Se. Reg'l Physician Servs. v. Scott

• Court: Court of Appeals of North Carolina
• Decided: July 15, 2026
• Docket: 25-1046
• Status: Published
• Author: Judge Jefferson Griffin

Opinion

IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA25-1046

Filed 15 July 2026

Robeson County, No. 25CV001805-770

SOUTHEASTERN REGIONAL PHYSICIAN SERVICES, Plaintiff,

v.

ALLISON L. SCOTT, FNP, and CHASTITY BENSON, NP, Defendants.

Appeal by Plaintiff from order entered 22 August 2025 by Judge Tiffany

Powers in Robeson County Superior Court. Heard in the Court of Appeals 24 March

2026.

Cranfill Sumner LLP, by Benton L. Toups and Tammy L. Neil, for Plaintiff- Appellant.

Murchison, Taylor & Gibson PLLC, by Andrew K. McVey, for Defendants- Appellees.

GRIFFIN, Judge.

Plaintiff Southeastern Regional Physician Services appeals an order granting

judgment on the pleadings after Defendants Allison L. Scott and Chastity Benson

successfully argued Plaintiff’s non-compete agreements were overly broad and

unenforceable. Plaintiff argues the trial court erred because the non-compete

agreements were temporary and reasonable restrictions, and the trial court’s reliance

on public interest doctrine was improper. We hold the non-compete agreements are SE. REG’L PHYSICIAN SERVS. V. SCOTT

Opinion of the Court

overly broad and unenforceable, and we decline to blue-pencil the challenged

provisions.

I. Factual and Procedural History

Plaintiff is a wholly owned subsidiary of Southeastern Regional Medical

Center and operates several primary and specialty care medical clinics. Defendant

Scott and Benson are a licensed family nurse practitioner and licensed nurse

practitioner, respectively. Plaintiff hired Scott on or about 17 February 2021 and

hired Benson on or about 15 July 2023. Prior to employment, Plaintiff had both

Defendants sign Provider Employment Agreements containing covenants not to

compete. Scott’s covenant not to compete contains the following language:

[Defendant] agrees that during the term of employment and for a period of one (1) year following the termination of employment with [Plaintiff] for any reason (the “noncompetition period”), [Defendant] will not engage in the practice of Medicine or provide services similar to those provided under this Agreement as an employee, independent contractor, or in any other capacity, for a competing Southeastern or other competing institutional health care providers within Robeson County without the expressed, written consent of [Plaintiff].

(Emphasis added). In contrast, Benson’s covenant not to compete reads:

[Defendant] agrees that during the term of employment and for a period of one (1) year following the termination of employment with [Plaintiff] for any reason (the “noncompetition period”), [Defendant] will not engage in the practice of Medicine or provide services similar to those provided under this Agreement as an employee, independent contractor, or in any other capacity, for a competing hospital or other competing institutional health

-2- SE. REG’L PHYSICIAN SERVS. V. SCOTT

care providers within 35 miles of any [of Plaintiff’s] clinic[s] or facilit[ies] without the expressed, written consent of [Plaintiff].

(Emphasis added). The Provider Employment Agreements also required Defendants

to give ninety-days’ notice to Plaintiff prior to resigning from their positions. During

their time working for Plaintiff, both Defendants worked in Plaintiff’s

cardiology/cardiovascular clinic.

On 19 July 2024, Benson notified Plaintiff with her intent to resign, effective

18 October 2024. Similarly, on 1 August 2024, Scott notified Plaintiff with her intent

to resign, effective 15 November 2024. Shortly thereafter, Southeastern Integrated

Care, a primary care, mental health, and substance abuse treatment center, hired

both Defendants.

Plaintiff filed its complaint against Defendants on 4 March 2025, alleging

Defendants breached their respective covenants not to compete by providing medical

services for Southeastern Integrated Care. Defendants answered Plaintiff’s

complaint on 16 May 2025 and moved to dismiss under Rule 12(b)(6) of the North

Carolina Rules of Civil Procedure and, alternatively, for judgment on the pleadings

under Rule 12(c). Defendants argued in their answer: (1) Southeastern Integrated

Care is neither a hospital nor an “institutional health care provider;” (2) the

covenants not to compete are unenforceable because “they are more restrictive than

necessary” as they wholly restrict Defendants’ ability to practice medicine; and (3)

-3- SE. REG’L PHYSICIAN SERVS. V. SCOTT

Plaintiff had no legitimate business interest in prohibiting Defendants from

practicing medical specialties other than cardiology.

