Court Opinion

ID: 2726980
Source: CourtListenerOpinion
Date Created: 2014-09-08 21:10:31.48798+00
Date Added: 2024-06-11T12:56:40.772503
License: Public Domain

NO. COA14-185

                    NORTH CAROLINA COURT OF APPEALS

                           Filed: 5 August 2014

Beverage Systems of the Carolinas,
LLC,

    Plaintiff,

    v.                                     Iredell County
                                           No. 12 CVS 1519
Associated Beverage Repair, LLC,
Ludine Dotoli and Cheryl Dotoli,

    Defendants.

    Appeal by plaintiff from order entered 3 October 2013 by

Judge   A.   Robinson   Hassell    in   Iredell   County   Superior   Court.

Heard in the Court of Appeals 20 May 2014.

    Jones, Childers, McLurkin & Donaldson, PLLC, by Kevin C.
    Donaldson and Dennis W. Dorsey, for plaintiff-appellant.

    Eisele, Ashburn, Greene & Chapman,               PA,   by   Douglas   G.
    Eisele, for defendants-appellees.

    HUNTER, Robert C., Judge.

    Plaintiff timely appeals from an order entered 3 October

2013 granting defendants’ motion for summary judgment.                 After

careful review, because the trial court had express authority to

revise the restrictions of the non-compete agreement, we reverse

the trial court’s order and remand for the trial court to revise

the geographic area covered by the non-compete to include those
                                         -2-
areas   necessary      to        reasonably    protect       plaintiff’s     business

interests.      Furthermore,         since     there    is   a   genuine   issue    of

material fact as to whether Ludine Dotoli violated the revised

non-compete, we reverse the order granting summary judgment on

the breach of contract claim and remand for trial.                           Finally,

because plaintiff presented evidence showing a genuine issue of

material fact    for the           remaining    tort claims and request for

injunctive    relief,       we    reverse     the   order    granting    defendants’

motion for summary judgment and remand for trial.

                                      Background

     The pertinent facts alleged in plaintiff’s complaint are as

follows: In 2009, Mark Gandino (“Gandino”) created and organized

Beverage Systems of the Carolinas, LLC, a company that supplies,

installs, and services beverage products and beverage dispensing

equipment in North Carolina (“plaintiff”).                       Beginning in 2008

and continuing through 2009, Gandino negotiated with Thomas and

Kathleen     Dotoli,    the        parents     of      defendant    Ludine    Dotoli

(“Ludine”)1    (collectively,          Thomas,      Kathleen,      and   Ludine    are

referred to as “the Dotolis”), about the potential purchase of

the business and assets of Imperial Unlimited Services, Inc.

1
  Throughout their pleadings and brief, plaintiff and defendants
refer to Mr. Dotoli as “Ludine” even though it appears from his
affidavit that his name is spelled “Loudine.” For consistency,
we use the same spelling as the parties in this opinion.
                                       -3-
(“Imperial”)      and   Elegant   Beverage       Products,    LLC    (“Elegant”)

(collectively,      Imperial    and    Elegant    are    referred    to   as   “the

businesses”).      On or about 20 July 2009, plaintiff entered into

an “Asset Purchase Agreement” (the “Agreement”) with Elegant,

Imperial, and the Dotolis.            The Agreement provided for the sale

of Imperial’s and Elegant’s assets, trade names, customer lists,

accounts receivable, current customers and customer contracts,

all equipment, and real property.

    As   part     of    the   Agreement,     Thomas,     Kathleen,   and    Ludine

agreed   to     execute   a    “Non-Competition         Agreement”   (the      “non-

compete”).      Specifically, section 1 of the non-compete provided

that:

              Subject to the provisions of Section 6
              hereof, Seller and Shareholder shall not,
              from   the effective date of the Asset
              Agreement in the states of North Carolina or
              South Carolina until the earlier of (i)
              October   1,   2014    (the    “Non-Competition
              Period”), or (ii) such other period of time
              as may be the maximum permissible period of
              enforceability    of    this    covenant    (the
              “Termination   Date”),    without    the   prior
              written, consent of Purchaser, directly or
              indirectly, for himself or on behalf of or
              in conjunction with any person, partnership,
              corporation or other entity, compete, own,
              operate, control, or participate or engage
              in the ownership, management, operation or
              control of, or be connected with as an
              officer,    employee,     partner,     director,
              shareholder,    representative,     consultant,
              independent contractor, guarantor, advisor
                                      -4-
            or in any other manner or otherwise,
            directly or indirectly, have a financial
            interest in, a proprietorship, partnership,
            joint     venture,     association,   firm,
            corporation or other business organization
            or enterprise that is engaged in the
            business of the Purchaser or any of its
            respective affiliates or subsidiaries on
            behalf of clients (the “Business”).

The non-compete went on to say that:

            If, at the time of enforcement of any
            provisions of Sections 1, 3 or 4 hereof, a
            court holds that the restrictions stated
            herein are unreasonable under circumstances
            then existing, the parties hereto agree that
            the maximum period, scope or geographical
            area   that   are   reasonable  under   such
            circumstances shall be substituted for the
            stated period, scope or area, and that the
            court shall be allowed to revise the
            restrictions contained in Sections 1, 3 and
            4 hereof to cover the maximum period, scope
            and area permitted by law.

The   Dotolis     executed    the   non-compete   at     the    closing    on    30

September 2009.      Plaintiff claimed that it collectively paid the

Dotolis, Imperial, and Elegant $10,000 as consideration for the

non-compete.

      In March 2011, plaintiff learned that Ludine’s wife Cheryl

Dotoli    (“Cheryl”)    had    created    defendant    Associated     Beverage

Repair,    LLC,    (“Associated     Beverage”)    (for    purposes    of    this

opinion,     Associated       Beverage,     Ludine,       and     Cheryl        are

collectively referred to as “defendants”) and that Ludine was
                                              -5-
the manager of Associated Beverage.                       Moreover, plaintiff alleged

that    it   found      out    that     Ludine      was    soliciting         business     from

plaintiff’s       existing        customers,        specifically         PF    Chang’s       and

Bunn-O-Matic.

