Beverage Systems of the Carolinas, LLC v. Associated Beverage Repair, LLC

NO. COA14-185

NORTH CAROLINA COURT OF APPEALS

Filed: 5 August 2014

Beverage Systems of the Carolinas,
LLC,

Plaintiff,

v. Iredell County
No. 12 CVS 1519
Associated Beverage Repair, LLC,
Ludine Dotoli and Cheryl Dotoli,

Defendants.

Appeal by plaintiff from order entered 3 October 2013 by

Judge A. Robinson Hassell in Iredell County Superior Court.

Heard in the Court of Appeals 20 May 2014.

Jones, Childers, McLurkin & Donaldson, PLLC, by Kevin C.
Donaldson and Dennis W. Dorsey, for plaintiff-appellant.

Eisele, Ashburn, Greene & Chapman, PA, by Douglas G.
Eisele, for defendants-appellees.

HUNTER, Robert C., Judge.

Plaintiff timely appeals from an order entered 3 October

2013 granting defendants’ motion for summary judgment. After

careful review, because the trial court had express authority to

revise the restrictions of the non-compete agreement, we reverse

the trial court’s order and remand for the trial court to revise

the geographic area covered by the non-compete to include those
 -2-
areas necessary to reasonably protect plaintiff’s business

interests. Furthermore, since there is a genuine issue of

material fact as to whether Ludine Dotoli violated the revised

non-compete, we reverse the order granting summary judgment on

the breach of contract claim and remand for trial. Finally,

because plaintiff presented evidence showing a genuine issue of

material fact for the remaining tort claims and request for

injunctive relief, we reverse the order granting defendants’

motion for summary judgment and remand for trial.

Background

The pertinent facts alleged in plaintiff’s complaint are as

follows: In 2009, Mark Gandino (“Gandino”) created and organized

Beverage Systems of the Carolinas, LLC, a company that supplies,

installs, and services beverage products and beverage dispensing

equipment in North Carolina (“plaintiff”). Beginning in 2008

and continuing through 2009, Gandino negotiated with Thomas and

Kathleen Dotoli, the parents of defendant Ludine Dotoli

(“Ludine”)1 (collectively, Thomas, Kathleen, and Ludine are

referred to as “the Dotolis”), about the potential purchase of

the business and assets of Imperial Unlimited Services, Inc.

1
Throughout their pleadings and brief, plaintiff and defendants
refer to Mr. Dotoli as “Ludine” even though it appears from his
affidavit that his name is spelled “Loudine.” For consistency,
we use the same spelling as the parties in this opinion.
 -3-
(“Imperial”) and Elegant Beverage Products, LLC (“Elegant”)

(collectively, Imperial and Elegant are referred to as “the

businesses”). On or about 20 July 2009, plaintiff entered into

an “Asset Purchase Agreement” (the “Agreement”) with Elegant,

Imperial, and the Dotolis. The Agreement provided for the sale

of Imperial’s and Elegant’s assets, trade names, customer lists,

accounts receivable, current customers and customer contracts,

all equipment, and real property.

As part of the Agreement, Thomas, Kathleen, and Ludine

agreed to execute a “Non-Competition Agreement” (the “non-

compete”). Specifically, section 1 of the non-compete provided

that:

Subject to the provisions of Section 6
hereof, Seller and Shareholder shall not,
from the effective date of the Asset
Agreement in the states of North Carolina or
South Carolina until the earlier of (i)
October 1, 2014 (the “Non-Competition
Period”), or (ii) such other period of time
as may be the maximum permissible period of
enforceability of this covenant (the
“Termination Date”), without the prior
written, consent of Purchaser, directly or
indirectly, for himself or on behalf of or
in conjunction with any person, partnership,
corporation or other entity, compete, own,
operate, control, or participate or engage
in the ownership, management, operation or
control of, or be connected with as an
officer, employee, partner, director,
shareholder, representative, consultant,
independent contractor, guarantor, advisor
 -4-
or in any other manner or otherwise,
directly or indirectly, have a financial
interest in, a proprietorship, partnership,
joint venture, association, firm,
corporation or other business organization
or enterprise that is engaged in the
business of the Purchaser or any of its
respective affiliates or subsidiaries on
behalf of clients (the “Business”).

The non-compete went on to say that:

If, at the time of enforcement of any
provisions of Sections 1, 3 or 4 hereof, a
court holds that the restrictions stated
herein are unreasonable under circumstances
then existing, the parties hereto agree that
the maximum period, scope or geographical
area that are reasonable under such
circumstances shall be substituted for the
stated period, scope or area, and that the
court shall be allowed to revise the
restrictions contained in Sections 1, 3 and
4 hereof to cover the maximum period, scope
and area permitted by law.

The Dotolis executed the non-compete at the closing on 30

September 2009. Plaintiff claimed that it collectively paid the

Dotolis, Imperial, and Elegant $10,000 as consideration for the

non-compete.

In March 2011, plaintiff learned that Ludine’s wife Cheryl

Dotoli (“Cheryl”) had created defendant Associated Beverage

Repair, LLC, (“Associated Beverage”) (for purposes of this

opinion, Associated Beverage, Ludine, and Cheryl are

collectively referred to as “defendants”) and that Ludine was
 -5-
the manager of Associated Beverage. Moreover, plaintiff alleged

that it found out that Ludine was soliciting business from

plaintiff’s existing customers, specifically PF Chang’s and

Bunn-O-Matic.

