LOWDER CONSTR., INC. v. PHILLIPS, 2019 NCBC 82

Lowder Constr., Inc. v. Phillips, 2019 NCBC 82.
STATE OF NORTH CAROLINA 	IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
COUNTY OF RANDOLPH 	18 CVS 686
LOWDER CONSTRUCTION,
INC.,
ORDER AND OPINION ON
DEFENDANT RONALD E.
PHILLIPS’S MOTION FOR
JUDGMENT
ON THE PLEADINGS
Plaintiff,
v.
RONALD E. PHILLIPS; KEVIN
W. GLENN; and ATLANTIC
WOOD & TIMBER, LLC,
Defendants.
RONALD E. PHILLIPS,
Counterclaim
Plaintiff,
v.
LOWDER CONSTRUCTION,
INC. and J. DEAN LOWDER,
Counterclaim
Defendants.
THIS MATTER comes before the Court on Defendant Ronald E. Phillips’s
Motion for Judgment on the Pleadings. (“Motion,” ECF No. 49.)1
THE COURT, having considered the Motion, the briefs in support of and in
opposition to the Motion, the arguments of counsel at the hearing, the pleadings at
1 Plaintiff voluntarily dismissed its claims against Defendant Kevin W. Glenn (ECF No. 61)
and reported to the Court that it settled its claims with Defendant Atlantic Wood & Timber,
LLC and that dismissals of those claims would be filed shortly. Therefore, Defendant Atlantic
Wood & Timber, LLC’s Motion to Dismiss First Amended Complaint (ECF No. 7), Defendant
Kevin W. Glenn’s Motion for Judgment on the Pleadings (ECF No. 44), Defendant Atlantic
Wood & Timber, LLC’s Motion for Judgment on the Pleadings (ECF No. 46), and Plaintiff
Lowder Construction, Inc.’s Motion to Dismiss Defendant Atlantic Wood & Timber, LLC’s
Counterclaim (ECF No. 38), which were filed in and around the same time as the Motion and
briefed and argued by the parties, are DENIED as MOOT. 	Lowder Construction, Inc.’s
Motion to Dismiss the Sixth Amended and Supplemental Counterclaim filed by Defendant
Ronald E. Phillips (ECF No. 39) will be addressed by separate order.

issue, and other appropriate matters of record, CONCLUDES that the Motion should
be GRANTED, in part, and DENIED, in part.
Roberson, Haworth & Reese, PLLC, by Christopher C. Finan, Esq. for
Plaintiff Lowder Construction, Inc.
David E. Shives, PLLC, by David E. Shives, Esq. for Defendant Ronald
E. Phillips.
McGuire, Judge.
I. 	FACTS2 AND PROCEDURAL BACKGROUND
1. 	Plaintiff 	Lowder 	Construction, 	Inc. 	(“LCI”) 	is 	a 	North 	Carolina
corporation with its principal place of business in Randolph County, North Carolina.
LCI is a turnkey framing contractor that frames commercial structures such as
apartment buildings, student housing, and other multi-family residential buildings.
2. 	Defendant Ronald E. Phillips (“Phillips”) is a citizen and resident of
North Myrtle Beach, South Carolina, and a former independent contractor of LCI.
Phillips is employed with Atlantic Wood & Timber, LLC (“Atlantic”).
3. 	Defendant Kevin W. Glenn (“Glenn”) is a citizen and resident of Gaston
County, North Carolina, and a former employee of LCI. 	Glenn is employed with
Atlantic.
4. 	Defendant 	Atlantic 	Wood 	& 	Timber, 	LLC 	(“Atlantic”) 	is 	a 	North
Carolina limited liability company with its principal place of business in Mecklenburg
County, North Carolina. Atlantic is a competitor of LCI.
2 The facts cited herein are drawn from the First Amended Complaint. (“FAC,” ECF No. 4.)

A. 	LCI’s Trade Secrets
5. 	LCI regularly competes with other commercial framing companies in
submitting bids for framing work projects. (ECF No. 4, at ¶ 7.) To gain a competitive
advantage 	and 	grow 	its 	business, 	LCI 	has 	made 	a 	significant 	investment 	in
automating and refining its pricing and bidding process. (Id. at ¶ 10.)
6. 	LCI 	“independently 	created 	and 	developed 	a 	unique, 	proprietary
method, process and technique . . . to quickly and accurately develop, generate and
prepare for submission to prospective clients, full and complete three-dimensional
structural renderings of proposed Projects” (the “Structural Model”). 	(Id. at ¶ 11.)
LCI alleges that “[t]he Structural Model, . . . consist[s] of a significant amount of
specially-purposed and customized software.” (Id. at ¶ 16.)
7. 	One of the benefits of the Structural Model is that the three-dimensional
structural rendering allows LCI to identify any potential problems in its proposed
projects, permitting LCI to integrate any issues into its pricing. 	(Id. at ¶ 13.)
Additionally, the Structural Model automatically generates “material takeoffs,” a
full, complete, and accurate list of all necessary materials to complete a proposed
project. LCI alleges that this gives it a significant, commercially-valuable advantage
because LCI’s competitors routinely generate “material takeoffs” manually, a time-
consuming and inaccurate process. (Id. at ¶ 15.)
8. 	LCI also maintains a specific list of customers and potential customers,
including pricing information relating to its services, and key contact persons
associated with 	customers 	and potential customers, 	along 	with 	“commercially-

