MARKETPLACE 4 INS., LLC v. VAUGHN, 2023 NCBC 17

STATE OF NORTH CAROLINA
WAKE COUNTY
IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
22 CVS 7588
MARKETPLACE 4 INSURANCE,
LLC,
Plaintiff,
v.
JEFFREY VAUGHN and
GUIDELIGHT INSURANCE
SOLUTIONS, INC.,
Defendants.
ORDER AND OPINION ON MOTIONS
FOR JUDGMENT ON THE
PLEADINGS
THIS MATTER comes before the Court on Defendant Guidelight Insurance
Solutions, Inc.’s Motion for Judgment on the Pleadings (ECF No. 25) and Defendant
Jeffrey Vaughn’s Motion for Judgment on the Pleadings (ECF No. 28) (collectively,
“Motions”). 	The Court, having considered the Motions, the parties’ briefs, the
arguments of counsel, and all appropriate matters of record, concludes that the
Motions should be GRANTED, in part, and DENIED, in part.
Fox Rothschild LLP, by Jeffrey R. Whitley, for Plaintiff MarketPlace 4
Insurance, LLC.
Bell, Davis & Pitt, P.A., by Kevin G. Williams and Kevin J. Roak, for
Defendant Jeffrey Vaughn.
Brooks, Pierce, McLendon, Humphrey & Leonard, LLP, by Jennifer K.
Van Zant and Agustin M. Martinez, for Defendant Guidelight Insurance
Solutions, Inc.
INTRODUCTION
1. 	The 	present 	motions 	mostly 	require 	the 	Court 	to 	revisit 	familiar
territory in assessing the legal sufficiency of claims alleging that an ex-employee has
MarketPlace 4 Ins., LLC v. Vaughn, 2023 NCBC 17.

engaged 	in 	tortious 	conduct 	against 	his 	former 	employer, 	including 	the
misappropriation of its trade secrets. 	In addition, however, the Court must also
address more novel issues requiring it to clarify the extent to which the employee’s
new employer can be held liable on a theory of vicarious liability.
FACTUAL AND PROCEDURAL BACKGROUND
2. 	The Court does not make findings of fact on motions for judgment on the
pleadings under North Carolina Rule of Civil Procedure 12(c) and recites only those
allegations 	in 	the 	pleadings 	that 	are 	relevant 	and 	necessary 	to 	the 	Court’s
determination of the Motions. Golden Triangle #3, LLC v. RMP-Mallard Pointe, LLC,
2020 NCBC LEXIS 37, at *1 (N.C. Super. Ct. Mar. 23, 2020).
3. 	Plaintiff MarketPlace 4 Insurance, LLC (“MarketPlace”) is a limited
liability company that is organized and existing under the laws of Georgia with its
principal office in Cherokee County, Georgia. MarketPlace has an office in Charlotte,
North Carolina. 	(Verif. Compl. and App. for Temp., Prelim., and Perm. Injunctive
Relief [“Verif. Compl.”] ¶ 1, ECF No. 3.)
4. 	MarketPlace “owns and operates independent insurance agencies in
several states across the United States.” (Verif. Compl. ¶ 6.) On 13 November 2020,
MarketPlace entered into a written Asset Purchase Agreement (“APA”) with Mike
Gilliam and the Mike Gilliam Agency, Inc. (the “Gilliam Agency”) through which
MarketPlace 	acquired 	“the 	assets 	of 	the 	[Gilliam] 	Agency 	including, 	without
limitation its: book of business; customer lists; policies and rights of renewals thereof;
post-closing commissions; accounts receivable; physical property; telephone number,

website, internet address, name (the ‘Mike Gilliam Agency’); and the covenants not
to 	compete 	in 	effect 	between 	the 	Agency 	and its 	current 	and former agents,
representatives, contractors, and employees.” (Verif. Compl. ¶ 10.) “Under the terms
of the [APA], copies of all non-solicitation agreements and nonpiracy agreements
executed between the [Gilliam] Agency and its current or former staff members were
to be conveyed to [MarketPlace].” (Verif Compl. ¶ 12.)
5. 	In connection with MarketPlace’s acquisition of the Gilliam Agency,
certain staff members, employees, agents, and contractors previously employed by
the Gilliam Agency became employees of MarketPlace, including Defendant Jeffrey
Vaughn. (Verif. Compl. ¶¶ 15, 16.)
6. 	MarketPlace alleges the existence of an Agency Associate Agent/Office
Staff Agreement (the “Agreement”) executed between Vaughn, Nationwide Mutual
Insurance Company, and the Gilliam Agency. Although a copy of the document is not
attached to the Complaint, MarketPlace asserts that it contains the following
promises by Vaughn:
a. To return, within 24 hours of the termination of the Associate
Agreement, 	any 	property 	(including 	manuals, 	forms, 	and 	records
necessary for selling insurance products) furnished by the Agency or
Nationwide (Associate Agreement § 6);
b. Not to directly or indirectly “solicit or service” customers/policyholders
of Nationwide or policyholders of the Agency for a period of one year
following 	the 	termination 	of 	the 	Associate 	Agreement 	(Associate
Agreement § 11);
c. Not 	to 	“interfere 	in 	any 	way” 	with 	existing 	policies 	or
customers/policyholders of Nationwide or serviced by any Nationwide
agencies within 25 miles of the Agency for a period of one year following
the termination of the Associate Agreement (Associate Agreement § 11);

d. To hold in strict confidence any “proprietary information, confidential
information, and/or 	trade 	secrets” 	belonging 	to 	the 	Agency 	and
furnished to Vaughn in the scope of his work (Associate Agreement §
14); and
e. Not to disclose or utilize any of such information for any purpose other
than 	Nationwide 	or 	the 	Agency’s 	business, 	during 	or 	after 	the
termination of the Associate Agreement (Associate Agreement § 14).
(Verif. Compl. ¶ 19.)
7. 	After 	the 	execution 	of 	the 	APA, 	Vaughn 	continued 	working 	for
MarketPlace until he resigned on or around 30 June 2021. 	(Verif. Compl. ¶ 22.)
During Vaughn’s employment with MarketPlace, he “had access to [MarketPlace’s]
confidential information including trade secrets, relating to insurance and financial
products, and [MarketPlace’s] customers.” (Verif. Compl. ¶ 23.)
8. 	After his resignation, Vaughn began working for Defendant Guidelight
Insurance Solutions, Inc. (“Guidelight”) in August 2021. 	(Verif. Compl. ¶ 36.) 	An
individual 	named 	Jason 	Trent 	owned 	Guidelight 	“in 	whole 	or 	in 	part” 	until
September 2021, when it was acquired by High Street Insurance Partners. 	(Verif.
Comp. ¶¶ 37–38.) 	Following this acquisition, Trent was retained as the Chief
Executive 	Officer 	of 	Guidelight, 	which 	currently 	operates 	as 	a 	wholly 	owned
subsidiary of High Street Insurance Partners. 	(Verif. Compl. ¶ 39.) 	Vaughn has
reported to Trent during his entire tenure at Guidelight. (Verif. Compl. ¶ 40.)
9. 	The 	Complaint 	alleges 	that 	“[i]n 	late 	2021, 	[MarketPlace] 	began
receiving unusually frequent electronic notices from Nationwide and other insurance
carriers, informing [MarketPlace] that [MarketPlace’s] customers had allegedly

submitted requests to change their Agent of Record (‘AOR’) and move their business
to a different agency.” (Verif. Compl. ¶ 41.) In the insurance industry, an AOR “refers
to a document a client would sign in order to specify which agent the client designates
to represent their interests with one or more insurance companies.” 	(Verif. Compl.
¶ 42.) In other words, MarketPlace was placed on notice that many of its customers
“were leaving [MarketPlace] and moving to another [agency] shortly after Vaughn
began his employment with Guidelight.” (Verif. Compl. ¶ 43.)
10. 	In 	attempting 	to 	retain 	its 	customer 	relationships, 	MarketPlace
contacted customers from whom it received AOR change forms in late 2021 and early
2022. (Verif. Compl. ¶ 44.) During several of these conversations, certain customers
informed MarketPlace representatives that they had not, in fact, signed a new AOR
form and had not “request[ed] to transfer their business to another agency.” 	(Verif.
Compl. ¶ 45.)
11. 	For example, MarketPlace alleges that it contacted a client named
Debra Ledford on 24 March 2022 after MarketPlace received an AOR form from her.
(Verif. Compl. ¶¶ 46–47.) Ledford said that Vaughn had approached her and asked
her for a copy of her insurance policies, but that she never actually requested that
Vaughn or Guidelight become her new insurance agent. 	(Verif. Compl. ¶¶ 48–50.)
Vaughn thereafter submitted an AOR form on behalf of Ledford without her consent
“in an attempt to steal her business from” MarketPlace. (Verif. Compl. ¶¶ 50–51.)
12. 	On 7 February 2022, a MarketPlace employee received an anonymous
telephone call stating that Vaughn was “purging [their] client list” and was “actively

