Encompass Servs., PLLC v. Maser Consulting P.A., 2019 NCBC 66.
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION COUNTY OF DURHAM 19 CVS 1782
ENCOMPASS SERVICES, PLLC and ENCOMPASS SERVICES, LLC d/b/a ) ENCOMPASS ENERGY SERVICES, ) ORDER AND OPINION ON LLC, ) CHRISTOPHER HILSMAN’S ) MOTION TO DISMISS, OR Plaintiffs, ) ALTERNATIVELY, FOR JUDGMENT ) ON THE PLEADINGS AND MASER v. ) CONSULTING P.A.’S MOTION TO ) DISMISS MASER CONSULTING P.A. and ) CHRISTOPHER HILSMAN,
Defendants.
THIS MATTER comes before the Court on Defendant Christopher Hilsman’s
(“Hilsman”) Motion to Dismiss or, Alternatively, for Judgment on the Pleadings
(“Hilsman’s Motion,” ECF No. 38), and Defendant Maser Consulting P.A.’s (“Maser”)
Motion to Dismiss (“Maser’s Motion,” ECF No. 63; collectively with Maser’s Motion,
the “Motions”).
THE COURT, having considered the Motions, the briefs filed in support of and
in opposition to the Motions, the arguments of counsel at the hearing, and other
appropriate matters of record, concludes that the Motions should be GRANTED, in
part, and DENIED, in part, for the reasons set forth herein.
Oak City Law LLP, by Samuel Pinero for Plaintiffs Encompass Services, PLLC and Encompass Services, LLC d/b/a Encompass Energy Services, LLC.
McDermott Will & Emery, LLP, by Rachel B. Cowen and Emory D. Moore Jr. for Plaintiffs Encompass Services, PLLC and Encompass Services, LLC d/b/a Encompass Energy Services, LLC. Ragsdale Liggett PLLC, by John M. Nunnally for Defendant Maser Consulting P.A.
Williams Mullen, by Edward S. Schenk III and John W. Holton for Defendant Christopher Hilsman.
McGuire, Judge.
I. Nature of Defendants’ Motions
1. As an initial matter, the Court must determine under what rules each
of the Defendants are entitled to move for dismissal. Pursuant to North Carolina
Rule of Civil Procedure (“Rules”) a motion to dismiss under Rules 12(b) (1)–(7) “shall
be made before pleading if a further pleading is permitted.” N.C.G.S. § 1A-1, Rule
12(b) (emphasis added). Accordingly, this Court has held that under the plain
language of Rule 12(b), “a motion to dismiss for failure to state a claim must be . . .
filed prior to an answer.” Johnston v. Johnston Props., Inc., 2018 NCBC LEXIS 119,
at *14 (N.C. Super. Ct. Nov. 15, 2018); see also New Friendship Used Clothing
Collection, LLC v. Katz, 2017 NCBC LEXIS 72, at *24 (N.C. Super. Ct. Aug. 18, 2017).
Hilsman filed Hilsman’s Motion, seeking dismissal pursuant to Rule 12(b)(6), or
alternatively, for judgment on the pleadings pursuant to Rule 12(c), at 3:42 p.m. on
April 3, 2019. (ECF No. 38.) Hilsman filed his answer at 4:04 p.m. on April 3, 2019.
(ECF No. 40.) Accordingly, Hilsman’s Motion was filed before his answer and is
appropriately treated as a motion to dismiss under Rule 12(b)(6), and the Court need
not consider his alternative motion pursuant to Rule 12(c).
2. On the other hand, Maser moves for dismissal solely under Rule
12(b)(6). Maser filed its answer on April 8, 2019 (ECF No. 41), then waited over two months to file Maser’s Motion on June 14, 2019 (ECF No. 63). Therefore, pursuant
to Rule 12(b), Maser’s Motion is untimely and cannot be considered as a 12(b)(6)
motion to dismiss for failure to state a claim.
