Restrictive covenants are a set of tools that employers sometimes utilize to prevent employees from competing with them after termination of their employment.   One of the most common restrictive covenants used by an employer is a “non-compete clause.”   An evaluation of the enforceability of a non-complete clause necessarily involves a balancing of interests.   On the one hand, there is the employer’s interest in protecting its investment in an employee’s success whether that be training, promotional or marketing activities, or granting the employee access to important company trade secrets.  Obviously, the employee would be positioned to unfairly use this information to harm its former employer if not for the employer’s ability to protect itself.  On the other hand, there is the employee’s interest in earning a living and promoting his/her own professional growth and development through the freedom to seek new job opportunities.  While non-compete clauses are solely intended to protect and benefit the employer, they cannot unduly burden an employee’s freedom to seek other gainful employment.

State courts tend to view restrictive covenants with varying degrees of favorability, and they are generally disfavored in North Carolina.  In order to be enforceable in North Carolina courts, a covenant not to compete must meet certain general requirements:

1. It must be in writing and incorporated into the employment contract.
2. It must be reasonable as to time and territory.
3. If the restriction is implemented as to an existing employee, it must be based on valuable consideration. This means that the employee must be offered something – typically some form of monetary compensation – in exchange for abiding by the restriction. This is not necessary for new employees, as the restriction is part of the bargain of receiving employment with the company.

An element that tends to be heavily litigated is the reasonableness of time and territory.   For a discussion on the enforceability of non-compete agreements in general, please click here to review our previous post on this topic.  This post will focus on what happens when a restrictive covenant’s time and territory limitations are found unduly restrictive.

Historically, North Carolina has adhered to a strict doctrine known as the “blue pencil” rule, meaning a court may strike out (but not revise) provisions of a non-compete clause that it finds unreasonable while upholding the remainder of the employment agreement.   The blue-pencil rule can be beneficial to employers in that it might allow courts to enforce an agreement even when one of the terms is enforceable.   A court can simply strike (blue pencil) an unenforceable provision and uphold the rest of the agreement.  However, the blue-pencil rule has traditionally stopped short of allowing courts to not only strike, but to revise an unenforceable term.   The North Carolina Supreme Court recently rendered an opinion in Beverage Systems of the Carolinas, LLC, v. Associated Beverage Repair, LLC that sheds additional light on a court’s power to not only strike an unenforceable provision, but to revise a provision altogether to make it enforceable.

The underlying dispute in the Beverage Systems case involved two companies in the beverage service industry that had negotiated the purchase and sale of a business.  The purchase and sale agreement contained a restrictive covenant that prohibited the sellers from conducting business in their industry anywhere in North or South Carolina.  The agreement also contained a provision allowing courts to revise or narrow these territorial provisions should a dispute arise.  Shortly thereafter, one of the parties to the agreement broke away and formed a new beverage company that directly competed with the plaintiff’s business.  In the ensuing litigation, the trial court determined that the geographical scope of the restrictive covenant was overly broad and thus unenforceable.   Although the agreement itself allowed the Court to rewrite portions of the agreement, the Court declined to do so.  With no territorial restriction left in the agreement after blue-penciling, the remainder of the agreement was rendered unenforceable.

On appeal, the North Carolina Court of Appeals reversed the trial court’s decision, holding that the parties’ express consent to the Court’s revision of portions of the agreement trumped the blue pencil doctrine, which allows a court to strike unenforceable provisions but not to add or revise the terms of the agreement.  That is, instead of striking out the over-broad territorial restrictions and scrapping the entire argument, the trial judge should have simply rewritten that portion of the agreement to make it reasonable, that is, narrow the designated geographical area.

However, upon discretionary review, the Supreme Court reversed the opinion of the Court of Appeals.  Although the Supreme Court agreed with the Court of Appeals that the territorial restriction was overbroad, the Supreme Court’s opinion stated that the blue pencil doctrine only applies when the agreement “sets out both reasonable and unreasonable restricted territories.”  In the present case, the territorial limitation was only unreasonable and was so broad that striking the unenforceable provisions of the agreement would leave no territory left within which to enforce the agreement.  As the Court thus noted, “blue-penciling cannot save the Agreement.”  The Supreme Court further noted that “[a]llowing litigants to assign to the court their drafting duties as parties to a contract would put the court in the role of a scrivener, making judges postulate new terms that the court hopes the parties would have agreed to be reasonable after the court rewrote the limitation.”