       On    8   July     2013,    plaintiff         filed     an    amended         complaint

alleging the following causes of action: (1) breach of the non-

compete      against      Ludine;       (2)    a    request       for    preliminary         and

permanent        injunctive       relief       against        Ludine;         (3)     tortious

interference with contract against all defendants; (4) unfair

and    deceptive     practices        against       all    defendants;         (5)    tortious

interference       with       prospective      economic       advantage        against       all

defendants; and (6) punitive damages.                         On 11 September 2013,

defendants filed a motion for summary judgment as to all causes

of action.         In support of their motion, defendants filed an

affidavit by Ludine claiming that “the deepest penetration by

either Elegant or Imperial for the conduct of their business

into South Carolina was Rock Hill . . . and to Spartanburg,” and

the “western-most penetration” included Gaffney.                               Furthermore,

Ludine averred that in North Carolina, the furthest west the

companies’       business       went     was       Morganton.           The    eastern-most

penetration       was     to     Wake     County.           Finally,      Ludine          denied

contacting,       communicating,         or    in    any    way     inducing        any    prior
                                        -6-
customers    of     Imperial     or   Elegance      or   present       customers    of

plaintiff into switching their business to Associated Beverage.

     The matter came on for hearing on 30 September 2013.                        On 3

October     2013,    the     trial    court       entered   an    order       granting

defendants’       motion   for    summary     judgment      as    to    all    claims.

Plaintiff timely appealed.

                               Standard of Review

     “Our standard of review of an appeal from summary judgment

is de novo; such judgment is appropriate only when the record

shows that there is no genuine issue as to any material fact and

that any party is entitled to a judgment as a matter of law.”

In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 573

(2008) (internal citations omitted).

                                      Arguments

I.   The Non-Compete Agreement

     Plaintiff       first    argues    that      the    trial    court   erred    in

granting    summary     judgment       on   its    breach    of    contract      claim

against Ludine.       Specifically, plaintiff contends that the non-

compete is valid as a matter of law and that there is an issue

of material fact as to whether Ludine violated it.                             In the

alternative, should the Court determine that the non-compete is

unenforceable as to South Carolina, plaintiff argues that the
                                          -7-
non-compete may still be enforced in North Carolina based on the

“blue pencil doctrine.”              Because the trial court had express

authority to revise the territorial restrictions of the non-

compete pursuant to the terms of the agreement, we reverse the

trial court’s order granting summary judgment and remand this

issue for the trial court to revise the geographic territories

to   include       those     areas     reasonably     necessary     to    protect

plaintiff’s       business    interests     acquired    by   the   purchase    of

Elegant and Imperial.             Furthermore, there is a genuine issue of

material fact as to whether Ludine violated the terms of the

non-compete for the jury to resolve.

                    It
                     is the rule today that when one
            sells a trade or business and, as an
            incident of the sale, covenants not to
            engage in the same business in competition
            with the purchaser, the covenant is valid
            and enforceable (1) if it is reasonably
            necessary to protect the legitimate interest
            of the purchaser; (2) if it is reasonable
            with respect to both time and territory; and
            (3) if it does not interfere with the
            interest of the public.

Jewel Box Stores Corp. v. Morrow, 272 N.C. 659, 662-63, 158

S.E.2d 840, 843 (1968).              Whether a covenant not to compete is

reasonable is a matter of law to be decided by the court.                      Id.

at   663,   158    S.E.2d    at    843.    “Greater    latitude    is    generally

allowed in these covenants given by the seller in connection
                                         -8-
with the sale of a business than in covenants ancillary to an

employment contract.”         Seaboard Indus., Inc. v. Blair, 10 N.C.

App. 323, 333, 178 S.E.2d 781, 787 (1971).                 Here, only the first

two elements need to be addressed since defendants did not argue

before    the    trial   court    nor    on    appeal    that    the    non-compete

interfered with the interest of the public.

  A. Legitimate Interest

       “A covenant must be no wider in scope than is necessary to

protect the business of the employer.”              Hartman v. W.H. Odell &

Associates, Inc., 117 N.C. App. 307, 316, 450 S.E.2d 912, 919

(1994) (internal quotation marks omitted).

       Here, the scope of prohibited employment activities in the

non-compete      is   reasonably      necessary     to     protect      plaintiff’s

business.       In his affidavit, Ludine stated that he had not only

been the creator and owner of Elegant, but he had also been the

“principal      technician”      of   Imperial.          Thus,   his     employment

activities for the businesses would have included both employee

ones     and    activities    related     to    management,      operation,     and

control.        The   non-compete       prohibits   Ludine       from    competing,

owning, managing, operating or controlling, or be connected to

someone who has a financial interest in any business involved in

the beverage dispensing or servicing industry.                    Thus, the non-
                                         -9-
compete prohibits Ludine from engaging in employment activities

he used to perform for Elegant and Imperial, and the scope of

the     non-compete     reasonably      protects        a    legitimate         business

interest of plaintiff.

  B. Time and Territory Reasonableness

       The non-compete restricted Ludine’s activities for a five-

year    period      following    the    sale     of     Elegant          and   Imperial.

Although      our     Court   has     stated     that       “[a]        five-year   time

restriction      is    the    outer    boundary       which        our     courts   have

considered reasonable” and has noted that five-year restrictions

“are not favored” in employment contracts, Farr Assocs., Inc. v.

Baskin, 138 N.C. App. 276, 280, 530 S.E.2d 878, 881 (2000),

“[i]n cases where the covenants not to compete accompanied the

sale of a trade or business, time limitations of ten, fifteen

and twenty years, as well as limitations for the life of one of

the parties, have been upheld by the Supreme Court of North

Carolina[,]”        Seaboard Indus., 10 N.C. App. at 335, 178 S.E.2d

at 788.       Furthermore, the five-year restriction was reasonable

based    on   Imperial’s      past    business   presence          in    the   industry.

