United States District Court, W.D. North Carolina, Charlotte Division
Kenneth D. Bell, United States District Judge
Worley Claims Services (“Worley”) is a company
that provides, inter alia, claims adjusting services
to insurance companies. The individual defendants Tom
Jeffries, Robert Wilkey and Tim Simmons (collectively the
“Individual Defendants”) are former Worley
employees, and defendant Allcat Claims Services
(“Allcat”) is their current employer and one of
Worley's competitors. In this action, Worley asserts
numerous contract and tort claims related to the defendant
employees' departure from Worley and alleged breach of
the non-competition and non-solicitation provisions in their
employment related agreements.
before the Court is Defendants' Motion for Summary
Judgment on all claims (Doc. No. 56), and Worley's Motion
for Partial Summary Judgment on its breach of contract claim
against Defendants Wilkey and Jeffries (Doc. No. 41). The
primary issues before the Court on these motions are which
state's law applies to Worley's claims (the parties
dispute the applicable law for both Worley's contract and
tort claims), whether the restrictive covenants are
enforceable and whether Worley's various tort claims can
survive summary judgment.
Court has carefully considered these motions and the
parties' briefs and exhibits and heard oral argument from
the parties' counsel during a hearing on the motions held
December 4, 2019. For the reasons discussed below, the Court
finds that neither party is entitled to summary judgment on
Worley's breach of contract claims and most of its tort
claims, but that Defendants are entitled to summary judgment
on a limited portion of Worley's claims for intentional
interference with contract and unjust enrichment.
Accordingly, the Court will in part GRANT
and in part DENY the Defendants' Motion
for Summary Judgment, DENY the
Plaintiff's Motion for Partial Summary Judgment and enter
Partial Summary Judgment in favor of
Defendants as set forth below.
judgment must be granted “if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56. A factual dispute is considered genuine
“if the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.” Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
“A fact is material if it might affect the outcome of
the suit under the governing law.” Vannoy v.
Federal Reserve Bank of Richmond, 827 F.3d 296, 300 (4th
Cir. 2016) (quoting Libertarian Party of Va. v.
Judd, 718 F.3d 308, 313 (4th Cir. 2013)).
party seeking summary judgment bears the initial burden of
demonstrating the absence of a genuine issue of material fact
through citations to the pleadings, depositions, answers to
interrogatories, admissions or affidavits in the record.
See Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986); Bouchat v. Baltimore Ravens Football Club,
Inc., 346 F.3d 514, 522 (4th Cir.
2003). “The burden on the moving party
may be discharged by ‘showing' ... an absence of
evidence to support the nonmoving party's case.”
Celotex, 477 U.S. at 325. Once this initial burden
is met, the burden shifts to the nonmoving party. The
nonmoving party “must set forth specific facts showing
that there is a genuine issue for trial, ” Id.
at 322 n.3. The nonmoving party may not rely upon mere
allegations or denials of allegations in his pleadings to
defeat a motion for summary judgment. Id. at 324.
ruling on a summary judgment motion, a court must view the
evidence and any inferences from the evidence in the light
most favorable to the nonmoving party. Tolan v.
Cotton, 572 U.S. 650, 657 (2014); see also
Anderson, 477 U.S. at 255. “Summary judgment
cannot be granted merely because the court believes that the
movant will prevail if the action is tried on the
merits.” Jacobs v. N.C. Admin. Office of the
Courts, 780 F.3d 562, 568-69 (4th Cir. 2015) (quoting
10A Charles Alan Wright & Arthur R. Miller et al.,
Federal Practice & Procedure § 2728 (3d ed.1998)).
“The court therefore cannot weigh the evidence or make
credibility determinations.” Id. at 569
(citing Mercantile Peninsula Bank v. French (In
re French), 499 F.3d 345, 352 (4th Cir. 2007)).
“[w]here the record taken as a whole could not lead a
rational trier of fact to find for the nonmoving party, there
is no genuine issue for trial.” Ricci v.
DeStefano, 557 U.S. 557, 586 (2009) (internal citations
omitted). “Only disputes over facts that might affect
the outcome of the suit under the governing law will properly
preclude the entry of summary judgment. Factual disputes that
are irrelevant or unnecessary will not be counted.”
Anderson, 477 U.S. at 248. Also, the mere argued
existence of a factual dispute does not defeat an otherwise
properly supported motion. Id. If the evidence is
merely colorable, or is not significantly probative, summary
judgment is appropriate. Id. at 249-50.
end, the question posed by a summary judgment motion is
whether the evidence as applied to the governing legal rules
“is so one-sided that one party must prevail as a
matter of law.” Id. at 252.
FACTS AND PROCEDURAL HISTORY
is a limited liability holding company organized under the
laws of Delaware and through its subsidiaries is in the
business of providing claims assessment, processing, and
adjustment services for insurance carriers throughout the
country. For example, after natural disasters Worley provides
claims adjusters to insurance companies who do not have
enough adjusters to handle the increased number of claims.
