Opinion
No. COA18-498
11-20-2018
EAST HARDWOOD COMPANY, INC., Plaintiff, v. CHARLES E. TRADER, Defendant.
Kirkman, Whitford, Brady, Berryman & Gordon, P.A., by Jane A. Gordon, for plaintiff-appellee. Dunn, Pittman, Skinner & Cushman, PLLC, by Raymond E. Dunn, Jr., for defendant-appellant.
An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure. Carteret County, No. 17 CVS 1052 Appeal by defendant from injunction entered 1 December 2017 by Judge R. Kent Harrell in Carteret County Superior Court. Heard in the Court of Appeals 31 October 2018. Kirkman, Whitford, Brady, Berryman & Gordon, P.A., by Jane A. Gordon, for plaintiff-appellee. Dunn, Pittman, Skinner & Cushman, PLLC, by Raymond E. Dunn, Jr., for defendant-appellant. TYSON, Judge.
Charles E. Trader ("Defendant") appeals the trial court's order granting East Hardwood Company, Inc.'s ("Plaintiff") motion for preliminary injunction. We dismiss this interlocutory appeal, without prejudice.
I. Background
Plaintiff is a building supply company operating in eastern North Carolina, primarily in Carteret, Craven, Onslow, and Pender Counties. For several decades, Plaintiff has sold and delivered building materials and supplies to contractors and property owners throughout the eastern part of the state.
Defendant was employed as a salesman by Plaintiff from April 2011 until July 2017. Defendant operated a company-owned van to travel and sell pneumatic nails to contractors and subcontractors. Defendant's responsibilities also included servicing and repairing nail guns for customers.
On 26 June 2014, Plaintiff and Defendant entered into an employment agreement ("the Agreement"), which contained a confidentiality provision and a non-competition provision. As consideration for the Agreement, Plaintiff modified Defendant's compensation structure, resulting in an increase in available commissions to Defendant.
The Agreement's confidentiality provision barred Defendant from "disseminat[ing]" the names and addresses of current or prospective clients of Plaintiff and any information regarding product lines and pricing of products sold by Plaintiff, except information "generally available to third parties unrelated to" Plaintiff. The Agreement's non-competition covenant barred Defendant from "accept[ing] employment from any third party, which employment requires as one of its duties the sale of materials and products within Carteret County, Onslow County, Pender County or Craven County, which products were available for sale by [Defendant] as an employee of [Plaintiff]" for a period of twelve months after termination.
On 19 July 2017, Defendant gave notice to his supervisor that he was terminating his employment with Plaintiff, effective two weeks from the date of that notice. Defendant became employed by one of Plaintiff's competitors, Parks Building Supply ("Parks"), which sells building materials and supplies across eastern North Carolina, including the four named counties covered by the Agreement's non-competition clause.
Plaintiff commenced this action by filing a verified complaint and motion for preliminary injunction on 30 October 2017, seeking: (1) a ruling that Defendant breached the Agreement; and (2) preliminary and permanent injunctions barring Defendant from "selling and/or attempting to sell nails and other building materials to customers in Carteret, Craven, Onslow or Pender Counties for the duration of the term of the Non-Competition Agreement."
During the hearing on Plaintiff's motion for preliminary injunction, Defendant testified his job responsibilities at Parks included selling nails and other building materials to contractors in the eastern portions of North and South Carolina. Defendant admitted to selling nails to customers, some of whom he had previously sold to during his employment with Plaintiff, in the four counties covered by the Agreement's non-competition covenant. Defendant further testified he sold nails for Parks "from Greenville to Myrtle Beach" and spent three days a week selling building supplies to customers in Leland in Brunswick County, which is located outside of the four named counties covered by the Agreement's non-competition covenant.
The trial court concluded Plaintiff "has established a reasonable likelihood of success on the merits," and granted Plaintiff's motion for preliminary injunction. The trial court enjoined Defendant from "any employment for any third party, which employment requires as one of its duties the sale of materials and products within [the four counties listed in the Agreement], which products were available for sale by Defendant as an employee of Plaintiff." Defendant timely filed notice of appeal.
