IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA25-1046
Filed 15 July 2026
Robeson County, No. 25CV001805-770
SOUTHEASTERN REGIONAL PHYSICIAN SERVICES, Plaintiff,
v.
ALLISON L. SCOTT, FNP, and CHASTITY BENSON, NP, Defendants.
Appeal by Plaintiff from order entered 22 August 2025 by Judge Tiffany
Powers in Robeson County Superior Court. Heard in the Court of Appeals 24 March
2026.
Cranfill Sumner LLP, by Benton L. Toups and Tammy L. Neil, for PlaintiffAppellant.
Murchison, Taylor & Gibson PLLC, by Andrew K. McVey, for DefendantsAppellees.
GRIFFIN, Judge.
Plaintiff Southeastern Regional Physician Services appeals an order granting
judgment on the pleadings after Defendants Allison L. Scott and Chastity Benson
successfully argued Plaintiff’s non-compete agreements were overly broad and
unenforceable. Plaintiff argues the trial court erred because the non-compete
agreements were temporary and reasonable restrictions, and the trial court’s reliance
on public interest doctrine was improper. We hold the non-compete agreements are
SE. REG’L PHYSICIAN SERVS. V. SCOTT
Opinion of the Court
overly broad and unenforceable, and we decline to blue-pencil the challenged
provisions.
I. Factual and Procedural History
Plaintiff is a wholly owned subsidiary of Southeastern Regional Medical
Center and operates several primary and specialty care medical clinics. Defendant
Scott and Benson are a licensed family nurse practitioner and licensed nurse
practitioner, respectively. Plaintiff hired Scott on or about 17 February 2021 and
hired Benson on or about 15 July 2023. Prior to employment, Plaintiff had both
Defendants sign Provider Employment Agreements containing covenants not to
compete. Scott’s covenant not to compete contains the following language:
[Defendant] agrees that during the term of employment
and for a period of one (1) year following the termination of
employment with [Plaintiff] for any reason (the
“noncompetition period”), [Defendant] will not engage in
the practice of Medicine or provide services similar to those
provided under this Agreement as an employee,
independent contractor, or in any other capacity, for a
competing Southeastern or other competing institutional
health care providers within Robeson County without the
expressed, written consent of [Plaintiff].
(Emphasis added). In contrast, Benson’s covenant not to compete reads:
[Defendant] agrees that during the term of employment
and for a period of one (1) year following the termination of
employment with [Plaintiff] for any reason (the
“noncompetition period”), [Defendant] will not engage in
the practice of Medicine or provide services similar to those
provided under this Agreement as an employee,
independent contractor, or in any other capacity, for a
competing hospital or other competing institutional health
-2-SE. REG’L PHYSICIAN SERVS. V. SCOTT
Opinion of the Court
care providers within 35 miles of any [of Plaintiff’s] clinic[s]
or facilit[ies] without the expressed, written consent of
[Plaintiff].
(Emphasis added). The Provider Employment Agreements also required Defendants
to give ninety-days’ notice to Plaintiff prior to resigning from their positions. During
their time working for Plaintiff, both Defendants worked in Plaintiff’s
cardiology/cardiovascular clinic.
On 19 July 2024, Benson notified Plaintiff with her intent to resign, effective
18 October 2024. Similarly, on 1 August 2024, Scott notified Plaintiff with her intent
to resign, effective 15 November 2024. Shortly thereafter, Southeastern Integrated
Care, a primary care, mental health, and substance abuse treatment center, hired
both Defendants.
Plaintiff filed its complaint against Defendants on 4 March 2025, alleging
Defendants breached their respective covenants not to compete by providing medical
services for Southeastern Integrated Care. Defendants answered Plaintiff’s
complaint on 16 May 2025 and moved to dismiss under Rule 12(b)(6) of the North
Carolina Rules of Civil Procedure and, alternatively, for judgment on the pleadings
under Rule 12(c). Defendants argued in their answer: (1) Southeastern Integrated
Care is neither a hospital nor an “institutional health care provider;” (2) the
covenants not to compete are unenforceable because “they are more restrictive than
necessary” as they wholly restrict Defendants’ ability to practice medicine; and (3)
-3-SE. REG’L PHYSICIAN SERVS. V. SCOTT
Opinion of the Court
Plaintiff had no legitimate business interest in prohibiting Defendants from
practicing medical specialties other than cardiology.