sensitive and confidential pricing information relating to the services it provides, and
. . . direct solicitations from potential customers” (the “Customer Data”). (Id. at ¶ 22.)
9. 	Lastly, LCI maintains other proprietary business data, including “cost
histories, bid and pricing policies, operating margins and profits, sales and marketing
strategies, vendor pricing and relationship histories, and other confidential business
information [(the ‘Business Data’)].” (Id. at ¶ 23.)
10. 	LCI alleges that the Structural Model, Customer Data, and Business
Data (collectively, the “Trade Secrets”) are trade secrets owned by LCI. (Id. at ¶ 24.)
11. 	LCI’s Trade Secrets are known only to a few designated LCI employees
and/or independent contractors. (Id. at ¶¶ 19, 26.) As additional security measures,
LCI retains hardware ownership and uses “permission-restricted access on a need-
to-know basis, and confidentiality policies and/or agreements.” (Id. at ¶ 27.)
B. 	Phillips’s and Glenn’s work for LCI
12. 	In January 2014, LCI retained Phillips as an independent contractor.
Phillips was tasked with assisting LCI in sales and marketing and improving LCI’s
operations. (Id. at ¶ 29.)
13. 	On August 11, 2014, LCI and Phillips entered into a written consulting
agreement 	(the 	“Phillips 	Agreement”), 	which 	included 	provisions 	governing
compensation and LCI’s confidential and proprietary information. (Id. at ¶ 31.) LCI
alleges that under the terms of the Phillips Agreement:
a. 	[LCI] paid, and Defendant Phillips accepted, a ‘Gross
Margin’ bonus of $195,273.00, for the calendar year 2015.
Said ‘Gross Margin’ bonus was paid in two installments—

$48,357.00 	on 	or 	about 	September 	16, 	2015, 	and
$146,916.00 on or about March 16, 2016.
b. 	However, 	subsequent 	corrections 	and 	restatements 	of
[LCI]’s financial statements for 2015 revealed that the
amount of the foregoing bonus was, in fact, too great, and
that 	the 	same 	should 	properly 	have 	totaled 	only
$140,808.00.
c. 	Accordingly, 	pursuant 	to 	the 	terms 	of 	the 	Phillips
Agreement, Defendant Phillips properly owes [LCI] the
total sum of $54,465.00.
d. 	[LCI] has fully-paid Defendant Phillips all amounts due
him 	under 	the 	terms 	and 	conditions 	of 	the 	Phillips
Agreement.
(Id. at ¶¶ 34–36, 38.) Phillips denies that he was overpaid any bonuses.
14. 	The Phillips Agreement terminated on February 14, 2016. 	However,
Phillips continued to be associated with LCI as an independent contractor, and the
parties continued to act in conformity with the Phillips Agreement. (Id. at ¶¶ 37, 40,
41.) 	In November 2016, Phillips and LCI entered into an oral agreement that was
identical to the Phillips Agreement except for the terms relating to Phillips’s
compensation. (Id. at ¶¶ 44–45.)
15. 	LCI hired Glenn as an employee in August 2014 to assist in diversifying
LCI’s business. (Id. at ¶ 50.)
16. 	LCI alleges that Phillips and Glenn were the only two employees and/or
independent contractors whose duties “focused, to a significant degree, on the
creation, development and implementation of the Structural Model” and who “had
significant, direct and unfettered access to all constituent components—both tangible
and intangible—of the Structural Model.” 	(Id. at ¶¶ 54–55.) 	While employed with

