Encompass Servs., Pllc v. Maser Consulting P.A.

Encompass Servs., PLLC v. Maser Consulting P.A., 2019 NCBC 66.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
COUNTY OF DURHAM 19 CVS 1782

ENCOMPASS SERVICES, PLLC and
ENCOMPASS SERVICES, LLC d/b/a )
ENCOMPASS ENERGY SERVICES, )
ORDER AND OPINION ON
LLC, )
CHRISTOPHER HILSMAN’S
)
MOTION TO DISMISS, OR
Plaintiffs, )
ALTERNATIVELY, FOR JUDGMENT
)
ON THE PLEADINGS AND MASER
v. )
CONSULTING P.A.’S MOTION TO
)
DISMISS
MASER CONSULTING P.A. and )
CHRISTOPHER HILSMAN,

Defendants.

THIS MATTER comes before the Court on Defendant Christopher Hilsman’s

(“Hilsman”) Motion to Dismiss or, Alternatively, for Judgment on the Pleadings

(“Hilsman’s Motion,” ECF No. 38), and Defendant Maser Consulting P.A.’s (“Maser”)

Motion to Dismiss (“Maser’s Motion,” ECF No. 63; collectively with Maser’s Motion,

the “Motions”).

THE COURT, having considered the Motions, the briefs filed in support of and

in opposition to the Motions, the arguments of counsel at the hearing, and other

appropriate matters of record, concludes that the Motions should be GRANTED, in

part, and DENIED, in part, for the reasons set forth herein.

Oak City Law LLP, by Samuel Pinero for Plaintiffs Encompass Services,
PLLC and Encompass Services, LLC d/b/a Encompass Energy Services,
LLC.

McDermott Will & Emery, LLP, by Rachel B. Cowen and Emory D. Moore
Jr. for Plaintiffs Encompass Services, PLLC and Encompass Services,
LLC d/b/a Encompass Energy Services, LLC.
Ragsdale Liggett PLLC, by John M. Nunnally for Defendant Maser
Consulting P.A.

Williams Mullen, by Edward S. Schenk III and John W. Holton for
Defendant Christopher Hilsman.

McGuire, Judge.

I. Nature of Defendants’ Motions

1. As an initial matter, the Court must determine under what rules each

of the Defendants are entitled to move for dismissal. Pursuant to North Carolina

Rule of Civil Procedure (“Rules”) a motion to dismiss under Rules 12(b) (1)–(7) “shall

be made before pleading if a further pleading is permitted.” N.C.G.S. § 1A-1, Rule

12(b) (emphasis added). Accordingly, this Court has held that under the plain

language of Rule 12(b), “a motion to dismiss for failure to state a claim must be . . .

filed prior to an answer.” Johnston v. Johnston Props., Inc., 2018 NCBC LEXIS 119,

at *14 (N.C. Super. Ct. Nov. 15, 2018); see also New Friendship Used Clothing

Collection, LLC v. Katz, 2017 NCBC LEXIS 72, at *24 (N.C. Super. Ct. Aug. 18, 2017).

Hilsman filed Hilsman’s Motion, seeking dismissal pursuant to Rule 12(b)(6), or

alternatively, for judgment on the pleadings pursuant to Rule 12(c), at 3:42 p.m. on

April 3, 2019. (ECF No. 38.) Hilsman filed his answer at 4:04 p.m. on April 3, 2019.

(ECF No. 40.) Accordingly, Hilsman’s Motion was filed before his answer and is

appropriately treated as a motion to dismiss under Rule 12(b)(6), and the Court need

not consider his alternative motion pursuant to Rule 12(c).

2. On the other hand, Maser moves for dismissal solely under Rule

12(b)(6). Maser filed its answer on April 8, 2019 (ECF No. 41), then waited over two
months to file Maser’s Motion on June 14, 2019 (ECF No. 63). Therefore, pursuant

to Rule 12(b), Maser’s Motion is untimely and cannot be considered as a 12(b)(6)

motion to dismiss for failure to state a claim.

