North Carolina court strikes down wealth firm's non-compete and non-solicit as overbroad

A North Carolina court has struck down a wealth firm's non-compete and non-solicit at the pleading stage, faulting overbroad drafting.

The North Carolina Business Court has dismissed the central restrictive covenant claims brought by Greensboro-based Matt Logan, Inc., which does business as TMRW Wealth, against a former financial planner. Chief Business Court Judge Michael L. Robinson ruled on June 9, 2026 that both the non-competition and non-solicitation provisions in the planner's employment agreement were facially overbroad and unenforceable.

For HR leaders and in-house counsel who oversee restrictive covenants, the decision is worth reading carefully. It is a clean illustration of how quickly poorly drafted clauses can collapse - even before any factual record is built.

The dispute came out of the firm's planned switch from broker-dealer Cetera to Kestra, projected for sometime in October 2025. According to the order, financial planner Benjamin Abitz took part in attorney-client meetings about the transition, then resigned on October 6, 2025, the day before the switch was to take effect. The firm alleges that on transition day, Abitz contacted its clients and left them under the impression the firm was no longer offering financial advisory services. Three days later, an email went to clients on behalf of Abax Capital, LLC, a new entity Abitz had formed, stating the entity had decided to remain with Cetera.

The firm sued for breach of the employment agreement, misappropriation of trade secrets, unfair and deceptive trade practices, and injunctive relief. Abitz moved to dismiss most of those claims.

On the non-solicitation clause, the court found the language reached too far. It tried to bar Abitz from inducing, directly or indirectly, "any person or persons to discontinue doing business with the Company." Under North Carolina law, a client-based limitation generally cannot reach beyond clients the employee actually had contact with during employment. Because the clause covered anyone doing business with the firm, the court called it unreasonable in scope and dismissed the claim with prejudice.

The non-compete fared no better. It barred Abitz from performing "any services in competition" with the firm within Guilford County, North Carolina, for a year after termination. The court read that as restricting him from any role at a competitor, even work unrelated to his financial planning duties. North Carolina case law treats that kind of breadth as fatal. The firm argued at the hearing that the clause should be read to restrict only identical roles, but the court said the plain language could not be rewritten after the fact. Dismissed with prejudice.

The trade secrets claim failed too, but without prejudice - meaning the firm may try again with a new pleading. The court found the firm had described its alleged trade secrets only in broad terms - "confidential client information" and confidential business information about the broker-dealer transition - without enough detail to put the defendant on notice of what he was accused of taking.

Two claims survive. The unfair and deceptive trade practices claim moves forward, tied to an unchallenged computer trespass claim. The firm alleges Abitz accessed its tax analysis software and eMoney Advisor accounts after his resignation to identify confidential client information. The breach claim tied to the agreement's nondisclosure provision was not part of the motion and also continues.

For HR and employment counsel, the practical lessons are direct. Non-solicitation clauses should be tied to clients the employee actually worked with, not to every client the company has. Non-competes need limiting language that ties the restriction to the kind of work the employee actually performed - not any work at any competitor. And trade secret claims need specificity from day one. Bare references to "confidential information" will not survive a motion to dismiss in North Carolina, and likely in many other jurisdictions either.

Template restrictive covenants drafted years ago, and never revisited, are exactly the kind of language that collapses under this analysis. A periodic audit, with employment counsel, is cheap insurance.

The court's order resolves only the partial motion to dismiss. The surviving claims have not been decided on the merits, and the dismissed trade secrets claim could be repleaded.