N.C. Business Court Opinions, March 26, 2025 – April 8, 2025
By: Austin Webber
Rodriguez v. FastMed Urgent Care, Inc., 2025 NCBC 15 (N. C. Super. Ct. Mar. 25, 2025) (Davis, J.)
Key Terms: Rule 12(b)(6); common law negligence; emotional distress; economic injury
Plaintiff Jackelyn Rodriguez initiated this putative class action, asserting claims for violation of the N.C. Electronic Surveillance Act, negligence per se, common law negligence, and invasion of privacy against Defendant Fastmed Urgent Care, Inc., based on allegations that Defendant secretly embedded third-party technology on its website that collected and disseminated her confidential information without her consent. Defendant moved to dismiss all claims under Rule 12(b)(6).
In her brief and at the hearing, counsel for Plaintiff indicated that Plaintiff only intended to proceed on her claim for common law negligence. Accordingly, the Court dismissed the other claims with prejudice.
Regarding the common law negligence claim, the Court rejected Defendant’s argument that Plaintiff had failed to establish any legal duty that it owed its patients with regard to maintaining the privacy of health information. The Court of Appeals has unambiguously recognized that healthcare providers owe a general duty of care to patients regarding maintenance of their confidential information, the very duty Plaintiff had alleged in her complaint. The Court also rejected Defendant’s argument that Plaintiff had not adequately alleged injury. Plaintiff’s allegations that she suffered from “embarrassment, humiliation, emotional harm, and distress” were sufficient to allege emotional distress damages as there is no heightened pleading requirement in this regard. Regarding Defendant’s argument that Plaintiff’s alleged economic damages were barred by the economic loss rule, the Court determined that, first, the alleged duty of care was not dependent on any contractual duty between the parties, and second, any argument regarding the economic loss rule was premature since even if a contract existed between the parties, further factual development would be necessary to determine the contours of that relationship.
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Bourgeois v. Lapelusa, 2025 NCBC 16 (N.C. Super Ct. March 18, 2025) (Earp, J.)
Key Terms: N.C.G.S. § 1-569.22; arbitration award; motion to confirm
Defendants moved to confirm an arbitration award in which the arbitrator: (1) ruled that Defendants had not been unjustly enriched to the detriment of Plaintiff Bourgeois or The Pit Box, LLC; (2) ruled in favor of The Pit Box, LLC with respect to its counterclaims and ordered Plaintiff Bourgeois to pay compensatory damages; and (3) denied all remaining claims. The arbitrator also directed the distribution of the assets of The Pit Box, LLC, which had been judicially dissolved. Plaintiffs objected to the motion to confirm and moved the arbitrator to amend the award. The arbitrator denied the motion to amend. Because N.C.G.S. § 1-569.22 requires the court, upon motion, to enter an order confirming an arbitration award unless the award is modified, corrected, or vacated, and the Court had not received a motion to modify, correct, or vacate the award, the Court granted Defendant’s motion to confirm.
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Hose Co. v. Smith, 2025 NCBC 17 (N.C. Super. Ct. March 28, 2025) (Earp, J.)
Key Terms: Rule 12(b)(6); breach of contract; fraudulent concealment; misappropriation of trade secrets; Unfair and Deceptive Trade Practice Act; civil conspiracy; employment agreement; non-competition agreement; confidentiality; fiduciary duty.
Plaintiff The Hose Company (“THC”) initiated this lawsuit asserting various claims against Defendant Smith arising from his resignation from THC and subsequent employment in alleged violation of his non-compete agreement. Smith moved to dismiss all claims.
Breach of Contract. Having already determined that the non-compete agreement was unenforceable as a matter of law, the Court dismissed this claim with prejudice.
Fraudulent Concealment. THC’s first fraudulent concealment claim alleged that in his resignation letter, Smith affirmatively concealed the true nature of his new job in the hose industry. The Court found these allegations sufficient to state a claim for fraudulent concealment and denied dismissal of the first claim.
THC’s second fraudulent concealment claim alleged that Smith, while employed at THC, fraudulently concealed his efforts to form a competing business. However, since THC did not adequately allege the existence of a fiduciary relationship, and therefore a duty to disclose, the Court dismissed the claim.