Ultimately, the Supreme Court’s decision reinforced the principle that parties cannot contract to give courts power they do not have.  As a result, courts are now definitively limited to the blue pencil rule.  They have the power to strike out overbroad provisions in an employment contract.  However, if after striking out these provisions, the agreement is unenforceable, the Courts must put the task of recrafting the agreement in the hands of the parties.

When drafting restrictive covenants, it is crucial to consider which geographical areas should and should not be included, considering factors such as the presence of existing business relationships or opportunities.   Moreover, any provision purporting to give courts authority to intervene in resolving disputes will likely be struck down and the entire agreement rendered unenforceable.  The attorneys at Miller Monroe PLLC can assist you in drafting a non-compete clause that will be narrowly tailored to serve your business interests.   Our firm also has substantial experience litigating the enforceability of non-compete provisions and other restrictive covenants.  If you are considering the enforceability of a restrictive covenant, please feel free to contact Miller Monroe for a consultation.

For the Supreme Court’s full opinion, click here.

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Many clients are surprised to learn that obtaining a judgment is not the end of the story in litigation. Even lawyers fall into the trap of celebrating a large verdict or favorable judgment before a judgment is actually collected.  The often disappointing reality, particularly in commercial litigation, is that a judgment is sometimes only the tip of the iceberg.  The post-judgment collection process is often complex, extensive, and fraught with frustrations ranging from minor challenges, such as a judgment debtor’s relocation, to significant obstacles, including a judgment debtor’s insolvency, bankruptcy, or artful service-dodging.  At times, simply serving the judgment papers will rattle a party into writing a check.  However, the more common scenario is a prolonged hunt for assets that may ultimately leave the judgment creditor empty-handed.

Understanding the basics of judgment execution is critical in creating realistic expectations about the prospects of collection.  The first step is to ensure compliance with the judgment debtor’s rights.  Hearkening back to the foundational principles of property law, an individual’s right to use, enjoy, and retain his own property is sacred and spans all practice areas.  As such, the law allows a judgment debtor to designate certain property as exempt from a civil judgment.  All states have their own exemption laws that apply to a judgment debtor’s property located in that state.  In North Carolina, there are several items an individual can protect from the judgment’s reach. A few examples include:

• Up to $35,000 in a residence and burial plots. If the individual is unmarried and 65 or older, he or she may designate the same in an amount up to $60,000.
• Up to $5,000 in personal property – including household goods and appliances – and an additional $1,000, but not to exceed $4,000, for dependents.
• Up to $3,500 in a motor vehicle after deduction of valid liens or security interests.
• Healthcare aids such as wheelchairs and hearing aids.
• Up to $2,000 in professional books or tools.
• Life insurance policies where the sole beneficiaries are the spouse and/or children.
• Retirement accounts.

In the case of an individual judgment debtor (as opposed to a corporate judgment debtor), the judgment creditor is required by law to serve the judgment debtor with a formal notice of the right to designate exemptions.  From the date of service of the notice, the judgment debtor is allowed twenty days to designate exemptions.    The judgment creditor is entitled to challenge the exemptions by filing a Notice of Objection with the Court in the county where the case was heard. However, there are narrow circumstances in which the Court will uphold a judgment creditor’s objections, for instance, if the judgment debtor designated more property than the law allows.