Imperial had been operating since 1999.                       In fact, plaintiff

recognized how valuable Imperial’s presence was in the beverage
                                           -10-
dispensing industry and specifically purchased its                                 “goodwill”

for $100,000.         Accordingly, the time restraint was reasonable.

       With regard to the reasonableness of the territory, this

Court has noted that

               to 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. A restriction as to
               territory is reasonable only to the extent
               it protects the legitimate interests of the
               employer in maintaining its customers.   The
               employer   must  show  that   the  territory
               embraced by the covenant is no greater than
               necessary to secure the protection of its
               business or good will.

Hartman,    117    N.C.      App.   at    312,     450    S.E.2d       at    917    (internal

citations omitted).

       Here,    the     non-compete       was     limited       to     North       and   South

Carolina.         Ludine’s      affidavit         stated        that        Imperial’s      and

Elegant’s       combined      business      extended           from    Wake        County    to

Morganton in North Carolina.               In South Carolina, Ludine averred

that   their     business      only      reached    as     deep       as    Rock    Hill    and

Spartanburg       and   as    far   west    as     Gaffney.           Consequently,         the

geographic area covered by the non-compete was not limited to

places   where     Elegant      and      Imperial        had    former       customers      and

included areas not necessary to maintain plaintiff’s customer
                                      -11-
relationships; thus, it was unreasonable.2               Plaintiff requests

that should the Court find that the geographic territory in the

non-compete is overly broad, the Court should enforce the non-

compete   only    as   to   North    Carolina   under    the   “blue   pencil

doctrine.”

      North     Carolina    has     adopted   the   “strict    blue    pencil

doctrine”:

              When the language of a covenant not to
              compete is overly broad, North Carolina’s
              “blue pencil” rule severely limits what the
              court may do to alter the covenant. A court
              at most may choose not to enforce a
              distinctly separable part of a covenant in
              order to render the provision reasonable. It
              may not otherwise revise or rewrite the
              covenant.

Hartman, 117 N.C. App. at 317, 450 S.E.2d at 920.                Under this

doctrine, the trial court may use its inherent power to enforce

the   reasonable,      divisible      provisions    of   the   non-compete.

2
 It should be noted that any area in which plaintiff itself had
former or existing customers would also be reasonable to include
in the non-compete.     However, defendants contended in their
motion for summary judgment that “[t]here is no pleading or
proof that [plaintiff] operated anywhere in North Carolina or
South Carolina prior to concluding purchase of the assets of
Imperial and Elegant[.]” Plaintiff did not refute this nor did
it provide any evidence in the record that it either had been
operating in North or South Carolina prior to the acquisition or
that it has existing customers it did not acquire from Imperial
or Elegant.    Therefore, for purposes of reasonableness, only
former customers of Imperial and Elegant will determine the
scope of the territory.
                                      -12-
Welcome Wagon Int’l, Inc. v. Pender, 255 N.C. 244, 248, 120

S.E.2d 739, 742 (1961).

      We   agree     with   plaintiff      that,    under       the    “blue    pencil

doctrine,” the trial court could have, but chose not to, strike

the   unreasonable     territorial         provisions      of    the   non-compete.

However,    the    trial    court   had    authority    to       enforce     the   non-

compete     through     paragraph      six     of    the        non-compete        which

specifically and expressly gave the trial court authority to

“revise the restrictions . . . to cover the maximum period,

scope and area permitted by law.”                  In other words, the trial

court’s ability to revise the non-compete is not subject to the

restrictions of the “blue pencil doctrine” which prohibits a

trial court from revising unreasonable provisions in non-compete

agreements.        Instead,   here,     the   parties      included      a    specific

provision     in     the    non-compete—specifically,             paragraph        six—

enabling the trial court to revise the non-compete.                          Given the

fact that non-competes drafted based on the sale of a business

are   given   more    leniency      than    those   drafted       pursuant      to   an

employment contract since the parties are in relatively equal

bargaining positions, the trial court should not have held the

entire non-compete unenforceable nor should the trial court’s

power to revise and enforce reasonable provisions of the non-
                                         -13-
compete be limited under the “blue pencil doctrine.”                        Instead,

the trial court should have invoked its power under paragraph

six and revised the non-compete to make it reasonable based on

the evidence before it.

    The facts of this case are distinguishable from those in

which the trial court’s authority to revise a non-compete is

substantially    limited      by    the   “blue    pencil     doctrine”     because

those     non-competes      did    not    give    the      trial    court   express

authority to revise the agreements.               See Hartman, 117 N.C. App.

at 318, 450 S.E.2d at 920 (ruling that the non-compete “could

not be saved by ‘blue penciling’”); Manpower of Guilford Cnty.,

Inc. v. Hedgecock, 42 N.C. App. 515, 523, 257 S.E.2d 109, 115

(1979)    (noting    that    “th[e]      Court    cannot    in     the   absence   of

clearly      severable       territorial          divisions,         enforce       the

restrictions    only     insofar    as    they    are   reasonable”       under    the

“blue pencil doctrine”).           In contrast, pursuant to the sale of a

business,    these    parties,     who    were    at    arms-length      with   equal

bargaining power, agreed to allow the trial court to revise the

non-compete to make it reasonable, and the trial court should

have done so.        In sum, unlike previous cases, the parties here

specifically contracted to give the court power to revise the
                                             -14-
scope of the non-compete should part of it be determined to be

unenforceable.

       While this precise issue has not arisen in our Courts,

i.e., the right of a trial court to revise the provisions of a

non-compete based on the express language of the contract for

the    sale    of    a   business,      this       Court   has     noted   that    similar

language      has    appeared      in   a    franchisor-franchisee          contract     in

Outdoor Lighting Perspectives Franchising, Inc. v. Harders, __

N.C. App. __, 747 S.E.2d 256 (2013).                        In Outdoor Lighting, __

N.C. App. at __, 747 S.E.2d at 261, the franchise agreement

between the parties gave the franchisor the right to reduce the

scope of the non-compete, a right which the franchisor attempted

to invoke.          In looking at this particular provision, the Court

noted that “it appears, given the language of the agreement,

that    [the    franchisor]         had      the     right    to       modify    the   non-

competition         provision      in       this    manner       and     exercised     this

authority in an appropriate manner.”                       Id. at __, 747 S.E.2d at

265, n.3.      However, the Court was not required to “determine the

effectiveness of [that] exercise in private ‘blue penciling’”

because the modified geographic scope was still unreasonable.

