United States District Court, M.D. North Carolina
SUPERIOR PERFORMERS, INC., d/b/a NATIONAL AGENTS ALLIANCE, Plaintiff,
SHAWN MEAIKE, MARC J. MEADE, BRYANT STONE, FRANK EUFEMIA, JAIME EUFEMIA, and MICHAEL SIZER, Defendants.
MEMORANDUM OPINION AND ORDER
JAMES A. BEAT, District Judge.
This matter is currently before the Court on the Motion to Amend [Doc. #62] filed by Plaintiff Superior Performers, Inc. ("Plaintiff" or "NAA"). Defendants have filed a Response in Opposition to the Motion to Amend [Doc. #77], to which, Plaintiff has filed a Reply [Doc. #93]. Also before the Court is the Motion to Dismiss [Doc. #31], filed by all Defendants in this case. Plaintiff filed a Response in Opposition to Defendants' Motion to Dismiss [Doc. #71], to which Defendant filed a Reply [Doc. #78]. For the reasons discussed below, the Court grants in part and denies in part Plaintiff's Motion to Amend and as a result, the Court denies Defendants' Motion to Dismiss without prejudice to Defendants refiling such a motion based upon Plaintiff's Second Amended Complaint if it is warranted in light of the findings below.
This case is one of several related cases brought by Plaintiff in an attempt to, among other things, enforce restrictive covenants entered into by current and former NAA agents and managers. As to the First Amended Complaint in this action, Plaintiff alleged five separate Causes of Action. These Causes of Action included those for breach of contract based on alleged violations of the non-solicitation and non-competition agreements, a claim for tortious interference with contract and business relationships, a claim for unfair and deceptive trade practices, a civil conspiracy claim, and a wiretapping claim.
Plaintiff now brings a formal Motion to Amend its Complaint. If allowed, this Complaint would be Plaintiff's Second Amended Complaint, as Plaintiff previously amended its complaint once as a matter of course. (See Amended Compl. [Doc. #11].) In support of its Motion to Amend, Plaintiff asserts that it has now learned of multiple instances of solicitation that is allegedly prohibited pursuant to the parties' agreements. As a result, Plaintiff seeks to include such allegations in its Second Amended Complaint. Plaintiff attached its proposed Second Amended Complaint to its Motion to Amend. After reviewing the Second Amended Complaint, it appears that it contains other changes besides merely adding additional allegations of solicitation. For instance, the Causes of Action increase from five separate Causes of Action to a total of 13 separate Causes of Action. The Plaintiff's First Amended Complaint contained one Cause of Action for breach of contract based on Defendants' alleged violations of the non-competition and non-solicitation agreements. The Second Amended Complaint, however, has a total of seven separate breach of contract Causes of Action. These Causes of Action more explicitly explain what provision of the parties' various agreements that the Defendants allegedly has breached. The proposed Second Amended Complaint, however, no longer make claims concerning the non-competition provisions. Cause of Action Seven, one of Plaintiff's breach of contract Causes of Action in the proposed Second Amended Complaint, however, includes new allegations against certain Defendants' who allegedly breached their contracts by failing to pay debts owed to NAA. Such claim was not alleged in the First Amended Complaint. All other Causes of Action for breach of contract in the proposed Second Amended Complaint focus on Defendants' alleged breach of the non-solicitation provisions in either the parties' agent agreements or management agreements. Furthermore, Plaintiff has alleged a new Cause of Action in the proposed Second Amended Complaint for common law unfair competition and business conversion. Accordingly, it is clear that Plaintiff's Second Amended Complaint contains more than additional instances of solicitation alone.
