant's Tupelo
and new Greensboro projects.
The trial court's findings of fact fail to support these
conclusions. None of the trial court's extensive thirty findings
of fact state how defendant knowingly participated with Yokeleyto solicit defendant's cabling business or usurped a business
opportunity from plaintiff.
The trial court's findings of fact support the opposite
conclusion. The findings of fact show: (1) plaintiff was aware,
through Yokeley, of defendant's approval process for the bids on
any project with defendant; (2) no contract was ever entered into
between defendant and plaintiff to perform work on defendant's
Tupelo or new Greensboro projects; (3) defendant did not accept
Yokeley's bids on these projects until after he had resigned from
plaintiff on 6 February 2004; and (4) Yokeley was neither bound by
a covenant not to compete nor non-solicitation agreement with
The trial court's findings of fact demonstrate defendant's
only participation with Yokeley was Bridges's receipt and
subsequent acceptance of Fleet's bids, which Yokeley had prepared,
on defendant's Tupelo and new Greensboro projects. Defendant's
acceptance of Yokeley's bids on 18 February 2004 and 11 February
2004 did not constitute an UDP. See Chesapeake Microfilm, Inc. v.
Eastern Microfilm Sales and Service, 91 N.C. App. 539, 545, 372
S.E.2d 901, 904 (1988) (N.C. Gen. Stat. § 75-1.1 is not so
inclusive as to permit one competitor to claim unfair or deceptive
trade practices on the ground that another competitor successfully
bid for a contract.). The trial court also failed to find as fact
any egregious or aggravating circumstances by defendant. Dalton,
353 N.C. at 657, 548 S.E.2d at 711. Plaintiff argues and the trial court's judgment appears to
infer the existence of a conspiracy between defendant and Yokeley
to divert a business opportunity from plaintiff to Yokeley or
Fleet. A conspiracy has been defined as 'an agreement between two
or more individuals to do an unlawful act or to do a lawful act in
an unlawful way.' Dickens v. Puryear, 302 N.C. 437, 456, 276
S.E.2d 325, 337 (1981) (quoting State v. Dalton, 168 N.C. 204, 205,
83 S.E. 693, 694 (1914)). To create an action for conspiracy, 'a
wrongful act resulting in injury to another must be done by one or
more of the conspirators pursuant to the common scheme and in
furtherance of the common object.' Muse v. Morrison, 234 N.C.
195, 198, 66 S.E.2d 783, 785 (1951) (emphasis supplied) (quoting
Holt v. Holt, 232 N.C. 497, 500, 61 S.E.2d 448, 451 (1950)).
The trial court failed to find, and no evidence in the record
shows, an agreement between defendant and Yokeley. Dickens, 302
N.C. at 456, 276 S.E.2d at 337. The trial court also failed to
find, and no evidence in the record shows, a common scheme
between defendant and Yokeley to divert a business opportunity from
plaintiff to Yokeley or Fleet. Muse, 234 N.C. at 198, 66 S.E.2d at
785. The trial court failed to find or conclude, and no evidence
in the record shows, that defendant and Yokeley were engaged in a
conspiracy. The fact that defendant accepted Fleet's bids, which
were prepared by Yokeley, and that Fleet performed and defendant
paid for the work completed does not equate to an agreement or
common scheme between defendant and Yokeley. Dickens, 302 N.C.
at 456, 276 S.E.2d at 337; Muse, 234 N.C. at 198, 66 S.E.2d at 785. Plaintiff also argues defendant participated with Yokeley to
divert a business opportunity because Bridges deceived plaintiff
during his electronic communications with Shira Hedgepeth on 11
March 2004. We disagree.
The trial court found as fact:
20. On March 11, 2004, Shira Hedgepeth
(Shira), on behalf of [plaintiff], contacted
Bridges by e-mail . . . inquiring as to
whether or not there were Any updates on the
cabling projects start date? Bridges
responded by e-mail on March 11, 2004, saying,
Nothing to date. Looks like the new CFO
[Kame] may be looking at other solutions that
do not require the upgrades. Shira further
inquired of Bridges by e-mail on March 11,
2004, asking, When will we know for sure?
Bridges responded by e-mail on March 11,2004,
saying, I have no idea at this point. I told
Bud [Hedgepeth, Shira's husband and President
of [plaintiff]] that until I hear from the
CXOs [i.e., [defendant's] chief executive
officers], and Bud hears from me, all bets are
off. Shira responded by e-mail late on March
11, 2004, saying, We just want to make sure
we do not overbook ourselves so we needed to
check. Thanks for your help. Early on March
12, 2004, Bridges responded to Shira saying,
I think at this point you need to plan as
though it is not going to happen, which is a
real possibilily. I understand if we come back
later we will go into the scheduling que. . .
. At the time of the aforesaid e-mail
exchange, Bridges was aware that [defendant]
had contracted with Fleet (through Yokeley) on
February 18, 2004, to provide the cabling
installation work at [defendant's] Tupelo
facility on a proposal that was essentially
identical to [plaintiff's] bid to do that work
dated July 28, 2003. He was also aware that
[defendant] had accepted Fleet's February 11,
2004, proposal on [defendant's] new
[Greensboro] project. However, Bridges did not
advise Shira, nor anyone else at [plaintiff],
that Fleet was then doing, or about to do, the
work on both the Tupelo . . . and the new
Deceptive acts can constitute UDP, but recovery according to
[N.C. Gen. Stat. § 75-1.1 and 75-16] is limited to those situations
when a plaintiff can show that plaintiff detrimentally relied upon
a statement or misrepresentation and he or she suffered actual
injury as a proximate result of defendant's deceptive statement or
misrepresentation. Forbes v. Par Ten Group, Inc., 99 N.C. App.
587, 601, 394 S.E.2d 643, 651 (1990) (internal citation and
quotation omitted), disc. rev. denied, 328 N.C. 89, 402 S.E.2d 824
Here, the trial court failed to find as fact, and no evidence
shows, plaintiff detrimentally relied upon Bridges statement.
Id. As the trial court's findings of fact indicate, at the time of
this communication, defendant had already accepted plaintiff's
competitor's bids on 11 February 2004 and 18 February 2004. Also,
the trial court failed to find as fact, and no evidence tends to
show, plaintiff suffered actual injury as a proximate result of
defendant's deceptive statement or misrepresentation. Id.
Until all conditions precedent were satisfied, no contract
could or did exist between plaintiff and defendant. No evidence
tends to show defendant would have accepted plaintiff's bid or was
under any restraints from accepting any competitors' bids. At the
time of the awarding of the contracts for the Tupelo and new
Greensboro projects, Fleet and Yokeley were plaintiff's
competitors. Defendant cannot be placed at risk for accepting one
competitor's bid over another. Chesapeake Microfilm, Inc. v.
Eastern Microfilm Sales and Service, 91 N.C. App. at 545, 372S.E.2d at 904. Such risk is beyond what the law requires and is
contrary to Chapter 75 of the North Carolina General Statutes. Id.
The trial court's findings of fact, and the evidence in the
record, fails to support the trial court's conclusions of law that
defendant engaged in UDP. In light of our holding, we do not reach
defendant's remaining assignments of error, nor do we reach
plaintiff's cross assignment of error. The trial court's judgment
Judges HUNTER and JACKSON concur.
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