3. The Court notes that in Johnston, this Court concluded that the
interplay between Rules 12(b) and 12(h)(2)1 permits the Court to treat a post-answer
Rule 12(b)(6) motion as a 12(c) motion for judgment on the pleadings. See Johnston,
2018 NCBC LEXIS 119, at *14–15. In Johnston, the Court, in its discretion,
determined that defendants’ 12(b)(6) motion filed minutes after their answer could
properly be treated as a Rule 12(c) motion. By contrast, Maser’s Motion was filed two
months after his initial answer. Moreover, Maser has not argued that his Motion
should be treated as one for judgment on the pleadings under Rule 12(c).
4. On these facts, the Court concludes, in its discretion, that Maser’s
Motion should not be treated as a Rule 12(c) motion for judgment on the pleadings.
Therefore, Maser’s Motion should be DENIED as untimely.
II. Facts
5. The facts relevant to the determination of the Motions are drawn from
the Verified Complaint. (“Verified Complaint,” ECF No. 3.)
6. Plaintiffs Encompass Services, PLLC and Encompass Services, LLC
d/b/a Encompass Energy Services, LLC (collectively, “Encompass”) provide land
surveying services for oil and gas transmission pipelines. Encompass’s services
1 Rule 12(h)(2) provides “[a] defense of failure to state a claim upon which relief can be granted, a defense of failure to join a necessary party, and an objection of failure to state a legal defense to a claim may be made in any pleading permitted or ordered under Rule 7(a), or by motion for judgment on the pleadings, or at the trial on the merits.” include, inter alia, “conducting pipe line surveys, mapping, routing, and pipeline
integrity testing[.]” (ECF No. 3, at ¶ 8.)
7. Encompass submits bids to customers to obtain particular projects. To
prepare bids, Encompass uses data it compiles including: “(i) cost data for prior
similar projects, (ii) maps and drawings developed with the use of expensive
investments in technology such as radar scanning, and satellite and aerial imaging,
[and] (iii) knowledge of constructability, environmental, and socio-economic issues.”
(Id. at ¶ 12.) Encompass “considers this data confidential and prohibits its disclosure
to third parties.” (Id. at ¶ 13.) Encompass stores its confidential information on a
cloud-based computer server (“the Server”), to which only certain authorized
employees are allowed access. Authorized employees are given a user name and
password and their access is controlled and monitored by a third-party information
technology provider, CMIT Solutions of Pittsburgh North (“CMIT”). (Id. at ¶ 22;
Declar. of Sunil Yalamarthy, ECF No. 3 at Ex. A, ¶ 5.)2
8. Encompass hired Hilsman in April 2015 as a survey coordinator. At the
time of his hire, Hilsman executed an Employment Agreement. (ECF No. 3, at ¶ 15;
“Employment Agreement,” ECF No. 3 at Ex. B.) By entering into the Employment
Agreement, Hilsman agreed “during his employment and for a one-year period
thereafter, not to disclose to or make use of for any person, corporation or other entity,
2 “[W]hen ruling on a Rule 12(b)(6) motion, a court may properly consider documents which
are the subject of a plaintiff’s complaint and to which the complaint specifically refers even though they are presented by the defendant.” Oberlin Capital, L.P. v. Slavin, 147 N.C. App. 52, 60, 554 S.E.2d 840, 847 (2001). The declaration is attached to and referenced in the Verified Complaint. any proprietary files, trade secrets or other confidential information defined as, the
business, clients, methods, operations, financing or services of [Encompass].” (ECF
No. 3, at ¶ 17; ECF No. 3 at Ex. B, ¶ 8.)
9. As a survey coordinator, Hilsman was directly involved with the
preparation of Encompass’s bid proposals and had access to Encompass’s confidential
information stored on the Server. (ECF No. 3, at ¶¶ 15–16.)
10. On August 3, 2018, Hilsman notified Encompass that he was resigning
his employment to work for Maser. Maser is a direct competitor of Encompass. (Id.
at ¶ 19.) Maser recruited Hilsman to work as a senior project manager, and to
establish an office in Wilmington, North Carolina. (Id. at ¶¶ 18, 21.) Hilsman’s last
day of work with Encompass was on or about August 18, 2018.
11. Encompass notified CMIT of Hilsman’s resignation and requested that
Hilsman’s access to the Server be revoked effective as of August 18, 2018. (Id. at ¶
23.)
