Phelps Staffing, LLC v S.C. Phelps, Inc

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NO. COA11-472 NORTH CAROLINA COURT OF APPEALS Filed: 20 December 2011 PHELPS STAFFING, LLC, Plaintiff, v. Franklin County No. 09 CVS 500 S.C. PHELPS, INC.; SHEILA PHELPS; CHARLES T. PHELPS; MOYSES ROA MATA; and C T PHELPS, INC., Defendants, S.C. PHELPS, INC., Third Party Plaintiff, v. OMAR EL-KAISSI, Third Party Defendant. Appeal by Plaintiff from order entered 13 May 2010 and memorandum of decision and judgment entered 18 August 2010 by Judge Howard E. Manning, Jr. in Franklin County Superior Court. Heard in the Court of Appeals 27 October 2011. Harris & Hilton, P.A., by Nelson G. Harris, for Plaintiffappellant. Edmundson & Burnette, L.L.P., by J. Thomas Burnette and James T. Duckworth, III, The Law Office of Thomas H. Clifton, PLLC, by Thomas H. Clifton, Davis, Sturges & Tomlinson, by Conrad Boyd Sturges, III, and J.P. Williamson, Jr., for Defendant-appellees. HUNTER, JR., Robert N., Judge. -2This controversy centers upon the sale of a contract labor staffing business and the alleged breach of a non-compete clause in the asset sale agreement. The purchaser of the business, Phelps Staffing, LLC ( Plaintiff ), appeals the trial court s order and memorandum Plaintiff s claims including, inter for alia, of decision relief the and against seller of Phelps, and her husband, Charles Phelps. judgment six named the denying defendants, business, Sheila Plaintiff contends the trial court erred by concluding (1) Ms. Phelps did not breach her obligations under the non-compete clause of the asset sale agreement; and (2) Mr. Phelps was not bound by the asset sale agreement and, therefore, did not breach the non-compete clause by entering into competition with Plaintiff. After careful review, we affirm. I. Factual Background & Procedural History The facts of this case are not in dispute. incorporated S.C. Phelps, Inc. ( SCP ) in 1996. as the president incorporation. and SCP sole engaged shareholder in the contract labor to local businesses. of Ms. Phelps She has served SCP business of since its providing Ms. Phelps handled SCP s payroll, bookkeeping, and workers compensation matters. Phelps used his prior experience and contacts in the labor staffing -3industry to recruit customers and contract laborers for SCP.1 While Mr. Phelps did not draw a salary for his work through 2006 due to apparent approximately business. tax issues,2 $250,000 in he cash was, out however, of the provided proceeds with of the In addition, SCP paid various personal expenses on behalf of Mr. and Ms. Phelps including mortgage payments on their primary residence, rental payments on their beach cottage, utility bill payments at both residences, and personal vehicle expenses such as automotive insurance. SCP customers. thrived as Mr. Phelps continued to acquire new These customers included Arcola Lumber Company, Cal- Maine Foods, Carolina Egg Companies, Coastal Supply, Inc., and Flippo Lumber Company. SCP, assisted Mr. Moyses Roa Mata, another employee of Phelps in recruiting the contract labor workers. Ms. Phelps first attempted to sell SCP in 2000. The sale fell through, however, because Mr. Phelps refused to sign a noncompetition agreement. on Bickett Boulevard. 1 In 2001, SCP leased a new office space Ms. Phelps hired Crystal Powell to assist The record before this Court indicates Mr. Phelps operated a contract labor business as a sole proprietor for at least two years prior to the incorporation of SCP. 2 The trial court determined that SCP was incorporated in Ms. Phelps name because Mr. Phelps owed taxes to the Internal Revenue Service and the North Carolina Department of Revenue. -4with SCP s payroll, taxes, and workers compensation matters. Ms. Powell s role and responsibilities increased as Ms. Phelps involvement with the business diminished. Mr. Phelps role with SCP also increased and, by 2006, he was the primary manager of the business and began drawing a weekly salary of $1,000. In March 2007, Mr. Phelps formed a new company, Inc. C. T. Phelps, ( CTP ). Ms. Phelps held no ownership interest in CTP, nor was she otherwise affiliated with CTP as Mr. Phelps partner, agent, or employee. Around this time, Ms. Phelps told Mr. Phelps she was ready to get out of the contract labor business and wanted to sell SCP. Mr. Phelps agreed