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Contract – Covenant Not to Compete – Geographic Scope – Merger 

Where plaintiff alleges that it “typically provides services in over forty states, and it routinely performs work throughout the United States,” and where plaintiff alleges that defendant was a high-level executive whose duties covered the United States and who had knowledge of unique strategies, marketing materials, trade secrets and other confidential information used to reach and keep customers and vendors, the court does not, at the judgment on the pleadings stage, find it unreasonable for the parties’ noncompete agreement to bar defendant from competing with plaintiff within the United States or any state or province in another country in which plaintiff engages in or plans to engage (as of the date of defendant’s resignation) in the restoration business. 

The court grants judgment on the pleadings for defendant on plaintiff’s “claim” for punitive damages, since punitive damages are a remedy, not a claim. Otherwise, defendant’s motion is denied. 

Even though the parties’ 2017 Confidentiality, Noncompetition, and Nonsolicitation Agreement (the 2017 Agreement) conditions its noncompetition provisions on the payment of severance, the 2017 Agreement does not condition its non-solicitation provisions on the payment of severance. Therefore, the fact that no severance payments were made does not affect defendant’s duty to refrain from soliciting plaintiff’s employees. 

Defendant relies on a version of the parties’ limited liability company agreement to argue that a merger rendered the restrictive covenants in the parties’ limited liability agreement (the LLC Agreement) unenforceable. However, the version on which defendant relies is not part of the pleadings, nor is it attached as an exhibit to any of the pleadings. Accordingly, the court declines to consider the cited version of the LLC Agreement to decide whether a merger rendered the LLC Agreement’s restrictive covenants unenforceable against defendant. Nothing else in the record shows an intent to release defendant from the restrictive covenants in the LLC agreement after the merger. 

Defendant also contends that, because of the merger, the restrictive covenants in a 2018 limited partnership agreement (the LP Agreement) are no longer enforceable. However, defendant signed a Letter of Transmittal, which specifically states that, in accordance with § 9.4 of the LP Agreement, all limited partners must take “all actions necessary to comply with the terms of the Management LP Agreement.” This specifically rebuts defendant’s argument that the LP Agreement terminated with the merger. Viewed in the light most favorable to the non-movants, the terms of the LP Agreement and the restrictive covenants therein survived the merger. 

Motion granted in part, denied in part. 

Blusky Restoration Contractors, LLC v. Brown (Lawyers Weekly No. 020-063-22, 34 pp.) (Michael Robinson, J.) Bryan Scott, Jasmine Pitt and Adam Massaro for plaintiff; Abbey Krysak, Sean Wagner, Derek Bast and Meagan Allen for defendant. 2022 NCBC 63  

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