12. On January 4, 2019, CMIT discovered that it had failed to revoke
Hilsman’s access to the Server when he resigned. (Id. at ¶ 24; ECF No. 3 at Ex. A, ¶
8.) A report prepared by CMIT shows that on August 17 and 18, 2018, the last two
days of Hilsman’s employment with Encompass, he downloaded numerous documents
from the Server. On August 17, 2018, Hilsman downloaded one-hundred sixty-three
(163) documents from the Server including: “budget information, rate tables,
materials information, and design files for various projects.” (ECF No. 3, at ¶ 25.)
On August 18, 2018, Hilsman downloaded thirty-nine (39) documents related to a project for Encompass’s customer AECOM, and on August 20, 2018, two days after
he left Encompass, Hilsman downloaded nine (9) more documents related to AECOM
Project 61203 including “a plat template, multiple deed plat tracking spreadsheets,
survey plats, and project progress information.” (Id. at ¶¶ 25–26.) From August 17
through December 11, 2018, Hilsman downloaded more than six-hundred (600)
documents from the Server. (Id. at ¶ 28.)
13. Hilsman and Maser used Encompass’s documents to compete with
Encompass on “projects like the Line 328 Project, the Line 202 Project, and the Duke
RLNG Project.” (Id. at ¶ 29.) On August 27, 2018, four days prior to the due date for
the Line 328 proposal, Hilsman accessed the Server and downloaded “Encompass’[s]
proposal documents, including Encompass’s Scope of Work, which sets forth what
Encompass is willing to agree to in relation to the work anticipated.” (Id. at ¶¶ 30–
31.) Hilsman and Maser undercut Encompass’s bid on the Line 328 Project and won
the bid. (Id. at ¶¶ 32–33.)
14. On October 18, 2018, Hilsman downloaded drawing templates and
deliverables related to the Line 202 project for Kinder Morgan. Hilsman “pulled
drawing templates and deliverables to assist Maser to know how to bid the
project. This was in addition to three documents he downloaded on August 17
relating to Encompass’s projects with Kinder Morgan.” (Id. at ¶ 35.) Maser’s bid for
the Line 202 Project was ultimately unsuccessful, however, the table in Maser’s bid
proposal was identical to Encompass’s. (Id. at ¶ 36.) 15. Finally, on November 5, 2018, Hilsman accessed the Server and viewed
confidential information related to Encompass’s past proposals for projects
comparable to the Duke RLNG Project, “e.g., Encompass’[s] proposal for a prior
project titled ‘Duke_Line 328 Extension_Proposal_R0.docx,’ and related fee tables in
a file titled ‘PNG – Line 328 Extension_Fee Tables_Rev0.xlsx.’” (Id. at ¶ 38.) Maser
was subsequently awarded the Duke RLNG Project contract. (Id. at ¶¶ 39–40.)
III. Procedural History
16. Encompass initiated this action by filing its Verified Complaint on
January 30, 2019. (ECF No. 3.) This matter was designated as a complex business
case and assigned to the undersigned on January 31, 2019. (Des. Ord., ECF No. 1;
Assign. Ord., ECF No. 2.)
17. In the Verified Complaint, Encompass makes a claim against Hilsman
for conversion, and claims against both Hilsman and Maser (collectively,
“Defendants”) for: misappropriation of trade secrets in violation of the North
Carolina Trade Secrets Protection Act, N.C.G.S. § 66-152, et seq. (“TSPA”); tortious
interference with prospective economic advantage; computer trespass in violation of
N.C.G.S. § 14-458; § 1-539.2A; unfair trade practices in violation of the North
Carolina Unfair and Deceptive Trade Practices Act, N.C.G.S. § 75-1.1. (“UDTPA”);
and punitive damages pursuant to N.C.G.S. § 1D-1, et seq.