Once the exemption period expires, the judgment creditor may file for the issuance of a writ of execution in each county in which the judgment debtor is believed to own assets.  In counties other than the county in which the judgment was entered, the judgment creditor must pay a small fee to transcribe the judgment in that county.  The Clerk of Court in each county in which the judgment has been transcribed will then issue the writ of execution.  The writ gives the Sheriff’s Office in each county the authority to execute the judgment, which entails formally serving the writ of execution on the judgment debtor and locating and seizing non-exempt property.  The Sheriff may clear bank accounts, seize motor vehicles, place a lien on a home, and collect personal items and effects.   Unlike other states, however, North Carolina does not allow a creditor to garnish wages except in certain rare situations (for example, child support).  If the judgment attaches to a motor vehicle or other personal property, the Sheriff’s Office may sell the property and use the proceeds from the sale to pay off all liens against it, including the judgment.  A judgment can also attach as a lien on a house, which will render it unsaleable until the judgment is satisfied.  This can give the judgment creditor leverage in forcing the judgment debtor to satisfy a judgment.  However, it is not always easy to find property that is unencumbered or valuable enough to satisfy a judgment.  Therefore, often the most efficient way to satisfy a judgment, aside from the judgment debtor writing a check, is to locate a non-exempt bank account with sufficient funds to satisfy the judgment.

A judgment is valid for up to ten years.  If a judgment debtor acquires new property in the counties in which the judgment has been entered or transcribed, the judgment will automatically attach to that property.  However, it is important to understand that a judgment may never be satisfied.  If the judgment debtor has several other judgments against him/her, any seizable assets will be subject to a priority battle among the various creditors.  Additionally, many corporate judgment debtors may dissolve, file bankruptcy, or transfer or hide assets, while debtors who are individuals may dodge the judgment by relocating to another state.  A skilled attorney will conduct the research necessary to assess the likelihood of collecting on a judgment and will advise you of these risks prior to initiating litigation.

Given the inherent challenges in judgment execution, it is critical to engage attorneys who will diligently and tenaciously pursue collection.  A skilled attorney will take an active role in judgment collection by routinely investigating the status of the judgment debtor’s assets and liabilities and communicating with the Sheriff’s Office in the relevant counties regarding what property might be available and subject to seizure.  At Miller Monroe, we understand that post-judgment collection requires as much diligence as litigating a case.  We have successfully collected on numerous judgments in and out of bankruptcy, and we will take an aggressive role in enforcing a judgment in your case.  We will also guide you through an honest and transparent cost/benefit analysis where we believe collection is unlikely. When hiring a litigator to handle your commercial litigation matters, we would strongly encourage you to inquire about the firm’s experience in enforcing judgments as part of your due diligence process.  It is critically important that your attorney be well-versed in litigating the underlying case, but also in pursuing assets necessary to fulfill a judgment in the event that you prevail.

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Business North Carolina magazine honors Tar Heel lawyers by publishing Business North Carolina’s Legal Elite, a listing of the State’s top lawyers in business-related categories.  Winners are chosen not by the magazine’s editors, but by the state’s lawyers.  In developing the list, Business North Carolina made ballots available to more than 20,000 Tar Heel Lawyers and only 3% were selected for Legal Elite.

Jason A. Miller has litigation experience in state and federal courts throughout North Carolina and beyond.  He has represented Fortune 500 companies in complex business litigation matters, builders and developers in real property disputes, information technology companies in trade secrets disputes, partners in closely-held company disputes, investors in business deals gone awry, and dozens of cases in between.  Jason has litigated matters in more than a dozen counties in North Carolina and is licensed to practice in every state and federal court in North Carolina.  Most recently, Jason became licensed to practice law in his home state of New York.

Jeffrey R. Monroe commenced his legal career in the Raleigh office of a mid-sized insurance defense firm, where he handled a variety of litigation matters throughout the state, including defending individuals and companies in personal injury claims, construction defect claims, and business disputes.   Since joining Miller & Monroe in 2013, Jeff has litigated business disputes, estate and fiduciary disputes, personal injury claims, and a variety of other civil litigation matters.

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Business North Carolina magazine honors Tar Heel lawyers by publishing Business North Carolina’s Legal Elite, a listing of the State’s top lawyers in business-related categories.  Winners are choosen not by the magazine’s editors, but by the state’s lawyers.  In developing the list, Business North Carolina made ballots available to more than 20,000 Tar Heel Lawyers and only 3% were selected for Legal Elite (including Mr. Miller’s wife Kimberly Miller of Owens & Miller PLLC).

