Envtl. Holdings Grp. v. Finch
| Decision Date | 16 May 2022 |
| Docket Number | 21 CVS 14019 |
| Citation | 2022 NCBC 25 |
| Parties | ENVIRONMENTAL HOLDINGS GROUP, LLC, Plaintiff, v. SCOTT FINCH, Defendant. |
| Court | Superior Court of North Carolina |
THIS MATTER comes before the Court on Defendant Scott Finch's Motion to Dismiss. ("Motion to Dismiss" or "Motion," ECF No. 13.)
THE COURT, having considered the Motion, the briefs of the parties, the arguments of counsel, and all applicable matters of record, CONCLUDES that the Motion should be GRANTED, in part, and DENIED, in part, for the reasons set forth below.
Fox Rothschild LLP, by Jeffrey R. Whitley and George J. Oliver for Plaintiff Environmental Holdings Group, LLC.
Hamilton Stephens Steele + Martin, PLLC, by Mark R. Kutny for Defendant Scott Finch.
Mark A. Davis Special Superior Court Judge.
1. In this action, an environmental services company doing business in multiple states, but principally located in North Carolina, has brought suit against a former employee, a Virginia resident, alleging an array of tortious conduct by the former employee relating to his work for the company in Virginia and his subsequent departure from the company to work for a direct competitor. The present motion requires the Court to (1) apply choice of law rules to determine whether the substantive laws of North Carolina or Virginia govern the plaintiff's claims; and (2) determine whether the plaintiff has stated valid claims for relief under Rule 12(b)(6) of the North Carolina Rules of Civil Procedure based on the substantive laws of that state.
2. The Court does not make findings of fact on motions to dismiss under Rule 12(b)(6) and instead recites pertinent facts contained in the Complaint ("Complaint," ECF No. 3) that are relevant to the Court's determination of the Motion.
3. Plaintiff Environmental Holdings Group, LLC ("Plaintiff" or "Alloy") is a "specialty environmental services company, providing niche services such as the abatement of hazardous materials, demolition, and environmental engineering to protect people from the adverse effects of pollution and improve the environmental quality of communities." (Id. at ¶ 6.) Alloy is a North Carolina limited liability company with its principal office in Morrisville, North Carolina and is registered to do business in North Carolina. (Id. at ¶ 1.) Alloy also does business and maintains offices "throughout the United States[.]" (Id. at ¶ 6.)
4. Alloy operates largely as a subcontractor by submitting competitive bids to contractors for specific contracts. (Id. at ¶ 7.) Alloy alleges that it has "at significant expense, developed substantial confidential information and trade secrets over the years that provide it with a competitive advantage in this bidding process." (Id. at ¶ 8.) These purported trade secrets include: "client lists and information, client data and preferences, price points for bids, pricing strategies, supplier information, operating information [ ] including profits and expenses, business plans, strategic analysis, processes, and procedures." (Id.)
5. Alloy further alleges that its trade secrets are not generally available to the public and that it utilizes various measures designed to safeguard the secrecy of these trade secrets. (Id. at ¶¶ 9-10.) Such measures include "explicit policies requiring employees to maintain the secrecy of [Alloy's] confidential trade secret information"; requiring "all employees to sign an acknowledgment and receipt of the Employee Handbook containing these policies"; and "limiting employee access based on their position and job duties, password-protecting electronically-stored information, conducting exit interviews for departing employees, and requiring the immediate return of company property on an employee's last day of work." (Id. at ¶ 10.)
6. Defendant Scott Finch ("Defendant" or "Finch") was employed by Alloy as a Senior Project Manager for Alloy's projects in Richmond, Virginia from 10 December 2019 through 9 July 2021. (Id. at ¶¶ 11, 27.) During his employment with Alloy, Finch-a resident of Virginia-worked out of his "home office" while reporting to the Branch Manager of the Raleigh, North Carolina office, from which all of his work for Alloy was "facilitated." (Id. at ¶¶ 2-3, 11.) More specifically, Finch was supervised by an employee of the Raleigh office-Jim Smith-and Finch "directed weekly or daily communications to Raleigh as a result of his employment duties." (Id. at ¶¶ 3, 24.)
7. Alloy alleges that "Finch had substantial control and authority over the entire operation of [Alloy's] Richmond . . . projects, managing another project manager/estimator and overseeing all field personnel in Richmond[.]" (Id. at ¶ 12.) Notably, Finch was responsible for making bids on behalf of Alloy with regard to a project in Richmond known as the "Mutual Building Project" in early April 2021. Finch's bids were submitted to the general contractor of the project, L.F. Jennings. (Id. at ¶ 19.)