18. On April 3, 2019, Hilsman filed Hilsman’s Motion and a brief in support.
(ECF No. 38; Hilsman Br. in Supp., ECF No. 39.) On April 3, 2019, Hilsman also
filed his answer to the Verified Complaint. (Hilsman Answer to Compl., ECF No. 40.) On April 8, 2019, Maser filed its answer to the Verified Complaint. (Maser Answer
to Compl., ECF No. 41.) On May 21, 2019, Maser filed an amended answer adding a
counterclaim against Encompass. (Maser Amend. Answer, ECF No. 61.) On June
14, 2019, Maser filed Maser’s Motion along with a supporting brief. (ECF No. 63;
Maser Br. in Supp., ECF No. 64.) On June 20, 2019, Encompass filed a reply to
Maser’s counterclaim. (Pls. Answer to Maser Counterclaim, ECF No. 65.)
19. On June 7, 2019, Encompass filed a brief in opposition to Hilsman’s
Motion. (Pls. Br. in Opp. to Hillsman Mot. to Diss., ECF No. 62.) On June 28, 2019,
Encompass filed a brief in opposition to Maser’s Motion. (Pls. Br. in Opp. to Maser
Mot. to Diss., ECF No. 67.) On August 7, 2019, the Motions came before the Court
for a hearing and the Court heard oral argument from counsel. The Motions are now
ripe for disposition.
IV. Analysis
A. Standard of Review
20. Pursuant to Rule 12(b)(6), Hilsman moves to dismiss Encompass’s
claims for conversion, misappropriation of trade secrets, and computer trespass for
failure to state a claim upon which relief may be granted.
21. In ruling on a motion to dismiss pursuant to Rule 12(b)(6), the Court’s
inquiry is “whether, as a matter of law, the allegations of the complaint, treated as
true are sufficient to state a claim upon which relief may be granted under some legal
theory, whether properly labeled or not.” Harris v. NCNB Nat’l Bank, 85 N.C. App.
669, 670, 355 S.E.2d 838, 840 (1987). Our appellate courts frequently reaffirm that North Carolina is a notice pleading state. See, e.g., Feltman v. City of Wilson, 238
N.C. App. 246, 252, 767 S.E.2d 615, 620 (2014) (quoting Wake Cty. v. Hotels.com, L.P.,
235 N.C. App. 633, 647, 762 S.E.2d 477, 486 (2014)) (“Under notice pleading, a
statement of claim is adequate if it gives sufficient notice of the claim asserted to
enable the adverse party to answer and prepare for trial, to allow for the application
of the doctrine of res judicata, and to show the type of case brought.”).
22. “It is well established that dismissal pursuant to Rule 12(b)(6) is proper
when ‘(1) the complaint on its face reveals that no law supports the plaintiff’s claim;
(2) the complaint on its face reveals the absence of facts sufficient to make a good
claim; or (3) the complaint discloses some fact that necessarily defeats the plaintiff’s
claim.’” Corwin v. British Am. Tobacco PLC, 371 N.C. 605, 615, 821 S.E.2d 729, 736–
37 (2018) (quoting Wood v. Guilford County, 355 N.C. 161, 166, 558 S.E.2d 490, 494
(2002)).
23. In ruling on a 12(b)(6) motion, the court construes the
complaint liberally and accepts all allegations as true. See Laster v. Francis, 199
N.C. App. 572, 577, 681 S.E.2d 858, 862 (2009). However, the Court is not required
“to accept as true allegations that are merely conclusory, unwarranted deductions of
fact, or unreasonable inferences.” Good Hope Hosp., Inc. v. N.C. Dep’t of Health &
Human Servs., 174 N.C. App. 266, 274, 620 S.E.2d 873, 880 (2005) (quoting Veney v.
Wyche, 293 F.3d 726, 730 (4th Cir. 2002)). B. Conversion
24. In its first claim, Encompass alleges that Hilsman is liable for
conversion because he took “Encompass’[s] business information and documents and
converted those to use for his own purposes . . . without consent[.]” (ECF No. 3, at ¶
42.) Encompass also alleges that it has suffered damages and that the conversion
was carried out “willfully and wantonly . . . repeatedly and surreptitiously[.]” (Id. at
¶¶ 43–44.)
25. Hilsman argues that Encompass’s conversion claim fails for three
reasons. (ECF No. 39, at p. 5.) The Court need only address Hilsman’s first argument
for dismissal of Encompass’s conversion claim. Hilsman avers that the Verified
Complaint fails to allege that Encompass has been “deprived from the information at
issue or excluded from its use” which is a necessary element of a claim for conversion.
