Orca Communications Unlimited, LLC v. Noder
233 Ariz. 411
| Ariz. Ct. App. | 2013Background
- Orea Communications Unlimited, LLC sued Ann J. Noder for breach of contract and several business torts after Noder left to form Pitch Public Relations, LLC.
- Noder, as Orea’s former president, had broad access to confidential information, customer and vendor contracts, and relationships.
- Noder signed a four-covenant Agreement restricting confidentiality, non-competition, and non-solicitation, with no employment contract implied.
- The covenants were later found overbroad and unenforceable; trial court dismissed breach of contract and one other claim.
- Orea later amended its complaint and the trial court dismissed subsequent claims but allowed fraud to be amended; the appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of restrictive covenants | Orea argues covenants protect legitimate interests and are enforceable. | Noder argues covenants are overbroad and unenforceable. | Covenants unenforceable; breach of contract claim dismissal affirmed. |
| Covenant of good faith and fair dealing | Implied covenant supports breach claim beyond the Agreement. | Coventants within the Agreement govern all issues. | Court erred; implied covenant claim viable outside the Agreement. |
| AUTSA preemption of tort claims | AUTSA preempts broader tort theories based on misappropriation. | AUTSA preempts trade-secret misappropriation and related torts. | AUTSA does not preempt non-trade-secret confidential information; tortious interference and fiduciary claims reinstated; unfair competition limited to trade-secret basis. |
| Fraud claim sufficiency | Noder misrepresented sale terms intending reliance. | Promissory aspects insufficient for fraud; contract governs. | Fraud claim properly dismissed for lack of particularity and misrepresentation. |
| Leave to amend the complaint | Amendment should be allowed for fraud. | Waived on appeal; issue not preserved. |
Key Cases Cited
- Amex Distrib. Co., Inc. v. Mascari, 150 Ariz. 510 (App. 1986) (restrictive covenants require tailoring to protect legitimate interests)
- Valley Med. Specialist v. Farber, 194 Ariz. 363 (1999) (restraint scope defined by duration and geographic area)
- Hilb, Rogal & Hamilton Co. v. McKinney, 190 Ariz. 213 (App. 1997) (restrictive covenants judged against legitimate business interests)
- Bryceland v. Northey, 160 Ariz. 213 (App. 1989) (limits on customer/non-solicitation to protect legitimate interests)
- Johnson Int'l, Inc. v. City of Phoenix, 192 Ariz. 466 (App. 1998) (employment contract implied covenant guidance)
- Enter. Leasing Co. of Phoenix v. Ehmke, 197 Ariz. 144 (App. 1999) (definition of confidential information and trade secrets under AUTSA)
- Sec. Title Agency, Inc. v. Pope, 219 Ariz. 480 (App. 2008) (fiduciary duties and loyalty in employment context)
- Trollope v. Koerner, 106 Ariz. 10 (1980) (promissory fraud and contract interplay)
- Spudnuts, Inc. v. Lane, 131 Ariz. 424 (App. 1982) (fraud claims require particularity)