it was a good time to sell, and SCP was listed for sale later that year. Omar Through El-Kaissi discussions expressed an with and Mr. interest Ms. in Phelps, acquiring Mr. SCP. El-Kaissi learned that Ms. Phelps was the sole owner of SCP and that SCP had been paying some of the Phelps personal expenses. Mr. El- Kaissi informed Mr. and Ms. Phelps that he wanted both of them to sign a non-compete agreement as part of his asset purchase of SCP. Ms. Phelps agreed to sign on behalf of herself and SCP, but Mr. Phelps stated he would not sign a non-compete agreement. -5Nevertheless, the transaction proceeded. On 10 December 2007, Ms. Phelps, acting on her own behalf and on behalf of SCP, and Mr. El-Kaissi, acting on behalf of Plaintiff, entered into an Asset Purchase Agreement (the Agreement ). Pursuant to the Agreement, Plaintiff agreed to purchase all of SCP s assets including, inter alia, equipment, files, the business s customer lists, good and will, client inventory, information. Plaintiff agreed to pay a purchase price of $1.4 million, plus an additional pursuant to $100,000 the terms to be of paid a over promissory a ten-year note. Mr. period Phelps negotiated the sale on SCP s behalf and persuaded Mr. El-Kaissi to personally guarantee payment of the $100,000 note within twelve months of the Agreement. The Agreement specifies $25,000 of the purchase price as consideration Pursuant covenanted to for this not the inclusion clause, [to] SCP directly of and and/or a Ms. non-compete Phelps indirectly clause. agreed and Compete with Buyer . . . either by himself [sic] or through any entity owned or managed, in whole or in part, by the Seller for a period of [5 years]3 from the date of this Agreement within the Prohibited 3 The non-competition provision initially prescribed a three-year effective period. Upon further negotiation, the parties extended this period to five years. -6Territory.4 The clause further provides, for the same five-year period, Seller, Shelia [sic] Phelps and Charles Phillips5 shall not jeopardize the present and future operations of the Business by requesting any present or future client, customer, or vendor of Buyer to curtail, amend, or cancel its business with Buyer. Moreover, the Agreement defines Confidential Information broadly and states: Seller, Shelia [sic] Phelps and Charles Phillips agree to hold in confidence and shall not, except pursuant to written authorization from the Buyer or as required by a governmental entity: (i) directly or indirectly reveal, report, publish, disclose or transfer the Confidential Information or any part thereof to any person or entity; (ii) use any Confidential Information or any part thereof for any purpose other than the benefit of the Buyer; or (iii) assist any person or entity other than the Buyer to secure any benefit from the Confidential Information or any part thereof for a period of two (2) years after the date of Closing . . . . Mr. Phelps was present at the execution of the Agreement but he did not sign the Agreement. Mr. Phelps did not sign a non-compete agreement relating to the asset sale of SCP, nor did 4 The Prohibited Territory includes Hanover, Brunswick, Sussex, Caroline, Spotsylvania, and Amelia Counties in Virginia; Franklin, Warren, Vance, and Nash Counties in North Carolina; McDuffie County in Georgia; and Darke County in Ohio. 5 As the trial court noted, it is unclear why the name Charles Phillips appears in the Agreement. Charles Phillips is Ms. Phelps son. He never met Mr. El-Kaissi and took no part in the execution of the Agreement. -7he give any written or oral assurance that he would not compete with Plaintiff s business. Plaintiff initially retained Ms. Powell and Mr. Mata as employees; however, both refused to sign a non-compete agreement. Ms. Phelps with Ms. Powell left Plaintiff to assist accounting work at SCP in February 2008. Plaintiff terminated Mr. Mata s employment in October 2008 after Mr. El-Kaissi discovered Mr. Mata had been diverting Plaintiff s customers to a competing business.6 Ms. Phelps split the proceeds from the asset sale of SCP with Mr. account Phelps, in approximately June one transferring 2008. month $759,263.41 Mr. and later. Ms. After into Mr. Phelps their Phelps separated separation, Ms. Powell continued to do accounting work for Mr. Phelps and Ms. Phelps separately and continued to pay expenses out of SCP s business account. mortgage payments on the Phelps the Phelps personal These expenses included primary residence, rental payments on a beach cottage at Emerald Isle, utility payments for their primary residence and vehicles, and automobile insurance. the beach cottage, personal In August 2008, Mr. Phelps transferred $50,000 to SCP, which Ms. Powell applied towards payment of these expenses. 