Jason A. Miller has litigation experience in state and federal courts throughout North Carolina and beyond.  He has represented Fortune 500 companies in complex business litigation matters, builders and developers in real property disputes, information technology companies in trade secrets disputes, partners in closely-held company disputes, investors in business deals gone awry, and dozens of cases in between.  Jason has litigated matters in more than a dozen counties in North Carolina and is licensed to practice in every state and federal court in North Carolina.

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If you are a business, the first thing  you must do is hire an attorney.  North Carolina law actually prohibits an LLC or corporation from appearing in court on its own behalf; only a licensed attorney can file legal documents or make court appearances for your business.  Even if a lawyer is not required, hiring one is still an obvious first step.  The litigation process is full of complex rules and procedures.  A mistake on even one procedural issue can cause you to lose your case before ever having a chance to prove your case.  Take the time to select an attorney with experience handling your type of case, and just as important, an attorney that is skilled and has practical business experience outside of the law.  It is important that your attorney be able to guide you through complicated business decisions that are just as important as the legal decisions in your case.

The first phase of a lawsuit is the initial filing phase. This process starts with the drafting and filing of the Complaint. In theory, this is just a short, plain statement of what the other party did wrong and what sort of compensation your business is seeking. In practice, it is far more complex. If the right claims are not made in the right way, you run the risk of having your suit thrown out of court early in the process. If you forget to make certain claims or request certain types of compensation, you may not be able to pursue them at a later date. The Civil Summons is also filed with the Complaint. The Summons is the official document that gives the defendant notice that suit has been filed against him. Serving the Summons and Complaint is one of those procedures that has to be done with exacting compliance with the rules of civil procedure. The right person must receive them and the documents have to be delivered in a certain manner. If you serve the wrong person or deliver the Summons and Complaint the wrong way, you are looking at a delay in your suit at the very least. A North Carolina Summons must be served within sixty days, but it can be renewed up until ninety days after its issuance.

The defendant’s Answer is the next step in the opening phase of litigation. The defendant has thirty days from the date it is served with the Summons and Complaint to file an Answer with the Clerk of Court. In most cases, the defendant will request extra time to answer the suit. The Court will almost always grant another thirty days to answer, so long as the original thirty day time limit has not yet expired. Like the Complaint, the Answer is a simple in theory, as it is just a statement of the disputed facts. In practice, it will list numerous defenses, which are reasons why the defendant should not have to pay you money, even if he did what you claiming it did. The Answer may also include counterclaims and cross-claims. Counterclaims are basically a lawsuit the defendant files against you; if it proves its claims, you may owe it money. Cross-claims are claims the defendant asserts against other third-parties. Each counter or cross-claim has to be answered within thirty days, with extensions available. If an answer is not filed within the appropriate time, the claimant may be entitled to a default judgment, which allows it to win the compensation sought without having to actually prove the claims asserted.

This first phase of litigation can go very quickly, or it can drag on for a long time. If you are suing just one party, get them served properly, and they do not request an extension to answer or make counter or cross-claims, it can be a month or two before the initial phase wraps up. If you are suing several parties, have trouble serving them, or are facing counter or cross-claims, this first phase can easily drag out for several months or more.

At Miller & Monroe, we have the experience and skill to help you navigate these complicated waters.  Our lawyers have prosecuted and defended complicated and critically important matters for our clients.  If you are considering filing a lawsuit, please call today and setup a consultation to discuss your options.

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The first law allows for recovery of attorney’s fees in cases where you’re attempting to collect a debt, which is based on a note, conditional sales contract, or some other instrument of indebtedness, including a lease agreement. This law is not just limited to when a suit is filed – it permits you to recover attorney’s fees at any time after the debt has matured, so long as you use a lawyer to collect the amount owed.

There are a few limitations to the ability to recover attorney’s fees on debt owed. The first is a notice requirement. You must place the debtor on notice that he owes you, and that he will be subject to payment of attorney’s fees if he does not pay the outstanding balance within five days from the date of notice. Courts read this requirement very strictly and it is always best to reference the appropriate statute and contractual provision in the notice. The other limitations have to do with how much you are actually able to recover. This issue turns on the language of the contract. If the contract calls for recovery of attorney’s fees in a specific percentage of the outstanding debt, the courts will enforce that provision up to 15% of the outstanding balance. This 15% cap is absolute, regardless of what percentage the contract calls for or what the attorney’s fees actually end up being. If the contract calls for a range which may be recovered, “reasonable fees not less than 10%,” for example, the courts will not allow more than 15%, but may award less if they determine a lower amount is reasonable. If the contract is silent on the amount which may be recovered, the courts will typically award 15% of the outstanding balance as the default.