Id.     Although         Outdoor    Lighting’s        holding      does    not    directly

affect the outcome in this case, it indicates a willingness of
                                         -15-
our   Courts     to   recognize        and      enforce     revised      non-compete

agreements when the parties contract for the right to revise a

non-compete outside the employment context.

      Finally, in recognizing the importance of allowing parties

who agree that provisions of a non-compete may be revised in an

effort to enforce them, we believe that this practice makes good

business    sense     and     better      protects     both       a    seller’s   and

purchaser’s interests in the sale of a business.                        It not only

protects the business interests of the purchaser, which is a

notable concern especially in cases where the seller, similar to

Elegant and Imperial, has spent a substantial amount of time

building    up   goodwill     in   a     particular    industry,       but   it   also

allows the seller to make more money than it would have had it

just sold the assets of the business.                 This is especially true

in North Carolina where our Supreme Court has been unwilling to

adopt a more flexible approach to the “blue pencil doctrine,”

leaving    the   courts     with   few    options     to    try   to   enforce    non-

competes in a rapidly changing economy.3                   In addition, potential

buyers may be reluctant to buy a business not only if a seller

3
  Judge Steelman highlighted this issue in his concurring opinion
in MJM Investigations, Inc. v. Sjostedt, 205 N.C. App. 468, 698
S.E.2d 202, 2010 WL 2814531, *5 (No. COA09-596) (July 20, 2010)
(unpublished), noting that: “The law of restrictive covenants
should be re-evaluated by our Supreme Court in the context of
changing economic conditions.”
                                        -16-
was unwilling to sign a non-compete but also if that non-compete

could not be modified and enforced by the courts.                          As a final

note, it is important to remember that, here, pursuant to the

sale of Imperial and Elegant, Ludine agreed to sign the non-

compete    and    was    compensated        for    that    agreement      as    well    as

getting, arguably, a higher price for the businesses’ assets.

Then, after allegedly violating the non-compete and being sued

by plaintiff, he asked the courts to hold the negotiated-for

non-compete invalid.

      In support of its conclusion that the trial court could not

have revised the non-compete despite the fact that paragraph six

explicitly gave it the power to, the dissent notes that the

language of paragraph six limits the trial court’s authority to

revise    to    that    “permitted     by    law.”        Thus,   according      to    the

dissent,       paragraph   six   “by    its       very    terms   makes    the    ‘blue

pencil’ doctrine applicable.”                However, this interpretation of

the   language     of    paragraph     six    would       construe   the       provision

meaningless.        By this logic, the parties would be giving the

trial court authority to revise the agreement but, in the same

sentence, restrict its power under the “blue pencil doctrine”

which expressly prohibits any and all revisions by the trial

court.
                                     -17-
      Instead, in interpreting the language of paragraph six, the

phrase “permitted by law” applies to how the trial court revises

the agreement, requiring it to revise under the parameters of

reasonableness in terms of time and territory.                  On remand, the

trial court is tasked with revising the territorial restrictions

of the non-compete to make them reasonable based on the former

client base of Imperial and Elegant.           Thus, by the terms of this

opinion, the trial court is revising the scope in such a way as

to make it enforceable, i.e., “permitted,” by law.

      For all the above mentioned reasons, we reverse the trial

court’s   order   and   remand   this   matter      to    the   trial    court   to

revise    the   non-compete   provisions      after      determining     where   in

North Carolina and South Carolina it would be reasonable to

enforce the non-compete based on Elegant’s and Imperial’s former

customer base.

      In addition, although, as a matter of law, the trial court

should have revised the non-compete to make it reasonable and

enforceable, there exists a genuine issue of material fact as to

whether Ludine violated the non-compete.              Plaintiff alleged that

its   customers    claimed    that   Ludine   was     attempting    to    solicit

their business to Associated Beverage.              Although Ludine refutes

this in his affidavit, “[c]ontradictions or discrepancies in the
                                    -18-
evidence must be resolved by the jury rather than the trial

judge[,]”      Martishius v. Carolco Studios, Inc., 355 N.C. 465,

481, 562 S.E.2d 887, 897 (2002).                Thus, once the trial court

revises the non-compete to include only those areas reasonably

necessary to protect plaintiff’s business interests, the issue

of whether Ludine violated the non-compete should be tried to

determine whether Ludine violated the non-compete.

II.   Tortious Interference with a Contract

      Next,    plaintiff   argues   that        the    trial   court   erred   in

granting      summary   judgment    as     to    its     claim   for   tortious

interference with a contract.            Specifically, plaintiff contends

that it had implied-in-fact contracts with third parties based

on past business dealings and that there is a material issue of

fact as to whether defendants interfered with those contracts.

                   To establish a claim for tortious
              interference with contract, a 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 to plaintiff.

Sellers v. Morton, 191 N.C. App. 75, 81, 661 S.E.2d 915, 921

(2008).
                                             -19-
      Here, plaintiff has forecasted evidence that it had implied

contracts with third-party customers.                       Although it is undisputed

that plaintiff did not have express contracts with third-party

customers,    plaintiff          presented         evidence       showing      conduct      that

created implied contracts.                  “An implied in fact contract is a

genuine     agreement       between          parties;       its    terms       may    not     be

expressed in words, or at least not fully in words.                                  The term,

implied in fact contract, only means that the                                 parties had a

contract that can be seen in their conduct rather than in any

explicit set of words.”                    Miles v. Carolina Forest Ass’n, 167

N.C. App. 28, 35-36, 604 S.E.2d 327, 333 (2004); see also Archer

v. Rockingham Cnty., 144 N.C. App. 550, 557, 548 S.E.2d 788, 793

(2001)    (“An     implied       contract          refers    to    an    actual       contract

inferred from the circumstances, conduct, acts or relations of

the   parties,         showing    a     tacit       understanding.”).             Defendants

described the businesses’ relationship with its customers as:

