Syndicated Servs., Inc. v. Yarbrough

2017 NCBC 13
CourtNorth Carolina Business Court
DecidedFebruary 15, 2017
Docket16-CVS-20912
StatusPublished

This text of 2017 NCBC 13 (Syndicated Servs., Inc. v. Yarbrough) is published on Counsel Stack Legal Research, covering North Carolina Business Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Syndicated Servs., Inc. v. Yarbrough, 2017 NCBC 13 (N.C. Super. Ct. 2017).

Opinion

Syndicated Servs., Inc. v. Yarbrough, 2017 NCBC 13.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION MECKLENBURG COUNTY 16 CVS 20912

SYNDICATED SERVICES, INC. d/b/a ) WORKERS’ COMPENSATION ) AGENT EXCHANGE, ) ) Plaintiff, ) ) ORDER AND OPINION ON v. ) DEFENDANT’S MOTION TO DISMISS ) JOHN STANLEY YARBROUGH, III, ) ) Defendant. ) )

1. THIS MATTER is before the Court on Defendant John Stanley Yarbrough,

III’s (“Defendant”) Motion to Dismiss (the “Motion”) received by counsel for Plaintiff

Syndicated Services, Inc. (“Plaintiff” or the “Corporation”) on December 20, 2016 and

thereafter filed with the Court by Plaintiff’s counsel on January 6, 2017. For the

reasons stated below, the Court hereby GRANTS IN PART and DENIES IN PART

the Motion.

Hamilton Stephens Steele & Martin, PLLC by Mark R. Kutny, for Plaintiff Syndicated Services, Inc.

John Stanley Yarbrough, III, appearing pro se.

Robinson, Judge.

I. INTRODUCTION

2. This lawsuit arises out of Defendant’s actions after the Corporation

terminated Defendant’s employment. Plaintiff alleges that Defendant took

Confidential Information—computer code and customer contact information—and used the Confidential Information to compete against the Corporation. The Court

concludes that the allegations of the Verified Complaint (“Complaint”) are sufficient

to state claims for breach of contract, breach of the duty of good faith and fair dealing,

misappropriation of trade secrets, and unfair and deceptive trade practices. On the

other hand, the Court concludes that the allegations of the Complaint are insufficient

to state a claim for tortious interference with contract. Therefore, the Court grants

in part and denies in part the Motion.

II. PROCEDURAL HISTORY

3. Plaintiff initiated this action by filing its Complaint on November 17, 2016.

4. This case was designated as a mandatory complex business case by order

of the Chief Justice of the Supreme Court of North Carolina dated November 18, 2016

and assigned to the undersigned by order of Chief Business Court Judge James L.

Gale dated November 29, 2016.

5. Defendant was personally served with the summons and Complaint on

November 21, 2016.

6. On December 20, 2016, Plaintiff’s counsel received by mail from Defendant

the Motion and Defendant’s memorandum in support of the Motion. Defendant’s

memorandum in support of the Motion argues that the Complaint fails to state a

claim upon which relief can be granted. Therefore, even though not expressly stated

in the Motion or Defendant’s brief, the Motion is deemed by the Court to be made

pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure (“Rule(s)”). 7. On January 6, 2017, Plaintiff filed its brief in opposition to the Motion (the

“Response”).

8. On January 6, 2017, the Court entered a Scheduling Order that reminded

the parties that the deadline for Defendant to file and serve his reply brief was

January 19, 2017. Defendant did not file a reply brief. The Court held a hearing on

the Motion on February 14, 2017, and the Motion is now ripe for resolution.

III. FACTUAL BACKGROUND

9. The Court does not make findings of fact on the Motion under Rule 12(b)(6),

but only recites those allegations of the Complaint that are relevant and necessary to

the Court’s determination of the Motion.

10. The Corporation is a North Carolina corporation with its principal place of

business in Ponce Inlet, Florida. (Verified Compl. ¶ 1 [hereinafter Compl.].)

11. Defendant, a resident of Florida, is a former employee of the Corporation

who worked for the Corporation in both North Carolina and Florida. (Compl. ¶ 2.)

12. David Bell (“Mr. Bell”) and Tracy Bell (“Mrs. Bell”)—Defendant’s step-

father and mother—are the Chief Executive Officer and Secretary/Treasurer,

respectively, of the Corporation. (Compl. ¶ 6.)

13. The Corporation provides staffing solutions, worker’s compensation

insurance, payroll, and other employee benefit services to companies in all fifty

states. (Compl. ¶ 7.)

14. The Corporation created a proprietary product, Staff Pro+, “which offers

clients the ability to outsource and manage on-boarding paperwork electronically, including employment agreements, employment eligibility, and enrollment

documents.” (Compl. ¶ 9.)

15. Mr. Bell wrote the computer code for Staff Pro+ to work with other products

offered by the Corporation. (Compl. ¶ 10.) Staff Pro+ is integrated with PayPal for

billing and utilizes Zoho database management. (Compl. ¶ 12.) Staff Pro+ is

currently only offered in Georgia, Alabama, and New York. (Compl. ¶ 7.)

16. On or about July 12, 2013, the Corporation hired Defendant to work part-

time. (Compl. ¶ 15.) On or about October 1, 2013, Defendant began working for the

Corporation full-time and assisting with the coding of the Corporation’s proprietary

software. (Compl. ¶ 15.) Defendant learned the programing, implementation, and

design behind the Corporation’s products, including Staff Pro+. (Compl. ¶ 16.)

17. All of the Corporation’s employees were required to sign a Confidentiality

and NonCircumvention Agreement (the “Confidentiality Agreement”). (Compl. ¶ 18.)

Defendant executed the Confidentiality Agreement on October 1, 2013. (Compl. ¶¶ 3,

29, Ex. A [hereinafter Confidentiality Agreement].) Execution of the Confidentiality

Agreement was a condition precedent to Defendant’s employment by the Corporation.

(Compl. ¶ 38.)

18. The Confidentiality Agreement states that in the event of a breach or

threatened breach of the Confidentiality Agreement, “[j]urisdiction and venue for any

such proceeding shall be exclusively in North Carolina.” (Confidentiality Agreement

¶ 5.) The Confidentiality Agreement also includes a choice of law provision that states that the agreement shall be governed by and interpreted under North Carolina

law. (Confidentiality Agreement ¶ 5.)

19. The Confidentiality Agreement has a five-year term and provides that a

party to whom Confidential Information is disclosed will

a. Use such Confidential Information solely for the [potential business relationship between the Parties];

b. Not disclose the Confidential Information voluntarily to any person, organization, body, committee, commission, tribunal or any other entity;

c. Maintain the confidence of such Confidential Information with at least the same ardor and care with which it protects its own confidential or proprietary information, and at a minimum in accordance with reasonably prudent standards; ....

e. Promptly return to the Disclosing Party, upon its request, or certify as destroyed, Information in whatever form, including all electronic and magnetic copies and notes thereof.

(Confidentiality Agreement ¶¶ 2, 7.)

20. The Confidentiality Agreement defines “Confidential Information” as

all non-public information designated as being confidential or which, under the circumstances surrounding disclosure, ought to be treated as confidential, as well as any derivatives thereof, including but not limited to . . . all information oral, written or otherwise exchanged between the parties hereto concerning [the potential business relationship between the Parties], including but not limited to financial information, development plans, marketing plan, business opportunities, personnel, and research.

(Confidentiality Agreement ¶ 1.)

21.

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