6 In addition, Ms. Powell performed It is unclear from the trial court s factual findings whether this competing entity was CTP. -8accounting work for Mr. Phelps business, CTP. She was not being paid for this work but was drawing unemployment benefits from SCP. CTP began operating its business Boulevard office location in August 2008. at the Bickett SCP, however, paid the rent on that office space through January 2009. Mr. Phelps maintained contact with SCP s former customers throughout 2008. Ms. Powell staffing of In October of that year, Mr. Phelps informed his intent business. He to asked return her to to the contract acquire new labor computer software to assist the accounting work for CTP. Ms. Powell obliged a and installed new accounting software on computer purchased by Mr. Phelps for CTP. Without Ms. Phelps permission or old participation, all of SCP s business, financial, and accounting data sets were installed into the accounting software on CTP s new computer. In December Plaintiff. 2008, Mr. Phelps began competing with Mr. Phelps contacted SCP s former customers, Arcola Lumber Company, Cal-Maine Foods, Carolina Egg Companies, Coastal Supply, Inc., and Flippo Lumber Company. At the time, these companies were engaged in business with Plaintiff. Mr. Phelps persuaded some of these companies to conduct business with CTP, and, in addition, flipped many of the contract laborers who -9were then working for Plaintiff. Mr. Mata assisted Mr. Phelps in recruiting and transferring the laborers from Plaintiff to CTP. Plaintiff contends that because many of these workers did not fill out job applications with CTP,7 Mr. Phelps must have obtained their personal information, such as social security numbers, from SCP s old records. In February 2009, CTP began paying the rent for its office space and the various personal expenses (rent and utilities for the beach house, mortgage and formerly been paid by SCP. insurance payments) that had CTP also took over operation and payments on a fax machine and copier formerly used by SCP. On 13 April 2009, Plaintiff filed a complaint in Franklin County Superior Court naming Ms. Phelps, SCP, Mr. Phelps, CTP, Mr. Mata, and Ms. Powell as Defendants. In its complaint, Plaintiff asserted claims against Ms. Phelps and SCP for breach of the confidentiality and non-competition clauses set forth in the Agreement (first and second claims for relief); against Ms. Phelps and SCP for breach of contract relating to payments of workers compensation premiums made by Plaintiff, post-closing, which Plaintiff contended should have been paid by Ms. Phelps 7 The record indicates many of these laborers were in fact unaware they had been flipped prior to receiving their first paycheck from CTP in January 2009. -10and SCP (third claim for relief); against all Defendants for violations of the Trade Secrets Protection Act (fourth and fifth claims for relief); against all Defendants for civil conspiracy (sixth claim for relief); against all Defendants for tortious interference with contractual relations (seventh claim for relief); and against all Defendants for unfair and deceptive trade practices (eighth claim for relief). counterclaimed against Plaintiff and Ms. Phelps and SCP impleaded third party Defendant Mr. El-Kaissi, alleging breach of contract for failure to pay the $100,000 promissory note in its entirety within one year of the Agreement. On 19 January 2010, Ms. Phelps and SCP filed a motion for summary judgment. Ms. Powell and Mr. Mata filed motions for summary judgment on 30 April 2010. Neither Mr. Phelps nor CTP moved for summary judgment with respect to Plaintiff s claims. On 13 May 2010, the trial court entered an order: (1) granting Ms. Powell s motion for summary judgment as to all claims; (2) granting summary judgment in favor of Ms. Phelps, SCP, and Mr. Mata with respect to the Trade Secrets Act claim and the tortious interference with