The second law allows recovery of attorney’s fees in enforcement of business contracts. This law became effective on October 1, 2011 and it only applies to contracts entered into on or after that date. Although the law’s definition of “business contract” is very broad, encompassing contracts entered into primarily for business or commercial purposes, the law does have a few key limiting factors.

The first is that the attorney fee recovery provision must be reciprocal; it must be equally applicable to all parties to the contract. The second limitation is that the law only applies to contracts signed by hand. The courts have not yet had a chance to determine exactly what that provision means, but it could prevent the law from applying to any electronically-signed contract. However, the legislative history behind the statute suggests that the “by hand” requirement is only meant to exempt “click-through” agreements on software and similar arrangements from the law. Only reasonable attorney’s fees can be recovered, and unlike the debt-collection law discussed above, there is no hard and fast rule for what is a reasonable fee. The statute allows the judge to examine all relevant facts and circumstances in deciding what a reasonable fee is. The statute does limit the reasonable fee to no more than the amount in controversy or the amount of monetary damages awarded. Finally, the statute applies only to contracts subject to North Carolina law, another important reason to include a choice of law clause in the contract.

Litigation is an expensive proposition, but by allowing for recovery of attorney’s fees in many cases, North Carolina is trying to make it more affordable and ensure that all business can afford to have their day in court. In order to allow you to obtain your attorney’s fee in a business dispute, it is critically important that your contract contains a carefully drafted, reciprocal attorney’s fees provision. Contact an experienced business lawyer at Miller & Monroe today to review your contracts and ensure you have valid and enforceable attorney’s fees provision.

Miller & Monroe is a civil litigation firm serving corporations, small businesses, and investors in the Raleigh, Durham, and Chapel Hill areas, and throughout the State of North Carolina. We offer big firm expertise with small firm rates and personal attention. We have extensive business experience having managed multimillion dollar budgets and dozens of employees. Whether it be resolving operational or financial challenges, navigating insurance issues, or managing growth, we know business. Using this experience, we will create a custom-tailored litigation plan to meet your unique business needs. When you hire Miller & Monroe, you get a business consultant and attorney for one reasonable price.

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The first thing your small business must do, even before filing suit, is hire an attorney. North Carolina law actually prohibits an LLC or corporation from appearing in court on its own behalf; only a licensed attorney can file legal documents or make court appearances for your business. Even if a lawyer was not required, hiring one would still make good business sense. The litigation process is full of complex rules and procedures. If you make a mistake on one of them, you risk losing before getting a chance to prove your case.

The first phase of a lawsuit is the initial filing phase. This process starts with the drafting and filing of the Complaint. In theory, this is just a short, plain statement of what the other party did wrong, what legal claims you are asserting, and what compensation you are seeking. In practice, it gets more complex. If the right claims are not made in the right way, you run the risk of having your suit thrown out of court right at the beginning of the process. If you forget to make some claims or request certain types of relief, you might be prevented from adding them at a later date. A Civil Summons is also filed with the Complaint. The Summons is the official document that gives the defendant notice that suit has been filed against him. Serving the Summons and Complaint is one of those procedures that has to be performed according to the specific rules of civil procedure. The right person must receive the Summons and Complaint and they have to be delivered in a certain manner. If you serve the wrong person, or deliver the Summons and Complaint the wrong way, you might be looking at a delay in your lawsuit or worse. The Summons is good for sixty days, but it can be renewed up to 90 days from issuance.

