in the Court of Appeals 19 September 2017.
by plaintiff from orders entered 17 August 2016 and 16
November 2016 by Judge Patrice A. Hinnant in Guilford County
No. 15 CVS 10300 Superior Court.
Carlyle Sandridge & Rice, LLP, by Pressly M. Millen and
Samuel B. Hartzell, for plaintiff-appellant.
Richards, P.A., by Marc E. Gustafson, for
are two questions presented in this appeal. The first issue
is whether a plaintiff is permitted to voluntarily dismiss
its claims pursuant to Rule 41(a)(1) of the North Carolina
Rules of Civil Procedure after the trial court has announced
its ruling against the plaintiff on the defendant's
dispositive motion but before the court's ruling is
memorialized in a written order. The second issue concerns
the circumstances under which a covenant not to compete
contained in an employment contract can be held unenforceable
as a matter of law under Rule 12 of the North Carolina Rules
of Civil Procedure.
America, Inc. ("Market America") appeals from the
trial court's 17 August 2016 order vacating its notice of
voluntary dismissal and dismissing with prejudice its claims
against Pamela Lee and from the court's 16 November 2016
order denying its motion for reconsideration. Because we
conclude that Market America's voluntary dismissal was
improperly taken, we affirm the portion of the trial
court's order vacating the voluntary dismissal. However,
in light of our determination that the court's dismissal
of Market America's claims under Rule 12 constituted
error, we reverse that portion of the trial court's
and Procedural Background
summarized the pertinent facts below using Market
America's own statements from its complaint, which we
treat as true in reviewing a trial court's order granting
a motion to dismiss. See, e.g., Stein v. Asheville City
Bd. of Educ., 360 N.C. 321, 325, 626 S.E.2d 263, 266
(2006) ("When reviewing a complaint dismissed under Rule
12(b)(6), we treat a plaintiff's factual allegations as
America is a product brokerage company that is headquartered
in Greensboro, North Carolina and "sells its products
through a network of independent distributors." Its
employees have the opportunity to attain the status of
"certified trainers" in order to provide
specialized training to Market America's distributors.
Certified trainers are required to sign a Certified Trainer
Agreement, which requires them to agree not to compete or
solicit other distributors in a specified geographic area for
one year after ceasing their employment with Market America.
America's employees can also become "approved
speakers" who "represent the company's finest
distributors and, as a result of their role, also attain a
high profile with the Market America field sales
organization." Approved speakers must sign a Speakers
Bureau Agreement, which also imposes "certain
restrictions concerning confidentiality and non-solicitation
of Market America distributors."
hired as an independent distributor in 1997. During her
employment with Market America, she became a certified
trainer and later - through her corporate entity, Rusty
Anchor Group, Inc. - an approved speaker. On 14 March 2008,
she signed the Certified Trainer Agreement. On 26 June 2015,
she signed the Speakers Bureau Agreement.
2015, while she was still employed with Market America, Lee
began working with a network marketing company called ARIIX,
which used "person-to-person and/or Internet sales of
products or services directly to consumers in their homes or
at places other than fixed, permanent retail establishments,
through independent distributors or salespersons."
Market America learned of Lee's involvement with ARIIX
and discovered that she had "actively solicited other
Market America distributors to become involved in
ARIIX." Based on this discovery, Lee's employment
with Market America was terminated. After her employment with
Market America ended, Lee continued to solicit Market America
distributors to join ARIIX.
December 2015, Market America filed a complaint against Lee
and Rusty Anchor Group, Inc. (collectively
"Defendants") in Guilford County Superior Court,
alleging that Lee had breached the Certified Trainer
Agreement and the Speakers Bureau Agreement. On or about 2
March 2016, Defendants filed an answer along with a motion to
dismiss based on Rule 12(b)(6) and a motion for judgment on
the pleadings pursuant to Rule 12(c).
July 2016, a hearing was held before the Honorable Patrice A.