“so long as Imperial provided its services competently and at

reasonable rates, its customers kept calling back for additional

services.         So    long     as    Elegant       called       on    its   accounts      and

successfully       promoted       and       sold    the     coffee      and   tea     products

provided     to        Elegant        by     its     vendors,          Elegant       continued

representing its suppliers.”                       Thus, there was evidence of a
                                       -20-
substantial     business    relationship      between     the    businesses         and

third-party customers based on the prior dealings between the

parties.     Accordingly, plaintiff satisfied its burden of showing

a genuine issue of fact as to this first element since “the

legal effect of an implied in fact contract is the same as that

of an express contract in that it too is considered a ‘real’

contract or genuine agreement between the parties[,]” Miles, 167

N.C. App. at 36, 604 S.E.2d at 333.

      With    regard   to   the      second    element,    it        is    undisputed

defendants knew about those contracts since plaintiff acquired

those customers when it purchased Elegant and Imperial.                            Thus,

defendants would have been aware of those contracts.                        As to the

third element, plaintiff has forecasted evidence that Ludine, on

behalf of Associated Beverage, induced or attempted to induce

the customers to switch their business to defendants.

      Regarding the fourth element, this Court has noted that:

“In   order     to   demonstrate       the    element     of     acting       without

justification,       the    action     must     indicate        no        motive     for

interference other than malice.”              Area Landscaping, L.L.C. v.

Glaxo-Wellcome, Inc., 160 N.C. App. 520, 523, 586 S.E.2d 507,

510   (2003)    (internal    quotation        marks   omitted).             Plaintiff

alleged      that    defendants      maliciously      interfered            with    the
                                          -21-
 contracts in violation of the non-compete.                   As discussed above,

 because there is a genuine issue of fact as to whether Ludine

 violated the non-compete once it has been revised on remand,

 there is also a genuine issue of fact as to whether he acted

 without justification.

        Finally,       with    regard    to   the     last    element,    plaintiff

 forecasted evidence that it suffered damages in the form of lost

 business and lost profits.             Specifically, plaintiff claimed that

 although it used to generate $70,000 in business, it now only

 generates $20,000 based on defendants’ alleged interference with

 third-party customers.           Thus, in sum, plaintiff has forecasted

 evidence    for       each   element    of   tortious       interference   with    a

 contract,      and    the    trial   court   erred    in    granting    defendants’

 motion for summary judgment as to this claim.

III.    Tortious Interference with a Prospective Economic Advantage

        Next,     plaintiff     argues    that   the    trial     court   erred    in

 granting defendants’ summary judgment motion on its claim for

 tortious interference with a prospective economic advantage.

        “In order to maintain an action for tortious interference

 with prospective advantage, a [p]laintiff must show that [the]

 [d]efendants induced a third party to refrain from entering into

 a     contract       with    [the]     [p]laintiff     without     justification.
                                             -22-
Additionally,         [the]    [p]laintiff             must    show     that    the   contract

would    have    ensued       but    for    [the]       [d]efendants’          interference.”

DaimlerChrysler Corp. v. Kirkhart, 148 N.C. App. 572, 585, 561

S.E.2d 276, 286 (2002).

      Here,      as    discussed,          plaintiff          alleged    that    third-party

customers       switched      their        business       to    defendants       instead       of

continuing        their       business           relationships           with     plaintiff.

Furthermore, as noted above, defendants were not justified in

their    conduct       because,      according          to     plaintiff’s      contentions,

they did so in violation of the non-compete signed by Ludine.

Accordingly, there is a genuine issue of fact whether customers

refrained from entering into contracts or continuing previous

implied contracts with plaintiff but for defendants’ unjustified

interference.          Therefore,          the    trial       court     erred    in   granting

summary judgment on this claim.

IV.   Unfair and Deceptive Practices or Acts

      Next,      plaintiff      argues        that       the    trial     court       erred    in

granting    summary        judgment         as    to     his    claim     for    unfair       and

deceptive practices            or acts.          Specifically, plaintiff contends

that since there is a material issue of fact whether defendants

solicited       business      away    from        plaintiff       and    whether      Ludine’s

breach     of    the     non-compete             was    accompanied        by    aggravating
                                      -23-
factors, the unfair and deceptive practice claim survives as

well.

    “Although       [N.C.   Gen.    Stat.    §   75-1.1]      was   intended    to

benefit consumers, its protections do extend to businesses in

appropriate situations.”           DaimlerChrysler Corp., 148 N.C. App.

at 585, 561 S.E.2d at 286.          To prevail on a claim of unfair and

deceptive      practices,   a   plaintiff      must   show:    “(1)   defendants

committed an unfair or deceptive act or practice; (2) in or

affecting commerce; and (3) that plaintiff was injured thereby.”

First Atl. Mgmt. Corp. v. Dunlea Realty Co., 131 N.C. App. 242,

252, 507 S.E.2d 56, 63 (1998).

    Here,       plaintiff’s     unfair   and     deceptive    practices      claim

rests on its claims for Ludine’s breach of the non-compete,

tortious interference with contract, and tortious interference

with an economic advantage.          Initially, we note that plaintiff’s

claims   for    tortious    interference       with   contract      and   tortious

interference with an economic advantage allege that defendants

engaged in an unfair method of competing with plaintiff.                        As

discussed above, since there is a material issue of fact whether

defendants solicited business away from plaintiff in violation

of the non-compete, plaintiff’s allegations may also maintain an

unfair and deceptive practice claim.
                                           -24-
      With regard to plaintiff’s contention that its unfair and

deceptive practices claim could be based upon Ludine’s breach of

the   non-compete,         “a      mere     breach     of     contract,        even     if

intentional, is not sufficiently unfair or deceptive to sustain

an action under N.C.G.S. § 75–1.1.                     The plaintiff must show

substantial aggravating circumstances attending the breach to

recover    under    the    Act.”          Eastover   Ridge,        L.L.C.     v.    Metric

Constructors, Inc., 139 N.C. App. 360, 368, 533 S.E.2d 827, 833

(2000) (internal quotation marks and citations omitted).                             Here,

plaintiff     has     pled       sufficient       facts      showing        aggravating

circumstances accompanying Ludine’s alleged breach of the non-

compete to support its unfair and deceptive practices claim.