The trial court held a hearing on Defendants’ motions on 11 August 2025. After

considering the parties’ briefs and arguments, the trial court found the covenants not

to compete unenforceable because they were “too broad to constitute a reasonable

protection of [Plaintiff’s] business interest,” they restricted Defendants’ ability to

practice medicine, and their enforcement “would create a substantial question of

public harm to residents of North Carolina’s largest and poorest county[,]” thus

outweighing Plaintiff’s business interest.

The trial court granted Defendants’ motion for judgment on the pleadings and

denied Defendant’s motion to dismiss as moot. Plaintiff timely appeals.

II. Analysis

Plaintiff raises three issues on appeal: (1) “[w]hether the trial court erred in

granting [D]efendants’ motion for judgment on the pleadings and dismissing

[P]laintiff’s complaint pursuant to N.C. R. Civ. P. 12(c)[;]” (2) “[w]hether the trial

court erred in dismissing plaintiff’s complaint in finding that the covenants are

unenforceable[;]” and (3) “[w]hether the trial court erred in dismissing [P]laintiff’s

complaint in finding the public interest outweighs the business interest of the

covenantee in enforcing the covenant.”

Plaintiff argues the trial court erred by granting Defendants’ motion for

judgment on the pleadings because it provided valuable consideration to uphold the

-4- SE. REG’L PHYSICIAN SERVS. V. SCOTT

covenants not to compete, and the covenants not to compete were reasonable.

Plaintiff also argues the trial court’s reliance on public interest doctrine was improper

and, alternatively, if this Court holds the covenants not to compete are overly broad,

this Court should “blue-pencil” to render the covenants not to compete reasonable.

We review a trial court’s ruling on a motion for judgment on the pleadings de

novo. Barefoot v. Rule, 265 N.C. App. 401, 403, 828 S.E.2d 685, 687 (2019). When

presented with a motion for judgment on the pleadings, the trial court must view the

facts and permissible inferences in the light most favorable to the nonmoving party

and take all well-pleaded factual allegations as true. Ragsdale v. Kennedy, 286 N.C.

130, 137, 209 S.E.2d 494, 499 (1974). All contravening assertions in the movant’s

pleadings are taken as false. Id. “All allegations in the nonmovant’s pleadings,

except conclusions of law, legally impossible facts, and matters not admissible in

evidence at the trial, are deemed admitted by the movant for purposes of the motion

[for judgment on the pleadings].” Id.

A motion for judgment on the pleadings “should not be granted unless the

movant clearly establishes that no material issue of fact remains to be resolved and

that he is entitled to judgment as a matter of law.” Am. Bank & Trust Co. v. Elzey,

26 N.C. App. 29, 32, 214 S.E.2d 800, 802 (1975) (internal citation omitted). The

purpose of the motion is to “dispose of baseless claims or defenses when the formal

pleadings reveal their lack of merit[,]” leaving only the admitted material allegations

and questions of law. Ragsdale, 286 N.C. at 137, 209 S.E.2d at 499. “When the

-5- SE. REG’L PHYSICIAN SERVS. V. SCOTT

pleadings do not resolve all the factual issues, judgment on the pleadings is generally

[i]nappropriate.” Id.

A. Enforceability of Covenants

Covenants not to compete are valid and enforceable if they are: “(1) in writing;

(2) reasonable as to terms, time, and territory; (3) made a part of the employment

contract; (4) based on valuable consideration; and (5) not against public policy.”

Triangle Leasing Co. v. McMahon, 327 N.C. 224, 228, 393 S.E.2d 854, 857 (1990). 1

Here, Plaintiff argues the elements of a valid covenant not to compete are met

for both Covenants. Regarding the elements of writing, made as part of the initial

employment agreement, and made with valuable consideration, we agree and

dispense these arguments. See id.; Precision Walls, Inc. v. Servie, 152 N.C. App. 630,

636, 568 S.E.2d 267, 272 (2002) (“It is well established in North Carolina that the

promise of new employment is valuable consideration and will support an otherwise

valid covenant not to compete contained in the initial employment contract.” (internal

quotation marks and citation omitted)). We address the remaining elements.