Hinnant on the Rule 12 motions. At the close of the hearing,
Judge Hinnant announced from the bench that she was granting
Defendants' motions and directed Defendants' counsel
to draft a written order.
hours after Judge Hinnant announced her ruling in open court,
Market America filed a notice of voluntary dismissal stating
that it was dismissing without prejudice all of its claims
against Defendants pursuant to Rule 41(a)(1). On 11 July
2016, Defendants filed a motion to vacate the notice of
voluntary dismissal on the ground that the dismissal was
ineffective because it was not taken in good faith.
August 2016, Judge Hinnant entered a written order (1)
granting Defendants' motion to vacate the voluntary
dismissal; (2) dismissing Market America's claims against
Rusty Anchor Group without prejudice; and (3) dismissing its
claims against Lee with prejudice to the extent that those
claims were based upon a breach of paragraphs 18(b) and (c)
and 19(b) and (c) of the Certified Trainer Agreement.
America filed a motion for reconsideration on 31 August 2016.
On 16 November 2016, Judge Hinnant entered an order denying
this motion. Market America subsequently filed a notice of
appeal as to both of the trial court's orders.
initial matter, we must determine whether we have
jurisdiction to hear this appeal. "A final judgment is
one which disposes of the cause as to all the parties,
leaving nothing to be judicially determined between them in
the trial court." Duval v. OM Hospitality, LLC,
186 N.C.App. 390, 392, 651 S.E.2d 261, 263 (2007) (citation
omitted). Conversely, an order or judgment is interlocutory
if it does not settle all of the issues in the case but
rather "directs some further proceeding preliminary to
the final decree." Heavner v. Heavner, 73
N.C.App. 331, 332, 326 S.E.2d 78, 80, disc. review
denied, 313 N.C. 601, 330 S.E.2d 610 (1985). In the
present case, Lee asserts that Judge Hinnant's rulings
were interlocutory because "the trial court did not
dismiss those portions of Market America's claim
involving [Lee]'s alleged breach of the Speakers Bureau
Agreement or [Lee]'s alleged breach of Paragraph 18(a)
and Paragraph 19(a) of the Certified Trainer Agreement."
there is no right of immediate appeal from interlocutory
orders and judgments." Paradigm Consultants, Ltd. v.
Builders Mut. Ins. Co., 228 N.C.App. 314, 317, 745
S.E.2d 69, 72 (2013) (citation and quotation marks omitted).
The prohibition against interlocutory appeals "prevents
fragmentary, premature and unnecessary appeals by permitting
the trial court to bring the case to final judgment before it
is presented to the appellate courts." Russell v.
State Farm Ins. Co., 136 N.C.App. 798, 800, 526 S.E.2d
494, 496 (2000) (citation and brackets omitted).
However, there are two avenues by which a party may
immediately appeal an interlocutory order or judgment. First,
if the order or judgment is final as to some but not all of
the claims or parties, and the trial court certifies the case
for appeal pursuant to N.C. Gen. Stat. § 1A-1, Rule
54(b), an immediate appeal will li e. Second, an appeal is
permitted under N.C. Gen. Stat. §§ 1-277(a) and
7A-27(d)(1) if the trial court's decision deprives the
appellant of a substantial right which would be lost absent
N.C. Dep't of Transp. v. Page, 119 N.C.App. 730,
734, 460 S.E.2d 332, 334 (1995) (internal citations omitted).
Hinnant's order does not contain a certification under
Rule 54(b). Therefore, Market America's appeal is proper
only if it can demonstrate a substantial right that would be
lost absent an immediate appeal. See Embler v.
Embler, 143 N.C.App. 162, 166, 545 S.E.2d 259, 262
(2001) ("The burden is on the appellant to establish
that a substantial right will be affected unless he is
allowed immediate appeal from an interlocutory order."
Lee concedes - and we agree - that a substantial right is
affected with respect to the trial court's order vacating
Market America's voluntary dismissal. However, Lee argues
that Market America will not be deprived of a substantial
right in the event it is required to await a final judgment
in this ...