This Court has noted that “[a]ggravating circumstances include

conduct of the breaching party that is deceptive[,]” and, when

determining whether conduct is deceptive, “its effect on the

average consumer is considered.”                  Becker v. Graber Builders,

Inc., 149 N.C. App. 787, 794, 561 S.E.2d 905, 910 (2002).                               As

discussed, Ludine had been involved in the industry for over

fifteen     years   and      had    built     significant          goodwill    in     this

particular area.          As part of the sale of Elegant and Imperial,

Ludine    agreed    to    sign     a     non-compete    agreement,        which      would

presumably     have       been      an     important        part     of     plaintiff’s
                                         -25-
willingness      to    buy     the    businesses.           Then,     according       to

plaintiff,    Ludine     purposefully       violated        it   in   an   effort     to

solicit   customers      to    his    wife’s    new    business.           Given   that

plaintiff    has      pled    facts   alleging     that      Ludine    purposefully

violated an agreement which served as important consideration

for plaintiff’s decision to buy Imperial and Elegant, plaintiff

has   sufficiently      pled    facts    showing      the   egregious        nature   of

Ludine’s breach of the non-compete to survive summary judgment.

Accordingly,     plaintiff      has     forecasted     evidence       that    Ludine’s

breach of the non-compete was deceptive and was sufficient to

maintain an unfair and deceptive practice claim.

V.    Injunctive Relief

      Finally, plaintiff contends that the trial court erred in

granting summary judgment on its claim for injunctive relief.

Specifically, plaintiff alleges that it has shown the likelihood

of success on the merits of its case; thus, it is entitled to

pursue injunctive relief.

      “Because     a    preliminary      injunction         is   an   extraordinary

measure, it will issue only upon the movant’s showing that: (1)

there is a likelihood of success on the merits of his case; and

(2) the movant will likely suffer irreparable loss unless the

injunction is issued.”          VisionAIR, Inc. v. James, 167 N.C. App.
                                          -26-
504, 508, 606 S.E.2d 359, 362 (2004) (internal quotation marks

omitted).       Here, because it held the non-compete unenforceable,

the trial court necessarily found that plaintiff failed to show

there was a likelihood of success on its breach of contract

claim.        However, as discussed above, because we are reversing

the trial court’s order and remanding the non-compete to the

trial court to exercise its authority to revise the geographic

scope    of    the   non-compete        based    on    paragraph      6    of    the    non-

compete,      the    trial    court     must    determine       whether        there    is   a

likelihood of success on the merits of plaintiff’s breach of

contract claim based on the revised non-compete.                                Should the

trial court conclude there is, it must also determine “whether

the issuance of the injunction is necessary for the protection

of plaintiff’s rights during the course of litigation; that is,

whether       plaintiff      has   an    adequate      remedy    at   law.”            A.E.P.

Indus., Inc. v. McClure, 308 N.C. 393, 406, 302 S.E.2d 754, 762

(1983).       Based on these considerations, the trial court should

determine whether plaintiff is entitled to injunctive relief.

                                        Conclusion

      Because the trial court had the express authority to revise

the geographic scope of the non-compete based on the terms of

the   agreement,      we     remand     for    the    trial   court       to   revise    the
                                    -27-
territorial area of the non-compete to include those areas where

Elegant and Imperial had former customers.                Since there is a

genuine   issue   of   material    fact    whether     Ludine   violated   the

revised   non-compete,    we   reverse      the   order   granting   summary

judgment on plaintiff’s breach of contract claim.               In addition,

we   conclude   that   plaintiff   has     presented    evidence   showing   a

genuine issue of material fact on its remaining tort claims and

request for injunctive relief.           Therefore, we reverse the order

granting summary judgment on those claims and remand for trial.

      REVERSED AND REMANDED.

      Judge McGEE concurs.

      Judge ELMORE dissents by separate opinion.
                                       NO. COA14-185

                           NORTH CAROLINA COURT OF APPEALS

                                 Filed: 5 August 2014

Beverage Systems of the
Carolinas, LLC,

       Plaintiff,

       v.                                           Iredell County
                                                    No. 12 CVS 1519
Associated Beverage Repair,
LLC, Ludine Dotoli and
Cheryl Dotoli,

       Defendants.

       ELMORE, Judge., dissenting.

       Because I believe the “blue pencil” doctrine applies to the

parties’ provision in the non-compete purportedly enabling the

trial   court    to     rewrite      or    modify    the   unreasonable     territory

restrictions, I would affirm the trial court’s order granting

summary judgment for defendants on plaintiff’s claim of breach

of the non-compete.           I would also affirm the trial court’s order

granting defendants’ motion for summary judgment on plaintiff’s

cause   of     action      for   tortious      interference     with    a    contract

because plaintiff did not forecast enough evidence of conduct to

show    that    it    formed      an      implied    contract-in-fact       with   its

customers.            As     such,        plaintiff’s      claims     for    tortious

interference with a prospective economic advantage, unfair and
                                       -2-
deceptive       trade    practices,        and     injunctive     relief       would

necessarily fail, and I would affirm the trial court’s order as

to those issues.

                                    I. Analysis

a.) Breach of the non-compete

      Plaintiff argues that the trial court erred in granting

defendants’ motion for summary judgment on plaintiff’s claim for

breach of the non-compete.         I disagree.

      “Our standard of review of an appeal from summary judgment

is de novo; such judgment is appropriate only when the record

shows that ‘there is no genuine issue as to any material fact

and that any party is entitled to a judgment as a matter of

law.’”   In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572,

576 (2008) (quoting Forbis v. Neal, 361 N.C. 519, 523-24, 649

S.E.2d   382,    385    (2007)).      We    must    consider    “the   pleadings,

affidavits and discovery materials available in the light most

favorable to the non-moving party[.]”               Pine Knoll Ass'n, Inc. v.