1 We note that our Court has used a similar five-element analysis in Hartman v. W.H. Odell & Assocs.,

Inc., 117 N.C. App. 307, 311, 450 S.E.2d 912, 916 (1994). The Hartman test replaces element (5) with “designed to protect a legitimate business interest of the employer.” Id. (citation omitted). We use the Triangle Leasing Co. test language instead because the protection of a legitimate business interest is a required consideration for determining whether a covenant not to compete is void against public policy, see Phelps Staffing, LLC v. C.T. Phelps, Inc., 226 N.C. App. 506, 509, 740 S.E.2d 923, 927 (2013), and we are bound by decisions of our Supreme Court if our decisions are in conflict, Emp. Staffing Grp., Inc. v. Little, 243 N.C. App. 266, 271, n.3, 777 S.E.2d 309, 313 n.3 (2015). Further, “[i]t is well settled that the courts of a state will not lend their aid to the enforcement of a contract . . . [w]hen it violates public policy.” Std. Fashion Co. v. Grant, 165 N.C. 453, 456, 81 S.E. 606, 607–08 (1914).

-6- SE. REG’L PHYSICIAN SERVS. V. SCOTT

1. Reasonability in Terms, Time, and Territory

“The reasonableness of a restraining covenant is a matter of law for the court

to decide.” Jewel Box Stores Corp. v. Morrow, 272 N.C. 659, 663, 158 S.E.2d 840, 843

(1968) (citation omitted). When evaluating reasonableness as to time and territory,

we must consider the two elements together because “the two requirements are not

independent or unrelated.” Farr Assocs., Inc. v. Baskin, 138 N.C. App. 276, 280, 530

S.E.2d 878, 881 (2000). Though either element, standing alone, may be reasonable,

the combined effect of both elements may be unreasonable. Id. “A longer period of

time is acceptable where the geographic restriction is relatively small, and vice versa.”

Id. (citing Jewel Box Stores, 272 N.C. at 665, 158 S.E.2d at 844).

To properly consider the reasonableness of a territorial restriction, we must

consider six factors:

(1) the area or scope of the restriction; (2) the area assigned to the employee; (3) the area where the employee actually worked; (4) the area in which the employee operated; (5) the nature of the business involved; and (6) the nature of the employee’s duty and his knowledge of the employer’s business operation.

Id. at 281, 530 S.E.2d at 882 (citing Hartman, 117 N.C. App. at 312, 450 S.E.2d at

917). A territorial restriction is reasonable “only to the extent it protects the

legitimate interests of the employer in maintaining [its] customers.” Manpower of

Guilford Cnty., Inc. v. Hedgecock, 42 N.C. App. 515, 523, 257 S.E.2d 109, 115 (1979).

“Before a covenant can be found reasonably necessary for the protection of a

-7- SE. REG’L PHYSICIAN SERVS. V. SCOTT

legitimate business interest, we hold that it is first necessary to find the employee,

as a result of his employment, acquired intimate knowledge of the nature and

character of the business which was not otherwise generally available to the public.”

United Lab’ys, Inc. v. Kuykendall, 322 N.C. 643, 650, 370 S.E.2d 375, 380 (1988)

(citation omitted).

Here, Plaintiff argues the covenants not to compete were reasonable in both

time and territory as well as, implicitly, in terms. Regarding the timing restriction,

we agree a one-year restriction is reasonable. See Farr Assocs., 138 N.C. App. at 280,

530 S.E.2d at 881 (“A five-year time restriction is the outer boundary which our courts

have considered reasonable[.]”). We also hold the geographical restrictions of 35 miles

and “within Robeson County” reasonable. See Masterclean of N.C., Inc. v. Guy, 82

N.C. App. 45, 50, 345 S.E.2d 692, 696 (1986) (holding a geographical restriction

embracing the entire United States is “patently unreasonable”). However, we do not

agree the terms are reasonable.

North Carolina courts have consistently held covenants not to compete are

unenforceable when overly broad in scope. E.g., Henley Paper Co. v. McAllister, 253

N.C. 529, 534–35, 117 S.E.2d 431, 434 (1960); VisionAIR, Inc. v. James, 167 N.C. App.

