June 2026 OPINIONS (Part I)

This issue of the newsletter (Opinions Part 1), continuing with past practice, is available to all subscribers, whether paid or not.

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The Business Court picked up its pace in June 2026 and delivered eleven Opinions. This edition of the Newsletter covers five of them. Two of these were Opinions in covenant not to compete cases, which I found particularly interesting. The remaining six are coming in the next Newsletter. You’ll have to pay for that one.

The nonsolicitation provision contained in Defendant Jason West’s Employment Agreement with plaintiff BioSkyrb in BioSkryb Genomics, Inc. v. AClarity Genomics Inc., 2026 NCBC 51 (Conrad, J.) was presumably valid on its face (I am assuming that to be the case because the language was not quoted at all by Judge Conrad in his Opinion).

But it failed for an entirely different reason—the inclusion of a California choice of law provision in the Agreement. California does not just invalidate covenants not to compete. It calls them an “act of unfair competition.” CA Bus & Prof Code §16600.1. (c).California’s Business and Professions Code provides that:

It shall be unlawful to include a noncompete clause in an employment contract, or to require an employee to enter a noncompete agreement, that does not satisfy an exception in this chapter.

CA Bus & Prof Code §16600.1. (a).

Not only does the Golden State make a noncompetition provisions illegal, but it also deems it a civil violation for an employer to require an employee to execute an Agreement containing a noncompete provision.

And further saucing the non-compete goose, California law permits an employee who signs a noncompete to recover actual damages suffered as a result of having to sign a restrictive provision, but it also allows her to recover her attorneys’ fees in pursuing her claim. CA Bus & Prof Code § 16600.5(e1 and e2) (2025).

Well, hold on a second. The defendant in the case before the Business Court was based in North Carolina when he signed the Agreement containing the restrictive covenant. Can California extend the force of this law beyond the boundaries of its State? Well, the statute provides exactly that. It reads as follows:

An employer or former employer shall not attempt to enforce a contract that is void under this chapter regardless of whether the contract was signed and the employment was maintained outside of California.

CA Bus & Prof Code § 16600.5(a)(emphasis added).

The extraterritorial reach of the statute was the principal issue addressed by Judge Conrad. He observed “[i]t is true that ‘legislation is presumptively territorial and confined to limits over which the law-making power has jurisdiction.’ Op. ¶19 (quoting Sawyer v. Mkt. Am., Inc., 190 N.C. App. 791, 796 (2008). He held, nevertheless, that the language of the statute was “wholly unambiguous in its intent to extend the application of this section of the California Business and Professions Code to outside of the state.” Op.¶19 (quoting FBC Mortg., LLC v. New Am. Funding, LLC, 2024 U.S. Dist. LEXIS 250486, at *14 (D. Ariz. Apr. 22, 2024).

What about the argument that applying this California statute would be contrary to a fundamental policy of North Carolina and that it should not be enforced in our state? That principle applies when the foreign law violates “some prevalent conception of good morals or fundamental principle of natural justice or involve injustice to the people of the forum state.” Op. ¶16.

Restrictions on the ability to compete are not in that description. In fact, North Carolina’s courts have expressed a general disapproval of restrictive covenants in employment contracts. Op. ¶16 (citing Farr Assocs., Inc. v. Baskin, 138 N.C. App. 276, 279 (2000) (“Covenants not to compete between an employer and employee are not viewed favorably in modern law.”)

So not only did plaintiff not get its nonsolicitation provision enforced, it ended up voluntarily dismissing that claim and being on the hook for his former employee’s attorneys’ fees. Ouch!

[note that this is a fairly new California law. It came into effect in January 2024]

The issue before Judge Conrad in Moore v. Brooks, 2026 NCBC 52 (Conrad, J.) involved which forum was the appropriate one to decide whether the claims and counterclaims levelled by the Plaintiffs and the Defendants against each other were subject to arbitration. Was it the Business Court or the arbitrator appointed per the Operating Agreements of the LLCs involved?

There was also an issue whether entities which had not signed the Operating Agreement containing the arbitration provision could be compelled to go to arbitration. This is not the first time that Judge Conrad dealt with this issue. He also did so eight years ago in Charlotte Student Housing DST v. Choate Construction Co., 2018 NCBC 88 If this issue fascinates you (it doesn’t me, hence my lackluster writing about this Moore v. Brooks decision), I wrote about this issue long ago on my blog. I will be mentioning my old blog more frequently in this Newsletter going forward.