(ECF No. 39, at p. 5.) The Court agrees.
26. Conversion is the “unauthorized assumption and exercise of the right of
ownership over goods or personal chattels belonging to another, to the alteration of
their condition or the exclusion of an owner’s rights.” Variety Wholesalers, Inc. v.
Salem Logistics Traffic Servs., LLC, 365 N.C. 520, 523, 723 S.E.2d 744, 747
(2012) (internal citation and quotation marks omitted). “There are, in effect, two
essential elements of a conversion claim: ownership in the plaintiff and wrongful
possession or conversion by the defendant.” Id.
27. Encompass relies on federal case law to argue that the “deprivation”
necessary for a conversion claim occurs when electronic data is copied but the owner retains access to the data. (ECF No. 62 at .pdf, pp. 2–3; citing Bridgetree, Inc. v. Red
F Mktg. LLC, 2013 U.S. Dist. LEXIS 15372, at *49 (W.D.N.C. Feb. 5, 2013).)
However, this Court has, time and again, expressly rejected the Bridgetree
holding. See, e.g., New Friendship Used Clothing Collection, LLC, 2017 NCBC LEXIS
72, at *38–39; Duo-Fast Carolinas, Inc. v. Scott’s Hill Hardware & Supply Co., 2018
NCBC LEXIS 2, at *36 (N.C. Super. Ct. Jan. 2, 2018); Addison Whitney, LLC v.
Cashion, 2017 NCBC LEXIS 51, at *18 (N.C. Super. Ct. June 9, 2017). “Merely
making a copy of, as opposed to deleting, electronically stored information does not
support a conversion claim because the owner is not deprived of possession or use of
the information.” New Friendship Used Clothing Collection, LLC, 2017 NCBC LEXIS
72, at *38–39.
28. The Court finds that Encompass has failed to sufficiently plead a claim
for conversion against Hilsman. In its Verified Complaint, Encompass alleges that
on several occasions, Hilsman accessed Encompass’s database and downloaded its
electronically stored property without Encompass’s consent. (ECF No. 3, at ¶¶ 22–
42.) However, the Verified Complaint is devoid of any allegation that it has been
deprived of, or excluded from, its electronically stored property. “[R]etention by a
wrongdoer of an electronic copy in a manner that does not deprive the original owner
of access to the same electronic data cannot constitute conversion under current
North Carolina law.” Duo-Fast Carolinas, Inc., 2018 NCBC LEXIS 2, at *36.
Therefore, Hilsman’s motion to dismiss Encompass’s claim for conversion should be
GRANTED. C. Misappropriation of trade secrets
29. In its second claim, Encompass makes a claim against Defendants for
misappropriation of trade secrets in violation of the TSPA. (ECF No. 3, at ¶¶ 45–49.)
Encompass alleges that its “confidential information . . . constitutes trade secrets . . .
is business or technical information . . . that derives independent . . . value from not
being generally known or readily ascertainable through independent development[.]”
(Id. at ¶ 46.)
30. Hilsman’s sole argument for dismissal of Encompass’s claim for
misappropriation is that Encompass fails to identify any trade secret with sufficient
particularity to survive dismissal at the pleadings stage. (ECF No. 39, at pp. 5–8.)
Essentially, Hilsman argues that Encompass’s descriptions of its alleged trade
secrets are vague, general, and insufficient to put Defendants on notice of what
exactly has been misappropriated. (ECF No. 39, at p. 8.)
31. In North Carolina, “[t]o successfully plead a claim for misappropriation
of trade secrets, a plaintiff must identify a trade secret with sufficient particularity
so as to enable a defendant to delineate that which he is accused of misappropriating
and a court can determine whether misappropriation has or is threatened to occur.”
Krawiec v. Manly, 370 N.C. 602, 609, 811 S.E.2d 542, 547–48 (2018) (quoting
Washburn v. Yadkin Valley Bank & Tr. Co., 190 N.C. App. 315, 326, 660 S.E.2d 577,
585 (2008)) (internal quotations omitted). At the pleadings stage, claimants must do
more than make “general allegations in sweeping and conclusory statements, without specifically identifying the trade secrets allegedly misappropriated.” Washburn, 190
N.C. App at 327, 660 S.E.2d at 585.