504, 508–09, 606 S.E.2d 359, 362–63 (2004); Med. Staffing Network, Inc. v. Ridgway,

194 N.C. App. 649, 656–57, 670 S.E.2d 321, 327–28 (2009).

Here, the language of the covenants not to compete forbids Defendants from

“engag[ing] in the practice of Medicine” or to provide substantially similar services to

-8- SE. REG’L PHYSICIAN SERVS. V. SCOTT

those they provided for Plaintiff. This prohibition impermissibly limits Defendants’

abilities to meaningfully engage in their careers. If Defendants were to comply with

their covenants not to compete, they would both be required to stop any work

remotely related to the practice of medicine or operation of a healthcare facility. This

restriction is overbroad and unenforceable. See Hartman, 117 N.C. App. at 317, 450

S.E.2d at 920 (holding a non-compete agreement is overly broad when “rather than

attempting to prevent [a] plaintiff from competing for [] business, it requires [a]

plaintiff to have no association whatsoever with any business that provides [similar]

services”).

2. Voidability Against Public Policy

We would also hold the covenants not to compete void against public policy.

When considering public policy, we “disfavor[] noncompetition agreements which

hamper an individual’s right to earn a livelihood unless the restriction protects a

sufficient countervailing interest of the employer.” Phelps Staffing, LLC v. C.T.

Phelps, Inc., 226 N.C. App. 506, 509−10, 740 S.E.2d 923, 927 (2013) (citation omitted).

Employer rights must be balanced against the “undue hardship” of the employee:

[E]ven where there is an otherwise permissible covenant not to compete: [t]he restraint is unreasonable and void if it is greater than is required for the protection of the promisee or if it imposes an undue hardship on the person who is restricted. Owing to the possibility that a person may be deprived of his livelihood, the courts are less disposed to uphold restraints in contracts of employment than to uphold them in contracts of sale.

-9- SE. REG’L PHYSICIAN SERVS. V. SCOTT

Starkings Ct. Rep’ing Servs. v. Collins, 67 N.C. App. 540, 541–42, 313 S.E.2d 614, 615

(1984) (quoting Wilmer, Inc. v. Liles, 13 N.C. App. 71, 75, 185 S.E.2d 278, 281 (1971)).

In the public policy analysis, we must consider “the right of the employer to protect,

by reasonable contract with [its] employee, the unique assets of [its] business, a

knowledge of which is acquired during the employment and by reason of it[.]” Elec.

S., Inc. v. Lewis, 96 N.C. App. 160, 165, 385 S.E.2d 352, 355 (1989) (quoting Kadis v.

Britt, 224 N.C. 154, 159, 29 S.E.2d 543, 546 (1944)). These unique assets include

contacts and confidential information. Id. at 166, 285 S.E.2d at 355. In contrast,

“when such proprietary interests of the employer are absent and the effect of a

contract is merely to stifle normal competition, it is offensive to public policy in

promoting monopoly at the public expense and is bad.” Phelps Staffing, LLC, 226

N.C. App. at 510, 740 S.E.2d at 927 (citation modified). Covenants not to compete

offend public policy when they impose a “greater restraint on the [employee’s] ability

to earn a living than was necessary to protect the [employer’s] business interests.”

Id. (citing Starkings Ct. Rep’ing Servs., 67 N.C. App. at 542, 313 S.E.2d at 616.).

Here, Plaintiff argues public interest doctrine should not apply to a Rule 12(c)

analysis because the application of public interest doctrine is “inherently factual” and

“involve[s] fact finding and submission of evidence in the context of motions for

preliminary injunction[s] and summary judgment.” Alternatively, Plaintiff argues

the covenants not to compete are not contrary to public policy because they protect

Plaintiff’s legitimate business interests. Plaintiff’s asserted business interests are

- 10 - SE. REG’L PHYSICIAN SERVS. V. SCOTT

protection from adverse use of intimate knowledge of Plaintiff’s business operations

and protection of customer relationships. Plaintiff alleges it has lost patients to

Southern Integrated Care after Defendants’ departure. We hold Plaintiff’s legitimate

business interest does not sufficiently justify the bar to Defendants’ ability to engage

in the practice of medicine based on the pleadings; therefore, the case need not

proceed to the fact finding and submissions of evidence for which Plaintiff argues.