LCI, Phillips and Glenn created renderings using the Structural Model for specific
proposed projects and presented them to clients and prospective clients. 	(Id. at ¶¶
59–60.)
17. 	The Structural Model resided solely on a secure computer purchased by
LCI for Glenn’s use (the “Computer”). (Id. at ¶ 55.) The Computer was not accessible
by outside parties and Glenn and Phillips “had sole possession of the tangible
components” of the Structural Model. (Id. at ¶ 120.)
C. 	Phillips’s and Glenn’s alleged sabotage of LCI projects
18. 	In approximately the summer of 2017, a disagreement arose between
LCI 	and 	Glenn 	and 	Phillips 	regarding 	the 	continued 	development 	and
implementation of the Structural Model. (Id. at ¶ 62.) At the conclusion of a heated
discussion between LCI’s president and Phillips regarding the Structural Model,
Phillips closed the conversation by telling LCI’s president, “I’ll fix this.” (Id. at ¶ 63.)
19. 	LCI alleges that thereafter “Glenn and/or [ ] Phillips prepared and/or
were requested to prepare and finalize several actual ‘structural models,’ purportedly
utilizing [LCI]’s Structural Model to do so.” (Id. at ¶ 65.) Several of these structural
models contained significant inaccuracies, and LCI only discovered after constructing
the projects for its customers that the structural models “grossly-underestimated the
actual costs necessary to complete the [p]rojects.” (Id. at ¶¶ 66–67.) The inaccuracies
caused LCI to significantly underbid the projects, which substantially impacted LCI’s
profits. 	(Id. at ¶ 68.) 	LCI alleges Phillips and Glenn intentionally underestimated
the costs “with the specific intent to cause material harm to” LCI. (Id. at ¶ 73.)

D. 	Atlantic hires Phillips and Glenn
20. 	Prior 	to 	September 	2017, 	Atlantic 	was 	primarily 	a 	“labor 	only”
contractor; Atlantic would provide the labor to perform the framing, but the framing
materials would have to be purchased separately. (Id. at ¶ 76.) Atlantic then sought
to expand into providing “turnkey” framing services similar to those provided by LCI.
(Id. at ¶ 77.)
21. 	In September 2017, Phillips and Glenn began discussing potential
employment with Atlantic. 	(Id. at ¶ 79.) 	During these discussions, Glenn, at
Phillips’s request, provided Atlantic with one of LCI’s “structural models.” (Id.)
22. 	In October 2017, Atlantic communicated to Phillips and Glenn that it
was “‘all in’ on the acquisition and use of the Structural Model as a means to expand
its ‘turnkey’ business.” 	(Id. at ¶ 82 (emphasis in original).) 	In November 2017,
Atlantic discussed employment terms with Phillips and Glenn, including paying them
a bonus for two projects on which they were working for LCI that they would bring
“in hand” to Atlantic after they left LCI. (Id. at ¶ 83.)
23. 	In early December 2017, unbeknownst to LCI, Phillips and Glenn
accepted employment with Atlantic. 	(Id. at ¶ 84.) 	LCI alleges that Phillips and
Glenn, while still employed by LCI, performed work for Atlantic with respect to a bid
proposal for a project on which LCI was also bidding: the Overture Centennial project
offered by Greystar Real Estate Partners. 	(Id.) 	Atlantic then “wrongfully obtained
from [Phillips and Glenn] a copy of the [Structural Model LCI] prepared for the
Overture Centennial project.” (Id. at ¶ 96.)

24. 	On December 21, 2017, Phillips ended his association with LCI, and on
December 22, 2017, LCI terminated Glenn’s employment. (Id. at ¶¶ 85–86.) Phillips
and Glenn were immediately hired by Atlantic, and shortly thereafter began working
for Atlantic. (Id. at ¶ 87.)
25. 	LCI alleges that:
a. 	Prior to the termination of their employment with [LCI] . .
., 	Defendants 	Glen 	[sic] 	and 	Phillips 	misappropriated
[LCI]’s Trade Secrets by accessing and taking the Trade
Secrets in physical and/or electronic form.
. . .
b. 	Upon 	information 	and 	belief, 	Atlantic 	intended 	to
misappropriate [LCI]’s Trade Secrets, including without
limitation the Structural Model, for the purpose of carrying
out a plan, reached with and led by Defendants Glenn and
Phillips, to undercut [LCI]’s bids on current and upcoming
projects, 	and thereby 	acquire 	[LCI]’s 	largest 	and most
profitable 	customers 	for 	the 	dual 	purpose 	of 	crippling
[LCI]’s ability to compete and immediately establishing
Atlantic as a competitive ‘turnkey’ framing contractor for
large, complex commercial structures in the Carolinas.
c. 	Upon information and belief, since hiring Defendants Glenn
and Phillips, Atlantic has misappropriated [LCI]’s Trade
Secrets to acquire large project contracts from [LCI]’s most
important and critical customers, thereby harming [LCI]’s
ability to compete and allowing Atlantic to immediately
establish an expanded and more prominent presence in the
Carolinas 	without 	expending 	the 	time, 	money, 	and
resources that would have been required had Atlantic not
misappropriated [LCI]’s Trade Secrets.
d. 	Specifically, since hiring Defendants Glenn and Phillips,
upon information and belief Atlantic has used [LCI]’s Trade
Secrets 	to 	obtain 	contracts 	for 	at 	least 	two 	(2) 	large
commercial ‘turnkey’ framing jobs from key existing [LCI]
customers—The 	Preserve 	at 	Mountain 	Island 	(by 	Blue