8. Alloy's internal process associated with submitting a bid on a project is for its employees to put bid-related information in Alloy's secure on-line third-party cloud software filing system-referred to as "Box." (Id. at ¶¶ 20-21.) "Box" allows for the storing of bid information in a "shared location so that other Alloy team members can assess the status of [a] bid, provide input, and ensure a collaborative process that will result in the most competitive bid." (Id.)
9. Contrary to the above-referenced practice, Finch failed to upload any information into "Box" regarding the Mutual Building Project until his last day of employment with Alloy on 9 July 2021. (Id. at ¶¶ 21, 27.) Instead, after the original bid of $1, 789, 098 (which had been reviewed by Alloy's Raleigh Branch Manager) was submitted, Finch subsequently submitted three revised bids for the Mutual Building Project between 10 June 2021 and 25 June 2021-increasing the original bid price by $140, 215. (Id. at ¶¶ 24-25.) Finch did not obtain approval from, or even inform, his supervisor or the Raleigh Branch Manager about the revised bid proposals or put information about them into "Box." (Id.)
10. During this same time period and without the knowledge of Alloy, Finch was also engaged in negotiations for employment with a direct competitor of Alloy, Trifecta Services Company ("Trifecta").[1] (Id. at ¶¶ 14, 22-23.) Trifecta made an offer of employment to Finch on 2 July 2021, and Finch subsequently gave notice of his resignation from Alloy three days later-designating 9 July 2021 as his last day of employment. (Id. at ¶¶ 26-27.) On 6 July 2021, Finch's supervisor asked Finch directly if he was leaving to join Trifecta. Finch responded "no" despite having already accepted the offer from Trifecta. (Id. at ¶ 28.)
11. On Finch's last day of employment with Alloy, Alloy received notification from L.F. Jennings that Trifecta had been awarded the Mutual Building Project. It was only then that Finch finally uploaded the revised bids he had made on behalf of Alloy into "Box." (Id. at ¶ 29.) Upon finally learning that Finch had revised Alloy's bid amounts without his knowledge, Smith cut approximately $140, 000 from Finch's last submitted bid on the project and then submitted the new reduced bid to L.F. Jennings. (Id. at ¶ 30-31.) Smith then met with L.F. Jennings management officials who informed him that the new revised bid would have been less than Trifecta's bid, but that it was too late because L.F. Jennings had already awarded the project to Trifecta. (Id.)
12. Finch is currently managing the Mutual Building Project for Trifecta. (Id. at ¶ 32.) Within a short period of time after Finch's final day of employment with Alloy (and possibly earlier), Finch began contacting various supervisors of Alloy and soliciting them to terminate their employment with Alloy and come to work for Trifecta. (Id. at ¶ 33.)
13. On 15 October 2021, Alloy filed its Complaint in this matter, asserting four claims for relief against Finch: (1) misappropriation of trade secrets pursuant to N.C. G.S. § 66-152 et seq.; (2) unfair and deceptive trade practices ("UDTP") pursuant to Chapter 75 of the North Carolina General Statutes; (3) breach of fiduciary duty; and (4) tortious interference with prospective economic relations. (Id. at ¶¶ 34-61.)
14. This matter was designated a mandatory complex business case on 8 December 2021. (ECF Nos. 1-2.)
15. On 19 January 2022, Defendant filed a Motion to Dismiss pursuant to Rule 12(b)(6). (ECF No. 13.)
16. This matter came before the Court for a hearing on 20 April 2022. The Motion is now ripe for decision.
17. "A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the complaint by presenting the question whether, as a matter of law, the allegations of the complaint, treated as true, are sufficient to state a claim upon which relief can be granted under some recognized legal theory." Forsyth Mem'l Hosp., Inc. v. Armstrong World Indus., Inc., 336 N.C. 438, 442 (1994) (cleaned up).
18. In ruling on a motion to dismiss under Rule 12(b)(6), the Court may only consider the pleading and "any exhibits attached to the [pleading, ]" Krawiec v. Manly, 370 N.C. 602, 606 (2018), and must view the allegations in the complaint "in the light most favorable to the non-moving party." Christenbury Eye Ctr., P.A. v. Medflow, Inc., 370 N.C. 1, 5 (2017) (quoting Kirby v. N.C. Dep't of Transp., 368 N.C. 847, 852 (2016)).
19. "It is well-established that dismissal pursuant to Rule 12(b)(6) is proper when (1) the complaint on its face reveals that no law supports the plaintiff's claim; (2) the complaint on its face reveals the absence of facts sufficient to make a good claim; or (3) the...
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