We have previously held, “[t]o plead 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 to

determine whether misappropriation has or is threatened to occur.” VisionAIR, Inc.,

167 N.C. App. at 510–11, 606 S.E.2d at 364 (citation modified). Here, Plaintiff does

not plead a specific trade secret misappropriated by Defendants. Plaintiff generally

pleads Defendants had access to Plaintiff’s “practice management techniques and

confidential information;” provide medical services “similar to those” provided for

Plaintiff; and, due to Defendants’ employment with Southeastern Integrated Care,

Plaintiff has lost patients. Plaintiff also argues Defendants’ previous association with

Plaintiff “provided them with an opportunity to injure [Plaintiff] and its business.”

Absent allegations of misappropriated trade secrets Defendants know, Plaintiff

cannot enforce an absolute bar to Defendants’ practice of medicine. Id. at 511, 606

S.E.2d at 364 (holding “general allegations” that one’s employment “has or will

immediately engender misappropriation of trade secrets” combined with a failure “to

- 11 - SE. REG’L PHYSICIAN SERVS. V. SCOTT

identify with any specificity the trade secrets allegedly misappropriated, mentioning

only broad . . . categories” were “insufficient to state a claim for misappropriation of

trade secrets” (citation omitted)); see United Lab’ys, Inc., 322 N.C. at 650, 370 S.E.2d

at 380 (“Before a covenant can be found reasonably necessary for the protection of a

legitimate business interest, we hold that it is first necessary to find the employee,

as a result of his employment, acquired intimate knowledge of [a confidential] nature

and character of the business which was not otherwise generally available to the

public.”).

In contrast, we agree Plaintiff has a legitimate business interest in protecting

its client relationships. United Lab’ys, Inc., 322 N.C. at 651, 370 S.E.2d at 381 (first

citing C.T. Drechsler, Annotation, Enforceability of Restrictive Covenant, Ancillary to

Employment Contract, as Affected by Territorial Extent of Restriction, 43 A.L.R.2d 94,

§ 24 (1955); and then citing C.T. Drechsler, Annotation, Enforceability of Restrictive

Covenant, Ancillary to Employment, as Affected by Duration of Restriction, 41

A.L.R.2d 15, § 14 (1955)). North Carolina has adopted a “customer-contact” theory

which recognizes “[t]he greater the employee’s opportunity to engage in personal

contact with the employer’s customer, the greater the need for the employer to protect

these customer relationships.” Id. at 651, 370 S.E.2d at 381. The theory is most

applicable when “the employee is the sole or primary contact between the customer

and the employer.” Id.

- 12 - SE. REG’L PHYSICIAN SERVS. V. SCOTT

Although we hold Plaintiff’s customer-contact interest legitimate, we hold it

does not sufficiently justify the bar to Defendants’ ability to engage in the practice of

medicine. See Iredell Digestive Disease Clinic, P.A. v. Petrozza, 92 N.C. App. 21, 27,

373 S.E.2d 449, 453 (1988) (“A covenant not to compete between physicians is not

contrary to public policy if it is intended to protect a legitimate interest of the

covenantee and is not so broad as to be oppressive to the covenantor or the public.”

(emphasis added) (citation omitted)). Defendants were not the sole contacts between

Plaintiff and its patients, and Plaintiff does not plead Defendants were the primary

contacts between Plaintiff’s patients and Plaintiff. The mere loss of patients after

Defendants’ departure is not sufficient to justify precluding Defendants’ practice of

medicine. See Elec. S., Inc., 96 N.C. App. at 165–66, 385 S.E.2d at 355 (stating “[t]he

equitable balance between conflicting interests of employer and employee takes into

account the right of the employer to protect, by reasonable contract with its employee,

the unique assets of its business, a knowledge of which is acquired during the

employment and by reason of it,” including “customer contacts” and “confidential

information,” and “to this employer’s right must be added the condition that the

contract does not impose unreasonable hardship on the employee” (citation

modified)).