Prior to Plaintiff filing its Motion to Amend, Defendants filed a Motion to Dismiss Plaintiff's First Amended Complaint. In the Motion to Dismiss, Defendants first assert that Plaintiff failed to adequately plead its claims against Defendants. Specifically, Defendants assert that all of the claims are devoid of supportive facts, and thus, must be dismissed. Second, Defendants assert that Plaintiff's tort claims must be dismissed because they are not identifiable nor distinct from Plaintiff's breach of contract claims. The Court, however, will first address Plaintiff's Motion to Amend to assert a Second Amended Complaint, as any amendment may moot Defendants' Motion to Dismiss the First Amended Complaint.
A. Motion to Amend
Rule 15(a) of the Federal Rules of Civil Procedure provides that a party may amend its pleading with the court's leave and "the court should freely give leave when justice so requires." Fed.R.Civ.P. 15(a). While the decision to grant a party leave to amend a pleading is within the sound discretion of the trial court, that discretion is limited by the general policy favoring the resolution of cases on the merits. Island Creek Coal Co. v. Lake Shore, Inc., 832 F.2d 274, 279 (4th Cir. 1987). In exercising its discretion in resolving the question of whether to allow leave to amend, a court "should focus on prejudice or futility or bad faith as the only legitimate concerns in denying leave to amend, since only these truly relate to protection of the judicial system or other litigants.'" Id . (quoting Davis v. Piper Aircraft Corp., 615 F.2d 606, 613 (4th Cir. 1980)). In the Fourth Circuit, "absence of prejudice, though not alone determinative, will normally warrant granting leave to amend." Davis, 615 F.2d at 613. Furthermore, as to futility, leave to amend should only be denied based on futility "when the proposed amendment is clearly insufficient or frivolous on its face." Johnson v. Oroweat Foods Co., 785 F.2d 503, 510 (4th Cir. 1986). Such "[f]utility is apparent if the proposed amended complaint fails to state a claim under the applicable rules and accompanying standards." Katyle v. Penn Nat. Gaming, Inc., 637 F.3d 462, 471 (4th Cir. 2011).
Defendants argue that Plaintiff's Motion to Amend is futile as to the claims arising from the agreements and the wiretapping claim. As to the claims arising from the agreements, Defendants assert that the proposed Second Amended Complaint does not cure the deficiencies addressed in Defendants' Motion to Dismiss the First Amended Complaint. Further, as to the wiretapping claim, Defendants argue that any such amendment is futile because Plaintiff lacks standing to bring such claim and even if standing exists, the wiretapping claim is not adequately plead. Accordingly, the Court will address each claim of the proposed Second Amended Complaint in turn to determine whether Plaintiff's Motion to Amend is in fact futile.
1. Breach of Contract Claims
Plaintiff asserts seven separate Causes of Action in the proposed Second Amended Complaint for breach of contract based on the parties' agreements. Six of these Causes of Action are based on the Defendants' alleged breach of the restrictive covenants in either their agent agreements or management agreements. The agent agreements' restrictive covenant reads as follows:
Non-Solicitation of Employees and Independent Contractors. During the Restriction Period, the Independent Contractor shall not, directly or indirectly: (a) solicit for the provision of services or employment any employee or independent contractor of NAA or its Affiliates, (b) advise or recommend to any other person that they employ or solicit for provision of services any employee or independent contractor of NAA or its Affiliates, or (c) encourage or advise such employees or independent contractors to sever, discontinue or not renew any agreement or relationship to NAA or its Affiliates, or (d) otherwise establish or seek to establish any business relationship with any such employee or independent contractor relating to the sale of Life Insurance Products.
(Agent Agreement [Doc. #15-1], ¶ 15 at 10.) The almost identical restrictive covenant in the management agreements reads as follows:
Non-Solicitation of Employees and Independent Contractors. During the period of time Independent Contractor provides services to or for the Company and for a period of two (2) years following the termination of Independent Contractor's provision of services to the Company, the Independent Contractor shall not, directly or indirectly, solicit for provision of services, advise or recommend to any other person that they employ or solicit for provision of services, or otherwise establish or seek to establish any business relationship relating to the sale of insurance products with, any employee of the Company or of its affiliates or any other independent ...