contractual relations claim; and (3) granting summary judgment in favor of Mr. Mata with respect to the unfair and deceptive trade practices claim. -11On 7 resolved June by Plaintiff Phelps 2010, its to 13 amend operated SCP the May its as trial court 2010 order. complaint to heard a The claim: partnership and, the claims court (1) not permitted Mr. and Ms. accordingly, Mr. Phelps was bound by the non-competition clause set forth in the Agreement; (2) Mr. Phelps acted as the agent of SCP in competing with Plaintiff; (3) Mr. Phelps was the alter ego of SCP; and (4) as the true owner and alter ego of SCP, Mr. Phelps is bound by the terms of the non-competition clause. On 18 August 2010, the trial court entered a memorandum of decision and judgment awarding Plaintiff $8,478.00 relating to the unpaid workers compensation premiums (Plaintiff s third claim for relief) and denying relief with respect to Plaintiff s remaining claims. The trial court also concluded that Ms. Phelps and SCP were equitably estopped from accelerating the obligation of Mr. El-Kaissi and Plaintiff due under the promissory note. II. Jurisdiction & Scope of Review On 17 September 2010, Plaintiff filed a timely notice of appeal with this Court. Plaintiff s notice of appeal provides as follows: PLEASE TAKE NOTICE THAT Plaintiff Phelps Staffing, LLC, by and through the -12undersigned counsel, hereby appeals the Memorandum of Decision And Judgment filed August 18, 2010, and any and all interlocutory decisions of Court previously made and reflected in that Memorandum of Decision And Judgment. On 21 December 2010, Defendants filed a motion with the trial court alleging jurisdictional default dismiss Plaintiff s appeal to this Court. in their motion that and seeking to Defendants contended Plaintiff s notice of appeal failed to comport with the requirements of Rule 3(d) of the North Carolina Rules of Appellate Procedure because it did not designate this Court as the court to which Plaintiff directed its appeal. Defendants further contended Plaintiff had failed to prepare and deliver the trial transcript in a timely manner as required by Rule 7(b)(1) of the North Carolina Rules of Appellate Procedure. The trial court denied Defendants motion to dismiss in an order entered 9 February 2011. Defendants appealed the trial court s order by filing a notice of appeal with this Court on 1 March 2011. However, Defendants did not file an appellate brief and, on August 2 2011, this Court entered an order granting Plaintiff s motion to dismiss Defendants appeal. On 25 July Plaintiff s jurisdictional 2011, appeal Defendants with default this based filed a motion Court, again asserting Plaintiff s allegedly upon to dismiss -13defective notice of appeal. In its motion, Defendants cite two defects in Plaintiff s notice of appeal: (1) the notice does not designate the court to which Plaintiff directs its appeal, and (2) Plaintiff s intent to appeal the trial court s 13 May 2010 order cannot be fairly inferred from the language of the notice. Defendants aver these defects render Plaintiff s notice of appeal insufficient to confer appellate jurisdiction upon this Court. In order to confer jurisdiction on the state s appellate courts, appellants of lower court orders must comply with the requirements of Rule 3 of the North Carolina Rules of Appellate Procedure. Bailey v. State, 353 N.C. 142, 156, 540 S.E.2d 313, 322 (2000). Rule 3(d) governs the content of a notice of appeal and requires that [t]he notice of appeal . . . shall designate the judgment or order from which appeal is taken and the court to which appeal is taken. N.C. R. App. P. 3(d). The provisions of Rule 3 are jurisdictional, and failure to follow the requirements thereof requires dismissal of an appeal. Abels v. Renfro Corp., 126 N.C. App. 800, 802, 486 S.E.2d 735, 737 (1997). However, [m]istakes by appellants in following all the subparts of Appellate Procedure Rule 3(d) have not always been fatal to an appeal. Stephenson v. Bartlett, 177 N.C. App. -14239, 242, 628 S.E.2d 442, 444 (2006). It is well established that a mistake in designating the judgment, or in designating the part appealed from if only a part is designated, should not result in loss of the appeal as long as the intent to appeal from a specific judgment can be fairly inferred from the notice and the appellee is