We hold the covenants not to compete place an undue hardship on Defendants’

ability to meaningfully engage with their careers and are too broad to protect

Plaintiff’s legitimate business interests. Starkings Ct. Rep’ing Servs., 67 N.C. App.

- 13 - SE. REG’L PHYSICIAN SERVS. V. SCOTT

at 541–42, 313 S.E.2d at 615. Therefore, on balance, we hold the trial court did not

err in finding the covenants not to compete unenforceable.2

B. Blue-Pencil Doctrine

Plaintiff argues, alternatively, this Court may “blue[-]pencil” the phrase

“practice of Medicine” in both covenants not to compete to render the provisions

reasonable.

“The blue-pencil doctrine is a doctrine in equity, designed to save a contract

where particular restrictions are deemed unreasonable and unenforceable.” Rel. Ins.,

Inc. v. Pilot Risk Mgmt. Consulting, LLC, --- N.C. ---, ---, 929 S.E.2d 893, 914 (2026)

(citing Welcome Wagon Int’l, Inc. v. Pender, 255 N.C. 244, 248, 120 S.E.2d 739, 742

(1961)). “Generally, under the blue-pencil doctrine, courts ‘will sever unreasonable,

divisible portions and then enforce the reasonable parts that remain, usually without

rewriting the covenant by adding, changing, or rearranging terms.’” Id. (quoting 6

Richard A. Lord, Williston on Contracts § 13:31 (4th ed. 2025)). Courts may not,

however, revise or rewrite the overly broad provisions. Whittaker Gen. Med. Corp. v.

Daniel, 324 N.C. 523, 528, 379 S.E.2d 824, 828 (1989).

2 We also recognize the trial court found “the enforceability of the covenants would create a substantial

question of public harm to residents of North Carolina’s largest and poorest county.” Even assuming Robeson County is North Carolina’s “largest and poorest county,” we hold the trial court’s taking of judicial notice of this fact inconsequential because we hold the covenants not to compete are void against public policy for the reasons stated above.

- 14 - SE. REG’L PHYSICIAN SERVS. V. SCOTT

“Under a liberal blue-pencil standard, employers are encouraged to create

ominous covenants, knowing that if the provisions are contested, courts will modify

the agreement to make it enforceable—all the while maintaining the added benefit

that departing employees may adhere to the onerous covenant without challenge.”

Rel. Ins., Inc., --- N.C. at ---, 929 S.E.2d at 914.3 In contrast, North Carolina courts

adopt a strict blue-pencil doctrine, allowing “[o]nly those separable or divisible

covenants [to] be fairly stricken out. This is rooted in the notion that a natural

reading of [the] contract would indicate that the parties separately intended to agree

to each separable covenant.” Id. Accordingly, the strict blue-pencil doctrine “does

not allow courts to surgically excise language.” Id. at ---, 929 S.E.2d at 915.

Here, Plaintiff requests this Court blue-pencil the covenants not to compete in

the following ways:

Defendant Scott’s Covenant Not to Compete:

[Defendant] agrees that during the term of employment and for a period of one (1) year following the termination of employment with [Plaintiff] for any reason (the “noncompetition period”), [Defendant] will not engage in the practice of Medicine or provide services similar to those provided under this Agreement as an employee, independent contractor, or in any other capacity, for a competing Southeastern or other competing institutional

3 We recognize our Supreme Court’s opinion in Relation Ins., Inc. was released after the submission of

the Parties’ briefs. Although neither party filed a memorandum of additional authority including Relation Ins., Inc., this opinion is binding on this Court and the trial courts of North Carolina. See Snipes v. TitleMax of Va., Inc., 285 N.C. App. 176, 184, 876 S.E.2d 864, 870 (2022) (“Of course, we are . . . bound by decisions of our Supreme Court[.]”)); In re Civil Penalty, 324 N.C. 373, 384, 379 S.E.2d 30, 37 (1989).

- 15 - SE. REG’L PHYSICIAN SERVS. V. SCOTT

health care providers within Robeson County without the expressed, written consent of [Plaintiff].

Defendant Benson’s Covenant Not to Compete:

[Defendant] agrees that during the term of employment and for a period of one (1) year following the termination of employment with [Plaintiff] for any reason (the “noncompetition period”), [Defendant] will not engage in the practice of Medicine or provide services similar to those provided under this Agreement as an employee, independent contractor, or in any other capacity, for a competing hospital or other competing institutional health care providers within 35 miles of any [of Plaintiff’s] clinic[s] or facilit[ies] without the expressed, written consent of [Plaintiff].