The non-signatories in the 2026 case were the Estate of Drue A. Moore, the Redwood Trust, and Redwood WI Holdings. The Redwood entities had become members of Defendant Winthrop Intelligence, LLC which had signed off on the arbitration provision. Neither the Estate, nor the Redwood Trust, nor Redwood WI Holdings had signed off on the Operating Agreement containing the arbitration provision.

Winthrop offered a number of arguments as to why the non-signatories should be forced to arbitrate, but Judge Conrad shut them down one by one. He rejected the argument that the Estate, the Redwood trust, and Redwood WI Holdings were the alter egos of each other or signatory Drue Moore. He scoffed at the argument by the parties seeking arbitration that “the facts supporting an alter ego theory will be further developed as this matter progresses,” holding that Winthrop could not rely on “conclusory assertions and minimal evidence of asset commingling.” Op. ¶65. So too he rejected the argument that the non-signatories were bound by the arbitration provisions because they accepted the “benefits” of membership in Winthrop.

Who Decides Whether A Dispute Is Subject To Arbitration?

Why was Judge Conrad deciding this issue anyway? Shouldn’t it have been left to the arbitrator to decide? The short answer is “no.” Judge Conrad held that:

While the validity of an arbitration agreement is a question of substantive arbitrability that may be delegated to an arbitrator, “a court, not an arbitrator . . . must initially decide whether a nonparty” is bound by or has recourse under a putative arbitration agreement, regardless of any delegation provision therein.

Op. ¶55 (emphasis in original)(citing Rogers v. Tug Hill Operating, LLC, 76 F.4th 279, 286 (4th Cir. 2023) (citing Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 630–32 (2009)).

That power of the Court to rule on whether a party is bound to arbitrate is in contrast to the power of the Court to determine whether a dispute is subject to arbitration in the first place. The parties to an arbitration agreement can delegate to the arbitrator the authority to decide whether a dispute is arbitrable. The delegation of that authority to the arbitrator must show “that the parties ‘clearly and unmistakably’ intended for an arbitrator, instead of a court, to decide issues of substantive arbitrability.” Op. ¶43. Here, the parties had done that by expressly incorporating the AAA Commercial Rules providing for the arbitrator’s resolution of substantive arbitrability issues. Op. ¶44.

When I was still practicing law, the Business Court’s dual filing system used to drive me crazy. File electronically in the Business Court but file the same document on paper in the County in which the case had been filed? Why, why, why?

If not for the able assistance of my wonderful assistant, Nancy P, I would have routinely been in violation of the Business Court Rule which required dual filing. Every lawyer in North Carolina needs a Nancy P. But they are rare and hard to find. I was lucky.

Things are slightly different now that all of the Clerks of Superior Court (as of October 2025) have their own e-filing system (Odyssey).  But dual filings are still required because the Business Court has its own, different e-filing system (Alpine). Perhaps they will be integrated in the future.

Business Court Rule 3.11 still requires that” material listed in Rule 5(d) of the Rules of Civil Procedure must be filed with the Clerk of Superior Court in the county of venue, either before service or within five days after service.”  Rule 5(d) includes “all pleadings, written motions, and all notices of hearing.”

With that preamble and setting aside my annoyance over the need for dual filing, let’s get into the guts of Judge Houston’s “Order of Inclination” in Moore v. Brooks, 2026 NCBC 53 (Houston, J.) If you are reaching for your Rules of Civil Procedure to find the Rule governing Orders of Inclination, you won’t find one. It is not mentioned.

In November 2025, Judge Houston had granted a Motion to Dismiss filed by several of the then Defendants in the lawsuit. The Motion was properly filed on the Business Court’s Alpine e-filing system, but was not filed by the moving Defendants in the county where the case originated (Durham County).

Plaintiffs raised no objection to the insufficient filing. They proceeded to fully brief the Motion and attended a hearing on the Motion. After losing the Motion (to dismiss for lack of personal jurisdiction), Plaintiffs properly filed a Notice of Appeal with the North Carolina Supreme Court.

