Superior Performers, Inc. v. Thornton

• Decision Date: 27 May 2021
• Docket Number: 1:20-cv-00123
• Court: U.S. District Court — Middle District of North Carolina
• Parties: SUPERIOR PERFORMERS, INC. d/b/a NATIONAL AGENTS ALLIANCE, Plaintiff, v. JASON J. THORNTON, DORIAN K. SAUNDERS, WILLIAM N. SAUNDERS, GLENN A. LAMB, SHONDEL A. FERGUSON, and SANSON GARZA, Defendants.

SUPERIOR PERFORMERS, INC. d/b/a NATIONAL AGENTS ALLIANCE, Plaintiff, v. JASON J. THORNTON, DORIAN K. SAUNDERS, WILLIAM N. SAUNDERS,GLENN A. LAMB, SHONDEL A. FERGUSON, and SANSON GARZA, Defendants.

1:20-cv-00123

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

May 27, 2021

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, Chief District Judge.

This case involves a dispute over the enforcement of non-solicitation restrictions contained in independent contractors' employment contracts. Before the court is the second motion of Plaintiff Superior Performers, Inc. ("Superior Performers") for default judgment against the remaining Defendants, Dorian K. Saunders ("D. Saunders"), William N. Saunders ("W. Saunders"), Glenn A. Lamb, and Shondel A. Ferguson.¹ (Doc. 58.) For the reasons set forth below, the motion will be granted in part and denied in part.

I. BACKGROUND

The facts alleged in the complaint, as relevant to the motionbefore the court, are as follows:

Superior Performers is an Independent Marketing Organization ("IMO") that recruits and trains sales agents for various insurance companies. (Doc. 28 ¶¶ 9, 10.) Defendants, through their business relationships with Superior Performers, are each party to an Agent Agreement with Superior Performers ("the agreement"). (Id. ¶ 18.) The agreement contains various provisions that prohibit Defendants from engaging in certain conduct, including the solicitation of current or recent Superior Performers agents ("the non-solicitation provision"). (See id. ¶¶ 20, 21.) The non-solicitation provision provides that for the duration of Defendants' professional relationships with Superior Performers and for a period of two years following (or, if engaged for less than one year, one year following) that

the Independent Contractor shall not, directly or indirectly: (a) solicit for the provision of services or employment any Protected Person, (b) advise or recommend to any other person that they employ or solicit for provision of services any Protected Person, (c) encourage or advise such Protected Person to sever, discontinue or not renew any agreement or relationship to [Superior Performers] or its Affiliates, or (d) otherwise establish or seek to establish any business relationship with any such Protected Person relating to the sale of Life Insurance Products. "Protected Person" is any person who, at the time of the prohibited conduct . . . , is or was in the immediately preceding 12 months an employee or Agent of [Superior Performers] . . . .

(Doc. 36-1 at 30, ¶¶ 7.a., d.) Other provisions of the contract prohibit the disclosure of confidential information to thirdparties or the use of such information by an agent for his own benefit. (Doc. 28 ¶ 21.)

Based on information from publicly-available insurance licensing databases, Superior Performers alleges that Defendants Lamb and Ferguson resigned from its employ in late December 2019 after being recruited to an IMO affiliated with Defendant Jason Thornton. (Id. ¶¶ 24-25.) Around that same time, Lamb invited Ferguson and certain other Superior Performers agents to attend a recruitment meeting hosted by Thornton on behalf of his insurance agency, Partners Life, Inc. ("Partners Life"). (Id. ¶ 54.)

On December 20, 2019, Superior Performers brought this action in North Carolina state court. (Doc. 1-1.) On February 10, 2020, following the dismissal of non-diverse parties and with the consent of the remaining Defendants, Thornton removed the action to this court. (Doc. 1.) Following removal, Defendants Lamb, D. Saunders, W. Saunders, Ferguson, and Sanson Garza — at the time, proceeding pro se — failed to answer or otherwise plead within the seven-day limit of Federal Rule of Civil Procedure 81(c) and default was entered against them on February 24, 2020. (Docs. 12, 15.)

After retaining counsel, Lamb, D. Saunders, W. Saunders, and Ferguson moved to set aside entry of default. (Doc. 30.) Shortly thereafter, Superior Performers moved for default judgment. (Doc. 34.) On October 13, 2020, this court granted Defendants' motion to set aside entry of default and denied Superior Performers'motion for default judgment.² (Doc. 48.) Defendants were ordered to file their responses to Superior Performers' complaint within twenty days of that order. (Id. at 21.) Defendants failed to do so and, on November 25, 2020, default was again entered against them. (Doc. 53.) Defendants have made no response to the entry of default against them. Superior Performers now moves, for a second time, for default judgment against Lamb, D. Saunders, W. Saunders, and Ferguson. (Doc. 58.) The motion is ready for resolution. (See Doc. 59.)