The trial court held a hearing on Defendants’ motions on 11 August 2025. After
considering the parties’ briefs and arguments, the trial court found the covenants not
to compete unenforceable because they were “too broad to constitute a reasonable
protection of [Plaintiff’s] business interest,” they restricted Defendants’ ability to
practice medicine, and their enforcement “would create a substantial question of
public harm to residents of North Carolina’s largest and poorest county[,]” thus
outweighing Plaintiff’s business interest.
The trial court granted Defendants’ motion for judgment on the pleadings and
denied Defendant’s motion to dismiss as moot. Plaintiff timely appeals.
II. Analysis
Plaintiff raises three issues on appeal: (1) “[w]hether the trial court erred in
granting [D]efendants’ motion for judgment on the pleadings and dismissing
[P]laintiff’s complaint pursuant to N.C. R. Civ. P. 12(c)[;]” (2) “[w]hether the trial
court erred in dismissing plaintiff’s complaint in finding that the covenants are
unenforceable[;]” and (3) “[w]hether the trial court erred in dismissing [P]laintiff’s
complaint in finding the public interest outweighs the business interest of the
covenantee in enforcing the covenant.”
Plaintiff argues the trial court erred by granting Defendants’ motion for
judgment on the pleadings because it provided valuable consideration to uphold the
-4-SE. REG’L PHYSICIAN SERVS. V. SCOTT
Opinion of the Court
covenants not to compete, and the covenants not to compete were reasonable.
Plaintiff also argues the trial court’s reliance on public interest doctrine was improper
and, alternatively, if this Court holds the covenants not to compete are overly broad,
this Court should “blue-pencil” to render the covenants not to compete reasonable.
We review a trial court’s ruling on a motion for judgment on the pleadings de
novo. Barefoot v. Rule, 265 N.C. App. 401, 403, 828 S.E.2d 685, 687 (2019). When
presented with a motion for judgment on the pleadings, the trial court must view the
facts and permissible inferences in the light most favorable to the nonmoving party
and take all well-pleaded factual allegations as true. Ragsdale v. Kennedy, 286 N.C.
130, 137, 209 S.E.2d 494, 499 (1974). All contravening assertions in the movant’s
pleadings are taken as false. Id. “All allegations in the nonmovant’s pleadings,
except conclusions of law, legally impossible facts, and matters not admissible in
evidence at the trial, are deemed admitted by the movant for purposes of the motion
[for judgment on the pleadings].” Id.
A motion for judgment on the pleadings “should not be granted unless the
movant clearly establishes that no material issue of fact remains to be resolved and
that he is entitled to judgment as a matter of law.” Am. Bank & Trust Co. v. Elzey,
26 N.C. App. 29, 32, 214 S.E.2d 800, 802 (1975) (internal citation omitted). The
purpose of the motion is to “dispose of baseless claims or defenses when the formal
pleadings reveal their lack of merit[,]” leaving only the admitted material allegations
and questions of law. Ragsdale, 286 N.C. at 137, 209 S.E.2d at 499. “When the
-5-SE. REG’L PHYSICIAN SERVS. V. SCOTT
Opinion of the Court
pleadings do not resolve all the factual issues, judgment on the pleadings is generally
[i]nappropriate.” Id.
A. Enforceability of Covenants
Covenants not to compete are valid and enforceable if they are: “(1) in writing;
(2) reasonable as to terms, time, and territory; (3) made a part of the employment
contract; (4) based on valuable consideration; and (5) not against public policy.”
Triangle Leasing Co. v. McMahon, 327 N.C. 224, 228, 393 S.E.2d 854, 857 (1990). 1
Here, Plaintiff argues the elements of a valid covenant not to compete are met
for both Covenants. Regarding the elements of writing, made as part of the initial
employment agreement, and made with valuable consideration, we agree and
dispense these arguments. See id.; Precision Walls, Inc. v. Servie, 152 N.C. App. 630,
636, 568 S.E.2d 267, 272 (2002) (“It is well established in North Carolina that the
promise of new employment is valuable consideration and will support an otherwise
valid covenant not to compete contained in the initial employment contract.” (internal
quotation marks and citation omitted)). We address the remaining elements.