pursuing [MarketPlace’s] customers for AORs and purging [MarketPlace’s] customer
base with Nationwide.” (Verif. Compl. ¶ 55.)
13. 	MarketPlace received another suspicious call concerning Vaughn in
February 2022 from a customer named Amanda Beavers. Beavers told MarketPlace
she had received a call from a Guidelight representative who “requested her
permission to quote her home and automobile insurance policies to potentially save
her money[.]” 	(Verif. Compl. ¶¶ 57–58.) 	Beavers was told such a review would be
quick 	because 	the 	Guidelight 	representative 	already 	had 	her 	current 	policy
information. 	(Verif. Compl. ¶ 59.) 	Beavers said she called MarketPlace to ask
whether the Guidelight representative was affiliated with MarketPlace. 	(Verif.
Compl. ¶ 60.) 	These phone calls caused MarketPlace to believe that Vaughn was
using MarketPlace’s “confidential customer and policy information to solicit its
customers to leave [MarketPlace] and move their business to Guidelight.” 	(Verif.
Compl. ¶ 61.)
14. 	The Complaint also contains allegations regarding the Vertafore QQ
database that was used by the Gilliam Agency to manage its internal company
information. 	MarketPlace sought to transition Gilliam Agency information on the
Vertafore QQ system over to another database in late 2021, during which time
MarketPlace attempted to terminate access to the old Vertafore QQ system. 	(Verif.
Compl. ¶¶ 62–64.) 	However, unbeknownst to MarketPlace, the Vertafore QQ
database was not actually terminated in late 2021, meaning that certain users—

including 	Vaughn—had 	continuing 	access 	to 	the 	Vertafore 	system, 	“including
confidential and trade secret information.” (Verif. Compl. ¶ 65.)
15. 	MarketPlace alleges that Vaughn “exploited this failure by the third-
party Vertafore QQ and accessed [its] computer database without authorization on
multiple occasions in late 2021 and early 2022.” (Verif. Compl. ¶ 66.) After receiving
an anonymous report of Vaughn’s activities, MarketPlace contacted Vertafore to
regain access to the system so that it could learn the full extent of Vaughn’s access.
(Verif. Compl. ¶ 67.) 	MarketPlace confirmed that Vaughn’s access had never been
revoked and that “since August 2021 (when he became employed by Guidelight),
Vaughn had logged into Vertafore QQ repeatedly, logging well over 150 hours of
unauthorized 	access 	to 	[MarketPlace’s] 	systems.” 	(Verif. 	Compl. 	¶¶ 	68–71.)
MarketPlace alleges that Vaughn used the information from the Vertafore QQ
database in order to submit AOR forms on behalf of MarketPlace’s clients in order to
transfer their business to Guidelight and did so without customer authorization.
(Verif. Compl. ¶¶ 73–74.)
16. 	On 23 March 2022, it was revealed that the anonymous caller who had
contacted MarketPlace about Vaughn’s alleged misconduct was a former Guidelight
employee (and former colleague of Vaughn’s) named Ian Buchanan. 	(Verif. Compl.
¶ 75.) 	Buchanan stated that he became suspicious of Vaughn’s sales performance
after discovering that most of Vaughn’s sales were through AORs, which was
unusual. 	(Verif. Compl. ¶ 76.) 	Because Buchanan suspected that Vaughn was
improperly using information from his former employer, he reported his suspicions

to his supervisor at Guidelight, Regina Hensley, who then reported this information
to Trent. (Verif. Compl. ¶ 76.)
17. 	Despite learning of Vaughn’s actions, Guidelight took no steps to
prevent Vaughn “from stealing [MarketPlace’s] customers.” Indeed, Buchanan later
noticed that Vaughn “had created a profile for Debra Ledford on Guidelight’s agency
management system and uploaded to Ledford’s profile a screenshot of Ledford’s
information from [Marketplace’s] agency management system, Vertafore QQ.” (Verif.
Compl. ¶ 76.) 	Buchanan was familiar with Vertafore QQ from a prior job and
concluded that Vaughn had taken Ledford’s information from another insurance
agency. 	(Verif. Compl. ¶ 76.) 	Buchanan once again reported this information to
Hensley, and she relayed it to Trent. 	Buchanan was subsequently told by Hensley
and Trent to “stay in his lane” and that he should “let it go.” 	(Verif. Compl. ¶ 76.)
Buchanan’s employment with Guidelight was terminated shortly afterward, and he
was told he was not “a team player.” (Verif. Compl. ¶ 76.) MarketPlace alleges that
Vaughn continued to access the Vertafore QQ system and utilize MarketPlace’s
confidential information and trade secrets following Buchanan’s termination. (Verif.
Compl. ¶ 77.)
18. 	On 17 March 2022, Vaughn sent an email to MarketPlace, requesting
that MarketPlace send “policy information relating to Raymond ‘Trevis’ Hicks
directly to Vaughn.” 	(Verif. Compl. ¶ 82.) 	Vaughn copied Hicks on the email and
instructed him to provide his consent via email. 	(Verif. Compl. ¶ 83.) 	MarketPlace
replied that it would only forward policy information if specifically requested by

Hicks. 	(Verif. Compl. ¶ 84.) 	In response, Vaughn filed a complaint against
MarketPlace with the North Carolina Department of Insurance on 24 March 2022.
(Verif. Compl. ¶ 85.) 	Vaughn also emailed “two of [MarketPlace’s] customers,
erroneously informing them that [MarketPlace] had refused to release their policy
information ‘to you or to me.’ ” (Verif. Compl. ¶ 86.)
19. 	MarketPlace alleges that since August 2021 it has “lost a substantial
amount of customers and business and suffered damage to its reputation due to
Vaughn’s wrongful conduct and misrepresentations[.]” (Verif. Compl. ¶ 89.)
20. 	On 23 June 2022, MarketPlace initiated the present action by filing a
Complaint in Wake County Superior Court. 	(Verif. Compl.) The Complaint asserts
claims 	for 	misappropriation 	of 	trade 	secrets 	against 	Vaughn 	and 	Guidelight;
computer 	trespass 	against 	Vaughn 	and 	Guidelight; 	tortious 	interference 	with
contract against Vaughn and Guidelight; tortious interference with prospective
economic advantage against Vaughn and Guidelight; tortious interference with
prospective economic advantage against Guidelight alone; tortious interference with
contract against Guidelight alone; breach of contract/restrictive covenants against
Vaughn; and unfair and deceptive trade practices (“UDTP”) against Vaughn and
Guidelight. (Verif. Compl. ¶¶ 90–160.) In its Complaint, MarketPlace also requested
the issuance of a temporary restraining order, a preliminary injunction, and a
permanent injunction. (Verif. Compl. ¶¶ 161–72.)
21. 	On 29 June 2022, the Honorable Graham Shirley entered a Temporary
Restraining Order (“TRO”) against Defendants, enjoining Vaughn and Guidelight

from “A. Using or disclosing [MarketPlace’s] confidential or trade secret information,
including any information obtained by Vaughn from [MarketPlace’s] computer
database(s); and B. Soliciting customers of [MarketPlace’s] using any information
obtained by Vaughn from [MarketPlace’s] computer database(s).” 	(TRO p. 2, ECF
No. 6.)
22. 	This case was designated a mandatory complex business case on 1 July
2022 and assigned to the undersigned on 5 July 2022. (ECF Nos. 1, 2.)
23. 	On 10 August 2022, at the parties’ request, the Court issued a Consent
Order providing that the TRO would stay in effect while this action remains pending.
(Consent Order, ECF No. 20.)
24. 	Guidelight and Vaughn filed Answers to the Complaint on 26 August
2022. (ECF Nos. 22, 23.)
25. 	On 15 September 2022, Guidelight filed a Motion for Judgment on the
Pleadings pursuant to Rule 12(c) of the North Carolina Rules of Civil Procedure
seeking the dismissal of all claims against it in this action. 	(ECF No. 25.) 	On 21
September 2022, Vaughn filed a similar motion. (ECF No. 28.)
26. 	The Motions came before the Court for a hearing on 20 December 2022
and are now ripe for decision.
LEGAL STANDARD
27. 	“A [Rule 12(c)] motion for judgment on the pleadings is the proper
procedure when all the material allegations of fact are admitted in the pleadings and
only questions of law remain. 	When the pleadings do not resolve all the factual

issues, judgment on the pleadings is generally inappropriate.” Ragsdale v. Kennedy,
286 N.C. 130, 137 (1974). “A complaint is fatally deficient in substance, and subject
to a motion by the defendant for judgment on the pleadings if it fails to state a good
cause of action for plaintiff and against defendant[.]” Bigelow v. Town of Chapel Hill,
227 N.C. App. 1, 3 (2013).
28. 	When deciding a motion under Rule 12(c), the Court may only consider
“the pleadings and exhibits which are attached and incorporated into the pleadings.”
Davis v. Durham Mental Health/Dev. Disabilities/Substance Abuse Area Auth., 165
N.C. App. 100, 104 (2004). The Court must “view the facts and permissible inferences
in the light most favorable to the nonmoving party.” Ragsdale, 286 N.C. at 137. “All
well pleaded factual allegations in the nonmoving party’s pleadings are taken as true
and all contravening assertions in the movant’s pleadings are taken as false. 	All
allegations 	in 	the 	non-movant’s 	pleadings, 	except 	conclusions 	of 	law, 	legally
impossible facts, and matters not admissible in evidence at the trial, are deemed
admitted by the movant[.]” Id. (internal citations omitted).
ANALYSIS
I. 	Vaughn’s Motion for Judgment on the Pleadings
29. 	Vaughn seeks judgment on the pleadings on all claims asserted against
him by MarketPlace. The Complaint raises the following claims against him: breach
of 	contract/restrictive 	covenants; 	misappropriation 	of 	trade 	secrets; 	computer
trespass; tortious interference with contract; tortious interference with prospective
economic advantage; and UDTP.