Misappropriation of Trade Secrets. THC asserted that Smith misappropriated its customer lists and pricing information. Regarding the customer list, the Court found the compiled list of customers alluded to by THC did not identify the trade secret information with sufficient specificity, nor did THC describe the effort and cost it incurred to put the list together. Regarding the pricing information, the Court noted that THC did not provide an explanation to how the dealer network information, once released externally, is kept secret. Therefore, the Court granted Smith’s motion.
Unfair and Deceptive Trade Practice. THC’s UDTPA claim was premised on its fraud and misappropriation of trade secrets claims, along with Smith’s general unscrupulous behavior while employed by THC. Since the misappropriation claim was dismissed and since the fraud and “unscrupulous behavior” allegations involved internal conduct and were therefore not in or affecting commerce under the UDTPA, the Court dismissed this claim.
Civil Conspiracy. Because the tort claims underlying the civil conspiracy claim had all been dismissed, the Court dismissed the civil conspiracy claim as well.
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Exencial Wealth Advisors, LLC v. Downing, 2025 NCBC 18 (N.C. Super. Ct. April 1, 2025) (Brown, J.)
Key Terms: Rule 12(b)(6); breach of contract; choice of law; tortious interference with business relationship; misappropriation of trade secrets; declaratory judgment; non-solicitation; confidentiality agreement; de facto non-compete; customer and pricing lists
Plaintiff filed suit against its former employee, asserting various claims arising from Defendant’s alleged violation of confidentiality and non-solicitation provisions in his employment agreement. Defendant moved to dismiss all claims.
Choice of Law. The Court determined that Oklahoma law governed the claims for breach of the employment agreement because the agreement had an Oklahoma choice of law provision, Oklahoma has a substantial relationship to the parties, and application of Oklahoma law would not violate public policy. However, North Carolina law governed the tortious interference with business relationship and misappropriation of trade secrets claims under the lex loci test because the injury alleged was sustained in North Carolina. North Carolina law also governed the declaratory judgment claim as procedural matters are governed by the law of the forum.
Breach of Contract. The Court found that the non-solicitation provisions in the employment agreement violated Oklahoma’s public policy, because they prohibited far more than the “direct solicitation of established customers” allowed by statute.
Regarding the confidentiality provisions, Defendant argued that they acted as a de facto non-compete and were therefore void. The Court disagreed, finding that the confidentiality provisions were not so burdensome as to operate as a de facto non-compete, particularly because they were tailored to apply only to information which was not part of the public domain or of which the Defendant did not have independent knowledge. Moreover, Plaintiff had adequately alleged that Defendant had breached these provisions by storing Plaintiff’s confidential information on a personal computer and sharing it with others, including his new employer. Therefore, the Court dismissed the breach of contract claim related to the non-solicitation provisions but otherwise allowed the claim to survive.
Tortious Interference with Business Relationships. Because Plaintiff had adequately alleged that Defendant engaged in unlawful competition by violating the confidentiality provisions of his employment agreement and otherwise pleaded the necessary elements, the Court denied dismissal of this claim.
Misappropriation of Trade Secrets. The Court dismissed this claim because Plaintiff failed to allege with sufficient particularity the existence of a trade secret. Plaintiff’s identification of its potential trade secrets as “its Confidential information, manner of doing business with customers, members’ contact information, and other non-public information” were insufficient to put Defendant on notice as to the precise information allegedly misappropriated.
Declaratory Judgment. The Court dismissed the declaratory judgment claim regarding the confidentiality provisions of the employment agreement because it was duplicative of Plaintiff’s claim for breach of those provisions.
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Wolfspeed, Inc. v. Van Brunt, 2025 NCBC 19 (N.C. Super. Ct. April 2, 2025) (Robinson, C.J.)
Key Terms: Rule 12(b)(6); preliminary and permanent injunction, breach of contract; wrongful interference with contractual relationships; misappropriation of trade secrets, confidentiality; non-competition; breach of duty of loyalty; breach of fiduciary duty; UDTPA
Wolfspeed initiated this action contending that former employees Van Brunt and Allen left Wolfspeed for a competitor, Onsemi, in violation of their respective employment agreements and the restrictive covenants found therein, taking with them to Onsemi trade secret information. Wolfspeed also contends Onsemi wrongfully interfered with Van Brunt’s and Allen’s respective employment agreements by inducing them to breach the restrictive covenants found therein. Defendants moved to dismiss all claims.