32. In Krawiec, the Supreme Court affirmed the dismissal of a complaint
that described the plaintiff’s trade secrets as “original ideas and concepts for dance
productions, marketing strategies and tactics, as well as student, client and customer
lists and their contact information.” 370 N.C. at 611, 811 S.E.2d at 549. In reaching
its conclusion, the Court noted that “[p]laintiffs provided no further detail about these
ideas, concepts, strategies, and tactics sufficient to put defendants on notice as to the
precise information allegedly misappropriated.” Id.
33. In this case, Encompass’s descriptions of its alleged trade secrets are
more than sufficient to survive dismissal at the pleadings stage. First, in addition to
its more general allegations, Encompass also identifies specific information Hilsman
misappropriated including “rate tables,” “design files,” and “a plat template, multiple
deed plat tracking spreadsheets, survey plats, and project progress information.”
(ECF No. 3, at ¶¶ 25–26.) These descriptions are more precise than those found
deficient in Krawiec and Washburn.
34. Second, Encompass identifies specific documents and information
Hilsman accessed related to particular projects on which Encompass was bidding,
including the names of two specific files that Hilsman accessed regarding the Duke
RLNG Project. (Id. at ¶ 38.) 35. Finally, Encompass attached to the Verified Complaint a detailed list
generated by CMIT of the specific files and documents Hilsman accessed and
downloaded from the Server with the dates and times of such access.
36. The Court finds that Encompass pleaded enough to put Defendants on
notice of the trade secrets they are accused of misappropriating. Therefore, Hilsman’s
motion to dismiss Encompass’s claim for misappropriation of trade secrets is
DENIED.
D. Computer Trespass
37. In its fourth claim, Encompass alleges that Defendants are civilly liable
for computer trespass in violation of N.C.G.S. § 14-458. (Id. at ¶¶ 56–59.) Encompass
alleges that Defendants “used Encompass’s computer or computer network without
authority . . . to remove computer data . . . and made or caused to be made an
unauthorized copy of Encompass’[s] computer data.” (Id. at ¶ 57.) Encompass further
alleges that in accessing and downloading documents from the Server beginning on
and after August 17, 2018, “Defendants had no right or permission from Encompass
to use its computer or computer network . . . in a manner exceeding any right or
permission.” (Id. at ¶ 58.)
38. Section 14-458 provides, in relevant part, that “it shall be unlawful for
any person to use a computer or computer network without authority and with the
intent to do any of the following”:
(1) Temporarily or permanently remove, halt, or otherwise disable any computer data, computer programs, or computer software from a computer or computer network. ...
(5) Make or cause to be made an unauthorized copy, in any form, including, but not limited to, any printed or electronic form of computer data, computer programs, or computer software residing in, communicated by, or produced by a computer or computer network. . . .
N.C.G.S. § 14-458(a)(1), (5).
39. Section 14-458(a) further provides:
a person is ‘without authority’ when (i) the person has no right or permission of the owner to use a computer, or the person uses a computer in a manner exceeding the right or permission, or (ii) the person uses a computer or computer network, or the computer services of an electronic mail service provider to transmit unsolicited bulk commercial electronic mail in contravention of the authority granted by or in violation of the policies set by the electronic mail service provider.
N.C.G.S. § 14-458(a).
40. Moreover, “[a]ny person whose property or person is injured by reason
of a [computer trespass] may sue for and recover any damages sustained and the costs
of the suit pursuant to G.S. 1-539.2A.” N.C.G.S. § 14-458(c). The statute defines
property as “financial instruments, information, including electronically processed or
produced data, and computer software and computer programs in either machine or
human readable form, and any other tangible or intangible item of value.” N.C.G.S.
§ 14-453(8).