On 8 July 2013, plaintiff filed an amended complaint

alleging the following causes of action: (1) breach of the non-

compete against Ludine; (2) a request for preliminary and

permanent injunctive relief against Ludine; (3) tortious

interference with contract against all defendants; (4) unfair

and deceptive practices against all defendants; (5) tortious

interference with prospective economic advantage against all

defendants; and (6) punitive damages. On 11 September 2013,

defendants filed a motion for summary judgment as to all causes

of action. In support of their motion, defendants filed an

affidavit by Ludine claiming that “the deepest penetration by

either Elegant or Imperial for the conduct of their business

into South Carolina was Rock Hill . . . and to Spartanburg,” and

the “western-most penetration” included Gaffney. Furthermore,

Ludine averred that in North Carolina, the furthest west the

companies’ business went was Morganton. The eastern-most

penetration was to Wake County. Finally, Ludine denied

contacting, communicating, or in any way inducing any prior
 -6-
customers of Imperial or Elegance or present customers of

plaintiff into switching their business to Associated Beverage.

The matter came on for hearing on 30 September 2013. On 3

October 2013, the trial court entered an order granting

defendants’ motion for summary judgment as to all claims.

Plaintiff timely appealed.

Standard of Review

“Our standard of review of an appeal from summary judgment

is de novo; such judgment is appropriate only when the record

shows that there is no genuine issue as to any material fact and

that any party is entitled to a judgment as a matter of law.”

In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 573

(2008) (internal citations omitted).

Arguments

I. The Non-Compete Agreement

Plaintiff first argues that the trial court erred in

granting summary judgment on its breach of contract claim

against Ludine. Specifically, plaintiff contends that the non-

compete is valid as a matter of law and that there is an issue

of material fact as to whether Ludine violated it. In the

alternative, should the Court determine that the non-compete is

unenforceable as to South Carolina, plaintiff argues that the
 -7-
non-compete may still be enforced in North Carolina based on the

“blue pencil doctrine.” Because the trial court had express

authority to revise the territorial restrictions of the non-

compete pursuant to the terms of the agreement, we reverse the

trial court’s order granting summary judgment and remand this

issue for the trial court to revise the geographic territories

to include those areas reasonably necessary to protect

plaintiff’s business interests acquired by the purchase of

Elegant and Imperial. Furthermore, there is a genuine issue of

material fact as to whether Ludine violated the terms of the

non-compete for the jury to resolve.

It
is the rule today that when one
sells a trade or business and, as an
incident of the sale, covenants not to
engage in the same business in competition
with the purchaser, the covenant is valid
and enforceable (1) if it is reasonably
necessary to protect the legitimate interest
of the purchaser; (2) if it is reasonable
with respect to both time and territory; and
(3) if it does not interfere with the
interest of the public.

Jewel Box Stores Corp. v. Morrow, 272 N.C. 659, 662-63, 158

S.E.2d 840, 843 (1968). Whether a covenant not to compete is

reasonable is a matter of law to be decided by the court. Id.

at 663, 158 S.E.2d at 843. “Greater latitude is generally

allowed in these covenants given by the seller in connection
 -8-
with the sale of a business than in covenants ancillary to an

employment contract.” Seaboard Indus., Inc. v. Blair, 10 N.C.

App. 323, 333, 178 S.E.2d 781, 787 (1971). Here, only the first

two elements need to be addressed since defendants did not argue

before the trial court nor on appeal that the non-compete

interfered with the interest of the public.

A. Legitimate Interest

“A covenant must be no wider in scope than is necessary to

protect the business of the employer.” Hartman v. W.H. Odell &

Associates, Inc., 117 N.C. App. 307, 316, 450 S.E.2d 912, 919

(1994) (internal quotation marks omitted).

Here, the scope of prohibited employment activities in the

non-compete is reasonably necessary to protect plaintiff’s

business. In his affidavit, Ludine stated that he had not only

been the creator and owner of Elegant, but he had also been the

“principal technician” of Imperial. Thus, his employment

activities for the businesses would have included both employee

ones and activities related to management, operation, and

control. The non-compete prohibits Ludine from competing,

owning, managing, operating or controlling, or be connected to

someone who has a financial interest in any business involved in

the beverage dispensing or servicing industry. Thus, the non-
 -9-
compete prohibits Ludine from engaging in employment activities

he used to perform for Elegant and Imperial, and the scope of

the non-compete reasonably protects a legitimate business

interest of plaintiff.

B. Time and Territory Reasonableness

The non-compete restricted Ludine’s activities for a five-

year period following the sale of Elegant and Imperial.

Although our Court has stated that “[a] five-year time

restriction is the outer boundary which our courts have

considered reasonable” and has noted that five-year restrictions

“are not favored” in employment contracts, Farr Assocs., Inc. v.

Baskin, 138 N.C. App. 276, 280, 530 S.E.2d 878, 881 (2000),

“[i]n cases where the covenants not to compete accompanied the

sale of a trade or business, time limitations of ten, fifteen

and twenty years, as well as limitations for the life of one of

the parties, have been upheld by the Supreme Court of North

Carolina[,]” Seaboard Indus., 10 N.C. App. at 335, 178 S.E.2d

at 788. Furthermore, the five-year restriction was reasonable

based on Imperial’s past business presence in the industry.

Imperial had been operating since 1999. In fact, plaintiff

recognized how valuable Imperial’s presence was in the beverage
 -10-
dispensing industry and specifically purchased its “goodwill”

for $100,000. Accordingly, the time restraint was reasonable.