3. The Court notes that in Johnston, this Court concluded that the

interplay between Rules 12(b) and 12(h)(2)1 permits the Court to treat a post-answer

Rule 12(b)(6) motion as a 12(c) motion for judgment on the pleadings. See Johnston,

2018 NCBC LEXIS 119, at *14–15. In Johnston, the Court, in its discretion,

determined that defendants’ 12(b)(6) motion filed minutes after their answer could

properly be treated as a Rule 12(c) motion. By contrast, Maser’s Motion was filed two

months after his initial answer. Moreover, Maser has not argued that his Motion

should be treated as one for judgment on the pleadings under Rule 12(c).

4. On these facts, the Court concludes, in its discretion, that Maser’s

Motion should not be treated as a Rule 12(c) motion for judgment on the pleadings.

Therefore, Maser’s Motion should be DENIED as untimely.

II. Facts

5. The facts relevant to the determination of the Motions are drawn from

the Verified Complaint. (“Verified Complaint,” ECF No. 3.)

6. Plaintiffs Encompass Services, PLLC and Encompass Services, LLC

d/b/a Encompass Energy Services, LLC (collectively, “Encompass”) provide land

surveying services for oil and gas transmission pipelines. Encompass’s services

1 Rule 12(h)(2) provides “[a] defense of failure to state a claim upon which relief can be
granted, a defense of failure to join a necessary party, and an objection of failure to state a
legal defense to a claim may be made in any pleading permitted or ordered under Rule 7(a),
or by motion for judgment on the pleadings, or at the trial on the merits.”
include, inter alia, “conducting pipe line surveys, mapping, routing, and pipeline

integrity testing[.]” (ECF No. 3, at ¶ 8.)

7. Encompass submits bids to customers to obtain particular projects. To

prepare bids, Encompass uses data it compiles including: “(i) cost data for prior

similar projects, (ii) maps and drawings developed with the use of expensive

investments in technology such as radar scanning, and satellite and aerial imaging,

[and] (iii) knowledge of constructability, environmental, and socio-economic issues.”

(Id. at ¶ 12.) Encompass “considers this data confidential and prohibits its disclosure

to third parties.” (Id. at ¶ 13.) Encompass stores its confidential information on a

cloud-based computer server (“the Server”), to which only certain authorized

employees are allowed access. Authorized employees are given a user name and

password and their access is controlled and monitored by a third-party information

technology provider, CMIT Solutions of Pittsburgh North (“CMIT”). (Id. at ¶ 22;

Declar. of Sunil Yalamarthy, ECF No. 3 at Ex. A, ¶ 5.)2

8. Encompass hired Hilsman in April 2015 as a survey coordinator. At the

time of his hire, Hilsman executed an Employment Agreement. (ECF No. 3, at ¶ 15;

“Employment Agreement,” ECF No. 3 at Ex. B.) By entering into the Employment

Agreement, Hilsman agreed “during his employment and for a one-year period

thereafter, not to disclose to or make use of for any person, corporation or other entity,

2 “[W]hen ruling on a Rule 12(b)(6) motion, a court may properly consider documents which

are the subject of a plaintiff’s complaint and to which the complaint specifically refers even
though they are presented by the defendant.” Oberlin Capital, L.P. v. Slavin, 147 N.C. App.
52, 60, 554 S.E.2d 840, 847 (2001). The declaration is attached to and referenced in the
Verified Complaint.
any proprietary files, trade secrets or other confidential information defined as, the

business, clients, methods, operations, financing or services of [Encompass].” (ECF

No. 3, at ¶ 17; ECF No. 3 at Ex. B, ¶ 8.)

9. As a survey coordinator, Hilsman was directly involved with the

preparation of Encompass’s bid proposals and had access to Encompass’s confidential

information stored on the Server. (ECF No. 3, at ¶¶ 15–16.)

