American Marble Corp. v. Crawford

WELLS, Judge. Defendant Crawford (hereinafter defendant) contends that the court erred in entering summary judgment against his claim that plaintiff violated N.C. Gen. Stat. § 75-1.1 and that he thus was entitled to treble damages under G.S. § 75-16. We disagree. Defendant’s counterclaim alleged that the “covenant not to compete, as used by the plaintiff, is an unfair trade practice pursuant to [G.S.] § 75-1.1 et seq.” We have held previously that “employer-employee relationships do not fall within the intended scope of G.S. § 75-1.1 . . . .” Buie v. Daniel International, 56 N.C. App. 445, 289 S.E. 2d 118, disc. rev. denied, 305 N.C. 759, 292 S.E. 2d 574 (1982). As defendant’s counterclaim involves such a relationship, we hold, following Buie, that it lies outside the scope of G.S. § 75-1.1. Accordingly, we hold that the court did not err in entering summary judgment against this claim. *89 Defendant contends the court improperly entered summary judgment for plaintiff regarding his claim that plaintiff wrongfully interfered with his contractual rights. We agree. In general, In order to prevail when moving for summary judgment, the moving party must establish that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law when all factual inferences arising from the evidence are taken in the light most favorable to the nonmov-ing party. Speck v. North Carolina Dairy Foundation, Inc., 311 N.C. 679, 319 S.E. 2d 139 (1984). Uzzell v. Integon Life Ins. Corp., 78 N.C. App. 458, 337 S.E. 2d 639 (1985). One who procures the discharge of an employee by malicious or wanton interference may be liable to that employee in an action for damages. See Smith v. Ford Motor Co., 289 N.C. 71, 221 S.E. 2d 282 (1976). See also 45 Am. Jur. 2d Interference § 47. To establish such a claim defendant must prove: (1) that a valid contract existed between him and a third person; (2) that plaintiff had knowledge of such contract; (3) that plaintiff intentionally induced the third person not to perform his contract with defendant; (4) that plaintiff acted without justification; and (5) that the outsider’s acts caused the defendant actual damages. Childress v. Abeles, 240 N.C. 667, 84 S.E. 2d 176 (1954). The facts here, when viewed in the light most favorable to defendant, clearly establish the first three elements and the fifth element for defendant’s action. The central question is whether there is a genuine issue of material fact as to the element of justification. See Uzzell, supra. In general, “ ‘[o]ne is privileged purposely to cause another not to perform a contract, or enter into or continue a business relation, with a third party by in good faith asserting or threatening to protect properly a legally protected interest of his own which he believes may otherwise be impaired or destroyed by the performance of the contract or transaction.’ ” Kelly v. Harvester Co., 278 N.C. 153, 179 S.E. 2d 396 (1971), quoting Restatement of Torts § 773. Further, the question of justification for procuring a breach of contract or interference with another’s employment is ordinarily a question of fact for the jury. See Annot., 26 A.L.R. 2d 1227. *90 We hold that defendant has forecast sufficient evidence to establish that plaintiff acted without justification in that plaintiff was seeking to enforce a covenant not to compete from the parties’ employment contract which was legally invalid as an unreasonable restraint of trade. Accordingly, we hold that the court erred in granting summary judgment against defendant’s claim for wrongful or malicious interference with contractual rights. Ordinarily, the issue, on remand, regarding the “without justification” element would be whether plaintiffs actions constituted a good faith assertion to protect a legally protected interest which plaintiff believed might otherwise be impaired or destroyed by the performance of defendant’s employment contract with Dean Hunter. See Kelly, supra. However, as the parties have already fully litigated the question of the validity of the covenant not to compete in the determination of plaintiffs original action, plaintiff, on remand, will be collaterally estopped from contesting the fact that this covenant is legally invalid as an unreasonable restraint of trade. See King v. Grindstaff, 284 N.C. 348, 200 S.E. 2d 799 (1973). The remaining question for the “without justification” element on remand, then, will be as follows: Whether plaintiff, even though it was in fact not protecting a legally protected interest (since the covenant not to compete was invalid), still acted in the good faith belief that it was protecting a legally protected interest which it believed might otherwise be impaired or destroyed by the performance of defendant’s employment contract with Dean Hunter. Defendant contends that his second counterclaim also included a claim for recovery of damages pursuant to N.C. Gen. Stat. § 1A-1, Rule 65(e), and that the court erred in failing to conclude that he was entitled to such damages as a matter of law. Rule 65(e) provides that an order or judgment dissolving an injunction or restraining order may include an award of damages against the party procuring the injunction. Despite defendant’s suggestion to the contrary, he does not expressly assert a claim for damages under Rule 65(e) in any of his counterclaims. The record also reveals no motion by defendant for such damages. We thus do not reach the merits of defendant’s contention. We note instead that defendant may seek leave to amend his counterclaim pursuant to G.S. § 1A-1, Rule 15(a) to assert an additional claim for such damages. *91 Defendant contends the court improperly entered summary judgment against his claim for punitive damages. We agree. “As a general rule, punitive damages are recoverable only when the tortious conduct which causes the injury partakes of or is accompanied by some element of aggravation such as ‘fraud, malice, gross negligence, insult,’ or ‘when the wrong is done willfully, or under circumstances of rudeness or oppression, or in a manner which evidences a reckless and wanton disregard of the plaintiffs rights.’ ” Hornby v. Penn. Nat’l Mut. Casualty Ins. Co., 77 N.C. App. 475, 335 S.E. 2d 335 (1985), disc. rev. denied, 316 N.C. 193, 341 S.E. 2d 570 (1986), quoting Baker v. Winslow, 184 N.C. 1, 113 S.E. 570 (1922). “Punitive damages are awarded in addition to compensatory damages for the purpose of punishing the wrongdoer and deterring others from committing similar acts.” Id. We hold that the evidence here, viewed in the light most favorable to defendant, is sufficient to establish a claim for punitive damages. Specifically, from the evidence of plaintiffs “side agreement” with defendant Dean Hunter to drop Hunter from its suit in exchange for Hunter’s promise not to rehire Crawford and the evidence that plaintiff did not follow through on its preliminary injunction by posting the required bond, a jury could find or reasonably infer willful, oppressive or reckless conduct in wanton disregard of defendant’s rights warranting damages “for the purpose of punishing [plaintiff] and deterring others from committing similar acts.” Accordingly, we hold that the court erred in entering summary judgment against defendant’s claim for punitive damages. Affirmed in part, reversed in part, and remanded. Judges Martin and Parker concur.