With regard to the reasonableness of the territory, this

Court has noted that

to prove that a geographic restriction in a
covenant not to compete is reasonable, an
employer must first show where its customers
are located and that the geographic scope of
the covenant is necessary to maintain those
customer relationships. A restriction as to
territory is reasonable only to the extent
it protects the legitimate interests of the
employer in maintaining its customers. The
employer must show that the territory
embraced by the covenant is no greater than
necessary to secure the protection of its
business or good will.

Hartman, 117 N.C. App. at 312, 450 S.E.2d at 917 (internal

citations omitted).

Here, the non-compete was limited to North and South

Carolina. Ludine’s affidavit stated that Imperial’s and

Elegant’s combined business extended from Wake County to

Morganton in North Carolina. In South Carolina, Ludine averred

that their business only reached as deep as Rock Hill and

Spartanburg and as far west as Gaffney. Consequently, the

geographic area covered by the non-compete was not limited to

places where Elegant and Imperial had former customers and

included areas not necessary to maintain plaintiff’s customer
 -11-
relationships; thus, it was unreasonable.2 Plaintiff requests

that should the Court find that the geographic territory in the

non-compete is overly broad, the Court should enforce the non-

compete only as to North Carolina under the “blue pencil

doctrine.”

North Carolina has adopted the “strict blue pencil

doctrine”:

When the language of a covenant not to
compete is overly broad, North Carolina’s
“blue pencil” rule severely limits what the
court may do to alter the covenant. A court
at most may choose not to enforce a
distinctly separable part of a covenant in
order to render the provision reasonable. It
may not otherwise revise or rewrite the
covenant.

Hartman, 117 N.C. App. at 317, 450 S.E.2d at 920. Under this

doctrine, the trial court may use its inherent power to enforce

the reasonable, divisible provisions of the non-compete.

2
It should be noted that any area in which plaintiff itself had
former or existing customers would also be reasonable to include
in the non-compete. However, defendants contended in their
motion for summary judgment that “[t]here is no pleading or
proof that [plaintiff] operated anywhere in North Carolina or
South Carolina prior to concluding purchase of the assets of
Imperial and Elegant[.]” Plaintiff did not refute this nor did
it provide any evidence in the record that it either had been
operating in North or South Carolina prior to the acquisition or
that it has existing customers it did not acquire from Imperial
or Elegant. Therefore, for purposes of reasonableness, only
former customers of Imperial and Elegant will determine the
scope of the territory.
 -12-
Welcome Wagon Int’l, Inc. v. Pender, 255 N.C. 244, 248, 120

S.E.2d 739, 742 (1961).

We agree with plaintiff that, under the “blue pencil

doctrine,” the trial court could have, but chose not to, strike

the unreasonable territorial provisions of the non-compete.

However, the trial court had authority to enforce the non-

compete through paragraph six of the non-compete which

specifically and expressly gave the trial court authority to

“revise the restrictions . . . to cover the maximum period,

scope and area permitted by law.” In other words, the trial

court’s ability to revise the non-compete is not subject to the

restrictions of the “blue pencil doctrine” which prohibits a

trial court from revising unreasonable provisions in non-compete

agreements. Instead, here, the parties included a specific

provision in the non-compete—specifically, paragraph six—

enabling the trial court to revise the non-compete. Given the

fact that non-competes drafted based on the sale of a business

are given more leniency than those drafted pursuant to an

employment contract since the parties are in relatively equal

bargaining positions, the trial court should not have held the

entire non-compete unenforceable nor should the trial court’s

power to revise and enforce reasonable provisions of the non-
 -13-
compete be limited under the “blue pencil doctrine.” Instead,

the trial court should have invoked its power under paragraph

six and revised the non-compete to make it reasonable based on

the evidence before it.

The facts of this case are distinguishable from those in

which the trial court’s authority to revise a non-compete is

substantially limited by the “blue pencil doctrine” because

those non-competes did not give the trial court express

authority to revise the agreements. See Hartman, 117 N.C. App.

at 318, 450 S.E.2d at 920 (ruling that the non-compete “could

not be saved by ‘blue penciling’”); Manpower of Guilford Cnty.,

Inc. v. Hedgecock, 42 N.C. App. 515, 523, 257 S.E.2d 109, 115

(1979) (noting that “th[e] Court cannot in the absence of

clearly severable territorial divisions, enforce the

restrictions only insofar as they are reasonable” under the

“blue pencil doctrine”). In contrast, pursuant to the sale of a

business, these parties, who were at arms-length with equal

bargaining power, agreed to allow the trial court to revise the

non-compete to make it reasonable, and the trial court should

have done so. In sum, unlike previous cases, the parties here

specifically contracted to give the court power to revise the
 -14-
scope of the non-compete should part of it be determined to be

unenforceable.

While this precise issue has not arisen in our Courts,

i.e., the right of a trial court to revise the provisions of a

non-compete based on the express language of the contract for

the sale of a business, this Court has noted that similar

language has appeared in a franchisor-franchisee contract in

Outdoor Lighting Perspectives Franchising, Inc. v. Harders, __

N.C. App. __, 747 S.E.2d 256 (2013). In Outdoor Lighting, __

N.C. App. at __, 747 S.E.2d at 261, the franchise agreement

between the parties gave the franchisor the right to reduce the

scope of the non-compete, a right which the franchisor attempted

to invoke. In looking at this particular provision, the Court

noted that “it appears, given the language of the agreement,

that [the franchisor] had the right to modify the non-

competition provision in this manner and exercised this

authority in an appropriate manner.” Id. at __, 747 S.E.2d at

265, n.3. However, the Court was not required to “determine the

effectiveness of [that] exercise in private ‘blue penciling’”

because the modified geographic scope was still unreasonable.