1 We note that our Court has used a similar five-element analysis in Hartman v. W.H. Odell & Assocs.,
Inc., 117 N.C. App. 307, 311, 450 S.E.2d 912, 916 (1994). The Hartman test replaces element (5) with “designed to protect a legitimate business interest of the employer.” Id. (citation omitted). We use the Triangle Leasing Co. test language instead because the protection of a legitimate business interest is a required consideration for determining whether a covenant not to compete is void against public policy, see Phelps Staffing, LLC v. C.T. Phelps, Inc., 226 N.C. App. 506, 509, 740 S.E.2d 923, 927 (2013), and we are bound by decisions of our Supreme Court if our decisions are in conflict, Emp. Staffing Grp., Inc. v. Little, 243 N.C. App. 266, 271, n.3, 777 S.E.2d 309, 313 n.3 (2015). Further, “[i]t is well settled that the courts of a state will not lend their aid to the enforcement of a contract . . . [w]hen it violates public policy.” Std. Fashion Co. v. Grant, 165 N.C. 453, 456, 81 S.E. 606, 607–08 (1914).
-6-SE. REG’L PHYSICIAN SERVS. V. SCOTT
Opinion of the Court
1. Reasonability in Terms, Time, and Territory
“The reasonableness of a restraining covenant is a matter of law for the court
to decide.” Jewel Box Stores Corp. v. Morrow, 272 N.C. 659, 663, 158 S.E.2d 840, 843
(1968) (citation omitted). When evaluating reasonableness as to time and territory,
we must consider the two elements together because “the two requirements are not
independent or unrelated.” Farr Assocs., Inc. v. Baskin, 138 N.C. App. 276, 280, 530
S.E.2d 878, 881 (2000). Though either element, standing alone, may be reasonable,
the combined effect of both elements may be unreasonable. Id. “A longer period of
time is acceptable where the geographic restriction is relatively small, and vice versa.”
Id. (citing Jewel Box Stores, 272 N.C. at 665, 158 S.E.2d at 844).
To properly consider the reasonableness of a territorial restriction, we must
consider six factors:
(1) the area or scope of the restriction; (2) the area assigned
to the employee; (3) the area where the employee actually
worked; (4) the area in which the employee operated; (5)
the nature of the business involved; and (6) the nature of
the employee’s duty and his knowledge of the employer’s
business operation.
Id. at 281, 530 S.E.2d at 882 (citing Hartman, 117 N.C. App. at 312, 450 S.E.2d at
917). A territorial restriction is reasonable “only to the extent it protects the
legitimate interests of the employer in maintaining [its] customers.” Manpower of
Guilford Cnty., Inc. v. Hedgecock, 42 N.C. App. 515, 523, 257 S.E.2d 109, 115 (1979).
“Before a covenant can be found reasonably necessary for the protection of a
-7-SE. REG’L PHYSICIAN SERVS. V. SCOTT
Opinion of the Court
legitimate business interest, we hold that it is first necessary to find the employee,
as a result of his employment, acquired intimate knowledge of the nature and
character of the business which was not otherwise generally available to the public.”
United Lab’ys, Inc. v. Kuykendall, 322 N.C. 643, 650, 370 S.E.2d 375, 380 (1988)
(citation omitted).
Here, Plaintiff argues the covenants not to compete were reasonable in both
time and territory as well as, implicitly, in terms. Regarding the timing restriction,
we agree a one-year restriction is reasonable. See Farr Assocs., 138 N.C. App. at 280,
530 S.E.2d at 881 (“A five-year time restriction is the outer boundary which our courts
have considered reasonable[.]”). We also hold the geographical restrictions of 35 miles
and “within Robeson County” reasonable. See Masterclean of N.C., Inc. v. Guy, 82
N.C. App. 45, 50, 345 S.E.2d 692, 696 (1986) (holding a geographical restriction
embracing the entire United States is “patently unreasonable”). However, we do not
agree the terms are reasonable.
North Carolina courts have consistently held covenants not to compete are
unenforceable when overly broad in scope. E.g., Henley Paper Co. v. McAllister, 253
N.C. 529, 534–35, 117 S.E.2d 431, 434 (1960); VisionAIR, Inc. v. James, 167 N.C. App.
