Attorney John Burns and client Magnolia Title prevail at NC Court of Appeals

In an August 6, 2019 published decision, the North Carolina Court of Appeals upheld a trial court’s dismissal of a lawsuit against Forrest Firm client Magnolia Title Company, LLC and its owner Laura Martin. The case is Sterling Title Company v. Laura Louise Martin and Magnolia Title Company LLC, ____ S.E.2d ___ (COA18-1189, August 6, 2019).

The case, in which the plaintiff alleged violation of a non-competition and non-solicitation clause in Ms. Martin’s prior employment contract, arose when Martin left her former employer to open her own real estate title insurance agency. Her former employer sued and sought an injunction barring Ms. Martin from competing or soliciting customers for one year. The claims also included violation of the NC Trade Secrets Protection Act, breach of contract, and breach the duty of good faith and fair dealing.

The trial court dismissed the case and the Court of Appeals upheld the dismissal, finding that the terms of the noncompete / nonsolicitation agreement were unenforceable as a matter of law because they were too broad as to their effect and their time period. The court also upheld the dismissal of the remaining claims, including the trade secret allegations, finding that a list of potential title insurance customers could be easily recreated without using secret information and the list therefore could not constitute a protectable trade secret.

Forrest Firm attorney John D. Burns represented Ms. Martin and Magnolia Title. 

“We are happy that if this opinion stands, Ms. Martin can continue to do business without looking over her shoulder. The Court applied well-established case law in North Carolina that makes it clear that noncompete agreements will be carefully and restrictively read and must be reasonable. This one wasn’t,” Burns explained. “We are glad this is a published opinion, because it lays out an excellent guide for how to draft enforceable noncompetition agreements, and makes clear the results of not doing so on the front end.”

Forrest Firm attorney Leslie Lasher, who focuses her practice on employment law, noted that the “holding clearly emphasizes the importance of including a reasonable, specifically tailored ‘look back’ period in a restrictive covenant. Without such a restriction a business may not be protected from competition.”

The plaintiff in the case has the right to seek review by the Supreme Court of North Carolina.

If you’re an employer concerned about your noncompete agreements, we have employment law attorneys across the state who are happy to review your existing documents.

John Burns

For more information on this case or to request a consult with our litigation team, contact John Burns in our Raleigh office by phone (919) 706-1389 or email john.burns@forrestfirm.com or Patrick Lineberry in our Greensboro office by phone (336) 660-2570 or email patrick.lineberry@forrestfirm.com.