Worley alleges that the market for its services is national
and global and that the industry in which it competes is
has four subsidiaries. Two of the subsidiaries - Worley
Specialty Services, LLC and Worley Catastrophe Services, LLC
- focus on claims administration, specialty staffing,
governmental services, and environmental services. The other
two subsidiaries - Alacrity Renovation Services, LLC
(“Alacrity”) and Nexxus Solutions Group, LLC
(“Nexxus”) - provide a general contractor network
to manage contractors and to coordinate emergency mitigation
work. None of the Individual Defendants were involved with
either the business of Alacrity or Nexxus. Both Jefferies and
Wilkey were, however, managerial level employees at Worley.
Jefferies was Vice President of Claims and Wilkey was
Director of Flood. Both individuals managed Worley's
relationships with some of its largest customers and
supervised Worley's regional business operations, while
simultaneously supervising lower tier employees.
and Jefferies joined Worley subsidiaries following
Worley's October 30, 2015 acquisition transaction with
their prior employer, North Carolina-based Reid, Jones,
McRorie and Williams (“RJMW”). Simmons has been
employed by Worley and its affiliates since approximately
2011. There is no dispute that Jeffries and Wilkey were aware
of the pending acquisition and knowingly planned to continue
working with Worley after the closing.
on October 30, 2015, the same day as the acquisition,
Jefferies and Wilkey each executed a “Retention Bonus,
Noncompete/Nonsolicitation and Confidentiality
Agreement” (the “Retention Agreement” or
“RA”). This Retention Agreement contains the
restrictive covenants that are primarily at issue in this
action. In the RA, Worley and the employees agreed that they
would receive a $100, 000 retention bonus (the
“Retention Bonus”) payable in annual equal
installments for two (2) years. As part of the consideration
for the Retention Bonus, the RA contains the following
the Restricted Period, Employee agrees to not do the
(1) Directly or indirectly contact, solicit or encourage a
Customer of RJMW Group to deal with Employee, a Competitor of
RJMW Group, or any person or entity other than RJMW Group; or
(2) Directly or indirectly accept business from a Customer of
RJMW Group; or
(3) Request or advise any customer of RJMW Group to withdraw,
curtail, or cease doing business with RJMW Group; or
(4) Employ, hire, solicit for employment or services, advise
or recommend to any other person or entity that it employ or
solicit for employment or services any then-current employee,
consultant, independent contractor, sales or other
representative of RJMW Group; or
(5) Advise, recommend, encourage or solicit any then-current
employee, consultant, independent contractor, sales or other
representative of RJMW Group to leave RJMW Group's
employment or services; or
(6) Directly or indirectly solicit, encourage, or materially
assist others to engage in any of the activities restricted
of Employee in this Agreement.
Worley's acquisition of RJMW, Jefferies and Wilkey were
retained and employed by Worley pursuant to their Retention
Agreements. Worley entrusted Jefferies and Wilkey to continue
to work with the same insurance carriers they previously
serviced. Jefferies testified he would frequently visit
customers to maintain relationships after Worley's
acquisition of RJMW. On March 31, 2017, Jefferies signed a
Unit Grant Agreement in which he was given an ownership
interest in Worley as part of a performance bonus he
received. This Unit Grant Agreement also contained
post-employment restrictive covenants that are similar to,
but not the same as, those in the Retention Agreement.
April 24, 2018, Jefferies resigned from Worley. Jefferies
disclosed to Worley his intention to work for Allcat. By
email, Worley reminded Jefferies of his restrictive covenants
after his resignation. Jefferies and Worley later negotiated
and executed an agreement (the “2018 Agreement”)
that released Jefferies from the non-competition obligations
in the Unit Grant Agreement. As discussed further below, the
parties dispute the effect of the 2018 Agreement on the
earlier Retention Agreement. However, there is no dispute
that the 2018 Agreement absolved Jeffries of any duty to
abide by the restrictive covenants in the Unit Agreement
(upon the forfeiture of his equity units).
25, 2018, Simmons, whom Worley had designated to replace
Jefferies, also resigned. Simmons did not disclose his intent
to work for Allcat. His last day with Worley was June 8,
2018. Unbeknownst to Worley, Simmons had been pursuing
employment with Allcat since May 23, 2018. On August 13,
2018, Wilkey resigned from Worley. At the time of his
resignation, Wilkey informed Jim Pearl, Worley's CEO, he
planned to work for an “insurance company.”