A. Breach of Contract
30. 	Vaughn first seeks judgment on the pleadings as to MarketPlace’s
breach of contract claim on a number of grounds, which the Court will address in
turn.
31. 	A threshold issue raised by Vaughn concerns the ability of MarketPlace
to bring a claim for breach of contract based on covenants contained in an agreement
that was entered into between Vaughn and the Gilliam Agency (rather than between
him and MarketPlace). 	In response, MarketPlace asserts that by virtue of the APA
it acquired all of the Gilliam Agency’s contracts—including the contractual rights
that the Gilliam Agency possessed based on its Agreement with Vaughn.
32. 	However, as Vaughn notes, this Court has held that when an asset
purchase agreement is executed that purports to transfer a former employer’s rights
under a restrictive covenant to a new employer, the prescribed period contained
within the covenant begins to run from the date of the execution of the agreement.
The North Carolina courts have held that the acquisition of another
company through an asset purchase — as opposed to a purchase of
ownership interests — terminates the seller’s existing employment
relationships. 	See, e.g., Calhoun v. WHA Med. Clinic, PLLC, 178 N.C.
App. 585, 597, 632 S.E.2d 563, 571 (2006) (noting that, in an asset sale,
an offer of employment to the seller’s employees is an offer of new
employment); Covenant Equip. Corp. v. Forklift Pro, Inc., 2008 NCBC
LEXIS 	12, 	at 	*25 	(N.C. 	Super. 	Ct. 	May 	1, 	2008) 	(Tennille, 	J.)
(recognizing that an asset sale terminates employment relationships on
the date of the asset sale); see also AmeriGas Propane, L.P. v. Coffey,
2015 NCBC LEXIS 98, at *12-13 (N.C. Super. Ct. Oct. 15, 2015)
(“[A]cquisition of another company by asset purchase will act as a
termination 	of 	existing 	employment 	relationships, 	and 	existing
employees of the acquired business do not necessarily become employees
of the acquiring entity.”).

This Court has therefore held that “when an employer sells its assets,
including its right to enforce a restrictive covenant in an employment
contract, the period of the restrictive covenant begins to run because the
employment relationship has been terminated.” 	Better Bus. Forms &
Prods., Inc. v. Craver, 2007 NCBC LEXIS 34, at *21 (N.C. Super. Ct.
Nov. 1, 2007) (Tennille, J.). 	See also Covenant, 2008 NCBC LEXIS 12,
at *24-25 (“[T]he buyer of a noncompetition agreement does not step
fully into the shoes of the original employer because the buyer is a new
employer. 	Instead, the buyer can either enforce the noncompetition
agreement or enter into a new noncompetition agreement.”). 	Thus, “a
noncompetition agreement that has been sold as part of an asset sale . . .
gives the buyer the right to enforce the noncompetition agreement as of
the date of the sale but not to enforce the noncompetition agreement as
if it had been entered into originally by the buyer.” Id. at *24.
Artistic S. Inc. v. Lund, 2015 NCBC LEXIS 113, at **14 (N.C. Super. Ct. Dec. 9, 2015).
33. 	Therefore, any time-based covenants contained in Vaughn’s Agreement
with the Gilliam Agency began to run when the APA was executed on 13 November
2020. As quoted above, the non-solicitation provisions in Vaughn’s Agreement stated
that they would remain in effect for one year. Accordingly, any actionable breach of
those covenants alleged to have been committed by Vaughn must have occurred prior
to 13 November 2021—that is, one year from the date the APA was executed.
34. 	Therefore, to the extent that Vaughn’s Motion seeks judgment on the
pleadings as to MarketPlace’s claim for breach of contract regarding any breaches of
non-solicitation covenants in the Agreement that occurred after 13 November 2021,
the Motion is GRANTED.
35. 	Vaughn next argues that the restrictive covenants themselves are
unenforceable because they are unreasonable under North Carolina law.
36. 	The 	Court 	will 	first 	analyze 	the 	reasonableness 	of 	the 	two 	non-
solicitation provisions. This Court has previously stated that

valid non-solicitation provisions must be: (1) in writing, (2) entered into
at the time and as part of the contract of employment, (3) based on
valuable consideration, (4) reasonable both as to the time and territory
embraced in the restrictions, (5) fair to the parties, and (6) not against
public policy. 	Aeroflow Inc. v. Arias, 2011 NCBC LEXIS 21, *24 (N.C.
Super. Ct. 2011).
Sandhills Home Care, L.L.C. v. Companion Home Care - Unimed, Inc., 2016 NCBC
LEXIS 61, at **25 (N.C. Super Ct. Aug. 1, 2016).
37. 	The two non-solicitation provisions here state that Vaughn, as an
associate of the Gilliam Agency, agreed
b. Not to directly or indirectly “solicit or service” customers/policyholders
of Nationwide or policyholders of the Agency for a period of one year
following 	the 	termination 	of 	the 	Associate 	Agreement 	(Associate
Agreement § 11); [and]
c. Not 	to 	“interfere 	in 	any 	way” 	with 	existing 	policies 	or
customers/policyholders of Nationwide or serviced by any Nationwide
agencies within 25 miles of the Agency for a period of one year following
the termination of the Associate Agreement (Associate Agreement § 11)
(Verif. Compl. ¶ 19.)
38. 	We have previously stated that “North Carolina’s courts will enforce a
covenant 	prohibiting 	a 	former 	employee 	from 	soliciting 	his 	former 	employer’s
customers even when not tied to a specific geographic region where the terms and
conditions of this contract clause were reasonably necessary to protect the employer’s
legitimate business interests.” Sandhills, 2016 NCBC LEXIS 61, at **25–26 (cleaned
up).
39. 	With regard to subpart c., the Court 	finds that this provision is
impermissibly broad and was not necessary to protect the Gilliam Agency’s legitimate
business interests. The provision forbids contact with any customers/policyholders of

Nationwide, which would encompass even those Nationwide customers who never did
business with the Gilliam Agency. 	The Court therefore concludes that subpart c. is
unenforceable. 	Accordingly, to the extent that Vaughn seeks judgment on the
pleadings as to the portion of MarketPlace’s breach of contract claim based on subpart
c., the Motion is GRANTED.
40. 	Subpart b.—as written—likewise includes customers/policyholders of
Nationwide and, as such, is also overbroad. 	MarketPlace does not seriously contest
this conclusion. 	Instead, it requests that the Court “blue pencil” subpart b. so as to
limit it solely to solicitation of policyholders of the Gilliam Agency—thereby curing
the overbreadth of the provision.
41. 	“[B]lue-penciling is the process by which a court of equity will take notice
of the divisions the parties themselves have made [in a restrictive covenant] and
enforce the restrictions in the territorial divisions deemed reasonable and refuse to
enforce them in the divisions deemed unreasonable.” Beverage Sys. of the Carolinas,
LLC v. Associated Beverage Repair, LLC, 368 N.C. 693, 699 (2016) (cleaned up).
“North Carolina has adopted a ‘strict blue pencil doctrine’ wherein a court cannot
rewrite an unenforceable covenant; instead, to avoid scrapping an entire covenant, a
Court may enforce the divisible parts of a covenant that are reasonable.” 	NFH, Inc.
v. Troutman, 2019 NCBC LEXIS 66, at *33 (N.C. Super. Ct. Oct. 29, 2019) (citing
Bev. Sys. of the Carolinas, 368 N.C. at 696).