41. Hilsman argues that Encompass’s computer trespass claim should be
dismissed for two reasons. First, Hilsman contends that Encompass alleges only that
Hilsman accessed its computer network without authorization, and not that Hilsman used or accessed an Encompass computer without authorization.3 (ECF No. 39, at
pp. 9, 12.) Defendants contend that Section 14-458(a), by its express terms, “does not
extend its definition of ‘without authority’ to one who accesses a ‘computer network’”
without authority. (Id. at p. 12.) Consequently, if Hilsman accessed Encompass’s
computer network using his personal computer and not an Encompass-owned
computer, his actions could not have been “without authority” and Encompass is
unable to meet a fundamental element of its claim for computer trespass. (Id.)
42. Alternatively, Hilsman argues that assuming accessing a computer
network falls within the definition of “without authority,” Encompass’s claim still
fails. (Id. at pp. 8–11.) Hilsman contends that he always acted with the authority of
Encompass because Hilsman’s account log-in “expressly granted permission to access
the server” and his account was not terminated when he resigned from Encompass
because CMIT failed to revoke his access. (Id. at p. 9.)
43. The Court has researched the issue but found no North Carolina
appellate precedent analyzing claims for civil computer trespass, let alone providing
guidance on how such claims should be viewed on a motion to dismiss. However, the
Court is persuaded that Encompass has sufficiently stated a claim for computer
trespass at this preliminary stage of the case. While it is not clear from the
allegations whether Hilsman used an Encompass computer to download some or all
of the information, Encompass alleges that Hilsman “used Encompass’s computer or
3 Although not expressly alleged in the Verified Complaint, Defendants apparently contend
that Hilsman returned his company-issued laptop computer to Encompass when he was terminated and could only have accessed the Server through devices not owned or controlled by Encompass. computer network without authority,” or exceeding his authority, when he accessed
the Server and downloaded the confidential information at issue. (ECF No. 3, at ¶¶
57–58.)
44. In addition, there are no express allegations in the Verified Complaint
regarding what, if anything, Encompass told Hilsman about his access to the Server
when he was terminated. The question of Hilsman’s authority to access Encompass’s
systems is one that may require discovery to resolve.
45. North Carolina’s “system of notice pleading affords a sufficiently liberal
construction of complaints so that few fail to survive a motion to dismiss.” Wray v.
City of Greensboro, 370 N.C. 41, 46, 802 S.E.2d 894, 898 (2017) (quoting Ladd v.
Estate of Kellenberger, 314 N.C. 477, 481, 334 S.E.2d 751, 755 (1985)). Encompass’s
allegations of computer trespass put Hilsman on “notice of the claim asserted,” allow
him to understand the nature of Encompass’s claim, and enable Hilsman to “answer
and prepare for trial.” Wake County, L.P., 235 N.C. App. at 646, 762 S.E.2d at 486;
County of Wayne Constr. Managers of Goldsboro v. Amory, 2019 NCBC LEXIS 32, at
*51–52 (N.C. Super. Ct. May 17, 2019) (concluding that allegations that defendant
“download[ed] . . . computer data from the Box Account to his personal device(s)
exceed[ing] the right or permission granted to him by plaintiffs and result[ing] in
damage” are sufficient to state claim for computer trespass); see also Spirax Sarco,
Inc. v. SSI Eng’g, Inc., 122 F. Supp. 3d 408, 417–18 (E.D.N.C. Aug. 10, 2015) (stating
that plaintiff companies’ allegations that “[the defendant] intentionally used his
[company-issued] laptop to download vast quantities of computer files to his own media devices and Dropbox account, without authorization and . . . deleted vast
quantities of computer files from his [company-issued] laptop without authorization”
were “sufficient to state a claim [for computer trespass] under North Carolina law”).
Therefore, Hilsman’s Motion seeking dismissal of Encompass’s computer trespass
claim should be DENIED.
THEREFORE, it is ORDERED that:
1. Hilsman’s Motion is GRANTED, in part, and DENIED, in part. To the
extent Hilsman seeks dismissal of Encompass’s claim for conversion, the
motion is GRANTED. To the extent Hilsman seeks dismissal of
Encompass’s claims for misappropriation of trade secrets and for
computer trespass, the motion is DENIED.
2. Maser’s Motion is DENIED.
SO ORDERED, this the 5th day of November, 2019.
/s/ Gregory P. McGuire Gregory P. McGuire Special Superior Court Judge for Complex Business Cases