One month after noticing their appeal, the Plaintiffs filed a Rule 60 motion requesting the Business Court to set aside its Order of Dismissal because of the lack of the filing of the motion on the Durham counties Odyssey filing system. The plaintiff said that the dismissal order was “void” due to the e-filing snafu.

The nub of Plaintiff’s argument was that because the prevailing Defendants’ “motion to dismiss was filed on the Business Court’s Alpine filing system but was not timely filed on Odyssey, the motion was effectively non-existent and could not be ruled on.” Order ¶21

Judge Houston disagreed with that argument and stated several reasons for doing so:

First, he observed that “[e]ven when a motion is not properly filed, in its discretion, a court may still consider the motion as long as the parties ‘were put on notice, or had reason to know,’ of the motion. (quoting Towne v. Cope, 32 N.C. App. 660, 665 (1977)). There was no question here that the Plaintiffs had been put on notice of the motion.  They had briefed it and argued it!

Second, he observed that the North Carolina Rules of Civil Procedure “specifically contemplate situations in which circumstances compel courts to rule on motions before they been filed with the Clerk of Superior Court.”  Op. ¶25. Those situations include motions for Temporary Restraining Order’s or preliminary injunctions” on short notice or, at times, no notice.” Id.

Next, he observed that “taken to its logical end, Plaintiffs’ interpretation of the rules could effectively deprive the Business Court of the ability to consider motions for temporary restraining orders, preliminary injunctions, last-minute motions for extensions of time, or other motions that seek expedited relief any time before the motion has been filed with the Clerk—even if the motion has been properly filed and served via the Business Court’s Alpine filing system and even though the movant, by the plain language of the rules, has five days from such contemporaneous service to get the document on file with the Clerk.” Op. ¶26

Finally, Judge Houston said that this interpretation of the rules “would appear to prevent courts from hearing or resolving oral motions made in open court since they would not otherwise constitute written motions filed specifically with the Clerk of Superior Court—even though the Rules of Civil Procedure permit courts to consider oral motions that have never been filed with the Clerk.” Op. ¶27.

Don't walk away from this Order “of Inclination” thinking that you can disregard the dual filing dictate of BCR 3.11. You shouldn’t.

The Plaintiff in Matt Logan, Inc. v. Abitz, 2026 NCBC 54 (Robinson, CJ.) had obtained a Temporary Restraining Order in the North Carolina Superior Court of Guilford County. It had followed that success with obtaining a Preliminary Injunction in the same Court. The orders enforced the defendant Abitz’s restrictive covenants in his employment agreement.

Defendant Abitz is a certified financial planner who worked for the Plaintiff in its business of providing financial and brokerage advice to its clients. The Employment Agreement which Abitz signed at the outset of his employment contained restrictions on non-competition, non-solicitation, and confidentiality. A few years later, Defendant Abitz formed a competing company and left the employment of Plaintiff Matt Logan. He promptly began contacting his former employer’s clients to solicit their business. Plaintiff Matt Logan contended that defendant Abitz had taken confidential client information from its computer servers.

The usual cease and desist letters from plaintiff to his former employee followed, but the alleged violations of the restrictive covenants continued and plaintiff filed a Verified Complaint and Motion for Temporary Restraining Order, Preliminary and Permanent Injunction in Guilford County Superior Court on November 4, 2025.

Superior Court Judge William Wood entered the TRO on November 7, 2025. Superior Court Judge Robert Broadie continued the TRO into an;

Order Granting Preliminary Injunction on January 21, 2026. The Orders were obviously prepared by Plaintiff’s counsel and contain absolutely no analysis of the reasonableness of the restrictions.

The Injunction Was Lost When Plaintiff Renewed Its Claims In the Business Court

The case moved over from regular old Superior Court to the Business Court in February 2026. The Complaint was titled First Amended Verified and Motion for Temporary Restraining Order, Preliminary and Permanent Injunction. The Defendant responded with a Motion to Dismiss in March 2026.  I will note here that the Guilford County Courthouse is only two blocks from the chambers of the North Carolina Business Court in Greensboro which involves crossing two streets. It is about a five minute walk.