42. 	MarketPlace asserts that subpart b. would be fully enforceable if the
Court would strike the words “customers/policyholders of Nationwide or” such that
the revised provision applies solely to “policyholders of the [Gilliam] Agency.”
43. 	It is true that this Court has previously noted that where two clauses in
a restrictive covenant (one enforceable and the other unenforceable) are separated by
the word “or,” the blue pencil doctrine allows a reviewing court to give effect to the
covenant by striking the unenforceable clause. 	See Wells Fargo Ins. Servs. USA v.
Link, 2018 NCBC LEXIS 42, at *24–25 (N.C. Super. Ct. May 8, 2018), aff’d per
curiam, 372 N.C. 260 (2019).
44. 	Here, however, the Court is not comfortable “blue penciling” subpart b.
without being able to review the covenants in their entirety. 	Moreover, the Court’s
analysis on this issue will be guided by information likely to be obtained during
discovery such as the number of employees and policyholders the Gilliam Agency had,
the number of offices it maintained, and other relevant information. Accordingly, the
Court elects to defer a final decision on whether to apply the “blue pencil” doctrine to
subpart b. until a more fully developed factual record exists. 	In the meantime,
however, Vaughn’s Motion is DENIED as to subpart b.1
1 At the 20 December hearing, counsel for MarketPlace acknowledged that the covenants
themselves are not part of the record and that he does not know if any copies of the Agreement
still exist. 	In addition, he candidly conceded that if he is unable to obtain a copy of the
Agreement during discovery, the entry of summary judgment in Vaughn’s favor as to
MarketPlace’s breach of contract claim would be appropriate.

45. 	Finally, MarketPlace also seeks damages for Vaughn’s alleged improper
disclosure of confidential information. 	The provisions of the Agreement that are
pertinent to this argument state that Vaughn promised:
d. To hold in strict confidence any “proprietary information, confidential
information, 	and/or 	trade 	secrets” 	belonging 	to 	the 	Agency 	and
furnished to Vaughn in the scope of his work (Associate Agreement
§ 14); and
e. Not to disclose or utilize any of such information for any purpose other
than 	Nationwide 	or 	the 	Agency’s 	business, 	during 	or 	after 	the
termination of the Associate Agreement (Associate Agreement § 14).
(Verif. Compl. ¶ 19.)
46. 	Based on our prior caselaw, however, it is clear that—by virtue of the
APA—MarketPlace acquired the ability to enforce the Agreement against Vaughn
only as to those rights the Gilliam Agency possessed as of that date. See Artistic S.,
2015 NCBC LEXIS 113, at **17 (“In short Plaintiff could only buy what [the selling
company] could sell—and that only included [the selling company’s rights] at the time
of sale.”). 	This means that MarketPlace is unable to enforce the confidentiality
provisions of the Agreement with regard to confidential information that belonged
solely to MarketPlace (i.e. information that was never possessed by the Gilliam
Agency).
47. 	Thus, to the extent that the Complaint seeks to hold Vaughn liable for
breach of contract based on his disclosure of MarketPlace’s confidential information,
the Motion is GRANTED. However, to the extent that the Complaint seeks to hold
Vaughn liable for breach of contract based on disclosure of the Gilliam Agency’s
confidential information, Vaughn’s Motion is DENIED.

B. Misappropriation of Trade Secrets
48. 	Vaughn also moves for judgment on the pleadings as to MarketPlace’s
claim for misappropriation of trade secrets.
49. 	North Carolina’s Trade Secrets Protection Act (the “Act”) provides that
“[t]he owner of a trade secret shall have a remedy by civil action for misappropriation
of his trade secret.” N.C.G.S. § 66-153 (2021). The Act defines misappropriation as
“acquisition, disclosure or use of a trade secret of another without express or implied
authority 	or 	consent, 	unless 	such 	trade 	secret 	is 	arrived 	at 	by 	independent
development, reverse engineering, or was obtained from another person with a right
to disclose the trade secret.” N.C.G.S. § 66-152(1) (2021).
50. 	Therefore, a threshold question in any action involving such a claim is
whether the information at issue actually constitutes a trade secret under the Act.
Koch Measurement Devices, Inc. v. Armke, 2015 NCBC LEXIS 45, at *10 (N.C. Super.
Ct. May 1, 2015).
51. 	The Act defines a trade secret as follows:
“Trade secret” means business or technical information, including but
not limited to a formula, pattern, program, device, compilation of
information, method, technique, or process that:
a. Derives independent actual or potential commercial value from
not 	being 	generally known 	or readily 	ascertainable through
independent development or reverse engineering by persons who
can obtain economic value from its disclosure or use; and
b. 	Is 	the 	subject 	of 	efforts 	that 	are 	reasonable 	under 	the
circumstances to maintain its secrecy.
N.C.G.S. § 66-152(3).

52. 	Vaughn first argues that MarketPlace has failed to plead the existence
of a trade secret with the particularity required by our caselaw. The Court disagrees.
53. 	As our Supreme Court has held, “[t]o plead misappropriation of trade
secrets, a plaintiff must identify a trade secret with sufficient specificity so as to
enable a defendant to delineate that which he is accused of misappropriating and a
court to determine whether misappropriation has or is threatened to occur.” Krawiec
v. Manly, 370 N.C. 602, 609 (2018).
54. 	In its Complaint, MarketPlace identified its trade secrets as follows:
Plaintiff’s trade secrets include, but are not limited to, documents and
information which specify the insurance policies and financial products
Plaintiff has sold to its customers; the pricing and terms of specific
policies for each of its customers; expiration dates of customer policies;
policy application information; policy renewal information; sales and
account maintenance practices; cost data; sales data; profit and loss
statements; and profit margins.
Additionally, 	Plaintiff 	maintains 	its 	trade 	secrets 	in 	unique
compilations in one or more computer databases. 	These compilations
include the relevant information for each of customers [sic] and their
respective policies. These databases in which Plaintiff maintains its
customer [sic] and other information are protectable trade secrets as
well.
(Verif. Compl. ¶¶ 24–25.)
55. 	Based on our case law, the Court is satisfied that the information
forming the basis for MarketPlace’s claim under the Act has been pled with sufficient
particularity to survive a motion for judgment on the pleadings.
56. 	In making this determination, the Court is guided by its prior decision
in Wells Fargo. 	In Wells Fargo, the plaintiff employer, an insurance broker, sued
several former employees and their new employer alleging, inter alia, that the

employees had misappropriated the plaintiff’s confidential information in order to
solicit its customers and bring them to their new employer. Wells Fargo, 2018 NCBC
LEXIS 42, at *1–8.
57. 	The plaintiff’s complaint described its trade secrets as follows:
[I]nformation concerning Wells Fargo’s customers and the details of
their 	insurance 	needs 	and 	policies, 	including 	but 	not 	limited 	to,
customer 	policies, 	insurance 	application 	information, 	policy 	cost
information, payment information, profit loss statements, insurance
schedules, certificate of holder lists, underwriting information, detailed
customer information, detailed employee information, detailed property
information, 	customer 	financial 	information, 	expiration 	dates 	of
insurance policies and insurance daily reports.
. . .
The books, files, electronic data, and all other records of Wells Fargo,
the confidential information contained in [the records], and especially
the data pertaining to Wells Fargo customers, such as customers’ names
and addresses, as well as additional information such as customers’
social security numbers, account numbers, financial status, and other
highly confidential personal and financial information[.]
. . .
[T]he names, addresses, and contact information of the Company’s
customers and prospective customers, as well as any other personal or
financial information relating to any customer or prospect, including,
without limitation, account numbers, balances, portfolios, maturity
and/or expiration or renewal dates, loans, policies, investment activities,
purchasing practices, insurance, annuity policies and objectives[.]
Id. at *35–36.
58. 	In analyzing whether this information was sufficient to constitute a
trade secret under the TSPA, we held the following:
Within these sprawling lists, there are particular pieces of information
that might constitute trade secrets, including: “insurance application

