United Laboratories, Inc. v. Kuykendall

Decision Date16 April 1991
Docket NumberNo. 9028SC97,9028SC97
Citation102 N.C.App. 484,403 S.E.2d 104
CourtNorth Carolina Court of Appeals
PartiesUNITED LABORATORIES, INC., a Delaware Corporation, Plaintiff, v. William Douglas KUYKENDALL and Share Corporation, a Wisconsin Corporation, Defendants.

Petree, Stockton & Robinson by Jackson N. Steele, Charlotte, and Schwartz & Freeman by Paul G. Simon and Jamie A. Maloney, Chicago, Ill., for plaintiff-appellee.

Brock, Drye & Aceto, P.A. by Michael W. Drye, Asheville, for defendants-appellants.

EAGLES, Judge.

First, Share assigns as error the trial court's exclusion from evidence a newsletter which Share contends was relevant to its intent. Without citing any authority, Share argues that it was unfair for the trial court to hold that plaintiff could introduce either the entire newsletter or none of it and then later refuse the same option to Share on the grounds that the document was irrelevant. Share argues that this was "the height of unfairness."

We hold that it is unnecessary to decide whether the trial court erred in refusing to admit the newsletter. The substance of the newsletter which related to Share's policy of defending employees in suits brought by the employees' former employers was admitted into evidence when portions of a transcript from the deposition of Share's General Counsel, Stephen C. Raymonds, were read to the jury. Also the jury heard similar testimony from portions of a transcript from the deposition of Share's Chairman of the Board and Director, Paul desJardins. During his deposition, Mr. desJardins stated that he did not know whether an offer was made to Kuykendall to pay for legal fees and expenses incurred during litigation but stated that "we [Share] will defend any of our employees whether they be salespeople or not, or what, in any litigation of this type." He further replied "yes" to a question concerning whether it was the custom and practice of Share to inform potential salespersons that it would pay legal fees and expenses prior to their being employed. While the newsletter contained details concerning the litigation of another suit, it addressed the policy of Share in defending its employees so that the threat of litigation would not deter a potential employee from leaving the employment of one of Share's competitors. Also, in a letter dated 15 October 1985, Stephen Raymonds told David Brown, General Counsel for United, that "[a]s you probably know, Share has a history of fighting for the right of the salesperson to be free to choose for whom he or she wishes to work." Where the same evidence or testimony is introduced during the trial, the exclusion of even relevant evidence is harmless error. Munchak Corp. v. Caldwell, 37 N.C.App. 240, 247, 246 S.E.2d 13, disc. rev. denied, 295 N.C. 647, 248 S.E.2d 252 (1978). Accordingly, this assignment of error is overruled.

Second, Share assigns as error the trial court's refusal to instruct the jury that United had to mitigate its damages. Share contends that had the trial court instructed the jury on this issue, "the jury would have returned a verdict of zero damages or at least of smaller damages as to the unfair trade practice claims." We disagree.

"The rule in North Carolina is that an injured plaintiff, whether his case be tort or contract, must exercise reasonable care and diligence to avoid or lessen the consequences of the defendant's wrong. If he fails to do so, for any part of the loss incident to such failure, no recovery can be had. Johnson v. R.R., 184 N.C. 101, 113 S.E. 606. [ (1922) ] This rule is known as the doctrine of avoidable consequences or the duty to minimize damages. Failure to minimize damages does not bar the remedy; it goes only to the amount of damages recoverable. 22 Am.Jur.2d Damages §§ 30-32 (1965)."

Watson v. Storie, 60 N.C.App. 736, 739, 300 S.E.2d 55, 58 (1983), appeal after remand, 70 N.C.App. 327, 318 S.E.2d 910 (1984) quoting, Miller v. Miller, 273 N.C. 228, 239, 160 S.E.2d 65, 73-4 (1968). Where the duty to minimize damages applies, the burden is on the party who breached the contract to show matters in mitigation. Andrews & Knowles Produce Co. v. Currin, 243 N.C. 131, 90 S.E.2d 228 (1955). "A trial judge is required to instruct a jury on the law arising from the evidence presented." Lusk v. Case, 94 N.C.App. 215, 216, 379 S.E.2d 651, 652 (1989). "When a defendant submits a request for specific instructions which are correct and are supported by the evidence, the trial court commits reversible error in failing to submit the substance of those instructions to the jury." Alston v. Monk, 92 N.C.App. 59, 66, 373 S.E.2d 463, 468 (1988), disc. rev. denied, 324 N.C. 246, 378 S.E.2d 420 (1989).

