Outdoor Lighting Perspectives Franchising, Inc. v. Harders

747 S.E.2d 256, 228 N.C. App. 613, 2013 WL 3990588, 2013 N.C. App. LEXIS 828
CourtCourt of Appeals of North Carolina
DecidedAugust 6, 2013
DocketNo. COA12-1204
StatusPublished
Cited by20 cases

This text of 747 S.E.2d 256 (Outdoor Lighting Perspectives Franchising, Inc. v. Harders) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Outdoor Lighting Perspectives Franchising, Inc. v. Harders, 747 S.E.2d 256, 228 N.C. App. 613, 2013 WL 3990588, 2013 N.C. App. LEXIS 828 (N.C. Ct. App. 2013).

Opinion

ERVIN, Judge.

Plaintiff Outdoor Lighting Perspectives Franchising, Inc., appeals from an order entered by the trial court denying its request for the issuance of a preliminary injunction against Defendants Patrick Harders, Outdoor Lighting Perspectives of Northern Virginia, Inc. (OLP-NVA), and Enlightened Lighting, LLC, prohibiting Mr. Harders and Enlightened Lighting from having any involvement in an outdoor lighting business. On appeal, Plaintiff argues that the trial court erred by failing to enforce the non-competition agreement between itself, on the one hand, and Mr. Harders and OLP-NVA, on the other, in its entirety on the grounds that none of the covenant’s provisions were overly broad or otherwise unenforceable. After careful consideration of Plaintiff’s challenges to the trial court’s order in light of the record and the applicable law, we conclude that the trial court’s order should be affirmed.

I. Factual Background

A. Substantive Facts

1. Plaintiffs Evidence

Plaintiff is a corporation which enters into franchise agreements authorizing franchisees to engage in the design, construction, and installation of residential and commercial outdoor lighting products. Mr. Harders began operating an OLP franchise, OLP-NVA, between July and October of 2001. Pursuant to the underlying franchise agreement, Mr. Harders had the right to operate an OLP franchise in an exclusive territory consisting of Arlington, Fairfax, Prince William, and Loudoun Counties in Virginia using the trademarked name of “Outdoor Lighting Perspectives®” for a five-year term. According to the franchise agreement, Mr. Harders and OLP-NVA were required to safeguard confidential OLP information and trade secrets during the term of the agreement. [615]*615The franchise agreement also required Mr. Harders and OLP-NVA to return all franchise materials to OLP upon the termination of the contract or the expiration of the franchise term and prohibited Mr. Harders and OLP-NVA from operating another outdoor lighting business within a specified area for a period of two years beginning on the date upon which the franchise agreement terminated or expired.

Lathe course of his work as an OLP franchisee, Mr. Harders received training and support services from OLP in the form of attendance at workshops, seminars, and conventions. In addition, Mr. Harders was provided with a manual that contained proprietary information deemed necessary to permit the proper operation of an OLP franchise. A number of the manuals given to Mr. Harders and OLP-NVA contained information concerning standardized “marketing, sales, operations, products and services.” Although techniques concerning the installation of outdoor lighting are “relatively universal,” the information that Plaintiff provided to Mr. Harders and OLP-NVA addressed all facets of the outdoor lighting business, including “organization, marketing and promotion, sales techniques, design techniques, pricing and estimating, maintenance, customer service, accounting, billing and collections.” Finally, Plaintiff referred approximately nineteen projects to Mr. Harders and OLP-NVA during the term of the franchise agreement, which projects generated around $60,000 in income. After Mr. Harders and OLP-NVA operated this OLP franchise consistently with the terms of the franchise agreement throughout the initial five-year term, the parties renewed their agreement for a subsequent five-year term on 23 October 2006.

In 2008, Plaintiff was purchased by Outdoor Living Brands (OLB), an entity which owned two subsidiaries: Mosquito Squad® and Archadeck®. OLB had not been previously involved in the outdoor lighting business. During the acquisition process, OLB surveyed OLP franchise owners for the purpose of inquiring into their level of satisfaction with the franchise system. Mr. Harders offered exclusively positive comments in the course of responding to this survey.

In October 2011, Plaintiff contacted Mr. Harders for the purpose of informing him of the steps that needed to be taken in order to renew the franchise agreement. At that time, Mr. Harders informed Plaintiff that he had received a phone call from a customer informing him that the customer had been contacted by an individual representing himself to be the new owner of OLP-NVA who claimed to have been going through Mr. Harders’ database for the purpose of introducing himself to all of Mr. Harders’ existing customers. After receiving that information, Plaintiff assured Mr. Harders that the franchise had not been awarded to anyone [616]*616else and determined that no one had had access to Mr. Harders’ database without first having received permission to do so from him. Even so, Mr. Harders and OLP-NVA allowed their franchise agreement with Plaintiff to expire on 23 October 2011, specifically informing Plaintiff two days later that they no longer had any interest in remaining affiliated with OLP.

In January of 2012, Corey Schroeder, Plaintiff’s Vice President and Chief Financial Officer, read an article in Loudoun Magazine which indicated that Mr. Harders was operating an outdoor lighting business under the name of “Enlightened Landscape Lighting.” A number of projects which Mr. Harders had completed while operating as an OLP franchise were displayed on the new business’ website. As a result, counsel for Plaintiff sent a letter to Defendants’ attorney dated 18 January 2012 stating that Plaintiff was aware that Mr. Harders was operating an outdoor lighting business within his former territory and giving Mr. Harders ten days to voluntarily comply with the post-expiration restrictions contained in the franchise agreement. In addition, Plaintiff requested that Mr. Harders cease attempting to supply other OLP franchisees with fixtures from China because of quality issues associated with the use of such fixtures and because Mr. Harders was not an approved supplier of such products. Plaintiff did not, however, attempt to totally exclude Mr. Harders from participating in the interior lighting business. Mr. Harders, however, refused to cease operating his outdoor lighting business and to deliver allegedly proprietary information in his possession, including his customer list, to Plaintiff.1

2. Defendants’ Evidence

Mr. Harders, who had purchased an OLP franchise in 2001, served as president of OLP-NVA. As part of the process of operating an OLP franchise, Mr. Harders entered into a franchise agreement that was drafted by OLP on or about 23 October 2006. During the time in which he operated as an OLP franchisee, both OLP and OLP-NVA were in the business of providing low-voltage outdoor landscape lighting. However, neither entity was involved in providing “mercury vapor (moonlighting), high voltage outdoor landscape installations, and exterior attached home [617]*617lighting using 120 volt fixtures and wiring (security lighting, entrance-way lighting, outdoor lampposts).”

During the time in which Mr. Harders operated as an OLP franchisee, entities holding OLP franchises encountered numerous problems with OLP suppliers. Since OLB purchased Plaintiff in 2008, numerous franchises have closed and the OLP business model has been devalued. Among other things, Plaintiff failed to provide its franchisees with adequate support, feedback, and product innovation. Although the information provided to Mr. Harders and OLP-NVA by OLP was alleged to be proprietary, much of it was publicly available and common knowledge in the industry.

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Cite This Page — Counsel Stack

Bluebook (online)
747 S.E.2d 256, 228 N.C. App. 613, 2013 WL 3990588, 2013 N.C. App. LEXIS 828, Counsel Stack Legal Research, https://law.counselstack.com/opinion/outdoor-lighting-perspectives-franchising-inc-v-harders-ncctapp-2013.