information, policy cost information, payment information, profit loss
statements, 	insurance 	schedules, 	certificate 	of 	holder 	lists, 	[and]
underwriting information”; “expiration dates of insurance policies and
insurance daily reports”; “customers’ social security numbers, account
numbers, [and] financial status”; and “maturity and/or expiration or
renewal dates, loans, . . . investment activities, purchasing practices,
[and], annuity policies and objectives.” (Id.) In addition, while not
expressly pleaded, this information, if compiled in a database or other
form for each of Plaintiff’s customers, might also constitute a trade
secret. 	This Court has held that “where an individual maintains a
compilation of detailed records over a significant period of time,” such
that they have particular value as a compilation or manipulation of
information, “those records could constitute a trade secret even if
‘similar information may have been ascertainable by anyone in the . . .
business.’ ” 	Koch Measurement Devices, Inc. v. Armke, 2015 NCBC
LEXIS 45, at *13 (N.C. Super. Ct. May 1, 2015) (quoting Byrd’s Lawn &
Landscaping, Inc. v. Smith, 142 N.C. App. 371, 376, 542 S.E.2d 689, 692
(2001)). See also, State ex rel. Utils. Comm’n v. MCI Telecomms., Corp.,
132 N.C. App. 625, 634, 514 S.E.2d 276, 282 (1999) (concluding that a
“compilation of information” involving customer data and business
operations which has “actual or potential commercial value from not
being generally known” is sufficient to constitute a trade secret under
the NCTSPA); RoundPoint Mortg. Co. v. Florez, 2016 NCBC LEXIS 18,
at *31-32 (N.C. Super. Ct. Feb. 18, 2016); Red Valve v. Titan Valve, 2018
NCBC LEXIS 41, at *27 (N.C. Super. Ct. Apr. 17, 2018) (citing Koch,
Byrd’s, and RoundPoint).
Id. at *37–38.
59. 	Although admittedly the allegations in Wells Fargo contained greater
detail than those set out in MarketPlace’s Complaint, the Court is unable to conclude
that the allegations presently before the Court are insufficient to survive Rule 12
scrutiny. See, e.g., Am. Air. Filter Co. v. Price, 2018 NCBC LEXIS 73, at *19–20 (N.C.
Super. Ct. July 10, 2018) (“This Court has held that where an individual maintains a
compilation of detailed records over a significant period of time, such that they have
particular value as a compilation or manipulation of information, those records could

constitute a trade secret even if similar information may have been ascertainable by
anyone in the business.”) (cleaned up).
60. 	Vaughn also argues that the Complaint does not contain sufficient
allegations of reasonable measures taken by MarketPlace to protect this information
as is required in order to state a valid claim under the Act. 	See BIOMILQ, Inc. v.
Guiliano, 2023 NCBC LEXIS 24, at **20 (N.C. Super. Ct. Feb. 10, 2023) (“North
Carolina law is clear that to state a claim for misappropriation of trade secrets, a
plaintiff must allege that the trade secret information is subject to reasonable efforts
to maintain its secrecy.”).
61. 	Claims under the Act, however, are subject to dismissal on this basis at
the pleadings stage only where the complaint contains virtually no allegations at all
of such protective measures. See, e.g., BIOMILQ, 2023 NCBC LEXIS 24, at **20–24
(“While [Plaintiff] alleges its security measures generally, it does not allege measures
taken to maintain the secrecy of the trade secrets at issue in the Notebook, or what
its security practices were for notebooks currently in use[.]”). 	Here, MarketPlace
alleges that it took the following measures to protect its trade secrets:
Plaintiff password-protects its computer systems, limits access to trade
secret files to employees with a demonstrated need to access such
information for their job functions, and maintains policies for document
retention and destruction to minimize copies of trade secrets.
(Verif. Compl. ¶ 28.)
62. 	The Court concludes that these allegations are sufficient to allow this
claim to go forward. 	See Bldg. Ctr., Inc. v. Carter Lumber Inc., 2016 NCBC LEXIS
79, at *13–14 (N.C. Super. Ct. Oct. 21, 2016) (holding that the plaintiff had alleged

sufficient reasonable measures when it cited “security measures, including but not
limited to password-protected login, controlled and permission-restricted access on a
need-to-know basis, and confidentiality policies and/or agreements”).
63. 	Finally, Vaughn contends that the Complaint fails to allege that the
trade 	secrets 	at 	issue 	were 	actually 	misappropriated. 	But 	in 	its 	Complaint
MarketPlace asserts that Vaughn, improperly using his continued access to the
Vertafore QQ system, “viewed, copied, or extracted confidential and trade secret
customer and policy data.” (Verif. Compl. ¶ 72.) Such conduct, if proven, would fall
squarely within the scope of “acquisition, disclosure or use” that our General Statutes
define as misappropriation of a trade secret. N.C.G.S. § 66-152(1); see also Mech Sys.
& Servs. v. Howard, 2021 NCBC LEXIS 69, at *7 (N.C. Super. Ct. Aug. 11, 2021)
(“The allegations of misappropriation are also adequate. . . . Here, [Defendant]
allegedly accessed [Plaintiff’s] trade secrets after deciding to join a competitor, kept
them in his possession after resigning, and then used them to solicit [Plaintiff’s]
customers on behalf of his new employer.”).
64. 	The Court therefore concludes that Vaughn’s Motion is DENIED as to
MarketPlace’s misappropriation of trade secrets claim.
C. Computer Trespass
65. 	In 	addition, 	Vaughn 	seeks 	judgment 	on 	the 	pleadings 	as 	to
MarketPlace’s claim for computer trespass.
66. 	N.C.G.S. § 14-458(a) states, in pertinent part, as follows:

(a) Except as otherwise made unlawful by this Article, it shall be
unlawful for any person to use a computer or computer network without
authority and with the intent to do any of the following:
(1) 	Temporarily 	or 	permanently 	remove, 	halt, 	or 	otherwise
disable any computer data, computer programs, or computer
software from a computer or computer network.
(2) Cause a computer to malfunction, regardless of how long the
malfunction persists.
(3) Alter or erase any computer data, computer programs, or
computer software.
(4) Cause physical injury to the property of another.
(5) Make or cause to be made an unauthorized copy, in any form,
including, but not limited to, any printed or electronic form of
computer 	data, 	computer 	programs, 	or 	computer 	software
residing in, communicated by, or produced by a computer or
computer network.
(6) Falsely identify with the intent to deceive or defraud the
recipient 	or 	forge 	commercial 	electronic 	mail 	transmission
information 	or other routing 	information in 	any 	manner in
connection with the transmission of unsolicited bulk commercial
electronic mail through or into the computer network of an
electronic mail service provider or its subscribers.
N.C.G.S. § 14-458(a) (2021).
67. 	For purpose of this statute, the phrase “without authority” means, inter
alia, “when . . . the person has no right or permission of the owner to use a computer,
or the person uses a computer in a manner exceeding the right or permission[.]” Id.
68. 	Section 14-458 provides for both civil and criminal liability against
persons who engage in the conduct prohibited by the statute. Id. § 14-458(b)–(c).

69. 	In his Motion, Vaughn acknowledges that MarketPlace has alleged that
his accessing of its computerized database was unauthorized but asserts that
MarketPlace has failed to allege he acted with intent. The Court is unpersuaded.
70. 	The Complaint is replete with allegations of intentional acts by Vaughn
as part of a scheme on his part to use MarketPlace’s computer systems in order to
gain unauthorized access to customer information for the purpose of obtaining
additional clients for Guidelight at the expense of MarketPlace. 	Taken as a whole,
the allegations in the Complaint allow for no other rational inference than that
Vaughn’s allegedly unlawful actions were intentional.
71. 	Vaughn’s Motion for Judgment on the Pleadings as to MarketPlace’s
computer trespass claim is therefore DENIED.
D. Tortious Interference with Contract
72. 	Our Supreme Court has articulated the following elements of a tortious
interference with contract claim:
(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.
United Labs., Inc. v. Kuykendall, 322 N.C. 643, 661 (1988).
73. 	Vaughn makes two arguments as to why judgment on the pleadings is
proper as to this claim. First, he contends that the Complaint contains no allegations
that any MarketPlace customers or policyholders actually breached their contracts
with MarketPlace.

74. 	This 	argument, 	however, 	rests 	upon 	a 	misapprehension 	of 	North
Carolina law. A plaintiff asserting this claim is not required to allege, or prove, that
the defendant’s acts actually caused a third party to breach its contract with the
plaintiff. 	Instead, a plaintiff must merely show that the defendant wrongfully
interfered with such a contract. 	See Lexington Homes, Inc. v. W.E. Tyson Builders,
Inc., 75 N.C. App. 404, 411 (1985) (“[The plaintiff] does not have to prove that [the
defendant] caused [the third party] to breach its contract with [the plaintiff], because
its claim is only that [the defendant] wrongfully interfered with [the plaintiff’s] rights
under the contract.”).
75. 	Here, the Complaint alleges that Vaughn improperly interfered with the
contractual relationship between MarketPlace and several of its customers. 	For
example, MarketPlace alleges that Vaughn submitted an AOR form requesting a
change in agency on behalf of Debra Ledford without Ledford’s consent, used
MarketPlace’s confidential customer information about Amanda Beavers in order to
solicit her to move her business away from MarketPlace, and falsely told MarketPlace
customers that MarketPlace was withholding their customer information. 	(Verif.
Compl. ¶¶ 50–51, 56–61, 86.) 	The Court concludes that these allegations are
sufficient.
76. 	Vaughn’s remaining argument is that MarketPlace fails to allege that
Vaughn acted without “justification.” 	Moreover, he asserts that all of his actions
were, in fact, justified because at all relevant times he was acting as a business
competitor of MarketPlace.