Ridge Companies) and Hazel SouthPark (by CBG Building
Company).
e. 	But 	for 	Atlantic’s 	wrongful 	conduct 	described 	above,
including without limitation its misappropriation of [LCI]’s
Trade Secrets, [LCI] would have been awarded and agreed
to enter into both of these contracts with its longtime
existing customers.
(Id. at ¶¶ 89, 91–94.)
26. 	LCI further alleges that Atlantic intended “to acquire [LCI]’s Trade
Secrets and cripple its ability to compete with Atlantic for ‘turnkey’ framing projects.”
(Id. at ¶ 96.) Additionally, LCI alleges that the “Structural Model remains solely in
the possession of the Defendants.” (Id. at ¶ 98.)
E. 	Relevant procedural history
27. 	LCI initiated this action by filing its Complaint on April 18, 2018. (ECF
No. 3.) On March 14, 2019, LCI filed the Amended Complaint. (ECF No. 4.) In the
Amended Complaint, LCI alleges claims against Phillips for: a declaratory judgment
that it overpaid bonuses to Phillips (First Claim); misappropriation of trade secrets
in violation of the North Carolina Trade Secrets Protection Act, N.C.G.S. §§ 66-152 et
seq. (“NCTSPA”) (Second Claim); conversion (Third Claim); tortious interference with
prospective economic advantage (Fifth Claim); civil conspiracy (Sixth Claim); unfair
or deceptive trade practices in violation of N.C.G.S. § 75-1.1 (“UDTPA”) (Seventh
Claim); punitive damages (Eighth Claim); and injunctive relief (Ninth Claim). (ECF
No. 4, at ¶¶ 106–63.)
28. 	Phillips filed an Answer and Counterclaim on June 17, 2019. (ECF No.
33.)

29. 	On August 16, 2019, Phillips filed the Motion. Phillips simultaneously
filed a brief in support of the Motion. (ECF No. 50.)
30. 	LCI filed a memorandum in opposition to the Motion on September 9,
2019. (ECF No. 53.) On September 19, 2019, Phillips filed a reply brief in support of
the Motion. (ECF No. 58.)
31. 	The Court held a hearing on the Motion on September 25, 2019, at which
counsel for the parties made oral arguments.
32. 	The Motion has been fully briefed and argued, and is now ripe for
determination.
II. 	ANALYSIS
33. 	“A 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,
209 S.E.2d 494, 499 (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, 745 S.E.2d 316, 319 (2013) (citation omitted).
34. 	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, 598 S.E.2d 237,
240 (2004) (citation omitted). 	The Court must “view the facts and permissible

inferences in the light most favorable to the nonmoving party.” Ragsdale, 286 N.C.
at 137, 209 S.E.2d at 499. “A party who moves for judgment on the pleadings admits
two things: (1) the truth of all well-pleaded facts in the non-movant’s pleading,
together with all permissible inferences to be drawn from such facts; and (2) the
untruth of his own allegations in so far as they are controverted by the non-movant’s
pleading.” Hedrick v. Rains, 121 N.C. App. 466, 468, 466 S.E.2d 281, 283 (1996). “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 	nonmovant’s pleadings, 	except 	conclusions 	of 	law, 	legally
impossible facts, and matters not admissible in evidence at the trial, are deemed
admitted by the movant.” 	Ragsdale, 286 N.C. at 137, 209 S.E.2d at 499 (internal
citations omitted).
35. 	Phillips seeks judgment on the pleadings as to each of LCI’s claims
against him. The Court will address these claims in turn.
A. 	Declaratory Judgment
36. 	LCI’s first claim against Phillips seeks a declaratory judgment “that no
further sums whatsoever are owed by [LCI] to Defendant Phillips, pursuant to the
Phillips Agreement, the 2016 Agreement, or otherwise.” (ECF No. 4, at ¶ 114.) LCI
also requests that “pursuant to the terms and conditions of the then-in-effect Phillips
Agreement, the Court should properly enter its judgment against Defendant Phillips
in the amount of $54,465.00 in regard to the 2015 calendar year ‘Gross Margin’ bonus
overpayment made to Defendant Phillips by [LCI].” (Id. at ¶ 115.)