504, 508–09, 606 S.E.2d 359, 362–63 (2004); Med. Staffing Network, Inc. v. Ridgway,
194 N.C. App. 649, 656–57, 670 S.E.2d 321, 327–28 (2009).
Here, the language of the covenants not to compete forbids Defendants from
“engag[ing] in the practice of Medicine” or to provide substantially similar services to
-8-SE. REG’L PHYSICIAN SERVS. V. SCOTT
Opinion of the Court
those they provided for Plaintiff. This prohibition impermissibly limits Defendants’
abilities to meaningfully engage in their careers. If Defendants were to comply with
their covenants not to compete, they would both be required to stop any work
remotely related to the practice of medicine or operation of a healthcare facility. This
restriction is overbroad and unenforceable. See Hartman, 117 N.C. App. at 317, 450
S.E.2d at 920 (holding a non-compete agreement is overly broad when “rather than
attempting to prevent [a] plaintiff from competing for [] business, it requires [a]
plaintiff to have no association whatsoever with any business that provides [similar]
services”).
2. Voidability Against Public Policy
We would also hold the covenants not to compete void against public policy.
When considering public policy, we “disfavor[] noncompetition agreements which
hamper an individual’s right to earn a livelihood unless the restriction protects a
sufficient countervailing interest of the employer.” Phelps Staffing, LLC v. C.T.
Phelps, Inc., 226 N.C. App. 506, 509−10, 740 S.E.2d 923, 927 (2013) (citation omitted).
Employer rights must be balanced against the “undue hardship” of the employee:
[E]ven where there is an otherwise permissible covenant
not to compete: [t]he restraint is unreasonable and void if
it is greater than is required for the protection of the
promisee or if it imposes an undue hardship on the person
who is restricted. Owing to the possibility that a person
may be deprived of his livelihood, the courts are less
disposed to uphold restraints in contracts of employment
than to uphold them in contracts of sale.
-9-SE. REG’L PHYSICIAN SERVS. V. SCOTT
Opinion of the Court
Starkings Ct. Rep’ing Servs. v. Collins, 67 N.C. App. 540, 541–42, 313 S.E.2d 614, 615
(1984) (quoting Wilmer, Inc. v. Liles, 13 N.C. App. 71, 75, 185 S.E.2d 278, 281 (1971)).
In the public policy analysis, we must consider “the right of the employer to protect,
by reasonable contract with [its] employee, the unique assets of [its] business, a
knowledge of which is acquired during the employment and by reason of it[.]” Elec.
S., Inc. v. Lewis, 96 N.C. App. 160, 165, 385 S.E.2d 352, 355 (1989) (quoting Kadis v.
Britt, 224 N.C. 154, 159, 29 S.E.2d 543, 546 (1944)). These unique assets include
contacts and confidential information. Id. at 166, 285 S.E.2d at 355. In contrast,
“when such proprietary interests of the employer are absent and the effect of a
contract is merely to stifle normal competition, it is offensive to public policy in
promoting monopoly at the public expense and is bad.” Phelps Staffing, LLC, 226
N.C. App. at 510, 740 S.E.2d at 927 (citation modified). Covenants not to compete
offend public policy when they impose a “greater restraint on the [employee’s] ability
to earn a living than was necessary to protect the [employer’s] business interests.”
Id. (citing Starkings Ct. Rep’ing Servs., 67 N.C. App. at 542, 313 S.E.2d at 616.).
Here, Plaintiff argues public interest doctrine should not apply to a Rule 12(c)
analysis because the application of public interest doctrine is “inherently factual” and
“involve[s] fact finding and submission of evidence in the context of motions for
preliminary injunction[s] and summary judgment.” Alternatively, Plaintiff argues
the covenants not to compete are not contrary to public policy because they protect
Plaintiff’s legitimate business interests. Plaintiff’s asserted business interests are
- 10 -SE. REG’L PHYSICIAN SERVS. V. SCOTT
Opinion of the Court
protection from adverse use of intimate knowledge of Plaintiff’s business operations
and protection of customer relationships. Plaintiff alleges it has lost patients to
Southern Integrated Care after Defendants’ departure. We hold Plaintiff’s legitimate
business interest does not sufficiently justify the bar to Defendants’ ability to engage
in the practice of medicine based on the pleadings; therefore, the case need not
proceed to the fact finding and submissions of evidence for which Plaintiff argues.