not misled by the mistake. Smith v. Indep. Life Ins. Co., 43 N.C. App. 269, 274, 258 S.E.2d 864, 867 (1979) (citation omitted) (emphasis added). In the instant case, Plaintiff s notice of appeal fails to designate the court to which appeal is taken. This defect is obvious, as Plaintiff s notice of appeal does not designate any court as the proper venue for its appeal. Plaintiff s error is a complete omission of the content requirement as set forth in Rule 3(d). However, this Court has liberally construed this requirement and has specifically held that a plaintiff s failure to designate this Court in its notice of appeal is not fatal to the appeal where the plaintiff s intent to appeal can be fairly inferred and the defendants are not mislead by the plaintiff s mistake. 444-45 See Stephenson, 177 N.C. App. at 243, 628 S.E.2d at (permitting plaintiff to proceed with appeal to this Court despite designating the North Carolina Supreme Court in its notice of appeal). The fairly inferred doctrine ensures -15that a violation of Rule 3(d) results in dismissal only where the appellee is prejudiced by the appellant s mistake. Here, Plaintiff timely filed its notice of appeal with this Court. Defendants could fairly infer Plaintiff s intent to appeal to this Court, as this Court is the only court with jurisdiction over Plaintiff s appeal. Furthermore, Defendants concede they were not misled or prejudiced by Plaintiff s error. Therefore, we conclude Plaintiff s mistake in failing to name this Court in its notice of appeal does not warrant dismissal of Plaintiff s appeal. Plaintiff also appears to be playing fast and loose with Rule 3(d) s mandate that a notice of appeal must designate the judgment or order from which appeal is taken. R. 3(d). N.C. R. App. P. In its notice, Plaintiff states its intent to appeal the trial court s memorandum of decision and judgment. However, Plaintiff further declares its intent to appeal any and all interlocutory decisions made and reflected therein. This ambiguous catchall language is problematic in light of the multitude of claims resolved by the trial court in two separate rulings. However, even if this ambiguity raises an issue as to whether Plaintiff s intent to appeal the trial court s 13 May 2010 order can be fairly inferred, Plaintiff has rendered this a -16moot issue by challenging only the trial court s dismissal of Plaintiff s breach of contract claims against Sheila and Charles Phelps. The trial court disposed of both of these claims in its memorandum of decision and judgment, and Plaintiff s intent to appeal these appeal. claims is clearly set forth in its notice of Whether this Court has jurisdiction over the claims adjudicated by the trial court in its 13 May 2010 order is immaterial, as those claims are not before this Court. Accordingly, we deny Defendants motion to dismiss and proceed to address the merits of Plaintiff s appeal. Before reaching the merits, however, we must consider the scope of Plaintiff s appeal. In both its appellate brief and its oral arguments before this Court, Plaintiff assigns error only to the trial court s dismissal of Plaintiff s breach of contract claims against Mr. and Ms. Phelps. Specifically, Plaintiff alleges that Mr. and Ms. Phelps breached the noncompetition clause of the Agreement. Thus, Plaintiff has abandoned its remaining claims against Mr. and Ms. Phelps and has abandoned all claims Powell, and Mr. Mata. review on appeal several briefs. is against Defendants SCP, CTP, Ms. See N.C. R. App. P. 28(a) ( The scope of limited to issues so presented in the Issues not presented and discussed in a party's -17brief are deemed abandoned. ). As the trial court s memorandum of decision and judgment was a final judgment of the superior court, this Court exercises jurisdiction over Plaintiff s appeal pursuant to North Carolina General Statutes § 7A-27(b) (2009). III. Analysis When reviewing a judgment from a bench trial, our standard of review is whether there is competent evidence to support the trial court s findings of fact and whether the findings support the conclusions of law and ensuing judgment. Town of Green Level v. Alamance County, 184 N.C. App. 665, 668-69, 646 S.E.2d 851, 854 (2007) (citation omitted). The trial court s [f]indings of fact are binding on appeal if there is competent evidence to contrary. support