Id. Although Outdoor Lighting’s holding does not directly

affect the outcome in this case, it indicates a willingness of
 -15-
our Courts to recognize and enforce revised non-compete

agreements when the parties contract for the right to revise a

non-compete outside the employment context.

Finally, in recognizing the importance of allowing parties

who agree that provisions of a non-compete may be revised in an

effort to enforce them, we believe that this practice makes good

business sense and better protects both a seller’s and

purchaser’s interests in the sale of a business. It not only

protects the business interests of the purchaser, which is a

notable concern especially in cases where the seller, similar to

Elegant and Imperial, has spent a substantial amount of time

building up goodwill in a particular industry, but it also

allows the seller to make more money than it would have had it

just sold the assets of the business. This is especially true

in North Carolina where our Supreme Court has been unwilling to

adopt a more flexible approach to the “blue pencil doctrine,”

leaving the courts with few options to try to enforce non-

competes in a rapidly changing economy.3 In addition, potential

buyers may be reluctant to buy a business not only if a seller

3
Judge Steelman highlighted this issue in his concurring opinion
in MJM Investigations, Inc. v. Sjostedt, 205 N.C. App. 468, 698
S.E.2d 202, 2010 WL 2814531, *5 (No. COA09-596) (July 20, 2010)
(unpublished), noting that: “The law of restrictive covenants
should be re-evaluated by our Supreme Court in the context of
changing economic conditions.”
 -16-
was unwilling to sign a non-compete but also if that non-compete

could not be modified and enforced by the courts. As a final

note, it is important to remember that, here, pursuant to the

sale of Imperial and Elegant, Ludine agreed to sign the non-

compete and was compensated for that agreement as well as

getting, arguably, a higher price for the businesses’ assets.

Then, after allegedly violating the non-compete and being sued

by plaintiff, he asked the courts to hold the negotiated-for

non-compete invalid.

In support of its conclusion that the trial court could not

have revised the non-compete despite the fact that paragraph six

explicitly gave it the power to, the dissent notes that the

language of paragraph six limits the trial court’s authority to

revise to that “permitted by law.” Thus, according to the

dissent, paragraph six “by its very terms makes the ‘blue

pencil’ doctrine applicable.” However, this interpretation of

the language of paragraph six would construe the provision

meaningless. By this logic, the parties would be giving the

trial court authority to revise the agreement but, in the same

sentence, restrict its power under the “blue pencil doctrine”

which expressly prohibits any and all revisions by the trial

court.
 -17-
Instead, in interpreting the language of paragraph six, the

phrase “permitted by law” applies to how the trial court revises

the agreement, requiring it to revise under the parameters of

reasonableness in terms of time and territory. On remand, the

trial court is tasked with revising the territorial restrictions

of the non-compete to make them reasonable based on the former

client base of Imperial and Elegant. Thus, by the terms of this

opinion, the trial court is revising the scope in such a way as

to make it enforceable, i.e., “permitted,” by law.

For all the above mentioned reasons, we reverse the trial

court’s order and remand this matter to the trial court to

revise the non-compete provisions after determining where in

North Carolina and South Carolina it would be reasonable to

enforce the non-compete based on Elegant’s and Imperial’s former

customer base.

In addition, although, as a matter of law, the trial court

should have revised the non-compete to make it reasonable and

enforceable, there exists a genuine issue of material fact as to

whether Ludine violated the non-compete. Plaintiff alleged that

its customers claimed that Ludine was attempting to solicit

their business to Associated Beverage. Although Ludine refutes

this in his affidavit, “[c]ontradictions or discrepancies in the
 -18-
evidence must be resolved by the jury rather than the trial

judge[,]” Martishius v. Carolco Studios, Inc., 355 N.C. 465,

481, 562 S.E.2d 887, 897 (2002). Thus, once the trial court

revises the non-compete to include only those areas reasonably

necessary to protect plaintiff’s business interests, the issue

of whether Ludine violated the non-compete should be tried to

determine whether Ludine violated the non-compete.

II. Tortious Interference with a Contract

Next, plaintiff argues that the trial court erred in

granting summary judgment as to its claim for tortious

interference with a contract. Specifically, plaintiff contends

that it had implied-in-fact contracts with third parties based

on past business dealings and that there is a material issue of

fact as to whether defendants interfered with those contracts.

To establish a claim for tortious
interference with contract, a plaintiff must
show: (1) a valid contract between the
plaintiff and a third person which confers
upon the plaintiff a contractual right
against a third person; (2) the defendant
knows of the contract; (3) the defendant
intentionally induces the third person not
to perform the contract; (4) and in doing so
acts without justification; (5) resulting in
actual damage to plaintiff.