We have previously held, “[t]o plead misappropriation of trade secrets, a
plaintiff must identify a trade secret with sufficient particularity so as to enable a
defendant to delineate that which he is accused of misappropriating and a court to
determine whether misappropriation has or is threatened to occur.” VisionAIR, Inc.,
167 N.C. App. at 510–11, 606 S.E.2d at 364 (citation modified). Here, Plaintiff does
not plead a specific trade secret misappropriated by Defendants. Plaintiff generally
pleads Defendants had access to Plaintiff’s “practice management techniques and
confidential information;” provide medical services “similar to those” provided for
Plaintiff; and, due to Defendants’ employment with Southeastern Integrated Care,
Plaintiff has lost patients. Plaintiff also argues Defendants’ previous association with
Plaintiff “provided them with an opportunity to injure [Plaintiff] and its business.”
Absent allegations of misappropriated trade secrets Defendants know, Plaintiff
cannot enforce an absolute bar to Defendants’ practice of medicine. Id. at 511, 606
S.E.2d at 364 (holding “general allegations” that one’s employment “has or will
immediately engender misappropriation of trade secrets” combined with a failure “to
- 11 -SE. REG’L PHYSICIAN SERVS. V. SCOTT
Opinion of the Court
identify with any specificity the trade secrets allegedly misappropriated, mentioning
only broad . . . categories” were “insufficient to state a claim for misappropriation of
trade secrets” (citation omitted)); see United Lab’ys, Inc., 322 N.C. at 650, 370 S.E.2d
at 380 (“Before a covenant can be found reasonably necessary for the protection of a
legitimate business interest, we hold that it is first necessary to find the employee,
as a result of his employment, acquired intimate knowledge of [a confidential] nature
and character of the business which was not otherwise generally available to the
public.”).
In contrast, we agree Plaintiff has a legitimate business interest in protecting
its client relationships. United Lab’ys, Inc., 322 N.C. at 651, 370 S.E.2d at 381 (first
citing C.T. Drechsler, Annotation, Enforceability of Restrictive Covenant, Ancillary to
Employment Contract, as Affected by Territorial Extent of Restriction, 43 A.L.R.2d 94,
§ 24 (1955); and then citing C.T. Drechsler, Annotation, Enforceability of Restrictive
Covenant, Ancillary to Employment, as Affected by Duration of Restriction, 41
A.L.R.2d 15, § 14 (1955)). North Carolina has adopted a “customer-contact” theory
which recognizes “[t]he greater the employee’s opportunity to engage in personal
contact with the employer’s customer, the greater the need for the employer to protect
these customer relationships.” Id. at 651, 370 S.E.2d at 381. The theory is most
applicable when “the employee is the sole or primary contact between the customer
and the employer.” Id.
- 12 -SE. REG’L PHYSICIAN SERVS. V. SCOTT
Opinion of the Court
Although we hold Plaintiff’s customer-contact interest legitimate, we hold it
does not sufficiently justify the bar to Defendants’ ability to engage in the practice of
medicine. See Iredell Digestive Disease Clinic, P.A. v. Petrozza, 92 N.C. App. 21, 27,
373 S.E.2d 449, 453 (1988) (“A covenant not to compete between physicians is not
contrary to public policy if it is intended to protect a legitimate interest of the
covenantee and is not so broad as to be oppressive to the covenantor or the public.”
(emphasis added) (citation omitted)). Defendants were not the sole contacts between
Plaintiff and its patients, and Plaintiff does not plead Defendants were the primary
contacts between Plaintiff’s patients and Plaintiff. The mere loss of patients after
Defendants’ departure is not sufficient to justify precluding Defendants’ practice of
medicine. See Elec. S., Inc., 96 N.C. App. at 165–66, 385 S.E.2d at 355 (stating “[t]he
equitable balance between conflicting interests of employer and employee takes into
account the right of the employer to protect, by reasonable contract with its employee,
the unique assets of its business, a knowledge of which is acquired during the
employment and by reason of it,” including “customer contacts” and “confidential
information,” and “to this employer’s right must be added the condition that the
contract does not impose unreasonable hardship on the employee” (citation
modified)).
We hold the covenants not to compete place an undue hardship on Defendants’
ability to meaningfully engage with their careers and are too broad to protect
Plaintiff’s legitimate business interests. Starkings Ct. Rep’ing Servs., 67 N.C. App.