them, even if there is evidence to the Id. at 669, 646 S.E.2d at 854 (citation omitted). This Court reviews the trial court s conclusions of law de novo. Id. Plaintiff court. challenges one factual finding of the trial The trial court found that neither Sheila nor S.C. Phelps, individually or together, entered into competition with Plaintiff in any form, direct or indirect, at any time up to and including the present. Plaintiff asserts this is not a finding of fact, but rather a conclusion of law. -18As this Court has recognized, [t]he classification of a determination as either a finding of fact or a conclusion of law is admittedly difficult. 491 S.E.2d 672, 675 In re Helms, 127 N.C. App. 505, 510, (1997). Generally, any determination requiring the exercise of judgment or the application of legal principles is more properly classified a conclusion of law. Id. (internal citations omitted). A determination reached through logical reasoning from the evidentiary facts is more properly classified a finding of fact. Id. (citation omitted). We agree with Plaintiff that the trial court s determination concerning whether Ms. Phelps and SCP entered into competition with Plaintiff involves application of legal principles and is appropriately classified as a conclusion of law. We therefore reclassify this determination as a conclusion of law and apply our standard of review accordingly. 189 N.C. App. 80, ( [C]lassification determinative, and, of 88, an when 658 item See N.C. State Bar v. Key, S.E.2d within necessary, the 493, the 499 order appellate (2008) is court not can reclassify an item before applying the appropriate standard of review. ). A. We now address the merits of Plaintiff s appeal. Sheila Phelps Plaintiff contends the trial court erred in determining Ms. -19Phelps did not breach her clause of the Agreement. obligations under the non-compete We initially note that covenants not to compete are disfavored by the law. Med. Staffing Network, Inc. v. Ridgway, 194 N.C. App. 649, 655, 670 S.E.2d 321, 327 (2009); see also Kennedy v. Kennedy, 160 N.C. App. 1, 9, 584 S.E.2d 328, 333 (2003) ( Covenants not to compete restrain trade and are scrutinized strictly. ). engage in a particular Nonetheless, a covenant not to business is a valid and enforceable contract provided the geographic and durational restrictions are reasonably necessary to protect the interest of the covenantee. See Sineath v. Katzis, 218 N.C. 740, 754, 12 S.E.2d 671, 680 (1941). The parties in the instant case do not dispute the validity of the non-compete clause contained in the Agreement. Plaintiff s challenge rests upon its assertion that the trial court s findings of fact do not support its conclusion of law that Ms. Phelps Agreement. did not breach her obligations under the Specifically, Plaintiff contends Ms. Phelps breached the non-compete clause by (1) holding a pecuniary interest in Plaintiff s competitor, CTP, and (2) providing financial and other support to CTP. Plaintiff Brothers v. cites our Michael, 167 Supreme N.C. 322, Court s 83 ruling S.E. 458 in Finch (1914), as -20support for its proposition that a party violates a non-compete agreement by holding a pecuniary interest in a competitor of the party protected by the agreement. In Finch, the court stated: the defendant has no pecuniary interest in the [competing entity], either directly or indirectly, as member, manager, agent, or otherwise, for he is only a creditor of the partnership, which is a very different thing from conducting the business or being interested therein. In a sense, he may be considered as having some concern for its success as its creditor, but this is all, and is not sufficient to constitute a breach of his contract, either under the sale of the good will or the restrictive covenant. 