“Since [Plaintiff does] not request blue-penciling of a separable, divisible

provision from an otherwise enforceable provision, blue-penciling cannot apply.” Id.

III. Conclusion

The trial court did not err in finding the covenants not to compete overly broad

and unenforceable or in granting Defendants’ motion for judgment on the pleadings,

and we decline to blue-pencil the challenged provisions.

AFFIRMED.

Judge WOOD concurs.

Chief Judge DILLON dissents by separate opinion.

- 16 - No. COA25-1046 – Se. Reg’l Physicians Servs. v. Scott

DILLON, Chief Judge, dissenting.

Defendants are nurses, each hired by Plaintiff and each signing a non-compete

agreement as a condition of employment.

I agree with the majority that the prohibition in their respective covenants

prohibiting Defendants from “engaging in the practice of medicine” is over broad and,

therefore, unenforceable. However, for the reasoning below, I conclude other

limitations in the covenant are not over broad. Further, I conclude the over broad

portion can be properly struck, thus allowing the “non- over broad” portions to stand.

(I question certain jurisprudence suggesting the trial court has discretion whether to

strike offending language, as I believe this should be a question of law. But even if it

is a discretionary call, the call should not be made at a Rule 12(c) hearing.)

I agree with the majority that Defendants may, otherwise, be able to show the

covenants restricting their ability to serve Robeson County as nurses – a vital part of

the county’s medical community – may violate public policy. And it may be shown

through discovery these covenants are, indeed, unenforceable. However, I conclude

Plaintiff’s complaint should survive at this early stage, that the trial court should not

have granted Defendants judgment on the pleadings. Accordingly, I respectfully

dissent.

Analysis

A. Blue Penciling SE. REG’L PHYSICIAN SERVS. V. SCOTT

DILLON, C.J., dissenting

Our Supreme Court has recently reiterated long-standing North Carolina

precedent that courts will not rewrite language in a contract that we conclude is

unenforceable. Relation. Ins., Inc. v. Pilot Risk, __ N.C. __ (2026).

For instance, in the present case, I agree with the majority that the 35-mile

range is a reasonable area. But assume the covenant at issue stated that Defendants

could “not work as nurses anywhere in the United States”. Assume, further, we were

to conclude a 35-mile distance was the outer limit of a reasonable restriction. We

would, thus, strike the covenant, thereby relieving Defendants from the covenant

altogether. Our case law would not allow us to change “United States” to “a 35-mile

distance”.

However, our Supreme Court also reiterated long-standing North Carolina

precedent that there are circumstances where a trial court may enforce the non-

offensive restrictions in a restrictive covenant which otherwise contains offensive

restrictions. For instance, assume the contract in my example above contains several

clauses, as follows:

Defendants may not work as nurses anywhere in the United States; Defendants may not work as nurses in North Carolina; Defendants may not work as nurses within 100 miles of Plaintiff’s clinic; Defendants may not work as nurses within 35 miles of Plaintiff’s clinic.

See Beverage Sys. v. Associated Bev., 368 N.C. 693, 696-97 (2016); Welcome Wagon v.

Pender, 255 N.C. 244, 248 (1961). In this case, the trial court could strike the first

three lines, leaving the fourth as valid and enforceable.

2 SE. REG’L PHYSICIAN SERVS. V. SCOTT

However, our Supreme Court has also stated that blue penciling is only

allowed where the offending provision is “a separable, divisible provision from an

otherwise enforceable provision.” Relation Ins., __ N.C. at __.

In the present case, we are faced with whether the offending provision,

prohibiting Defendants from “the practice of Medicine”, is subject to blue penciling

from the remainder of the same sentence in the covenant which prohibits Defendants

from “provid[ing] services similar to those provided” under their respective

employment agreements with Plaintiff.

Our Supreme Court has essentially held that it is permissible for a trial court

to strike offending language - even within the same phrase - from non-offending

language. For instance, in one case our Supreme Court was faced with a provision

which prohibited a former employee from the “business of manufacturing, selling,

renting, or distributing” certain goods, where the former employer was not in the

business of manufacturing. Whittaker General v. Daniel, 324 N.C. 523, 528 (1989).