- 13 -SE. REG’L PHYSICIAN SERVS. V. SCOTT
Opinion of the Court
at 541–42, 313 S.E.2d at 615. Therefore, on balance, we hold the trial court did not
err in finding the covenants not to compete unenforceable.2
B. Blue-Pencil Doctrine
Plaintiff argues, alternatively, this Court may “blue[-]pencil” the phrase
“practice of Medicine” in both covenants not to compete to render the provisions
reasonable.
“The blue-pencil doctrine is a doctrine in equity, designed to save a contract
where particular restrictions are deemed unreasonable and unenforceable.” Rel. Ins.,
Inc. v. Pilot Risk Mgmt. Consulting, LLC, --- N.C. ---, ---, 929 S.E.2d 893, 914 (2026)
(citing Welcome Wagon Int’l, Inc. v. Pender, 255 N.C. 244, 248, 120 S.E.2d 739, 742
(1961)). “Generally, under the blue-pencil doctrine, courts ‘will sever unreasonable,
divisible portions and then enforce the reasonable parts that remain, usually without
rewriting the covenant by adding, changing, or rearranging terms.’” Id. (quoting 6
Richard A. Lord, Williston on Contracts § 13:31 (4th ed. 2025)). Courts may not,
however, revise or rewrite the overly broad provisions. Whittaker Gen. Med. Corp. v.
Daniel, 324 N.C. 523, 528, 379 S.E.2d 824, 828 (1989).
2 We also recognize the trial court found “the enforceability of the covenants would create a substantial
question of public harm to residents of North Carolina’s largest and poorest county.” Even assuming Robeson County is North Carolina’s “largest and poorest county,” we hold the trial court’s taking of judicial notice of this fact inconsequential because we hold the covenants not to compete are void against public policy for the reasons stated above.
- 14 -SE. REG’L PHYSICIAN SERVS. V. SCOTT
Opinion of the Court
“Under a liberal blue-pencil standard, employers are encouraged to create
ominous covenants, knowing that if the provisions are contested, courts will modify
the agreement to make it enforceable—all the while maintaining the added benefit
that departing employees may adhere to the onerous covenant without challenge.”
Rel. Ins., Inc., --- N.C. at ---, 929 S.E.2d at 914.3 In contrast, North Carolina courts
adopt a strict blue-pencil doctrine, allowing “[o]nly those separable or divisible
covenants [to] be fairly stricken out. This is rooted in the notion that a natural
reading of [the] contract would indicate that the parties separately intended to agree
to each separable covenant.” Id. Accordingly, the strict blue-pencil doctrine “does
not allow courts to surgically excise language.” Id. at ---, 929 S.E.2d at 915.
Here, Plaintiff requests this Court blue-pencil the covenants not to compete in
the following ways:
Defendant Scott’s Covenant Not to Compete:
[Defendant] agrees that during the term of employment
and for a period of one (1) year following the termination of
employment with [Plaintiff] for any reason (the
“noncompetition period”), [Defendant] will not engage in
the practice of Medicine or provide services similar to those
provided under this Agreement as an employee,
independent contractor, or in any other capacity, for a
competing Southeastern or other competing institutional
3 We recognize our Supreme Court’s opinion in Relation Ins., Inc. was released after the submission of
the Parties’ briefs. Although neither party filed a memorandum of additional authority including Relation Ins., Inc., this opinion is binding on this Court and the trial courts of North Carolina. See Snipes v. TitleMax of Va., Inc., 285 N.C. App. 176, 184, 876 S.E.2d 864, 870 (2022) (“Of course, we are . . . bound by decisions of our Supreme Court[.]”)); In re Civil Penalty, 324 N.C. 373, 384, 379 S.E.2d 30, 37 (1989).
- 15 -SE. REG’L PHYSICIAN SERVS. V. SCOTT
Opinion of the Court
health care providers within Robeson County without the
expressed, written consent of [Plaintiff].
Defendant Benson’s Covenant Not to Compete:
[Defendant] agrees that during the term of employment
and for a period of one (1) year following the termination of
employment with [Plaintiff] for any reason (the
“noncompetition period”), [Defendant] will not engage in
the practice of Medicine or provide services similar to those
provided under this Agreement as an employee,
independent contractor, or in any other capacity, for a
competing hospital or other competing institutional health
care providers within 35 miles of any [of Plaintiff’s] clinic[s]
or facilit[ies] without the expressed, written consent of
[Plaintiff].