Sellers v. Morton, 191 N.C. App. 75, 81, 661 S.E.2d 915, 921

(2008).
 -19-
Here, plaintiff has forecasted evidence that it had implied

contracts with third-party customers. Although it is undisputed

that plaintiff did not have express contracts with third-party

customers, plaintiff presented evidence showing conduct that

created implied contracts. “An implied in fact contract is a

genuine agreement between parties; its terms may not be

expressed in words, or at least not fully in words. The term,

implied in fact contract, only means that the parties had a

contract that can be seen in their conduct rather than in any

explicit set of words.” Miles v. Carolina Forest Ass’n, 167

N.C. App. 28, 35-36, 604 S.E.2d 327, 333 (2004); see also Archer

v. Rockingham Cnty., 144 N.C. App. 550, 557, 548 S.E.2d 788, 793

(2001) (“An implied contract refers to an actual contract

inferred from the circumstances, conduct, acts or relations of

the parties, showing a tacit understanding.”). Defendants

described the businesses’ relationship with its customers as:

“so long as Imperial provided its services competently and at

reasonable rates, its customers kept calling back for additional

services. So long as Elegant called on its accounts and

successfully promoted and sold the coffee and tea products

provided to Elegant by its vendors, Elegant continued

representing its suppliers.” Thus, there was evidence of a
 -20-
substantial business relationship between the businesses and

third-party customers based on the prior dealings between the

parties. Accordingly, plaintiff satisfied its burden of showing

a genuine issue of fact as to this first element since “the

legal effect of an implied in fact contract is the same as that

of an express contract in that it too is considered a ‘real’

contract or genuine agreement between the parties[,]” Miles, 167

N.C. App. at 36, 604 S.E.2d at 333.

With regard to the second element, it is undisputed

defendants knew about those contracts since plaintiff acquired

those customers when it purchased Elegant and Imperial. Thus,

defendants would have been aware of those contracts. As to the

third element, plaintiff has forecasted evidence that Ludine, on

behalf of Associated Beverage, induced or attempted to induce

the customers to switch their business to defendants.

Regarding the fourth element, this Court has noted that:

“In order to demonstrate the element of acting without

justification, the action must indicate no motive for

interference other than malice.” Area Landscaping, L.L.C. v.

Glaxo-Wellcome, Inc., 160 N.C. App. 520, 523, 586 S.E.2d 507,

510 (2003) (internal quotation marks omitted). Plaintiff

alleged that defendants maliciously interfered with the
 -21-
contracts in violation of the non-compete. As discussed above,

because there is a genuine issue of fact as to whether Ludine

violated the non-compete once it has been revised on remand,

there is also a genuine issue of fact as to whether he acted

without justification.

Finally, with regard to the last element, plaintiff

forecasted evidence that it suffered damages in the form of lost

business and lost profits. Specifically, plaintiff claimed that

although it used to generate $70,000 in business, it now only

generates $20,000 based on defendants’ alleged interference with

third-party customers. Thus, in sum, plaintiff has forecasted

evidence for each element of tortious interference with a

contract, and the trial court erred in granting defendants’

motion for summary judgment as to this claim.

III. Tortious Interference with a Prospective Economic Advantage

Next, plaintiff argues that the trial court erred in

granting defendants’ summary judgment motion on its claim for

tortious interference with a prospective economic advantage.

“In order to maintain an action for tortious interference

with prospective advantage, a [p]laintiff must show that [the]

[d]efendants induced a third party to refrain from entering into

a contract with [the] [p]laintiff without justification.
 -22-
Additionally, [the] [p]laintiff must show that the contract

would have ensued but for [the] [d]efendants’ interference.”

DaimlerChrysler Corp. v. Kirkhart, 148 N.C. App. 572, 585, 561

S.E.2d 276, 286 (2002).

Here, as discussed, plaintiff alleged that third-party

customers switched their business to defendants instead of

continuing their business relationships with plaintiff.

Furthermore, as noted above, defendants were not justified in

their conduct because, according to plaintiff’s contentions,

they did so in violation of the non-compete signed by Ludine.

Accordingly, there is a genuine issue of fact whether customers

refrained from entering into contracts or continuing previous

implied contracts with plaintiff but for defendants’ unjustified

interference. Therefore, the trial court erred in granting

summary judgment on this claim.

IV. Unfair and Deceptive Practices or Acts

Next, plaintiff argues that the trial court erred in

granting summary judgment as to his claim for unfair and

deceptive practices or acts. Specifically, plaintiff contends

that since there is a material issue of fact whether defendants

solicited business away from plaintiff and whether Ludine’s

breach of the non-compete was accompanied by aggravating
 -23-
factors, the unfair and deceptive practice claim survives as

well.

“Although [N.C. Gen. Stat. § 75-1.1] was intended to

benefit consumers, its protections do extend to businesses in

appropriate situations.” DaimlerChrysler Corp., 148 N.C. App.

at 585, 561 S.E.2d at 286. To prevail on a claim of unfair and

deceptive practices, a plaintiff must show: “(1) defendants

committed an unfair or deceptive act or practice; (2) in or

affecting commerce; and (3) that plaintiff was injured thereby.”

First Atl. Mgmt. Corp. v. Dunlea Realty Co., 131 N.C. App. 242,

252, 507 S.E.2d 56, 63 (1998).

Here, plaintiff’s unfair and deceptive practices claim

rests on its claims for Ludine’s breach of the non-compete,

tortious interference with contract, and tortious interference

with an economic advantage. Initially, we note that plaintiff’s

claims for tortious interference with contract and tortious

interference with an economic advantage allege that defendants

engaged in an unfair method of competing with plaintiff. As

discussed above, since there is a material issue of fact whether

defendants solicited business away from plaintiff in violation

of the non-compete, plaintiff’s allegations may also maintain an

unfair and deceptive practice claim.
 -24-
With regard to plaintiff’s contention that its unfair and

deceptive practices claim could be based upon Ludine’s breach of

the non-compete, “a mere breach of contract, even if

intentional, is not sufficiently unfair or deceptive to sustain

an action under N.C.G.S. § 75–1.1. The plaintiff must show

substantial aggravating circumstances attending the breach to

recover under the Act.” Eastover Ridge, L.L.C. v. Metric

Constructors, Inc., 139 N.C. App. 360, 368, 533 S.E.2d 827, 833

(2000) (internal quotation marks and citations omitted). Here,

plaintiff has pled sufficient facts showing aggravating

circumstances accompanying Ludine’s alleged breach of the non-

compete to support its unfair and deceptive practices claim.