The defendant’s Answer is the next step in the opening phase of litigation. The defendant has thirty days from when he is served with the Summons and Complaint to file his Answer with the Court. In most cases, the defendant will request extra time to answer the suit. The Court will almost always grant a thirty day extension to answer, so long as the original thirty day time limit has not yet expired. Like the Complaint, the Answer is simple in theory – just a basic response to the facts alleged by the plaintiff. In practice, however, this is a critical step of the process. The Answer will typically list numerous defenses as to why the defendant is not liable. If certain defenses are omitted, they are waived and cannot be asserted later on. The Answer might also include counterclaims and cross-claims. Counterclaims are basically a lawsuit that the defendant files against you; if he meets his burden of proof, then you would liable. Cross-claims are claims that the defendant asserts against other people. Each counter or cross-claim has to be answered within thirty days by the appropriate party unless an extension is obtained. If the defendant does not file an Answer within the appropriate time, you may be entitled to a default judgment, which is an judgment determining that defendant is liable to you and carries the full weight of the law even though you obtained it without having to go to court.

This first phase of litigation can go very quickly, or it can drag on for a long time. If you’re suing just one person, get them properly served, and they do not request an extension to answer or make counter or cross-claims, it can be over in a month or so. If you’re suing multiple defendants, have trouble serving them, or there are counter or cross-claims, this first phase can easily drag out for many months. After the first phase is complete, the parties move into the discovery phase and this will be addressed in a later post.

While the legal process seems relatively straightforward, it is fraught with nuances that can make or break your lawsuit or your defense. It is critically important to hire a seasoned attorney that can help you navigate these waters. At Miller & Monroe, we have extensive experience litigating business matters and we can offer you the help you need to obtain compensation or defend your business. If you thinking about pursuing legal action or if you have been sued, contact Miller & Monroe today for a consultation.

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The last of these issues is the simplest. The non-compete agreement must be in writing, and it must be signed by the employee, or made part of the employment contract in some other manner. The issue of consideration (value) is a little more complex. The employee must receive something in exchange for giving up his right to compete. Consideration is not an issue when hiring a new employee as North Carolina courts have held that the promise of new employment is sufficient to make a non-compete agreement enforceable. However, additional consideration must be offered to an existing employee. North Carolina courts have ruled that all of the following are valid consideration that will allow the enforcement of a non-compete agreement: continued employment for a set length of time, an increase in salary, a promotion, additional training, shares of stock, or some other increase in responsibility or hours worked.

Once the threshold issues of writing and consideration are met, the enforceability of the non-compete turns to the reasonableness factors: time, geographic scope, and business purpose. Courts frequently look at the reasonableness of the business purpose from both a customer-centric and business-centric point of view. If the departing employee is in a position to interact personally with customers of his old employer or to obtain valuable commercial information about them, a non-compete agreement is likely to be found to have a legitimate business purpose. Agreements that prevent an employee from working for a direct competitor are also usually found to be reasonable.

North Carolina courts look at six factors to determine whether the geographic restriction is reasonable: the total scope of the restriction; the area in which the employee was assigned; the area in which the employee actually worked; the employer’s area of operation; the nature of the business; and the nature of the employee’s duties and his knowledge of the employer’s business operations. Unfortunately, due to the number of factors and their interrelation, it is hard to come up with a rule of thumb for what type of geographic restriction will be enforced, other than the smaller the restricted area is, the more likely it is it will be found reasonable. Employers should consult with an experienced attorney when drafting a non-compete agreement in order to ensure that the agreement will be enforceable.

The same idea also applies to the time restriction: the shorter the time, the more likely it is the restriction will be found reasonable. Generally, according to established North Carolina case law, anything longer than five years will not be enforceable, and a year or less will almost always be enforceable. However, even this rule of thumb is complicated by the fact that courts look at the time and geographic scope restrictions in tandem. The more restrictive one is, the less restrictive the other must be in order for the agreement as a whole to be enforceable.

Since enforceability is dependent on the individual facts of each situation, drafting a non-compete agreement is one of the most difficult things a small business owner can attempt to do, and it is something we absolutely recommend you do not attempt to do alone. The attorneys at Miller & Monroe have drafted many non-compete agreements and we would be happy to do the same for your business.