10. On August 3, 2018, Hilsman notified Encompass that he was resigning

his employment to work for Maser. Maser is a direct competitor of Encompass. (Id.

at ¶ 19.) Maser recruited Hilsman to work as a senior project manager, and to

establish an office in Wilmington, North Carolina. (Id. at ¶¶ 18, 21.) Hilsman’s last

day of work with Encompass was on or about August 18, 2018.

11. Encompass notified CMIT of Hilsman’s resignation and requested that

Hilsman’s access to the Server be revoked effective as of August 18, 2018. (Id. at ¶

23.)

12. On January 4, 2019, CMIT discovered that it had failed to revoke

Hilsman’s access to the Server when he resigned. (Id. at ¶ 24; ECF No. 3 at Ex. A, ¶

8.) A report prepared by CMIT shows that on August 17 and 18, 2018, the last two

days of Hilsman’s employment with Encompass, he downloaded numerous documents

from the Server. On August 17, 2018, Hilsman downloaded one-hundred sixty-three

(163) documents from the Server including: “budget information, rate tables,

materials information, and design files for various projects.” (ECF No. 3, at ¶ 25.)

On August 18, 2018, Hilsman downloaded thirty-nine (39) documents related to a
project for Encompass’s customer AECOM, and on August 20, 2018, two days after

he left Encompass, Hilsman downloaded nine (9) more documents related to AECOM

Project 61203 including “a plat template, multiple deed plat tracking spreadsheets,

survey plats, and project progress information.” (Id. at ¶¶ 25–26.) From August 17

through December 11, 2018, Hilsman downloaded more than six-hundred (600)

documents from the Server. (Id. at ¶ 28.)

13. Hilsman and Maser used Encompass’s documents to compete with

Encompass on “projects like the Line 328 Project, the Line 202 Project, and the Duke

RLNG Project.” (Id. at ¶ 29.) On August 27, 2018, four days prior to the due date for

the Line 328 proposal, Hilsman accessed the Server and downloaded “Encompass’[s]

proposal documents, including Encompass’s Scope of Work, which sets forth what

Encompass is willing to agree to in relation to the work anticipated.” (Id. at ¶¶ 30–

31.) Hilsman and Maser undercut Encompass’s bid on the Line 328 Project and won

the bid. (Id. at ¶¶ 32–33.)

14. On October 18, 2018, Hilsman downloaded drawing templates and

deliverables related to the Line 202 project for Kinder Morgan. Hilsman “pulled

drawing templates and deliverables to assist Maser to know how to bid the

project. This was in addition to three documents he downloaded on August 17

relating to Encompass’s projects with Kinder Morgan.” (Id. at ¶ 35.) Maser’s bid for

the Line 202 Project was ultimately unsuccessful, however, the table in Maser’s bid

proposal was identical to Encompass’s. (Id. at ¶ 36.)
15. Finally, on November 5, 2018, Hilsman accessed the Server and viewed

confidential information related to Encompass’s past proposals for projects

comparable to the Duke RLNG Project, “e.g., Encompass’[s] proposal for a prior

project titled ‘Duke_Line 328 Extension_Proposal_R0.docx,’ and related fee tables in

a file titled ‘PNG – Line 328 Extension_Fee Tables_Rev0.xlsx.’” (Id. at ¶ 38.) Maser

was subsequently awarded the Duke RLNG Project contract. (Id. at ¶¶ 39–40.)

III. Procedural History

16. Encompass initiated this action by filing its Verified Complaint on

January 30, 2019. (ECF No. 3.) This matter was designated as a complex business

case and assigned to the undersigned on January 31, 2019. (Des. Ord., ECF No. 1;

Assign. Ord., ECF No. 2.)

17. In the Verified Complaint, Encompass makes a claim against Hilsman

for conversion, and claims against both Hilsman and Maser (collectively,

“Defendants”) for: misappropriation of trade secrets in violation of the North

Carolina Trade Secrets Protection Act, N.C.G.S. § 66-152, et seq. (“TSPA”); tortious

interference with prospective economic advantage; computer trespass in violation of

N.C.G.S. § 14-458; § 1-539.2A; unfair trade practices in violation of the North

Carolina Unfair and Deceptive Trade Practices Act, N.C.G.S. § 75-1.1. (“UDTPA”);

and punitive damages pursuant to N.C.G.S. § 1D-1, et seq.