37. 	Under 	North 	Carolina 	law, 	a declaratory 	judgment 	is 	a 	statutory
remedy that grants a court the authority to “declare rights, status, and other legal
relations” when an “actual controversy” exists between parties to a lawsuit. N.C.G.S.
§ 1-253; Town of Pine Knoll Shores v. Carolina Water Serv., 128 N.C. App. 321, 321,
494 S.E.2d 618, 618 (1998). The Court may, by declaratory judgment, “determine[ ]
any question of construction or validity” and declare “rights, status, and other legal
relations” under a written contract. N.C.G.S. § 1-254. An actual controversy between
the parties must exist at the time the complaint is filed in order for the court to have
jurisdiction to render a declaratory judgment. 	Sharpe v. Park Newspapers of
Lumberton, Inc., 317 N.C. 579, 584–85, 347 S.E.2d 25, 29 (1986).
38. 	Phillips argues that LCI fails to allege facts sufficient to support the
claim for a declaratory judgment. 	(ECF No. 50, at pp. 7–9.) 	The Court disagrees.
LCI alleges that it paid Phillips a 2015 bonus greater than that to which he was
entitled under the Phillips Agreement, and seeks a declaration regarding the alleged
overpayment. 	Phillips denies that LCI overpaid any bonus amounts to him or that
he is liable for repaying any amounts to LCI. 	There exists an actual controversy
between the parties, and the facts are in dispute.
39. 	Therefore, to the extent that the Motion seeks judgment in Phillips’s
favor on the claim for declaratory judgment, the Motion should be DENIED.
B. 	Misappropriation of Trade Secrets
40. 	LCI alleges the Structural Model, Customer Data, and Business Data
are 	trade 	secrets 	within 	the 	meaning 	of 	the 	NCTSPA 	and 	that 	Phillips

misappropriated those trade secrets. (ECF No. 4, at ¶¶ 116–124.) Phillips contends
that LCI’s allegations do not support the claim that the Structural Model, Customer
Data, and Business Data are trade secrets. (ECF No. 50, at pp. 9–15.)
41. 	The standards for pleading a claim for misappropriation of trade secrets
under the NCTSPA are well-established. See County of Wayne Constr. Managers of
Goldsboro v. Amory, 2019 NCBC LEXIS 32, at *18–23 (N.C. Super. Ct. May 17, 2019).
The Supreme Court of North Carolina recently reiterated that a plaintiff “must
identify a trade secret with sufficient particularity 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, 811 S.E.2d 542, 547–48 (2018) (citations omitted).
42. 	Phillips argues that the Structural Model is nothing more than a
combination of commercially available software programs and cannot be a trade
secret. 	(ECF No. 50, at pp. 9–13.) 	However, LCI alleges that it “independently
created and developed a unique, proprietary method, process and technique – utilizing,
among other things, a unique set of software tools – to quickly and accurately develop,
generate and prepare for submission to prospective clients, full and complete three-
dimensional structural renderings of proposed Projects [the ‘Structural Model’].”
(ECF No. 4, at ¶ 11 (emphasis added).) LCI further alleges that “the Structural Model
automatically 	generates 	full, 	complete, 	and accurate 	‘material 	takeoffs’ – 	full,
complete, and accurate listings of all materials necessary to complete a given
prospective Project.” 	(Id. at ¶ 15.) 	LCI alleges that material takeoffs are routinely

performed 	manually 	within 	the 	industry 	and, 	consequently, 	“the 	process 	of
generating ‘material takeoffs’ is an inherently time-consuming and necessarily-
inaccurate process.” (Id.)
43. 	LCI alleges that the Structural Model provides LCI “unique benefits,”
and “a significant, commercially-valuable advantage.” 	(Id. at ¶¶ 13–14.) 	LCI
summarizes by alleging that the Structural Model is not merely the software, but a
“specially developed process and method by which the various software tools are
utilized to generate both the three-dimensional structural models and highly-
accurate ‘material takeoffs.’” (Id. at ¶ 16.) The Court concludes that these allegations
sufficiently allege that the Structural Model contains proprietary features that are
competitively advantageous to LCI to survive the Motion.
44. 	Phillips further argues that LCI has not alleged that it took reasonable
measures to protect the Structural Model. 	(ECF No. 50, at pp. 12–13.) 	The Court,
however, concludes that LCI’s allegations regarding the security measures to protect
the Structural Model, while thin, are sufficient to survive a motion for judgment on
the pleadings. 	“Generally, only where efforts to maintain secrecy of the allegedly
misappropriated trade secrets were completely absent have North Carolina courts
dismissed claims at the [pleadings] stage.” 	Bldg. Ctr., Inc. v. Carter Lumber, Inc.,
2016 NCBC LEXIS 79, at *14 (N.C. Super. Ct. Oct. 21, 2016).
45. 	Phillips also contends that LCI’s allegations do not support the claim
that the Customer Data and Business Data are trade secrets because the information

