North Carolina Business Litigation Report

Sports Quest, Inc. v. Dale Earnhardt, Inc., 2004 NCBC 3 (N.C. Super. Ct. Feb. 12, 2004)(Tennille)

The plaintiff claimed that the defendant caused its business to fail. The defendant asserted plaintiff's business had failed because he used illegal drugs, had extramarital affairs, and because he "had a propensity to sleep and fish during the day."

When the defendant sought to question the owner of the plaintiff about these matters at his deposition, he took the Fifth Amendment. The defendant claimed it was entitled to a complete dismissal of plaintiff's claims as a result, but the Court determined that dismissal was not the appropriate remedy. Instead, the Court prohibited the plaintiff from presenting testimony about these matters at trial, and indicated that it would instruct the jury that it was entitled to draw an adverse inference from plaintiff's refusal to testify.

In a companion case, the plaintiff asserted that the defendant had tortiously interfered with a contract which it had to distribute die-cast race cars by the defendant selling those cars directly to plaintiff's customer. The Court held that interference with contract is justified if motivated by a legitimate business purpose, as when the parties are competitors.

The Court also dismissed plaintiff's conspiracy claim  There had been no illegal act, because "suppliers are free to contract with whomever they please and structure the distribution chain accordingly." Nor was there any claim for unfair and deceptive trade practices. The Court held that the defendant "merely took measures to protect its own business interests that happened to be detrimental to [the plaintiff's financial condition. Every business transaction impacts a party either through its participation in or through its exclusion from the deal. Absent the presence of an act that violates moral, ethical, or legal standards, the courts cannot punish a business solely because a transaction financially harms another entity. That is competition. An unfair trade practice requires more than a negative impact on a party."

Full Opinion

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Mack Sperling
Brooks Pierce, LLP
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