18. On April 3, 2019, Hilsman filed Hilsman’s Motion and a brief in support.

(ECF No. 38; Hilsman Br. in Supp., ECF No. 39.) On April 3, 2019, Hilsman also

filed his answer to the Verified Complaint. (Hilsman Answer to Compl., ECF No. 40.)
On April 8, 2019, Maser filed its answer to the Verified Complaint. (Maser Answer

to Compl., ECF No. 41.) On May 21, 2019, Maser filed an amended answer adding a

counterclaim against Encompass. (Maser Amend. Answer, ECF No. 61.) On June

14, 2019, Maser filed Maser’s Motion along with a supporting brief. (ECF No. 63;

Maser Br. in Supp., ECF No. 64.) On June 20, 2019, Encompass filed a reply to

Maser’s counterclaim. (Pls. Answer to Maser Counterclaim, ECF No. 65.)

19. On June 7, 2019, Encompass filed a brief in opposition to Hilsman’s

Motion. (Pls. Br. in Opp. to Hillsman Mot. to Diss., ECF No. 62.) On June 28, 2019,

Encompass filed a brief in opposition to Maser’s Motion. (Pls. Br. in Opp. to Maser

Mot. to Diss., ECF No. 67.) On August 7, 2019, the Motions came before the Court

for a hearing and the Court heard oral argument from counsel. The Motions are now

ripe for disposition.

IV. Analysis

A. Standard of Review

20. Pursuant to Rule 12(b)(6), Hilsman moves to dismiss Encompass’s

claims for conversion, misappropriation of trade secrets, and computer trespass for

failure to state a claim upon which relief may be granted.

21. In ruling on a motion to dismiss pursuant to Rule 12(b)(6), the Court’s

inquiry is “whether, as a matter of law, the allegations of the complaint, treated as

true are sufficient to state a claim upon which relief may be granted under some legal

theory, whether properly labeled or not.” Harris v. NCNB Nat’l Bank, 85 N.C. App.

669, 670, 355 S.E.2d 838, 840 (1987). Our appellate courts frequently reaffirm that
North Carolina is a notice pleading state. See, e.g., Feltman v. City of Wilson, 238

N.C. App. 246, 252, 767 S.E.2d 615, 620 (2014) (quoting Wake Cty. v. Hotels.com, L.P.,

235 N.C. App. 633, 647, 762 S.E.2d 477, 486 (2014)) (“Under notice pleading, a

statement of claim is adequate if it gives sufficient notice of the claim asserted to

enable the adverse party to answer and prepare for trial, to allow for the application

of the doctrine of res judicata, and to show the type of case brought.”).

22. “It is well established that dismissal pursuant to Rule 12(b)(6) is proper

when ‘(1) the complaint on its face reveals that no law supports the plaintiff’s claim;

(2) the complaint on its face reveals the absence of facts sufficient to make a good

claim; or (3) the complaint discloses some fact that necessarily defeats the plaintiff’s

claim.’” Corwin v. British Am. Tobacco PLC, 371 N.C. 605, 615, 821 S.E.2d 729, 736–

37 (2018) (quoting Wood v. Guilford County, 355 N.C. 161, 166, 558 S.E.2d 490, 494

(2002)).

23. In ruling on a 12(b)(6) motion, the court construes the

complaint liberally and accepts all allegations as true. See Laster v. Francis, 199

N.C. App. 572, 577, 681 S.E.2d 858, 862 (2009). However, the Court is not required

“to accept as true allegations that are merely conclusory, unwarranted deductions of

fact, or unreasonable inferences.” Good Hope Hosp., Inc. v. N.C. Dep’t of Health &

Human Servs., 174 N.C. App. 266, 274, 620 S.E.2d 873, 880 (2005) (quoting Veney v.