contained therein was vaguely described and is publicly available. 	(ECF No. 50, at
pp. 13–14.)
46. 	To the extent that the Customer Data and Business Data constitute
trade secrets, they would have to be “compilation[s] of information.” 	N.C.G.S. § 66-
152(3). “[I]n some instances, a trade secret can be found if the information or process
has particular value as a compilation or manipulation of information, even if the
underlying information is otherwise publicly available. 	Whether a compilation or
manipulation of information deserves trade secret protection depends on several
factors, including the difficulty with which the information could be gathered,
compiled, or manipulated.” RoundPoint Mortg. Co. v. Florez, 2016 NCBC LEXIS 18,
at *32 (N.C. Super. Ct. Feb. 18, 2016); see also Safety Test & Equip. Co. v. Am. Safety
Util. Corp., 2015 NCBC LEXIS 40, at *26 (N.C. Super. Ct. Apr. 23, 2015) (“A
compilation of publicly available information may, however, receive trade secret
protection where the claimant encountered some difficulty in assembling each of the
public components.”).
47. 	Again, while the allegations are minimal, the Court concludes that LCI’s
allegations regarding its Customer Data satisfy the burden of alleging the nature of
its trade secret with “sufficient particularity 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, 370 N.C. at 609, 811 S.E.2d
at 547–48. LCI alleges that the Customer Data is “a highly-specific list of customers
and potential customers” compiled with “commercially-sensitive and confidential

pricing information relating to the services it provides,” and can contain information
about “direct solicitations from potential customers not generally known to the
public.” 	(ECF No. 4, at ¶ 22.) 	This goes beyond mere allegations of customer
identities and contact information and includes information that could be valuable to
a competitor of LCI.
48. 	LCI alleges that its Business Data consists of “proprietary data and
information in the conduct of its business, including without limitation cost histories,
bid 	and 	pricing 	policies, 	operating 	margins 	and 	profits, 	sales 	and 	marketing
strategies, vendor pricing and relationship histories, and other confidential business
information.” 	(Id. at ¶ 23.) 	This also describes private information that could be
considered, in compilation, a trade secret.
49. 	Finally, 	LCI 	alleges 	that 	Phillips 	acquired 	and 	used 	trade 	secret
information regarding specific projects for which LCI was bidding—The Preserve at
Mountain Island (by Blue Ridge Companies) and Hazel SouthPark (by CBG Building
Company)—to help Atlantic win those projects. (Id. at ¶ 93.) This allegation is highly
specific and can leave no doubt as to the information that LCI claims Phillips
misappropriated.
50. 	LCI sufficiently pleads its claim for misappropriation of trade secrets to
survive Phillips’s challenge, and to the extent the Motion seeks judgment in Phillips’s
favor on the claim for misappropriation of trade secrets in violation of the NCTSPA,
the Motion should be DENIED.

C. 	Conversion
51. 	LCI attempts to repackage its misappropriation of trade secrets claim
as a claim for common law conversion. (ECF No. 4, at ¶¶ 125–31.) Phillips moves for
judgment on the pleadings on LCI’s conversion claim, arguing that “LCI fails to allege
that it has been deprived of the possession or use of its Structural Model, Customer
Data, or Business Data.” (ECF No. 50, at p. 15.) The Court agrees with Phillips as
to the Customer Data and Business Data, but not as to the Structural Model.
52. 	Under North Carolina law, conversion is the “unauthorized assumption
and exercise of the right of ownership over goods or personal chattels belonging to
another, to the alteration of their condition or the exclusion of an owner’s rights.”
Variety Wholesalers, Inc. v. Salem Logistics Traffic Servs., LLC, 365 N.C. 520, 523,
723 S.E.2d 744, 747 (2012) (citation omitted). There are two elements in a claim for
conversion: (1) the plaintiff’s ownership and (2) the defendant’s wrongful possession.
Id.
53. 	“The essence of conversion is not the acquisition of property by the
wrongdoer, but a wrongful deprivation of it to the owner.” Bartlett Milling Co., L.P.
v. Walnut Grove Auction & Realty Co., 192 N.C. App. 74, 86, 665 S.E.2d 478, 488
(2008) (citation omitted). 	“[R]etention by a wrongdoer of an electronic copy in a
manner that does not deprive the original owner of access to the same electronic data
cannot 	constitute 	conversion 	under 	current 	North 	Carolina 	law.” 	Duo-Fast
Carolinas, Inc. v. Scott’s Hill Hardware & Supply Co., 2018 NCBC LEXIS 2, at *36
(N.C. Super. Ct. Jan. 2, 2018); see also New Friendship Used Clothing Collection, LLC