II. ANALYSIS

A. Standard of Review

After default has been entered under Rule 55(a) of the Federal Rules of Civil Procedure, Rule 55(b)(2) authorizes the court to enter default judgment against a properly served defendant who fails to file a timely responsive pleading. However, a clerk's entry of default does not entitle a party to default judgment as a matter of right. See J&J Sports Prods., Inc. v. Romenski, 845 F. Supp. 2d 703, 705 (W.D.N.C. 2012). Even where a "motion for default judgment is unopposed, the court must exercise sound judicial discretion to determine whether default judgment should be entered." United States v. Williams, No. 1:17-cv-00278, 2017WL 3700901, at *1 (M.D.N.C. Aug. 25, 2017) (internal quotation marks omitted).

Default is not considered "an absolute confession by the defendant of his liability and of the plaintiff's right to recover." Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (quoting Nishimatsu Constr. Co. v. Hous. Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)). Rather, a defaulted defendant is considered to have admitted the factual allegations — but not the conclusions of law — contained in the complaint.³ See Partington v. Am. Int'l Specialty Lines Ins. Co., 443 F.3d 334, 341 (4th Cir. 2006); Harris v. Blueridge Health Servs. Inc., 388 F. Supp. 3d 633, 637 (M.D.N.C. 2019). Ultimately, the court must "determine whether the well-pleaded allegations in the complaint support the relief sought." Romenski, 845 F. Supp. 2d at 705. In making this determination, courts in this circuit have applied a standard similar to that applied in the context of Federal Rule of Civil Procedure 12(b)(6). Silvers v. Iredell Cnty. Dep't of Soc. Servs., 2016 WL 427953, at *5 (W.D.N.C. Feb. 3, 2016) (collecting cases), aff'd, 669 F. App'x 182 (4th Cir. 2016); see also Cannon v. Exum, 799 F.2d 751 (4th Cir. 1986) ("A party by hisdefault, however, admits only the well pleaded allegations of fact. He is not held to admit facts that are not well-pleaded or to admit conclusions of law." (emphasis in original) (internal quotation marks omitted)).

In order to impose default judgment, the moving party must first show that the defaulted party was properly served. Harris, 388 F. Supp. 3d at 637-38. Second, the court must evaluate the complaint to ensure that it states a legitimate cause of action. See id.; see also Anderson v. Found. for Advancement, Educ. & Emp. of Am. Indians, 155 F.3d 500, 506 (4th Cir. 1998) (holding that the district court erred in granting default judgment where plaintiff failed to state a claim). "[I]f the court determines that liability is established, the court must then determine the appropriate amount of damages. The court does not accept factual allegations regarding damages as true, but rather must make an independent determination regarding such allegations." Harris, 388 F. Supp. 3d at 638 (internal citation omitted).

As Defendants have defaulted and elected not to respond to the pending motion, the briefing on the issues before the court is limited to that offered by Superior Performers. The court's analysis is further informed only by its independent research necessary to the extent required to discharge its obligations under the standard of review involving a default. Given these constraints, caution should be exercised in attempting to drawconclusions beyond the limited facts of this case.

B. Service of Process

Federal Rule of Civil Procedure 4(e)(1), which applies to service upon individuals, permits service that "follow[s] state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made." The relevant North Carolina statute allows for service on an individual by, among other ways, "mailing a copy of the summons and of the complaint, registered or certified mail, return receipt requested, addressed to the party to be served, and delivering to the addressee." N.C. Gen. Stat. § 1A-1, Rule 4(j)(1)(c).

In this case, Superior Performers has provided evidence that it properly served each Defendant. Lamb was served a copy of the civil summons and complaint via certified mail to his address in Houston, Texas, return receipt requested, on December 23, 2019. (Doc. 14-1.) On that same day, Ferguson was also served via certified mail, return receipt requested, to her address in Opeika, Alabama. (Doc. 14-4.) Both D. Saunders and W. Saunders were similarly served via certified mail at their address in St. Louis, Missouri on December 24, 2019. (Docs. 14-2, 14-3.) On this record, it appears that Superior Performers properly served Defendants.

C. Liability

To obtain a default judgment, Superior Performers must adequately state a cause of action against each Defendant. Superior Performers brings four causes of action against each Defendant: breach of contract, tortious interference with contract and business relations, unfair trade practices, and civil conspiracy. Each claim is addressed in turn.

1. Breach of contract

Under North Carolina law, the essential elements for a breach of contract claim are the existence of a valid contract and a breach of the terms of that contract. Eli Rsch., Inc. v. United Commc'ns Grp., LLC, 312 F. Supp. 2d 748, 755 (M.D.N.C. 2004) (citing Poor v. Hill, ...