This Court has noted that “[a]ggravating circumstances include

conduct of the breaching party that is deceptive[,]” and, when

determining whether conduct is deceptive, “its effect on the

average consumer is considered.” Becker v. Graber Builders,

Inc., 149 N.C. App. 787, 794, 561 S.E.2d 905, 910 (2002). As

discussed, Ludine had been involved in the industry for over

fifteen years and had built significant goodwill in this

particular area. As part of the sale of Elegant and Imperial,

Ludine agreed to sign a non-compete agreement, which would

presumably have been an important part of plaintiff’s
 -25-
willingness to buy the businesses. Then, according to

plaintiff, Ludine purposefully violated it in an effort to

solicit customers to his wife’s new business. Given that

plaintiff has pled facts alleging that Ludine purposefully

violated an agreement which served as important consideration

for plaintiff’s decision to buy Imperial and Elegant, plaintiff

has sufficiently pled facts showing the egregious nature of

Ludine’s breach of the non-compete to survive summary judgment.

Accordingly, plaintiff has forecasted evidence that Ludine’s

breach of the non-compete was deceptive and was sufficient to

maintain an unfair and deceptive practice claim.

V. Injunctive Relief

Finally, plaintiff contends that the trial court erred in

granting summary judgment on its claim for injunctive relief.

Specifically, plaintiff alleges that it has shown the likelihood

of success on the merits of its case; thus, it is entitled to

pursue injunctive relief.

“Because a preliminary injunction is an extraordinary

measure, it will issue only upon the movant’s showing that: (1)

there is a likelihood of success on the merits of his case; and

(2) the movant will likely suffer irreparable loss unless the

injunction is issued.” VisionAIR, Inc. v. James, 167 N.C. App.
 -26-
504, 508, 606 S.E.2d 359, 362 (2004) (internal quotation marks

omitted). Here, because it held the non-compete unenforceable,

the trial court necessarily found that plaintiff failed to show

there was a likelihood of success on its breach of contract

claim. However, as discussed above, because we are reversing

the trial court’s order and remanding the non-compete to the

trial court to exercise its authority to revise the geographic

scope of the non-compete based on paragraph 6 of the non-

compete, the trial court must determine whether there is a

likelihood of success on the merits of plaintiff’s breach of

contract claim based on the revised non-compete. Should the

trial court conclude there is, it must also determine “whether

the issuance of the injunction is necessary for the protection

of plaintiff’s rights during the course of litigation; that is,

whether plaintiff has an adequate remedy at law.” A.E.P.

Indus., Inc. v. McClure, 308 N.C. 393, 406, 302 S.E.2d 754, 762

(1983). Based on these considerations, the trial court should

determine whether plaintiff is entitled to injunctive relief.

Conclusion

Because the trial court had the express authority to revise

the geographic scope of the non-compete based on the terms of

the agreement, we remand for the trial court to revise the
 -27-
territorial area of the non-compete to include those areas where

Elegant and Imperial had former customers. Since there is a

genuine issue of material fact whether Ludine violated the

revised non-compete, we reverse the order granting summary

judgment on plaintiff’s breach of contract claim. In addition,

we conclude that plaintiff has presented evidence showing a

genuine issue of material fact on its remaining tort claims and

request for injunctive relief. Therefore, we reverse the order

granting summary judgment on those claims and remand for trial.

REVERSED AND REMANDED.

Judge McGEE concurs.

Judge ELMORE dissents by separate opinion.
 NO. COA14-185

NORTH CAROLINA COURT OF APPEALS

Filed: 5 August 2014

Beverage Systems of the
Carolinas, LLC,

Plaintiff,

v. Iredell County
No. 12 CVS 1519
Associated Beverage Repair,
LLC, Ludine Dotoli and
Cheryl Dotoli,

Defendants.

ELMORE, Judge., dissenting.

Because I believe the “blue pencil” doctrine applies to the

parties’ provision in the non-compete purportedly enabling the

trial court to rewrite or modify the unreasonable territory

restrictions, I would affirm the trial court’s order granting

summary judgment for defendants on plaintiff’s claim of breach

of the non-compete. I would also affirm the trial court’s order

granting defendants’ motion for summary judgment on plaintiff’s

cause of action for tortious interference with a contract

because plaintiff did not forecast enough evidence of conduct to

show that it formed an implied contract-in-fact with its

customers. As such, plaintiff’s claims for tortious

interference with a prospective economic advantage, unfair and
 -2-
deceptive trade practices, and injunctive relief would

necessarily fail, and I would affirm the trial court’s order as

to those issues.

I. Analysis

a.) Breach of the non-compete

Plaintiff argues that the trial court erred in granting

defendants’ motion for summary judgment on plaintiff’s claim for

breach of the non-compete. I disagree.

“Our standard of review of an appeal from summary judgment

is de novo; such judgment is appropriate only when the record

shows that ‘there is no genuine issue as to any material fact

and that any party is entitled to a judgment as a matter of

law.’” In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572,

576 (2008) (quoting Forbis v. Neal, 361 N.C. 519, 523-24, 649

S.E.2d 382, 385 (2007)). We must consider “the pleadings,

affidavits and discovery materials available in the light most

favorable to the non-moving party[.]” Pine Knoll Ass'n, Inc. v.