167 N.C. at 324, 83 S.E. at 460. The court s language makes clear that holding a pecuniary interest in a competitor of the protected party is not a per se breach of a covenant not to compete. Black s pecuniary Law interest as Dictionary an interest defines a involving financial money or or its equivalent; esp., an interest in the nature of an investment. BLACK S LAW DICTIONARY 829, 1167 (8th ed. 2004). Clearly, both a creditor and a manager of a business have a pecuniary interest in the business, yet, only the interest held constitutes a breach of a non-compete agreement. N.C. at 324, 83 S.E. at 460. by the latter See Finch, 167 Therefore, it is the nature of the pecuniary interest taken by the covenantor that is critical in determining whether the covenantor has breached its agreement to -21refrain from entering into competition with the covenantee. Serving as a creditor does not amount to a breach because, as the court implied in Finch, a creditor s interest does not constitute a stake in the competing entity s success sufficient to constitute a breach. stock in, compete organizing, with the See id. or On the other hand, taking managing protected party a is covenantor s promise not to compete. corporation a clear formed breach of to the Sineath, 218 N.C. at 755, 12 S.E.2d at 681; see also Kramer v. Old, 119 N.C. 1, 25 S.E. 813 (1896) (holding defendants breached non-compete covenant by forming and holding stock in competing corporation). In the case sub judice, Ms. Phelps covenanted under the Agreement not to directly and/or indirectly Compete with [Plaintiff] . . . through any entity owned or managed, in whole or in part, by [Ms. Phelps], for a period of [5 years] from the date of [the] Agreement within the Prohibited Territory. trial court found as fact that Plaintiff since December 2008. CTP has been competing The with The trial court also determined that CTP has been paying some of Ms. Phelps personal expenses since February 2009. In light of these factual findings, which Defendant does not dispute, Plaintiff contends the trial court erred by concluding as a matter of law that Ms. Phelps did not -22breach her obligations under the Agreement. We cannot agree, as Ms. Phelps interest in CTP is not the type of prohibited pecuniary interest contemplated by the precedent of our Courts. The record indicates that Ms. Phelps has held no stock or other financial stake in CTP since its incorporation in 2007. Nor has Ms. Phelps participated as a manager, employee, or agent of CTP. In fact, it appears Ms. Phelps had been attempting to disassociate herself from the contract labor staffing business for years Plaintiff prior entering asserts into the Agreement Ms. Phelps shares with Plaintiff. in the profits of CTP because CTP has paid her personal expenses, including mortgage payments, credit card payments, and utility bills. This contention is without merit, as there is no legal nexus between CTP s profits Phelps. and the benefits CTP has conferred upon Ms. Phelps has no entitlement to these payments. Ms. Quite the opposite, these payments are entirely within the discretion of Mr. Phelps. We note that many of the payments at issue, such as the mortgage payments, have been made for the benefit of both Mr. and Ms. Phelps, who, until 2008, lived together as a married couple for many years. Furthermore, this Court fails to see how Ms. Phelps receipt of these benefits assists CTP in competing with Plaintiff. Nor do we see how Plaintiff is injured by these -23payments.8 We hold Ms. Phelps interest in CTP does not amount to direct or indirect competition with Plaintiff, and the trial court correctly concluded that Ms. Phelps receipt of these payments does not amount to a breach of her obligations under the Agreement. Plaintiff further contends Ms. Phelps breached the non- compete clause by providing financial and other assistance to CTP. made Plaintiff cites the trial court s findings that (1) SCP office rental payments on CTP s behalf through January 2009, (2) SCP transferred confidential data sets to CTP when Ms. Powell installed the accounting software on CTP s computer, (3) CTP took over payments on SCP s fax machine and copier, and (4) CTP used SCP s fax number competing with Plaintiff. and phone number when it began Plaintiff concludes: The bottom line is that, at the very least, paying the rent for a competitor must be direct or indirect assistance. Plaintiff s argument is misplaced. Ms. Phelps, through SCP, leased the office space located at Bickett Boulevard to conduct SCP s business. Plaintiff asserts that SCP made these payments from August 2008 through the end of January 2009, when C 8 T Phelps was in direct competition with Plaintiff. While not necessary to our holding, we note that Plaintiff s claim for damages appears speculative in this respect. -24Plaintiff s recitation of the trial court s factual findings is inaccurate. The