Here, the evidence does not support the instruction on mitigation of damages. No testimony indicates that plaintiff failed to mitigate its damages or act other than reasonably. During trial, Eric Frazer, Vice President of Sales for United, testified that after Kuykendall left, they "started to call all of the accounts on the telephone and tried to assure them that United would still service their needs, and tried to maintain that relationship or contact with the customer." Frazer further testified that they "then took the accounts and [they] divided them up between three of our top sales representatives in those areas, and our most experienced sales representatives, and had them call on the accounts and try to service the accounts as well." Kuykendall even testified that he had approached United about returning to his former job, which can be attributed to the delay, if any, on United's part in reassigning the accounts. While we note that Share presented testimony from one of United's former customers stating that he did not remember being called on by United after Kuykendall left the company, we hold that Share had not met its burden of proving that United did not act reasonably in seeking to reduce its loss. Since defendant has failed to meet its burden of proving that plaintiff did not act reasonably in minimizing its loss, we find it unnecessary to address whether the instruction is relevant as a matter of law to the unfair trade practice claim. Accordingly, this assignment of error is overruled.

Third, Share contends that the trial court erred in concluding that Share engaged in an unfair trade practice by paying legal fees and draws and by using employees' customer information. We disagree.

The overall purpose and legislative intent of G.S. 75-1.1 is "to declare deceptive acts or practices in the conduct of any trade or commerce in North Carolina unlawful, to provide civil means to maintain ethical standards of dealings between persons engaged in business and the consuming public within this State, and to enable a person injured by deceptive acts or practices to recover treble damages from a wrongdoer." Furthermore, "[t]he statutes do not protect only individual consumers, but serve to protect business persons as well." Thus, disputes between competitors in business fall under the province of the statute. Whether a trade practice is unfair or deceptive usually depends upon the facts of each case and the impact the practice has on the marketplace. Based upon the jury's findings of fact, the court must determine as a matter of law whether a defendant's conduct violates this section. [Citations omitted.]

McDonald v. Scarboro, 91 N.C.App. 13, 18, 370 S.E.2d 680, 683-84, disc. rev. denied, 323 N.C. 476, 373 S.E.2d 864 (1988).

No precise definition of "unfair methods of competition" as used in this section exists.

"Unfair competition has been referred to in terms of conduct 'which a court of equity would consider unfair.' (Citation omitted.) Thus viewed, the fairness or unfairness of particular conduct is not an abstraction to be derived by logic. Rather, the fair or unfair nature of particular conduct is to be judged by viewing it against the background of actual human experience and by determining its intended and actual effects upon others."

Id., 370 S.E.2d at 684, quoting, Harrington Manufacturing Co. v. Powell Manufacturing Co., 38 N.C.App. 393, 400, 248 S.E.2d 739, 744 (1978), cert. denied, 296 N.C. 411, 251 S.E.2d 469, disc. rev. denied, 296 N.C. 411, 251 S.E.2d 469 (1979). "Furthermore, '[t]he concept of 'unfairness' is broader than and includes the concept of 'deception.' ' " Id., quoting, Overstreet v. Brookland, Inc., 52 N.C.App. 444, 453, 279 S.E.2d 1, 7 (1981), quoting, Johnson v. Phoenix Mut. Life Ins. Co., 300 N.C. 247, 263, 266 S.E.2d 610, 621 (1980). "Unfair methods of competition have been found by this Court in actions involving competitive business relationships." Id. 91 N.C.App. at 19, 370 S.E.2d at 684. "The act is directed toward maintaining ethical standards in dealings between persons engaged in business and to promote good faith at all levels of commerce. Unfair methods of competition [ ... ] would not promote good faith at any level of commerce." Id. at 20-21, 370 S.E.2d at 685 (citations omitted).

Here, in its verdict, the jury specifically found that Share did the following: "(a) Offer[ed] to pay legal fees and costs to induce Kuykendall, in breach of his covenant not to compete, to attempt to divert to Share, unfairly, United's accounts; (b) Induce[ed] Kuykendall to use his relationship with United's accounts and knowledge of confidential business information to attempt to divert to Share, unfairly, United's accounts; (c) Offer[ed] to subsidize the income, draw and expenses of Kuykendall in the event of an injunction, to induce Kuykendall, to divert to Share, unfairly, United's accounts; and (d) As a matter of routine practice, offer[ed] to pay legal fees and costs to induce experienced chemical sales representatives, in breach of the salesmen's covenant not to compete, to attempt to divert to Share, unfairly, the former employer's accounts." The jury also found that Share's conduct was in commerce or affected commerce. We agree with the trial court's...

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