United Laboratories, Inc. v. Kuykendall

437 S.E.2d 374, 335 N.C. 183, 9 I.E.R. Cas. (BNA) 34, 1993 N.C. LEXIS 554
CourtSupreme Court of North Carolina
DecidedDecember 3, 1993
Docket243PA91
StatusPublished
Cited by94 cases

This text of 437 S.E.2d 374 (United Laboratories, Inc. v. Kuykendall) is published on Counsel Stack Legal Research, covering Supreme Court of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United Laboratories, Inc. v. Kuykendall, 437 S.E.2d 374, 335 N.C. 183, 9 I.E.R. Cas. (BNA) 34, 1993 N.C. LEXIS 554 (N.C. 1993).

Opinions

EXUM, Chief Justice.

We allowed defendant Share Corporation’s petition for discretionary review in order to consider whether and to what extent a claimant who successfully prosecutes both a common law claim and an unfair practices claim under Chapter 75 of our General Statutes is required to elect between remedies when both claims arise out of essentially the same conduct.

This case has occupied the parties and the courts for a number of years. The essence of it is that plaintiff, United Laboratories, Inc. (United), employed defendant Kuykendall to sell chemical products. The employment contract provided that Kuykendall would not call upon accounts which he serviced for United for eighteen months after his termination of employment with United. Defendant Share Corporation (Share), a competitor of United, induced Kuykendall to leave his employment with United in order to work as a sales representative for Share under circumstances which amounted to a breach of Kuykendall’s non-competition agreement with United.

United filed this action against Kuykendall and Share in November 1985, claiming that Kuykendall had breached his non-[185]*185competition agreement, that Share had tortiously interfered with this agreement, and that Share had violated North Carolina’s unfair practices law, codified in Chapter 75 of our General Statutes. At the first trial United, after having obtained a preliminary injunction against Kuykendall, also obtained directed verdicts against Kuykendall for breach of contract and against Share for tortious interference with contract and for violating the unfair practices law. A jury assessed general damages in favor of United in the amount of $77,477.77, which the trial court reduced to $38,738.89. The jury also found that United had incurred attorneys’ fees and costs in the amount of $47,522.23, and the trial court entered judgment that defendants pay United this amount for its attorneys’ fees and costs. The trial court also permanently enjoined Kuykendall from further violations of his agreement with United.

On defendants’ first appeal this Court, reversing the Court of Appeals, concluded that the non-competition agreement was enforceable. United Laboratories, Inc. v. Kuykendall, 322 N.C. 643, 370 S.E.2d 375 (1988). We also concluded that the trial court erred in directing a verdict in favor of United in its tortious interference claim and that the Court of Appeals erred in concluding that a directed verdict should have been entered on this claim for defendant Share. We held this claim should have been submitted to the jury for determination. Id. We affirmed the Court of Appeals’ decision to remand the case for a new trial on United’s unfair practices claim, agreeing that it was error for the trial court to direct a verdict in favor of United on this claim.1

At the retrial of the case issues were submitted and answered by the jury as follows:

(1) What amount of damages is Plaintiff United entitled to recover of Defendant Kuykendall for breach of the Sales Representative Agreement and Supplemental Compensation Agreement?
Answer: $11,700
(2) Did Defendant Share unjustifiably induce Kuykendall not to perform his contract with United?
Answer: Yes
[186]*186(3) What amount of damages, if any, is Plaintiff United entitled to recover of Defendant Share?
Answer: $1.00
(4) In your discretion, what amount of punitive damages, if any, should be awarded to Plaintiff United from Defendant Share?
Answer: $100,000
(5) Did Defendant Share do one or more of the following:
a. Offer to pay legal fees and costs to induce Kuykendall, in breach of his covenant not to compete, to attempt to divert to Share, unfairly, United’s accounts;
Answer: Yes
b. Induce Kuykendall to use his relationship with United’s accounts and knowledge of confidential business information to attempt to divert to Share, unfairly, United’s accounts;
Answer: Yes
c. Offer to subsidize the income, draw and expenses of Kuykendall in the event of an injunction, to induce Kuykendall, to divert to Share, unfairly, United’s accounts;
Answer: Yes
d. As a matter of routine practice, offer to pay legal fees and costs to induce experienced chemical sales representatives, in breach of the salesmen’s covenant not to compete, to attempt to divert to Share, unfairly, the former employer’s accounts.
Answer: Yes
(6) Was Defendant Share’s conduct in commerce or did it affect commerce?
Answer: Yes
(7) Was Defendant Share’s conduct a proximate cause of any injury to Plaintiff United’s business?
Answer: Yes
[187]*187(8) By what amount, if any, has the business of Plaintiff United been injured?
Answer: $15,000

Upon the coming in of the verdict, all parties seemed to agree that it was then a question of law for the trial court to determine whether defendant Share’s conduct as found by the jury constituted a violation of the unfair practices law.2 After the verdict was returned on 26 May 1989, the parties exchanged evidence pertaining to the issue of attorneys’ fees and prepared for a posttrial hearing before Judge Owens on the question of whether Share’s conduct as found by the jury amounted to a violation of the unfair practices law and, if so, what amount of attorneys’ fees should be awarded to United. After the posttrial hearing on 5 July 1989 Judge Owens concluded that Share’s conduct as found by the jury in Issue 5 constituted “unfair methods of competition and unfair trade practices in violation of N.C.G.S. § 75-1.1, and that plaintiff’s damages found by the jury in Issue 8 shall be trebled pursuant to N.C.G.S. § 75-16.” Judge Owens concluded further that Share “willfully engaged in the acts and practices which are the subject of this action and that there was an unwarranted refusal by [Share] to resolve the matter.” Judge Owens found that United was entitled to recover from Share reasonable attorneys’ fees in the amount of $250,000 pursuant to N.C.G.S. § 75-16.1. Judge Owens entered these conclusions as recitations in a “Judgment and Order” which further provided as follows:

Plaintiff United Laboratories, not being permitted to recover both punitive damages and treble damages for unfair methods of competition and unfair trade practices, shall, within ten days of the filing of this Judgment, file a Motion in this cause electing between the recovery of punitive damages or the recovery of treble damages.
Now, Therefore, it is hereby Ordered, Adjudged and Decreed:
[188]

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Bluebook (online)
437 S.E.2d 374, 335 N.C. 183, 9 I.E.R. Cas. (BNA) 34, 1993 N.C. LEXIS 554, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-laboratories-inc-v-kuykendall-nc-1993.