trial court found that Mr. Phelps intended to return to the contract labor staffing business in October 2008, and Mr. Phelps did not actually begin competing with Plaintiff until December 2008. At most, SCP made rental payments on CTP s behalf while CTP was competing with Plaintiff from December 2008 through January 2009. In light of the relationship between Mr. and Ms. Phelps, one month represents a reasonable period for transition of the office space from SCP to CTP. CTP assumed payments on the lease in February 2009, after the transition was complete. This is competent evidence from which the trial court could conclude that Ms. Phelps made these rental payments to further SCP s business, not to assist CTP in competing with Plaintiff. Furthermore, we conclude that Ms. Phelps did not breach her obligations under the Agreement when Ms. Powell transferred SCP s old data sets to CTP through installation of accounting software on a CTP computer. As the trial court found and Plaintiff concedes, Ms. Phelps did not participate and had no knowledge of this transaction. Plaintiff s contentions on this issue are without merit. hold the trial court correctly concluded remaining Accordingly, we Ms. Phelps did not -25breach her obligations under the non-compete clause of the Agreement. B. Charles Phelps The parties agree Mr. Phelps did not sign the Agreement. Nonetheless, Plaintiff urges this Court to find that Mr. Phelps, as the true owner of SCP, was bound by the non-compete clause and breached Plaintiff. said clause by entering into competition with Plaintiff cites a Montana Supreme Court decision, Bolz v. Myers, 651 P.2d 606 (Mont. 1982), in support of its position. upon We initially note that Bolz is not binding authority this Court. distinguishable More from importantly, the instant we case conclude and is Bolz is therefore unpersuasive. In Bolz, Defendant Mason Myers met with Plaintiff Dale Bolz to negotiate the purchase of a hearing aid center by Mr. Bolz. Id. at 608. Mr. Myers wife, Merle, and son, Michael, were present at this meeting. the sale of the hearing signed as sellers. agreement, which Id. included Id. aid Later, when the parties executed center, only Merle and Michael Mr. Myers did not sign the purchase a non-compete clause. Id. The Montana Supreme Court held that Mr. Myers was the true owner of the business and was therefore bound by the purchase agreement. -26Id. at 612. We agree with Plaintiff that there are factual similarities between Bolz and the case before this Court. However, we cannot agree with Plaintiff s assertion that the facts of Bolz are, obviously, virtually identical in substance to the facts found by the trial court in the instant case. distinguish Bolz from the instant case. a concern as to what would keep Two critical facts First, Bolz expressed Myers from going into competition with him, and Myers gave him an oral assurance that he had no intent to do so. Second, the proposed Bolz contracts court Id. determined exchanged at 608 based between (emphasis added). upon the a series of that the parties parties considered Mr. Mason the owner of the business. Id. Here, Mr. El-Kaissi knew through negotiations with Mr. and Ms. Phelps that Ms. Phelps was the sole owner of SCP. Mr. El- Kaissi also knew Mr. Phelps had a background in the contract labor business and might pose a threat to his business. Mr. El- Kaissi demonstrated his concern when he asked Mr. Phelps to sign a non-compete agreement in conjunction with the sale of SCP. Mr. Phelps agreement. assurance stated he was unwilling to sign a non-compete Unlike the defendant in Bolz, Mr. Phelps gave no that he would not enter into competition with -27Plaintiff. Mr. El-Kaissi made a business decision and proceeded with consummation of the Agreement. Based on these facts, we must agree with the trial court s conclusion that Mr. El-Kaissi assumed the risk that Mr. Phelps might enter into competition with Plaintiff. Plaintiff s assignment of error is overruled. IV. Conclusion For the foregoing reasons, we hold there was sufficient competent evidence from which the trial court could conclude that neither Ms. Phelps nor Mr. Phelps breached the Agreement. The trial court s memorandum of decision and judgment is hereby Affirmed. Judges THIGPEN and MCCULLOUGH concur.

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