II. Jurisdiction
A. Interlocutory Appeal
All parties agree the injunction from which Defendant appeals is interlocutory. QSP, Inc. v. Hair, 152 N.C. App. 174, 175, 566 S.E.2d 851, 852 (2002) ("Appeal of a trial court's ruling on a motion for preliminary injunction is interlocutory."). "An order or judgment is interlocutory if it is made during the pendency of an action and does not dispose of the case but requires further action by the trial court in order to finally determine the entire controversy." N.C. Dep't of Transp. v. Page, 119 N.C. App. 730, 733, 460 S.E.2d 332, 334 (1995) (citation omitted).
To be reviewable on appeal, "the trial court's order must: (1) certify the case for appeal pursuant to N.C. R. Civ. P. 54(b); or (2) have deprived the appellant of a substantial right that will be lost absent review before final disposition of the case." Bessemer City Express, Inc. v. City of Kings Mountain, 155 N.C. App. 637, 639, 573 S.E.2d 712, 714 (2002) (citations omitted). The order granting Plaintiff's motion for preliminary injunction was not certified by the trial court as immediately appealable under N.C. R. Civ. P. 54(b).
B. Substantial Right
Defendant argues the trial court's order affects his substantial right to earn a living and he will be irreparably harmed, unless the preliminary injunction is vacated. Defendant further asserts this Court has jurisdiction over this appeal because the trial court's conclusion of law number six is the equivalent of a formal judgment, because it "in effect determines the action and prevents a judgment from which an appeal might be taken."
A substantial right is "a legal right affecting or involving a matter of substance as distinguished from matters of form: a right materially affecting those interests which a [person] is entitled to have preserved and protected by law: a material right." Sharpe v. Worland, 351 N.C. 159, 162, 522 S.E.2d 577, 579 (1999) (citation omitted). "Essentially a two-part test has developed—the right itself must be substantial and the deprivation of that substantial right must potentially work injury . . . if not corrected before appeal from final judgment." Goldston v. Am. Motors Corp., 326 N.C. 723, 726, 392 S.E.2d 735, 736 (1990) (citation omitted).
To prove that a substantial right is affected, an appellant must first prove that the right itself is substantial. Id. Second, an appellant "must demonstrate why the order affects a substantial right." Hoke Cty. Bd. of Educ. v. State, 198 N.C. App. 274, 277-78, 679 S.E.2d 512, 516 (2009) (emphasis and citation omitted).
North Carolina courts "have recognized the inability to practice one's livelihood and the deprivation of a significant property interest to be substantial rights." Bessemer City Express, 155 N.C. App. at 640, 573 S.E.2d at 714 (citation omitted). However, "[n]ot every order which affects a person's right to earn a living is deemed to affect a substantial right." A & D Envtl. Servs., Inc. v. Miller, 243 N.C. App. 1, 4, 776 S.E.2d 733, 735 (2015). "Rather, whether such an order affects a substantial right depends on the extent that a person's right to earn a living is affected." Id.
A preliminary injunction affects an individual's substantial right to earn a living when the "preliminary injunction . . . effectively prevents a person from [engaging in] 'a realistic opportunity to use his own skill and talents,'" but not where the injunction "merely limits a person's ability to earn a living." Id., 776 S.E.2d at 735-36 (emphasis original) (citations omitted).
In A & D Environmental Services, this Court concluded it lacked jurisdiction to address the merits of a preliminary injunction, because the injunction only "limit[ed] [the defendant's] activities by not allowing him to call on or service a narrowly defined group of customers" within that industry. Id. at 4-5, 776 S.E.2d at 736; see also Consol. Textiles v. Sprague, 117 N.C. App. 132, 134, 450 S.E.2d 348, 349 (1994) (holding "defendant [was] not prevented from earning a living or practicing his livelihood" where the preliminary injunction "appear[ed] to restrict him from contacting approximately three hundred customers—a fraction of the thousands that remain[ed] available" (citations omitted)).