77. 	This 	Court 	has 	previously 	stated 	the 	following 	regarding 	the
justification element of a tortious interference claim:
“A motion to dismiss a claim of tortious interference is properly granted
where the complaint shows the interference was justified[.]” Pinewood
Homes, Inc. v. Harris, 184 N.C. App. 597, 605 (2007) (citing Peoples Sec.
Life Ins. Co. v. Hooks, 322 N.C. 216, 220 (1988)). 	“The interference is
‘without justification’ if the defendants’ motives . . . were ‘not reasonably
related 	to 	the 	protection 	of 	a 	legitimate 	business 	interest’ of 	the
defendant.” 	Privette v. Univ. North Carolina, 96 N.C. App. 124, 134
(1989) (quoting Smith v. Ford Motor Co., 289 N.C. 71, 94 (1976)).
Avadim Health, Inc. v. Harkey, 2021 NCBC LEXIS 104 , at **18 (N.C. Super. Ct. Nov.
30, 2021).
78. 	It is true that “North Carolina’s case law paints a less-than-clear picture
of when a defendant’s interference is justified by a legitimate business interest.”
K&M Collision, LLC v. N.C. Farm Bureau Mut. Ins. Co., 2017 NCBC LEXIS 109, at
*21 (N.C. Super. Ct. Nov. 21, 2017). 	“A plaintiff [in a tortious interference claim]
must plead legal malice, which is just another way of saying ‘the intentional doing of
the harmful act without legal justification.’ ” Lunsford v. ViaOne Servs., LLC, 2020
NCBC LEXIS 111, at *14 (N.C. Super Ct. Sept. 28, 2020) (quoting Childress v. Abeles,
240 N.C. 667, 675 (1954).
79. 	However, 	this 	Court 	has 	recently 	emphasized 	that 	the 	“without
justification” 	element 	of 	a 	tortious 	interference 	claim 	is 	satisfied 	where 	the
defendant’s conduct involved the use of unlawful means. 	See, e.g., Mech. Sys., 2021
NCBC LEXIS 69, at *13 (“It is true that competition in business constitutes
justifiable interference in another’s business relations and is not actionable so long
as it is carried on in furtherance of one’s own interests and by means that are lawful.

. . . . But the amended complaint alleges that the means of competition used by
[Defendants]—misappropriation of trade secrets, for example—were not lawful. This
is sufficient to allege a lack of justification.”) (cleaned up).
80. 	This 	limitation 	on 	a 	defendant’s 	ability 	to 	assert 	justification 	is
eminently logical. 	After all, if a defendant could automatically escape liability on a
tortious interference claim simply by claiming that it was engaged in a competitive
relationship with the plaintiff during the time period referenced in the complaint,
then it would be virtually impossible for a plaintiff to ever succeed on a tortious
interference claim in this context.
81. 	In this case, the Complaint alleges that the means used by Vaughn to
“compete” 	with 	MarketPlace 	were 	unlawful: 	Vaughn, 	among 	other 	things,
misappropriated 	MarketPlace’s 	trade 	secrets 	by 	accessing 	them 	without
permission—committing computer trespass in the process—and used MarketPlace’s
confidential information in attempts to persuade customers to leave MarketPlace and
take their business to Guidelight.
82. 	The Court therefore DENIES Vaughn’s Motion as to MarketPlace’s
claim for tortious interference with contract.
E. Tortious Interference with Prospective Economic Advantage
83. 	Vaughn also seeks judgment on the pleadings as to MarketPlace’s claim
against him for tortious interference with prospective economic advantage. Vaughn
argues that because the Complaint fails to allege the loss of any specific contractual
opportunity, dismissal of this claim is proper. The Court agrees.

84. 	“To state a claim for tortious interference with prospective economic
advantage, a plaintiff must show that the defendant, without justification, induced a
third party to refrain from entering into a contract with the plaintiff and which would
have been entered into absent the defendant’s interference.” 	Silverdeer, LLC v.
Berton, 2013 NCBC LEXIS 21, at **31 (N.C. Super. Ct. Apr. 24, 2013). Our Supreme
Court has held that a plaintiff must identify a specific contractual opportunity that
was lost as a result of the defendant’s allegedly tortious conduct in order to sustain a
claim for interference with prospective economic advantage. See Beverage Sys. of the
Carolinas, 368 N.C. at 701 (“[A] plaintiff must produce evidence that a contract would
have resulted but for a defendant’s malicious intervention.”); see also Bldg. Ctr., 2016
NCBC LEXIS 79, at *29 (“Plaintiff alleges only that it ‘reasonably expected that, but
for [Defendants’] conduct, its business relationships with its customers would have
continued and grown.’ 	The Complaint does not identify any particular prospective
contracts with which Defendants interfered, nor does it expressly allege that any
contract would have ensued.”).
85. 	Vaughn argues that the Complaint in this case is devoid of any reference
to specific contracts that would have resulted but for his alleged tortious conduct. At
the 20 December hearing, counsel for MarketPlace conceded both that such a
pleading requirement exists under North Carolina law for this claim and that the
Complaint lacks sufficient allegations to go forward. 	Accordingly, Vaughn’s Motion
for Judgment on the Pleadings is GRANTED, and MarketPlace’s claim for tortious

interference 	with 	prospective 	economic 	advantage 	is 	DISMISSED 	without
prejudice.2
F. UDTP
86. 	Finally, Vaughn seeks judgment on the pleadings as to MarketPlace’s
claim for UDTP.
87. 	We have previously stated that
Chapter 75 of the North Carolina General Statutes [the “UDTPA”]
provides, in pertinent part, that “[u]nfair methods of competition in or
affecting commerce, and unfair or deceptive acts or practices in or
affecting commerce, are declared unlawful. For purposes of this section,
‘commerce’ includes all business activities, however denominated, but
does not include professional services rendered by a member of a learned
profession.” N.C.G.S. § 75-1.1(a)-(b) (2019). Therefore, “[t]o successfully
state a claim under [the UDTPA]. . . a plaintiff must allege (1) an unfair
or deceptive act or practice, or an unfair method of competition, (2) in or
affecting commerce, (3) which proximately caused actual injury to the
plaintiff or to his business.” Window World of N. Atlanta, Inc. v. Window
World, Inc., 2018 NCBC LEXIS 111, at *14–15 (N.C. Super. Ct. Oct. 22,
2018) (cleaned up).
Poluka v. Willette, 2021 NCBC LEXIS 105, at **13 (N.C. Super Ct. Dec. 2, 2021).
88. 	Vaughn argues that he is entitled to judgment on the pleadings as to
MarketPlace’s UDTP claim because there is no conduct by him alleged in the
Complaint that constitutes a violation of the UDTPA. However, this contention lacks
merit.
89. 	Most basically, this Court has held that the existence of valid underlying
claims for misappropriation of trade secrets or tortious interference with contract is
2 “The decision whether to dismiss a claim with or without prejudice is one vested in the
sound discretion of the trial court.” Miriam Equities, LLC v. LB-UBS 2007-C2 Millstream
Road, LLC, 2020 NCBC LEXIS 2, at **6 (N.C. Super Ct. Jan. 9, 2020).

sufficient to give rise to liability on a UDTP theory. See, e.g., Power Home Solar, LLC
v. Sigora Solar, LLC, 2021 NCBC LEXIS 55, at *51 (N.C. Super. Ct. June 18, 2021)
(“Our Courts have long recognized that claims for misappropriation of trade secrets
and tortious interference with contract may form the basis of a UDTPA claim.”)
(cleaned up). Therefore, at a minimum, MarketPlace has stated a valid UDTP claim
based on the Court’s rulings set out above with regard to those claims.3 As a result,
Vaughn’s Motion for Judgment on the Pleadings as to MarketPlace’s UDTP claim is
DENIED.
II. 	Guidelight’s Motion for Judgment on the Pleadings
90. 	Guidelight seeks judgment on the pleadings on all claims raised against
it. The Complaint asserts the following claims against Guidelight: misappropriation
of trade secrets; computer trespass; tortious interference with contract; tortious
interference with prospective economic advantage; and UDTP. 	As discussed more
fully below, all of these claims are based—at least in part—on a theory of vicarious
liability for the conduct of Vaughn. 	In addition, however, MarketPlace has also
asserted direct claims against Guidelight for tortious interference with contract and
tortious interference with prospective economic advantage.
A. Tortious Interference with Contract
i. 	Direct Claim
3 Therefore, the Court need not—and does not—consider whether any of MarketPlace’s
additional allegations in the Complaint of conduct by Vaughn are likewise sufficient to
support a UDTP claim.