However, Worley has presented evidence that Wilkey signed an
employment agreement with Allcat five days before giving his
resignation and had no job offers from any insurance
these employees' departures from Worley to Allcat, Allcat
sought business from customers who had done business with
Worley and who had relationships with the Individual
Defendants. Also, Allcat sought to use a number of the same
independent adjusters whom Worley had previously used in
responding to business opportunities after Hurricane Florence
formed in September 2018. The parties hotly dispute the
details and legal import of these various contacts and sales
efforts. Worley contends that Jeffries and Wilkey have
directly and/or indirectly violated the non-solicitation
obligations in the Retention Agreements and the Defendants
deny they have done so. For its part, Allcat contends that it
was unaware of the Individual Defendants' restrictive
covenants “at the time their offers were extended,
” but acknowledges that it knew about Jeffries'
restrictions in May 2018, not long after his resignation and
months before Wilkey joined Allcat.
October 9, 2018, Worley filed this action seeking injunctive
relief and monetary damages. Worley has alleged claims for
Breach of Contract as to Wilkey and Jefferies (“Count
I”); Breach of Contract as to Simmons (“Count
II”); Breach of Fiduciary Duty of Loyalty as to Wilkey
and Jefferies (“Count III”); Intentional
Interference with Contract as to all Defendants (“Count
IV”); Intentional Interference with Prospective
Economic Advantage as to all Defendants (“Count
V”); Aiding and Abetting Breach of Fiduciary Duty of
Loyalty as to all Defendants (“Count VI”); Civil
Conspiracy as to all Defendants (“Count X”); and
Unjust Enrichment as to all Defendants (“Count
Choice of Law
action, the Court's jurisdiction is based upon diversity
of citizenship; therefore, the Court must “apply the
substantive law of the state in which it sits, including the
state's choice of law rules.” Volvo Constr.
Equip. N. Am., Inc. v. CLM Equip. Co., 386 F.3d 581,
599-600 (4th Cir.2004) (citing Erie R.R. Co. v.
Tompkins, 304 U.S. 64 (1938); Klaxon Co. v. Stentor
Elec. Mfg. Co., Inc., 313 U.S. 487 (1941) (“We are
of opinion that the prohibition declared in Erie
Railroad ... against such independent determinations by
the federal courts extends to the field of conflict of
laws.”)). Accordingly, the Court must follow North
Carolina's choice of law rules in determining which
state's or states' law governs this action.
North Carolina choice of law rules, “the interpretation
of a contract is governed by the law of the place where the
contract was made.” Bueltel v. Lumber Mut. Ins.
Co., 134 N.C.App. 626, 631 (1999) (citing Tanglewood
Land Co., Inc. v. Byrd, 299 N.C. 260, 262, 261 S.E.2d
655, 656 (1980)). However, “where parties to a contract
have agreed that a given jurisdiction's substantive law
shall govern the interpretation of the contract, such a
contractual provision will be given effect.”
Id.; Volvo, 386 F.3d at 600-01 (finding
that North Carolina typically gives effect to choice of law
provisions). This rule has been applied in the context of
covenants not to compete. See Bueltel v. Lumber Mut. Ins.
Co., 134 N.C.App. 626, 631 (1999).
certain circumstances, however, “North Carolina courts
will not honor a choice of law provision.” Cable
Tel. Servs., Inc. v. Overland Contr'g, Inc., 154
N.C.App. 639, 642 (2002):
The law of the state chosen by the parties to govern their
contractual rights and duties will be applied ... unless
either (a) the chosen state has no substantial relationship
to the parties or the transaction and there is no other
reasonable basis for the parties' choice, or (b)
application of the law of the chosen state would be contrary
to a fundamental policy of a state which has a materially
greater interest than the chosen state in the determination
of a particular issue and which, under the rule of § 188
[of the Restatement (Second) of Conflict of Laws], would be
the state of applicable law in the absence of an effective
choice of law by the parties.
Id. at 643.
is no dispute that both of the contracts at issue - the
Retention Agreement and the Unit Agreement - contain choice
of law provisions in which the parties agreed that Delaware
law would govern the contract. Therefore, unless the Court
finds either that Delaware “has no substantial
relationship to the parties or the transaction and there is
no other reasonable basis for the parties' choice”
or application of Delaware law would be contrary to a
fundamental policy of the state which would have been the
state of applicable law in the absence of a valid choice by
the parties, then Delaware law should apply.
Court finds that there is a reasonable basis for the
parties' choice of Delaware law. Both RJMW and Worley
were incorporated in Delaware at the time the contracts were
executed. See Akzo Nobel Coatings, Inc. v. Rogers,
2011 NCBC 41, 2011 NCBC LEXIS 42 ( N.C. Super. Nov. 3, 2011)
(“There is no question that Delaware law has a
substantial relationship to the transactions [because] Akzo
Nobel is a Delaware corporation, and both the Rogers and
Taylor Agreements were made with Akzo Nobel.”).
Further, although Defendants contend that the Individual
Defendants' RJMW relationship was based out of a North
Carolina office, the Retention Agreements were entered into
with Jeffries (a South Carolina resident), Wilkey (a
Connecticut resident) and other employees residing in
different states. Thus, it is reasonable for RJMW and Worley
to choose a single state's law (Delaware, the state of
its incorporation which has well-established and robust
corporate law precedents) to govern its ...