Wyche, 293 F.3d 726, 730 (4th Cir. 2002)).
B. Conversion

24. In its first claim, Encompass alleges that Hilsman is liable for

conversion because he took “Encompass’[s] business information and documents and

converted those to use for his own purposes . . . without consent[.]” (ECF No. 3, at ¶

42.) Encompass also alleges that it has suffered damages and that the conversion

was carried out “willfully and wantonly . . . repeatedly and surreptitiously[.]” (Id. at

¶¶ 43–44.)

25. Hilsman argues that Encompass’s conversion claim fails for three

reasons. (ECF No. 39, at p. 5.) The Court need only address Hilsman’s first argument

for dismissal of Encompass’s conversion claim. Hilsman avers that the Verified

Complaint fails to allege that Encompass has been “deprived from the information at

issue or excluded from its use” which is a necessary element of a claim for conversion.

(ECF No. 39, at p. 5.) The Court agrees.

26. 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) (internal citation and quotation marks omitted). “There are, in effect, two

essential elements of a conversion claim: ownership in the plaintiff and wrongful

possession or conversion by the defendant.” Id.

27. Encompass relies on federal case law to argue that the “deprivation”

necessary for a conversion claim occurs when electronic data is copied but the owner
retains access to the data. (ECF No. 62 at .pdf, pp. 2–3; citing Bridgetree, Inc. v. Red

F Mktg. LLC, 2013 U.S. Dist. LEXIS 15372, at *49 (W.D.N.C. Feb. 5, 2013).)

However, this Court has, time and again, expressly rejected the Bridgetree

holding. See, e.g., New Friendship Used Clothing Collection, LLC, 2017 NCBC LEXIS

72, at *38–39; Duo-Fast Carolinas, Inc. v. Scott’s Hill Hardware & Supply Co., 2018

NCBC LEXIS 2, at *36 (N.C. Super. Ct. Jan. 2, 2018); Addison Whitney, LLC v.

Cashion, 2017 NCBC LEXIS 51, at *18 (N.C. Super. Ct. June 9, 2017). “Merely

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.” New Friendship Used Clothing Collection, LLC, 2017 NCBC LEXIS

72, at *38–39.

28. The Court finds that Encompass has failed to sufficiently plead a claim

for conversion against Hilsman. In its Verified Complaint, Encompass alleges that

on several occasions, Hilsman accessed Encompass’s database and downloaded its

electronically stored property without Encompass’s consent. (ECF No. 3, at ¶¶ 22–

42.) However, the Verified Complaint is devoid of any allegation that it has been

deprived of, or excluded from, its electronically stored property. “[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., 2018 NCBC LEXIS 2, at *36.

Therefore, Hilsman’s motion to dismiss Encompass’s claim for conversion should be

GRANTED.
C. Misappropriation of trade secrets

29. In its second claim, Encompass makes a claim against Defendants for

misappropriation of trade secrets in violation of the TSPA. (ECF No. 3, at ¶¶ 45–49.)

Encompass alleges that its “confidential information . . . constitutes trade secrets . . .

is business or technical information . . . that derives independent . . . value from not

being generally known or readily ascertainable through independent development[.]”

(Id. at ¶ 46.)

30. Hilsman’s sole argument for dismissal of Encompass’s claim for

misappropriation is that Encompass fails to identify any trade secret with sufficient

particularity to survive dismissal at the pleadings stage. (ECF No. 39, at pp. 5–8.)

Essentially, Hilsman argues that Encompass’s descriptions of its alleged trade

secrets are vague, general, and insufficient to put Defendants on notice of what

exactly has been misappropriated. (ECF No. 39, at p. 8.)

31. In North Carolina, “[t]o successfully plead a claim for misappropriation

of trade secrets, 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 can 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) (quoting

Washburn v. Yadkin Valley Bank & Tr. Co., 190 N.C. App. 315, 326, 660 S.E.2d 577,

585 (2008)) (internal quotations omitted). At the pleadings stage, claimants must do

more than make “general allegations in sweeping and conclusory statements, without
specifically identifying the trade secrets allegedly misappropriated.” Washburn, 190

N.C. App at 327, 660 S.E.2d at 585.