Preliminary and Permanent Injunction. The Court dismissed this claim without prejudice as preliminary and permanent injunctions are remedies, not independent causes of action.
Breach of Contract against Allen. The Court denied the motion to dismiss Plaintiff’s claim for breach of the confidentiality provision in Allen’s employment agreement, finding that Plaintiff’s allegations that the agreement was enforceable and that Allen had breached it by using Plaintiff’s confidential information in concert with Van Brunt and Onsemi were sufficient to state a claim.
Breach of Contract against Van Brunt. Plaintiff asserted two breach of contract claims against Van Brunt: 1) breach of the non-competition and confidentiality provisions in his employment agreement; and 2) breach of his RSU agreements’ terms and conditions. Regarding the first, the Court determined that the non-compete provision was overly broad and unenforceable because it prohibited Van Brunt from working for a competitor in any capacity. However, breach of the non-solicitation provision was adequately pleaded based on Plaintiff’s allegations that Van Brunt retained his Plaintiff-issued laptop which contained Plaintiff’s sensitive and proprietary information and did not return it until nearly one month after he accepted employment with Onsemi. Regarding the second claim, neither side addressed the claim in their briefs and the Court found the allegations minimally sufficient.
Wrongful Interference with Contractual Relationships Against Onsemi and Allen. Plaintiff asserted two claims for wrongful interference, the first against Onsemi and Allen for inducing Van Brunt to breach his restrictive covenants and the second against Onsemi for inducing Allen to breach his restrictive covenants. Due to its ruling that Van Brunt’s non-compete was unenforceable, the Court dismissed the first claim to the extent it was premised on that provision. The Court otherwise found that the claims had been sufficiently pleaded and therefore denied dismissal.
Misappropriation of Trade Secrets. The Court found that Plaintiff had sufficiently identified its trade secrets at this stage. Regarding acts of misappropriation, the Court found that Plaintiff’s allegations (made upon information and belief) that Van Brunt retained his Plaintiff-issued laptop and accessed trade secret information or had access to such information after his employment with Onsemi commenced were minimally sufficient to state a claim for misappropriation of trade secrets against Van Brunt and Onsemi. However, since the complaint did not contain any allegations that Allen accessed, had access to, or took with him upon termination of his employment with Plaintiff, any trade secret information, the Court dismissed the claim against Allen.
Unfair and Deceptive Trade Practices. Since the UDTPA claims were predicated on the misappropriation of trade secrets claims, the Court dismissed the UDTPA claim against Allen but allowed it to survive against Van Brunt and Onsemi.
Breach of Duty of Loyalty by Van Brunt. Construing the claim for breach of the duty of loyalty as a claim for breach of fiduciary duty, the Court concluded that Plaintiff had failed to allege the existence of a fiduciary duty. As alleged, Van Brunt was a research scientist, not an officer of Plaintiff, therefore, no de jure fiduciary relationship existed. Further, Plaintiff did not plead that Van Brunt exercised any dominion or control over Plaintiff such that a de facto fiduciary relationship existed. Accordingly, the Court dismissed this claim.
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Murphy-Brown, LLC v. Ace Am. Ins. Co., 2025 NCBC Order 19 (N. C. Super. Ct. Mar. 26, 2025) (Davis, J.)
Key Terms: motion in limine; expert witnesses; qualifications; vouching; Rule 702 of the North Carolina Rules of Evidence; Rule 1.5 of the Rules of Professional Conduct; block billing; forum rate rule; Real Rate Report; legal opinion
Plaintiffs originally sued various insurers who provided them with primary and excess insurance coverage, contending that the insurers were obligated to indemnify Plaintiffs for amounts paid to settle certain nuisance actions relating to Plaintiffs’ hog farms and to reimburse Plaintiffs for their defense costs for such underlying lawsuits. The Court previously determined that Defendant Ace breached its contractual duty to defend Plaintiff in those lawsuits and is required to reimburse Plaintiff for its Defense Costs. A jury trial on the issue of the reasonable amount of Defense Costs is scheduled. Presently before the Court are the parties’ motions to exclude, either in whole or in part, the opinion testimony of the opposing side’s expert witnesses regarding the reasonableness of the Defense Costs.