The employer sued when the employee began working for a competitor selling goods.

The employee tried to avoid the covenant altogether by pointing to the word

“manufacturing”, restricting his ability to manufacture for another company, as being

over broad. Our Supreme Court rejected that argument, holding the word

“manufacturing” was severable from the remainder of the sentence and allowed the

former employer to collect damages for the former employee’s actions in “selling”. Id.

3 SE. REG’L PHYSICIAN SERVS. V. SCOTT

However, in Relation Ins., our Supreme Court in its recent decision seemingly

held that a covenant was unenforceable in its entirety though the covenant could be

read as enforceable by simply striking through the offending language. The Court,

though, seemed to base its holding on the fact that it would require language in over

forty different places to be struck in order to make the remainder enforceable.

Relation Ins. __ N.C. at __.4

Here, though, the pleadings do not show that a trial court would have to engage

in blue penciling except in a few places and thus would not run counter to our

Supreme Court’s opinion in Relation Ins.. Therefore, I conclude the trial court could

engage in blue penciling to strike the offending language.

B. Public Policy

The majority also holds the provision violates public policy as Defendants are

nurses working in the medical field. It may be the provision violates public policy.

However, I do not believe this has been shown at the pleading stage. For instance,

there is no evidence showing whether there is a shortage of nurses in Robeson

County. See, e.g., Statesville Medical v. Dickey, 106 N.C. App. 669, 673 (1992). In

4 Though not relevant to the analysis in this current matter, I note that I read Relation Ins.

as moving the goal post a little, thus making the question of whether a non-compete contract can be blue-penciled less certain under our law. It could be argued that the blue-penciling requested by Relation Insurance in that case was not that overwhelming, as the request largely required the trial court to blue pencil the same phrase, which happened to occur some forty times in the agreement at issue.

4 SE. REG’L PHYSICIAN SERVS. V. SCOTT

other words, Defendants may be able to show through discovery that the provision

violates public policy as a matter of law, therefore entitling Defendants to summary

judgment at a later stage of this litigation. However, I see nothing in the pleadings

which entitle Defendants judgment at this stage.

C. Abuse of Discretion vs, De Novo Standard

Though not an issue raised in this appeal, I think it important to note another

issue that arises in the context of blue-penciling.

There is case law from our Court which suggests that, where blue penciling

may be allowed, it is within the trial court’s discretion whether to actually engage in

blue pencil offending language. See, e.g., Hartman v. W.H. Odell, 117 N.C. App. 307,

317 (1994) (holding that “[a] court at most may choose to enforce a distinctly separable

part of a covenant in order to render the provision reasonable” (emphasis added)).

That is, it is within the trial court’s discretion to decide whether or not parties to a

contract capable of being blue penciled are bound by the non-offending language in

that contract. This may be because the blue pencil doctrine has been viewed as a

“doctrine of equity”. See Relation Ins., __ N.C. at __.

In sum, it appears the law in North Carolina is that it is a question of law

whether a provision is able to be blue penciled, e.g., whether the offending provision

is separable. Then, in cases where an offending provision is separable as a matter of

law, it is within a trial court’s discretion whether to allow an employer to enforce the

5 SE. REG’L PHYSICIAN SERVS. V. SCOTT

reasonable provisions by engaging in the “blue penciling” process. Allowing a trial

court discretion whether or not to enforce provisions in a contract creates uncertainty

in our society between contracting parties. It could be argued that our law should

provide for more certainty. That is, one could argue the matter should be simply a

question of law, as it is a matter of contract interpretation, where the rights of the

parties would be the same no matter the judge. See, e.g. Morrell v. Hardin Creek,

371 N.C. 672 (2018) (applying a de novo standard in reviewing contract language).

Our Supreme Court did not need to resolve this issue in its recent Relation Ins.

opinion; and, therefore, the Court did not render any opinion on our precedent on this

issue.

In any event, in the present case, my vote is the same whether a trial court has

discretion or not, based on the posture of this case. Specifically, the trial court at this

stage of the litigation was only to address the pleadings, that is, to address the legal

question whether the offending provision was severable.