Contract – Unfair Trade Practices Claim – Mere Breach – Anti-Competition – Windows & Doors Installer

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Thompson Installations, Inc. v. Stock Building Supply, LLC (Lawyers Weekly No. 12-15-0235, 12 pp.) (John R. Jolly Jr., Ch.J.) 2012 NCBC 12

Holding: Plaintiff alleges that, despite the non-exclusive nature of the parties’ contract, defendant tried to prevent plaintiff from accepting jobs from defendant’s competitors. This is not a sufficient aggravating circumstance to raise plaintiff’s breach of contract claim to the level of an unfair trade practices claim.

The court grants defendant’s motion for judgment on the pleadings on plaintiff’s unfair trade practices claim.

The parties entered into a contract pursuant to which plaintiff agreed to act as an independent contractor for the installation of doors and windows supplied by defendant. Either party was permitted to enter into similar agreements with competitors of the other party. The contract was terminable on a job-by-job basis.

After entering into the contract, defendant’s employees and agents told plaintiff that it was not permitted to work for defendant’s competitors. Defendant told plaintiff that the contract would be terminated if plaintiff performed work for defendant’s competitors.

Plaintiff contends that defendant’s use of “threats and coercive tactics” to force plaintiff to refuse work from competitors constitutes the “substantial aggravating circumstances” necessary to support a G.S. § 75-1.1 violation. Plaintiff argues that the wrongful termination of a contract aimed at achieving exclusivity (i.e., breach of contract coupled with anti-competitive intent) is a “substantial aggravating circumstance” and more than a “mere” breach of contract.

In Telephone services, Inc. v. General Telephone Co., 92 N.C. App. 90 (1988), the defendant telephone equipment seller hired the plaintiff as a telephone equipment installer to perform installations for defendant’s customers. The plaintiff argued that defendant was “unfairly using its position of power” in an attempt to “force” plaintiff to abandon its work with competitors. In fact, it was alleged that the defendant was taking advantage of its “monopoly status as a public utility” to force the plaintiff into abandoning any competitive work. The plaintiff in that case even alleged an adverse effect on competition based on defendant’s unfair anti-competitive practices, namely, higher costs to consumers. Nonetheless, the Court of Appeals disagreed with the plaintiff’s contentions and affirmed dismissal of the plaintiff’s G.S. § 75-1.1 claim, reasoning, “In the absence of conspiracy or monopoly, one may deal with whom he pleases.”

The facts of Telephone Services are analogous to the present case as both involve contractual disputes between a supplier and the installer of that supplier’s products. In both cases, the installer brought suit against the supplier alleging that the supplier terminated the contractual relationship in an anti-competitive manner, which it was argued constituted an unfair trade practice.

Here, plaintiff’s allegations of a violation under G.S. § 75-1.1 are noticeably weaker than the allegations made by the plaintiff in Telephone Services.

Following Telephone Services, the court disagrees with plaintiff’s contention that defendant’s “threatening and coercive conduct,” regardless of defendant’s potentially anti-competitive intent, amounts to a substantial aggravating circumstance sufficient to support a claim under § 75-1.1 in this breach of contract setting. Accordingly, plaintiff has failed to state a claim that defendant committed unfair or deceptive trade practices under § 75-1.1.

Although plaintiff now contends that defendant’s conduct also constituted an unlawful restraint of trade in violation of the common law under G.S. § 75-2, since plaintiff failed to plead or otherwise raise § 75-2 in its complaint, plaintiff has abandoned any claim under that section.

Motion granted.