Plaintiff’s Motion to Exclude Defendant’s Expert Witness (Pierce)
Qualifications. Based on Pierce’s decades of experience as a complex commercial litigator, coupled with his experience consulting on attorneys’ fees cases, the Court was satisfied that Pierce had sufficient specialized knowledge regarding billing practices within the legal industry so as to be helpful to the jury in determining the reasonableness of the Defense Costs. Plaintiff’s concerns that Pierce’s lack of experience in the specific area of hog farm litigation and North Carolina litigation goes to the weight that the jury should give his opinions, not their admissibility.
Vouching. Plaintiff argued that Pierce’s opinions were unreliable because he took information and opinions provided by a legal auditing firm and presented them as his own. The Court disagreed, finding that based on the record, it appeared that the legal auditing firm merely performed organization and computational functions and that reliance on such work was permissible. Moreover, Plaintiff would have the opportunity to cross-examine Peirce on the role the legal auditing firm played in his analysis.
Consideration of the Rule 1.5 Factors. Plaintiff next argued that Pierce’s testimony should be excluded because he ignored Rule 1.5(a) of the North Carolina Rules of Professional Conduct, which governs the reasonableness of fees in North Carolina, in forming his opinions. The Court rejected this argument as it was clear that Pierce had considered at least some of the Rule 1.5 factors and the comments to Rule 1.5 make clear that not all of the factors were necessarily relevant to every case.
Reasonableness of Hourly Rates Charged. The Court also determined that Pierce’s reliance on the “Forum Rate Rule” and the Real Rate Report issued by Wolters Kluwer did not warrant exclusion of his testimony. Although North Carolina has never adopted the Forum Rate Rule by name, it has recognized that community rates in the geographic area of the litigation are relevant to the reasonableness determination. The reliability of the Real Rate Report went to the weight, rather than the admissibility, of Pierce’s opinion and could be examined at trial.
Redacted Time Entries. Plaintiff argued that Pierce should not be allowed to opine on the reasonableness of redacted time entries because, without the redacted information, he could not have formed a reliable opinion. The Court agreed and noted that Ace had forfeited its right to complain about the redactions by failing to object to them during discovery.
Vague and Block-Billed Time Entries. The Court concluded that Pierce could offer opinions as the unreasonableness of time entries based on vagueness or block-billing as North Carolina courts have allowed challenges to the reasonableness of claimed attorneys’ fees on these bases.
Alternative Fee Arrangement Invoices. The Court prohibited Pierce from opining regarding the reasonableness of certain invoices billed under an alternative fee arrangement because Pierce had not reviewed the detailed narrative time entries for those invoices and therefore could not have formed a reliable opinion as to their reasonableness.
Opinion on Legal Issues. The Court prohibited Pierce from testifying regarding legal issues or other cases as such testimony invades the province of the court to determine the applicable law and instruct the jury accordingly. Further, to the extent Pierce’s opinions addressed coverage defenses based on policy provisions, the Court had already ruled that Ace was estopped from asserting such defenses.
Defendant’s Motion to Exclude Plaintiff’s Expert Witness (DeGeorge)
The Court held that DeGeorge was prohibited from offering opinions at trial as to legal principles and from referencing case law while testifying. However, since Defendant failed to identify any other basis to exclude DeGeorge under Rule 702, he was not otherwise excluded from testifying as an expert.
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Hose Co. v. Smith, 2025 NCBC Order 20 (N. C. Super. Ct. Mar. 27, 2025) (Earp, J.)
Key Terms: Rule 65; preliminary injunction; non-competition; breach of contract; look-back rule; restraint of trade
Plaintiff The Hose Company LLC (“THC”) moved for a preliminary injunction prohibiting Defendant Smith from violating a Noncompetition Agreement he signed while a THC employee, which provided that, during his employment and for a period of two years after termination, he would not accept employment involving the same or similar services that he provided at THC, within a defined restricted territory. On January 2, 2024, Smith had resigned from THC and accepted employment with Triosim. It is undisputed that Triosim, through its subsidiaries, is involved in the industrial hose industry and that its sales territories overlap with THC’s.