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Unfortunately, the easiest part about taking someone to court is sometimes prevailing at the hearing or trial, and the actual collection of the money owed can be the most complicated. While it may feel good to have your argument validated by a judgment, that judgment is only a piece of paper. Until you are able to collect what you are owed, you haven’t really been made whole.

The first step in the collections process is docketing the judgment. This is done automatically in the county where the judgment is won, and it grants you a lien on all the real property possessed by the judgment debtor (the person who owes the judgment) in that county. If the judgment debtor owns real estate in a different county, you’ll have to file a copy of the judgment with the clerk of court in that other county. The judgment will be good for ten years, and may be extended for an additional ten year period.

Having a lien against real property is well and good, but in reality, it’s not much more than just another piece of paper. If the judgment debtor sells his real estate, you’ll get the proceeds of the sale before he does. But if he doesn’t sell, your lien doesn’t necessarily accomplish much. In order to get some actual money from the judgment, you’ll need to execute it.

Before beginning the execution process, you must first wait for the judgment debtor’s window to appeal the judgment to expire. Next, if the judgment debtor is an individual, you’ll need to serve him with a Notice of Right to Have Exemptions Designated and a Motion to Claim Exemptions. These must be filed with the clerk of court in the county in which you’re seeking to execute the judgment, and they must be served on the judgment debtor by the sheriff or sent by registered or certified mail, with a return receipt requested. The exemption forms allow the judgment debtor to designate certain property upon which you cannot execute on, often his residence and/or motor vehicle up to a certain amount, retirement accounts, and other assets. The judgment debtor has 20 days to claim his exemptions. If he fails to do so, or if his filed exemption form lists property as not exempt, you can move on to execution. It is important to note that if the judgment debtor is not an individual, you do not need to worry about the exemption documents.

Execution is the step in this process that will finally get the money you are owed in your pocket. Once the exemption period is done, you can petition the clerk of court for a writ of execution. This is a document issued to the sheriff allowing him to seize and sell the judgment debtor’s assets to satisfy the judgment. Generally, any personal property which is not exempt can be seized and sold. The sheriff is not always able to identify all the property held by the judgment debtor, so if you know of anything, make sure you pass along that information. Money in non-exempt bank accounts can be seized. North Carolina does not allow you to garnish a judgment debtor’s wages to satisfy a judgment, but if you know of money owed to the judgment debtor, a writ of execution will allow you to be paid that money directly.

There is one final step after execution that is frequently forgotten by unrepresented parties. Once the judgment had been satisfied through execution, you have to ensure the judgment is marked satisfied and paid in full. This can be done by filing a form with the clerk of court. If you forget this important step, the judgment debtor can actually sue you for damages.

Winning a judgment is really only the first step in being made whole when you’ve been wronged. Actually collecting on the judgment can be a long difficult process, especially when the judgment debtor is not cooperative. In some cases, you may even be subject to the federal Fair Debt Collection Practices Act or the North Carolina Debt Collections Act when you try to collect your judgment. In most cases, you’re far better off hiring an experienced attorney to handle the collections process for you. Here at Miller & Monroe, we have significant experience obtaining judgments for our clients and executing on judgments to get our clients paid. Contact us today at 919-809-7346 to set up a consultation.

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So, who should be concerned, the employee or the new employer? Both. The employee who agreed not to compete with its former employer can be held accountable for breach his/her contract. The former employer might seek an injunction preventing the employee from competing against it or, alternatively, it might seek monetary damages. The new employer might also face liability. For example, if the new employer is made aware of the agreement, but refuses to honor it, the new employer might face a number of business tort claims, including an unfair and deceptive trade practices claim. An unfair and deceptive trade practices claim allows a plaintiff to pursue treble damages (multiply actual damages by 3), attorney’s fees, and even punitive damages.

Non-compete agreements are often accompanied by non-solicitation and non-disclosure agreements. Thus, the employee and new employer could also face claims of misappropriation of trade secrets and similar claims. When you receive a cease and desist letter, it is critical to consult with an attorney who has practical experience in this area of law. Miller & Monroe has defended unfair and deceptive trade practices, misappropriation of trade secrets, and other business tort claims involving non-compete agreements. If your North Carolina business faces business tort claims, call Miller & Monroe today!

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