Cardon, 126 N.C. App. 155, 158, 484 S.E.2d 446, 448 (1997).

      While I agree with the majority that the geographic area

covered by the non-compete was overbroad and thus unreasonable,

the   majority     further    concludes      that     “the     trial   court    had

authority to enforce the non-compete through paragraph six of
                                          -3-
the non-compete which specifically and expressly gave the trial

court    authority    to    ‘revise     the     restrictions’      ‘to    cover   the

maximum period, scope and area permitted by law.’”                        Thus, the

majority rules that the “blue pencil” doctrine is inapplicable

in the present case due to the parties’ aforementioned agreed

upon provision.

       Parties to a contract “may bind themselves as they see fit

. . . unless the contract would violate the law or is contrary

to public policy.”          Lexington Ins. Co. v. Tires Into Recycled

Energy & Supplies, Inc., 136 N.C. App. 223, 225, 522 S.E.2d 798,

800 (1999) (citation and quotation marks omitted).                        The “blue

pencil”      doctrine,     in   part,   serves     to    prevent    a    court    from

“draft[ing] a new contract for the parties.”                    Seaboard Indus.,

Inc.    v.   Blair,   10    N.C.   App.    323,   337,    178   S.E.2d     781,    790

(1971).      The doctrine drastically restricts a court’s authority

to modify an overly broad territory restriction: “A court at

most may choose not to enforce a distinctly separable part of a

covenant in order to render the provision reasonable.                        It may

not otherwise revise or rewrite the covenant.”                     Hartman v. W.H.

Odell & Associates, Inc., 117 N.C. App. 307, 317, 450 S.E.2d

912, 920 (1994).
                                         -4-
    Here, the provision that purportedly gives the trial court

authority to rewrite the non-compete’s unreasonable territory

restrictions states, in part:

            If, at the time of enforcement . . . a court
            holds that the restrictions stated herein
            are unreasonable under the circumstances
            then existing, the parties hereto agree that
            . . . the court shall be allowed to revise
            the restrictions contained . . . to cover
            the maximum period, scope and area permitted
            by law.”

(emphasis    added).        The    language    of   the   provision   expressly

limits a court’s revision to that “permitted by law.”                 Thus, the

provision by its very terms makes the “blue pencil” doctrine

applicable.    Alternatively, the provision is unenforceable as it

violates the “blue pencil” doctrine on its face.                 Under either

scenario, the “blue-pencil” doctrine applies.

    The     trial   court    was    correct    by   not   rewriting   the   non-

compete to make it reasonable because the law makes clear that a

court cannot engage in such action.                 However, the trial court

has the authority to enforce portions of a non-compete that are

reasonable    and   disregard      the   remaining    portions   if   the   non-

compete divides the restricted area into distinct units.                     See

Welcome Wagon Int’l, Inc. v. Pender, 255 N.C. 244, 248, 120

S.E.2d 739, 742 (1961).            While the non-compete in the case at
                                       -5-
bar divides the restricted territory into North Carolina and

South Carolina, the trial court did not enforce any portion of

the   non-compete    because    neither       of   those   restrictions    taken

separately are reasonable, even in light of the deference given

towards non-compete covenants resulting from business sales.                   In

sum, the non-compete’s territory restrictions were unreasonable,

and the trial court was without legal authority to rewrite or

modify the territory restrictions irrespective of the parties’

contractual provision providing otherwise.

       While the majority relies on Outdoor Lighting Perspectives

Franchising, Inc. v. Harders, ___ N.C. ___ App. ___, 747 S.E.2d

256 (2013) in support of its holding, that case addressed a

franchisor’s (a party to the non-compete), as opposed to a trial

court’s, right to modify a non-compete outside the context of a

business sales contract.         Id. at ___, 747 S.E.2d at 265, n.3.

The    majority     asserts    that     Outdoor     Lighting      “indicates    a

willingness of our courts to recognize and enforce revised non-

compete agreements[.]”         However, the majority’s ruling in this

case takes a far more drastic approach, ordering the trial court

to    undertake   the   revising      and    rewriting     of   the   non-compete

rather than the contracting party.
                                          -6-
      In light of these reasons, I would affirm the trial court’s

order granting summary judgment for defendants on plaintiff’s

claim    of    breach   of    the   non-compete       because      the   covenant   is

unenforceable and invalid.

b.) Tortious Interference With a Contract

      Next, the majority agrees with plaintiff’s argument that

the trial court erred in granting defendants’ motion for summary

judgment       on   plaintiff’s       cause      of     action       for    tortious

interference with a contract.              Plaintiff avers that a contract

implied-in-fact         existed     between      itself      and     its    customers

acquired from the agreement.           I disagree.

      The first element of tortious interference with contractual

rights    is    “(1)    the    existence    of    a    valid     contract    between

plaintiff and a third party[.]”             Barker v. Kimberly-Clark Corp.,

136 N.C. App. 455, 462, 524 S.E.2d 821, 826 (2000) (citation

omitted).       Mutual assent of both parties to the terms of a

contract “is essential to the formation of any contract . . . so

as to establish a meeting of the minds.”                  Connor v. Harless, 176

N.C. App. 402, 405, 626 S.E.2d 755, 757 (2006) (citation and

quotation omitted).            Mutual assent is typically formed “by an

offer by one party and an acceptance by the other, which offer

and   acceptance       are    essential    elements     of   a     contract.”       Id.
                                      -7-
(citation and quotation omitted) (emphasis in original).                              An

implied    contract-in-fact      is   “as    valid     and    enforceable       as    an

express contract.”         Creech v. Melnik, 347 N.C. 520, 526, 495

S.E.2d 907, 911 (1998) (citation omitted).                   The formation of an

implied contract “arises where the intent of the parties is not

expressed, but an agreement in fact, creating an obligation, is

implied or presumed from their acts.”                 Id. (citation omitted).

The conduct of the parties shall imply an offer and acceptance.