The Court began by considering the two-year time restriction in the non-compete. Smith argued that the time period was unreasonable because the language of the restriction required the Court to apply the look-back rule and add in his seven years of employment. In response, THC argued that the look-back rule did not apply because it only applies when the restriction is tied to an employee’s contact with customers, not his job duties as it was here. Although the Court agreed that the look-back rule was applicable, it determined that the rule was not determinative in this case. The look-back rule is merely a tool used to determine whether a restriction is broader than necessary to protect an employer’s legitimate business interests. Here, the passage of time did not lessen the relevance of the information at issue because Smith’s testimony established that his most recent job duties at THC encompassed the duties of his prior position. Accordingly, the Court determined that the non-compete was reasonable as to time.
Turning to the territorial restrictions, the Court determined that the noncompete was unenforceable because it contained a nationwide restriction and THC had not met its burden to show that such a broad restriction was necessary. While the “Restricted Territory” was drafted in the alternative and THC encouraged the Court to apply the blue pencil rule, the Court lacked sufficient information about THC’s business to make a reasoned choice.
Moreover, even if the time and territory were reasonable, the non-compete was unenforceable as a matter of law because its second clause, which limited the services Smith could provide, was not restricted to a particular industry or business. Although Plaintiff urged the Court to use the blue pencil rule to eliminate this second clause, the Court determined that even though the clauses were joined by “or,” they were not distinctly separable and thus the blue pencil rule could not be applied.
Because Plaintiff had not shown it was likely to succeed on the merits of its breach of contract claim, the Court denied its motion for a preliminary injunction.
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Vista Horticultural, Inc. v. Johnson Price Sprinkle PA, 2025 NCBC Order 21 (N.C. Super. Ct. April 1, 2025) (Brown, J.)
Key Terms: motion in limine; expert witnesses and opinions; professional malpractice; negligence; taxes; N.C. R. Evid. 404; N.C. R. Evid 411; N.C. R. Evid. 401; N.C. R. Evid. 403
This is an accounting malpractice case concerning Defendants alleged failure to notify Plaintiff of its obligation to pay various state sales taxes based on sales made to residents of those states. Plaintiff contends that this failure caused it to incur an unexpected tax liability of $2.1 million. Prior to trial on Plaintiff’s claims against Defendant JPS for breach of contract and against JPS and Defendant Cheng for professional negligence/malpractice and common law negligence, the parties filed various motions in limine.
Plaintiff’s Motion to Exclude Expert Opinions. Plaintiff objected to the admissibility of certain testimony and opinions by Defendants’ expert. First, the Court granted the motion with respect to any testimony regarding anyone’s state of mind or Cheng’s credibility as these were the province of the jury. Second, the Court determined that Cheng and other JPS personnel could not be identified as experts to the jury but could, if otherwise qualified as experts, testify as to whether Cheng’s conduct met the standard of care. Third, the Court denied the motion to the extent it sought to preclude the expert from testifying regarding JPS’s passing scores on previous peer review reports because such testimony did not constitute inadmissible character evidence but was instead being used to show JPS’s capabilities, quality control standards, and experience. Finally, the Court granted Plaintiff’s motion to exclude any evidence, testimony, and opinions by Defendant’s expert regarding the percentage amount by which any compensatory damages award that the jury may award to Plaintiff must be reduced because of potential income tax savings Plaintiff may realize due to potential tax deductions. While there was no North Carolina case law on point, persuasive authority from other jurisdictions applied this general rule.
Defendants’ Motion to Exclude Any Evidence or Opinions at Trial Other than as Disclosed in Discovery. Defendants sought to preclude Plaintiff’s expert from testifying that Cheng violated the standard care because, according to Defendants, the expert’s report was limited to conclusions regarding JPS. The Court disagreed, finding that Defendants received ample notice that Plaintiff’s expert intended to opine on the failures of both JPS and Cheng to meet the professional standard of care, as it was clearly stated in Plaintiff’s notice of designation of expert witness, the expert’s summary judgment affidavit, and the expert’s report.
Defendants’ Motion to Prohibit Evidence of Effect on Judgment on the Parties. Based on N.C. R. Evid. 411, the Court granted Defendants’ motion to prohibit evidence of any insurance coverage available to Defendants. Based on N.C. R. Evid. 401 and 403, the Court also granted Defendants’ motion to prohibit evidence regarding tax consequences to Plaintiff.
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