32. In Krawiec, the Supreme Court affirmed the dismissal of a complaint

that described the plaintiff’s trade secrets as “original ideas and concepts for dance

productions, marketing strategies and tactics, as well as student, client and customer

lists and their contact information.” 370 N.C. at 611, 811 S.E.2d at 549. In reaching

its conclusion, the Court noted that “[p]laintiffs provided no further detail about these

ideas, concepts, strategies, and tactics sufficient to put defendants on notice as to the

precise information allegedly misappropriated.” Id.

33. In this case, Encompass’s descriptions of its alleged trade secrets are

more than sufficient to survive dismissal at the pleadings stage. First, in addition to

its more general allegations, Encompass also identifies specific information Hilsman

misappropriated including “rate tables,” “design files,” and “a plat template, multiple

deed plat tracking spreadsheets, survey plats, and project progress information.”

(ECF No. 3, at ¶¶ 25–26.) These descriptions are more precise than those found

deficient in Krawiec and Washburn.

34. Second, Encompass identifies specific documents and information

Hilsman accessed related to particular projects on which Encompass was bidding,

including the names of two specific files that Hilsman accessed regarding the Duke

RLNG Project. (Id. at ¶ 38.)
35. Finally, Encompass attached to the Verified Complaint a detailed list

generated by CMIT of the specific files and documents Hilsman accessed and

downloaded from the Server with the dates and times of such access.

36. The Court finds that Encompass pleaded enough to put Defendants on

notice of the trade secrets they are accused of misappropriating. Therefore, Hilsman’s

motion to dismiss Encompass’s claim for misappropriation of trade secrets is

DENIED.

D. Computer Trespass

37. In its fourth claim, Encompass alleges that Defendants are civilly liable

for computer trespass in violation of N.C.G.S. § 14-458. (Id. at ¶¶ 56–59.) Encompass

alleges that Defendants “used Encompass’s computer or computer network without

authority . . . to remove computer data . . . and made or caused to be made an

unauthorized copy of Encompass’[s] computer data.” (Id. at ¶ 57.) Encompass further

alleges that in accessing and downloading documents from the Server beginning on

and after August 17, 2018, “Defendants had no right or permission from Encompass

to use its computer or computer network . . . in a manner exceeding any right or

permission.” (Id. at ¶ 58.)

38. Section 14-458 provides, in relevant part, that “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.
...

(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. . . .

N.C.G.S. § 14-458(a)(1), (5).

39. Section 14-458(a) further provides:

a person is ‘without authority’ when (i) 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, or (ii) the person uses a computer or computer
network, or the computer services of an electronic mail
service provider to transmit unsolicited bulk commercial
electronic mail in contravention of the authority granted by
or in violation of the policies set by the electronic mail
service provider.

N.C.G.S. § 14-458(a).

40. Moreover, “[a]ny person whose property or person is injured by reason

of a [computer trespass] may sue for and recover any damages sustained and the costs

of the suit pursuant to G.S. 1-539.2A.” N.C.G.S. § 14-458(c). The statute defines

property as “financial instruments, information, including electronically processed or

produced data, and computer software and computer programs in either machine or

human readable form, and any other tangible or intangible item of value.” N.C.G.S.

§ 14-453(8).

41. Hilsman argues that Encompass’s computer trespass claim should be

dismissed for two reasons. First, Hilsman contends that Encompass alleges only that

Hilsman accessed its computer network without authorization, and not that Hilsman
used or accessed an Encompass computer without authorization.3 (ECF No. 39, at

pp. 9, 12.) Defendants contend that Section 14-458(a), by its express terms, “does not

extend its definition of ‘without authority’ to one who accesses a ‘computer network’”

without authority. (Id. at p. 12.) Consequently, if Hilsman accessed Encompass’s

computer network using his personal computer and not an Encompass-owned

computer, his actions could not have been “without authority” and Encompass is

unable to meet a fundamental element of its claim for computer trespass. (Id.)