91. 	Guidelight 	argues 	that 	MarketPlace’s 	direct 	claim 	for 	tortious
interference with contract against it fails to plead any actual inducement by
Guidelight (as opposed to inducement by Vaughn) and that for this reason the claim
fails as a matter of law. 	The Court agrees. 	As noted earlier, the elements for this
claim are as follows:
(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.
United Labs, 322 N.C. at 661.
92. 	When examining the inducement element at the Rule 12 stage, this
Court has previously held that “[t]o sufficiently plead inducement, there must be
allegations of purposeful conduct, active persuasion, request, or petition.” 	Se.
Anesthesiology 	Consultants, 	PLLC 	v. 	Charlotte-Mecklenburg 	Hosp. 	Auth., 	2019
NCBC LEXIS 107, at *19 (N.C. Super. Ct. Dec. 13, 2019) (cleaned up).
93. 	Here, as conceded by counsel for MarketPlace at the 20 December
hearing, the Complaint contains no such allegations against anyone other than
Vaughn himself as Vaughn is the only employee or representative at Guidelight
alleged to have made any contact with MarketPlace’s customers.
94. 	The Court therefore GRANTS Guidelight’s Motion for Judgment on the
Pleadings 	as 	to 	MarketPlace’s 	direct 	claim 	against 	Guidelight 	for 	tortious
interference with contract, and this claim is DISMISSED with prejudice.
ii. 	Vicarious Liability Claim

95. 	The 	Court 	reaches 	a 	different 	result, 	however, 	with 	regard 	to
MarketPlace’s tortious interference with contract claim against Guidelight premised
upon a theory of vicarious liability. 	As discussed above, the Court has refused to
enter judgment on the pleadings on MarketPlace’s claim against Vaughn for tortious
interference with contract. 	Therefore, the question that remains is whether the
Complaint sufficiently alleges a claim against Guidelight on a theory of vicarious
liability.
96. 	“Generally, liability of a principal for the torts of his agent may arise in
three situations: (1) when the agent’s act is expressly authorized by the principal; (2)
when the agent’s act is ratified by the principal; or (3) when the agent’s act is
committed within the scope of his employment and in furtherance of the principal’s
business.” Creel v. N.C. HHS, 152 N.C. App. 200, 202 (2002) (citing Hogan v. Forsyth
Country Club Co., 79 N.C. App. 483, 491 (1986), disc. rev. denied, 317 N.C. 334
(1986)).
97. 	In order to prove “ratification, the plaintiff[] must show that the
principal had knowledge of all material facts and circumstances relative to the
wrongful act, and that the principal, by words or conduct, showed an intention to
ratify the act. 	Ratification may be express or implied, and intent may be inferred
from failure to repudiate an unauthorized act.” Walker v. Sloan, 137 N.C. App. 387,
397 (2000) (cleaned up).
98. 	Although an employer’s alleged ratification of an employee’s tortious
conduct 	is 	typically 	pled 	by 	inference 	based 	on 	circumstantial 	evidence,

MarketPlace’s ratification allegations here are more tangible. 	Specifically, the
Complaint alleges that a former colleague of Vaughn’s at Guidelight, Ian Buchanan,
affirmatively told his supervisor, Regina Hensley, of his suspicions about Vaughn’s
actions.
99. 	Moreover, 	the 	Complaint 	asserts 	that 	after 	Hensley 	reported
Buchanan’s concerns to Trent, Guidelight did nothing “to prevent Vaughn from
stealing Plaintiff’s customers.” 	(Verif. Compl. ¶ 76.) 	MarketPlace further alleges
that Buchanan discovered subsequent evidence on Guidelight’s computer system that
a profile for a MarketPlace customer, Debra Ledford, had been created based on
information from Guidelight’s Vertafore system. 	Buchanan, who believed such acts
by Vaughn to have been illegal, reported Vaughn’s conduct once again to Hensley,
who then shared the information with Trent. 	According to the Complaint, rather
than 	taking 	any 	action 	against 	Vaughn, 	Trent 	or 	Hensley 	instead 	instructed
Buchanan to “stay in his lane.” 	(Verif. Compl. ¶ 76.) 	Shortly afterward, Buchanan
was allegedly terminated by Guidelight for “not being a team player.” (Verif. Compl.
¶ 76.)
100. 	These allegations of ratification easily suffice to overcome Guidelight’s
Rule 12 Motion. The Court therefore DENIES Guidelight’s Motion for Judgment on
the Pleadings as to the claim for tortious interference with contract based on a theory
of vicarious liability.4
4 Guidelight also makes the same justification argument asserted by Vaughn, which the
Court has rejected.

B. Tortious Interference with Prospective Economic Advantage
i. 	Direct Claim
101. 	As with MarketPlace’s claim for tortious interference with prospective
economic advantage claim against Vaughn, MarketPlace’s similar claim against
Guidelight fails to allege the essential elements of this cause of action. Specifically,
the Complaint does not sufficiently allege “that [Guidelight], without justification,
induced a third party to refrain from entering into a contract with [MarketPlace] and
which 	would 	have 	been 	entered 	into 	absent 	[Guidelight’s] 	interference.” 	See
Silverdeer, 2013 NCBC LEXIS 21, at **31. 	MarketPlace has failed to identify any
specific prospective contractual opportunity that was lost as a result of Guidelight’s
interference. 	Therefore, Guidelight’s Motion for Judgment on the Pleadings as to
MarketPlace’s direct claim against it for tortious interference with prospective
economic advantage is GRANTED, and that claim is DISMISSED with prejudice.
ii. 	Vicarious Liability
102. 	Judgment on the pleadings is likewise proper as to MarketPlace’s
tortious interference with prospective economic advantage claim against Guidelight
premised on a theory of vicarious liability.
103. 	It is axiomatic that when a court dismisses the underlying tort claim
upon which a vicarious liability claim is based, the claim for vicarious liability must
be dismissed as well. See, e.g., Berkeley Fed. Sav. & Loan Ass’n v. Terra Del Sol, 111
N.C. App. 692, 708 1993) (“[The claims] for vicarious liability necessarily fail since
the underlying causes of action . . . fail.”).

104. 	Here, as discussed above, the Court has dismissed without prejudice
MarketPlace’s claim against Vaughn for tortious interference with prospective
economic advantage. 	Accordingly, Guidelight’s Motion as to the claim against it for
tortious interference with prospective economic advantage based on vicarious liability
is similarly GRANTED, and this claim is DISMISSED without prejudice.
C. UDTP (Vicarious Liability)
105. 	The Court rejects Guidelight’s argument seeking judgment on the
pleadings as to the UDTP claim asserted against it. As discussed above, MarketPlace
has pled a valid claim for UDTP against Vaughn, and the Complaint sufficiently
alleges that Guidelight ratified Vaughn’s conduct.
106. 	Guidelight does not dispute the fact that liability can exist for UDTP on
a theory of vicarious liability. See, e.g., White v. Consol. Planning, Inc., 166 N.C. App.
283, 300 (2004) (“A jury could find, on the basis of this evidence, that [the employee]
was acting within the scope of his employment or authority and [his employer] was,
as a result, liable for [the employee’s] fraud, conversion, and unfair and deceptive
trade practices.” (emphasis added)), disc rev. denied, 359 N.C. 286 (2005).
107. 	The Court therefore DENIES Guidelight’s Motion as to MarketPlace’s
UDTP claim.
D. Misappropriation of Trade Secrets (Vicarious Liability)
108. 	Guidelight 	also 	seeks 	judgment 	on 	the 	pleadings 	with 	regard 	to
MarketPlace’s misappropriation of trade secrets claim, which was asserted against
Guidelight solely under the theory of vicarious liability. Guidelight argues that North

Carolina law does not permit vicarious liability principles to be applied to statutory
claims (such as a claim under the Trade Secrets Protection Act) absent express
authorization from our General Assembly.
109. 	A prior opinion from this Court suggests that misappropriation of trade
secrets claims based on a theory of vicarious liability are recognized in this State. In
Salon Blu, Inc. v. Salon Lofts Grp., LLC, 2018 NCBC LEXIS 72 (N.C. Super. Ct. July
16, 2018), this Court stated the following with regard to such a claim:
Salon Blu, however, has not alleged facts that would support an
allegation that Salon Lofts is vicariously liable for the acts of Salon Blu’s
former stylists. Salon Blu concedes that Salon Lofts does not employ the
former Salon Blu stylists at issue; the former stylists are instead tenants
who rent space from Lofts. (ECF No. 30, at ¶ 16); see Gordon v. Garner,
127 N.C. App. 649, 658, 493 S.E.2d 58, 63 (1997) (“Under the doctrine of
respondeat superior, for one defendant to be held vicariously liable for
the actions of another, an employer-employee relationship must exist
between the two.”). There is also no allegation that the former stylists
were agents of Salon Lofts. 	Therefore, any attempt by Salon Blu to
attribute the conduct of its former stylists to Salon Lofts must fail.
Id. at *17.
110. 	Thus, although our opinion in Salon Blu dismissed the vicarious liability
claim based on the facts of that case, it implicitly recognized that such a claim could
exist—given the existence of sufficient factual support.
111. 	A federal court applying North Carolina law has expressly held that
such a claim is proper, stating the following:
Because corporations, and other legal entities, only have knowledge
through [their] agents and can only act through [their] agents, the
NCTSPA 	cannot 	be 	construed 	to 	disallow 	liability 	under 	agency
princip[les]. “[A] corporation is liable civil[ly] for torts committed by its
servants or agents precisely as a natural person. 	Though it may have
no mind with which to plot a wrong or hands capable of doing an injury,