Revels v. Miss Am. Org., 182 N.C. App. 334, 337, 641 S.E.2d 721,

724 (2007).

    Here,      plaintiff       concedes     that     “there     are    no    written

[customer] contracts.           The [defendants] didn’t have any when

they sold the business nor did [plaintiff].”                  However, plaintiff

alleges    that    defendants     “w[ere]    aware     of     the   contracts        and

customers transferred to [plaintiff] at the time of purchase of

the Business.”

    In support of its contention that a contract implied-in-

fact existed with customers, plaintiff referenced 1.) Gandino’s

affidavit     stating    that     plaintiff        conducted        business     with

customers who “had engaged in a regular course of conduct and

business    relationships      with   Imperial     and/or      Elegant      since     at

least     2007”;   and   2.)    Ludine      Dotoli’s    affidavit        that    “the
                                                      -8-
arrangement         was        that    so    long       as    Imperial        provided       competent

services at reasonable rates, its customers kept calling back

for    additional          services.             So     long    as        Elegant    called    on   its

account and successfully promoted and sold the coffee and tea

products      provided           to    it        by    its     vendors,           Elegant    continued

representing             its     suppliers.”                 Contrary        to     the     majority’s

holding,          the    forecast           of    evidence           put     forth    by    plaintiff

suggesting a general business relationship with its customers

was insufficient evidence to constitute an offer, acceptance,

mutual assent, or obligation to fulfill specific terms of an

agreement.              Thus,     I    would          affirm     the        trial    court’s       order

granting defendants’ motion for summary judgment on this issue

because plaintiff did not forecast enough evidence of conduct to

show       that     it     formed       an       implied        contract-in-fact            with     its

customers.

c.) Tortious Interference With a Prospective Economic Advantage

       Plaintiff          also        argues          that     the        trial    court    erred    in

granting defendants’ motion for summary judgment on plaintiff’s

cause of action for tortious interference with a prospective

economic advantage.               I disagree.

       A    plaintiff           bringing          a     cause        of     action    for     tortious

interference             with     a     prospective              economic           advantage       must
                                          -9-
establish that “the defendant, without justification, induced a

third party to refrain from entering into a contract with the

plaintiff, which would have been made absent the defendant’s

interference.”        MLC Auto., LLC v. Town of S. Pines, 207 N.C.

App. 555, 571, 702 S.E.2d 68, 79 (2010) (citation omitted).

     As previously discussed, plaintiff did not establish the

existence     of     any      contracts        with    its    customers.           Thus,

plaintiff’s forecast of evidence necessarily does not and cannot

identify any actual contract that defendants induced customers

to   refrain        from      entering.           Moreover,       plaintiff        never

specifically        alleges      defendants’     inducement       to    refrain     from

entering      a     contract,       but    merely       states,        “[a]bsent     the

Defendants’ interference, [plaintiff] would have maintained its

customer base[,]” “Defendants have purposely and intentionally

interfered with the contracts . . . of [plaintiff] with the

intent   to   steal        the   customers[,]”        “Defendants      have   directly

contacted     and    solicited      the   customers      of   [plaintiff][,]”        and

“Defendants         have     interfered        with     [plaintiff’s]         business

relationships[.]”

     While        plaintiff       had     an    expectation       of     a    business

relationship with its customers, it forecasts no evidence in the

record to show that but for defendants’ actions, contracts with
                                           -10-
its customers would have been formed.                        Plaintiff merely makes

general and speculative allegations regarding potential future

contracts:     “As     a    result        of    Defendants’      interference        with

[plaintiff’s]      business       relationships         and    business      expectancy,

[plaintiff] has suffered damages . . . in excess of $10,000.00.”

Plaintiff’s expectation of a business relationship with current

customers    is    insufficient       by       itself   to    establish      a   tortious

interference with a prospective economic advantage claim.                                See

Dalton v. Camp, 353 N.C. 647, 655, 548 S.E.2d 704, 710 (2001)

(rejecting a claim for tortious interference with a prospective

economic advantage claim because “while [plaintiff] may have had

an   expectation       of    a    continuing       business      relationship            with

[customer], at least in the short term, he offers no evidence

showing     that     but    for    [defendant’s]         alleged     interference          a

contract would have ensued”).                  Thus, I would affirm the trial

court’s order granting summary judgment in favor of defendants

on this issue.

d.) Unfair and/or Deceptive Trade Practices

     Next,    plaintiff          argues    that    the       trial   court       erred     in

granting summary judgment for defendants on plaintiff’s claim

for unfair and deceptive trade practices.                     I disagree.
                                           -11-
       Plaintiff       contends     that    claims        involving         breach     of     a

covenant not to compete, tortious interference with contracts,

and tortious interference with a prospective economic advantage

form     the    basis    for   claims       of    unfair       and    deceptive        trade

practices.        Even if we assume arguendo that this is true under

North Carolina law, plaintiff argues that the trial court erred

in     granting    summary     judgment      on     the       issue    of     unfair        and

deceptive      trade     practices   because       “[plaintiff]         has    set     forth

sufficient evidence to establish material questions of fact as

to each element of its claims” for tortious interference with a

contract,       tortious    interference          with    a    prospective       economic

advantage, and breach of the non-compete.                        Since I would rule

that plaintiff failed to establish genuine issues of material

facts     on    those     claims,    plaintiff’s          claim       for     unfair        and

deceptive trade practices would necessarily also fail.

e.) Injunctive Relief

       Finally, plaintiff argues that it is entitled to injunctive

relief because it has established that the trial court erred in

granting       summary    judgment   for     defendants.             However,    since        I

would hold that the trial court did not err in granting summary

judgment, plaintiff’s argument for injunctive relief would be

meritless.
                              -12-
                         II. Conclusion

    In sum, I would affirm the trial court’s order granting

defendants’ motion for summary judgment because no genuine issue

of material fact exists as to plaintiff’s claims for breach of

the non-compete, tortious interference with a contract, tortious

interference with a prospective economic advantage, unfair and

deceptive trade practices, and injunctive relief.