“Since [Plaintiff does] not request blue-penciling of a separable, divisible
provision from an otherwise enforceable provision, blue-penciling cannot apply.” Id.
III. Conclusion
The trial court did not err in finding the covenants not to compete overly broad
and unenforceable or in granting Defendants’ motion for judgment on the pleadings,
and we decline to blue-pencil the challenged provisions.
AFFIRMED.
Judge WOOD concurs.
Chief Judge DILLON dissents by separate opinion.
- 16 -No. COA25-1046 – Se. Reg’l Physicians Servs. v. Scott
DILLON, Chief Judge, dissenting.
Defendants are nurses, each hired by Plaintiff and each signing a non-compete
agreement as a condition of employment.
I agree with the majority that the prohibition in their respective covenants
prohibiting Defendants from “engaging in the practice of medicine” is over broad and,
therefore, unenforceable. However, for the reasoning below, I conclude other
limitations in the covenant are not over broad. Further, I conclude the over broad
portion can be properly struck, thus allowing the “non- over broad” portions to stand.
(I question certain jurisprudence suggesting the trial court has discretion whether to
strike offending language, as I believe this should be a question of law. But even if it
is a discretionary call, the call should not be made at a Rule 12(c) hearing.)
I agree with the majority that Defendants may, otherwise, be able to show the
covenants restricting their ability to serve Robeson County as nurses – a vital part of
the county’s medical community – may violate public policy. And it may be shown
through discovery these covenants are, indeed, unenforceable. However, I conclude
Plaintiff’s complaint should survive at this early stage, that the trial court should not
have granted Defendants judgment on the pleadings. Accordingly, I respectfully
dissent.
Analysis
A. Blue Penciling
SE. REG’L PHYSICIAN SERVS. V. SCOTT
DILLON, C.J., dissenting
Our Supreme Court has recently reiterated long-standing North Carolina
precedent that courts will not rewrite language in a contract that we conclude is
unenforceable. Relation. Ins., Inc. v. Pilot Risk, __ N.C. __ (2026).
For instance, in the present case, I agree with the majority that the 35-mile
range is a reasonable area. But assume the covenant at issue stated that Defendants
could “not work as nurses anywhere in the United States”. Assume, further, we were
to conclude a 35-mile distance was the outer limit of a reasonable restriction. We
would, thus, strike the covenant, thereby relieving Defendants from the covenant
altogether. Our case law would not allow us to change “United States” to “a 35-mile
distance”.
However, our Supreme Court also reiterated long-standing North Carolina
precedent that there are circumstances where a trial court may enforce the nonoffensive restrictions in a restrictive covenant which otherwise contains offensive
restrictions. For instance, assume the contract in my example above contains several
clauses, as follows:
Defendants may not work as nurses anywhere in the United States;
Defendants may not work as nurses in North Carolina;
Defendants may not work as nurses within 100 miles of Plaintiff’s clinic;
Defendants may not work as nurses within 35 miles of Plaintiff’s clinic.
See Beverage Sys. v. Associated Bev., 368 N.C. 693, 696-97 (2016); Welcome Wagon v.
Pender, 255 N.C. 244, 248 (1961). In this case, the trial court could strike the first
three lines, leaving the fourth as valid and enforceable.
2
SE. REG’L PHYSICIAN SERVS. V. SCOTT
DILLON, C.J., dissenting
However, our Supreme Court has also stated that blue penciling is only
allowed where the offending provision is “a separable, divisible provision from an
otherwise enforceable provision.” Relation Ins., __ N.C. at __.
In the present case, we are faced with whether the offending provision,
prohibiting Defendants from “the practice of Medicine”, is subject to blue penciling
from the remainder of the same sentence in the covenant which prohibits Defendants
from “provid[ing] services similar to those provided” under their respective
employment agreements with Plaintiff.
Our Supreme Court has essentially held that it is permissible for a trial court
to strike offending language - even within the same phrase - from non-offending
language. For instance, in one case our Supreme Court was faced with a provision
which prohibited a former employee from the “business of manufacturing, selling,
renting, or distributing” certain goods, where the former employer was not in the
business of manufacturing. Whittaker General v. Daniel, 324 N.C. 523, 528 (1989).