v. Katz, 2017 NCBC LEXIS 72, at *38–39 (N.C. Super. Ct. Aug. 18, 2017) (“[M]erely
making a copy of, as opposed to deleting, electronically stored information does not
support a conversion claim because the owner is not deprived of possession or use of
the information.”).
54. 	While LCI alleges that Phillips took its Business Data and Customer
Data, inter alia, “by accessing and taking [the data] in physical and/or electronic
form,” LCI does not allege that it no longer has access, or that it has been deprived of
access, to the data. (ECF No. 4, at ¶ 89.)
55. 	On the other hand, LCI alleges that since the separation of Phillips and
Glenn from LCI, the “Structural Model remains solely in the possession of the
Defendants.” (Id. at ¶ 98.) The Court is satisfied that, read in the light most favorable
to LCI, it has alleged that it has been deprived of access to the Structural Model.
56. 	Therefore, to the extent the Motion seeks judgment in Phillips’s favor on
the claim for conversion regarding the Structural Model, the Motion should be
DENIED. 	However, to the extent the Motion seeks judgment in Phillips’s favor on
the claim for conversion regarding the Customer Data and Business Data, the Motion
should be GRANTED.
D. 	Tortious Interference with Prospective Economic Advantage
57. 	LCI alleges that Defendants, including Phillips, interfered with its
potential acquisition of contracts with its customers. (ECF No. 4, at ¶¶ 140–46.) In
support of its claim, LCI alleges, inter alia:
a. 	The 	Defendants 	knowingly, 	intentionally, 	and 	without
privilege, justification, or excuse induced [LCI] customers

to 	cease 	using 	[LCI] 	on 	certain 	‘turnkey’ 	commercial
framing projects and to award those projects to Atlantic
instead.
b. 	At minimum, the Defendants’ wrongful actions specifically
induced Blue Ridge Companies to enter into a framing
contract with Atlantic, and not with [LCI], for its Preserve
at Mountain Island project, and specifically induced CBG
Building Company to enter into a framing contract with
Atlantic, and not with [LCI], for its Hazel SouthPark
project.
c. 	Based on the nature and length of its existing business
relationship with both companies, [LCI]’s own bid history
with both companies, and the terms of other submitted
bids, at least these two (2) contracts would in fact, upon
information and belief, have been awarded to and accepted
by [LCI], but for the Defendants’ wrongful conduct.
(Id. at ¶¶ 141–43.)
58. 	The Supreme Court of North Carolina recently reaffirmed that the tort
of interference with prospective economic advantage “arises when a party interferes
with a business relationship by maliciously inducing a person not to enter into a
contract 	with 	a 	third person, 	which 	he 	would have 	entered into 	but 	for the
interference, . . . if damage proximately ensues, when this interference is done not in
the legitimate exercise of the interfering person’s rights. However, a plaintiff’s mere
expectation of a continuing business relationship is insufficient to establish such a
claim. Instead, a plaintiff must produce evidence that a contract would have resulted
but for a defendant’s malicious intervention.” Beverage Sys. of the Carolinas, LLC v.
Associated Bev. Repair, LLC, 368 N.C. 693, 701, 784 S.E.2d 457, 463 (2016) (internal
quotation marks and citations omitted).

59. 	“Stating a claim for tortious interference with prospective economic
advantage requires that the plaintiff ‘allege facts [ ] show[ing] that the defendants
acted without justification in inducing a third party to refrain from entering into a
contract 	with 	them[,] 	which 	contract 	would 	have 	ensued 	but 	for 	the
interference.’” 	Cheryl Lloyd Humphrey Land Inv. Co., LLC v. Resco Prods., 831
S.E.2d 395, 403 (N.C. Ct. App. 2019) (citing Walker v. Sloan, 137 N.C. App. 387, 393,
529 S.E.2d 236, 242 (1999)). “Interference with a contract is justified if it is motivated
by a legitimate business purpose, as when the plaintiff and the defendant, an
outsider, are competitors.” Beverage Sys. of the Carolinas, LLC, 368 N.C. at 700, 784
S.E.2d at 462 (internal quotation marks and citation omitted). On the other hand,
“‘[i]nterference is without justification if it is ‘malicious and wanton[.]’” 	Alcorn v.
Bland, No. COA12-613, 2012 N.C. App. LEXIS 1416, at *21 (Dec. 18, 2012) (citing
Coleman v. Whisnant, 225 N.C. 494, 506, 35 S.E.2d 647, 655 (1945)).
60. 	Phillips’s very short argument in support of dismissal of the claim for
tortious interference is hard to follow. 	(ECF No. 50, at pp. 16–17.) 	It appears that
Phillips contends that LCI does not allege that, to the extent Phillips interfered with
LCI’s prospective contracts for the Preserve at Mountain Island and Hazel SouthPark
projects, he acted maliciously or “without justification.” (Id.)
61. 	LCI makes no argument in response to Phillips’s motion for judgment
on 	the 	claim 	for 	tortious 	interference 	with 	prospective 	economic 	advantage.
Nevertheless, LCI alleges that Phillips interfered, in part, “for the [ ] purpose of
crippling [LCI]’s ability to compete.” 	(ECF No. 4, at ¶¶ 91, 96.) 	Considering the