In SIA Group, Inc., the issued preliminary injunction prevented the defendant from "soliciting or accepting business from . . . approximately 300 [of the plaintiff's previous] clients[;]" however, the defendant could still seek out other clients from in the insurance industry. SIA Group, Inc. v. Patterson, ___ N.C. App. ___, ___, 801 S.E.2d 707, 710 (2017). This Court held that it lacked jurisdiction and stated:
Therefore, the preliminary injunction does not prevent or "destroy" Defendant's ability to earn a living or sustain a livelihood. Its terms merely limits Defendant's activities by not allowing him to solicit or passively accept business from a narrowly defined group of customers. Defendant continues to have a realistic opportunity to use his own skill and talents to generate new client relationships outside the customer list on which the preliminary injunction focuses. Defendant did not establish that the trial court's preliminary injunction affected his ability to earn a living to the extent at which it affects a substantial right.Id. (citations, internal quotation marks, and brackets omitted).
Here, the preliminary injunction before us limits Defendant from selling nails to customers located in the four specifically named counties in eastern North Carolina. Defendant admitted that prior to the issuance of the preliminary injunction, he had sold nails "from Greenville to Myrtle Beach" and spent three days a week selling building supplies to customers in Leland, located in Brunswick County, which is not included in the four named counties covered by the Agreement's non-competition covenant. The preliminary injunction order does not prevent Defendant from continuing to work for Parks or further restrict his activities, so long as he does not attempt to sell nails and supplies within the four named counties.
Defendant's right to earn a living is not "destroyed" by the restrictions contained in the preliminary injunction. See id.; see also Copypro, Inc. v. Musgrove, 232 N.C. App. 194, 197, 754 S.E.2d 188, 191 (2014) ("when the entry of an order [for] . . . a preliminary injunction has the effect of destroying a party's livelihood, [it] affects a substantial right"). Rather, the preliminary injunction narrowly and "merely limits" the scope and geographic area of Defendant's activities for a specific and limited period of time. Defendant continues to have "a realistic opportunity to use his own skill and talents" to attract business outside the geographical limits of the injunction. A & D Envtl. Servs., 243 N.C. App. at 4, 776 S.E.2d at 736.
C. "Final Judgment"
Defendant further contends this Court has jurisdiction to address the merits of the appealed preliminary injunction because the trial court's conclusion of law number six "[i]n effect determines the action and prevents a judgment from which an appeal might be taken." N.C. Gen. Stat. § 1-277(a) (2017); see also N.C. Gen. Stat. § 7A-27(b)(3)(b) (2017).
Conclusion of law number six states:
In that the Defendant has already breached the terms of the agreement, injunctive relief follows almost as a matter of course, damage from the breach is presumed to be irreparable and the remedy at law is considered inadequate. A.E.P. Industries, Inc. v. McClure, 308 N.C. 393, 406, 302 S.E.2d 754 (1983).Defendant contends this conclusion of law decides the ultimate issue of whether Defendant breached the contract with Plaintiff, thereby depriving Defendant of due process and "in effect determines the action."
This Court has long recognized that "findings of fact and other proceedings of the trial court which hears the application for a preliminary injunction are not binding at a trial on the merits." Kaplan v. Prolife Action League of Greensboro, 111 N.C. App. 1, 16, 431 S.E.2d 828, 835 (1993). Conclusion of law number six is "not binding at a trial on the merits." The trial court's conclusion of law does not constitute a final decision on the merits of Plaintiff's purported breach of contract claim. See id. "Because it is the appellant's burden to present appropriate grounds for this Court's acceptance of an interlocutory appeal, and Defendant has not met his burden, Defendant's appeal must be dismissed." SIA Group, Inc., ___ N.C. App. at ___, 801 S.E.2d at 710-11 (citation and brackets omitted).
III. Conclusion
Defendant has failed to show his substantial rights or his ability to earn a living is affected by the trial court's granting of Plaintiff's motion for preliminary injunction. Without the Rule 54(b) certification or Defendant's showing of a substantial right, we lack jurisdiction over Defendant's interlocutory appeal. The appeal is dismissed without prejudice. It is so ordered.
DISMISSED.
Judges CALABRIA and ZACHARY concur.
Report per Rule 30(e).