The employer sued when the employee began working for a competitor selling goods.
The employee tried to avoid the covenant altogether by pointing to the word
“manufacturing”, restricting his ability to manufacture for another company, as being
over broad. Our Supreme Court rejected that argument, holding the word
“manufacturing” was severable from the remainder of the sentence and allowed the
former employer to collect damages for the former employee’s actions in “selling”. Id.
3
SE. REG’L PHYSICIAN SERVS. V. SCOTT
DILLON, C.J., dissenting
However, in Relation Ins., our Supreme Court in its recent decision seemingly
held that a covenant was unenforceable in its entirety though the covenant could be
read as enforceable by simply striking through the offending language. The Court,
though, seemed to base its holding on the fact that it would require language in over
forty different places to be struck in order to make the remainder enforceable.
Relation Ins. __ N.C. at __.4
Here, though, the pleadings do not show that a trial court would have to engage
in blue penciling except in a few places and thus would not run counter to our
Supreme Court’s opinion in Relation Ins.. Therefore, I conclude the trial court could
engage in blue penciling to strike the offending language.
B. Public Policy
The majority also holds the provision violates public policy as Defendants are
nurses working in the medical field. It may be the provision violates public policy.
However, I do not believe this has been shown at the pleading stage. For instance,
there is no evidence showing whether there is a shortage of nurses in Robeson
County. See, e.g., Statesville Medical v. Dickey, 106 N.C. App. 669, 673 (1992). In
4 Though not relevant to the analysis in this current matter, I note that I read Relation Ins.
as moving the goal post a little, thus making the question of whether a non-compete contract can be blue-penciled less certain under our law. It could be argued that the blue-penciling requested by Relation Insurance in that case was not that overwhelming, as the request largely required the trial court to blue pencil the same phrase, which happened to occur some forty times in the agreement at issue.
4
SE. REG’L PHYSICIAN SERVS. V. SCOTT
DILLON, C.J., dissenting
other words, Defendants may be able to show through discovery that the provision
violates public policy as a matter of law, therefore entitling Defendants to summary
judgment at a later stage of this litigation. However, I see nothing in the pleadings
which entitle Defendants judgment at this stage.
C. Abuse of Discretion vs, De Novo Standard
Though not an issue raised in this appeal, I think it important to note another
issue that arises in the context of blue-penciling.
There is case law from our Court which suggests that, where blue penciling
may be allowed, it is within the trial court’s discretion whether to actually engage in
blue pencil offending language. See, e.g., Hartman v. W.H. Odell, 117 N.C. App. 307,
317 (1994) (holding that “[a] court at most may choose to enforce a distinctly separable
part of a covenant in order to render the provision reasonable” (emphasis added)).
That is, it is within the trial court’s discretion to decide whether or not parties to a
contract capable of being blue penciled are bound by the non-offending language in
that contract. This may be because the blue pencil doctrine has been viewed as a
“doctrine of equity”. See Relation Ins., __ N.C. at __.
In sum, it appears the law in North Carolina is that it is a question of law
whether a provision is able to be blue penciled, e.g., whether the offending provision
is separable. Then, in cases where an offending provision is separable as a matter of
law, it is within a trial court’s discretion whether to allow an employer to enforce the
5
SE. REG’L PHYSICIAN SERVS. V. SCOTT
DILLON, C.J., dissenting
reasonable provisions by engaging in the “blue penciling” process. Allowing a trial
court discretion whether or not to enforce provisions in a contract creates uncertainty
in our society between contracting parties. It could be argued that our law should
provide for more certainty. That is, one could argue the matter should be simply a
question of law, as it is a matter of contract interpretation, where the rights of the
parties would be the same no matter the judge. See, e.g. Morrell v. Hardin Creek,
371 N.C. 672 (2018) (applying a de novo standard in reviewing contract language).
Our Supreme Court did not need to resolve this issue in its recent Relation Ins.
opinion; and, therefore, the Court did not render any opinion on our precedent on this
issue.
In any event, in the present case, my vote is the same whether a trial court has
discretion or not, based on the posture of this case. Specifically, the trial court at this
stage of the litigation was only to address the pleadings, that is, to address the legal
question whether the offending provision was severable.
6