Weren’t the TRO and the injunction a done deal? One Superior Court Judge cannot overrule another.  Wasn’t Chief Judge Robinson’s obligation to reenter the injunctive orders, not to dismiss the claims? I am sure that it would not have been hard for the Plaintiff to conjure up some argument that the Business Court was bound by the previous Superior Court Judges’ rulings. Law of the case perhaps? Maybe it did. I don’t know because the Business Court’s electronic filing system was not available as of the time that I am writing this post over a couple of days. That frequently happens. I don’t like it.

Anyway, Chief Judge Robinson pointed out that the Preliminary Injunction Order expressly stated that it was not effective until the “filing and the posting of a bond in the amount of $200,000.”  Order ¶30 & n.1.  The bond was never posted and Chief Judge Robinson stated that “even though the Superior Court concluded that Plaintiff was entitled to preliminary injunctive relief, none has ever become effective.” Id. Why didn’t the Plaintiff post the bond? I have no idea. Maybe the client refused to or couldn’t post the $200,000 bond stipulated by the Preliminary Injunction? Why had they gone to regular old Superior Court in the first place? Maybe because they knew that the deficient restrictions they were trying to enforce would not get the the careful scrutiny there that they ended up receiving in the Business Court.

The lack of the bond and the resulting ineffectiveness of the previous Orders gave Chief Judge Robinson the authority to strictly scrutinize the restrictive covenants.  Op. ¶42. When he did so, he found covenants to be unenforceable. 

I won’t burrow into his analysis, but suffice to say that these restrictions were classically unenforceable. The noncompete provision restricted the defendant “from performing any services with a competitor, even those wholly unrelated to his previous role as a Financial Planner.” Op. ¶64.

The nonsolicitation provision was not limited to soliciting customers with whom Abitz had had some contact or ability to influence, which rendered it unenforceable. Op. ¶56. It also contained the words which are the kiss of death to any restrictive covenant: “directly or indirectly.”

Misappropriation of Trade Secrets Claim Also Dismissed

There is more to the Abitz case than the restrictive covenant aspect. Plaintiff also brought a claim for misappropriation of trade secrets. Chief Judge Robinson concluded that the alleged trade secrets had not been identified with sufficient particularity.

He held that information that the defendant had developed during his employment with the plaintiff could not be the subject of a claim for misappropriation of trade secrets. Op. ¶77. Furthermore, the court held that the defendant had not “misappropriated” any alleged trade secrets because he had not acquired that information after the plaintiff had withdrawn its consent as to that information.

That holding was based on a recent North Carolina Supreme Court decision, in which the Supreme Court held that:

[A]n employer cannot state a prima facie case against its employee merely by showing that it gave the employee access to its trade secrets at some point. Rather, an employer must show that the employee had the specific opportunity to acquire the trade secret after the employer’s express or implied consent or authority ceased to exist. . . . [M]ere access to a trade secret alone is insufficient. There must also be an absence of express or implied consent or authority at the time that the employee had a specific opportunity to acquire the trade secret.

Op. ¶ 79 (emphasis added)(quoting Relation Ins., Inc. v. Pilot Risk Management Consulting, LLC (N.C. Supreme Court 2026). The way I read that, once an employer has consented to disclosing a “trade secret” to an employee, that employee cannot be later found to have “misappropriated” it. [It is worth noting that the two month old Supreme Court decision in Relation Insurance is a direct appeal from a Business Court Opinion. Although the appellate court partially reversed the Business Court, it said that its construction of G.S. §66-152 on misappropriation was “slightly different. . . [but] functions in much the same way.”]

There is no Such Thing as a Cause of Action for Injunctive Relief

I have said this before and I will say it again. You cannot bring a claim for injunctive relief. Chief Judge Robinson said that:

Op. ¶95. The Court dismissed the “claim” for injunctive relief without prejudice, leaving the Plaintiff free “to seek injunctive relief if warranted by the evidence at the appropriate time.” Op. ¶96.

A Final Word From Me On North Carolina Business Court vs. North Carolina Superior Court

Let me be clear that in this post I am not saying that justice in the Business Court is of a higher quality than that in Superior Court.  But let’s face it, the Superior Court Judges handling the motions in the Matt Logan case undoubtedly came to them on a motions calendar with 50 or more cases to be decided in a space of five days. Without the benefit of the two clerks that a Business Court Judge receives, they did not have the time or the bandwidth to delve into the intricacies of the restrictive covenants before them.