yet it may employ the minds and hands of others.” 	Dickerson v. Atl.
Refining Co., 201 N.C. 90, 99, 159 S.E. 446, 452 (1931); see Woodson v.
Rowland, 329 N.C. 330, 344, 407 S.E.2d 222, 231 (1991) (“A corporation
can act only through its agents . . . .”); Sledge Lumber Corp. v. S.
Builders 	Equip. 	Co., 	257 	N.C. 	435, 	439, 	126 	S.E.2d 	97, 	100
(1962) (holding that executives’ position “was such that his acts and
knowledge would be the acts and knowledge of the corporation which
can act only through its agents”); see also St. Paul Mercury Ins. Co. v.
Am. Bank Holdings, Inc., 819 F.3d 728, 734 (4th Cir. 2016) (“Because a
corporation is a fiction that can have knowledge only through its agents,
knowledge 	of 	an 	agent 	acquired 	within 	the 	scope 	of 	the 	agency
relationship 	is 	imputable 	to 	the 	corporation.” (applying 	Maryland
law)). Construing [the] NCTSPA to preclude the application of agency
theory 	would 	shield 	legal 	entities 	such 	as 	limited 	liability
companies and corporations from liability under the NCTSPA. This is
inconsistent with the language of the NCTSPA, which defines person to
include a “corporation . . . or any other legal or commercial entity.” N.C.
Gen. Stat. § 66-152(2). 	North Carolina appellate courts have also
affirmed rulings holding corporations and limited liability companies
liable under [the] NCTSPA for the acts of their employee agents. 	For
example, the North Carolina Court of Appeals affirmed a claim against
a limited liability company where the trial court sitting as fact finder
found that defendant’s employees “knew of [Plaintiff’s] trade secrets and
had access to them, and each had the opportunity to acquire them for
disclosure and use.” Sunbelt Rentals, Inc. v. Head & Engquist Equip.,
LLC., 	174 	N.C. 	App. 	49, 	57-58, 	620 	S.E.2d 	222, 	229
(2005). 	Therefore, the NCTSPA does permit liability based upon an
agency theory, and the jury instructions as a whole adequately state the
controlling law on this matter.
Legacy Data Access, LLC v. Mediquant, Inc., 2017 U.S. Dist. LEXIS 198817, at *25–
26 (W.D.N.C. Dec. 4, 2017).
112. 	Courts in other states interpreting analogous trade secret statutes have
reached a similar conclusion. 	See, e.g., Newport News Indus. v. Dynamite Testing,
130 F. Supp.2d 745, 751 (E.D. Va. 2001) (“[N]othing in the statute precludes liability
for the employer due to the misconduct or bad faith of his employee conducted for the
employer’s benefit. Respondeat superior liability simply does not change the nature
of the prohibited conduct in the [statute].”); Hagen v. Burmeister & Assocs., Inc., 1999

Minn. App. LEXIS 85, at *9–10 (Minn. App. Jan. 26, 1999) (applying respondeat
superior to a misappropriation of trade secrets claim because the doctrine “applies to
common law torts and a wide range of federal statutory wrongs” and “[t]he same
principles that support extension of the respondeat superior doctrine in federal law
apply to violations of state statutes . . . Logically, the general rule for vicarious
liability should apply to trade secrets torts that an agent commits in the course and
within the scope of the agency which are not for a purpose personal to the agent.”).
113. 	The Court agrees with the reasoning set out in these cases and is
satisfied that the public policy underlying North Carolina’s Act supports extending
liability to an employer in cases where (as has been alleged here) it has ratified acts
of wrongful misappropriation by its employee.
114. 	Nor has the Court identified any decision from our Supreme Court that
would prohibit the application of vicarious liability principles to this statute. Indeed,
to the contrary, the Supreme Court—albeit in a different context—has recognized the
continuing validity of common law remedies where a statute does not contain
language suggesting an intent to preclude them. See Amos v. Oakdale Knitting Co.,
331 N.C. 348, 358 (1992) (“In determining whether the state legislature intended to
preclude common law actions, [courts] first look to the words of the statute to see if
the legislature expressly precluded common law remedies. The Wage and Hour Act,
unlike the Workers’ Compensation Act, does not expressly preclude common law
remedies. . . . Because the legislature did not expressly preclude common law
remedies, we look to the purpose and spirit of the statute and what the enactment

sought to accomplish, considering both the history and circumstances surrounding
the legislation and the reason for its enactment.”) (cleaned up).
115. 	Similarly, 	nothing 	in 	the 	text 	of 	North 	Carolina’s 	Trade 	Secrets
Protection Act suggests an intent by our General Assembly to preclude liability based
on common law principles such as the doctrine of respondeat superior. Moreover, as
noted above, allowing vicarious liability in appropriate cases is perfectly consistent
with the purpose of the Act. 	Indeed, it would make little sense to avoid holding
accountable employers who ratify their employees’ unlawful misappropriation of
another company’s trade secrets.
116. 	For 	all 	of 	these 	reasons, 	Guidelight’s 	Motion 	is 	DENIED 	as 	to
MarketPlace’s misappropriation of trade secrets claim against it.
E. Computer Trespass (Vicarious Liability)
117. 	The Court declines, however, to recognize a vicarious liability claim for
computer trespass.
118. 	Although it also provides for civil liability, N.C.G.S. § 14-458 is a
criminal statute that authorizes specified criminal penalties against violators. 	See,
e.g., N.C.G.S. § 14-458(b). 	The statute also contains a scienter requirement. 	See
N.C.G.S. § 14-458(a).
119. 	Moreover, the statutory text suggests a legislative intent to limit civil
liability to a specific class of defendants—namely, those persons who intentionally
violate one or more of the enumerated statutory provisions. See N.C.G.S. § 14-458(a)
(“[I]t shall be unlawful for any person to use a computer or computer network without

authority and with the intent to do any of the following[.]”); see also Doe v. Dartmouth-
Hitchcock Med. Ctr., 2001 U.S. Dist. LEXIS 10704, at *12–16 (D.N.H. July 19, 2001)
(declining to apply vicarious liability to the federal Computer Fraud and Abuse Act
(“CFAA”) because it is “essentially a criminal statute” that created a “limited private
of right of action,” which was confined to liability “against the violator” and because
the CFAA’s primary purpose was to “deter and punish those who intentionally access
computer files and systems without authority and cause harm,” rather than the
improper use of any information accessed therein).
120. 	The Court therefore GRANTS Guidelight’s Motion for Judgment on the
Pleadings 	as 	to 	MarketPlace’s 	computer 	trespass 	claim, 	and 	that 	claim 	is
DISMISSED with prejudice.
CONCLUSION
THEREFORE, IT IS ORDERED as follows:
1. 	Vaughn’s Motion for Judgment on the Pleadings is GRANTED, in part, and
DENIED, in part, as follows:
a. 	Vaughn’s Motion for Judgment on the Pleadings as to MarketPlace’s
breach of contract claim against him is GRANTED, in part, and
DENIED, in part.
b. 	Vaughn’s Motion for Judgment on the Pleadings is GRANTED as to
MarketPlace’s 	claim 	against 	him 	for 	tortious 	interference 	with
prospective 	economic 	advantage, 	and 	that 	claim 	is 	DISMISSED
without prejudice.

c. 	Vaughn’s Motion for Judgment on the Pleadings is otherwise DENIED.
2. 	Guidelight’s Motion for Judgment on the Pleadings is GRANTED, in part, and
DENIED, in part, as follows:
a. 	Guidelight’s Motion for Judgment on the Pleadings as to MarketPlace’s
direct 	claims 	against 	it 	for 	tortious 	interference 	with 	prospective
economic 	advantage 	and 	tortious 	interference 	with 	contract 	is
GRANTED, and those claims are DISMISSED with prejudice.
b. 	Guidelight’s Motion for Judgment on the Pleadings is GRANTED as to
MarketPlace’s vicarious liability claim against Guidelight for tortious
interference with prospective economic advantage, and that claim is
DISMISSED without prejudice.
c. 	Guidelight’s Motion for Judgment on the Pleadings is DENIED as to
MarketPlace’s 	vicarious 	liability 	claims 	against 	it 	for 	tortious
interference 	with 	contract, 	UDTP, 	and 	misappropriation 	of 	trade
secrets.
d. 	Guidelight’s Motion for Judgment on the Pleadings is GRANTED as to
MarketPlace’s vicarious liability claim against it for computer trespass,
and that claim is DISMISSED with prejudice.
SO ORDERED, this the 24th day of February, 2023.
/s/ Mark A. Davis
Mark A. Davis
Special Superior Court Judge for
Complex Business Cases