42. Alternatively, Hilsman argues that assuming accessing a computer

network falls within the definition of “without authority,” Encompass’s claim still

fails. (Id. at pp. 8–11.) Hilsman contends that he always acted with the authority of

Encompass because Hilsman’s account log-in “expressly granted permission to access

the server” and his account was not terminated when he resigned from Encompass

because CMIT failed to revoke his access. (Id. at p. 9.)

43. The Court has researched the issue but found no North Carolina

appellate precedent analyzing claims for civil computer trespass, let alone providing

guidance on how such claims should be viewed on a motion to dismiss. However, the

Court is persuaded that Encompass has sufficiently stated a claim for computer

trespass at this preliminary stage of the case. While it is not clear from the

allegations whether Hilsman used an Encompass computer to download some or all

of the information, Encompass alleges that Hilsman “used Encompass’s computer or

3 Although not expressly alleged in the Verified Complaint, Defendants apparently contend

that Hilsman returned his company-issued laptop computer to Encompass when he was
terminated and could only have accessed the Server through devices not owned or controlled
by Encompass.
computer network without authority,” or exceeding his authority, when he accessed

the Server and downloaded the confidential information at issue. (ECF No. 3, at ¶¶

57–58.)

44. In addition, there are no express allegations in the Verified Complaint

regarding what, if anything, Encompass told Hilsman about his access to the Server

when he was terminated. The question of Hilsman’s authority to access Encompass’s

systems is one that may require discovery to resolve.

45. North Carolina’s “system of notice pleading affords a sufficiently liberal

construction of complaints so that few fail to survive a motion to dismiss.” Wray v.

City of Greensboro, 370 N.C. 41, 46, 802 S.E.2d 894, 898 (2017) (quoting Ladd v.

Estate of Kellenberger, 314 N.C. 477, 481, 334 S.E.2d 751, 755 (1985)). Encompass’s

allegations of computer trespass put Hilsman on “notice of the claim asserted,” allow

him to understand the nature of Encompass’s claim, and enable Hilsman to “answer

and prepare for trial.” Wake County, L.P., 235 N.C. App. at 646, 762 S.E.2d at 486;

County of Wayne Constr. Managers of Goldsboro v. Amory, 2019 NCBC LEXIS 32, at

*51–52 (N.C. Super. Ct. May 17, 2019) (concluding that allegations that defendant

“download[ed] . . . computer data from the Box Account to his personal device(s)

exceed[ing] the right or permission granted to him by plaintiffs and result[ing] in

damage” are sufficient to state claim for computer trespass); see also Spirax Sarco,

Inc. v. SSI Eng’g, Inc., 122 F. Supp. 3d 408, 417–18 (E.D.N.C. Aug. 10, 2015) (stating

that plaintiff companies’ allegations that “[the defendant] intentionally used his

[company-issued] laptop to download vast quantities of computer files to his own
media devices and Dropbox account, without authorization and . . . deleted vast

quantities of computer files from his [company-issued] laptop without authorization”

were “sufficient to state a claim [for computer trespass] under North Carolina law”).

Therefore, Hilsman’s Motion seeking dismissal of Encompass’s computer trespass

claim should be DENIED.

THEREFORE, it is ORDERED that:

1. Hilsman’s Motion is GRANTED, in part, and DENIED, in part. To the

extent Hilsman seeks dismissal of Encompass’s claim for conversion, the

motion is GRANTED. To the extent Hilsman seeks dismissal of

Encompass’s claims for misappropriation of trade secrets and for

computer trespass, the motion is DENIED.

2. Maser’s Motion is DENIED.

SO ORDERED, this the 5th day of November, 2019.

/s/ Gregory P. McGuire
Gregory P. McGuire
Special Superior Court Judge
for Complex Business Cases