Cardon, 126 N.C. App. 155, 158, 484 S.E.2d 446, 448 (1997).

While I agree with the majority that the geographic area

covered by the non-compete was overbroad and thus unreasonable,

the majority further concludes that “the trial court had

authority to enforce the non-compete through paragraph six of
 -3-
the non-compete which specifically and expressly gave the trial

court authority to ‘revise the restrictions’ ‘to cover the

maximum period, scope and area permitted by law.’” Thus, the

majority rules that the “blue pencil” doctrine is inapplicable

in the present case due to the parties’ aforementioned agreed

upon provision.

Parties to a contract “may bind themselves as they see fit

. . . unless the contract would violate the law or is contrary

to public policy.” Lexington Ins. Co. v. Tires Into Recycled

Energy & Supplies, Inc., 136 N.C. App. 223, 225, 522 S.E.2d 798,

800 (1999) (citation and quotation marks omitted). The “blue

pencil” doctrine, in part, serves to prevent a court from

“draft[ing] a new contract for the parties.” Seaboard Indus.,

Inc. v. Blair, 10 N.C. App. 323, 337, 178 S.E.2d 781, 790

(1971). The doctrine drastically restricts a court’s authority

to modify an overly broad territory restriction: “A court at

most may choose not to enforce a distinctly separable part of a

covenant in order to render the provision reasonable. It may

not otherwise revise or rewrite the covenant.” Hartman v. W.H.

Odell & Associates, Inc., 117 N.C. App. 307, 317, 450 S.E.2d

912, 920 (1994).
 -4-
Here, the provision that purportedly gives the trial court

authority to rewrite the non-compete’s unreasonable territory

restrictions states, in part:

If, at the time of enforcement . . . a court
holds that the restrictions stated herein
are unreasonable under the circumstances
then existing, the parties hereto agree that
. . . the court shall be allowed to revise
the restrictions contained . . . to cover
the maximum period, scope and area permitted
by law.”

(emphasis added). The language of the provision expressly

limits a court’s revision to that “permitted by law.” Thus, the

provision by its very terms makes the “blue pencil” doctrine

applicable. Alternatively, the provision is unenforceable as it

violates the “blue pencil” doctrine on its face. Under either

scenario, the “blue-pencil” doctrine applies.

The trial court was correct by not rewriting the non-

compete to make it reasonable because the law makes clear that a

court cannot engage in such action. However, the trial court

has the authority to enforce portions of a non-compete that are

reasonable and disregard the remaining portions if the non-

compete divides the restricted area into distinct units. See

Welcome Wagon Int’l, Inc. v. Pender, 255 N.C. 244, 248, 120

S.E.2d 739, 742 (1961). While the non-compete in the case at
 -5-
bar divides the restricted territory into North Carolina and

South Carolina, the trial court did not enforce any portion of

the non-compete because neither of those restrictions taken

separately are reasonable, even in light of the deference given

towards non-compete covenants resulting from business sales. In

sum, the non-compete’s territory restrictions were unreasonable,

and the trial court was without legal authority to rewrite or

modify the territory restrictions irrespective of the parties’

contractual provision providing otherwise.

While the majority relies on Outdoor Lighting Perspectives

Franchising, Inc. v. Harders, ___ N.C. ___ App. ___, 747 S.E.2d

256 (2013) in support of its holding, that case addressed a

franchisor’s (a party to the non-compete), as opposed to a trial

court’s, right to modify a non-compete outside the context of a

business sales contract. Id. at ___, 747 S.E.2d at 265, n.3.

The majority asserts that Outdoor Lighting “indicates a

willingness of our courts to recognize and enforce revised non-

compete agreements[.]” However, the majority’s ruling in this

case takes a far more drastic approach, ordering the trial court

to undertake the revising and rewriting of the non-compete

rather than the contracting party.
 -6-
In light of these reasons, I would affirm the trial court’s

order granting summary judgment for defendants on plaintiff’s

claim of breach of the non-compete because the covenant is

unenforceable and invalid.

b.) Tortious Interference With a Contract

Next, the majority agrees with plaintiff’s argument that

the trial court erred in granting defendants’ motion for summary

judgment on plaintiff’s cause of action for tortious

interference with a contract. Plaintiff avers that a contract

implied-in-fact existed between itself and its customers

acquired from the agreement. I disagree.

The first element of tortious interference with contractual

rights is “(1) the existence of a valid contract between

plaintiff and a third party[.]” Barker v. Kimberly-Clark Corp.,

136 N.C. App. 455, 462, 524 S.E.2d 821, 826 (2000) (citation

omitted). Mutual assent of both parties to the terms of a

contract “is essential to the formation of any contract . . . so

as to establish a meeting of the minds.” Connor v. Harless, 176

N.C. App. 402, 405, 626 S.E.2d 755, 757 (2006) (citation and

quotation omitted). Mutual assent is typically formed “by an

offer by one party and an acceptance by the other, which offer

and acceptance are essential elements of a contract.” Id.
 -7-
(citation and quotation omitted) (emphasis in original). An

implied contract-in-fact is “as valid and enforceable as an

express contract.” Creech v. Melnik, 347 N.C. 520, 526, 495

S.E.2d 907, 911 (1998) (citation omitted). The formation of an

implied contract “arises where the intent of the parties is not

expressed, but an agreement in fact, creating an obligation, is

implied or presumed from their acts.” Id. (citation omitted).