Still, if you’re worried about whether the restrictive covenant you’re seeking to enforce will withstand scrutiny, do not go to the Business Court. It won’t.  Roll the dice with an overburdened clerkless Superior Court Judge.

It is not very often that I have to struggle to extract something of value from a Business Court Opinion, but Belmont Korners, LLC v. Lynk Invs., LLC, 2026 NCBC 55 (Shirley, J.) Is such a case.  This is no reflection on Judge Shirley sparkling future as a Business Court Judge (it’s only his second Opinion for the Court), but simply an observation that complex business cases are sometimes pretty boring.

That said, here’s what I drew out of Belmont Korners:

The case involves a failed real estate development in Charlotte, North Carolina. The original owners of the property (the Stewarts) hooked up with Defendant Staley.  Staley represented himself as an “experienced real estate developer.” Op. ¶5. He was responsible for seeking financing for the project and paying costs until the financing closed.

Title to the property was conveyed to Plaintiff Belmont Properties. Defendant Staley held a 20% interest in Belmont properties via another LLC, Belmont Korners Investor, LLC.

Staley arranged a $6 million loan from Defendant Lynk Investments, LLC. When that loan came due, Lynk extended another loan, in the amount of $7 million, to refinance the first loan and provide additional funds that Defendant Staley claimed were needed. Despite the millions of dollars, no progress was made on the construction project.

A different entity owned by Defendant Staley filed for bankruptcy in October 2023. Staley allegedly abandoned the Belmont project and ceased communicating with the Stewarts. The Stewarts then learned that the $7 million loan with Lynk was in default.

In an attempt to work out the declining situation, Lynk was to take over the project in the place of Staley.  Another Belmont entity was formed -- Plaintiff Belmont Development Partners, LLC.  Defendant Lynk was to own 70% of Belmont Development Partners, LLC via yet another LLC to be formed (“RATB”).  The representations regarding the formation of RATB were made by a Lynk employee (Valentine).  RATB was never formed, though Valentine signed the Operating Agreement for defendant Belmont Developments Partners on behalf of RATB.

Judge Shirley plowed through nine claims for relief in his Opinion, not all of which I will deal with here.  First was his consideration of a claim for breach of fiduciary duty. The plaintiffs alleged that such a duty existed between Belmont Korners and Defendant Lynk. That was a nonstarter for Judge Shirley he said that” “[o]rdinary borrower-lender transactions . . . are considered arm’s length and do not typically give rise to fiduciary duties.” Op. ¶32 (quoting Dallaire v. Bank of Am., N.A., 367 N.C. 363, 368 (2014)).  Judge Shirley dismissed the fiduciary duty claim and the contributive fraud claim that rested upon it.

Alleged Misrepresentations. Plaintiff Belmont Properties allege that it conveyed the undeveloped property to Belmont Korners as a result of the misrepresentations regarding the formation (or non-formation) of RATB. Judge Shirley held that the Plaintiff could not have reasonably relied on this misrepresentation because a check of the Secretary of State’s public records would have disproved that RATB had been formed. Plaintiff had not been denied the opportunity to investigate or conduct a reasonably diligent inquiry regarding the existence of RATB.

Civil Conspiracy Claim.  For their civil conspiracy claim. Plaintiffs alleged that the defendants had acted in concert with to “wrongfully seize control of the property, exclude the Plaintiffs and deprive them of ownership benefits. Op. ¶34. Judge Shirley dismissed this claim based upon the intracorporate immunity doctrine, “which holds that there can be no conspiracy between a corporation and its agents.’” Op. ¶57

Unfair and Deceptive Trade Practices Claim is also Booted. Plaintiff’s claim for unfair and deceptive trade practices was also dismissed because the claims were not “in or affecting commerce” as required by the statute. As Judge Shirley put it, these “allegations describe an internal ownership and governance dispute within a single business enterprise, not marketplace conduct between separate market participants.. . that is insufficient to satisfy the commerce element of section 75-1.1.

Remedies Couched as Claims were also Dismissed. Plaintiff purported to bring claims for constructive trust, damages and for an accounting appointment of a referee.  Judge Shirley held that these “claims” were remedies, rather than a standalone action. He dismissed all of them.  He said that this dismissal did not preclude plaintiffs from seeking these remedies if they “are supported by a surviving substantive claim, proper motion, and proof.” Op. ¶69