allegations in the FAC and the inferences therefrom in the light most favorable to
LCI, Ragsdale, 286 N.C. at 137, 209 S.E.2d at 499, the Court concludes that LCI has
adequately alleged that Phillips acted without justification in interfering with LCI’s
prospective contracts.
62. 	Therefore, to the extent the Motion seeks judgment in Phillips’s favor on
the claim for tortious interference with prospective economic advantage, the Motion
should be DENIED.
E. 	Civil Conspiracy
63. 	LCI alleges that Phillips took part in a civil conspiracy with the other
Defendants and “agreed to act, and in fact did act, in concert and conjunction with
one another in engaging in the wrongful and unlawful conduct complained of by [LCI]
hereinabove, all in furtherance of their conspiracy.” (ECF No. 4, at ¶ 148.) Phillips
argues that “‘[t]here is no independent cause of action for civil conspiracy. 	A claim
for conspiracy is dependent on ‘an underlying claim for unlawful conduct.’” (ECF No.
50, at p. 17 (quoting Sellers v. Morton, 191 N.C. App. 75, 83, 661 S.E.2d 915, 922
(2008)).) 	Phillips contends he is entitled to judgment in his favor because “LCI has
failed to allege any such claim against Phillips.” (Id.)
64. 	Phillips’s argument that LCI has not alleged claims for unlawful conduct
against Phillips is, of course, incorrect. 	The Court already has concluded that LCI
states claims against Phillips for misappropriation of trade secrets and tortious
interference with prospective economic advantage. 	Accordingly, to the extent the

Motion seeks judgment in Phillips’s favor on the claim for civil conspiracy, the Motion
should be DENIED.
F. 	UDTPA Claim
65. 	LCI claims Phillips’s conduct constitutes unfair or deceptive trade
practices in violation of the UDTPA. 	(ECF No. 4, at ¶¶ 153–56.) 	The entirety of
Phillips’s argument in his brief in opposition to the Motion is as follows:
LCI’s . . . claim for unfair [or] deceptive trade practices is
entirely 	premised 	on 	an 	insufficient 	claim 	of
misappropriation of trade secrets. Where a violation of the
UDTPA is based on a claim for tortious interference with
contract or misappropriation of trade secrets – or any other
claim – for which the plaintiff has failed to state a claim for
relief, the UDTPA claim also fails. 	Krawiec, 370 N.C. at
613, 811 S.E.2d at 550. 	Phillips is therefore entitled to
judgment in its favor on LCI’s claim under the UDTPA.
(ECF No. 50, at p. 17.)
66. 	As stated above, the Court concludes that LCI has sufficiently alleged
claims 	against 	Phillips 	for 	misappropriation 	of 	trade 	secrets 	and 	tortious
interference. Accordingly, to the extent the Motion seeks judgment in Phillips’s favor
on the claim for violation of the UDTPA, the Motion should be DENIED.
G. 	Punitive Damages and Injunctive Relief
67. 	With regard to LCI’s cause of action in the FAC labeled “Punitive
Damages” (ECF No. 4, at ¶¶ 157–59), Phillips argues only that LCI has failed to state
a claim against Phillips that would support an award of punitive damages. (ECF No.
50, at pp. 17–18 (citing Watson v. Dixon, 352 N.C. 343, 348, 532 S.E.2d 175, 178 (2000)
(Under the statute, “[p]unitive damages may be awarded only if the claimant proves

that the defendant is liable for compensatory damages.”)).) 	The Court already has
concluded that Phillips alleges claims that would support an award of punitive
damages. 	See 	N.C.G.S. 	§ 	66-154(c) 	(Punitive 	damages 	can 	be 	awarded 	for
misappropriation of trade secrets if “willful and malicious misappropriation exists.”).
To the extent the Motion seeks judgment in Phillips’s favor on the claim for punitive
damages, the Motion should be DENIED.
68. 	Phillips also argues that LCI’s claim labeled “Injunctive Relief” (ECF
No. 4, at ¶¶ 160–63) should be dismissed because it is a “remed[y], not [an]
independent cause[ ] of action.” (ECF No. 50, at p. 18 (citing Brewster v. Powell Bail
Bonding, Inc., 2018 NCBC LEXIS 76, at *18–19 (N.C. Super. Ct. July 26, 2018)).)
Since LCI has stated viable claims against Phillips, the Court concludes it is
premature to dismiss the claim for injunctive relief. To the extent the Motion seeks
judgment in Phillips’s favor on the claim for injunctive relief, the Motion should be
DENIED.
III. 	CONCLUSION
THEREFORE, IT IS ORDERED that:
69. 	To the extent Phillips seeks judgment in his favor as to LCI’s claim for
conversion of the Customer Data and Business Data, the Motion is GRANTED, and
LCI’s claim is dismissed with prejudice.
70. 	Except as expressly granted herein, the Motion is DENIED.

SO ORDERED, this the 30th day of December, 2019.
/s/ Gregory P. McGuire
Gregory P. McGuire
Special Superior Court Judge
for Complex Business Cases