The conduct of the parties shall imply an offer and acceptance.

Revels v. Miss Am. Org., 182 N.C. App. 334, 337, 641 S.E.2d 721,

724 (2007).

Here, plaintiff concedes that “there are no written

[customer] contracts. The [defendants] didn’t have any when

they sold the business nor did [plaintiff].” However, plaintiff

alleges that defendants “w[ere] aware of the contracts and

customers transferred to [plaintiff] at the time of purchase of

the Business.”

In support of its contention that a contract implied-in-

fact existed with customers, plaintiff referenced 1.) Gandino’s

affidavit stating that plaintiff conducted business with

customers who “had engaged in a regular course of conduct and

business relationships with Imperial and/or Elegant since at

least 2007”; and 2.) Ludine Dotoli’s affidavit that “the
 -8-
arrangement was that so long as Imperial provided competent

services at reasonable rates, its customers kept calling back

for additional services. So long as Elegant called on its

account and successfully promoted and sold the coffee and tea

products provided to it by its vendors, Elegant continued

representing its suppliers.” Contrary to the majority’s

holding, the forecast of evidence put forth by plaintiff

suggesting a general business relationship with its customers

was insufficient evidence to constitute an offer, acceptance,

mutual assent, or obligation to fulfill specific terms of an

agreement. Thus, I would affirm the trial court’s order

granting defendants’ motion for summary judgment on this issue

because plaintiff did not forecast enough evidence of conduct to

show that it formed an implied contract-in-fact with its

customers.

c.) Tortious Interference With a Prospective Economic Advantage

Plaintiff also argues that the trial court erred in

granting defendants’ motion for summary judgment on plaintiff’s

cause of action for tortious interference with a prospective

economic advantage. I disagree.

A plaintiff bringing a cause of action for tortious

interference with a prospective economic advantage must
 -9-
establish that “the defendant, without justification, induced a

third party to refrain from entering into a contract with the

plaintiff, which would have been made absent the defendant’s

interference.” MLC Auto., LLC v. Town of S. Pines, 207 N.C.

App. 555, 571, 702 S.E.2d 68, 79 (2010) (citation omitted).

As previously discussed, plaintiff did not establish the

existence of any contracts with its customers. Thus,

plaintiff’s forecast of evidence necessarily does not and cannot

identify any actual contract that defendants induced customers

to refrain from entering. Moreover, plaintiff never

specifically alleges defendants’ inducement to refrain from

entering a contract, but merely states, “[a]bsent the

Defendants’ interference, [plaintiff] would have maintained its

customer base[,]” “Defendants have purposely and intentionally

interfered with the contracts . . . of [plaintiff] with the

intent to steal the customers[,]” “Defendants have directly

contacted and solicited the customers of [plaintiff][,]” and

“Defendants have interfered with [plaintiff’s] business

relationships[.]”

While plaintiff had an expectation of a business

relationship with its customers, it forecasts no evidence in the

record to show that but for defendants’ actions, contracts with
 -10-
its customers would have been formed. Plaintiff merely makes

general and speculative allegations regarding potential future

contracts: “As a result of Defendants’ interference with

[plaintiff’s] business relationships and business expectancy,

[plaintiff] has suffered damages . . . in excess of $10,000.00.”

Plaintiff’s expectation of a business relationship with current

customers is insufficient by itself to establish a tortious

interference with a prospective economic advantage claim. See

Dalton v. Camp, 353 N.C. 647, 655, 548 S.E.2d 704, 710 (2001)

(rejecting a claim for tortious interference with a prospective

economic advantage claim because “while [plaintiff] may have had

an expectation of a continuing business relationship with

[customer], at least in the short term, he offers no evidence

showing that but for [defendant’s] alleged interference a

contract would have ensued”). Thus, I would affirm the trial

court’s order granting summary judgment in favor of defendants

on this issue.

d.) Unfair and/or Deceptive Trade Practices

Next, plaintiff argues that the trial court erred in

granting summary judgment for defendants on plaintiff’s claim

for unfair and deceptive trade practices. I disagree.
 -11-
Plaintiff contends that claims involving breach of a

covenant not to compete, tortious interference with contracts,

and tortious interference with a prospective economic advantage

form the basis for claims of unfair and deceptive trade

practices. Even if we assume arguendo that this is true under

North Carolina law, plaintiff argues that the trial court erred

in granting summary judgment on the issue of unfair and

deceptive trade practices because “[plaintiff] has set forth

sufficient evidence to establish material questions of fact as

to each element of its claims” for tortious interference with a

contract, tortious interference with a prospective economic

advantage, and breach of the non-compete. Since I would rule

that plaintiff failed to establish genuine issues of material

facts on those claims, plaintiff’s claim for unfair and

deceptive trade practices would necessarily also fail.

e.) Injunctive Relief

Finally, plaintiff argues that it is entitled to injunctive

relief because it has established that the trial court erred in

granting summary judgment for defendants. However, since I

would hold that the trial court did not err in granting summary

judgment, plaintiff’s argument for injunctive relief would be

meritless.
 -12-
II. Conclusion

In sum, I would affirm the trial court’s order granting

defendants’ motion for summary judgment because no genuine issue

of material fact exists as to plaintiff’s claims for breach of

the non-compete, tortious interference with a contract, tortious

interference with a prospective economic advantage, unfair and

deceptive trade practices, and injunctive relief.